Cathay United Bank (國泰世華銀行), a subsidiary of Cathay Financial Holdings Co (國泰金控), halved its mortgage lending growth forecast for this year in light of the government’s plan to tax speculative property transactions, a senior executive said yesterday.
The lender had forecast a 10 percent increase in mortgage lending this year, on par with overall loan growth, but now expects the figure to drop to 5 percent, if the draft luxury tax bill clears the legislature this session and takes effect on July 1, executive vice president Allen Peng (彭友倫) said.
The government aims to enact a luxury tax that would impose a 10 percent levy on real estate properties resold within two years of purchase. The rate would rise to 15 percent of the transaction price if the property is sold within one year of purchase.
“The tax plan has already weakened demand for new home loans this month,” Peng said. “The impact will become more evident once the bill is passed into law.”
The bank has cut in half its new home loans forecast this year to approximately NT$10 billion (US$338 million), from an earlier estimate of more than NT$20 billion, Peng said.
Last year, mortgage loans expanded 7.49 percent to NT$401.7 billion, from NT$373.7 billion a year earlier, as funds flew to the property market amid limited investment tools.
Mortgage loans took up 44.4 percent of the bank’s total lending last year, while corporate loans accounted for 51.2 percent, company data showed.
The bank was the largest contributor to Cathay Financial’s balance sheet last year as foreign exchange volatility took its toll on the bank’s life insurance arm, Cathay Life Insurance Co (國泰人壽).
The insurer, the nation’s largest by market share, expects a mild growth in first year premiums this year, after a 26.2 percent jump last year to NT$330.1 billion, Lin Chao-ting (林昭廷), a senior vice president at Cathay Life, told an investor conference.
Cathay United Bank aims to achieve a 15 percent increase in pre-tax earnings this year on improving interest and fee incomes amid a stable economic recovery, Peng said.
Net interest margin averaged 1.07 percent last year and is expected to climb 5 to 10 basis points this year, without factoring in interest rate hikes by the central bank, Peng said.
The lender expects total loans to grow 10 percent this year with even demand from big enterprises as well as small and medium-sized firms, Peng said.
He expects a 30 percent increase in unsecured micro-loans amid recovering confidence.
Cathay Financial dropped 1.49 percent to close at NT$43.05 yesterday, compared with the financial sector’s 0.2 percent gain and the main bourse’s 0.5 percent fall.
Brandon Liu (劉恆成), an analyst at Taiwan International Securities Corp (金鼎證券) said the stock would remain weak as long as the local currency gains against the US currency, driving up hedging costs.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure