Yuanta Financial Holding Co (元大金控), parent of the nation’s largest securities firm, aims to become a prime capital movement facilitator in Greater China as securities companies gain more importance in providing wealth management services, a company executive said yesterday.
“The company will keep on increasing its economies of scale through aggressive expansion,” Yuanta Financial investors relation head Allen Wu (吳敬堂) told a media briefing.
Much has been done under the table because Taiwan and China have yet to open their securities markets to each other, Wu said.
Liberalization is only a matter of time following the opening of the banking and insurance industries, he said.
Greater China — ie, China, Taiwan and Hong Kong — accounted for 75 percent of total equity turnover for Asia ex-Japan markets last year, as well as 75 percent of total initial public offerings and 55 percent of the stock value, Yuanta Financial data showed.
Net earnings of Taiwanese securities firms totaled NT$30.2 billion (US$1.04 billion) last year, equivalent only to 10 percent of their Chinese peers, Wu said.
“That is why we must tap into the Chinese market,” he said. “The business opportunity is too big to ignore.”
Yuanta Financial will continue its securities-centric business model, while expanding at home and across the Taiwan Strait, Wu said, adding that the strategy, along with its cautious risk control, has paid off as evidenced by its financial results.
The group posted a net income of NT$11.49 billion in the first six months of the year, or earnings per share of NT$1.42, the company’s report showed.
Yuanta Securities Co (元大證券) generated 57 percent of the group’s net worth, while Yuanta Bank (元大銀行) contributed 23 percent as of June 30, the report indicated.
However, the conglomerate, which pledged in June to deliver stronger earnings in the second half of the year, has turned more cautious about its outlook in light of a weaker-than-expected global recovery.
“The financial results are likely to be lackluster for the rest of the year as the debt crises in the US and Europe have dampened appetite for risky assets,” Wu said.
Foreign institutional investors, which hold 36 percent of Yuanta Financial’s shares, net sold NT$16.34 billion in local shares yesterday, pushing down the TAIEX 1.64 percent to 7,614.97.
Yuanta Securities has revised its forecast peak for the index to 8,500 by the end of the year, from its prior estimate of 9,800 before the global equity turbulence, Wu said.
Yuanta Financial expects to benefit from the acquisition of Polaris Securities Co (寶來證券), which will boost its number of banking and securities branches to 277 nationwide, from the current 229.
“Channel is the key now that securities firms are also allowed to provide asset management services,” Wu said. “That will allow Yuanta Financial to strengthen cross-selling benefits after the integration is completed by the end of next year.”
The banking unit has an exposure of NT$1.04 billion to lossmaking ProMOS Technologies Inc (茂德科技), with total lending to the DRAM sector reaching NT$6.3 billion, Wu said.
Wu said the bank had set aside 70 percent in reserves for the ProMOS loan.