Fubon Financial Holding Co., Ltd. (2881) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to Fubon Financial Full Year of 2019 Financial Results. [Operator Instructions] This call is being recorded. [Operator Instructions] Now I'll hand the call over to your host, Ms. Amanda Wang, IR Officer of Fubon Financial Holdings. You may now begin.

Thank you, everyone, for joining our conference call today. This is Amanda, the IR officer of Fubon Financial. In this call, we will update you on Fubon's year '19 results and later on your questions will be answered by our management team. Firstly, let's start the presentation on Page 4, please. As you can see here, the key milestone in year '19, including the earning performance, has been robust. The EPS and the total asset reached high level. The asset reached a historical high at TWD 8.5 trillion and EPS topped Taiwan financial holding companies. For the operation, we continue to diversify, including Taipei Fubon Bank's investment of LINE Banks at 25.1%, which we expect to start business in second half this year. For asset management, Fubon's business now becomes a direct own subsidiary under the holding company in order to have better cross-subsidiaries on synergy going forward. And for our overseas business, we continue to expand into Southeast Asia in Jakarta and also in China to set up new branches. In the meantime, we continue our strong commitment in environmental, society and governance. As you can see, we are a constituent of several index and also a winner in several awards. In Page 5, the operational highlights here, you can see that the earnings growth are pretty much apparent across all subsidiaries. In Taipei Fubon Bank, the earnings growth at 8%, which is driven by margin improvement, fee income growth and also overseas contribution. In Fubon Life, the earning growth by 6%. The FYP continues to be a very strong driver, and we are #1 in the market last year. And the investment return indicators, if you were to see the [ chart ], shows improvement year-over-year. In Fubon Insurance, the net profit increased by 6%. The volume and also the margin continue to be very strong in the market. For Fubon Security, the earnings growth at 39% with the market position, a strong one in our brokerage and emerging stock trading business. In Page 6, the profitability track record, you can see here that we deliver very strong results in year '19. On Page 7, we further break down into subsidiaries. There, you can see we deliver quite decent growth with our major 4 subsidiaries including Life, Bank, Insurance and Security. While in Fubon Life, the contribution is 46% of the total earnings. While last 3 banking subsidiaries in total, they represent another -- over 40% of the earning contribution. In Page 8, the total asset continues to grow nicely. That leave us to TWD 8.5 trillion level. That is the 10.8% growth. And the net worth also increased by over 30% while our capitalization among subsidiaries all shows a very decent level. In Page 9, that -- you can see the ROA and ROE leverage, 0.7% and 10.9%, respectively. And it also shows an improvement compared to a year ago. In Page 10, that we show the business indicators of our major 4 subsidiaries. Now you can see that we are sitting at a leading market position across major business lines. The outlook for the holding company into year 2020 is indeed a very challenging external environment, including the coronavirus impact, the trade tension and also the global situation quite volatile. However, we're trying to capture the opportunities in the market through the company's prudent capitalization. And looking for further cross-sales synergy especially for wealth management business to develop across subsidiaries. From customer growth perspective, we focus on fintech and efficiency enhancement solutions. And while for a strategic angle, we continue to look for regional expansion opportunities, including M&As or strategic alliance opportunities in domestic and also overseas. Next, let's move on to Page 13 in Taipei Fubon Bank. In Taipei Fubon Bank, the revenue growth, 10%, that is a strong record that you can see across each of the revenue lines that we also deliver quite decent growth. In Page 14, the credit growth at 3.6% is largely because of the structure adjustment that we -- intentionally to reduce government-related lendings, while in corporate retail loans are still decently growing at mid- to high single digits. In Page 15, we further break down corporate credit into various indicators that you can see we have a very strong result in NT book. While in foreign currencies, growth slightly lower largely due to the Hong Kong friendship status from external market volatility. The SME growth remained focused for the bank. It grow 7.3% and continued to represent over 40% of the total portfolio. In Page 16, we move on to the retail credit of the bank. As you can see, the mortgage growth at 5.7%. That is pretty much in line with the market growth. While the rest of the consumer lending is primarily driven by the consumer secured loans that drive up the overall loan growth, and we intend to further enhance the consumer on secure-related credit. In Page 17, the overall liabilities management from the deposit side, there, you can see we focus on structural improvement. And especially in the foreign currency demand deposit that you can see, we deliver over 20% growth, and CASA ratio also shows improvement. For LDR, it's pretty much still in the stable range. While foreign currency LDR slightly came down, but if we add back the fixed income asset investment, that would go up to about over 60% of the deployment of the foreign deposits. In Page 18, in terms of the asset -- sorry, in terms of the net interest margin and loan deposit spread, you can see we deliver widening for both indicators. For NIM, it widened by 8 bps and spread is widened by 11 bps. And that's driven primarily by our adjustment in the loan mix, the increase in fixed income asset and also a liability, especially from a deposit structure's improvement. In Page 19, the asset quality continue to be quite stable and benign. And we continue to outperform the industry average. In Page 20, the fee and wealth management revenue here, you can see we delivered very strong result of 15.9% growth Y-o-Y, primarily driven by the wealth management. That grow by over 20%. The fee income that you see, the credit card and also the syndicate fee came down but more critical is largely due to the marketing expenses, while syndication loan primarily due to the delay of the schedule. And while in wealth management, the right-hand side of the chart, you can see the growth, especially from overseas fixed income and also from the insurance side, deliver some quite decent growth. In Page 21, in terms of the revenue and earnings from overseas branches, we've seen revenue line grow by over 20% in year '19 for overseas branches including Hong Kong, Vietnam and Singapore. And that's mainly driven by the loan growth and is now accounted for over 17% of the bank's pretax profit. In Taipei Fubon Bank's earning outlook, we see 3 key topics for us to pursue. Firstly is in terms of the asset and liability that we see further room for optimization. So that we see that foreign currency loan and fixed income and also consumer lending driven by fintech technology, they should help us to further deepen the opportunity. And in terms of cross-sell, we see the growth between Taipei Fubon Bank and Fubon Bank (China) has been quite strong in the past years. And starting from end of last year, we also worked together with our sister company in the group, momo, the e-commerce company to ensure affinity credit card. And we see that will help us to further increase the growth of subsidiaries across companies' synergy. And for fintech development, we see that, that is another long-term critical point for the bank to develop. One concrete result is that our online payment solution already attract over 400,000 users to date. And together with LINE Pay's support, that the merchant number already surpassed more than 10,000 in the first year of operation. And we see this expansion of the customer base will help us to further enhance our fintech development and also the cross-sell business opportunities. In Page 24, let's move on to Fubon Life. In Fubon Life, the total premium increased by 9.8%. And that is mainly driven by the renewal premium that is also a result that shows that our efforts to focus our regular pay product over the past few years. In the meantime, the size make us a market leader in terms of FYP, #1, and also #2 in terms of total premiums and FYPE. In Page 25, it again shows that our result of the product strategy changes over the years. You can see our regular pay product for traditional life now accounted for 55%. All the single pay now accounted less at only 20%. And going forward, we'll continue to develop the regular pay and also more protected oriented products. In Page 26, the FYPE and VNB also shows very strong growth at over 40% and over 30%, respectively. Again, it's mainly due to the growth into traditional installment payment type of policies. In Page 27, in terms of channel contribution, you can see that our internal channel accounted for over half from the tied agent and also from Taipei Fubon Bank in terms of FYP and FYPE. While external bancassurance channel contribution increase largely reflect their efforts in the regular paid product, and therefore, FYPE's contribution against the bancassurance through external banks grow quite meaningfully. In Page 28, in terms of the investment portfolio in Fubon Life, the overall asset growth, in line with our expectation of 11.6%, while the portfolio's changes mainly focus on the addition into domestic assets. And in Page 29, you can see overseas fixed income primarily is in corporate and financial bonds investment grade, while in terms of geography exposure, primarily in North America. In Page 30, the recurring return accounts for the majority of our composition in investment income and that increased by over 8%, largely contribute by the dividend and also the dividend from mutual fund and also from stocks. From a capital gain perspective, we see fixed income contribute to TWD 26 billion of the profit, while the equity also contribute over 18%. And together with the hedging cost improvement, the overall investment return reached 3.83%. That is enhancement compared to year '18. In Page 31, the composition of the overall hedging portfolio that you can see, that our recurring hedging cost shows quite sequential trend of improvement as the interest rate spread between NT and USD has been narrowing. And as the NT dollar strengthens, that we can see our hedge position actually come down while the proxy's position slightly increased from a quarter-over-quarter perspective. While the FX reserve is another factor to report to you is that we reached TWD 13.2 billion by end of December last year and the latest data point of TWD 14.5 billion as of end of February. So with the increase of FX reserves, that will also help us to better manage the hedging portfolio. On the lower left-hand side, the recurring return from both before and after hedge shows improvement. Okay, in Page 32, in terms of the cost of liability and breakeven point, that we can see the cost of liability largely reflect the declared rate decline starting from April last year, which applied to new policy and also existing policies. So compared to last year, the decline is 11 bps. Compared to previous quarter, that is 5 bps improvement. While the breakeven point at 2.97%, the increase compared to last year is largely because of the first year's trend from the strong first year premium growth. In Page 33, we share with you the unrealized balance from OCI and TPL. Here is TWD 62 billion and the appreciation come from both the fixed income equities and that also lead to the increase of live shareholder equity to over TWD 337 billion. In Page 34, in terms of the business initiatives and outlook. From a channel perspective, product perspective and investment, 3 angles to share with you. From channels, we continue to aim for further cooperation within the holding company and also within the group. While in the product offering side, we will focus more on the pension, protection, retirement planning products through a segmentation approach. While in the investment perspective, to keep a positive spread is our goal. And what we are going to face in this current environment that we see the timing for fixed income assets will give us the opportunity. And also, the dividend stocks in Taiwan and especially for some industry niche stocks, that's also our focus. For property, that's another growth -- potential growth of area including in Taiwan and also in global market. And lastly is the hedging cost. We see there is opportunity to show improvement compared to last year. Next section, let's move on to Page 36 regarding Fubon Insurance. Fubon Insurance continue to be the market leader for over 38 years with a market position of 23.8%. While the net combined ratio slightly increased, that's largely due to the compulsory auto business while you can see the expense line continue to improve. In Page 37 regarding China's operation. The premium is relatively flat, largely due to we are still in the process to adjust this insurance premium structure. We lowered the auto's line while we increased more into personal, accident and health product. So in terms of the net combined ratio, the increase reflects the auto's loss ratio still high, but the trends start to reverse starting from second half of the year, while the variable expense ratio shows improvement in year '19. In Page 38, in terms of the business outlook in Fubon Insurance, we came to keep a very strong market position and further widened our leading position through our product innovation and also a focus on the prime product line. In terms of the fintech application, Fubon Insurance continue to be the #1 in online offerings with a 36% market share in spite of the volume actually still limited. Clearly, we have over 1.4 million of members through online, and we continue to expand through our corporation channels. In China, we see opportunities still there in spite of the auto sales and auto price utilization challenge. We focus on the health and accident product. And we start to cultivate our own sales team and to have it all through online management business structure. Next, let's move on to Fubon Securities. In Page 40, the operation here, we can see that leading market position of top 3 continues, while in terms of the revenue it came down by 7% primarily due to the trading volume came down as well. While the net profit increase shows that our results from the capital gain performance, our fee income increased and also a lower base in year '18 due to, at the time, we have the one-off credit loss recognition. In terms of the business outlook in Page 41, we focus on service diversification, especially into wealth management business. And secondly, on the fintech application, we see that our starting point is already a very strong one with over 70% of the online trading, and we aim to further increase the level and through the customer's segmentation approach. In terms of Fubon Asset Management in Page 43, the overall AUM is over TWD 300 billion with over 80% growth Y-o-Y. And also, you can see from the lower left-hand side that our ETF contribution is quite meaningful and made us a top player in the local market. In Page 44, in terms of the strategic angle that we developed for Fubon Asset Management, that we decided to have the stake transfer from Fubon Security to the holding company in end of last year. That is in order to enhance its strategic importance in the holding company's development. And also, we expect to further enhance the synergy across the subsidiaries. In terms of product, it will be the company's focus going forward, especially in ETF continues to expand and also in terms of the REITs, PE fund and discretionary investment business opportunity, are all the new areas we try to further enhance. The next section regarding our overseas banking operations. So firstly is Fubon Bank (Hong Kong). The loan growth of 9.7%, that is quite decently a level mainly driven by corporate banking business, while deposit also grow by another 10%. That is mainly to -- in face of the market liquidity that we have a more aggressive approach to grow the deposit base. So in Page 47, now we can see the net profit came down by 27%. That largely reflect a different earning recognition of Xiamen Bank that started to be recognized into the holding company level in year '19 compared to in -- Fubon Bank (Hong Kong) in year '18. And also, there's another factor to lead the earnings come down is because of the general provisions increase. But the NIM decline that -- you can see that came down by about 4 bps in the upper right-hand side. That largely reflect the deposit cost increase in spite of the lending yield actually also increased. Overall speaking, the asset quality remained quite well so that we can see the coverage and also the NPL ratio both shows improvement. In Page 48, the business outlook in Fubon Bank (Hong Kong), we focus on asset optimization, fee income expansion, and internally, we would like to further enhance the efficiency. In terms of asset optimization, we see opportunities to grow especially in midsized corporate customers and the consumer business. For fee expansion, we see that wealth management and also the corporate banking from TMU-related fee business that should still give us some growth momentum. And next, let's move on to Fubon Bank (China). In Page 49, in terms of the loan and deposit, it shows quite strong growth. On back of that, the strategy is to have the deposit to grow. That will stabilize our funding sources, and therefore, to expand our exercise afterwards. And in Page 50, that we can also see the net profit also grow quite nicely. So the volume growth indeed bring in the profit enhancement. On the margin, also remained at a quite decent level of 1.73%, a 3 bps expansion while asset quality remained quite benign. In Page 51, the business outlook indeed is a challenging timing in face of the current coronavirus situation and also the global macro market volatility. However, from our business strategy over the past 3 years that we continue to expand the deposit base and actually lastly, we expand our asset to follow such a strategy that we expect to continue into year '20. And for corporate side, we see the supply chain business, the Taiwanese corporate. And retail, we see the local and also Taiwanese corporate -- Taiwanese individuals. These are all the opportunities that we can further enhance. Well, in terms of the retail business, we see the wealth management product expansion continue to present us room for growth. On the credit card, we start to issue new cards in November last year. And through the Taiwanese customer base and also the local cooperation with fintech players that we expect there is further room for growth. And lastly, regarding the cross-border opportunity, we expect that will be a very unique proposition for Fubon Bank (China) to work together with Taipei Fubon Bank, and that would help us to develop a long-term unique action. Okay. Thank you for your listening. And here, we would like to start the Q&A session. So operator, can you please take questions with the investor's name and the company name, please? Thank you.

[Operator Instructions] Our first question comes from Ethan Lam (sic) [ Steven Lam ] from Bloomberg Intelligence.

It's Steven from Bloomberg Intelligence. So yes, well, congratulate on the good set of results. I have about 3 areas of questions. So firstly, I would like to talk about on the investment side. So I was curious, could you tell us about the Taiwan dollar-denominated overseas bond ETF's position as of December? And whether you have an increase or decrease so far in 2020? And I'm also curious about how do you classify those ETFs, whether is it a FVTPL, HTM or -- and what does that mean to the net income impact in the near term. Because, basically, I'm asking because I noticed there was a drop in terms of the -- in terms of proportion in the overseas bonds, but there's basically an upwards -- increase in the allocation to domestic bonds. So I would imagine it's because you switched over to the ETFs, the exposure to overseas bonds are basically there still. And then also on the investment side, I'm curious how -- I saw the numbers for the year. Fubon Life profit was very strong in January and February. I'm not sure how -- what was really driving that, probably some stock gains. But if you can elaborate a bit more, that will be great. And also, if you can comment on the March situation. And then on the life insurance sales side, I think I heard that the outlook for the FYPE will be a contraction of somewhere around 20%. Just want to verify that. Asking because also saw very strong numbers in the first 2 months of this year, so would like to get some color on that. And maybe I'll stop here for now and then come back later on.

Okay. About the ETF, right now, I would say it's obviously the same level. We do not have a material investment from this year is most likely because of the legal cap. Right now, it's set about 10%. And we still have room, but it all depends on what we can earn this moment. So I would say that probably it's perhaps at the same level. And as for the classification, yes, you are right. We classify the [indiscernible] each year while [ domestic ] bank as a location as you can see on the PowerPoint. And how about the second question because we -- I do not -- please repeat again. I did not catch it.

Maybe on the classification of the ETF. I just want to see like if there's swings in the bond prices, would that be a direct impact in the P&L? Is it that part you're talking about?

Most likely, we classify our bond in, I would say, maybe hold-to-maturity or even fair value through OCI, sorry. So actually, the bond price should be -- do not have an impact on that, on P&L.

Okay. I see. That's very clear.

Hold on. We have one point to add. Yes. We would like to further the clarification -- have a further clarification on the classification of ETF. Since we put those investments under the FVTPL and through the overlap, so any fluctuation on the price will be go through the P&L first and then reclassify into the OCI. That's the accounting approach for us.

Okay. So it will hit the P&L first but then...

And then reclassify into the OCI.

It will impact our equity net worth, not P&L, in simple terms.

Okay. For the sales, certainly in January and February, there were many costs by the reprice we did early this year. And at end of last year, there was half sale and some business we cannot insure the policy in time last 3 years. So some business left to January and February. And we expect in March, the business will go back to normal.

I see. And so on the strong net profit in Fubon Life in the first 2 months, is that mostly because of investment or something else?

Are you asking about the earnings or -- sorry.

Yes, yes, P&L. The simple answer is yes.

We exposed that on our bonds last year.

Sorry, not last year. I mean generally...

No, last month, okay, and this month. So we realized some capital gain out of our portfolio.

Okay. On bonds?

On bond and equity.

We realize some capital gain from stocks.

The next question comes from Edward Lu (sic) [ Edwin Liu ] from Bloomberg Intelligence (sic) [ HSBC ].

I'm Edwin Liu from HSBC. I have 2 questions. First one is on the duration. Can I get a latest update in terms of your asset and liability duration for Fubon Life? And a related question on that is the interest rate level has decreased sharply. And if you are to value your assets and liability on a fair value basis, can I confirm that the low interest rate will hit your equity -- shareholder equity on a fair value basis? The second question is in terms of your life reserve. Can I have the percentage of your life reserve, which can be adjusted in terms of the crediting rate? Meaning that in your back book, what's the percentage of reserve -- that is -- that belongs to interest-sensitive insurance products?

Okay. For asset duration, it's about 10 to 11, and we have similar duration for liability. And for the interest-sensitive product, they are subject to the credit rate mechanism. It's the reserve accountable about 34%.

Okay. Can I just follow-up on that? You were saying that asset and liability duration is basically matched. So can I understand that as even if the industry environment is now lower-for-longer, that the economic value of bond life remains largely unchanged?

But I think because the current shareholder equity is still -- the reserve is still based on the lock-in basis, so this -- the duration I mentioned is mainly on the fair value approach. So it's both under fair value approach. The liability ratio and asset duration are quite close. But actually, in our current shareholder equity, the reserve is not fair value-based. So still subject to somewhat the market volatility.

Okay. Got it. Can I -- if I can just ask a final question. In terms of your new business, can I get an update in terms of the new -- blended new money view on the investment side and also the new cost of liability -- for the new money on the liability side? Just to understand the interest spread that you can earn from the new business.

In terms of new money, actually, it's very hard to say right now. This market is very volatile. But I just mentioned in the earlier section of the -- in the earlier part, I would say that if we -- as we expect that if not integrate the [indiscernible] later if, say, any likelihood of the outbreak is easy or even the [indiscernible] have a huge supply then. Then if that's the case, they're integrated [indiscernible], I would say new money will be -- go higher at that time. But I would say, currently, it's pretty low or even lower than average of the 2019. But in the long run, you will be subject to new curve. And compared to the cost of liability, I would say that we try to maintain a positive net spread as we expect our total liability would be...

The total liability of new business is average about less than 3% right now. But it could be further reduced, interest-sensitive product. So we expect in the later this year, it will drop to below 2.5%.

I think I would like to clear -- to comment these questions, when the market stabilize a little bit, because we will adjust our portfolio, investment portfolio, and at the same time, we'll adjust our product portfolio as well.

Our next question comes from Jemmy Huang from JPMorgan.

Two question from me. I think the first one is for Fubon Bank (Hong Kong). Given now it no longer holds the Fubon China states, it looks like the ROE is low. Is there any chance that you can redeploy the capital to the holding label in any moment that allow better capital utilization rather than just on the organic growth, given I think that the network outlook probably won't support much growth in the next 1 to 2 years or so? And second question is on your fixed income investment portfolio at Fubon Life. How do you see the underlying risks for your existing portfolio in terms of either the industry-wise or the country-wise exposure? Have you done anything in terms of the potential default analysis? And then have you met any adjustments in the past 3 months or so?

Okay. I'll take this question. From the financial holdings perspective, we will evaluate the performance of all our investments in our portfolio, either it's Fubon Hong Kong or any other equity investment. We will keep improving the operation. But at the same time, we will also evaluate all possible strategic propositions. Number two, on the -- we, at Fubon Hong Kong, followed the requirements by HKMA strictly. So we actually -- I mean we do our stress test on not just fixed income, but all our investments theoretically on a monthly basis, if not more frequent. So -- but at the moment, we don't see any material change of our asset quality in either fixed income or other loan portfolio at this moment.

Sorry, I mean, for the fixed income investment, I refer you to Fubon Life. Yes. Thanks.

Okay. And about the portfolio, and you may see on our PowerPoint on Page 29 and the left -- the right-hand chart there. And as you can see that we actually do some refunds of -- about international and regional. And you can see that, actually, we increased some North American exposure, also decreased Asia and others is so [indiscernible]. And as a [indiscernible], we see some potential heightening of future risk in China. So naturally, we see decrease is in the brand China bank, brand China bank and also, we are still focusing on investment-grade corporate in America region. So what -- in light of why we still -- we sit in the last quarter.

And how about year-to-date? And then also in terms of the sector, sector-wise, have you also made some changes as well?

I would say that in terms of sector, it's hard. It's still dynamic and because our retail is quite actually widened and tightened just in couple of space. So in terms of region, I think we're still focusing on the North American, but also think about if we further decrease Asia. But it is a fair to market.

The next question comes from Chung Hsu from Crédit Suisse.

I have 3 questions. My first question is on the holding company. Just want to check if you have any one-off gain at the holding company level in 2019 or you can perhaps remind me if there's only -- any one-off adjustment because I can't seem to reconcile the TWD 10 billion gains at holding company for 2019 against the profit increase at your major subsidiaries. My second question is about Fubon Life. I may have -- I missed it in the Chinese session. But with 28% year-over-year decline in FYP for -- in 2020, are you still looking to grow your VNB or we should expect to see VNB decline in 2020? And my last question is on Fubon Bank. At the beginning of the year, I recall Fubon made an announcement to inject TWD 9 billion to TWD 10 billion, if I remember the number correct, to Fubon Bank (China). I believe half of that or roughly around half that will come from Taipei Fubon Bank. So my question is, with that capital injection from Taipei Fubon Bank to Fubon Bank (China) and given the basic requirement that Taipei Fubon bank need to meet, can Fubon Bank now still able to meet that -- this requirement organically?

Okay. Regarding to the one-off gain in 2019, actually, we don't have a one-off gain in 2019. However, we do have appropriate profit tax in 2018 with around TWD 4.6 billion but while as we don't have such appropriate profit tax in 2019. So that's the difference between 2 years.

That's the only one-off we can think of.

Yes. For the VNB growth, this year, since the FYP will drive 20% because the whole market, the resolution change and the low interest rate caused the drop. And we're still trying to address our product mix. And the last year, the VNB grew 32% already at very high level. So we expect the VNB will drop by not as much as the FYP drops.

Can I clarify your third question? Are you saying that the Taipei Fubon Bank is going to inject TWD 9 billion into Fubon Bank (China) or...?

I think at the beginning of the year, Fubon made an announcement that they will inject capital to Fubon Bank (China). And I believe the total amount is about TWD 9 billion or TWD 9.8 billion and...

Okay. We changed our plan, which will be discussed in our next Board meeting. We may reduce our capital injection from Taipei Fubon Bank to Fubon Bank (China). But we will still continue this capital injection to support their normal business expansion. And as you can see from the numbers, Fubon Bank (China) has performed, I mean, not well, but improving. They have improved their operation in 2019, and we expect the improvement will continue in the next few years. Therefore, internally, we have decided to continue support the equity required by Fubon Bank (China) for their normal business operation. But the exact number will not be as high as TWD 9 billion, it will be probably around -- I would say, around half of that number. But the exact number has to be decided by the Board later.

Can I clarify that half of that, that means you're referring to the amount by Taipei Fubon Bank?

Yes, yes, yes.

Is there any way you can shift capital from other subsidiaries, such as Fubon Bank (Hong Kong) or the financial holding company to inject to Fubon Bank (China)?

Okay. The Taipei Fubon Bank has plenty liquidity to support the Fubon Bank (China) at the moment. As to other sort of strategic adjustment, we're doing that on daily basis. So that has nothing to do with, anyway, for this particular capital injection at all.

And our next question comes from Ethan Lam (sic) [ Steven Lam ] from Bloomberg Intelligence.

Sorry, it's Steven again quickly. Also back on to the overseas bonds. So noticed that there's an increase in the allocation to corporate credit and then a decrease in financial bonds and government bonds, you can call since September or throughout the whole year. So I was just curious what has increased in terms of the corporate credit. And with that logic, could you see any opportunity due to the widening of the credit spread in the last few weeks? That's first question. Second question is on the Life VNB margin. So noticed that there's quite a bit of a drop in the last 2 quarters of 2019. I'm curious, should we expect a similar decline in the VNB margin in the near term and then sort of a stabilization? And last question is on the banking side. So I recall from the Chinese call that there is a comment about 3 to 5 basis points pressure in the NIM. And I'm curious with that outlook, does that factor in the risk appetite of your loan mix, i.e., is it also already including that you may increase allocation to safer asset classes and back away a bit more from SMEs or other riskier clientele, so to speak? And also from the risk appetite or preference standpoint, given the COVID-19, given the global scale and low interest rate environment, I'm just curious how would you rank your risk appetite between, say, a Taiwanese client versus Mainland Chinese clients or even Southeast Asian markets per se?

Okay. About the corporate, as you can see on the Page 29, we still increase -- or we've increased our corporate issuance in the last quarter, and most likely it's in corporate bond. So here's my answer.

On the VNB margin, we expect the margin will be keeping the same as the last quarter.

Okay. Sorry. On the corporate bond question, is there any color to provide? Like what kind of corporate bonds you have increased, like financial institutions or more like manufacturing? Any -- and do you actually invest in mortgage-backed securities by any chance?

No, no, no. Actually, no, it is the rate. So you're too low in terms of the mortgage bank security. So most likely just a corporate issue.

Okay. I see. And of those opt-in investment-grade for the corporate credit, that leaves...

Yes.

BBB+? Yes.

No further -- sorry.

No further comment on this. Okay. Now we're back to our risk appetite for the bank.

Okay. On the China -- on Taipei Fubon Bank, the risk appetite we refer to earlier this afternoon, we do the credit review on very frequent basis due to the coronavirus situation. And for those industry sector directly impacted by the such situation, yes, we do have control on the credit appetite. But it doesn't affect materially on our risk appetite, especially in SME or any big corporate, but its review on case-by-case basis. And for the region allocation, for China, we don't want any new deal with the big China corporate NIMs, and if we're still doing so, it won't upset our credit discipline. And for Southeastern region, yes, we will still watch the trend on the global basis and the daily cash flow [indiscernible]. So in terms of risk appetite change, [indiscernible] much material adjustment will come down.

I see. And the NIM projection, is that including also a loan mix?

Yes, yes. That's our current stance. The market has changed quite rapidly, so we'll adjust our stance accordingly.

To follow-up your earlier question for the financial institutions, new additions investment in fixed income, we primarily invest into an A level, A-rated or higher rate kind of asset.

Thank you. At this time, speakers, there are no further questions. You may proceed.

Thank you, everyone, for taking part in this Fubon conference call today. If you have any further questions, please feel free to contact us, the IR team, who will stand by here for you. Thank you. Have a nice day.

Thank you.

That concludes today's conference. Thank you for participating. You may now disconnect.