King’s Town Bank (京城銀行) on Monday reported that net profit for last quarter halved from a year earlier to NT$894 million (US$29.65 million), curtailed by slowing economic activity and stock investment losses amid the COVID-19 pandemic.
The Tainan-based lender saw its lending in the first three months of the year increase 1 percent, a relatively slow pace, as customers turned conservative amid the pandemic.
The bank, which focuses on small and medium-sized enterprises, has less exposure to businesses in the food and beverage and tourism industries, which have been hardest hit during the pandemic, so it has not received many applications for loan relief, King’s Town spokesman You Qi-wei (尤其偉) told the Taipei Times by telephone.
“We might need to wait until the second half of this year to see if a rapid increase in corporate lending emerges, as investment momentum could be weakened amid the ongoing pandemic,” the bank said.
Stock investment losses eroded handling fees and interest income, as the TAIEX dropped 28 percent from January to last month, causing net profit for last month to decline 98.9 percent annually to NT$6 million, King’s Town said.
Earnings per share last month were NT$0.01 and totaled NT$0.91 for the January-to-March period, the bank said.
“We are not the only bank that has been hit by the bear market. As some of our peers might also have fallen into the red in March due to their larger investments in local shares, I think we did okay,” You said, adding that the bank at one time had more than NT$4 billion of local shares.
To weather volatility on global financial markets, the bank would avoid foreign bonds with ratings of “BBB-” and focus on those with ratings of “A-” or “BBB+,” a manager surnamed Hong (洪) said.
Despite slumping crude oil prices, the bank has no immediate plans to cut holdings of foreign corporate bonds issued by energy companies, which account for 20 percent of its total bond investments, Hong said.
The bank aims to keep its net interest margin — a gauge for bank profitability — at 1.74 percent this year, flat from the end of last year, despite the central bank’s rate cut of 25 basis points, Hong said.
“We will not lower our interest rates for demand deposits, as they are too low, and we will trim lending rates based on borrowers’ credit profiles,” he said.
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