- Pre-Tax Profit: TWD46 billion for the first half of the year.
- Net Profit: TWD37.2 billion, a 29% increase year-over-year (Y-o-Y).
- Earnings Per Share (EPS): TWD1.85, achieving a record high.
- Return on Equity (ROE): 17.5%.
- CTBC Bank Pre-Tax Profit: TWD30 billion, a 14% increase Y-o-Y.
- CTBC Bank Net Profit: TWD23.2 billion, an 11% increase Y-o-Y.
- Overseas Pre-Tax Profit: TWD11.3 billion, a 10% increase Y-o-Y.
- Taiwan Life Net Profit: TWD13 billion, a 154% increase Y-o-Y.
- Assets Under Management Growth: 30% increase.
- Group Capital Adequacy Ratio (CAR): 118%.
- Life RBC Ratio: 318%.
- Bank CAR: 13.5%.
- Net Interest Income: Up 2.2% quarter-over-quarter (Q-o-Q), down 3.4% Y-o-Y.
- Fee Income: Down 13.3% Q-o-Q, up 26.3% Y-o-Y.
- Trading Income and Others: Increased 25% Q-o-Q and 35.5% Y-o-Y.
- Total Lending Growth: Up 0.8% Q-o-Q and 7.6% Y-o-Y.
- Mortgage Growth: Up 2% Q-o-Q and 9.8% Y-o-Y.
- Foreign Currency Loan Growth: Up 1.5% Q-o-Q and 8.3% Y-o-Y.
- Total Deposits: TWD5.1 trillion, up 1.2% Q-o-Q and 8.1% Y-o-Y.
- Loan to Deposit Ratio (LDR): Overall 71.9%, NT dollar LDR 83.3%, foreign currency LDR 57%.
- Cost Income Ratio: 52% in Q2, improved Q-o-Q.
- Non-Performing Loan (NPL) Ratio: 0.53%, down one basis point Q-o-Q.
- Credit Costs: 39 basis points in Q2, up 13 bps Q-o-Q.
- Investment Yield After Hedge: 4.44% in the first half.
- Hedging Cost: 52 basis points in the first half, improved Y-o-Y.
Release Date: August 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CTBC Financial Holding Co Ltd (TPE:2891, Financial) achieved record-high profits in the first half of 2024, with a pre-tax profit of TWD46 billion and a net profit of TWD37.2 billion, representing a nearly 30% growth year-over-year.
- CTBC Bank, a subsidiary, reported a double-digit growth in profits, with a pre-tax profit of TWD30 billion, marking a 14% increase year-over-year.
- Taiwan Life, another subsidiary, recorded a net profit of TWD13 billion in the first half, a 154% increase compared to the same period last year, driven by favorable capital market conditions.
- The company anticipates continued steady growth in profits, supported by expected Fed rate cuts and a rebound in business momentum.
- CTBC Financial Holding Co Ltd (TPE:2891) has been included in the S&P Global sustainability yearbook for the fifth consecutive year, highlighting its commitment to sustainable development.
Negative Points
- CTBC Bank's net profit in Q2 was down 9% quarter-over-quarter, primarily due to lower lottery fees and higher provisions amid loan growth.
- Taiwan Life's net profit decreased by 30% quarter-over-quarter due to higher hedging costs and decreased capital gains.
- The company's cost-income ratio was 52% in Q2, indicating room for improvement in operational efficiency.
- There are concerns about the impact of potential interest rate cuts on the bank's net interest margin (NIM) and overall profitability.
- The acquisition of Shin Kong Financial Holding may lead to increased leverage and potential dilution of shareholder value, raising questions about the long-term financial impact.
Q & A Highlights
Q: What is CTBC's view on the impact of expected interest rate cuts by the Fed on the bank's performance in the second half of the year?
A: Unidentified Company Representative 1 explained that lower interest rates will reduce capital and lending costs for customers, making them more willing to borrow money. This should be beneficial for the bank in the long run, and this year's profits are not expected to be negatively affected by the rate cuts.
Q: How does CTBC plan to manage its mortgage volume in response to the Central Bank's policy, and what will be the main driver of growth without mortgage growth momentum?
A: CTBC will focus on maintaining customer relationships and prioritize housing needs for residents. While mortgages are a significant source, the bank also relies on overseas and corporate loans, as well as unsecured loans, to diversify and maintain stable growth.
Q: Can you provide more details on the valuation of Shin Kong Financial Holding and the rationale behind the acquisition price of TWD14.55 per share?
A: Unidentified Company Representative 2 explained that the valuation considered Shin Kong's RBC improvement, unrealized losses, and potential synergies with CTBC. The price reflects future profit estimations and partial synergy benefits, with the expectation that Shin Kong's operations will align more closely with Taiwan Life's experience.
Q: What is the outlook for CTBC's Net Interest Margin (NIM) and asset quality, particularly in relation to CRE loans in the US?
A: CTBC expects NIM to remain in the range of 1.6 to 1.63, with potential for improvement due to loan repricing and a decrease in time deposit ratios. Asset quality remains stable, with no significant changes in the CRE loan position or NPL ratio.
Q: How will the acquisition of Shin Kong Financial Holding affect CTBC's capital adequacy and dividend policy?
A: CTBC does not anticipate a need to increase capital for normal business operations this year. The acquisition is expected to have a minimal impact on dividend policy, with the potential for maintaining similar dividend levels as last year despite the dilution effect from issuing new shares.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
