State-run First Financial Holding Co (第一金控) on Wednesday said that its earnings might grow by double-digit percentage points this year on top of a 12.3 percent pickup last year buoyed by lending operations in overseas markets.
The bank-focused conglomerate is to bolster its presence in foreign markets this year in a bid to increase earnings contributions from overseas operations to 50 percent from a 46 percent share last year, company officials told an online investors’ conference.
Main subsidiary First Commercial Bank (第一銀行) plans to set up a new branch in Houston, Texas, and add two outlets to its subsidiary in California later this year, company representatives said.
The lender is seeking to further tap the European market by establishing a branch in Frankfurt, Germany, and intends to open an outlet of its branch in Phnom Penh, Cambodia, they said.
It also plans to open a representative office in Jakarta, Indonesia, they said.
Overseas operations help widen interest spreads and profit margins, because foreign-currency loans come with higher fees, while excessive competition in Taiwan keeps interest rates low, they said.
First Financial posted NT$17.33 billion (US$563.12 million) in net income last year, an increase of 12.3 percent from 2017, after the group emerged from loan defaults linked to Kaohsiung-based Ching Fu Shipbuilding Co (慶富造船).
The figures last year translated into earnings per share of NT$1.4, up from NT$1.27 in 2017, company data showed.
Revenue from loan operations rose 7.3 percent to a seven-year high of NT$1.69 trillion last year, with foreign-currency loans gaining 12.5 percent, company representatives said.
Mortgage operations advanced 7.5 percent, while commercial banking increased 2.2 percent due to portfolio adjustments made to cut risk exposure, they said.
First Financial is looking to increase its lending operations by 4.5 to 5 percent this year as the economy at home and abroad is expected to slow.
Fee income from wealth management business might rise 6 percent, as the lender is to improve its service quality and product mix, company representatives said.
The bank expects the coverage ratio to reclaim the levels of 500 to 600 percent it had prior to the Ching Fu incident, they said, adding that lower provisions might support profitability.
Analysts said that earnings improvement might make First Financial more generous with dividend payouts this year.
The conglomerate issued NT$1 per share from profits in 2017, with NT$0.9 in cash and the remainder in stock dividends.
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