Title Financials: Life insurers grew their profits in OCT, rising bond yields will boost ROI of new
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Title:Financials: Life insurers grew their profits in OCT, rising bond yields will boost ROI of new
Download File:Financial industry note 161116--sinopac.pdf 
 
Summary:Financials: Life insurers grew their profits in OCT, rising bond yields will boost ROI of new

1) Aggregate unaudited OCT net profit of 15 FHCs arrived at NT$17.8bn (-7.8% MoM; 6% YoY).

?Bank-centric FHCs: Net profit generally dropped MoM as investment returns declined on falling bond values, plus lower fee incomes.

?Life-insurance FHCs: Although net profit performances of insurers varied depending on hedge costs, as foreign exchange trading became riskier on severe Asian currencies volatility, the aggregate net profit of the insurers sustained in YoY growth.

?Outlook: The US 10-year treasury yield rose above 2% after the US general election. If the uptrend remains intact, insurers?ROI for new funds will increase, helping improve interest spread structure. On the other hand, if Fed remains its hawkish stance, domestic banks with relatively large foreign currency business weightings might enjoy better net interest income growth than their peers.

2) Stock Picks

  • Buy Cathay FHC (2882 TT) with TP raised to NT$53 (1.3x 2017F P/B)

  • Buy Fubon FHC (2881 TT) with TP of NT$53 (1.2 X 2017F P/B)

  • Buy Mega FHC (2886 TT) with TP of NT$27 (1.2 X 2017F P/B
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    Date:2016/11/16
    Author:TaiwanResearch.com
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