Shin Kong Financial : 2022 Q4 Quarterly Results

Highlights of Q4 2022 Earnings

SKFH Announces Results for Q4 2022

March 14, 2023, Taipei

Shin Kong Financial Holding Company Limited (“Shin Kong”, “SKFH”, or the “Company”, TWSE: 2888) announces consolidated results of the Company and its subsidiaries for the fourth quarter of 2022.

HIGHLIGHTS

• SKFH recorded a consolidated after-tax profit of NT$2.17bn for 2022. EPS was NT$0.10. Total group assets amounted to approximately NT$4.9 trillion, up 3.5% year-on-year. Consolidated shareholders’ equity was NT$212.13bn, and book value per share was NT$13.41.
• Shin Kong Life continued to promote foreign currency policies and value-focused products, with first year premium (FYP) growing 1.7% year-on-year to NT$53.70bn, securing a market share of 6.9%. Consolidated shareholders’ equity was NT$139.43bn, and equity-to-asset ratio was 3.94%.
• Shin Kong Bank’s loan book grew 4.7% year-on-year to NT$754.20bn, driving up net interest income by 8.8% year-on-year. Consolidated after-tax profit for 2022 reached NT$6.86bn. Asset quality remained benign with NPL ratio of 0.12% and coverage ratio of 1,090.09%.
• MasterLink Securities recorded a consolidated after-tax profit of NT$0.36bn for 2022, as brokerage market share was 3.43%, remaining 7th place in the industry. MasterLink Securities won “Best Securities Firm Wealth Management Trust Innovation Award” in 2022 Trust Award for its efforts to optimize wealth management business.
• SKFH was selected as a constituent stock of the DJSI World Index for 2 consecutive years, reflecting its achievement on corporate sustainability development. The recent inclusion in the Bloomberg Gender-Equality Index also recognized the company’s commitment to improving gender equality in the workplace and creating a friendly, inclusive working environment.

SHIN KONG LIFE: FIRST YEAR PREMIUM GREW AND COST OF LIABILITIES FELL

Shin Kong Life posted a consolidated after-tax loss of NT$4.79bn, due to lower capital gains from

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Highlights of Q4 2022 Earnings

equities and fixed incomes amid global market volatility, mark-to-market loss on investment property of NT$5.49bn, and hedging cost of NT$6.39bn.

FYP increased 1.7% year-on-year to NT$53.70bn, securing a market share of 6.9%. Shin Kong Life has been focusing on foreign currency policies and value-focused products to acquire stable interest spreads, optimize asset liability matching, stabilize VNB margin, and accumulate CSM. FYP of foreign currency policies for 2022 was NT$41.28bn, accounting for 76.9% of the total. First year premium equivalent (FYPE) reached NT$19.28bn, and FYPE/FYP was 35.9%, beating the industry average. Cost of liabilities decreased 4 bps from 3.73% to 3.69% in 2022.

Shin Kong Life progressively invests in overseas fixed incomes, deploying funds in corporate bonds with stable credit quality across sectors, including communication, consumer, utilities and financials. As of the end of 2022, the company’s overseas fixed incomes position topped NT$2.3 trillion, and the funds were mainly invested in USD-denominated bonds. Investment return for 2022 was 3.21%, and recurring yield before hedging was 3.46%, 5 bps higher year-on-year.

Looking into 2023, Shin Kong Life will optimize its organizational constitution. Foreign currency policies and value-focused products will be promoted to accumulate CSM. The life insurer will actively promote digital service to enhance service efficiency. In addition, Shin Kong Life will continue to invest in fixed incomes and outperforming equities to enhance investment income.

SHIN KONG BANK: CORE BUSINESSES STRENGTHENED AND ASSET QUALITY REMAINED SOLID

Loan balance increased 4.7% year-on-year to NT$754.20bn, with balanced growth in consumer and corporate loans, up 4.8% and 4.5% year-on-year, respectively. NIM for 2022 increased 2 bps year-on-year to 1.26%, and NIS increased 3 bps year-on-year to 1.68%. Asset quality remained solid. NPL ratio and coverage ratio were 0.12% and 1,090.09%, both better than the industry average.

Wealth management income for 2022 was NT$2.57bn, broadly flat compared to the previous year. Mutual fund sales dropped amid volatile market conditions; however, income from fixed income products and bancassurance increased 32.5% and 20.5% year-on-year, respectively, offsetting the decline in mutual funds fee income. Shin Kong Bank continues to build strong relationship with valued clients, and the number of high-net-worth clients increased 10.7% year-on-year. Also, wealth management AUM grew 8.1% year-on-year, growing steadily with continued effort to actively attract new funds and client base.

In 2023, Shin Kong Bank will optimize deposit and loan structure in order to control funding cost and maintain net interest income growth. By leveraging AI lending, Shin Kong Bank will actively

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Highlights of Q4 2022 Earnings

expand SME loans and unsecured consumer loans. Besides, to optimize customer experience, the company continues to reinvent digital platforms and develop digital products; a new m-banking app will be launched in the third quarter. The number of active digital customers and incomes from digital platforms and products are both aiming at double-digit growth.

MASTERLINK SECURITIES: PERFORMANCE ENHANCED AND BUSINESS MOMENTUM STRENGTHENED

Due to the decline in average daily turnover, brokerage income declined 29.7% year-on-year to NT$4.86bn. Brokerage market share was 3.43%, ranked 7th place in the industry. However, MasterLink Securities managed to balance its business interests and adjust investment strategies, achieving a consolidated after-tax profit of NT$0.36bn for the year.

Going forward this year, MasterLink Securities will adopt the strategy of “enhancing operational efficiency, expanding profit sources, optimizing digital experiences, stabilizing investment income and promoting ESG” to cope with market challenges ahead and demonstrate value.

OUTLOOK

SKFH will continue to leverage the strengths of its subsidiaries, integrate resources, and develop cross-subsidiary synergies to maximize value for shareholders. The company’s future development strategy will be guided by the following six main principles:

• Stabilize profitability to increase shareholders’ equity
• Integrate resources to deepen synergies
• Optimize customer experience through digital transformation
• Create profit sources and expand markets
• Focus on compliance as well as risk control and deliver fair treatment to customers
• Implement corporate governance and promote sustainable operations

Disclaimer:

This document and the attachments distributed herewith include forward-looking statements. All statements, other than statements of historical facts, that address activities, events or developments that Shin Kong Financial Holding Company expect or anticipate will or may occur in the future (including but not limited to projections, targets, estimates and business plans) are forward-looking statements. Shin Kong FHC’s actual results or developments may differ materially from those indicated by these forward-looking statements as a result of various factors and uncertainties, including but not limited to price fluctuations, actual demand, exchange rate fluctuations, market shares, competition, changes in legal, financial and regulatory frameworks, international economic and financial market conditions, political risks, cost estimates and other risks and factors beyond our control. In addition, Shin Kong FHC makes the forward-looking statements referred to herein as of today and undertakes no obligation to update these statements.

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