Release Date: November 19, 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 a record high pre-tax profit of 71.3 billion and a net profit of 58.6 billion for the first three quarters of 2024.
- The company reported a 40% year-over-year growth in fee income, driven by strong performance in wealth management and credit card operations.
- Taiwan Life, a subsidiary, achieved a net profit of 21.1 billion for the first three quarters, marking a 46% year-over-year growth.
- CTBC Financial Holding Co Ltd (TPE:2891) maintained a strong capital position with a group CAR of 123% and a life RBC ratio of 336%.
- The company has been recognized for its sustainability efforts, ranking among the top 5% globally in banking sustainability performance.
Negative Points
- The swap revenue decreased in Q3 due to the Fed's interest rate cuts, impacting overall income.
- The company anticipates a moderate growth in NIM for Q4, with no significant increase expected.
- Taiwan Life's CSM target for 2024 is lower than 2023 due to a slowdown in policy sales in the first half of the year.
- The company faces competitive pressures in the market, limiting the potential for significant repricing of loans.
- There is uncertainty regarding the impact of asset reallocation on net asset value due to interest rate fluctuations.
Q & A Highlights
Q: Can you confirm the swap revenue for 2023 and explain the NTD spread expansion? Also, what are your expectations for credit costs and wealth management momentum?
A: The swap revenue for Q3 was around 2.9 billion. The NTD spread saw positive growth due to a 12.5 basis point interest rate increase by the central bank, affecting unsecured loans and mortgages. Credit costs are expected to remain between 25 to 30 basis points. Wealth management momentum is positive and expected to continue, with customer behavior adapting to market conditions. (Respondent: CFO)
Q: Regarding Taiwan Life, how is the transition to IFRS 17 affecting your investment portfolio?
A: The transition to IFRS 17 is planned for 2026, with a few years for adjustment. The investment portfolio will be dynamically adjusted based on market conditions, but significant changes are not expected. (Respondent: CSO of Taiwan Life)
Q: What is the outlook for NIM and swap income in Q4?
A: NIM increased by four basis points in Q3, and there is room for further improvement in Q4. However, swap income's impact on NIM is shrinking, so only slight growth is expected. The annual NIM is projected to be around 1.60 to 1.63%. (Respondent: CFO)
Q: How is the hedging strategy for Taiwan Life evolving, and what are the expected costs?
A: The hedging ratio for traditional policies increased to 62% due to weaker New Taiwan Dollar momentum. The overall hedge cost for 2024 is around 1%. (Respondent: CSO of Taiwan Life)
Q: What are the expectations for NII in 2025, considering potential interest rate cuts?
A: Interest rate cuts are expected to have a neutral to slightly positive impact on NII due to the current asset-liability structure. The cost reduction from rate cuts is anticipated to outpace the depreciation of the US dollar. (Respondent: CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
