State-run Taiwan Business Bank (台灣企銀) is seeking to enhance its earnings ability this year through growth in its overseas and offshore operations, as well as lending to small and medium-sized enterprises (SMEs), top executives said yesterday.
The lender aims to expand its loan book by 5 percent and SME loans by 10 percent to support firms in the “five plus two” industries, in line with the government’s economic development plans.
Outstanding loans stood at NT$1.01 trillion (US$32.8 billion) at the end of last year, company data showed.
The “five plus two” industries refer to the development of an “Asian Silicon Valley,” “intelligent” machinery, “green” energy technology, biomedicine and national defense — plus setting up a new agricultural business model and a circular economy.
“With a long-standing focus on SME financing, Taiwan Business Bank is in a better position than its peers to reach out to and forge relationships with firms in the specific sectors,” bank chairman Robert Chu (朱潤逢) told a news conference.
All state-run banks are prioritizing helping firms in the “five plus two” industries, he said.
The bank has set up a special window at its 125 branches to process loans for the target industries and is to organize 15 speeches nationwide to promote the policy.
In addition, the bank is aiming to boost its offshore and overseas operations so that they contribute 30 percent of its overall earnings this year, up from 25 percent last year, Chu said, adding that the goal is achievable if the bank can successfully manage its default risks.
Overseas and offshore business generated 30 percent of the bank’s profits in 2015, but the contribution shrank last year due to asset impairments, Chu said.
Last year proved a tough year, with shocks such as Britain’s vote to exit the EU and US President Donald Trump winning the US election, he said.
However, the bank posted net income of NT$5.25 billion last year, an increase of 2.68 percent from the previous year, according to Taiwan Stock Exchange data. The results translate into earnings per share of NT$1.07, better than the NT$0.9 posted in 2015 and bucking a 6 percent profit decline in the banking sector.
“That is because an increase in fee and financial investment income more than offset a fall in interest income following a series of interest rate cuts,” senior vice president and general manager Yang Chin-fu (楊金福) said.
Faster growth in savings than in loans meant the bank had more idle money with which to pursue investment gains, Yang said.
Looking forward, the lender expects interest margins to stay flat or pick up slightly from 0.97 percent last year, as a stable economic recovery would allow the central bank to keep interest rates unchanged or end its loose monetary policy, Yang said.
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