CTBC Financial Holding Co (中信金控) aims to distribute higher cash dividends next year, as it expects robust growth in profit from its banking arm due to global interest rate hikes, the company told shareholders on Friday last week.
CTBC Bank (中信銀行), which holds the most demand deposits in foreign currencies among all local banks, posted a net profit of NT$17.2 billion (US$559.6 million) in the first five months of this year, an increase of 35 percent year-on-year, CTBC Financial president James Chen (陳佳文) said at the company’s annual general meeting in Taipei.
The ratio of profit generated by the bank’s foreign branches to overall profit climbed to 35 percent as of the end of last month, up from 33 percent a year earlier, Chen said.
Photo courtesy of CTBC Financial Holding Co
The ratio is predicted to climb further, he said, as the banking business in Vietnam, Thailand and Singapore is gaining traction amid supply chain realignments in the region, he said.
Although Taiwan’s and the US’ central banks on Thursday last week held off on rate hikes, their pause should not affect CTBC Bank’s profitability, as its interest spread is already wide, Chen said.
With a strong contribution from the banking unit, CTBC Financial reported earnings per share of NT$1.01 in the first five months of this year, he said.
“Overall, our profit momentum has returned to the level prior to 2022,” Chen said.
Last year, CTBC Financial’s net profit dove 42.29 percent annually, because of a net loss in its insurance business and a fall in value of its financial assets.
Downside risks remain, such as the volatility in the investment environment for bonds, Chen said, adding that the company plans to issue subordinated debt of NT$13 billion this year to build its financial strength.
Asked whether CTBC Bank would consider partnering with Far Eastern Sogo Department Store (遠東Sogo百貨) to issue cobranded credit cards, given the end of the collaboration between the department store and Cathay United Bank (國泰世華銀行), Chen said that the chance was very low.
The department store chain last week said it would terminate its cobranded card partnership with Cathay United on Aug. 16, with the latter opposing the breakup and seeking to take their dispute to court.
The cobranded credit card provides users with a discount of 10 percent at the department store chain. About 600,000 people currently use the card.
The department store chain welcomes proposals from Cathay United to issue a new and fair cobranded card, and it would not rule out collaborations with other banks, the store said in a statement on Thursday.
CTBC Bank has collaborated with nine local department stores and has issued cobranded cards with Taipei 101 Mall, Chen said.
However, non-compete agreements the bank signed with partners would not allow it to partner with Far Eastern Sogo, he added.
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