Diversification paying off for SinoPac

By Kao Shih-ching  /  Staff reporter

Fri, May 24, 2019 - Page 12

The US-China trade tensions have had a limited impact on SinoPac Financial Holdings Co (永豐金控) as the company has diversified its loan portfolio in China, president Stanley Chu (朱士廷) said yesterday.

SinoPac’s exposure to China, totaling NT$86.39 billion (US$2.74 billion) as of the end of March, accounted for 72 percent of its net worth and was lower than most of its local peers, Chu told an investors’ conference in Taipei.

The Financial Supervisory Commission has demanded that financial firms with exposure to China exceeding 80 percent of their net worth pay more attention to credit extension.

“The company’s exposure to China surpassed 80 percent a few years ago, but we began reducing it from the second half of last year due to the escalating trade tensions,” Chu said.

As SinoPac’s exposure is spread across China’s top 20 industries, the company is not worried that the headwinds for a single industry would hurt its business, Chu said.

Its exposure to the US was NT$34.6 billion as of the end of March, which was not high, he said.

SinoPac expects the latest round of US tariffs — 25 percent on US$200 billion worth of Chinese goods effective from May 10 — would trim 0.15 percentage points off Taiwan’s economic growth for this year.

A full-blown trade war would hurt Taiwan, eroding GDP growth by 0.63 percentage points this year, Chu said.

Washington’s plan to impose another 25 percent tariff on US$300 billion of Chinese goods would be a bigger threat for Taiwan, SinoPac chief economist Jack Huang (黃蔭基) said.

Companies that are involved in China’s supply chains, including petrochemicals, machinery and networking communications, would be the ones most affected, Huang said.

The New Taiwan dollar fell NT$0.017 to close at NT$31.547 against the US dollar in Taipei trading yesterday, amid a sell-off of local shares by foreign institutional investors, Huang said, adding that he expects the greenback to weaken in the second half of the year.

SinoPac reported a net profit of NT$3.72 billion for the first quarter, up 41 percent year-on-year, bolstered by contributions from fee income, company data showed.