30
Financial Review of 2Q 2017 (Bloomberg: 2801 TT) 2017.08.30
Financial Review of 2Q 2017 (Bloomberg: 2801 TT)
2017.08.30
Disclaimer • This presentation is provided by Chang Hwa Bank Co., Ltd. („CHB‟).The information contained
within is not reviewed or reviewed by any accountant or any independent third party. Users should
read this material in conjunction with all other public financial and operational information filed to
the competent authorities by CHB. While we endeavor to provide accurate, complete and
consistent information herein, CHB makes no guarantee or warranties as to the accuracy or
correctness of all the material contained. After this presentation is released to the public, we
undertake no obligation to update any relevant data to reflect any change hereafter.
• Users should also notice that this presentation may contain forward-looking statements.
Statements that are not historical facts, including statements relating to the implementation of
strategic initiatives, future business development and economic performance are forward-looking
statements. By their nature, forward-looking statements involve uncertainties, risks, assumptions
and other factors that could cause actual developments and results to differ materially from our
statement in this presentation. These factors include, but not limited to, regulatory developments,
competitive conditions, technological developments, general economic conditions and
management changes.
• The information, statements or opinions in this presentation do not constitute a public offer under
any applicable legislation or an offer to sell or solicitation of an offer to buy any securities or
financial instruments or any advice or recommendation respect to such securities or other financial
instruments. CHB and its affiliates representatives, no matter for their negligence or any other
reasons, should not be liable for any loss or damages arising from the use of or interpretation by
others of information contained within this presentation or any matter related to this document.
2
Agenda
3
Operating Results
Appendix
Operations Highlight
Financial Performance
BIS ratio is 12.75%.
Loans declines 1.4% YoY, and grows 1.6% than
2016/2H.
Deposits increases 4.2% YoY, and grows 2.3%
than 2016/2H.
NPL ratio is 0.32%.(After deducting “Transasia
Airways Co.”, NPL ratio is 0.24%.)
Net Income declines 1.9% YoY.(After deducting
one-off THSR preferred shares recovery, Net
Income increases 3.4% YoY.)
NII increases 2.9% YoY, and the spread is widen.
Operations Highlight
4
Core Business
Profitability
Asset quality
Capital Adequacy Ratio
Agenda
5
Operating Results
Appendix
Financial Performance
Operations Highlight
Asset size and Net Worth
6
Asset size (in NT$ bn) Net Worth (in NT$ bn)
1,6141,700
1,8161,906
2,0051,920
1,984
1000
1200
1400
1600
1800
2000
2200
2012 2013 2014 2015 2016 2Q16 2Q17
105112 119
129138 133 140
0
200
2012 2013 2014 2015 2016 2Q16 2Q17
10,244 10,74812,424
13,746 14,083
7,102
0
5000
10000
15000
20000
2012 2013 2014 2015 2016 2Q17
Financial Performance
7
1.ROE and ROA were after-tax figures and annualized figures.
Net Income Before Tax (in NT$ mn)
ROE
8.35 8.12
9.41 9.36 9.058.60
5
10
15
2012 2013 2014 2015 2016 2Q17
EPS After tax
1.17 1.14
1.38 1.38 1.35
0.63
0
1
2
2012 2013 2014 2015 2016 2Q17
ROA
0.53 0.530.62 0.63 0.62 0.60
0.2
1.2
2012 2013 2014 2015 2016 2Q17
PPOP
(In NT$ mn ) 2Q16 2Q17 YoY(%)
PPOP1 7,654 7,513 -1.8%
Provision Expense 953 1,107 16.2%
Recovery 480 696 45.0%
Net Income Before tax 7,181 7,102 -1.1%
Income Tax Expense 1,111 1,146 3.2%
Net Income After tax 6,070 5,956 -1.9%
Net Income After tax2 5,762 5,956 3.4%
8
1.PPOP means Pre-Provision Operating Profits.
2.Excluding one-off THSR preferred shares recovery.
10,767
2,703
1,314
151101
1,465
2,480
11,083
0
5, 000
10, 000
15, 000
NII Net Fee Income Gain on Invest. Others
2Q16 2Q17
Net Revenue
9
2Q17 Net Revenue breakdown
NII, 73%
Net Fee Income,
16%
Gain on Invest.,
10%
Others, 1%
Net Revenue (in NT$ mn)
2Q16 2Q17 YoY
15,299 15,129 -1.1%
14,935* 15,129 1.3%
* Excluding one-off THSR preferred shares recovery.
*
487383
9 675 67
1,7571,569
393446
0
Wealth
Management
Loan FX Credit Card Others
2Q16 2Q17
Net Fee Income
10
2Q17 Net Fee Income breakdown
Wealth Managem
ent, 63.3%
Loan, 18.0%
FX, 15.8%
Credit Card, 0.2%
Others, 2.7%
Net Fee Income (in NT$ mn)
2Q16 2Q17 YoY
2,703 2,480 -8.3%
Agenda
11
Financial Performance
Operating Results
Appendix
Operations Highlight
308 308 315 309 305
368 373 381 398 403
139 81 86 87 75
124 123 123 120 1184
4 4 4 4
365366 367 370 372
6768 69 72 75
0
600
1,200
1,800
2Q16 3Q16 4Q16 1Q17 2Q17
Large Corp. SME Gov.-linked Overseas
Other Corp. Mortgage Other consumer
Loan breakdown by customer
12
2Q17 loan breakdown by customer
Large Corp., 22.6%
SME, 29.8%
Gov.-linked, 5.6%
Overseas, 8.7%
Other Corp., 0.3%
Mortgage, 27.5%
Other consumer,
5.5%
Quarterly loan balance (in NT$ bn)
1,375 1,323 1,345
Total
YoY -1.4%
QoQ -0.6%
Large Corp.
YoY -1.3%
QoQ -1.1%
SME
YoY 8.6%
QoQ 1.3%
Gov.-linked
YoY -40.3%
QoQ -14.0%
Overseas
YoY -3.0%
QoQ -2.1%
Mortgage
YoY 1.0%
QoQ 0.6%
1,360
1.Loans included ordinary loans, advances (credit card), factoring A/R, exchange bills negotiated, and import / export
bills negotiated, and excluded overdue loans.
2.Quarterly loan balance is single quarter average balance basis.
3. YoY is campared to average of the first six months in 2016 and 2017.
1,352
1,116 1,068 1,090 1,112 1,104
259 255 255 248 248
0
600
1,200
1,800
2Q16 3Q16 4Q16 1Q17 2Q17
NTD FX
Loan breakdown by currency
13
2Q17 loan breakdown by currency
NTD, 81.7%
FX, 18.3%
Quarterly loan balance (in NT$ bn)
1,375 1,352 1,323 1,345
FX
YoY -5.0%
QoQ 0.1%
NTD
YoY -0.6%
QoQ -0.7% Quarterly USD loan balance (in NT$ bn)
206 201 202 195 192
0
200
2Q16 3Q16 4Q16 1Q17 2Q17
YoY -7.9%
QoQ -1.4%
1.Loans included ordinary loans, advances (credit card), factoring A/R, exchange bills negotiated, and import / export
bills negotiated, and excluded overdue loans.
2.Quarterly loan balance is single quarter average balance basis.
3. YoY is campared to average of the first six months in 2016 and 2017.
1,360
1,653 1,616
494
1,941
1,476
488
0
1,000
2,000
3,000
4,000
Europe and America Asia( China exclude) China
6M16 6M17
Overseas Loan breakdown
14
6M17 overseas loan breakdown by regions
Europe and
America, 49.7%
Asia( China
exclude), 37.8%
China, 12.5%
Overseas loan balance(in US$ mn)
6M16 6M17 YoY
3,763 3,905 3.8%
1. Loans included ordinary loans, advances (credit card), factoring A/R, exchange bills negotiated, and import /
export bills negotiated , and excluded overdue loans.
2. The figures were the average of the first six months.
3. Asia included HK branch .
Overseas & OBU PPOP yearly Grow
15
Overseas & OBU PPOP proportion 2Q17 PPOP breakdown
Domestic, 49.9%
OBU, 29.7%
Overseas, 20.4%
29.1% 27.5%
38.0% 37.5%
46.3%50.1%
0.00%
25.00%
50.00%
2012 2013 2014 2015 2016 2Q17
1.PPOP means Pre-Provision Operating Profits.
Overseas & OBU
Net Income Before Tax (in NT$ mn)
4,425 4,653
5,933
3,371
0
1, 000
2, 000
3, 000
4, 000
5, 000
6, 000
2014 2015 2016 2Q17
722 737 755 774 766
472 465 462 465 466
0
700
1,400
2Q16 3Q16 4Q16 1Q17 2Q17
Demand deposit Time deposit
NTD Deposit breakdown
16
Quarterly NTD deposit balance(in NT$ bn)
1,239 1,232 1,194 1,202 1,217 Total
YoY 3.3%
QoQ -0.6%
Quarterly NTD demand deposit
proportion
DD
YoY 6.5%
QoQ -1.0%
1.Quarterly deposit balance is single quarter average balance basis.
2.YoY is campared to average of the first six months in 2016 and 2017.
60.5% 61.3% 62.0% 62.4% 62.2%
40.00%
80.00%
2Q16 3Q16 4Q16 1Q17 2Q17
FX Deposit breakdown
17
2Q17 FX deposit breakdown by currency
USD, 76.0%
CNY, 13.0%
Others, 11.0%
Quarterly RMB deposit balance(in NT$ bn)
Quarterly FX deposit balance(in NT$ bn)
156 164 167 168 170
187 188 196 197 201
0
400
2Q16 3Q16 4Q16 1Q17 2Q17
Demand deposit Time deposit
365 371 343 352 363
Total
YoY 7.3%
QoQ 1.7%
TD
YoY 4.5%
QoQ 1.9%
DD
YoY 10.7%
QoQ 1.5%
55 55 55 53 50
- 10
2Q16 3Q16 4Q16 1Q17 2Q17
YoY -9.2%
QoQ -6.0%
1.Quarterly deposit balance is single quarter average balance basis.
2.YoY is campared to average of the first six months in 2016 and 2017.
131 138 140 138 139
122 125 131 135 143
0
400
2Q16 3Q16 4Q16 1Q17 2Q17
Demand deposit Time deposit
Quarterly USD deposit balance(in NT$ bn)
Total
YoY 11.0%
QoQ 3.3%
TD
YoY 13.4%
QoQ 5.8%
DD
YoY 8.6%
QoQ 0.7%
253 263 271 273 282
LDR
89.06%
84.70% 84.68% 84.42% 83.93%
2Q16 3Q16 4Q16 1Q17 2Q17
18
Total LDR NTD LDR
93.35%
88.69% 89.41% 89.58%
89.44%
2Q16 3Q16 4Q16 1Q17 2Q17
FX LDR
74.12% 71.07%
68.84% 66.90% 65.64%
2Q16 3Q16 4Q16 1Q17 2Q17
Spread and NIM
1.92% 1.95% 1.94% 1.98% 1.99%
0.60% 0.56% 0.55% 0.58% 0.58%
1.32% 1.39% 1.39% 1.40% 1.41%
1.12% 1.12% 1.12% 1.13% 1.13%
2Q16 3Q16 4Q16 1Q17 2Q17
Lending Rate Deposit Rate
Spread NIM
19
Quarterly total loan interest spread and NIM NTD loan interest spread*
* Quarterly based.
FX loan interest spread*
2.63% 2.67% 2.80% 3.01% 3.01%
0.78% 0.75% 0.79% 0.94% 0.94%
1.85% 1.92% 2.01% 2.07% 2.07%
2Q16 3Q16 4Q16 1Q17 2Q17
Lending Rate Deposit Rate Spread
1.75% 1.77% 1.75% 1.75% 1.76%
0.54% 0.50% 0.48% 0.47% 0.47%
1.21% 1.27% 1.27% 1.28% 1.29%
2Q16 3Q16 4Q16 1Q17 2Q17
Lending Rate Deposit Rate Spread
FED vs. CBC interest rates trends
2015/1, 0.250%
2015/12, 0.500% 2017/1,
0.750%
2017/3, 1.000%
2017/6, 1.250%
2015/1, 1.875% 2015/9,
1.750% 2015/12, 1.625% 2016/3,
1.500% 2016/7, 1.375%
0.000%
0.200%
0.400%
0.600%
0.800%
1.000%
1.200%
1.400%
1.600%
1.800%
Fed Fund Rate Rediscount Rate
20
Fed Fund Rate VS. Rediscount Rate
15,299 15,129
7,6167,645
50.34%49.97%
0
10000
20000
2Q16 2Q17
- 40.00%
60.00%
Net Revenue (in NT$ mn)
Operation Expense (in NT$ mn)
Cost-Income Ratio
Cost-Income Ratio
21
Cost-Income Ratio Operating Expense (in NT$ mn)
0
5,000
10,000
2Q16 2Q17
7,645 7,616
1,646
2,320
1,474
2,157
2,683
953 1,107
0
2000
4000
2012 2013 2014 2015 2016 2Q16 2Q17
Loan provision, write-off and recovery
22
Provision (in NT$ mn)
Recovery (in NT$ mn)
3,014 2,958
2,358
1,8281,545
480696
0
4,000
2012 2013 2014 2015 2016 2Q16 2Q17
Write-Off (in NT$ mn)
2,344
274
998
2,087
1,161 1,160
3,101
0
4,000
2012 2013 2014 2015 2016 2Q16 2Q17
Reserve (in NT$ mn)
13,517 13,510
14,671
16,135 16,12315,695 15,955
10,000
2012 2013 2014 2015 2016 2Q16 2Q17
NPL Ratio and Coverage Ratio
23
3,068 3,483 3,516
4,121 4,345
0.23% 0.26% 0.25% 0.30% 0.32%
-200.00%
-100.00%
0.00%
100.00%
200.00%
1,000
6,000
2Q16 3Q16 4Q16 1Q17 2Q17
NPL Balance(in NT$ mn) NPL Ratio
NPL Ratio Coverage Ratio
15,695 15,777 16,123 15,836 15,955
511.52%
384.29% 367.24%458.58%453.01%
5000
9000
13000
17000
21000
25000
2Q16 3Q16 4Q16 1Q17 2Q17
- 300.00%
- 200.00%
- 100.00%
0.00%
100.00%
200.00%
300.00%
400.00%
500.00%
600.00%
Loan loss reserved(in NT$ mn) Coverage Ratio
Asset quality
24
Large Corp.
Mortgage
SME
Highlight
406
763
402
948 1,168
0.10% 0.19% 0.10% 0.24% 0.30%
-15.00%0
500
1,000
1,500
2,000
2Q16 3Q16 4Q16 1Q17 2Q17
NPL Balance(in NT$ mn) NPL Ratio
1,620 1,618 1,839
1,561 1,600
0.39% 0.40% 0.43% 0.36% 0.36%
-15.00%0
500
1,000
1,500
2,000
2,500
3,000
2Q16 3Q16 4Q16 1Q17 2Q17
NPL Balance(in NT$ mn) NPL Ratio
680 692 774 1,011 1,103
0.24% 0.25% 0.28% 0.36% 0.39%
-15.00%0
500
1,000
1,500
2,000
2,500
2Q16 3Q16 4Q16 1Q17 2Q17
NPL Balance(in NT$ mn) NPL Ratio
The NPL ratio of Large corp.
is increased, which mailly due
to the “Transasia Airways Co.”
loan becomed NPL.
Credit Rating & CAR
25
11.5612.21 12.01
12.79 12.75
8.87 9.02 8.86 8.96 8.97
2Q16 3Q16 4Q16 1Q17 2Q17
6.00
8.00
10.00
12.00
14.00
16.00
BIS Tier I
Credit Rating
Capital Adequacy Ratio
Moody’s ( Dec. 16 Review) ：
－Long Term Rating：A2
－Short Term Rating：P-1
－Outlook：Stable
S&P ( Nov. 16 Review) ：
－Long Term Rating：BBB+
－Short Term Rating：A-2
－Outlook：Stable
Operation Perspective Cultivate high grade SME and FX loan richly to raise the spread up.
In response to government‟s policy as urban renewal plan, 5+2 innovative industries plan, and
new southbound policy to grasp financing opportunities. Be the leading Bank of Syndicated Loan to increase in fee income. Enhance the risk management of loan to strengthen assets quality.
Develop diversified product to strengthen the W/M biz. growth momentum. Advance financial efficiency with flexible asset allocation strategy . Participate in urban renewal plan to enhance the own assets utilization and efficiency.
ASEAN marketing layout gain ground with Myanmar Representative Office is grand opened,
and Manila Branch is expected to open at the end of the year. Intensify business and management capabilities of overseas branches. Extend the scope of overseas location and training experts for global business.
Cultivate Fin-Tech talent and provide digitization financial service with big data, block-chain and
AI technology. Apply for Fin-Tech patents actively and encourage E-payment and mobile payment. Enhance multichannel integration and introduce cross platform mobile development tools to
extend the social network. Enhance the sound of the risk management of Fin-Tech and the protection mechanism of
information security.
Enhance regulatory compliance system continually to ensure its on-going and effective
operation and develop culture conscious of regulatory compliance. Enhance the sound of AML and CFT to reduce related risk. 2016 Top 5% of TWSE-listed Company in Corporate Governance. Added to the TWSE Corporate Governance 100 Index as a constituent in 2016.
26
Strengthen Core
Business
Develop Diversified
Sources of Profit
Extend Overseas Layouts
Enhance Competition
of Digital Finance
Implement Compliance &
Corporate Governance
Q&A
27
Agenda
28
Financial Performance
Appendix
Operating Results
Operations Highlight
CHB Balance Sheets (in NT$ mn)
2015 2016Change
%2Q16 3Q16 4Q16 1Q17 2Q17
Change
%2Q16 2Q17
Change
%
Assets
Cash and cash equivalents,due from the
Central Bank and other banks177,880 240,024 34.94% 202,901 237,754 240,024 242,434 245,673 1.34% 202,901 245,673 21.08%
Financial assets at fair value through profit or
loss, net43,519 34,699 -20.27% 37,192 42,531 34,699 24,969 22,691 -9.12% 37,192 22,691 -38.99%
Derivative financial assets for hedging 193 86 -55.44% 256 235 86 177 230 29.94% 256 230 -10.16%
Available-for-sale financial assets, net 67,415 76,825 13.96% 74,313 75,335 76,825 76,981 80,420 4.47% 74,313 80,420 8.22%
Held-to-maturity financial assets, net 205,777 204,865 -0.44% 193,148 204,426 204,865 212,712 217,335 2.17% 193,148 217,335 12.52%
Other financial assets, net 31,748 23,098 -27.25% 16,789 23,966 23,098 19,645 17,719 -9.80% 16,789 17,719 5.54%
Receivables, net 19,729 20,280 2.79% 21,904 19,454 20,280 18,785 21,415 14.00% 21,904 21,415 -2.23%
Loans, net 1,321,934 1,367,260 3.43% 1,335,636 1,298,881 1,367,260 1,342,762 1,340,346 -0.18% 1,335,636 1,340,346 0.35%
Property and equipment, net 22,253 20,802 -6.52% 22,034 20,803 20,802 20,737 20,727 -0.05% 22,034 20,727 -5.93%
Investment property, net 12,537 13,754 9.71% 12,548 13,755 13,754 13,752 13,751 -0.01% 12,548 13,751 9.59%
Other assets 3,272 3,459 5.72% 3,359 3,346 3,459 5,675 3,502 -38.29% 3,359 3,502 4.26%
Total Assets 1,906,257 2,005,152 5.19% 1,920,080 1,940,486 2,005,152 1,978,629 1,983,809 0.26% 1,920,080 1,983,809 3.32%
Liabilities
Deposits and remittances 1,547,740 1,624,430 4.95% 1,552,896 1,565,173 1,624,430 1,610,400 1,628,137 1.10% 1,552,896 1,628,137 4.85%
Other liabilities 229,042 243,198 6.18% 234,211 239,382 243,198 228,634 216,135 -5.47% 234,211 216,135 -7.72%
Total Liabilities 1,776,782 1,867,628 5.11% 1,787,107 1,804,555 1,867,628 1,839,034 1,844,272 0.28% 1,787,107 1,844,272 3.20%
Stockholders' Equity 129,475 137,524 6.22% 132,973 135,931 137,524 139,595 139,537 -0.04% 132,973 139,537 4.94%
Total Liabilities and Stockholders' Equity 1,906,257 2,005,152 5.19% 1,920,080 1,940,486 2,005,152 1,978,629 1,983,809 0.26% 1,920,080 1,983,809 3.32%
Year(IFRSs) Quarter(IFRSs) Period(IFRSs)
29
CHB Income Statements(in NT$ mn)
2015 2016Change
%2Q16 3Q16 4Q16 1Q17 2Q17
Change
%2Q16 2Q17
Change
%
Interest Income 32,992 32,590 -1.22% 8,137 7,982 8,191 8,281 8,502 2.67% 16,417 16,783 2.23%
Interest Expense 12,076 10,863 -10.04% 2,733 2,568 2,644 2,818 2,882 2.27% 5,650 5,700 0.88%
Net Interest Income 20,916 21,727 3.88% 5,404 5,414 5,547 5,463 5,620 2.87% 10,767 11,083 2.93%
Net Service fee and commissions income 4,905 5,412 10.34% 1,603 1,411 1,299 1,365 1,115 -18.32% 2,703 2,480 -8.25%
Gains(losses) on financial assets and liabilities at fair
value through profit or loss407 2,071 408.85% 409 475 358 753 480 -36.25% 1,238 1,233 -0.40%
Realized gains(losses) of available-for-sale financial
assets280 432 54.29% 46 201 99 146 23 -84.25% 132 169 28.03%
Foreign exchange gains(losses) 1,647 280 -83.00% 88 41 322 -334 222 -166.47% -83 -112 34.94%
Other non-interest income 1,502 1,086 -27.70% 101 366 178 58 218 275.86% 542 276 -49.08%
Net Income excluding Interest Income 8,741 9,281 6.18% 2,247 2,494 2,256 1,988 2,058 3.52% 4,532 4,046 -10.72%
Net Revenues 29,657 31,008 4.56% 7,651 7,908 7,803 7,451 7,678 3.05% 15,299 15,129 -1.11%
Reversed allowance for Bad-debt expenses and
guarantee liability provisions329 1,138 245.90% 525 382 283 432 -21 -104.86% 473 411 -13.11%
Operating Expenses 15,582 15,787 1.32% 3,913 3,780 4,364 3,570 4,046 13.33% 7,645 7,616 -0.38%
Employee Benefits 10,193 10,549 3.49% 2,602 2,536 2,937 2,367 2,703 14.20% 5,077 5,071 -0.12%
Depreciation and amortization 702 718 2.28% 179 181 179 177 178 0.56% 358 354 -1.12%
Other general and administrative expenses 4,687 4,520 -3.56% 1,132 1,063 1,248 1,026 1,165 13.55% 2,210 2,191 -0.86%
Income before income tax from continuing
operations13,746 14,083 2.45% 3,213 3,746 3,156 3,449 3,653 5.91% 7,181 7,102 -1.10%
Income Tax Expense 2,103 1,997 -5.04% 537 500 386 582 564 -3.09% 1,111 1,146 3.15%
Net Income 11,643 12,086 3.80% 2,676 3,246 2,770 2,867 3,089 7.74% 6,070 5,956 -1.88%
Basic EPS(NT$) 1.38 1.35 -1.94% 0.30 0.36 0.31 0.32 0.33 3.13% 0.64 0.63 -1.56%
Other comprehensive income 172 -1,077 -726.16% 126 -289 -1,176 -795 618 -177.74% 388 -177 -145.62%
Total comprehensive income for the period 11,815 11,009 -6.82% 2,802 2,957 1,594 2,072 3,707 78.91% 6,458 5,779 -10.51%
Year(IFRSs) Quarter(IFRSs) Period(IFRSs)
30
