State-run First Financial Holding Co (第一金控) is looking to acquire banks in Indonesia or Thailand this year as part of a strategy to deepen its presence in the Southeast Asian market, senior executives said yesterday.
“The group will continue to seek growth this year unfazed by external challenges” such as the eurozone’s debt problems, volatile inflationary pressure and the economic slowdown in emerging markets, First Financial chairman Tsai Ching-nian (蔡慶年) told a media briefing.
The conglomerate is scouting for acquisition targets valued at about NT$150 million (US$5.07 million) in ASEAN member countries, to take advantage of the region’s fast-growing economies, Tsai said.
Concrete headway was expected in this endeavor during the first half of the year, he told -reporters one week ago.
Lin Hann-chyi (林漢奇), executive vice president of First Commercial Bank (第一銀行), the group’s flagship subsidiary and main source of income, said the group is interested in buying lenders in Indonesia or Thailand where regulators do not allow new foreign banking branches.
“That limitation means that mergers and acquisitions are the better option to enter those markets,” Lin said.
First Bank has already entered key ASEAN markets including China, Singapore, Vietnam, and Cambodia, and is seeking to further expand its business in the trading bloc, which has seen increasing investment from Taiwanese firms looking to exploit favorable taxation regulations for member nations, Lin said.
The group might fund the expansion with money from new capital proceeds raised late last year, Lin said.
First Financial issued 800 million new shares priced at NT$20.5, lifting its capital by NT$16.4 billion, company data showed. Most of the proceeds — NT$15 billion — went to the banking arm to meet tightened capital requirements.
In addition to overseas expansions, First Financial aims to increase earnings this year at about the same pace as GDP growth, most recently forecast at 3.91 percent, Tsai said.
First Financial reported a net income of NT$7.56 billion last year, rising 7.2 percent from a year earlier, its stock filing indicated.
The group plans to strengthen core businesses at home and overseas branches to realize its growth target, Tsai said.
With interest rates unlikely to change this year, First Bank will seek to boost lending to small and medium firms as well as demand savings to widen interest spreads, Lin said. The loans generate higher interest income, while the deposits require lower capital costs.
The capital leasing unit, which incurred losses for three consecutive years on bad loan provisions, expects to turn a profit this year now that its coverage ratio it more than 100 percent, unit chairman Hsu Yung-ping (徐永平) said.
The turnaround is expected to extend to branches in China where interest spreads averaged 14 percent last year, Hsu said.
First Financial earned NT$795 million in net profit last month, jumping from NT$148 million in December, as global financial markets showed signs of stabilizing, company data showed. That figures translated into NT$0.1 earnings per share.