Business Sustainability

About Fubon Financial Holdings

The Benchmark for Taiwanese Financial Institutions in Greater China

Intent on becoming one of Asia’s first-class financial institutions, Fubon Financial Holdings offers the most complete and diversified line of financial products and services in the industry through its many subsidiaries, including Fubon Life, Taipei Fubon Bank, Fubon Bank (Hong Kong), Fubon Bank (China), Fubon Insurance, Fubon Securities and Fubon Asset Management. All of these subsidiaries are leaders in their fields. As of the end of 2019, Fubon Financial Holdings had total assets of NT$8.5 trillion, standing the second most of any domestic financial holding company, and was serving more than 10 million customers. Fubon Financial Holdings garnered a net profit of NT$58.5 billion, rising 23% from 2018, or NT$5.46 per share, the highest in the industry for the eleventh consecutive year.

The main businesses and profit models of these four subsidiaries are detailed below

Fubon Financial Holdings Corporate Governance Structure

Note: See Appendix 9.3.1 for composition rules, main responsibilities and the operations in 2019. Date:2020/1/1


Shareholder Composition

In accordance with law, Fubon Financial Holdings discloses various information concerning shareholder structure and major shareholders, as presented in the table below:

1. Shareholder Structure (Common Stock), as of April 14, 2020

Unit: shares; %

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Shareholder
Structure

Quantity
Government agencies Financial Institutions Other Juridical Persons Domestic Natural Persons Foreign Institutions and Foreign Individuals Total
Number of Shareholders 12 49 952 237,603 1,596 239,672
Shares Held 1,987,313,159 500,124,438 2,575,508,346 2,530,639,604 2,640,018,448 10,233,603,995
Shareholding Percentage 19.42 4.89 25.17 24.73 25.80 100
  • Note1:A total of one government institution has an equity stake of 5% or higher, namely the Taipei City Government, which holds approximately 13.11% of the paid-in capital (common stock) of Fubon Financial Holdings.
  • Note2:More Shareholder Structure information please see the Annual Report 4.1.2 Status of Shareholders p.174-177(EN)

2. Major Shareholders:

Date:2020/2/29

Taipei City Government Taipei City Government 13.11%
Family of Richard M. Tsai (subtotal of approximately 31.2%) Richard M. Tsai 3.20%, Daniel M. Tsai 3.02%, Cheng-tao Tsai 1.00%, Shiang-shun Yang Tsai 1.06%, Ming-wen Tsai 0.53%, Ming-chun Tsai 0.54%, Ai-ling Tsai Chen 0.28%, Mei-hui Tsai Weng 0.29%, Tao Chi Enterprises 0.23%, Ru Chi Investment Corp. 0.15%, Tao Chi Investment Corp. 0.13%, Fu Chi Investment Corp. 0.28%, Tao Ying Enterprises 7.73%, Ming Tung Enterprises 8.45%, Chung Hsing Development Corp. 1.42%, Fubon Hsing Chi Corp. 0.10%, Hung Fu Investment Corp. 2.57%, Immanuel 0.15%.
  • Note1:Out of the total number of shares held by Daniel M. Tsai, 100,000,000 shares (approximately 0.98%) have been entrusted for purposes yet to be determined.
  • Note2:For the latest details concerning shares held by major shareholders, please visit the Market Observation Post System (MOPS) → Investment Section → Inquiry on the reports on the change of shareholding by Major Shareholders of Banks (Financial Holding Companies)

Composition of the Board of Directors

Fubon Financial Holding’s Board of Directors is the Company’s highest governance body. The board comprises 15 seats, 2 of which are executive directors, and 13 of which are non-executive directors. (See gender and age information of board directors in Appendix 9.3.2 and 9.3.3.)

Fubon Board directors serve a three-year tenure (the current tenure runs from June 16, 2017, to June 15, 2020). Since 2014, the Company has adopted a nomination mechanism to determine board members. The directors was elected from among the nominees listed in the roster of director candidates by the shareholders’ meeting, and directors (including independent directors) are selected and recommended to the board based on independence standards stipulated by competent authorities, as well as the Company’s “Procedures for the Election of Directors”.

Since 2017 was a board election year for Fubon Financial Holdings, a comprehensive re-election was conducted, and six nominees for independent director were recommended to the board. With independent directors accounting for 40% of all directors, Fubon has the highest proportion of independent directors of any financial holding company.

“Directors, Supervisor and Key Staff Liabilities Insurance” has been purchased on an annual basis since 2002 to mitigate the legal and financial risks of Fubon Financial Holdings and its subsidiaries and their board directors, board supervisors, and key personnel. The step was taken in consideration of the importance of board members and key personnel being able to exercise their rights and fulfill their duties and has reinforced the Company’s corporate governance mechanism.


2019 Operating Performance

Fubon Financial Holdings’ Financial Highlights

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Unit: NT$ million 2016 2017 2018 2019
Total Assets 6,351,258 6,919,454 7,715,060 8,547,702
Total Equity 427,105 488,771 468,826 619,686
Equity Attributable to Owners of the Parent 426,820 488,432 459,243 607,774
Consolidated Net Income 48,575 54,016 47,721 59,573
Net Income Attributable to Owners of the Parent 48,421 54,122 47,729 58,497
Earnings per Share (NT$) 4.73 5.19 4.52 5.46
Net Worth per Share (NT$) 39.40 45.08 39.93 52.85
Return on Assets (ROA) 0.8% 0.81% 0.65% 0.73%
Return on Equity (ROE) 12.2% 11.83% 9.98% 10.94%

Fubon Financial Holdings’ Ratings in 2019

While Fubon Financial Holdings puts a high priority on controlling risk to maintain a level of asset quality that exceeds the market average and strengthens the Company’s capital structure. Fubon Financial Holdings’ capital adequacy ratio (CAR) was approximately 116.81% in 2019, well above the legally required 100% minimum.

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Rating Agency Type Rating Agency Credit Rating Outlook Effective Date
Long-term; Shortterm
International Standard & Poor’s BBB+;A-2 Stable 2019/11/22
Moody’s Baa1 Stable 2019/10/08
Domestic Taiwan Ratings Corp. twAA;twA-1+ Stable 2019/11/22

  • Note:
    • (1) Profit contribution is based on the summation of the six subsidiaries shown in the chart. The holding company and other subsidiaries have combined net profit of NT$2,264mn. The net inter-company account is -NT$1,323mn;
    • (2) Net profit of Fubon Bank(China) is excluded from Taipei Fubon Bank
More About Fubon subsidiaries’ performance in the 2019 Conference Report >

Financial Capital Management

Fubon Financial Holdings invests its financial capital in six sustainable development strategies—Sustainable Governance, Responsible Finance, Environmental Sustainability, Employee Care, Innovative Services and Tender Care to maximize financial, human, intellectual, natural, manufacturing, and social capital.

Unit:NT$ million, unless otherwise noted

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Source of Funds Purpose of Funds Financial Results (Note 2)
Cash and Cash Equivalents at Beginning of Period 370,652 Repayments of Bonds 7,123 Consolidated net income attributable to owners of parent 58,497
Proceeds from Issuing Bonds 9,110 Repayments of Bank Financial Debentures 38,158 Earnings per share (NT$) 5.46
Proceeds from Issuing Bank Financial Debentures 62,689 Decrease in Due to the Central Bank and Banks 443 Return on equity (%) 10.94
Increase in Other Borrowings 448 Cash Dividends Paid 23,091 Return on total assets (%) 0.73
Increase in Commercial Papers Issued 15,374 Repayments of lease Liabilities 3,155 Average closing price (NT$,share) 44.71
Net Cash Flows from Operating Activities 134,485 Net Cash Flows Used in Investing Activities 24,342
Changes in Non-Controlling Interests 107 Effect of Exchange Rate Changes on Cash and Cash Equivalents 4,492
ash and Cash Equivalents at End of Period 492,061
  • Note1:This table shows Fubon Financial Holdings’ major financial capital inflows and outflows in 2019. For more details, see 3.1,4.1, 5.1, 6.1, 7.1 and 8.1. For more on change in cash balances and on net income, see Fubon Financial Holdings’ financial statements for 2019.
  • Note2:Formulas for calculating financial performance indicators as follows:
    • (1) EPS = (Net income attributable to owners of parent - preferred share dividends)/weighted average of outstanding shares during the year)
    • (2) Return on equity = Net profit /average equity
    • (3) Return on assets = Net profit /average assets

Tax Governance

Tax Policies

Fubon Financial Holdings has established tax strategies in order to ensure compliance with tax laws and fulfill the company’s corporate social responsibility.

More About Tax Strategy >

Operating Conditions

Fubon Financial Holdings’ primary base of operations is in Taiwan. In 2018 and 2019, 96.24% and 96.45% of its net revenue is originated in Taiwan, respectively.

Unit: NTD, thousand

Year 2018 2019
Net revenue (A) $410,933,257 $447,992,422
Net revenue originating in Taiwan(B) $395,501,474 $432,072,331
Weight originating in Taiwan (B ÷ A) 96.24% 96.45%

Source: FY2019 Fubon Financial Holdings Consolidated Financial Statements


Relevant information on the Company’s income taxes for the years 2018 and 2019 is as follows:

Unit: NTD thousand

Year 2018 2019
Net income before tax $57,615,327 $65,468,415
Income tax expense $9,894,305 $5,895,528
Income tax paid $13,698,608 $5,287,751

Source: FY2019 Fubon Financial Holdings Consolidated Financial Statements


Tax Overview

The income taxes paid worldwide by Fubon Financial Holdings in 2018 and 2019 were NT$13,698,608,000 and NT$5,287,751,000, respectively, of which the amounts paid in Taiwan accounted for 93.01%and 66.90%, of the income taxes paid.

The ratios of income taxes paid by Fubon Financial Holdings in each country in the most recent two years are presented below:


Effective Tax Rate

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Year 2018 2019 Average Industry Average
Effective Tax Rate 17.0% 9.01% 13.01% 21.10%
Cash Effective Tax Rate 23.5% 8.07% 15.79% 24.66%
  • Source: 2019 Fubon Financial Holdings Consolidated Financial Statements
  • Effective Tax Rate = income tax expense ÷ net income before tax
  • Cash effective tax rate = income tax paid ÷ net income before tax
  • The average industry values for accounting effective tax rates and cash effective tax rates are calculated according to the 24 standard global industry sectors based on the Sustainability Assessment Companion published in 2020 by RobecoSAM, a Swiss-based company which focuses on sustainability investments.

Fubon Financial Holdings' average effective tax rate is lower than the industry average, mainly due to the following two reasons:

  • In 2018 and 2019, Fubon's operations were primarily in Taiwan and the applicable income tax rate is explained below.
    • In Taiwan, the higher of regular income tax or alternative minimum tax is selected to determine the corporate income tax:
      • (1) Regular income tax = amount of taxable income × 20%
      • (2) Alternative minimum tax = (amount of taxable income + income derived from tax-exempt securities transactions) × 12%
  • The rate in 2019 resulted from a higher percentage of income generated from tax-exempt securities transactions and the impact of recognizing the income tax benefits due to loss carry-forward in previous years. In 2018, the statutory tax rate increased to 20%, so the deferred income tax benefits were recognized.