Fubon Financial Holding Co., Ltd. · TWSE:2881
Fubon Financial — H1 2015 Earnings Presentation
46 slides from Fubon Financial's earnings presentation, Aug 25, 2015
Slide 1: 1H15 Interim Results
1H15 Interim Results Fubon Financial Holdings 2015.08.25
Slide 2: Disclaimer
Disclaimer This meeting may contain forward-looking statements with respect to the financial condition, results of operations and business of the company. These forward-looking statements represent the company’s expectations or beliefs concerning future events and involve known and unknown risks and
Slide 3: Agenda
Agenda Performance highlights of Fubon Financial Holdings Performance review by subsidiary • Taipei Fubon Bank • Fubon Life • Fubon Insurance • Fubon Securities • Overseas banking operation 3
Slide 4: Fubon Financial Holdings: Operation highlights
Fubon Financial Holdings: Operation highlights Net profits NT$42,053 million 1H15 with 47.8% yoy growth. Asset allocation and lending in overseas market are earning drivers. Strong fee from wealth management business Taipei Fubon Bank Improving NIM and favorable loan mix in 2Q15 Strong investment pe
Slide 5: Fubon Financial Holdings: Profitability
Fubon Financial Holdings: Profitability Net profits NT$bn 60.2 42.1 38.5 28.5 29.1 6M14 6M15 2012 2013 2014 Earning per share (EPS) NT$ 5.89 4.11 3.90 2.78 3.07 6M14 6M15 2012 2013 2014 Note: Fubon adopted fair value method for investment property evaluation since September 2014. 2013 and 2014 data
Slide 6: Fubon Financial Holdings: Net profits by major subsidiary
Fubon Financial Holdings: Net profits by major subsidiary Net profits by major subsidiaries Profit contribution from major subsidiaries NT$bn NT$bn Fubon Bank (HK) Fubon 1.6 42.1 6M14 6M15 Securities 4% 0.6 Fubon P&C 1% Taipei 1.9 Fubon Bank 4% 10.2 24% 28.5 29.1 14.1 10.3 10.2 1.6 1.9 1.1 0.6 Fubon
Slide 7: Fubon Financial Holdings: Asset and net worth
Fubon Financial Holdings: Asset and net worth Total assets NT$bn 5,575 5,438 5,149 4,597 4,106 6M14 6M15 2012 2013 2014 Equity attributable to parent company NT$bn 387 408 384 342 306 6M14 6M15 2012 2013 2014 Note: Fubon adopted fair value method for investment property evaluation since September 20
Slide 8: Fubon Financial Holdings: ROA & ROE
Fubon Financial Holdings: ROA & ROE ROA 1.53% 1.21% 1.17% 0.88% 0.75% 6M14 6M15 2012 2013 2014 ROE 21.25% 16.07% 15.62% 11.54% 10.71% 6M14 6M15 2012 2013 2014 Note: Fubon adopted fair value method for investment property evaluation since September 2014. 2013 and 2014 data are on pro forma basis. 8
Slide 9: Cash dividend income from equity investment
Fubon Financial Holdings: Cash dividend income from equity investment NT$mn 16,729 1H 2H 14,821 14,526 12,608 12,700 11,300 11,961 10,702 4,029 3,521 881 870 554 607 345 476 2,565 1,906 690 438 653 262 272 344 228 252 292 73 139 183 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 Sum Fubon Life Fu
Slide 10: Agenda
Agenda Performance highlights of Fubon Financial Holdings Performance review by subsidiary • Taipei Fubon Bank • Fubon Life • Fubon Insurance • Fubon Securities • Overseas banking operation 10
Slide 11: Taipei Fubon Bank: Revenue
Taipei Fubon Bank: Revenue Strong fee growth from wealth management business Net interest income increase due to NIM improvement and favorable loan mix Revenue composition of Taipei Fubon Bank NT$bn 44.1 Fubon Bank (China) Treasury & others 5.2 Net fee income 33.7 Net interest income 29.2 11.1 9.5 2
Slide 12: Taipei Fubon Bank: Fee and wealth management revenue
Taipei Fubon Bank: Fee and wealth management revenue Fee income growth 11.5% yoy along with wealth management and syndication business Sources of fee revenue(1) Wealth management revenue(2) NT$mn NT$mn 5,757 4,787 4,433 5,161 249 374 616 335 575 661 299 DCI,SI,SN and Others 533 others 1,723 Syndicat
Slide 13: Taipei Fubon Bank: Loan composition
Taipei Fubon Bank: Loan composition Corporate and mortgage loans continue growing Loan growth excluding government loans reached 7.5% Loans by type NT$bn 1,140.9 1,146.6 YoY +0.5% 7.1 6.8 46.2 43.1 Credit card revolving YoY -4.1% 365.3 416.1 Other consumer loans YoY -6.7% Mortgage loan YoY +13.9% 57
Slide 14: Taipei Fubon Bank: Corporate credit
Taipei Fubon Bank: Corporate credit Foreign currency loans represents 43% of corporate loans in 2Q15 SME loan accounts for 31.7% of corporate loans in 2Q15 Corporate loan by currency SME loan and as % of corporate loan NT$bn NT$bn NTD FX FX loan as % of corporate loan SME SME as % of corporate loan
Slide 15: Taipei Fubon Bank: Interest yield and margin
Taipei Fubon Bank: Interest yield and margin NIM and loan-to-deposit spread NIM Loan-to-deposit spread 1.28% 1.29% 1.26% 1.24% 1.10% 1.10% 1.09% 1.07% 1Q15 2Q15 1H14 1H15 Loan yield and deposit yield Loan rate Deposit rate 2.05% 2.05% 2.07% 2.05% 0.81% 0.77% 0.78% 0.79% 1Q15 2Q15 1H14 1H15 Note: Loa
Slide 16: Taipei Fubon Bank: Deposit mix and LDR
Taipei Fubon Bank: Deposit mix and LDR Deposit mix in NTD NTD loan-to-deposit ratio (LDR) NT$bn 1,008 1,065 48.6% 45.5% Time 90.7% Demand 83.0% 51.4% 54.5% Jun-14 Jun-15 Jun-14 Jun-15 Deposit mix in foreign currency Foreign currency LDR NT$bn 364 391 62.9% 58.0% Time 68.4% 65.5% Demand 37.1% 42.0% J
Slide 17: Taipei Fubon Bank: Asset quality
Taipei Fubon Bank: Asset quality NPL ratio Coverage ratio 1320.4% 0.20% 1096.0% 1113.1% 0.17% 788.6% 0.11% 0.11% 589.5% 0.09% Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 NPL ratio by business Provision NT$m 0.6% Corporate loan Mortgage loan 1,987 0.4% 0.15% 42 0.2% 0.02% 0.
Slide 18: Agenda
Agenda Performance highlights of Fubon Financial Holdings Performance review by subsidiary • Taipei Fubon Bank • Fubon Life • Fubon Insurance • Fubon Securities • Overseas banking operation 18
Slide 19: Fubon Life: Total premium
Fubon Life: Total premium 13% growth from renewal premium income NT$bn 420.7 420.1 425.0 171.0 207.2 234.0 210.4 Renewal premium 205.1 FYP 109.6 124.1 249.7 212.9 191.0 100.8 81.0 1H14 1H15 2012 2013 2014 19
Slide 20: Fubon Life: First year premium (FYP)
Fubon Life: First year premium (FYP) Product mix improvement from regular-paid policies 1. FYP from regular-paid policy grew 18% yoy 2. FYP from health, accidents and others grew 14% yoy VNB reached NT$16.8bn in 1H15. Stable trend compared to 1H14 based on 2014 EV calculation assumptions FYP composi
Slide 21: Fubon Life: First year premium equivalent (FYPE)
Fubon Life: First year premium equivalent (FYPE) FYPE growth mainly came from traditional regular paid policies NT$bn 28.9 27.8 16.6 Traditional life: Regular-paid Traditional life: Single- paid 12.3 62.1% Investment-linked 72.2% 75.2% Interest-sensitive annuity 68.3% Health, accidents and others 23
Slide 22: Fubon Life: Sales channel
Fubon Life: Sales channel FYP by channel Growth of the size in agency force outperformed peers. FYP contribution & Other cross-sale increased Bancassurance: through Taipei Fubon Bank NT$2.0bn of P&C insurance premium sold Bancassurance: through external banks through agency channel, up 12.3% YoY Tie
Slide 23: Fubon Life: Composition of investment income
Fubon Life: Composition of investment income Investment income mainly came from recurring revenue Realized gains from fixed income and equity investment reached a new high level YoY NT$bn 1H14 1H15 2012 2013* 2014 growth Recurring investment income 38.7 42.6 62.7 75.2 88.7 10.0% Realized gains from
Slide 24: Fubon Life: Investment portfolio
Fubon Life: Investment portfolio Investment scale grow steadily with diversified investment in domestic and overseas assets Investment toward overseas fixed income in 2Q 2015 in response to market volatility 2014/6/30 2015/3/31 2015/6/30 NT$bn Deposit and cash 100.5 4.2% 133.3 5.1% 159.4 6.0% equiva
Slide 25: Fubon Life: Portfolio of Overseas fixed income
Fubon Life: Portfolio of Overseas fixed income Active deployment in overseas fixed income assets. Incremental position mainly in corporate bond in North America Deployment in overseas fixed income Overseas fixed income by asset type US$bn Overseeas fixed income net change 4.9% 4.3% US 30 year govern
Slide 26: Fubon Life: Hedging composition
Fubon Life: Hedging composition Hedging cost & FX gain/loss FX position CS cost FX gain/loss & net provision of FX reserve 84 bps 85 bps 103 bps 68 bps Naked Other 1H14 1H15 1Q15 2Q15 USD, currencies Equities/ 7.4% , 2.2% mutual -27 -17 funds , -36 -69 14.9% -51 -58 -67 -15 Recurring return 3.43% 3.
Slide 27: Fubon Life: Positive investment spread widened
Fubon Life: Positive investment spread widened Cost of liability improving and investment return increasing Positive spread between recurring return and breakeven point (net underwriting cost) widened Investment spread Recurring return and breakeven point Cost of liabilities Investment return Breake
Slide 28: Fubon Life: Capital position
Fubon Life: Capital position Part of the decrease in unrealized gains Movement of unrealized gains from AFS assets NT$bn from AFS assets in 2Q15 reflected in net profits 16.4 Realized 3.5 Mark to market valuation change mainly 68.6 26.3 gains Equity due to interest rate volatility dividend Mark to 2
Slide 29: Agenda
Agenda Performance highlights of Fubon Financial Holdings Performance review by subsidiary • Taipei Fubon Bank • Fubon Life • Fubon Insurance • Fubon Securities • Overseas banking operation 29
Slide 30: Fubon Insurance: Operating snapshot
Fubon Insurance: Operating snapshot Top 1 position in premium market share at 22% Solid earnings and operating performance Direct written premium by product Net combined ratio NT$bn 15.6 15.0 86.4% 85.3% 1.5 1.4 Others 2.0 2.2 Health/Injury 34.5% 0.5 0.5 33.3% 0.9 1.0 Net expense ratio Engineering N
Slide 31: Fubon P&C (China): Business progress
Fubon P&C (China): Business progress 32 offices in 3 provinces with premium growth of 37% yoy Top five foreign P&C insurance in China in terms of premium market share Gross written premium Net combined ratio RMB$m 415.6 115.1% 109.3% 77.9 Fixed Exp.Ratio 303.2 Commerci al line 40.6% Variable Exp.Rat
Slide 32: Agenda
Agenda Performance highlights of Fubon Financial Holdings Performance review by subsidiary • Taipei Fubon Bank • Fubon Life • Fubon Insurance • Fubon Securities • Overseas banking operation 32
Slide 33: Fubon Securities: Financial highlights
Fubon Securities: Financial highlights Decent market position in major business Market share & ranking lines Growth in wealth management business 1H15 Ranking 1H14 Ranking Award of leading underwriting house Emerging stock 16.80% #2 18.90% #2 trading Approval of investment in Huishan Brokerage per 0
Slide 34: Agenda
Agenda Performance highlights of Fubon Financial Holdings Performance review by subsidiary • Taipei Fubon Bank • Fubon Life • Fubon Insurance • Fubon Securities • Overseas banking operation 34
Slide 35: Fubon Bank (Hong Kong): Key balance sheet items
Fubon Bank (Hong Kong): Key balance sheet items Aggressive in core business expansion, supported by the growth momentum in corporate and retail loans Loans Deposits HK$m 56,901 44,338 37,856 51,164 Jun-14 Jun-15 Jun-14 Jun-15 Assets Net worth 89,910 10,798 82,637 10,067 Jun-14 Jun-15 Jun-14 Jun-15 3
Slide 36: Fubon Bank (Hong Kong): Financial highlight
Fubon Bank (Hong Kong): Financial highlight 49% earnings growth led by strong revenue growth, while asset quality remained sound. NIM improved due to lower funding costs and lending yield increase Net Profits NIM HK$m 378 1.33% 254 1.18% 1H14 1H15 1H14 1H15 ROAA & ROAE NPL ratio & Coverage ratio ROA
Slide 37: Fubon Bank (China): Key balance sheet items
Fubon Bank (China): Key balance sheet items Loans Deposits RMB$m Rediscount Loans (excluding rediscount) 33,424 44,429 28,237 29,493 41,185 11,250 37,882 7,567 9,367 22,174 20,670 20,126 Jun-14 Mar-15 Jun-15 Jun-14 Mar-15 Jun-15 Assets Net worth 65,541 4,578 4,669 60,885 4,335 58,418 Jun-14 Mar-15 J
Slide 38: Fubon Bank (China): Financial highlight
Fubon Bank (China): Financial highlight Net Profits NIM RMB$m 125 112 1.92% 1.73% 84 1.40% 2Q14 1Q15 2Q15 2Q14 1Q15 2Q15 ROAA & ROAE NPL ratio & Coverage ratio ROAA ROAE NPL Coverage ratio 11.76% 9.72% 230.0% 252.2% 7.39% 154.8% 0.92% 1.17% 0.71% 1.48% 1.03% 0.55% 2Q14 1Q15 2Q15 Jun-14 Mar-15 Jun-15
Slide 39: Thank you
as Hahei he. Thank you
Slide 40: Fubon Financial - Financial summary
Fubon Financial - Financial summary (Pro Forma) NT$ millions, except for percentages 2013 2014 YoY 1H14 1H15 YoY 1Q15 2Q15 Income Statement Data Net interest income 73,264 89,242 21.8% 43,819 44,628 1.8% 22,241 22,387 Insurance income 266,247 230,938 -13.3% 110,969 102,357 -7.8% 45,819 56,538 Net ga
Slide 41: Taipei Fubon Bank - Financial summary
Taipei Fubon Bank - Financial summary (Pro Forma) NT$ millions, except for percentages 2013 2014 YoY 1H14 1H15 YoY 1Q15 2Q15 Income statement data Interest income 27,680 45,157 63.1% 22,154 23,013 3.9% 11,441 11,572 Interest expense (11,904) (22,964) 92.9% (11,223) (11,880) 5.9% (6,118) (5,763) Net
Slide 42: Fubon Life - Financial summary
Fubon Life - Financial summary (Pro Forma) NT$ millions, except for percentages 2013 2014 YoY 1H14 1H15 YoY 1Q15 2Q15 Income statement data First year premium 212,818 190,974 -10.3% 100,756 81,022 -19.59% 37,418 43,604 Retained earned premium 386,587 390,077 0.9% 192,743 191,627 -0.58% 92,422 99,205
Slide 43: Fubon Insurance - Financial summary
Fubon Insurance - Financial summary (Pro Forma) NT$ millions, except for percentages 2013 2014 YoY 1H14 1H15 YoY 1Q15 2Q15 Income statement data Direct written premiums 29,448 32,718 11.1% 16,530 17,690 7.0% 8,150 9,540 Retention of earned premiums 22,152 24,653 11.3% 11,797 13,283 12.6% 6,450 6,833
Slide 44: Fubon Securities - Financial summary
Fubon Securities - Financial summary (Pro Forma) NT$ millions, except for percentages 2013 2014 YoY 1H14 1H15 YoY 1Q15 2Q15 Income statement data Brokerage commissions 2,636 3,204 21.5% 1,642 1,482 -9.7% 692 790 Net interest income 827 932 12.7% 456 520 14.1% 247 274 Fee income 271 157 -42.1% 82 45
Slide 45: Fubon Bank (Hong Kong) - Financial Summary
Fubon Bank (Hong Kong) - Financial Summary HK$ millions, except for percentages 2013 2014 YoY 1H14 1H15 YoY Income Statement Data Interest income 1,382 1,677 21.3% 797 881 10.5% Interest expense (632) (835) 32.1% (401) (381) -5.0% Net interest income 750 842 12.2% 395 499 26.4% Net fee income 271 31
Slide 46: Fubon Bank (China) - Financial Summary
Fubon Bank (China) - Financial Summary RMB millions, except for percentages 2013 2014 YoY 1H14 1H15 YoY 1Q15 2Q15 Income Statement Data Interest income 2,243 2,425 8.1% 1,224 1,131 -7.6% 572 559 Interest expense (1,361) (1,846) 35.7% (902) (997) 10.5% (515) (482) Net interest income 882 579 -34.4% 3
Fubon Financial Holdings — H1 2015 Earnings Presentation on 6ix