Thank you for joining Fubon's analyst meeting today. First of all, we will share with you the performance in 2025. Please turn to page five. The company achieved another record high year. Its net profit and earnings per share both rank the top in Taiwan financial holding industry. In terms of assets and net worth, both are record highs and the profit of the three banking business, Fubon Securities, Fubon Insurance, all reached their record highs. Another record we achieved is Fubon Bank (Hong Kong)'s S&P rating was upgraded to A-, which shows its overall performance is decent and also improving. Next, regarding subsidiaries overview. Fubon Life's net profit was over TWD 62 billion. It's top ranking in the life industry. The balance of FX reserve of over TWD 14.2 billion, this is also the highest among the peers.
While its capital ratio RBC came strong at 434%. Taipei Fubon Bank's net profit reached over TWD 36 billion. That hit the historical high and also up by 19.5% year-over-year, mainly come from interest and fee income that both grow by double digit. In Fubon Securities, the net profit was over TWD 10 billion. That was also a record high. In Fubon Insurance, the net profit was TWD 6.7 billion. The profit doubled, while in particular its net loss ratio improved year-over-year. That shows the underwriting profit steadily grows. On page six, the net profit and EPS came down year-over-year. If we add back the one-time, FX reserve provision, at the life insurance business, the profitability of the holding company approached a similar level, in year 2024.
In page seven, in terms of profit of each subsidiaries, the three banking business, including Taipei Fubon Bank, Fubon Bank Hong Kong and Fubon Bank China, also, Fubon Securities and Fubon Insurance, all have hit the record highs. In page eight, the total asset was close to TWD 12.9 trillion. That is an increase of 6.7% year-over-year, while the net worth is about TWD 98.3 billion. In the table, we can see the capital level of each subsidiary is decent and also provides the foundation for growth. In page nine, the profit indicator ROA is about 0.97% and ROE is about 12.5%. While we compare this level with the peer, it is in a decent level. In page ten, in terms of the market position of the main business lines.
Life and P&C insurance are top 1 and top 2 while banks are in Taipei Fubon Bank is about top 2 to top 4 among private banks. We are among top 3 in securities business lines. Overall speaking, the expansion of the scale continued to be the focus for Fubon's long-term growth driver. In page eleven, we further deep dive into each areas we aim for growth. In life insurance, optimize the product structure and channel cooperation are critical. In Fubon Insurance, we keep a leading position advantage and further develop the SME business with a focus on underwriting. In Taipei Fubon Bank, the expansion of franchise in Taiwan and overseas are both undergoing. In Fubon Securities, we focus on brokerage business and also developing the wealth management opportunities.
In page 12, year 2026 remain a year full of challenges and uncertainties. Meanwhile, this presents opportunities for Fubon to demonstrate its expertise to manage risk and also help our clients to face the challenge and seize opportunities. In page 13, in terms of the sustainable development, Fubon promotes green finance in investment and financing. It reached TWD 2.7 trillion in year 2025 and meanwhile, we propose a more active decarbonization time frames starting from year 2025. Fubon continues selected as a constituent stock under several important indexes for ESG category and also an award-winning player in Taiwan and overseas. We can see the page here for your reference. Next, let me walk you through the operation highlights of Fubon Life. In page 15, the sales momentum of insurance premium remain positive.
The FIP increased by about 3%, while the renewal premium and total premium are roughly flat, while the ranking of Fubon Life is second in all three indicators in the industry. In page 16, the FIP mix is more toward the regular pay product, accounting for about 61%. The proportion from the foreign currency policy also increased from about 40% to about 51%. That is mainly from the US dollar participating policy that helped improve the currency mismatch level between asset and liabilities. In page 17, in VNB, the proportion of regular pay rose to more than 70%, while VNB decreased slightly by about 1.6%. This mainly reflect the impact of the high base from last year's stock selling of the high margin product.
In page 18, in terms of channels, 72.6% of VNB come from internal ones, including through Fubon Bank, Tied Agent and also other subsidiaries. We also see a 17% growth year-over-year in Tied Agent. That is relatively strong. While the bancassurance channel are focusing on selling of the regular pay products. In page 19, in terms of investment portfolio. Domestic and overseas equity investment return outperform the benchmark with a return of over 28% for Taiwan stock investment and over 18% for overseas ones. Fubon maintain a higher cash level of 6.2% and we continue to adjust according to the market condition. In page 20, the overseas fixed income portfolio that we have the investment-grade corporate bond and the financial bonds as the main focus. For North America as the core investment area and followed by Asia, others and EU.
In page 21, in terms of the composition in investment income, the amount from the recurring part is close to the level in year 2024, mainly due to the increase in the dividend income offset the decrease in the fund income distribution. The total investment return before hedging is 6.62%. This is an increase from previous year mainly due to the capital gains of the stock investment. While the return after hedging and FX came down, this is mainly due to the FX gains are no longer in P&L starting from second half of 2025 but booked into the reserve account. The return actually would be 5.42% if we follow the same basis in second half as if it was in first half, as we share in the footnote here.
In page 22, the cost of hedging in the upper left-hand chart shows the improvement in second half 2025. The total cost came down all the way to 117% in Q4. The recurring currency swap type of hedging cost also falling down to 66 basis points. That also reflect the interest rate differential between NT and USD narrowed. That also lead to the recurring yield after hedge is at 2.51%. That is better than in 2024. Meanwhile, the Taiwan dollar continued to depreciate in second half of the year, while FX gains are no longer including in the upper left-hand chart. It actually reflects the increase in the FX reserve.
We can see the 51 basis point in the upper left-hand chart here actually is the regular provision that booked into the FX reserve, which we will come back to this point in a later page. In page 23, along with the IFRS 17 adoption and also various rules start to take place in 2026, there are more measures for Taiwan Life industry players can adopt to manage the currency risk. Firstly, the scope of the FX module market reflect in the P&L. There is a new added item, is the stock and the funds under FVTPL, that's start to include in this year. It does not really translate into a higher volatility but instead the FX OCI accounting and also the FX reserve pool will help to mitigate the P&L fluctuation risk.
From the P&L perspective, the hedge costs were primarily from the recurring hedging such as currency swap and also the provision expense at 0.5% of the naked position. This part, it also accumulate into the FX reserve. More details, please also refer to the right-hand side of the information on page 23. In page 24, regarding the FX reserve, it reached to TWD 142.1 billion in 2025, which is the highest level in the industry. This is mainly due to the contribution from the FX gains from second half's US dollar appreciation, also the 30% pretax profit top-up into the pool. You may find more details in the footnotes in this page. Going forward, the FX reserve system will runs a dual track. Fubon has a high base of TWD 144.8 billion to begin with.
That will further improve our ability to respond to the currency's fluctuation. In page 25, regarding the spread. If we look at the investment return versus the cost of liability, the cost of liability is 3.11% and investment return at 4.9%. That give us a positive spread of 179 basis points. While the negative spread between the breakeven point of 2.78% and the after-hedge recurring return is at 2.51%. That also shows a narrowing trend down to less than 30 basis points in year 2025. On page 26. In terms of the performance, Fubon sees the market opportunities and realize the capital gains and therefore the unrealized balance under the OCI decreased slightly. While the equity-to-asset ratio is around 11.3%, which is close to the level in year 2024.
That also reflect the net increase of the FX reserve of TWD 120.6 billion is actually reflected under the liability account. Next, let's move on to page 27 and onwards regarding Taipei Fubon Bank. In page 28, the overall revenue increased by 12.6%, mainly due to the net interest income and also net fee income. While the net interest income increased, mainly reflect the scale and also the increase in the net interest margin. In page 29, the overall credit balance increased by over 10%. Other than the government related loans, the corporate and also personal loans actually both grow at double digit. In page 30, out of the corporate loans, the foreign currency portion increased by 13.3%. They're mainly from the large corporate and overseas syndicate business.
While the Taiwan dollar credit increased by 13.2%, that reflect increase also from SMEs growth. In page 31, the balance of the mortgage increased by 7.7% and that mainly comes from the home equity type of lending that we also see the clients need for flexible use of funds. While other personal type of credit increased by over 38%, especially driven by the unsecured personal loans. In page 32, the overall deposit of the bank increased by over 6% and both the NT and foreign currency deposit increased. The LDR of the Taiwan and foreign currencies also increased. The growth of the demand deposit that lead to the CASA in NT up to over 60% and non-NT also to 33.6%. In the following page, the NIM performance, we can see the increase by 6 basis points on year-over-year basis.
They reflect we continue to improve the deposit structure and also the loan deposit spreads expansion by 15 basis points year-over-year. On a quarter-over-quarter basis, the NIM increased by 4 basis points. They're mainly from also the loan deposit spreads improvement by about 6 basis points and also the increase in LDR and also the foreign currency bonds investment. In page 34, the asset quality side that the NPL and coverage ratio remain benign, while the asset quality across business lines remain stable. The provision cost reflect both the GP and SPs and we can see it came in at around 20 basis points. That's in line with our expectation. In page 35, the credit card business amount is stable. While the transaction amount also stable, the revolving balance increased steadily.
On the asset quality side, it remain low at about 0.18% of NPL. That indicate a stable risk performance. In page 36, regarding the fee business, the growth basically is across various areas. The total net fee increased up by 13.4%, while credit card up by over 11%. Wealth management fee grow by over 12%, mainly driven by insurance and also the mutual fund. On page 37, in overseas branches, including Hong Kong, Singapore and Vietnam, we saw the loan and deposit both are growing double-digit on back of the growing franchise, while the revenue came down slightly, mainly due to a lower swap revenue in the Hong Kong branch. Net profit from overseas branches down 13%. That reflects the revenue decrease and also some special provisions case.
Next, let's move on to Fubon Securities. The volatilities and rapid rebound in 2025 in global market, while we make a record high net profit of TWD 10.59 billion, that's up by 5.7% in Fubon Securities, mainly on back of the high trading volume and record high index level in Taiwan. From the revenue mix, we can see the increase in other is mainly from the interest income and also the underwriting business. While the business ranking, we are among the top three and we aim to continue to lift the market share and promote a wealth management business. Next, let's move on to Fubon Insurance. The direct written premium was up by 4.9% with a leading market share of 23.7%, with a top ranking in the industry.
The combined ratio came in a very good level of 83.9%, that further improved year-over-year, mainly due to the improvement in the net claim ratio. Next, is the Fubon Bank Hong Kong. In page 43, the bank's loan balance was up by over 23%, supported by the corporate and also financial institution lending. While the deposit balance was also grow double digit at 21.7%, mainly driven by the retail segment. It also drives the net profits growth, supported by the scale increase and also a lower provision, while the NIM was down by 7 basis points on back of a lower rate environment. Lastly is Fubon Bank China. Its loan balance was up by 19%, with the corporate and retail loan both up double digit. Its deposit increased by 16.6% and mainly driven by the corporate segment.
Its NIM was up by 78 basis points, mainly reflect a higher online retail lending mix and also a reduction in the U.S. dollar deposit. As a result, its net profit increased 31% year-over-year, mainly from NII, while its asset quality remains stable. Thank you for your attention. Next, we'll move on to the next topic regarding the implementation of IFRS 17 accounting system and also the new capital standard TIS. Let's have Grace Chiu, the appointed actuary and also the Senior Vice President for Fubon Life to share with you. Over to you, Grace.
Thank you, Amanda. Please turn to page 45. Good afternoon. This year, Fubon is navigating a fundamental transition to IFRS 17 and the TIS, Taiwan Insurance Solvency Framework. I will briefly touch on what is changing in reporting, then spend most of the time on the financial highlights and capital strength. Further on a few Taiwan-specific regulatory features that help explain the numbers you are seeing. Page 48. Let me start with the core message. Our underlying business fundamentals remain intact. Under the prior regime, Fubon Life delivered solid profitability and a strong solvency profile. Even during periods of elevated market volatility, our earnings and capital remained resilient. IFRS 17 primarily changes financial statement presentation and the timing of profit recognition. It does not change the underlying economics or earning capacity of the business.
Importantly, we have prepared for this transition for years across product strategy, investment management and asset liability management. That preparation is reflected in our transition metrics, our TIS solvency level, CSM balance, FX reserve and IFRS 17 adjusted profit and adjusted net worth, which together provide a strong foundation going into the new regime. Page 49. Turning to the income statement, IFRS 17 makes profit drivers more transparent. On the underwriting side, CSM is released over the coverage period, supporting a smoother and more stable earnings pattern. On the investment side, the cost of liabilities decline at transition, which improves the spread outlook. On recurring yield after hedging and fixed FX reserve provision has turned positive relative to the cost of liabilities. We also disclose adjusted profit by adding back after-tax gains and losses from FVOCI equity disposals.
These gains and losses are recorded in net worth rather than P&L under accounting rules. Economic profit is real and distributable. Adjusted profit provides a fuller view of underlying profitability. Page 50. On the balance sheet, the key change under IFRS 17 is that insurance liabilities move from a locked-in basis to current measurement. To manage the impact of discount rate movements on earnings, we have elected to recognize these effects in other comprehensive income or OCI. To further enhance asset liability matching and reduce net worth volatility, we selectively reclassify certain specific bonds from amortized cost to FVOCI. For the same volatility management considerations, most equity investments are also classified as FVOCI. At transition, the cost of liabilities declined to around 2%. While total assets and liabilities remain broadly stable, IFRS 17 recognized CSM as a liability.
This lowers reported IFRS 17 net worth compared with IFRS 4. To better reflect economic value and future earnings capacity, we therefore also present adjusted net worth, defined as IFRS 17 net worth plus after-tax CSM. On this basis, adjusted net worth amounts to TWD 857.1 billion, representing an increase of TWD 226.7 billion or 36% compared with IFRS 4 net worth. In addition, accumulated FX reserve of TWD 142.1 billion further strengthen our profitability and capital position at transition. Page 51. Now turning to TIS. It raises the confidence level and expands risk coverage, including longevity and lapse risk. Headline capital requirements are higher than under the current RBC regime. Because the change is meaningful, the regulator introduced transitional measures to facilitate a smooth industry transition.
Page 52. Transitional measures help by reducing required risk capital and increasing available capital. Available capital, the adequacy adjustment is the amount needed to lift the TIS ratio to the 125% capital adequacy level. The excess adjustment is the additional amount needed to reach our internal target beyond that threshold. Risk capital transitional measures are phased in over 15 years. On available capital, the high interest rate policy net asset transition is optional as well. Adequacy adjustment phases in over 15 years, while excess adjustment phases in over five years with annual performance checks. If annual targets are not met, the adequacy adjustment is reduced and the entire excess adjustment is set to zero. Let me highlight one more Taiwan-specific ex-FX item. Starting 2026, we adopt the new AC bond FX amortization approach.
Under the amended guidelines on FX reserve for life insurance companies, hedging cost savings may be included in available capital subject to conditions. As of end January 2026, our on-book FX reserve of TWD 144.8 billion are reclassified to a volatility reserve and can be fully included in available capital, strengthening capital resilience. Including transitional measures, our TIS ratio and transition is around 125%-140%. Page 53. Our post-adoption strategy is anchored on two priorities, value growth and disciplined risk management. On products, we focus on participating products and continue to strengthen regular premium protection products, including health, accident and USD policies that are seeing CSM generation with capital efficiency. On investments, our long-term investment track record remains a core competitive advantage. The new AC bond FX amortization approach and our record high FX reserve enhance FX risk management flexibility.
This supports our objective to maintain a positive spread, recurring yield after hedging and mandatory provision for FX reserve above the cost of liabilities. We will also continue to strengthen ALM to enhance capital resilience. Page 54. To ensure a smooth transition and enhance capital efficiency, we have applied for all optional transitional measures. Given our relatively low share of high interest rate legacy policy, around 15%, the transition impact is limited. During the transition period, we aim to meet our target TIS ratio without relying on the net asset transitional measures as early as possible. We expect to maintain stable adjusted profit and a stable TIS ratio post-adoption. Dividend distribution will be in accordance with regulatory requirements and approvals. Page 55. Let me briefly walk through 2025 earnings under IFRS 17.
Net profit after tax was around TWD 60 billion under IFRS 17, broadly comparable to TWD 62.7 billion under IFRS 4. Under IFRS 17, P&L comprises three major components. First, insurance service results, underwriting profit was TWD 37 billion, mainly from CSM amortization of around TWD 27 billion. Second, finance result, spread related was -TWD 5.3 billion, mainly reflecting one-off items. These include temporary reserve measures, one-off FX reserve allocation of TWD 56.1 billion at end June and a mandatory year-end allocation of 30% of pre-tax profit, TWD 28.2 billion into FX reserves. They also include the removal of the overlay approach for certain assets previously classified as FVTPL with overlay, where value changes are now recognized in P&L with an impact of about -TWD 44 billion.
Third, others was +TWD 37.2 billion, mainly from releasing other reserves into FX reserve. This largely offset the FX reserve allocation recorded in financial results, resulting in no net P&L impact. From 2026 onward, this item will no longer recur. Others will mainly include non-insurance contract costs and expenses, financing costs on debt issuance and other regulatory reserves. Importantly, the sizable FX reserve allocations in 2025 position us with over TWD 140 billion in FX reserve at transition in 2026. That materially enhances FX management flexibility and helps reduce hedging costs. Looking ahead, CSM release will remain the key driver of underwriting profit. Hedging cost management and positive spread will be the core of financial results. Reclassifying most equities from FVTPL to FVOCI helps reduce P&L volatility.
Through the disclosure of adjusted profit, we present a more comprehensive view of the company's underlying earnings capacity. Page 56, net worth bridge and adjusted net worth. IFRS 4 net worth at end 2025 of TWD 630.4 billion is adjusted to IFRS 4 net worth of TWD 534.5 billion, mainly from two one-off impact items. First, liability remeasurement reduced net worth by TWD 36.9 billion, while also lowering the cost of liabilities to around 2%. Second, financial asset redesignation was -59 billion, mainly from measuring certain AC bonds at fair value to improve AUM. As noted earlier, adjusting net worth, IFRS 17 net worth plus after-tax CSM is 557.1 billion, is 857.1 billion, providing a more complete view of economic value and future earnings capacity. Page 57, CSM movement.
At transition in 2026, CSM is TWD 403.2 billion, up TWD 47.1 billion or 13% versus the beginning of 2025. This was primarily driven by new business CSM of TWD 62 billion, well above our annual target of over TWD 50 billion. To participating policies, the shareholder portion of underwriting profit and investment income is recognized in CSM, which helps absorb asset fair value movements and reduce reported volatility. Within variances and others of TWD 8.5 billion, around TWD 3 billion relates to participating products. Fubon relaunched participating product sales in 2023. The participating features generally show higher persistency and stable cash flows support asset allocation. Together with our investment capabilities, continued growth is expected to strengthen CSM and support earnings.
In 2025, CSM release to P&L was around TWD 26.9 billion relative to the pre-amortization balance of TWD 430.1 billion. This implies an amortization rate of about 6.2%. After recognized CSM release, net CSM increased by TWD 47.1 billion in 2025. We expect steady net CSM growth going forward, further supported by shareholder investment returns from participating policies accumulating into CSM. Page 58. On an AUM basis, the cost of liability declined by around 60 basis points after adoption. Compared with our recurring yield after hedging and fixed FX reserve provision, the negative spread before adoption turned positive. With ample on-book FX reserve and adoption of the AC bond FX amortization approach, we are well positioned to support a more durable positive spread, contributing to the financial results. Page 59.
This page shows discount rates for major TWD- and USD-dominated liability categories. Per regulatory requirements, curves are built using a risk-free rate plus liquidity premium approach. For in-force policies, the cost of liabilities trends upward along the curve. High interest rate legacy policies are defined as those with reserve rate of 6% or higher. Given their lower liquidity, the regulator allows an additional 50 basis points liquidity premium. With a lower proportion of such policies around 15%, we expect to maintain a favorable COL position post-adoption. Page 60. Let me close with three key takeaways. First, resilient earnings with improved resiliency. Our CSM over TWD 400 billion and new business CSM at TWD 62 billion is well above our annual target of over TWD 50 billion.
Supporting stable CSM growth and steady underwriting profit, together with strong investment performance and more than TWD 140 billion in FX reserve that help manage hedging costs. We believe we are well-positioned to sustain solid earnings momentum. Second, higher economic value. Adjusting net worth of TWD 857.1 billion is up 36% versus IFRS 4 net worth, reflecting years of execution across products, investments and AUM. Third, strong capital. Our TIS ratio at transition meets our target. We aim to achieve our TIS ratio target as early as possible without relying on the net asset transitional measures. In addition, the end January FX reserve of TWD 144.8 billion will be recorded as volatility reserve, eligible for inclusion in available capital, strengthens capital resilience and supports both earnings and capital stability amid market volatility.
In summary, post-adoption Fubon Life demonstrates resilient earnings, improved economic value and strong capital. We will continue to build on a sound financial foundation and deliver long-term stable value for shareholders. Thank you.
Thank you, Grace for the presentation. Next, in Fubon Insurance, on page 62, we can see its net worth migration from IFRS 4 into IFRS 17, which is at around TWD 34.5 billion in IFRS 17. That is a increase of TWD 5.7 billion higher than the earlier basis. That's mainly on back of the decrease of the asset liabilities. Such increment amount will be booked into special reserve. While its TIS ratio will be over 150% based on 2025's data and that is also higher than the regulatory standard and therefore the transition measure will be not required. In page 63, the net profit in IFRS 17 based on year 2025's financial, we can see it will be TWD 7.9 billion in Fubon Insurance.
That is a slight increase by about TWD 0.9 billion compared to IFRS 4's basis, mainly due to the cancellation of the overlays approach. While the combined ratio increase under IFRS 17 basis up to 89.3%, that mainly reflects the change of the calculation formula. Please, you can find the detail in the footnote. Next section is Fubon Financial. In page 65, the net worth migration from IFRS 4 to IFRS 17, you may see a change in the bar chart here. It's a reduction from TWD 982.6 billion under IFRS 4 down to TWD 905.7 billion. That mainly reflect the change from the life business. For the adjusted net worth that include in the after-tax CSM, it will be a total of over TWD 1.2 trillion. That's a 26% increase compared to the level under IFRS 4.
While among the bar chart, we would like to highlight the net worth increase in the financial holding level upon the IFRS 17 adoption of a TWD 13.2 billion. That reflect the acquisition of VOBA, i.e. the value of a business acquired from ING Life transaction. Also the impact of the deferred profit from subsidiaries cross-selling. You may find more details from the footnote. On page 66, in terms of the net profit, if we use year 2025 financial to do the IFRS 17 standard, it will be around TWD 115 billion under IFRS 17. The changes in the parent company level of downward impact of TWD 4.6 billion mainly reflect the cross-sell of the Fubon Life's policy by other subsidiaries.
The value that cross-sell will be reflected in the new business of CSM under the holding company level and the profit will be released into P&L over the service period of the insurance policies. On page 67, here we summarize the key financial metrics under IFRS 17 for your reference, i.e. The adjusted net income will be the key metrics to reflect the overall business performance. This is the end of the presentation today. If you would like to ask questions, please access Fubon's website in the Investor Relations under the Analyst Meeting webpage. You may type in the questions and management team will respond in the live meeting session. Alternatively, please always feel free to contact us at ir@fubon.com. Thank you for your attention.