Drastic interest rate hikes by major global central banks to fight high inflation, causing investment losses and asset value decline, is why earnings have been so lackluster this year, state-run Taiwan Cooperative Financial Holding Co (合庫金控) said yesterday.
Securities transactions also took a hit due to market volatility and a high comparison base last year, adding to the weak results this year, Taiwan Cooperative Financial president Chen Mei-tsu (陳美足) told an online investors’ conference.
The bank-focused conglomerate accumulated NT$14.82 billion (US$476.3 million) in net profit in the first nine months of this year, down 6.72 percent from the same period last year, company data showed.
Photo: CNA
The results translated into earnings per share of NT$1.06.
The situation improved last quarter, with net profit gaining 22 percent from three months earlier as contributions from interest spread and net interest income grew, Chen said.
Net interest income climbed to 0.937 percent as of the end of September, while interest spread widened to 1.28 percent, thanks to global interest rate hikes, she said.
Net profit at the company’s main subsidiary, Taiwan Cooperative Bank (合庫銀行), totaled NT$13.76 billion due to a 7.22 percent increase in saving deposits and loan growth of 4.65 percent, company data showed.
Taiwan Cooperative Financial has no intention of raising holdings in local shares from its 3 percent stake in light of cap requirements and lingering global financial tumult, Chen said.
“We prefer a cautious investment approach, as economic downside risks remain tough moving forward,” she said, referring to continued monetary tightening, the war in Ukraine and COVID-19 restrictions in China.
The outlook is unfavorable for Taiwanese companies dependent on exports, Chen said, adding that major companies are looking at inventory corrections through the first half of next year.
Chen declined to comment on the company’s dividend policy from this year’s income as assets linked to dividend distributions slipped into negative territory.
The board would discuss the matter after the full-year earnings data settle, she said.
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