Thank you for standing by, and welcome to Fubon Financial's 2020 financial results. At this time, all participants will be in listen-only mode. Questions will be taken at the end of the presentation. This call is being recorded. If you have any objections, you may disconnect at this time. Now I'll hand the call over to your host, Ms. Amanda Wang, investor relations officer of Fubon Financial Holdings. You may begin. Thank you. Welcome, everybody. Thank you for joining the call today. I'm Amanda from Fubon's investor relations. Let me walk you through the key highlights for presentation today. Please turn to page four. In page four, there are three key highlights for the milestones we achieved in year 2020. Firstly, Fubon delivered top EPS among peers with record high earnings in Fubon Life, Fubon Insurance, Fubon Securities, and Fubon Bank China. For the growth into the next stage, we complete the tender offer of Jih Sun successfully, which will be a key driver in providing comprehensive financial services going forward. Expansion in China market also continuing. In the ESG area, that is a highly committed area for Fubon. It is our honor as a constituent of MSCI and DJSI index, also we are the first and the only Taiwan financials ranked A-listed in both the CDP climate change and also the Supplier Engagement Leaderboard. In page five, Fubon Financial made a net profit of over TWD 90 billion in year 2020, which represents over 50% of growth year-over-year, in spite of the COVID-19 pandemic. The key drivers from the key major subsidiaries. Firstly, in Taipei Fubon Bank, we deliver a balance sheet growth and also mix adjustment while the asset quality remained benign. We delivered the highest growth among peers in terms of numbers of active credit cards that lead us to a higher growth in card spending and ahead of the market average performance. In Fubon Life, we ranked top two in terms of FYP, renewal premium, and also FYPE. On the investment side, we are delivering both a positive spread in terms of the recurring return versus breakeven point, and also total return compared to the cost of liability. In Fubon Insurance, we keep our top position with a market share of over 24%. In Fubon Securities, the brokerage revenue is the beneficiary of the market turnover strength, and the net profit also increased meaningfully. In page six, the overall pre-tax profit for the holding company is over TWD 100 billion, while the EPS reached a record high of TWD 8.54. The top rank among Taiwan financial holding company peers. In page seven, the composition from earning contribution of each subsidiaries. As you can see in Fubon Life, Insurance, Securities, and Fubon Bank China all shows growth. Fubon Life as the main driver of the group, that contribute over 66%, while the three subsidiaries together accounts for another 22.6%. In page eight, the asset size reach over TWD 90 billion, with the growth rate at 8%, while the book value reach a record high with over 25% year-over-year growth. In page nine, along with the earnings growth, the ROA of 1% and ROE of 13%, both at a record high during the past three years. In page 10, the market position of our major four subsidiaries, as you can see, all keep a leading position among peers. Page 11, looking into the new year in 2021, we see the opportunity side that economic recovery and also a gradual stabilization from the pandemic should drive multiple growth opportunities, especially in the wealth management business. On the challenging side, the market volatility, especially from the interest rate movement, will lead us cautiously to navigate through the market. From the business operation perspective, cross-sell, fintech are the main things. Strategically, we continue to look for opportunities to expand scale through M&A and strategic alliances. In page 12, in each of our main business, in Fubon Life, the focus on product variety and aiming for a positive spread performance. In Taipei Fubon Bank, the growth through a dual approach from both online and offline is a focus, and also we plan to further broaden our overseas operation. In Fubon Insurance, we aim to continue expand our top 1 position. In Fubon Securities, the focus will be on brokerage and develop the wealth management potential. Next, in page 13, we would like to share with you the strategic rationale behind the tender offer on tender offer. We complete the offer successfully this month, the transaction is a milestone in Taiwan's financial industry. The rationale behind is to expand the securities and banking business to achieve the scale of economy and a better balanced revenue stream among business lines, and the customer base expansion. In page 14, to complete the merger, there will be 3 stages we will go through. Firstly, regarding the fundraising. Fubon plan to issue common and preferred shares total of TWD 49 billion to fund the transaction. The plan is expected to be complete in second half this year. Second stage is the merger between the 2 FHCs, which is also expected to complete second half this year. Thirdly is the merger of the subsidiaries. That is expected to complete next year, i.e., in year 2022. Above schedule are all subject to full resolutions, shareholders meeting approval, and also regulatory approval. In the next few pages, we would like to walk you through some benefits we expect to achieve going forward. On page 15, from the securities business, as you can see on a pro forma basis, the brokerage market share will increase meaningfully to over 9% for securities business. In page 16, we can also see in terms of margin loan and sub-brokerage business, will be also ranked upward to top 3. In page 17, the futures and options business would reach a top 5 market position. For the banking side, in page 18, the numbers of branches would be the highest among private banks. The deposit market share would be top 10 or top four among private banks. In page 19, in terms of loan and SME market share, will both achieve a top 10 on a pro forma basis. Next, let's move on to Fubon Life. Please turn to page 21. The total premium in year 2020 was down by 8.4%, mainly due to a slower FYP, while the renewal premium continued to grow at 9% YoY. In page 22, we can see the FYP decline of over 40%, mainly reflect the product focus moving toward regular pay policy, as well as the impact from the COVID-19 pandemic, and regulatory changes on the product offerings. In page 22, again, we can see that the product mix actually moved toward investment-linked policy, which we have over 32% of FYP, and also the higher margin type of product in the health and accident policy that also go up to 7.9% of FYP. Page 23. With the focus of the regular pay product, the VNB margin improved to 19% versus 15.8% a year ago. The higher margin type of policy that contribute to this VNB improvement, as well as the regular pay product. In page 24, by business channel, the FYP impact across the board, but more drastic to the bank insurance channel. However, from the Taipei Fubon Bank's contribution, we can see the percentage now is getting higher, may reflect the value of a cross-sell synergy. In page 25, the investment asset now reach nearly TWD 4.4 trillion, that is 8.8% growth YoY. In terms of the asset allocation, percentage in domestic assets increase in Q4 versus a quarter ago, mainly reflect the allocation and also the value appreciation. As the rate rising start from this year, the cash position gradually go up, which reflect, we expect the yield steepening opportunity, if continues, that will help us to deploy the cash position to enhance the overall yield going forward. In page 26, in terms of the overseas fixed income portfolio, we continue overweight on the corporate credit and financial bonds. In the following page 27. In the bottom of the table, we can see the investment yield reached 5.09% before hedge or 4.49% after hedge, both improved on a year-over-year basis. All the capital gain largely comes from the fixed income assets that contribute TWD 34.7 billion, also equity assets capital gain of TWD 41.8 billion. Other than that, the hedge cost is improved, while the dividend income from mutual funds also contribute to the investment return performance. In page 28, in your upper left-hand side in this chart, the overall hedge cost was improved. You can see a recurring hedging cost improved from the spread narrowing of the NT and USD. The overall hedging cost of 93 basis points was in line of our expectation, which our earlier guidance is below 100 basis points for this year. On your right-hand side, the hedging portfolio, the currency swap accounts for 85%, which is the majority of our hedging tool. On your lower left-hand side, the recurring return before hedge trend down that mainly reflect a lower market rate and also the TWD's appreciation. On the post-hedge recurring return, that was up due to the better recurring hedging cost benefit. In page 29, the cost of liability improved meaningfully at 22 basis points as the new policy carry a lower cost and also the renewal policy that we can reprice at this anniversary. That also lead to the improvement in the break-even point, as you can see, of 2.79%. If we compare these two ratios with the return ratios we just shared with you, we can see the positive spread between the cost of liability with the total return of 115 basis points, or break-even point versus the recurring return after hedge, that's 25 basis points. In page 30, the unrealized balance increased to over TWD 150 billion end of last year. That lead to the book value increase to over TWD 484 billion, while the equity to asset ratio also improved to slightly over 10%. In page 31, in Fubon Hyundai Life, we would like to share with you the results after our management since our investment. Our investment lets the company become a subsidiary in year 2018. We deliver a meaningful transformation in terms of the profit, the scale that you can see in the FYP and asset growth all deliver decent growth. The collaboration with the Hyundai Motor Group that help us to grow the pension business that make us a top two in the Korea market. In response to the growth, we plan to go through a capital raising of TWD 11.9 billion equivalent that's expected to be complete in the quarter this year. That will bring the stake of Fubon Life's investment up to 77%. Next, let's move on to Taipei Fubon Bank. In page 33, the revenue slightly came down, while we can see the core earnings from NII remain on growth track of over 9% growth. That is mainly driven by the loan and deposit mix improvement. The fee income decline reflects a softer syndication market and also insurance product mix change. The treasury-related revenue came down by 40% plus, mainly due to the interest rate swap and FX swap as the interest spread narrowing between USD and NT. In page 34, the loan growth of Taipei Fubon Bank is at 10%, that outperform the market growth of 6%. In page 35, in terms of the corporate banking book, we can see both the NT and foreign currency growth. While the TWD book is relatively strong at 13.7% growth. While the SME sector also grows decently at over 17%. In page 36, in the retail market, mortgage growth at over 8%, while other consumer credit also grows by over 11%, mainly driven by the personal unsecured loans. On the funding side, in page 37, the demand deposit ratio shows meaningful improvement from both NT books and also the foreign currency book. That is mainly driven by our improvement, especially from securities trading account, the credit card merchants business, and also the opportunities of capital repatriation. On the right-hand side, we can see the loan deposit ratio largely stable. While the investment asset for foreign asset allocation is also one of our priority. If we top up that to the foreign currency LDR, that will reach around 64%. In page 38, in terms of the spread and margin performance, we can see from your left-hand side that the quarterly loan deposit spread shows improvement of 3 basis point in Q4, and it reached 1.29%, while the net interest margin stabilized at 1.07%, starting from second quarter last year. From the full-year perspective, both ratio trend down a bit by 7 basis points for loan deposit spread and 2 basis points for NIM, largely due to the rate cut impact. Going forward, we expect the ratio will turn stabilized. In page 39, the asset quality remain quite outperformed, as you can see the data point here for NPL and coverage ratio. For page 40, the fee performance for Taipei Fubon Bank, we see a slight decline of 3%, largely due to the wealth management business. The sales volume actually grow over 20%, and including wealth management in investment or insurance product, while the product mix change in the insurance business led to the slight decline in the wealth management fees. In page 41. From the overseas branches, the revenue are down by about 26%, that mainly came from the rate cut, the decline of loan balance, especially in the Hong Kong and Singapore branch, and also the COVID-19 impact. The profit contribution as a result from overseas was down to 11%. Next, let's move on to Fubon Insurance in page 43. We deliver 7.7% premium growth. That is, again, we grow faster than market and therefore the market share further increase to 24.1%. While the underwriting performance continue outstanding with the net combined ratio at 92.4%. In the operation China, page 44 shows that the premium growth of nearly 20%, that mainly come from the personal line. While the underwriting results and the combined ratio on your right-hand side also shows improvement from both expense and also loss ratio. Going forward, the company will focus on the business mix improvement and further diversified out of the auto business. In page 46, in Fubon Securities, the key business indicators are on your upper right-hand side. You can see the brokerage underwriting, emerging stock market trading, all ranked top three. While the wealth management is our potential growth area, that we can see the sub brokerage market share also increase and reach over 10%. In the lower part of this page, we can see the revenue and also the net profit increase that largely reflects the benefit of a higher market turnover in brokerage business. In page 48, for Fubon asset management business, the AUM was up by 5%. However, the net profit was down, mainly due to a higher risk reserve in the investment of fund of Fubon's asset management company. Going forward, we expect the product variety will continue to be the growth focus. Next, let's move on to the overseas banking subsidiaries. In page 50, Fubon Bank Hong Kong, the loan and deposit both grow decently. For loan growth is 5.7%, and deposits at 2%. In page 51, the net profit contraction largely reflects a lower net interest margin. As you can see, a decline of 28 basis points, also a higher provisions, also the impact from the COVID-19. We expect the profitability should show improvement this year. In page 52, in Fubon Bank China, the deposit and loans both deliver decent growth. Deposit growth of 30% plus and loan at 15% plus. The asset balance for this year, we reach over RMB 100 billion, on top of the asset growth, we focus on the mix enhancement and further develop the Taiwanese clients' opportunities through Fubon's connection. In page 53, the net profit reached 31.9% growth, while the driver mainly comes from the net interest income growth. As you can see, the net interest margin increased by four basis points, mainly due to a better mix in deposit and loans. The overall asset quality remains benign with NPL ratio of 0.55%. Lastly, Fubon Bank China's capital raising plan that we expected to complete in first half this year, that should provide a further growth capacity in the future. This is the end of the briefing. Thank you for your attention. Next, we would like to open for Q&A and host by the President of Fubon Financial Holdings, President Mr. Jerry Harn. Thank you. Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one. Please unmute your phone and record your name clearly when prompted. Your name is required to introduce your question. To cancel your request, press star two. Again, to ask a question, please press star one. One moment, please, for our first question to queue up. Excuse me. Our first question is from Chung Hsu of Credit Suisse. Your line is now open. Thank you. Thank you for the presentation. Congratulations on your successful tender with Jih Sun. I have three questions. My first question is related to this Jih Sun transaction of capital raising. Just wondering if, of that 60% common equity, do we know as of now if it will be a rights issue or GDR, and whether any portion of that capital raise will be privately placed? Second part of this question is on the preferred share. If my calculation is correct, I think Fubon Group will have more than TWD 90 billion worth of preferred share outstanding. Just want to check that none of those preferred shares issued about four years ago, five years ago, need to be redeemed any time in the next two years. My second question is on the cash dividend. I know in earlier Chinese session, management gave some guidance about a constant payout ratio for 2021. I think management also said that may consider use or issue some stock dividend. My question is, or just want to clarify, whether that constant payout ratio is inclusive of stock dividend or that will be just purely for cash. My third and last question is on Taipei Fubon Bank, the cost income ratio. I don't think the apex guidance was given in the Chinese session, and the cost income ratio increased from 48%-50% last year. I think based on your guidance for your NIM, loan growth, and fee, your revenue will most likely grow this year. Just wondering if we could see a decline in cost income ratio in 2021. Thank you. Okay. As the capital raising. Capital raising on GDR. Okay. Also private placement. Okay. With regards to our proposed common equity raising, based on our current plan, it should be done via public offering of common stock in local markets. Honestly, our preference is to a DR in international market. The use of the proceeds is for domestic market and It's extremely unlikely that Central Bank would grant the approval for us to do a DR issue. It's going to be a common stock, and through public markets. Okay. Well, that's a couple of years away from us. Yeah. We don't have a redemption plan for that yet, and that is equity type of preferred share. The option is with the company, whether we want to redeem it or we decided not to redeem it. Okay. With regards to our cash dividend policy, the overall payout ratio includes both cash dividend and stock dividend. We are planning to distribute a part of it, not in a huge way. Okay. Part of it via stock option, not in the big portions. That's our current plan. CIR. Our cost to income ratio, in 2020 was 47%. The number has come down to 45% in first quarter. Depends on the market, I think, looking forward 2021, we expect the cost to income ratio should remain at a similar level as 2020. Can I just clarify that the preferred shares that was issued in 2017 can remain as treated like an equity at a holding level by even two years later? I mean, it would not become. I understand it's a perpetual, all preferred shares you issue at a holding level are all perpetual. Just checking or just want to confirm. Yes. That none of those should become Okay. Confirmed. Okay. Thank you. Thank you. Thank you. Our next question is from Jimmy Huang of J.P. Morgan Securities. Your line is now open. Yeah. Hi. Thanks for taking my question. Three questions from me. First one continue on dividend policy. I think previously, the market perception is, or according to the previous guidances, you want to maintain a stable DPS or gradual increase, if possible. Whatever the DPS this year finally out, should we expect this also represent management's competence to maintain similar DPS on, whether it's a combination of cash or stock or all cash? I'm sorry, your dividend payout, dividend per shares? When we're saying we want to maintain a stable dividend policy, we mean payout ratio. Our dividend- Okay. DPS should reflect the growth of our net income last year. I see. Okay. Got it. Yeah. Second question will be on the merger with Jih Sun. I think previously we have seen some cases that there need to be satisfied additional expenses to settle the employee contracts or tenders with the previous company. Is there any possibility that we need to incur additional cost related to employee compensation, as a result? The final question will be on the bank. I think within the revenue line, other income was down around almost 50% year-on-year last year, mainly due to the swap revenue. Could you give us some color, in terms of the swap revenue, what's the year-on-year change or what's the number in 2020 versus 2019? Whether there will be any possibility for recovery this year. Thank you. Okay. Regarding our upcoming merger with Jih Sun Financial. As you know, this is a hostile takeover, our analyses are all based on public information. We have just contacted the Jih Sun management recently, and we will start our due diligence as soon as possible. Okay? Before the end of our due diligence, I'm afraid that I cannot give you more detail as to how we are going to consolidate and the cost associated with the proposed consolidation at a later stage. Having said that, Jih Sun Financial in total has just over 3,000 staff. Even if we need to do some personnel consolidation at the bank or the security side, it's very easy for us to absorb through other subsidiaries under the financial holding company. We don't see that to be a big issue. If it does happen, we need to do some employee adjustment plan. We don't expect it to be a huge number to our P&L. Okay. We will provide more details estimate when we complete our due diligence process, and that is what I can really provide at this moment. Regarding the question about the swap revenue decrease in 2020 versus 2019. In 2019, we see the opportunities that the interest rate, U.S. dollar versus TWD has the opportunity for us to do the cross-currency swap. We enjoy good swap revenue. That gap has been narrowed, as Amanda mentioned earlier, that revenue reduced in 2020. You can see, even without the opportunity to do the cross-currency swap, we also have the funding and gathering strategy move to our NII business. You can see our bond investment increased, and our loan also increased by 10%. Right. The part of that revenue drop is mitigated by our NII increase. Looking forward in 2021, that interest gap actually versus 2020, that gap will not drop that dramatically versus 2020 versus 2019. We can also expect our NII can still maintain healthy growth at the middle single digit, and the swap revenue reduction can also be narrowed. Got it. Thank you. Yeah. Okay. At this time, there are no questions in queue. Once again, to ask a question, please press star one. Excuse me, speakers. There are no further questions in queue. Oh, I'm sorry, there is one question. Let me just get the name, one moment, please. Thank you for patiently waiting. Our next question is from Brooks Lee of Bank of America Securities. Your line is now open. Thank you. Good afternoon to the management. I have a few questions to double-check. First, I think the tender offer of the E.Sun deal already settled. Does that mean that we will start to recognize E.Sun earnings as early as in our first quarter financial reporting? Correct. We started yesterday already. Sorry. Sorry, just to give you a quick answer. Sure. We just completed the settlement with E.Sun's shares yesterday, so we'll start counting the profit from that starting yesterday. Okay. The second question is on banks. Why did government-related loans grow very fast in 2020? Is that due to the interim liquidity management or the trend will likely to continue this year as well? Third question on life insurance. I just want to double-check the number of the reinvestment capacity of Fubon Life, is 3% or 13% of the AUM, as in the Mandarin session? Thank you. I think the increase of the government relations lending is due to two reasons. Number 1 is the base is very low, so high growth is not that a surprise. Secondly, we, as one of the major Taiwanese banks, know how to operate the government treasuries, for example, Taipei City Government. We know their demands, and also we see an increase of credit spread in TWD. We increase our exposure to government-related lending. About the total available for investment is about 13% of our AUM, which including the cash and also the investment inflow from policy renewal, also increasing our 13%. Investment and also redemption. Apology, I can't hear very clearly. It's 13, right? 13%? Yes. Okay. Thank you. I'm sorry, yes. That, including the cash, the premium inflow, and also the investment income that we can pull for further reinvestment. Oh, right. The interest income from existing bond portfolio. Yes, exactly. Thank you. Thank you. At this time, there are no further questions on queue. Speakers, please proceed. Okay. If no further question, operator, we would end the session here. Thank you very much. That concludes today's conference. Thank you all for participating. You may disconnect at this time. Thank you very much. Thank you.