TAIPEI: State-run Chang Hwa Commercial Bank Ltd aims to build on the record-high profit it posted last year by increasing this year’s earnings through organic growth driven by corporate lending and overseas operations, Chairman Chang Ming-daw said here the other day.
Chang Hwa Bank, in which Taishing Financial Holding Co and the Ministry of Finance are the two largest shareholders, with 22.5 percent and 20 percent stakes respectively, posted NT$12.45 billion (US$393.18 billion) in pre-tax income last year, the fifth year above the NT$10 billion mark, company data showed.
“The mark will serve as the minimum earnings target for the company in the future,” Chang said.
The lender intends to grow its loan book by 5 percent this year, higher than the GDP growth forecast of 3.78 percent, with economic conditions likely to be better this year, spokesman Philip Tu said.
Commercial banking, which accounted for 60 percent of profits last year, is expected to underpin the growth, as the lender remains cautious about mortgage operations, Tu said.
To that end, Chang Hwa Bank is to focus more on deepening overseas operations, with the aim of putting it in a better position to take advantage of higher interest margins in foreign markets, mainly China, Chang Hwa vice president Carol Lai said.
While the interest margins in China remain comfortably higher than in Taiwan, they are tapering off, as the nation’s economy slows down, Lai said.
As a result, Chang Hwa Bank’s net interest margins might only grow 2 to 3 basis points this year, as the central bank is likely to maintain its monetary policy amid ultra-low inflation due to cheaper oil prices, Lai said.
In addition, the lender is seeking more balanced sources of income this year by increasing fee incomes to 30 percent, from 27 percent last year, Lai said.
Lai dismissed reports of a potential mergers with state-run Mega Financial Holding Co and Nan Shan Life Insurance Co as “ non-issues” that might unfairly affect the share prices of the relevant companies.
While interested in expanding its scale, Chang Hwa Bank prefers to do so through organic growth, Chang said.
“It is unwise and irresponsible even just to touch upon the issue because such talks will affect the share prices of the companies involved,” said Chang, who is a former Financial Supervisory Commission official.
Chang refused to comment at all if Mega Financial approached Chang Hwa Bank and Nan Shan Life last year.
Local media outlets this week reported that Mega Financial held the discussions last year in response to the government’s wish that it develop into a regional player through mergers and acquisitions.
