First Financial Holding Co (第一金控) said yesterday it aims to grow its loan book by a modest 5 percent this year with an emphasis on corporate lending, because it is maintaining a cautious outlook on consumer banking and fee income growth as financial markets remain unstable.
“We expect overall loan growth to equal 5 percent this year, even though the government trimmed its forecast for GDP growth” a day earlier to 3.85 percent, from 3.91 percent, First Financial investor relations head Annie Lee (李淑玲) said at an investors’ conference.
The financial conglomerate posted NT$74.24 billion (US$2.508 billion) in net income last year, up 6.6 percent from a year earlier, translating into earnings of NT$1.07 per share, down from NT$1.09 per share in 2010.
Its banking arm, First Commercial Bank (第一銀行), contributed NT$85.91 billion to net profit last year, while the securities and insurance units lost NT$832 million and NT$268 million respectively, owing to market volatility, Lee said.
The lender drew 67.2 percent of its profit from net interest income, which totaled NT$20.76 billion last year, up 14.2 percent from a year earlier, company data showed.
Lee said net interest margins may increase by five basis points this year, bolstered by loans to small and medium enterprises, although the central bank is likely to hold interest rates steady.
“Loan demand from this segment remains solid after retreating a bit last quarter amid the deteriorating external environment,” she said. “Taiwan’s improving trade ties with China will offset the slowdown in exports to Europe.”
The manufacturing sector accounted for 30.3 percent of the state-run bank’s outstanding loans last year, First Bank executive vice president Lin Hann-chyi (林漢奇) said.
Loans to the hotels and restaurants sector grew fastest last year, followed by transportation, warehousing, and wholesale and retail firms. This was consistent with the government’s effort to boost cross-strait tourism and other domestically driven industries, Lin said.
The lender set a growth target for retail banking at between zero and 3 percent this year, and intends to cut loans to the state sector because they generate lower interest income, Lin said.
First Financial vice president Hung Hsin-shih (洪新湜) said the group would embark on mergers and acquisitions if the government began a fresh round of financial reform.
“Securities houses sit on top of the list of potential targets because our brokerage arm is small at present,” Hung said.
The conglomerate is conducting an internal assessment of the matter, although the government has given no clear signals yet, Hung said.