Fubon Financial : Reports July 2023 Earnings Results

Fubon Financial reported unaudited consolidated pre-tax profit of NT$15.277bn and net profit of NT$12.526bn in July. Cumulative consolidated pre-tax profit and net profit was NT$61.858bn and NT$55.449bn, respectively, translating into EPS of NT$4.19 for the first seven months of the year. Fubon Financial Holding's cumulative net profit for the first seven months exceeded the net profit of the whole last year. Taipei Fubon Bank's cumulative net profit for the first seven months hit a record high for the same period and net profit in July hit the 2nd highest for the same period. Fubon Securities' net profit in July and cumulative net profit in the first seven months were the 2nd highest for the same period. Fubon Insurance has been profitable for four consecutive months since April.

The performance of the main subsidiaries is as follows:

Fubon Life's July net profit was NT$8,367mn and cumulative net profit was NT$34,666mn. The main sources of investment profit came from interest income, dividend income (including foreign and domestic equities and funds) and FX gains. TAIEX traded at a high in July, leading to an increase in the unrealized balance. Fed raised its funds rate by a quarter percentage point in July to cope with the uncertainty of future economic development. The rate hike, as a result, did not have meaningful impact on the company's net worth. Fubon Life takes a balanced approach in liquidity management and revenue growth in response to the market movement. USD/NTD appreciated by 0.95%, contributing to FX gain in July. The ending balance of Fubon Life's FX reserves was close to NT$30bn, exceeding the upper limit, and thus helped offset FX risks. Fubon Life's standalone cumulative FYP and TP reached NT$56,967mn and NT$186,632mn, respectively, both estimated to rank the top 2 in the industry. FYP was NT$9,185mn in July, up 36.1% yoy. The traditional type increased 526.5% yoy, mainly from participating policy which reached NT$3,672mn in July. The cumulated FYP of participating policy reached NT$8,307mn, accounting for over 14% of total FYP. TP was NT$28,569mn, up 17.0% yoy. Both FYP and TP in July are estimated to rank the top 2 in the industry. Fubon Life's capital position remained decent, with RBC ratio above 300% and equity to asset ratio above 9%.

Taipei Fubon Bank's July net profit was NT$3,148mn, an increase of NT$673mn mom, benefiting from the growth of net interest income, fee and dividend income. The cumulative net profit was NT$16,164mn, up 3% yoy. The growth of cumulative net profit would be around 20% yoy if the bargain purchase gain in 2022 was excluded, mainly due to the rise of loans and the widening interest spread, leading to the steady increase of net interest income. The revenue from wealth management and credit card business grew, driving an increase of over 30% yoy in total fee income. Gains from bond and stock valuation and FX SWAP increased significantly, as the global financial markets turned stable and the gap between NTD and USD remained at a high level. Cumulative total revenue maintained double-digit growth yoy. In the credit card business, the number of newly issued cards in July reached 350,000, an increase of over 40% mom. Cumulative number of new card issuance has exceeded 2mn, and the total number of active cards grew by 40% yoy. The cumulative amount of general card spending increased 32% yoy, and the fee income from the credit card business continued to grow. Asset quality remained benign. NPL ratio and coverage ratio were at 0.12% and 1102%, respectively.

Fubon Insurance's July net profit was NT$372mn. Cumulative net loss was NT$2,867mn, mainly caused by Covid-related policy, which narrowed mom given business growth and decent investment performance.

In terms of business performance, TP in July was NT$4,721mn, up 10.6% yoy, of which premium from commercial line grew by 26.8% yoy. Engineering insurance rose by 166.8% yoy due to the company's active participation in green energy insurance. Accumulated premium in the first seven months was NT$35,224mn, up 3.0% yoy. With a market share of 24.1%, Fubon Insurance continued to be the market leader.

Fubon Securities' July net profit was NT$1,193mn, up 17% mom, the 2nd highest in record, benefited from dividend income and the consistently strong performance of Taiwan's stock market in July. Monthly net profit exceeded NT$1,000mn for two consecutive months and July cumulative net profit was NT$4,632mn, up 67% yoy. The booming market led to significant profit growth year-to-date in brokerage, wealth management and proprietary trading businesses.