State-run Mega Financial Holding Co is looking at sustained earnings growth momentum for the rest of this year. Their net profit more than doubled in the first half of 2023.

The bank-focused conglomerate’s net profit soared 136 percent to a record high of NT$18.77 billion (US$586.65 million) in the first six months, or earnings per share of NT$1.35, as monetary tightening at home and abroad drove up interest income, Mega Financial president Hsiao Yu-mei told an online investors conference on Wednesday.

The interest rate differences between Taiwan and the US also allowed the company to make hefty gains of NT$7.85 billion from currency swap operations in the first half, Hsiao said.

Currency swap operations might provide similar contributions in the second half, assuming the US Federal Reserve raises interest rates to around 5.25 percent to 5.75 percent while Taiwan’s central bank would stay put, Mega Financial said.

The backdrop would not lift the company’s net interest margin, standing at 1.02 percent in June, at its main subsidiary Mega International Commercial Bank, as high interest rates have raised funding costs and dampened loan demand, it said.

As economic uncertainty persists, retail customers have moved their money from demand deposits to time deposits, while corporate clients refrain from borrowing, the company said.

Things might improve as Taiwan’s exports are about to emerge from the down cycle for technology products following quarters of inventory corrections, it said.

Mega International Commercial Bank aims to grow lending with small and medium enterprises and syndicated loans that generate higher margin to guard its earnings ability, the lender’s president David Hu said.

The bank would seek to bolster its wealth management business by wooing more high-net-worth clients, Hu said.

The lender opened a private banking business this month that could actively enlarge its assets under management from NT$131.5 billion in the first half, he added.

Mega Securities Co posted a net profit of NT$1.09 billion in the first half, a surge of 466 percent from a year earlier, given the TAIEX rally of 19.6 percent over the period amid an artificial intelligence hype.

However, Chung Kuo Insurance Co remained a drag by posting a net loss of NT$3.95 billion due to provisions for the COVID-19 insurance business.

Taipei Times