| Introduction |
| Message from the Chairman MasterLink Securities’ revenues for 2006 came in at NT$7,656,062,000, for a pre-tax profit of NT$1,047,698,000 and a net profit of NT$747,844,000. Pre-tax EPS came in at NT$0.78, while after-tax EPS was NT$0.56, for a rise of 25.22%and 12.68%, respectively, over the previous year. Strong domestic and international equity markets, which helped revived financial activity, not to mention loose domestic monetary policy, allowed all of MasterLink’s divisions to post impressive revenues and earnings. This solid performance has laid the foundation for continued future growth. In the third quarter of 2006, Taiwan Ratings Corporation raised MasterLink’s long-term credit rating from twA- to twA, and reaffirmed a twA-2 short-term credit rating. These ratings were confirmation of MasterLink’s ability to react to, and effectively capitalize upon, liberalizations in the finance industry, as well as our success in diversifying revenue streams and, in turn, strengthening profitability. Several of MasterLink’s key achievements in 2006:
1. Enhanced Risk Management
3. Increased Operational Efficiency; Developed Niche Markets Looking to 2007, MasterLink Securities will continue to make fundamental advances in risk management, corporate governance, and transparency. At the same time, we will continue developing our niche businesses, while also building strong strategic alliances. Indeed, in the first quarter of this year, we began master distribution of BSI Mutual Funds. By adding foreign-based financial products, we enhance our aptitude for product screening and for in-house product development. In addition to greater internationalization, we are also eagerly forming alliances with domestic investment trust companies, banks, and brokerage houses, so as to be able to offer excellent products to our clients.
MasterLink’s is forging alliances with domestic and foreign institutional investors for its brokerage business, futures business, and fix income business. As well, MasterLink’s insurance brokerage has formed sales alliances with Fubon Life Insurance, Shin Kong Life Insurance, and Aegon Life Insurance. Yet, through various smart, strategic alliances, we can meet client demand for increasingly creative and diversified products.
Going forward, MasterLink will be devoted to delivering increasing revenues and profitability, as well as increasingly shareholder value, year after year.
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| Compliance and Risk Management |
| With the objective of
reducing operational risks, MasterLink adopts a compliance management
approach. In addition to focusing on traditional auditing, the
compliance management approach also highly emphasizes management’s
participation in the policy setting process and real-time
surveillance. In relation to policy setting, this management approach
emphasizes the setting of clearly defined standards and
responsibilities. Other than requiring the various divisions to set up
and update documented policies and procedures prior to carrying out
the business procedures, the central staff division also conducts
reviews on these policies. A specialist unit (Compliance Unit) is
delegated to be responsible for policy review, follow-up and
management to ensure that policies are being established and updated
appropriately. In terms of policy compliance, the management team
places especially high emphasis on “whether important risks are
properly controlled” in addition to reviewing “whether important
procedures have been complied with”. In cooperation with the risk
management unit, this aims to expand the scope of ex post auditing to
real-time management to strengthen overall risk management. Risk management is essential to enable MasterLink to actively engage in developing various types of business under an appropriate risk level to continue improving its profitability; as well as to maximize the return on capital under a sound risk management policy. MasterLink’s risk management unit affiliates to President Office.Its responsibility is to control overall risk of the company. With the aim of carrying out risk management thoroughly, the risk management function has been incorporated into each division with clearly defined description to clearly distinguish central and local responsibilities. Moreover, risk measurements such as VaR, DV01, and Greeks are implemented on positions to ensure that risks are under control. In the future, following the development of new business services and products, Masterllink will integrate all business information and establish risk management information system to undertake real-time surveillance and end-of-day analysis on all its positions to improve the efficiency of risk management and to reduce potential risks.
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