E.Sun Financial Holding Co (玉山金控) expects to post higher earnings growth in the second half of the year, as macroeconomic conditions in Taiwan and internationally continue to improve.
“We believe the nation’s sluggish economic growth reached a trough at the end of the first half of the year and that a recovery is at hand, despite persistent volatility in global markets due to Brexit and looming US Federal Reserve interest rate hikes,” E.Sun president Joseph Huang (黃男州) told an investors’ conference on Thursday.
The lender expects earnings to pick up as the nation’s sluggish exports recover and GDP expands to a predicted 1.22 percent this year, Huang said.
The company, which derives more than half of its profits from overseas branches and offshore banking units, is expected to commence operations of its new Myanmar branch next quarter, while its Tokyo branch is expected to open in the final quarter of next year, Huang said.
Amid concern over Mega Financial Holding Co’s (兆豐金控) troubles with New York regulators, Huang said the company established a money-laundering control department about 18 months ago.
The department has more than 10 staff members and more company resources are to be dedicated to satisfy international compliance, Huang said.
He added that the company has begun offering incentives to encourage employees to earn certification from the Association of Certified Anti-Money Laundering Specialists, the largest international membership organization dedicated to advancing controls against financial crimes, including terrorism financing.
Employees are given subsidies for courses and examination fees, as well as bonuses should they earn the certificate, Huang said.
“The costs of compliance will only rise in the future,” he said, adding that it is difficult to quantify costs due to the varying degree of complexity in each of the company’s overseas and offshore businesses.
E. Sun Financial recorded an 8.5 percent gain in first-half profits to NT$7.2 billion (US$227.33 million), of which its flagship company, E.Sun Commercial Bank (玉山銀行), saw earnings rise 16.7 percent annually to NT$7.41 billion.
However, the company’s venture capital subsidiary reported a net loss of NT$15.6 million during the period, compared with profits of NT$79.1 million a year earlier, impacting aggregate earnings by 0.2 percent, the company said.
Its securities brokerage subsidiary also saw earnings plummet from to NT$28.7 million in the first half from NT$105.9 million in the same period last year, E.Sun Financial said.
Overall, the company’s pre-provision operating profits fell 6.4 percent annually in the first half of the year, due to weaker fee income growth, lower trading and other non-interest income, as well as higher operating expense growth.
E.Sun Financial’s earnings per share were NT$0.83 in the first six months of the year, with return on equity and return on assets reaching 11.73 percent and 0.8 percent respectively.
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