E. Sun Financial Holding Co (玉山金控) yesterday reported a large increase in net income in the third quarter from a year earlier on the back of growing core businesses, but earnings appeared flat when compared with the preceding quarter.
The bank-centric conglomerate earned NT$1.83 billion (US462.6 million) in net profit during the July-to-September period, a sharp gain of 40.97 percent from the same period last year as efforts to strengthen its credit card business paid off, the company said in its quarterly report.
Cumulative profit hit a record NT$5.7 billion for the first nine months, more than the NT$3.48 billion posted for the whole of last year and translating into earnings per share of NT$1.18, in sixth place among its 15 domestic peers.
Compared sequentially, net income edged up 1.3 percent last quarter from three months earlier, driven by a 7.9 percent increase in fee income and a 3.2 percent in net interest income, the report said.
E. Sun Commercial Bank (玉山銀行), the firm’s main subsidiary and its biggest source of income, generated NT$5.78 billion, or 93.3 percent of total revenue, while the securities and insurance units contributed 0.4 percent and 5.3 percent respectively, the report said.
Net interest margin, an important barometer of banks’ profitability, shed one basis point to 1.25 percent at the end of September, while the interest spread narrowed from 1.74 percent to 1.71 percent, the report said.
E. Sun Financial attributed the lower margin to an increasingly difficult operating environment as the global economic slowdown weighs on the export-oriented economy.
“It remains to be seen if the latest US quantitative easing measures will substantially stimulate economic growth,” the firm said. “While the US jobless rate has dropped to 7.8 percent, the pace of the recovery appears tepid, with downside risks looming.”
The company also pointed to worsening liquidity and the potential fallout as global central banks continue to ease monetary policies in an attempt to avoid a protracted slowdown.
E. Sun Bank took a more cautious approach in its lending operations and consequently corporate loans declined 0.5 percent to NT$354.6 billion in the third quarter, the report said.
Meanwhile, lending to small and medium-sized enterprises grew 1.6 percent last quarter, while mortgage loans inched up 0.9 percent, the report said.
The non-performing loan ratio stood at 0.16 percent at the end of last month, lower than the financial industry average of 0.54 percent, the report said.
E. Sun Financial shares closed flat yesterday at NT$15.9, Taiwan Stock Exchange data showed.