Chang Hwa Commercial Bank bullish on earnings

  • By Crystal Hsu / Staff Reporter

The state-run Chang Hwa Commercial Bank (CHB, 彰化銀行) said yesterday that its profitability would benefit more from interest rate hikes in Taiwan and abroad, after announcing an annual increase of 27, 65% in the first six months of this year.

At an online investor conference, the lender described its net income of NT$5.32 billion ($174.8 million) in the first half as “stronger than expected”.

This translated into earnings per share of NT$0.5, an annual improvement of almost 30% thanks to rising global interest rates.

Photo courtesy of Kaohsiung Gushan Police Station via CNA

The uptrend is likely to continue after the US Federal Reserve announced over the weekend that it would continue with rate hikes to fight inflation, even though it would hurt economic growth, household incomes and businesses.

The central bank is expected to follow suit, but at a moderate pace, as inflation in Taiwan is not serious, the CHB said.

The scenario, if realized, would widen the interest spread and increase its net interest margin, CHB officials said.

Banks appear to be the main beneficiaries of interest rate hikes as life insurance companies suffer drastic declines in net worth caused by asset writedowns amid global bond price corrections and shares.

CHB’s profit boost came even though its mortgage operations were down 12.3% in the second quarter from the first quarter as rate hikes and economic uncertainty dampened buyer interest, investors said. responsible.

Real estate transactions will likely slow, but developers will not lower prices to facilitate transactions due to rising construction costs, CHB said.

Asset quality remained healthy, with bad debt ratios falling to 0.23% in June, he said.

Total loans in the first six months rose 7.19 percent year-on-year, while savings deposits rose 11.72 percent, the CHB said.

The bank would seek to boost its profits by expanding business banking services, particularly by lending to small and medium-sized businesses, he said.

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