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Balanced development of four profit engines AUM scaled up substantially

      2019-04-30

On April 30, China Development Financial (hereinafter CDF) held an investor conference to report 1Q19 results. Impacted by capital market volatility, CDF posted 2018 net profit of NT$7.85 billion. Benefiting from the recovery in global financial markets, 1Q19 preliminary net profit came in at NT$3.61 billion, up 10.2% YoY. In 2018, CDF’s total assets reached NT$2.7 trillion, up 13.6% YoY. Meanwhile, FINI holdings rose from 25.2% at the start of 2017 to 30.6% in end-March, 2019.

On CDF’s six operating strategies, Alan Wang, President of CDF, pointed out the following:

1. Capital redistribution and improving capital utilization efficiency: CDIB Capital aggressively disposed direct investment positions in 2018, with net cash recovery of NT$15.42 billion, greatly reducing the impact of capital market volatility in 4Q18 on CDF’s profitability.

2. Changing corporate culture, retail and institutional businesses advancing hand-in-hand, focusing on a business model of garnering stable income: Consumer business earnings of KGI Bank and KGI Securities contributed a significantly greater share of earnings. KGI Bank’s ratio jumped from 43% in 2017 to 59% in 2018, while that of KGI Securities climbed from 53% to 60% during the same period of time.

3. Integrating group resources to strengthen client cultivation and cross-selling synergy: The aggressive push for introducing businesses to corporate or institutional clients and cross-selling financial products to individual consumers that began in 2018 have delivered significant results. CDF will continue to offer comprehensive financial services to create synergies from subsidiaries’ cross-selling.

4. Strengthening asset management brand and improving the scale of fund management: CDIB Capital saw AUM rise from NT$38.1 billion at the end of 2017 to NT$41.8 billion at the end of 2018, up 9.8% YoY, while KGI SITE’s AUM climbed from NT$9.4 billion at the end of 2017 to NT$76.8 billion as of April 25, 2019, far surpassing our expectations.

5. Risk control and asset activation: CDF assisted subsidiaries in examining risk control mechanisms and formulating market strategies with a risk-based approach. CDIB Capital will accelerate to divest legacy direct investment positions while all subsidiaries will review and dispose idle properties.

6. Actively promote corporate governance and sustainable development: Both CDF and China Life were re-selected into the FTSE4Good Emerging Index and FTSE4Good TIP Taiwan ESG Index. CDF won the honors for the Top 50 Corporate Sustainability Report Platinum Award, Overall Enterprise Performance Award and Social Inclusion Award from TCSA. CDF was also selected for Commonwealth Magazine’s CSR Corporate Citizen Award for the first time in 2018. China Life has been ranked in the top 5% in the Corporate Governance Evaluation by the Securities and Futures Institute for four consecutive years, and was also selected for CRRA, the only global awards for corporate responsibility (CR) reporting.

Subsidiary China Life posted 2018 net profit of NT$10.18 billion, up 12.1% YoY, thanks to strong sales of policies denominated in foreign currencies, which drove first-year premium up 87.4% YoY and total premium up 46.2% YoY. In 2018, total assets reached NT$1.7 trillion, a 16.8% increase from 2017.

KGI Bank saw deposits and loans rise a significant 12.0% and 14.3% YoY, boosting net interest income by 11.9% and net fee income by 5.1%. The bank’s non-performing loan ratio stood at 0.17% at end-2018. In the face of digitalization, the bank will devote to expanding and deepening digital customers, by providing digital communication and trading services to existing customers and reaching potential customers via digital channels. In 2018 and 2019, the bank is committed to developing FinTech applications. In particular, its mobile loan and credit card application service marks the first financial regulatory sandbox experiment in Taiwan.

KGI Securities posted 2018 net profit of NT$3.76 billion. It is dedicated to providing diverse wealth management products to achieve successful customer segmentation. As of end-March 2019, KGI Securities’ wealth management AUM reached NT$106.5 billion, up 17% YoY. In response to the new continuous trading mechanism scheduled to hit the market next year, KGI Securities has launched a trading interface for customers to experience first-hand and will be among the first group of securities brokers to launch its continuous trading simulation platform next year. The firm’s first exchange-traded note (ETN), KGI TWSE Taiwan 500 Total Return Index ETN listed on April 30, 2019 serves as a new tool to satisfy investors’ need to track the performance of Taiwan’s stock market.

CDIB Capital has continued to transform into an asset manager, with NT$41.8 billion private equity fund assets under management (up 9.8% YoY) as of end-2018. In September 2018, CDIB Capital hit a strong first close for its Global Opportunities Fund with US$116 million of committed capital. The firm schedules to finish its first-round fundraising for CDIB Yida Private Equity Healthcare Fund by 2Q19, targeting RMB$800 million, and launches an NT dollar healthcare fund by end-2019.

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CDF Foundation

CDF is model of responsible corporate Citizenship. The company leads the way in maintaining good relations with Taiwanese society outside the business community by investing in day-to-day community welfare activities. In doing so, CDF reaches beyond the bounds of its role as a major investment bank and its corporate philosophy of assisting entrepreneurship and creating value for customers.
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