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

Fubon Financial — 1H 2017 Earnings Presentation

45 slides from Fubon Financial's earnings presentation, Aug 25, 2017

1. Slide 1: 2017 1H Interim Results

   2017 1H Interim Results Fubon Financial Holdings 2017.08.25

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 reached NT$18,690 million in 6M17, down 21.2% yoy, due to FX losses and hedging costs on the back of NT dollar appreciation.  Net interest revenue maintains steady growth with sound loan growth Taipei Fubon Bank momentum  Asset quality rem

5. Slide 5: Fubon Financial Holdings: Profitability

   Fubon Financial Holdings: Profitability Net profits NT$bn 14.9 23.7 18.7 9.9 8.8 2Q16 1Q17 2Q17 1H16 1H17 Earning per share (EPS) NT$ 2.32 1.46 1.73 0.97 0.76 2Q16 1Q17 2Q17 1H16 1H17 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$bn NT$bn 1H16 1H17 Fubon Fubon Bank (HK), Securities, 1.4 , 6.5% 23.7 0.8 , 3.9% Fubon 18.7 P&C, 1.9 , Taipei 8.9% Fubon Bank, 8.6 , 40.4% 13.0 8.6 8.6 8.6

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

   Fubon Financial Holdings: Asset and net worth Total assets NT$bn 6,585 6,351 6,161 5,987 5,438 Jun-16 Jun-17 2014 2015 2016 Equity attributable to parent company NT$bn 437 447 408 427 368 Jun-16 Jun-17 2014 2015 2016 Note: Fubon adopted fair value method for investment property evaluation since Sept

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

   Fubon Financial Holdings: ROA & ROE ROA 1.21% 0.79% 1.12% 0.79% 0.58% 1H16 1H17 2014 2015 2016 ROE 11.79% 16.07% 16.40% 8.55% 12.19% 1H16 1H17 2014 2015 2016 Note: Fubon adopted fair value method for investment property evaluation since September 2014. 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  Core revenue maintains steady growth Revenue composition of Taipei Fubon Bank NT$bn Fubon Bank (China) Treasury & others 44.1 42.4 Net fee income 40.7 11.7% Net interest income 14.1% 13.9% 21.7 21.2 25.0% 17.5% 13.6% 15.2% 8.9% 15.2% 19.1% 26.3% 28.3% 24.0% 28.1% 27.8% 3

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

    Taipei Fubon Bank: Fee and wealth management revenue  Sound growth momentum in credit card and syndication loan business  Wealth management product sales volume continue growing Sources of fee revenue Wealth management fee NT$mn NT$mn 6,143 5,895 4,895 4.6% 5,355 5.5% 5.1% 4,429 8.2% 7.9% 10.3% 5.

12. Slide 12: Taipei Fubon Bank: Loan composition

    Taipei Fubon Bank: Loan composition  Mortgages and consumer loans growth outperformed industry with increasing contribution  Corporate loans momentum recovering, up 3.6% QoQ Loans by type NT$bn 1,155.3 1,136.0 1,151.0 QoQ 1.3% YoY -0.4% 0.5% 0.5% 0.5% 3.9% 4.1% 4.3% QoQ -2.5% YoY -10.2% Credit car

13. Slide 13: Taipei Fubon Bank: Corporate credit

    Taipei Fubon Bank: Corporate credit  Foreign currency loans up by 10.6% from the trough at end-2016, mainly from overseas branches  SME credit continues growing, with 4% QoQ growth, and maintaining steady contributions Corporate loan by currency SME credit and as % of corporate credit NT$bn NT$bn

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% 1.34% 1.34% 1.30% 1.29% 1.08% 1.04% 1.01% 1.01% 1.00% 1.03% 0.97% 0.98% 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 Loan yield and deposit yield Loan rate Deposit rate 2.05% 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$bn 1,117 1,178 48.5% 48.4% Time Demand 83.5% 79.8% 51.5% 51.6% Jun-16 Jun-17 Jun-16 Jun-17 Deposit mix in foreign currency Foreign currency LDR NT$bn 456 567 54.3% 55.7% Time Demand 48.5% 37.1% 45.7% 44.3% J

16. Slide 16: Taipei Fubon Bank: Asset quality

    Taipei Fubon Bank: Asset quality NPL ratio Coverage ratio 0.30% Market average 678.90% 663.16% 652.12% 641.81% 657.81% 0.19% 0.20% 0.20% 0.20% 0.18% Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 NPL ratio by business Net provision Corporate loan Mortgage loan NT$mn 0.8% 781 0

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  2% yoy growth in total premium income and 22% growth in renewal premium NT$bn 493.6 474.4 425.0 255.3 260.5 269.1 289.3 58.6% 55.1% 56.7% 234.0 139.2 54.5% 65.0% Renewal premium 169.3 FYP 191.0 205.3 43.3% 204.3 41.4% 116.1 45.5% 35.0% 44.9% 91.2 1H16 1H17 2014 2015 2016

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

    Fubon Life: First year premium (FYP)  Contributions from traditional policies sales reached 78.8% FYP composition YoY NT$bn 1Q17 2Q17 1H17 % 1H16 % growth Traditional life: Regular-paid 20.5 11.6 32.1 35.2% 48.8 42.1% -34.3% Traditional life: Single-paid 20.0 19.8 39.7 43.6% 41.8 36.0% -4.9% Intere

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

    Fubon Life: Value of new business (VNB) & First year premium equivalent (FYPE)  FYPE reached NT$32.7 billion in 6M17, FYPE with balanced distribution channel NT$bn 58.9  VNB/FYPE ratio improved thanks to Traditional life: Regular-paid stable contributions from traditional Traditional life: regular

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

    Fubon Life: Composition of investment income  Investment income mainly came from recurring revenue  Capital gains performance remains decent NT$bn 1H16 1H17 YoY 2014 2015 2016 Recurring investment income 49.9 50.2 0.6% 88.7 101.0 106.1 Cash dividend income from equity investment 4.4 3.0 -31.9% 12.

22. Slide 22: Fubon Life: Investment portfolio

    Fubon Life: Investment portfolio  Steady growth of investment book  Investment portfolio repositioned in response to market volatility 2016/6/30 2017/03/31 2017/06/30 NT$bn Deposit and cash equivalent 228.8 7.6% 142.8 4.6% 124.4 3.8% Domestic fixed income 465.5 15.6% 445.1 14.3% 431.8 13.2% Overse

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 3.0% 3.1% 19.0% 20.7% Others 53.5% 52.6% Corporate credit Asia & Other Financial bond 60.4% North America 57.1% Europe Government bond 40.7% 39.7% 20.6% 22.2% 2.8% 4.6% Jun-16 Jun-17 Ju

24. Slide 24: Fubon Life: Hedging composition

    Fubon Life: Hedging composition Hedging cost & FX gain/loss FX position CS+NDF cost FX gain/loss & net provision of FX reserve Other -75bps -169bps -203bps -137bps Naked currencies, 1H16 1H17 1Q17 2Q17 USD, 1.0% 1.6% Equities/ mutual -30 -88 -87 -89 funds , -45 17.3% -48 -81 -116 Recurring return Be

25. Slide 25: Fubon Life: Cost of liability & Breakeven point

    Fubon Life: Cost of liability & Breakeven point  Cost of liability improvement continues  Breakeven point improvement due to improving cost structure Cost of liability Breakeven point 3.80% 3.79% 3.24% 3.78% 3.19% 3.19% 3.76% 3.74% 2.98% 2.85% Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Jun-16 Sep-16 Dec-1

26. Slide 26: Fubon Life: Investment performance

    Fubon Life: Investment performance  Improvement in unrealized position Unrealized outstanding Movement of unrealized gains from AFS assets NT$bn AFS HTM+Inactive* NT$bn Realized Dividend gains income & MTM 24.3 17.4 0.0 17.4 27.4 (3.2) (3.2) Mar-17 6.8 Jun-17 Mar-17 Jun-17 Note: *before tax basis N

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  Outstanding underwriting performance with decreasing net combined ratio Direct written premium by product Net combined ratio NT$bn 19.3 91.7% 87.5% 17.2 9.7% 9.7% 14.1% 35.4% 33.7% 2.

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

    Fubon P&C (China): Business progress  56 offices located in Xiamen, Fujian, Xiamen, Dalian, Liaoning etc.  Top five foreign P&C insurance in China in terms of premium market share Gross written premium Net combined ratio RMB$m 502.5 522.7 114.4% 109.9% 22.3% 23.8% 36.4% Fixed Exp.Ratio 34.2% Comme

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 Market share & ranking  Franchise optimization to enhance market position 1H17 Ranking 1H16 Ranking  Completion of the largest CB issuance this Brokerage per branch* 0.125% 1 0.094% 2 year from Highwealth Construction Market Share of SPO 33.06% 1 8.83% 5  ET

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 Loans Deposits HK$m HK$m 45,222 63,334 43,177 61,789 Jun-16 Jun-17 Jun-16 Jun-17 Assets Net worth HK$m HK$m 97,147 12,069 94,139 11,010 Jun-16 Jun-17 Jun-16 Jun-17 33

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

    Fubon Bank (Hong Kong): Financial highlight  Net profits up by 35% with net interest income increase and lower provisions  Asset quality stable with coverage ratio improvement continues Net Profits NIM HK$m 312 1.46% 1.42% 231 1H16 1H17 1H16 1H17 ROAA & ROAE1 NPL ratio & Coverage ratio2 ROAA ROAE

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

    Fubon Bank (China): Key balance sheet items Assets Net worth RMB$m RMB$m 68,640 5,140 5,318 5,352 64,150 64,588 Jun-16 Mar-17 Jun-17 Jun-16 Mar-17 Jun-17 Loans Deposits RMB$m RMB$m Rediscount Loans (excluding rediscount) 42,209 29,672 28,625 39,338 27,174 37,960 7,669 3,241 3,947 23,228 25,384 22,00

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

    Fubon Bank (China): Financial highlight Net Profits NIM RMB$m 1.54% -74 1.44% -68 264 1.39% -29 93 1H16 Treasury NII Net fees 1H17 1H16 1Q17 2Q17 and others ROAA & ROAE NPL ratio & Coverage ratio ROAA ROAE NPL Coverage Ratio 10.55% 161.4% 167.1% 161.1% 1.85% 1.62% 1.59% 3.48% 0.74% 0.28% 1H16 1H17 J

37. Slide 37: Fubon Bank (China): Business outlook

    Fubon Bank (China): Business outlook  Local retail business on back of RMB retail AUM license RMB$m (1) Local retail business launched in Shanghai by Retail AUM (Left) Number of retail clients (Right) end-September and across all branches by year-end 16,000 80,000 (2) Growth opportunities in demand

38. Slide 38: Thank you

    es © Hawes we, Thank you

39. Slide 39: Fubon Financial - Financial summary

    Fubon Financial - Financial summary NT$ millions, except for percentages 1H17 1H16 YoY 2Q17 1Q17 2016 2015 YoY Income Statement Data Net interest income 54,873 52,203 5.1% 27,782 27,091 105,777 94,965 11.4% Insurance income 146,192 157,859 -7.4% 61,371 84,821 294,382 264,088 11.5% Net gains (losses)

40. Slide 40: Taipei Fubon Bank - Financial summary

    Taipei Fubon Bank - Financial summary NT$ millions, except for percentages 1H17 1H16 YoY 2Q17 1Q17 2016 2015 YoY Income statement data Interest income 21,697 22,041 -1.6% 11,021 10,676 42,709 46,647 -8.4% Interest expense (10,426) (10,339) 0.8% (5,394) (5,032) (19,855) (23,294) -14.8% Net interest i

41. Slide 41: Fubon Life - Financial summary

    Fubon Life - Financial summary NT$ millions, except for percentages 1H17 1H16 YoY 2Q17 1Q17 2016 2015 YoY Income statement data First year premium 91,209 116,064 -21.4% 42,836 48,373 204,283 205,282 -0.5% Retained earned premium 243,313 243,553 -0.1% 117,431 125,882 468,608 440,297 6.4% Total invest

42. Slide 42: Fubon Insurance - Financial summary

    Fubon Insurance - Financial summary NT$ millions, except for percentages 1H17 1H16 YoY 2Q17 1Q17 2016 2015 YoY Income statement data Direct written premiums 21,657 19,627 10.3% 11,116 10,541 38,172 35,016 9.0% Retention of earned premiums 15,890 14,516 9.5% 8,006 7,884 29,577 27,139 9.0% Net income

43. Slide 43: Fubon Securities - Financial summary

    Fubon Securities - Financial summary NT$ millions, except for percentages 1H17 1H16 YoY 2Q17 1Q17 2016 2015 YoY Income statement data Brokerage commissions 1,630 1,356 20.2% 852 778 2,728 3,044 -10.4% Net interest income 490 459 7.0% 248 242 901 942 -4.3% Fee income 334 113 195.8% 190 145 336 298 12

44. Slide 44: Fubon Bank (Hong Kong) - Financial Summary

    Fubon Bank (Hong Kong) - Financial Summary HK$ millions, except for percentages 1H17 1H16 YoY 2016 2015 YoY Income Statement Data Interest income 1,053 936 12.5% 1,925 1,809 6.4% Interest expense (459) (370) 23.8% (756) (736) 2.7% Net interest income 594 566 5.0% 1,169 1,073 8.9% Net fee income 166

45. Slide 45: Fubon Bank (China) - Financial Summary

    Fubon Bank (China) - Financial Summary RMB millions, except for percentages 1H17 1H16 YoY 2Q17 1Q17 2016 2015 YoY Income Statement Data Interest income 963 1,046 -8.0% 491 472 2,011 2,232 -9.9% Interest expense (819) (834) -1.8% (420) (399) (1,618) (1,925) -16.0% Net interest income 144 212 -32.2% 7

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