Sat, Mar 03, 2018 - Page 12 News List

First Financial sees income drop after Ching Fu default

LOOKING ELSEWHERE:The firm said it sees US rate hike expectations as a net positive, as 48.4% of all profit last year was generated by its overseas branches

By Crystal Hsu  /  Staff reporter

State-run First Financial Holding Co (第一金控) saw its net income fall 10.7 percent to NT$15.43 billion (US$526.8 million) last year as it was dragged down by Ching Fu Shipbuilding Co (慶富造船) defaulting on a large loan, but said it expects improvement this year on the back of interest rate hikes abroad.

“The conglomerate has emerged from the default and recovered its growth momentum,” First Financial spokeswoman Annie Lee (李淑玲) told an investors’ conference on Thursday.

Lee attributed most of the earnings slowdown to a troubled syndicated loan of NT$20.5 billion linked to Kaohsiung-based Ching Fu, in which its main subsidiary, First Commercial Bank (第一銀行), is the lead bank and on which it wrote down NT$4.8 billion in the fourth quarter of last year.

First Bank this year expects to take advantage of interest rate hikes in the US and to expand its foreign-currency lending operations, Lee said.

The lender aims to increase foreign-currency loans by 10 percent and boost fee incomes by between 6 and 7 percent, she said.

Trade income could rise by a double-digit percentage this year after experiencing a 20 percent pickup last year, Lee added.

Three expected rate hikes by the US Federal Reserve would help achieve the goal, she said.

Lee said the bank expects the Fed to raise its policy rate by 25 basis points each in the first three quarters, adding that foreign-currency loans, which account for 22 percent of its loan book, would benefit from such US monetary moves.

Overseas operations generated 48.4 percent of the profit last year, a big increase from 29.9 percent in 2016, Lee said, adding that branches in Hong Kong, Cambodia and New York performed best.

First Financial would likely decide to issue mostly cash dividend payouts, Lee said, adding that, as in the past, it might pay out 60 percent of the earnings per share in the previous year to live up to shareholders’ expectations.

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