Bank of Taiwan
-Deeply Cultivating Finance in Taiwan, Advancing Toward International Market
Theresa Bin Chow 2016.11.25
1 AGENDA
Brief History
Organization Structure
Operational Highlight
Financial Information
2 History
3 Brief History
2016 2008 2013 2007 Growing with You 1961 1946 over a Century
4 Brief History
1946~1961: Dual Functions both as Central Bank and Commercial Bank. Reorganized and delegated to serve as the agent of the Central Bank of China (CBC) to manage the public treasury and issue currency in Taiwan area. Issuer of Liberty Lottery tickets.
Exclusive agent in foreign exchange business. 5 Brief History
1961~2000: Focusing on Commercial Banking After the re-commencement of the CBC in Taiwan on July 1st ,1961, the BOT switched its primary focus on commercial banking. Other missions: coordinate with government policy, foster industries development, and promote economic upgrading and growth.
6 Brief History
1961~2000: Focusing on Commercial Banking Maintain close relationship with the CBC: Assisting the CBC’s open market operation Still act as the issuance agent of NT Dollar: The New Taiwan Dollar Notes issued by “臺灣銀行 (Bank of Taiwan)”
7 Brief History
1961~2000: Focusing on Commercial Banking
8 Brief History
2000~Present : Focusing on Commercial Banking NTD before 2000 → NTD after 2000
9 Brief History
2000~Present : 2007/7 Merged with Central Trust of China
Business expanded into non-banking business, such as life insurance, procurement for government departments and agencies, precious metals trading(gold in particular) , and tariff rate quota allocation. 10 Brief History
2000~Present : Established Taiwan Financial Holding Co.
2008/ 01/ 01
2008/ 01/ 02
BankTaiwan Life BankTaiwan Bank of Taiwan Insurance Co. Securities Co.
2013/02/06 BankTaiwan Insurance Brokers 11 Brief History
2000~Present : The BOT opened its first branch in Shanghai in July 2012. BOT's Shanghai Branch and the Bank of China's Taipei Branch were designated, respectively, as the New Taiwan Dollar clearing bank in mainland China and as the Renminbi clearing bank in Taiwan. In 2013 BOT's domestic business units (DBUs) started to offer Renminbi services, ushering into a
new epoch of cross-strait banking. 12 Current Status
．Integrity ．Care ．Efficiency ．Prudence 100% State-Owned Bank Ranked No.1 among domestic banks in Taiwan in terms of equity and assets size. As Taiwan's largest bank, the BOT has long been the leader in Taiwan's financial industry, with total assets in excess of NT$4.8 trillion (around US$154 bio) and the biggest market shares in deposit, loan, Asset, and equity, 11.13%, 8.99%, 10.87%, and8.32%(as of 2016.08) . 13 Current Status
Deposit (As of 2016/08) Loans (As of 2016/08)
Bank Deposit(NTD mio) Market Share Bank Loans(NTD mio) Market Share 臺灣銀行 臺灣銀行 3,899,536 11.13% 2,299,582 8.99% Bank of Taiwan Bank of Taiwan 合作金庫商業銀行 合作金庫商業銀行 2,559,503 7.30% 1,955,989 7.65% Taiwan Cooperative Bank Taiwan Cooperative Bank 臺灣土地銀行 臺灣土地銀行 2,225,256 6.35% 1,801,512 7.04% Land Bank of Taiwan Land Bank of Taiwan 兆豐國際商業銀行 兆豐國際商業銀行 2,209,447 6.30% 1,738,657 6.80% Mega International Commercial Bank Mega International Commercial Bank Co. 中國信託商業銀行 中國信託商業銀行 2,146,847 6.13% 1,549,264 6.06% CTBC Bank Co. CTBC Bank Co. 華南商業銀行 華南商業銀行 2,056,857 5.87% 1,528,087 5.97% Hua Nan Commercial Bank Hua Nan Commercial Bank 國泰世華商業銀行 第一商業銀行 1,960,180 5.59% 1,505,253 5.89% Cathay United Bank First Commercial Bank 第一商業銀行 彰化商業銀行 1,925,622 5.49% 1,311,921 5.13% First Commercial Bank Chang Hwa Commercial Bank 台北富邦銀行 國泰世華商業銀行 1,631,770 4.66% 1,281,182 5.01% Taipei Fubon Commercial Bank Cathay United Bank 彰化商業銀行 台北富邦銀行 1,567,345 4.47% 1,142,778 4.47% Chang Hwa Commercial Bank Taipei Fubon Commercial Bank Co 14 Source: Financial Supervisory Commission Current Status
Assets Size (As of 2016/08) Equity (As of 2016/02)
Market Market Bank Assets(NTD) Bank Equity(NTD) Share Share 臺灣銀行 臺灣銀行 4,845,923 10.87% 272,656 8.32% Bank of Taiwan Bank of Taiwan 合作金庫銀行 兆豐國際商業銀行 3,111,128 6.98% 252,733 7.71% Taiwan Cooperative Bank Mega International Commercial Bank Co. 兆豐國際商業銀行 中國信託商業銀行 2,947,960 6.61% 248,949 7.59% Mega International Commercial Bank Co. CTBC Bank Co. 中國信託商業銀行 合作金庫銀行 2,785,554 6.25% 189,823 5.79% CTBC Bank Co., Ltd. Taiwan Cooperative Bank 臺灣土地銀行 第一商業銀行 2,631,059 5.90% 187,338 5.71% Land Bank of Taiwan First Commercial Bank 華南商業銀行 台北富邦銀行 2,484,785 5.57% 172,905 5.27% Hua Nan Commercial Bank Taipei Fubon Commercial Bank Co. 國泰世華商業銀行 華南商業銀行 2,464,125 5.53% 155,368 4.74% Cathay United Bank Hua Nan Commercial Bank 第一商業銀行 國泰世華商業銀行 2,419,692 5.43% 154,533 4.71% First Commercial Bank Cathay United Bank 台北富邦銀行 臺灣土地銀行 2,141,692 4.80% 135,820 4.14% Taipei Fubon Commercial Bank Co. Land Bank of Taiwan 彰化商業銀行 彰化商業銀行 1,953,120 4.38% 135,338 4.13% Chang Hwa Commercial Bank Chang Hwa Commercial Bank 15 Source: Financial Supervisory Commission Operational Highlight
Credit Ratings
Credit Rating Agencies Long-term Short-term Outlook
Moody’s Aa3 P-1 Stable
Standard and Poor’s A+ A-1 Stable
Taiwan Ratings Corp. tw AAA tw A-1+ Stable
As of 2016/01 16 Operational Highlight
“Top 50 Safest Banks in Emerging Markets” and ”Top 10 Safest Banks in Asia” in 2013 by Global Finance. Ranked 124th in terms of assets size and 204th in global banking industry in terms of Tier 1 Capital both by Britain’s The Banker in 2015. Awarded No. 1 in “Mandated Lead Arranger” and “Book Runner of Syndicated Loans in Taiwan” from 2012 to 2015 by Basis Point.
17 Operational Highlight
Awarded the double of “Golden Security Award” and “Golden Quality Award” in 2015 Double winners of “Best Domestic Bank” and “Best Banking Brand Image” from 2013 to 2015 Winner of “Top 100 Most Downloaded APP” in 2015. Winner of “2015 ITeS Award by itSMA (IT-enabled Services Management Association)
18 Organization Structure
Secretariat , Board of Directors
Executive Vice Department of Auditing, Board of Directors President and General Auditor Department of Department of Planning Government Employees Department of DepartmentInsurance of Real Estate Circulation Management Department of Department Of Domestic Business Operations Department of Department of Loan Risk Management Assets Management Department of Department of Credit Corporate Finance Analysis Domestic Department of Department of Precious Branches Public Treasury Metals Board of Directors Department of Department of Chairperson of the Board Executive Consumer Finance Accounting Offshore Banking President Vice Branch Presidents Department of Department of Human Int’l Banking Resources Department of Department of Information Overseas Chief Treasury Management Branches Compliance Audit Department of Department of General Committee Officer Trusts Affairs Department of Department of Economic Electronic Banking Research Department of Wealth Management Department of Ethics Department of Department of Legal Secretariat Compliance Credit Management Department of Procurement 19 Organization Structure
TaoYuan Domestic Appearance Greater Taipei 12 63 159 Branches, Machu Hsinchu 1 5 Miaoli 5 Mini Branches Kimeng 2 Cold Spring 1 Yilan Taichung 3 1 OBU 21 Changhua 3 Penghu 1 南投 Yuanlin 3 Hualien 2 2 Birth place of new Jiayi restaurant styles 4 Tainan Origin of Local Cuisine 10 Taidong Kaohsiung 1 24 Pingdong 6 Toroko National 20 Kengting Park (gorge) main street Organization Structure Overseas Appearance
London
NY Tokyo LA Shanghai Jiading, Fuzhou, Shiamen, Guangzhou Bombay YangonHK Singapore
Johannesburg Sydney
21 Organization Structure
Strengths Weaknesses
•Decreasing spread in domestic •Taiwan’s most trustworthy bank market and high cost of capital -Solid asset quality - Time Deposits accounts -Top Credit Ranking for large portion of BOT’s deposits. •The privilege serving as the cross- - BOT shoulders policy mission. strait currency settlement bank e.g. Preferential Interest Deposits Opportunities Threats •The Emergence of Third-party •The booming of mainland China and Payment ASEAN market e.g. Taobao: China’s largest C2C O2O - One Belt and One Road shopping platform founded by Alibaba Group 22 Operational Highlight
Main Area of Business Operations Deposits Trust Banking Corporate Banking Wealth Management Consumer Banking Procurement Business Electronic Banking Precious Metals Foreign Exchange & Auxiliary Business related Int’l Banking to the NTD issuance Public Treasure Government Employee Business Insurance 23 Operational Highlight
Total deposits at the end of Feb. 2016 amounted to NT$3,826 billion, Balance of Deposits (in Billion)
3,859 3,881 4,000 3,411 3,298 3,553 3,500 3,222 3,189 3,221 2,986 3,000 2,509 2,500 2,131 2,177 2,000 1,500 1,000 500 0 24 Operational Highlight
Total loans outstanding at the end of Feb. 2016 stood at NT$2,386 billion Balance of Loan (in Billion) 2,500 2,252 2,318 2,371 2,163 2,185 2,339 1,982 2,041 2,079 1,912 2,000
1,472 1,500 1,320
1,000
500
0
25 Operational Highlight
The first bank in TW offering online service for “Gold Passbook” and “Gold Savings Plan.” The largest gold-trading bank in TW with services: Bank of Taiwan Gold Bars Gold Credit Card Commemorative coins Precious metal coins Round-the-Clock Gold Trading 26 Operational Highlight
On-line Banking User-friendly Comprehensive functions Mobile APP Awarded for providing the best payment scheme
27 Operational Highlight
Mobile App On-line banking Interest/exchange rates Gold list prices Branch locations On-line application Economic & financial info. Transportation (MRT, THR, TR, Bus, Taxi, Parking) Entertainment 28 Operational Highlight
Banking Services Available for Foreigners All foreign exchanges (checks, cash, remittances) Opening an account Things you need to bring: 2 photo IDs, ARC, passport, Record of ID number in ROC Things you need to do: filling in application forms and a signature specimen card, taking a picture for record. Types of account: demand deposit, demand savings deposit, time deposit
Other options: On-line services, ATM card, BOT App29 Operational Highlight
Banking Services Available for Foreigners 19 foreign currencies available
30 Operational Highlight
Outlook Expand business market from domestic to overseas Increase loan business in RMB other than USD Risk and NPL management Electronic services (e-banking to digital banking) Mobile payment (HCE) Fintech 31 Banking Industry
Development
2000 2001 2008 2013 2016/2 1993 1990 14 53 19 3 39 Local 1964 41 FHC 25 Local M&A MChina 16 FHC Local 1960 Citi Local 27 Foreign 8 Local 3 Chinese DKB
32 Banking Industry
Foreign Banks Countries H.O. No. of Br. Countries H.O. No. of Br.
Japan 3 5 Swiss 1 3
Hong Kong 2 3 Germany 1 1
Thailand 1 3 Spain 1 1
Philippines 1 1 French 3 5
Singapore 3 3 United Kingdom 2 2
Australia 1 1 Netherlands 1 1
Canada 1 1 Mainland China 3 3
USA 6 6 Total 30 3933 Banking Industry
16 Financial Holdings Co. Earnings Unit: NT$ Billion
Year Earnings After Taxes
2014 289.73 (US$8.97 bio)
2015 315.49 (US$10.02bio)
2016 Q3 227.04 (US$7.21 bio)
34 Banking Industry
Comments From Standard & Poor’s
35 Changing Environments Confronted by Banking Industry Biggest Bank in Major Asian Countries
Asset Size Country Bank (in USD tio ) Industrial and Commercial Bank China 2.71 of China The Bank of Tokyo-Mitsubishi Japan 2.05 UFJ
Singapore DBS Bank 0.27
Korea Kookmin Bank 0.24
Taiwan Bank of Taiwan 0.14
36 Banking Industry
Development 2nd Financial Reform Targets in 2004: 3 F.I. market share above 10% 12 state-owned banks down to 6 No. of FHCs down to less than 50% 1 F.I. run by foreign investor or go public overseas
37 Banking Industry
Development the FSC has developed 12 measures to bolster the financial industry on 2015/5/13: • Strengthening capital–top 100 in the world • Enlarging asset size–top 100 in the world • Facilitating M&A • Spurring financial innovation • Stipulating laws to ban cut-throat competition • Enhancing risk management….. 38 Changing Environments Confronted by Banking Industry
Taiwanese banks can’t count on domestic market only. Expanding to Asia and Pam-Pacific markets where economy growth is rising.(Vietnam, Cambodia, Indonesia, Malaysia) Wherever the business goes, banks follow.
Bank’s (B/S) size and quality do matter when entering into overseas markets M&A is necessary for Taiwanese Banks. M&A among state-owned banks and private banks 39 Changing Environments Confronted by Banking Industry
In 1998, the asset size of DBS Bank is almost the same as MegaBank. Now it is three times bigger in terms of profit and assets size.
DBS Bank, Maybank, Hana Bank have all gone through M&As to expand economics of scope and scale and to promote competitiveness.
DBS Bank and Maybank had 5 M&As each and Hana Bank had 10.
40 Changing Environments Confronted by Banking Industry
The demarcation is blurred in terms of Country Borders Competitions from other F.I.s Competitions from customers Competitions from other industries
41 Changing Environments Confronted by Banking Industry
Country Borders are Blurred Internet Banking & Online Shopping Bank 3.0. by Brett King : Banking is no longer somewhere you go but something you do. Other F.I.s involve Banking Business Insurance co. offers services similar to bank’s deposit, loan business Leasing companies Banks’ customers do cash management by themselves. 42 Changing Environments Confronted by Banking Industry
Other Industries’ Hands In The Third-Party-Payment: Taobao(淘寶網) Alipay(支付寶) Alipaybao(餘額寶) P2P (Peer to Peer lending) Crowd Funding Non-Banks Co. (ex. life insurance co.) are providing services that are very similar to banking business. 43 Changing Environments Confronted by Banking Industry
Alibaba became money lender in China RMB 1mio max limit, period 6-12 months Monthly repayment both principal and interests No collateral needed, no guarantor required Processing time – 1-3 days Interest rate 1.5% per month (18% per annum) RMB Internationalization Banks to Increase RMB deposits, trade finances, loans, and investment business. Became one of the currencies in Special Drawing
Right (SDR) 44 Strategy
Prospect Making fee incomes (investment banking) Assets management Increasing value-added products in innovation, talents, business scale Mainland China is a market that no one can afford to overlook.
45 Strategy
Expand presence in Asian market Strong growth of Asian economies will bring higher profits for Taiwan’s financial institutions. Expanded presence in Asia for Taiwan’s financial services providers, i.e. banks, securities firms and insurers. (OBU, OSU, OIU) Rapid Expansion by acquiring offshore banking subsidiaries. Asian markets include China and countries in SEA.
46 Strategy
We need Cross-border M&A, Cross-Strait M&A In Oct. 2014, China Trust Bank merged with Tokyo Star Bank. In 2013, Industrial and Commercial Bank of China invested in Bank Sinopac 20% stock shares. In 2013, Cathay United Bank acquired SBC Bank in Cambodia. Financial industries made US$16.5bio in 2014 which is very promising in expanding our presence.
47 Strategy Setting Outlets Bank China SEA Other Area Bank of Taiwan Br. Sub-br, Sub. MM, IN, HK,SG,JP, Auz. US,UK,ZA Landbank of WuHan Br. HK,SG US Taiwan PH,HK,VN,KH,SG. US,PA,FR,NL, Mega Bank Br. Sub. MY,TH,IN,AE,BH,JP UK,AU,CA HK,MO,SG,VN,KH,TH, US,CA,UK,GU, First Bank Br. Sub-br. Sub MM,JP AU HuaNan Bank Br. Sub. HK,MO,SG,VN US,UK,AU
ChangHua Bank Sub-br. Sub. HK,SG,JP US,UK Taiwan Coop. Br. Sub-br. PH,KH, US,AU,BE Bank
Taiwan Biz Bank Br. HK US,AU 48 Strategy
Things that require attention Aging issue 65-year-old people will be accounted for 15.6% in 2050 (in Europe, US, Taiwan, Japan, China, Korea) The senior are risk adverse. Banks should provide financial products with annuity feathers, such as Reverse Mortgage
49 Strategy
Things that require attention Middle class arising in emerging countries. OECD predicts 2/3 of middle class families come from emerging countries of which nearly 50% are from China and India. They will contribute $34 trillion consumption power in 10-20 years. Provide value-added products which bring brand-identification to enhance adhesiveness
50 Strategy
Things that require attention Bank 3.0 We need banking not banks. Digital Banking Banking industry is heading toward a new era. Most of the transactions will be done through cellphones including traditional consumer banking, wealth management, as well as house or car shopping. Through big data analysis, banks can identify the specific needs of different customers. With the help of cellphone GPS, LBS (Location - Based Service) becomes very user-friendly, ex. Easytable. 51 Strategy
Fintech application
Payment Insurance Scheme P2P Lending
Fin-tech
Market Crowd Wealth Information Funding Management 52 Strategy
Fintech Big Data
53 Strategy
Fintech Video Teller Machine Opening bank account Applying for credit card Applying for consumer loan Wealth management services
54 Strategy
Fintech Bio Recognition
Iris scan Facial Features
Voice Finger print Palm Print
Benefits: Effectiveness: Weakness: Non-penetrating Expression-laugh, smile Privacy compromised Duplication-challenged Wearing glasses, hat, FB- face-age Easy to remember Different hair style Vedio-chatting 55 Portable Enemy of the State Strategy -- Bank 3.0
56 Strategy -- Bank 3.0
「Human Advisor」 +「Robot Advisor」
Segmented Versatile Comprehensive
• Services to E- • Make the best • Integrate generations use of robot information to advisor promote • Expand market efficiency shares • On-going expansion • Enhance customers’ experience
57 Strategy -- Bank 3.0
High Profit
Embrace Fin-tech Mix virtual and Reality
58 Strategy
Fintech Robot NAO vs PEPPER Item s NAO Pepper
Developer French Japanese Height 58cm 120cm Weight 4.3 Kg 2 8Kg More joints in the lower part. No joints in the lower part. Joints Moves on feet. Move on wheels. Motion Slow, but can dance and play foot ball. Fast (3km/h) speed 59 Strategy
Fintech Robot NAO vs PEPPER Item s NAO Pepper
Display Must combined with Kiosk Built-in 10.1-inch touch display Battery 2hr >4hr Able to detect facial features and Able to analyze human facial Function locate sound source expression and voice tones.
60 Strategy
Fintech Robot NAO vs PEPPER Item s NAO Pepper
1. For research, education, scientific, 1. Not a functional robot for domestic and entertainment: use. 2. Teaching autistic children, 2. Intended to make people happy, 3. Assisting elderly patients, Helping enhance people’s lives. Purpose train space station crews, 4. Working in bank branches as a concierge 61 Strategy
Fintech Robot NAO vs PEPPER Item s NAO Pepper
1. Greetings Usage in 2. Identifying VIP customers bank 3. Introducing financial products branches 4. Interacting with customers 5. Providing entertainment
62 I am the master of my fate. I am the captain of my soul.
William Ernest Henley 1875
63