The state-run Taiwan Business Bank (台灣企銀) is aiming to achieve a record pre-provision profit of NT$10.6 billion (US$348.62 million) this year, which would be a 31.88 percent increase from last year, driven by higher-yielding loans to small and medium-sized enterprises (SMEs), company chairman Liao Tsan-chang (廖燦昌) said yesterday.
The lender posted pre-provision income of NT$8.04 billion last year, an increase of 10.45 percent from 2012, thanks to its strategy of courting SME clients, Liao said.
“We are looking for a double-digit increase in SME lending this year, with an interest spread of 3 percent, although our peers shun setting ambitious growth targets,” Liao told a media briefing.
The bank set a target of a 15 percent gain, or NT$50 billion, in its SME loans this year from a year ago, which would generate NT$1.5 billion in interest income, Liao said.
Particularly, Taiwan Business Bank is to reach out to companies with annual revenues of NT$30 million and less, as they account for 92 percent of the nation’s 1.34 registered firms, he said.
Those companies have difficulty securing loans from the nation’s first-tier lenders and many of them have no choice but to seek recourse with underground banking institutions, Liao said.
Taiwan Business Bank intends to fill that void and craft a niche market around serving those customers, as they play an important role in upholding the nation’s economy, Liao said.
Aware of the higher credit risks involved, the lender is to target firms that are at least five years old, given that many businesses do not survive that long, he said.
The bank will also seek to expand its wealth management business by 20 to 30 percent this year, as an improving macroenvironment is favorable for product sales, especially yuan-linked products and services, Liao said.
To that end, Taiwan Business Bank plans to set up a capital leasing company in China’s Shanghai free-trade zone to take advantage of laxer regulations there on capital flows to meet its customers’ needs.
Meanwhile, the lender is looking to tap into business opportunities in Australia, Cambodia, Myanmar and Malaysia, Liao said.
Overseas operations generated 23 percent of the bank’s income last year, a proportion that may rise to 25 percent this year, Taiwan Business Bank president T.C. Huang (黃添昌) forecast.
The lender is expected to stage a stronger performance this year in the absence of provision costs, Huang said.
The bank plans to set aside NT$5 billion to bring its coverage and bad loan ratios on par with the sector this year at 260 percent and 0.5 percent respectively, he said.