KGI Financial Holding Co., Ltd. (2883) Earnings Call Transcript & Summary

[Foreign Language]

Thank you, Richard. [Foreign Language] So first of all, thank you very much for joining us today. I want to give you a brief update on our first quarter performance. We had a record quarter of 9.8 billion, which compares to a loss during the first quarter of 2021. The Board approved a cash dividend of TWD 0.55 per share, which represents 4.07% dividend. We also were the first company to have approved at the Board a restricted share program, which is designed to help us increase retention, help us attract new talent and also better align the interest of our company and our shareholders. This is still subject to shareholder approval and also appropriate regulatory approvals. We're also very pleased to be the first financial services holding company in Taiwan to commit to 0 carbon emissions by 2045. A few more details on this further back in the presentation. In terms of [indiscernible] China Life had a very successful tender offer by CDF, where we increased our share to 56%. China Life also had an excellent first quarter with net income of 9.8 billion, up 121% of last year, and we recognized half of that account in our books. It also further improved the cost of the liabilities and maintained a positive spread. In terms of KGI Bank, baseline net income increased 92%, and net revenue was up 27%. [indiscernible] also increased our NIM by 12 basis points and deposits grew by 38%. And wealth management fee income increased by 20% year-on-year. CDIB saw strong recovery from valuations due to COVID early last year and reported 1.6 billion in net income during the first quarter. They launched a health care fund too at 3.1 billion and also saw AUMs reach 46.7 billion as of the end of the first quarter. [indiscernible] also had a very good first quarter with net income of 4.2 billion, led by momentum -- strong momentum across all business lines. Major improvement in overseas profit up to 703 million, now representing almost 17% of KGI Securities net income. And also managed to grow ECM and DCM market share from last year, now up to 41.5% and 13.9%. Before updating you on our ABCDE strategy, I want to remind you why this is so important to us. There are 5 major trends occurring globally and also in Taiwan that will impact all financial services businesses. The first is that customer experience now is a competitive advantage. This is more important than distribution and it's more important than brand. Also we continue to see disruption in payments. In Taiwan alone, for example, mobile payments were up 132% last year. And also fintech continues to be an area that focuses in this space in many forms, including wallets. We also expect to see new competitors and business models emerge. We see data on artificial intelligence, combined with using the cloud and robotics as the next battleground. When you combine data, AI and customer experience, that's a very difficult combination to beat. This is why companies such as Amazon, Google and Apple have been so successful. And of course, the regulatory environment continues to evolve. Regulators are encouraging more competition and also focusing more on privacy as well as encouraging open banking. These 5 trends are the reason that we came up with our ABCDE strategy. I will not go into this in detail, I'll just cover a few areas just to give you an update. [indiscernible] is obviously very important to us. We are doing a lot of work to accelerate the delivery and implementation in digital across the companies. We're moving towards a hybrid cloud environment and partnering with world-class technology and design partners. [indiscernible] in this area, we believe it's very important to help our employees become more successful by giving them better training, better leadership skills and also ensuring that what we measure aligns to our strategy. In the area of customer focus, as I mentioned, customer experience is critical and we started already working in several areas. We've started a lot of work around benchmarking, particularly in NPS. And we're not only doing work on our brand, but also on our mission, vision and values. The area of growth is also very important to us. We're focused on improving ROE and our margins by utilizing capital more efficiently, leveraging cross-sell and analytics and also looking for opportunities for partnerships and alliances. And last but not least, [indiscernible] we're very focused on enhancing our infrastructure and maintaining our ESG leadership, which we'll talk a bit more in a moment. Each one of these 5 has a very clear goal. Accelerate digital is about becoming best in the market. Becoming employer of choice is about having very high employee engagement. We believe that happy employees equal happy customers. In customers' focus, we want to be the most recommended company for our products and services. When it comes to financial metrics, we want to exceed the industry. So we want to deliver consistently for our shareholders and our communities. On the next slide, I briefly wanted to show you the wonderful management team that we have put together. This is a very experienced team that not only has experience in Taiwan, Asia, but also many other parts of the world. We have diverse backgrounds and some of these are brand-new positions that didn't exist before. Some of these people will join us in July, for example, the CRO and the Chief Operating Officer. It's also important to note that we also continue to attract and hire great local talent, and we've also began to make some key strategic hires in some of our subsidiaries. The following page was shared with you before, the key area I wanted to focus on is the top right. These are both a few financial and nonfinancial metrics that are very important to us. Net Promoter Score, I mentioned before, this measures how willing our customers are to recommend our product or services. The NPS is a measure of employee engagement. ROE, you're very familiar with, and we're very committed to improving our return on equity. Total shareholder returns is also very important, and this is, for example, one of the key metrics in the restricted share program I mentioned earlier. And the fifth box, we should be here, but we didn't include it because we're already at the top as ESG, but we want to be leaders in all 5. So let's briefly spend a few moments on ESG. As you're aware, we've been recognized for our efforts over many years, as evidenced by the recent included in the Dow Jones Emerging Market Index. We've also been recognized domestically. You can see that we also have very strong ratings across the board with some of the key rating agencies. And we continue to receive recognition from third parties for our efforts. One on the bottom right is quite interesting. This is a partnership we formed with Taiwan University and Chunghwa Telecom and Ernst & Young. We are looking to develop a risk management model that we can then share with the industry, hopefully, by the end of this year. And last but not least, I wanted to briefly mention something on 0 emissions. We're the first company -- financial services company in Taiwan to commit to reaching net 0 emissions by 2045. This is a very aggressive goal. Most other global financial services players have committed to only 2050. We have a clear plan, and we're very committed to making strong progress in this area. I'll now turn it over to Jenny to give you more details on our financial performance.

Thank You, Steve. [Foreign Language]

[Foreign Language]

Thanks, Richard. I think, obviously, the situation continues to evolve. We will make a decision closer to the date. I think it's premature to make an announcement at this stage, but we will definitely update the website and communicate via the usual methods to let people know closer to the date.

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

Thanks, Richard. Yes, this is a question I came up last time. So as we discussed, the timing really dependent on the market conditions, ensuring that we can protect the shareholder rights of both parties. And obviously, we'll have to continue to monitor that. It's our intent to get this done in the time line that has been announced. But obviously, the precise timing, we can't make a comment on at this time.

[Foreign Language]

[Foreign Language]

[Foreign Language]

Thanks, Richard. As all of you know, wealth management is very important to us. We have teams working on wealth management, both in our securities and our bank. And our goal is really to look for ways to serve our customers in the best possible way. We are thinking about different ways of doing it. But at this stage, we're not prepared to make any comments because it is early days. And our goal is to find the most efficient way to provide the best customer experience to our customers, regardless of where they originated from, subject to, of course, appropriate privacy rules and regulations. I can also add that we also believe that the opportunity is for our international businesses to work closer together in this space as well, and particularly Hong Kong and Singapore.

[Foreign Language]

[Foreign Language]

[Foreign Language]