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Annual Report 2015
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Message to Shareholders
Global economy continued to recover on a lower-than-expected pace as it was in 2014. Except for U.S. who kept up the
momentum, others including Euro Zone, Japan, China as well as emerging economies were dissatisfied the previously
envisioned. With regard to Taiwan, as export performance, private consumption and capital expenditure were impacted
by the global economy, the economic growth rate was held back to 0.75%, the worst in recent six years.
Despite the decelerating economic growth pace across the world and increased volatility in financial market which led to
lower-than-expected revenue from treasury operations, growth in Corporate Banking, Retail Banking and Wealth
Management Business were outperformed. Profit before tax of the Bank reached TWD30.25 billion while financial
position and asset quality remained at satisfactory level, with NPL ratio at 0.08%; coverage ratio at 1,723%; capital
adequacy ratio at 13.16% and Common Equity Tier I Ratio at 11.23%, retained the preeminent position in banking
industry.
With respect to global presence which focused on China and Asia Pacific region, the Bank has successively established
its Suzhou Branch, Wujiang Sub-Branch, Kunshan Sub-Branch and Ningbo Branch in China following the stage of
gradual opening of cross-strait financial services. In addition, by means of establishing strategic alliance and business
relationship with leading Chinese banks, RMB related business volume, as well as the asset pool, have shown substantial
growth. Looking ahead, the Bank will make every endeavor to entrench the service network in Asia Pacific market with
the intension to build solid asset and profit pool from OBU and overseas service network.
Operation Results of 2015
I. Global & Domestic Economic Dynamics
1. Economic Growth
In 2015, the developed countries presented modest recovery while overshadowed by decelerating growth in emerging
countries, as a result, the global economic growth kept at a slower-than-expected pace for a second consecutive year. To
look into 2016, IMF suggests a 3.4% GDP growth rate for global economy, from which modest growth is expected for
some specific advanced economies and a bottom-up growth pattern is expected for emerging countries. Nevertheless, the
expectation of US dollar’s appreciation along with the downturn and rebalancing risk concerns over China, which may
expand the instability in global financial and commodity market, cast a shadow on brightening global prospect.
As for Taiwan, in 2015 as a whole, the real GDP rose merely a margin up. As of 2016, since the Legislative Yuan has
announced budgetary increase for infrastructure and R&D investment, it is expected to move up the domestic demand
and export volume. The Directorate-General of Budget, Accounting and Statistics (DGBAS) forecasts GDP growth rate
at 1.47%. Nonetheless, cautions are warranted for implications from anticipated tighter U.S. monetary policy, risk arising
from economic downside and the supply chain localization in China, and the volatility of oil and commodity price.
2. Financial Market
The Central Bank of Republic of China (Taiwan) maintained the major interest rate references stable until the third quarter
of 2015, where economic leading indicators suggested possible economic distress ahead. In light of the signaled concerns,
the Central Bank announced 0.125% interest rate cut on re-discount rate on September and December separately to
1.625%, after six and a half years of no interest rate adjustment. The average overnight call-loan rate also dropped to
0.275% by the end of December 2015.
With regard to NT dollar exchange rate, the expectation of “Shanghai-Taiwan Stock Connect” led to NT dollar
appreciation from April to July 2015, and then it depreciated after Federal Reserve raised interest rate and signaled an
upward trend. Affected by this confluence, the average exchange rate of NT dollar for 2015 was at NT$31.80 to one US
dollar, depreciated by 6.4% compared to NT$29.77 for 2014, the largest depreciation recorded after 2012.