SinoPac Financial Holding Co (永豐金控) is looking for its banking subsidiary in Nanjing, China, to turn a profit next year and generate better returns than the parent lender in 2015, given the higher yields across the Taiwan Strait, a spokesman said yesterday.
The bank-focused conglomerate is set to open the first Taiwanese banking subsidiary in China early next year after gaining approval for its operations.
“We expect the subsidiary to break even and make a profit the first year after its establishment in 2014,” SinoPac Financial spokesman Michael Chang (張晉源) told reporters prior to an investors’ conference in Taipei.
In 2015, the subsidiary is expected to report a return on equity of more than 10 percent for its parent, Bank SinoPac (永豐銀行), Chang said.
This will be a challenge, but it is achievable given the higher yields in China, he said.
SinoPac Financial recorded a return on average equity (ROAE) of 10.79 percent for the first nine months, though the figure dropped to 9.24 percent in the last quarter, company data showed.
The group generated NT$2.41 billion in net profit during the July-to-September period, down 20 percent and 8.6 percent from the preceding quarter and the year-ago level respectively, because of higher provisioning costs, Chang said.
Bank SinoPac also fell victim to Taiwan Maritime Transportation Co Ltd (台灣海陸運輸), a troubled bulk shipper and energy transportation firm.
“The landscape looks fair for the rest of the year,” he said, referring to the possibility of defaults.
Cumulative profit at SinoPac Financial stood at NT$8.28 billion, translating into earnings per share of 1.01 for the first three quarters, the company said.
There is no need for an increase in capital, despite capital adequacy declining for four straight quarters to 106 percent by the end of September, Chang said.
Bank SinoPac also aims to take advantage of business opportunities linked to the Shanghai free-trade zone, although it does not have a branch in the city, unlike some of its Taiwanese peers, he said.
The lender is a leader in terms of yuan deposits valued at 12 billion yuan (US$1.97 billion) to date, accounting for 10 percent of the pool, while its outstanding loans make up only 3.5 percent.
SinoPac Financial also plans to open an asset management company in China before the end of the year and has won Taiwan’s approval for setting up a capital leasing firm and a financial advisory in China.
SinoPac Securities Co (永豐金證券) generated NT$385 million in the third quarter, jumping from a parlous NT$31 million three months earlier on recovering confidence and higher turnover, company president Yeh Huang-chi (葉黃杞) said.
SinoPac Financial shares closed down 0.68 percent at NT$14.5 yesterday, weaker than the TAIEX’s 0.41 percent dip, Taiwan Stock Exchange data showed.