S&P Global Ratings has raised its credit ratings on E.Sun Commercial Bank Ltd (E.Sun Bank, 玉山銀行), as the bank has consistently increased its scale compared with other major private banks in Taiwan, while maintaining above-average profitability and good asset quality.
The international ratings agency upgraded its long-term issuer credit rating on the bank to “A-” from “BBB+” and affirmed the short-term issuer credit rating at “A-2,” with a stable outlook on the long-term rating, S&P said in a statement on Friday.
“The upgrade reflects our view that E.Sun Bank has enhanced its domestic operating scale to be comparable to that of other large-scale private banks in Taiwan,” S&P Global Ratings credit analyst Patty Wang (王珮齡) said in the statement.
“The upgrade also reflects our expectation that E.Sun Bank will continue to grow its domestic market share in terms of deposits and assets, while maintaining above-average profitability and good asset quality,” Wang said.
In addition, S&P said it now considers the bank to be of moderate systemic importance in Taiwan’s banking system.
“This means we expect there is a moderately high likelihood the Taiwan government will provide financial support to the bank, if needed, to sustain stability in the banking system,” the ratings agency’s statement said.
E.Sun Bank is a banking arm of E.Sun Financial Holding Co (E.Sun FHC, 玉山金控). As of the end of March, the bank ranked ninth in terms of domestic deposits with a 4.9 percent share and 10th in terms of total system assets with a 4.6 percent share, S&P said.
Thanks to strong fee income contribution with satisfactory management and execution of business strategies, the bank reported net income of NT$1.52 billion (US$48.8 million) for last month, compared with NT$1.46 billion a year earlier.
Cumulative net income totaled NT$8.23 billion for the first five months of the year, up from NT$7.25 billion the previous year, with earnings per share rising from NT$0.84 to NT$0.91 over the period, company data showed.
Wang said E.Sun Bank is likely to maintain a strong capitalization over the next two years, backed by the bank’s prudent capital policy and growth strategy.
“We also anticipate the bank will maintain its sound asset quality and profitability despite its above-average business growth in recent years. In addition, we expect E.Sun Bank to continue to play a dominant role in terms of the E.Sun FHC group’s overall risk profile,” she said.
Shares of E.Sun Financial have surged 30.6 percent so far this year, compared with the main bourse’s 11.07 percent rise, as anticipated fee income growth and adequate risk position have buoyed investor sentiment.
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