Far Eastern International Bank (FEIB, 遠東國際商銀) aims to grow profits by double digits this year and develop itself into a major financial services provider within three years through organic expansions and acquisitions, senior executives said yesterday.
The medium-sized lender, the banking arm of Far Eastern Group (遠東集團), posted NT$969 million (US$32.85 million) in pre tax profit for the first quarter, which translated into earnings per share of NT$0.46 and an annualized return of 13 percent, company data showed.
“We expect total loans to increase by between 10 percent and 15 percent this year, driven by the offshore banking and corporate finance businesses,” bank president Eli Hong (洪信德) told a media briefing.
The bank expects the fast-growing demand for loans in the Greater China region to boost overall interest income, while the economic slowdown and sharp competition reduce the interest spread at home, Hong said.
Total lending by the offshore banking unit reached NT$290.2 billion last quarter, up 16.41 percent from the same period last year, he said.
Corporate financing — including provision of funds for customers to lease capital equipment from abroad — promises to be another major source of income because such deals involve large cash flows, bank executive vice president Thomas Chou (周添財) said.
Although loans to small and medium-sized enterprises have grown robustly in recent years, they have generated limited income because of their modest size, Chou said.
In addition to organic growth, Far Eastern Bank aims to raise its total assets to NT$800 billion by 2015, from NT$443.8 billion last month and an estimated NT$500 billion this year, in keeping with its medium-term goal of becoming a major financial services provider, Hong said.
With the goal in mind, the lender plans to seize acquisition opportunities likely to increase revenue synergy and facilitate cost saving, Hong said.
Far Eastern Bank has 54 branches nationwide and owns two more branch licenses after integrating 19 Chinfon Commercial Bank (慶豐銀行) branches in 2010.
The lender acquired ING’s securities brokerage last year and is set to take over the Royal Bank of Scotland’s loans in Asia, Hong said.
“The financial industry may see active acquisition and merger activity this year,” Hong said.
China Development Financial Holdings Corp (開發金控) has announced an offer to buy KGI Securities (凱基證券) and Taishin Financial Holdings Co (台新金控) has voiced interest in buying a life insurance firm.
In a related development, Douglas Hsu (徐旭東), chairman of Far Eastern Group, which owns Asia Cement Corp (亞泥), Far EasTone (遠傳電信), Far Eastern Department Stores Ltd (遠東百貨) and Pacific Sogo Department Store (太平洋崇光百貨), questioned the wisdom of the government’s plan to raise electricity rates.
“The reported 60 percent increase in electricity rates for use during off-peak hours is particularly unreasonable because such consumption should be encouraged to lower outage risks,” Hsu said at a public function.
The planned hikes in electricity rates would impact the company’s cement business most, he added.