SinoPac Financial Holdings Co (永豐金控) said yesterday it might have to trim its growth target for this year if the global economy fares worse in the second half, despite a robust gain in earnings in the first quarter.
“We remain guardedly optimistic thus far about our business outlook, but will not rule out a downward revision next month, depending on how the European debt problem pans out,” SinoPac Financial chief executive officer Stan Siao (蕭子昂) told a media briefing.
The conglomerate posted NT$709 million (US$23.96 million) in net income last month, 10.25 percent off its March figure and down 26.45 percent from a year earlier, as earnings in the banking and securities units weakened amid unfavorable tidings at home and abroad.
The bank-centric group saw its net profits soar 81 percent year-on-year to NT$2.7 billion in the first quarter — compared with net losses of NT$10.53 million in the fourth quarter — driven by yuan-linked operations to serve Taiwanese companies in the Greater China region.
Inflationary pressures pose a lesser threat to the company’s profitability than the government’s plan to tax capital gains on securities investments, because the proposed levy is hurting the nation’s capital markets, Siao said.
For instance, the local bourse’s slumping turnover is retarding liquidity and pushing up trading costs, SinoPac Financial chief strategy officer Michael Chang (張晉源) said.
As a result, net profit in the securities unit, SinoPac Securities Co (永豐金證券), tumbled 45.84 percent last month to NT$78.39 million, from NT$144.75 million in March, while Bank SinoPac (永豐銀行) saw net income drop 7.81 percent to NT$637 million, from NT$691 million in March, as a stronger credit card business partially offset the impact of the proposed tax, company data showed.
Bank SinoPac remains upbeat about double-digit growth in loans this year to small and medium-sized enterprises, but is conservative about sales of wealth management products ahead, Bank SinoPac president Tina Chiang (江威娜) said.
In the first quarter, yuan-related business contributed 10 percent of SinoPac Financial’s earnings with more growth potential on the horizon if regulators loosen restrictions, Chang said.
The fast-growing demand for yuan financing among firms with operations in Greater China provides a structural solution to Taiwan’s overbanking problem, he said.
Meanwhile, Bank SinoPac intends to expand in China through a planned subsidiary in Nanjing, Jiangsu Province, and reach out to satellite areas later, Chang said, adding that cooperation with Industrial & Commercial Bank of China Ltd (中國工商銀行), the world’s largest lender by market value, allows it to better serve Taiwanese customers there.