Dear investors, welcome to this earnings call for the second quarter of 2024. My name is Chi-Wei . I will be the moderator of the discussion today. Alongside me, my colleagues, Alex Chiu and Martin Lin, are also in the meeting room. First of all, I would like to invite Davis Tsai, the Vice CFO of E.SUN Financial Holding, for an opening note.
Welcome, everyone. This is Davis. In the first half of the year 2024, E.SUN achieved a remarkable performance with a record high net profit. Net fee income also set a new record high, growing at a rate of around 30% compared to the previous year. The net fee income from wealth management also reached a record high. We have seen significant growth in fee income from major products such as mutual funds, insurance, and fixed income due to the active investment market this year. Moreover, our credit card transactions have reached the highest record for the first half in history, with monthly consumption reaching TWD 100 billion in June. Yesterday, we announced the financial performance for July. Net profit for the first seven months grew at around 26%, while net fee income continued to grow, reaching 29.9%.
The fee income from wealth management in July was the best monthly result in recent years. We are optimistic about our fee income performance for this year and expect to achieve good results. We have also achieved positive results in cost control. Operating expenses in the second quarter were slightly lower, with year-on-year growth decreasing to 77.5%. Our cost-to-income ratio dropped to 53.1%. We will continue to strictly control the growth rate of expenses for the entire year. Regarding our overseas expansion, E.SUN recently opened a rep office in Kuala Lumpur, Malaysia, further expanding our presence in the Asia Pacific. We plan to open a sub-branch in Kumamoto, Japan, in the fourth quarter, where TSMC fab is located. This will allow us to serve TSMC and its supply chain. Additionally, we are currently applying to open a branch in Toronto, Canada.
Over the next few years, we aim to strengthen our overseas presence. Lastly, E.SUN has consistently received recognition for our commitment to ESG. We have been selected into the Dow Jones Sustainability Index for 10 consecutive years. We will continue to deliver value to our shareholders. Thank you.
Thank you, Davis. Next, my colleague, Alex, he will walk through the presentation, then we will start to take questions for this evening.
Hello, everyone. We'll start on page one. On page one is the financial summary for E.SUN Financial Holding Company. For total assets for the holding company, it was TWD 3.9 trillion. The growth rate year-to-date was 7.6%. For our subsidiaries, total assets on the bank side was TWD 3.87 trillion, and the growth rate was 7.4%. For securities and venture capital, we're all on very decent growth. For key financial indicators, our book value per share is TWD 15.1. The drop compared to the first quarter is mainly because of the distribution of our dividends. For the debt-to-leverage ratio, it was 108.74%. The cover ratio for the financial holding company was 127.89%, both at a very decent level. For our operating sites in Taiwan, all remain unchanged.
For our overseas presence, we newly opened a rep office in Kuala Lumpur, and we're scheduled to open a Kumamoto sub-branch in the fourth quarter. On page two is the business and financial review for the first half. For the holding company, our net revenue was TWD 36.1 billion, grew by 15.4%, and for net profit, it was TWD 12.7 billion. The growth rate was 20.6%. Both figures were the highest in the same period. For the EPS for the holding company, it was TWD 0.81, and for ROE, it's 10.76%. ROA is 0.767%. For the subsidiary, E.SUN Bank, our net profit was TWD 11.6 billion. The growth rate was 21.8%. For E.SUN Securities, the growth rate is even higher at 72.9%. The net profit for both entities are all at an all-time high in the same period.
For the business development, our loan balance grew by 13%, and it was mainly driven by the corporate loans, which grew by 12.3%, and also a very strong retail loan demand. The growth rate was 14%. Out of the corporate loans, the SME loan balance grew by 13.6%, reflecting a very strong economic condition in Taiwan. Also for our foreign currency loans, the growth rate was 12.3%, also reflects a very strong loan demand in our overseas market. On fee income side, in the first half, the net fee income was TWD 13.2 billion, and the growth rate was 13.2%, which is another record high. It's mainly contributed by the very strong wealth management business in the first half, and also the second quarter as well. For a single quarter, in the second quarter, it was TWD 3.3 billion, and in the first half it's TWD 6.3 billion.
The growth rate for the first half is 41.6%. Both single quarter and the first half are all the record high. For credit card, the fee income was TWD 3.7 billion. The growth rate was 8.7%. The consumption in June was gone high to TWD 100 billion for a single month, which is another record high. Meanwhile, we keep our asset quality at a very benign level for NPL ratio at 16 basis points and coverage ratio at 775.7%. At the lower part of the slide, you can see the business highlight of this quarter. First is our new presence in Malaysia. Also, we are going to have our third presence in Japan. We expect to have 33 operating sites in 11 countries and regions by the end of this year.
Our overall performance and ESG performance has been widely recognized by international media and international institutions. Going ahead, we are going to work harder and deliver more value to the shareholders and also the society. On slide three, on page three, we use four graphs to illustrate on our financial performance in the past five years. One thing I would like to highlight is for our ROE and ROA performance. Those two indicators were the best performing across the past three years. For ROA, even are the best performing across the past five years. On page four was the profit contribution by subsidiary. E.SUN Bank remains to be the main contributor for our profit. It contribute 90% of the profit.
On the other hand, our E.SUN Securities also deliver very strong performance in the first half, which lead its profit contribution go as high as to 8.2%. Now it's a very significant portion of our profit. On next page five, is the net profit breakdown. For the financial holding company, the net revenue grew by 15.4%. Our operating expense, the growth rate was 7.5%, which shows a very good result after we very actively managed our cost control program. For net provision, the increment compared to the same period last year was TWD 1.2 billion. The increase was mainly driven by the strong loan demand, which are request to make 1%-1.5% general provision against all the performing loans. For the net profit was a 20% growth.
One thing I would like to mention in this page is that we have shown a very good growth strategy, follow the positive and healthy correlation for profit, revenue, and expense. That is our growth rate for the net profit is greater than the net revenue's growth rate. Of which, the growth rate is higher than the growth rate of operating expense. We're happy to follow this path for our further growth. On page six, which shows the revenue breakdown by net interest income and net fee income, which contribute 44.7% and 36.5% respectively. The fixed income and other products are 18.8%. On the right-hand side, you can see the graph to show that we had a very strong growth in both net interest income and net fee income.
Especially, we're going to dig into the detail of net fee income, which has a 30% growth this year. On next page seven, you can see the breakdown of our net fee income. The two main contributors are the wealth management and credit card, which contribute 47.7% and 27.9% respectively. On the right-hand side, you can see the growth rate for credit card in the first half was 8.7%, and for wealth management was 41.6%. Also, a record high in the first half. In page eight, you can see the breakdown of our wealth management fees. Bancassurance and mutual funds also contribute a 37.3% and 40% of the wealth management sales, and other products were 23%. On the right-hand side, you can see that across all the product lines, including mutual funds, bancassurance, and other products, are all positive growth.
Not to mention, the mutual funds was nearly double, reflecting a very strong investment sentiment in Taiwan in the first half. One thing we also would like to highlight is about our strong growth in bancassurance. You can see the growth rate is 15.3%, especially it's on a relatively high base. We want to keep a very balanced product breakdown between the investment product and the bancassurance. It will make E.SUN a very resilient product breakdown in a very volatile market. On page nine, you can see the graph, the four indicators we use to evaluate our performance in credit card. One thing I would like to highlight is the card consumption, which has a 13% growth, and led our market share to go higher to 13.5% in the first six months this year.
It was mainly because of the very strong international traveling demand and also a very successful paying your income tax with E.SUN credit card campaign this year. On page 10 is the overview of our overseas business development. In the first half, including our subsidiaries and overseas branches, contributed 33.6% of the bank's total net profit, and the profitability has grown 12% compared to the same period last year. Currently, we have a very comprehensive deployment in Asia Pacific and looking forward, the overseas market continues to be a very important strategy and market for E.SUN. On page 11 is the deposit and loan structures. You can see the total deposit grew by 9% year-on-year. We're happy to see that our demand deposit for TWD is a nearly double-digit growth.
It's 9.9%, reflecting our strategy to collect more lower cost of deposit from our customers, which is a very good result. Also for total loans, the growth rate was 13% and was driven by the strong sectors, especially in SME loans, was at 13.6%, and consumer loans, including mortgage, another 13% growth. On page 12 is loan portfolio breakdown. E.SUN still keeps a very balanced loan portfolio in corporate and retail. For corporate, out of 76.1% were SME, and large corporate was 21%. On retail side, mortgage is 24.8%. Secured personal loan was 20%, and unsecured personal loan was nearly 6%. On the right-hand side, you can see across all different loan sectors or the customer segments, we're all delivering a positive and strong growth in our loan balance. On next page, you can see the loan-to-deposit ratio. For the total loan-to-deposit ratio is 69.8%.
Our foreign currency loan-to-deposit ratio was 37.6%, which has been improving in the past quarters. We're looking forward to a very good, also very strong momentum in the foreign currency loan. On slide 14, you can see the NIM and spread. In the second quarter, we report our NIM to be 1.28%, 2 basis point decrease compared to last quarter. Also for our spread, we reported a 1.22% in spread, also a 2 basis point reduction compared to the first quarter. In the next slide, on page 15, is our asset quality. Both the NPL ratio and coverage ratio were at a very benign level. For NPL, only 16 basis point, and coverage ratio was above 700%. On page 16 is our NPL ratio by products. For corporate, the NPL ratio was only 17 basis point, and for mortgage, it's 6 basis point.
Compared to the market, we're in line with the market standard. On page 17 was the cost-to-income ratio. Until the end of June this year, our cost-to-income ratio was 53.1%. It was largely improved compared to what we had in the past three years, it was mainly improved in two ways, in both cost side and income sides. We're happy to see a stronger profitability, also we had a very good result in our cost control program. On page 18 is the capital adequacy ratio. For the financial holding company, the CAR ratio was 127.89%. For the bank, the Tier 1 ratio is 12.47%, the BIS ratio is 14.93%. This is the end of the presentation, we can head into the Q&A section. Please feel free to put in your questions in the dialog box.
Okay, investors, we have the first question, which is regarding our growth target for this year. What is the target for loan growth, deposit growth in percent for this year, and also the total fee income growth target for this year?
Yeah. The loan growth and deposit growth is even more robust than we expected in the beginning of the year. At the beginning, the guidance that we gave for loan growth, it was 8%-10%. Deposit growth, it was also 6%-8%. However, it is only the first half of this year. However, the loan growth is already approaching our guidance, which is 8%. We will revise our growth guidance for loan and also for deposits. The net increase amount
for loan, as of the first half, is TWD 187 billion, the revised growth target for loan net increase amount is TWD 250 billion. In percentage terms, it will be 12% for the loan growth. Sorry, the number that I was talking about was for deposit. Sorry. For the deposit target, it's TWD 320 billion for the net increase amount. In percentage terms, it's about 10% growth for the full- year. For loans, the net increase amount as of the first half is TWD 156 billion. The revised target for loan net increase amount is TWD 250 billion. In percentage terms, it's 12% for the loan growth. Also about the fee income growth target. The original fee income growth guidance that we provide in the beginning is double- digits, nearly 20%, it seems more positive than the guidance that we provided.
It's very likely that the net fee income growth will surpass 20% for the full- year. However, there is still some uncertainty for the second half. We are quite confident that the fee income growth for the full- year will fall somewhere between 20%-30%. One more thing that I want to highlight is the wealth management fee income, which is the main reason and the main driver for the fee income growth for this year. As of the first half, the fee income growth is more than 40%. For the full- year, we are still quite positive about the full-year growth rate for the fee income of wealth management. However, the second half for 2023, it was a high base. In percentage-wise, it's not easy for us to maintain at 40% growth rate for the full- year.
We will try to maintain the momentum of the wealth management itself, and hopefully, we can also have a wealth management fee income growth rate of more than 30%. Thank you.
We have the second question about the mortgage loan. The investor is curious about the loan growth for mortgage. You are cautious on mortgage loan. Why? Is there still any growth? Should growth accelerate into the second quarter? If cautious, can loan be flat half year- over- half year?
In the first half, the mortgage loan growth rate, year-on-year, it was 13%. Year-to-date, it was already 7.4%. 7.4%, actually, it is already within the range that we provided in the guidance that we gave in the beginning of the year. Take last year, for example, the full- year mortgage loan increase, the amount was TWD 600 billion.
So far, as of the first half, the net increase amount for the mortgage is already around TWD 500 billion. In Taiwan, the first half, actually, the housing market is a little bit overheated. For E.SUN, we see the market in a prudent manner. Therefore, we do not try to accelerate the mortgage loan growth in the second half, even though there is still strong demand from the market. However, we will try to be more selective in the selection of our customers. Of course, the asset quality is the number one priority that we care about. Secondly, we will also be more selective in terms of the customer and try to choose the high-quality customer who we can also have a decent pricing for the mortgage loan.
For the full- year of the mortgage loan growth rate, it will be mid- to high- single digits. Thank you.
Now we have the next question regarding NIM. Can you tell me the reason for the NIM drop quarter-over-quarter?
By the way, the NIM on the chart is dropped by 2 basis points quarter-over-quarter. However, it is mainly because of the rounding. In fact, the NIM only dropped by 1.1 basis points in this quarter. However, in the previous quarter, the number rounded up, so the number for the previous quarter was 1.3%. However, for this quarter, the number did not get to round up, so it is only 1.28%.
I'll finish the question. It is expected that the Fed will accelerate to lower the interest rate. What is your outlook for the NIM for the full- year and for the second half? I would like to invite Davis to answer this question.
Hi, this is Davis. Regarding our NIM, just like Chi-Wei said, in the first half of this year, the Central Bank of Taiwan unexpectedly raised interest rate up of 5 basis points in this March, therefore, there's a little bit of the effect of our NIM for the first half. For the second half, our house view is that the Central Bank of Taiwan, they may not hike rates this year. As for Fed decision, we expect there may be two rate cuts this year, around 50 basis points-75 basis points. Besides, for our loan portfolio, we see the growth momentum is still very strong, and we will keep control of our cost of funding. Therefore, for the loan spread, we expect it will be 2 basis points higher in the end of this year.
However, on the investment side, because Fed cut interest rate, they will suffer a little for the reinvestment yield. For the whole year, we expect our NIM will be remain stable around 1.3% in the end of this year. Thank you.
Okay, we have the next question about the credit card. Can you tell us more about the outlook for the credit card and the consumption? Also, the fee income associated with the credit card outlook in the second half.
In the first half, as we just mentioned in the slide, the consumption amount growth rate, it was 13% year-over-year. Also, in June, for the single month, the consumption amount was even more than TWD 100 billion and also set the record high for the first half. There is a very strong momentum for the credit card consumption, we are still quite positive about the credit card spending in the second half, especially the overseas consumption and traveling continuing to be a very important driver for the credit card consumption. On top of that, the Taiwanese government is promoting the non-cash payment locally.
It is a government policy guidance that by 2026, the non-cash payment will reach TWD 10 trillion. Within two years, the non-cash payment will reach TWD 10 trillion. It will continue to fuel the credit card consumption going forward. We expect the credit card consumption for the full- year, it will be similar to what we have, 12%-13% for the full- year. Also, the credit card fee income will remain at the similar level as what we had in the first half. Thank you.
Okay, thank you, investor. It seems like we have answered all the questions, and I hope you enjoyed the discussion that we had this evening. If you still have any questions, please contact the IR of E.SUN. We hope to see you soon in the earnings call for the third quarter. Thank you. Goodbye.
Thank you.