Backed by an improving global operating environment, state-run Chang Hwa Commercial Bank said that it expects its growth momentum to recover this year, after net income tumbled by double-percentage points last year and remained weak in the first two months of this year.

Net income slumped 38.53% to NT$8.31 billion (US$291.3 million) last year, as bad loans at home and abroad increased, and drastic interest rate cuts weighed on interest and fee income, company data showed. “We will make dynamic strategy adjustments to avoid a repeat of last year’s disappointing performance,” the company told an online investors’ conference.

The bank recently appointed a new president, Chou Chao-Chung, to replace Huang Rui-mu, who stepped down to take responsibility for poor earnings. Chou, who served in different positions in another state-run lender, First Commercial Bank, aims to strengthen Chang Hwa Bank’s overseas operations and risk controls.

Chang Hwa Bank is seeking to expand its loanbook by 5 to 6% this year, led by loans to small and medium-sized enterprises, and mortgage for people with real demand, the bank said.

Overseas outlets and local branches’ offshore banking units generated 37.5% of overall earnings last year, down from 44% in 2019, the bank said, adding that it is looking to raise their contributions to more than 40%. Chou, who headed First Bank’s Phnom Penh branch, can share his professional expertise and experience in this area, the bank said.

Chang Hwa Bank would be engaged in loans to first-time home buyers, as the central bank’s two recent waves of credit controls are directed at multiple home owners and property investors, it said.

The bank added that it was not surprised at escalating yields in US Treasury and plans to raise its stakes in Taiwanese government and corporate bonds, as well as stocks that offer generous cash dividends. “We will adopt more diversified trading tactics and be more active in pursuing investment gains this year as the world emerges from the COVID-19 pandemic,” it said.

Interest spread inched up 6 basis points from the third quarter to 1.15% late last year, while net interest margin gained 3 basis points to 0.88%, signs that the market has stabilized and would improve further, it said. However, interest spread and margins remain low compared with the same time last year, accounting for weak earnings in the first two months of this year, the bank said.

Net interest income accounted for 70 %of Chang Hwa’s revenue, while fee income and investment gains contributed 16.57 and 12.08% respectively, company data showed.

Taipei Times