1-4. Impact of Competitive, Regulative and Banking Environments
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ANNUAL REPORT 2020 1. To Our Shareholders 001 Contents 2. Corporate Profile 007 3. Corporate Governance 009 4. Capital Arrangement 059 5. Business Operation 067 6. Financial Status 085 7. Financial Status Analysis, Operation Performance Analysis and Risk Management 195 8. Special Notes 210 Chronological Highlights 211 Head Office and Branches 213 1. To Our Shareholders 001 1. To Our Shareholders 1-1. Year 2020 Business Report 1-1-1. Financial Environment In response to the epidemic, every country has announced unprecedented large-scale fiscal, monetary and regulatory measures to maintain household disposable income ensure corporate cash flow and support credit supply in 2020. The Organization for Economic Cooperation and Development (OECD) has raised the global economic outlook for the next year. The global economy will continue to grow moderately as of the vaccine can effectively control COVID-19. However, the service industry is still depressing in the job market and trade tensions among major economies may slow the pace of recovery. In recent years, Taiwan's economy has gradually changed and domestic demand has become the main growth support. Since next semiannually of 2020, the impact of private consumption has shrunk and investment activities have continued, meanwhile the domestic economy has emerged from the haze of the epidemic. Looking forward, the global economic rebound and the reduction of the uncertainty of the epidemic, some production lines transfer from oversea to Taiwan, and the booming demand for emerging technologies, As a result the export performance is expected to grow substantially in Taiwan. The Chief Accounting Office of the Executive Yuan predicts the economic growth rate of Taiwan will be 3.83% in 2021. Although the advent of the vaccine boosts the market’s optimistic outlook on the business outlook and the global economy is expected to resume growth next year, it still faces at least four major risks, including the slow economic recovery due to repeated epidemics, the financial situation may shrink suddenly or financial fragility continues to rise, every country economy support policies may exit early and the US diplomacy policy still emphasizes domestic interests, the confrontation situation may continue between the US and China. Once the above mentioned risks rise or are realized, they will slow down the economic recovery and should be closely observed. We will adopt a flexible business strategy and prudently respond to the ever-changing business environment. 1-1-2. Organization Development None 1-1-3. Business Plans and Strategies Performance 1-1-3-1. Main Achievements • Implementation of the “Principles of internal control practices relating to the prevention of misappropriation of customers’ account by the bank’s wealth specialist”-account monitoring mechanism, wealth management customer visit mechanism and customer communication data comparison management mechanism. • Mobile Internet Banking has added “Online Credit Application” and “One-Finger Shortcut” services. • Completed the declaration and due diligence criteria CRS 2019 reportable matters. • The credit card EMV 3D SECURE service launched to enhance the security of credit card online transactions. • “Mobile phone number inter-bank transfer” service launched. • Personal online banking update and English version service launched. 1-1-3-2. Budget Execution As of Dec. 31, 2020, our deposits balance with sum of TWD162.2 billion (excluding deposits from banks) increased by TWD8.5 billion compared with previous year; our loans balance with sum of TWD121.4 billion increased by TWD8.4 billion compared with previous year.COTA would be commit to strengthen the Fintech services, expansion e-banking services, provide diversified products to satisfy the requirement of the customer, to develop new financial products, to achieve better structure of quality between deposits and loans and higher multi-source income. 002 Annual Report 2020 Main business budget executions reported as follows: • Final account of average deposits balance amounted to TWD154.5 billion, achieved 102.32% budgeting goal of TWD151 billion. • Final account of average loans balance amounted to TWD115.3 billion, achieved 99.40% budgeting goal of TWD116 billion. 1-1-3-3. Financial Structure and Profitability In 2020, COTA solo financial report earnings before income-tax figured as TWD854,672 thousand turned into EPS before income-tax as TWD0.97, turned into EPS after income-tax as TWD0.78. Our BIS ratio maintained at a level of 13.07% and net worth of per share stood at TWD13.55.Our non-performing loan coverage ratio to 705.42%. Overdue loan ratio decreased to 0.20%. Nevertheless, we would constant improve business effectiveness and risk control to boost operation capability and competitive edge. 1-1-3-4. Research and Development To keep in line with critical issues of international and domestic political and economic environments and demands of banking business expansion, our H.O. departments compiled assorted analyses and reports regarding financial situations, banking business development, industrial insight and tendency periodically or non-periodically. Such analyses and reports would circulate to our staff for reference and application through our electronic official document system to prompt business development. 003 1. To Our Shareholders 1-2. Year 2021 Business Plans Outline We have always held the spirit of “Integrity, Innovation, Affability, and Service”, and fulfill compliance and legal affairs on business management. Meanwhile, strive more deeply rooted in corporate culture to satisfy the requirement of the customer and intensify managerial strength. Main business plans are described as follows. 1-2-1. Business Operating Policy • Cooperating with the development of digital banks, using e-commerce to develop potential online banking customers, select excellent target customer groups, and provide exclusive discounts and services to expand business. • Cooperate with the competent authority to promote the development of financial technology and the revision of laws and regulations, continue to develop and improve the electronic channel service system, expand the digitization of various business transaction functions, beside, provides more convenient and diversified financial services. • Continue to expand demand deposits, consumer finance, corporate credit, wealth management, trust, foreign exchange, international finance and electronic finance businesses, adjust the profit structure of banking business, expand the economic scale, and improve operating efficiency to reduce costs and increase profitability. • Make full use of the internal credit rating system of credit-granting accounts, appropriately adjust the rating factors and their weights after statistically sufficient quantitative data, and use the post-loan default database to summarize the timing of the default and the reasons for the overdue of the rated account. • Strengthen the pre-risk control capabilities of all products to improve asset quality, and implement post-event management, regularly review the operating status and asset quality of consumer finance credit business, adjust product pricing and credit policies at any time, establish a management structure for the entire product line to ensure reflect product performance. • In line with the advent of an aging society and in response to government policies. To actively participate in the promotion and promotion of the elderly and the physically and mentally handicapped Anyang Trust, fulfill corporate social responsibility and enhance customer value. • Strengthen the professional knowledge training of the wealth management business of the staff, and adopt all employee marketing as the sales strategy, improve professional knowledge and marketing skills through comprehensive financial management training, meanwhile, tailor-made financial planning for customers can more effectively achieve customers' financial goals as quickly as possible, and improve and enhance the core value of wealth management "services". • Actively cooperate with financial policies and various laws and regulations, strengthen the operating physique and capital structure, to improve the overall efficiency of operations, and develop towards the vision and goals of high-quality financial institutions. 1-2-2. Business Target Unit: TWD thousand: % Increase volume Main Business Budget of Year 2021 Result of Year 2020 Amount % Average deposits 155,000,000 154,543,703 456,297 0.30 Average loans 119,500,000 115,330,466 4,169,534 3.62 Trust assets 5,471,647 5,446,956 24,691 0.45 Wealth management 168,653 136,566 31,787 23.28 004 Annual Report 2020 Average deposits Trust assets Budget of 2021 155,000,000 Budget of 2021 5,471,647 +0.30 +0.45 Result of 2020 154,543,703 % Result of 2020 5,446,956 % Average loans Wealth management Budget of 2021 119,500,000 Budget of 2021 168,353 +3.62 +23.28 Result of 2020 115,330,466 % Result of 2020 136,566 % Unit: TWD thousand 1-3. Long-term Development Strategy • Establish and implement a sound risk management system for on-balance sheet and off-balance sheet and implemented to make the use of funds more effective and in line with the principles of safety, liquidity and profitability. • Monitor credit limit management to exhibit the risk management function, improve the structure of risky assets, and strengthen the bank’s BIS. • Strictly monitor the limit of market risk to achieve the balance between risk and reward and the optimization of capital allocation to