Fubon Financial : Reports May 2023 Earnings Results

Fubon Financial reported unaudited consolidated pre-tax profit of NT$4.246bn and net profit of NT$3.752bn in May. Cumulative consolidated pre-tax profit and net profit was NT$27.525bn and NT$25.620bn, respectively, translating into EPS of NT$2.07 for the first five months of the year. Taipei Fubon Bank's cumulative net profit in the first five months hit a record high for the same period and exceeded NT$10.0bn for the first time. Fubon Securities' cumulative net profit in the first five months hit the second highest for the same period. Fubon Insurance has been profitable for two consecutive months since April.

The performance of the main subsidiaries is as follows:

Fubon Life's May net profit was NT$1,373mn and cumulative net profit was NT$13,780mn. TAIEX rose in May as US and tech stocks rebounded. Fubon Life continued to realize capital gains and collect dividends. The main sources of profit came from interest income and investment income of foreign and domestic equities and funds. For fixed income investment, bond market rates rebounded in May as the market was optimistic that a consensus would be reached in the US debt ceiling issue. Rising interest rates boost life companies' recurring return in the medium- and long-term. Fubon Life maintained liquidity to flexibly respond to the market movement. USD was supported by the Fed's interest rate hike path. Meanwhile, NTD was also resilient due to the inflow of foreign capital. USD/NTD appreciated slightly by 0.08% in May, showing a consolidation trend compared to the appreciation of 0.94% in April. The ending balance of Fubon Life's FX reserves was over NT$31bn, exceeding the upper limit of the FX reserve requirement, which helped mitigate FX risks. Fubon Life's standalone cumulative FYP and TP reached NT$38,835mn and NT$127,817mn, respectively, both estimated to rank the top 2 in the industry. FYP was NT$7,917mn in May, up 30.0% yoy. The growth was mainly from traditional and investment products. The traditional type increased 168.2% yoy, mainly due to the sale of participating policy, and the investment type increased 62.4% yoy. TP was NT$ 26,217mn, up 5.5% yoy. Both FYP and TP in May 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 May net profit was NT$1,901mn and cumulative net profit was NT$10,540mn, up 1.7% and 1.3% yoy, respectively. The growth of cumulative net profit would be around 29% yoy if the bargain purchase gain in 2022 was excluded. The increase in net profit was mainly from the double-digit growth in revenue yoy. Net interest income growth benefited from rate hikes, adjustments in deposit and loan structure, and the steady growth of overseas lending momentum. Meanwhile, net fee income grew by over 20% yoy, primarily due to the growth of customer base in wealth management and credit card business, as well as increase of wealth management AUM. Treasury related income maintained high growth year-to-May. In the credit card business, the number of active credit cards exceeded 4 million, up 30% yoy. Cumulative card spending, up 22% yoy, could accelerate in 2H23 due to higher travel demand in summer and Costco affinity card consumption. Asset quality remained benign. NPL ratio and coverage ratio were at 0.14% and 885%, respectively.

Fubon Insurance's May net profit was NT$312mn and cumulative net loss was NT$3,562mn. The profit in May indicated that the impact of Covid-related policy is coming to an end and the company adjusted its business mix. The capital injection of NT$16bn was completed in May, which enhanced its capital position and working capital. The capital adequacy ratio exceeded the statutory requirements.

In terms of business performance, TP in May was NT$4,585mn. Fubon Insurance continues to expand its business and prudently control risk appetite. Marine insurance growth reached 28.3% yoy and auto and new types of insurance climbed over 10% yoy. Accumulated premium in the first five months was NT$24,877mn, up 3.0% yoy. With a market share of 24.5%, Fubon Insurance continued to be the market leader.

Fubon Securities' May net profit was NT$401mn and cumulative net profit was NT$2,421mn, up NT$846mn or 54% yoy, mainly due the contribution from proprietary trading, as TAIEX surpassed 16,000, a record high year-to-May.