Taiwan Financial Holding Co (台灣金控) plans to improve its returns on equity and assets, newly installed chairperson Lee Jih-chu (李紀珠) said yesterday, adding that the state-owned financial service provider has dragged down the sector since 2009.
Lee, 53, made the statement upon taking over at Taiwan Financial, filling the vacancy left by William Tseng (曾銘宗), who was appointed last week by Premier Jiang Yi-huah (江宜樺) to chairman of the Financial Supervisory Commission (FSC).
“Taiwan Financial has lagged behind the sector in terms of returns on equity [ROE] and returns on assets [ROA] since 2009,” Lee said.
The conglomerate’s banking arm, Bank of Taiwan (BOT, 台灣銀行) had a ROA of 0.2 percent and ROE of 3.3 percent last year, underperforming the averages of 0.68 percent and 10.41 percent for the sector, BOT figures showed.
The state-owned lender fared weaker in 2011 with ROA standing at 0.11 percent and ROE at 1.82 percent, compared with its peers, which averaged 0.59 percent and 9.33 percent respectively.
“The [below-par] showings suggest room for improvement even though BOT has had to shoulder burdens of preferential interest rates on savings of public school teachers, civil servants and military personnel,” said Lee, who formerly served as chairwoman of state-run Chunghwa Post Co (中華郵政), FSC vice chairwoman and legislator-at-large, among other positions.
Despite the burden, BOT outperformed peers in ROE and ROA prior to 2009, Lee said.
Lee declined to talk about a remedy, saying she needs more time to learn about the bank and find the causes.
Unlike her predecessors who vowed to establish banking branches in all major ASEAN cities, Lee said she preferred a niche-market approach to differentiate BOT from rivals.
“I don’t think it is wise to adopt this ‘me-too’ strategy... Rather, BOT should seek to create its own niche market based on its own strength,” Lee said.
BOT has the nation’s second-highest savings, after Chunghwa Post, with 169 branches across Taiwan and eight others overseas, and overall assets valued at NT$4.6 trillion (US$153.5 billion).
A vast sales channel, assets and 8,000 employees are all favorable for business growth, Lee said.
In addition, BOT is Taiwan’s mediatory lender for currency clearing and settlement with China, another plus for developing a niche market, Lee said.
The unlisted conglomerate posted a pre-tax income of more than NT$5 billion in the first six months and may double that figure by the end of this year, former chairman Liu Teng-cheng (劉燈城) said last month.