The state-run Land Bank of Taiwan (土地銀行), the nation’s largest mortgage provider, aims to boost earnings to more than NT$10 billion (US$340 million) this year and will set up an investment trust company in the first half to cash in on urban renewal fever, company executives said yesterday.
The unlisted bank’s pre-tax income totaled NT$9.35 billion last year — NT$1.87 in earnings per share — and 33.55 percent higher than the target, president Su Ler-ming (蘇樂明) told a media briefing.
“We expect earnings to surpass NT$10 billion this year” as improvement in corporate loans is expected to more than offset a modest decline in mortgage and land financing in the wake of tightening measures, he said.
Corporate banking and mortgage services made roughly equal contributions to the lender’s coffers.
Vice executive president Ruan Chien-ping (阮健平) said mortgage volume shrank about NT$1 billion each month after the central bank introduced selective credit control on second home loans in Taipei City and New Taipei City (新北市) in June last year.
Home loans stood at about NT$703.1 billion in December while land and construction lending was at NT$211.7 billion, translating into market shares of 10 percent and 21 percent respectively, Ruan said.
Ruan expects the mortgage volume to drop below NT$700 billion this year after the central bank in December lowered the loan-to-value ratio from 70 percent to 60 percent for second homes in Greater Taipei.
Land and construction financing is also expected to slide, Ruan said, after the amount is capped at 65 percent of acquisition costs or pricing evaluation, whichever is lower. However, the lender is optimistic that growth in fee and -interest -incomes at units at home and abroad would bolster overall earnings, Ruan said.
The bank expects recently established branches in New York and Shanghai, China, to turn a profit this year and the units in Los Angeles and Singapore have already done so, he said.
“The goal is not difficult given the global macroeconomic climate,” Ruan said.
Corporate banking aside, the lender intends to create the first state-run money manager specialized in real-estate investment trust. The bank plans to own a 75 percent stake in the planned firm with another state-run enterprise — which he declined to name — to take up the remaining 25 percent.
The firm is expected to be stablished by June with the first fund sized at NT$3 billion, Ruan said.
“People who cannot afford to buy a house may opt to invest in real estate funds,” he said.