Far Eastern International Bank (遠東國際商銀) said yesterday it aims to expand into the securities business at home and prefers acquiring shares in a Chinese peer to establish a representative office when tapping the market across the Taiwan Strait.
The lender plans to prioritize acquiring a stake in a Chinese city-level counterpart to tap into this massive market, Far Eastern Group (遠東集團) chairman Douglas Hsu (徐旭東) told a shareholders’ meeting.
The expansion plan, part of a program called “building a high-powered bank,” aims to better serve Taiwanese firms in China and strengthen the group’s operations there, Hsu said.
Far Eastern Group includes the nation’s largest textile company and has operations in shipping, telecommunications and retail at home and in China. The group’s Asia Cement Corp (亞泥), Far Eastern Department Stores Ltd (遠東百貨) and Pacific Sogo Department Store (太平洋崇光百貨) have more than 50 business outlets in 10 Chinese cities.
Far Eastern Bank may opt to set up a representative office in the Yangtze River Delta region, depending on which expansion plan better meets the bank’s needs, Hsu said, without offering a timetable.
Domestically, the medium-sized lender plans to pursue both organic growth and new opportunities this year, after net profits gained 77 percent year-on-year to NT$2.19 billion (US$76.04 million) last year as its core businesses recovered.
Cumulative net income reached NT$3.1 billion as of last month, attributable to roughly even growth in corporate lending, wealth management and credit card services, the bank said.
While satisfied with its current number of 56 branches, Far Eastern Bank does not rule out further acquisitions after integrating 19 branches of Chinfon Commercial Bank (慶豐銀行) and American International Group’s local credit card business, public affairs general manager Pepina Lee (李佩蘋) said.
The bank plans to launch securities services later this year, either through cooperating with or acquiring a brokerage house, Lee said.
The acquisition of Chinfon Bank last year could take two more years to turn a profit, Lee said.
To improve its asset quality, the lender raised its coverage ratio to 359 percent last month, setting aside provisions of 32 percent and 75 percent of loans to two local memory chipmakers, Powerchip Technology Corp (力晶科技) and ProMOS Technologies Inc (茂德科技) respectively, Lee said.
Lee declined to reveal either loan amount, but said the bank was well-equipped for any worst-case scenario.
Far Eastern Bank has a capital adequacy ratio of 13.18 percent, compared with an average of 11.97 percent for the sector, the company’s data showed.
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