Over Year 2008, the financial crises stroke the global economy. Private consumption shrank and investment turned weak, hence major corporations and financial institutions suffered from drastically dropping profits and even losses. This economic crisis is estimated to persist and influence the global economy in 2009. According to the IMF’s report in November 2008, the growth rate of the global economy in 2008 was estimated to be 3.7%, and would fall down further to 2.2% in 2009 with the economic downturn continued to persist. Meanwhile, the World Bank’s report in December 2008 predicted the global trade volume to shrink down to 2.1%, which is the first negative growth ever in 27 years.
Domestically, impacted by the U.S. subprime mortgage crisis and the derivative credit crunch, the economic growth demonstrated weak dynamics. The total exports of 2008 dropped drastically. The economic growth slid quarter by quarter. According to the Domestic Economic Prospect of February 2009 from the Directorate General of Budget, Accounting and Statistics, Executive Yuan, the economic growth rate fell down to 0.12% while Consumer Price Indices elevated to 3.53%.
Organizational Change
In order to maximize operational efficiency
and the value of branch channels, Yuanta Commercial Bank (“ the Bank” ) merged
27 divisions in Head Office into 19 divisions in July 2008.
Functions of departments in Head Office are illustrated hereby:
(1)
Develop business strategies, new products, risk-pricing policies, and manage performance targets.
(2)
Implement strategies into practical action plans, and assist branches to develop all businesses and achieve budget objectives.
Actual Accomplishments for 2008
The net income in 2008 was NT$ 4.31 billion, among which net interest income amounted to NT$ 4.33 billion and net non-interest income totaled negative NT$ 22 million. Compared with the net income in 2007 of NT$ 6.59 billion, 2008 net income dropped by NT$ 2.28 billion mainly because of the decrease of net interest income by NT$ 1.15 billion, increase of asset impairment by NT$ 1 billion, and the increase in
loss on financial asset and liabilities at fair value through profit or loss by NT$ 460 million.
The bad debt expense amounted to NT$ 3.2 billion throughout 2008, a decrease of NT$ 897 million from NT$ 4.1 billion in 2007. The operating expense of 2008 was NT$ 5.05 billion, a decrease of NT$ 41 million from NT$ 5.09 billion in 2007.
In conclusion, the Bank had a pretax loss of NT$ 3.94 billion in 2008. After adding in income tax benefit of NT$698 million, the loss after tax narrowed to NT$ 3.24 billion, an increase of NT$1.24 billion from loss after tax of NT$ 2 billion in 2007.
The Bank received stronger resources right after joining Yuanta Financial Holdings, which have helped the
company’s endeavor to advance the quality and quantity of its services. As of the end of December, 2008, the Bank has 70 branches in total. The total deposits of the year reached NT$ 306.88 billion (excluding deposits from Central Bank, the same hereunder). Total loan amounted to NT$ 231.27 billion (excluding overdue receivable). The operation expense was NT$ 5.05 billion and loss before tax was NT$ 3.94 billion.
The service status in 2008 is detailed as below:
(1) Deposits
In 2008, total deposits of the Bank was NT$ 306.88 billion, an increase of NT$ 19.41 billion, or 6.33%, from NT$ 287.46 billion from 2007. In order to expand its customer base, solidify deposit structure, minimize capital cost, the Bank proactively promoted the settlement business of the securities firms. The demand deposits of 2008 totaled NT$ 109.1 billion, which accounted for 35.55% of total deposits. Time deposits amounted to NT$ 197.78 billion, 64.45% of total deposits.
(2) Loans
The Bank has placed strong emphasis on the ascension of asset quality. In corporate banking, the Bank aggressively strives toward businesses with great potentials and elevated clients. In consumer banking, housing mortgages aimed at premium clients and provided differentiated rate-pricing conditions in order to segment the Bank’s target market. Meanwhile, the Bank strengthened product diversification, deepened and broadened its relationship with clients.
In 2008, the total loans amounted to NT$ 231.27 billion, an increase of NT$ 114 million from NT$ 231.16
billion in 2007. Secured loans totaled NT$ 148.12 billion, or 64.05% of total loans. Unsecured loans amounted to NT$ 83.15 billion, or 35.95% of total loans. Total loans of corporate banking and consumer banking in 2008 reached NT$ 133.6 billion and NT$ 97.67 billion respectively.
(3) Foreign exchange
The Bank’s current service locations of foreign exchange include one Offshore Banking Unit (OBU), 11 Designated Foreign Exchange Branches, 59 Foreign Exchange and Traveler’s Check Dealership Branches, and the Hong Kong Representative Office. In order to develop cross-strait financial business further and meet the demand of Taiwanese companies on capital transfer, the Bank has successfully constructed direct cross-strait remittance links with mainland branches of 32 foreign banks and the head office of 18 mainland banks. In 2008, the Bank’s foreign exchange business volume amounted to US$ 14.54 billion, almost equivalent to US$ 14.54 billion in 2007, among which 7.92% was accounted for by import, 2.18% by export, 44.98% by outward remittance and 44.92% by inward remittance.
(4) Guarantees and Acceptances
The total balances of guarantee and acceptance at the end of 2008 amounted to NT$ 7.6 billion. The total balance consisted of the acceptance of NT$ 762 million, guaranteed commercial paper of NT$ 1.58 billion, the issuance of guaranteed corporate bonds of NT$ 78 million, construction performance bonds of NT$ 1.51 billion,guarantee from financial institution borrowings of NT$ 895 million and other guarantees and acceptances of NT$ 2.78 billion.
(5) Trust Business
The total balance of the trust asset amounted to NT$ 58.62 billion, a decrease of NT$ 6.47 billion or 9.94%from NT$ 65.09 billion at the end of 2007. The trust fee income of 2008 was NT$ 442 million. Compared with NT$658 million at the end of 2007, trust fee income in 2008 decreased NT$ 216 million. Fees from custody services in2008 amounted to NT$24 million, a decrease of NT$ 15 million from 2007 (NT$39 million).
At the end of 2008, two investment-oriented insurance products, totaled NT$ 5.16 billion, were under the
Bank’s custody. There were six accounts of fully fiduciary discretionary investment, with asset valued NT$ 90million. Meanwhile, the Bank acted as the custodian of 17 foreign investment accounts, with asset valued at NT$662 million and 9 business guarantee accounts, with asset of NT$ 3.09 billion. The Bank had certified a total of 118 securities in 2008, which amounted to NT$ 72.79 billion.
(6) Wealth Management
The Bank has carried out its wealth management service in accord with the demands of high net worth clients.Our Financial Advisors provide professional advices on financial planning and asset allocation to satisfy their specific financial needs. At the end of 2008, net fee income from wealth management amounted to NT$ 422 million, a decrease of NT$ 211 million from NT$ 633 million in 2007.
(7) Credit Card
In order to better serve the platinum card customers, the Bank issued the JCB platinum cards with various promotional offers. At the end of 2008, the Bank had issued a total of 800,300 credit cards, an increase of 108,600 cards or 15.70% from 691,700 at the end of 2007. The credit card transaction value totaled NT$ 10.36 billion in 2008.
Research and Development
The results of research and development expenses during the past two years and future research and development plans are illustrated as follows:
(1)
Migrated to the New Core Banking System:
In order to strengthen its information efficiency for the flexibility of diverse product development and cross-industry integration system, the Bank replaced its previous New Taiwan Dollar core system with a New Core Bank System (launched in the end of February 2009). In the future, the Bank is going to persist in furthering information system upgrade, establish the Remote Back Up Mechanism, strengthen the MIS report platform and develop the Data Warehousing analysis system to maximize the Bank’s comprehensive competence.
(2)
Established Diverse E-Channel:
To enhance the service quality of e-channels, the Bank has been successively upgrading its various functions and services such as voice service, Web ATM, online banking, and Smart Pay. In the future, the Bank will continue bettering its e-channels and centering its main development on personalized online banking service, which will include FHC account overview, wire transfer, funds transaction, personal finance, and online subscription and loans. Similarly, the corporate online banking service will be constructed on four core areas- account management, cash flow management, collection and payment services, and will strengthen its customization function in accordance with the demands of each corporate client.
(3)
Furthered Operation Standardization and Process Improvement:
In conformity with the New Core Bank System, the Bank re-developed and simplified its operating process and established “ The Standardization Operation and Process Improvement Team” to further process re-organization, aiming to increase operation efficiency and minimize operation cost.
2. The Impact of the External Competitive, Regulative and Overall Climate
In the past year, the global financial tsunami triggered by the U.S. subprime mortgage crisis put many international financial groups in bitter ordeals. The global finance was thus re-territorized. The investment market in every country steadily weakened and financing was tightened as well. Companies, one after another, pleaded for bailout and funding, which trapped financial institutions in grimmer operation. Aside from the weak market, the unemployment and lay-offs also struck the world.
During the first two quarters of 2008, Taiwan’s economic growth stayed as robust as the second half of 2007. The economic growth remained at a certain level with, however, international trade as the major driver. Struck by sluggish global economy, persistent high agricultural and industrial material prices, downward IT industrial cycle and the global financial crisis, the overall market prospect turned conservative continuously. Private investment and consumption weakened gradually and the entire economic growth faced tremendous challenge.
In preview of 2009, based on Chung-Hua Institution for Economic Research’s constructed forecast for
Taiwan’s future economy and prospect estimate, the government’s expansionary fiscal policies (such as enlarging the investment from the public department, earned income subsidy program, Taiwan’s Twelve Major Programs etc.) and measures to boost private consumption (such as consumption coupons) as well as the loosening up of crossstrait economic and trading policies will generate positive effect on Taiwan’s economic growth. In addition, the financial industry should persist in raising its capital level and strengthening risk management in line with global economic trends for returning back to the growth track.
3. Latest Credit Ratings
Rating Agency
Date
Rating Results
Long-Term
Short-Term
Outlook
Taiwan Ratings Corp.
2009.02.16
twAA
twA-1+
Stable
Fitch
2008.10.02
A+(twn)
F1 (twn)
Stable
According to Taiwan Ratings Corp., the commercial bank business of the Bank is consistent with the strategic objectives of providing One-Stop-Shopping of Yuanta Financial Holdings. The rating also mirrors the support the Bank obtains from the financial holding company and the proper capital adequacy, source of the capital and the liquidity structure. Fitch also agrees on the Bank’s effort to develop its professional marketing position in wealth management through the financial holding’s leading position and eminent foundation in Taiwan’s securities market. The Bank’s persistently improved profitability and asset quality will influence the Bank’s individual rating positively.
4. Business Plan in 2009 and Outlook
Although with the government’s aggressive fiscal and monetary policies under the recession, it is estimated that, during the first half of 2009, consumer confidence is still be pessimistic and industrial productions remains at low levels, resulting in the financial industry still having to face rising bad debt costs, a weak investment market and decreasing sources of income.
Notwithstanding the present fiercely competitive and challenging operating environment, the Bank still plans not only to manifest our eminent execution, but also progressively advance our efficiency, strengthen risk management and endeavor to achieve our objectives for the maximum interests of all shareholders.
The Bank’s 2009 Business Plan is summarized below:
(1)
To minimize Cost-Income Ratio and improve operation efficiency;
(2)
To utilize the channels of full-function branches and make them client- oriented;
(3)
To monitor asset quality and advance risk-managing ability;
(4)
To persist in promoting re-organization and incubating the core team;
(5)
To deepen the relations with clients and expand its market share.
In the future, the Bank is going to persist in advancing its business relations with Yuanta Financial Holdings’
subsidiary companies and act as the integrated financial service platform. The Bank will endeavor to create premium differentiated services, develop new financial products and raises the business-exploring competence of branches. At the same time, it will integrate with the security channels, promote e-commerce and construct the financial service platform that covers Taiwan, Hong Kong and China so as to fully utilize maximal synergy under the financial holding operational framework.
All data and
information on this page is provided for informational purposes only,
and may subject to adjustment. For more details, please refer to our official
annual reports.
Copyright c 2007 Yuanta Commercial Bank Company Limited. All Rights Reserved.
No. 157, Sec. 3, Ren'ai Rd., Da'an Dist., Taipei City 106 , Taiwan
E-mail: service@yuanta.com
Service Hotline: 0800-688-168
