Reflecting on 2008, no country’s economic performance escaped the global financial crisis triggered by heavy losses in the U.S. sub-prime mortgage market that led to the demise of Fannie Mae, Bear Stearns, and Lehman Brothers, etc. While emerging market economies including China’s continued to report growth, the world’s major economies mobilized to take various measures to stabilize the markets. Many governments together with their central banks worked assiduously to improve liquidity and initiated all kinds of monetary and fiscal policy measures; however, the results remain to be seen. Against a deep pessimistic scenario and continued lack of confidence, the pace of global economic recovery shall be slow.
Taiwan’s domestic economic performance during the past year was affected by the international financial tsunami, turbulent global stock markets, drastically shrinking private wealth, and a brake on domestic consumption which led to sluggish domestic investment and the absence of any export momentum. With the quick global economic downturn, the pessimistic outlook for diverse industries and the effect of deleveraging on world trade, Taiwan’s economic growth is expected to stagnate due to this unfavorable overall economic scenario.
Looking into 2009, the world economy’s return to moderate growth will remain hindered by global financial tsunami and its pervasive effect. While many countries have adopted active monetary and financial policies to meet the challenges, the economic downturn is so strong that such initiatives are not having an immediate positive effect. This year the major industrialized nations will face the worst recession since World War II. Therefore, the Directorate General of Budget, Accounting & Statistics of the Executive Yuan of the Republic of China, forecasts the Taiwan economy will contract -2.97% in 2009 from the year earlier. This is due largely to a drop in export trade, higher unemployment, lower personal income, more conservative private consumption, and declining domestic fixed investment.
Thanks to the combined efforts of our colleagues, Far Eastern International Bank (FEIB) continued to perform well in 2008 in its various niche market businesses: our treasury markets business gained steady profit, convertible asset swaps ranked first in the marketplace, and our credit card business scale topped 1 million cards issued. To improve our overall operating efficiency, the Bank continues its restructuring and process reform. Operations & Technology (“O&T”) was set up at the end of 2008 to integrate the whole Bank’s operations and IT departments to optimize operations processes, elevate operating efficiency, lower operating cost, and enhance risk management through IT. The Bank posted profits every month before the financial tsunami. FEIB’s P&L then turned to deficit with the sudden recession and unexpected reversal of the economy. To strengthen our capital structure, cope with the operating environment and seek continuous growth opportunities, thanks to the support of our major shareholder Far Eastern Group, FEIB completed a capital injection of NT$3 billion at the end of 2008, bringing our total BIS ratio to 10.61%.
Looking into the coming year, FEIB will continue to develop its niche businesses, cultivate CRM and promote multi-directional cross-sales, strengthen asset and liability management, lower operating risk, maintain balanced and steady profit sources, and also implement cost control and efficiency enhancement strategies to actively maximize profit gain. FEIB aims to become a “Professional and Exquisite Bank of the Greater China Region.” Facing any future challenge, the Bank’s whole staff is committed to offering dependable and reliable services to our customers. We are determined to provide all individual and corporate banking clients modern, professional, and good quality financial services. The Bank plans to develop into the financial bridge connecting with the Greater China market to create maximum value for the Bank’s clients, shareholders, and employees.
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