Taiwan Financial counting on yuan business

DIVERSIFICATION::The bank-centric conglomerate has set up an insurance brokerage subsidiary to promote cross-selling benefits at its 164 branches

By Crystal Hsu  /  Staff reporter

Thu, Feb 07, 2013 - Page 13

Taiwan Financial Holding Co (台灣金控), a fully state-owned financial services provider, aims to accelerate its expansion in the Asia-Pacific region and increase profit contributions from overseas operations this year, chairperson Liu Teng-cheng (劉燈城) said yesterday.

Despite lingering downside risks worldwide, the bank-oriented conglomerate is confident about growing profits this year, aided by its yuan business, after booking NT$7.31 billion (US$246.95 million) in net income last year, more than meeting its target of nearly NT$7 billion, Liu said.

The banking arm, Bank of Taiwan (台灣銀行), will seek to deepen its presence in China this year after setting up its first Chinese branch in Shanghai in July last year, Liu said.

The branch may apply to offer yuan products and services to Taiwanese customers based in China after proving profitable one year after its establishment, Liu said.

Yuan lending operations can help boost interest income because borrowing costs for the yuan are much higher than for the New Taiwan dollar.

Bank of Taiwan posted a net interest margin of below 1 percent last year, lagging behind the industry average of 1.5 percent, as the lender struggled to digest its loanbook totaling NT$3 trillion, the largest among domestic lenders, Liu said.

At home, Bank of Taiwan aims to build up its yuan deposits to 5 billion yuan (US$802.3 million) by the end of the year, topping the 3 billion yuan target of another state-run bank, Hua Nan Commercial Bank (華南銀行).

“We hope 80 percent of our [NT dollar] time deposits will switch to yuan, allowing the bank to lower its capital costs,” the official said.

Bank of Taiwan is offering an additional 50 basis points in interest rates for yuan time deposits of different durations, Liu said, adding that the bonus rises to 100 basis points for deposits in excess of 100,000 yuan.

The lender’s ambition is not limited to China, but extends to other populous cities in the region, such as Mumbai in India, Sydney in Australia and Phnom Penh in Cambodia, Liu said.

While looking to expand its business footprint, the bank is not seeking merger and acquisition opportunities, but will focus on organic growth, Liu said.

The lender yesterday set up an insurance brokerage subsidiary to diversify its product lines and promote cross-selling benefits at its 164 branches nationwide.

The insurance brokerage could quickly win the trust and acceptance of the public, because it is the only one that is 100 percent owned by the government, Liu said.