State-run Hua Nan Financial Holding Co (華南金控) aims to boost its profit margin this year by diversifying its sources of income and achieving a higher capital utilization rate.
The bank-focused conglomerate said it intends to step up lending operations for small and medium-sized enterprises (SMEs), which could account for 70 percent of its loan book and raise the bank’ s interest rate spread.
“Hua Nan Financial will shore up its legal compliance system and capital utilization rates this year, while pressing ahead with efforts to support firms in the five-plus two sectors,” chairman Wu Tang-chieh (吳當傑) told a news conference.
Hua Nan Commercial Bank (華南銀行), the holding firm’s main subsidiary and source of income, is to increase loans to the “five plus two” industries by NT$15 billion (US$512.12 million), in line with the Cabinet’s plan to stimulate local development of an “Asian Silicon Valley,” and “smart” machinery, “green” energy, biomedicine and defense industries, as well as a new agricultural business model and a circular economy.
The lender has built a clientele list of 8,000 in those sectors, with a total of NT$400 billion in outstanding loans in December last year, Wu said, adding that loans to firms involved in “green” energy development amounted to NT$76 billion.
Hua Nan Bank would refrain from loan book expansion, but would seek to widen interest spread by 6 basis points this year, from an average of 1.4 percent last year, the bank executive vice president Jonathan Huang (黃俊智) said.
Net interest income, a critical gauge of banks’ profitability, hovered around 1.07 percent last year, he said.
The focus on SMEs and overseas operations would help expand the margin following interest rate hikes in the US and other countries, he said.
The lender is looking at a 5 percent increase in SME lending from NT$400 billion, company data showed.
The bank of 180 branches would keep mortgage operations flat this year, as the local property market has yet to come out of price correction pressures, although transactions have improved, Huang said.
Overall, the financial holding reported a net income of NT$12.09 billion last year, or earnings per share of NT$1.09. The showing represented a 14.29 percent decline from NT$14.09 billion recorded in 2016.
The company’s banking arm took part in the syndicated loan of NT$20.5 billion to troubled Ching Fu Shipbuilding Co (慶富造船) and booked a bad loan of NT$1.7 billion.
The lender last year wrote down additional bad debt of NT$2 billion linked to TransAsia Airways Corp (復興航空), but could recover some of the debt this year after the company found buyers for its aircraft.
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