Investors and media friends, welcome all of you to the third quarter investor conference of KGI Financial. I'm Jenny Huang, representing on behalf of the company. I appreciate your support and attention to our company. In the full year and half year investor conference, our Chief Executive Officer and Presidents from the subsidiaries will focus on strategies. In the first quarter and third quarter investor conference will focus on the results of the business and financial results.
Chief Financial Officer's and actuary officers from subsidiaries will talk about the content. Today, there are two parts. First are the business overview, and second part is the Q&A. You're welcome to use the Webex system to ask questions. Now I hand over to the Managing Director of our Investor Relation Management Department.
Thank you, Jenny. I'll talk about the first nine months' performance. Our management talk in the previous investor conference, we have five subsidiaries. Life Insurance, Securities, Banking, SITE, and Capital will create more synergies. On page seven, we'll talk about the financial overview of KGI Financial. The net income was TWD 29 billion, compared with the same period last year, grew 66%, mainly driven by Securities and Life Insurance.
Due to the contribution and the investment valuation rebounded, our net worth recovered TWD 43 billion and reached TWD 306 billion, a recovery of 60%. Next on page eight. For KGI Life, the profit performance is approximately TWD 20 billion, a 78% growth, mainly due to the improved investment income. In addition to the stable investment strategy, we also seized the opportunities in the market to realize capital gains. The overall investment income increased by 19% year-on-year.
In Q3, we also saw the rebound in the insurance policy sales. The overall FYP is 43%, driven by the traditional regular paid sales. The sales agent channel also grew by 40%. In KGIB, the profit was TWD 4.3 billion and slight growth compared with last year. That is driven by the growth in loan. Also, we saw increase in provision.
If we look at the PPLP, there was a 22% growth. In terms of net income, the income grew 44%. The contribution in the total revenue continued to rise and further optimizing the structure of net income. KGIB also obtained a business license from Hong Kong Branch in October. That's the first overseas branch. We'll leverage existing presence of KGI Securities and CDIB in Hong Kong to provide a comprehensive financial service. On page nine, KGI Securities.
The first three quarters' profit was TWD 8.1 billion, a 51% increase ROE of 17.7%, exceeding the industry average. With the active market trading volume, the brokerage fee grew by 39% year-on-year. Investment income grew by 46%. Wealth management business is also a key focus for the Securities development. Clients' asset management scale grew by 31%. Wealth management fee income grew by 59%.
In terms of CDIB, the profit was TWD 587 million, mainly affected by the valuation fluctuation in overseas investment positions. In the first three quarters, five new asset management business contributed TWD 14.9 billion, with the total asset management reaching TWD 54.6 billion at 26% growth.
Additionally, the supply chain green energy fund from Kai-Hong Energy has committed TWD 2.4 billion, with four projects, company receiving a total of TWD 310 million in investment disbursement. On page 10, this talks about our capitalization. The double leverage ratio of KGI Financial decreased further to 119 from the end of last year, and the subsidiaries maintain a stable capital adequacy ratio. Next, the business overview of KGI Life.
On page 12. Our strategy still focuses on growing our agency channel, increasing our premium, and through prudent investment strategy to improve our returns and aligning with IFRS 17. Page 13, you can see our premium income and channel breakdown. Starting from Q3, premium momentum began to pick up and KGI Life also launched single-pay products in response to market demand. Total premium in Q3 increased 9% YOY. FYP increased 4% YOY.
In terms of channel distribution, agency took up 40% of FYP. Increasing agency channel share continues to be our focus moving forward. On page 14. For VNB Driven by premium income, VNB grew 4% YOY. VNB margin was 36.2%. On the lower part, we can see investment spread. COL is at 30.07, and for investment returns due to capital gain and dividend income, the return reached 4.17%. The overall spread has improved gradually. Page 15, investment portfolio.
We maintain stable allocation. We do not make big adjustment in the first nine months, and the returns for each asset class is provided on this slide for your reference. Page 16, investment performance. Re-hedged recurring yield was 3.88%, up slightly YOY. Due to a weak greenback in Q3, the overall hedging cost slightly increased to 1.14%.
For our hedging ratio, it is maintained at 52%. The FX reserve is $13.2 billion. Next, KGIB. Page 18. For consumer and corporate finance, the direction is to expand its asset scale while increasing fee income and optimizing deposit and loan structure. Page 19, our profitability. In the first three quarter, net revenue TWD 11.9 billion, up 16% YOY, mainly driven by fee income up 44%. For wealth management, fee income grew 60%, and fee income from loans and other increased by 25% YOY.
For NIM and spread performance, it has decreased slightly. This is because of the expansion of asset scale. For NPL ratio, because it was impacted by a single case. If we rule that out, the actual ratio is about 0.2%. The quality is still stable. Page 20, our loan and deposit structure. We continue to actively expand deposit and loan scale. Loan increased 14% YOY, and we see double digit growth for all loan products. Deposit balance also increased by 15% YOY.
Securities on Page 22. Our strategy, KGIS continues to strengthen the growth of its wealth management business, both domestically and internationally. Meanwhile, we collaborate with diverse partners to expand our customer base and enhance synergy with subsidiaries within the group. Page 23 is our net income. It has grown by 40% year-on-year.
Our brokerage fee and investment income have both grown by 40%-50%, and our AUM in wealth management has continued to grow. On the lower chart, it also shows that the revenue related to financial management increased by also 60% year-on-year. On Page 24, our net income, the overseas contribution is about 14%. In terms of brokerage and underwriting, we maintain a leading position in the market. Next, KGI SITE on Page 26. Our strategy still is focusing on expanding our AUM and ETF scale.
We continue to stay on top of the market trends and develop a comprehensive product line that is thematic and meets the diverse needs of our clients. On the next page, our AUM continued to grow, and in addition to traditional institutional business, we continue to drive other business. For example, in our retail, the retail size is about TWD 280.6 billion, ranking top 10 in the industry, and the quarterly growth is 22%. Next page is a more detailed breakdown.
Our ETF assets in terms of beneficiary and growth are all doing better than the industry average. Next is CDIB on Page 31 is our strategy. We continue to shift our focus towards an asset management model with effort to promote services such as private equity and FICC.
Turning to Page 33, starting from this quarter, our AUM calculation has changed to by market value of the funds plus the committed investment amounts that can still be withdrawn. The calculation basis is slightly different from the previous quarters. On the upper chart, our portfolio this year, we have raised new funds. It has contributed about TWD 14.9 billion, therefore driving a growth rate of 26%.
On the lower chart, our principal investment position, the growth is mainly coming from disbursement and valuation growth, which has driven the fair value to about TWD 35 billion, and the year-on-year growth rate is about 3%. Next page, our performance. We continue to focus on enhancing sustainable revenue, including fee income. We have closed several fundraisings, and the fee income for the first three quarters has increased by 11%.
We've also begun to position and to venture into foreign currency private debt, and the overall position is about TWD 2.7 billion. The coupon rate is about 11.5%, and this is the performance overview. We'll enter our Q&A session. If you would like to ask any question, please click the Raise Your Hand button on Webex, and we will unmute you and invite you to ask the question. Now I'll hand over to our Chief Financial Officer.
Okay, thank you. We now turn to JP Morgan. First, we'll invite Jamie from JP Morgan. Jamie, the floor is yours.
I have a few questions for Life. Since you have already applied the new reserve mechanism, when will you begin to apply this and adopt this? What is your expression on the effects, and what adjustment will you make on your hedging strategy? Since you have the new reserve mechanism, are you not going to roll over your CS position, or you will continue to roll over your CS position as planned?
Second question, also to Life insurance. You mentioned Q3, you've added a new lump sum payment for NTD products, so your VNB margin quarter-on-quarter has dropped slightly. I wonder, in terms of volume and margin, how can you balance volume and margin, including in the following years, what would be your outlook for FYP growth and margin? A question to Bank. Can you give us your Q3 NIM? On the slide is the adjusted number. What is the pre-adjustment number for Q3 alone? It seems like NIM and spread changes are not matched.
What is the cause of such a difference, and how would you look into the following quarters changes in terms of your NIM? In terms of credit cost, in the last quarter, you mentioned it should be 20- 25 basis points for the whole year. It seems like it should be revised up. The premise is that your loans will be maintained at double-digit, or what will be the changes?
Okay. For Life, we'll hand over to Chief Financial Officer at Life.
I am the investment officer from KGI Life. For FX, we have applied for the new scheme. When it will be effective, it depends on the regulator's approval. The expected outcome after using the new scheme, when it is accumulated, when it is sufficient, our hedging will be more flexible. We can lower our hedging point cost. The overall hedging cost and its impact on our profit will be limited.
It offers great flexibility for us moving forward. For hedging strategy, even if we apply for the new scheme, we will not lower our hedging ratio because that will increase our FX risk. It really depends on the market situation, exchange rate. We will adjust it dynamically, and we will continue to accumulate more FX reserve so that we can have a stable capitalization. This is my answer.
Second question. I am Chief Financial Officer from KGI Life. We have launched single-pay products in June, because there is such demand in the market, we also launched such product, the sales was quite good, as expected. The long-term goal is still the sales of regular pay with high VNB and CSM. That's the same for next year. This is my answer. Thank you.
[inaudible] . First, the Q3 NIM. The adjusted NIM is 1.32%. Before adjustment is 95 basis points. In Q3, our NIM spread are both improving. That is due to the negative carry have been improved. For the future NIM, our full year forecast will maintain about 1.3% level, even now exactly adjusted down. Under our asset growth strategy, that's the result.
Especially we have double-digit growth in loan, not only in corporate or mortgage, we both see growth. Some of the spread is better, some of the spreads is less favorable, but this is part of our strategy, so we believe this is still normal. Secondly, credit cost. In the first three quarters, our credit cost is about 23 basis points. It is still within the 20 - 25 basis points. Due to our assets continue to growth, the credit cost will maintain around below 25 basis points. If there's no special circumstances, it will be retained at this level, and that's all.
Up next, we will invite Peggy from Morgan Stanley.
Thank you. The first question, you already applied for the FX provision, the new regulation. The FX rates in the future will be 100% absorbed by the provision. What is the impact to your hedging cost? Now your hedging cost in the first 9 months is 1.14%. Next year, what is your forecast? Do you believe it will be reduced next year? That's the first question.
Second, for the pre-hedging recurring yield of KGI Life, the first nine months increased 3 basis points. Next year, because interest rate is forecasted to be reduced, what is your forecast for the pre-hedging recurring yield? [URCL] of KGI Life, what is the amount of bond and stock?
The third question, will you adopt ICS 2.0 and IFRS? Do you have any figure or direction you can share the impact to your COL and CIS release and ICS ratio? Recently or next year, what is the fund insurance plan? Lastly, can you share us with the dividend policy next year? Thank you.
I will answer the question regarding FX reserve. Under the new scheme, it will calculate hedging cost. It includes point cost and for unhedged position, the compensatory allocation, that is 1.2%. It is fixed. For the point cost, it is the cost that we paid for our hedging, and it depends on the market condition. We know that the Fed will cut rate next year. For the overall hedging cost, it is positive, so the cost will go down. For the hedging ratio, if our hedging ratio is very low, the point cost will also be low. This is why we apply for the new scheme. Future FX fluctuation will be absorbed by reserve. It will be more stable moving forward.
For recurring yield outlook next year, although we expect Fed to cut rates, risk of deficits in the U.S. is still quite serious. Long-term rates will remain high, so the yield will still be steep. This is good for lifers because it is good for our hedging. For recurring yield next year, if for fixed income, it is quite positive. For stocks, recently, we focus on grasping market opportunity.
We will not sacrifice capital gain for dividend income. We will maintain such strategy. For recurring yield, we are still very positive. How much will it exactly be? It really depends on the market condition next year. For [URCG], for stocks, it is positive, and bonds, it is still negative. For aligning with ICS, the regulator will release basis for details. If we rule that out, based on our calculation, we can successfully transition to the new scheme.
For our IFRS 17, CSM has been our main focus. We want CSM from new business can grow steadily every year. For the net worth ratio, it depends on asset reclassification and other factors. There is no concrete answer yet.
Regarding our dividend policy, KGI Financial, our performance was outstanding this year. Our dividend policy will reflect the business performance. The future subsidiaries upstream to the KGI Financial, we will also consider it. In the future dividend policy, we will consider the long-term stability, and if possible, we will maintain a growth. That is about dividend.
Wish to ask question, remember to click the hand button on the Webex interface. We will invite Qiaoying from Commercial Times. You need to click on the accept button before you speak.
I have questions for the holdings, it is that under Trump 2.0 and his administration, what will be your financial outlook? Do you expect another round of inflation, and how would it impact your profits? I also have question for KGI Life on your operation in the stock markets. What is your outlook for next year?
Since our chief investor is here, I will ask the head chief investor to talk about the financial outlook.
Trump 2.0 strategy, the tariff increase, tax decrease for 2025, the economic outlook is still positive. High rate environment has bring pressure to the economy, the Fed still have room to cut rates. Because of fiscal deficit, it will affect their debt issuance. For 2025, the yield curve will be steep. Through different policies and their impact, inflation pressure will be apparent in the second half of next year.
Because through increasing productivity, the cost can be absorbed. Basically, next year, our outlook for the stock market are cautiously optimistic. Because the economy is still growing, there is still opportunity next year in the stock market. We will grasp market trend to engage in range trading. After Trump takes office, there will be new policies, so fluctuation will be big. We will leverage these opportunities to realize gain and try to make greater profits. This is my answer. For CDS outlook.
We are still planning on our budget, but our Chief Executive Officer, Paul, has been discussing thoroughly with the business unit, and he uphold the same principle, is that we set the goal and we will deliver it no matter what, no matter the challenges. The simple answer will be that we will try our best. As our chief investor said, she also reflects the overall outlook on the KGIF side. We are cautiously optimistic, but we do know that there are uncertainty in the market. We will try our best to manage our downside risk and to manage the risk possible.
Okay. I will ask JPMorgan's Jamie again.
I have two follow-up questions. Q3 swap revenue for the bank, what is the figure? For Life, I still have follow-up questions for hedging. Your monthly contribution will likely double afterwards.
If I understand correctly, under the current scheme, your CS and NDF cost is above 25%. If it is higher than your average, then the 25% can be absorbed under the new mechanism. What will be the changes? If that is the case, if your hedging structure doesn't change dramatically, then your returning hedging cost in the next year actually will rise. Do I explain that correctly?
Let me answer first on the swap revenue bank. This year, the monthly figure is about TWD 200 million, so by Q3 it's about TWD 700 million. Regarding the new scheme, indeed, the 25%, it will be deleted. It's not in the new scheme. Whether the hedging cost will increase. When NTD depreciates in the old scheme, it will be reflected in hedging cost.
For reserve, it is not reflected. In the new scheme, it will be reflected in the reserve. If TWD appreciates, the negatives will also be absorbed by the reserve. The new scheme will make us more stable against FX fluctuation. When we have sufficient reserve, the cost that can be saved will be more apparent. After looking into the new scheme, that's why we made a decision to apply for the new scheme. This is my answer for your reference.
Next, let's welcome in Ichi.
The floor is yours. Can you hear me now? Yes. I have two questions. First is to KGI Life. This year and last year, have you gained the approval from the Insurance Bureau to upstream your dividend? If so, what is the amount? Also, before the new scheme, do you expect to receive any approval to upstream your dividend further? Next question is on the KGI Financial Holding Co. dividend payout. You mentioned you want to keep a stable long-term dividend payout. This is quite a vague answer. Are you talking about the amount? Are you talking about the yield rate? What exactly did you mean?
Regarding cash dividend, I will respond to that. Last year, we turned it into capital. We did not upstream our dividend. Next year, it needs to be further discussed with the regulator. That's my answer. Thank you. In terms of stable dividend payout, we want to be more stable in terms of the dividend payout rate and the yield rate. They both are the factors that we considered.
Next question, Yun Jun. Yun Jun, the floor is yours.
[Ichi] has mentioned the dividend payout issue. You say long-term. Before 2023, you didn't give any dividend. Before that, you gave as high as TWD 1 per share. Your payout rate is about 40%-70%. You say you want to maintain growth. I don't think that really is a clear answer. Maybe you can tell us if the payout ratio will be 50%, or it will go as high as to 60%-70%. In terms of yield, do you expect to maintain a 4% yield rate or even higher? Please specify.
Thank you for the question. Certainly, in the past, our dividend consideration has to do with the dividend upstream by our subsidiaries. Therefore, I stress that we set a goal we will try our best to achieve. We do have to factor in all the uncertainty because now we need to have approval for the life insurance subsidiary to upstream their dividend. We are still on the discussion phase. Last year, we gave out TWD 0.5 per share. This year, our profit has increased. We are discussing internally on the ratio of payout. It is still under discussion.
Today, thank you for joining. This ends our investors' conference today. Thank you