Taiwan Cooperative Financial Holding Co (TCFH, 合庫金控) aims to improve its business next year in line with the nation’s economic growth, but uncertainty related to the COVID-19 pandemic lingers, top executives told an investors’ conference yesterday.
The guardedly positive view was shared after the state-run conglomerate reported NT$12.39 billion (US$429.75 million) in net income for the first three quarters — a 6.29 percent decline from the same period last year, as the low interest rate environment restricted its earnings ability, TCFH president Chen Mei-tsu (陳美足) said.
That translated into earnings per share of NT$0.9, down from NT$0.97 for the same period last year, company data showed.
Photo: Lu Kuan-cheng, Taipei Times
“We will take cues from the nation’s GDP growth next year in setting profitability goals,” Chen told an online conference call, adding that the Directorate-General of Budget, Accounting and Statistics in August forecast that Taiwan’s economy would grow 3.92 percent next year.
The company’s main subsidiary, Taiwan Cooperative Bank (合庫銀行), saw its net income shrink 10.09 percent year-on-year to NT$10.7 billion due to a drop in interest and fee incomes, as well as an increase in bad loans and provision costs, Chen said.
The interest spread for local and foreign currency loans narrowed to 1.282 percent at the end of September from 1.316 percent in June, TCFH’s report showed.
Net interest margin, a critical gauge for the banking industry, stood at 0.966 percent in September, compared with 0.993 percent three months earlier.
The lender attributed the retreat to interest rate cuts at home and abroad, as well as competition among its peers to woo customers.
Chen said net interest margin showed signs of stabilization last quarter, but added that it is too early to talk about a recovery.
TCFH said fee income dropped 1.44 percent from a year earlier, after its wealth management business tumbled 9.48 percent and credit card operations plunged 49.61 percent.
Sales of insurance policies took a hard hit from drastic interest cuts, while international travel restrictions significantly dampened interest in card spending abroad, it said.
The situation is unlikely to improve until the world returns to normal, TCFH said.
It said that it has room to grow its real-estate lending, which stands at 28.25 percent, lower than its peers, adding that it has leeway of NT$56 billion before it hits the 30 percent cap of total deposits and debts.
TCFH said it would seek to raise land and construction financing to NT$140 billion next year, from NT$125.6 billion as of September this year.
The current volume is 20 percent more than it was a year earlier, it said, adding that real-estate loans could increase 24 percent year-on-year if operations reach NT$130 billion at the end of this year as hoped for.
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