State-run Taiwan Cooperative Financial Holding Co (TCFH, 合庫金控) yesterday said that it stands by its goal to pursue stable profit growth this year, despite the COVID-19 pandemic, which has prompted central banks to aggressively cut interest rates.
“The rate cuts at home and abroad would drag the net interest margin by 10 basis points,” Taiwan Cooperative Financial president Chen Mei-tsu (陳美足) told investors in a webcast.
The net interest margin was 1.03 percent at the end of last quarter, 3 basis points lower than three months earlier, while interest spread fell 6.8 basis points to 1.359 percent, company data showed.
The local market has not fully assimilated the central bank’s March 19 rate cut of 25 basis points, Chen said.
The US Federal Reserve in March cut rates twice to a range of 0 to 0.25 percent in a drastic move to avert a credit crunch after Washington shut its borders and most states closed nonessential businesses, putting tens of millions of people out of work.
Taiwan Cooperative Financial said that it remains confident of loan growth of 3 percent this year, driven by companies shifting production back to Taiwan from China, which would require them to take out loans and acquire industrial property.
Land financing rose 8.5 percent year-on-year in the first three months of this year, while mortgage operations added 2.7 percent, said the company, one of Taiwan’s largest real-estate loan operators.
The pandemic is temporarily slowing property purchases, which might regain traction once infections slow. Taiwan has not reported new confirmed cases in the past week.
Taiwan Cooperative Financial aims to tap businesses linked to the nation’s fast-aging population, raising their contribution from reverse mortgages, trust fees and wealth management to 15 percent of overall income.
The company posted NT$4.1 billion (US$136.9 million) in net profit last quarter, a 0.96 percent increase from a year earlier, but outperforming other state-run peers.
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