Mon, Dec 22, 2014 - Page 13 News List

Hua Nan aims for flat mortgage growth

TOUGH MARKET:A sluggish property market and clients paying off mortgages faster are among a number of factors making it difficult to increase profits, the financial group said

By Crystal Hsu  /  Staff reporter

Hua Nan Commercial Bank chairman Lin Ming-cheng, left, and Hua Nan Financial Holding Co chairman Liu Teng-cheng attend a public event sponsored by their group at the Songshan Cultural and Creative Park in Taipei yesterday.

Photo: Lu Kuan-cheng, Taipei Times

State-run Hua Nan Financial Holding Co (華南金控) aims to keep mortgage operations flat or pursue very little growth next year, as sluggish property trading makes expansion difficult, top executives said yesterday.

“It will not be easy to grow mortgages next year, as the property market is likely to go through another soft patch, given high housing prices and cautious sentiment,” Hua Nan Commercial Bank (華南銀行) president Bruce Yang (楊豐彥) said by telephone.

Hua Nan Commercial Bank is the main subsidiary of Hua Nan Financial Holding Co.

Clients have paid off mortgage loans faster than the bank is able to find new borrowers, Yang said.

As a result, the lender is seeking to grow mortgage operations by a tiny 1 percent next year, from NT$450 billion (US$14.29 billion), he said.

Though the central bank has held interest rates unchanged for 14 quarters, borrowing costs for home loans might edge up to an average of 2.1 percent next year, from 2 percent this year and 1.96 percent last year, he said.

The environment has tightened a little following the end of the US Federal Reserve’s quantitative easing and with rate hikes expected in the second half of next year, he said.

Hua Nan Bank chairman Lin Ming-cheng (林明成) agreed with forecasts by property analysts that home prices might fall next year, but voiced confidence that there would not be a bubble.

Instead, the bank would exercise more caution when reviewing loan applications, Lin said.

The bank accounts for 90 percent of Hua Nan Financial’s profits, which rose to a new high of NT$12.05 billion for the first 11 months, or earnings per share of NT$1.29, company data showed.

Hua Nan Financial chairman Liu Teng-cheng (劉燈城) attributed the performance to contributions by overseas units, yuan operations and robust sales of wealth management products — businesses that generate higher interest margins.

Interest generates 70 percent of income, while fees contribute 19 percent, Yang said, adding that investments and other operations make up the rest.

The bank is eyeing double-digit growth for its wealth management business next year and a modest increase of between 4 percent and 5 percent in overall loans, or slightly better than the nation’s GDP growth, Yang said.

The bank plans to increase lending to firms in the creative industry from an estimated NT$18 billion this year to NT$25 billion next year and NT$30 billion in 2016, in line with the government’s support for the industry, he said.

The conglomerate is due to move to its new headquarters in Taipei’s Xinyi District (信義) next week.

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