State-owned Taiwan Financial Holding Co (台灣金控) plans to set up a committee within the company later this year to better manage its huge idle funds after earning a record profit last year if excluding policy subsidies, company chairwoman Lee Chi-chu (李紀珠) said yesterday.
The bank-oriented conglomerate posted NT$8.27 billion (US$272.2 million) in pre-tax income last year, up 4.59 percent from a year earlier, thanks to a more efficient cross-selling platform that generated NT$922 million, more than double the target set a year earlier, Lee said.
Bank of Taiwan (台灣銀行), Taiwan Financial’s main subsidiary, contributed NT$8.8 billion in revenue last year, the highest in six years, which more than offset losses caused by stock market volatility and increased prevision costs at its life insurance division, company data showed.
The bank’s earnings would reach NT$20.4 billion if spared the burden to subsidize legacy interest for preferential savings enjoyed by civil servants, public school teachers and military personnel, Lee said.
Preferential savings total NT$400 billion with interest rates fixed at 18 percent, she added.
The lender tops peers in terms of deposits and outstanding loans, valued at NT$3.39 trillion and NT$2.21 trillion respectively as of the end of last year representing an increase of 5.5 percent and 1.5 percent from their year-ago levels, according to internal statistics.
“That indicates a relatively low loan-to-deposit ratio, [65.21 percent], and a huge idle fund for better allocation to grow profit,” Lee said.
Lee, who took the helm at Taiwan Financial in August last year, said she is pushing for a fund utilization committee to better manage the bank’s funds and investment strategy.
The committee is to consist of about seven members, including existing financial executives and external fund allocation experts, Lee said. She declined to name the external partners.
Like other peers, Taiwan Financial is seeking to increase operations in the Asia-Pacific region this year, especially in China, Australia, Cambodia, India and Myanmar, where Taiwanese firms increasingly cluster, Lee said.
Overseas operations generated 38 percent of the overall profit last year with the contribution rising to 55 percent, if factoring in business through offshore banking units, company data indicated.
Bank of Taiwan would withstand drastic home price corrections unharmed as home loans are smaller than 50 percent of their market value, Lee said.
Many have predicted a price fall for houses in districts with large supply when global central banks end loose monetary cycles amid sustained economic recovery.