State-owned Taiwan Financial Holding Co (臺灣金控) aims to increase its revenue by 5 to 10 percent this year, driven by non-interest income, as it is cautious about lending operations, top executives said.
The bank-focused conglomerate announced the goal after posting a record pretax income of NT$10.51 billion (US$313.54 million) last year, an increase of more than 10 percent from a year earlier, company data showed.
“The global landscape looks bumpy with uncertainty and challenges,” company chairwoman Lee Jih-chu (李紀珠) said last week.
The interest rate hikes by the US Federal Reserve in December last year suggest both greater volatility in global financial markets and higher returns for investments if the company reins in risks, Lee said.
The company’s main subsidiary, Bank of Taiwan (臺灣銀行), draws the bulk of its earnings from fee incomes and investment returns, although it ranks the largest by outstanding loans.
The lender has to support government policy and provide preferential interest rates on savings deposits from civil servants, military personnel and public school teachers, therefore squeezing interest income, company president Shiau Chang-ruey (蕭長瑞) said.
The bank expects loan books to grow at a pace similar to the nation’s GDP growth, around 2 percent this year, suggesting a very limited room for lending expansion, Shiau said.
Potential interest rate cuts by the central bank to support the economy would further narrow interest spread and margin that stood at below 1 percent last year, Shiau said.
Still, the bank and other subsidiaries are seeking to boost earnings on par with the past showings.
“We aim to be a regional champion in Chinese currency operations and Internet banking,” Lee said, adding that the company would also tap into retirement-related businesses.
Bank of Taiwan plans to set up branches in Fuzhou, China, and Sydney this year and is seeking cooperation with US trust institutes, she said.
The moves would help boost earnings at overseas outlets, which generated about 50 percent of profits last year, higher than the 35.37 percent average for the sector, company data showed.
The company has obtained regulatory approval to convert unrealized real-estate property gains into proceeds for capital increase, allowing it to improve capitalization and operation funding, Lee said.
Bank of Taiwan has sought to maintain a healthy asset quality by setting aside the highest provisions among peers at NT$27.89 billion last year, as the operating conditions deteriorated, she said.
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