Welcome to join CTBC Financial Holding Company 2023 third quarter analyst meeting. Today, the meeting will be hosted by Ms. Rachael Kao, Chief Staff Officer and Spokesperson of CTBC Holding, Ms. Megan Shih, CFO of CTBC Holding, and Mr. Pai-Hung Yeh, Chief Strategy Officer of Taiwan Life. First of all, let's welcome Ms. Rachael Kao to speak a few words.
Thank you, Justine. Before we head to go through the analyst meeting package, I would like to give you some highlights of CTBC's third quarter performance. For the third quarter of CTBC, the performance continued to be very strong. The pre-tax income for the third quarter was TWD 23.7 billion, and after tax was TWD 19.8 billion. If we count it for the cumulative January to September, the pre-tax was TWD 56.5 billion, and after tax was TWD 48.6 billion. We saw a very strong momentum at year-on-year, more than 50% growth. The EPS for the three quarters was NT dollar 2.44, and ROE was 17.62%. We saw a historical high performance for the first nine months compared to before. The highlight of the third quarter, first of all, is the core subsidiary, CTBC Bank. We saw continued momentum from institutional banking and also the wealth management of retail banking.
We saw very good numbers, later on, we will explain in more detail. For the Taiwan Life, our insurance business also, because of the dividend payout focused on the third quarter, and also NT dollar depreciated in the third quarter, we saw good FX benefit. We took some advantage of the stock market trading. All the three reasons contributed to the high performance of the Taiwan Life of the third quarter. In the third quarter, we saw TWD 9.3 billion for the life business, and for the first nine months, we saw TWD 14.5 billion. In addition to bank and life there, we also see very strong momentum for our other subsidiaries, like our securities, venture capitals, site business, and also lottery, which all contributed to our performance for the first nine months.
Looking forward, I think we will expect very stable and strong momentum from the bank. However, for the life, because there's not too much dividend in the fourth quarter, we think that the peak earning of life business should be in the third quarter. Continue, if we add together for this year, we think it's still high chance to achieve historical high earnings for this year. Here is the brief update from me, later on, we will have more details later on for our presentation packages. Thank you.
Thank you everyone for joining CTBC Financial Holding's third quarter 2023 earnings call. Please turn to performance highlights on page four. Supported by resilient operating performance at CTBC Bank and Taiwan Life, Holding's net profit reached TWD 19.8 billion in 3Q, and TWD 48.6 billion in the first nine months, up 25% QoQ and 51% YoY respectively. EPS was TWD 2.44. Holding's ROE was 17.6%, outperforming peers. On the bank, CTBC Bank's net profit was TWD 10.8 billion in 3Q, and TWD 31.7 billion in the first nine months, marking the highest net profit for the first three quarters on record. The strong performance was driven by sustained net interest income and fee income growth, and increased trading income.
Bank's asset quality was stable and capitalization remained adequate. Taiwan Life reported net profit of TWD 14.5 billion in the first nine months, show a strong rebound from one-off COVID loss last year. Hedging costs declined in 3Q amid NT dollar depreciation. Capitalization at Taiwan Life was strengthened as it issued sub-debt of TWD 13 billion in July. Page five, profitability. Holding's EPS was TWD 2.44 in the first nine months. Group ROE was 17.6%, and ROA was 0.83%. Page six, capital ratio. We remain well-capitalized with group CAR at 122%, Life RBC ratio at 337%, Bank CAR at 13.4%, and CET1 ratio at 10.6%.
Page seven, profit breakdown by entities. In 3Q, Holding's net profit was up 25%, driven by solid growth at CTBC Bank and Taiwan Life. Bank net profit reached TWD 10.8 billion, up 12% QoQ, mostly due to increased fees and trading income. Life net profit reached TWD 6 billion, up 56%, benefiting from lower hedging costs as NT dollar continued to depreciate in 3Q. In the first nine months, Holding's net profit was up 51% YoY, supported by strong operating performance at the bank. Bank net profit reached TWD 31.7 billion, up 10% YoY, driven by higher net interest income, fee income, and trading gains. Life profit was TWD 14.5 billion, rebounded strongly owing to higher recurring income this year and a low base effect of COVID loss last year. Net profit movements on page eight is provided for your reference.
Page nine, revenue breakdown excluding Life. Total revenue was up 3% QoQ and 20% YoY, largely driven by decent operating results at the bank. Net interest income increased 2% QoQ and 7% YoY. Fee income increased 9% QoQ and 14% YoY. Combined derivatives, FX and trading gains increased YoY, driven by swap income and commercial paper-related gains as well as equity-related gains. Let's go to our banking business. Starting with loan breakdown on page 11. Total lending with credit card revolving was up 4% QoQ and 11% YoY, largely driven by solid growth in NT dollar loans. NT dollar corporate loan was up 4% QoQ, driven by growth in manufacturing, and commercial and service sectors.
NT dollar corporate loan was up 16% YoY, reflecting resilient loan demand across sectors. Mortgage was up 5% QoQ and 16% YoY, supported by stable business momentum and our participation in lending to civil servants. Unsecured and other loans increased as we continue to expand our customer base for unsecured consumer loans. Page 12, foreign currency loan breakdown. Foreign currency loan was up 4% QoQ and YoY. Overseas subsidiaries accounted for 59% of foreign currency loans, with TSB and LH being two larger subsidiaries. Overseas branches accounted for 31%. Overseas subsidiaries loan grew, driven by sustained business momentum in LH and U.S. subsidiary, both reporting double-digit loan growth.
Overseas branch loan increased as most overseas branches observed loan growth to sustain, except Hong Kong, Singapore, and Vietnam branches. OBU plus DBU loan was down as rising interest rates leads to lower customer demands for loans. Page 13, bank deposit mix. Total deposits reached TWD 4.8 trillion, up 2% QoQ and 8% YoY. On the right, CASA ratio in NT dollar deposits has been relatively stable, accounting for 61% of total NT dollar deposits. Time deposit ratio in foreign currency deposits increased to 61%, as higher US dollar interest rates represent a strong incentive for depositors to shift from savings to time deposits. Page 14, loan-to-deposit ratio. Overall, LDR was 73.7%. NT dollar LDR rose to 85.5%. Foreign currency LDR was 58.3%. Page 15, NIM and spread.
In 3 Q, NT dollar spread continued to improve, while foreign currency spread was down QoQ as declining CASA ratio and increased swap positions caused spread to narrow. 3 Q NIM was 1.47%. Including swap income, NIM was 1.7% in the first nine months. Page 16, bank fee breakdown. Total fees were up 10% QoQ and 13% YoY, driven by improved momentum in wealth management, credit card, and corporate business. Wealth management fee grew in 3 Q as sales momentum sustained, driving mutual fund, structured products, and bank insurance fees to increase. Wealth management fee increased 17% YoY as business momentum recovered and rising interest rates supported sales of bonds. Credit card fee was up 18% QoQ as travel fees and push up commissions. Credit card fee was up 10% YoY, driven by consumptions, which increased nearly 30%.
Corporate business was up 22% QoQ, driven by syndicated loan and cash management fees, and up 12% YoY, reflecting increased syndication and M&A volume. Page 17, wealth management fee. For wealth management fee breakdown in the first nine months, the proportion of mutual funds increased, underpinned by better capital markets performance this year. The proportion of bonds increased, reflecting the impact of rate hikes. Page 18, cost income ratio. Cost income ratio was 53% in 3 Q, improved QoQ. Cost income ratio in the first nine months rose to 54.9% due to increased operating expense, along with growing operating revenue and higher ESOP valuation. Page 19. Asset quality at the bank remains stable, with NPL ratio at 0.48%. NPL coverage ratio was 337%. 3Q credit costs were 29 basis points, relatively stable QoQ. In the first nine months, credit costs were 23 basis points, remain benign.
Moving to life business. Let's go to page 21, which shows information about total premium, first-year premium, and FYPE. FYPEs in the first nine months declined YoY as the banking turmoil earlier this year affected sales of investment-linked products and customers turned to time deposits that capture the rising interest rates. Taiwan Life has been focusing on long-term value products, driving FYPE to increase by 18% YoY. Page 22, FYPE breakdown by products and channels. On the left is the product breakdown. We can see the proportion of value products, including health and PA, and traditional policies notably increased, reflecting Taiwan Life's focus on long-term value products. The proportion of investment-linked products declined as customers turned to other financial products. On the right, in terms of channels, the proportion of bank insurance channel was lower, reflecting declined sales of interest-sensitive and investment-linked policies.
On the other hand, the proportion of insurance brokers and paid agents increased. Page 23, FYP breakdown by type of payment and currencies. On the left, the proportion of regular pay products has increased. On the right, foreign currency policy accounted for 51%, and NT dollar policy, 40% of FYP. Page 24, investment asset mix. Total investment assets reached nearly TWD 2 trillion. In terms of portfolio breakdown, cash position slightly increased QoQ as Taiwan Life continued to receive cash dividend in 3Q. The proportion of other types of assets remained relatively steady. Page 25, investment yield, cost of liability, and break-even point. In the first nine months, overall investment yield after hedge was 3.25%. Recurring yield before hedge was 3.72%, both improved YoY, reflecting a low base effect of COVID loss last year and improved recurring income this year.
Taiwan Life continues to maintain positive investment spreads against rising costs of liability and break-even point. Page 26, hedging mix. On the left, 42% of overseas investment assets were foreign currency policies, 33% were fully hedged, 15% were unhedged, and the rest was OCI position. On the right, FX reserve amounted to TWD 13 billion as of 3Q. Hedging cost was 39 basis points in the first nine months, improved from the first half, largely due to NT dollar depreciation in 3Q. Turning now to ESG highlights. CTBC Holding is committed to 2050 net zero. We are aware that the financial industry has a responsibility to lead the sustainable development of society and the environment. CTBC Holding will continue working with our customers and suppliers to move toward low carbon operations through practical solutions. That concludes the presentation. We are now open for Q&A.
Thank you. We are now in the Q&A session. Please type down your question in the dialogue box. Now we have the first question from Citi, Michael. How much ESOP cost was recorded in the quarter 2023?
Okay, the amount for the third quarter for the total financial holding company was TWD 304 million. For banks was TWD 226 million.
We have a second question from Goldman. Can you please guide around year 2024 target for loan deposit fee and VNB, also hedging costs?
I am sorry for the question that we are still in the budgeting process. We are not able to provide any guidance at this moment. Thank you.
Just a soft reminder, now we are in the QA session. Please type down your question if you have any questions. Now we have a second question from Goldman. What is the target CAR for this year with and without ESOP?
The cost income ratio for the nine months was 54.9% for bank, and without Star expense was 54%.
Another question from Goldman. Another question from Goldman. Are we confident that CET1 ratio CAR will be 11%+ starting 2025? Is it around 10.5% now? We are a D-SIB, so need that level. How to get there?
Before CFO provide more details, I can first of all give some quick response. Our CET1 ratio at the end of September is around 10.6%, and we are expecting that more earnings coming through, so the CET1 ratio actually will improve. This year, the regulatory requirement for D-SIB is 10.5%, so we are comfortable that it's 10%, so we are comfortable that we will maintain about that level. As of the requirement for 2025, which is 11%, we are also confident that we will do necessary adjustment and also continuing to accumulating our earnings, to achieve that level.
I would like to add some comments on the CAR ratio and dividend policy. As Justine mentioned, we'll continue to make profit for our bank operation. That's why for the targets going forward for 2024, 2025, we are confident that we will achieve all the targets. For the dividend, I think one of the reasons for the lower of the CET1 for this year was for our dividend payout at the holding company, that highly rely on the earnings contributed from the bank because the life operation last year that we do have P&L issues.
For this year, we have very healthy earnings from the life operation. We think for next year to distribute this year's earning, the bank can reserve the necessary capital at hand. We don't think that's going to impact the dividend payout at the holding company. That's some comment for our dividend policy and also for our CAR ratio.
Next question is from KGI. Can you offer the quarter two three financial holding company OCI?
The amount of other interest in the equity in September was TWD 57.7 billion.
We have a question regarding Taiwan Life. What is the bond exposure by Taiwan Life, which is under fair value OCI or fair value P&L, plus still adjust to mark-to-market loss? In third quarter 2023, why the unrealized mark-to-market in other equity item related to bonds not seeing further mark-to-market losses given the rise in U.S. bond yields?
For Taiwan Life, the bond exposure under fair value P&L is TWD 94.5 billion. Under OCI, it was TWD 100.8 billion at the end of September. The unrealized loss for FVPL was TWD 7.7 billion at the end of September. For OCI, the unrealized loss was TWD 21 billion at the end of September. Compared to last year, it was TWD 5.8 billion loss further. That's all.
The next question is from JPMorgan. Are you planning to apply for IRB? If yes, when would you expect to use IRB, and what is rough benefit for CET1 ratio?
Okay. For the IRB, actually, for CTBC, we have been implementing IRB for, say, maybe more than 10 years. Now that we're talking to the regulators to use IRB for our capital ratio base for calculation for the risk-weighted asset. We're still in the process communicating to the regulators, so we're not sure yet for the timing. It definitely will be benefit, but probably it's not ready to disclose the potential benefit at this moment, but it's quite a big upside. That's for your reference. Thank you.
The next question is from Goldman. How much growth in Tokyo Star Bank on loans and deposit? I am sorry, we have another question before. There is a question about 2023 full year of loan and deposit target, the fee growth target, the credit cost target. As for Life, the 2023 target for pre-hedging recurring yield and cost of liability.
Okay. Full year loan and deposit growth expectation for 2023, we are expected to be high single-digit growth. For fee income growth, we expected to have double-digit. For credit cost, we expect it to be 25 basis points. For Life, the target pre-hedge recurring yield are expected to be 3.61%. For cost of liability was 3.21%.
The next question is about Tokyo Star. How much growth in Tokyo Star Bank on loans and deposit can we see now? Where the growth come from?
The loan balance for the Tokyo Star Bank this year was about low-digit growth.
A soft reminder, now we are in the Q&A section. If you have any questions, please type down. Now we have another question. It is about Taiwan Life. What is the hedging cost target for this year? Regarding the traditional hedging position, what is the split between cross-currency swap and NDF?
Originally, we actually guided for 108 basis points for the hedging cost this year. However, actually, we have been seeing FX gain in the third quarter. We are expecting that the hedging cost for the full year can be lower to 60 to 70 basis points. The swap proportion was around 57%-58%. Sorry, NDF portion was about 57%-58%.
We are now in the Q&A session. If you have any questions, please feel free to type down your question in the box. It appears that we have no further questions. Thank you for attending the meeting. If you have any other questions, always feel free to contact CTBC IR team. Thank you for your participation. Goodbye.