Taiwan Cooperative Financial Holding Co (TCFHC 合作金控) yesterday celebrated its establishment as company chairman Liu Teng-cheng (劉燈城) said the firm would aim for moderate growth in earnings next year if the domestic economy continued to expand.
With assets totaling NT$2.6 trillion (US$86.26 billion), the bank-centric conglomerate is the nation’s fourth-largest financial services provider after state-owned Taiwan Financial Holding Co (台灣金控), Cathay Financial Holding Co (國泰金控) and Fubon Financial Holding Co (富邦金控).
“The group will likely expand at a slower pace next year with the nation’s GDP growth trimmed to 4 percent,” Liu said on the sidelines of the inauguration ceremony.
The group’s banking arm, Taiwan Cooperative Bank (TCB, 合作金庫銀行), could see its overall loans increase by between 1 percent and 2 percent next year as economic uncertainty would probably dampen private investment, Liu said.
TCB would focus on lending to small and medium-sized enterprises as such loans generate higher interest income, Liu said.
The lender, which has more than 300 branches nationwide, aims to keep its mortgage operations steady so as to avoid default risks and support government efforts to curb housing prices, Liu said.
However, Liu voiced concerns that TCB would have to write off loans to memorychip maker ProMOS Technologies Inc (茂德科技), which has yet to find a strategic partner, key to its rescue, after having its loan interest rate cut to 0.1 percent.
TCB would have to increase its bad loan provisions, which would inevitably dilute earnings, he said.
To improve profitability, Taiwan Cooperative Financial will also seek to expand its securities and life insurance businesses, Liu said.
The newly established Taiwan Cooperative Securities Co (合庫證券) would look for acquisition opportunities to increase its scale, Liu said.
Development plans for the life insurance unit are more complicated because it is a joint venture with French banking group BNP Paribas, Liu said.
“Market volatility makes expansions difficult for life insurance and securities brokerage,” he added.
Taiwan Cooperative Financial plans to issue 1 billion new shares next year to strengthen the bank’s capital, which currently has a core capital ratio under 7 percent, Liu said. The capital increase plan is set for the first quarter of next year and should be completed in the second quarter, Liu said, adding the company had yet to decide on the price.
Shares in Taiwan Cooperative Financial closed up 3.79 percent at NT$19.15 on its debut yesterday, underperforming the main bourse which rallied 3.98 percent, Taiwan Stock Exchange data indicated.