EnTie Bank made tremendous progress across business lines and delivered strong rewards for shareholders in 2010. Reflecting the great effort and dedication of the management team and staff, EnTie achieved significant growth in profitability in 2010 on the back of a successful turnaround in 2009. In 2010, the Bank’s net income reached NT$2.003 billion and EPS was NT$1.19, both being record highs in the Bank’s history.

Through improvements in operational efficiency, product innovation and the provision of value-added services, the Bank has emerged as a provider of comprehensive financial services and solutions to customers across well diversified business lines. Notably in 2010, non-interest income increased dramatically, helping EnTie move beyond its years of losses and low profitability to become a bank of notable profitability, with shareholders as well as customers able to enjoy and share in the rewards of the Bank’s success.

The global economy was in a state of flux in 2010. In the first half of the year, due to the lower level of economic activity in 2009 and an abundant supply of liquidity, governments around the world adjusted economic growth projection upwards. However, with the expiration of stimulus programs, emergence of the European Debt Crisis, instability of the economic recovery in the US, and the less certain near term economic outlook in China, growth momentum slowed in the second half of the year. Despite these temporary fluctuations, overall, the global economy recovered to pre-crisis levels.

The Taiwanese economy also rebounded in 2010. Exports expanded and unemployment retreated. Income growth returned to pre-crisis levels, the financial markets were busy, and the private sector was willing to invest and consume at healthy levels, resulting in economic growth of 10.82%. Overall the profitability of local banks reached a record high, while asset quality was at historically strong levels.

As the fundamentals of the financial industry improved, EnTie’s performance was no exception. Total loans (excluding overdue loans) grew 6% YoY to NT$197.3 billion, while total deposits grew 13% YoY to NT$272.3 billion. In terms of revenue and profitability, pre-tax profit amounted to NT$2.789 billion; post-tax, this resulted in net income of NT$2.003 billion, an increase of NT$1.929 billion YoY, representing a 27 times growth. The Bank also achieved a record high post-tax EPS of NT$1.19.

As we work to expand the Bank’s operations and profitability, risk management remains a core focus. We take pride in having a robust capital structure and solid asset quality. At the end of 2010, our NPLs (including overdue loans) stood at NT$730 million which translated to a very comfortable NPL percentage of 0.37%, less than half of the 2009 figure of 0.84%, and ranking No. 7 among all local banks. The bad debt reserve was NT$760 million, with a coverage ratio at 103.45%, compared to 99.81% in 2009. The Bank also issued subordinated debt of NT$4 billion and NT$6 billion in August 2010 and December 2010 respectively. At the end of 2010, EnTie’s capital adequacy ratio stood at 14.40%, with Tier 1 capital of 9.89%. The Bank’s capital position is among the best in the industry. This robust capital structure provides an excellent foundation for the Bank to achieve even greater profitability in the coming years.
Due to the clear improvements in operational efficiency and asset quality at EnTie, on July 16th, 2010, the Bank was assigned a National Long-Term Rating of ‘A-(twn)’ with “Stable” outlook by Fitch Ratings. EnTie was one of the very few banks that achieved a ratings upgrade in 2010, which again confirmed the success and effectiveness of our turnaround efforts. Furthermore, in a recently published survey by the National Cheng-Chi University, EnTie was again granted an “A”, the highest level of recognition for the Bank’s performance and service in the fourth consecutive quarter.

Looking forward into 2011, instability in selected segments of the global economy means that confidently predictable economic growth levels remains elusive. However, with the economy in the US continuing to show signs of recovery and emerging economies such as China and India sustaining a rapid pace of growth, the outlook of the global economy is optimistic.

With continued improvement in the global economy, and the execution of the ECFA agreement, Taiwan’s exports are forecast to grow steadily while the labor market and consumer sentiment should continue to pick up. The Directorate-General of Budgeting, Accounting and Statistics (“DGBAS”) projected that Taiwan’s economic growth for 2011 will be 4.92%. As the economy bounces back from trough interest rates, banks stand to benefit from improving interest margins.

As the banking environment improves, the Bank will adhere to its core values of “speed, professionalism, and trust” to build ever stronger long-term relationships with customers, while utilizing strong asset quality and a robust capital structure as foundations for growth and prudently managing risk. Key focus areas of business development will be:

A. Corporate Banking Group
We will continue to develop our SME client base by focusing on business opportunities from SMEs within the general industry. Our plan is to provide our SME clients with comprehensive banking solutions, by developing customized multi-product financing structures, proactively sourcing and participating in syndication projects in preferred industries, continuing to develop new products in the real estate trust segment, and establishing the e-loan platform to better service customers.

B. Retail Banking Group
(a) Consumer Finance
We will adjust our loan portfolio mix to enhance interest spread. Personal Loans will be the key business focus in 2011. The Bank’s strategy is to develop targeted products for our selected preferred customer groups. In addition through the establishment of a telemarketing team, the Bank intends to efficiently grow the personal loan portfolio both in absolute terms and as a proportion of the loan portfolio. As for mortgage loans, growth is expected to be managed in a selective and prudent manner, with strict control to maximize the quality, margin and cross-selling opportunities for EnTie’s other retail products. With regard to our credit card business, multiple channels will be deployed to attract new cardholders, and the Bank will also issue new differentiated card types.
(b) Wealth Management
We will continue to adjust our deposit structure to increase the proportion of demand deposits. Products and services will be broadened and further customized to meet the needs of different customers. The Bank will also continue to develop strategic alliances with insurers, and to optimize Wealth Management revenue sources.

C. Financial Markets Group
We will strive to ensure an optimized operation in fund allocation and ALM aiming to enhance the yield from EnTie’s excess liquidity. The derivatives product line will be further developed, and more customized products will be launched to drive profitability.

Overall the Bank’s management and staff are deeply committed to excel in the four key dimensions of profitability, product offering, quality of staff and our corporate image. We aim to exceed our own 2010 performance and those of our competitors to achieve yet another record year in profits, thereby further increasing the strength of our franchise and continuing to create value for our shareholders.