State-run Hua Nan Financial Holdings Co (華南金控) yesterday said that it would not join the bandwagon and seek yuan deposits with high interest rates, but instead will aim to expand its loan book this year at a pace faster than the nation’s GDP growth.
The bank-centered conglomerate intends to increase its loan book by 4.25 percent, higher than the government’s GDP growth , forecast of 3.5 percent for the same period. This intention has been fueled by overseas banking operations and lending to small and medium-sized enterprises, senior executives said.
The growth target came after Hua Nan Financial posted NT$8.87 billion (US$298.63 million) in net income for last year, rising by a modest 4 percent from a year earlier and translating into earnings per share of NT$1.03.
“Looking forward, Hua Nan Financial will seek to strengthen its cross-selling efficiency and to take better advantage of business opportunities linked to Taiwan’s improving ties with China,” company chairman Wang Rong-jou (王榮周) said.
Cross-selling generated 24 percent of sales at individual subsidiaries last year, suggesting that there is ample room for growth, Wang said.
Hua Nan Financial's capital adequacy ratio stood at 136.17 percent at the end of last years and at 12.93 percent for at its flagship subsidiary, Hua Nan Commercial Bank (華南銀行), indicating there is sufficient funding for expansions if necessary, Wang added.
Hua Nan Bank, which already has a branch in Shenzhen, China, is awaiting regulatory approval for a second branch in Shanghai and is evaluating locations for setting up a third, Wang said.
The company’s securities arm, Hua Nan Securities Co (華南永昌證券), is intending to open a representative office in Beijing in the first half of the year, with the office to double as headquarters for the group’s operations in the Chinese market given its location in the capital, Wang said.
On the domestic front, Hua Nan Bank will refrain from competing for yuan deposits by offering unreasonably high interest rates, the lender’s chairman Lin Ming-cheng (林明成) said.
“We prefer to pursue stable growth and profits, and will accumulate yuan deposits in a pace consistent with our demand for yuan assets,” Lin added.
Banks will have difficulty turning a profit from yuan deposits that have interest rates of 2.5 percent or higher, a Hua Nan bank official said.
Instead, Hua Nan Bank aims to increase lending by 30 percent this year through its offshore and overseas banks.
Such loans will generate higher interest and fee incomes which is beneficial to the company, Hua Nan Financial executive vice president David Cheng (鄭永春) said.
In addition, Hua Nan Investment Trust (華南投信) has filed applications to issue yuan-based bonds that will pay dividends on a monthly basis because these products are popular with Taiwanese investors, company chairwoman Kimiko Lin (林怡君) said.