State-run First Financial Holding Co (第一金控) on Thursday said that it would shift its focus to extending higher-margin loans in the Southeast Asian and North American markets as economic growth momentum cools in the greater China region.
The company has targeted a double-digit year-on-year increase in foreign currency-denominated loans at its overseas branches this year, after loans extended by those branches rose 10.7 percent last year from 2015, First Financial said.
In a conference call with investors, the company said it expects net interest margin to increase by about 2 basis points this year, propelled by anticipated interest rate hikes in the US, while Taiwan’s central bank might keep its policy rates unchanged throughout the year.
The widening net interest margin and increasing overseas lending would be positive to its bottom line this year, while the rising interest rates would not pose a major concern to its mortgage lending, as Taiwan’s real-estate market has had a “soft landing” amid an ongoing correction, it said.
While there have been concerns about debt servicing for loans extended to hotel operators and construction companies — which have been seriously affected by a falling number of Chinese tourists — a recovery in the nation’s technology sector that began last quarter is expected to offset those negative effects this year, First Financial said.
Excluding planned wage hikes, the government’s new labor rules would lead to a 4.4 percent increase in overall payroll expenses, the company said, but added that new employees would be needed to expand its advisory business.
First Financial forecast operating costs will continue to increase this year, after growing 0.4 percent to NT$18.8 billion (US$613.4 million) last year.
The company said it also expects a 20 percent increase in regulatory compliance and information technology systems costs following an automated teller machine hacking heist last year and ransomware attacks earlier this year.
First Financial’s net income last year rose 8.2 percent annually to NT$17.28 billion, with earnings per share of NT$1.45.
The firm aims to achieve pretax profit of NT$25 billion in the next two years, compared with pretax profit of NT$20.19 billion last year, chairman Joseph Tsai (蔡慶年) said earlier this month.
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