＜Taipei＞ The Industrial Bank of Taiwan( IBT) announced today its 2009 after tax earnings of NT$ 1.653 billion, and EPS of NT$ 0.69. The IBT Group will start to aggressively establish its presence in mainland China. It is planning to invest more in China through raising venture capital fund of NT$ 2 billion and to develop business through cooperation with financial institutions in China via equity investment or strategic alliance.
Chairman Lo of IBT indicated, despite the impact from global financial tsunami and economic meltdown in 2009, the IBT was able to turn its year end bottom line from loss to gain, recording an EPS of NT$ 0.69. ROE and ROA were 6.74% and 1.34% respectively. As of the end of 2009, NPL ratio was 0.78%; NPL coverage ratio was 160.9%; BIS ratio was 15.11%; efficiency ratio was 37.65%. In terms of profitability, asset quality, financial structure and operating efficiency, the bank enjoyed high rankings among domestic banks in these areas and met the criteria set by the regulators for “healthy financial institutions.”
IBT Securities Co., Ltd., the bank’s subsidiary, has had a good performance in 2009 with its after tax earnings of NT$ 444 million and EPS of NT$ 1.06. This result has put the company among the top 30% in the industry. Its proprietary trading recorded a gain of 170%, which more than doubled the returns of the TSE stock index. Funding and gapping business also delivered a 3- year record gain. With respect to underwriting, the company was involved in 22 issues including IPO, SPO and CB, achieving a participation rate of 12.6%. Fee income from brokerage business increased greatly as the electronic trading continued to outweigh the traditional trading. Trading volume of warrants was ranked the second highest in the industry. After a year of reform, the company has become more stable financially. Net worth per share returned to above NT$ 11. The efforts to strengthen internal control and risk management have helped to enhance the company’s credit rating.
Benefitting from a decreasing interest rate, widening spread and proper risk control, China Bills Finance Corp. (CBF) has performed well in its fixed income and credit extension business. Total after tax earnings reached NT$ 1.65 billion and EPS was NT$ 0.98. Based on its capital of NT$ 13.429 billion (after capital decrease), the dividend per share is expected to be better. Looking forward, CBF shall continue to improve interest rate spread for fixed income trading and expand loan portfolio. It will also engage in trading foreign currency bonds and bills. Continued business growth is expected.
The IBT Venture Co., Ltd., managed by IBT Management Corp. (IBTM), has recently expired and will be liquidated within a year. This venture fund started with a principal of NT$ 2.364 billion. Its IRR was about 30%. It is one of the few venture funds that managed to produce gains in spite of the internet bubble. The IBT Venture II Co., Ltd., which was raised in 2008, had a capitalization of NT$ 1.2 billion. Despite the financial turbulence in 2009, the fund managed to deliver a profit of NT$ 30 million and an EPS of NT$ 0.24. It is unusual for a venture fund to produce profits in the second year. IBTM is planning to raise a new fund of NT$ 2 billion to focus on investing in enterprises in Greater China area and energy related industries.
Chairman Lo further stressed, 2010 is a crucial year for Taiwan’s financial institutions to enter into China. Building presence in China is IBT’s primary mission of the year. In addition to IBTS Asia, an entity established by IBTS in Hong Kong, the IBT established its Hong Kong branch in April 2009 to provide a financial business platform to serve the Greater China area. In response to the opening of financial markets and the bilateral cooperation and exchange across the Taiwan Strait, the bank last year formed “China Strategy Group,” headed by Ms. Tina Lo, Chief Executive of the bank’s Hong Kong Branch, to integrate group resources and facilitate cross strait cooperation to ultimately turn a leaf for the bank’s business development in China.
The IBT Group has a range of diversified financial services, including industrial banking, commercial banking, securities, venture capital, bill finance and investment trust. The Group can thus enter China in multiple ways. As the Ministry of Economics recently allowed venture capitalists to invest in China, the VC arms of the Group will seek investment targets in China aggressively. With regard to establishing financial institutions, the Group will conduct an overall planning by taking into consideration business models, geographical locations, and partners. No industrial banks have been established in China, so China has a fair interest in industrial banking, whose mission is to support strategic industries and provide both investment and loan services. Should there be an opportunity, the IBT is more than willing to introduce this business model of industrial banking to China, integrating the power of both sides to support potential industries in Greater China area.