Strengthening our Core Business FY2015 Investor Conference Jesse - - PowerPoint PPT Presentation

Confidential Presentation to

FY2015 Investor Conference

Strengthening our Core Business

Jesse Ding, Chairman March 10, 2016

Notice

Certain information contained herein constitutes “forward-looking statements”, which can be identified by the use of forward- looking terminology such as “may”, “will”, “should”, “expect”, “anticipate”, “project”, “estimate”, “intend”, “continue”, or “believe” or variations thereon or comparable terminology. Although we believe that the expectations and assumptions reflected in these forward-looking statements are reasonable, undue reliance should not be placed on these forward-looking statements. Due to various risks and uncertainties, actual events or results or the actual performance of EnTie Commercial Bank, Limited and its subsidiaries (“EnTie”) may differ materially from those reflected or contemplated in such forward-looking statements. The forward-looking statements included in this presentation are made only at the date of this presentation and, except as may be required by applicable laws, EnTie does not undertake to update such forward-looking statements to reflect new information, future events or otherwise. Certain of the economic and financial market information contained herein (including certain forward-looking statements and information) has been obtained from published sources and/or prepared by other parties. While such sources are believed to be reliable, none of EnTie or its representatives or any other person assumes any responsibility for the accuracy of such information. Subject to certain exceptions under applicable laws, any person who receives certain material information relating to the business of EnTie which may be contained in this presentation is prohibited from trading in the shares of EnTie or undertaking certain other transactions related to such shares until such material information is deemed to be made public under applicable laws. By accepting delivery of this presentation, you agree to treat the information contained herein as confidential and to treat it in a confidential manner. You agree not to reproduce or provide this presentation to others without prior written consent of EnTie Commercial Bank, Limited.

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Agenda

Introduction of EnTie Bank Financial Performance 2016 Outlook Appendix - Share Price Performance

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New President and CEO (1)

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High structured succession planning and talent development program

Education 1986 BA, National Taiwan University

Claudie Yu, 6 years of experiences in EnTie

2014 to date Head of Retail Banking, EnTie Commercial Bank 2009 - 2013 Head of Wealth Management Banking, EnTie Commercial Bank 2008 - 2009 Chief Operating Officer, Noah Private Wealth Management (Shanghai) 2007 - 2008 Private Banking Relationship Manager, Senior Vice President, Credit Suisse Bank, Hong Kong Branch 2004 - 2006 President & Chief Operating Officer, ABN AMRO Asset Management, Taiwan 2002 - 2004 Head of Financial Institutions Business Development, ING AnTai Life Insurance, Taiwan 1997 - 2002 Senior Vice President, Head of Marketing & Product Development, Personal Financial Services, HSBC Taiwan 1989 -1997 Various positions within Citibank Consumer Banking, Taiwan 26+ years of experiences in foreign and local commercial banks

Notes : (1) The effective date will be upon the approvals of the reorganization and revision proposals of Regulations Governing the Organization of Managerial Departments from the board of directors at the next board meeting (April 28, 2016), as well as the approval from the FSC, whichever occurs latter

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INTRODUCTION OF ENTIE BANK

Snapshot of EnTie

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Company overview

 EnTie is one of the 16 “ new” private banks established in the wave of liberalization of Taiwan’s banking industry in early 1990’s  The Bank completed its initial public

• ffering on GreTai Securities Market in

1995 and moved to list on Taiwan Stock Exchange in 1999  EnTie acquired the Seventh Credit Cooperative of Taipei City in July 1998  The Bank is now operated with 1,803 employees and 54 branches, of which 34 are in the affluent Greater Taipei area (as

• f Feb.26)

 In November 2007, Longreach Group made an investment in EnTie, acquiring

• approx. a 58% stake with full management

rights  EnTie’s latest ratings is A(twn)/F1/Stable assigned by Fitch Ratings in 2015  As of March 9, 2016, the Bank’s market cap is NT$24.90bn or US$0.75bn

(NT$ million) 2014 2015 Income Statement Items Net Interest Income 4,138.82 4,275.68 Net Fee Income 2,482.08 2,246.59 Operating Income 7,184.25 7,857.42 Pre-Provision Operating Profit 3,925.97 4,528.51 Net Profit (stated) 3,201.48 3,295.13 Basic EPS (NT$) 1.91 1.96 Balance Sheet Items Gross Loans 193,779.25 182,966.20 Total Deposits 262,745.65 248,627.26 Total Assets 335,076.45 322,504.81 Shareholders’ Equity (stated) 27,976.35 30,482.15 Stated Book Value Per Share (NT$) 16.66 18.15 Key Ratios (%) Net Interest Margin / Net Interest Spread 1.28% / 1.25% 1.41% / 1.38% Fee as % of Operating Income 34.55% 28.59% Cost-to-Income Ratio 45.35% 42.37% ROAA / ROAE 0.94% / 12.03% 1.00% / 11.27% Loan-to-Deposit Ratio 73.75% 73.60% CET1 / Tier 1 / CAR 10.22% / 10.97% / 12.51% 11.73% / 12.42% / 13.22% NPL Ratio / Coverage Ratio 0.38% / 323.45% 0.98% / 149.33%

Introduction to EnTie Bank

Selected Key Metrics / Ratios

Sector Leading Profitability Profile…

1.17 0.65 EnTie Industry Pre-tax ROAE (L5Y Avg.) (%) (1) Pre-tax ROAA (L5Y Avg.) (%) (1) 33.71 25.68 EnTie Industry

…Driven by Fee Income Franchise

33.36 34.64 32.75 35.36 32.46 '11 '12 '13 '14 '15 Fee Income Ratio (L5Y Avg.) (%) (3) Fee Income Ratio Development (%) (3) 43.00 52.69 EnTie Industry

…And Strong Cost Discipline and Efficiency

2.19 1.60 EnTie Industry Cost-to-Income Ratio (L5Y Avg.) (%) (3) PBT per Employee (L5Y Avg.) (NT$MM) (1) 12.42 9.87 EnTie Industry

High Quality Capitalization (4)

11.73 9.56 EnTie Industry Tier 1 (%) CET1 (%)

A Rare, High Quality Franchise

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16.47 10.55 EnTie Industry

Notes: (1) For EnTie, PBT is adjusted for preferred dividends, and ROAE is calculated based on IFRS-based shareholder’s equity (2) For industry data, annualized 2015 figures based on 9M2015 numbers are adopted when calculating averages (3) Fee income ratio is calculated as net fee income / (net fee income + net interest income); for EnTie, net interest income and operating income are adjusted for preferred dividends (4) 2015 year-end data for EnTie; 1H2015 for industry

Introduction to EnTie Bank

(2) (2) (2) (2)

Diversified financial services platform

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 Focused on the distribution and management of Consumer Finance products (such as mortgage, personal loans, credit card, etc)  Strategically focused on channel management, controlling time and speed in response to demand and changes

• f retail market

 Fee income and AUM focused wealth management distributes insurance, mutual funds and structured investment products to qualified customers through 54 branches  Strategically focused on providing high net worth customers installment type protection-based insurance product

Consumer Finance (15.2% of 2015 Operating Income) Wealth Management (16.1% of 2015 Operating Income) Retail Banking (31.3% of 2015 Operating Income)

Business Segments

 Offer loans, trade financing, cash management, trusts, syndicated financing and structured credit solutions to corporate customers  Strategically focused on niche mid-sized enterprise segment with broad industry focus and provided tailor-made financial solutions  Responsible for deployment of funds, controlling on funding cost, ALM, and interest rate/FX related trading  Following the approval to research and promote newly financial products

Corporate Banking (50.2% of 2015 Operating Income) Financial Markets (18.5% of 2015 Operating Income) Corporate Banking And Markets (68.7% of 2015 Operating Income)

Introduction to EnTie Bank

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FINANCIAL PERFORMANCE

2015 Strategies

We continued to focus on core earnings growth in FY2015 by strengthening asset-liability management and emphasizing yield-enhancing asset expansion in a prudent risk-calculated way  Optimized funding structure by increasing demand deposits and re-balancing corporate/retail mix  Expanded corporate customer base by better sourcing structured deals in our targeted segments  Increased unsecured lending to consumer with accurate segmentation and pricing  Deepened relationship with existing wealth management customers by penetrating into the next generation of the family  Captured financial market opportunities by dynamic asset allocation assisted by trading discipline in volatilities  Integrated enabling functions by a timely and comprehensive management reporting system

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Financial Performance

2015 Performance Summary

 Stable top-line growth achieved in 2015 despite the uncertain macroeconomic environment: EnTie reported a PPOP of NT$4,529MM for 2015, a YoY growth of 15.36% vs. 2014  Through precise market segmentation and improved asset-liability management, EnTie has grown its NIM and interest spread by 13 bps  Structured finance and wealth management business continued providing steady fee income  Generated strong PPOP growth by strict cost control  EnTie’s reported net income for 2015 of NT$ 3,295MM, a modest YoY increase of 2.94% mainly due to provision made to certain accounts  Improved profit structure through improving asset-liability management  NPLs increased, but the well-planned drawdown conditions and collateral arrangement ensured future recovery  The strategy of focusing on core business development, the efficient cost management, and the steady profit performance have created strong and high- quality capital to support future business growth

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Financial Performance

Growing Fee Income

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Net Interest Income

NT$4.7bn

Net Fee Income

NT$ 2.2bn

2007 2008 2009 2010 2011 2012 2013 2015

2.2 | 32% 68% | 4.7

2.1 1.9 0.9 0.4 | 35% | 33% | 23% | 10%

EnTie transformed from being a funding source for customers to a financial service and solution provider

4.1 65% | 3.9 67% | 3.1 77% | 3.4 90% |

Note: Net interest income is adjusted for preferred dividends

Financial Performance 4.6 67% | 3.3 66% | 2.3 | 33% 1.7 | 34% 4.1 87% | 0.6 | 13% 2014 65% | 4.5 2.5 | 35%

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NIM and spread expansion reflects precise market segmentation and improved asset-liability management Net Interest Income and Margin Spread

NIM Expansion

Note: Adjusted for preferred dividends

Financial Performance

4.1 3.4 3.1 3.3 3.9 4.1 4.6 4.5

4.7

1.44% 1.28% 1.12% 1.09% 1.19% 1.20% 1.33% 1.40%

1.54%

1 2 3 4 5 6 7

2007 2008 2009 2010 2011 2012 2013 2014 2015

Net Interest Income(NT$bn) Net Interest Margin

1.84% 1.82% 1.54% 1.72% 1.83% 1.95% 1.90% 2.04%

2.21%

1.46% 1.18% 1.07% 1.07% 1.19% 1.32% 1.31% 1.37% 1.51%

2007 2008 2009 2010 2011 2012 2013 2014 2015

Loan-Deposit Spread Net Interest Spread

Loan Composition

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Optimized risk and return in pursuit of a balanced portfolio Total Loan Book

NT$183.0bn NT$96.4bn NT$86.6bn

Corporate Loans : 53% Retail Loans : 47%

Financial Performance 33.2 43.0 42.8 37.8 36.7 33.2 15.8 19.3 24.9 27.1 34.1 31.2 21.9 22.6 20.1 15.9 21.7 21.4 43.4 34.1 31.3 26.4 16.2 10.6

2010 2011 2012 2013 2014 2015

Unsecured Corporate Secured Corporate Enterpreneur Mortgage Land and Construction 81.5 69.3 72.0 72.4 77.0 76.9 2.8 7.2 7.7 5.9 6.2 8.2 3.6 2.7 2.2 2.0 1.6 1.3 1.3 1.2 1.3 0.7 0.2 0.2

2010 2011 2012 2013 2014 2015

Retail Mortgage P-Loan IDRP Others

Stable Customer Deposits Base

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Deposit Balance Split Gross Loans / Deposits

65.7 67.6 68.0 73.8 73.6

2011 2012 2013 2014 2015 69 66 69 73 76 77 87 89 92 84 146 153 158 165 160 2011 2012 2013 2014 2015

Current Account Savings Account

Deposit Cost & Net Interest Margin Core Deposits Evolution (1)

0.88% 0.98% 0.91% 0.92% 0.90% 1.19% 1.20% 1.33% 1.40% 1.54% 2011 2012 2013 2014 2015

Deposit Cost Net Interest Margin

% NT$ Bn %

Note: (1) Current Accounts include Demand and Demand Savings; Savings Accounts include Time Savings

48.6%

CASA %

• f Total

Deposits

51.9% 57.1% 62.6% 64.3%

54% 53% 48% 47% 44% 46% 47% 52% 53% 56% 2011 2012 2013 2014 2015

Corporate Retail

Deposit balance has been carefully managed to increase core deposit and to achieve higher LDR

1.7 3.2 2.4 2.2 4.9 3.7

Net Fee Income PPOP Net Income

Revenue Growth and Cost Discipline

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Superb return comes from growth in revenue and strict cost disciplines

Unit : NT$bn

29% 54% 54%

ROAE ROAA Cost / Income ratio

Note : Adjusted for preferred dividends

Financial Performance

342 197.7 323 183.0

Total Assets Loans

2010 2015

43.36% 40.32%

2010 2015

12.42% 12.64%

2010 2015

0.74% 1.12%

2010 2015

6.07% 11.18% 9.94% 9.89% 9.85% 9.86% 9.84% 10.97% 12.42% 4.64% 0.53% 1.01% 4.51% 4.41% 2.97% 2.28% 1.54% 0.80%

2007 2008 2009 2010 2011 2012 2013 2014 2015

High Quality Capitalization

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Strong and high quality capitalization underlies long term business development

Capital Adequacy Ratio

13.22%

CAR Ratio

10.71%

Financial Performance

11.71% 10.95% 14.40% 14.27% 12.83% 12.12% 12.51% 13.22%

Tier II Ratio Tier I Ratio

Investment Portfolio

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Conservative and transparent securities investment all marked to market

Investment Portfolio

Note : (1) US treasury notes of NT$7.20 bn accounts for 52% of overseas securities.

Financial Performance

Securities NT$ mm Government bonds 16,321 Corporate bonds 20,702 Overseas bonds (1) 13,795 Due from interbank 12,309 Commercial papers 7,155 CBC CDs 36,165 Stock 324 Total 106,771

CBC CDs 34% Commerc ial papers 7% Due from interbank 12% Overseas bonds 13% Corporate bonds 19% Governm ent bonds 15% Stock 0%

AAA 62% AA+ 10% AA 9% AA- 12% A+ 5% A- 2% TCRI 4 (CB) 0% TCRI 5 (CB) 0% TCRI 8 (CB) 0%

Bonds Credit Profile

NT$ Bond Foreign Currency Bond

AAA (US Gov't Bond) 52% AA- 1% A+ 26% A 17% A- 1% TCRI 4 (ECB) 2% TCRI 6 (ECB) 1%

NPL Ratio and Coverage

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NPLs increased, but the well-planned drawdown conditions and collateral arrangement ensured future recovery

NPLs and Ratios LLR and Coverage

Financial Performance

4,624 3,418 1,577 732 678 1,031 1,429 733 1,791

2.48% 1.86% 0.84% 0.37% 0.34% 0.51% 0.76% 0.38% 0.98%

• 5.00%
• 4.00%
• 3.00%
• 2.00%
• 1.00%

0.00% 1.00% 2.00%

• 1,000

2,000 3,000 4,000 5,000 6,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 NPLs (NT$ million) NPL Ratio (%)

0.88% 1.88% 0.84% 0.38% 0.72% 1.04% 1.11% 1.22% 1.46% 1.19% 1.07% 1.04% 0.96% 1.09% 1.10% 1.21% 1.28% 1.30%

2007 2008 2009 2010 2011 2012 2013 2014 2015

EnTie (%) Industry (%) 1,641 3,463 1,574 757 1,438 2,103 2,090 2,371 2,675 35.30% 101.31% 99.81% 103.45% 211.99% 204.01% 146.22% 323.45% 149.33%

• 1600.00%
• 1100.00%
• 600.00%
• 100.00%

400.00%

• 1,000

2,000 3,000 4,000 5,000 6,000

2007 2008 2009 2010 2011 2012 2013 2014 2015

LLR (NT$ million) Coverage Ratio (%)

Loan Coverage

• 16.8
• 5.8

0.5 2.4 2.6 4.5 3.0 3.6 3.7

• 5.55%
• 2.02%

0.16% 0.74% 0.73% 1.23% 0.86% 1.05% 1.12% 2007 2008 2009 2010 2011 2012 2013 2014 2015

Superior Profitability

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Continual growth in 2015 resulted in a net income of NT$3.7bn and basic EPS of NT$1.96 Net Income(1) NT$3.7bn ROAA(1)

1.12%

EPS

NT$ 1.96

ROAE(1)

12.64%

Financial Performance

Note: (1) Adjusted for preferred dividends

• 7.61
• 3.84

0.04 1.19 1.31 2.47 1.57 1.91 1.96

• 113.05%
• 35.52%

2.58% 12.42% 12.47% 19.49% 12.30% 13.53% 12.64% 2007 2008 2009 2010 2011 2012 2013 2014 2015

2007 2008 2009 2010 2011 2012 2013 2014 2015 2007 2008 2009 2010 2011 2012 2013 2014 2015

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2016 OUTLOOK

2016 Outlook

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2016 Outlook

Faced with the increasing downside risk of global economy, Central banks of Eurozone, Japan, and other countries had executed unconventional monetary policies including QE and NIRP, which yield no significant improvement to economic growth with diminishing interest income for the banks. Banks can respond by providing financial services with higher added value, and expanding fee income based businesses.  Wealth management business and structured deals continue providing steady service fee income  Balance the loan growth of retail and corporate banking with strong capitalization  Observe the digital banking development closely, analyze and adopt the most suitable financial service solutions in order to remain competitive  Continue to optimize operational processes to strengthen risk management and facilitate future business growth  Strengthen cost discipline with cost control embedded in overall management  Diversify customer base in corporate banking  Diversify product offerings in retail banking by precise customer segmentation and diversified product mix  Value and execute Corporate Social Responsibility

5 10 15 20 25 2 4 6 8 10 12 14 16 18 20

Appendix - Share Price Performance

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Trading Multiples LTM Share Price Performance

Source : Company financial statements, Taiwan Stock Exchange

• 1. As of Mar. 9, 2016

Price (NT$) Volume (mm) Volume Closing Price

Appendix

Market price (Mar. 9, 2016) NT$14.80 52-week hight/low NT$20.45/13.15 52-week average NT$15.42 30-day average NT$14.37 Common shares outstanding 1,679.68 M Market capitalization NT$24.90bn Book value per share NT$18.15 Basic EPS NT$1.96 Price to book 0.82x Price to earnings 7.55x