Shin Kong Financial Holding

1
Shin Kong Financial Holding

• Corporate Governance and Disclosure, CFA Exam
  Preparation
• ????????? / CFA????
• (???? ????????????)
• November 2009

2
???? ??? (Stan Lee)

• CFA (Chartered Financial Analyst) charterholder
• ?????? IR Manager
• ?????? ????????
• Citigroup Fixed Income Sales
  (summer associate)
• ???? ????/??????
• ???? ??????????
• ???? ?????(Georgetown University) MBA
• ???? ?????

3
Agenda

• ????
• IR?????
• ??????(???? ????)
• CFA????

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4
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9
Agenda

• ????
• IR?????
• ??????(???? ????)
• CFA????

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IR(?????)?????
11
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12
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13
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17
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19
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20
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21
Agenda

• ????
• IR?????
• ??????(???? ????)
• CFA????

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Investment Portfolio
NTbn
Total Investment
1,130.7 1,209.0
Total Assets
Real Estate
Mortgage Corp. Loans
CAGR 12
Policy Loans
Foreign Equities
Foreign Fixed Income
Domestic Fixed Income
Domestic Equities
Cash
Investment return
5.2 5.1 5.3 4.1 2.0

• Note
• Due to rounding, asset allocation figures may not
  add up to 100
• Includes capital gains and FX hedging cost

23
Overseas Fixed Income Prudent Credit Risk
Overseas Fixed Income Portfolio
TotalNT417.57bn
Comments

• Portfolio mainly comprises low risk investments
  such as government bonds, US Agency MBS/Bonds,
  and Non-US Agency Bonds
• AAA rated investments accounted for 88.1 of the
  portfolio. 96.9 of the portfolio is rated A and
  above. Overall credit risk exposure is very
  limited
• Corporate bond portfolio comprises leading
  investment grade names with stable credit quality
  (e.g., Dell, ATT, Wal-Mart, Du Pont)

Corp. Bonds
CDO
Government Bonds
Non-US Agencies
AAA
US Agency MBS/Bond
AA
A
BBB and below
24
CDO Exposure
CDO Exposure
Comments

• 10.9 of CDOs were referenced to Asset Backed
  Securities which consist of RMBS, CMBS, auto
  loans, etc.
• Accounting treatment is no active market
• Policy is to conduct impairment test when there
  is significant deterioration in credit quality
  (downgrade by more than 5 notches or to
  non-investment grade)
• Total CDO exposure were NT22.69bn
• Due to deterioration in credit market, cumulative
  loss of NT1.49bn among corporate CDOs has been
  recorded. The company will proactively manage the
  portfolio and deploy necessary hedging strategies
  to minimize losses. Overall credit risk is
  expected to be manageable

NTbn
24.9 22.7
ABS
CMBS
Corp.
25
ABS CDO Rating Distribution
ABS CDO Rating Distribution
NTbn
10.6
AAA
AA
4.0
2.5
A
AAA
AA
BBB and below
26
Hedging Strategy
Mix of Hedging Strategies Used
Comments
TotalNT459.68bn

• Share of traditional hedges increased to the
  upper limit of medium-long term target 7090
• Proxy hedging remained low at 3.7
• Driven by effective hedging strategy, annualized
  hedging cost was lower than 1 in 1H
• Available for sale position in foreign equities
  accounted for 6.3 of the portfolio and was not
  marked to market in income statement

Equity AFS position (1)
Proxy hedge
US position
CS and NDF (2)

• Note
• Available for sale position
• Currency swaps and non-delivery forwards

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Investment Strategy

• Develop Strategic Asset Allocation based on
  liability profile and capital budget
• Build core portfolio of recurring income
• Achieve diversification and yield pick-up through
  overseas investments obtained approval to
  increase overseas investment to 40 currently
  operating between 3540

Strong ALM Discipline
Well-diversified Portfolio

• Diversification by asset class (equity, credit,
  currency, commodity, real estate)
• Diversification by strategy for uncorrelated
  sources of alpha (quantitative, value, etc.)

Cost-effective Currency Hedging

• Target share of traditional hedges at 7090 in
  the medium-long term
• Target hedging cost at 200 bps or below

• Manage/ control investment risk by prudent SAA
  and TAA ranges
• Cooperated with leading consulting company to
  enhance investment processes and investment risk
  management
• Completed phase I of the Algo system (a
  cross-subsidiary market risk management platform)
  in April 2009

Enhance Investment Risk Management
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Agenda

• ????
• IR?????
• ??????(???? ????)
• CFA????

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• ?????1995??2.8?????2009???20??,???????15
• ?????????,??????????????2009??????????,??2009/4/2,
  ?2008??14?

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CFAI???????

• ?21 portfolio managers (institutional
  and/or private)
• ?17 research analysts
• ?6 chief executives (CEO, CFO, CIO, etc.)
• ?5 consultants
• ?5 investment banking analysts/bankers
• ?5 relationship managers
• ?4 corporate finance analysts
• ?4 risk managers

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?????????CFA?????????

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• ?????????????????50,???????,???50
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??CFA?????????

• ??????Level 13 ????Level(s)?????
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• ??investment decision-making process
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• ??CFA Institute????
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???CFA?

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• ?CFAI??http//www.cfainstitute.org/cfaprog/registe
  r/??
• ??????????(????????)?email address???????????????
  ????????????????????????
• ?????????,??????510?????
• ?2009/12/7??????,???????
• 2009/3/16????US390???US600US990 (?NT3.3?)
• 2009/8/21????US390???US690US1,080
  (?NT3.6?)
• 2009/9/15????US465???US930US1,395
  (?NT4.6?)
• ??????????????Sample Exam??????(Mock Exam)

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CFA 2008/12 Level1 ??????????

• Alternative Investments
  3.3
• Corporate Finance ?
  8.3
• Derivatives ?
  5
• Economics
  ? 10
• Equity Investments ?
  10
• Ethical Professional Standards ?
  15
• Financial Statement Analysis ?
  20
• Fixed Income Investments ?
  11.7
• Portfolio Management ?
  5
• Quantitative Methods ?
  11.7

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???CFA ?????
Level 2002 2003 2004 2005 2006 2007 2008
1 44 4042 3436 3436 3940 3940 35
2 47 47 32 56 48 40 46
3 58 68 64 55 76 50 53
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• Website www.skfh.com.tw
• E-mail stan.lee_at_skfh.com.tw

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