Tue, May 01, 2018 - Page 12 News List

Taichung Commercial to open branch in Malaysia

AMPLE POTENTIAL:The bank is also looking to tap the Vietnamese market, but might open a branch office, as the nation no longer issues banking licenses

By Crystal Hsu  /  Staff reporter

Taichung Commercial Bank (台中商銀) plans to open its first overseas branch in Malaysia this year as Taiwanese companies have increasingly shifted their manufacturing facilities from China to Southeast Asia, senior executives said yesterday.

The Taichung-based lender has gained regulatory approval to establish a branch and a representative office in Malaysia, as it seeks to take advantage of the rapidly growing economy in Southeast Asia and support the government’s New Southbound Policy.

“We plan to open the offices by the end of this year at the latest as the bank’s first foray into overseas markets,” executive vice president Chen Cheng-yuan (陳振源) told an investors’ conference at the Taiwan Stock Exchange in Taipei.

The venture would help the 65-year-old bank to cultivate talent and attract new clients to diversify its income sources, Chen said.

Interest income accounted for 71.84 percent of NT$3.63 billion (US$122.61 million) in net profit last year, company data showed, with fee income contributing 21.49 percent.

The results are a 3.4 percent increase from a year earlier, while earnings per share edged up 0.92 percent to NT$1.1.

The bank had previously planned to enter China and Hong Kong, but has gained little headway in clearing regulatory obstacles, Chen said.

The government’s policy lent support to a strategy adjustment to tap Malaysia, Cambodia, Vietnam and other Southeast Asian markets instead, Chen said.

Chen, who was in Vietnam recently, said Taiwanese firms there are expanding their operations and are in need of financial assistance.

“That suggests ample business growth potential,” Chen said.

Ease of market access and legal compliance costs are top concerns for the lender when evaluating overseas expansions, he said.

Since Vietnam no longer issues new banking licenses, Taichung Bank is looking into whether to establish a representative office there and conduct business via its offshore banking unit, Chen said.

Foreign-currency loans and operations generate higher yields, he said.

Net interest margin improved to 1.28 percent last year, from 1.27 percent in 2016, company data show.

Excess liquidity continues to squeeze the profitability of businesses operating using the local currency, Chen said.

Apart from overseas expansions, Taichung Bank intends to consolidate its relations with small and medium-sized enterprises in central Taiwan, its mainstay clientele.

The lender is looking at a modest increase for its loan book this year as the economy remains on the course of expansion, but uncertainty lingers, Chen said.

In addition, Taichung Bank is courting high net-worth clients in central Taiwan, where it keeps 50 of its 81 branches, he said.

Such clients might need personalized banking services the lender offers, Chen said.

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