Global central banks have adopted interest rate cuts and easing monetary policies to boost the economy since the outbreak of Coronavirus pandemic, resulting in a narrowing of bank interest rate spreads. Fortunately, the pandemic in Taiwan has been well controlled, and with the rapid development of emerging technology applications driven by international demand for “zero distance and remote,” the demand for semiconductor, 5G, electric vehicles, and other related industry chains has been robust. The expansion of capital expenditure by domestic major technology companies and companies of related supply chain, the continued policy to encourage the influc of capital from overseas Taiwanese companies, as well as the demand for corporate loans driven by the increase in private investment, all contributed to the strong growth of the domestic economy. The steady development of the economy has led to a continuous increase in the amount of real-estate lending. At the same time, due to the favorable economic environment and the relief package, there is no systematic credit default risk in the country, which reduces the provision of additional bad debts and helps banks to increase their profits.
Looking forward to 2022, there are still many variables affecting the global economic recovery and growth, including those factors such as the different speed of economic recovery in various countries, inflation, the urgency of the pandemic, geopolitical risks, risk of China’s economic downturn, dear money policies of global central banks, etc., which are interacting with each other, so continued close attention is required. However, given the current stable development of the domestic economy, the demand for corporate financing and personal loans is expected to remain strong, and the chance of systematic credit risk is low, so the overall environment is conducive to boosting credit business growth. And, if the interest rate rising cycle of US dollar and NTD begins as expected, it is could be looked for a widen interest rate spread of the banking industry. In the wealth management business, the demand for wealth management products is strong due to abundant funds in the market. Also, in response to the influx of capital from overseas Taiwanese companies and strengthening the development of wealth management business in the financial industry, the Financial Supervisory Commission (FSC) has approved a number of banks to conduct financial products and services for high-asset customers, which contributes to a further breakthrough in fee income.
In addition, the pandemic has prompted domestic banks to accelerate the promotion and application of financial technology, while people’s lifestyle and habits have also changed, making them more receptive to the services of various digital platforms. During the period of the severe domestic epidemic, domestic banks serve customers with not only the existing digital financial platform, but also alternative solutions such as video streaming of identity verification, online order placing, mobile insurance purchasing etc., to maintain operations and customer services. Mobile payment business has grown fast during the pandemic period; meanwhile, all industry players continue to optimize their service interfaces and to strive for cross-industry cooperation to expand the usage scenario and penetration rate of mobile payment. With the accelerated integration of virtual and physical channels, the banking business is expected to continue to expand.
As aforementioned, it is expected that the profit of Taiwan’s banking industry in 2022 will increase compared to the previous year.
Changes in Company Organization
(1) In line with business needs, the following changes effective since January 2021: the Bank (1) newly set up a new Treating Customers Fairly Executive Committee; (2) abolished the Group Corporate Department III and the Corporate Operation Center; (3) merged the Project Finance Department into the Corporate Product Department; (4) added the Deposit and Remittance Banking Channels Division to the Consumer Banking Group and moved the Deposit and Remittance Banking Department from the Personal Financial Services Division to the Deposit Remittance Banking Channels Division.
(2) In response to the rapid development of digital finance and operational management needs, the Information Technology Department I was split into two departments in June 2021, including the Information Technology Management Department, which is responsible for system maintenance and management, and the Digital Innovative Development Department, which is responsible for financial technology system development. At the same time, the Information Technology Department II was renamed Information Technology Development Department, which is responsible for the development of applications for the Bank’s core business and peripheral businesses.
(3) In order to effectively integrate the operation and management of the Wholesale Banking Group, the Board of Directors approved to abolish the Group Banking Division and the International Business Division in December 2021. The Group Business Department I and II, formerly under the Group Banking Division, were merged into the Wholesale Banking Division for centralized supervision, while the Offshore Banking Unit (OBU), formerly under the International Business Division, was transferred to the direct supervision of the Wholesale Banking Group. The aformentioned organization adjustments were effective since January 1, 2022.
Business Accomplishments in 2021
In 2021, in the face of abundant capital and a competitive business environment, the Bank focused on prudent risk control in the loan and credit business, and continued to reduce its exposure to mainland China. At the same time, the Bank targets the customers of high-quality large corporate and owner-occupied mortgage loan, and has adopted a business strategy of using volume to compensate for price to accumulate the basis for growth in net interest income when interest rates rise in the future. For the wealth management business, with high-quality products, membership-based customer management and enhanced digital services, the Bank has continuous growth in the volume of core deposits, the sales of mutual funds and insurance, effectively driving net fee income and assets under management (AUM) to new highs. At the end of December 2021, the Bank’s non-performing loan (NPL) ratio, NPL coverage ratio and coverage ratio recorded 0.10%, 1,422.01% and 1.42%, respectively, maintaining high quality in the industry. The Bank had benefited from the growth of securities deposits and core deposits, which led to the expansion of the overall asset size. At the end of December 2021, the asset size reached NT$1,664.4 billion, an increase of NT$222.4 billion or 15.42% from the previous year. The changes in major services are as follows：
Item
2021
2020
Growth %
Deposit Balance
NT$1,474.8 billion
NT$1,251.5 billion
17.84%
Loan Balance
NT$875.4 billion
NT$782.8 billion
11.83%
Trust Asset
NT$206.5 billion
NT$214.0 billion
-3.50%
On the other hand, the Bank’s long-standing efforts in customer management and product innovation have received recognition from external organizations in multiple evaluations, including wealth management, digital finance and payment services. The awards the Bank won in 2021 are as follows：
Awarding Organization
Award
National Enterprise Competitiveness Development Association
The National Brand Yushan Award -
(1) Outstanding Enterprise
(2) Best Product: Omni Wealth Management Experience
(3)Best Popular Brand:Yuanta School Payment Solution
The Banker
Top 500 Banking Brands 2021 – No. 315
Wealth Magazine
Wealth Management Awards: Best Services, Best Financial Consulting Team, and Best Digital Finance
Business Today
Wealth Management Evaluation: Best Wealth Value Added
World Business Outlook
Best Digital Bank, Taiwan
Best Mobile Banking App, Taiwan
Best Wealth Management Experience, Taiwan
Global Business Outlook
Most Innovative Wealth Management Solutions Provider, Taiwan
International Business Magazine
Most Innovative Digital Bank Taiwan
Best Mobile Banking Application Taiwan
World Economic Magazine
Best Digital Wealth Management Experience Taiwan
Best School Payment Solution Taiwan
Joint Credit Information Center
The 15th Golden Quality Award - Credit Information
Information Service Industry Association of R.O.C.
Golden Young Award- Runner-Up in usiness Model Innovation
Taiwan Clearing House
eFCS Award in Providing Excellent On-line Bill Payment Service
eFCS Award in Promotino of Account Write-off Processing Business
Budget Implementation, Financial Status and Profitability
The net income in 2021 was NT$21.105 billion, an increase of NT$0.84 billion from the net income of NT$20.265 billion in 2020. In which:
(1) The net interest income was NT$13.069 billion, an increase of NT$448 million from 2020, mainly due to the continuous improvement in the deposit structure driven by the increase in the demand-deposit ratio, which resulted in a larger decrease in interest expense on deposits than the decrease in interest income on loans, and the decrease in interest expense because of the maturity of financial debts.
(2) The net income other than interest was NT$8.036 billion, an increase of NT$392 million compared to 2020, mainly due to the increase in net fee income from wealth management business and the decrease in impairment loss on goodwill recognized in 2021 compared to 2020.
(3) The bad debt expense was NT$533 million, a decrease of NT$1.410 billion from 2020; the operating expense was NT$11.375 billion, an increase of NT$1.085 billion from 2020.
(4) In summary, the Bank’s net income before tax in 2021 was NT$9.197 billion, and the net income after tax was NT$8.022 billion, an increase of NT$1.126 billion from 2020, with a budget achievement rate of 94%.
Research and Development
(1) The Bank continuously optimizes the mobile insurance purchasing system, has expanded Yuanta Life investment link Product platform in 2021. Also, to improve the speed and customers’ digital experience significantly, the Bank has been adjusting the process to take out insurance, expanding the incoming time, and optimizing the signature interface, which have making it more convenient for business sales.
(2) The Bank introduces a number of Robotic Process Automation (RPA) to achieve the goal of economizing manpower and raising employees’ output through human-machine collaboration. Taking the Department of International Banking’s operation of transaction note reminder as an example, after the implementation of RPA, it saves about 90% of man-hours, and can completely replaces the manual operation.
(3) The Bank launches the online credit loan application service; meanwhile, the Bank optimizes the front, middle and back office system. As a result, the Bank has reduced the manual operation by about 80%, and the proportion of online identity verification and automatic system examination continues to increase.
(4) In line with the competent authorities’ progress of Open Banking, the Bank was among the first wave of approved banks in the first and second phases. For the second phase of Open Banking – “Consumer Information Inquiry,” the Bank has completed the concatenation with Taiwan Depository & Clearing Corporation and Far Eas Tone Telecommunications Co., Ltd., allowing customers to experience the immediacy and convenience brought by cross-field open and innovative financial services.
(5) In order to enhance the Group’s integration efficiency and increase the Bank’s financial service resilience, the Bank applies not only to the Central Bank for the business qualification of “Central Government Bond Clearing Bank” but also to the Taiwan Depository & Clearing Corporation for the business qualification of “Bonds, Notes and Bills Agent Clearing Bank,” serving the Group’s subsidiaries and expanding new customers.
(6) To expand the arbitrage trading business, the Bank’s application for dealing in foreign stock index futures as a futures traders has been approved by the competent authorities.
(7) In response to the development of digital finance, technological innovation, business strategies and future expansion goals, the Bank continues to enhance its information infrastructure, improve efficiency and information security, and actively strengthen various digital channel functions based on customer needs. Main information system development and upgrade projects include NTD Core System Upgrading Project, Credit Analysis System’s Expansion of Disbursement Module and E-Contract Module, Addition of Online Estimation of Loan Amount to Housing Loan Appraisal System, Management Decision-Making Supporting System(EIS), Insurance Agency System – insurance mobile purchasing, Open Banking Phase II, RPA Process Automation- 2nd stage , 24-Hour Original Currency Transfer on Automated Channel, Online Application and Identity Verification of the Worker Relief Loans, Hardware Security Module Upgrade of Corporate Internet Banking, Internet Banking Database Upgrade, Basel IV Capital Accrual System Upgrade, Microsoft Windows Server Upgrade and Database Upgrade, ATM and Passbook Entry Machine Operation System and Database Upgrade, Expansion of Network Construction in Remote Server Room, etc.
(8) To strengthen the defense capability and effectiveness of the information system, the Bank have achieved the British Standards Institute (BSI) ISO 27001:2013 Information Security Management System (ISMS) certification, performed various information security assessments attack and defense exercise , and built a network advanced persistent threat (APT) defense system for early detection of abnormal activities. Also, the Bank has established the Security Information and Event Management System (SIEM) to enhance the ability to manage and analyze information security events and provide customers with safe and stable financial services.
2. Impacts of External Competitive, Requlatory and Overall Business Environment
In recent years, the financial industry has been facing the challenges of low interest rate, economic fluctuations, and increasingly stringent regulatory, as well as rapid changes in the external environment such as technological development, aging population, climate change, etc. It is necessary to actively create a development niche and establish a good business model through digital transformation and development, emphasizing environmental sustainability, social responsibility and corporate governance (ESG), in order to achieve an advantageous and sustainable development in a competitive environment.
In addition, the influence of important supervisory policies and changes in regulations on the Bank and the Bank’s corresponding measures are as follows：
(1) Continuously strengthening the internal control principles of the Bank’s wealth management specialists and implementing the protection of customers’rights and interests： In order to more effectively prevent incidents of misappropriation of customer funds by wealth management specialists, The Bankers Association Of The Republic Of China issued the letter, “Internal Control Principles for the Prevention of Misappropriation of Clien Funds by Wealth Management Specialists,” on 31st of August, 2021, which amended and added “the 21 red flags of suspected misappropriation of customer funds by wealth management specialists,” and it was officially implemented on 1st of January, 2022. To lower the risk of fraudulent behavior, toestablish a corporate culture of ethical management, as well as to enhance customers’ trust, the Bank has carried out relevant revisions to internal rugulations in advance.
Besides, to strictly follow the principles of treating customers fairly and to avoid significant losses caused by drastic market changes, the Bank continuously carries out the customer care mechanism. In response to the global market turmoil in 2021, the Bank has implemented 53 items, 64,783 customer-times notificaiton under the customer care program. Meanwhile, approximately a total of NT$3.36 billion in risk-alerted assets were redeemed by customers. Also, in order to ensure the suitability of products for the elderly and physically and mentally challenged customers, the Bank has also added restrictions on the sale of high-risk products and a care mechanism for the sales process to implement customer rights protection.
(2) Promoting the Trust 2.0 Program and developing a full range of trust services： The FSC continues to promote the Trust 2.0 program to create an age-friendly society by encouraging the trust industry to further enhance the breadth and depth of trust services, and to develop a full range of trust services to meet people’s needs in all aspects of their lives. The Bank will continues to promote Employee Welfare Trust System, which play a role as the third pillar to enhance employees’ retirement preparedness. Besides, the Bank will expand the marketing of the elder care trust, which combines the functions of nursing care and medical services to help middle-aged and elderly people to plan for their future living and medical expenses, in response to Taiwan’s aging population structure. Also, the elder care trsut is the key promotion product for the trust business in 2022.
(3) Evaluating feasible new financial models in accordance with the “Guidelines on Information Sharing between Financial Institutions” of the Financial Supervisory Commission： With the development of financial techonology, the FSC has issued the “Guidelines on Information Sharing between Financial Institutions” on 23th of December, 2021, to enhance the convenience of the public, strengthen the risk control of financial institutions and promote cross-industry cooperation among financial institutions. These Guidelines explicitly reveal the relevant principles for the types of information sharing that can be handled among financial institutions, relaxing the nine major types of information that can be shared by financial institutions, including customer basic information, identity verification information, account information, transaction records of financial products or services, negative information, Know Your Customer (KYC) information, value-added information of financial institutions, electronic communication history, and other information shared with the consent of customers and partner financial institutions, with the consent of the customer on a case-by-case basis and with appropriate internal control systems. In addition to enhancing the convenience of customers in using financial services, it will also help to improve the internal risk control of each financial institution and the overall synergy of the financial holding group, or to further the development of the financial ecosystem. The Bank will follow the contents of the Guidelines, and at the same time, in line with the practices and timeline promoted by the Group, examine the needs of customers and the relevant internal control system to provide customers with a more convenient new financial model.
(4) Adjusting the credit business strategies in response to real estate credit-related control measures by competent authorities： In order to control the real estate credit risk of financial institutions, the Central Bank has made adjustments four times to the selective credit control measures since December 2020. In addition, the FSC intends to increase the risk weights of banks’ specific real estate credits, which mainly cover land financing, construction loan, unsold housing unit loans and housing loan for purchasing the third house. The Bank will coordinate and control the undertaken volume in this business on the balance of risk, revenue and efficiency of fund utilization.
(5) Actively participating in the open banking policy and financial fast identity online promoted by the Financial Supervisory Commission to accelerate the development of financial technology： In line with the FSC’s continuous promotion of financial technology development, Open Banking entered the second phase of “Consumer Information Inquiry” in 2020. Following the codes of practice set by The Bankers Association of The Republic of China and Financial Information Service Co., Ltd. (FISC), the Bank was approved by the competent authority as one of the first wave of banks to conduct business. In 2021, the Bank completed the conjunction with the “e-Passbook” App, which launched by the Taiwan Depository & Clearing Corporation, to meet cutomers’ expectation of “unified information on funds nd securities.” The Bank also completed the concatenation of the “friDay Banking+” App with Far EasTome Telecommunications to provide new funcions of bank dposit account information inquiry.In the future, the Bank will evaluate increasing cooperation with other third-party service providers and launch the third phase of Open Banking - transaction information, according to the schedule of The Bankers Association of The Republic of China. At the same time, the Bank will continue to create a digital financial application scene and enhance customer experience.
The FSC, affiliating with the Joint Credit Information Center (JCIC), FISC and financial institutions, has formed the “Financial FIDO (F-FIDO) Alliance” in May 2021, planning to introduce international FIDO standards which allow users to first bind mobile devices, physical card and biometrics and leverage the bounded devices and biometrics (instead of the physical idenetities, user account names and passwords) for subsequent financial service identification and authentication. In order to provide customers with convenient mobile identification services, enhance information security and create cross-domain service applications, the Bank plans to adopt the international FIDO standards and implement the F-FIDO identification mechanism in mobile banking, accelerating the security and convenience of digital financial services.
3. Latest Credit Ratings
Rating Category
Rating Agency
Effective Date
Credit Rating
Long-term
Short-term
Outlook
International ratings
S&P
2022.01.19
BBB+
A-2
Stable
Fitch
2021.11.19
BBB+
F2
Stable
Domestic Rating
Taiwan Ratings
2022.01.19
twAA
twA-1+
Stable
Fitch
2021.11.19
AA- (twn)
F1+ (twn)
Stable
4. Business Plan in 2022 and Outlook
In 2022, he Bank will focus on expanding business scale, increasing revenue sources, and enhancing the competitiveness in digital finance. The Bank will gradually expand the scales of various businesses to enhance the competitiveness in the market while maintaining good quality of assets and complying with laws and regulations. The highlights of the business plan are summarized as follows：
(1) Business Development
A. The Bank’s loan business is growing steadily and the main goal is to increase the loan-to-deposit ratio appropriately. With the advantages of sufficient capital and good asset quality, the Bank will continue to expand the scale, deepen the customer base and strengthen the fee income in the operation of the loan business to increase its profit source. The Bank’s net interest income will be improved by increasing the loan-to-deposit ratio, while the growth momentum in the loan business will be based on the balanced growth between the wholesale banking and retail banking businesses. In terms of the loan business of wholesale banking, the Bank will carefully select the cases in the industries that are less affected by the pandemic and have good prospects, and focus on developing loan business that does not fall under Article 72-2 of the Banking Act. The Bank will maintain a prudent approach in undertaking international syndicated loans and loan business in China, Hong Kong and Macau. For the loan business of retail banking, the Bank adopts a strategy of diversifying the customer base and appropriately increases the credit balance of personal loan.
B. For the wealth management business, the Bank will continue to integrate the Group’s resources (securities investment and research, investment and trust funds, and life insurance), select high-quality products as the main marketing axis, and expand the business team and assets scale with referrals from the wholesale banking and retail banking. The Bank will also actively strengthen the management and development of high-asset consumers and increase the proportion of digital transactions in the future.
C. For the financial investment business, the Bank continues the strategy of investing in high credit quality bonds and shortening the duration of bond positions, in response to the possible beginning of the interest rate rising cycle. In addition to fixed income, stocks, foreign exchange and other sources of income, the Bank will also expand investment targets and develop new businesses to improve the efficiency of fund utilization.
D. In addition to meeting the needs to serve customers and improving operational efficiency, digital finance development will be further applied to assist business development, such as organizing digital power innovation contests and RPA proposal selection, to encourage employees’ to be innovative and to drive organizational digital transformation. At the same time, in order to build the financial scene, the Bank actively participates in projects such as Open Banking, F-FIDO, and the college campus mobile payment promotion project, etc., to apply financial technology to customers’ daily needs.
(2) Internal Control
A. Through the establishment of risk models and databases, the Bank will strengthen its ability to control risks in credit, market, operation and concentration, and regularly implement the review and monitoring mechanism for the detection of risks to reduce risks effectively.
B. The Bank will continuous strengthen the awareness and norms of the code of conduct for employees, establish an ethical corporate management culture, and strengthen education and advocacy, in order to implement fair treatment of customers, internal control, AML/CFT, information security, personal data protection, etc., creating a good legal compliance culture.
C. The Bank will continue to consolidate and implement risk management, compliance, and internal audit and control mechanisms for overseas branches and subsidiaries
(3) Personnel Training
A. The Bank will continue to conduct pre-service and on-the-job education and training for employees, and to strengthen employees’ organizational cultural identity. Also, in response to business development needs, the Bank continues to enhance employees’ functional competency to establish a succession ladder cultivation mechanism to reserve business and management talents at all levels to strengthen the foundation for sustainable development of the Bank.
B. The Bank will encourage employees to keep enhancing digital literacy and language skills by organizing training courses on digital finance practices and business English, and providing English language certification and international professional certification exam awards, etc., to facilitate digital transformation, the establishment of bilingual branches and overseas business development.
5. Strategies for Sustainable Development
With the United Nations Sustainable Development Goals (SDGs) as the blueprint, Yuanta Financial Holding Co., Ltd. (YFH) incorporates the concept of environment, social and corporate governance (ESG) into its corporate culture and operational strategies. In striving to become an international benchmark enterprise for sustainability, YFH promotes sustainable practices in the five facets of corporate governance, customer rights, employee care, environmental sustainability, and social welfare, and sets short-, medium-, and long-term performance indicators of sustainability to be the basis for compliance and review.
The Bank, under the firm leadership of the Board of Directors, upholds the business philosophy of “integrity, stability, service, innovation, and care” to implement the ethical management and corporate culture of YFH and follows the mechanisms of corporate governance, legal compliance, and risk control. In addition to various internal control mechanisms and sound products and services, the Bank has set up a corporate governance supervisor, an e-mail address of the audit committee, a whistleblowing channel, and an employee suggestion box. Moreover, the Bank has been working on improving the framework, such as obtaining certification of ISO 10002 Customer Satisfaction and Complaints Handling, conducting regular internal and external performance evaluations of the Board of Directors and functional committees, signing and disclosing institutional investor due diligence information, andimplementing the principle of treating customers fairly, etc. As a result of these improvement, the Bank was awarded the “CG6012 (2019) Corporate Governance Framework Assessment Certificate” with High Distinction by the Taiwan Corporate Governance Association in 2020. The Bank will keep cooperating with the FSC in promoting the “Corporate Governance 3.0 - Sustainable Development Roadmap” and consulting the recommendations of the CG6012 (2019) Corporate Governance Framework Assessment Report, to strengthen the diversity and independence of board members, member qualification of functional committees, disclosure of independence and operations, and to improve the timeliness and quality of corporate information disclosure in 2022, in order to continue to refine and to establish a better corporate governance system.
To promote green finance and sustainable development, the Bank joined the Equator Principles Association and signed the Equator Principles in October 2020, becoming the 7th Equator bank in Taiwan and the 112th in the world. The Bank will review credit cases according to international standards, also follow the spirit of “Yuanta Financial Holding’s Sustainable Finance Guidelines” to implement responsible credit into its credit business, including the management of potential environmental and social risks in credit cases, and the promotion of sustainable performance-linked credit, with the aim of supporting enterprises that promote sustainable development with differentiated credit terms. Other sustainable development projects, such as issuing sustainable development bonds, applying for carbon labels and carbon reduction labels for credit cards, introducing the ISO14067 Carbon Footprint of Products and PAS2060 Carbon Neutral into the mobile banking, promoting credit business such as loans for purchasing green building and green energy car loans, responsible investment, promoting energy saving and carbon reduction, establishing a climate change risk management team, etc., are also being promoted. At the same time, the Bank also encourages its suppliers to comply with the Bank’s “Yuanta Group Supplier Sustainable Procurement Guidance,” starting from oneself and working together with customers which fulfill corporate social responsibility, to jointly achieve the goal of sustainable management.
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.
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No. 157, Sec. 3, Ren'ai Rd., Da'an Dist., Taipei City 106 , Taiwan
E-mail: service@yuanta.com
Service Hotline: 0800-688-168
