INCREASE IN PROFITABILITY:
State-owned bank aims to expand overseas operations and target high net worth domestic clients, CHB said
By Crystal Hsu / Journalist
The state-run Chang Hwa Commercial Bank (CHB,) aims to keep business growth targets unchanged for this year as many economies around the world recover from the COVID-19 pandemic, a the bank announced yesterday.
“We are striving to increase profitability this year as planned, recognizing that the COVID-19 pandemic poses lingering uncertainty at home and abroad,” CHB spokesman Chen Bin (陳斌) said. at an online investor conference in Taipei.
Chen gave a cautiously optimistic outlook after the bank’s financial performance continued to disappoint in the first quarter of this year.
Pre-tax profit fell 23% year-on-year to NT $ 2.38 billion (US $ 85.86 million), while net profit fell 7.5% to NT $ 6.9 billion , or earnings per share of NT $ 0.19, according to company data.
The low profits are due to the fact that funding has weakened amid the global COVID-19 crisis and that interest rate cuts by global central banks have reduced interest and commission income, a the bank said, adding that a conservative investment strategy was also weighing on business income.
The interest spread for local and foreign currency loans was 1.18% last quarter, while net interest income averaged 0.86%, he said, adding that both rates were lower than the previous quarter.
Sentiment improved, as evidenced by an increase in interest on syndicated loans and other banking operations, Chen said, attributing the trend to the rollout of COVID-19 vaccines in the United States and Europe.
The CHB would increase its overseas banking operations, he said, adding that the bank’s domestic operations would target customers with high net worth.
Overseas branches and offshore banking units of local branches generated 28.8% of pre-tax profit, down from an average of 37.5% last year, Chen said, adding that their contributions would likely increase later this year.
CHB said it increased its holdings in local stocks last quarter and would acquire more local and foreign bonds this quarter to increase yields.
The lender said it will abide by the decision of the main shareholder Taishin Financial Holding Co (台 新 金控) to sell its stake in CHB to end a long-standing management dispute with the Ministry of Finance, another shareholder important.
A local COVID-19 outbreak is slowing sales of wealth management products, but the effect would likely be temporary if authorities kept infections at bay, the CHB said.
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