Financial and Technology News

IFRS 9 reclassification, declining US debt yield boon for Fubon Financial

 2018/04/09
Fubon Financial Holding Co yesterday said its net value rose about NT$10 billion (US$343 million) following a reclassification of assets held by its life insurance unit under the International Financial Reporting Standard (IFRS) 9 guidelines, which translates into a gain of NT$1 per share.
 
Excluding gains from the IFRS 9 reclassification, Fubon Life Insurance Co, the company’s most profitable unit, saw its net value at the end of last year grow NT$59.4 billion to NT$272.9 billion as declining US debt yields helped boost equity investment profits at home and abroad.
 
The life insurer said that realized gains from equity investments surged 147.5 percent year-on-year to NT$25.5 billion.
 
However, a stronger New Taiwan dollar saw its hedging costs and foreign exchange-related losses widen to 133 basis points at the end of last year from 90 basis points at the end of 2016.
 
In light of rising currency swap costs, which expanded to 89 basis points at the end of last year from 52 basis points in 2016, the insurer said it would reduce its unhedged US dollar position.
 
Fubon Life’s post-hedge investment fell from 4.3 percent in 2016 to 3.93 percent last year.
 
Meanwhile, Fubon Commercial Bank said that each 25 basis point interest rate increase by the US Federal Reserve is expected to raise the lender’s net interest income by about NT$160 million.
 
Foreign currency loans grew 18.3 percent year-on-year to NT$221.3 billion last year, the bank said.
 
Fubon Bank (China) Co Ltd, the only Taiwanese-run lender to have a full banking license in China, saw its net profit fall to NT$1 billion last year from NT$2 billion in 2016.
 
Fubon Financial said it has no immediate plans to hold an initial public offering for its China-based lender, adding that it is planning to open two or three new branches in Shanghai to expand its wealth management business.
 
Overall, Fubon Financial’s net income rose 11.8 percent year-on-year to NT$54.12 billion last year, or earnings per share of NT$5.19.
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