State-run Hua Nan Financial Holdings Co (華南金控) yesterday expressed interest in acquiring local securities brokerages after reporting a 1 percent decline in net profits of NT$9.1 billion (US$261.6 million) for last year — the second-highest among 13 other domestic rivals.
"If there are suitable candidates, we will look for acquisition opportunities among securities brokerages whose assets are relatively transparent and easy to conduct due diligence checks on, compared to those of insurance companies or banks," company president David Lee (李正義) told an investors' conference yesterday, adding that the valuations of some financial institutions had become very attractive.
The company hopes to beef up its securities arm, which currently has a 3 percent market share, Lee said.
The financial service provider also vowed to accelerate its expansion into the Chinese market once the government inks a financial accord with its Chinese counterpart.
"This year, we will be very aggressive in upgrading our liaison offices in Shenzhen into, hopefully, the first Taiwanese bank branch there," Lee said, adding that the company will first focus on serving Taiwanese businesspeople in the Pearl River Delta area.
The company will also aggressively seek Chinese financial institutions as strategic partners, while looking for a capital injection from small and medium-sized or regional Chinese banks as shareholders, the executive said. Hua Nan yesterday posted an earning per share (EPS) of NT$1.49, down from the previous year’s NT$1.54, with a 0.54 return on asset and a 10.02 return on equity.
Its main growth driver came from its banking subsidiary, whose profits grew 6 percent year-on-year to NT$9.5 billion last year, while its securities and non-life insurance arms incurred NT$235 million and NT$183 million in losses respectively.
The company wrote off NT$1.93 billion in losses from its structured note investments linked to several failing overseas investment banks, such as Lehman Brothers Inc.
The company vowed to expand fee income-based businesses, such as principal-guaranteed insurance products and wealth management, while seeking growth in loans to fund the government’s infrastructure projects, so as to make up losses from a narrowed net interest margin following the central bank’s interest rate cuts, Lee said.
The company plans to raise NT$10 billion this year to strengthen its capital reserves through the issuance of subordinated bonds, Lee said, adding that it will continue to cut its operating costs.
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