E. Sun Financial Holding Co (玉山金控) expects business to strengthen this quarter and next year as major economic bellwethers show signs of recovery, which is favorable for earnings growth, a senior executive said yesterday.
“The [domestic] economy will put up a better showing in the fourth quarter as evidenced by recovering exports and other economic indicators,” E. Sun Financial president Joseph Huang (黃男州) told reporters on the sidelines of public function.
Despite lingering downside risks overseas, the improvement is positive for financial services providers, including bank-centric E. Sun Financial, which has gained significant headway in the wealth management and consumer banking businesses this year, Huang said.
Huang’s remarks came after the Ministry of Economic Affairs announced a 1.9 percent increase in export orders last month, ending six straight months of declines. Earlier this month, the Ministry of Finance said outbound shipments registered 10.4 percent growth in September, as firms started to build up inventory for the Christmas shopping season.
Both sets of data bode well for the nation’s export-oriented economy because Taiwan is home to the world’s largest manufacturers of electronic products.
Huang expects GDP growth this year to hover between 1.5 percent and 2 percent, suggesting a strong second half because the gauge nearly slipped into the red in the first six months.
At home, consumer spending tends be concentrated in the fourth quarter, which is favorable for growing the credit card business and improving fee income, Huang said.
E. Sun Financial reported net profit of NT$1.8 billion in the third quarter, up 1.3 percent from the second quarter and outpacing the same period last year by 38.2 percent, driven by robust fee income and low credit costs.
The growth momentum is expected to extend into next year when the global economy could see a mild rebound, even though Europe’s debt problems will continue to weigh, Huang said.
China, the largest destination of Taiwan’s exports, may see its GDP grow by between 7 percent and 8 percent next year, strong enough to support GDP growth of between 2.5 percent and 3 percent in Taiwan, Huang said.
E. Sun Financial is poised to offer yuan-based products and services once Taiwan and China work out a settlement mechanism, he said.
The upcoming liberalization will not trigger massive sell-offs in the local currency as the interest rate differential between the two currencies is limited, Huang said.
“Banks will not offer high interest rates on yuan deposits given limited channels to digest the currency,” he said.
Yuan deposits account for only 10 percent of overall deposits in Hong Kong years after regulatory relaxation because it remains a controlled currency, Huang said.