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Hua Nan reports NT$0.7 earnings per share for first half of '14

TAIPEI, Taiwan -- Hua Nan Financial Holdings Co. (HNFC, 華南金控) yesterday held its earnings conference, reporting consolidated revenues of NT$6.305 billion, with their net income improving by 21 percent year-on-year to reach NT$6.305 billion over the first half of this year, yielding an earnings-per-share performance of NT$0.7 for the period.

The company attributed the strong growth in overall net income to its banking arm Hua Nan Bank (華南銀行), which accumulated revenue of NT$11.898 billion, improving by 8 percent year-on-year. In addition, revenues derived from transaction fees and wealth management services grew by 15 percent on a year-on-year basis, reaching NT$2.766 billion.

Throughout the period, the company's asset quality has remained stellar, with non-performing loans ratio maintaining at 0.31 percent, and non-performing coverage ratio at 404.17 percent. As of July this year, non-performing loans ratio improved to 0.24 percent, with non-performing coverage ratio rising to 503.50 percent, achieving overall debt-service coverage ratio of 1.23.

The company outlined its development strategy for the second half of this year, including a drive to diversify sources of net income as profit contribution, maintaining an even earnings contribution among the company's numerous divisions, expand towards markets abroad and increase marketing synergy among business units.

Profit Sources Diversify

Specifically, the company noted that net income contribution from sources excluding non-interest payments has risen to 36 percent of overall earnings, and that revenue contribution from its non-banking operations have reached 11 percent of overall sales, while its overseas operations have contributed 32 percent of the company's pre-tax net income. Most notably, the company is seeking additional improvements in its financial condition, which has achieved BIS ratio of 133.13 percent, banking adequacy ratio of 12.20 percent, and tier 1 capital ratio of 8.85 percent.

The company noted that its second banking branch is to be opened in Shanghai soon, and plans are in place for a third branch in Fuzhou. In addition, the company announced its plans to expand its full-service brokerage business to the China market, and establish financial advisory service and auto insurance businesses across the strait, while aiming to capture opportunities created by the renminbi qualified foreign institutional investor (RQFII) scheme.

On the prospects that HNFC, a company heavy with government stakeholders may be merged with another financial institution in a similar situation, the market has named several possible candidates including First Financial Holding (第一金), and the Taiwan Cooperative Bank (合庫). The company's private sector stakeholders, however, have remained opposed to the merger.

Meanwhile, during yesterday's session HNFC shares recovered above its post-dividend payout reference share price of NT$17.75, gaining NT$0.15, or 0.85 percent to close at NT$17.90.

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