E.Sun Financial Holding Co (玉山金控) yesterday reported a 34 percent pickup in net income for the first quarter and expects the uptrend to continue for the rest of the year on growing demand for loans and fee incomes.
Net profits totaled NT$1.41 billion (US$48.99 million) during the January-to-March period, rising 34 percent from the same period last year, as recovering corporate and consumer lending boosted interest and fee incomes.
The figures translated into earnings of NT$0.37 per share, pushing the bad loan ratio down to 0.31 percent at the end of March, from 0.39 percent a year earlier, while the coverage ratio improved from 154.3 percent to 189.8 percent, the company’s report showed.
“We expect the growth momentum to extend into the year, driven by strong loan demand from small and medium-sized enterprises [SME],” E.Sun investors relations manager Anthony Cheng (鄭恩融) said by telephone.
Meanwhile, the nation’s stable economic expansion will help boost credit card and wealth management businesses at the group’s banking arm, E.Sun Commercial Bank (玉山銀行), Cheng said.
The lender, which contributed 88.7 percent of the group’s earnings for the first three months, saw its net profits expand 39.4 percent year-on-year to NT$1.30 billion, the report said.
Net interest incomes amounted to NT$3.11 billion, increasing 14.4 percent from a year earlier and 3.8 percent from the preceding quarter, the report said.
Net fee incomes approximated NT$1.51 billion, picking up 13.1 percent from a year earlier, or edging up 0.9 percent from three months earlier, the report said.
Despite its medium size, the bank topped private peers in terms of SME lending, with a market share of 3.8 percent, Cheng said.
“Unlike financial groups with government shares that have pursued big companies, E.Sun has focused on expanding SME loans, a strategy that has paid off,” he said.
E.Sun Bank expects SME lending to rise 20 percent this year from last year after achieving 5 percent growth in the first quarter, Cheng said. SME loans accounted for 23 percent of the bank’s total loan portfolios.
Cheng expects wealth management and credit card businesses to replace home loans as the main driver of consumer loans amid -improving consumer confidence.
Mortgage loans, which took up 41 percent of overall lending, shrank 1.1 percent from the preceding quarter as the luxury tax plan cooled housing transactions, Cheng said.
Net interest margin (NIM) stayed steady at 1.22 percent in the first quarter from the previous quarter as interest rates for government bonds and negotiable certificates of deposit remained little changed, Cheng said.
He expects NIM to edge up to 1.3 percent in December if the central bank raises interest rates by 12.5 basis points quarterly for the rest of the year.