State-run Hua Nan Financial Holding Co (華南金控) aims to grow its earnings this year at a pace in line with the nation’s GDP growth, although the COVID-19 pandemic and low interest rates would continue to weigh on its performance, senior officials told a virtual investors’ conference yesterday.
That suggests an improvement of about 5 percent after missing its pre-tax profit target last year by 4 percent mainly due to losses at its securities arm, Hua Nan Securities Co (華南永昌證券) senior vice president and general manager Jully Chu (朱婉麗) said.
The Directorate-General of Budget, Accounting and Statistics last month raised its forecast for the nation’s GDP growth to 4.64 percent this year on surging global demand for technology products.
Photo: Chen Mei-ying, Taipei Times
“We are cautiously optimistic about the economy at home and abroad now that COVID-19 infections have shown signs of easing,” Chu said, adding that the pandemic nevertheless poses great uncertainty, with global central banks maintaining loose monetary policies, which are unfavorable to banking operations.
The interest spread for foreign currency banking tumbled 52 basis points to 1.35 percent last year after the US Federal Reserve cut interest rates to a range of zero to 0.25 percent, Chu said.
Likewise, the maneuvering room for local currency-based lending shed 12 basis points to 1.19 percent after the nation’s central bank lowered the rediscount rate to a record 1.125 percent to ease the financial burden on households, Chu said.
Consequently, net interest margin, a critical profitability gauge for financial institutions, shrank to 1.21 percent for foreign-currency operations and 0.83 percent for local currency loans, she said.
Hua Nan Financial said that it is looking at a flat loanbook this year, while seeking to expand its interest and fee income by growing loans to small and medium-sized enterprises, and in overseas markets, as such businesses generate higher margins.
Main subsidiary Hua Nan Commercial Bank (華南銀行) would actively take part in syndicated loans and strengthen its bancassurance business, the company said, adding that these efforts are intended to boost the interest spread and net interest margin by 4 and 2 basis points respectively this year.
The bank-focused conglomerate is to diversify its sources of income by raising earnings contributions from its stock brokerage, South China Insurance Co (華南產險), and other units, it added.
Asked about its dividend payout plan, Hua Nan Financial said that its net income slumped 48.85 percent to NT$8.66 billion (US$305.73 million) last year, or earnings per share of NT$0.67, down from NT$1.31 a year earlier.
“We will deal with the issue by referring to past practices,” the company said.
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