Fubon Financial Holding Co., Ltd. · TWSE:2881
Fubon Financial — FY2016 Earnings Presentation
48 slides from Fubon Financial's earnings presentation, Mar 24, 2017
Slide 1: Fubon Financial Holdings Year 2016 Overview
Fubon Financial Holdings Year 2016 Overview 2017.03.24
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: Milestones in 2016
Fubon Financial Holdings: Milestones in 2016 Highest net profits and EPS among Taiwan FHCs for the 8th Robust earning consecutive year performance Total assets reached historical high at NT$6,351 billion Leading Fubon Bank (China) turned into a fully-owned subsidiary of Fubon FHC position in
Slide 5: Fubon Financial Holdings: Operation highlights
Fubon Financial Holdings: Operation highlights Net profits reached NT$48,421 million in 2016, down 23.9% yoy, due to higher FX losses on the back of stronger NT dollar. Net interest revenue and net fee revenue maintain steady Taipei Fubon Bank growth Interest spread maintains stable Sound inve
Slide 6: Fubon Financial Holdings: Profitability
Fubon Financial Holdings: Profitability Net profits Earning per share (EPS) NT$bn NT$ 6.21 5.89 63.6 60.2 4.73 48.4 3.90 38.5 2013 2014 2015 2016 2013 2014 2015 2016 Note: Fubon adopted fair value method for investment property evaluation since September 2014. 6
Slide 7: Fubon Financial Holdings: Net profits from major subsidiaries
Fubon Financial Holdings: Net profits from major subsidiaries Net profits from major subsidiaries Profit contribution from major subsidiaries NT$bn 2015 2016 NT$bn Fubon Fubon Bank (HK), Securities, 2.9 , 5.8% Taipei 1.5 , 3.0% Fubon 63.6 Fubon Bank, 14.5 P&C, 3.1 , , 28.5% 6.2% 48.4 41.0 28.7 17.8
Slide 8: Fubon Financial Holdings: ROA & ROE
Fubon Financial Holdings: ROA & ROE ROA ROE 1.21% 16.07% 16.40% 1.12% 12.19% 11.54% 0.88% 0.79% 2013 2014 2015 2016 2013 2014 2015 2016 Note: Fubon adopted fair value method for investment property evaluation since September 2014. 8
Slide 9: Fubon Financial Holdings: Asset and net worth
Fubon Financial Holdings: Asset and net worth Total assets Net worth NT$bn 6,351 NT$bn 5,987 408 427 5,438 368 4,597 342 2013 2014 2015 2016 2013 2014 2015 2016 Capitalization of FHC and subsidiaries 4Q16 Regulatory requirements Fubon Financial CAR 133.0% 100% Taipei Fubon Bank tier one 12.6% 6.625%
Slide 10: Fubon Financial Holdings: Market position
Fubon Financial Holdings: Market position Leading positions across business lines Taipei Fubon Bank Fubon Life Market Market Market Market ranking share/amount ranking share Monthly per card spending (1) 1 NT$10,018 First year premium 2 16.1% FYP through bancassurance 2 16.0% Loan Syndication (2)
Slide 11: Fubon Financial Holdings: Growth opportunities
Fubon Financial Holdings: Growth opportunities Opportunities Channels • Growth opportunities from global economy • Branch relocation & life agency growth recovery and US Fed rate hike • e-platforms for efficiency and business growth • Cross-sale synergy • Portfolio management along with asset growth
Slide 12: Initiatives and development directions
Initiatives and development directions Taipei Fubon Bank Fubon Insurance Growth in SME and foreign currency assets Product development from life-style concepts Cross border platform consolidation Oversea business and channels expansion Digital platform and franchise value enhancement Dig
Slide 13: Agenda
Agenda Performance highlights of Fubon Financial Holdings Performance review by subsidiary • Taipei Fubon Bank • Fubon Life • Fubon Insurance • Fubon Securities • Overseas Banking Operation 13
Slide 14: Taipei Fubon Bank: Revenue
Taipei Fubon Bank: Revenue Steadily growth from net interest income and net fees Revenue composition of Taipei Fubon Bank NT$bn Fubon Bank (China) Treasury & others Net fee income Net interest income 44.1 42.4 40.7 11.7% 14.1% 33.7 13.9% 25.0% 17.5% 13.6% 28.2% 24.0% 26.3% 28.3% 25.0% 46.8% 39.3%
Slide 15: Taipei Fubon Bank: Fee and wealth management revenue
Taipei Fubon Bank: Fee and wealth management revenue Wealth management business continues growing with increasing insurance contribution Sources of fee revenue Wealth management fee(1) NT$mn NT$mn 11,141 11,498 4.9% 8,943 4.8% 8,801 5.2% 5.4% 10.1% 8.4% 11.0% 11.9% Others 16.6% structured and 1.7%
Slide 16: Taipei Fubon Bank: Loan composition
Taipei Fubon Bank: Loan composition Mortgages growth outperformed industry while consumer loans contribution increase Loan growth excluding government loans was down 2.6%. Slower foreign currency corporate loans due to Renminbi depreciation & China’s easing monetary policy Loans by type NT$bn 1,
Slide 17: Taipei Fubon Bank: Corporate credit
Taipei Fubon Bank: Corporate credit NT dollar corporate loans maintain steady Contributions from SME credit continues increasing, reaching 39.3% in 2016 Corporate loan by currency SME credit and as % of corporate credit NT$bn NT$bn SME SME as % of corporate credit NTD Non-NTD 357.4 218 219 218 3
Slide 18: Taipei Fubon Bank: Interest yield and margin
Taipei Fubon Bank: Interest yield and margin NIM and loan-to-deposit spread NIM Loan-to-deposit spread 1.32% 1.31% 1.32% 1.34% 1.34% 1.28% 1.31% 1.24% 1.07% 1.10% 1.08% 1.04% 1.01% 1.01% 1.00% 0.97% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 Loan yield and deposit yield Loan rate Deposit rate 2.05% 2.0
Slide 19: Taipei Fubon Bank: Deposit mix and LDR
Taipei Fubon Bank: Deposit mix and LDR Deposit mix in NTD NTD loan-to-deposit ratio (LDR) NT$bn 1,088 1,141 44.9% 47.3% Time 84.5% 81.8% Demand 55.1% 52.7% Dec-15 Dec-16 Dec-15 Dec-16 Deposit mix in foreign currency Foreign currency LDR NT$bn 468 514 56.6% 56.6% Time Demand 53.5% 37.1% 43.4% 43.4% D
Slide 20: Taipei Fubon Bank: Asset quality
Taipei Fubon Bank: Asset quality NPL ratio Coverage ratio 0.27% Market average 816.37% 0.19% 0.20% 716.80% 678.90% 663.16% 0.18% 0.18% 652.12% 0.15% Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 NPL ratio by business Net provision NT$mn Corporate loan Mortgage loan 0.8% 0.6%
Slide 21: Agenda
Agenda Performance highlights of Fubon Financial Holdings Performance review by subsidiary • Taipei Fubon Bank • Fubon Life • Fubon Insurance • Fubon Securities • Overseas Banking Operation 21
Slide 22: Fubon Life: Total premium
Fubon Life: Total premium 4% yoy growth in total premium income NT$bn 493.6 474.4 420.1 425.0 289.3 58.6% 269.1 56.7% 207.2 49.3% 234.0 55.1% Renewal premium FYP 212.9 50.7% 205.3 43.3% 204.3 41.4% 191.0 44.9% 2013 2014 2015 2016 22
Slide 23: Fubon Life: First year premium (FYP)
Fubon Life: First year premium (FYP) Sales of tradition regular-paid policies was up 76.5% yoy Traditional regular-paid policies contribution increased from 24.9% to 44.2% in 2016 FYP composition YoY NT$bn 1Q16 2Q16 3Q16 4Q16 2016 % 2015 % growth Traditional life: Regular-paid 24.9 23.9 20.0 21.
Slide 24: Fubon Life: Value of new business & FYPE
Fubon Life: Value of new business (VNB) & First year premium equivalent (FYPE) FYPE growth 54.0% yoy in 2016,leading FYPE to the improvement in FYPE/FYP ratio NT$bn 103.5 VNB grew 55.2% yoy in 2016 Traditional life: Regular-paid 67.2 Traditional life: Single-paid 79.5% Investment-linked 66.3% VN
Slide 25: Fubon Life: Composition of investment income
Fubon Life: Composition of investment income Recurring revenue continues to grow and account for the majority of investment income Steady contributions from realized gains 2016 YoY NT$bn 2014 2015 2016 growth Recurring investment income 88.7 101.0 106.1 5.0% Cash dividend income from equity inve
Slide 26: Fubon Life: Investment portfolio
Fubon Life: Investment portfolio Investment assets grew steadily Investment portfolio repositioned in response to market volatility 2015/12/31 2016/09/30 2016/12/31 NT$bn Deposit and cash equivalent 168.6 6.0% 189.7 6.2% 165.3 5.3% Domestic fixed income 523.2 18.6% 502.8 16.5% 489.3 15.7% Overse
Slide 27: Fubon Life: Portfolio of overseas fixed income
Fubon Life: Portfolio of overseas fixed income Overseas fixed income by asset type Overseas fixed income by region 3.5% 3.3% 21.5% 18.1% 54.3% 54.2% Others Corporate Asia & Other credit 59.1% 60.1% North America Financial bond Europe Government bond 39.2% 39.4% 22.8% 18.4% 3.0% 3.1% 2015 2016 2015 2
Slide 28: Fubon Life: Hedging composition
Fubon Life: Hedging composition Hedging cost & FX gain/loss FX position of financial assets -28bps -90bps Naked Other USD, currencies, 2015 2016 10.9% 1.1% CS+NDF cost Equities/ mutual -28 -52 funds , 0 FX gain/loss & net 11.1% provision of FX reserve -38 Recurring return 3.86% 3.70% 3.65% 3.34% Bef
Slide 29: Fubon Life: Investment spread
Fubon Life: Investment spread Cost of liability improvement continues Higher breakeven point (net underwriting cost) due to changes in insurance policy mix Investment spread Recurring return and breakeven point Cost of liabilities Investment return Breakeven point Recurring return 4.97% 3.70% 3.
Slide 30: Fubon Life: Investment performance
Fubon Life: Investment performance Movement of unrealized position driven by market volatility and realized gains Unrealized outstanding Movement of unrealized gains from AFS assets Realized Dividend income NT$bn AFS HTM+Inactive* NT$bn gains & MTM (6.4) 52.8 (15.6) 31.7 32.6 3.6 23.4 (6.4) (15.6)
Slide 31: Agenda
Agenda Performance highlights of Fubon Financial Holdings Performance review by subsidiary • Taipei Fubon Bank • Fubon Life • Fubon Insurance • Fubon Securities • Overseas Banking Operation 31
Slide 32: Fubon Insurance: Operating snapshot
Fubon Insurance: Operating snapshot Premium growth outperformed industry. Top 1 position in premium market share Net combined ratio increased 1.2ppts due to earthquake and typhoons incidents happened in 2016 Direct written premium by product Net combined ratio NT$bn 33.1 91.1% 92.3% 30.4 10.2% 9
Slide 33: Fubon P&C (China): Business progress
Fubon P&C (China): Business progress 50 offices in Fujian, Liaoning, Chongqing and other cities Top 5 among foreign players in Mainland China in terms of premium with 20.9% growth yoy Gross written premium Net combined ratio RMB$m 1055.1 118.8% 116.3% 872.6 20.7% Fixed Exp.Ratio Commercial line
Slide 34: Agenda
Agenda Performance highlights of Fubon Financial Holdings Performance review by subsidiary • Taipei Fubon Bank • Fubon Life • Fubon Insurance • Fubon Securities • Overseas Banking Operation 34
Slide 35: Fubon Securities: Financial highlights
Fubon Securities: Financial highlights Growth in wealth management business Market share & ranking with diversified products 2016 Ranking 2015 Ranking Market leader in overseas ETF with AUM AUM of overseas 594 2 457 2 ETF (NT$mn) up by 30% yoy Brokerage per 0.097% 2 0.094% 2 branch* Leading po
Slide 36: Agenda
Agenda Performance highlights of Fubon Financial Holdings Performance review by subsidiary • Taipei Fubon Bank • Fubon Life • Fubon Insurance • Fubon Securities • Overseas Banking Operation 36
Slide 37: Fubon Bank (Hong Kong): Key balance sheet items
Fubon Bank (Hong Kong): Key balance sheet items Conservative credit policy given China & Hong Kong economy slowdown Core revenue steadily grow with cautious stance Loans Deposits HK$m HK$m 63,564 43,578 42,570 58,385 Dec-15 Dec-16 Dec-15 Dec-16 Assets Net worth HK$m HK$m 95,648 11,373 90,993 10,
Slide 38: Fubon Bank (Hong Kong): Financial highlight
Fubon Bank (Hong Kong): Financial highlight Earnings grew by 22% with bancassurance fee growth of 40% and 9% growth in net interest income Stable asset quality with improvement in coverage ratio Net Profits NIM HK$m 1.45% 635 1.40% 522 2015 2016 2015 2016 ROAA & ROAE NPL ratio & Coverage ratio R
Slide 39: Fubon Bank (China): Key balance sheet items
Fubon Bank (China): Key balance sheet items Assets Net worth RMB$m RMB$m 73,647 5,286 68,154 4,879 2015 2016 2015 2016 Loans Deposits RMB$m Rediscount Loans (excluding rediscount) RMB$m 30,822 46,013 27,814 40,210 6,664 5,552 24,159 22,262 2015 2016 2015 2016 39
Slide 40: Fubon Bank (China): Financial highlight
Fubon Bank (China): Financial highlight Net Profits NIM RMB$m 390 412 1.57% 1.45% 2015 2016 2015 2016 ROAA & ROAE NPL ratio & Coverage ratio ROAA ROAE NPL Coverage ratio 8.28% 8.11% 265.1% 0.58% 0.58% 161.8% 165.1% 1.92% 1.60% 1.04% 2015 2016 Dec-15 Sep-16 Dec-16 40
Slide 41: Thank you
es Hawes we, Thank you
Slide 42: Fubon Financial - Financial summary
Fubon Financial - Financial summary NT$ millions, except for percentages 4Q16 3Q16 2Q16 1Q16 2016 2015 YoY Income Statement Data Net interest income 27,293 26,280 26,422 25,781 105,777 94,965 11.4% Insurance income 60,820 75,704 79,434 78,425 294,382 264,088 11.5% Net gains (losses) on FX and financ
Slide 43: Taipei Fubon Bank - Financial summary
Taipei Fubon Bank - Financial summary NT$ millions, except for percentages 4Q16 3Q16 2Q16 1Q16 2016 2015 YoY Income statement data Interest income 10,286 10,382 10,818 11,223 42,709 46,647 -8.4% Interest expense (4,758) (4,758) (4,962) (5,377) (19,855) (23,294) -14.8% Net interest income 5,528 5,624
Slide 44: Fubon Life - Financial summary
Fubon Life - Financial summary NT$ millions, except for percentages 4Q16 3Q16 2Q16 1Q16 2016 2015 YoY Income statement data First year premium 45,253 42,966 56,342 59,722 204,283 205,282 -0.5% Retained earned premium 110,595 114,461 122,708 120,844 468,608 440,297 6.4% Total investment income 30,143
Slide 45: Fubon Insurance - Financial summary
Fubon Insurance - Financial summary NT$ millions, except for percentages 4Q16 3Q16 2Q16 1Q16 2016 2015 YoY Income statement data Direct written premiums 9,384 9,161 10,330 9,297 38,172 35,016 9.0% Retention of earned premiums 7,610 7,451 7,286 7,230 29,577 27,139 9.0% Net income from investment 566
Slide 46: Fubon Securities - Financial summary
Fubon Securities - Financial summary NT$ millions, except for percentages 4Q16 3Q16 2Q16 1Q16 2016 2015 YoY Income statement data Brokerage commissions 659 712 655 701 2,728 3,044 -10.4% Net interest income 218 224 244 215 901 942 -4.3% Fee income 142 81 74 39 336 298 12.8% Net principal transaction
Slide 47: Fubon Bank (Hong Kong) - Financial Summary
Fubon Bank (Hong Kong) - Financial Summary HK$ millions, except for percentages 2H16 1H16 HoH 2016 2015 YoY Income Statement Data Interest income 989 936 5.6% 1,925 1,809 6.4% Interest expense (386) (370) 4.2% (756) (736) 2.7% Net interest income 603 566 6.6% 1,169 1,073 8.9% Net fee income 181 184
Slide 48: Fubon Bank (China) - Financial Summary
Fubon Bank (China) - Financial Summary RMB millions, except for percentages 4Q16 3Q16 2Q16 1Q16 2016 2015 YoY Income Statement Data Interest income 472 492 555 491 2,011 2,232 -9.9% Interest expense (382) (401) (416) (418) (1,618) (1,925) -16.0% Net interest income 90 91 139 73 393 307 28.1% Net fee
Fubon Financial Holdings — FY2016 Earnings Presentation on 6ix