Mega Bank Annual Report 2017

18 Mega Bank -18- Taiwanese Banking Industry & Market Overview „ Competition in the domestic banking industry is intense, and amplifying deposit spreads is not easy. The Bank has an advantageous market position in businesses with larger spreads, such as OBU and overseas loans and will strengthen the development of these niche businesses; it will also expand consumer loans to increase interest spreads. „ US dollar has gone into a rate-hike cycle, which helps increase return on US dollar assets. The US dollar deposits of the Bank are abundant, which is beneficial for expanding the US dollar loan business and increasing revenue. At the same time, while taking risks into consideration, the Bank adopts a more flexible financial operation strategy, masters the dynamics of the financial market, and creates opportunities for profit. „ Compliance requirements for financial institutions have increased in various countries; it is more difficult to operate overseas branches. The business branches of the Bank spread out globally, and there is a good foundation for the international layout; the Bank actively invested in compliance system reform, and progress is leading in the industry. In the future, it is expected to improve after hard work. While strengthening the compliance system, the Bank will look for operational niches of specific locations and give play to the advantages of international business. „ The impact of financial technology development on financial business models is increasing. The growth of mobile payments is accelerating in Taiwan; the Bank will actively participate in various mobile payment interfaces. At the same time, the Bank will also seek to cooperate with the financial technology industry, strengthen the capabilities of technological applications, plan for the transformation of physical channels, and improve the competitiveness of digital financial services. „ The economic development policies of the government are expected to bring business opportunities to banks. The government is actively promoting industrial innovation and transformation and is expected to drive domestic investment; the Bank will develop relevant key industrial opportunities by providing corporate loans, making strategic investments, and participating in national investment companies. I. Positive Factors „ In 2018, the global economic boom is expected to improve over 2017; the demand for corporate capital and the willingness to invest in the market are improving, which is beneficial for the growth momentum of loan and wealth management businesses of domestic banks and the improvement of profitability of banks. „ To cooperate with the “New Southbound Policy” promoted by the government, domestic banks focus on overseas businesses and develop new markets; supervisory authorities also continue to relax restrictions on domestic banks to undertake domestic and foreign credit cases, and encourage loans to key innovative industries, which is beneficial for domestic banks to develop new loan cases and improve bank competitiveness and revenue. „ Policy promotion, accelerated relaxation of regulations, gradually improving information security, increasing acceptance by the public, and continual expansion of cooperation and strategic alliance between the industry and technology industries help domestic banks improve innovation capabilities of financial technology products, develop the financial technology market, and develop new customers. „ The global economic boom is stable, and the United States is raising interest rates and shrinking the balance sheet, which will drive the gradual rise of interest rates in major countries; moreover, domestic interest rates are expected to be stable, which is beneficial for domestic banks to expand interest spreads of domestic and foreign loans and improve profitability.