E. Sun Financial Holding Co (玉山金控) expects moderate earnings for the remainder of the year after net income surged 31 percent in the first half, on the back of rapid fee and loan growth, a top executive said yesterday.
The bank-focused conglomerate, which derives 93.4 percent of its overall income from banking arm E. Sun Commercial Bank (玉山銀行), is reshaping its business strategy to grow market shares for its securities unit, while it is on track to become the nation’s third-largest credit card issuer, E. Sun Financial president Joseph Huang (黃男州) told a media briefing.
“Core businesses will remain stable for the remainder of the year as the domestic economic slowdown proves more serious than expected,” Huang said.
For the first six months, E. Sun Financial reported NT$3.87 billion (US$128.96 million) in net profits, or NT$0.85 in earnings per share, company data showed.
The results represent a 31 percent increase from the same period last year, and are better than earnings for the whole of last year, thanks to strong pickups in wealth management and credit card businesses, as well as loans to small and medium-sized enterprises (SMEs), Huang said.
As of June 30, the company’s income from credit card and wealth management fees increased 26.4 percent and 25.7 percent to reach NT$1.24 billion and NT$1.31 billion respectively, aided by partnerships with French retail giant Carrefour and local Sinyi Realty Inc (信義房屋), as well as China’s top online payment service provider, Alipay (支付寶), Huang said.
Net interest margin edged up two basis points from 1.24 percent in the first quarter to 1.26 percent at the end of last quarter, while interest spreads narrowed from 1.78 percent to 1.74 percent, company data showed.
Increased positions in demand deposits and foreign currency-denominated investments helped boost interest margins, as the former requires lower interest payouts and the latter generates higher yields than local currency assets, investors relations manager Anthony Cheng (鄭恩融) said.
In corporate lending, E. Sun Bank posted an 11.5 percent increase in loans to small and medium-sized businesses in the first half, while the market reported a contraction, Cheng said.
Net interest margin is expected to stagnate at 1.24 percent for the rest of the year now that the bank has achieved 6.8 percent growth in overall lending as of June, with the target for the entire year set at 8 percent, Huang said.
However, earnings abilities have already showed signs of a slowdown judging by quarterly comparisons.
Net income declined 12.9 percent to NT$1.8 billion during the April-to-June period, from NT$2.07 billion in the first quarter, company figures indicated.
E. Sun Financial aims to strengthen its securities unit, increasing its market share from the current 1.3 percent to 2 percent in next two to three years and pushing it up to 3.5 percent in the long term, Huang said.
Toward that end, the group is formulating a new business model to take better advantage of its 130 banking branches nationwide, he said.
The bank plans to add four branches in Taiwan this year and another one in Dongguan, China, next month, Huang said.
E. Sun Financial has set up a team to study business opportunities linked with China’s currency so the group can benefit from cross-strait regulatory easing, he added.
Yuan-related businesses will have a limited impact on earnings this year, but may be a significant driver next year, he said.