SinoPac Financial Holdings Co (永豐金控) expects continued global stock market volatility to further erode its earnings this quarter and next as the impact of Europe’s sovereign debt crisis has yet to come into full play, senior executives said yesterday.
The financial services provider reported a 57 percent sequential drop in net profit last quarter to NT$799 million (US$26.4 million), mainly because of its securities subsidiary’s loss of NT$114 million, reversing a net profit of NT$390 million three months earlier.
Compared with a year earlier, SinoPac Financial’s third-quarter earnings shrank 63 percent.
“The landscape is tough going forward as Europe’s debt crisis and [companies’ implementation of] unpaid leave at home are likely to worsen, sapping investor confidence further,” SinoPac Financial chief strategy officer Michael Chang (張晉源) said. “It remains to be seen if the leadership reshuffle in Greece and Italy is the end of the problem, or the beginning of a bigger storm.”
SinoPac Financial has no exposure to debt-ridden European countries like Italy, Greece, Portugal and Ireland, and its other European bonds and shares make up a mere 1.37 percent, or NT$3.8 billion, of its investment portfolio, Chang said.
The group accumulated NT$41.29 billion in net income in the first nine months of the year, an increase of 4.2 percent from a year -earlier on improving fee and interest income prior to the sentiment change, the report said.
That translated into NT$0.56 in earnings per share (EPS), making SinoPac Financial the second-worst performer among 14 peers after China Development Financial Holding Corp (中華開發金控), with EPS of NT$0.25.
The modest earnings may further weaken this quarter as Bank SinoPac (永豐銀行), the group’s main source of income, plans to raise its loan loss reserve to 1 percent from the present 0.76 percent, at the urging of the Financial Supervisory Commission to fend off a potential default. That would entail an extra NT$1 billion in provisions, Chang said.
Bank SinoPac’s loans to domestic flat-panel manufacturers total NT$15 billion, while those to solar energy and LED companies stand at NT$300 million, Chang said.
However, the lender has no exposure to financially stressed computer memory chipmakers, he added.
The four sectors have reported sharp losses this year and showed no sign of picking up as an industry oversupply and government austerity measures will likely continue to suppress demand.
The bank’s new offshore yuan business, while positive to -earnings, will not be a significant catalyst unless Taiwan allows investment in bonds issued by the Chinese government and enterprises, SinoPac Financial chief executive officer Stan Siao (蕭子昂) said.
“There aren’t many investment vehicles around even after offshore banking units were allowed to take in yuan deposits,” Siao said.
Siao pressed for an extension of the yuan businesses to domestic banking units so that Taiwanese may own savings in the Chinese currency.
The opening would make the yuan the second-largest foreign currency here after the US dollar, Siao said.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure