State-run First Financial Holding Co (第一金控) has cut its loan growth target for this year from 4 percent to 3.5 percent due to economic slowdown at home and abroad, senior executives said yesterday.
“We should be able to achieve a loan growth of 3.5 percent this year, similar to the government’s GDP growth forecast of 3.28 percent,” First Financial investor relations chief Annie Lee (李淑玲) told an online investors’ conference.
The pickup in the local currency this quarter will also help weaken loan demand, Lee said.
The New Taiwan dollar closed down 0.25 percent at NT$30.801 against the US dollar in Taipei trading yesterday.
However, the currency has gained 1.9 percent so far this quarter and 2.9 percent this year, according to the central bank’s tallies.
Analysts attribute the NT dollar’s strength to continued foreign fund inflows as Japan and Europe step up money-printing operations to support economic growth.
The bank-focused conglomerate expects lending to small and medium-sized enterprises and foreign currency operations to drive loan growth with an increase of 8 percent and 10 percent respectively this year, Lee said.
First Financial posted NT$1.29 billion (US$41.88 million) in net income last month, with main subsidiary First Commercial Bank (第一銀行) generating NT$1.25 billion, accounting for 97 percent of the total, a company report said.
The group generated NT$5.39 billion profit for the first four months of this year, translating into NT$0.58 in earnings per share.
First Financial plans to distribute NT$1.35 per share in a dividend payout later this year — with NT$0.7 in cash and 6.5 percent in stock dividend — based on a net profit of NT$14.09 billion it made last year, if shareholders give their approval at a meeting next month.
The company also plans to raise its net interest margin (NIM) by 3 to 4 basis points this year by increasing earnings contributions from overseas operations, given excessive competition in the domestic market, Lee said.
NIM gained 1 basis point to 1.29 percent at the end of last quarter, while interest spread picked up 5 basis points to 1.6 percent, according to the report.
Overseas operations generated NT$1.83 billion in revenue last quarter with a 37.5 percent contribution, down from 44.8 percent in the fourth quarter of last year, the report said.
First Financial attributed the declining contribution from overseas operations to less debts booked in its offshore banking units rather than the impact of softening loan demand.
The company’s board on May 21 approved plans to issue 1.6 billion new common shares next quarter with a view to raising capital by more than NT$20 billion to finance expansions overseas and improve operating funding.
First Commercial Bank is looking for acquisition targets in Indonesia, the Philippines, Thailand and other emerging markets in Southeast Asia, Lee said.
First Financial shares closed down 0.52 percent at NT$19 in Taipei trading yesterday, bucking the TAIEX’s 0.2 percent rise, Taiwan Stock Exchange data showed.
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