Taiwan’s financial companies are likely to grow profit by 7 percent to 8 percent this year on the back of steady loan and margin expansion, flattish non-interest income and low credit costs, Credit Suisse AG said yesterday.
“We estimate the profit of Taiwan’s financial companies will increase 7 percent to 8 percent” this year, compared with last year, driven mainly by stable loan growth,” Credit Suisse’s equity research team said in a report.
State-run lenders have all indicated plans to increase their loan books this year at a pace slightly faster than the nation’s GDP growth, which the Directorate-General of Budget, Accounting and Statistics projected at 3.5 percent for this year. The forecast is better than an estimated 3.43 percent expansion for last year.
Altogether, the nation’s 15 listed financial firms posted NT$282.77 billion (US$8.88 billion) in net income last year, with bank-focused conglomerates ending the year on a weaker note, the report said.
That is because most banks set aside more provisions following new requirements that raised provisions for bad debts from 1 percent to 1.5 percent of total property loans, Credit Suisse said.
As a result, most financial firms saw a reduction in their bottom lines with the exception of state-run First Financial Holding Co (第一金控), Credit Suisse said.
Cathay United Bank (國泰世華銀行), CTBC Bank (中信銀行), Taipei Fubon Commercial Bank (台北富邦銀行) and Bank SinoPac (永豐銀行) booked one-off provisions due to early compliance with the requirement.
The Financial Supervisory Commission late last year raised the threshold as a pre-emptive measure amid concern over risks of a slowdown in the property market.
Many financial conglomerates reported record-high earnings for last year and the increased provisioning costs are unlikely to have a big impact, the commission said.
CTBC Financial also saw higher tax payments caused by revised tax treatments of bargain purchase gains linked to its acquisition of Tokyo Star Bank.
Credit Suisse expects credit costs to be below 25 basis points and non-interest income to hold steady this year.
Among state-run financials, Mega Financial Holding Co (兆豐金控) posted a net income of NT$30.19 billion for last year, or earnings per share (EPS) of NT$2.43, up 34.3 percent from the previous year, according to the company’s stock filings.
First Financial reported a net income of NT$14.08 billion, or EPS of NT$1.52, rising 29.5 percent from a year earlier, the company said in a statement.
First Financial attributed the showing to improved earnings among different subsidiaries.
Hua Nan Financial Holding Co (華南金控), another state-run financial service provider, achieved NT$13.19 billion in net profit last year, or EPS of 1.41, the company said in a statement.
Taiwan Financial Cooperative Holding Co (合庫金控) recorded NT$10.37 billion in net income last year, or EPS of NT$1.13.
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