SinoPac Financial Holdings Co (永豐金控) is confident in the local banking sector’s health as global financial sector fears are easing and most local bank deposits have been insured by Central Deposit Insurance Corp (CDIC), company president Stanley Chu (朱士廷) told an investors’ conference in Taipei yesterday.
One of the reasons the recent US bank failures have caused panic is because most of the deposits are not insured by the US Federal Deposit Insurance Corp (FDIC), Chu said.
The FDIC’s deposit guarantees are capped at US$250,000 per account, and about 86 percent of Silicon Valley Bank’s deposits were uninshured, he said.
Photo: Kelson Wang, Taipei Times
In Taiwan, the CDIC offers maximum insurance coverage of NT$3 million (US$98,733) per depositor, and 98 percent of local bank deposits are under that threshold, so most depositors are covered, Chu said.
Taiwan’s banks have good capital adequacy and relatively few non-performing loans, he said.
“There is a slim chance that local banks would experience the same crisis as the American banks did,” he added.
Last year, SinoPac Financial had the highest return on equity (ROE) among its local peers at 10.1 percent, the company said yesterday.
ROE, calculated by dividing net income by shareholders’ equity, indicates how efficiently a company is generating profit. The company ranked 10th among local financial holding firms in 2019 when its ROE stood at 8.6 percent.
Interest rate hikes in Taiwan and the US pushed the company’s net interest income up by 22 percent year-on-year to NT$26.9 billion last year, SinoPac Financial said.
The company’s net fee income plunged 18 percent last year, causing its total net profit to drop 1.5 percent from a year earlier to NT$15.96 billion, it said.
Its banking arm, Bank SinoPac (永豐銀行), generated net profit of NT$14.72 billion last year, accounting for 92 percent of the company’s total profit, and its securities unit, SinoPac Securities Co (永豐金證券), made up the rest, company data showed.
This year, Bank SinoPac plans to use a freshly raised NT$10 billion to boost its capital adequacy instead of using it for investment or expansion, due to economic uncertainties, it said.
“Most local financial holding companies with a focus on the insurance business had a difficult time last year, and are facing tighter accounting rules going forward,” Chu said. “As a result, we are cautious about the insurance business and will not consider merger and acquisition activities with an insurance company.”
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