Hua Nan Financial Holdings Co (華南金控) voiced pessimism yesterday about the business outlook in the second half as the return of Europe’s debt crisis and deepening inflationary pressures at home constrain corporate lending and consumer banking.
However, the state-run financial service provider said it would press ahead with plans to expand in China and elsewhere after starting yuan operations last week.
“We have a dim view about business prospects for the rest of the year as the European debt problems deteriorate and domestic consumers cut spending to cope with higher energy costs,” said Derek Chang (張雲鵬), an executive vice president of Hua Nan Commercial Bank (華南銀行), the group’s main source of revenue.
The lender aims to grow total lending by a moderate 5 percent this year, with loans in New Taiwan dollars to increase 4.3 percent, and foreign currency and offshore operations to expand 6 percent and 12 percent respectively, Chang said.
The growth targets, set early this year and expected to raise fee income by 10 percent, failed to factor in recent hikes in petroleum-based product and electricity prices and downside risks abroad, Chang said.
The increased financial burden will curtail demand for consumer banking and wealth management services, he said.
Furthermore, it would be more difficult to strengthen syndicated loan operations amid growing unease over the global economy, Chang said.
China has not emerged from a slowdown, which has proven worse than expected so far, Hua Nan Financial executive vice president David Cheng (鄭永春) said.
The trend bodes ill for major technology firms in Taiwan, after export orders from China contracted for the fifth consecutive month last month, Ministry of Economic Affairs’ data showed on Monday.
Hua Nan Financial will push ahead with expansion plans in China, but will step up risk control, Cheng said.
Hua Nan Bank is awaiting China’s approval for plans to set up a branch in Shanghai and is looking to tap into the capital leasing market there, Hua Nan Financial president Ed Liu (劉茂賢) said.
The lender is also assessing opportunities to invest in Chinese peers in second-tier or third-tier cities, Liu added.
“We will disclose investment details after securing concrete progress,” he said.
Hua Nan Securities Co (華南永昌證券) is applying to establish a representative office in Beijing and will continue talks with strategic partners Founder Group (方正集團) and E Fund Management Co (易方達) for opportunities for cooperation, Liu said.