Tue, Mar 04, 2014 - Page 13 News List

CTBC forecasting limited interest, fee-income growth

By Crystal Hsu  /  Staff reporter

CTBC Financial Holding Co (中信金控), the nation’s third-largest financial service provider by assets, yesterday said it is looking at single-digit growth in interest and fee income this year as a high base limits expansion in some core businesses.

“We expect interest income to expand by high single digits this year, and fee income to pick up by low single digits,” CTBC Financial spokeswoman Rachael Kao (高麗雪) told an investors’ conference in Taipei.

The guidance is modest, compared with another bank-focused conglomerate, E.Sun Financial Holding Co (玉山金控), which last week said it aims to grow fee income by between 15 percent and 20 percent this year, and outperform peers in other operations as well.

CTBC Bank (中信銀行), the nation’s largest credit-card issuer and the main source of revenue for CTBC Financial, had 1.28 million credit cards in circulation last year and is unlikely to lift the number this year now that Costco Wholesale Co, an international chain of membership warehouses, has ended its partnership with the bank, Kao said.

CTBC Financial posted NT$21.5 billion (US$708.06 million) in net income last year, up only 1 percent from 2012. The group attributed the lackluster showing to the one-off provision costs of NT$5.6 billion to raise its Tier 1 capital ratio to the regulatory threshold of 1 percent.

Kao declined to comment on the company’s net interest margin (NIM), apart from saying that it should be able to climb higher amid an improving economy and moves to underscore better-yielding products and services.

CTBC’s NIM hovered at about 1.54 percent in the final quarter of last year, up 4 basis points from three months earlier, but down 2 basis points from its level a year ago, company data showed.

The company yesterday urged the Ministry of Finance to reconsider raising the business tax on banks and life insurance companies from 2 percent to 5 percent on par with non-financial sectors because manufacturers can deduct costs from the revenue on which the levy is based.

“We hope authorities can reconsider the tax’s base before carrying out the policy change,” Kao said.

The planned tax rate hike, which could take effect next year if it clears the legislature, may translate into NT$1.57 billion a year, decreasing CTBC Financial earnings by 7.3 percent, based on its profit last year, Kao said.

CTBC Financial has yet to gain headway in its talks with the Taipei City Government over the fate of Novel Hall, part of the company’s headquarters complex in the Xinyi District (信義).

The conglomerate plans to auction the complex, but had to postpone the sale indefinitely after the government declared Novel Hall as a cultural heritage property.

“The interests of shareholders and would-be buyers remain our top concern,” Kao said.

CTBC Financial shares closed down 1.53 percent yesterday, weaker than the TAIEX’s 0.44 percent decline, Taiwan Stock Exchange data showed.

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