Fubon Financial

Fubon Financial Holdings (2881) held an investor conference today (May 23rd) to announce the unaudited financial figures and operating status in the first quarter of 2024, and its subsidiaries continued to maintain solid performance, with a net income of NT$30.41 billion, an increase of 117.5% YoY, and an earnings per share (EPS) of NT$2.34 in the first quarter of 2024, and the net income and earnings per share continued to rank second in the financial holding industry.

As of the end of March 2024, Fubon Financial Holdings’ total assets exceeded NT$11.5 trillion, an annual increase of 8.4%. The net worth was NT$896.5 billion, up by 25.7% annually, with a net worth per common share of NT$61.51. Return on assets (ROA) and return on equity (ROE) were 1.08% and 14.32% respectively, both showing growth as compared to the same period of last year.

On April 25th, the board of directors of Fubon Financial Holdings approved a proposal to distribute a cash dividend of NT$2.5 per common share and a stock dividend of NT$0.5 per common share. The total dividend distribution amounts to NT$3.0 per common share, with a dividend payout ratio of 62.5%. On the 10th of this month, Fubon Financial Holdings disclosed its unaudited net income for April, which amounted to NT$13.03 billion. The company's cumulative net income for the first four months of this year reached NT$43.41 billion, with earnings per share of NT$3.34. The company's profitability remains stable and robust.

Fubon Financial Holdings Actively Implements Four Major Sustainable Strategies to Continuously Exert its Financial Influence

Richard M. Tsai, Chairman of Fubon Financial Holdings, has stated that in addition to a stable profit performance, Fubon Financial Holdings continues to focus on sustainable operation through four major strategies of ”decarbonization, digitalization, empowerment, and connection.” This effort has earned the company recognition as one of the top sustainable reputation brands in the "Brand Finance" Global 500 for two consecutive years. Its subsidiaries are actively leveraging their financial influence and implementing sustainability in their core financial businesses. Notable actions include Taipei Fubon Bank serving as the manager for the Taipei City Government's inaugural social responsibility bond issuance which is the first sustainable bond issuance for domestic government agencies. The bank also coordinated the arrangement of the largest-ever NT$15.8 billion syndicated loan for the SunnyRich Multifunction Solar Power Co., Ltd., setting a record for the highest amount in Taiwan's fishery and electricity symbiosis syndicated loan. Fubon Insurance collaborated with Taiwan Mobile to plan and launch an innovative "one-stop" insurance service, the industry's first trial of innovative insurance services between an insurance company and a telecommunications company.

Maintaining a Strong Investment Performance, Fubon Life Recorded the Second Highest Net Income in the Industry in the First Quarter

Fubon Life achieved a net income of NT$17.46 billion in the first quarter of 2024, securing the second position in the industry. The company's focus on enhancing sales of traditional participating policies led to 18.0% growth in first year premium (FYP) as compared to the same period of last year, ranking first in the industry. Fubon Life ranks second in the industry for both total premium (TP) and first year premium equivalent (FYPE). Benefiting from the installment payment plan for product sales, the FYPE grew by 35.5% as compared to the same period of last year, surpassing the industry average performance. This increase also led to the FYPE/FYP ratio rising from 41.6% to 47.7%. Fubon Life's main sales channel is the bancassurance channel, accounting for 46% of the total, ranking first in the industry. The salesperson channel comes next, accounting for 43.4%. At the same time, the installment payment sales have significantly driven the growth of FYPE across all channels, with both salesperson and bancassurance channels growing by over 30%.

Regarding the investment portfolio, there has been a rise in the proportion of domestic and foreign stock investments which signifies an increase in the evaluation of stock positions and an expansion in allocation. Maintain an appropriate level of cash position and adjust investment portfolios dynamically based on market conditions to enhance returns. The primary focus of overseas fixed income asset allocation remains on investing in investment-grade corporate bonds and financial bonds. As of the end of March 2024, Fubon Life's total investment assets reached NT$4.9934 trillion. Benefiting from the increase in interest rates and the appreciation of the US dollar, the company's recurring investment income in the first quarter of 2024 grew by 8.6%. Meanwhile, the annual growth rate of capital gains from variable income reached 96.6%. This leads to the return on investment both before and after hedging outperformed the same period of last year, with a post-hedging and exchange rate return on investment of 4.62%, widening the positive spread over the cost of debt as compared to the same period of last year.

As a result of the stabilization of the financial market and the increase in stock valuation, Fubon Life's unrealized financial assets balance for the first quarter of 2024 has turned positive from negative. As of the end of March 2024, the net worth ratio stands at approximately 10.9%, with a risk-based capital (RBC) exceeding 300%.

In Q1, 2024, Taipei Fubon Bank Continues to Achieve a New High Net Income as Compared to the Same Period of Last Year

With a net income of NT$8.16 billion in the first quarter of 2024, Taipei Fubon Bank has once again achieved a new high for the same period in history. The bank's various business segments have shown steady and robust growth. The overall net income increased by 16.0% YoY, with interest net income growing by 13.7% YoY. This growth can be attributed to the expansion of the bank's asset size and a 6bps increase in net interest margin (NIM). The annual growth of 50.9% in net fee income highlights an increase in revenue from wealth management and credit card services. In terms of credit, there was a yearly growth of 12.8% in the overall credit balance, with both corporate credit and personal loans showing double-digit growth. The annual rise of 14.9% in the total corporate credit balance highlights the expanding economy and the growing demand for corporate financing. Regarding personal credit, the balance of housing loans has exceeded NT$1 trillion, with a yearly growth rate of 10.9%. The remaining balance of other personal credit has shown an annual increase of 16.6%, while personal loans and revolving balances on credit cards have demonstrated double-digit growth.

In the first quarter of 2024, Taipei Fubon Bank saw an annual growth of 8.6% in deposit balance. In the high interest rate environment, both NT dollar and foreign currency fixed deposits showed higher growth rates compared to demand deposits. By continuously improving the efficiency of foreign currency fund utilization, the proportion of foreign currency loans and bonds to foreign currency deposits is increasing. In terms of asset quality, the bank maintains a favorable NPL ratio of 0.11% and a NPL coverage ratio of 1,143.73%. These indicators demonstrate the bank's commitment to maintaining a stable asset quality across its various business segments.

In terms of credit card business, the Costco co-branded card has driven the growth of effective card numbers by 50.5% YoY, with a market share of 14.8%, ranking second in the market. The annual growth rate of transaction amount through card payments has reached 51.4%, with a market share of 13.7%, placing it in the third position in the market. In terms of wealth management business, the various product lines of wealth management have shown significant growth, with wealth management fee income growing by 44.0% YoY. Among them, mutual funds have grown by 128.4% YoY, reflecting the active investment market. The overseas branch loan scale has grown and the asset quality is stable, driving the overseas branch net income to increase by 18.5% YoY, and overseas after-tax net income to increase by 15.8% YoY.

Fubon Insurance Maintains its Leading Position in the Market Share & Fubon Securities Maintains its Ranking Among the Top Three in Terms of Important Businesses and Profitability

Fubon Insurance has overcome the obstacles posed by pandemic insurance and the profit for the first quarter of 2024 has turned from negative to positive, with net income of NT$1.35 billion. Achieving a significant growth of 6.2% in premium income and capturing a market share of 24.7%, Fubon Insurance continues to dominate the market as the industry leader. At the same time, the combined ratio improved to 84.0% as compared to the same period of last year, as it is no longer affected by epidemic insurance and contributions from business structure adjustments. Despite the fluctuations in the investment market, the investment performance remains stable, with an investment return rate of 6.83%.

With a net income of NT$2.34 billion in the first quarter of 2024, Fubon Securities experienced a 43.1% annual growth. This remarkable performance can be attributed to the favorable market conditions in the Taiwan stock market, where both stock prices and trading volume experienced a simultaneous increase. The profitability has risen across positions in brokerage, wealth management, and financial assets. Fubon Securities has successfully maintained its position among the top three in terms of market rankings and profitability in crucial business areas such as brokerage, financing, and securities lending. Looking ahead to the future, Fubon Securities will continue to deepen customer management, consolidate brokerage business, enhance the penetration rate of wealth management products, and leverage economies of scale.

Fubon Bank (China) witnessed a double-digit growth in both deposits and loans during the first quarter of 2024. The loan portfolio primarily consisted of newly added mortgage assets since the second quarter of 2023, while deposits experienced synchronized growth. The bank remains committed to maintaining a robust asset quality.

By the End of 2023, the Embedded Value (EV) of Fubon Life Reached NT$931 Billion, which is Reflected in Fubon Financial Holdings' EV per share of NT$71.5

Fubon Financial Holdings also announced today the Embedded Value (EV) of Fubon Life at the end of 2023. Benefiting from robust profits and net worth improvement in 2023, the adjusted net worth rose to NT$535.8 billion, a YoY growth of 29.0%. The effective contract value was NT$395.2 billion, with a YoY growth of 3.2%. The overall Embedded Value at the end of 2023 was NT$931 billion, up 16.6% from NT$798.6 billion at the end of 2022.

In 2023, due to changes in the economic environment and regulations, the overall market's first year premium (FYP) decreased by 13.1%, with a continuous decline in the sales of investment-type products. Fubon Life's FYP dropped by 11.1% YoY. By focusing on installment payment and protection-type product sales to enhance the product portfolio, the Value of New Business (VNB) reached NT$20 billion, showing a YoY growth of 20.3%.

Fubon Life's reflection on Fubon Financial Holdings' EV per share is NT$71.5. In terms of Appraisal Value (AV), if the future 20-year VNB is taken into account, Fubon Life's AV at the end of 2023 will be NT$1,129.8 billion, equivalent to NT$86.8 per share for the Fubon Financial Holdings.