Hi, dear investors. Welcome to the investors call for E.SUN Financial Holding, third quarter of 2025. The earnings call today, we have Deputy CFO, Ms. Sarah Chen, and also my colleagues Martin, Bernard, and Ruby. At the beginning, I will invite Sarah for a brief opening note, then Ruby will take over and walk you through the slides. Thank you.
Dear investors, E.SUN delivered a strong performance in the first nine months of this year, marking a record high in net profit for the same period. Solid growth across all core businesses, coupled with high single-digit growth in overseas profits. Net fee income set a new record high, growing at a rate of 10.3% worldwide. Wealth management fee income also achieved a record high, in which bancassurance grew by 26%.
Last week, we announced the financial results of October. Growth rate of net profit for the first 10 months was 30.9%. Net fee income continued to grow. We are optimistic about our performance this year and expecting to achieve good results. With well execution of cost management, the ratio decreased to 47.3% in the first nine months. E.SUN will continue to strictly control the growth rate of expense to single digits for the whole year.
For overseas expansion, overseas branches and subsidiaries net profits continue to grow, and Dallas rep office has opened in October, further expanding our North American financial services network and creating a convenient cross-border financial platform. E.SUN will continue to expand our footprint across Asia- Pacific. The Board of Directors have announced the resolution on acquiring Mercuries Life Insurance through a share swap.
It is still subject to the approval of shareholders' meeting and the competent authority. Following the merger, E.SUN FHC's total assets will surpass TWD 5.8 trillion, propelling the company to become the fifth largest listed financial holding company in Taiwan. Expanding the financial holding company landscape is one of the critical development strategies for E.SUN's fourth decade. Following the acquisition of 91.2% equity stake in PGIM Securities Investment Trust Enterprise this July, the Board approval of the Mercuries Life merger further solidifies the FHC's footprint.
Lastly, E.SUN outstanding performance has received recognition from international institutions. We are highly commended by The Banker as the best private bank in 2025. For the fifth consecutive year, E.SUN hosted the ESG Sustainability Initiative to raise the awareness of ESG and to collaborate with corporate partners to a sustainable future. We will continue to deliver value to our shareholders. Thank you very much.
Hi, dear investors. This is Ruby. I will begin the presentation with the summary of E.SUN Financial Holding Company. On slide four, as the third quarter, the total asset of both financial holding company and E.SUN Bank is [TWD 54.2 trillion] For the key financial indicators, the book value of financial holding company is TWD 16.08 per share. The double leverage ratio is 115.57%, the financial holding company's CAR ratio is 132.9%.
For the cyclical channels domestically, E.SUN Bank runs 140 branches around Taiwan, for the overseas channels, we run 35 overseas sites in 11 countries and regions. The Dallas representative office opened in October, further expanding our North American financial service network, the securities branch remains the same at 17. On slide five is the business and financial review of the third quarter of 2025.
For the financial performance, net revenue of financial holding company was TWD 67.8 billion, which grew by 15.6% year-on-year. Net profit was TWD 26.2 billion, which grew by 25.4% year-on-year. The financial holding EPS was TWD 1.62, ROE 13.6%, ROA was 0.84%. For subsidiaries, E.SUN Bank net profit for the first nine months was TWD 25.2 billion, which grew by nearly 30%. Move on to business development. The loan balance reached TWD 2.6 trillion, which grew by 10.7%, in which corporate loans grew by 15.7%.
SME loan grew by 8.9%, retail loan grew by 6.8%. The deposit balance grew by 10% year-on-year. Net income was TWD 22.6 billion, which grew by 10.3% and set record high for the same period. For the wealth management fee was TWD 10.9 billion, grew by 11.2%, also set a record high. For asset quality, E.SUN kept in line, NPL ratio at 15 basis points , capital coverage ratio at 803%. For the business highlight, E.SUN advanced financial holding company's landscape and keep moving toward a sustainable future.
The Board of Directors announced resolution on November 5th to acquire Mercuries Life via a share swap. The transaction is contingent on final approval of the EGM and regulatory authorities. On slide six, we chart to illustrate our financial performance. As you can see in the upper side of the slide, the net profit and the EPS both set a record high on the first three quarters of 2025, ROE and ROA are all the best performance in the past five years. Moving to slide seven, we present the net income of the financial holding company and its subsidiaries.
You can see on the left-hand side, the pie chart shows that E.SUN Bank remains the main contributor of the financial holding company, which contributes to nearly 93% of the total profits. The growth momentum for the E.SUN Bank is very strong. As you can see on the right-hand side, the growth rate of the E.SUN Bank is nearly 30% year-on-year. On the next slide is a net income breakdown. Again, E.SUN follows the golden rule of the growth. Net profit growth is larger than the net revenue growth, which is larger than the operating expense growth.
Driven by effective cost control, the operating expense only grew by 8% year-on-year. On slide nine shows the revenue breakdown of the financial holding company. As you can see on the left-hand side, the pie chart shows our net revenue. The net interest income accounts for 43.7% of the total net revenue. The net income accounts for 33.4%. The other income accounts for nearly 23%. On the right-hand side, you can see that all revenue sectors deliver a very decent growth.
On slide 10, shows the net fee income breakdown of the financial holding company. The pie chart shows wealth management accounts for 38% of the net fee income. On the right-hand side, you can see the growth rate of wealth management was 11.2%, which was after a third consecutive year of double-digit growth. We still deliver a very decent growth in the wealth management business. On slide 11, present the capital adequacy ratio of both financial holding company and the bank. Both maintain its capital ratio at a very adequate level.
The current ratio of financial holding company is 132.9%. The tier one ratio of the bank is 13.72%. Moving on to the subsidiaries. First, we take a look at E.SUN Bank. On slide 13, presents the deposit and loan structure of E.SUN Bank. The total deposit grew by 10.03% year-on-year, in which the foreign currency deposits grew by 10.13%. The total loans grew by 10.71% year-on-year, in which the foreign currency loans grew by 15.67%. If we denominated the foreign currency deposit and loans in U.S. dollars, the foreign currency deposit and loans grew by 13.6% and 19.8% respectively.
On slide 14, shows the loan portfolio breakdown of E.SUN Bank. E.SUN has very diverse loan structure. With our large corporate loan, SME loan, mortgage loan, and secured personal loan are all account for around 20%-25%. On the right-hand side, you can see across all the loan categories, we have a very decent growth in first nine months of 2025. On slide 15, we would like to highlight the SME loan and the foreign currency loan of E.SUN Bank.
E.SUN Bank maintains the largest SME loan balance among Taiwan's private banks, driven by stable growth. For the foreign currency loan, as just mentioned, if we denominate it in the U.S. dollars, the foreign currency loan is still very strong in first nine months of 2025. On slide 16 is the overseas development of E.SUN Bank. The overseas branches and subsidiaries net profit grew by 4.9% and contributed 25.5% of total net profits. The loan balance grew by nearly 11%.
For the overseas network, the establishment of Dallas representative office on October will help us grab local business intelligence, and in conjunction with our Los Angeles branch, provide more timely and comprehensive financial service to local customers. On slide 17, shows the deposit structure of E.SUN Bank. The overall LDR is 71.6%. The LDR for the foreign currency is 38.9%, which has been increased in the past few years. On slide 18, the NIM and spread . E.SUN NIM has remained at a very flat level in the past quarters, around 1.28%-1.31%.
On right-hand side, you can see that the spread has been improving over the past few quarters. It is thanks to the wealth management of cost funding controls. As the green line shows, we have lowered our deposit rate over the past year. On slide 19 is the wealth management fee breakdown. The bancassurance accounts for 42% of the total wealth management fee income, and the mutual fund accounts for 34%. On the right-hand side, you can see the growth rate of bancassurance was 26% in the first nine months of 2025, also after the third consecutive year of double-digit growth.
We still deliver 26%, which is a very strong performance. On slide 20 is the credit card business breakdown. We have 5,438 active cards, and the market share was around 13%, and card consumption hit a record high of TWD 498 billion. The gross fee income grew by nearly 8% year-on-year. On slide 21 is the asset quality of E.SUN Bank. E.SUN keeps very benign asset quality. Our NPL ratio is 15 basis points in the first nine months, and the coverage ratio is 803%. The credit cost is 21 basis points.
On slide 22 is the asset quality comparing to the market. E.SUN keeps very benign in asset quality, which you can see is lower than the market average. On slide 23 is cost income ratio. Thanks to the very well management of the cost control, now E.SUN Bank cost income ratio is 47.3%, which has been improving since 2022 from nearly 13%. Next is about E.SUN Financial Holding Company of other subsidiaries. First, on slide 25 is E.SUN Securities.
At the third quarter, we see a TAIEX rebound , driven positive year-on-year earnings growth. ROE is 23.6%, which ranks top one among securities under financial holding companies. Both their revenue and net profit deliver the positive growth. On slide 26 is the performance of E.SUN Asset Management. Domestic fund AUM is TWD 84.3 billion. Discretionary AUM is TWD 95.9 billion. Year-to-date growth rate will boost 12%.
On slide 27 is the sustainable development of E.SUN companies. E.SUN Financial Holding Company was honored with Jade Award, the highest rating, and CEO James Chen was recognized as best CEO at The Asset Corporate Sustainability Leadership Awards on November. We will continue our efforts and be the pioneer in ESG. As mentioned, the Board of Directors of E.SUN Financial Holding Company and Mercuries Life simultaneously approved the consensual merge on November 5th.
Here's the presentation about merger between E.SUN Financial Holding Company and Mercuries Life. On slide 29, the entire transaction will be conducted by a share swap. E.SUN Financial Holding Company plans to acquire 100% of Mercuries Life equity by issuing new shares, exchanges 0.2486 E.SUN shares for every one Mercuries Life share. Upon completion, Mercuries Life shareholders will hold approximately 8.31% of E.SUN Financial Holding Company's shares.
The transaction is contingent on final approval of the EGM and regulatory authorities. On slide 30, principle of M&A evaluation. The process was adhered to the ARM principle. First, affordable. The financial and future capital needs are within the financial holding company capacity, which ensures stable dividend distribution. Second, reasonable. Both price and non-price transaction terms are determined to be reasonable and fair. The 100% share swap structure ensures both E.SUN and Mercuries Life shareholders will share future growth.
Third, manageable. Mercuries Life asset yield is optimal for financial holding companies and being highly complementary to the bank. E.SUN will continue to unwavering operating philosophy, including integrity and high standards of corporate governance, management by professional executives, by adhering to the guideline of maintaining a bank-centric financial holding company. On slide 31 is our strategic thinking. First, M&A is the most efficient path to achieve immediate synergies and accelerate growth.
This not only align our strategy to expand the financial holding company landscape, but also help us to build a complete financial ecosystem. Some might ask, why now? The current moment is critical turning point for Taiwan insurance industry. The adoption of IFRS 17 and the new solvency regime will increase financial transparency and boost the investment value of the insurance industry. Besides government policies, including localization and new reserve rules, promote stable and healthy growth for life insurers.
Last but not least, the policy about Asian Wealth Management Hub, supporting life insurance industry to enhance high-net worth customer acquisition and competitiveness. Why Mercuries? With 32 year of operation, Mercuries Life has a solid foundation of 8,600 agents, 2.5 million customers, and 257 branches. As of June 2025, Mercuries Life's TWD 1.5 trillion assets and TWD 30.9 billion net worth ensures the pro forma consolidated financial holding company's capital and liability ratio remains within safe limits and a bank-centric financial holding company.
For future operation, we are going to recruit top talent, leverage complementary bank sharing channels, product diversification, and technology to unleash Mercuries Life potential. On slide 32 is a business overview of Mercuries Life. Established in 1993. Total premiums of 2024 reached approximately TWD 110 billion, ranking seventh domestically with a 4.5% market share, serving 2.5 million customers across 4.2 million policies.
On slide 33, we can see that following the merger, E.SUN Financial Holding Company's total asset will surpass TWD 5.8 trillion, propelling the company to be the sixth largest financial holding company in Taiwan, strengthen resilience, and brand values. That will be the third quarter presentation. Now we are heading to the Q&A session. Thank you.
Investors, please fill in your question into the dialogue box and we will answer the questions one by one. Thank you.
Okay. Investors would like to ask how our forecast regarding the NT dollar and U.S. dollar interest rate, what is our forecast? I think for the NT dollar, because the economic situation in Taiwan is quite stable and the inflation pressure is quite low. So in our forecast, central bank in Taiwan will maintain the interest rate as flat until the end of next year. For the U.S., in our forecast, Fed will cut interest rate four times, in December this year and March, June, and September for next year.
Each for 25 basis points rate cut. In this forecast, we believe even under these circumstances, we still can maintain our NIM level. Our initial forecast at the end of this year, we still can have 2 basis points-3 basis points NIM to improve until the end of this year. For next year, because we strictly control our cost of funding, and since Fed is going to cut interest rate, that means our funding level can be lower and lower. On the other way, we still try to lock in some level, especially for our loan and investment portfolio. So in our forecast, compared to the end of this year, for the next year, maybe we still have 4 basis points-5 basis points NIM to be up. That is our forecast.
Okay. My name-- I'm Chi-Wei and I will add something about the transaction of Mercuries Life. First of all is, why E.SUN wants to enter life insurance in Taiwan. It is a very strategic decision for E.SUN, and we think it is very important for the long-term development of E.SUN. In Taiwan, the financial industry is dominated by financial holding company, and it is very obvious. As well you can see all the good banks, insurance companies, and security houses are converged to the financial holding companies. In the long run, the holding companies will become more and more competitive.
While the financial industry in Taiwan is quite fragmented, all the sizable and good banks and insurers and security companies will be under financial holding companies. For E.SUN's long-term development, it is very critical for us to have a life insurance company, and to make more synergies and more cross-sellings, and to deliver better financial product services to our customers. This is our strategic thinking in why we want to enter this industry.
Also, Mercuries Life is low in its capital level, and it is the only one insurance company which does not meet the so-called RBC standard. In Taiwan, life insurance need to meet 200%, while Mercuries was only at 154% as of June in this year. We also made an estimate of how much it will require to replenish its capital to meet the 200%. Roughly, every 1% is equivalent to TWD 420 million. So it will take approximately TWD 20 billion to meet the 200% RBC.
At the same time, Mercuries Life in the second half of this year has already issued a sub-debt and also common share equity injection. The total amount is nearly TWD 10 billion, which means the balance is around TWD 10.1 billion or TWD 10.5 billion to meet the RBC 200%. In the pipeline, Mercuries Life is planning to issue another roughly TWD 8 billion sub-debt next year, which would reduce the balance down to only TWD 2 billion. So the capital gap is very manageable and very limited. As what we just mentioned in the slides, we follow the three guiding principle when we are evaluating this transaction.
The first is affordable, second is reasonable, and third is manageable. The affordability is our top concern when we are considering this transaction. In terms of the capital gap, it is totally affordable based on E.SUN's capability, considering that E.SUN is expected to make TWD 33 billion in our profit. Also, the EPS, in our projection, it will probably hit a record high for E.SUN. For E.SUN's capability, we are totally sufficient to manage this deal, to manage this transaction.
Also, in the earnings call this afternoon in the Chinese session, Joseph Huang, the Chairman, also guided the dividend policy. In this year, 2025, E.SUN distributed a cash dividend TWD 1.2 per share, and the stock dividend TWD 0.1 per share to our investors. With the growth of our profit and EPS, Joseph, he is very positive on the dividend payout next year. He thinks TWD 1.2 per share is a baseline, and it is highly likely E.SUN will increase the cash payout in the coming year.
We will maintain the cash payout ratio ideally at 60%-70%. If E.SUN along the way continues to enhance its profitability, then it is very likely that E.SUN will continue to raise the cash dividend. Even with the merger of Mercuries Life, even with the potential capital injection in the future, but E.SUN, in the next three years, we are very certain that we will not make capital raising through common equity. In the coming three years, E.SUN does not plan to raise capital through new common equity issuance. This is our plan associated with this transaction in dividend payout and also in the equity planning.
One thing to add on. In our observation, the growth momentum and profitability seems to be very good. Our senior management will try to balance the need for investors and the whole development in FHC's future. The dividend policy is still subject to our Board's approval. That's just for your reference.
Thank you, investor, for participating in the earnings call this evening with us. It seems like we have answered all the questions. Thank you for your participation, and we look forward to meeting you in near future in the next earnings call. Thank you.