Fubon Financial

Fubon Financial Holdings Reported Net Income of NT$150.82 Billion for 2024, with Earnings Per Share of NT$10.77

The Net Income has Reached a Historic High for the Financial Holding Company, Marking 16 Consecutive Years of Being the Leader in Earnings Per Share

Fubon Financial Holdings (2881) held its investor conference for 2024 today (17th), announcing a net income of NT$150.82 billion for the year, setting a new high in the financial holding industry. The earnings per share (EPS) stands at NT$10.77, maintaining its position as the most profitable financial holding company in Taiwan for sixteen consecutive years. As of the end of December 2024, Fubon Financial Holdings’ total assets exceeded NT$12 trillion, reflecting an annual growth of 8.7%. The net worth reached NT$951.1 billion, marking an annual growth of 18.5%, with a net asset value per common share of NT$62.58. The return on assets (ROA) and return on equity (ROE) were recorded at 1.30% and 17.20%, respectively, both showing improvement as compared to the same period of last year.

Fubon Financial Holdings announced on the 10th of this month that its unaudited net income for February reached NT$14.8 billion. For the first two months of this year, the cumulative net income amounts to NT$30 billion, resulting in earnings per share of NT$2.20, maintaining its position as the leader in the financial holding industry.

Fubon Financial Holdings Maintains a Leading Position in the Market, Consistently Focusing on Deepening its Presence in Taiwan while Expanding its Footprint in the Asian Market

Richard M. Tsai, Chairman of Fubon Financial Holdings, announced that the company is projected to deliver exceptional financial results in 2024, with its primary operations retaining a dominant market position. The subsidiaries, including Fubon Life, Taipei Fubon Bank, Fubon Securities, and Fubon Asset Management, have all recorded unprecedented profits. As Fubon Financial Holdings looks toward 2025, it aims to navigate a challenging and uncertain financial environment by deepening its commitment to Taiwan and expanding its footprint in the Asian market. The company will pursue three strategic initiatives to harness market prospects: (1) enhancing customer engagement to leverage the growth potential in wealth management and cross-selling; (2) utilizing financial expertise to advance sustainable practices and low-carbon operations; (3) continuing its digital transformation efforts to elevate customer experiences and improve internal service efficiency.

In terms of business outlook, Fubon Life will continue to adjust its product structure, focusing on long-term and protection-oriented products while enhancing installment payment sales. Concurrently, it aims to strengthen its competitive edge in self-owned channels and deepen partnerships with external channels to solidify its market position. Taipei Fubon Bank will expedite the optimization of domestic branches and accelerate the establishment of overseas locations to expand its operational footprint. Additionally, it will enhance customer relationship management and rapidly grow its wealth management services both domestically and internationally. The introduction of the new mobile banking app "Fubon+" will enable the company to offer integrated asset services across subsidiaries, thereby increasing customer satisfaction. Fubon Insurance will optimize its business structure and strengthen quality control while accelerating cross-industry collaborations to create a diverse range of services and improve insurance accessibility, thus fostering a new insurance ecosystem and advancing digital technology. Fubon Securities will continue to enhance its core brokerage market share and accelerate customer acquisition efforts while deepening customer engagement and expanding wealth management revenue. Furthermore, it will strengthen product integration to improve customer service.

In addition to its impressive operational performance, Fubon Financial Holdings continues to demonstrate its commitment to leading sustainable development and promoting low-carbon transformation, earning significant international recognition. The company has been included in the Dow Jones Sustainability Index (DJSI) for eight consecutive years and has been part of the Emerging Markets Index for nine consecutive years. Furthermore, it has been selected for the MSCI Sustainable Index for eight consecutive years, receiving an AA rating in the MSCI ESG Insurance sector evaluation. Fubon has also achieved a leadership level in the CDP Climate Change assessment for five consecutive years, with a score of A for 2024, and has maintained a leadership level in the CDP Supply Chain engagement assessment for four consecutive years. Additionally, Fubon Financial Holdings has made it onto the inaugural TIME Global 500 list of sustainable enterprises and has also repeated its achievement as one of the top 500 brands with sustainable reputations according to “Brand Finance.”

Fubon Life Ranked First in the Industry for Net Income in 2024 & the Return on Investment has Reached a Historic High

Fubon Life reported a net income of NT$102.66 billion for the entire year of 2024, marking a historic high and securing the top position in the industry. The company also ranked second in first year premiums (FYP), total premiums, and first year premium equivalent. The growth of participating products contributed to a 16.5% year-on-year increase in first year premiums, while renewal premiums rose by 10.9% and total premium income increased by 12.5%, all surpassing industry averages. In terms of FYP, the sales focus on installment payment and protection-oriented high CSM products led to an increase in the share of installment payments from 51.9% to 58.2%. Additionally, strong sales of US dollar-denominated participating policies boosted the proportion of foreign currency policies from 32.5% to 41.2%. The rise in the share of installment payment and protection products resulted in a 25.8% year-on-year increase in FYPE, exceeding the industry average and raising the FYPE/FYP ratio to 45.7%. The value of new business (VNB) also grew by 18.7% compared to the same period last year. The sales channels developed evenly, with both bank insurance and agent channels accounting for over 40% of FYP, with bank insurance maintaining the leading position in the industry.

In terms of investment portfolio, Fubon Life achieved a record-high investment return rate of 5.48% for 2024. The increase in domestic and international stock returns primarily reflects realized capital gains and the disposal of private equity funds. Cash levels remain relatively high, with plans to strategically allocate based on market conditions to enhance returns. Both pre-hedging and post-hedging investment returns have improved compared to previous periods, largely due to a significant increase in capital gains from variable income assets, which has widened the positive spread compared to liability costs. By the end of 2024, Fubon Life's total investment assets have steadily grown to NT$5.176 trillion, marking a 7.4% annual increase. In response to market changes, Fubon Life has moderately reduced its hedging ratio, resulting in a decrease in regular hedging costs in the fourth quarter of 2024. Additionally, the recovery of the U.S. economy has contributed to the appreciation of the U.S. dollar, leading to foreign exchange gains in the same quarter. As of the end of 2024, the net worth ratio stands at approximately 11.4%, with a risk-based capital (RBC) ratio of about 388%.

Taipei Fubon Bank has Achieved a Profit Exceeding NT$30 Billion & the Net Income and the Annual Increase in Deposit and Loan Balances have Reached Historic Highs

In 2024, Taipei Fubon Bank achieved a net income of NT$30.41 billion, setting a new record with a 24.2% YoY increase from the previous year. The bank's overall net revenue rose by 17.0%, with net interest income growing by 8.4% YoY due to an expansion in asset size. The total credit balance also increased by 12.4% YoY. For corporate loan, foreign currency loans experienced a growth of 19.4% YoY, while loans to small and medium-sized enterprises grew by 13.8% YoY, representing 38.2% of total corporate loans. In the personal loan sector, mortgage loan balances rose by 13.3% YoY, and personal loans saw a significant increase of 33.7% YoY.

In 2024, the deposits and loan balances of Taipei Fubon Bank reached historic highs, with an overall deposit growth of 11% YoY. Both NTD and foreign currency deposits saw increases, resulting in an improved loan-to-deposit ratio compared to the end of 2023. The rise in NTD lending rates offset the impact of U.S. dollar interest rate cuts, leading to a 1 basis point increase in the net interest margin (NIM) for 2024. In terms of asset quality, both the non-performing loan ratio and the coverage ratio for provisions remained at satisfactory levels. Regarding credit card operations, the collaboration with Costco and the boost in domestic and international consumer spending contributed to growth in both the number of active cards and transaction amounts in 2024. The market share of active cards reached 14.7%, with transaction amounts exceeding NT$600 billion, reflecting a growth of 25.1% YoY and an increase in market share to 13.0%. Additionally, the non-performing loan ratio for credit cards decreased as compared to the previous quarter, indicating asset quality that surpasses the market average.

Due to the robust performance in wealth management and credit card services, Taipei Fubon Bank is projected to see a 37.1% YoY increase in net fee income for 2024. The wealth management fees are expected to grow by 35.5% YoY, primarily driven by contributions from bank insurance and mutual funds. Additionally, credit card fee income is anticipated to rise by 68.0% YoY, largely attributed to increased spending on Costco cards and overseas transactions. In terms of overseas branches, the growth in loan volume and stable asset quality have led to a net income increase of 12.2% YoY and a post-tax net profit growth of 10.0% YoY.

Fubon Securities has Achieved a Record Profit Exceeding NT$10 Billion, Marking a Historic High. Additionally, Fubon Insurance Continues to Maintain its Position as the Market Leader in Terms of Market Share

Fubon Securities achieved a record high net profit after tax in 2024, surpassing the NT$10 billion mark for the first time, reaching NT$10.02 billion, which represents a 42.0% YoY growth. This remarkable performance was primarily driven by a favorable stock market in Taiwan, characterized by both rising prices and trading volumes, leading to significant profit growth across various business segments. The company maintained its position among the top three in market rankings and profitability in key business areas. Looking ahead, Fubon Securities plans to further enhance customer relationship management and optimize digital services to increase its market share in core operations while expanding its wealth management business.

Fubon Insurance reported a net income of NT$3.02 billion for 2024, benefiting from adjustments in its business structure and enhanced quality control, leading to a continuous increase in profits. The premium income from signed policies grew by 11.2%, achieving a market share of 23.9%, thus maintaining its position as the market leader. The retention combined ratio improved to 87.0% compared to the same period last year, reflecting ongoing optimization of the business structure and effective risk management. The investment performance remained robust, with a return on investment of 5.18%.

Fubon Bank (Hong Kong) Reported a Net Income Growth of 15.6% YoY, while Fubon Bank (China) has Demonstrated Steady Growth in its Deposit and Loan Scale

Fubon Bank (Hong Kong) reported a net income of HK$907 million for 2024. This growth can be attributed to an increase in personal deposits, effective management of deposit costs, and a rise in financial assets and yields. As a result, the net interest margin (NIM) experienced a year-on-year increase of 13 basis points, while the post-tax net profit grew by 15.6% YoY as compared to the previous year.

Fubon Bank (China) has experienced steady growth in its deposit and loan scale, with an improved loan structure contributing to 44 basis points increase in net interest margin (NIM). When factoring in swap income, the NIM has risen by 52 basis points YoY. Additionally, the bank benefited from increased net interest income, swap earnings, and capital gains from bonds, resulting in a post-tax net profit of RMB395 million, reflecting significant profit growth.

Fubon Life has Proposed Strategies to Align with IFRS 17 and the TW-ICS

With the upcoming IFRS 17 and the TW-ICS set for 2026, Fubon Life emphasizes that its strong financial position will allow it to adapt to these changes without affecting its long-term operational and financial fundamentals.

Following the implementation of IFRS 17, significant changes include: (1) The income statement will now display results from insurance services and insurance financial results, enhancing the transparency of profit sources. (2) In the balance sheet, liabilities will be calculated based on current estimates to reflect the prevailing interest rate environment and experiential assumptions, differing from the current method of using locked-in basis for liability calculations. Additionally, a new liability contract service margin (CSM) will be introduced, representing the present value of estimated future profits, which will be recognized in profit and loss over time as policy services are rendered. (3) Due to the asset cancellation overlay approach, financial assets will also undergo reclassification to improve asset-liability matching and risk management. For equities valued at FVOCI, capital gains will be included in retained earnings under equity, serving as a significant source for life insurance dividends, with plans for periodic disclosures in the future.

In preparation for the successful alignment with IFRS 17, Fubon Life has established two primary strategies: (1) Actively adjusting its product portfolio by shifting sales strategies towards high-value insurance products, including installment payment and protection-oriented offerings. Starting in 2023, the company has taken the lead in the industry by launching participating policies, which aim to reduce the capital requirements under the new solvency regime while continuously accumulating the Contractual Service Margin (CSM). By 2024, the proportion of first-year premiums (FYP) from participating policies is expected to exceed 50%. Furthermore, Fubon Life has been tracking CSM since 2021, incorporating it as a key management indicator. (2) Fubon Life has consistently demonstrated superior investment performance and profitability, which supports capital accumulation. From 2023 to 2025, the company plans to issue subordinated bonds amounting to NT$25 billion, NT$56 billion, and NT$19 billion (pending issuance) to enhance its capital levels. The long-term solvency target for Fubon Life is set above 150%, ensuring robust financial planning to meet the increasing capital requirements associated with the transition period, while also maintaining the goal of distributing dividends to the financial holding company to create long-term value for shareholders.