CTBC, through its legacy institutions, started out as Taiwan’s first private securities underwriter in 1966. It evolved into a trust and investment business in 1971, brought the first credit cards to Taiwan in 1974 and in 1992 became a private commercial bank when licences were first awarded. In 2002, it became a financial holding company when that licensing regime opened up.
In recent years, the group’s priority has been expanding into insurance, buying the Taiwanese operations of Metlife, Manulife and Taiwan Life in the space of five years. Along the way it changed its name from Chinatrust in 2013.
“China is too confusing a name,” says CTBC president Daniel Wu. “In Indonesia people think we are from China and in Canada people think we are a trust company.”
But it wasn’t all bad.
“When you go to China and see high-ranking officers, they say: ‘Chinatrust must mean trust in China.’ So that’s good.”
CTBC has achieved as much as is reasonable in a tight, overbanked and low-margin market like Taiwan; going from zero to NT$1.8 trillion ($58.3 billion) in insurance assets in seven years was the latest signature achievement at home.
“It’s still very challenging, because the overbanking situation is not improved,” he says. “Therefore, in Taiwan you have seen the lowest returns on equity and investment in Asia for years here. You cannot just stick to these areas: you really cannot make a decent profit because the NIM [net interest margin] is so thin,” typically below 1.5%, compared with 2.5% in Thailand and 3% in the US.
So instead, the priority of recent years has been to grow internationally, with overseas revenues now representing 38% of the group total and likely to top 50% within five years.
Taiwan is one of the markets most at the mercy of shifting global trade patterns, but Wu says the threat of a US-China trade war has not yet had a material impact.
“According to official numbers, that has probably affected 0.3% of GDP, which is nothing,” he says.
He claims CTBC, whose weak point is China, probably benefits, as Taiwanese clients in China now want flexibility and are looking at new areas of manufacturing in places such as Vietnam. He describes it as a shift in capacity rather than outright flight from China: just getting ready for whatever comes next.
“Taiwanese manufacturers are different,” he says. “They have always had their survival skills for 40 years.”