Fubon Financial

Fubon Financial Holding Delivered Net Income of NT$48.421 billion and EPS of NT$4.73 in 2016

2017.03.24

Fubon Financial Holdings (2881) held an investor conference today (the 24th) to announce its 2016 full-year performance and explain its 2017 business strategies. With net income amounting to NT$48.421 billion and EPS at NT$4.73, Fubon Financial Holdings once again surpassed peer financial holding companies in profitability and EPS in 2016, and secured its place as the most profitable company in Taiwan's financial industry for the 8th consecutive year!

Fubon Financial Holdings has consistently grown in terms of asset size, expanding 6.1% year-on-year to a new height of NT$6,351.3 billion by December 2016 that placed it the second largest financial holding company in Taiwan. Meanwhile, Fubon continued to deliver exceptional returns at 0.79% ROA and 12.19% ROE. In 2016, Fubon Financial Holdings completed its first preferred share offering for a sum of NT$36 billion while Fubon Life had also completed offering of its NT$28.5-billion subordinated bonds. Both offerings had the effect of strengthening capital structure, raising Fubon Financial Holdings' capital adequacy ratio (CAR) to 133% and Fubon Life's risk-based capital (RBC) adequacy ratio to 300.6%, which far exceeded the statutory requirements.

As time progresses into 2017, Fubon Financial Holdings Chairman Richard Tsai said that the organization’s business strategies and growth will be primarily focused on three dimensions: (1) Capturing the current prospects - taking advantage of the global economic recovery and Fed's interest rate hike; (2) Distribution - optimize performance of each banking branch and increase the penetration rate of life insurance services, while at the same time exploit digital and mobile channels for greater efficiency and more cross-selling opportunities; (3) Overseas opportunities - explore overseas markets and search for M&A and strategic alliance opportunities both local and abroad.

In 2016, Fubon Financial Holdings continued to lead Taiwanese peers in business development throughout the Greater China Region. Not only did the Company acquire the remaining 20% ownership interest in Fubon Bank (China) and made it a 100%-owned subsidiary in October 2016, Fubon Bank (China) was later awarded the approval to offer RMB services to Chinese residents in November 2016, which made Fubon the first Taiwanese bank to be fully licensed for RMB services in China. Apart from financial performance and business development in the Greater China Region, Fubon Financial Holdings was equally exceptional in terms of ESG. In 2016, Fubon was chosen as one of the compositions of "DJSI - Emerging Markets" for the first time, making it the first and only Taiwanese financial holding company to be selected in the "FBN Diversified Financial Services and Capital Markets" category. This recognition by a world-renowned institution serves as a testament to Fubon's commitment in sustainability.

According to Richard Tsai, Fubon Financial Holdings’ outstanding performance in 2016 was largely attributed to the two main subsidiaries: Fubon Life and Taipei Fubon Bank, which aggregately contributed 85.1% of group profit (Note 1). Fubon Life continued to exhibit growth in business expansion and investment performance, and delivered net income totaling NT$28.688 billion in 2016. Total premium revenues increased by 4% in 2016 to a record-high NT$493.6 billion. A more detailed breakdown showed first-year premiums (FYP) amounting to NT$204.3 billion, ranking second in the market due largely to a 76.5% increase in conventional regular premium policies and a 36.8% increase in health insurance and accident insurance policies as compared to 2015. Meanwhile, premiums from renewal policies increased by 7.5% from 2015 to a record-high level.

Fubon Life's investment performance remained consistent throughout 2016; total assets expanded 10.8% year-on-year by the end of 2016. Investment income totaled NT$124.3 billion; most of which is recurring and increasing consistently. Recurrent income amounted to NT$106.1 billion in 2016, up 5% from 2015. Fubon Life had made improvements to funding costs in 2016 by adjusting the liability side of its balance sheet. The investment portfolio delivered positive return of 4.3% above the funding cost; recurring income is being generated at a yield of 3.34%, which exceeds the break-even point of 3.19%. In response to market changes, Fubon Life will continue making adjustments to its asset allocation and deliver better investment returns. In the future, Fubon Life will continue to recruit and focus on maintaining balance in regional business development, while at the same time introduce retirement plans, nursing and in-kind benefit products to satisfy customers' needs.

According to Vice Chairman Daniel Tsai of Fubon Financial Holdings, Taipei Fubon Bank concluded net income at NT$14.466 billion in 2016 and exhibited consistent growth in terms of net fee revenues and net interest revenues. The Bank performed exceptionally well in terms of insurance agency service, delivering a growth of 29% that helped boost wealth management income. Mortgage portfolio expanded by 7.9% compared to 2015, which was higher than the market average. In the future, Taipei Fubon Bank will focus on expanding foreign currency assets, growing SME customers, maximizing cross-border synergies, and exploring values in virtual and physical distribution channels.

Daniel Tsai pointed out that key subsidiaries of Fubon Financial Holdings had maintained leadership position in their respective markets throughout 2016. Taipei Fubon Bank led the credit card business in monthly spending per card, topped private banks in syndicated lending, and ranked second in housing loan balance; Fubon Life ranked second in terms of first-year premium revenues and sales through banking channel; Fubon Securities ranked second in terms of ETF AUM, transaction of Emerging Stock Market securities, and single branch market share; Fubon Insurance has attained the market’s No. 1 place in personal insurance and corporate insurance, whereas its 22.8% market share in direct written premiums has secured the top place in the property insurance business for 35 consecutive years.

In China, Fubon Insurance’s Chinese subsidiary - Fubon Property & Casualty Insurance continued to expand into the nation, and is now operating a network of 50 offices located throughout Xiamen, Fujian, Liaoning, Dalian, Chongqing and Sichuan. Fubon Property & Casualty Insurance generated RMB 1.055 billion of premiums in 2016, which represented a significant growth of 20.9% over 2015 and made it the fifth largest non-local property insurance company in China in terms of market share. Its net combined ratio had reduced to 116.3%.

At the end of 2016, Fubon Bank (China) accumulated RMB 68.154 billion in assets and achieved an 8.3% growth in net worth compared to the end of 2015. Net income totaled RMB 412 million, representing a 5.6% growth over 2015. In November 2016, Fubon Bank (China) was awarded the RMB retail banking license in China. The subsidiary expects to commence retail banking service in the second quarter of 2017, and will begin with the introduction of online retail banking products and small personal loans for mid-level and senior white collar workers, small business owners and family members. The retail banking license is expected to contribute significantly to the subsidiary's growth in terms of customer base and personal account balance in 2017. The subsidiary currently has 24 offices (including the approved Wuhan Branch) spread across Pearl River Delta, Yangtze River Delta, the coastal area long Bohai Sea, and Western China. It is the Taiwanese bank with the largest and widest service network in China, and the only Taiwanese bank to have a branch presence in four free economy pilot zones.