Welcome everyone to Shin Kong Financial Holding Company's 2023 Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent background noise. After the presentation, there will be a question and answer session. Please follow the instructions given at that time if you would like to ask the question. For your information, this conference call is now being broadcasted live over the internet. Webcast replay will be available within an hour after the conference is finished. Please visit www.skfh.com.tw under the Investor Relations section. Now, I would like to introduce Miss Isabella Wang, IR team from Shin Kong Financial Holding Company. Miss Wang, please begin. Good afternoon, ladies and gentlemen. Welcome again for joining Shin Kong Financial Holding 2023 Third Quarter Results Conference Call. Before we get started, please allow me to introduce the management who are with us today. Here in the meeting room are Stephen Chen, President of Shin Kong Financial Holding, Judy Lin, CFO of Shin Kong Financial Holding, Vicky Lu, Vice President of Shin Kong Financial Holding, Han-Wei Lin, Chief Actuary of Shin Kong Life, Steven Wang, Deputy Chief Investment Officer, Stacey Chen, Senior Vice President, Monica, member of our IR team. The presentation we're about to go through was sent out two hours ago. You may download it from our website or participate through the webcast. Now, please turn to page 4. Shin Kong Financial Holding recorded a consolidated after-tax loss of NT$ 693 million for the first nine months of 2023. Consolidated total comprehensive income grew more than 100% year-on-year to TWD 18.35 billion. Consolidated shareholders' equity increased 8.8% year to date, to TWD 230.75 billion. Book value per share at the end of the third quarter was 14.59 TWD. Our subsidiaries maintained stable business momentum during the first nine months. More details will be covered later on in the presentation. I'd like to highlight that Shin Kong's efforts on ESG practices were highly recognized by winning various grand awards in the 2023 Taiwan Corporate Sustainability Award earlier this month. As ESG is growing in importance for investors, Shin Kong will continue to realize ESG commitment through tangible actions. Page 10. First year premium for the first nine months decreased 27.9% year-on-year to NT$30.2 billion due to unfavorable market conditions. However, with sales focused on regular pay and high CSM products, FYPE grew 6.7% year-on-year to NT$14.2 billion, and the ratio of FYPE over FYP was 47%, beating the industry average. Foreign currency policies can create stable interest spreads and better asset liability matching. The sales of foreign currency policies amounted to NT$16.5 billion, accounting for 54.6% of total FYP. Page 11 and page 12. Just as we have guided the market, CSM serves as an important profitability indicator under IFRS 17. Shin Kong Life has been promoting protection products, health insurance, and riders, those high CSM products, to accumulate CSM balance. The top priority is to accumulate CSM of TWD 30 billion per year since 2020. The table on the lower left corner on page 12 demonstrates Shin Kong's achievement on CSM balance over the past few years. The table on the lower right corner shows that the CSM contribution from protection type, health insurance, and riders increased from 71%-88% this year, despite the decrease in first-year premium. Page 15 shows the overall view of Shin Kong Life's investment portfolio. Total investment was around TWD 3.5 trillion at the end of the first nine months. Annualized investment return after hedging for the first nine months was 3.04%, mainly due to less realized capital gain and higher hedging costs compared to the same period last year. The breakdown of investment returns for different asset classes were real estate, 1.7%; mortgage and corporate loans, 2.4%; policy loans, 5.2%; overseas investments, 2.8%; domestic securities, 4.1%; and cash, 2.4%. Page 16 shows the portfolio of overseas fixed income. At the end of the first nine months, overseas fixed income position was around NT$2.4 trillion. The funds were mainly deployed in investment-grade corporate bonds, and the portfolio remained similar to that of the previous quarter. Over 90% of the overseas fixed income position was deployed in US dollar-denominated bonds. As for the bond portfolio by region, North America and Europe were Shin Kong Life's investment focus, showing a combined share of 63.8%.... Page 18. The pie chart on the left shows the mixed hedging vehicles. At the end of the first nine months, hedging ratio was 81.1%, including CS and NDF, and naturally hedged foreign currency policies. Annualized hedging costs further reduced to 89 basis points on the back of US dollar appreciation. So full year hedging cost is expected to stay under 150 basis points, as we guided in the previous quarter. Page 22. Driven by increased investment income, Shin Kong Bank's pre-provision operating profit reached NT$7.3 billion, which was 8.5% higher from the same period last year. Consolidated net income grew 2.3% year-on-year to NT$5.2 billion. Page 23. The bank's loan balance was NT$ 769 billion at the end of the first nine months, which was 2.5% higher year-on-year. Consumer loan book grew 5.1% year-on-year, representing 63% of the loan portfolio, as secured consumer loans and other consumer loans increased 13.1% and 4.4% year-on-year, respectively. The full year loan growth is expected to be 4%-6%. Page 24. Benefiting from higher loan to deposit ratio and improved fund utilization, the interest margin increased three basis points quarter-on-quarter to 1.23%. The interest spread is down one basis point quarter-on-quarter to 1.6%. Given the current interest rate level, we expect to see net interest margin and net interest spread in the fourth quarter stay similar to the level of the third quarter. Page 26. Wealth management income increased 8% year-on-year to NT$2.1 billion, thanks to surging sales of structured products and securities. On top of that, bank insurance showed strong momentum in the third quarter, with income growing 15.4% quarter-on-quarter, while sales of mutual funds also made a notable impression, with quarterly growth of 24%. The full year wealth management income is expected to exceed the earlier guidance. Page 27. Asset quality remained robust. NPL ratio and coverage ratio were 0.12% and over 1,100%, respectively. Both ratios surpassed the industry average. New NPL generated in the third quarter was merely NT$ 262 million, accounting for less than 0.1% of total loans. Page 29. Fueled by the increase in average daily market turnover, brokerage income for the third quarter grew 14.6% quarter-on-quarter, making the first nine months brokerage income reach NT$ 3.83 billion. MasterLink Securities also capitalized on market trends to enhance investment income, and the after-tax profit amounted to NT$ 1.99 billion for the first nine months. That concludes the presentation for today. Now, we'd like to proceed with the Q&A session. Yes. Thank you, Ms. Wang. Ladies and gentlemen, we will now begin our question and answer session. If you wish to ask a question, please press star one on your telephone keypad, and you will enter the queue. After you are announced, please ask your question. Should you wish to cancel your question, you may press star two. Thank you. Now, please press star key and number one to ask the question. Thank you. And our first question is coming from Jemmy Huang of JP Morgan. Go ahead, please. Yeah, thanks for the presentation. Got a couple of questions for life insurance here. If we compare to slide 10 of the FYPE breakdown and also the slide 12 of the CSM breakdown, could you roughly give us some idea how much of the 88% the protection in slide 12 is contributed by the PA, Health, and Group type of products, and how much from the traditional, the protection, maybe the protection component of the traditional policies? And then, is the FYPE a good reference for the year-on-year migration on CSM going forward? And second question is, is it possible to give us some rough idea of the blended liquidity premium you use to under the IFRS, IFRS 17? And then also the rough breakdown of the assets between the middle bucket and also the general bucket. And another question for the banks is that you do disclose the swap revenue for the first nine months. Should we assume it's also roughly around TWD 250-300 million?... swap revenue for fourth quarter as well. And then if we exclude swap revenue from your investment income, we can still see roughly around TWD 1 billion increase year-on-year in this item in the first nine months. Is that trading gains largely related to equity or related to fixed income products? Thanks. Regarding the liquidity premium and also the protection type insurance, maybe I would like to have Hanwei Lin to answer the first two questions. And for the swap, I will answer the question. First question, Jimmy, ask about on slide 10 to slide 12. A little difficult to... I would say all of the health and the PA products, the CSM from those kind of products are all included in a protection type of the CSM. And within the traditional, probably from some of them, because as for traditional, they are saving type, also protection type of products. So it's the protection type of product within the traditional that would be including the protection type of CSM. I think maybe around 20% of those traditional products of premium. Did I answer your first question? Yeah, sure. That's still helpful. Yeah. Okay. Thank you. Can you repeat your second question? Is there any, like, rough range of the blended liquidity premium you use under IFRS 17? And, within this, my understanding is the liquidity premium, it's currently calculated under the three bucket approach, right? And I think the top bucket is probably not likely to be used. So just trying to get an understanding like, within the middle bucket and also the general bucket, what's the rough mix between these two buckets? Yeah. For the liquidity premium, yes, I, we—I think, since right now, it's calculated a very, very in detail, so, we, we... I, I don't, I don't think I have a blended liquidity premium. For all the different buckets, the liquidity premium varies. It's from 20 to 70+ liquidity premium that are used in each different bucket. So, based on the different segments. As for the different assets, I think, I need... I have to provide a more detailed information maybe later. No problem. Yeah, no problem. All right. Thank you. Okay. But going back to the first question, I think the protection type policy, to my understanding, will account for probably 37% of our FYP. That is my understanding. And so, regarding your third questions on the swap income, the total swap income of the first three quarters, around TWD 840 million, and for the third quarter, the swap income amount to about TWD 237 million. And because of the interest differential between US dollar and also NT dollar. I think the opportunity for the swap business are still there, and so I expect the swap income of the fourth quarter maybe, you know, remain the same level of the third quarter. That is my estimate. I'm not so sure I answer your question, Jemmy? Yeah, but just to follow up, the first one is investment income. If we exclude the swap revenue, we still see roughly around TWD 1 billion increase year-on-year. So trying to understand where that additional TWD 1 billion coming from, either from the equity trading gains or fixed income trading gains, or is that related to the structured product under wealth management businesses? And I think back to the insurance parts, also just trying to gauge whether FYPE, the year-on-year momentum could be a better indication for CSM growth going forward. Thanks. Apart from the swap income, the remaining, you know, NT$1 billion income is due, is related to the investment gain on our bond portfolio. I see. Yeah. Okay. Yes, Jamie, I think, compared to FYP, you can use FYPE as a better, better index for the CSM. Okay. Got it. Thank you. Thank you. Thank you. Now please press star one on your keypad if you would like to ask the question. Thank you. Next, we'll have Nancy Chen of Cathay Securities for questions. Go ahead, please. Okay, and thank you for having my question. I want to know what the outlook for hedging cost this year and for 2024. Do you feel more pressure given the recent Taiwan dollar appreciation? Thank you. Okay. I would like to have, Stephen or Stacey? Stacey, to answer the questions. Okay. Hi, Nancy. Yes, as you just mentioned, the current market is quite challenging. But as you probably know, the long-term Taiwan dollar is kind of being reversed. So, with this high hedge cost right now and then the shallow Taiwan dollar NDF market, we tend to stay poised, and then weather through this short-term volatility while using FX Valuation Reserve as a buffer. But meanwhile, we will use some pricing hedging to absorb the short-term volatility, and then which seems quite effective so far. With regard to the hedging cost outlook for this year and next year, as we just mentioned, is still 1.5% as our target. Hi, Nancy, does that answer your question? Oh, yes. Thank you. Thank you. Thank you. We're now in question and answer session. If you would like to ask the question, please press star one on your telephone keypad. Thank you. Please press star one on your keypad if you would like to ask the question. Thank you. Ladies and gentlemen, we are 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, President, President Chen, can we close the conference call now? Sure. Thank you for everyone participating in this event, and I think, if there's no more questions, we would like to conclude this sessions. Thank you for your, you know, participation. Yes. Thank you. Ladies and gentlemen, we thank you for your participation in Shin Kong Financial Holding Company's Conference Call. There will be a webcast replay within an hour. Please visit www.skfh.com.tw under the Investor Relations section. Should you have further questions, please don't hesitate to contact the IR team of SKFH by phone or by email. You may now disconnect. Thank you.