State-run Taiwan Cooperative Financial Holding Co (合庫金控) is to benefit from extra rental income after moving into a new headquarters complex in Taipei that allows it to lease extra office space.
The bank-focused conglomerate might gain more than NT$200 million (US$6.65 million) in rental income per year after securing tenants for a 12-floor office building on Changan E Road that is part of its complex, company spokesman David Hu (胡光華) said.
The complex consists of three new buildings with 32,500 ping (107,438m2) of floor space, Hu said.
The firm has occupied the first building’s 20 floors and set aside the second seven-story building as social and conference space, Hu said, adding that it is seeking tenants for the third building with help from brokers.
The third building could generate NT$130 million annually in rental income, while the firm’s former headquarters could contribute an extra NT$50 million, property officials said, adding that another building nearby would generate further rental earnings.
Net income totaled nearly NT$9 billion in the first seven months of the year and might rise 6 percent from the NT$14.1 billion recorded last year, analysts said.
Taiwan Cooperative chairman Jason Liao (廖燦昌) said he has asked all subsidiaries to assess the effects of the US Federal Reserve’s planned unwinding of its balance sheet and accounting rule changes next year.
Main subsidiary Taiwan Cooperative Bank (合庫銀行) holds NT$50 billion to NT$60 billion of foreign government bonds, which would drastically change in value once the Fed offloads its assets, Liao said, adding that the holdings report mild gains thus far.
The Fed’s balance sheet changes would create a big headache for domestic life insurance companies as they have heavy exposures to foreign government bonds, Liao said.
As for real-estate financing, Taiwan Cooperative Bank said that it welcomes urban renewal projects and would not introduce a cap on related lending.
State-owned Bank of Taiwan (臺灣銀行) in July set aside NT$100 billion for renewal financing, while Land Bank of Taiwan (土地銀行) said it would grant 100 percent loans for the redevelopment of dangerous buildings.
“Taiwan Cooperative Bank will not set limits, but renewal lending demand is sluggish due to lengthy review,” Liao said.
The company is waiting for regulatory approval to reconstruct an old office building, but has failed to gain headway for the past three years, he said.
Land and construction financing generates higher yields than mortgage operations.
In addition, the bank has actively increased lending to firms in the “five-plus-two” industries the government is promoting, with related loans making up 50 percent of new outstanding loans, Liao said.
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