Fubon Financial : Reports June 2023 Earnings Results

Fubon Financial reported unaudited consolidated pre-tax profit of NT$19.057bn and net profit of NT$17.303bn in June. Cumulative consolidated pre-tax profit and net profit was NT$46.582bn and NT$42.923bn, respectively, translating into EPS of NT$3.18 for the first six months of the year. Fubon Financial Holding's both pre-tax profit and net profit in June hit a record high for the same period. Fubon Life's net profit in June hit a record high for the same period. Taipei Fubon Bank's net profit in June and cumulative net profit in the first six months hit a record high for the same period. Fubon Securities' net profit in June and cumulative net profit in the first six months were the second highest for the same period. Fubon Insurance has been profitable for three consecutive months since April.

The performance of the main subsidiaries is as follows:

Fubon Life's June net profit was NT$12,519mn and cumulative net profit was NT$26,298mn. Fubon Life collected dividends and realized capital gains as TAIEX rose in June. For fixed income investment, bond market rates rose in range-bound as employment rate grew steadily and core inflation remained high in the US, resulting in the market's expectation of Fed's monetary tightening policy in 2H23. Fubon Life maintained liquidity to flexibly respond to the market movement. USD was supported by the Fed's interest rate hike path, as Fed 'dot plot' shows interest rates may rise twice more before the end of the year, more hawkish than the market expected. USD/NTD appreciated by 1.2%, contributing to the FX gain in June. The ending balance of Fubon Life's FX reserves was over NT$30bn. Fubon Life's standalone cumulative FYP and TP reached NT$47,782mn and NT$158,064mn, respectively, both estimated to rank the top 2 in the industry. FYP was NT$8,947mn in June, up 20.3% yoy. The traditional type increased 423.3% yoy, mainly due to FYP of participating policy reaching NT$2,910mn in June (cumulated FYP of participating policy reached NT$4,635mn). TP was NT$30,247mn, up 6.6% yoy. Both FYP and TP in June are estimated to rank the top 2 in the industry. Fubon Life's capital position remained decent, with RBC ratio and equity to asset ratio exceeding the legal minimum requirement of 200% and 3%, respectively.

Taipei Fubon Bank's June net profit was NT$2,476mn, up over 30% compared with the same period last year. Cumulative net profit was NT$13,016mn, up 7.0%. The growth of cumulative net profit would be around 31% yoy if the bargain purchase gain in 2022 was excluded. The growth of net profit was mainly due to solid earnings momentum in the core business, including steady growth in interest income and 27% increase in net fee income yoy. Growth of net income benefited from wealth management and credit card business. Treasury related income also maintained high growth in 1H23. In the credit card business, the number of new issuance card reached 1.7mn in the first half of the year, of which nearly 80% came from the Costco affinity card. As of the end of June, the total number of active cards grew by nearly 40% yoy, and the cumulative amount of card spending exceeded NT$200bn in the first six months of the year, hitting a record high. Asset quality remained benign. NPL ratio and coverage ratio were at 0.12% and 1070%, respectively.

Fubon Insurance's June net profit was NT$324mn and cumulative net loss was NT$3,239mn. The company continued to adjust its business mix and strengthen risk control, leading to the steady rise of profitability. Coupled with decent investment performance, cumulated net loss caused by Covid-related policy narrowed mom.

In terms of business performance, Fubon Insurance expanded its business and prudently controlled risk appetite. TP in June was NT$5,626mn, of which premium from commercial line grew by 21.8% yoy. Engineering insurance rose by 107.6% yoy due to the company's active participation in green energy insurance. Commercial fire insurance and new types of insurance also climbed over 10% yoy. Accumulated premium in the first six months was NT$30,503mn, up 1.9% yoy. With a market share of 24.5%, Fubon Insurance continued to be the market leader.

Fubon Securities' June net profit was NT$1,018mn, up 1.5 times from the previous month, mainly benefited from the dividend income and the surge of Taiwan's stock trading volume and price, leading to the revenue growth of various securities businesses compared with previous month. June cumulative net profit was NT$3,440mn, up 51% yoy, mainly due the contribution from proprietary trading, as TAIEX surpassed 17,000 in mid-June, a record high in1H23.