Financial organizations under government control exhibit moderated earnings expansion during the initial three months of the year.
State-run financial holding companies saw a decrease in first-quarter profits compared to the previous year, as market volatility at home and abroad affected the performance of their securities and insurance arms.
Hua Nan Financial
Hua Nan Financial Holding Co reported a net profit of NT$5.34 billion for the first quarter, marking a 5.2% decline year-on-year. The decline was attributed to weaker results from its securities and insurance subsidiaries. Earnings per share were NT$0.39.
Despite this decrease, the core operations of the main subsidiary, Hua Nan Commercial Bank, remained healthy, with net income rising 3.3% to NT$5.21 billion. This contributed 92% to the total earnings, according to officials who spoke at an investors' conference.
Mortgage lending dropped by 80% due to the central bank's credit controls, but the bank plans to focus on policy-supported lending, such as first-home loans, for the rest of the year. Full-year growth in this segment is expected to be modest, officials said.
The net interest margin improved to 0.71% in the first quarter and is projected to expand by around 10 basis points for the year, officials said, citing limited foreign currency exposure and anticipated rate cuts by the US Federal Reserve, which could lower overall funding costs.
Non-banking subsidiaries underperformed. Hua Nan Securities Co's net profit plunged 50% to NT$215 million, while Hua Nan South China Insurance Co's net profit declined 16.8% to NT$332 million. The poor investment income amid wild market swings was cited as the reason for the decline.
Hua Nan Financial is optimistic about its earnings ahead, stating that it has adjusted its investment strategy and anticipates that the rise in the local currency could benefit the equity market for the rest of the year.
Taiwan Cooperative
Taiwan Cooperative Financial Holding Co reported a net profit of NT$4.99 billion for the quarter, down 7.28% from the previous year. The decline was attributed to softer results at its insurance and securities units.
The group's life insurance arm, BNP Paribas Cardif TCB Life Insurance Co, reported a net profit of NT$108 million, a slump of 63.76%. This was attributed to a stronger New Taiwan dollar, a product mix heavily weighted toward single-premium policies, and heightened market volatility. For every NT$0.1 appreciation in the local currency, the company would incur NT$15 million in asset value losses. The insurer is seeking regulatory approval to create a foreign exchange reserve, which would help mitigate the impact of currency fluctuations.
Subsidiary Taiwan Cooperative Securities Co booked losses due to falling revenues from proprietary trading and brokerage operations, as market turbulence caused investors to adopt a wait-and-see approach. However, losses began to narrow following a realignment of the investment portfolio, and the subsidiary aims to return to profit this year by focusing on dividend-oriented investment tools and adjusting bond holdings.
Investing in securities and insurance arms seems to have contributed to a decline in Hua Nan Financial Holding Co's first-quarter profits, as reported net profit dropped by 5.2% year-on-year to NT$5.34 billion. similar struggles with investing were observed at Taiwan Cooperative Financial Holding Co, where the net profit for the quarter decreased by 7.28% to NT$4.99 billion.
