Taiwan Cooperative Financial Holding Co’s (合庫金控) net income grew 12.42 percent to NT$5.03 billion (US$163.29 million) last quarter, as global capital markets regained some stability, favorable for financial operations and investment dealings to drive profit growth, the state-run bank said yesterday.
The performance translated into earnings per share of NT$0.35 after loan growth beat expectations at 8.8 percent, but higher funding costs weighed on interest spread and margin, Taiwan Cooperative president Chen Mei-tsu (陳美足) said.
“There is room for business improvement moving forward as global monetary tightening has slowed and the situation would stabilize,” Chen told an online investors’ conference.
Photo: Chen Mei-ying, Taipei Times
Main subsidiary Taiwan Cooperative Bank (合作金庫銀行) generated NT$44.57 billion, accounting for 90.14 percent of overall profit and offsetting Taiwan Cooperative Bills Finance Corp’s (合作金庫票?金融) losses of NT$59 million linked to higher provision costs, Chen said.
Further, market volatility weakened earnings at the securities and life insurance arms, the official said, adding that different subsidiaries have drawn up profit enhancement strategies, in line with the conglomerate’s pursuit of stable profitability.
Net interest income at Taiwan Cooperative Bank shrank 2.23 percent to NT$85.39 billion, while fee income declined 2.27 percent to NT$15.92 billion, company data showed.
Interest spread narrowed to 1.219 percent, while net interest margin dropped to 0.839 percent, a company official said.
The loan structure also grew unfavorable, with time deposits expanding 11.19 percent, much faster than a 2.65 percent increase in demand deposits, a company financial statement said, as people avoid risky assets and put money away during a tight monetary cycle.
Loans to the government and public enterprises soared 37.8 percent, while lending to large-capital companies gained 16.16 percent, the statement showed.
At the same time, more profitable loans with small and medium-sized enterprises advanced 1.3 percent and lending to retail customers grew 1.51 percent, it said.
The mortgage business declined as unfavorable policy measures and interest-rate hikes chilled property transactions, officials said.
Taiwan Cooperative Bank expects to expand its mortgage business this year by targeting customers with real demand, they said.
Overseas lending drove 11.86 percent of total profit, falling from 28.19 percent three months earlier, it said, as the failure of several US regional banks prompted lenders to turn cautious.
The bad loan ratio climbed to 0.2 percent, from 0.18 percent in the preceding quarter.
The rise was related to unprofitable LED maker Genesis Photonics Inc (新世紀光電), which in November last year filed for bankruptcy and laid off 238 employees, officials said.
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