Tue, Feb 14, 2012 - Page 12 News List

Land Bank cautious on growth outlook this year

DIVERSIFICATION:To soften the impact of low demand from the property sector, the lender said it is turning to corporate banking and will set up a second China branch

By Crystal Hsu  /  Staff Reporter

Land Bank of Taiwan chairman Wang Yao-shing, center, and president Su Ler-ming, second right, together with several executives, greet the press during the bank’s annual press conference in Taipei yesterday.

Photo: CNA

Land Bank of Taiwan (土地銀行), the nation’s largest property lender, is cautious about its growth outlook this year, having seen only one major land financing application so far this year, bank chairman Wang Yao-shing (王耀興) said yesterday.

The state-owned bank aims to step up its corporate banking business this year to help mitigate the impact of falling loan demand as a result of the government’s effort to rein in property prices, Wang said.

“It is unlikely that Land Bank will see earnings grow this year” after pre-tax income rose to a new high last year on the back of robust commercial property trading, Wang told a media briefing.

The number of land financing loans has shrunk by 20 percent so far this year, with only one valued at more than NT$50 million (US$1.69 million), suggesting that the housing supply may take a dive in the coming two to three years if the situation persists, Wang said.

Government policies that are unfavorable to the housing sector have dampened investment interest, Wang said, adding that he still had not seen any concrete signs of a price correction.

“It is better for the bank to adopt a cautious approach and step up risk control this year” as the European debt crisis will continue to weigh on the economy at home and abroad, he said.

Toward that end, Land Bank staff members have visited construction sites nationwide to monitor business flows, Wang said.

The lender’s land and construction loans totaled NT$283.67 billion at the end of December, rising 17.43 percent from a year earlier and outpacing its peers with a market share of 21 percent, company data showed.

“Once property auction results are out, our employees are on the spot to offer financing applications,” Wang said.

Land Bank, which is not listed on the local bourse, reported NT$10.53 billion in pre-tax income last year, 31 percent higher than its target, the chairman said. He expects earnings to drop below NT$10 billion this year.

The lender processed 363 land and construction financing applications last year, with the number falling each quarter, from 123 in the first three months to 69 in the fourth quarter, said Chang Tang-fong (張堂豐), general manager of the credit management department.

The number of large-scale land financing cases plummeted to 20 last year, from 40 a year earlier, company data showed.

Land Bank plans to increase lending to companies to help offset sluggish demand from developers and construction firms, Wang said.

The lender also aims to further tap the Chinese market by opening its second branch in Tianjin this year, after setting up a branch in Shanghai last year, Wang said.

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