Responding to Acquisition Rumors for the First Time, SinoPac: Cannot Comment on 'Rumors'

Rumors of mergers and acquisitions continue to swirl in the financial sector. Recent market speculation suggests that Cathay Financial and China Trust Financial may be interested in acquiring SinoPac Financial Holdings. In response, SinoPac's CEO Chu Shih-Ting stated today, 'We cannot comment on market rumors.' Regarding whether SinoPac would pursue acquiring other entities, Chu said the company would actively pursue any opportunity that benefits its financial footprint, business expansion, and group synergies, and would not abandon any potential opportunity.

SinoPac Financial Holdings held its Q1 earnings briefing today. Chu explained that the company achieved a record-high after-tax net profit of NT$10.974 billion in the first quarter, representing a 52% year-on-year increase, with earnings per share (EPS) at NT$0.76. Cumulative after-tax net profit for the first five months reached NT$20.291 billion, also a record high, up 96% year-on-year, with EPS at NT$1.40 and an annualized return on equity (ROE) of 18.98%.

Chu noted that the strong financial performance this year stems not only from organic growth but also from synergies generated by last year's acquisition. For instance, Chinfon Bank's net fee income grew significantly in Q1, driven by its wealth management business, which had previously received less focus. The integration of Hui Li Securities has also steadily increased SinoPac Securities' foreign investor market share, with further contributions expected in the future.

SinoPac's stock price hit a new intraday high of NT$36.80 today, closing at NT$36.35, surpassing E.Sun Financial's closing price of NT$35.50. In response, Chu said, 'E.Sun is a respected competitor. We respect the capital market's assessment and believe the market will assign a fair valuation.'

Benefiting from the strong performance of the Taiwan stock market in terms of both price and volume this year, SinoPac Securities posted a record-high after-tax net profit of NT$2.363 billion in Q1, up 96% year-on-year. When asked whether daily trading volumes exceeding NT$1 trillion could become the new norm, SinoPac Securities CEO Su Wei-Chia explained that if the fundamentals of the Taiwan stock market remain stable, the outlook for the next two to three years is optimistic, and daily trillion-dollar trading volumes could be sustained. However, he noted that the securities industry is 'weather-dependent,' and trading volumes could shrink if market fundamentals deteriorate.

Looking ahead to the second half of the year, Chu stated that AI-related business opportunities remain robust, with both the U.S. and Taiwan capital markets showing strength. He emphasized that the next one to two months will be a critical observation period, particularly regarding the impact of U.S.-Iran negotiations on energy markets.

On interest rate policy, Chu believes the U.S. Federal Reserve will maintain current rates, depending on employment data and whether energy prices decline. He expects Taiwan's central bank to remain cautious, with little likelihood of rate adjustments.

Overall, Chu expressed a 'cautiously optimistic' view of the economy. However, he noted that the market's recent focus on the 'four loans in one' phenomenon warrants attention, particularly regarding its impact and whether funding momentum can be sustained.

Regarding the merger progress between SinoPac Bank and Chinfon Bank, Chu mentioned that the merger benchmark date will be determined after regulatory approval, with the formal merger expected in the first quarter of next year.

Chinfon Bank had initially planned to sell 100% of Chinfon Securities to JKO Fintech, but the share purchase agreement expired, and the termination was recently announced. Chu stated definitively that there are no further plans to sell the securities unit externally. He added that a contingency plan will be proposed at next week's board meeting to ensure the best possible arrangements for customer and employee interests.

Additionally, recent media reports suggest that the Ho family, a major shareholder of SinoPac, may be considering selling their stake, making SinoPac a potential acquisition target. Chu reiterated, 'We cannot comment on market rumors.' On M&A matters, he emphasized that the company will actively pursue any opportunity that enhances its financial footprint, business reach, and group synergies, adhering to the principle of 'assessing the situation and building strength over time.' As long as such opportunities align with three key principles, the company will not abandon any potential deal.

When asked whether SinoPac has a positive outlook on acquiring life insurance companies, Chu frankly stated that life insurance involves more complex considerations. An internal team is continuously reviewing the industry's developments, but 'there are currently no ongoing discussions with any targets.'