State-run Chang Hwa Commercial Bank (CHB, 彰化銀行) yesterday said its profitability would further benefit from interest rate hikes in Taiwan and abroad, after reporting an annual increase of 27.65 percent in the first six months of this year.
During an online investors’ conference, the lender described its net income of NT$5.32 billion (US$174.8 million) in the first half as “stronger than expected.”
That translated into earnings per share of NT$0.5, an annual improvement of nearly 30 percent on the back of global interest rate hikes.
Photo courtesy of the Kaohsiung Gushan Police Station via CNA
The uptrend is expected to continue after the US Federal Reserve said over the weekend it would press ahead with rate hikes to fight inflation, even if doing so would hurt economic growth, household income and businesses.
The central bank is likely follow suit, but at a moderate pace, as inflation in Taiwan is not serious, CHB said.
The scenario, if realized, would widen interest spread and lift its net interest margin, CHB officials said.
Banks appear to be the biggest beneficiaries of interest rate hikes, as life insurance companies are suffering drastic net worth declines caused by asset value losses amid global bond and stock price corrections.
The increase in CHB’s profit came even though its mortgage operation shrank 12.3 percent in the second quarter from the first quarter, as rate hikes and economic uncertainty dampened buying interest, the officials said.
Housing transactions are likely to slow moving forward, but developers would not lower prices to facilitate deals because of construction cost hikes, CHB said.
Asset quality remained healthy, with bad-loan ratios falling to 0.23 percent as of June, it said.
Total loans in the first six months picked up 7.19 percent year-on-year, while saving deposits rose 11.72 percent, CHB said.
The bank would seek to boost profit by growing corporate banking, especially lending to small and medium-sized enterprises, it said.
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