China Development Financial (hereinafter CDF; TWSE: 2883) held a board meeting today and approved the resolution to distribute cash dividend of NT$0.6 per share. The dividend yield is 7.38% based on today’s closing price and 6.78% based on the average closing price for the past 60 days. CDF’s cash dividend yield is the highest among financial holding company peers that have announced their latest dividend policy.
CDF posted 2019 consolidated net income of NT$12.796bn, up 63% from 2018, for EPS of NT$0.88, reaching its best performance in 13 years. The board meeting today approved the resolution to distribute a cash dividend of NT$0.6 per share, which compared to the 2018 cash dividend of NT$0.3 is a two-fold increase offering a compelling 7.38% cash yield and a steady source of dividend income for shareholders.
The COVID-19 pandemic outbreak has caused severe fluctuations in global financial markets. China Development Financial says due to the unrealized loss from direct investments, the Company posted preliminary net loss of NT$1.594bn in March and cumulative net loss of NT$488mn for 1Q20, for NT$0.03 per share.
Subsidiary KGI Bank maintained stable earnings for its core business, with both NIM (net interest margin) and fee income making contributions. However, as trading was impacted by financial market fluctuations, the Bank posted March net profit of NT$16mn and 1Q20 net profit of NT$565mn. Though proprietary trading increased, KGI Securities was also affected by the fluctuations of global stocks and bonds and FINI Taiex selloffs. With valuations of investment positions falling, the subsidiary posted net loss of NT$411mn in March and net loss of NT$71mn in 1Q20. CDIB Capital Group was affected by capital market corrections that suppressed earnings momentum. CDIB posted net loss of NT$1.369bn in March and net loss of NT$1.717bn in 1Q20. China Life posted March net profit of NT$1.416bn and 1Q20 net profit of NT$4.459bn.
CDF spokesperson Richard Chang says that given the COVID-19 outbreak, CDIB Capital’s investment positions are held for the long-term and loss booked in March was from unrealized mark-to-market loss. With investment valuations coming down and small-/mid-sized venture capitals exiting the market, CDIB Capital is actually in a better position to engage targets at bargain prices. The Company’s private-equity (PE) investment team will more actively raise healthcare funds to take advantage of anti-pandemic business opportunities. As for stock brokerage, KGI Securities will strictly enforce risk control and is planning long-term investment strategies. KGI Bank has completed the stress test and risk management is under control. China Life, though being hardly affected by COVID-19, has been actively ushering in digital tools to enhance service efficiency and care measures for its policyholders.
Richard Chang says that despite capital market fluctuations that affected earnings, CDF will continue to focus on its core business, encompassing life insurance, banking, securities, and private equity. The Group will keep leveraging its cross-divisional cooperation and product development to cultivate and expand client relationships, which will translate into long-term and steady profitability. In addition, CDF is abiding by the government’s anti-pandemic policy, fulfilling its corporate social responsibility, and using high-standard anti-pandemic emergency rules to internally raise employees’ anti-outbreak awareness, so as to make sure that all the employees are healthy and that operations won’t be disrupted.