State-run First Financial Holding Co (第一金控) aims to modestly expand its lending operations next year, as demand from small and medium-sized enterprises might gain traction amid an improving global economy, a senior executive said yesterday.
“We are looking at a loan growth of between 5 percent and 6 percent next year, faster than an estimated 4 percent increase this year, as the world continues to recover from a slowdown,” First Financial investment relations head Anne Lee (李淑玲) told an investors’ conference.
The goal is achievable for this year and beyond on top of a 3.4 percent increase in the loan book valued at NT$1.51 trillion (US$47.46 billion) last quarter, Lee said, adding that interest rate hikes by the US Federal Reserve will also lend support.
Global markets expect the Fed to usher in a tightening monetary cycle next month following the election of Donald Trump to the US presidency, which would lure funds to the US to pursue higher yields. Trump has blamed the US’ limited GDP growth partly on its low interest rates.
“The era of cheap US dollars is over and we will take advantage of the trend and explore related business opportunities to boost our earnings ability,” Lee said.
The conglomerate intends to increase its foreign-currency loans by 15 percent to 16 percent, Lee said.
While the operating environment might improve, net interest income (NIM), a critical profitability gauge for banking institutions, might see only a mild advance of 2 basis points from the end of last quarter’s 1.26 percent to 1.28 percent next year, Lee said, as most global central banks would maintain loose monetary policy.
First Financial expects its fee income to rise 6 percent to 7 percent, slowing from a 10.7 percent increase last quarter, due to higher provision costs and lower bancassurance commissions, Lee said.
Credit costs might rise 13 basis points after ultra-low bases in recent years, Lee said.
However, non-performing loans amounted to NT$520 million in the first nine months of this year, higher than expectations of between NT$400 million and NT$500 million a year, due to defaults by local and Chinese firms, Lee said.
The conglomerate is to open a branch in Manila, but does not expect it to generate significant incomes until 2018, Lee said.
“We plan to keep our scale at the current level next year until China shows better signs of recovery,” Lee said.
The group reported a net income of NT$14.48 billion in the first 10 months of this year, or earnings of NT$1.21 per share, company data showed.
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