State-run Taiwan Cooperative Financial Holding Co (合庫金控) expects earnings to improve this year on the back of healthy economic fundamentals and better asset quality after its main unit wrote down bad loans linked to Ching Fu Shipbuilding Co (慶富造船) last year, top executives said yesterday.
The bank-focused conglomerate is seeking to grow its loan book by 8 percent this year, driven by more active lending to small and medium-sized enterprises that desire to strengthen operation amid a stable global economy, said Huang Bor-chang (黃柏川), president at main subsidiary Taiwan Cooperative Bank (金庫銀行).
The group recorded a net income of NT$12.89 billion (US$440.23 million) for last year, or earnings per share of NT$1.48, despite a noticeable pickup in provision costs.
“The landscape looks fair ahead without major black swan risks in sight to threaten profits,” Huang said at a public function in Taipei.
The nation’s largest lender by number of branches, Taiwan Cooperative Bank wrote off NT$1.71 billion for its share in the syndicated loan to Ching Fu and recognized another NT$1.63 billion loss caused by TransAsia Airways Corp (復興航空).
In particular, the bank is interested in lending to firms in national industrial parks as they play an important role in driving GDP growth and might lead to other business opportunities, Huang said.
The bank plans to set up two outlets in Cambodia by the end of this year to take advantage of fast-growing business demand in the Southeast Asian nation, Taiwan Cooperative Financial chairman Lei Chung-dar (雷仲達) said.
The Financial Supervisory Commission has approved the expansion plan, which would come after the opening of branches and outlets in Changsha, China; Melbourne, Australia; and Phnom Penh, Cambodia, he said.
Overseas operations generate higher yields, which averaged 9 percent in Phnom Phenh last year, compared with thin margins in Taiwan due to excessive competition, Huang said.
Taiwan Cooperative Bank ranks second in terms of lending operations in Taiwan, with a market share of 10 percent, next only to state-owned Bank of Taiwan’s (台灣銀行) 12 percent.
Its mortgage operations, another core business with outstanding loans of NT$700 billion as of December last year, should remain stable, Huang said.
“There is little room for growth in this regard, as mortgage lending has almost approached the regulatory limit,” he said.
Huang said he is not worried about asset quality, because most borrowers are first-time home buyers.
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