Government-appointed executives at state-run Chang Hwa Commercial Bank (CHB, 彰化銀行) yesterday said that significant earnings improvement have made them confident of maintaining management rights as the lender prepares for board of directors elections later this year.
The move is expected to rile the largest shareholder, Taishin Financial Holding Co (台新金控), which is suing the Ministry of Finance over claims it failed to help Taishin win a majority in the boardroom in line with a 22.5 percent share purchase agreement in 2005.
“CHB’s financial performance improved after shareholders awarded government representatives management rights in 2014, and we will not step aside if they do the same this year,” CHB chairman Chang Ming-daw (張明道) said.
The bank posted NT$11.99 billion (US$389.55 million) in net income last year, a 2.93 percent increase from 2015, the company said in a filing to the Taiwan Stock Exchange.
The results meant NT$1.34 earnings per share, slightly lower than NT$1.38 earnings per share a year earlier.
Chang said he thinks shareholders will be able to judge for themselves who can better protect and advance their interests.
Under Taishin’s leadership, bad loan recoveries generated up to 80 percent profit, while businesses in other areas made little earnings contribution, Chang cited workers’ unions as saying.
However, the Cabinet has told the ministry and related parties not to buy authorization letters for fear the practice might give the impression of unfair game.
CHB is to underscore the benefits of shareholders and keep enhancing its earnings ability, Chang said.
The government controls an 18.5 percent stake in the bank.
The lender is eyeing a 5 percent increase in its loan book this year, driven mainly by offshore and overseas lending operations, CHB president James Shih (施建安) said.
Offshore and overseas financing generated 42 percent of profits last year and the contribution could climb to 45 percent this year, Shih said.
CHB plans to open branches in the Philippines, Cambodia and Myanmar later this year to serve Taiwanese firms expanding in those markets, Shih said.
The bank is also to increase lending to small and medium-sized enterprises, especially firms in the “five plus two” sectors, in line with the government’s effort to support “green” energy, technological innovation and biomedicine, Shih said.
CHB expects its net interest margin to pick up a few basis points this year from standing at 1.34 percent last year, as the central bank is expected to raise interest rates if Taiwan’s economy continues its stable recovery, Shih said.
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