State-funded Taiwan Asset Management Co’s (TAMC, 台灣金聯資產管理) goal this year is to hold earnings steady from last year as an expected increase in rental income may offset shrinking profit from sales of bad assets, top executives said yesterday.
The government controls an 81.46 percent stake in the company to help domestic lenders digest non-performing loans.
TAMC has set a budget target of NT$1.1 billion (US$36.38 million) this year as the nation’s bad loan ratio keeps falling, chairman Hwang Ding-fang (黃定方) said.
It posted a record NT$1.26 billion in net profit last year after setting aside a NT$1.88 billion provision, company data showed.
Rental income generated about NT$300 million last year, accounting for almost 25 percent of profits, TAMC said.
The average bad loan ratio for the nation’s 39 banks dropped to 0.35 percent at the end of February, from 0.36 percent in January, with all having a ratio of lower than 2 percent, Financial Supervisory Commission data showed.
The figures suggest strained sources of income as banks with less than 3 percent in bad assets are not required to auction them off.
“We have not acquired any toxic assets from domestic financial institutions for the past three or four years,” despite our leadership position in terms of market share, senior vice president Huang Hsien-chun (黃顯鈞) said.
The company has increasingly turned to the foreclosure market to increase its inventory. However, this strategy has its own limits, given the narrowing gap between bidding costs and market prices for foreclosed houses in the Greater Taipei area.
TAMC is cautious about properties outside Greater Taipei because they are vulnerable to price corrections, making them difficult to dispose to turn a profit, assistant vice president Rock Lin (林智暉) said.
The company auctioned off 75 percent of the 100 houses and office space it put on the market last year and is rolling out another 100 units nationwide tomorrow, Hwang said.
Given the dwindling inventory, tomorrow’s units will be the last batch of the so-called low-price housing projects.
Priced at 20 percent under market rates, the units include four apartments in Taipei’s Daan District (大安) whose ownership will be decided by lots if more than one buyer files an application before the deadline, Hwang said.
TAMC intends to keep commercial properties to generate rental income as it shifts its business model to stay viable, he said.