UBOT — Interim / Quarterly Report 2018

Jul 25, 2018

Union Bank of Taiwan

Analyst Meeting Financial Review of 1H18 July 2018

1

DISCLAIMER

• This presentation is provided by Union Bank of Taiwan (”UBOT”).The information contained within is not reviewed or reviewed by any accountant or any independent third party. Users should read this material in conjunction with all other public financial and operational information filed to the competent authorities by UBOT. While we endeavor to provide accurate, complete and consistent information herein, UBOT makes no guarantee or warranties as to the accuracy or correctness of all the material contained. After this presentation is released to the public, we undertake no obligation to update any relevant data to reflect any change hereafter.

• Users should also notice that this presentation may contain forward-looking statements. Statements that are not historical facts, including statements relating to the implementation of strategic initiatives, future business development and economic performance are forward-looking statements. By their nature, forward-looking statements involve uncertainties, risks, assumptions and other factors that could cause actual developments and results to differ materially from our statement in this presentation. These factors include, but not limited to, regulatory developments, competitive conditions, technological developments, general economic conditions and management changes.

• The information, statements or opinions in this presentation do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to buy any securities or financial instruments or any advice or recommendation respect to such securities or other financial instruments. UBOT and its affiliates representatives, no matter for their negligence or any other reasons, should not be liable for any loss or damages arising from the use of or interpretation by others of information contained within this presentation or any matter related to this document.

Financial Highlights of 1H18

Profitable and steady growth

• Net income was 1.484 billion, increased 15.58% YoY.

• Operating revenue was 5.325 billion, increased 9.55% YoY.

• EPS was 0.52 in 1H18, compare with 0.49 in 1H17 , increased 6.12% YoY.

• Steady growth of business

• Net interest income was increased2.08% YoY.

• Net fee income was increased 9.37%YoY.

• Total deposits (avg. balance) was increased 4.46% YoY .

• Total loans (avg. balance) was increased 11.81% YoY.

• Cards outstanding was increased 3.86% YoY.

• Value of transactions was increased 6.88% YoY.

• Value of acquiring was increased 5.44% YoY.

Financial Highlights of 1H18 (conti.)

• Capital is adequate and robust  CAR was 13.95%, Tier 1 ratio was 12.33%, and CET1 ratio was 8.95% as of June 30, 2018.

• Good asset quality and overdue loan coverage  NPL was 444 million, NPL ratio was 0.13%, and NPL coverage ratio was 828.37% as of June 30, 2018.

Net Profit Movements

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5,325 (3,376)
NT$ mn, %
1H18
(238)
(227)
1,484
Operating Revenue Operating Expense Provision Income Tax Net Income
YoY+9.55%
1H17
YoY+5.43% YoY+15.58%
4,861
(3,202)
(100) (276)
1,284
Operating Revenue Operating Expense Provision Income Tax Net Income
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Revenue Breakdown

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NT$ mn, %
5,325
4,861
Other Income%
8.62%
13.30% Fee Income%
NII%
23.27%
23.23%
Operating Revenue
68.11% 63.47%
1H17 1H18 (Before audited)
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Financial Performance

Operating Revenue

NT$ mn

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9,907 10,288
9,806
8,850
5,325
2014 2015 2016 2017 1H18
Net Income NT$ mn EPS NT$ dollar
1.20
1.19
3,094 3,121
1.01 1.05
2,636 2,745
1,484 0.52
2014 2015 2016 2017 1H18 2014 2015 2016 2017 1H18
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Operating revenue analysis

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35.67%
35.26%
Corporate Busibess 23.53%
14.97% 20.01% 19.48%
17.29%
14.97% 14.35% 1H18
Others 9.87%
9.57% 1H17
19.48%
Corporate Consumer Trust & Ｗ ealth Investment Others
Business Business
Mgmt.
2018.06 2017.06
Investment Items portion in portion in Diff%
20.01% revenues revenues
Consumer
Business Corporate Business 14.97% 14.35% 0.62%
35.67%
Consumer Business 35.67% 35.26% 0.41%
Trust & Wealth
9.87% 9.57% 0.30%
Mgmt.
Trust & Ｗ ealth Mgmt. Investment 20.01% 23.53% (3.52%)
9.87% Others 19.48% 17.29% 2.19%
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Business Performance

				NT$ mn, %
Items	2018.06	2017.06	Diff. Amt	Diff. %
Total deposits (avg. bal.)	456,878	437,372	19,506	4.46%
Demand deposits	186,912	174,241	12,671	7.27%
Time deposits	203,185	201,963	1,222	0.61%
Foreign exchange deposits	66,781	61,168	5,613	9.18%
Total Loans (avg. bal.)	327,994	293,341	34,653	11.81%
Corporate loans	148,979	135,009	13,970	10.35%
Consumer loans	179,015	158,332	20,683	13.06%
Indirect Finance (end bal.)	21,765	17,732	4,033	22.74%

Deposits analysis

Total deposits （ avg. bal. ） TWD$456.9 billion

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Foreign exchange deposits,
14.62%
Demand deposits,
40.91%
Time deposits, 44.47%
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YoY Comparison

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NT$ bn
202.0 203.2
186.9
174.2 1H17
1H18
66.8
61.2
Demand deposits Time deposits Foreign exchange
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deposits

Deposits balance over the years Demand Deposits Time Deposits

NT$ mn

249,964 208,826 206,423 178,913 192,697 196,360 244,310 243,611 247,357 171,260 240,632 229,164 2014 2015 2016 2017.06 2018.03 2018.06 2014 2015 2016 2017.06 2018.03 2018.06 Total Deposits Date End of End of End of End of End of End of 458,790 2014 2015 2016 Jun. 2017 Mar. Jun. 453,780 Items 2018 2018 439,971 433,329 Demand 171,260 178,913 192,697 196,360 206,423 208,826 423,223 deposits 400,424 Time deposits 229,164 244,310 240,632 243,611 247,357 249,964 Total deposits 400,424 423,223 433,329 439,971 453,780 458,790 Portion of demand 43% 42% 44% 45% 45% 46% 2014 2015 2016 2017.06 2018.03 2018.06 deposits

Loans analysis

Total Loans TWD$322.4 billion

YoY Comparison

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NT$ bn
Construction
Government,
loans 10.2% Large 1H17
180.3
2.0% Corporate,
1H18
3.3%
159.4
SME, 17.8%
Consumer 57.5
45.5
loans, 55.9% 28.6 32.8 33.6 34.7
10 10.6 7.3 6.5
Other Corporate,
Government Large SME Other Consumer Construction
10.8%
Corporate Corporate loans loans
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Loans balance over the years

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NT$ mn
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Corporate Loans

Consumer Loans

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112,673
106,295
179,955
168,173
94,786 154,226
146,708
96,267
136,793
90,068
2014 2015 2016 2017 1H18 2014 2015 2016 2017 1H18
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 Government Loans is excluded from Corporate Loans.

Business Performance

Cards, NT$ Mn,%

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Items Jan. to Jun. 2018 Jan. to Jun. 2017 Diff. Amt Diff. %
Cards outstanding 2,088,891 2,011,326 77,565 3.86%
Valid cards in 6 months 1,162,846 1,126,393 36,453 3.24%
Operating income 1,196 1,132 64 5.65%
Value of transactions 6.88%
45,455 42,529 2,926
Value of acquiring 28,353 26,889 1,464 5.44%
Telephone marketing
1,799 1,376 423 30.74%
credit loan
Accounts Receivable 16,727 15,043 1,684 11.19%
Revolving banlance 5,559 5,065 494 9.75%
NPL over 90 days 45,634 41,049 4,585 11.17%
NPL Ratio over 90 days 0.27% 0.27% 0.00% 0.00%
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Credit Card Business Breakdown

Active Cards

Card Consumption Thousand Card,%

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Thousand Card,% NT$mn
3.27%
4.01% 3.20% 3.18%
4.11% 4.07% 2.98%
2.76%
3.24% 3.21% 78,284 86,566
1,153 1,162 67,323
1,084
57,881
789 813 45,861
2014 2015 2016 2017 1H18 2014 2015 2016 2017 1H18
Active Cards Market Share-5M18 Card consumption Market Share-5M18
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Per Card Spending (Monthly) NT$ dollar Gross Fee Income NT$mn
2,346
6,901 2,218
6,573 2,054
6,113 6,019 6,259 1,980
1,196
2014 2015 2016 2017 6M18 2014 2015 2016 2017 1H18
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Per Card Spending (Monthly) NT$ dollar Gross Fee Income
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NIM and Spread

Overall Leanding Rate Overall Deposit Rate Interest Spread

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NIM
Interest Spread
1.48% 1.46% 1.37%
1.45% 1.41% 1.41%
1.35%
1.34%
2.15% 2.14% 2.13% 2.10% 2.11%
1.29%
1.29%
0.67% 0.68% 0.68% 0.69% 0.70%
2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17 1Q18 2Q18
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Assets Quality

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NT$ mn,%
NPL NPL Ratio
599
0.20%
551
0.19%
440 444 0.14%
383
0.13%
0.12%
2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17 1Q18 2Q18
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NPL
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 NPL increased by Foshin Airline 200 million in 2Q17 was written off at the year ended of 2017.

Assets Quality (Conti.)

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NT$ mn, %
887.26%
828.37%
800.40%
616.54%
587.80%
492.92% 492.41% 495.23%
455.56% 472.15%
3,398 3,521 3,402 3,520 3,674
2Q17 3Q17 4Q17 1Q18 2Q18
Allowance for bad debts. NPL Coverage Ratio Avg. NPL Coverage Ratio in TW Banks
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 Avg. NPL Coverage Ratio in TW Banks of 2Q18 was from FSC Statistic of May 2018.

Capital Adequacy

NT$ thousand

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2014 2015 2016 2017 2018/2Q
Regulatory capital 32,843,359 36,390,672 38,935,126 49,740,733 50,111,882
Common share 26,380,471 28,573,380 30,419,225 31,867,478 32,153,086
Other tier 1 capital 0 0 1,664,565 12,146,864 12,115,582
Tier 2 capital 6,462,888 7,817,292 6,851,336 5,726,391 5,843,214
Risk Weighted Assets 248,800,854 275,981,855 288,993,781 316,857,171 359,101,387
Risk Weighted Assets
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Capital Adequacy Ratio

CET1 Ratio Other Tier 1 Ratio Tier 2 Ratio

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15.70%
13.95%
13.47% 1.81%
13.20% 13.19%
1.62%
2.60% 2.84% 2.37% 3.83%
0.57% 3.38%
10.60% 10.35% 10.53% 10.06%
8.95%
2014 2015 2016 2017 2018.06
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