First-quarter profit hits record high

First Gold’s first-quarter profit reached a record high. (File photo)

[Reporter Chen Meiying/Taipei Report] Taiwan’s economy is reaping the benefits of AI, and the General Accounting Office estimates that this year’s economic growth rate is expected to exceed 9%. Li Shuling, deputy general manager of First Financial Holdings, said that thanks to the strong economic growth momentum in Taiwan and the active capital market, which has driven the simultaneous growth of the three pillars of bank profits, First Bank has revised its loan growth target this year from the original estimate of about 5% to 9% to 10%. It is optimistic about the full-year profit outlook, and net income is expected to maintain double-digit growth and set another record.

First Gold's after-tax earnings in the first quarter of this year reached 8.244 billion yuan, an annual increase of 26.5%, setting a new high for the same period in previous years, with after-tax earnings per share (EPS) of 0.57 yuan. Among them, subsidiary First Bank had an after-tax surplus of 7.573 billion yuan, an increase of 11.7% year-on-year; First Gold Securities benefited from the increase in Taiwan stock trading volume and active market trading, and its profits increased significantly by 325.8% to 511 million yuan, driving the profit contribution of non-bank subsidiaries to increase from 9% last year to 12%.

Looking at the sources of profits, net interest income in the first quarter increased by 22.4% year-on-year, driven by the continued expansion of credit scale; net fee income increased by 13.7% year-on-year, driven by the 17.1% growth of the wealth management business, indicating strong growth momentum in the core business.

In terms of loan business, the total loan balance in the first quarter reached 2.95 trillion yuan, an annual increase of 10.8%. Benefiting from the expansion of investment, capital expenditure and operational turnover needs of the technology industry driven by AI, loans to small and medium-sized enterprises, foreign currency loans and loans to large enterprises increased by 8.2%, 17.3% and 10.5% respectively year-on-year; the mortgage business grew steadily by 5.5%, and the overall credit asset quality remained good.

Li Shuling pointed out that the total loan growth this year was originally expected to be about 5%, but thanks to Taiwan's strong economic growth momentum and corporate investment and capital demand in the first quarter were significantly better than expected, the full-year loan growth target was revised upward to 9% to 10%. Among them, the main growth momentum comes from small and medium-sized enterprises and foreign currency lending, which are expected to grow by about 9% and 17% respectively for the whole year, and drive net interest income to double-digit growth of 12% to 15%.

In terms of fee income, benefiting from the wealth management business maintaining a growth momentum of more than 20%, the full-year fee income is expected to grow by 15% to 16%. As for financial investment income, although the demand for hedging in the life insurance industry has declined, resulting in pressure on exchange transaction (Swap) income, it can still be compensated by seizing investment opportunities in the capital market and deploying high-yield fixed-income assets. The overall investment income still has the opportunity to be better than last year.

Li Shuling said that with the implementation of the new system of the Financial Supervisory Commission, the life insurance industry has more adequate reserves for foreign exchange price changes, and the risk aversion ratio has dropped from about 70 to 80% in the past to about 50%, resulting in a significant reduction in market Swap trading volume. Swap revenue is estimated to be approximately 10.5 billion yuan this year, down from 13.7 billion yuan last year, but overall financial market revenue is still expected to maintain solid performance.

With the simultaneous growth of the three profit pillars of net interest income, net fee income and investment income, First Bank is optimistic about its profits this year, and it is estimated that the full-year net income is still expected to grow at double digits.

In terms of the housing market, First Gold believes that the housing market transaction volume will still show a slight correction this year, but the price performance varies by region. The support for housing prices in the Egg Yellow District of Greater Taipei is still strong. Builders mostly promote promotions by giving away decorations and home appliances, so price loosening is limited; some central and southern and non-core areas may experience slight corrections.

Observed from First Bank's mortgage business, the number of mortgage loans has not declined in the first five months of this year. The number of mortgage loans has increased by about 5% over the past few years, and the amount of loans has increased slightly by 1%. The popularity of Xinqing'an mortgage applications continues to increase, with both the number of households and the amount increasing by about 30% compared with the same period last year. It is speculated that some first-time homebuyers are considering possible policy changes after July and therefore apply for loans in advance.

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