Fubon Financial Holding Co., Ltd. · TWSE:2881

Fubon Financial — H1 2016 Earnings Presentation

44 slides from Fubon Financial's earnings presentation, Aug 26, 2016

1. Slide 1: 2016 1H Interim Results

   2016 1H Interim Results Fubon Financial Holdings 2016.08.26

2. 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

3. 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

4. Slide 4: Fubon Financial Holdings: Operation highlights

   Fubon Financial Holdings: Operation highlights Net profits NT$23,711 million in 6M16, down 43.6% yoy, due to lower investment income and higher first year strain on the back of strong premium growth as regular-paid policies increase  Net interest revenue and net fee revenue maintain steady growth T

5. Slide 5: Fubon Financial Holdings: Profitability

   Fubon Financial Holdings: Profitability Net profits NT$bn 42.1 22.0 14.9 23.7 8.8 2Q15 1Q16 2Q16 1H15 1H16 Earning per share (EPS) NT$ 4.11 2.15 1.46 2.32 0.86 2Q15 1Q16 2Q16 1H15 1H16 5

6. Slide 6: 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$bn 1H15 1H16 NT$bn Fubon Fubon Bank Securities, (HK), 1.1 , 0.8 , 3.1% 4.4% 42.1 Fubon P&C, 1.6 , 6.3% Taipei Fubon 29.1 Bank, 8.6 , 23.7 34.4% 13.0 10.2 8

7. Slide 7: Fubon Financial Holdings: Asset and net worth

   Fubon Financial Holdings: Asset and net worth Total assets NT$bn 6,161 5,987 5,575 5,438 4,597 6M15 6M16 2013 2014 2015 Equity attributable to parent company NT$bn 437 408 368 342 384 6M15 6M16 2013 2014 2015 Note: Fubon adopted fair value method for investment property evaluation since September 20

8. Slide 8: Fubon Financial Holdings: ROA & ROE

   Fubon Financial Holdings: ROA & ROE ROA 1.60% 1.53% 0.98% 0.79% 0.59% 2Q15 1Q16 2Q16 1H15 1H16 ROE 22.19% 21.25% 14.85% 11.79% 9.16% 2Q15 1Q16 2Q16 1H15 1H16 8

9. Slide 9: Agenda

   Agenda  Performance highlights of Fubon Financial Holdings  Performance review by subsidiary • Taipei Fubon Bank • Fubon Life • Fubon Insurance • Fubon Securities • Overseas banking operation 9

10. Slide 10: Taipei Fubon Bank: Revenue

    Taipei Fubon Bank: Revenue  Steadily growth from net interest income and net fee revenue Revenue composition of Taipei Fubon Bank NT$bn Fubon Bank (China) Treasury & others Net fee income 44.1 42.4 Net interest income 5.2 11.7% 6.0 14.1% 33.7 21.7 11.0 25.0% 21.2 7.4 17.5% 9.5 28.2% 2.5 3.3 15.3% 1

11. Slide 11: Taipei Fubon Bank: Fee and wealth management revenue

    Taipei Fubon Bank: Fee and wealth management revenue  Wealth management business continues growing with bancasurrance contribution increase Sources of fee revenue(1) Wealth management fee(2) NT$mn NT$mn 6,143 4,895 5,834 4,559 4.6% 7.9% 4.3% 5.4% 6.4% 13.2% 10.3% 14.6% 11.2% structured and 1.5% equ

12. Slide 12: Taipei Fubon Bank: Loan composition

    Taipei Fubon Bank: Loan composition  Contribution from mortgage increase  Loan growth excluding government loans was 1.5% Loans by type NT$bn 1,152.5 1,155.3 YoY +0.2% 0.6% 0.5% 3.7% 3.9% Credit card revolving YoY -7.1% 36.1% 39.7% Other consumer loans YoY +4.8% Mortgage YoY +10.3% 52.3% 49.7% Cor

13. Slide 13: Taipei Fubon Bank: Corporate credit

    Taipei Fubon Bank: Corporate credit  NT dollar denominated corporate loan delivered 5% YoY growth  SME credit accounts for 36.8% of corporate credit Corporate loan by currency SME credit and as % of corporate credit NT$bn NT$bn NTD Non-NTD SME SME as % of corporate credit 353.9 357.4 340.3 346.4 3

14. Slide 14: 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 1.31% 1.32% 1.31% 1.32% 1.27% 1.28% 1.24% 1.24% 1.09% 1.10% 1.07% 1.10% 1.08% 1.04% 1.01% 1.01% 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 Loan yield and deposit yield Loan rate Deposit rate 2.04% 2.0

15. Slide 15: 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$bn 1,065 1,117 45.6% 48.5% Time Demand 83.0% 83.5% 54.4% 51.5% Jun-15 Jun-16 Jun-15 Jun-16 Deposit mix in foreign currency Foreign currency LDR NT$bn 391 456 58.0% 54.3% Time Demand 68.4% 48.5% 42.0% 45.7% J

16. Slide 16: Taipei Fubon Bank: Asset quality

    Taipei Fubon Bank: Asset quality NPL ratio Coverage ratio 0.27% Market 1113.09% 1033.47% average 816.37% 0.18% 0.18% 716.80% 678.90% 0.15% 0.11% 0.12% Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 NPL ratio by business Net provision NT$mn Corporate loan Mortgage loan 436 0.8%

17. Slide 17: Agenda

    Agenda  Performance highlights of Fubon Financial Holdings  Performance review by subsidiary • Taipei Fubon Bank • Fubon Life • Fubon Insurance • Fubon Securities • Overseas banking operation 17

18. Slide 18: Fubon Life: Total premium

    Fubon Life: Total premium  24% yoy growth in total premium income NT$bn 474.4 425.0 420.1 255.3 269.1 56.7% 205.1 207.2 49.3% 55.1% 234.0 Renewal premium 139.2 54.5% FYP 124.1 60.5% 212.9 50.7% 205.3 43.3% 191.0 44.9% 116.1 45.5% 81.0 39.5% 1H15 1H16 2013 2014 2015 18

19. Slide 19: Fubon Life: First year premium (FYP)

    Fubon Life: First year premium (FYP)  43% yoy growth in FYP mainly came from tradition regular-paid policies FYP composition YoY NT$bn 1Q16 2Q16 1H16 % 1H15 % growth Traditional life: Regular-paid 24.9 23.9 48.8 42.1% 24.7 30.5% 97.9% Traditional life: Single-paid 22.9 18.9 41.8 36.0% 42.1 51.9% -0

20. Slide 20: Fubon Life: Value of new business & FYPE

    Fubon Life: Value of new business (VNB) & First year premium equivalent (FYPE)  FYPE growth 104% yoy led to FYPE improvement in FYPE/FYP ratio 58.9 NT$bn  VNB grew 104% in 1H16 yoy Traditional life: Regular-paid Traditional life: 28.9 79.4% Single-paid Investment-linked VNB 72.2% Interest-sensitiv

21. Slide 21: Fubon Life: Composition of investment income

    Fubon Life: Composition of investment income  Investment income mainly came from recurring revenue YoY NT$bn 1H15 1H16 20131 2014 2015 growth Recurring investment income 42.6 49.9 17.1% 75.2 88.7 101.0 Cash dividend income from equity investment2 3.5 4.4 23.6% 9.9 12.6 16.5 Realized gains from fixe

22. Slide 22: Fubon Life: Investment portfolio

    Fubon Life: Investment portfolio  Investment assets grew steadily  Investment portfolio repositioned in response to market volatility 2015/6/30 2015/12/31 2016/6/30 NT$bn Deposit and cash equivalent 159.4 6.0% 168.6 6.0% 228.8 7.6% Domestic fixed income 576.3 21.7% 523.2 18.6% 465.5 15.6% Overseas

23. Slide 23: 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 4.3% 3.0% 19.0% 26.3% Others 47.5% 53.5% Corporate credit Asia & Other Financial 60.4% North America bond 53.2% Europe Government bond 43.9% 40.7% 20.5% 20.6% 4.3% 2.8% Jun-15 Jun-16 Ju

24. Slide 24: Fubon Life: Hedging composition

    Fubon Life: Hedging composition Hedging cost & FX gain/loss FX position hedging composition -85bps -75bps Naked Other USD, currencies, 1H15 1H16 8.6% 4.1% Equities/ CS cost mutual -27 -30 funds , FX gain/loss & net 11.7% -58 -45 provision of FX reserve Recurring return 3.52% 3.36% 3.35% 3.22% Before

25. Slide 25: Fubon Life: Investment spread

    Fubon Life: Investment spread  Cost of liability improvement continues  Higher breakeven point (net underwriting cost) due to strong FYP growth Investment spread Recurring return and breakeven point Cost of liabilities Investment return Breakeven point Recurring return 5.59% 3.35% 3.22% 3.24% 4.33

26. Slide 26: Fubon Life: Investment performance

    Fubon Life: Investment performance  Improvement in unrealized position Unrealized outstanding Movement of unrealized gains from AFS assets Dividend income & Realized NT$bn AFS HTM+Inactive* NT$bn MTM gains 8.3 68.0 17.8 55.9 16.9 33.9 40.5 7.4 7.4 16.9 Mar-16 Jun-16 8/24 Mar-16 Jun-16 Note: *before

27. Slide 27: Agenda

    Agenda  Performance highlights of Fubon Financial Holdings  Performance review by subsidiary • Taipei Fubon Bank • Fubon Life • Fubon Insurance • Fubon Securities • Overseas banking operation 27

28. Slide 28: Fubon Insurance: Operating snapshot

    Fubon Insurance: Operating snapshot  Premium growth outperformed industry. Top 1 position in premium market share  Net retained losses from Tainan earthquake lifts net claim ratio by 5.7% Direct written premium by product Net combined ratio NT$bn 17.2 15.6 9.7% 91.7% Others 86.4% 9.6% 14.3% Health

29. Slide 29: Fubon P&C (China): Business progress

    Fubon P&C (China): Business progress  42 offices in 3 provinces with premium growth of 20.9% yoy  Top five foreign P&C insurance in China in terms of premium market share Gross written premium Net combined ratio RMB$m 115.1% 502.5 109.9% Commercial Net expense 415.6 line ratio: fixed cost 19.3% 40

30. Slide 30: Agenda

    Agenda  Performance highlights of Fubon Financial Holdings  Performance review by subsidiary • Taipei Fubon Bank • Fubon Life • Fubon Insurance • Fubon Securities • Overseas banking operation 30

31. Slide 31: Fubon Securities: Financial highlights

    Fubon Securities: Financial highlights  Stable market position in major business Market share & ranking lines 1H2016 Ranking 1H2015 Ranking  Market leader in overseas ETF NAV of overseas 58,000 #1 30,700 #2 ETF (NT$mn) Brokerage per  Growth in wealth management business 0.094% #2 0.093% #2 branch

32. 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

33. Slide 33: Fubon Bank (Hong Kong): Key balance sheet items

    Fubon Bank (Hong Kong): Key balance sheet items  Credit policy turns conservative given China & Hong Kong economy slowdown  Deposits accumulation to secure sufficient liquidity given market uncertainty Loans Deposits HK$m HK$m 61,789 44,338 43,177 56,901 Jun-15 Jun-16 Jun-15 Jun-16 Assets Net wort

34. Slide 34: Fubon Bank (Hong Kong): Financial highlight

    Fubon Bank (Hong Kong): Financial highlight  Loan reserves raised to lift coverage ratio  NIM widen due to continuous deposit costs improvement Net Profits NIM HK$m 378 1.46% 1.33% 231 1H15 1H16 1H15 1H16 ROAA & ROAE1 NPL ratio & Coverage ratio2 ROAA ROAE NPL ratio Coverage ratio 71.9% 7.18% 60.5%

35. Slide 35: Fubon Bank (China): Key balance sheet items

    Fubon Bank (China): Key balance sheet items Assets Net worth RMB$m RMB$m 5,140 68,640 4,669 65,541 Jun-15 Jun-16 Jun-15 Jun-16 Loans Deposits RMB$m Rediscount Loans (excluding rediscount) RMB$m 29,493 29,672 41,185 42,209 9,367 7,669 20,126 22,003 Jun-15 Jun-16 Jun-15 Jun-16 35

36. Slide 36: Fubon Bank (China): Financial highlight

    Fubon Bank (China): Financial highlight Net Profits NIM RMB$m 264 1.54% 197 1.47% 1H15 1H16 1H15 1H16 ROAA & ROAE NPL ratio & Coverage ratio ROAA ROAE NPL Coverage ratio 10.55% 8.53% 252.23% 0.74% 157.53% 0.62% 161.43% 1.91% 1.85% 1.03% 1H15 1H16 Jun-15 Mar-16 Jun-16 Note: ROAA and ROAE are annualiz

37. Slide 37: Thank you

    es © Hawes we, Thank you

38. Slide 38: Fubon Financial - Financial summary

    Fubon Financial - Financial summary NT$ millions, except for percentages 1H16 1H15 YoY 2Q16 1Q16 2015 2014 YoY Income Statement Data Net interest income 52,203 44,628 17.0% 26,422 25,781 94,965 89,315 6.3% Insurance income 157,859 102,357 54.2% 79,434 78,425 264,088 230,938 14.4% Net gains (losses)

39. Slide 39: Taipei Fubon Bank - Financial summary

    Taipei Fubon Bank - Financial summary NT$ millions, except for percentages 1H16 1H15 YoY 2Q16 1Q16 2015 2014 YoY Income statement data Interest income 22,041 23,013 -4.2% 10,818 11,223 46,647 45,231 3.1% Interest expense (10,339) (11,880) -13.0% (4,962) (5,377) (23,294) (22,964) 1.4% Net interest in

40. Slide 40: Fubon Life - Financial summary

    Fubon Life - Financial summary NT$ millions, except for percentages 1H16 1H15 YoY 2Q16 1Q16 2015 2014 YoY Income statement data First year premium 116,064 81,022 43.25% 56,342 59,722 205,282 190,974 7.5% Retained earned premium 243,553 191,627 27.10% 122,708 120,845 440,297 390,077 12.9% Total inves

41. Slide 41: Fubon Insurance - Financial summary

    Fubon Insurance - Financial summary NT$ millions, except for percentages 1H16 1H15 YoY 2Q16 1Q16 2015 2014 YoY Income statement data Direct written premiums 19,627 17,690 10.9% 10,330 9,297 35,016 32,718 7.0% Retention of earned premiums 14,516 13,283 9.3% 7,286 7,230 27,139 24,653 10.1% Net income

42. Slide 42: Fubon Securities - Financial summary

    Fubon Securities - Financial summary NT$ millions, except for percentages 1H16 1H15 YoY 2Q16 1Q16 2015 2014 YoY Income statement data Brokerage commissions 1,356 1,482 -8.5% 655 701 3,044 3,204 -5.0% Net interest income 459 520 -11.9% 244 215 942 932 1.0% Fee income 113 45 149.6% 74 39 298 157 89.7%

43. Slide 43: Fubon Bank (Hong Kong) - Financial Summary

    Fubon Bank (Hong Kong) - Financial Summary HK$ millions, except for percentages 1H16 1H15 YoY 2015 2014 YoY Income Statement Data Interest income 936 881 6.3% 1,809 1,677 7.9% Interest expense (370) (381) -2.9% (736) (835) -11.8% Net interest income 566 499 13.3% 1,073 842 27.5% Net fee income 184 1

44. Slide 44: Fubon Bank (China) - Financial Summary

    Fubon Bank (China) - Financial Summary RMB millions, except for percentages 1H16 1H15 YoY 2Q16 1Q16 2015 2014 YoY Income Statement Data Interest income 1,046 1,131 -7.5% 555 491 2,232 2,425 -7.9% Interest expense (834) (997) -16.3% (416) (418) (1,925) (1,846) 4.3% Net interest income 212 134 57.9% 1

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