E.SUN Financial Holding Company, Ltd. ($2884)

Hi, dear investors. Welcome to E.SUN Financial Holdings Company 2026 First Quarter Earnings Call and I'm Martin. And first, I would like to invite the CFO, Sarah, to say a few words.

Hi, dear investors, E.SUN delivered a strong performance in the first quarter of 2026, marking a record high in net profit item financial income in [indiscernible] banking business, coupled with strong growth in securities and venture capital. Net fee income set a new record high, growing at a rate of 28% Y-o-Y. Today, we also announced the financial result for April. Growth rate of net profit for the first 4 months was 26%. Both net interest income and net income continued to grow at a solid pace. We are optimistic about our performance this year and expecting to achieve good results. With objective cost management, [indiscernible] ratio improved to 46.9% for the first quarter. E.SUN will continue to strictly control the growth rate of expenses to a single-digit level this year. For overseas expansion, overseas branches and subsidiaries continue to post solid profit growth. In 2026, E.SUN plan to open the Mumbai branch in India and the Osaka representative office in Japan. Toronto branch in Canada is on the top line, further enhancing international surface network. At an EGM Health on January 23 this year, our shareholders approved the proposed acquisition with maturity life insurance. In March this year, E.SUN Bank launched 3 products from maturity insurance across its distribution channels. On April 1 this year, the fair trade committee has approved the merchant acquisition. On April 20 -- in April -- on April [indiscernible], the Board of [indiscernible] Life Insurance has approved the employee placement plan, which has joint signed Macula insurance as labor union at E.SUN. The application is being prepared for submission to the with the merger and acquisition expected to be calculated in Q3 this year. Lastly, E.SUN's outstanding performance has been recognized by international institutions. We were named for Taiwan Best Bank for the sixth consecutive year and also named the best bank in Taiwan by Global Finance. E.SUN is committed to its ESG goals. For 20 years in a row, we have been selected into the [ CBIC ] Index at S&P's Sustainability Yearbook, marking the best performance among Taiwan peers. Looking ahead, we will continue to deliver long-term value to our shareholders. Thank you for listening, and we will begin our presentation today.

So thank you, Sarah. And right now, I will walk you through the financial and business review for the first quarter of 2026 for E.SUN Financial Holding Company. So on Slide Page 4, the total asset of the financial holding company was TWD 4.66 trillion, which grew by 13% year-on-year. And also the total asset of E.SUN Bank was TWD 4.61 trillion, also grew by 13% year-on-year. And for the key financial indicators, -- the book value per share for E.SUN Financial Holding company was TWD 17.6 and the leverage ratio was 114 and the financial holding CAR ratio was 128%, all at a very adequate level. So on Page 5 of the slide is the business and financial review. So the net revenue of the financial holding company first quarter was TWD 25.2 billion, which grew by 17.4% year-on-year, and the net profit was TWD 10.1 billion, which also grew by 14% year-on-year. The EPS of the financial holding company was TWD 0.62 and the ROE was 14.43% and the ROA was 0.8%. And E.SUN Bank for the subsidiaries, the E.SUN Bank net profit was TWD 8.8 billion and E.SUN Securities net profit was TWD 1.1 billion, which grew by 137%. And E.SUN Venture Capital's net profit was TWD 710 million and for the E.SUN Asset Management, the net profit was TWD 100 million. So for the business development, the total loan balance reached TWD 2.7 trillion, which grew by 15.6% year-on-year, in which the corporate loan grew by 22.6% and the SME loan grew by 13% and the retail loan grew by 9%. And the net fee income was TWD 8.9 billion, which grew by 27.1%, out of which the wealth management fee was TWD 4.0 billion, both set a new record high for the same period. And on the credit card, the fee was TWD 2.2 billion, which grew by 16.5% and the consumption volume was TWD 150.6 billion. And the Board of Directors of E.SUN Financial Holding Company also made a resolution to pay a cash dividend of TWD 1.4 per share, and the resolution is still subject to the approval by the AGM this year. And on Page 6, -- on the top of the slide, you can see both the net profit and EPS are the highest for the same period. And on the bottom part of the slide, ROE and ROA, 14.43%, 0.8% are all the highest in the last 5 years. And on Page 7 is the net fee income of the financial holding company and subsidiaries. On the pie chart, you can see that the bank contributes to around 82.5% of the total profit of the financial holding company. And compared to last year, 2025, the proportion will be as high as nearly 90%, which means that the other subsidiaries, including security, venture capital and the asset management are contributing more to the financial holding company, which gives E.SUN a more balanced profit contribution and profit structure. And on slide, Page 8, you can see the net income breakdown. And net profit grew by 14.2% with a very well controlled expense, which the operating expense grew by 10.6% year-on-year. And on the next slide, Page 9 is the Financial Holding Company's revenue breakdown. 47% of the total net revenue comes from the net interest income and the 35.4% costs from net fee income. And on the right-hand side, you can see the chart both net interest income and net fee income had a very strong growth momentum year-on-year. So on Slide -- Page 10 is the net fee income breakdown of the financial holding company. So wealth management is still the main part of the net income, which accounts for around 45.2% of the total net fee income. And on the right-hand side, you can see both credit card and wealth management a very stable growth momentum 6.5% year-on-year and 14.4% year-on-year. And for the brokerage, thanks to high trading value of the Thai apps brokerage fee grew by nearly 100% year-on-year. And on Slide 11 is the capital ratio of the Financial Holding Company and the Bank. So for the Financial Holding Company, the car ratio was 128%. And for the Bank, the BIS ratio was 15.42%, and the CET1 ratio was 11.9%, all at a very adequate level. So on Page 2 is the priming of the E.SUN Bank. And on Page 13, you can see the total deposit grew by 12.5% year-on-year, and the total loan grew by 15.6% in which the foreign currency loan grew by nearly 30%. And that thanks to not just the domestic momentum for the domestic company, but also the overseas loan momentum is very strong in the first quarter for the E.SUN Bank subsidiaries overseas. And on Page 14 is the loan profile of breakdown of E.SUN Bank. And you can see on the left, the pie chart shows that E.SUN has a very balanced loan structure, large corporate SME mortgage and is the pure personal loan or accounts around 20% to 25% of the total loan book. And on the right-hand side, the Y-o-Y comparison, you can see across all the loan structure loan portfolio, we all had a very strong growth momentum year-on-year. And on Page 15, we wanted to highlight the SME loan and foreign currency loan for E.SUN Bank. So E.SUN is still right now leading the loan balance in Private Bank in Taiwan of the SME loan, which the loan balance was TWD 689 billion. And for the foreign currency loan, the gross momentum was very strong in the past few years, also in the first quarter of 2026. So on Slide 16, is the overseas development of E.SUN Bank. And right now the overseas branches and subsidiaries net profit contributed to 26.3% of the bank's total net profit and overseas loan balance also shows a very good growth momentum in the first quarter, which grew by 10.2% year-to-date. And for the overseas network right now, E.SUN has certified operating sites across 11 countries. And new branches in Mumbai and Osaka office are scheduled to open in this year, and also the Toranto branch in Canada is on the pipeline. So on Page 17 is the deposit structure. So on the left-hand side, you can see the overall LDR was 71.2% and the foreign currency LDR from -- grew from 39% to 44% shows our strong momentum in the foreign currency loan. So on Page 18 is the NIM spread for the bank. The NIM remains flat compared to the fourth quarter in 2025 at 1.32%. And on the right-hand side, the total spread grew by 5 bps to 1.42% in first quarter of 2026. And on Page 19, is the wealth management fee breakdown. So the -- neutral from accounts for around 40% of the total wealth management fee and the bancassurance accounts for around 33%. And on the right hand side, you can see, thanks to a very robust capital market mostly both mutual fund and bond had very good growth momentum in the first quarter. So on Page 20, is the credit card business. So although the active card has been reduced from nearly 5 million to 4.7 million cards. However, the consumption and the per card spending per still growing and the consumption for the first quarter of 2026, set a new record high for the same period in the past. So on the Page 21, is the asset quality. So E.SUN remains a very benign asset quality. The NPL ratio was 0.15% and the coverage ratio was near 800%. So -- and for the credit cost, the credit cost for first quarter was 0.14%. And on Page 22, is the NPL ratio across different sectors. So for the corporate, the NPL ratio was 0.06%. And for the mortgage and secured personal loan was 0.1%. So on Page 23 shows the cost-income ratio of bank. And due to the very well control of the expense, the cost income ratio for E.SUN Bank first quarter of 2026 was 46.9%, which has been improved since 2023 we hit the peak. And for other subsidiaries, Slide, Page #25 is the securities performance. So thanks to -- again, thanks to a very high [indiscernible] level and trade value securities net profit grew by 137% in the first quarter of 2026 and also the market share of our brokerage and the margin loans are increasing. And on Page 26, is E.SUN asset management's performance. The total AUM for the domestic fund reach to TWD 103 billion. And while the AUM of discretionary funds was TWD 114 billion, so combined representing a 9% Y-o-Y growth in the total AUM. And also the net project for the E.SUN asset management for the first quarter was TWD 100 million, also hit a new record high for the same period. And lastly, on Page 27, I would like to update the time line of the acquisition of Mercuries Life. So last year, in November, both E.SUN and Mercuries Board passed the acquisition in [indiscernible] and January this year, both companies test the votes by the EGM with a very high approval rates and on March 2026, E.SUN Bank started to offer the Mercuries last product. There are total 3 products on the Mercuries bancassurance channel. And on April 4, FTC, the [indiscernible] committee has approved the acquisition of E.SUN Financial Holding Company and Mercuries Life. And on April 17, the employee placement plan was signed by E.SUN and the Mercuries Life and its labor union. So after the acquisition, E.SU Financial Holding company is expected to rank #5 in terms of asset size among the private financial holding companies in Taiwan. So that will be a briefing for the first quarter of 2026, and we are ready to take questions. Thank you.

[indiscernible] have regard across all the business lines. E.SUN show a very good low momentum in the first quarter of 2026. So will the guidance 10% double-digit growth change because due to the very strong loan momentum. So Sarah can answer this question.

Okay. At present, we have no change to our guidance as for the loan and deposit growth, both over 10% growth Y-o-Y. And regarding to the net fee income, we set the guidance of double-digit growth. Actually, all growth across our business lines remains in line with our expectations.

Okay. So we have another question regarding the guidance of the NIM this year. So at the beginning of this year, we -- the guidance for the NIM expansion was 45 bps However, let under the assumption that Taiwan's CVC will not change the interest rate and the Fed will cut by 2 or 3x this year. However, since the possibility of [indiscernible] records decreased. So we think it also didn't change is interest rates and the Fed remains its interest rate at the level where it was. So our NIM will grow by 2 to 3 bps this year. So that will be our latest assumption for the NIM's guidance. So we have another question regarding the housing markets in Taiwan.

For the outlook of Taiwan housing market, we expect Central Bank in Taiwan remains to keep the ability in the real estate market and the end is to achieve of lending. So the policy is to [indiscernible] Bank [indiscernible] resources from concentrated on the real estate lending. Currently, real estate transaction volumes continue to decline and demand met subdued due to the tight funding and wait and see attitude. So we expected housing market this year will face a shrinking transaction volumes, but the price is still [indiscernible]. We set the guidance of [indiscernible] for the mortgage growth rate is 6% Y-o-Y, which is higher than 3% achieved last year. We will put more resources on the mortgage because we can see our clients still have the demand for it. And for E.SUN, we think the yield for mortgage is still attractive for us and risk weight is still lower. So this is our view regarding to the housing market and our guidance of mortgage. The fourth question is regarding to the asset quality. At this moment, we do not see any particular issues regarding to the asset quality and the provisions remain at a normal level. That's the general position.

Okay. It seems that we've answered all the questions. So -- if there's no other questions online, then we can wrap up call it for the day. So again, thank you for your participation, and we look forward to seeing you next quarter. Thank you. Bye-bye.

Thanks. Bye.