Business Operations

I. Foreword

In 2019, growth in the global economy slowed due to the impact of international trade disputes and an increase of geopolitical risks. The Shanghai Commercial & Savings Bank, Ltd. (SCSB) upheld its principles for “asset safety, liquidity sufficiency and capital adequacy” to stably expand businesses and create solid returns in its operating performance. The profit after income tax gained 6.9% to NT$14.66 billion year over year. The year-end NPL ratio was 0.20%, the liquidity ratio was 32.90%, and the capital adequacy ratio was 14.56%.


The results of SCSB’s operating performance in 2019, business plans and future development strategies for 2020, the impact of external competitive environment, regulatory environment and macroeconomic environment, and the latest affirmed credit ratings are illustrated as follows:


II. Operating Performance for 2019

  1. Overview of Global & Domestic Financial Environment
    Growth in global trade volume declined in 2019 due to the trade disputes between the United States and China. However, the domestic market benefited from transferred purchase orders and return of funds from Taiwanese businesses, resulting in increased economic momentum quarter by quarter. The annual economic growth in 2019 was 2.71%. Owing to the decrease in interest rate in the United States and continuous influx of foreign capital, the exchange rate for NTD against USD closed at 30.106, showing a 2.1% annual appreciation. With continuous foreign investment in Taiwan’s stock market, the TWSE closed at 11,997 at the end of the year with a 23.3% annual increase which was the best performance in the last decade. The Central Bank maintained interest rates unchanged for 14 consecutive quarters as domestic funds remained plentiful and inflation had been moderate, and continued to adopt an accommodative monetary policy.

  2. Organizational Change
    To strengthen the expansion of bancassurance, SCSB merged its life insurance and property insurance agency subsidiaries in May and established the Insurance Agency Department in the Headquarters. To expand services, SCSB added three smart branches in June including the Chu Ko Branch in Hsinchu City, Lin Kou Branch in New Taipei City, and Yongji Branch in Taipei City. To establish a more comprehensive financial service network in Asia Pacific, SCSB obtained approval for the establishment of Wuxi Branch in China in November and it is now actively preparing the opening of the Branch.
    To improve interdepartmental communication at the Headquarters and develop coordination and integration skills of department heads, SCSB has established functional integration meetings in business departments. To enhance corporate governance, SCSB appointed a dedicated Corporate Governance Officer. To comply with FSC policies, SCSB established the “Whistle-blowing Affair Review Committee” and “Consumer Protection Committee”. To promote financial inclusion, SCSB increased investments in the Cambodian subsidiary AMK Microfinance Institution and raised its shareholding ratio to 84.9%.
    SCSB’s stocks were selected as constituent stocks of the MSCI Taiwan Index and TWSE Taiwan High Compensation 100 Index in 2019, indicating investors’ recognition of its business performance. In response to the FSC’s amendment of capital calculation regulations, SCSB issued 380 million common shares in October and successfully raised NT$13.68 billion in capital to further enhance the soundness of its capital base. At the end of the year, SCSB’s capital reached NT$44.816 billion and total market value reached NT$233.04 billion. In addition, to comply with the government’s urban renewal strategy for dangerous and old buildings, SCSB’s Headquarters building on Minchuan East Road will be demolished for reconstruction and the Headquarters will be temporarily relocated to the Minsheng Building.

  3. Operational Plans, Strategies, and Results
    Corporate banking remained the core business in the 2019 business plan, but SCSB also gave consideration to personal banking, wealth management, treasury marketing, deposits and remittances, and digital banking. SCSB continued developing innovative financial products and services, enhancing FinTech applications, cultivating talents, actively fulfilling corporate social responsibility, and improving corporate image.
    The results of 2019 business plans and strategies were reflected on the growth of main businesses and profits, year on year, in which the average deposit balance was NT$955.7 billion, up 7.8%, and average loan balance was NT$708.1 billion, up 8.1%; profit before income tax was NT$16.56 billion, up 5.2%, net income after income tax was NT$14.66 billion, up 6.9%; EPS was NT$3.50, up 3.9%; after-tax return on assets and after-tax return on equity were 1.20% and 10.30% respectively.

  4. Budget Implementation
    As for main businesses and net income after income tax, the achieving ratio of operational targets for average deposit balance was 96.5%, average loan balance was 97.0%, and net income after income tax was 102.5%.

  5. Income, Expense and Profit

    Unit: NT$ Billion, except as indicated
    Item Year
    2019 2018 Change (%)
    Net interest 12.93 12.89 0%
    Total non-interest revenue 11.92 10.27 16%
    Net revenues 24.85 23.16 7%
    Provisions for bad-debt expense, commitment and guarantee liability 0.6 0.5 20%
    Total operating expenses 7.69 6.92 11%
    Profit before income tax 16.56 15.74 5%
    Net income 14.66 13.71 7%
    Earnings Per Share (in dollars) 3.50 3.37 4%
    ROA (after income tax) 1.20% 1.21% -0.01%
    ROE (after income tax) 10.30% 10.82% -0.52%

  6. Research and Development

    SCSB continued its customer-centric approach in 2019 and provided innovative digital banking services to satisfy customer demands and provide customers with new financial service experience. In terms of corporate banking, SCSB made full use of credit guarantee fund mechanisms and expanded financing services for small and medium enterprises and overseas Taiwanese businesses. SCSB also created preferential loans for startup industries, reconstruction of dangerous and old residences, and government projects. In terms of personal banking, SCSB entered a strategic alliance with Universal Studios and Master Card and launched the exclusive “Minions Master Card” in Taiwan. SCSB became the first to launch a 3D fragrance credit card catered to young users. In terms of wealth management, SCSB launched the new Target Maturity Emerging Market Bond Fund, Global Multiple Income Balance Fund, Senior Asset Secured Bond Fund, Target Maturity Bond Trust Collective Investment Management Account, asset heritage and asset allocation insurance portfolio marketing plans, and customized principal-guaranteed structured investment products to satisfy customer wealth management demands.

    In terms of deposits and remittances, SCSB provided flexible product portfolios and launched multiple deposit promotion programs through interdepartmental collaboration. SCSB also continued to promote settlements for security firms with separate accounts to increase demand deposits. In terms of digital banking and promotion of diverse payment collection channels, SCSB launched the “Financial Collection System Platform” (eFCS businesses) of Taiwan Clearing House and launched the integrated diverse mobile payment tool “One Code Go” payment collection service. The service was the first to incorporate parking lots, chain stores and traditional night markets. In response to the implementation of the “Open Banking” system, SCSB became one of the first banks in the “open API platform”. To provide customers with brand-new smart financial services, SCSB introduced innovative services such as AI applications in new smart branches, smart speaker customer service bots, mobile phone QR code scan for paperless ticketing, and Taiwan Pay ATM cardless withdrawals.


III. Business Plans for 2019

  1. Business Guidelines
    In 2020, SCSB will adopt strategies based on “smart finance for innovation and sustainability”. SCSB shall enhance the incorporation of smart technologies, expedite digital development, promote financial inclusion, innovate products and services, drive revenue growth and profitability, enhance business management, fulfill social responsibilities, and create sustainable value.

  2. Business Targets
    Taking into account factors including economic growth forecasts, market competition, as well as the growth result in 2019 and business strategies for 2020, SCSB is setting up appropriate growth for 2020 targets.

  3. Business Policies
    • Fundamental Policy: Conduct business with integrity and trustworthiness to achieve stable, sound, balanced and sustainable development, as well as excellent operating performance.
    • Operating Policy: Corporate banking continues to be core business for SCSB, but SCSB will also continue incorporating personal banking, wealth management, treasury marketing, deposits and remittances businesses, and strengthening its digital banking services.
    • Sales Policy: Unite sales personnel on four business lines to promote integrated marketing, deepen relationships with core customers, develop potential high-quality customers, pay attention to financial consumer protection, and treat customers with fairness.
    • Management Policy: Effectively implement three lines of defense in internal control, optimize risk management and strengthen the culture of compliance in order to improve financial and business development.


IV. Future Development Strategies

    SCSB’s main development strategies for 2020 are as follows:

  1. Overall Operations: Maintain stable and sustainable operations, achieve balanced and progressive growth, place equal emphasis on operations and management, and create good financial and business performance.
  2. Channel Development: Actively gain greater presence in Asia-Pacific, expand into China's market, make use of strategic alliances, and strengthen virtual channels.
  3. Business Development: Enhance niche businesses, strengthen cross-border sales and cross-selling, promote integrated marketing, and expand business scale.
  4. Customer Relations: Treat customers with fairness, secure core customers, develop high-quality customer groups, and create customer value.
  5. Digital Banking: Innovate in smart finance, optimize customer experience, promote virtual-physical integration, and develop inclusive finance.
  6. Information Technology: Improve system equipment, strengthen information applications, stabilize system operations and maintenance, and ensure information security.
  7. Human Resource: Cultivate a diverse workforce, enhance core and professional competencies, strengthen management succession, and enrich human capital.
  8. Internal Control: Implement internal control, optimize risk management, strengthen the culture of compliance, and fully implement the three lines of defense.
  9. Corporate Relations: Enhance corporate governance, fulfill corporate social responsibility, be responsible to both the environment and the society, and create sustainable value.


V. The Impact of the External Competitive Environment, Regulatory Environment, and Macroeconomic Environment
  1. External Competitive Environment
    Although the consolidation of domestic banks has continued in recent years, the number of banks is still excessively high. Price competition has intensified and the interest spread has decreased. The FSC approved the establishment of three Internet-only banks. They are expected to join the market and commence operations in 2020 and their participation will further intensify competition in banking businesses. SCSB will cautiously expand its business in response to the competitive external environment and focus on value competition instead of price competition. SCSB shall actively enhance digital banking products and services and continue to create positive momentum for business growth.

  2. Regulatory Environment
    To meet international standards, the FSC has completed the screening structure for domestic systemically important banks and enhanced relevant supervision measures. It also enhanced capital requirements for banks investing in other financial or banking related businesses, raised the maximum penalty for violations of regulations by banks, and added methods for administrative penalties. In response to the rapid development of FinTech, the FSC has also encouraged banks to develop a diverse range of online financial services and promoted Open Banking. SCSB shall continue to enhance operation management, improve finance and business, strengthen FinTech applications, and promote digital banking competitiveness.

  3. Macroeconomic Environment
    The global economy still faces many risk factors such as COVID-19 in 2020 and Taiwan's economic outlook expects to be cautious and conservative. However, the banking industry remains under pressure from over-banking and excess capital in the market. In the face of such volatile external challenges, SCSB will examine changes to the business environment and adopt flexible and appropriate business strategies to grasp business opportunities in the market. SCSB will steadily expand businesses, increase sources of revenue, and create profit.
VI. Credit Ratings
    Rating Agency Ratings


    Release Date



    Taiwan Ratings










    Standard & Poor’s










    In 2020, SCSB shall continue to uphold the business motto of “serving society and supporting industry”, mid-term development strategy of “deepening in Taiwan, linking Greater China, and expanding international business”, and strategy for 2020 of “smart finance for innovation and sustainability”. Also, SCSB shall continue to expand stable business development and focus on the environment protection, corporate social responsibility, and corporate governance and all employees will continue to uphold the service ideals for “considerate, efficient and respectful” and “always placing customers’ needs first” and work together to continue the outstanding performance. SCSB welcomes and appreciates the continued guidance and support from all shareholders.

    Chairman: Yung, Hung-Ching
    President: Chen, Shan-Chung
    Chief Accountant: Hsu, Shou-Ming

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