State-run Mega Financial Holding Co (兆豐金控) is to pursue stable and sustainable profit growth this year, and set up a computer system to prevent compliance failures, which led to a heavy fine on its New York banking branch last year, top executives said.
The bank-focused conglomerate is aiming for a conservative increase of between 1.5 and 2 percent in its loan book this year and is to stop seeking acquisition opportunities at home and abroad.
“We will give top priority to reversing the company’s tarnished image and shun bold moves in the pursuit of profit,” Mega Financial chairman Michael Chang (張兆順) told a news conference on Saturday.
Chang set the goal after the US$180 million fine in August last year by the New York State Department of Financial Services wiped out main subsidiary Mega International Commercial Bank’s (兆豐商銀) overseas earnings and accounted for the group’s profit decline of 23.52 percent from 2015.
Mega Financial posted a net income of NT$22.39 billion (US$826.9 million) last year, compared with NT$29.27 billion a year earlier, company data showed.
Offshore and overseas operations accounted for 60 percent of earnings contributions.
The company is to set up a computer system that will help identify money-laundering risks, allowing the bank and other subsidiaries to meet compliance requirements in Taiwan and overseas markets, Chang said.
Chang put his former colleague at First Commercial Bank (第一銀行) Jason Ko (柯明川) in charge of the task, which might entail NT$500 million of extra compliance costs and hiring hundreds of personnel.
Ko said he has to go to the US every month this year to handle the aftermath of the compliance failure.
Mega Financial president Bruce Yang (楊豐彥) said offshore and overseas operations would continue to drive business growth, but there would be much less emphasis on unreliable arbitrage opportunities.
“It is more important to focus on business areas where we can achieve stable and sustainable growth,” Yang said.
Mega Bank senior executive vice president Fu Ruey-yuan (傅瑞媛) said it is unrealistic to set aggressive loan growth targets if major local firms demonstrate a low appetite for investment.
Local developers and builders have refrained from launching new construction projects this year on expectations of an extended soft market, Fu said.
The abrupt and rapid appreciation of the New Taiwan dollar against the US dollar might erode the revenue of local exporters and life insurance companies if the upswing runs unchecked, Fu said.
Mega Bank vice president in charge of foreign-exchange trade Sandy Lee (李春香) declined to comment, saying the currency markets have evolved in directions at odds with earlier expectations.
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