SinoPac Financial Holdings Co (永豐金控) expects Chinese yuan business to significantly boost its earnings this year after yuan-linked services and products generated 17 percent of net profit last quarter.
The company’s fee income also rose to the new high last quarter since the global financial crisis in 2008, senior SinoPac executives said.
“The group may benefit further from yuan business for the rest of the year” after accumulating about 6 billion yuan (US$978.7 million), or 10 percent of total deposits in the market, said Tina Chiang (江威娜), president of Bank SinoPac (永豐銀行), the main subsidiary of SinoPac Financial.
A sizable number of time deposits are due to mature in the second half, providing business potential for wealth management products and services, Chiang said.
Wealth management accounted for 30 percent of the banking unit’s fee income of NT$1.49 billion (US$49.56 million) during the January-to-March period, rising 36 percent from the same period last year, Chiang said.
Chiang attributed the increase to the improving economy and new businesses linked to the yuan.
Chiang expects yuan business to contribute more than 20 percent of the year’s profit, compared with 10 percent last year.
Bank SinoPac booked NT$2.79 billion in net income for last quarter, making up 97.18 percent of the group’s profit and increasing 47.3 percent from three months earlier, even though net interest margin (NIM) stayed flat at 1.15 percent, company data showed.
Foreign currency loans, particularly in US dollars, depressed lending costs, Chiang said, adding that Bank SinoPac will seek to improve income by focusing on products and services that bear higher returns, rather than increase loan volumes.
The regulatory restriction on exposure to China to the equal of the bank’s net worth, currently at NT$70 billion, constrains loan growth, Chiang said.
The bank is hoping to set up a subsidiary in Nanjing, China, in the third quarter if Chinese authorities give approval, she said.
Meanwhile, the company’s plans to sell shares to the Industrial and Commercial Bank of China Ltd (ICBC, 中國工商銀行) and set up a securities company in Xiamen in China’s Fujian Province, will have to wait for approvals from Taiwan and China, SinoPac Financial spokesman Michael Chang (張晉源) said.
SinoPac Financial has also been exploring opportunities to buy banks and capital leasing companies in Southeast Asia to capitalize on the fast-growing economy in the region, Chang said.
However, earlier acquisition talks fell apart due to price differences, he said.
Shares in SinoPac Financial ended down 1.69 percent to NT$14.5 yesterday, deeper than the TAIEX’s 1.13 percent fall, Taiwan Stock Exchange statistics showed.
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