Wed, Aug 22, 2012 - Page 13 News List

Taishin Financial expects flat core business this year

AUTO LENDING:The only loans the financial firm really intends to increase are loans to joint ventures with car finance providers that are virtually risk-free

By Crystal Hsu  /  Staff reporter

Taishin Financial Holding Co (台新金控) expects its core business to remain flat for the rest of the year as risk control will top its list of concerns amid economic uncertainty, senior executives told an investors’ conference yesterday.

The bank-centric conglomerate will avoid aggressive loan expansion for the remainder of the year — except for car loans and lending to small and medium-sized enterprises (SMEs) that may both grow by 15 percent, Taishin Financial president Joseph Jao (饒世湛) said.

“Given the fragile global economy, we aim to pay more attention to risk control than loan growth,” Jao said. “We have a neutral outlook for secured, unsecured and corporate lending, and wealth management operations in the second half, while underwriting business may shrink a bit.”

Auto lending — new joint ventures with local car finance providers that will buy back assets in the event of default — carries virtually no risk, but accounts for a tiny share of the loan book at Taishin International Bank (台新銀行), the group’s main source of income, retail banking executive Oliver Shang (尚瑞強) said.

As for the SME segment, Taishin Bank is seeking to grow its customer base with a focus on payroll transfer accounts as they entail low interest expense, but promise great credit card, mortgage and other consumer banking business potential, Shang said.

The lender is also vying for the right to distribute public welfare lottery tickets, Shang said.

For the first half, Taishin Financial posted NT$5.6 billion (US$186.38 million) in net income, declining 3 percent from NT$5.77 billion a year earlier and translating into earnings of NT$0.71 per share, company data showed.

Taishin Financial chief financial officer Welch Lin (林維俊) attributed the earnings retreat to a high base last year on the back of one-off capital gains from bond and real-estate investments.

“Both revenue and profits would have increased 19 percent in the absence of the one-off gains,” Lin said, adding that net interest income rose 10.7 percent year-on-year in the first half, while net fee income grew 2.7 percent.

However, earnings momentum showed signs of a slowdown last quarter, as net income totaled NT$2.64 billion during the April-to-June period, down 11 percent from NT$2.96 billion three months earlier, according to company figures.

Net interest margin (NIM) dropped to 1.44 percent as of June, compared with 1.48 percent in the preceding quarter, while overall interest spreads narrowed from 2.07 percent to 2.04 percent, the company’s statistics showed.

Taishin Bank retail banking chief officer Spike Wu (吳清文) expects NIM to hover at about similar levels in the coming two quarters.

Taishin Financial shares closed up 1.79 percent at NT$11.4 yesterday, outpacing the main index’s 1.01 percent advance, Taiwan Stock Exchange data showed.

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