SinoPac Financial Holdings Company Limited (2890.TW) Earnings Call Transcript & Summary

Thank you for listening to SinoPac Holdings first quarter financial results. Please note that SinoPac Holdings does not hold an english version Analyst Meeting. This presentation only includes explanation of the operating results and does not include a Q&A session. This presentation and the presentation materials distributed here with may include forward-looking statements. Page 1 explore green opportunities and fulfill sustainability commitments. As of April 2022, SinoPac Holdings has been the only financial holding company in Taiwan to enjoy positive growth. In the first 4 months of 2022, SinoPac Holdings preliminary net income totaled TWD 5.6 billion, slightly increasing against the downward market trend. In addition, SinoPac Holdings sustainable governance was recognized by many prestigious institutions. In first quarter, SinoPac Holdings was added to the DJSI World Index awarded a Silver class of S&P Global Sustainability Year book 2022 and ranked in the top 5% of Taiwan Stock Exchange corporate governance evaluation for the third consecutive years. In March 2022, SinoPac Holding planned to net-zero emissions in our own operations by 2030 and reduce financed emissions from our customers' portfolio to net-zero by 2050. The Sankar Holding is preparing to launch an implementation plan in 2 years, establishing science-based targets and increasing renewable energy financing. As of March 2022, Bank SinoPac solar energy loan balance surpassed TWD 61 billion, and our market share in installed PV capacity was the largest in Taiwan at roughly 25.5%. Moving forward, SinoPac Holdings aims to develop a green finance e-com system that links our stakeholders together through capital markets and financing activities. Page 2, executive summary. SinoPac Holdings first quarter net revenues of TWD 12.5 billion increased 19% quarter-over-quarter and 7% year-over-year, continue to reach new highs. Net income of TWD 4.4 billion to increase to 29% quarter-over-quarter and flattened year-over-year. Annualized ROE was 10.96%. Net interest income of TWD 5.9 billion increased to 2.7% quarter-over-quarter and 12.6% year-over-year was driven by the steady growth of interest-earning assets and net interest margin. Net fee income of TWD 4.9 billion flattened compared to last year. Wealth Management and syndication fee revenues of Bank SinoPac increased. However, securities fee income slowed down due to lower market turnover. For asset growth, SinoPac Holdings total assets of TWD 2.4 trillion increased by 1.7% quarter-over-quarter with banking loans of TWD 1.3 trillion increased by 6.9% quarter-over-quarter. Capital remains sufficient. The first quarter SinoPac Holdings CAR was 131%. Bank SinoPac BIS and Tier 1 ratios reached 15.1% and 12.2%, respectively. Lately SinoPac Holding was added to DJSI World Index and ranked in the top 5% of Taiwan Stock Exchange corporate governance evaluation for the third consecutive year and listed top 10% of the financial sector for the second continuous year. Page 3, SinoPac Holdings financial highlights. SinoPac Holdings total assets increased 1.7% quarter-over-quarter and 9.4% year-over-year. Both Bank SinoPac and SinoPac Securities total assets increased. SinoPac Holdings first quarter net revenues and pretax net income both reached new highs. Net income of TWD 4.4 billion flattened compared to last year, simply because of higher tax expenses. EPS was TWD 0.39 with annualized ROA of 0.74% and ROE of 10.96%. Page 4, Bank SinoPac financial highlights. The first quarter net interest income, net fee income and income before tax of Bank SinoPac all reached historical highs. Annualized ROA and ROE raised to 0.68% and 10.44%, respectively. Noninterest income increased to 12.3% year-over-year, benefiting from continuous increase of both interest-earning assets and net interest margin. Net fee income grew 18.4% year-over-year, driven by robust wealth management and syndication fee revenues. The first quarter loan-to-deposit ratio increased to 5.6% quarter-over-quarter to 71%. The Bank SinoPac NPL ratio of 0.15% outperformed peer's average. The capital remains sufficient. Page 5, SinoPac Securities financial highlights. SinoPac Securities first quarter net income of TWD 0.8 billion decreased to 24% year-over-year due to decreasing market turnover and higher market volatility. The market share and average daily balance of margin trading have steadily increased, thanks to an ongoing revenue diversification strategy. Page 6, SinoPac Holding profit contribution by subsidiaries. In first quarter, Bank SinoPac contributed 80% of SinoPac Holding net income and SinoPac Securities contributed 17%. Page 7, SinoPac Holding P&L breakdown. From a consolidated basis, the first quarter SinoPac Holding net revenues increased 19% quarter-over-quarter and 6% year-over-year. Pretax net income increased 35% quarter-over-quarter, reaching a historical high. Net income slightly decreased due to higher tax expenses. Page 8, SinoPac Holding net revenues breakdown. The first quarter of SinoPac Holding total revenues of TWD 12.5 billion increased to 18.5% quarter-over-quarter, hitting a record high. Among the 3 major revenues of SinoPac Holding net interest income maintained a steady growth and reached a new high. In addition, net fee income was reported as the second highest figure in history. Page 9, Bank SinoPac NIM and spread. Compared to last quarter, interest-earning assets increased 3.6% quarter-over-quarter to TWD 2.06 trillion. Net interest income was TWD 5.4 billion increased 2.9% quarter-over-quarter. Spread increased by 3 bps quarter-over-quarter with sequential expansion for 7 quarters. On the rate hike expectation, we took a prudent approach to bond investment. Net interest margin increased by 1.7 bps quarter-over-quarter. Page 10, bank sale and loan structure. Total loans increased by 6.9% year-to-date, mainly boosted by FX loans. The percentage of FX loans rose to 22.2% and the percentage of USD loans increased to 15.4%. The average loan yield increased by 3 bps quarter-over-quarter, driven by the rate hike environment and increasing FX loan balance. Page 11, Bank SinoPac deposit portfolio. Total deposit of TWD 1.82 trillion that decreased to 1.5% year-to-date due to the decrease of NTD time deposits. NTD time deposit decreased 7.1% year-to-date to help lower funding costs and reduce the residual funds considering ample market liquidity. The percentage of NTD deposit decreased to 66.5%. And Page 12, SinoPac Holdings net fee income. First quarter SinoPac Holding net fee income of TWD 4.9 billion increased to 43% quarter-over-quarter was boosted by robust wealth management and loan-related fee revenues. Wealth management fee income increased by 159% quarter-over-quarter and 10% year-over-year, which was contributed by strong bancassurance momentum. Affected by lower market turnover, securities fee income decreased 16% quarter-over-quarter and 21% year-over-year. However, the total net fee income of SinoPac Holdings still set the second highest record in history, just slightly lower than the same period last year. Page 13, SinoPac Holdings operating expenses, the first quarter CI ratio of 52% lower than the last 4 quarters of 54%. Operating expense remains under control. Page 14. Bank SinoPac asset quality. The first quarter NPL ratio was 0.15%, outperforming peer's average. The NPL coverage ratio was 869%, and the loan coverage ratio was 1.31%, asset quality remains benign. We maintained our whole year's guidance of credit cost at 15 to 20 bps. Thank you for listening. If there are any questions, please feel free to reach us. You can click or scan the QR code for our IR mailbox and official website. We look forward to hearing from you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]