State-run First Financial Holding Co (第一金控) aims to boost overseas lending by at least 10 percent next year on the back of rising demand from Taiwanese businesses in China, a company executive said yesterday
Like its local peers, First Financial is looking for growth catalysts by tapping into the Chinese market as business at home stagnates. The signing of a financial memorandum of understanding (MOU) between Taipei and Beijing earlier this month is expected to help realize this goal.
As part of its overseas expansion plan, First Financial said its banking unit — First Commercial Bank (第一銀行) — planned to upgrade a Shanghai representative office into a branch office sometime next year, vice president Annie Lee (李淑玲) told an investor conference.
“We expect China to represent an important part of the 10 percent expansion [target],” Lee said.
Greater China accounted for 80 percent of First Commercial Bank’s pre-tax profits from overseas lending in the third quarter, Lee said.
Given China’s promising loan market, the bank plans to offer its services through its Hong Kong Overseas Business Unit or other branches outside China while its Shanghai branch is under development, Lee said.
The bank set up the Shanghai representative office in March 2003. It is likely to apply for upgrading into a branch after the cross-strait financial MOU takes effect early next year, although it could take several months for the application to be approved.
Overall, First Commercial Bank said it aimed to increase lending by as much as 5 percent next year, with corporate loan leading the estimated growth of 12 percent annually, Lee said.
Total loans reached NT$1.17 trillion (US$36 billion) last year. Lee did not provide an estimate for this year.
The bank, the biggest revenues source for First Financial Holding, said it had seen demand for corporate loans bottom out in the third quarter of this year.
Loans fell about 2.5 percent year-on-year to NT$331.8 billion in the third quarter, a statement released yesterday showed. The bank loaned NT$1.14 trillion in the first nine months of this year, it said.
The bank expects its bad loan ratio to improve slightly to 1.5 percent by the end of this year from 1.53 percent in the third quarter.
It also aims to improve its debt coverage ratio to 60 percent by the end of the year and to 65 percent next year, from 54 percent last quarter, Lee said.
First Financial Holding’s net income plunged about 45 percent to NT$4.46 billion in the third quarter, from NT$8.15 million a year ago, the company said last month.
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