The first half year of 2009 was swayed by the continued financial crisis and frail confidence in the market. Nonetheless, boosted by monetary and fiscal economy-stimulating policies in every country and massive bailout plans from advanced economic entities, such as the U.S.A and the E.U., global economy hit its bottom during the 3rd quarter and the recovery was becoming apparent. According to the latest IMF Global Economic Prospects released on 26 January 2010, the global economy declined by -0.8%. As actual economic activities turning more robust than expected, 2010 economic growth forecast has been raised, for the fourth time, to 3.9%.
Although conditions of global finance have ameliorated further, banks’ continued decrease in financial leverage has caused prolonged shrinkage of financing and hidden credit loan problems. Moreover, gigantic government deficits and debts are placing some sovereign debts under pressure and even possibly affecting regional financial stability. The economic prospect is still highly challenged.
Domestically, even though the economy during the first half year was clumsy and the typhoon catastrophe in August resulted in severe loss of people in their lives and property,fortunately, the negative effect did not heighten afterwards. As the global economy rebounded moderately, coupled with the initiation of the MOU and ECFA talks and negotiations of relevant treaties, the prospect of cross-strait relationship seems promising. Additionally,because the inventory of the information technology industry is cleared, demand rebounds,export increases month by month and the domestic demand turns up, the growth drive for the domestic economy is expected to be seen. According to Domestic Economy Prospect released in November 2009 from the Directorate General of Budget, Accounting and Statistics, the economic growth rate is estimated to be -2.53% for 2009 and 4.39% for 2010.
Organizational Change
In response to changes in the financial environment, the Bank has not only persistently and closely watched the latest global trends, but also timely reviewed the efficiency and dynamics of the organization structure. Since the reorganizing and streamlining of the headquarters’ departments in July 2008, the Bank has undergone smooth operation and horizontal integration. In 2009, the Bank focused its effort on solidifying the efficiency of centralized operation support and maximizing the operating value of branch channels; complementing them with personnel rearrangement and training, it is expected that individual average contribution and overall operating efficiency can be elevated.
In respect of enhancing the efficiency of centralized operation support, the Bank’s major measures were as follows: The Credit Management Department closed the Evaluation Department in June 2009 and outsourced hostage evaluation and credit verification. The North I and North III Credit Operation Centers were consolidated into North Credit Operation Center, thereby integrating regional services in order to achieve economies of scale for operations and minimize overall operating costs.
In respect of maximizing the operating value of branch channels, the Bank has strategically selected the same service locations as Yuanta Securities’ to utilize the full synergy generated from the integration of financial holdings’ resources. At the end of 2009,13 banking branches operate at the same address as Yuanta Securities’ brokerage offices.Also, in order to solidify business supervision, the Bank, has fortified its timeliness in information acquisition, sensitivity to market changes and execution of decisions through branch management. Ever since the implementation of the supervision system, it has become apparent that the operations are running with expected effectiveness whether in the business development, headquarters-branch interaction or information communication fronts.
Actual Accomplishments in 2009
The performance of the Bank’s branches gradually emerges as our asset quality turns sound. Major banking services are elaborated hereby:
(1) Deposits
Apart from striving to fine-tune its deposit structure, the Bank is also taking advantage of the leading position of Yuanta Securities as the No. 1 securities broker in the market by absorbing its settlement cash and turning them into deposits as well as providing a well-rounded service to securities clients to effectively lower the capital cost of deposit. In 2009, the Bank’s total deposits amounted to NT$ 293.54 billion with the share of demand deposits reaching NT$ 144.76 billion, or 49.31%, which is a rise from 35.55% in 2008.
(2) Loans
The Bank has placed strong emphasis on the
ascension of asset quality for its loan services. The corporate banking
business is centered on large-sized quality clients,complemented by mid- and
small- sized companies’ trading financing and secured loans. The Bank focused
its effort on cultivating highly contributive and interactive core clients. In
terms of mortgages for consumer banking, the Bank aimed to control risks for
best profit through carrying out market segmentation, developing proactively
diverse channels and differentiated product marketing as well as client’s risk
assessment model.
In 2009, the total loans amounted to NT$ 231.43 billion, an increase of NT$ 155
million from NT$ 231.27 billion in 2008. Secured loans totaled NT$ 150.79
billion, or 65.16% of total loans. Unsecured loans amounted to NT$ 80.63
billion, or 34.84% of total loans.
(3) Foreign Exchange
In order to further prosper cross-strait
financial business and meet the demands of Taiwanese companies on capital
transfer, the Bank has successfully established correspondent relationship with
32 foreign banks’ mainland branches and 18 mainland banks’ head offices.
In 2009, the Bank’s foreign exchange business volume amounted to US$ 15.14
billion or an increase of 4.15% from US$ 14.54 billion in 2008, among which
5.71% was accounted for by import, 2.35% by export, 44.73% by outward
remittances and 47.21% by inward remittances.
(4) Trust Business
With respect of trust business, the Bank has
strived to develop real estate and sales price trust services so as to broaden
and solidify the foundation of its trust business. The total balance of the
trust assets at the end of 2009 amounted to NT$ 78.96 billion, an increase of
NT$ 20.34 billion or 34.7% from NT$ 58.62 billion at the end of 2008.
(5) Wealth Management
The Bank has established the wealth management
service to accommodate the needs of our high net worth clients, providing
financial planning and asset allocation recommendations with the goal of
achieving stable growth of wealth. By the end of 2009, net fee income from
wealth management services amounted to NT$ 375 million, a decrease of NT$ 47
million compared to 2008 due to impact from the financial crisis.
(6) Credit Card
In order to better serve the platinum card customers, the Bank issued the JCB platinum cards in 2009 with various promotional offers through credit card receipts in hope for the elevation of credit card issuance and consumption amounts. At the end of 2009, the Bank issued a total of 301,800 valid cards with an effective ratio of 43.76%.
Budget Utilization, Financial Status and
Profitability
In 2009, net income was NT$ 5.55 billion, among which net
interest income amounted to NT$ 3.60 billion and net non-interest income
totaled NT$ 1.95 billion. Compared with 2008 net income of NT$ 4.31 billion,
2009 net income increased by NT$ 1.24 billion while net interest income dropped
by 730 million from 2008. This was mainly because the interest rate spread
decreased by 0.46% from 2008, which caused significant decrease in net interest
income of deposit and loans, interest income from the placement to other banks,
and interest income from securities investment. Non-interest income increased
by NT$ 1.97 billion mainly because of net income from financial product trading
and exchange in the amount of NT$ 819 million and NT$ 1.63 billion for goodwill
impairment recognized for 2008 and reimbursement allowance allocated for
disputes of structured notes of Lehman Brothers.
The bad debt expense amounted to NT$ 355 million throughout 2009, a decrease of
NT$ 2.85 billion from NT$ 3.20 billion in 2008. The operating expense of 2009
numbered NT$ 4.34 billion, a decrease of NT$ 708 million from NT$ 5.05 billion
in 2008. To conclude,pretax income of 2009 was NT$ 857 million and, with tax
expense of NT$ 412 million,after-tax income amounted to NT$ 445 million, an
increase of NT$ 3.69 billion from a loss of after-tax income of NT$ 3.24
billion in 2008.
Research and Development
(1)
Completion of the new core system.
(2)
Offered agency service for Taiwan Depositary Receipts.
(3)
Enhanced E-Channel and constructed a brand new personal and corporate online
banking platform.
(4)
In accordance with the Basel II Accord, established a credit risk management
system and a market risk management system.
(5)
Established a new generation of data warehouse system for data integration and
strategic analysis.
2. Impacts of External Competitive, Regulative and Overall
Operating Environment
The third amendment to the “Accounting for Financial Instruments” in Amendment
to Financial Accounting Standard No.34, announced on December 4, 2008,
incorporates loans and receivables originated by the banks into the scope of
the said Standards. Hence, banks are required to value loans and receivables at
fair value and evaluate the impairment loss. This differs greatly from the
current practices of classifying allowance for bad debts into 5 categories
based on the extent of debt security and non-performing duration and accord the
minimum coverage ratio of each category for the purposes of recognizing the
allowance for bad debts to. As a result, the relevant procedures and systems
must be adjusted accordingly. The Bank has consequently established a
cross-department team to develop responsive practices.
Financial Supervisory Commission announced on March 16, 2010 the “Regulations
Governing Approvals of Banks to Engage in Financial Activities between the
Taiwan Area and the Mainland Area”, which loosened its previous restriction on
credit granting against Taiwan businesses in China. Every well-operated bank
(i.e., non-performing ratio lower than 1.5%, coverage ratio over 80% and
capital adequacy ratio over 10%) may raise its upper credit limit on Taiwanese
businesses in China from 30% of OBU net worth to 50%. This amendment has a
positive effect on the Bank’s OBU credit service.
In preview of 2010, the Directorate General of Budget, Accounting and
Statistics indicated that the economy growth rate may reach 4.39%. With a more
robust recovery of the global economy, the export of domestic products may hike
by quarters. The growth of private consumption and fixed investments is
expected to return as Taiwan’s government adopts loose fiscal and monetary
policies and stimulating measures for domestic demand and consumption,and
broadens public and local construction projects. . However, Taiwan’s financial
industry still has tough challenges ahead including shrinking interest spread,
increasing risks and oversupply.
3. Latest Credit Ratings
Rating Agency
Date
Long-term
rating
Short-term
rating
Outlook
Fitch
2010.01.27
A+ (twn)
F1 (twn)
Stable
S&P
2010.01.18
BBB
A-2
Stable
Taiwan Ratings Corp.
2010.01.18
twAA-
twA-1+
Stable
According to Taiwan Ratings Corp., our
commercial banking business is consistent with the strategic objectives of
providing “one-stop-shopping” of Yuanta Financial Holdings.The rating also
reflects various advantages of the Bank, namely, proper capital adequacy and
source of capital attributable to the support of the financial holding company
and liquidity structure.
Fitch also recognizes the Bank’s effort in developing its professional
marketing position in wealth management through the financial holdings’ leading
position and eminent foundation in Taiwan’s securities market. The Bank’s
persistent improvement in profitability and asset quality will influence the
Bank’s individual rating positively.
4. Business Plan in 2010 and Outlook
Although facing a fiercely competitive and harsh operating
environment, the Bank still insists on effective resource integration, careful
planning as well as full execution, in an effort to enhance management
efficiency and risk management. Besides striving to achieve the established
performance target and proactively pursue the maximum value for all
shareholders,the Bank has developed its business plans for 2010 as follows:
(1)
Utilize the synergy of the financial holdings and persistently elevate
profitability to
favor the overall profit of the group.
(2)
Center the Bank’s business on four cores, corporate banking, consumer banking,
wealth
management and financial trading and drive the business with corporate banking.
(3)
Target securities clients for the deposit business, actively manage clients and
increase the
transaction breadth and depth.
(4)
Continue managing core clients, carry out customer segmentation and risk-based
pricing
and maximize customer contribution.
(5)
Promote staff marketing and maximize operating efficiency of each branch.
(6)
Maximize the quality of workforce corresponding to business development.
(7)
Strengthen auditing, internal control and risk management, minimize loss
contingency
and maximize operating efficiency.
(8)
Master major economic development, expand and adjust operation network, utilize
local
advantages and increase the market share of each business.
(9)
Aggressively engage in the overseas service network, integrate resources inside
the group
to develop diverse cash flow and develop business opportunities in the Greater
China
area.
(10)
Utilize the niche, amass core resources, and achieve the economies of scale
through
M&As to maximize overall competitiveness.
The Bank is an important subsidiary of Yuanta Financial
Holdings. In addition to providing a cash flow platform for the group, the Bank
will continue to take advantage of joint marketing and integrate the resources
of the group under the financial holdings structure in order to leverage its
operating niches, expand customer base and business scale effectively,and
maximize overall competitiveness, thereby resulting in effective cost control,
stable profit growth and create profits.
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
