Fubon Financial : Reports December 2022 Earnings Results

Fubon Financial reported unaudited consolidated pre-tax loss of NT$19.284bn and net loss of NT$15.492bn in December. Cumulative consolidated pre-tax profit was NT$60.643bn in 2022, and cumulative net profit was NT$46.718bn, translating into EPS of NT$3.52. Cumulative net profit of Taipei Fubon Bank hit a record high and cumulative net profit of Fubon Life was the second highest in record for the same period.

The performance of the main subsidiaries is as follows:

Fubon Life's December unaudited consolidated pre-tax loss was NT$9,265mn, and standalone net loss was NT$7,389mn. The loss this month mainly reflected higher provision from the growth of premium income, capital market volatility, FX and the rise of hedging costs. Cumulative standalone net profit was NT$65,546mn, which was the second highest in record for the same period. NTD appreciated against USD by around 0.63% this month with fluctuation in a narrow range. Fubon's FX loss was mitigated by gains from proxy hedge strategy. The increase of hedging cost this month was mainly due to the widening of USD-TWD interest spread. Cumulative FX gain and hedging cost continued to improve meaningfully yoy. The balance of FX reserves exceeded NT$37.0bn as of December, which would be a buffer against exchange rate fluctuation. The Taiwan stock market saw narrow range consolidation in December, yet the dividend income of Fubon Life grew significantly mom. For fixed income investment, as the long-term interest rates fluctuated in December, Fubon Life seized the opportunity to allocate bond positions at higher yield and maintained reasonable cash flow in order to balance the company's overall liquidity and long-term recurring return. Fubon Life's standalone cumulative FYP and TP reached NT$106,297mn and NT$346,171mn respectively, both estimated to rank the top 2 in the industry. FYP was NT$5,999mn and TP was NT$34,220mn in December, up 15.3% and 44.3% mom, respectively. Fubon Life's capital position remained decent with RBC ratio at over 300%. The equity to asset ratio exceeded the legal minimum requirement of 3%. The board of director approved the reclassification of financial assets, with an effective date of 2023/01/01. Shareholders' equity as of December 2022 would be increased by approximately NT$70bn on a post-reclassification basis.

Taipei Fubon Bank's December net profit was NT$653mn and cumulative net profit was NT$22,647mn, up 21% yoy. Cumulative net profit reached a record high, mainly due to the increase in net interest and equity method investment income. Total revenue grew 14% yoy and operating expenses were well managed, resulting in a record low cost-to-income ratio of 43% for the year. With stable business growth and decent risk control, total asset increased by 7% yoy and asset quality remained benign. NPL ratio and coverage ratio were at 0.19% and 702%, respectively. Despite the capital market fluctuation, customers' assets grew steadily. AUM of wealth management rose by 8% yoy. The credit card business also continued to grow, with the number of effective cards climbing by 15% yoy. Cumulative card spending amount reached NT$350bn, up 13% yoy.

Fubon Insurance's December net loss was NT$9,105mn and cumulative net loss was NT$40,014mn. Direct claims and retention claims of covid-related policy was NT$11,477mn from 263,000 cases, and NT$11,095mn, respectively, in December. Cumulative direct claims reached NT$73,324mn from 1.617mn cases and cumulative retention claims reached NT$53,210mn as of December. Also, the incurred-but-not-reported (IBNR) reserves balance on retention basis was NT$6,349mn as of December. Total direct claims and IBNR would be around NT$82bn without considering the recovery from reinsurance. In terms of business performance, the premium in December was NT$3,442mn. With double-digit growth in both personal and commercial lines, overall premium grew 13.2% compared to the same period last year. Among them, engineering insurance grew by 56.4% and health insurance grew by 22.3%. Meanwhile, automobile insurance, personal comprehensive insurance and marine insurance business also had better growth momentum than the market, climbing by more than 10% yoy on a monthly basis. Cumulative written premium was NT$53,872mn, up 5.9% yoy. With a market share of 24.4%, Fubon Insurance continued to be the market leader for 41 consecutive years.

Fubon Securities' December net profit was NT$104mn and cumulative net profit was NT$2,760mn, down 61% yoy. Taiwan and global stock markets fluctuated due to the Russia-Ukraine war, inflation, and Fed's rate hike. As daily average turnover decreased 36% yoy to NT$305.2bn, and TAIEX dropped 4,482 to 14,138 as of December 30, revenue from brokerage and proprietary trading decreased yoy.