Thank you for standing by, and welcome to Fubon Financial's third quarter 2024 financial results. The call will be in listen-only mode. Questions from the investors and analysts will be taken at the end of the presentation. Additionally, questions can also be submitted with text through the webcast system. This call is being recorded. If you have any objections, you may disconnect at this time. Now I will hand the call over to your host, Ms. Amanda Wang, IR Officer of Fubon Financial Holdings. Ms. Wang, please begin.
Thank you and welcome everyone to join Fubon's third quarter briefing. Firstly, please turn to page four. The overview that you can see, the first nine months we record a strong result. The net profit reached over TWD 120 billion with nearly 79% year-over-year growth. And the total asset and net worth also grew along with the result. All the key drivers come from all across the major subsidiaries, including Life, Banks, Insurance, and Securities. In Fubon Life, the net profit is of TWD 77.9 billion. That's a top among the local Life peers in Taiwan. While the driver behind is the strong investment result and also the underwriting premiums outcome. And in the meantime, the capital position remained a strong position. In Taipei Fubon Bank, the net profit of over TWD 20 billion reached another record high and also higher than the four-year result last year.
The driver behind mainly comes from the net interest income that grew 9.6% and also the net fee that grew nearly 40%. While the franchise from the active credit cards and also card spending continued to expand. And also the customer size from digital platform that recorded over five million size. In Fubon Insurance, the profit is over TWD 3.4 billion in the first nine months. While the driver behind also comes from both the underwriting and also the investment. In Fubon Securities, the net profit of over TWD 8 billion with the strong growth that comes from the market strength and also the company's franchise expansion. On page five, the net profit numbers, as you can see here, we reached a strong result. And in the meantime, the first 10 months net profit continued to grow with a net profit of TWD 147 billion and also EPS of TWD 9.27.
On page six, the net profit from all across the major subsidiaries shows growth, including the Life grew 81%, Taipei Fubon Bank increased 24%, Securities up 48%, and Fubon Insurance earnings turnaround. On page seven, the scale from assets and net worth continued to grow, and also the book value per share reached over TWD 61. In ROA and ROE on annualized basis, each also reached 1.4% and 18% respectively. On page nine, on the ESG front, on the back of the key major strategies, we demonstrate the achievement and also the awards from across the subsidiaries. On page 11, we move on to Fubon Life. In Fubon Life, the underwriting results, we can see the premiums result all outperform the industry average. With FYP growth of over 15%, renewal premium of over 7%, and total premium of over 9%.
On page 12, the composition of FYP mix, we can see we change more toward the higher CSM product, mainly from the regular pay and protection type, so the regular pay overall speaking increased to over half that reached 58% of the total FYP, and while the foreign currency policy is another growth angle that reached 40% of total FYP. On page 13, the FYPE growth also outperformed compared to industry average, and as a result of the regular pay's increase, the VNB's growth of 17% is the result that you can see as well. On page 14, the channel's contribution by FYP and FYPE that continue to deliver a balanced strategy between bancassurance and tied agent , which both contribute over 40% of the company's FYP, and in the meantime, the bank's contribution continued to be the highest compared to our peers.
From FYPE's perspective, we can see across all channels deliver growth. That again shows the focus of a regular pay's product strategy. On page 15, from the investment perspective, the spotlight this quarter, this first nine months is from the equities allocation in domestic and overseas. Both record annualized return of over 20%. That reflects the capital gains and also from the private equities investment. In the meantime, we can see our deposit and cash equivalents allocation of 4.5%. That's relatively higher. That also shows that we continue to have room for further allocation going forward. On page 16 is for your reference that our allocation overseas fixed income is pretty much at a stable level. On page 17, the investment income, you can see the bottom of the two lines table of the return before and after hedge both shows a meaningful improvement.
That again comes from the equity investment contribution. While the first line in the table shows the recurring investment income is a decline YoY that mainly reflects the cash dividend contribution is lower this year given our allocation strategy is more toward growth oriented. And also that on the other hand is that increase from interest income and also mutual funds contribution. On page 18, the hedging results, we can see on the upper left-hand side, the FX losses in the third quarter of 52 basis points. That's mainly because of the weakening of the dollar in Q3. While the first nine months we maintained to deliver positive gains of 27 basis points. And the dark color on the upper left-hand side that you can see the recurring hedge cost also shows increase in Q3.
It's mainly because of the higher percentage allocated in NDF and also higher cost as a result of the currency movement. And that led to a slightly higher trend compared to Q2. While we expect to see the currency swap, that's also the key element in the recurring hedge cost just shows improvement going forward. In the lower left-hand side, the recurring return that both indicators shows a decline year- over- year. That again is because of the cash dividends decrease and also because of the recurring hedging cost increase. In page 19, the spread between cost of liability and total investment return continued to expand. While the break-even point between this and after hedge recurring still a negative one, mainly due to the rise of the recurring hedge cost.
In page 20, the investment performance from the unrealized balance perspective, we continue to keep unrealized gain as of end of September, and we see the level to improve as of the November level. While the equity to asset ratio maintained at a decent level, as you can see here, equity to asset at 11.6%. And next, let's move on to Taipei Fubon Bank. In page 22, the total revenue delivered strong growth of 17.6%, mainly driven by the NII and also the fee. NII comes from the growth in the scaled asset and also slight expansion in NIM. In fees, we see a very strong growth first nine months from the wealth management and also the credit card. While the treasury also shows up, that's mainly from the bills investment and also the swap revenue. In page 23, the loan composition from retail that outweighs the composition from corporate.
While the total credit of 10% YTD growth or 11% YOY growth, that's slightly outperformed compared to the industry average of about close to 10%. In corporate business, in page 24, it's mainly driven by the foreign currency's loan growth. And in the NT book, we can see the SME is more of a spotlight. And the contribution to the corporate's percentage continued to improve. In the retail business, in page 25, the mortgage grew 12% YTD. And in the meantime, it's the unsecured consumer loans also outperformed the market average growth. In page 26, on the deposit front, the NT's growth at 8% YTD and the foreign currency also had a similar pattern. While the mix, we can see deposits from time deposit growth is relatively stronger. While the utilization in NT slightly edged up to 87.7%. And in the foreign currency, we also see some improvement YTD.
On page 27, the interest spread in the first nine months between loan and deposit spread fell 15 basis points, mainly because of the time deposit increase we just reported earlier. While the NIM slightly up one basis point, that mainly reflects in NT's loan improvement and also the structure's improvement. While on a quarterly basis, both loan deposit spread and NIM up by one basis point. And that again mainly reflects the NT book's improvement. On page 28, the asset quality in the bank continued to outperform compared to industry average. The NPL ratio of 0.11% and coverage over 1,000%. While by business lines, we see the personal unsecured loans, the NPL still edge up trend up to 27 basis points, which mainly due to the expiration of government's bailout measures on back of the COVID.
On page 29, the credit card business that we continue to deliver stronger than market average growth in card and also spending. While the monthly spending fell and mainly again due to the scale of the active cards increase. While the NPL ratio slightly edged up, also reflects the same reason that we just shared with you. On page 30, in fee business, overall speaking, the strength comes from the wealth management fees growth of 37% year- over- year growth. And also the credit cards are nearly doubled on the back of the size and scale's expansion. On page 31, in overseas branches of Taipei Fubon Bank, we see the momentum continue decently with the revenue and also the net profit both grow at over 14% year- over- year. On page 33, Fubon Insurance, direct written premium up by over 13%.
While the net combined ratio at 85%, that continued to show improvement. On page 35, Fubon Securities' strength in the net profit up by 48%. That reflects the market's expansion and also the company's franchise value. On page 37, in Fubon Bank (China), we see the scale from loan and deposit grow decently in the range of about 5%-6%. While the NIM expands by 24 basis points, that mainly reflects the purchase of Citi's China credit card receivable portfolio. While the swap revenue also contributes to the strength of the first nine months of net profit. While the asset quality perspective, we continue to control at a decent level. And thank you for your attention. And next, I will turn the floor to President Harn, the president of Fubon Financial, to host the Q&A session. Thank you.
Okay. Thank you.
So I think you will have the.
Ladies and gentlemen, we are now in question and answer session. If you would like to ask a question, please press star one on your telephone keypad and you will enter the queue. After you are announced, please ask your question. If you find that your question has been answered before it is your turn to speak, please press star two to cancel the question. And as a reminder, you may also submit your question through the webcast system. Thank you. Now, please press star one on your keypad if you would like to ask the question. Thank you. And our first question will be coming from Steven Lam, Bloomberg Intelligence. Go ahead, please.
Thank you, management. Congratulations on the good results. And just to clarify the VNB margin improvement, I can imagine that it's because of the share of the health product and accident. Just curious if this is just a pure mix impact or there's also a like-for-like increase in terms of margin. And what would be the VNB margin expectation for 2025? On the investment side, just a couple of quick ones. I wasn't sure if you gave the guidance for hedging costs in 2025 if you have. Apologies if you can repeat that again. And then just curious on the real estate return. I think I saw zero for nine months, which is an improvement from the first half. I think it was down 0.8%. Just want to ask what was driving that and any expectation for the full year on that front.
And then in terms of asset allocation, I think there's a notable increase in terms of the domestic bonds allocation. So I was curious if this is a price impact or this is actually active addition on the bonds. And of course, the flip side of that is I think there's some slight decrease in terms of foreign bonds. And I would imagine the U.S. Treasury yield was actually down in the third quarter. So this tells me that there's probably some active sell down. I just want to understand if the dynamics is correct. And on the NIM, I think there was a good commentary in terms of 2024. You're still expecting one basis point. Curious if you have guidance for 2025 and the loan growth for that. And last, if that's okay, on the credit card NPL ratio , I appreciate that because of the expansion of the business.
That's why it's catching up with the industry. Curious if you can comment on what you expect for next year, perhaps. Do you feel that it may be sort of stabilizing or there's some concerns there? Thank you.
Okay. On the bank side, talking about the NIM expectation for next year, I think next year is the pain of the interest rate cut. So the NIM should have some pressure, but we are going to increase the NIM through the adjustment of liability and asset portfolio. So we expect to grow maybe around mid-single digit. Loan growth for next year, because there's a limitation on the mortgage loan, so the growth momentum is kind of impacted. But we expect there should be about a high single-digit growth for next year. Credit card NPL, we have had the increase of new credit card holders for the past 12-18 months. So vintage-wise, the credit portfolio on these new card holders, we have encountered a higher credit NPL for this year.
But for next year, starting compared to this year, I think the credit NPL should be stabilized.
Okay. VNB.
I'm sorry.
Okay. Next, the insurance side.
Okay. The VNB growth this year is over double digits, and the main driver is the sale of health products in the second quarter, and that caused VNB margin increase slightly. We expect the VNB will continue to grow next year, and the VNB margin will be at a similar level.
Okay. For the hedge cost guidance of 2025, now we see as the Fed enters easing cycle and we expect the hedge cost or swap cost will be gradually improved afterwards. So currently, we see the overall hedging cost will be expected to be around 100-115 basis points for 2025. And also for this year, 2024, we expect still can try to maintain within 100 basis points. It's for the guidance of FS. And another question is about real estate, about the return is zero for this quarter. And the reason is because all overseas real estate portfolio have been affected by upcoming lease expiration and also planned renovation. So however, we expect further significant decline will be just unlikely to happen because we try to just talking to some tenants and expand our contract with the lessor.
And also we believe the renovation complete, the tenant, the rent can be also higher and also quality of the lease can be higher. So that's the view of our real estate and guidance. Another one is about our asset allocation in the third quarter. The question about the domestic stock, actually we have increased some position. Also the appreciation of the price makes the domestic stock, sorry, the position goes up. And about the foreign bond, actually we did not sell. We are slightly increased. However, because the AUM growth for this year, YTD, until the third quarter is about 4%. So the foreign bond position decreases due to the dilution of our asset allocation increase. And also another question is because the NT dollars also appreciated about 2.5% over the last period.
So there's two factors to make our foreign bonds look lesser and also decrease in terms of position. Here's my answer.
That's very good. Thank you, management, for the responses. Can I just confirm one thing? Did I hear that the hedging cost outlook is 100-115 basis points or 150 basis points for 2025?
For 2025, sorry, it's 100 to 150. 50, sorry.
Got it. Got it.
Okay.
Thank you.
Thank you. If you would like to ask a question, please press star one on your telephone keypad. Thank you.
Okay. On the bank side, another question is about the loan growth forecast for this year and next year. For this year, 2024, the loan growth forecast is about in the low teens digit level. And for the deposit growth, it's about in the high single digit level. And for next year, I think I just mentioned about the limitation on the mortgage loan. For next year, the loan growth and the deposit growth is in the range of high single digit.
Okay. We estimate the new CSM is about TWD 45 billion at the third quarter this year based on current interest rate. And it is on track of our target.
Ladies and gentlemen, we are now in question and answer session. If you would like to ask a question, please press star one on your telephone keypad. Thank you. You may also submit your question through the webcast system online. Thank you.
Another question asked me to repeat the hedge cost guidance in 2024, which is we expect our total hedging cost will be remained within 150 basis points this year.
Any more questions?
If you would like to ask a question, please press star one on your telephone keypad. Thank you.
Okay. Thank you, ladies and gentlemen, for your participation in this call today, and welcome to contact our team if you have further questions. Thank you.
Thank you very much for your participation. Talk to you again soon.
Thank you.