Slide 1: 3Q / 2008 (v.1) Investor Presentation
3Q / 2008 (v.1) Investor Presentation
Slide 2: Agenda
Agenda 1 Operation Highlights 2 Financial Performance 3 Appendix 2
Slide 3: Large corps loan grew as corps utilize more ST credit line and syndication loan
Large corps loan grew as corps utilize more ST credit line and syndication loan; SME loan remained flat Mega Bank 3Q/08 loan breakdown by customer segment * Unit: NT$bn YoY Growth 1,336 12% 1,277 1,282 Total:1,190 1,206 YoY Growth Other 13% consumer 4% 574 619 Large corp. Mortgage 598 17% 548 546 Go
Slide 4: Corp NPL and new NPL ratio show little sign of asset quality deterioration
Corp NPL and new NPL ratio show little sign of asset quality deterioration Mega Bank corp. NPL ratio Large corp. NPL% SME NPL % 1.50% 1.00% 0.50% 0.00% Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Mega Bank new NPL as % of total loan * Corp NPL ratio r
Slide 5: OBU customers are mainly TW corps with high quality parent companies in Taiwan
OBU customers are mainly TW corps with high quality parent companies in Taiwan Mega Bank 3Q/08 loan breakdown by region * Unit: NT$bn Overseas branches 15% 202 Overseas 186 192 branches 164 177 OBU 157 182 OBU 12% 147 134 144 Domestic 73% 930 930 951 Domestic All overseas / OBU loans are corp loan
Slide 6: OBU and overseas NPL ratio is up slightly but remains relatively low
OBU and overseas NPL ratio is up slightly but remains relatively low compared with domestic loan Mega Bank NPL ratio by regions OBU Overseas branches Domestic branches 1.44% 1.49% 1.35% 1.34% 1.29% 0.51% 0.44% 0.41% 0.41% 0.40% 0.21% 0.06% 0.06% 0.07% 0.07% 3Q/07 4Q/07 1Q/08 2Q/08 3Q/08 6
Slide 7: Unique funding structure, which yields higher actual LDR
Unique funding structure, which yields higher actual LDR; Other funding includes CBC deposit, Post re-deposit & debt Mega Bank’s LDR & deposit balance Mega Bank’s deposit breakdown Unit: %; NT$bn 102% 104% 99% Loan to NTD 96% FX time 94% deposit ratio demand 24% 25% 1,295 1,263 1,285 Total: 1,241 1,
Slide 8: NIM is down due to lower interest-earning investment yield
NIM is down due to lower interest-earning investment yield; while loan interest spread improves Mega Bank NIM & NII * Mega Bank loan interest spread* Unit: NT$MN Spread Yield cost 1.71% 1.61% 1.41% 1.46% 1.40% 4.00% 4.00% 3.78% 3.57% 3.62% 6,492 6,501 6,353 2.39% 2.31% 2.14% 6,221 2.00% 2.00% 6,025
Slide 9: Mutual funds sales is down, while demand for principal protection structured note increases
Mutual funds sales is down, while demand for principal protection structured note increases Mega wealth management AUM Mega wealth management sales Unit: NT$BN Unit: NT$BN Total: 160.9 Total: 150.9 36.0 Total: 76.6 40.8 Bancassurance 7.2 Total: 107.5 16.4 6.4 Total: 69.9 16.1 21.2 Structured Product
Slide 10: … helped to maintain WM fee despite slow global equity market
… helped to maintain WM fee despite slow global equity market Mega wealth management net fee income breakdown by product * Unit: NT$MN -3% Total: 1,403 Total: 1,365 Total: 1,984 160 219 233 Management fee** 458 Total: 1,196 805 1137 Mutual fund fee Total: 992 234 163 166 Total: 675 135 365 631 Banca
Slide 11: Strong FX & corp. banking related fee income
Strong FX & corp. banking related fee income Mega Bank 1-3Q /2008 gross fee income breakdown Unit: NT$MN 1-3Q/07 1-3Q/08 Credit Others card 5% 3% WM 1,4031,365 1,3021,363 Treasury 26% 963 1,060 14% 777 631 Custodian -3% 379 310 308 304 5% 10% 182 6% 61 FX Corp. loan 25% Wealth Mgmt FX Corp. loan Cus
Slide 12: Relatively conservative investment portfolio mix
Relatively conservative investment portfolio mix Stock Mega FHC financial assets breakdown 1 Others (Listed) Stock (Un- 1% 3% listed) Derivatives 5% 3Q/08 3Q/07 1% Mutual fund Stock (Listed) 2 13 28 3% Stock (Un-listed) 3 24 26 Mutual fund 15 24 Gov. bond CP CP 81 90 27% 16% NCD & CD 79 78 Corp bond
Slide 13: Agenda
Agenda 1 Operation Highlights 2 Financial Performance 3 Appendix 13
Slide 14: 1-3Q/2008 earning breakdown by subsidiaries
1-3Q/2008 earning breakdown by subsidiaries 1-3Q/08 earning contribution by sub. Unit: NT$MN - 1,364 170 - -173 -409 -1016 -2,218 -2,282 1 1 1 1 1, 2 3 Mega Bank Mega Mega Bills Chung Kuo Other Subs. FHC expense Mega FHC Securities Insurance & tax adjustment 1. Audited subsidiary earning deducts emp
Slide 15: Interest income is up 15% YoY; fee income is flat
Interest income is up 15% YoY; fee income is flat Mega FHC net revenue * Mega FHC net revenue breakdown Unit: NT$MN 1-3Q/07 1-3Q/08 Insurance Other 15% premium Income 21,809 Down due to NT$7b Down due to 3% 1% 18,954 sub-prime provision, NT$1.1b NT$3.6b Lehman Lehman Net trading** write-off and writ
Slide 16: Relatively stable asset quality so far
Relatively stable asset quality so far Mega NPL balance & NPL ratio* Mega Loan loss reserved and coverage ratio* Market Avg. Mega 2.16% 77.72% 81.05% 1.84% 1.69% 1.55% 76.46% 71.75% 73.42% Mega Market Avg. 1.07% 1.00% 1.12% 1.15% 1.06% 55.10% 64.05% 64.46% 67.35% 14,249 14,700 11,915 14,105 12,692 1
Slide 17: Expect to issue sub-debt on FHC and bank level by year end to maintain optimal CAR
Expect to issue sub-debt on FHC and bank level by year end to maintain optimal CAR Mega FHC* Mega Bank** Total Tier I CAR ratio Moody’s: Baa1 Regulatory Moody’s: A1 / S&P: A Regulatory Requirement : 100% Requirement : 8.0% 119.46% 10.51% 10.54% 10.90% 110.57% 108.99% 10.34% 103.04% 8.60% 8.52% 9.80%
Slide 18: Focus on providing consistent yields for investors
Focus on providing consistent yields for investors Key Earning Metrics 13.57% 12.59% Mid-term ROE target of 10~12% 12.10% Mid-term ROA target of >1% 1.13% 8.66% To increase our ROE and prevent 1.06% 1.04% over-inflated capital base ROE 7.61% Committed to pay out >70% ROA 2.22 0.75% 2.09 Di
Slide 19: 1-3Q/08 Mega FHC consolidated P&L statement
1-3Q/08 Mega FHC consolidated P&L statement NT$MN, except per share data 1-3Q/08* 1-3Q/07* YoY 2007* Net interest income 21,809 18,954 15% 26,296 Net fee income 6,612 6,671 -1% 9,327 Insurance premium 1,044 766 36% 1,167 ST Trading gain -3,212 5,383 -160% 4,545 Available for sales asset gain 492 2,1
Slide 20: 1-3Q/08 Mega FHC consolidated balance sheet
1-3Q/08 Mega FHC consolidated balance sheet NT$MN 1-3Q/08 1-3Q/07 YoY 2007* YTD Assets: Cash and due from banks 322,754 231,972 39% 349,728 -8% Bills and bonds under RP agreement 4,342 6,689 -35% 4,766 -9% Fin. assets at fair value through P&L 164,965 206,439 -20% 210,393 -22% AFS financial assets 2
Slide 21: Agenda
Agenda 1 Operation Highlights 2 Financial Performance 3 Appendix 21
Slide 22: Well established size and scale to win
Well established size and scale to win 1-3Q/2008* Mega Financial Holding Co. (TAIEX.2886) NT$ Billion 100% 100% 100% 100% 96.31% 100% 100% 100% Chung Mega Mega Mega Mega Int’l Mega Life Mega Mega Kuo Mega CTB Securities Investment Insurance FHC Bank Bills Insurance AMC Venture Trust** Agency (P&C) C
Slide 23: Mega Bank's Global Franchise
Mega Bank’s Global Franchise Bridge the gap, reach the world Toronto London Amsterdam Richmond Toronto -Chinatown Vancouver Paris Silicon Valley Chicago New York Tokyo Suzhou** Osaka Los Angeles Bahrain* Phnom Penh** HK Taiwan (OBU) Colon Abu Dhabi** Mumbai** Bangkok Ha Noi** Chonburi Ho Chi Minh Ci
Slide 24: Provision & write-off realized on RMBS/ Lehman/ WaMu/ Iceland
Provision & write-off realized on RMBS/ Lehman/ WaMu/ Iceland As of end of 3Q/2008 Unit: NT$MN USD:NTD=1:32.277 Mega Group Provision and Write-off Realized Original Securities Type Gross On 1~3Q/08 On 1~4Q/07 On 1~3Q/08 As % of total Balance balance income income Total gross balance sheet statement