The global economy faltered in 2020 as COVID-19 wreaked havoc around the world, but Taiwan kept the coronavirus at bay and its economy was left relatively unscathed. Taiwan’s financial holding companies performed extremely well, delivering record results. Fubon Financial Holdings reported net profit of NT$90.27 billion, or NT$8.54 per share, and led Taiwan’s financial holding company sector in profitability based on EPS for the 12th consecutive year.
Beyond deepening its presence in Taiwan, Fubon Financial Holdings has steadily forged a regional network and robust financial services platform in Greater China while extending its reach into other regions of Asia. Wherever the market, Fubon strives to optimize its financial department store services, advance innovation through financial technology, and strengthen the integration of the financial holding company’s resources to provide customers with the widest range of products and most convenient financial services in the industry. Ultimately, our vision is to become one of Asia’s first-class financial institutions.
Financial Sector Leader in EPS for 12 Straight Years
Although the coronavirus dealt a severe blow to the global economy in 2020 and hurt Taiwan’s exports in the first half of the year, exports of electronics goods bucked the trend because of new demand created by the remote work movement and upgrades of information and communications equipment. The pandemic also accelerated shifts in supply chains, which supported the steady expansion of domestic investment, offsetting weakness in private consumption. As a result, export and corporate investment growth exceeded expectations, helping Taiwan outperform most other countries by maintaining positive economic growth for the year as a whole.
Taiwan’s financial sector delivered strong growth despite the disruptions. Fubon Financial Holdings posted record net profit of NT$90.27 billion thanks to the solid performances of its subsidiaries, and it remained Taiwan’s most profitable financial holding company by earnings per share for the 12th year running with EPS of NT$8.54. Fubon Life and Taipei Fubon Bank, accounted for 88% of total net profit. Return on assets and return on equity were 1.02% and 13.17%, respectively.
Assets under management reached a new high in 2020, exceeding NT$9 trillion for the first time. As of the end of the year, Fubon Financial Holdings had total assets of NT$9.24 trillion, up 8% from the end of 2019, to remain Taiwan’s second-largest financial holding company by assets.
Record-setting Year for Fubon Life
The life insurance market slumped in 2020 because of disruptions caused by COVID-19 and regulatory restrictions, but Fubon Life continued to generate solid results through its flexible product and channel diversification strategies. Its first-year premium of NT$121.41 billion and total premium of NT$546.33 billion ranked second in the industry, and its AUM surpassed NT$5 trillion for the first time in July 2020. Net profit totaled NT$60.59 billion, a record high for the company, further establishing it as a key profit engine for Fubon Financial Holdings.
Fubon Life continues to roll out insurtech innovations and applications to deliver customer-centric services, such as an industry pioneering Taipei Fubon Bank electronic authorization function for direct debits of premiums and a LINE Pay function to pay insurance-related bills. It joined the insurance sector’s blockchain alliance and worked with the Life Insurance Association R.O.C. to use blockchain to transmit data to hospitals, enabling more convenient claims applications, advance payment of hospital fees, and access to medical records. The FBFLI (Fubon Facebook, LINE, Instagram) system, which was launched in July 2020, helps sales agents with customer relationship management by creating lists of customers by segment and increasing opportunities for interaction. It is also linked to the policy health check platform, augmenting the digital support system.
Overseas, Fubon Life’s Vietnam subsidiary solidified its sales team and opened new channels to scale up its business, while Fubon Hyundai Life Insurance, affected by low interest rates and legal constraints, sought to increase sales of purely protective policies to boost profitability. The Hong Kong subsidiary moved toward a model of stable growth by concentrating on building bancassurance and brokerage channels and developing internet insurance channels to tap into new customer segments.
Taipei Fubon Bank: Big on Digital Innovation
Taiwan’s banking sector also felt the economic impact of the global pandemic, as lower interest rates and international market volatility squeezed profits. In this challenging environment, Taipei Fubon Bank still generated good results in 2020 by maintaining its steady approach and building on its core competencies. Outstanding loans rose 10% from a year earlier while deposits rose 9% to a record high. Total assets increased 6.1% to NT$2.76 trillion amid efforts to solidify asset quality by adjusting and optimizing the structure of the bank’s assets and strengthening credit and investment risk controls. A revamped credit card strategy helped push the number of J Cards issued above the 1 million card milestone in 2020, leading to year-over-year growth in the bank’s credit cards in circulation of 17%, the highest in the market. Overall card spending rose 5%, beating the market average.
Taipei Fubon Bank achieved a major core banking milestone in 2020, completing the upgrade of its information system. This advanced IT infrastructure will provide a foundation for getting products more quickly to market and providing customers with even better service. The bank’s strength in fintech was evident in its management of virtual channels, using big data analytics, AI technology, virtual platforms, and diverse usage scenarios to upgrade the customer experience through digital innovation. The branch experience also remained a high priority. A total of eight new branches were set up in Taoyuan, Hsinchu, Miaoli, Yunlin, Tainan, Yilan and Taitung to broaden the bank’s financial services coverage, localize its services, and create a full-service ecosystem with other Fubon subsidiaries to meet the financial needs of local communities.
Another area in which Taipei Fubon Bank distinguished itself in 2020 was its support for anti-epidemic efforts. Its deft application of financial expertise and digital technology in support of economic relief and stimulus measures was recognized by the Financial Supervisory Commission, which ranked the bank as the most efficient domestic private bank in implementing both its own and public relief measures.
Fubon Insurance: Market Share No. 1 for 39 Years
Fubon Insurance capitalized on group resources and diversified channel strategies to set a new high for total written premium of NT$45.06 billion in 2020, resulting in a market share of 24.1%, the highest in the industry for the 39th straight year. Net profit was NT$5.64 billion.
Fubon Insurance took several steps in 2020 to develop innovative apps through insurance technology and make insurance services more convenient. Among them, it formed an experimental insurance claims alliance with 10 other general and life insurers, including Fubon Life, and worked with hospitals to promote advance payment of medical fees from insurance benefits.
The company continues to promote agriculture insurance in response to government policy. In 2020, it expanded the scope of its aquaculture insurance by adding rainfall index insurance to its product line. After COVID-19 erupted, it also led the industry in offering “Epidemic Salary Payment Insurance” for companies and a policy covering individuals for infectious disease-related medical expenses, helping customers isolate COVID-19 risk.
Fubon Insurance operates a growing overseas network that consists of subsidiaries in China and Vietnam, insurance brokerage units in Thailand and the Philippines, and representative offices in Beijing, Malaysia and Indonesia. Fubon Insurance (Vietnam), headquartered in Ho Chi Minh City with branches in Hanoi and Binh Duong, provides local clients and Taiwanese companies in Vietnam property & casualty protection. Fubon Property & Casualty Insurance, based in Xiamen, has service locations in Fujian, Sichuan, Chongqing, Liaoning and Dalian.
Fubon Securities: Building on Its Strengths
Fubon Securities maintained its balanced business development in 2020. Its brokerage business ranked in the top three in the industry, while in investment banking, it ranked second in emerging market underwriting and SPO underwriting market share. The borrowing and lending of funds and the overseas bond and overseas stock businesses all continued to grow, contributing to a 2020 net profit of NT$4.20 billion, the highest in the company’s 33-year history.
Financial inclusion is one of Fubon Securities’ core missions, evident through its efforts to develop products that have lower investment thresholds or help older investors accumulate wealth, or to optimize its e-trading platform through fintech advances. These many initiatives are aimed at forging an environment that makes financial services more accessible and satisfies customers' wealth management needs.
Aside from consolidating its core businesses, Fubon Securities will carry out several strategies to broaden its services and diversify its sources of revenue in the year to come, including tapping into new customer segments, growing sales of wealth management products, and strengthening cross-selling cooperation with other Fubon subsidiaries. Developing a digital customer management model to enhance digital services capabilities and boost e-trading market share are other priorities. The company will also pursue major underwriting opportunities to maintain its market leadership, harness its venture capital platform to make early-stage investments, create multiple profit engines and forge a one-stop shop for IPO, SPO and financial consulting services.
Fubon Bank (Hong Kong): Going All in on Digital Fubon Bank (China): Top Choice of Taiwanese Enterprises
Fubon Bank (Hong Kong)’s performance in 2020 was affected by the COVID-19 pandemic, but its bond and structured products sales and securities brokerage business still generated outstanding results. Faced with contracting economies in Hong Kong and the rest of the world, the bank focused on expanding its assets and adjusting its asset structure to create new impetus for growth while also optimizing interest rate spreads to control capital costs and mitigate the blows of lower rates and a low-interest environment.
In the digital realm, steps were taken to capitalize on the deregulation of the financial sector and fend off the challenge of new virtual banks. The bank accelerated the rollout of its digital platform, for example, to lay a strong digital banking foundation and sharpen its competitive edge. Going forward, strengthening risk management will remain an ongoing commitment. Credit access conditions and credit policies will be adjusted based on economic conditions and each industry’s prospects, and loans will be carefully managed after they are made to protect the quality of the bank’s assets.
Dedicated to serving Taiwanese businesses across the Taiwan Strait, Fubon Bank (China) homes in on areas where Taiwanese enterprises are concentrated. It opened its newest branch in Ningbo in November 2020, giving it 27 branches in 13 cities in China, the biggest network and broadest coverage of any Taiwanese-invested bank. The bank boasts a diversified product line and sophisticated services to meet the needs of its Taiwanese clients, and leverages new digital technologies to promote supply chain-oriented financial services that promote local integration, making it an invaluable partner. Although the operating environment was affected by the coronavirus outbreak in 2020, Fubon Bank (China) continued to focus on expanding deposits, relying on deposit-driven loan growth, and capitalizing on market opportunities to earn capital gains, helping create new sources of profit growth.
Fubon Asset Management: Eyeing the Retiree Market
Despite COVID-19’s impact on the global economy in 2020, Fubon Asset Management was still able to increase its assets under management. It offered customers a wealth of investment options through its robust product portfolio, and benefited from group synergies through collaborations with Fubon Life, Taipei Fubon Bank and Fubon Securities. Given the surging demand for retirement planning services, the company stepped up its efforts to roll out funds with steady yields and steered investors toward ETFs to solidify their portfolios. It also gave customers the chance to participate in financial opportunities in China through overseas investment companies as Beijing’s internationalization policies became clearer.
Robust Risk Management, Balance Sheet Strength
As its business has grown, Fubon Financial Holdings has put a premium on risk management, maintaining strong balance sheet strength and a level of asset quality that exceeds the market average. Those efforts resulted in a CAR of 124.96% in 2020, well above the minimum capital requirement of 100%.
Taipei Fubon Bank had a BIS ratio of 16.47% as of the end of the year, an indication of the bank’s strong capital position. Its nonperforming loan ratio was 0.16%, below the industry average, and its coverage ratio of 776.54% far exceeded the industry average.
Taiwan Ratings Corp. maintained its long-term and short-term ratings for Fubon Financial Holdings as “twAA” and “twA-1+,” respectively, in the news release published on Mar. 24, 2021. Moody’s Investors Service maintained the company’s long-term rating of “Baa1” in its latest ratings note on Dec. 28, 2020. These ratings reflect Fubon Financial Holdings’ market leadership and its strong financial performance relative to its competitors.
The latest ratings of various rating agencies were as follows:
|Rating Type||Rating Agency||Credit Rating||Outlook||Effective Date|
|International||Standard & Poor’s||BBB+||A-2||Stable||2021/03/24|
|Domestic||Taiwan Ratings Corp.||twAA||twA-1+||Stable||2021/03/24|
Deepening Corporate Governance, Sustainability
In 2015, Fubon Financial Holdings launched the Fubon ESG Visioning Project, a sustainability initiative founded on corporate governance. The initiative evolved in 2020 to encompass six strategies – sustainable governance, responsible finance, innovative services, environmental sustainability, employee care, and tender care – to better align Fubon with international norms and solidify its sustainability practices.
Fubon Financial Holdings was the first financial holding company institution to install an independent director system. It now has more independent directors than any of its competitors and has set the industry benchmark for board independence and diversity. The leadership shown on corporate governance and contribution to sustainable development earned Chairman Richard M. Tsai an Asian Corporate Director Recognition Award from Corporate Governance Asia for a fourth time in 2020.
Fubon Financial Holdings’ corporate governance performance was again widely acclaimed at home and abroad in 2020. Corporate Governance Asia honored Fubon Financial Holdings with an “Icon on Corporate Governance” award for a 12th year in a row and awarded it “Best Investor Relations” for a 10th year running. Fubon also ranked in the top 5% of the Taiwan Stock Exchange’s “Corporate Governance Evaluation” of listed companies for the fifth time and was a constituent of the exchange’s “Taiwan Corporate Governance Top 100 Index” for a sixth year in a row.
Among other honors, Fubon Financial Holdings made the prestigious Global Fortune 500 for a third year running and was Taiwan’s only financial holding company to be named by Brand Finance as one of the “Top 500 most valuable global brands” in 2020. These many honors show that Fubon’s efforts on corporate governance and commitment to forging a leading sustainable finance brand are keeping pace with the top global companies.
Widespread Acclaim for Fubon Subsidiaries
Fubon Financial Holdings’ subsidiaries reaped countless awards of their own in 2020. Fubon Life was honored as Taiwan’s Best Life Insurance Company by World Finance for the ninth straight year and was named one of the “Top 100 most valuable insurance brands” by Brand Finance for a fourth consecutive year. It also received Asia Responsible Enterprise Awards from Enterprise Asia for “Green Leadership” and “Health Promotion” and was honored by Risk Management, Insurance & Finance (RMIM) magazine as the Most Admired Life Insurance Company in the back office and field representative categories for a 10th year in a row.
Taipei Fubon Bank was again honored for its service when it won a Gold Award for Banks in the Commercial Times’ Survey of Taiwan’s Service Sector for a second year in a row. Its products earned several accolades, including Best Digital Wealth Management Experience from The Asset, Best Digital Robo-Advisor from The Asian Banker, Best Bank for Corporate Credit Cards Taiwan 2020 from Global Banking & Finance Review, and Outstanding Crisis Leadership in Health Care for its COVID-19 response from Global Finance.
Fubon Insurance was named the Most Admired Company in the P&C insurance sector among Taiwan’s top 1000 companies for a 20th straight year and the most admired P&C insurer among new finance department graduates for a 10th year running in RMIM surveys. It also garnered a “Growth through Innovation Award” in the Taiwan Corporate Sustainability Awards and was honored for Best Mobile Insurance Application by The Asset and Best Digital Customer Experience – Claims by The Digital Banker.
Fubon Securities was named Best Brokerage in Taiwan for a third consecutive year and honored for Best Structured Investment Solution – Equity by The Asset, and it garnered nine awards from Wealth Magazine, including for Best Brokerage Image and Best Fintech Brokerage. It also was honored for Best Wealth Appreciation and Best Sales Agent Team in Business Today’s Wealth Management Evaluation of Banks and Securities Firms.
In 2020, the COVID-19 pandemic led to a reduction in commercial activity and hurt global industries, further highlighting the need for companies to co-exist with society and the environment. Living up to the financial sector’s social responsibility, Fubon Financial Holdings became a TCFD supporter in 2019 and a World Economic Forum partner in 2020 to join international benchmark companies in promoting regional and global sustainable development. The company has been recognized for its climate finance efforts. It made the Carbon Disclosure Project’s (CDP) climate change A List for the first time in 2020, ranking in the top 7% of the world’s financial services companies for climate management. It was also the first Taiwanese insurer to make the A List.
Fubon Financial Holdings’ actions on sustainability have also paid dividends, earning it a spot as a constituent of the Dow Jones Sustainability World Index four years in a row and as a constituent of the DJSI Emerging Markets index five years running. It was also selected in 2020 as a constituent of the MSCI ESG Leaders Indexes for a fourth consecutive year and received an “A” MSCI ESG rating in the Life & Health Insurance category.
Fubon has translated its commitment to sustainability into action, joining with value chains to move Taiwan toward a low-carbon economy. Fubon Insurance, for instance, is Taiwan’s biggest insurer of green energy projects, and Taipei Fubon Bank is the biggest Taiwanese lender to local offshore wind projects – tangible actions that back the rise of the green energy industry and clean energy. Fubon Financial Holdings has also been a leading recipient of “Exercise Enterprise Certification” awards, and has aligned itself with the United Nations Sports for Climate Action Framework through its sponsorships of sports competitions by urging participants to support environmental protection, using the positive energy of sports to spur a more sustainable Taiwan.
Four Foundations: A Stabilizing Force in Society
When COVID-19 posed a serious threat to Taiwan in 2020, Fubon spread positive energy through its four foundations to help stabilize society.
The Fubon Charity Foundation’s “Making Friends with Love” initiative to keep underprivileged students in school raised more than NT$100 million and benefited 15,700 students. A related “Nutrition Subsidy Plan” provided meals for children in rural areas, and taught youngsters lifelong skills. The “Emergency Relief Fund” invested more than NT$32 million to help 44,939 people and groups, while the “Give a Wish, Build a Future” campaign fulfilled the dreams of 8,087 students.
The Fubon Cultural & Educational Foundation is dedicated to youth empowerment and media literacy and works with the Fubon Group to promote financial and environmental education. Youth empowerment initiatives echo the 2019 national curriculum’s emphasis on elevating the skill and competence of teenagers, while media literacy efforts focus on strengthening the ability of high school students to interpret and appreciate films and videos. The Future Tycoon Outreach Program travels to elementary schools to impart a healthy attitude toward money, and the Fubon EDU initiative highlights employee care and protecting the environment.
The Fubon Art Foundation is dedicated to bringing art and aesthetics to daily life. Its “Art Chopsticks” recycling competition in 2020, which turned wood from broken baseball bats into elegant chopsticks, reminded people of the importance of sustainability and environmental protection. The Fubon Forum, meanwhile, was transformed into a digital lecture hall as it moved into its 20th year. Looking to the future, the Fubon Art Museum, scheduled to open in 2023, will emerge as a key base for nurturing the younger generation through its adoption of international talent and perspectives.
The Taipei Fubon Bank Charity Foundation primarily cares for the elderly and people with disabilities . In 2020, it held another exhibit of the works of Taipei Fubon Bank Artistic Achievement Awards for the Disabled winners and offered an online version for the first time. The “Fubon Music Therapy Program” promotes healthy aging and the “Fubon Jiazi Singing Competition” champions staying active and interacting with others.
2021: Eye on Customer Service, Product Diversification
In the year ahead, Taiwan’s foreign trade should gain strength as the economic impact of the pandemic eases, leading to a rebound in overseas demand and export growth, while the tech sector continues to increase its capacity in Taiwan. The ongoing push for advances in semiconductor production processes, offshore wind power and 5G infrastructure will drive domestic investment growth, and private consumption should recover as people become willing to spend again. These positive trends should enable Taiwan to maintain stable economic growth in 2021.
The key strategies and goals for 2021 for Fubon Financial Holdings’ main subsidiaries are as follows:
1. Fubon Life: Life insurers will likely continue to be affected by low interest rates and COVID-19, and regulators are expected to lean toward more restrictive product and administrative regulations. Faced with these challenges, Fubon Life intends to adjust its product strategy and re-emphasize protective rather than investment-oriented policies as well as focus on the retirement planning market. Another priority will be digital upgrading to optimize the quality of customer service and make sales agents more efficient.
2. Taipei Fubon Bank: The overall goal is to strengthen the bank’s competitiveness by adjusting its asset and liability structure, expanding its overseas presence, creating innovative business models to accelerate new customer acquisition, capitalizing on opportunities from regulatory and market changes, and exploiting cross-selling synergies within the group. These many strategies should not only help the bank stay profitable but also create maximum benefit for its shareholders and customers and society.
3. Fubon Insurance: The top priorities will be maintaining the company’s market leadership and expanding its range of services. Personal insurance strategies will include creating a full-service robo-assistant and devising products tailored to different customer segments and consumer scenarios. Corporate insurance initiatives will include developing an app to help market liability insurance and creating new products to deal with emerging risks. Overseas, efforts will center on forging a Southeast Asian insurance platform, making management more effective, and encouraging headquarter-subsidiary collaboration on reinsurance.
4. Fubon Securities: Key plans involve emphasizing customer segment management, improving service through digital service tools, and strengthening wealth management services, as well as harnessing group resources to build a one-stop shop securities and wealth management platform. Another priority will be to provide a more complete range of securities and futures services by capitalizing on Taiwan’s capital market advantages and consolidating Fubon’s securities, futures, and equity investment platforms.
5. Fubon Bank (Hong Kong): 2021 strategies include strengthening core competencies by honing the bank’s deposit, loan and wealth management businesses; rolling out new virtual platform functions to diversify customer acquisition sources and expand its client base; and bolstering its media presence to build brand visibility and market recognition. As these measures to optimize the customer experience take hold, customer stickiness and loyalty should be imporved.
6. Fubon Bank (China): Beyond its primary focus on expanding deposits in 2021, the bank plans to optimize its asset structure and promote retail innovation by strengthening services tailored to Taiwanese enterprises, balancing assets and liabilities, fortifying the bank’s capital, and upgrading its businesses. Cooperation with Fubon subsidiaries will also be stepped up to help the bank become “the bank and group sales platform of choice of Taiwanese businesses in China.”
7. Fubon Asset Management: Focused on stable growth, strategies for 2021 include competing for opportunities to manage government funds and providing institutional investors with customized private equity services. The design of products will concentrate on regional offerings and specific themes, such as ESG, AI and 5G, and REIT opportunities will be pursued as new laws in the area are enacted at home and abroad.
In the year ahead, as it balances risk management and stable business growth, Fubon Financial Holdings will continue to deepen its presence in Taiwan and expand into the rest of Asia, relying on investments and acquisitions to expand its financial services network. This pursuit of business success will be support by the continued implementation of the Fubon ESG Visioning Project as the company moves closer to its vision of standing out as one of Asia’s first-class financial institutions.
Richard M. Tsai
Chairman, Fubon Financial Holdings