EnTie Commercial Bank (安泰銀行) yesterday said that earnings contributions from its yuan-linked target redemption forwards (TRF) would continue to fall this year, as contracts with clients expire.
The bank last year posted net income of NT$1.02 billion (US$33.72 million), representing a 71 percent annual decline from 2015’s NT$1.96 billion, amid a downturn in the domestic banking industry.
The lender was hurt by TRF-related exposure while it worked to resolve disputed contracts for the risky foreign exchange derivative with its clients, bank chief financial officer Frank Hsu (徐世偉) said.
Profits last year were dragged down by NT$1.5 billion in provisions, of which NT$800 million was allocated against TRFs, Hsu said.
In light of massive TRF-related losses, EnTie halted sales of the instrument, leading to lower earnings, Hsu said.
The bank’s earnings were also affected by a lack of high-margin borrowers in its core lending business, Hsu said.
Occupied with resolving TRF-related disputes, employees were unable to focus on pursuing growth in other businesses, Hsu said, adding that the bank has worked hard to contain the impacts of many exceptional incidents on last year’s books.
“This year, we hope to forge ahead with a clean slate,” Hsu said.
While the bank’s board has not finalized its dividend policy for this year, the bank has accrued about NT$5.9 billion in retained earnings, enough to provide a payout comparable with last year’s NT$0.63, Hsu said.
The bank has also begun talks with the Financial Supervisory Commission to optimize its branch footprint, president and chief operating officer Claudie Yu (俞宇琦) said.
It might take advantage of a regulation allowing it to swap two mini-branch licenses for one full-service branch entitlement, or move some branches from the ground floors of high-rent commercial buildings, Yu said.
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