Impact of housing market downtrend less than feared
Although we believe the weak housing market may not be a concern for banks or insurers at the current stage, we still keep our neutral view on Taiwan financials as 1) the earnings YoY decline trend continues; and 2) macro headwinds, such as the Central Bank’s rate cut, still linger. Despite housing prices and trading volume being in decline, we believe banks are less affected than feared as 1) stagnating mortgage/construction loan growth limits further exposure; 2) a conservative loan-to-value ratio protects banks from loss; 3) industry mortgage loan NPL ratios rose slightly but are still largely lower than the overall industry NPL ratio; and 4) The Financial Supervisory Commission (FSC) has required banks to accrue higher loss reserves for real estate loans.
Yuanta is a Taiwan-headquartered brokerage with a growing presence in Asia, especially across Greater China. Our team of 140+ provides cutting-edge analysis on key sectors, spread across offices in Taiwan, Hong Kong, Shanghai (A-Share), Seoul and Jakarta. With an ever-expanding coverage universe of 400+ companies, we provide in depth analysis with unique local color to investors. Consistently being voted the Best Investment Consulting Firm in Taiwan in the AsiaMoney broker poll is evidence of our strength. We target providing an extensive range of research, from small, to mid-sized, to large cap. We bring you the big, well-covered names, as well as going off the beaten track to research the less-familiar companies.
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