China Development Financial (hereinafter CDF, TWSE:2883) hosted the 2Q20 investor conference and posted 2Q20 preliminary net profit of NT$3.524bn, the accumulative 1H20 profit arriving at NT$3.036bn. As overall earnings were less affected by the COVID-19 pandemic, CDF posted July preliminary net profit of NT$2.263bn, marking the highest monthly performance YTD, January to July accumulative net profit of NT$5.30bn, EPS of NT$0.36. CDF said that ESG-relevant topics are expected to drive business growth for the Group after the inclusion of ESG into its investment analysis and decision-making process.
China Life, the subsidiary with the highest profit contribution to CDF in the first half of the year, achieved record-high net profit of NT$8bn in 1H20, of which CDF recognized NT$2.21bn. The COVID-19 pandemic containment and the success of the product mix strategy had accelerated the profit growth. Going forward, China Life will continue to prioritize high-value products to boost VNB (value of new business) margin.
KGI Bank's core earnings maintained 5% of steady growth YoY, posting net profit of NT$1.79bn for 1H20. The Bank turned the net loss of Q1 from financial markets to profit in Q2. It will continue to optimize its deposit structure to lower funding costs, while adjusting its pricing and credit structure in response to lower interest rates. Overall speaking, the Bank has sound capital structure and solid asset quality.
KGI Securities returned to profitability in 2Q20 as a result of growing brokerage business revenue and investment income, posting 1H20 profit of NT$2.41bn. Improving profitability has manifested in Taiwan and overseas markets. In addition to strengthening risk management, KGI Securities continues to promote its international business and seize opportunities for long-term expansion. At the end of July 2020, KGI Securities Investment Trust AUM (asset under management) stood at NT$182.3bn, ranked 7th in the onshore publicly-raised fund industry.
CDIB Capital Group was still impacted by mark-to-market valuation losses of some of its international investment positions during Q220, with accumulative loss of NT$1.462bn in 1H20, but most were unrealized. CDIB Capital has continued to revitalize its assets in response to CDF's capital planning, with AUM reaching NT$36.9bn as of the end of 2Q20.
While pursuing sustainable business growth, CDF has been recognized as a leader in responsible investment. The Group was named in the top 5% of the 6th (2019) Corporate Governance Evaluation carried out by the Taiwan Stock Exchange (TWSE). In addition, CDF and China Life have been selected as component stocks of the “FTSE4Good Emerging Market Index” and “FTSE4Good TIP Taiwan ESG Index” three years in a row.
CDIB Capital and China Life have further responded to the UN PRI's (Principles for Responsible Investment) lead in developing responsible investment policies in line with the recent revision to the “Stewardship Principles” enacted by the TWSE (announced on August 10th, 2020). CDF has fully integrated ESG (environment, social and governance) issues into its investment analysis and decision-making process, striving to assist invested enterprises in prioritizing corporate social responsibility and building an ESG investment portfolio that has high profitability potential.
