Shanghai Bank unveils overseas expansion plans

EXPOSURE::While expansions abroad are a positive for Taiwanese banks in the long term, caution is advised for ventures in China’s risky market, an analyst said

By Crystal Hsu  /  Staff reporter

Wed, Jun 12, 2013 - Page 13

Taiwan-based Shanghai Commercial & Savings Bank (上海商業儲蓄銀行) yesterday said it is seeking to deepen its presence in Southeast Asia and China this year, while strengthening its performance in Taiwan.

The unlisted lender made the statement during its annual shareholders’ meeting, which approved the distribution of a cash dividend of NT$1.50 per share based on a net income of NT$9.53 billion (US$315.92 million) last year.

The bank has 69 branches in Taiwan, one in Hong Kong, one in Vietnam and a representative office in Thailand. In addition, the bank owns a leasing company in Shanghai, China, through a subsidiary.

Earlier this month, the lender obtained regulatory approval from Cambodia to set up a representative office in the Southeast Asian market, company spokesman Alex Lin (林志宏) said.

The bank is also planning to set up a branch in Singapore later this year once it receives regulatory approval, Lin said.

“Shanghai Bank will facilitate expansions overseas, while improving its earnings ability at home,” Lin said.

Last year, its employees earned an average of NT$4.54 million, outperforming their peers at other lenders, he said.

As of May 31, Shanghai Bank had a pre-tax income of NT$4.88 billion, translating into pre-tax earnings of NT1.31 per share, company data showed.


The lender will apply to establish a representative office in Wuxi, China, once Taiwan and China formally drop the requirement that banks should have prior business experience in developed markets before they could seek entry in each other’s market, Lin said.

Taiwan and China agreed in early April to remove the restriction, but it is still awaiting confirmation at the next round of trade talks to expand the scope of the Economic Cooperation Framework Agreement (ECFA).

These development plans are aimed at helping Shanghai Bank better serve its customers as it expands its presence in the region, Lin said.

Eva Chou (周怡華), an analyst at Taiwan Ratings Corp (中華信評), the local arm of Standard & Poor’s, said overseas expansions are a positive for Taiwanese banks in the long run, but short-term benefits are limited.

New business operations may help boost interest spread as Taiwan offers very low interest margins because of excessive competition, Chou said.


Chou added that Taiwanese lenders should exercise more caution about their exposure to China, given its higher risks compared with other large economies.

Standard & Poor’s recently trimmed its GDP growth forecast for China this year to 7.8 percent, from its prior estimate of 8 percent, after a slower-than-expected economic recovery, said Andy Chang (張書評), another analyst at the agency.

Shanghai Bank has a bad loan ratio of 0.22 percent, a coverage ratio of 759.89 percent and a capital adequacy ratio of 14.33 percent.