Thank you for standing by. Welcome to Fubon Financial's 2022 full year financial results. At this time, all participants will be in listen-only mode. Questions will be taken at the end of this presentation. This call is being recorded. If you have any objections, you may disconnect at this time. Now I'll hand the call over to your host, Ms. Amanda Wang, the IR Officer of Fubon Financial Holding. Ms. Wang, please begin.
Thank you. Welcome, everyone. Thank you for joining Fubon Financial's 2022 results call today. I'm Amanda Wang from Investor Relations. There will be two sessions in the call today, including Fubon's performance review and followed by the Q and A, hosted by President Mr. Harn and the senior management team. Please turn to page four of the presentation. In the year 2022, Fubon's financial and business development has been going as stable as you can see here. The overall EPS reached top among Taiwan Financial Holding. The earnings remain strong, specifically from Fubon Bank, that reached a record high, and Fubon Life, that's the second highest in record, on back of these market fluctuations. In the meantime, from a strategic perspective, we completed the merger between Fubon Holding and Jih Sun Financial Holding, which is the first merger case in Taiwan.
In the ESG front, we also gained recognition from several important global institutions, including DJSI, MSCI, et cetera. In page five, the business performance by subsidiaries, as we can see here, Fubon Holding's net profit, which was down 67% year-over-year, mainly hit by the capital market and also the COVID-related policy. Meantime, we continue to lead the financial holding peers in Taiwan. In Fubon Life, the business remains robust. The net profit is top one among life's peers, while the premium in FYP and FYPE ranked top two. On back of this volatile capital market, our investment return continue decent, while our capitalization also remains strong at equity to asset ratio of 5.7% before any reclassification.
As you may aware, we announced the reclassification starting from beginning of this year and our pro forma basis, that will bring our equity to asset ratio to slightly over 7%. In Taipei Fubon Bank, the earnings growth driven on back of asset growth that's up by 7%. The overall net profit reached a record high. One of the key growth drivers from the wealth management that we can see, the AUM continue to grow by 10%. Specifically, the momentum for overseas market is strong. Okay, let's move on to page six in Fubon Insurance. In Fubon Insurance, the net loss was yearly TWD 40 billion, mainly due to the COVID-related policy. If we exclude such factors, the profit actually will be a net positive one of TWD 3.47 billion.
As we see the COVID-related policy will be a major adjustment going forward starting from next week. We expect the performance in P&C will gradually to resume normalization. The overall business momentum in insurance remains decent, with a premium growth of 5.9%. Market share remain top one in the market. The investment return also decent at 3.49%. In Fubon Securities, the profit TWD 2.7 billion last year was declined, mainly due to some market fluctuation. We see the synergies with Jih Sun Securities will bring as a new growth driver going forward. Page seven, the net profit overall speaking, as we just briefed to you, that we also see the first two months earnings gradually to resume normalization. In the first two months, the net profit is TWD 7.3 billion.
Page eight, profit by subsidiaries, that we can see Taipei Fubon Bank and Fubon Bank (Hong Kong) deliver growth of over 20% and over 40% respectively. While the rest show decline, which we will show you more detail in the following pages. Page nine, in terms of assets, the holding company respectively is pretty much stable, while the book value decrease mainly on back of the capital markets shock. The net worth actually would increase by TWD 70 billion if we factor in the asset reclassification from Fubon Life. That would be about TWD 5.65 increase on a per share basis. In the table below, as you can see, the capital level in the holding company remains quite strong and also across the subsidiaries, except for P&C. The RBC is negative one mainly because of the COVID policy.
The capitalization plan is ongoing. We plan to make an announcement after the board resolution in April. Page 10, our ROE data point is for your reference. If we can move on to page 11, the market position across major subsidiaries, as you can see, remains a strong one. Specifically in Life Insurance that we are probably top three, and in the Bank and Securities is also in the leading position. Page 12, in terms of the business outlook across the operation. Firstly, in Fubon Life. From the underwriting perspective, we expect the product to echo the market need and also the adoption for IFRS 17. On the channel development, we'll continue to focus on our internal ones and complement by the external channels.
In Fubon Insurance, we continue to keep a strong leading position. We expect the digitalization will bring us a better service experience for our customers. While the risk management will be a top priority, specifically after the COVID policies event. In the right-hand side of this page, Taipei Fubon Bank's key highlights firstly is to adjust its asset and liability structure in order to expand its net interest margin performance. On top of that is that the fee income's momentum from the wealth management and also from the collaboration with Costco from the credit card issuance, that we expect to further expand our retail business franchise. Also equally important is the merger with the Jih Sun Bank that will bring us a new group of customer and the business opportunity. In Fubon Securities, the focus also is in the mergers integration with Jih Sun Securities.
The business space expansion, that will be a focus and also capital utilization will be also a focus for us. In page 13, from the overall perspective of the holding company, we do see the opportunities in front of us is firstly, the post-COVID recovery, the overall system easing and the new business opportunity come along with that. Equally important is that we see the ESG an important initiative, and therefore how to utilize our financial expertise to foster our clients' needs in the low carbon business model as well as our internal transformation will be a focus. The challenge, obviously, as we can see the capital market remain very volatile, the interest rate movement, and inflation, et cetera, that we do see the macro's uncertainty.
Internally, we see the customer base management will be critical, where we see the opportunities from the merger with Jih Sun, the launch of the Costco Co-branded Card, and also the Fintech application. All of these angles will bring us new growth drivers. In terms of more of mid to long-term perspective, we continue to look for strategic expansion opportunities. Therefore, we continue to focus on the Taiwan and Asia market. In page 14, in terms of the low carbon strategy, the performance we can see here is that the green finance outstanding increased by 6% in year 2022, and we also further increased our target for year 2025 by 14%, on the back of the different growth momentum. We also get the approval from SBTi regarding Fubon's carbon reduction goals. That is, reduce emission by 42% before year 2030.
You can also see the action that we deliver across subsidiaries in the page on your right-hand side. Let's move on to page 16 in Fubon Life. Fubon Life's total premium declined by 23%. The FYP declined 16% and also renewal premium came down. Renewal premium mainly due to the paid up of the regular pay policy. While the FYP pretty much is a similar pattern as the market, which actually declined even further at about 26%. In page 17, if we further break down the FYP's composition. The regular paid and single paid product, actually, we can see the percentage increased year-over-year. While FYP still declines, mainly due to the impact from the COVID and also the more volatile capital market.
In page 18, the regular paid traditional life policy increased, and therefore, we can see the FYPE ratio increase and also the VNB to FYP margin also improved. The FYPE overall speaking, delivers a little bit of decline of 2%, but compared to the market decline of 5%, Fubon still outperforms. In terms of the VNB to FYP, this continued to be our key focus, and we expect this margin will continue to improve over time. In page 19, in terms of FYP by channels, the internal ones continue to be our key focus. They contribute over 70%, including the tied agents, 40%, and Taipei Fubon Bank contribute another 33.7%. We can see our performance both outperform the industry. If we compare to the industry's bancassurance , there's a decline of 15%. Fubon Bank is increased. Also, the bancassurance , overall speaking, is a 36% decline in the market.
Fubon Bank decline is smaller magnitude. In terms of the bankers ranking, Fubon Life ranks top one in the industry. On page 20, we move on to the investment portfolio. The migration, as you can see here, mainly is from the domestic equity. The proportion reduced. That reflects number one is the realization of the capital gain, and also number two is the market impact as the capital market dropped down. Overall speaking, our cash position is on the higher end in terms of the percentage, and we expect that will help us to seize the market opportunities going forward. A further breakdown in the overseas fixed income. On page 22, we can see that pretty much a stable one in terms of the asset type and also by region and distribution.
On page 22, the investment income composition, we can see the majority comes from the recurring investment income, and it grows by over 16% year-over-year. That reflects a higher interest rate market and also the dividend income increase from domestic equity. Overall investment return, in the bottom of this table of 4.48%, compared to before hedge of a slightly lower of 4.47%. That reflects our FX management is doing well. On page 23, the hedging portfolio. On the right-hand side, you can see that the proxy hedge, i.e. the other currencies, the contribution of 4.7%, is increased compared to previous quarter. Therefore, the appreciation in Asian currencies is quite strong in Q4 last year.
The FX loss in Q4, if you look at the upper left-hand side, is mainly due to the appreciation of NT dollar. Specifically, in November, we have a 4% appreciation followed by another appreciation in December. We do have a more serious hit in Q4. For a full-year perspective, we still see a net gain of two bits. In terms of recurring return, both before and after hedge basis improved year-over-year. On page 24, the cost of liabilities actually only increased by one bit in spite of the market rate hike. We continue to keep a positive spread between cost of liability and investment return. Same for the recurring return versus the break-even point. We also keep a positive one. On page 25, the unrealized balance in Fubon Life shows improvement in Q4.
The December end shareholder equity to asset ratio of 5.7%. That is before the reclassification. On a pro forma basis, if we factor in such factor, will be 7%. On page 27, please move on to Taipei Fubon Bank section. The net interest income growth is a key growth driver. On top of that is the loan growth of over 6%. While the fee income is a decline, that reflects the capital markets volatility and therefore a slower wealth management, as well as the credit card business strategy that we continue to expand the market coverage. For the investment side, also deliver a strong one, including the treasury and also the investment side. That bring our total revenue up and hit a record high as well as the net profit.
On page 28, if you further break down the loan growth, the retail growth of 8% is slightly higher than the corporate loan of 6.6%. On page 29, we can further see the breakdown in the corporate loans, where the NT dollar is stronger at 8% growth compared to the U.S . dollar lending at about 2%. Dollar NTD growth is about 6%, and as you may be aware, the definition we modified this time to be in line with the Ministry of Economic Affairs' definition, so that the market can use a similar definition for comparison. On page 30, the mortgage growth shows a 9% growth. That's slightly higher than the market of about 6% growth, while the personal unsecured loan is a slight decline. That reflects two factors. One is that the bail-out loan for the labor customers, that kind of lending stopped starting from year 2022.
Also, we adjust our strategy in the personal secured loan, more towards yield enhancement angle. Therefore, the ticket size per case also came down. By looking ahead, we expect the performance in the personal secured loan in terms of the balance and also the margin to see a greater improvement. On page 31, in the deposit perspective, we see growth of over 9%, including in NT dollars of 11.5%, and in foreign currencies, a 6.4% growth. The difference in terms of the growth, that pretty much reflects the loan growth momentum that we just briefed to you. Also, in the meantime, is that we try to enhance our loan to deposit ratio over time. The deposit growth here also reflects the market preference as we observe that the interest rates increase and also the volatile capital markets that bring up demand for deposits.
On page 32, in terms of the spread and margin, the net interest margin maintains stable at 1.04%, and loan to deposit at 1.25%, that is slightly down by 2 basis points compared to a year ago. The reason behind this trending down, that pretty much is because of the foreign currency loan growth is more moderate, also the time deposit percentage increase as well as the rise of the deposit rate. Looking ahead, in year 2023, we aim to address the asset and liability structure that including to enhance our foreign currency's LDR and also to enhance our loan structure as well as deposits, while the investment side will also increase our investment portfolios to enhance our interest margin. On page 33, in terms of asset quality, overall speaking, it's stable.
We can see that the NPL ratio of 0.19% end of December, that is slightly up compared to a year ago, mainly due to some specific case in overseas branches. In your lower right-hand side, the provision in Q4 increased. That mainly also reflects specific cases. Overall speaking, we still expect the asset quality will remain stable. In the following page, we can see the credit card performance. The active card and also the spending both grew up from the market, while the per card spending on monthly basis, Fubon continues to keep at the highest among the top five holders, while the asset quality remains benign. On page 35, the fee income was down, partly because of the wealth management fee and also because of the credit card expense from the growth of the card spending.
As we can see in Taiwan, the COVID situation is easing in Q4. Both the domestic and overseas spending shows a meaningful increase in Q4. Therefore, the rebate on back of this spending was higher. Therefore, starting from January this year, we start to make some adjustments in the rebate program, which we expect the credit cards of fee income should gradually to resume normalization. On the wealth management side, as you can see that there is some decrease in the fee income side, while the AUM actually continues to grow at 10% YOY. On page 36, that we see the overseas branches shows a strong revenue recovery, including the revenue of over 40% up and also net profit of nearly double. That's on back of our Vietnam, Hong Kong, and Singapore branches performance in lending and also from a better asset qualities of performance.
The following page in Jih Sun Bank. The net profit actually grow by 1.6 x. As we can see that even though the integration is ongoing, that the performance actually still remains strong. The synergies that we expect going forward was further to enhance the banking's franchise and also market position. In page 38, if we further see some key indicators, the loan deposit pretty much is stable one, while the margin increased by 21 basis points YOY. That's mainly contributed by the trading accounts from the recent securities customer that actually accounts for nearly 50% of Jih Sun Bank's demand deposit in NT dollar. The overall asset quality performance, as you can see in the lower right-hand side, remains stable with NPL ratio improvement. In page 40, in Fubon Insurance, their business momentum remains decent with a 5.9% premium growth. Market share remains at leading position.
Net loss of nearly TWD 40 billion mainly is on back of the total net retention loss of nearly TWD 60 billion in the COVID policy. Starting from next Monday in 20th of March that the COVID policy will be going to a new category that is not counted as the one that we have to reimburse for the infection. We expect the overall impact from the COVID policy to gradually to show stabilization. If we look at our underwriting performance again, if we exclude the COVID-related policy, the combined ratio actually will be around 92%. The underwriting profit actually will grow by over 37% year-over-year. On back of the COVID policy impact, we continue to focus on the risk control and also digitalization transformation going forward, specifically in our Fubon Insurance operation.
In Fubon Securities in page 42, the profit is down by 61%, mainly on back of the market turnover decline. You can see the Fubon Securities as well as Jih Sun Securities, both show their revenue and net profits decline. Going forward with the merger with the two security companies, we expect the synergies to deliver to enhance the overall capital market position. In page 44, the Fubon Bank Hong Kong. The loan and the deposit growth momentum both are strong. They reflect our liquidity management and also the asset expansion strategy. The net interest margin increased by 13 basis points. That's mainly on back of the acceleration of the Hong Kong rates hike starting from second half, and that bring up the net profit increase by over 40%, while the asset quality continues to improve.
On page 45, in Fubon Bank China, the balance sheet here is relatively conservative as we are adjusting our lending strategy and also reduce the U.S. dollars deposit that is more of a high cost. The margin wide, therefore, came down by 11 basis points YOY. If we look at the PPOP on the other hand, the PPOP data you can see from appendix in this presentation. Actually, it still shows about 7% growth. That mainly comes from the swap cost improvement and also the momentum from the online lending also shows us some growth from a four-year perspective. While the net profit still deliver a big decrease of about 15.7% down, that's mainly because of the provisioning cost increase. The reason behind that is, one, the definition for NPL for the online lending, we further stringent to 60 days overdue compared to originally of 90 days overdue.
Okay. Secondly, we also see the economic downturn come along with the COVID impact, and therefore the provisioning increase. While the overall asset quality or NPL ratio, coverage ratio still maintain at a stable level. So this is the end of the briefing today. Next, we will open for the Q and A and host by the President of Fubon Financial Holding Company, Mr. Jerry Harn. Thank you for your attention.
Thank you. Ladies and gentlemen, we are now in question and answer session. If you would like to ask the 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 would like to cancel your question, please press star two. Thank you. Now please press star one to ask the question. Thank you. If you would like to ask the question, please press star one on your telephone keypad. Thank you.
It looks like my colleague has done a good job.
Thank you. We'll have the first question is from the Jemmy Huang of JP Morgan. Go ahead please, Jemmy.
Thanks for the presentation and taking my question. Just first question is, I probably missed in the Chinese session, but could you remind me again, what's the bond portfolio accounting breakdown of Fubon Life, after your bond reclassification, what's the percentage in amortized cost and also in OCI, respectively? Second question is on bank, have you observed any improving momentum on your swap revenue in second half of last year or first quarter last year? How should we expect that part of the revenue momentum into this year? Thanks.
Hi, Jemmy. This is Sophia. Let me answer the first question. Before the reclassification, the amortized cost constitute around 60% - 70% of our total bond portfolios. After the reclassification, the percentage increased up to the 70% - 80%.
Swap revenue, last year we have about double-digit growth on second half last year. This year, I think because of the interest rate hike and the Taiwan/U.S. dollar getting bigger. We believe there is a swap momentum, okay, and there's a business opportunity.
Okay. When you're talking about the NIM likely to expand by 3 basis points-5 basis points this year, it doesn't include the impact from swap revenue, right?
No., c orrect, yeah.
I see. Thank you.
Thank you. If you would like to ask the question, please press star one on your keypad. Thank you.
Okay, if we don't get any further question, then we'll call the meeting off. Okay. Thank you for your participation today. This is probably the shortest investor meeting I had in my life so far. Okay. Thank you very much for your participation. If you do have some further questions to ask after the meeting, please contact my IR colleagues. We will be more than happy to answer the question raised. Okay, thank you.