SinoPac Financial Holdings Co (永豐金控) expects earnings to expand significantly this year as its banking arm seeks to become a payment vehicle for cross-strait online shopping, senior executives said yesterday.
The bank-centric financial services provider also aims to upgrade its representative office in Nanjing, China, into a banking subsidiary after it marks its first year on June 30.
“We expect earnings at Bank SinoPac (永豐銀行) to grow by double digits this year” after a lackluster showing last year due partly to tightened provision requirements, said Tina Chiang (江威娜), the lender’s newly designated president, whose appointment must still be approved by the Financial Supervisory Commission (FSC).
SinoPac Financial posted NT$3 billion in net income last year, or earnings of NT$0.41 per share.
The results meant a 41.1 percent decline from a year earlier as market volatility dampened long-term investment income, a report from the parent company showed.
Bank SinoPac generated NT$2.38 billion in net profit last year, 32 percent lower than in the previous year after setting aside a NT$2.07 billion provision last quarter to boost its reserve ratio to 1 percent of total loans, the report said.
The lender is in talks to provide third-party payment solutions for cross-strait online shopping, which promises massive fee incomes in light of the fast-growing trading volume and interest margin, Chiang said.
Currently, such services are not available due to the lack of a clearance mechanism between the yuan and the New Taiwan dollar.
E. Sun Commercial Bank (玉山銀行) won regulatory approval last year to partner with China’s online shopping and auction Web site Taobao (淘寶網) to pay Taiwanese sellers after Chinese buyers receive the goods.
Taobao, founded by Alibaba Group (阿里巴巴集團) in 2003, settles accounts with customers through affiliated Alipay (支付寶), China’s leading third-party online payment solution provider.
As of December 2010, Alipay said it had more than 550 million registered users and facilitated about 8.5 million transactions daily.
Bank SinoPac aims to serve as a payment vehicle for online shoppers in Taiwan and China, while Taobao requires customers to set up debit accounts beforehand for all cross-strait transactions, -Chiang said.
“We will make known more details after the venture gains a clear shape,” Chiang said.
In terms of expanding in China, SinoPac Financial prefers a cautious approach, SinoPac Financial chief strategy officer Michael Chang (張晉源) said.
The conglomerate intends to file regulatory applications in the second half of this year to turn its representative office into a subsidiary, which can provide full banking services, while branches can only serve institutional customers, Chang said.
SinoPac Financial has no plans to open a second capital leasing company, but would strengthen operations at the existing one in Nanjing, Chang said.
SinoPac Financial chief executive officer Stan Siao (蕭子昂) voiced concerns that global uncertainty could drive the FSC to raise the loan reserve to 2 percent in five to 10 years because the local ratio remains much lower than that in the US and China.
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