First Financial Holding Co (第一金控) yesterday vowed to achieve double-digit growth this year in loans to small and medium enterprises (SME) after posting about 25 percent year-on-year growth in such loans in the first quarter of the year, a company executive told an investors’ conference.
That would help boost the company’s net interest earnings since loans to SMEs usually yield an interest rate of between 30 and 50 basis points higher than loans to big corporations, vice president and head of the investor relation department Annie Lee (李淑玲) said.
Outstanding loans to SMEs reached NT$378.7 billion (US$11.7 billion) in the first quarter of this year, up from NT$305 billion one year earlier, the company’s financial report showed.
Commercial lending including loans to SMEs totaled NT$488 billion in the first quarter, up 7 percent year-on-year, the report showed.
First Financial said commercial lending was likely to remain the major profit driver for its core business this year.
However, Lee said the company faces pressure from an influx of new bad-loans from overseas lending, especially loans granted to “riskier” emerging countries and the Middle East.
Overseas loans declined to NT$102.6 billion in the first quarter from NT$127 billion one year earlier.
The company has no exposure to southern European countries including Portugal, Italy, Greece and Spain, Lee said.
Of the company’s new bad-loans, 50 percent come from central Asian countries, 23 percent from the US and the UK and the remainder from the Middle East, Lee said.
She also said the financial service provider’s insurance subsidiary had a US$2.5 million exposure to Ireland, which she believed would have minimal impact.
The company vowed to maintain its 20 percent growth target for this year in fee income-related businesses after seeing a pick up in demand for mutual funds and other wealth management products, Lee said.
First Financial will also try to maintain its credit costs at 55 basis points in terms of deposit rates this year, she added.
In the first quarter, the bank’s deposit rate was 0.52 percent, compared to a loan rate of 1.83 percent.
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