State-run Taiwan Cooperative Financial Holding Co (TCFH, 合庫金控) yesterday said that it is assessing the possibility of trimming its profit target for this year, as the operating environment has deteriorated amid the COVID-19 pandemic and because of steep interest rate cuts at home and abroad.
The bank-focused conglomerate had earlier stood by its annual budget, which was proposed late last year, but increasingly deemed it unrealistic after earnings missed expectations in the first half of this year, top-ranking officials said.
“The scenarios upon which the budget was written turned out to be different and challenging because of the global virus outbreak and ultra-low interest rates,” Taiwan Cooperative Financial president Chen Mei-tsu (陳美足) told an online investors’ conference.
The unfavorable situation warrants a review of earnings expectations, which would need approval from the board before being implemented, Chen said.
Pressure to revise the target came after net income shrank 5.21 percent from a year earlier to NT$8.05 billion (US$272.81 million) in the first six months, company data showed.
Taiwan Cooperative Financial’s main subsidiary, Taiwan Cooperative Bank (合庫銀行), reported an 8.22 percent decline in profit during the same period, weighed by lackluster interest and fee incomes, despite a 5.95 percent increase in the loan book, Chen said.
Its lending to small and medium-sized enterprises increased 11.75 percent, while loans to large corporations grew 3.72 percent, company data showed.
The government also expanded lending by 5.09 percent.
However, Taiwan Cooperative Bank’s net interest margin, a critical profit gauge for financial institutions, shed 6 basis points after the central bank cut interest rates to a record low of 1.125 percent and major economies keep their rates near zero or in negative territory.
The COVID-19 outbreak, while mild in Taiwan compared with other nations, wreaked havoc on credit card spending and wealth management business, investor relations officers said.
Bancassurance, insurance policies sold via banking branches, tumbled 48.5 percent as life insurers lowered their liability reserve interest rates in line with regulatory requirements, making insurance policies less attractive, they said.
Taiwan Cooperative Financial would seek to shore up profitability by raising earnings contributions from overseas banking operations, the group said.
“We hope overseas operations may account for 40 percent of overall earnings from the current 27 percent,” a banking executive said.
Higher provisions also subdued earnings ability.
Taiwan Cooperative Bank had NT$2.25 billion in syndicated loans to Far Eastern Air Transport Corp (遠東航空), but is looking to recover significant credit after going through legal procedures, officials said.
Nvidia Corp CEO Jensen Huang (黃仁勳) is expected to miss the inauguration of US president-elect Donald Trump on Monday, bucking a trend among high-profile US technology leaders. Huang is visiting East Asia this week, as he typically does around the time of the Lunar New Year, a person familiar with the situation said. He has never previously attended a US presidential inauguration, said the person, who asked not to be identified, because the plans have not been announced. That makes Nvidia an exception among the most valuable technology companies, most of which are sending cofounders or CEOs to the event. That includes
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.
Taiwanese manufacturers have a chance to play a key role in the humanoid robot supply chain, Tongtai Machine and Tool Co (東台精機) chairman Yen Jui-hsiung (嚴瑞雄) said yesterday. That is because Taiwanese companies are capable of making key parts needed for humanoid robots to move, such as harmonic drives and planetary gearboxes, Yen said. This ability to produce these key elements could help Taiwanese manufacturers “become part of the US supply chain,” he added. Yen made the remarks a day after Nvidia Corp cofounder and chief executive officer Jensen Huang (黃仁勳) said his company and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) are jointly
MARKET SHIFTS: Exports to the US soared more than 120 percent to almost one quarter, while ASEAN has steadily increased to 18.5 percent on rising tech sales The proportion of Taiwan’s exports directed to China, including Hong Kong, declined by more than 12 percentage points last year compared with its peak in 2020, the Ministry of Finance said on Thursday last week. The decrease reflects the ongoing restructuring of global supply chains, driven by escalating trade tensions between Beijing and Washington. Data compiled by the ministry showed China and Hong Kong accounted for 31.7 percent of Taiwan’s total outbound sales last year, a drop of 12.2 percentage points from a high of 43.9 percent in 2020. In addition to increasing trade conflicts between China and the US, the ministry said
RSS