China Development Financial Holding Corp

TWSE:2883

Earnings Call Transcript 2022-Q4

[Unknown Executive]

[Interpreted] Dear friends, good afternoon. I'm the spokesperson [indiscernible]. Welcome all of you to join the Q4 2022 investor conference of CDF. There will be 5 cards in our today's agenda. And first of all, we'll invite Steve, our CEO, to introduce the performance in 2022, the progress in the ABCDE strategies. Next, I will invite the Presidents from the subsidiaries to update their progresses in the ABCDE strategies. And the third part, we'll invite our CFO, Jenny Huang, to talk about the financial performances. And the performance of the subsidiaries will be covered by the Presidents in each subsidiary. And lastly, QA session. And QA session is the same with the previous conference.

I will not talk about the details. Now, I'll kick the floor to Steve.

[Steve Bertamini, executive]

[Foreign Language] Hello, everyone. Today, I'd like to do 2 things. The first is to give you a brief update of our 2022 performance. And secondly, talk about the progress that we've made on our ABCDE strategy. In terms of CDF, as you know, last year, we managed to deliver steady financial performance despite the market volatility. We delivered TWD 16.4 billion in profit, with an EPS of TWD 0.98. We're also -- we're ranked #4 globally and #1 in Taiwan by the Dow Jones Sustainability Index for the Life Insurance services sector.

And last year, for the first time, CDF ranked #2 in the financial holdings for top-down NPS relative to our competitors that also had insurance subsidiaries. And you'll hear in a moment that also 2 of our subsidiaries, in particular, made very strong progress in NPS as well.

In terms of China Life, they delivered net income of TWD 13.2 billion. The team remains focused on our high-value product strategy and increased market share of our regular paid policies. Our VNB grew by 1.4% (sic) [ 1.8% ] year-on-year to TWD 21.3 billion despite a challenging market. The team also continued to maintain prudent investment management with hedge -- sorry, with pre-hedging recurring yield up 24 basis points up to 3.75%. We also continue to have the lowest cost of liabilities, which is below 3%.

In terms of KGI Bank, profits were up 45% year-on-year up to TWD 6.02 billion. We maintained a superior NIM of 1.39%. The team continued to optimize our asset mix, and we saw a strong growth in SME and personal loans, growing 22% and 20%, respectively. Also, our consumer finance JV in China continues to do very well, delivering profits of RMB 160 million and doubling the size of their balance sheet.

CDIB Capital had a small loss in 2022 due to the unrealized value of the market turmoil. They established 2 new funds with new investments reaching TWD 2.1 billion for the full year. Also, we saw green investment drawdowns of 500 -- sorry, of TWD 500 million, with 8% year-on-year growth. And we also partnered with Hon Hai to explore renewable energy solutions for our Taiwanese SMEs -- for their Taiwanese SMEs.

KGI Securities, despite the drop in market volume, had a profit of TWD 3.6 billion. They maintained their leading ECM and DCM positions, and ranked #1 consistently now for the last 10 years in both Taiwan Stock Exchange and OTC. Customer service and innovation were also awarded and -- the Gold Award in the First Taiwan Customer Service Center Evaluation.

I'd like to briefly now turn to update on our strategy. As most of you are familiar, we've had our ABCDE strategy in place now for the last 2 years. It has 3 -- 5 components, which are Accelerate Digital, Become Employer of Choice, Customer Focus, Driving Growth and Execution Excellence, with the goal in each one of those at the bottom of each chart, which is to become the best-in-class, to have a higher engagement, to become the most recommended, to exceed the industry and to deliver.

I want to briefly give you some highlights of the progress that we've made. In terms of digital, we've made a lot of progress in terms of developing new applications and focusing on customer journeys to design better experiences for our customers. On the employee side, we've made very good progress over the last 2 years in our employee engagement scores. Initially, the first time we did it was 53. Year before, 61. This last year, we saw 68. Our goal here is to be in the 70% to 80% range, which is considered world class. We also invested heavily in our teams and our staff. Over 1,000 people were trained in soft skills and 400 people went through our leadership training. We further enhanced our KPIs this year to also make sure they're more aligned with the strategy.

On the customer focus, we've made very strong progress on NPS. Not only did we enable all our channels, but we also moved from either #5 or #7 in our businesses to #1 in both China Life and KGI Bank. And this year, we will focus on measuring and improving our digital NPS, which we think is very important for long-term competitiveness. We made good progress on our brand in terms of becoming the most recommended as a common objective across all our businesses, and also a common tagline of Committed to Your Prosperity.

On driving growth, we continue to make a lot of progress in terms of machine learning and cross-sell, getting 2 to 10x better response rate as we utilize new tools.

On execution excellence, we continue to work around our systems architecture to enable us to be more successful in digital, including cloud. We continue to automate many of our processes by using RPAs across the group. Our risk tools are much more enhanced to allow us to do better scenario planning and risk mitigation. And on ESG, as you're familiar, we've continued to exceed our KPIs. And also on the volunteering side, we saw a 50% increase in number of volunteering hours last year up to 65,000.

We're confident we have a strong operating system. And despite the market turbulence, we continue to make strong progress across every part of our strategy. The one area that we'd like to spend more energy on this year has been driving growth. Obviously, last year was quite challenging. But with the new tools and progress that have been made with the team, we're confident we'll see improvement in our growth during 2023.

I'll now hand it over to China Life to give you an update from Stephanie. [Foreign Language]

[Stephanie Hwang, executive]

[Interpreted] I'm Stephanie Hwang from China Life. I will share with you our progresses in ABCDE, and I will always have a free bucket future time limitation. For digital -- accelerate digital, in 2022, we launched the new app to provide a one-stop services to the customers and the service accumulated to 760,000 in 2022, and the online service usage increased by 44%. And we also received the recognition. And by receiving an award, we will continue to optimize the online service quality and continue to move forward.

And secondly, for customer orientation, we adhere to a customer-centric approach in delivering our services. And China Life ranked #1 in the industry according to an NPS survey conducted by global renowned market research agencies. Actually, in addition to customers' recognition of our service quality, we received FSC's Treating Customers Fairly Principle Assessment for consecutive -- for 4 consecutive years, and demonstrating our sustained leading position in the sector.

Lastly, for driving growth, China Life continued to actively promote service of high-value products. In 2022, the FYP of high-value products reached TWD 21 billion and up by 54% year-on-year. And the market share growth from the fifth through the third in the sector and driving our VNB against all odds.

And that is my update for the ABCDE strategies. Next, I'll hand over to Amy Tsao.

[Amy Tsao, executive]

[Interpreted] I'm from KGIB. Our strategic initiatives in 2022, I'd like to share our achievement. And first, in accelerate digital, we provided 24/7 smart customer services online platform, and the response are very positive on the customers. We will continue to refine the accuracy rate in responses and to improve the satisfactory from customers.

And the second part is customer focus. We note the markets are very volatile. We'll move toward a single wealth management bank starting from this year. We will focus on growing the AUM of our products -- of our customers.

And the other topic is the NPS score. Last year, we invited a third party to help us to measure NPS score. We were seeing -- we ranked #1 among the peers. Because we adopted NPS across 4 channels, including online and call centers, by positively receiving the feedbacks from customer and improve our services to the customers, we received the recognition from customers.

In driving growth, in SME and C loan, our year-on-year growth reached 22% and 20%, respectively. They can help us to improve the stickiness of our customers and can help us to move closer to our target customers. We will continue to work on the 2 areas.

Lastly, about execution excellence, we promoted RPA in the last 3 years. By the end of last year, plus 97 RPM processes have been adopted by the bank. And every year, we set a different goal for ourselves. We expect we can adopt more automatic processes to improve the efficiency.

And that's my update in KGIB. Next, I'll hand over to CDIB.

[Yi-Chun Nan, executive]

[Interpreted] Good afternoon. I'm Melanie Nan from CDIB. I will share about the ABCDE's strategy achievements in 2022. We still focus on the asset management and create synergy in the group. In terms of accelerate digital and drive growth, we focus on potential opportunities and ecosystems to create partnerships. In 2022, we established VAT and AI Mac funds, and we collaborated with international AI vendors to create a platform. And we also deployed, in ESG, the green investment increased 8% year-on-year. Like Steve mentioned, we also made an announcement to -- we are going to collaborate with [indiscernible] in a green platform, and we also try to solve the great electricity demand from SMEs.

But in terms of the group's synergy, we [indiscernible] 8 billion to our parent company and the group, with the investment of TWD 2 billion.

Next, I'll hand over to William Fang in KGIS.

[William Fang, executive]

[Interpreted] This is William Fang from KGIS. Now I will give you an overview of our progress in ABCDE's strategy. In terms of accelerate digital, through the online signature service, we led ahead of our peers and mostly online transaction than the adjustment service. Previously, the customer needed to visit their original branch to do the service and now through a single app from KGIS, we are able to make a reservation and do the online transaction adjustment service, and we're also going to extend our service to the elderly customer through the digital services.

And in terms of customer-centric, we have received the honor of the first phase by the Taiwan Customer Service Center Evaluation. And through the traditional e-mail and phone service, we have also enabled the line intelligent smart service. Customers are able to choose the most suitable tools that they want to gain the service from our side. And we -- as a result, we're honored with the Gold Award of the Taiwan Customer Service Center. In among the 193 other security houses, we received such an honor.

In terms of driving growth, KGIS has been proactively assisting and supporting premium corporates to enter the capital markets, and we have taken the first place of membership in the ECM market for 10 consecutive years. KGIS' official line of accounts is tailored based on customers' attributes. We provide business intelligence, order, results and all the customers -- customized services. In last August, we also launched different charities campaign, such as the line stickers and this has given us more than 1.3 million of follower online.

And now I will hand over to Jenny, our CFO.

[Jenny Huang, executive]

[Interpreted] This is Jenny Huang, the CFO of CDF. I will now cover the performance results. In 2022, our income is TWD 10.6 billion from China Life, and KGI Bank gained TWD 5.9 billion. CDIB has seen a net loss of TWD 0.5 billion, while KGIS gained TWD 3.4 billion. And the following chart is a comparison of 2021 and 2022's net income. Excluding the one-off profit of the disposal of the old building, which is TWD 8 billion, we can see the difference is that -- for example, China Life, the market turbulence affected its performance. There is a decrease of TWD 2.9 billion in the recognized income.

And the reason is that, first, CDF now recognized 100% of China Life. And last year, the recognition was only 56%. And as mentioned, the profits in China Life has decreased in 2022. As for KGIB, their performance has upped quite significantly. They have contributed over 47%, which is about TWD 1.8 billion in net income. As for CDIB Capital, due to the market turbulence, they also see the net loss of TWD 2 billion. And KGIS, due to the transaction volume dropped significantly and also the decline in the stock and bond market, they see a loss of TWD 7 billion in their net income.

And next, total assets of CDF rose to TWD 3.5 trillion, up 2% year-on-year. Our financial assets grew 3.6% and our loans grew 5%. As for provision, the attributable equity has down TWD 84 billion, which is a 29% decrease. This is mainly coming from these OCI impacts for deposits. It has grown around 9.5%. As per provision, it is also up 5%.

Next in CDF's leverage ratio in end of 2022, it has rose to 16.9%. This is also due to the decrease in our net worth. Our 2022 ROE is 6.5%.

And next page. The actual business is coming from our subs. And if we look into the breakdown of our capital ratio of the subsidiaries, they are very stable. CDF's double leverage ratio is at 128%, above the legal threshold of 125%. This is due to the decrease in our net worth from the impact of our OCI. And we have made -- applied a lot of supervision and monitoring our risk and control mechanism in order to decrease the impact on our net loss -- net worth.

And next, I will hand over to Stephanie for China Life's cards.

[Stephanie Hwang, executive]

[Interpreted] Please refer to Page 18 for China Life. Here in 2022 due to market rate line as well as the fluctuation in the overall market, the net income of China Life came at TWD 13.2 billion. The net worth ratio is 4.75%. ROE, 9.28%. And the total asset rose at TWD 2.3 trillion.

Moving on, FYP reached TWD 70.1 billion, although it is a decline year-on-year, but the sales momentum mainly came from the high-value products. Therefore, you can see that our FYPE has reached TWD 27.1 billion, up 17%. And this is the only -- we are the only lifer in the market to see a double-digit growth. And our FYPE ratio is 39%, also ranked among -- ranked the first.

In terms of our distribution channels, we still maintain a balanced development. We focus on high-value policies. And I would like to highlight the bancassurance channels. We continue to see some results in the product transformation. For example, the light products ranging along -- about 6 years, the sales amount has reached up to TWD 10.6 billion. We are also ranked #1 among the markets. Compared to the previous year, we have seen a growth of 75%.

And next, we continue to optimize our product mix. Our VNB has amounted to TWD 21.3 billion, up 1.8%. And the sales of high-value products also drove up our VNB margin from 29% to 38% this year. In terms of assets and liability, China Life's investment return reached 3.91% in 2022 and the cost of liability was 2.98%, maintaining a very stable and positive spread. Our cost of liability is the lowest among our peers.

And next page, in terms of asset/liability management, China Life focuses on the long-term recurring income. In addition to ceasing the investment opportunities in the rising interest rate environment, we continue to invest in foreign bonds with better yields, and we also focus on stocks with high yields and simple profits in the long run.

And moving on to the next page. Through prudent asset allocation, China Life maintains a very stable recurring yield. And to reflect the increase in the yield of new money, the annual pre-hedging recurring yield came at 3.75% and it is up 24 bps year-on-year. In terms of hedging structure and hedging costs, China Life has long adopted a sound hedging portfolio and resulting in the USD appreciation, the hedging cost was at 0.64%, down 54 bps year-over-year. And the FX reserve balance has also increased to TWD 10.89 billion.

And this is the overview of China Life. I will now hand over to KGIB's Amy.

[Amy Tsao, executive]

[Interpreted] Thank you. In 2022, our net income is TWD 6.02 billion and grew quite significantly. Our earning improved 6 basis points year-on-year. On the lower left-hand side, by Q3, our NIM grew gradually. But by Q4, due to the cost of FX increase, although we still maintain an upward trend of interest spread, but our net interest margin, since we have some fixed income position, our NIM declined slightly. And in 2022, in terms of spread, we grew 16 basis points. But for NIM, we have only grown 6 bps.

The next page, in terms of our asset, loan and deposits, in Q4 last year, our deposits grew to TWD 543 billion. And this year, we hope to continue to grow our deposits and to align with our loan mix. The total loan for the last year also grew, but our deposits actually grew higher than our loans.

And now I'll hand over to CDIB.

[Yi-Chun Nan, executive]

[Interpreted] Please refer to Page 27. In 2022, our fee income is about TWD 600 million. Comparing to last year, it was up 7.5%. In addition to the fee income, our investment is also a key increase. And due to the adaptation of IFRS rule, we need to mark to market our position. And in 2022, the first half of the year, stock market tumbled, so our valuation also saw a decrease. And in the next half, we still see some unrealized loss. And our performance in investments is still maintained at about 4.6%. And in this -- in the lower chart, we have upstream TWD 8 billion to our parent company. So in our total equity, we saw a decline.

In the next page, CDIB's main business still are in 2 parts, it's asset management and principal investment. In 2022, we focused on principal investment. And our asset management scale has grew from TWD 48.4 billion to TWD 50.6 billion, and we have positioned in USD, Taiwan and China. And for our investment partner, we have invested more than 50% in our Taiwanese partner.

As for the principal investment, by 2022, our investment amounts reached out to TWD 30.2 billion. And due to the valuation impact, we have seen a decrease in our book. However, our increased investment in Taiwan still grew quite significantly and the momentum is good. And we have seen growth in our Hong Kong's private equity business. And in addition to that, there is no new position added.

Now I'll hand over to KGIS.

[William Fang, executive]

[Interpreted] Please go to Page 30. Going on to the upper left corner, net income is TWD 945 million. For the year, TWD 3.6 billion. There are 2 main reasons for the decline. In 2021, our China Life position has been transitioned in scale loss for China Life, again, compared to 2021. 2022, there are several factors. First is the Russian-Ukraine war, inflation and the pandemic. Therefore, the transaction dropped. Our position and the transaction became difficult. And our overseas profit accounts for 11%, around TWD 400 million. In Singapore, in 2022, accelerated performance has reached record high and the brokerage business continues to grow and market share also reached a new high. They climbed to #2 in the market, and future business also improved as well.

Lower left corner is the ROE and compared to the industry average. As you can see, compared to industry average, we're about the same. And on the other side, our AUM buying back a little bit in the fourth quarter. But if we look on quarter-on-quarter, there is a drop because of the market conditions.

Now let's move on to Page 31. Our net revenue mix is TWD 2.7 billion. Because of market fluctuation, our investment income dropped in the first 2 quarters, but climbed back up in the fourth quarter and our commission remains stable. And if we look at the revenue movement, because of market condition and transaction, there is an impact but our drop in brokerage commission is better than industry average. And we continue to focus on optimizing digital experience. It is reflected in our customer satisfaction rates and our market share on digital channel.

Our brokerage market share is 10.4%, #2 in the market. And for other businesses, we are also top 1 or 2. And our strength is [indiscernible]. For 10 consecutive years, we are #1 in the market. These are some of the figures I want to share with you.

Now I'll pass the floor back to April. Thank you all for your presentation and sharing. Now is the Q&A session. First, let's welcome the analysts. For those that has a question, please raise your hand on Webex, and then we will invite you to speak.

[Unknown Executive]

[Interpreted] Let's welcome Jemmy from JPMorgan.

[Jemmy Huang, analyst]

[Interpreted] For the bank, can you elaborate, means outlook, because the drop last year -- second half last year, so what's the full year outlook? Is it possible there will be any improvement this year? And for loan, what's the objective this year and what's the focus this year?

And then for China Life, our RBC had dropped 45 bps, and what's the main reason? And will there also downside risk this year? In addition, for FX reserve in the new scheme, what is the upper limit based on the new scheme? And what's the impact on our hedging cost? And for COL, cost of liability, if FIP return back to normal and is there rate rates go up more? Is it possible SCO will also decrease? And although there is no AT1 exposure in addition to CF or capital instrument AT1, is there any position in SES, how big is that position? And what is the region?

Last is regarding CDF, because double leverage ratio went over the limit for the regulation, can we use capital reserve to give out dividends? If not, are there any saying that we can do? Are there special item that we can release so that we can pay out dividends? So this is my question.

[Unknown Executive]

[Interpreted] Thank you JPMorgan's question. Now I would like to invite Amy to respond.

[Amy Tsao, executive]

[Interpreted] Regarding NIM, in the fourth quarter, there are some challenges for the first quarter, although there are big changes in the market. But our target this year, we want to maintain as 1.39%, same as last year. This is our goal for this year.

[Unknown Executive]

[Interpreted] Now let's welcome China's Life Jay, Head of Actuary.

[Jay Ueng, executive]

[Interpreted] Hi, I'm Jay. Your questions are very professional for RBC. 2021, 2022, we dropped 45%. There are 2 main reasons. First, because [indiscernible], there are some legal changes, regulation changes. Therefore, it had a huge impact. Another factor, the stock market plummeted. The unrealized loss also had an impact. So these are the 2 main factors affecting our RBC. And for CLL, indeed, because of the overall market changes and rate hikes, our declare rate for new policies now is at a certain level. Whether it will increase or not, it depends on the market.

But overall speaking, just like what Stephanie said, we are still the lowest compared to our peers, and we continue to maintain a positive spread. So our expectation is that, moving forward, we will be at an advantaged place and maintain a stable and positive spread.

Now I will pass the mic to our Head of Investment.

[Lauren Hsieh, executive]

[Interpreted] I am Lauren. Regarding FX reserves, the new scheme, after calculation now, we -- our balance hasn't reached to upper limits. For our hedging cost, after calculation, they can drop around 25 bps. For AT1 exposure, it's very limited and only -- it's less than 1% and the distribution is also very diverse. In Europe it's even smaller, just even smaller than 0.01%.

[Jenny Huang, executive]

[Interpreted] I am Jenny, regarding double leverage ratio, exceeding 125%, it won't affect the dividend payout using capital reserve and earnings reserves.

[Unknown Executive]

[Interpreted] For the other questions, please raise your hand on Webex, and we will invite you to speak down. Let's welcome Tina.

[Unknown Analyst]

[Foreign Language]

[Unknown Executive]

[Interpreted] Tina, you -- can you hear?

[Unknown Analyst]

[Foreign Language]

[Unknown Executive]

[Interpreted] Yes, we can hear you.

[Unknown Analyst]

[Interpreted] [Technical Difficulty] expectation this year.

[Unknown Executive]

[Interpreted] Thank you, Tina, for your questions. For CDF, now let's welcome Jenny to answer your question.

[Jenny Huang, executive]

[Interpreted] Regarding cash dividend payout, our capital reserve is around TWD 30 billion. According to regulation, we can use that to give out dividend. But in this regard, it will be discussed in our Board meetings in April and May.

[Unknown Executive]

[Interpreted] And the second question regarding bank, now let's welcome Amy to answer the question.

[Amy Tsao, executive]

[Interpreted] Regarding our outlook -- loan outlook last year and in 2021, we increased 5%. Most importantly, over the past years, we are adjusting our loan structure. Last year for the incorporation, it takes up half. And for SMB and personal loans, it grew by 2 digits. This year, the outlook is to move towards the same direction. We would not increase our loan loss, but we will continue to optimize our loan mix.

[Unknown Executive]

[Interpreted] Next, let's welcome Lauren to answer your question regarding China Life.

[Lauren Hsieh, executive]

[Interpreted] First, for dividend last year for NTW stock is around TWD 7 billion. And this year, we will continue to -- try our best to increase our dividend income. But because of market fluctuation, we will be prudent regarding our stock position. And for our recurring yield outlook, because of rate hike, recurring yield, we will try to maintain at last year's level. In face of volatile market, we will be very cautious in terms of our investment, but of course, maintaining our yield as one of our focuses.

[Jay Ueng, executive]

[Interpreted] I am Jay. Regarding FYP expectations, you know that the premium income has been affected by the market, especially for our ILP. However, last year, although FYP declined, just like was Stephanie said, we continue to shift our focus to high-value products. So overall speaking, the direction remains the same. Our FYP expectation will still slightly grow compared to the last year, and we will continue to focus on high-value products. So we are cautiously optimistic.

And the second part compared to our peers, last year, we grew 1.8% in terms of VNB. And if we continue to focus on high-value products, VNB will also grow slightly.

[Unknown Executive]

[Interpreted] Any other questions from analysts and institutional investors? Now let's welcome [indiscernible].

[Unknown Analyst]

[Interpreted] Hello, [Foreign Language].

[Unknown Executive]

[Interpreted] Michail, you may proceed.

[Michail Paraskevopoulos, analyst]

[Interpreted] Okay. It's Michail now. I want to know more about the hedging cost of the borrowing reserve. And you mentioned about the strategy change being retained to your hedging costs about 25 bps. I've read the material. The regulation at the cumulated limits will be relaxed in the traditional currencies, while hedging costs, due to offset mechanism, I do not understand what this can help you to reduce your overall hedging plans. Can you elaborate?

[Unknown Executive]

[Interpreted] Thanks for your question. We will invite Lauren, the Chief Investment Officer from China Life to answer your question.

[Lauren Hsieh, executive]

[Interpreted] Of course, from the class, it will be really confusing because the FX reserve is complicated in the traditional hedging side. From this group, the traditional hedging cost and the current cost, when we compare them together, we can use part of the foreign reserve to help us reduce the current hedging cost. But the actual calculation is very complicated. While we're not talking about the detail, if you want to know more, I can provide you -- or I can explain it to you after the conference.

[Unknown Executive]

[Interpreted] Next question is from Zhenghong Ou from SinoPac.

[Zhenghong Ou, analyst]

[Interpreted] [Technical Difficulty] to each for the dividend.

[Unknown Executive]

[Interpreted] Jenny Huang, our CFO, will answer the question.

[Jenny Huang, executive]

[Interpreted] I'll briefly answer your question. Since the regulation regulated out the special -- the preferred shares can only come from the revenue. Now we have the additional paid-in capital. So for the preferred shares, for the special reserve, it's not applicable to the law. So...

[Unknown Executive]

[Interpreted] If there is any questions, you can raise your hand. Michail is today with us.

[Michail Paraskevopoulos, analyst]

[Interpreted] Sorry, I already asked my question.

[Unknown Executive]

[Interpreted] Is there are any question from the corporate investors? If no, we'll move to the next session.

Now we'll welcome all the media friends to ask questions. If you have any questions, please use the raise your hand function in Webex.

[ Sing Kui, Sheung Wan from Commercial Leisure Forward ]. Sing Kui, please. We cannot hear you. You need to accept unmute.

[Unknown Analyst]

[Foreign Language]

[Unknown Executive]

[Interpreted] Okay. We can hear you now.

[Unknown Analyst]

[Interpreted] I would like to confirm, for the preferred shares and only use your support, so you cannot issue dividend for preferred shares in the -- I don't hear any AT1 sites for financial figures. For your overall dividend policy, about the percentages, are you going to maintain the same strategy in the past?

[Unknown Executive]

[Interpreted] Thank you. You talked about the preferred shares. We welcome our CEO to answer that...

[Steve Bertamini, executive]

So first of all, our commitment is to always to maintain a consistent dividend policy. However, as you're aware, because of the market turbulence, it impacted our net worth last year. There has been some regulatory relief provided, which we're considering for common shareholders. But I think as Jenny clarified, based on the rules, we cannot use that for preferred shareholders.

[Unknown Executive]

[Interpreted] Now we'll invite William Fang, our President in KGIS, to answer your question.

[William Fang, executive]

[Interpreted] Thank you. KGI side, the profit of the property was steadily growing. Last year, it's around TWD 100 million. And this year, the company will continue to issue equity-related products. These kinds of products, the margin is relatively higher. As we launch new products, we believe the profit will steadily grow this year. Thank you.

[Unknown Executive]

[Interpreted] There are other questions. So we invite [ Tsao Ju-Sen from Economic JV ].

[Unknown Analyst]

[Interpreted] [Technical Difficulty] the value will not be as perfectly as in the last year than this year. That's all.

[Unknown Executive]

[Interpreted] I will answer your question. Our double leverage ratio or other financial indicators are not looking good due to the market volatility. These indicators are the factors we need to consider when we decided to issue dividend. Even though in terms of regulation, we can use the additional hedging capital, but the company will also consider our own standards in our financial performances. That's all.

[Unknown Executive]

[Interpreted] Are there other questions? Thank you for all your questions. Today's investor conference has ended. You can find our reportings and download the materials from today's conference. If you have other questions, you can e-mail or call us to discuss. And lastly, thank you again to joining today's meeting, and wish you all well. Thank you.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live

call.]