Upload
beck
View
35
Download
1
Embed Size (px)
DESCRIPTION
Financial Industry and opportunities facing Investors. 陳欽奇 國泰金控 專員 國泰證券 經理 北科大 兼任講師. 2005/10/27. Agenda. Global financials – cycle gets tougher Financials in Asia – year of the thoroughbreds Taiwan banking sector. Source: TEJ, CSFB. Global Financials. Cycle gets tougher. - PowerPoint PPT Presentation
Citation preview
Financial Industry and opportunities facing
Investors
陳欽奇國泰金控 專員國泰證券 經理北科大 兼任講師
2005/10/27
2
Agenda
Source: TEJ, CSFB
Global financials – cycle gets tougher Financials in Asia – year of the thoroughbreds Taiwan banking sector
Global Financials
Cycle gets tougher
4
Global Financials – Continuing Challenges
Industry rating has declined Key Industry Challenges
1. Weaker revenue growth2. Specialisation vs. diversification3. Efficiency4. Consolidation5. Capital efficiency6. Markets and risk
Risk Management, Basle 2
5
Global (G7) Banks de-rating and focused on cash
0
2
4
6
8
10
12
14
16
18
20
Jan-
95
Jul-9
5
Jan-
96
Jul-9
6
Jan-
97
Jul-9
7
Jan-
98
Jul-9
8
Jan-
99
Jul-9
9
Jan-
00
Jul-0
0
Jan-
01
Jul-0
1
Jan-
02
Jul-0
2
Jan-
03
Jul-0
3
Jan-
04
Jul-0
4
MSCI G7 Banks Forward PE Linear (MSCI G7 Banks Forward PE)
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Jan-
95
Jul-9
5
Jan-
96
Jul-9
6
Jan-
97
Jul-9
7
Jan-
98
Jul-9
8
Jan-
99
Jul-9
9
Jan-
00
Jul-0
0
Jan-
01
Jul-0
1
Jan-
02
Jul-0
2
Jan-
03
Jul-0
3
Jan-
04
Jul-0
4
MSCI G7 Banks Dividend Yield
0%
10%
20%
30%
40%
50%
60%
70%
80%
Mar
-01
May
-01
Jul-0
1
Sep-
01
Nov-
01
Jan-
02
Mar
-02
May
-02
Jul-0
2
Sep-
02
Nov-
02
Jan-
03
Mar
-03
May
-03
Jul-0
3
Sep-
03
Nov-
03
Jan-
04
Mar
-04
May
-04
MSCI G7 Banks PE Relative
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Mar
-01
May
-01
Jul-0
1
Sep-
01
Nov-
01
Jan-
02
Mar
-02
May
-02
Jul-0
2
Sep-
02
Nov-
02
Jan-
03
Mar
-03
May
-03
Jul-0
3
Sep-
03
Nov-
03
Jan-
04
Mar
-04
May
-04
MSCI G7 Market Dividend Yield MSCI G7 Banks Dividend Yield
G7 Banks Forward Price-earnings G7 Banks Dividend Yield
G7 Banks PE Relative to market PE G7 Banks dividend yield vs. market dividend yield
Source: Thomson Financial Datastream, MSCI, CSFB Analysis
6
Asia Banks are little differentAsia Banks Forward Price-earnings Asia Banks Dividend Yield
Asia Banks PE Relative to market PE Asia Banks dividend yield vs. market dividend yield
Source: Thomson Financial Datastream, MSCI, CSFB Analysis
-
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
50.00
Jan-
95
Jul-9
5
Jan-
96
Jul-9
6
Jan-
97
Jul-9
7
Jan-
98
Jul-9
8
Jan-
99
Jul-9
9
Jan-
00
Jul-0
0
Jan-
01
Jul-0
1
Jan-
02
Jul-0
2
Jan-
03
Jul-0
3
Jan-
04
Jul-0
4
MSCI Asia Banks Forward PE Linear (MSCI Asia Banks Forward PE)
0
0.5
1
1.5
2
2.5
3
Jan-
95
Jul-9
5
Jan-
96
Jul-9
6
Jan-
97
Jul-9
7
Jan-
98
Jul-9
8
Jan-
99
Jul-9
9
Jan-
00
Jul-0
0
Jan-
01
Jul-0
1
Jan-
02
Jul-0
2
Jan-
03
Jul-0
3
Jan-
04
Jul-0
4
MSCI Asia Banks Dividend Yield
0%
20%
40%
60%
80%
100%
120%
Mar
-01
May
-01
Jul-0
1
Sep-
01
Nov-
01
Jan-
02
Mar
-02
May
-02
Jul-0
2
Sep-
02
Nov-
02
Jan-
03
Mar
-03
May
-03
Jul-0
3
Sep-
03
Nov-
03
Jan-
04
Mar
-04
May
-04
Jul-0
4
Sep-
04
Nov-
04
MSCI G7 Banks PE Relative MSCI G7 Banks PE Relative
0
0.5
1
1.5
2
2.5
3
Mar
-01
May
-01
Jul-0
1
Sep-
01
Nov-
01
Jan-
02
Mar
-02
May
-02
Jul-0
2
Sep-
02
Nov-
02
Jan-
03
Mar
-03
May
-03
Jul-0
3
Sep-
03
Nov-
03
Jan-
04
Mar
-04
May
-04
MSCI MArket Market Dividend Yield MSCI Asia Banks Dividend Yield
7
Asia banks – no expectations of out-performance
0%
50%
100%
150%
200%
250%
300%
Jan-
95
Jul-9
5
Jan-
96
Jul-9
6
Jan-
97
Jul-9
7
Jan-
98
Jul-9
8
Jan-
99
Jul-9
9
Jan-
00
Jul-0
0
Jan-
01
Jul-0
1
Jan-
02
Jul-0
2
Jan-
03
Jul-0
3
Jan-
04
Jul-0
4
MSCI Asia Banks PE Relative to G7 Banks
MSCI Asia Banks PE Relative to G7 Banks
Source: Thomson Financial, MSCI, Company Data, CSFB Analysis
8
Despite sharply improved returns
Asia banks are benefiting from: Credit recoveries Revived loan growth Stable market structure Balance competitive
pressures Diversifying revenues Consumer oriented
growth
ROE Projections 2004-2006 Asia Banks
Source: Company Data, CSFB Analysis
0%
2%
4%
6%
8%
10%
12%
14%
16%
2000 2001 2002 2003 2004 2005 2006
9
Trends Driving Asia’s Growth
Taiwan’s FHC and Banking
Stick with consolidators
11
Number of Financial Institutions in Taiwan
Head Branch Head BranchFHCs 14 14Domestic Banks 47 3,217 50 3,175Local Branches of Foreign Banks 35 68 36 68Credit Cooperatives 30 305 34 337Credit Departments of Farmer's Associations 253 826 253 826Credit Departments of Fishermen's Associations 25 39 25 39Trust and Investment Companies 3 26 3 26Postal Savings System 1 1,320 1 1,322Securities Finance Companies 4 4 4 4Property Insurance Companies 24 174 24 174Life Insurance Companies 29 134 29 135Bills Finance Companies 14 44 14 45
2005.06 2004.06
12
14 FHCs Reorganization M&A happened continuously… Divestitures ? What next… Will Government Policy success?
Taiwan FHC – from 2001/07/09
13
Taiwan banking – consolidation inevitable
0
500
1000
1500
2000
Hong Kong Indonesia Malaysia Korea Singapore Taiwan Thailand Australia China
Deposits Loans
Hirschman Herfindahl Index – Asia Banks
Source: Central Bank Data, CSFB Analysis
HHI = s1^2 + s2^2 + s3^2 + ... + sn^2 (where sn is the market share of the ith firm).
14
Why stick with acquirers?
Economics favor buyer (supply exceeds demand)
Current valuation BV(P/B) Adjusted BV(P/ABV) Branch Value P/E
Ranking Reuter's code Bank/FHC name Market share1 Not listed Bank of Taiwan 9.2%2 5854.TW Taiwan Cooperative Bank 7.5%3 2886.TW Mega FHC (ICBC + Chiao Tung Bank) 7.0%4 Not listed Land Bank of Taiwan 6.4%5 2892.TW First FHC 5.6%6 2880.TW Hua Nan FHC 5.5%7 2801.TW Chang Hwa Bank 4.9%8 2891.TW Chinatrust FHC 4.5%9 2881.TW Fubon FHC 4.3%10 2834.TW Taiwan Medium Business Bank 3.9%11 2882.TW Cathay FHC 3.5%12 2887.TW Taishin FHC 2.4%13 2822.TW Farmers Bank 2.0%14 2890.TW Sinopac Holdings 1.7%15 2808.TW International Bank of Taipei 1.5%16 Not listed Shanghai Commercial Bank 1.5%17 2807.TW International Bank of Taipei 1.4%18 2884.TW E Sun FHC 1.3%19 2847.TW Ta Chong Bank 1.2%20 Not listed Central Trust of China 1.0%
Top 20 banks in Taiwan
15
Overview of Taiwan banking sector
Source: Banking Bureau of FSC, CSFB
MARKET SHARE DATA
Ranking Total assets Total loans Total deposits Number of branches1 Bank of Taiwan 9.2% Land Bank of Taiwan 8.2% Bank of Taiwan 10.4% Hua Nan FHC 1812 Taiwan Cooperative Bank 7.5% Taiwan Cooperative Bank 8.0% Taiwan Cooperative Bank 8.4% First FHC 1793 Mega FHC 7.0% Bank of Taiwan 7.2% Land Bank 7.0% Taiwan Cooperative Bank 1734 Land Bank of Taiwan 6.4% Mega FHC 6.6% Hua Nan FHC 5.9% Chang Hwa Bank 1675 First FHC 5.6% First FHC 5.9% First FHC 5.8% Bank of Taiwan 1476 Hua Nan FHC 5.5% Hua Nan FHC 5.7% Chang Hwa Bank 5.1% Land Bank of Taiwan 1347 Chang Hwa Bank 4.9% Chang Hwa Bank 5.4% Mega FHC 4.9% Taiwan Business Bank 1248 Chinatrust FHC 4.5% Taiwan Business Bank 4.4% Fubon FHC 4.0% Fubon FHC 1199 Fubon FHC 4.3% Chinatrust FHC 4.4% Chinatrust FHC 3.9% E Sun FHC 114
10 Taiwan Business Bank 3.9% Cathay FHC 3.9% Taiwan Business Bank 3.8% Cathay United bank 107
Ranking Corporate loans SME loans Consumer loans Mortgage1 Bank of Taiwan 9.1% Taiwan Cooperative Bank 19.4% Land Bank of Taiwan 10.3% Land Bank of Taiwan 11.5%2 Mega FHC 8.9% Taiwan Business Bank 12.1% Taiwan Cooperative Bank 8.7% Taiwan Cooperative Bank 8.8%3 Taiwan Cooperative Bank 7.7% Chang Hwa Bank 12.1% Chinatrust FHC 6.5% Chinatrust FHC 6.4%4 Land Bank of Taiwan 6.5% First FHC 8.6% Bank of Taiwan 5.7% First FHC 5.3%5 First FHC 6.3% Hua Nan FHC 6.5% First FHC 5.1% Chang Hwa Bank 5.1%6 Hua Nan FHC 6.1% Land Bank of Taiwan 4.0% Chang Hwa Bank 4.2% Hua Nan FHC 4.8%7 Chang Hwa Bank 5.8% Mega FHC 3.6% Hua Nan FHC 4.2% Cathay FHC 4.7%8 Taiwan Business Bank 5.1% Bank of Taiwan 3.4% Fubon FHC 4.2% Bank of Taiwan 4.6%9 Chinatrust FHC 4.1% Hsin Chu Int'l Bank 2.9% Cathay FHC 4.2% Fubon FHC 4.5%
10 Cathay FHC 3.8% Tainan MBB 2.5% Taishin FHC 4.1% Sinopac Holdings 3.6%
Ranking Credit card debts Other consumer loans* Cash card debts Car loans1 Chinatrust FHC 12.0% Bank of Taiwan 10.6% Cosmos Bank 33.9% Taishin FHC 23.3%2 Taishin FHC 10.8% Cosmos Bank 9.0% Taishin FHC 13.9% Chinatrust FHC 12.7%3 Cathay FHC 10.5% Taiwan Cooperative Bank 8.1% The Chinese Bank 9.2% Jih Sun FHC 11.5%4 Citibank 9.7% Chinatrust FHC 7.2% Chinatrust FHC 6.9% Cathay FHC 8.9%5 Far Eastern Int'l Bank 5.3% Taishin FHC 6.8% Ta Chong Bank 6.2% Far Eastern Int'l Bank 8.6%6 E Sun FHC 5.2% Land Bank of Taiwan 4.8% Union Bank 5.7% Union Bank 7.3%7 Fubon FHC 5.0% First FHC 4.2% Land Bank 3.4% EnTie Bank 6.2%8 Union Bank 5.0% Jih Sun FHC 3.3% Cathay FHC 3.0% Bowa Bank 3.4%9 ABN AMRO 3.9% Fubon FHC 2.7% E Sun FHC 2.9% Fubon FHC 3.3%
10 HSBC 3.0% Mega FHC 2.7% Bowa Bank 2.3% Chinfon Bank 3.1%* Excluding mortgage and credit card
16
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Car loansMortgageCredit card debtsOther consumer loans, cash card loans
49%
44%
12%
9%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
loan growth (to private sector) corporate loan growth consumer loans growth
18%
13%
8%
Earnings cycle recovered Loan growth
Source: FSC, CSFB
Loan growth rebounded post tech bubble and credit crunch
Consumer loan growth remains healthy
Credit Card and Cash Card?
17
Corporate loans61%
Mortgage34%
Credit card debts1%
Other consumerloans4%
Cash card loans0%
Car loans0.4%
Corporate loans52%
Mortgage35%
Car loans1%
Cash card loans2%
Other consumerloans7%
Credit card debts3%
Consumer loans remain growth driver Loan breakdown (as of March 05)
Source: FSC, DGBAS, CSFB
Non-mortgage consumer loans grew quickly to 13% of total loans (6% at end of 1999)
Consumer loans to GDP is rising quickly
Recovery in property prices support robust mortgage growth
Banks are under-taking more risks
• Fast growth in cash card loans
Non-mortgage loans: 13%
Loan breakdown (as of Dec 1999)
Non-mortgage loans: 6%
18
50
60
70
80
90
100
110
120
130
1Q91
1Q92
1Q93
1Q94
1Q95
1Q96
1Q97
1Q98
1Q99
1Q00
1Q01
1Q02
1Q03
1Q04
1Q05
Taipei City Taipei County Taichung City
Kaohsiung City Rest of Taiwan
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep Oct
Nov
Dec
2001 2002 2003 2004 2005
Property prices have peaked and stabilized
Property prices peaked in 4Q05 and were broadly flat in 1Q05
Transaction growth tapered off to 2% YoY in 1Q05 following +23% in 2002; 9% in 2003 (SARS) and 20% in 2004
CSFB expects property prices to stabilize in 2005
Residential property price index
Source: Sinyi Realty; Department of Interior, Taiwan
Transaction volume of residential housing
Taiwan property price index
Taipei CityTaipei
CountyTaichung
CityKaohsiung
CityRest ofTaiwan
WeightedAverage
2Q03 97.05 84.79 62.34 60.48 86.10 78.15 3Q03 100.55 88.56 63.44 60.83 89.00 80.48 4Q03 104.11 90.23 66.38 60.96 91.55 82.65 1Q04 105.61 93.70 67.69 65.48 93.97 85.29 2Q04 108.15 100.03 70.15 68.22 98.52 89.01 3Q04 109.19 104.08 70.74 64.57 99.95 89.71 4Q04 109.61 104.35 71.87 67.34 100.77 90.79
1Q05 109.66 104.39 72.29 68.53 100.78 91.13 QoQ % 0.0% 0.0% 0.6% 1.8% 0.0% 0.4%YoY % 3.8% 11.4% 6.8% 4.7% 7.2% 6.8%% from trough 13.0% 23.1% 16.0% 13.3% 17.0% 16.6%
19
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
Jan-
04
Feb-
04
Mar
-04
Apr-0
4
May
-04
Jun-
04
Jul-0
4
Aug-
04
Sep-
04
Oct
-04
Nov-
04
Dec-
04
Jan-
05
Feb-
05
Mar
-05
Charge off ratio* Charge off ratio* (6m lag)Charge off ratio* (12m lag)
0
50
100
150
200
250
300
Jan-
03
Apr-0
3
Jul-0
3
Oct
-03
Jan-
04
Apr-0
4
Jul-0
4
Oct
-04
Jan-
05
NT$bn
0%
20%
40%
60%
80%
100%
120%
Cash card loans YoY growth
0%
5%
10%
15%
20%
25%
30%
35%
Cosmos Bank Taishin FHC Chinatrust FHC The Chinese Bank Union Bank
Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05
Cash card market Cash card loan balance and YoY growth
Source: FSC
Cash card charge off ratio* Market share of top five cash card loans providers
*180-days past due plus charge offs
Cash card loans continued to grow +40%
Taishin Bank has been the most aggressive
Loss ratio for the market is closer to 8-9%
Market will further consolidate – large players have advantage
20
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Chinatrust Taishin Citibank Cathay Union Bank
2004/10 2004/11 2004/12 2005/01 2005/02
0
100
200
300
400
500
600
Jan-99
Jul-99
Jan-00
Jul-00
Jan-01
Jul-01
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
NT$bn
0%
10%
20%
30%
40%
50%
60%
Credit card revolving balance YoY growth (RHS)
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
Jun-04 Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05
Delinquency Ratio (90 days past due)
Credit card market Credit card revolving balance and YoY growth
Source: FSC
Credit card delinquency ratio
Market share of top five credit card players – by revolving debts
Growth has moderated but maintains at 15-20%
Net charge off ratio for top players are around 3-4%
Market structure is relatively stable
21
Significant Growth Opportunity
22
Credit crunch threat becoming real…?
23
1.50%
1.75%
2.00%
2.25%
2.50%
2.75%
3.00%
3.25%
3.50%
3.75%
4.00%
Jan-
91Ju
l-91
Jan-
92Ju
l-92
Jan-
93Ju
l-93
Jan-
94Ju
l-94
Jan-
95Ju
l-95
Jan-
96Ju
l-96
Jan-
97Ju
l-97
Jan-
98Ju
l-98
Jan-
99Ju
l-99
Jan-
00Ju
l-00
Jan-
01Ju
l-01
Jan-
02Ju
l-02
Jan-
03Ju
l-03
Jan-
04Ju
l-04
Jan-
05Ju
l-05
Margin: muted rate hikes cap expansion
Net interest spread at domestic banks
Source: FSC, CSFB
Interest rate hikes have been muted (37.5 bps in 4Q04)
Strong NTD delays rate hikes
Competition remains fierce
Interest spread remains low
24
-10%
-5%
0%
5%
10%
15%
20%
25%
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Deposit growth (yoy) Loan growth (yoy)
30%
40%
50%
60%
70%
80%
90%
100%
Jan-
91
Jan-
92
Jan-
93
Jan-
94
Jan-
95
Jan-
96
Jan-
97
Jan-
98
Jan-
99
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Margin: muted rate hikes cap expansionTaiwan banking system loan to deposit ratio
Source: FSC, CSFB
System loan to deposit ratio has stabilize
Deposit growth has been managed down due to aggressive sale of deposit substitute products (mutual funds, investment link life policies, etc)
Loan mix changes have so far been the key margin driver
Loan growth vs. deposit growth
25
Loan growth and NIM changes 1Q05 loan growth of major banks
Source: FSC, CSFB
1Q05 loan growth Private sector banks tend to
do better Consumer loans grew
stronger than corporate loans for most banks
1Q05 margin Changes in NIM is mostly a
function of changes in loan mix
General pressure persist to lift margin
Interest rate movement remains the key driver
NIM change from 1Q05 to 2004
-4%
-2%
0%
2%
4%
6%
8%
10%
Cathay
United
Bank
Taipei
Fubon
Bank
Chinatrust
Bank
Bank
Sinopac
Taishin
Bank
E Sun
Bank
Hua Nan
Bank
First Bank Mega
Corporate loan grow th Consumer loan grow th Total loan grow th
-30
-20
-10
0
10
20
30
40
CathayUnitedBank
TaipeiFubonBank
ChinatrustBank
BankSinopac
TaishinBank
E SunBank
Hua NanBank
First Bank Mega
(basis
poin
ts)
26
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
-10%
0%
10%
20%
30%
40%
50%
60%
Net fee income as % of total income Net fee income growth (RHS)
Non interest income: fee income
Net fee income as % of total income
Source: TEJ, CSFB
Wealth management initiatives led to strong fee income growth (+52% in 2004)
Low interest rates helped
Growth could moderate (consumer fatigue)
Fee income growth could vary greatly among banks
27
0%
5%
10%
15%
20%
25%
30%
35%
Mar-02
Jun-02
Sep-02
Dec-02
Mar-03
Jun-03
Sep-03
Dec-03
Mar-04
Jun-04
Sep-04
Dec-04
Mar-05
NPL ratio- 90 days Coverage ratio
Earnings drivers – credit loss
NPL ratio vs. coverage ratio
Source: TEJ, CSFB
Asset quality has normalized Provision charge fell to 100bps
of loans in 2004 Coverage ratio for the sector
remains low Credit loss will vary greatly
among banks0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
12
/97
03
/98
06
/98
09
/98
12
/98
03
/99
06
/99
09
/99
12
/99
03
/00
06
/00
09
/00
12
/00
03
/01
06
/01
09
/01
12
/01
03
/02
06
/02
09
/02
12
/02
03
/03
06
/03
09
/03
12
/03
03
/04
06
/04
09
/04
12
/04
NPL ratio - 180 days NPL ratio - 90 days
3.80%
2.78%
NPL ratios
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Provision charge to gross loans
28
0%
10%
20%
30%
40%
50%
60%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005E
Mortgage to GDP Consumer loans ex mortgage to GDP
0%
3%
5%
8%
10%
13%
15%
18%
20%
23%
25%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005E
Debt servicing ratio Household personal savings rate
Consumer loans: rising credit risk Consumer loans to GDP
Source: DGBAS, CSFB
Consumer loans to GDP likely to reach 57% by end of 2005
Non-mortgage consumer loans grew to 17% of GDP
CSFB estimates debts servicing could rise to 15% of disposable income in 2005
Regulators have stepped in to preempt systemic risk
Credit loss should rise
29
0%
10%
20%
30%
40%
50%
60%
CathayUnited Bank
TaipeiFubon Bank
ChinatrustBank
BankSinopac
TaishinBank
E Sun Bank Hua NanBank
First Bank Mega (ICBC+ CTB)
2003 2004 1Q05
0%
10%
20%
30%
40%
50%
60%
70%
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
0%
5%
10%
15%
20%
25%
Cost to income ratio Expense growth
Operating efficiencyIndustry expense growth and efficiency ratio
Cost to income ratio comparison
Source: TEJ, CSFB
Bank has managed expense growth reasonably well
Reduction of business tax in late 90’s helped
Bank reorganization affects cost structure (rising variable cost to link to top line growth)
Cost to income ratio post a gradual downward trend
30
Goals of Taiwan’s FIs Restructure
First Stage:In 2 years,NPL Ratio<5%,BIS Ratio>8% Second Stage: Developing at least three financial institutions with over 10% of
market shares by the end of 2005. Halving the number of banks with government ownership from
12 to 6 by the end of 2005. Encouraging M&As to reduce the number of FHCs from 14 to 7. Having at least one financial institution either managed by
foreign institutions or listed in overseas markets by the end of 2006.
Investment options:three pillars
Quality,Scope and Scale
32
Quality
NPL Ratio : <2.5% Coverage Ratio : >40% Profit +
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
90 91Q191Q291Q3 91 92Q192Q292Q3 92 93Q193Q293Q3 93 94Q194Q2
0.00 %
2.00 %
4.00 %
6.00 %
8.00 %
10.00 %
12.00 %
14.00 %
廣義逾期放款逾放比
6.19
3.60
-6.93
3.52
10.30 10.36
0.48 0.27 -0.480.22 0.63 0.66
-8.00
-6.00
-4.00
-2.00
0.00
2.00
4.00
6.00
8.00
10.00
12.00
89 90 91 92 93 94H1
ROA
ROE
Coverage Ratio
13.6%17.2%
22.7%
30.3%33.7%
0.0%5.0%
10.0%15.0%20.0%25.0%30.0%35.0%40.0%
90 91 92 93 94H1
33
Scope
Business Bank Insurance Security Others…
Revenues Interest Fee Investment
34
Scale
Market Share Asset Product Branch Acquirer or Target ?
單位:%,百萬元 廣義逾放比 廣義呆帳覆蓋率 手續費收入佔營業收入比 資產規模市佔率 分行數建華商業銀行 1.00% 41.82% 9.39% 1.77% 45
玉山商業銀行 1.04% 58.32% 12.04% 1.75% 89
中國國際商業銀行 1.10% 119.66% 11.59% 4.29% 76
台新國際商業銀行 1.11% 64.84% 16.26% 3.07% 101
中國信託商業銀行 1.33% 83.67% 24.59% 5.24% 109
上海商業儲蓄銀行 1.42% 111.83% 15.31% 1.65% 56
國泰世華商業銀行 1.50% 64.72% 13.21% 4.07% 108
高雄銀行 1.76% 37.71% 6.67% 0.59% 36
台北國際商業銀行 1.80% 28.20% 18.61% 1.64% 84
臺灣銀行 1.82% 44.60% 3.73% 9.76% 149
第一商業銀行 2.18% 42.20% 8.11% 6.08% 180
華泰商業銀行 2.33% 52.51% 10.90% 0.33% 30
遠東國際商業銀行 2.41% 44.32% 19.16% 1.02% 36
臺灣新光商業銀行 2.46% 44.57% 7.84% 0.35% 28
陽信商業銀行 2.57% 38.96% 10.23% 0.71% 61
華南商業銀行 2.68% 32.47% 8.65% 6.12% 182
新竹國際商業銀行 2.70% 51.06% 14.78% 1.60% 83
交通銀行 2.77% 32.78% 5.57% 2.42% 31
台北富邦銀行 2.79% 33.29% 21.65% 4.16% 121
第七商業銀行 2.86% 32.31% 2.34% 0.35% 32
中央信託局 3.00% 51.99% 11.57% 1.00% 22
安泰商業銀行 3.22% 32.59% 13.17% 1.18% 53
復華商業銀行 3.46% 30.97% 16.92% 1.14% 50
三信商業銀行 3.58% 32.35% 15.12% 0.32% 18
聯邦商業銀行 3.77% 28.14% 14.83% 1.17% 74
誠泰商業銀行 4.01% 20.03% 14.62% 0.94% 80
萬泰商業銀行 4.26% 18.80% 9.11% 0.99% 63
臺灣土地銀行 4.30% 27.34% 5.93% 7.05% 135
大眾商業銀行 4.33% 16.97% 13.87% 1.26% 53
合作金庫銀行 4.50% 28.22% 4.98% 7.84% 172
板信商業銀行 5.21% 30.27% 9.16% 0.63% 46
臺灣中小企業銀行 5.28% 19.42% 5.74% 4.13% 125
臺南區中小企業銀行 5.45% 16.50% 13.46% 0.57% 63
中國農民銀行 5.63% 10.43% 4.94% 2.31% 106
高新商業銀行 5.99% 14.75% 3.66% 0.20% 34
臺中商業銀行 6.01% 23.81% 8.28% 0.98% 79
日盛國際商業銀行 6.37% 17.48% 13.65% 1.15% 34
華僑商業銀行 6.64% 19.18% 13.66% 1.01% 55
彰化商業銀行 7.67% 16.87% 6.28% 5.01% 169
中華商業銀行 8.73% 13.03% 13.35% 0.87% 36
臺東區中小企業銀行 14.46% 34.85% 18.60% 0.24% 31
慶豐商業銀行 17.08% 13.33% 14.84% 0.62% 34
寶華商業銀行 23.43% 17.43% 9.81% 0.77% 39
花蓮區中小企業銀行 29.64% 24.58% 0.91% 0.15% 30
35
Branch Value
-600
-400
-200
-
200
400
600
800
1,000
1,200
1,400
(100)
0
100
200
300
400
500
富邦
中信銀
國泰世華
中銀
台新
遠東
中信局
上海
萬泰
建華
慶豐
臺銀
日盛
華南
玉山
第一
土銀
彰化
北銀
華僑
復華
臺企
竹商銀
北商銀
安泰
大眾
誠泰
東企
聯邦
農銀
合庫
南企
板信
寶華
中商銀
高銀
三信
陽信
華泰
新光
第七
高新
花企
中華
平均值 =141.28平均值 =96.44每分行提存前稅前淨利 每分行淨利息及淨手續費
調整後淨值 /分行家數
36
Fundamental strategic thinking A bank is a ‘leveraged’ play on the underlying economy,
therefore the key challenge is to: Select the better performing economies Attract the most valuable clients in our chosen economies Aims to produce a blend of earnings from: Developed mature-growth economies Developing higher-growth economies (considered on a risk-
adjusted basis) Leveraging internationality provides revenue generating
and cost saving opportunities Leveraging through our local presence the increasing trade and
other links between developed and developing economies
37
Conclusion
Global financials are facing tougher cycle Strong will get stronger regionally Bought growth and organic growth Taiwan banking offer growth opportunities through M&A Investment options:three pillars