First Quarter 2011 Update. Ta Chong Bank

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1 First Quarter 2011 Update Ta Chong Bank

2 Disclaimer The presentation contained within is not reviewed or reviewed by any accountant or any independent third party. While Ta Chong Bank endeavor to provide accurate, complete and consistent information herein, we makes no guarantee or warranties as to the accuracy or correctness of all the material contained. Figures in this presentation are calculated and estimated according to the market condition and performance of Ta Chong Bank at that time. Ta Chong Bank has no obligation to revise these figures and statements excluding what is required by applicable law or applicable stock exchange regulations. This presentation might contain forward-looking statements that reflect Ta Chong Bank management s current views with respect to certain future events and potential financial performance. Results might differ materially from those set out in the forward-looking statements due to various factors and uncertainties beyond Ta Chong Bank s control. The information, statements or opinions in this presentation do not constitute a public offer or any advice or recommendation respect to any securities or instruments. Ta Chong Bank and its representatives, no matter for any reasons, should not be liable for any loss or damages arising from the use of or interpretation by others of information contained within this presentation or any matter related to this document. 1

3 Key Takeaways Branch Network 70 domestic business units * 3,215 employees Hong Kong In progress Southern 25 branches Central 7 branches Northern 34 branches First Quarter 2011 Key Financials Assets Loans Deposits billion billion billion Total Revenue Net profit before tax Net profit after tax 2, million million Assets Quality Coverage ratio NPL ratio CAR ratio % % % Main Shareholders Credit Ratings Taiwan Ratings Corp. Carlyle KYMCO Long-term: twa- 24% 9% Short-term: twa-2 Outlook: Stable million Others 67% Market Capitalization* NT $24 B (USD $813M) Business Units Consumer banking Corporate banking Enterprise banking Financial markets * 66 branches plus Business Department, Trust Department, OBU, and International business department * As of March 31,

4 First Quarter 2011 Highlights Solid and steady growth in core business Net profit after tax of $548 million, grow 51% YoY and 38% QoQ Core revenue (interest income and fee) grow 12% Loan and deposit balance grow 12% and 14% YoY respectively Continue to invest in the franchise Launch new TV commercial 夢 騎 士 during the Chinese New Year Launch 利 高 天 下 deposit program and attract over 4,000 new retail customers New Dong-men branch (the 65 th branch) open in February 2011 Target to open the Hong Kong branch in the second half of 2011 Strong and clean balance sheet Coverage ratio over 300% and NPL ratio is 0.46% $2 billion sub-debts issued in March 2011 Total capital ratio of 11.8% and Tier 1 ratio of 9.3% 3

5 Financial P&L Positive and solid operating profit trends Strong core revenue growth and increased expenses from franchise investment With good loan portfolio quality and strong recovery, no credit cost in 1Q 2011 Inc/(dec) $ million 1Q10 4Q10 1,101 1,080 1,125 1,152 1,142 Interest Income 4% -1% Fee income 26% -7% 1,734 1,831 1,985 2,010 1,937 Core Revenue 12% -4% (24) 131 Others* -20% NM 1,898 1,845 2,204 1,986 2,069 Total Revenue 9% 4% 1,264 1,324 1,407 1,408 1,431 Total Expenses 13% 2% Operating Profit 0% 10% Credit Cost NM NM Net Profit before Tax 62% 49% Income Tax 188% 189% 363 (321) Net Profit after Tax 51% 38% * Others include trading revenue and non-core revenue (i.e. income from long-term investment) 4

6 Total Revenue Solid revenue growth with diversified sources 1Q 2011 total revenue grow 9% YoY primarily driven by 25% growth in fees income 1Q 2011 interest income grow 4% YoY Total Revenue Year to Date Total Revenue Growth Core Revenue Non-core Revenue 1,898 1,845 2,204 1,986 2,069 (%) Revenue Components YoY + 9% ($171 M) 2,069 1,898 1,142 1,101 Interest Income + 4% ($41 M) YoY The positive impact from asset growth (average assets + $48 B from $378 B to $ 426 B), partly offset by a 9 bps drop in NIM (118 bps to 109 bps) Interest Income Fee Trading & Others (1) 6 1Q10 4Q10 1Q Q10 1Q11 Fee income + 26% ($164 M) YoY UPL +210% ($131 M) Personal Investment +8% ($24 M) Corporate Banking +7% ($9 M) 5

7 Net Interest Margin and Total Average Assets 1Q 2011 net interest margin of 109 bps, 6 bps lower than prior quarter, reflecting the rising deposit cost after the CBC rate hike while the loan pricing remain under keen market competition Net Interest Margin and Total Average Assets Loan / Deposit Spread 1.18% 1.13% 1.15% 1.15% 1.09% 1.87% 1.81% 1.79% 1.78% 1.69% TCB Net Interest Margin 1.36% 1.36% 1.37% 1.40% 1.39% Industry Average * Total Average Assets ($ billion) NPL Ratio 1.07% Industry Average * 1,101 1,080 1,125 1,152 1,142 Interest Income 0.91% 0.78% 0.90% 0.61% 0.84% 0.55% 0.70% TCB 0.55% 0.46% * Industry average sourced from Central Bank of R.O.C. and FSC 6

8 Loans Strong and well balanced loan portfolio 1Q 2011 loan balance of $270 billion, grow 12% YoY and 3% QoQ Strong and solid growth in consumer loans (mortgage and unsecured personal loan) Selectively grow corporate loan portfolio in an overcrowded market Accelerating the growth in SME segment Loan Balance Mortgage Corporate / Syndication YoY + 12% YoY + 23% Corporate: YoY + 7% Syndication: YoY 15% Corporate Syndication Loan Components (% to total loan) Mortgage Corporate Syndication UPL* Others SME 0 0 1Q10 4Q10 1Q11 Unsecured Personal Loan* SME YoY + 29% YoY + 307% * Include cash card 7

9 Deposits 1Q 2011 deposit grow 14% YoY and loan to deposit ratio is 77.1% Expanding deposit base in the interest rate rising cycle Focus on growing low cost deposit with expanded customer base YoY + 27% - 7% Time Demand Time / Demand Deposit Q10 1Q11 (% to total deposit) Time Deposit Demand Deposit Corporate / Retial Deposits Q10 4Q10 1Q11 Deposit Trend Loan / Deposit Ratio 78.7% 77.5% 79.7% 81.8% YoY + 14% % 350 YoY + 20% + 8% Corporate Retail (% to total deposit) Corporate Retail Deposit 1Q10 1Q11 1Q10 4Q10 1Q11 8

10 Fee Income Solid growth with a diversified source of income Personal investment slightly slowed down in 1Q 2011 impact by the recent Japan crisis Significant growth in unsecured personal loan fee income, grow over 3 times in 4 quarters Great growth potential on corporate fee income Total Fee Personal Investment Corporate* YoY +26% YoY +8% YoY +7% 131 Fee Components Unsecured Personal Loan Credit Card (% to total fee) Personal Investment Credit Card Corporate * UPL YoY +210% YoY -6% 120 Mortgage & Others Q10 4Q10 1Q11 * include SME 9

11 Total Expenses Continue to invest in the franchise Extending branch network and expanding sales force Continue to tighten fixed BAU expenses and improve efficiency and productivity Expense / Revenue Ratio Year to Date Total Expense Growth Expense / Revenue Ratio 67% 72% 64% 71% 1,407 1,408 69% 1,431 1,264 YoY + 13% 1,431 8% ~ Franchise Investment 4% ~ Higher Revenue and Volume 1% ~ Others Franchise Investment included 1,264 1,324 Opened 9 new branches (8 in Taipei and 1 Taichung) Expanded consumer bank sales force (increase over 290 new RM) Corporate Image Campaign Total Expense 1Q10 1Q11 10

12 Asset Quality and Capital Position Strong capital position with clean balance Coverage and NPL are better than the industry average Solid capital position with total capital ratio of 11.8% and tier 1 ratio of 9.3% Coverage and NPL Ratio Capital Ratio ($ billion) Coverage Ratio (TCB) 212% 180% 113% 97% 242% 129% 323% 271% 158% 172% Coverage Ratio (Industry Average) * 12.5% 11.6% % % % 32.4 CAR 1.07% 0.91% 0.78% 0.90% 0.84% 0.70% NPL Ratio (TCB) NPL Ratio (Industry Average) 0.61% 0.55% 0.55% 0.46% * Tier Tier 2 * Industry average source from Central Bank of R.O.C. and FSC 11

13 Quarterly Financial Metrics Revenue Expenses Operating Profit (EOP, $ million) (EOP, $ million) (EOP, $ million) 1,898 1,845 2,204 1,986 2,069 1,264 1,324 1,407 1,408 1, Loan Deposits Net Profit before Tax (EOP, $ million) Coverage Ratio NPL Ratio Capital Ratio ( % ) 323% ( % ) ( % ) 180% 212% 242% 271% 0.90% 0.84% 0.70% 0.55% 0.46% 12.50% 11.62% 12.02% 11.07% 11.80% 12