State-run Chang Hwa Commercial Bank (CHB, 彰化銀行) gave a positive outlook for profit growth this year after net income last year spiked 24.62 percent annually to a record NT$10.97 billion (US$361.03 million), due to interest rate hikes and loan structure adjustments.
The results translate into earnings per share of NT$1.04 — a 30 percent improvement from earnings per share of NT$0.8 last year, CHB spokesman Chen Bin (陳斌) told an online investors’ conference on Monday.
“Growth momentum might continue this year, as global central banks stand by monetary tightening to fight inflation, boding well for the interest spread and net interest margin at CHB,” Chen said.
Photo: Chen Chih-chu, Taipei Times
The bank’s rosy outlook was supported by net profit of NT$2.23 billion in the first two months of this year, suggesting a 26 percent increase from the same period last year, company data showed.
Income from interest was the bank’s main profit driver after total loans grew nearly 10 percent, the data showed.
As a result, net interest margin rose more than 10 basis points and could continue to benefit from a tight monetary cycle this year, analysts said.
The US Federal Reserve last week said that it might raise interest rates further to push inflation back to 2 percent, while Taiwan’s central bank has conveyed a similar message.
Adjustments to CHB’s loan structure that place more emphasis on lending operations with higher yields and cost-efficient demand deposits also paid off, analysts said.
The strategy helped explain why foreign-currency loans rose 18 percent annually every quarter, outperforming lending denominated in the local currency, they said.
Analysts are expecting single-percentage growth in loan operations this year, while market volatility restricts fee income prospects.
CHB would likely decide on a dividend plan similar to last year’s NT$0.6 per share, including a NT$0.5 cash dividend and a NT$0.1 stock dividend, Chen said.
The board would discuss the issue later this year, he added.
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