Thank you for standing by, and welcome to Fubon Financial's Third Quarter 2023 financial results. At this time, all participants will be in listen-only mode. Questions will be taken at the end of the presentation, and this call is being recorded. If you have any objections, you may disconnect at this time. Now I will hand the call over to your host, Ms. Amanda Wang, the IR Officer of Fubon Financial Holdings. Ms. Wang, please begin. Thank you. Welcome, everyone. Thank you for joining Fubon's first nine months earnings results call today. There will be two sessions in this call, including Fubon's performance review and followed by the Q&A, hosted by the President, Mr. Harn, and also the senior management. Please turn to page four. In Fubon's first nine months, the profit it reached over TWD 67 billion. That including the EPS, those are the top among the holding companies in Taiwan. While the assets continues to grow at over 3% and book value up by over 30%. In Fubon Life, the profit of TWD 43 billion, that make us rank top one among the peers in Taiwan. And the earnings are mainly supported by the recurring return before hedge that increase, and also the premium side. We have a top-two market position across FYP, TP, and FYPE. I n the capital position, we are continues to be solid with equity-to-asset ratio at over 8.5%, and RBC over 350%. In Taipei Fubon Bank, the profit reached over NTD 20 billion. That, again, we hit another record high. And in terms of the profit driver for the interest margin growth of 9% year-on-year and also the loan growth. While the fee income grew by 37%, that reflect the wealth management on the credit card business. In Fubon Insurance, the net loss continued to narrow down. It came down to NTD 2.4 billion of loss, while the monthly income turned positive starting from April. While the premium side, the size continued to grow by over 5% and investment return at over 4.5%. In Fubon Financial, the net profit is over NTD 5 billion and up by close to 60%. That mainly comes from the investment gains as the TAIEX turned up. On the ESG side, we are honored to receive the awards and certificate from both in Taiwan and also from global institutions, including by ISS, by Sustainalytics, and by Commonwealth Magazine to Fubon Financials, and also a few awards to Taipei Fubon Bank. In page 6, in terms of the action across the subsidiaries, in Fubon Life, we have continued to focus on the green investment, and we reached over NTD 1.6 trillion. While in Taipei Fubon Bank, the size also reached 594 billion. We are also the first year to publish the TCFD report. Also, we have developed the Eagle Eye AI detection technology that leads the industry. I n Fubon Insurance, we are the first in the industry to propose a net zero underwriting by year fifteen. While in Securities, we also have initiatives as well. In page seven, in terms of profitability, the net profit and EPS are trend down, but still make us the top one among the holding companies in Taiwan. In page eight, across the subsidiaries, we can see that the profitability came down in Fubon Life, Fubon Insurance, and Fubon Bank China. In Fubon Life is mainly on back of the volatility in capital market, while P&C's loss gradually narrow down, and Fubon Bank (China) largely due to the decline in NIM and also the provisioning requirement increase. While the performance in other subsidiaries, including Taipei Fubon Bank, Fubon Securities and Fubon Bank (Hong Kong), are actually quite robust. In page 9, the asset size continued to grow, while the book value increased by over 30% year-over-year. In page 10, the ROA and ROE on annualized basis is here for your reference. If we can move on to page 12, let's start the Fubon Life section. The premium size, FYP declined pretty much in line with the market. That is also in about 17% level. While the renewal premiums are coming down due to the pay-up for the regular pay policies, and therefore, the total premium declined by 8.8%. That, again, is similar to the industry's average... and in page 13, in FYP sub-mix, we can see that we are pretty much moved toward the product strategy we aiming for, i.e., is to enhance our CSM to prepare for the IFRS 17 and ICS adoption. P ut into number, we can see the regular pay policy now go up to about 40% of FYP, and the health accident and others are also trend up to 8.9%, while the investment- linked policy came down to close to 30% of FYP. In page 14, we can see the FYPE, as a result, grew by 39%, and on behalf of the product mix change. This result is largely outperform compared to the industry's FYPE growth by about 9.7%. On your right-hand side, we can also see the VNB grew by 5% and margin enhanced to over 21%. In page 15, in terms of the channels contribution, internal channels continue to be the main focus, including tied agent, Taipei Fubon Bank, and other subsidiaries. They together accounts for around 70% of our FYP, while our market ranking from bancassurace is the top in the industry. If we look at the FYPE's contribution by channel, actually we can see across all channels, all shows the growth in FYPE. In page 16, in the investment side, the mix largely is that we reduce the position in the equity, domestic equity assets. That is to capture the capital gain opportunities and also to maintain sufficient cash level. Going forward, we'll continue to monitor the market carefully to adjust the asset allocation, while the overseas fixed income position increased largely is due to the appreciation of the US dollar. In page 17, the composition of the overseas income is largely similar. On page 18, in terms of the investment income, firstly, the total investment asset, we deliver a stable growth of over 4%. I n terms of the contribution, the recurring income improved by over 7%, that mainly reflect the higher interest rate environment and also the appreciation of the dollar. While the hedge cost is high and therefore that decreases the return and also the capital gain compared to last year's high base, and then both led to the investment return at 4.33% this year. I n page 19, the FX gain improved to 2.29... Sorry, the FX gain improved quarter-over-quarter to about 292 basis points in Q3, as the US dollar appreciate by about 3% above in the single quarter and the YTD appreciate by over 5%. Therefore, the total first nine months hedge cost and FX gain is about 12 basis points. That is better than our expectation. While your lower left-hand side, the recurring return before hedge actually shows improvement to 3.666%. T he after hedge, because of considering the CS and NDF cost, and therefore it decreased to about 2.71%. On page 20, the spread between investment return and cost of liability, we continue to maintain a positive spread, while the breakeven point spread with the recurring return after hedge turns slightly negative by 5 bps. It's mainly due to the cost, as we just mentioned, on the CS and NDF side. On page 21, the URGL we can see is trend slightly up quarter-over-quarter, and it reached NTD 81.6 billion of unrealized loss. While compared to the year-end last year, we can still see over NTD 100 billion of recovery. T hat also bring our equity to assets ratio, as well as the RBC ratio, improved over the same period of time. Next, let's move on to the Taipei Fubon Bank section. In page 23, the total revenue was up by over 17%, and it driven by NII, fee, and treasury income. And in NII, the growth largely due to the NIM expansion by 6-9 basis points, and also loan growth close to 6%. Fee income growth was also quite robust, at over 37%. While the treasury income grow, that also come from the contribution from the stock, bonds and FX gains. O n next page, we can see the credit expansion of 5.9%. They actually co-outperform compared to the market average at about 4%. I n page 25, the corporate loan segment grew by 5.8% and largely driven by the foreign currency asset. In the meantime, we see the SME loans also grow by close to 10% growth. In the retail side, on page 26, the mortgage continues to grow quite decently at 8.4%, while the personal loans, specifically in the unsecured consumer loans, that deliver quite robust quarter-over-quarter growth at 8%. In page 27, on the deposit side, the bank increased by over 3% of deposit base, largely driven by the NT book, specifically in the retail segment. In the foreign currency, we control the outstanding balance, and also we improve the utilization, so we can see the percentage on your lower right-hand side improved to 86%. In page 28, in terms of NIM and spread, on the both metrics shows improvement, quarter-over-quarter, and also on the first nine months basis, we also see the NIM's improvement. And that largely reflects on the loans, the lending's momentum and also the foreign currency bonds deployment. W hile we include the swap revenue, the nine months NIM actually also up by 20 basis points and reach 1.3%. In page 29, the asset quality it remains stable and outperform compared to industry average. And while the quarterly provision is largely due to the GP and also a few selective cases in domestic area. In the following page, in the credit card, we can see the active cards and card spending shows quite high momentum and also outperform, and therefore we gain the market share largely owe to the Costco Affinity card's contribution. On a monthly per card spending slightly trend down by 2%. That's largely due to the base effect that we have a higher growth in the active cards while the insurance payment on a per card basis are slightly trend down. In page 31, the fee income side growth is over 37% and largely from the wealth management fees and also quite significant growth from the credit card as we made adjustment in the marketing expenses and also the expansion in the card spending. While the wealth management may contribute over 85% of the fee revenue, it was up quite meaningfully at close to 30%, specifically from the banca ssurance contribution and the trend we expect to continue. In the following page, the overseas branches contribution also quite strong. The net profit is doubled, and that contribute over 20% of the bank's bottom line. Next, let's move on to Fubon Insurance. The direct written premium grow decently at over 5%, while underwriting profit grew by 13%, and the combined ratio is below, well below 90s. We exclude the COVID-related impact. In the following section, Fubon Securities, we can see the net profit growth of close to 60% year-over-year, that make us a top two in the peers, largely due to the investment gains. The market position across the board improved upon the merger. In the following section is Fubon Bank (China). In terms of loans and deposits, we both grow at a high single digits, and the revenue and net profit turn positive quarter-over-quarter, that we can see the improvement mainly on back of the net interest income and also the swap revenue. The net interest margin came down while the inclusive of the swap actually the came down level narrowed down to 117 basis points and reached 1.38%. The trend largely due to the market rate environment in RMB and also the adjustment in our lending portfolio, specifically on the online lending. O n the funding cost side, the US dollars increase funding cost increase. While the asset quality-wise, we continue to keep at a relatively stable level. This concludes the presentation, and next, we will open for the Q&A hosted by the President of Fubon Financial Holding, Mr. Jerry Harn. Thank you for your attention. Thank you, Miss Wang. Ladies and gentlemen, we are now in question and answer session. If you would like to ask the question, please press star one on your telephone keypad, and you will enter the queue. After you are announced, please ask your question. If you would like to cancel your question, please press star two. Thank you. Now, please press star one on your keypad to ask the question. Thank you. Now first question is coming from Leon Qi of Daiwa. Go ahead, please. Hi. Thanks for taking my questions. This is Leon Qi from Daiwa. I have two questions today, one on the insurance side and the other on the investments. Firstly, I do appreciate management's color just now on your FYP and improving profitability and more capital efficient product mix. In particular, I noted that Fubon is one of the insurers which has been a pioneer instead of in terms of selling the participating products. Would you please share with us some color in terms of the competitive landscape in participating products in the market? Because we also know that one of the international insurers has also been quite aggressive in terms of participating products. First question is on the competition in participating products. Secondly, given the more recently, there has been some changes in terms of the Fed interest rate in the U.S. for 2024. W e do understand that U.S. interest rate and the interest rate spread between Taiwan dollar and US dollar actually affects a lot of process of our investments. So appreciate if management can help us to give some color how we should think of our investment portfolio, investment allocation strategy, going into 2024. Thank you very much. The competitive landscape for the participating insurance product. Yes, Leon, thank you for your question. About the participating product. Actually, Fubon Life is the first pioneer to launch the participating product in first quarter. And so far, the market, actually, the competitor may be the potential the one of the foreign company provide participating product. A ctually, we are the pioneer, so we do not see a lot of competition in participating product. Also, if we compare the participating product to the interest-sensitive life product, actually, as we mentioned before, the product feature provided to the customer is actually different to the interest-sensitive product, because actually we provide customer more protection-oriented features. And because we expect the customer will stay with us longer, so we can provide a higher return to the customer also, because it's a sharing mechanism between the company and the shareholder, company and the customer. W e... It's actually a both win-win situation. A nother one is our company advantages actually based on our past investment performance. Actually, we are quite good at investment, and so we are quite confident that we actually have a more competitive advantage over other companies. Another one is that for launching the participating product, actually we need a lot of education through the sales channel, so we did a lot of work this year. I think we can hope, we hope that we can have a more diversified portfolio to in the future, so to adapting the future challenges. Yeah. Okay, quite a few of our competitors are now evaluating the possibility to follow our lead to launch participating product in the market. W e would like to emphasize that the one important competitive edge for us, that is our investment track records. As you probably know, we continue to maintain much higher than the industry peers in our investment performance. T hat is, I think, the key competitive edge for us to continue to sell and compete our potential competitor in this landscape. Okay, do you want to share any color on our investment strategy or thought? Sure. Based on- Yeah, strategy in case the interest rate comes down. Okay. Let me say, in our earlier session, and I will repeat again, as in terms of our asset allocation now, we have a sufficient cash on hand. Currently it's about TWD 270 billion, and we retain the flexibility to rebalance our portfolio in the future. Also, talking about the rate, and we expect the interest rate will hovering at a relatively high range and the likelihood of a sharp rise should be slim. W e will switch market opportunity to invest primarily in NTD-denominated ETF to enhance yield and also reduce our regular hedge costs. And about the stock market, we think about that, as the tightening cycle approach to the end, we were looking for the opportunity to invest stock market with upside potential. That's about the investment. Thanks a lot, Jerry. I trust that you appreciate that the market is very volatile, so we may change our investment strategy according to the market conditions. Okay. Any other questions, please? Yes. Thank you. Yep, thank you. Next, next we'll have Jimmy Huang of J.P. Morgan. Go ahead, please. Yeah. Hi. Thanks for the presentation. Just three questions from me. First one is for the COVID reinsurance claim. Could I just reconfirm according to the accounting requirement, you still need to set aside 100% provision by if you cannot get back all the receivable in two years? It's- No, that is not. That's not? No. Okay. So There's no such requirement. Okay. I n terms of the accounting practice that you mentioned, you need to set aside TWD 600 million-TWD 700 million in fourth quarter. What would be the, like, additional provision required in 2024, if you still cannot get back majority of the receivable? I think that's the first question. Sorry. Okay, okay. Let me, let me answer this one, okay? It's 25% of the receivable. By 2024? If we did not collect our receivable in two years, and that is our internal, I mean, in order to maintain our accounting books' integrity, not because of the regulators' requirement. It's purely internal accounting discipline. T hat is 25% of the receivable due in two years' time. Okay? I see. Thank you. S econd question is on the investment income related to the investment property. T here was other gains and losses of around TWD 3.1 billion in the first nine months. Compared to, I think, losses come from for this part of gains and losses related to investment property apart from the rental income. I guess the final question will be with your expectation for interest rate to stay higher for longer, how do we consider the credit risks for both your banking and also the life insurance operations? H ow should we expect you or have you have done any adjustment in terms of the investment and also the le- About the, let's see. You just mentioned about the income, about the evaluation, about property. Actually, it's because this year we have a completion of our A25 building, which coupled with about more than NTD 2 billion increase in valuation. It's because the building completion. W e have some, you know, just increasing rent. Rental is due to the low vacancy rate, so which lead to also lead to our some increase in domestic real estate valuation. I t's both from the both combined together. I see. Thank you. Interest rate hike has been this situation in, especially in this year, which along this dollar. But you can see the Chinese company, they tend to lend on the local currency to avoid such kind of high-cost interest cost. F or those foreign companies of the borrowers, I think they... Okay, they will adjust their balance sheet in various currency. A t least for this year, we don't see there's a credit cost hike because of the interest rate cost increase. I f you say for next year, if the interest rate hike, it will go down, and this affect directly to this kind of credit risk. We don't, I don't think there's a significant relationship. Okay, we have done a stress test, you know, based on this high interest rate, internally. W e have been watching the portfolio quite closely. Based on the condition of the loan book at the moment, we do not foresee in the near future, i.e., you know, maybe six months, we don't see a deterioration in terms of our overall asset qualities. Yeah. Got it. Thank you. Okay. Thank you. If you would like to ask the question, please press star one on your telephone keypad. Thank you. We are now in question and answer session. Please press star one on your telephone keypad if you would like to ask the question. Thank you. Next, we'll have Steven Lam of Bloomberg Intelligence. Go ahead, please. Hi, management. Thank you for the time for taking questions. Two questions here. One is on your new business value creation. I was just curious, what is your expectation? I think in the Chinese session you mentioned about, you know, you gave some comments on NBV and FYP. I was just curious, would you say most of the NBV increase is coming from margin or? I'm asking that because I think in the first nine months of this year, clearly from an FYP standpoint, your margin expanded quite nicely. T hen on the FYPE standpoint, I think there's some deterioration. Now, I know this is probably from math, but I just want to get a sort of overview in terms of your margin expectation. It sounds like from the product that you're selling, say, more participating or some more protection, it should be trending up. I just want to verify that at least for the next couple of quarters. T hen secondly, on the investment side, my main question would be, I think you made some comment about, you've exited some Taiwanese equities to control risk, and at the same time, you probably loaded up some more foreign bonds. Could you sort of explain to us in what kind of foreign bonds you have been more sort of constructive about? W ere those sort of... Did you put hedged on those one, or you're willing to take some unhedged position? If you can give some guidance in the coming months or quarters on the same investment class, that would be great. Thank you. I thank you for your question. For 2024 outlook, actually, in our Chinese session, we mentioned about that. We actually will continue our momentum this year, so FYP will grow at a double digit. As for the margin, actually we hoping that our parameters improve this year, based on our trending now. A ctually, in this year, we already improved a lot of FYPE and regular premium sharing. W e are hoping that parameters will improve next year. I n that way, actually, the margin will improve at the same time. T he second question is about your, you mentioned that VNB divided by FYP, the ratio. It's because that when you sell more single premium, actually the VNB divided by FYP will improve. This is because that, when you calculate the FYPE for the single premium, it actually will multiply by 0.1%, 0, 0.1. So it will making it, it will multiply by 10 times. I n third quarter, we actually, we reduce our sharing in single premium. T hat's why you see that, our VNB divided by FYP, it seems like deteriorate, deteriorate a little bit, but it's not because, it is just because our... We are shifting to a thing, shifting to a regular premium product. Third question is about, VNB margin. I think for product wise, in this quarter, we, we are sharing, more sa- compared to last quarter, we, we, we sharing more, some more saving-oriented products. That's why you see a little bit deteriorating in margin. Yeah. Thank you. A bout our bond investment. I will put it short that say, if for the NTD denominated policy, then actually we just buy NTD denominated ETF to save for the, you know, just regular or just CS hedge costs. F or the US policy, it's because the FX risk is taken, have been taken by our policyholder. That means actually, for the policy, US dollar policy, we no need to hedge. And in that case, we just buy some, you know, just straightforward bonds or into this position. Yeah, that's my answer. Okay. Can I have a follow on that one? Sure. Yeah, yeah. Yes. T he reason why I ask this is because, you know, of course, from slide 19, there's a good illustration in terms of before hedge and after hedge, right? Now, based on your last comment, in terms of, say, well, I'm buying - I'm using the NT dollar denominated international bond ETF for my Taiwan dollar liability. So that means- Exactly. Yeah. Right? Y ou can save a lot of hedging costs there. Yes, sure, sure, sure. Yeah, for foreign policies, obviously, you match it with foreign bonds, so that's fine. I 'm curious, but the implied sort of hedging costs, right, versus last year, has widened quite a bit. T hat tells me that, you know, in that process, you, you're still being hurt by some of the higher hedging costs. Of course, you have other FX gains that you can collect in the past few quarters. So I guess I'm just trying to take a step back and see, you know, what is the outlook for next year. I think you also mentioned, you know, you don't expect too high of a overall hedging cost situation next year, right? Is it around 50-100 basis points or something like that? Yeah. No, no, I'm talking about the range actually this year forecast, not, not, not for next year. Not for next year. The reason for your question, I would say it's because think about maybe we pay a lot on the CS hedge costs. From the year-to-date, maybe we pay total about 100 basis points as a whole. H owever, because the New Taiwan Dollar depreciate against the US dollar, maybe just till today, still have 5% or 4%, that make us have a huge average gain on this naked position. A s you can see on our page 19, that we have a naked position against US dollar, about 22% until the third quarter. That means, it makes our, as a whole, our average total expense is actually not that, then maybe we make a total fee. Oh, sorry. We, as a whole, we just only pay 12 basis points together as a whole for this year, is our total expenses. Actually, but looking forward, I would say that because the NT dollar right now is kind of a little stronger than you know in recent past couple of days. O ur hedge strategy also will just adjust accordingly, that we also have already closed some you know just NT sorry US naked position and also use the NDF and policy to hedge this at the current stage. Right. W ould you say that, you know, I think in the last few months, most of the fixed income strategy was you go for the shorter end, try to stay away from the longer end to capture the very attractive, you know, 5% or 4-5%, short-term rate. Of course, for life insurance, you probably don't too much of a short end. I 'm just curious, is that, does that still make sense? I s it just US Treasury, or you're willing to, you know, take a bit more credit risk in that respect? Yeah. I think we'll adjust our hedging positions, according to our views, to the markets. We are currently of the view that the NT dollar will probably on the short terms, on the stronger side, then we will adjust. Maybe we'll increase our hedging position a little bit. Number one, the hedging costs, I mean, we'll continue maintain at current level for probably, we don't know, probably another six months. A s to the Forex gain, based on our unhedged position, we will adjust, you know, according to market conditions, and that's hard to predict. Right. W ithin the U.S., like, would you say, it's still the US Treasury or you're, you're, you're- No, we are primarily invest in the corporate or financial institutions, banks, of investment grade. Hmm. Yeah, that's interesting because from your slide 17, on a quarter-on-quarter basis, it seems like there's a bit more in the, in the European allocation, and then the North American one sort of shrank a little bit. I don't know if it's like market movement or something like that. Yeah. Yes, we will adjust that the, you know, according to market conditions, the... O ur primary investment are in the US Markets and for the US C orporate and the US Financial Institution. We may adjust, I mean, a little bit quarter by quarter, but it's not much anyway. Okay, got it. Yeah. Great. Thank you. Yep. Okay. Thank you. If you would like to ask a question, please press star one on your telephone keypad. Thank you. Okay, I- We're now Are we having? Yep, go ahead. Are we having more additional questions from the guest? Maybe let me ask one more time. Thank you. Yep. Right. We're now in question and answer session. If you would like to ask a question, please press star one on your telephone keypad. Thank you. Okay, then there appears to be no further questions at this point, and we thank you very much for all your questions. That will be the end of the Q&A session, and then now I hand the call back to President Harn. Thank you. Okay. Thank you very much for your participation. If you have any further questions, you are most welcome to connect, our IR people. We will provide as much information as we could. Thank you very much for your participation today. Thank you.