CTBC Financial Holding Co (中信金控) yesterday reported record first-quarter profit and issued a positive outlook for earnings growth, thanks to strong overseas banking momentum, resilient core operations and potential interest-rate tailwinds.
The company posted net profit of NT$23.1 billion (US$729.9 million) for the first quarter, up 16 percent year-on-year and the highest on record for the period.
Earnings per share were NT$1.18, it said.
Photo: CNA
The company has proposed a cash dividend of NT$2.5 per share, implying a payout ratio of 61.3 percent.
Looking ahead, full-year profitability is expected to maintain a steady upward trajectory, underpinned by expanding overseas income and a favorable interest-rate environment in Taiwan, CTBC Financial president Rachael Kao (高麗雪) said at an earnings conference in Taipei.
Main subsidiary CTBC Bank Co (中信銀行) remained the key growth engine, posting net profit of NT$16.59 billion, up 23 percent year-on-year, also a quarterly record.
Kao attributed the results to rising cross-border financing demand as geopolitical realignment and global supply-chain diversification prompt technology and manufacturing firms to expand production bases outside China.
Overseas operations accounted for 35 percent of total profit at he bank, with Southeast Asia the strongest contributor, delivering 50 percent annual growth, the company said.
CTBC Bank’s international footprint is increasingly becoming a structural earnings driver, reinforcing its regional diversification strategy, with continued expansion planned in the US, Japan and Australia, CTBC Financial said.
The company said its banking unit would support financing mechanisms linked to Taiwanese firms’ US investment plans under the National Development Council’s initiative.
The company’s board is expected to discuss related capital allocation later this month, it said.
CTBC Financial said geopolitical tensions in the Middle East have added to global uncertainty and reinforced inflation stickiness in the US.
With US consumer inflation at 3.8 percent, the company sees a high likelihood the US Federal Reserve would keep interest rates unchanged for the rest of the year, given contained downside risks in the labor market.
In contrast, Taiwan’s economy continues to benefit from strong artificial intelligence-driven demand, with first-quarter GDP growing 13.69 percent year-on-year and exports surging more than 50 percent to US$195.7 billion. CTBC Financial expects Taiwan’s full-year GDP growth to exceed 8 percent, it said.
However, strong growth might prompt tighter monetary policy, as the company’s research team expects the central bank to raise its interest rates by 12.5 basis points at its quarterly meeting next month, with another possible increase later this year if overheating pressures persist.
A divergence between US and Taiwan rate paths would be supportive for the company’s earnings growth, CTBC Financial said.
The company estimates that each 12.5-basis-point rate hike in Taiwan could lift net interest margin by 1.7 basis points and add about NT$1.1 billion to net interest income, it said.
The New Taiwan dollar is expected to maintain a mild appreciation bias, supported by narrowing US-Taiwan rate differentials, fiscal concerns over the US dollar and strong equity inflows, with the local currency potentially strengthening toward NT$30.5 against the US dollar by the end of the year, CTBC Financial said.
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