State-run Mega International Commercial Bank (兆豐國際商銀), the banking arm of Mega Financial Holdings Co (兆豐金控), expects to see a moderate growth in earnings this year, driven by corporate lending, top executives said yesterday.
With a focus on corporate banking, the lender posted NT$11.57 billion (US$393.14 million) in net income last year, translating into earnings per share of NT$1.80, the most profitable among state-run financial firms.
That marked an 8.51 percent increase from a year earlier on the back of recovering loan demand from exporters after the world emerged from the global financial crisis.
“We expect the growth momentum to be sustainable this year, albeit at a less aggressive rate,” said bank chairman Mckinney Tsai (蔡友才), who also chairs Mega Financial.
Tsai refused to give any numbers, but expressed confidence that profitability would outpace the nation’s forecast GDP growth of 4.92 percent this year.
The bank expects total loans to expand 7.79 percent year-on-year to NT$1.37 trillion, while savings deposits would grow a modest 2.58 percent to NT$1.57 trillion, company data showed.
Its foreign exchange business is expected to increase 6.01 percent to NT$716.4 billion, it said.
The central bank’s credit tightening has had little impact on the bank, Tsai said, adding that home loans account for only 19 percent of overall lending, while corporate banking took up about 80 percent.
Mega Bank also aims to improve its asset quality this year, Tsai said.
The bank’s bad loan ratio dropped to 0.34 percent at the end of last year, from 0.95 percent a year earlier, while its coverage ratio rose from 100.53 percent to 227.14 percent, he said.
“The results were better than our internal target of 0.5 percent and 200 percent respectively,” Tsai said. “We will put more effort into loan recovery this year.”
Among listed financial firms, Mega Financial ranked second only to Fubon Financial Holding Co (富邦金控) in terms of profitability last year.
The state-run group is actively seeking merger and acquisition opportunities to lift competition at home and globally, Tsai said.
“There is not a single day I don’t think about expansions,” he told reporters. “But I cannot disclose any details.”
Tsai has told colleagues to draw up an overseas expansion plan within a month to set up new branches or subsidiaries in markets in addition to China.
Mega Bank also intends to upgrade its representative office in Suzhou, China, into a branch in the second quarter. The lender signed a cooperation agreement with the Bank of China (中國銀行) last month and will ink another cooperation pact with China’s Bank of Communications (交通銀行) soon.
Mega Bank is also applying to open branches in Hanoi, Vietnam, and Phnom Penh, Cambodia.