Stock Code：5848 Spokesman Name: Welch Lin Title: President of Taishin Holdings Tel: 886-2- 5576-1888 E-Mail Address: [email protected]
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Stock Code：5848 Spokesman Name: Welch Lin Title: President of Taishin Holdings Tel: 886-2- 5576-1888 E-mail address: [email protected] Acting Spokesman Name: Carol Lai Title: Chief Financial Officer of Taishin Holdings Tel: 886-2-5576-2881 E-mail address: [email protected] Taishin International Bank Co., Ltd. Address: B1&1F, No.44, Sec. 2, Jhongshan N. Rd., Jhongshan Dist., Taipei City 104 , Taiwan (R.O.C.) Tel: 886-2-2568-3988 Website: https://www.taishinbank.com.tw Stock Transfer Agency Name: Stock Affairs Agency Department of Taishin International Commercial Bank Address: B1, No. 96, Sec. 1, Jianguo N. Rd., Jhongshan Dist., Taipei City 104, Taiwan (R.O.C.) Tel: 886-2-2504-8125 Website: https://www.taishinbank.com.tw Credit Rating Institutions Fitch Ratings Address: Suite A2, 23F., No. 68, Sec. 5, Zhongxiao E. Rd., Xinyi Dist., Taipei City, Taiwan Tel: 886-2-8175-7600 Website: https://www.fitchratings.com/site/taiwan Taiwan Ratings Address: 49F, No.7, Sec. 5, Xinyi Rd., Xinyi Dist., Taipei City 110, Taiwan (R.O.C.) Tel: 886-2-8722-5800 Website: https://www.taiwanratings.com Certified Public Accountants CPAs: Tza Li Gung, Kwan-Chung Lai Name of accounting firm: Deloitte & Touche Address: 20F, No. 100, Songren Rd., Xinyi Dist., Taipei City 110, Taiwan (R.O.C.) Tel: 886-2-2725-9988 Website: https://www.deloitte.com.tw Names of Exchanges Where Overseas Securities Are Listed and Methods of Inquiry: None. Taishin Bank 2019 Annual Report CONTENTS 002 I. Letter to Shareholders 006 II. Company Profile 012 III. Corporate Governance Report 089 IV. Capital Overview 100 V. Operating Status 136 VI. Financial Information 144 VII. Review and Analysis of Financial Conditions, Financial Performance, and Risk Management 161 VIII. Special Disclosure 168 IX. Directory of Head Office & Branches 171 Appendix I. Financial Statements and Independent Auditors' Report 277 Appendix II. Consolidated Financial Statements and Independent Auditors' Report Rating Agency Date Ratings Issuer L-Term BBB+ Issuer S-Term F2 Outlook Stable Fitch Ratings 2019.11.19 Support 3 National L-Term AA- (twn) National S-Term F1+ (twn) Issuer L-Term BBB+ Standard&Poors 2019.12.16 ssuer S-Term A-2 Outlook Stable National L-Term twAA- Taiwan Ratings 2019.12.16 National S-Term twA-1+ Outlook Stable 01 Letter to Shareholders I. Letter to Shareholders Dear Shareholders, The ongoing US-China trade dispute created uncertainties in the global economy in 2019. The economic growth momentum was weaker than it was in 2018. Out of the major economies, the United States, while continuing to expand, showed clear signs of slowing down. China's economic growth fell to 6.0%, the lowest in 30 years. Slowing demand in both China and the U.S. caused export declines for major exporters of manufactured goods, including Germany, Japan, and South Korea, for the year. Taiwan's economy went in two extremes. Traditional industries, led by plasticization, chemical, steel, and machine industries, saw exports fell with the global economy. Meanwhile, the electronics industry benefited from the trade diversion effects caused by the US-China dispute, and exports of related products were pushed up as a result. In response to the US-China dispute, suppliers on the electronics supply chain made more fixed investments in Taiwan. Meanwhile, a strong demand for advanced semiconductor production products drove capital expenditure higher. As a result, Taiwan's economy achieved a strong 2.71% growth in 2019. Driven by rising stock prices in the electronics sector, TWSE closed at 11,997 at the end of 2019, a 23.3% YOY increase compared to 9,727 in 2018. The financial sector in Taiwan benefited from rising domestic investment and a strong financial market. Overall earnings before tax for the financial sector amounted to NT$634.1 billion, a 21.7% increase from 2018. Earnings before tax for the banking industry totaled NT$407.1 billion, a 7.8% increase from 2018 and another all-time high. Looking forward, the ongoing COVID-19 pandemic is having an increasingly severe impact on the global outlook and creating more challenges for the banking sector. Given the 2003 SARS outbreak lasted for months and had short-term effects on the economy, it is expected that the COVID-19 pandemic will affect Taiwan's economic results in the first half of 2020. If the situation does not deteriorate, the economy may have a chance to regain momentum in the second half of the year. We followed our operating budgets closely in 2019, and our core business delivered consistent profit growth on the whole. After-tax profit totaled NT$11.8 billion for the year, 13.5% higher than the previous year. Meanwhile, the annual growth rates for net interest income and net fee income were 0.4% and 6.5%, respectively. At the end of 2019, the EPS was NT$1.43, an ROE of 8.04% for common shareholders at a net value of NT$18.58 per share. While asset quality was kept at a satisfactory level, the nonperforming loan (NPL) ratio at the end of 2019 was 0.17%, with NPL coverage ratio at 814.6%, both above the average of state-owned banks. In terms of capital structure, the capital adequacy ratio was 14.40%, the Tier 1 capital ratio was 11.60%, and the Core Tier 1 capital ratio was 9.79% at the end of 2019. The capital structure remained sound. Taishin Bank received international long- and short-term credit ratings of BBB+ and F2, respectively, in a report issued by international credit rating agency Fitch Ratings in November 2019. Our national long- and short-term credit ratings were AA-(twn) and F1+(twn), respectively, and the outlook was “Stable”. Our global long-term credit rating was upgraded from BBB to BBB+ while the global short-term credit rating held at A-2 in a report issued by S&P in December 2019. Meanwhile, our national long-term credit rating was upgraded from twA+ to twAA- and the national short-term credit rating from twA-1 to twA-1+ in a report issued by Taiwan Ratings Corp in December 2019. The outlook was “Stable” in both reports. 002 Taishin Bank 2019 Annual Report 01 Letter to Shareholders Regarding overseas business expansion, Taishin Bank actively forges its presence in the Chinese and Asia Pacific markets, and has to date established branches in Hong Kong, Singapore, Japan (Tokyo), and Australia (Brisbane) as well as local offices in Vietnam (Ho Chi Minh City) and Myanmar (Yangon). The application process to open the Labuan Branch and the Kuala Lumpur Marketing Office in Malaysia and one to open the Shanghai Office are both underway. The Shanghai Office in particular obtained approval from the Shanghai Office, China Banking and Insurance Regulatory Commission on April 20, 2020. FinTech application: To accelerate innovation in services, Taishin Bank has built up a professional team dedicating to FinTech innovations, especially focusing in areas such as artificial intelligence and big data analytics on an ongoing basis. Our digital banking brand, Richart, is an established digital account leader by market share, and is well received by users. Meanwhile, Taishin Bank's “facial recognition app” won the highest award given by Gartner. Taishin Bank has implemented the facial recognition technology in various financial services such as Face ID login, Face-ID ATM, Facial Recognition VIP Guest Services, and Face ID enabled payment ahead of other banks. By effectively combining digital and banking innovations, Taishin Bank continues to build a better consumer experience. ◗ 1. Retail anking services As of the end of 2019, the size of Taishin Bank's mortgage portfolio stood at NT$518.9 billion, representing close to 7% in YOY growth; the auto loan balance amounted to NT$47.9 billion, representing a 6% YOY growth, and again placing the bank at the top of the financial industry; we had 5.35 million credit cards in circulation, ranking 4th with a 11.3% market share; and lastly, Taishin Bank had 145,000 card accepting merchants nationwide, ranking first with a 22.8% market share. Mobile payment marketing campaigns: Progress in FinTech is making consumers generally more open to mobile payment services. To give customers a better digital payment experience, Taishin Bank is the first bank in Taiwan to support all four contactless mobile payments (Apple Pay, Samsung Pay, Google Pay, and Taiwan Pay). It is also the first to concurrently support Alipay, WeChat Pay from China and payment tools used by the KEB Hana Bank. Furthermore, Taishin Bank teams up with FamilyMart to install the new “facial recognition payment” service. The service effectively introduces facial recognition technology into the everyday life. Credit cards: In 2019, in addition to maintaining the popularity of @GoGo and Flygo cards, Taishin Bank partnered with e-payment leader Jkos Pay to launch the Taishin Jkos Pay credit card. The card combines everyday services provided by Jkos and creates a one-stop service for everyday needs. By bringing digital banking and payment service together, Taishin Bank launches the CARDaily app exclusively for its cardholders. The app offers access to monthly statements, offers, and events and to barcode and contactless payments. Wealth management: Taishin Bank was first to open a wealth management flagship branch in 2003. Having followed a sophisticated customer segmentation process over the years, Taishin Bank is able to provide a wide range of exclusive financial services to meet the demand for “professional financial planning advice”, “exclusive benefits and experiences” and other services. Meanwhile, following digital banking trends, Taishin Bank also combines real branches, mobile apps, internet banking and other online and offline services to provide personalized services.