Thank you for waiting. The meeting will begin shortly. Good afternoon, ladies and gentlemen. Welcome to joining us for First Financial Holding Company 2024 full year webcast investor conference. We will start the meeting with the presentation, which includes the snapshot, financial highlights, and operating results. We will invite Ms. Annie Lee, our EVP and IR Head, to proceed the QA session. You can type your questions at the bottom box of the webcast. The presentation material will be put on our IR website, and we will provide it for one-year replay service for your convenience. Okay, I would like to hand over the microphone to Ms. Yating Chang to start the presentation.
Thank you, Keith. Greetings to everyone online. Let's get started to our full -year 2024 earnings presentation. We begin with slide six, where we review key operational outcomes and operating environment today. Number one, our yearly net profits hit record high of TWD 25.4 billion, up by 13% year-on-year. Earnings per share was 1.81. Our flagship sub, First Bank, contributed about 94% of group profits. For 2024, First Bank delivered a net profit of TWD 23.8 billion, marking a record high earnings as well. Other subs net income totaled TWD 2.3 billion, surged by close to 30% year-on-year. Number two, bank's performance was driven by continued strength in fee and treasury gains, which made up the decrease in the interest income and the increase in operating expenses. For the full year, net fee was up by 34%, thanks to a 43% increase in wealth management revenue.
Meanwhile, treasury gains was up by 11%, with a 3% increase in Forex swap gains. Number three, bank's loan book grew by 9.5% year-on-year to TWD 2.6 trillion. We see loan expansion across key segments towards the end of 2024. Mortgage balance increased by 15% year-on-year. Both large corp lending and FX loan were up by about 10%. SME loan was up by nearly 4%. Overall, the pick up in commercial lending categories was a combination of exporters' turnover needs before the Chinese New Year and Trump taking office. The stronger U.S. dollar also helped. Number four, coming into 2025, Trump administration's new tariff and policies unveiled, rattling orders and leaving markets uncertain and choppy.
With U.S. Fed in no hurry to cut rates and economic growth revolving around AI, First Financial Holding will continue focusing on navigating sustainable long-term growth by fortifying capital position and carrying out disciplined risk management. Starting from slide eight, we go to more details of group's profit trends. First, let's look at key financial data for 2024. Book value per share at 19.1, ROE at 9.82%, ROA at 0.56%. Group CAR at around 126%. Double leverage ratio close to 112%. Also, group asset continued to grow at a pace of 6% a year. It was now TWD 4.7 trillion. Next, we turn to key items of group's consolidated income in slide nine. Consolidated revenue was up 7% to about TWD 72 billion last year, offsetting higher operating expenses and contributing to a profit of TWD 25.4 billion. In slide 10, we show major subs' net profits for 2024.
All delivered good growth last year. As a bank-centric holding company, we will discuss Bank's earnings more in the following slides. Slide 12. Bank's ROE for 2024 was 8.99%. Slide 13, we review key items before pre-tax profit. Net revenue was TWD 63 billion, up by 7%. For net revenue, we check out three major items. Firstly, item of Net Interest Income. It was about TWD 28 billion for 2024, down by 4.6% year-on-year due to heightened funding costs. Secondly, item of Net Fee Income. It was about TWD 12 billion for the year, up by 34% year-on-year. Wealth management revenue contributed about 60% of the fee income, closing at TWD 7.3 billion. Thirdly, item of gains on financial products. It was about TWD 22 billion, up by 11% year-on-year. Fx swap gains contributed about 70% of gains on financial products, closing at TWD 15.4 billion.
On the cost front, net provision expense for 2024 was TWD 5.8 billion, which was at the same level of that of 2023. Operating expenses was about TWD 28 billion, up by 6% year-on-year, reflecting Bank-wide pay hike and more business tax payments. From slide 14 to slide 17, we follow up on data with regards to net interest income trend. Slide 14, Bank's loan book mix. We recap earlier briefing with some more details here. Total loan grew by 9.5% year-on-year to about TWD 2.6 trillion. Loan expansion was across the board last year, mortgage increased by 15% year-on-year to TWD 720 billion. Its lifted momentum is now curbed by Taiwan Central Bank's tightening policy. FX loan and large corporate lending both grew by about 10%. FX loan was about TWD 440 billion. Large corporate lending was about TWD 350 billion.
SME financing was close to TWD 960 billion, a size growing by about 4% year-on-year. In slide 15, loan book mix is presented on quarterly basis. Last quarter, moderate loan growth was delivered in all categories. Coming to slide 16, it is loan to deposit ratio, spread, and NIM over time. By end of 2024, total loan to deposit ratio was 71.1%, TWD loan to deposit ratio was 83%, USD loan to deposit ratio was 42%, spread was 1.17%, NIM was 0.67%. If including swap gains of TWD 15.4 billion, adjusted NIM was 1.05%. Slide 17, we look at quarterly spread data on TWD loan and USD loan. TWD loan spread is 1.29%. USD loan spread is 2.21%. In slide 18 is our deposit mix. By the end of last year, total deposit was TWD 3.7 trillion, up by 5.5% year-on-year.
US dollar deposit was up by 12% to about TWD 1 trillion NT dollar equivalent. NT dollar deposit was up by 3% to about TWD 2.5 trillion. Sorry, TWD 2.6 trillion, with CASA ratio at 62.75%. Slide 19, we supply Bank's loan concentration data for review. Slide 20, there is more details on mortgage business. The monthly mortgage volume we underwrote is given in the bottom graph. It has decelerated since second half 2024. The pie chart shows the proportion of mortgage location. It remains the same as previous reporting. In the upper left graph, new mortgage loan to value ratio at 65%. The average mortgage loan to value ratio at 49%. The average mortgage yield at 2.28%. In next two slides, we break out Bank's fee revenue of TWD 12 billion for review. Slide 21, wealth management revenue for 2024 closed at TWD 7.3 billion, up by 43% year-on-year.
Loan -related fee was TWD 2.85 billion, up by 35%. Loan related fee grew big last year because of a one-off item of TWD 2.57 billion. It was related to high speed rail syndication case, which was recorded in the fourth quarter 2024. Slide 22, fee revenue breakdown on quarterly basis. For the fourth quarter 2024, total fee income was up by 10% quarter-on-quarter to TWD 3 billion. Looking into three sublines of wealth management revenue, custody revenue was flat. Bancassurance increased by 31%. Fund sales reduced by 5%. For your note, in 2024, accumulated custody fee was over TWD 0.6 billion, up by 21% year-on-year. Accumulated bancassurance was TWD 3.7 billion, up by 49%, and accumulated fund sales was close to TWD 3 billion, up by 14%. Coming to Slide 23, bank's cost to income ratio on cumulative basis. It was 44.38% against the net revenue.
The pie chart in the bottom is the bank's net revenue and operating expenses on quarterly basis. In Slide 24 is coverage ratio and NPL ratio's trend chart. Coverage ratio was close to 820%. Overall, NPL ratio was down a bit to 0.17%. Segment NPL ratios on individual loan, mortgage, large corporate lending, and SME financing were in the bottom graph. Asset quality at the bank remains reliable. Slide 25, we review bank's overseas operating results. Bank's quarterly pre-tax profits and debt from overseas operations are supplied in the bar chart. The fluctuation in quarterly overseas profits during 2024 was mainly due to the handling of CRE charge-off or recovery. Accumulated pre-tax profits from overseas operation was about TWD 18 billion, which accounted for 28% of bank's total pre-tax profits.
In Slide 26. Bank's capital adequacy ratio was 14.45%. Tier 1 was 12.29%. CET1 for your notes was 10.75%. Back to Keith for next session Q&A.
Thank you, Yating. If you want to raise your questions, you can type your questions at the bottom box. First question is from KGI, Eric. Eric wants to know several issues. First one is that since you know that bank has provided some extra credit charge in 2024, last quarter, the fourth quarter. Our credit cost for 2024 was a little bit higher than our expectation. What about the 2025 projections for our credit cost? Will it be revised up or revised down?
The actual results will be we had a target lower than previous year's credit cost at less than 20 basis points. That will be somewhere around 18 basis points-19 basis points for this year's projection after we recorded more than 22 basis points credit cost last year, mainly driven by strategically heighten our provision level. The truth is that after the first quarter of 2024 last year, actually the NPL in the overseas market remained pretty much benign. In the second up to the fourth quarter of last year, there is no new NPLs surface, and we continued to recover from our previous charge-off. In that sense, the new influx of last year's overseas NPL actually reduced by nearly one-quarter, 25%. Last year's new NPL in overseas book, that would be less than TWD 4 billion when compared with the results of 2023.
That would be up to more than TWD 5.3 billion. You can see the balance sheet cleanup approach did a good booster to reduce our asset quality. In that sense, we would be more optimistic that this year's asset quality will be more stable and NPL or delinquent ratio would remain pretty much subdued. The net credit cost would also be helped by the following recovery in the prior charge of the overseas CRE losses. That will help us to revise down our net credit cost to less than 20 basis points. That will be somewhere around 18 basis points or so.
Okay. I think our credit cost for this year will be pretty benign comparing with last year. Another question, also from Eric and also related questions from Jamie Hwang, JP Morgan, they want to ask about the FX swap gains issue. Because last year our swap gains were still strong. What about this year's projection, and do we adjust our projection of our swap gain, and also what about our adjusted NIM?
In terms of the swap gains outlook, this would have to link to the interest rate cycle in the U.S., as most market consensus with the view that under the Trump administration the Fed attitude will become more conservative to further chop rates aggressively. As the rate cycle become more conservative and prudent, that would help us to ease the pressure from the falling swap gains. We actually predicted that the U.S. rate may only be further lowered one or two times with, let's say, 25 basis points. In that sense, our swap gains can maintain its momentum. We would project our swap gains for this year can be a more aggressive that just about 20% lower than last year's level around more than TWD 15 billion.
This year, our target for our swap gains can reach somewhere around TWD 12.5 billion for the whole year, based on our assumption that the U.S. rate cuts will be much more slower than what people would expect. Talking about the adjusted NIM, due to the recovery of our FX lending where we would project that the lower U.S. funding rates will be more evident than the pricing of the FX loan. It implies that expanding interest rate in the FX lending portfolio will help to boost the lending spread in FX, particular US dollars, that would actually help to increase up to 6 basis points- 7 basis points spread. However, because the flow of the swap gains actually is more than that of the increase in the FX lending spread.
Our adjusted NIM with the trending a bit lower that we project the adjusted NIM will be slightly lower than last year ending results to about 1.03%, which is about 2 basis points lower than the level of 1.05% last year, mainly driven by a falling gap left by the slower swap gains, even though the average lending spread may expand it.
Okay. Thank you, Annie. This also answers the questions from Tina because she also typed in the questions about our swap gains. She thought that maybe our swap gains this year might be minus for about 10%-15%. Annie's answer is more conservative for our swap gains. We will project for about 20%. The swap gains would be around TWD 12.5 billion this year. That's our projection so far. Our adjusted NIM would be 1.03%, 2 basis points lower than last year. The original NIM might be increased a little bit more. Another question from Jamie Hwang, JP Morgan. He'd like to know about our asset quality issues. He was considering because of the regulatory tightening for some policies, would it affect our smaller developers for our business? To influence our asset quality. What about this issue, Annie?
Well, in terms of the asset quality related to developer and the property markets, the thing is that our model to underwrite our loan to this construction loan or developer lending pretty much covers the major players in the market. Mostly would be some good brand name. We actually avoid those weak players or developers, smaller ones, in order to mitigate the risk may be associated with the potential downside of the property market. Up to now, we haven't seen any deterioration in this asset quality issue for the smaller player in the property market. We would not be particularly concerned about this issue. As long as the rate market remains resilient and the economic development domestically remains solid, that would not be an issue. Up to now, there is no deterioration in our asset quality for this developers' portfolio up to now.
You can see based on our disclosure on our asset quality trend, it still remain pretty much stable.
Okay. Thank you, Annie. So far our asset quality is no big issue right now. Another coming question was from Goldman Sachs, Wing Huang. Wing like to know our loan growth prediction for 2025, and what will be the drivers for our loan growth this year?
Well, our projection for this year's loan book expansion would remain in line with the prediction in the prior quarter. We still predicted our loan book will expand in the mid single digit around 5%-6% after we recorded a very strong and robust loan growth more than 9% last year. This is also due to a high base period that would impact the growth trend of this year. The major driver will come would be more normalized to our franchise in the corporate lending, particularly for the SME and FX lending. With the follow the trend of the growth in the exporting sector and the domestic economy.
In terms of the very booming mortgage market, we would remain a more conservative projection that this year's mortgage lending will be only half of last year's level to book around just 6%-7% for this year after the government subsidized lending become not so booming this year. The major driver for this year's lending would mainly come from our niche market in the SME that will grow by 4%, and FX lending, particularly in the overseas market, can further advance to 11%-12% based on a projection that the US dollars rate will come up. That is the cost of funding. This will be the two major pillars that help us to grow our loan book.
Thank you, Annie. Our loan growth for this year will be mainly driven by SME lending and FX lending. That will also help to boost our margin, we think. SME, it would be about 4% growth and FX about 11%-12% growth. There are questions coming in from Mandy Lin from Fubon. Mandy wants to know our swap gains again. Our swap gains, this projection is TWD 12.5 billion for 2025. TWD 12.5 billion. That is our projection. Another question also is for our loan outlook. We just answered the question also. Another question is from Eric Shi. He would like to know our dividend payout ratio. Because for the recent years, our payout ratios was just about around the 50% something. What about our 2024 earnings, the payout ratio? Well, it is also similar to 50% something.
Also, how about after we applied for IRB method? It would lift our CET1 ratio. How many basis points or percentage would it increase if we applied for the IRB method? How about our payout policy in the future?
I think I will add up one more thing for the swap gains that I am reading in the question box, that the swap gains for last year, 2024, was TWD 15.4 billion.
Yeah.
Which was more than the prior's level. More than TWD 15 billion. 2023, our swap gains was TWD 14.8 billion. Last year even outperformed the prior year's level. This year will be lower because the US dollar rates has gone down. We would project there will be 20% off than last year's peak. This is the add-up question to reply the prior swaps inquiry. Talking about our dividend policy that as we would actually enter into the IRB model next year, I have to reiterate that for this year, our dividend policy would have to be maintained conservative that a 50% payout ratio will be our base, our baseline. For this year's payout ratio, what I can have, the very preliminary commitment will be at least 50%, 50%. This will be for this year.
Of course, if our board can accept a more aggressive payout, then that will be good news for investor anyway. We actually had some add up in our incremental bits for our RWA and to help to reduce the overall risk asset quality that would give us some room to propose to the board that we may lift a bit to pay out some cash dividend to the investors. It's still subject to the final decision of the board. What I can elaborate here will be 50% payout ratio as the base. If there's any more add up, we have to have more discussion in our board. Okay? When we move on to the IRB application next year, yes, we would have 3% more to add up on our capital adequacy ratio.
That will be significantly help boost to free us from our very conservative dividend policy and let us can actually deliver more aggressive dividend payout. We will have to wait for another year before we can really actually reach that level. For this year, 50%.
Okay.
There may be some add up, but we have to wait until the final decision by the board anyway. Yeah. Next year, yes, we will pay more. Yeah. We will have one more year ahead.
Okay. We would say more conserved right now, it's at least 50% for cash. Maybe depending on our management team, maybe there will be a little bit add up. Another issue is about our fee income. Since our 2024 fee income was pretty aggressive. In our slide, it shows we had a 34% growth YoY, especially from the wealth management. It's about over 40% growth. What about our outlook for our fee income for 2025?
After we reach this historical high growth in the fee revenue, this year will be a very challenging year that maintains the momentum. The good thing is that the capital markets still remain pretty much robust and aggressive. We would manage to grow our wealth management businesses by growing about 12% double-digit growth, but not as high as 30%-40% last year due to the high base period phenomenon. Another factor would be last year, the loan-related fee would have a so-called one-time number that the Taiwan High Speed Rail breakup fees did some impact that this year no longer exist. The non-wealth management fee revenue would stay flattish, and overall, our fee revenue would manage to grow by 7%-8%, which will be our target to grow our fee income by high single digits, mainly driven by wealth management at 12% this year.
Okay. Thank you, Annie. We think our fee income will still have the momentum even, maybe the growth rate will now be less aggressive, but still keep the momentum. If you have any questions you want to ask, you can type your question at the bottom box. So far, there is no more question coming in. I'd like maybe to ask Annie to maybe give us some more outlook about our overseas deployment for next year, because some of you might know that we have new branches in Osaka, and maybe what's our plan for our overseas issue?
Well, we plan to open our loan office in Osaka in the third quarter this year in order to capture the business opportunities arising the relocation of the talent company, particularly for the tech sectors. Apart from Japan market, we actually have a very complete branch service and network in the U.S. market. We actually have four offices in the U.S. market, which is pretty much beneficial to the so-called new Trump administration's policy that would attract more investment in the U.S. I would say that in the future, particularly in the next one or two years, our U.S. branches or offices would give a good booster to help the Taiwanese business, especially for those tech sectors, to rebuild their supply chain or their investment in the U.S. market.
That will be our niche that we have deployed or had the extension in the U.S. market for many years. I suppose that the global trend that the supply chain will become more localized, that will help a bank like us to capture these opportunities to serve the local business. I guess that this will be our future plan to further serve those overseas Taiwan ese businesses to build up their new manufacturer site, and help them to expand their business there. I guess that I would particularly highlight our U.S. market businesses in the future.
Okay. Thank you, Annie. There is no more questions coming in, maybe most of you have no concern about our management team's operation. That's good news for us. Annie, do you have any conclusion for today's conference? Maybe we will end up the meeting here.
Okay. I would like to further highlight that after we clean up the balance sheet in the overseas market, particularly in the developed countries, that will help us to have more chances that we build our balance sheet in these countries, especially in the North America market. I will say that our future plans to connect our franchise from Taiwan to the overseas market can be a huge opportunity that we can further grow our loan book. We actually target that we would regain our overseas public contribution from less than 30% to gradually up to more than 30% or 40%. Hopefully, that will pretty much help us to further expand our margin because traditionally, the margin, I mean, the lending in the overseas market will be much more aggressive than that in Taiwan due to the competition is not so fierce.
That will be positive news for us. I would further update our future plans to expand our overseas mix business in the next quarter and so. Let's discuss more in the coming meetings. Okay?
Okay, thank you, Annie.
Thank you.
There's no more questions coming in. If you have any questions in your mind, you can also write emails to Annie or IR. We will reply it for you. Thank you for joining our conference today, and have a great day ahead.
Okay.
Okay. Thank you.
Thank you. See you next quarter. Bye.
Bye.