State-run Taiwan Business Bank (TBB, 台企銀) is looking to benefit further from interest rate hikes this year, but expects loan growth momentum to slow, as firms turn cautious amid economic uncertainty, senior officials said yesterday.
The lender gave the cautious outlook during an online earnings conference after reporting that net income last year soared almost twofold to a record NT$10.1 billion (US$331.6 million), or earnings of NT$1.26 per share.
TBB plans to distribute a small cash dividend of NT$0.34 per share as it has to raise provisions to tackle a negative other comprehensive income (OCI) caused by unrealized losses in bond and stock holdings, spokesman Chen Shao-huang (陳紹晃) said.
Photo: Chen Mei-ying, Taipei Times
For this year, TBB is to focus on loans to small and medium enterprises, syndicated loans, foreign currency operations and mortgages for people with self-occupancy needs, Chen said.
Furthermore, it would boost financing for development of renewable energy and urban renewal projects to support the government’s policy.
Interest income underpinned 71 percent of last year’s profit, aided by monetary tightening at home and abroad, while fee income accounted for a moderate 14 percent, company data showed.
A widening interest rate gap between the US and Taiwan helped TBB post a profit of NT$1 billion from foreign-currency swaps, officials said, adding that the bank would continue such operations, but does not have a profit target for this year as the tight monetary cycle is expected to come to an end soon.
TBB plans to raise its holdings in government and corporate bonds whose prices are expected to stabilize amid a pause in interest rate hikes, officials said.
The bank is also seeking to increase its holdings of stocks that offer decent business prospects and pay high dividends, officials said, adding that it would boost its portfolio ahead of dividend payouts, mostly in June to August in Taiwan.
OCI consists of long-term bonds and stocks, which together accumulated NT$3.77 billion in unrealized losses at the end of last year, wiping out potential dividends by NT$0.47 per share, TBB accounting official Lai Li-chin (賴莉青) said.
The losses eased by NT$1.08 billion this year after the US Federal Reserve slowed the pace of rate hikes, Lai said.
Improving bond and stock values might give TBB room to pay higher dividends next year, Chen said.
TBB has no exposure to troubled regional banks in the US, but would heighten risk controls to avoid any spillover, Chen said.
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