Fubon Financial

Fubon Financial Holdings (2881) held the 2023 annual investor conference today (22nd) to announce the financial figures and operating status for the whole year of 2023. In 2023, Fubon Financial Holdings' net income was NT$66.017 billion and its earnings per share (EPS) was NT$4.80. Both the net income and earnings per share were the highest among the financial holding industry and its earnings per share led the sector for 15 consecutive years. As of the end of December 2023, Fubon Financial Holdings' total assets exceeded NT$11.1 trillion, with 4.9% YoY and the net worth of NT$802.4 billion with 41.9% YoY and the net worth of per ordinary share has increased to NT$54.29. The return on assets (ROA) and return on equity (ROE) were 0.60% and 9.65% respectively.

Fubon Financial Holdings announced its unaudited net income of NT$8.309 billion for the month of February and accumulated net income of NT$22.379 billion for the first two months of this year, with an EPS of NT$1.72, both of which continue to rank first in the financial industry.

The Main Businesses of Fubon Financial Holdings Maintain Leading Position in the Market and its Sustainable Performance is Highly Recognized Internationally

Richard M. Tsai, Chairman of Fubon Financial Holdings, said that Fubon Financial Holdings’ financial performance in 2023 was excellent, with the diversified expansion of its major businesses maintaining its leading position in the market. Fubon Life's net income was NT$36.091 billion, ranking first in the industry and second in the market in terms of first year premium, total premium and first year premium equivalent. Taipei Fubon Bank’s net income was NT$24.473 billion, hitting a new historic high, and the market share of active credit cards reached 14.5% which ranked No.2 in the market. Fubon insurance’s written premium has grown 7.7% with a market share of 23.8% and continued to rank as a leader in the market. Benefiting from the Taiwan Stock market, Fubon Securities’ net income has grown by 75.4% YoY. After the merger of Fubon Securities and Jih Sun Securities, the scale of each business increased and the market ranking and profit of major businesses remained among the top three. Fubon Financial Holdings also continued to expand its overseas presence and further built its international financial services platform, including the acquisition of Citibank's mortgage loan assets by Fubon Bank (China), the application of upgrading Taipei Fubon Bank’s representative office in Australian to a branch in Sydney, the establishment of a branch in India and the establishment of a reinsurance subsidiary in Malaysia by Fubon Insurance.

In addition to strong operating performance, Fubon Financial Holdings has set ESG strategic goals for 2030 to demonstrate its commitment to sustainability and net-zero initiatives. It has continued to demonstrate its financial impact by achieving a green finance target of NT$2.57 trillion by 2023, a 4% annual growth rate and a 106% achievement rate. It has set a new green finance target of NT$2.91 trillion by 2030 and has also set the 2030 targets for each of its four major strategies: decarbonization, digitalization, empowerment and connection. It has been recognized internationally for its sustainable performance. It has been selected as a constituent of the MSCI Sustainability Index for seven consecutive years and has received an AA rating from the MSCI ESG Rating for the life insurance industry. It has also been selected as a constituent of the Dow Jones Sustainability World Index (DJSI World) for seven consecutive years and selected as a constituent of the Dow Jones Emerging Markets Index for the eighth consecutive year. It has been ranked No.1 in Asia and the top three in the global insurance industry by “Sustainalytics”. It has won the ESG Corporate Awards by “The Asset” for 13 consecutive years, the "Best ESG Company Platinum Award" in 2023 and has also been recognized as a leader in the CDP Supplier Engagement Rating for four consecutive years, with an A- rating in 2023.

Looking forward to 2024, Fubon Financial Holdings will continue to seek opportunities for mergers and acquisitions and strategic alliances in order to expand its economies of scale, deepen its presence in Taiwan and deploy in the Asian market. In terms of business outlook, Fubon Life will proactively transform its business in response to market changes and the smooth integration of IFRS17, and promote high CSM (Contract Service Margin) installment payment and protection products. Taipei Fubon Bank will continue to optimize its domestic and overseas locations and increase the penetration rate of its digital platforms through a strategy of parallel development of virtual and physical channels to enhance the momentum of its personal banking business. Fubon Insurance will strengthen its risk control and optimize the structure of its business while maintaining its leading position. Fubon Securities will consolidate its core brokerage business and deepen its customer base and digital operations.

In 2023, Fubon Life Ranked No. 1 in the Industry in Terms of Net Income & Bancassurance Channel Ranked No.1 in the Market

In 2023, Fubon Life ranked first in the industry with net income of NT$36.091 billion and ranked second in the industry in terms of first year premium (FYP), total premium and first year premium equivalent (FYPE). Fubon Life continued to transform its product strategy, increased the proportion of traditional life insurance installment sales from 24% to 42%, increased the proportion of health and injury insurance and others from 6.7% to 9.2% and reduced the proportion of investment products to 27.2%. In addition, benefiting from higher sales of installment products, Fubon Life's FYPE grew significantly by 42%, a significant increase as compared to the industry (11.7%), while driving the FYPE/FYP ratio up to 42.3%. As a result of the improved product mix, value of new contracts (VNB) grew 24% YoY and VNB/FYP increased significantly to 21.8%. The sales channels were mainly the salesperson channel, with a weighting of 47.5%, and the bancassurance channel ranked No.1 in the industry. Due to the increase in installment sales, the FYPE of various channels has significantly grown, with the growth rate of the bancassurance channel reaching up to 63%.

In terms of investment portfolio, the cash level is maintained at a sufficient level and the allocation will be adjusted according to market dynamics to enhance returns. The increase in the proportion of domestic and overseas equities mainly reflects the increase in the valuation of equity positions and the increase in allocation. By the end of 2023, Fubon Life's total investment assets has grown steadily to $4,818.1 billion, up 5% YoY, mainly reflecting the recovery in market capitalization and the impact of financial asset reclassification. Driven by higher interest rate and a stronger U.S. dollar, the recurring yield grew by 6.5% YoY.

The return on investment still maintains a positive spread over the cost of liabilities. In addition, the stabilization of financial markets in 2023 has led to a significant improvement in the unrealized balance of financial assets as compared to 2022, with net worth and net worth ratio recovering to a net worth ratio of approximately 9.8% and a Risk-Based Capital (RBC) of approximately 336% at the end of 2023.

Taipei Fubon Bank's Net Income Continued to Hit a Record High & the Number of Valid Credit Cards Ranked No.2 in the Market

In 2023, Taipei Fubon Bank's net income of NT$24.473 billion continued to hit a historic high, with overall net income increasing by 16.8% YoY, of which net interest income increased by 8.7% YoY and net fee income grew by 39.7% YoY, reflecting the increase in wealth management and credit card revenue, and the loan business also delivered outstanding results in 2023, with the overall balance of loan increasing by 7.9% YoY. For corporate loan, foreign currency loan grew by 13.6% YoY, outperforming NTD loan, while SME loan grew by 11.8% YoY and accounted for 36.5% of corporate loan. For personal loan, mortgage loan grew by 8.9% YoY, while other personal loan grew by 8.7% YoY, with double-digit growth in personal loan and credit card revolving balance.

The Bank's deposit balance grew by 5.7% YoY, benefiting from an increase in personal deposits, a rise in the NTD current deposit ratio to 61.6%, and a decline in the foreign currency current deposit ratio reflecting customers' preference for time deposits in the high interest environment. In 2023, the net interest margin (NIM) increased by 9bps YoY, or 18bps from the same period in 2022 if SWAP returns were included. In terms of asset quality, the overdue loan ratio and coverage ratio for NPL both remain at a good level, and the quality of various assets also remains solid. In terms of credit card business, the number of active cards and transaction amount grew by 63.8% and 37.6%, respectively, in 2023. The market share of active cards will rank second in the market at 14.5%, reflecting the impetus of Costco co-branded cards and the increase in domestic and international spending momentum, and the average monthly transaction amount per card remains high.

In 2023, Taipei Fubon Bank's net fee income grew by 39.7% YoY, with wealth management fee income growing 30.0% YoY. Credit card net fee income has grown mainly due to an increase in the number of active cards and the amount of transactions, as well as some equity adjustments. All wealth management product lines showed growth, with bancassurance revenue growing 50.6% YoY, accounting for 51.2% of total wealth management revenue, up 6.9% from 2022. Overseas branches benefited from the interest rate hike cycle and growth in loan scale, with net income increasing by 66.4% YoY. Overseas net income increased by 82.8%YoY which accounted for 24.5% of the Bank's total net income.

Fubon Insurance Continues to Lead the Market in Terms of Market Share & Fubon Securities Remains One of the Top Three in Terms of Key Business and Profitability

In 2023, Fubon Insurance's net loss was NT$2.23 billion, of which NT$6.06 billion (pre-tax basis) was loss on pandemic prevention insurance. The written premium income grew by 7.7% (on an individual basis), with a market share of 23.8%, continuing to be the market leader. Excluding pandemic prevention insurance, the underwriting profit grew by 42.5% YoY, with growth in both individual and corporate insurance. The combined rate was 89.4%, an improvement as compared to the same period of last year, reflecting the proper control of the underwriting quality. The investment performance was not affected by market volatility and remained stable with a return of 3.61%. Given the impact of pandemic prevention insurance, Fubon Insurance has strengthened risk management and digital transformation while growing its business, including establishing an immediate risk control mechanism and adopting online sales for new types of products.

In 2023, Fubon Securities' net income was NT$7,054 million, an annual growth of 75.4%, mainly benefited from the uptrend of the Taiwan stock market and the significant increase in profit from the position of the securities financial asset as compared to last year. After the merger of Fubon and Jih Sun, Fubon Securities has gradually realized its economies of scale, and the scale of its various businesses has increased, with its brokerage, financing, and securities lending businesses remaining among the top three in terms of market ranking and profitability.

The Net Income of Fubon Bank (Hong Kong) Grew 44.4% YOY & Steady Growth in Deposit and Loan Sizes of Fubon Bank (China)

In 2023, Fubon Bank (Hong Kong) maintained a solid liquidity management strategy, with deposit growth of 11.4% higher than loan, reflecting the rising interest rate environment. As the interest rate of Hong Kong dollars remained at a high level, which led to an increase in the rate of return on assets, NIM increased by 30bps, and its net income in 2023 reached HK$784 million, with an annual growth rate of 44.4%.

Fubon Bank (China) benefited from the retail business, and the deposit scale increased as compared with the same period of last year. Net income declined, reflecting the impact of RMB interest rate cuts and the increase in the cost of US dollar deposits on net interest margin. The increase in provision expense was mainly due to the addition of new mortgage loan assets and the increase in the statutory provision ratio, while the asset quality remained relatively healthy.