Fubon Financial Holding Co., Ltd. · TWSE:2881
Fubon Financial — FY2015 Earnings Presentation
48 slides from Fubon Financial's earnings presentation, Mar 30, 2016
Slide 1: Fubon Financial Holdings Year 2015 Overview
Fubon Financial Holdings Year 2015 Overview 2016.03.30
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 2015
Fubon Financial Holdings: Milestones in 2015 Record high financial results Robust earning Highest net profits and EPS among Taiwan FHCs for the 7th performance consecutive year Diversified investment portfolio and track record of investment return. Recurring return continue to increase and wel
Slide 5: Fubon Financial Holdings: Profitability
Fubon Financial Holdings: Profitability Net profits Earning per share (EPS) NT$bn NT$ 63.6 6.21 60.2 5.89 38.5 3.90 29.1 3.07 2012 2013 2014 2015 2012 2013 2014 2015 Note: Fubon adopted fair value method for investment property evaluation since September 2014. 5
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 Fubon Fubon Bank Securities, (HK), 2.4 , 2014 2015 1.3 , 2.0% 3.7% 63.6 60.2 Fubon P&C, 3.2 , 4.9% Taipei Fubon Bank, 17.8 , 27.0% 41.0 35.4 18.2
Slide 7: Fubon Financial Holdings: ROA & ROE
Fubon Financial Holdings: ROA & ROE ROA ROE 1.21% 16.40% 16.07% 1.12% 11.54% 0.88% 10.71% 0.75% 2012 2013 2014 2015 2012 2013 2014 2015 Note: Fubon adopted fair value method for investment property evaluation since September 2014. 7
Slide 8: Fubon Financial Holdings: Asset and net worth
Fubon Financial Holdings: Asset and net worth Total assets Net worth NT$bn NT$bn 5,987 408 5,438 368 342 4,597 306 4,106 2012 2013 2014 2015 2012 2013 2014 2015 Capitalization of FHC and subsidiaries 2015 Regulatory requirements Fubon Financial CAR 124.8% 100% Taipei Fubon Bank tier one 11.3% 6.0% t
Slide 9: 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$9,001 FYP through broker 1 20.6% FYP through bancassurance 1 19.2% Loan Syndication (2) 1
Slide 10: Fubon Financial Holdings: Growth opportunities
Fubon Financial Holdings: Growth opportunities Opportunities Channels • Growth opportunities in life insurance and wealth • Bank branch relocation & Life agency growth management business • e-platforms for efficiency and business growth • Cross-sale synergy • Portfolio management along with asset gr
Slide 11: Initiatives and development directions
Initiatives and development directions Taipei Fubon Bank Fubon Insurance Growth in SME and foreign currency assets Product development from life-style concepts Opportunities from wealth management business Business diversification in China Maintain stable asset quality Digital channel to
Slide 12: Agenda
Agenda Performance highlights of Fubon Financial Holdings Performance review by subsidiary • Taipei Fubon Bank • Fubon Life • Fubon Insurance • Fubon Securities • Overseas Banking Operation 12
Slide 13: Taipei Fubon Bank: Revenue
Taipei Fubon Bank: Revenue Steadily growth from net interest income and net fees Revenue composition of Taipei Fubon Bank NT$bn Fubon Bank (China) Treasury & others 44.1 42.4 Net fee income Net interest income 11.7% 14.1% 33.7 29.2 25.0% 17.5% 28.2% 21.7% 24.0% 26.3% 25.0% 28.3% 46.8% 39.3% 42.1%
Slide 14: Taipei Fubon Bank: Fee and wealth management revenue
Taipei Fubon Bank: Fee and wealth management revenue Sources of fee revenue(1) Wealth management fee(2) NT$mn NT$mn 11,141 +7.2% 10,582 8,801 4.7% 8,208 6.1% 5.2% 5.9% 4.3% 11.0% 7.4% 12.0% SN and others Others 30.6% 38.9% Syndication Mutual funds 5.9% loan Credit card 3.9% Custodian and 79.1% trust
Slide 15: Taipei Fubon Bank: Loan composition
Taipei Fubon Bank: Loan composition Corporate and mortgage loans growth outperformed market Loan growth excluding government loans reached 6% Loans by type NT$bn 1,132.7 1172.3 YoY +3.5.% 0.6% 0.6% 3.8% 3.9% Credit card revolving YoY -1.7% 34.9% 37.7% Other consumer loans YoY +1.5% Mortgage loan
Slide 16: Taipei Fubon Bank: Corporate credit
Taipei Fubon Bank: Corporate credit Foreign currency loan represents 41.1% of corporate loan SME credit accounts for 33.5% of corporate credit Corporate loan by currency SME credit and as % of corporate credit NT$bn NT$bn NTD Non-NTD Non-NTD loan as % of corporate loan SME SME as % of corporate
Slide 17: Taipei Fubon Bank: Interest yield and margin
Taipei Fubon Bank: Interest yield and margin NIM and loan-to-deposit spread NIM Loan-to-deposit spread 1.24% 1.28% 1.31% 1.32% 1.27% 1.29% 1.07% 1.10% 1.08% 1.04% 1.10% 1.07% 1Q15 2Q15 3Q15 4Q15 2014 2015 Loan yield and deposit yield Loan rate Deposit rate 2.05% 2.05% 2.05% 2.03% 2.07% 2.04% 0.81% 0
Slide 18: Taipei Fubon Bank: Deposit mix and LDR
Taipei Fubon Bank: Deposit mix and LDR Deposit mix in NTD NTD loan-to-deposit ratio (LDR) NT$bn 990 1,088 46.0% 44.9% Time 89.1% 84.5% Demand 54.0% 55.1% Dec-14 Dec-15 Dec-14 Dec-15 Deposit mix in foreign currency Foreign currency LDR NT$bn 392 468 59.7% 56.6% Time 63.6% Demand 53.5% 40.3% 43.4% Dec
Slide 19: Taipei Fubon Bank: Asset quality
Taipei Fubon Bank: Asset quality NPL ratio Coverage ratio 1096.0% 1113.1% 0.17% 1033.5% 0.15% 788.6% 816.4% 0.11% 0.11% 0.12% Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 NPL ratio by business Net provision NT$mn Corporate loan Mortgage loan 1,987 0.6% 0.4% 0.22% 0.2% (247)
Slide 20: Agenda
Agenda Performance highlights of Fubon Financial Holdings Performance review by subsidiary • Taipei Fubon Bank • Fubon Life • Fubon Insurance • Fubon Securities • Overseas Banking Operation 20
Slide 21: Fubon Life: Total premium
Fubon Life: Total premium 11.6% yoy growth in total premium income FYP and renewal premium grew constantly in 2015 NT$bn 474.4 425.0 420.7 420.1 171.0 40.6% 269.1 56.7% 207.2 49.3% 234.0 55.1% Renewal premium FYP 249.7 59.4% 212.9 50.7% 205.3 43.3% 191.0 44.9% 2012 2013 2014 2015 21
Slide 22: Fubon Life: First year premium (FYP)
Fubon Life: First year premium (FYP) Sustained strong FYP in 4Q15. 7.5% yoy growth in 2015 from diversified type of products FYP composition YoY NT$bn 1Q15 2Q15 3Q15 4Q15 2015 % 2014 % growth Traditional life: Regular-paid 10.7 14.0 13.0 13.5 51.2 24.9% 50.2 26.3% 2.1% Traditional life: Single-pai
Slide 23: Fubon Life: Value of new business (VNB) & FYPE
Fubon Life: Value of new business (VNB) & First year premium equivalent (FYPE) FYPE growth 15.5% yoy mainly came from traditional regular-paid policies. FYPE/FYP trend improvement VNB grew 10.4% in 2015 yoy based on EV 2014 assumptions VNB FYPE NT$bn NT$bn 67.2 38.4 58.2 54.2 Traditional life: R
Slide 24: Fubon Life: Sales channel
Fubon Life: Sales channel FYPE by channel Diversified channel strategy Agency force growth rate of 12.8% yoy Other outperformed peers Bancassurance: through Taipei Fubon bank NT$4.35bn of P&C insurance premium sold Bancassurance: through external banks through life agency channel, up 14% yoy T
Slide 25: Fubon Life: Composition of investment income
Fubon Life: Composition of investment income Investment income mainly came from recurring revenue Total investment income reached a new high level YoY NT$bn 2012 2013* 2014 2015 growth Recurring investment income 62.7 75.2 88.7 101.0 13.9% Realized gains from fixed income investment 7.9 8.0 12.1
Slide 26: Fubon Life: Investment portfolio
Fubon Life: Investment portfolio Investment assets grew steadily Investment portfolio repositioned in response to market volatility 2014/12/31 2015/12/31 NT$bn Deposit and cash equivalent 87.2 3.4% 168.6 6.0% Domestic fixed income 602.8 23.3% 523.2 18.6% Overseas fixed income* 1,176.5 45.5% 1,37
Slide 27: Fubon Life: Portfolio of Overseas fixed income
Fubon Life: Portfolio of Overseas fixed income Overseas fixed income by asset type Overseas fixed income by region 4.2% 3.5% 21.5% 26.7% 44.0% Others 54.3% Asia & Other Corporate credit North America Financial 50.4% 60.1% bond Europe Government 45.8% bond 39.2% 22.9% 18.4% 6.0% 3.0% 2014 2015 2014 2
Slide 28: Fubon Life: Hedging composition
Fubon Life: Hedging composition Hedging cost & FX gain/loss FX position CS cost FX gain/loss & net provision of FX reserve -58bps -28bps 2014 2015 Naked Other USD, currencies, 0 10.8% Equities/ 1.5% -28 mutual funds , -55 12.1% -3 Recurring return 3.84% 3.86% 3.70% 3.57% Before hedge Currency After
Slide 29: Fubon Life: Positive investment spread widened
Fubon Life: Positive investment spread widened Cost of liability improvement and increase in investment return Positive spread between recurring return and breakeven point (net underwriting cost) widened Investment spread Recurring return and breakeven point Cost of liabilities Investment return
Slide 30: Fubon Life: Investment performance
Fubon Life: Investment performance Improvement in unrealized position Recurring return grew steadily. Total investment return reached a new high level Unrealized outstanding Movement of unrealized gains from AFS assets NT$bn NT$bn Realized Sep-15 Dec-15 gains (18.1) (12.0) 6.6 32.3 Equity ,fund
Slide 31: Agenda
Agenda Performance highlights of Fubon Financial Holdings Performance review by subsidiary • Taipei Fubon Bank • Fubon Life • Fubon Insurance • Fubon Securities • Overseas Banking Operation 31
Slide 32: Fubon Insurance: Operating snapshot
Fubon Insurance: Operating snapshot Premium growth outperformed industry. Top 1 position in premium market share. Solid underwriting performance and profitability Direct written premium by product Net combined ratio NT$bn 30.4 29.2 91.1% 89.0% 9.9% 9.6% Others 14.9% 14.2% 37.0% Health/Injury 3.6
Slide 33: Fubon P&C (China): Business progress
Fubon P&C (China): Business progress Operation expanded to Sichuan province in 2015. 40 offices in Fujian, Liaoning, and Chongqing Top 6 among foreign players in Mainland China in terms of premium with 26% growth yoy Gross written premium Net combined ratio RMB$mn 872.6 118.8% 114.4% 692.5 19.3%
Slide 34: Agenda
Agenda Performance highlights of Fubon Financial Holdings Performance review by subsidiary • Taipei Fubon Bank • Fubon Life • Fubon Insurance • Fubon Securities • Overseas Banking Operation 34
Slide 35: Fubon Securities: Financial highlights
Fubon Securities: Financial highlights Stable market position in major business Market share & ranking lines 2015 Ranking 2014 Ranking Growth in wealth management business Brokerage per 0.10% #2 0.10% #2 branch Leading position in underwriting business Emerging stock 17.27% #2 18.58% #2 tradin
Slide 36: Agenda
Agenda Performance highlights of Fubon Financial Holdings Performance review by subsidiary • Taipei Fubon Bank • Fubon Life • Fubon Insurance • Fubon Securities • Overseas Banking Operation 36
Slide 37: Fubon Bank (Hong Kong): Key balance sheet items
Fubon Bank (Hong Kong): Key balance sheet items Core revenue grow steadily. Loan mix adjustment to enhance yield Loans Deposits HK$m HK$m 58,385 42,570 40,368 52,664 2014 2015 2014 2015 Assets Net worth HK$m HK$m 90,993 10,806 83,860 10,416 2014 2015 2014 2015 37
Slide 38: Fubon Bank (Hong Kong): Financial highlight
Fubon Bank (Hong Kong): Financial highlight Earnings growth driven by net interest revenue and net fee revenue NPL formation due to selective corporate accounts Net Profits NIM HK$m 1.40% 522 1.20% 481 2014 2015 2014 2015 ROAA & ROAE NPL ratio & Coverage ratio ROAA ROAE NPL ratio Coverage ratio
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 4,879 4,547 61,604 Dec-14 Dec-15 Dec-14 Dec-15 Loans Deposits RMB$m Rediscount Loans (excluding rediscount) RMB$m 46,013 31,163 30,822 42,063 9,384 6,664 21,779 24,159 Dec-14 Dec-15 Dec-14 Dec-15 39
Slide 40: Fubon Bank (China): Financial highlight
Fubon Bank (China): Financial highlight Net Profits NIM RMB$m 422 390 1.83% 1.78% 2014 2015 2014 2015 ROAA & ROAE NPL ratio & Coverage ratio ROAA ROAE NPL Coverage ratio 11.09% 282.3% 265.1% 8.28% 1.04% 0.89% 0.76% 0.58% 2014 2015 Dec-14 Dec-15 40
Slide 41: Thank you
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Slide 42: Fubon Financial - Financial summary
Fubon Financial - Financial summary NT$ millions, except for percentages 2014 2015 YoY 1Q15 2Q15 3Q15 4Q15 Income Statement Data Net interest income 89,315 94,965 6.3% 22,241 22,387 24,892 25,445 Insurance income 230,938 264,088 14.4% 45,819 56,538 84,384 77,347 Net gains (losses) on FX and financia
Slide 43: Taipei Fubon Bank - Financial summary
Taipei Fubon Bank - Financial summary NT$ millions, except for percentages 2014 2015 YoY 1Q15 2Q15 3Q15 4Q15 Income statement data Interest income 45,231 46,647 3.1% 11,441 11,572 11,906 11,727 Interest expense (22,964) (23,294) 1.4% (6,118) (5,763) (5,830) (5,584) Net interest income 22,268 23,352
Slide 44: Fubon Life - Financial summary
Fubon Life - Financial summary NT$ millions, except for percentages 2014 2015 YoY 1Q15 2Q15 3Q15 4Q15 Income statement data First year premium 190,974 205,282 7.5% 37,418 43,604 62,152 62,108 Retained earned premium 390,077 440,297 12.9% 92,422 99,205 125,791 122,879 Total investment income 109,876
Slide 45: Fubon Insurance - Financial summary
Fubon Insurance - Financial summary NT$ millions, except for percentages 2014 2015 YoY 1Q15 2Q15 3Q15 4Q15 Income statement data Direct written premiums 32,718 35,016 7.0% 8,150 9,540 8,452 8,874 Retention of earned premiums 24,653 27,139 10.1% 6,450 6,833 7,024 6,833 Net income from investment 2,49
Slide 46: Fubon Securities - Financial summary
Fubon Securities - Financial summary NT$ millions, except for percentages 2014 2015 YoY 1Q15 2Q15 3Q15 4Q15 Income statement data Brokerage commissions 3,204 3,044 -5.0% 692 790 771 791 Net interest income 932 942 1.0% 247 274 202 219 Fee income 157 298 89.7% 19 26 11 242 Net principal transactions
Slide 47: Fubon Bank (Hong Kong) - Financial Summary
Fubon Bank (Hong Kong) - Financial Summary HK$ millions, except for percentages 2014 2015 YoY 1H15 2H15 HoH Income Statement Data Interest income 1,677 1,809 7.9% 881 929 5.5% Interest expense (835) (736) -11.8% (381) (355) -6.9% Net interest income 842 1,073 27.5% 499 574 14.9% Net fee income 317 3
Slide 48: Fubon Bank (China) - Financial Summary
Fubon Bank (China) - Financial Summary RMB millions, except for percentages 2014 2015 YoY 1Q15 2Q15 3Q15 4Q15 Income Statement Data Interest income 2,425 2,232 -7.9% 572 559 550 552 Interest expense (1,846) (1,925) 4.3% (515) (482) (480) (449) Net interest income 579 307 -47.0% 57 77 70 102 Net fee
Fubon Financial Holdings — FY2015 Earnings Presentation on 6ix