Welcome to the CTBC Holding analyst meeting for the third quarter of 2024. Today's meeting will be hosted by CTBC Holding President, Ms. Rachael Kao; CFO, Ms. Megan Hsu; CSO of Taiwan Life, Mr. Yeh Po-Hung, and Head of IR, Ms. Justine Shen. First of all, we would be doing presentations first, and after the presentation, we will have a Q&A session. We have provided interpreter service for today's meeting, and in order to ensure the quality of interpreting, please make sure that you are in a quiet environment to allow for a clear voice. Now, let us invite President Kao to deliver her opening remarks.
Good afternoon, members of the media, investors, and analysts. Thank you for attending the CTBC Holding analyst meeting for the third quarter of 2024. First, we would like to share with you our profit performance year- to- date. For the first three quarters, we achieved a pre-tax profit of TWD 71.3 billion and a net profit of TWD 58.6 billion. These are marking new historical highs, over 20.7% of YoY growth. This performance in the first nine months has already outperformed that of the entire year of 2023. Our EPS reached a record high of TWD 2.95, and ROE stood at 17.8%. Regarding our subsidiary performance, we have a recorded after-tax profit of TWD 30.1 billion in the third quarter, and TWD 36.3 billion for the first three quarters. We have seen a 40% of YoY growth, maintaining a double-digit expansion and achieving a record high for the same period.
Overall, deposits and loans demonstrated steady growth, and wealth management benefited from rising capital markets, leading to a significant increase in insurance, mutual fund, and structured bond sales. This has driven our fee income, and we are seeing a 40.5% of YoY growth. Credit card operations are also seeing fee income rise. Compared with last year, we are seeing a 26% of YoY growth. For swap income, we are seeing a growth of 40% YoY. For our overseas operations, in the first nine months, we are seeing a TWD 17 billion pre-tax profit, and compared to last year, we are seeing a 10% YoY growth. This accounts for 37% of the bank's total profit. Our second growth engine subsidiary, Taiwan Life, achieved a net profit of TWD 8 billion in the third quarter and TWD 21.1 billion for the first three quarters.
We are seeing a 46% of YoY growth, and this was driven by strong insurance business momentum and favorable investment market performance, which yielded robust capital gains and profit recovery. Other subsidiaries, including securities, asset management, and venture capital, benefited from an active Taiwan stock market. The brokerage business saw increased fee income. Mutual fund scales continued to grow, and venture capital investments delivered excellent returns. They are contributing to steady profit growth. Although our holding profit is having a great performance, our future outlook is that Taiwan's robust export performance in the first half of the year boosted economic growth.
Looking into Q4, although export growth may moderate due to a high base, the demand for emerging technologies remains strong, and stable import expectations will provide support for investment. These are expected to further contribute to our economic growth. Inflation in Taiwan has shown signs of easing, and with a stable economic foundation, we anticipated that the central bank will maintain current policy rates. Regarding U.S. interest rates, the Fed has entered a rate-cutting cycle since September. The succession, or after Trump took the office, there may be influences in the policy, but overall, the general direction will remain the same, we still believe that the direction is towards a rate cut.
The common perception that rate cuts favor insurance while disadvantaging banks does not apply to CTBC Bank. This is because CTBC Bank has long been proactive in its allocation of short- and long-term debts. Based on the current asset liability structure, interest rate cuts have a neutral or a moderately positive impact on our bank's net interest income. Our overall asset allocation will continue to be dynamically adjusted in response to market conditions. Additionally, other business segments such as wealth management, credit cards, and capital markets remain strong. Overall, we believe in this year, we will see a stable profit growth for the bank. For Taiwan Life, the existing regulatory framework, including IFRS 17 and ICS standards, also rate cut from Fed, will suggest positive impact for Taiwan Life.
They will also have a moderate effect on the net asset value and cash flow management for policy surrenders. Overall, the CTBC Holding will be able to deliver strong profit performance throughout 2024. For sustainability initiatives, in recent years, we have remained committed to sustainable development. We have been included in the S&P Global Sustainability Yearbook for five consecutive years. We rank among the top 5% globally in banking sustainability performance. As COP29 is taking place in Azerbaijan, its theme, Enhancing Ambition and Enabling Action, aligns with our ongoing efforts. We are always expanding our ambitions to implement SDGs in our daily practices. Looking to the future, we will remain committed to these initiatives. This concludes my opening remarks. Next, we will have a presentation from the IR on our performance in Q3.
Okay, please turn to performance highlights on page four. Holding's net profit reached NTD 38.6 billion in the first nine months, up 21% YoY, achieving a record high, and EPS was NTD 2.95. Holding's ROE was 17.8%. CTBC Bank net profit was NTD 36.3 billion in the first nine months, marking a record high and ranked top one in the industry. Bank's capitalization was solid and asset quality remained stable. Taiwan Life reported net profits of NTD 21.1 billion in the first nine months, up 46% YoY, benefiting from decent investment gains. Other subsidiaries, including investments, securities, and venture capital performed well, benefiting from favorable capital market conditions and sustained business momentum. Page five, profitability. Holding's EPS was NTD 2.95 in the first nine months.
Group ROE was 17.8%, and ROA was 0.9%. Page seven, capital ratio. We remain well capitalized with group CAR at 123%, Life RBC ratio at 336%, bank CAR at 13.9%, and CET1 ratio at 11.2%. Page eight, profit breakdown by entity. In 3Q, bank net profit reached TWD 13.1 billion, up 19% QoQ, mostly due to increased net interest income and wealth management fees. Life reported net profit of TWD 8 billion, up 50% QoQ, driven by dividend income. Holding's net profit was TWD 21.4 billion, up 32% QoQ. In the first nine months, bank net profit reached TWD 36.3 billion, up 14% YoY, driven by robust trade income growth and increased trade income.
Life profit was TWD 21 billion, up 46% YoY, driven by decent capital gains amid positive capital markets conditions. Holding's net profit was TWD 58.6 billion, up 21% YoY. Let's go to our banking business, starting with profitability. Bank performed well in the first nine months. Net profit reached TWD 36.3 billion, up 14% YoY, ranked top one among peers. ROE was 13.1%, up 68 basis points YoY. CTBC Bank has prominent market positions in various business lines. We maintain leading positions in corporate and retail businesses such as wealth management, credit card, personal loans, mortgage, and number of ATM machines. We're also number one in foreign currency demand deposits, trade finance, and factoring. With extensive overseas network, CTBC Bank's overseas profit was ranked number one among peers.
Overseas pre-tax profit increased by 10% YoY to reach TWD 17 billion in the first nine months, driven by improved performance in Japan and North America. Page 13, revenue breakdown. Total revenue was up 8.8% QoQ and 13.2% YoY. Net interest income was up 7.1% QoQ and down 1.7% YoY. Fee income was up 11.2% QoQ and 26.1% YoY. Trade income and others increased 9.6% QoQ and 47% YoY, driven by fixed-income related gains and swap income at the bank. Next on, loan growth. Total lending with credit card revolving was up 5.7% QoQ and 9.1% YoY. NTD corporate loan was up 10.8% QoQ, driven by growth in government-related loans, constructions and real estate, and service sectors.
NTD corporate loan was up 10.7% YoY, driven by growth in government sectors. Mortgage was up 2.4% QoQ and 7.3% YoY, as business momentum remained stable. Unsecured and other loans increased 3.9% QoQ and 9.4% YoY. Foreign currency loan was up 5.1% QoQ and 9.4% YoY. Next on, foreign currency loan breakdown. Overseas subsidiaries accounted for 59.8% of foreign currency loans, with TSB and LH being two larger subsidiaries. Overseas branches accounted for 31.5%. Overseas branch subsidiaries loan was up 11.4% as business momentum remains solid at most overseas subsidiaries. Overseas branch loan was up 12.6%. Growth was especially strong in Singapore, Greater China, Tokyo, and India branches, all reporting double-digits growth. OBU plus DBU loan was down 8.8%. Page 16, bank deposit mix. Total deposits reached TWD 5.2 trillion, up 2.5% QoQ and 8.2% YoY. On the right, CASA accounted for 60.6% of NTD deposits.
Time deposits accounted for 63.3% of foreign currency deposits. Page 17, loan-to-deposit ratio. Overall LDR was 72.5%. NTD LDR was 84.2%. Foreign currency LDR was 57.6%. Page 18, NIM and spread. In 3Q, NTD spread increased by five basis points QoQ, driven by favorable change in loan mix. In addition, the yield of market securities went up, also supporting NIM to increase to 1.41% in 3Q. Including swap income, NIM was 1.61% in the first nine months. Page 19, fees breakdown. Total fees were up 11.2% QoQ, driven by improved momentum in wealth management and credit card business. Total fees were up 26% YoY. Wealth management fee was up 20.1% QoQ and 40.5% YoY as sales of wealth management products increased, supported by higher sales momentum and favorable capital markets condition. Credit card fees were up 5.5% QoQ and 26.1% YoY as credit card consumptions continued to grow.
Corporate/business fee was down 2.7% QoQ due to declines in syndication fees, but up 18.3% YoY driven by loan-related private banking, cash management, and syndication fees. Page 20, wealth management fees. For wealth management fee breakdown in the first nine months, the proportion of mutual funds increased, underpinned by strong capital markets performance. Page 21, cost income ratio. Cost income ratio was 51.4% in 3Q, improved QoQ. In the first nine months, cost income ratio was 52% improved YoY, driven by better growth in operating income and contained OPEX growth. Next on, asset quality. Asset quality remained stable with NPL ratio at 0.47%, down six basis points QoQ as asset quality in overseas subsidiaries improved and NPLs from consumer debt relief program declined. NPL coverage ratio was 350%.
3Q credit cost was 34 basis points, down five basis points QoQ, mostly due to lower provisions for the debt relief program and corporate loans. Credit costs in the first nine months was 33 basis points, up 10 basis points YoY, mostly due to higher provisions for growing corporate loans and debt relief program. Moving to life business. Taiwan Life reported net profits of NTD 21.1 billion in the first nine months, up 46% YoY, supported by decent investment gains amid positive capital markets conditions. ROE was 17.9%. FYPs in the first nine months increased 10% YoY, driven by stronger sales of interest-sensitive and investment-linked products. FYPE was up 4% YoY. Page 26, FYP breakdown by products and channels. On the left is the product breakdown. We can see the proportions of investment in policies increased.
On the right, in terms of channels, the proportions of external banks increased, reflecting increased sales of interest sensitive policies. Sales momentum in type agent channel also improved. Page 26. Page 27, the FYP breakdown by type of payments and currencies. On the left, regular paid products accounted for 53% and single paid product 33% of FYPs. On the right, foreign currency policies accounted for 45% and NTD policies 41% of FYPs. Page 28, investment asset mix. Total investment assets reached nearly NTD 2 trillion. The investment asset mix remained relatively steady. Page 29, investment yield, cost of liability, and break-even point. In the first nine months, total investment yield of after-hedge was 4.52%, up 67 basis points YoY, reflecting higher capital gains. Recurring yield before hedge was 3.79%, improved YoY.
Taiwan Life continues to maintain positive investment spreads against rising cost of liability and break-even point. Page 30, hedging mix. On the left, 31% of overseas investment assets were foreign currency policies. 37% were fully hedged and 12% were unhedged. The rest was OCI position. On the right, FX reserve amounted to TWD 11.2 billion as of 3Q. Hedging cost was 74 basis points in the first nine months, increased YoY, as the magnitude of NTD depreciation was smaller compared to the same period last year. Turning now to ESG highlights. CTBC Holding remains committed to sustainable financing. As of 2023, CTBC Bank extended sustainable financing of TWD 277 billion, representing a 19% increase YoY.
CTBC Holding also aims to leverage financing influences to promote slow carbon transitions. We have participated in CDP science-based targets campaign for two consecutive years. In 2023, our engagements successfully resulted in 77 companies signing up for SBTI. The contents on pages 32 to 34 highlight the sustainable developments and recognitions of CTBC Holding. For more information and complete reports, you may also refer to CTBC's IR website. That concludes the presentation. We're now open for Q&A.
Currently, we're waiting for the conclusion of Chinese presentation, and then we will address questions in Chinese first. Please type your questions in the chat box from our English audience. We will answer English questions after the Chinese Q&A session concludes. Thank you. Now we'll open the floor to our investors and analysts online and open the floor for Q&A. We're now proceeding to the Q&A session. If you want to raise a question, please enter your question in the chat box. We will address the questions in Chinese first, and then address the English questions. A housekeeping reminder here is that to maintain our interpreting quality, please make sure that you're in a quiet room as you raise your questions. Thank you. Our first question will be from Morgan Stanley, Jaime Hong. Okay.
My question is that, may I confirm the swap revenue for Q3? It's around TWD 3.1 billion. My question is that for NTD spread expansion, how many of it comes from the rate increase from the central bank and also from the triple R hike from the central bank? We're seeing an improve in the pricing power. We're not sure how the management team value this question and also the spread performance. Also, will we be able to see improved spread for NTD in the coming few quarters? Also, in Q3, we saw, compared to the previous quarters, this quarter, we're seeing more positive changes and impacts. I remember that the presentation mentioned that we are improving, or the asset quality has been improved. Can you talk more about this?
For credit cost, is your target still 25 to 30 basis points? For wealth management, we're now seeing that momentum for banks are now improving and showing great signs. For CTBC yourself, we're wondering, the behavior and demand from your customers, can they sustain and support this momentum? What's your strategy for this? For Taiwan Life. For other life insurance companies, my understanding is that they are covering ICS ratios, compared to RBC ratio, and compared with regulatory minimum, they are similar. I'm not sure about Taiwan Life. For performer ICS ratio, what is the level and performance right now? As we move into IFRS 17 standards, what are some of the changes or transformation that were made? Or are we going to remain the current investment portfolio? Thank you.
Regarding ICS, based on the three stages as announced, Taiwan Life. We'll move into IFRS 17 in 2026, and we have a few years of transition period, and we will meet the legal requirements of stage targets. Regarding our investment portfolio after the transition, if I understand it correctly, your question is that, are we going to readjust our portfolio? This question really depends on the dynamic of the market. We have reviewed several types of simulation, and based on our simulation results, I think a major portion of our portfolio will move from AC to other parts. Right now, we haven't finalized or confirmed the portion of movement yet, because we're still calculating and changing our calculation models based on market conditions. Thank you.
Next, I'll answer the part about banking. The first one is about our swap revenue in Q3. It's around TWD 2.9 billion in Q3. Compared with previous quarters, we're seeing a decrease here. The main reason is that the Fed is cutting interest rates. Right now, the response in the market will be way ahead the Fed's final decision. We are now already seeing a decrease from the market. Next, the question, I think it's about spread. In Q3, especially in the NTD spread, we are seeing a more positive growth. The central bank in Taiwan increased the interest rate by 12.5 basis points earlier this year. This influenced our unsecured policy loans and also mortgages. At the end of every month or around 21st, we will see the reflection of the changes in the interest rate.
This will be reflected in our Q3 loan rate. For our secured loans, we are repricing once every three months. If we couldn't make it in May, we will be able to do it in the later quarter. For corporate loans, as businesses are renewing their loans, we will reprice our loan rates. This is the conditions of our NTD spread. I think another part of the question is that, is it possible for us to adjust our pricing strategies? Right now, we know that the market is quite competitive. I would say a large scale or degree of repricing is maybe not foreseeable in the near future. We will be considerate about how to employ our capital more efficiently. The other question, I think, is about decrease in NPL. This is caused by mainly from three countries.
For CCC and LH, there are individual cases that the NPL has been paid. Our NPL decreases. In Taiwan, we are seeing unsecured loans from customer finance. This will also reduce our NPL as well. This is about the asset quality. Another question is about credit cost, whether it's going to remain at around 25 to 30 basis points. I would say right now our forecast is still yes, between this range. Finally, the question is about wealth management momentum in Taiwan are overly positive. I think in the near future, the momentum will continues to maintain positive and even grow. Our clients, their behaviors will change according to the market conditions and market dynamics. For example, in Q2 and Q3, we had a good sales performance on our funds. In Q3, customers are buying more bonds due to the condition changes in market.
We will be assessing and monitoring the market conditions and dynamics to make suggestions for our clients. We will recommend the best suitable products and investment tools for them. There's one more question for Taiwan Life. On the investments for Taiwan Life, for your asset card, as you're transitioning to IFRS 17, I want to ask if there's any adjustment on your asset allocation. It's maybe not just about what you just mentioned, maybe for other adjustments available as well. After transitioning to IFRS 17, based on our simulation, there won't be really significant changes in the ratio of our portfolio. The ratio of bonds and equities will remain similar to current status. In the future, we will monitor the interest rate risk, and also the net value fluctuations, and then seek a more stable allocation. Thank you.
Thank you. Our next participant is from Morgan Stanley, Peggy Shih.
Hello, this is Peggy. I have a few questions here. First of all, about bank, I want to ask about the NIM. The NIM in Q3, we're seeing an increase of four basis points, and I'm seeing that the one from NT have been offset. I think the revenue, is it from bond investment? Also, how do you analyze the performance of NIM and spread? Right now, the spread seem to be having a moderate development. This is my first question. Second question is that, for Taiwan Life, in the third quarter, for the unrealized profit and loss, it's around TWD 800 million.
I want to know more about the ratio of bond to equity and also the capital gains. What's the ratio of bonds and equities? Third question would be about life insurance as well. Can you elaborate more about the annual CSM that you can increase or have accumulated? Also, can you also update us with the M&As conditions and progress as well as your strategies as well? Last but not least, for the dividend policies, because in the past, the management team mentioned that there's a good profit performance this year, hope that in the next year we will see the same dividend distribution as from last year. For Taiwan Life, since we're having a good profit performance, we'll probably also allocate some part to the Fed Forex reserve. We want to know if the dividend distributed will be better compared to last year.
I'll first address the question with NIM. In Q3, our NIM increased by four BPS. Even though that the loan-to-deposit ratio reduced by 5%, they're actually happening in different positions. If you consider both entity and also foreign loan-to-deposits, the overall growth is 2%. For NTD loans. Since we are repricing at this timing, we're seeing an increase of four BPS on the NTD loan. At the same time, we are buying in the valued securities with our available capital. These are the two main reasons for the growth. For Q4, you're asking if we can remain or even improve our performance in NIM. According to the current trends, I would say yes, there is a room for further improvement or growth.
At the same time, we also need to consider swap income. If we also consider swap income and its impact onto NIM, I think the impact is shrinking. If you look at NIM in Q3 and Q4, we believe there is going to be a slight growth compared to Q3, but there won't be a significant growth or increase in Q4. Overall, the entire year or annual NIM will be around 1.60%-1.63%. The question for Taiwan Life. For unrealized capital gain, right now it's around TWD 16.1 billion, and for equities plus mutual funds, it's around TWD 13 billion. For the first nine months, for the realized capital gains, depend based on the performance, it's around TWD 18 billion. Bonds accounted for 15%.
The other remaining portion would be equity and funds. For CSM, right now our target for CSM is around TWD 15 billion per year. The CSM was TWD 16 billion in 2023. This year it seems that we may not be able to achieve the same target or record compared to 2023. The main reason is that in the first half of 2024, since we are seeing a stop or a cease in the sale of certain policies, and this also impacted our momentum for the growth here. For CSM, I would say this year the expected target would be around TWD 10 billion. Also there's another question about M&As. For M&A strategies, I think we always remain the same policy trends.
As long as we found opportunities in M&As, whether it's in bank, insurance, in securities and investments, we will try to explore the opportunities and availability. We will assess the profitability and also whether there are overlap in our businesses or complementary parts in our business. Right now, we don't have a specific target yet. The last question, I think it's about the dividend policy. In the first three quarters, we mentioned that the EPS is right now NTD 2.95, and for the announced EPS is NTD 3.2. Since we have a positive and favorable outlook this year, we believe that we can be optimistic about the dividend distribution next year. We are still calculating our financial performances, we can't give a guaranteed number at this stage yet. It seems that the future is quite optimistic.
We have a lot of factors to consider, but we deeply understand the expectations from our stockholders. We have several requirements from government that needs to be fulfilled. Right now we do believe that there's a capacity for this, and we were also evaluating influences from the market. Okay. I have one more question here. We talk about a good profit performance on Taiwan Life, and we're wondering if you will allocate some part of that to the reserve at the end of the year. If we make such a decision or movement after we consume our Forex reserves, we will see changes in the policies there. Right now we are still under discussion about this. We haven't made the decisive or finalized decisions yet.
Okay. Thank you.
If you would like to raise questions, please type in your questions in the chat box. Our next participant is [inaudible] from UBS.
Thank you for having me here. I have three questions. First of all, at the beginning of the presentation, you mentioned that the rate cut will have a positive impact on NII. I'm wondering whether you're talking about NII in 2024 or 2025, and whether there will be a positive impact on NII in 2025, and what's your basis of concept and forecast here? For example, you have the long-term debt here, and then this will contribute to maybe a slower impact from the rate cut. Also, we're wondering, what are some of the variables that contribute to maybe a higher or equivalent NII from your forecast results? What are some of the key variables here? My second question is that, for entity loans, we are seeing a 10% of growth YQoQ. Can you elaborate more on this part?
We would like to know more about the elaborations of the performance here. Because we know that the banks are now shrinking their capacity in mortgages. Also, the government is having a stricter control over this. I'm not sure what's your policies or strategies over this. Third question is that for the reallocation of our assets, this is also related to the transition to IFRS 17. Based on current situation, we will move some part of the portfolio from AC. I'm wondering what's the major directions for your allocation, and also, what's the influence of this on your net asset value? Because I know that as we are reallocating asset portfolio, we need to strike a balance between the impact of rate changes. At the same time, for net assets, we want to minimize its fluctuations as well. Can we meet both targets at the same time?
Thank you for your question. I will address with the question regarding interest rate cut. As we talk about rate cut, usually we look at SO. For example, this is the end of September, and we'll check our P&L, and check the BP delta and its influence. We don't have any other consumption or concept basis, but it's really about the interest cut and their influence on our NII. That is our basic assumption here. We won't make really a lot of assumptions on this. Then this is the status from September, and the conditions will change based on our asset allocations. It will change our performance at NII and also our sensitivity as well. Right now, we cannot make a precise forecast on 2025 yet.
We can only make an assumption based on our current portfolio to see the impact from rate cut and rate increase. This is dynamic adjustment. Right now, we are seeing these changes in US Delta, and we believe that it will contribute a slight increase. Right now, we have only 20% of our portfolio in US dollars, and for the other parts will be in bonds and also money market swap. Also transfer of deposits in Fed. Based on our loan and deposit tools and allocations and also interest rates, we made or calculated these potential impacts. These are our assumptions and explanations for our NII forecast. Next, for our loan strategies, we will have our CFO to answer this question.
Based on the Banking Act of The Republic of China, our number or article 72, we still have TWD 15 million of capacity or quota here. We will wisely and effectively, efficiently utilize our capital. Mentioned that in Q3, we have seen an increase in our corporate investment or corporate loans. These are mainly from construction engineering. The contribution was not really significant. We are now respond to the questions about reallocation of our asset portfolio. We are still calculating the possible strategies. This will be based on current conditions and also the historical trends, especially economic development trends.
In the future, we will still keep monitoring and adjusting it based on latest conditions. According to our latest calculation and simulation results, right now, our liabilities, based on the current interest rate, we will be seeing a reduction in our liability. This will be a positive impact on our net asset. Right now, we still are seeing some unrealized capital gains from AC. In the future, if the interest rates is fluctuating in a similar pattern from the past, we will be trying to explore strategies that can help us minimize the impact of interest rate changes.
We will try to seek solutions or strategies that can achieve this target, and then we can implement it on our asset allocation. Based on our simulation results, right now, most of the part of our assets will be reallocated to AC. I think this will have an impact on our liability as well. If you consider both assets and liabilities, this will have just a minimum impact on our net asset value. Our net asset value, according to our forecast, will see a slight influence from this condition. The influence is limited only 1%-2%. The influence will be limited. Thank you.
Also, let me address the question further. For mortgage, for new applicants of mortgage loans, we will have a more conservative attitude towards the applications. We will be providing services to our existing customers first, and our targets will be focusing on self-owned and also the first-owned housing properties. That would be our strategies for mortgage.
Okay, thank you. Can I ask one more question here? For the bank, the US dollar bonds, what is the proportion of that, and how many will be mature in one year?
Okay. Right now, we have 24% of the bonds that will be mature in one year.
Thank you. Okay, no further questions from my side. Thank you.
Our next participant, Michael Zhang from Citi.
Okay, I have three questions. First is to follow up the NIM discussion. You mentioned that right now the Fed interest cuts decisions will have a positive impact on our NII. For looking to 2025, what is your expectations for that? Does that mean that the NIM for next year will at least maintain at the same performance level of this year? Second question is that for the bank capital, the bank capital ratio, what are the conditions right now and also for Q4, as the yield rate increases, what will be the impact of this on the dividend policies and also your loan policies? At the same time, we want to ask questions about Taiwan Life. The hedging ratio in Q3 increased a lot compared to the previous quarters. My question is, what is your hedging policies or strategies, and what is your expectations for this?
This year, as what we just mentioned, the hedging ratio for traditional policies has increased to 62%, and then for the one basket hedging arrangement. The thing is that our hedged ratio is dependent on several factors. For example, the hedging cost, the exchange rate of New Taiwan dollars. Because right now, the exchange rate from New Taiwan dollars to US dollars is around 32. Based on the past or historical data, we are seeing that New Taiwan dollars is having a weaker momentum here. This is why we want to increase the proportion of hedged policies or hedged assets. This is why we want to hedge more. That will be our main strategy basis here. For this year, the overall hedge cost for 2024 is around 1%. That will be our hedge cost and target for this year.
Okay, regarding the question on NIM outlook, as what the president mentioned, the US dollar rate, if it decreased or depreciated, it will have a positive impact on our NIM performance. The reason is that right now, the interest rate sensitive bonds or liabilities are greater than the NIM sensitive liabilities. This means that our cost would reduce more rapidly than the depreciation of US dollars. Also for swap income, the swap point will be narrowing. If you consider both factors, we are going to see a neutral impact from the condition. Also for BIS level and performance, and also D-SIB performance, I would say for CTBC, we have this more tight control over this individual D-SIB, because according to government regulations, you have to have 2% more.
Total BIS would be more under tight pressure. In September, after the income from the bank comes in, right now the ratio has reached 11.69%. This has helped us already reach the requirements from the government by 2025. We have achieved over 15% right now. Also we talk about the influence on the yield rates of US dollars. I think this depends on the yield rate of the US dollar bonds, especially on OCI. We are going to see valuation loss, and this would have a negative impact on our assets value. Yes, we are going to see this trend, but at the same time, for our dividend distribution policy or capacity, I don't think there will be a significant influence because the range of change or adjustment is not really drastic compared to the past change in interest rate. Okay. Thank you.
Thank you. We are still taking questions from the floor. If you would like to raise questions, please type in your questions in the chat box. Thank you. Right now, we have a few questions from the English audience. First of all, I think some of the questions have been addressed from the previous questions, but we will elaborate on our responses. First of all, we have questions from the NIM outlook for 2025, and also the fee income, and also loan income for 2025. There are questions regarding our M&A strategies. This has been addressed by the President. There are questions about mortgage as per our central bank policies. There are tightened policies. This has also been addressed by our CFO as well. Do we still have any other questions on the floor, or would you like us to elaborate more? Please let us know.
If you need to raise questions, please type in your question in the chat box. Thank you. Now we are still in the Q&A session. If you still have any questions, please type it in in the chat box. If you still have any questions, please type it in in the chat box. Thank you. Since we have no further questions, we'll now give the floor back to our President.
These are the presentation from our performance in Q3. If you have any questions, please feel free to contact our IR team. Thank you.
Thank you, Ms. President. Thank you for your participation. This concludes our conference and meeting today. You may now leave or exit the conference room. Thank you.