After taking a hit from credit card loan defaults in 2005 and 2006, Taishin Financial Holdings Co (
"After two painful years, we can finally say it's time for a new start on the consumer lending business," company president Lin Keh-hsiao (林克孝) said during an investor and media meeting.
While the company is steering clear of cash cards, it expects to see strong growth in unsecured consumer lending and wealth-management fees.
"The risk from rolling out new products is low, as we have strengthened our risk management by increasing our understanding of customer profile and behavior," Taishin Financial chief operating officer Greg Gibb said. "[We] will grab hold of opportunities in the unsecured lending business by promoting online loans and new credit cards."
Online lending is a new service Taishin is offering existing credit card users who make very little use of their credit quota. Those who are in need of cash can borrow money within their credit quota from the bank and pay it back in installments.
Analysts, however, expressed concern over the company's sliding net interest margin (NIM) and a potential drop in recovery of unsecured loans after the implementation of a new regulation allowing credit card debtors to renegotiate rates in April.
Although Taishin Financial attributed the narrowing margin to the launch of a five-month time-deposit with an attractive rate of 3.88 percent in the fourth quarter, some analysts are not convinced.
"We noticed that its quarterly NIM for mortgage loans was on the slide last year," President Securities analyst Chang Yu-hui (張佑暉) said, adding that "it was unusual as the central bank had raised interest rates -- that is, unless Taishin has a very high cost structure, meaning its deposit interest rates are too high."
Taishin still has NT$8 billion in outstanding unsecured loans as of last month, while its non-performing loan ratio stood at 2.07 percent, down from 2.29 percent at the end of the third quarter of last year.
"The lower-than-expected interbank debt relief program cumulative redefault ratio of 43 percent at the end of last year was a relief," said a fund manager who requested anonymity. "We were thinking of somewhere close to 50 percent."
The fund manager warned, however, that it remained to be seen whether Taishin Financial had weathered its financial problems given market uncertainites, such as an anticipated economic slowdown.
Taishin said its proprietary trading department suffered losses owing to market volatility last year, but it would increase hedging and exercise caution in maintaining its position this year.