State-run First Financial Holding Co (第一金控) said it is looking to benefit from interest rate hikes in Taiwan and abroad, even though corporate and retail clients have turned conservative about financing.
The bank-focused conglomerate shared its business outlook with an online investors’ conference earlier this week.
The company has raised its loan growth target for small and medium-sized enterprises from between 6 to 7 percent to 7 to 8 percent, and that for overseas lending from 10 to 11 percent to 12 to 13 percent, it said.
The wealth management business could post 8 to 9 percent growth, helping fee income gain at the same pace, First Financial spokeswoman Anne Lee (李淑玲) said.
Interest rate hikes in March of 0.25 percentage points in Taiwan and the US are expected to boost interest income by NT$2.2 billion (US$74.9 million), with further momentum anticipated in the second half of the year.
The US Federal Reserve has made clear that it would raise interest rates by 0.5 percentage points this month and next month, Lee said.
The local central bank could follow suit, although at a milder pace, to flight inflation, slow capital flight and stabilize the local currency, she said.
Lending operations have slowed as corporate and retail customers have shown hesitancy about increasing their financial leverage, she added.
The cautious sentiment is expected to dissipate after interest rate hikes bring down inflation and provide consumers with enough confidence to resume spending, Lee said.
Interest rate hikes are also favorable for selling fixed-income investment tools and the group would highlight such wealth management products to clients, she said.
By contrast, mortgage operations could increase by a middle-single-digit percentage due to selective credit controls, Lee said.
The housing market would consolidate eventually, but with a slim chance of price corrections given that developers are factoring in soaring costs of building materials along with a labor shortage, she said.
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