Thu, Aug 20, 2015 - Page 13 News List

E.Sun says will maintain profitability in second half

By Ted Chen  /  Staff reporter

E.Sun Financial Holding Co (玉山金控) yesterday said that the company will weather the economic downturn on the back of its diversified earning drivers and solid asset quality.

“We are not expecting our profitability prospects and expansion plans to diminish in the second half of the year,” E.Sun president Joseph Huang (黃男州) told an investors’ conference.

In the first half, the banking-centric financial holding company saw its net income gain 20.3 percent year-on-year to NT$6.67 billion (US$204.05 million), or NT$0.93 per share. Net revenue during the period grew 19.8 percent year-on-year to NT$19.02 billion.

Huang said that gains in the first half were primarily driven by fees income, which grew 27.9 percent year-on-year to NT$6.77 billion. In particular, fees generated by its wealth management service during the period grew by 49.8 percent year-on-year to NT$3.74 billion.

Last quarter alone, net income came to NT$3.49 billion, improving from the NT$3.18 billion recorded in the first quarter, company data showed.

As the Financial Supervisory Commission has asked financial holding companies to increase their general provision reserves for China-related credit exposure to 1.5 percent from 1 percent, Huang said E.Sun Financial’s net provision surged 265.9 percent year-on-year to NT$2.01 billion in the first half.

However, he said the recognition of the higher provision in the first half would allow profits in the second half to be measured from a more level basis.

Huang said E.Sun had outperformed its local peers in year-on-year growth momentum during the first half, with deposits growing 8.5 percent annually, compared with a national average increase of 2.11 percent, and lending expanding 5.6 percent, while the figure for the national average nearly at a standstill at 0.13 percent.

The company’s credit card consumption also rose 18 percent year-on-year in the first half, compared with the national average of 9 percent, Huang added.

Asked about the impact of recent yuan devaluations, chief financial officer Magi Chen (陳美滿) said that the company’s offshore banking units has limited exposure to yuan deposits, as the majority of its profits are derived from investments in corporate bonds issued by blue-chip Chinese firms in Taiwan and Hong Kong, adding that the company’s board has barred the management from investing in China’s municipal bonds.

As for the company’s overseas expansion, E.Sun plans to open a new branch in Vietnam and another subsidiary in Shenzhen, China, later this year, Huang said.

As the banking industry moves into digitization, Huang said the company enjoys first-mover advantage, because it is the first financial company to receive an operating license for electronic payments, with partners including China’s Alipay (支付寶) and the US’ PayPal.

In particular, the company has rolled out electronic applications for credit loans and credit cards, he added.

“Physical branches will continue to process complex and high value services, such as syndicated loans for corporate clients, consultation, retirement planning and mortgages for retail banking customers, and they remain a vital aspect of our online-to-offline strategy along with virtual channels,” Huang said.

Huang said he is not expecting the central bank to cut interest rates to boost the nation’s economy.

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