State-run First Financial Holding Co (第一金控) yesterday said that earnings in the second half would be driven by rising loan demand abroad, as well as from local small and medium-sized enterprises as the nation’s economic prospects improve.
“We have witnessed strong momentum in the North American market, where we have four bank branches in major financial and Chinese population centers such as New York and Vancouver,” First Financial investment relations head Anne Lee (李淑玲) told an investors’ conference.
As of June 30, loans from North American markets grew 17 percent year-on-year, as the US economy continued to recover, while those from emerging Southeast Asian markets rose 16 percent, Lee said.
The company’s overseas operations would help offset rising exposure to the Greater China markets and contribute to growth in its US dollar-denominated lending spreads, she said.
US dollar-denominated spreads would also be helped by potential US Federal Reserve rate hikes this month, which would diminish the impact of Taiwan’s low interest rate environment, she added.
However, Lee said that the company is still facing a NT$1.1 billion (US$34.67 million) loan exposure to troubled Solar Applied Materials Technology Corp (光洋科), a company that is embroiled in a financial fraud scandal and whose shares have been suspended from trading on the Taipei Exchange since May 17.
“As of now, the company appears to be able to service its debt, and our exposure is partly covered by collateral, including the company’s plant and equipment,” Lee said.
First Financial’s other major exposure to distressed companies includes a US$20 million loan to China Firstextile Holdings Ltd (中國福斯特紡織), Lee said.
The company had written off the bad debt during the second quarter as well as raised the required provisions, she said.
In the first half, the company saw its net income rise 8.9 percent annually to NT$8.75 billion, or earnings per share of NT$0.73.
The company’s return on equity and return on assets reached 9.36 percent and 0.7 percent respectively during the same period.
Net interest margin was flat quarter-on-quarter at 1.64 percent, the company said.
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