E.Sun Financial Holding Co (玉山金控) yesterday said that it would evaluate whether to acquire an insurance company given the challenge of making a profit in a low-interest rate environment and the implementation of new international accounting standards by 2026.
The company has not found good targets to acquire, although local peer Taishin Financial Holding Co (台新金控) last week won a bid for Prudential Life Insurance Co of Taiwan (保德信人壽) for NT$5.5 billion (US$186.33 million).
“The company will keep looking for [suitable targets] ... but we are conservative, as it is challenging to run a life insurance business after a series of rate cuts around the world,” E.Sun Financial president Magi Chen (陳美滿) told an investors’ conference in Taipei.
Photo: Kelson Wang, Taipei Times
Meanwhile, companies with insurance units would be under more pressure financially after International Financial Reporting Standard 17 takes effect, as the new accounting rules have tighter requirements regarding insurers’ capital adequacy, Chen said.
Therefore, for now, it is more important for E.Sun Financial to continue pursuing a steady rise in profit and to keep its capital adequacy at a solid level, although there is still a possibility that the firm could acquire an insurer by 2026, if a qualified target emerges, she said.
E.Sun Financial reported that net profit declined 5.8 percent annually to NT$9.67 billion for the first six months due to less interest income.
Loan-loss provisions gained 60 percent annually to NT$1.6 billion as the company set aside more provisions for mortgages along with a loan default of US$10 million in Singapore.
The company also reported that its operating expenses increased 15.9 percent to NT$16 billion over the period, as there were more marketing activities for its credit cards and more digital investment to improves the bank’s online services, E.Sun Commercial Bank (玉山銀行) chairman Joseph Huang (黃男州) said.
For the first half of this year, net fee income for its credit card operation expanded 6.1 percent year-on-year to NT$3.2 billion, which bucked the trend as many banks saw their fee income decrease amid the COVID-19 pandemic, Huang said.
E.Sun Commercial Bank, which found two of its financial consultants stealing money from clients in the first half of this year, would improve its supervision of financial consultants and rotate their stays in different branches, he said.
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