State-run Taiwan Business Bank (台灣企銀) aims to increase pre-provision revenue by 15 percent this year on the back of fee incomes and earnings contributions from overseas operations, top executives said yesterday.
“Despite a challenging macro-environment, we are seeking to raise the level above the NT$10 billion mark [US$298.59 million]” after achieving record earnings last year, chairman Robert Chu (朱潤逢) told a news conference.
That target suggests a 16.28 increase from the record of NT$8.6 billion last year, a tough task given the economic slowdown and volatile financial markets worldwide.
With a focus on lending to small and medium enterprises (SMEs), the bank also invests in government bonds, short-term bills, corporate bonds and financial debentures. In addition, it offers services of remittance, acceptance, guarantee, foreign exchange and letters of credit.
While other peers seek to increase SME loans by double percentage digits this year, Taiwan Business Bank is looking at a minor pickup of between 2 percent and 3 percent for fear of growing default risks amid economic weakness, president Lin Tseng-show (林增壽) said.
The lender recently incurred asset impairments from an old client, Chien Shing Stainless Steel Co (千興不銹鋼), after the Tainan-based firm filed for a financial restructuring and rejected debt payments estimated at NT$300 million.
The central bank’s easy monetary policy is squeezing interest margins and incomes, warranting a shift in business strategy, Lin said.
Against the backdrop, Taiwan Business Bank plans to pursue fee income growth by strengthening wealth management, foreign-currency lending and syndicated loans, Lin said.
Conservative wealth management products, such as savings-like insurance policies and US dollar-based investment tools, tend to gain rapid popularity amid uncertainties, he said.
Overseas branches can make greater earnings contributions this year as foreign-currency operations bear higher yields, Lin said.
Taiwan Business Bank has branches in Los Angeles, Hong Kong, Sydney, Brisbane and Shanghai, a micro loans business in Cambodia and a capital leasing company in Shanghai.
It is soon to set up branches in New York and Tokyo that would help generate income, Lin said.
Altogether, overseas operations are counted on to drive 40 percent of total pre-provision income this year, from 30.9 percent last year, Chu said.
As a state-run lender, Taiwan Business Bank would support the government policy and provide reverse mortgages for citizens over the age of 60 if they want the retirement plan.
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