State-run Chang Hwa Commercial Bank (CHB, 彰化銀行) posted NT$3.26 billion (US$99.38 million) in net profit last quarter, an increase of 3.72 percent from a year earlier, on the back of expansions in overseas operations that might continue to drive growth next year, CHB executives said yesterday.
Cumulative income totaled NT$9.2 billion for the first nine months of the year, representing a 0.93 percent increase from the same period last year and NT$1.09 earnings per share, company data showed.
“We aim to grow the loan books by 6 percent next year, when the economy at home and abroad might improve and overseas earnings contribution might rise to 40 percent from about 38 percent this year,” CHB president James Shih (施建安) told the bank’s first-ever investors’ conference.
The century-old lender runs 10 branches in China, the US, Singapore, Hong Kong and the UK, where lending operations saw a modest, but steady increase, unlike in Taiwan, Shih said.
The branch in Kunshan in China’s Jiangsu Province generated the bulk of overseas earnings, CHB chairman Chang Ming-daw (張明道) said, adding that he expects the branches in Donguan and Fuzhou to increase their contributions next year.
Net interest income, a critical measure of profitability for financial institutions, gained five basis points to 1.15 percent last quarter from three months earlier, as demand for foreign currency loans outpaced that of New Taiwan dollars, Chang said.
Foreign currency-based loans bear higher yields, although the margin has increasingly tapered off amid global monetary easing.
The bank also seeks to grow fee income, which gained 3 percent over the past three quarters from a year earlier after the introduction of extra charges on all loans, Shih said. The actual increase in fee income should hit 6 percent, but the firm’s accountants insisted on classifying part of it as interest income, Shih said.
CHB plans to increase its capital, but does not plan to do so this year given low share prices amid weak market sentiment, Chang said.
Shares in the bank closed yesterday down 1.74 percent at NT$16.9, weaker than the TAIEX’s 0.2 percent fall, Taiwan Stock Exchange data showed.
“We definitely need to raise funds to meet our needs for future overseas expansions and tighter capital requirements,” Chang said.
The bank’s Tier 1 capital ratio stood at 8.56 percent as of last month, according to CHB statistics.
The lender is seeking acquisition targets in Southeast Asia, likely in Myanmar, after previously missing the best opportunities in Vietnam and Cambodia, Chang said.
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