Taiwan Cooperative Bank (TCB, 合庫銀行) is aiming for a moderate increase in mortgage and other lending operations in the second half to boost overall income without upsetting government efforts to cool the property sector, vice president Hsieh Chung-dea said yesterday.
Outstanding loans at the state-run bank, the main subsidiary of Taiwan Cooperative Financial Holding Co (合庫金控), stood at NT$1.8 trillion (US$60.06 billion) as of last month, or about 79 percent of its total deposits of NT$2.3 trillion, Hsieh said.
“We plan to raise the loan-to-deposit ratio by 5 percent this year, by lending an additional NT$50 billion to NT$100 billion,” Hsieh said on the sidelines of a corporate social responsibility event.
To achieve that goal, Taiwan Cooperative Bank intends to increase mortgage lending after virtually putting a halt to such operations in support of the central bank’s credit tightening, Hsieh said.
Mortgage loans currently make up 27.8 percent of total lending, the lowest level since approaching the 30 percent limit in 2006, indicating room for upward adjustment, Hsieh said.
Interest rates on home loans are 2.2 percent and above, 15 basis points higher than average interest rates of 2.05 percent to 2.07 percent, Hsieh said.
“We will exercise due caution when increasing mortgage operations because the central bank is still concerned about property price hikes,” Hsieh said.
In addition, Taiwan Cooperative Bank plans to boost foreign currency-denominated loans, which offer higher interest rates at 1.309 percent, compared with 1.267 percent for New Taiwan dollar loans, Hsieh said.
Foreign-currency operations made up 28 percent of the bank’s income last year, up from 11 percent a year earlier, Hsieh said.
“We expect the contribution to rise to 35 percent this year, thanks to healthy demand,” Hsieh said.
The portfolio adjustments should help raise the net interest margin, he said, adding that just a small 0.1 percentage increase could generate an additional NT$18 billion in interest income given the size of the bank’s loanbook.
Taiwan Cooperative Financial reported NT$729 million in net income last month, while cumulative profit in the first four months amounted to NT$3.11 billion, or NT$0.39 per share, it said in a filing to the Taiwan Stock Exchange earlier this month.
Taiwan Cooperative Financial shares closed up 0.59 percent at NT$17.10 yesterday, underperforming the TAIEX, which rose 0.86 percent.