Shanghai Commercial & Savings Bank (上海商業儲蓄銀行) is seeking to repeat its performance last year by making another NT$10 billion (US$328.93 million) in net income this year, even though attaining this goal may be complicated by the government’s plans to raise the business tax on the banking sector.
The Taiwan-based lender yesterday set the earnings target after achieving a record profit of NT$10.04 billion last year.
That figure made it the second-best performer in the nation last year, with earnings per share of NT$2.71, second only to Greater Tainan-based King’s Town Bank (京城銀行), company president E J Chiou (邱怡仁) told a press conference.
“We aim to earn another NT$10 billion this year, even though the goal now looks a bit difficult,” Chiou said.
On Monday, the Ministry of Finance announced a proposal to raise the business tax rate on life insurers and banks from 2 percent to 5 percent.
The proposed tax hike would translate into NT$400 million, or 3.98 percent of Shanghai Bank’s earnings based on the figures last year, Chiou said.
“I wonder if tax hikes are favorable for economic growth,” he said, adding that the extra expense would raise the difficulty of meeting the company’s profit target.
Shanghai Bank is focused on high-yield operations, such as foreign exchange and international financing services, and Chiou said the prospects for these core businesses are looking brighter as the global economy continues on the path of sustained recovery.
Overseas and offshore banking operations accounted for 55 percent of the bank’s pre-provision income last year and may make a similar contribution this year since the company does not want to neglect the domestic market, executive vice president Frank Peng (彭國貴) said.
The bank has 69 branches in Taiwan, one in Hong Kong, another in Vietnam and two representative offices in China and Thailand.
Its plans to expand into China have been delayed due to the legislative stalemate over the cross-strait service trade pact.
“We hope the pact can clear the legislature during the current session,” allowing Shanghai Bank to open a representative office in Wuxi, China, and a sub-branch in Shanghai’s free-trade zone, Chiou said.
The lender is also eyeing other Asian markets including Singapore, Cambodia, Myanmar and Malaysia, as well as a plan to debut its shares on the Emerging Stock Market (興櫃市場) in the fourth quarter, he said.