Thank you. Good afternoon, and good morning to those joining us from Europe.

Welcome to Cathay Financial Holding's 2025 fourth quarter analyst meeting. I am C.K.

Lee, CEO of Cathay Financial Holdings, and I will host today's meeting. Thank you for joining us.

Let me begin by introducing the senior management team with us today: Ms. Grace Chen, CFO of Cathay Financial Holdings; Mr.

Albert Lin, President of Cathay Life; Mr. Robert Fuh, EVP of Cathay United Bank.

Before we begin the presentation, let me share some key highlights. Cathay Financial Holdings delivered strong performance in 2025, achieving our third highest record, with net income of $108 billion NT dollars, EPS of $7.06 NT dollars, and an ROE of 11.7%.

This performance reflects the resilience of our core businesses. Cathay United Bank, Cathay Century Insurance, and Cathay Securities each delivered record-high results.

Cathay United Bank reported 13% year-on-year earning growth, driven by double-digit increases in both net interest income and fee income. Cathay Life, earnings reached third highest level on record or second highest excluding the one-off currency volatility reserve provision.

Business fundamentals remain solid, with healthy growth across annualized premium, value of new business, and recurring yield. Cathay Century continued to deliver strong underwriting profits, with net income increasing by 46% year-on-year.

Cathay SITE assets under management grew 7% year-on-year to a record high. Cathay Securities further strengthened its position in the domestic brokerage market and maintained its number one ranking in sub-brokerage business.

Now I will hand over the call to Charlie from our IR team for the 2025 fourth quarter results presentation. Charlie, please.

Thank you. Let's start with the business overview on page 4, which provides a quick highlight on each subsidiary.

Cathay United Bank net income increased by 13% year-on-year to $43.5 billion Taiwan dollars, marking a record high for the fifth consecutive year. Loan and deposits maintained solid growth.

Net interest income increased by 12% year-on-year. Asset quality stayed benign.

Net fee income rose 22% year-on-year. Wealth management and credit card fees grew 28% and 12%, respectively.

Cathay Life continued value-driven product strategy to accumulate CSM. First year premium, annualized premium, and value of new business continue to grow, fueled by strong sales of US dollar-denominated and investment-linked policies.

Recurring yield increased year-on-year, with dividend income rising by 11%. Capital position remained robust, with an equity-to-asset ratio of 9.4%.

Cathay Century, the general insurance subsidiary, net income reached an all-time high, increasing by 42% year-on-year. Premium income grew 7% year-on-year, and market share reached 13.8%.

Asset management subsidiary Cathay SITE listed its flagship Taiwan Equity ETF on Tokyo Stock Exchange in September 2025, marking the first Japan-listed ETF directly tied to the Taiwan stock market. Cathay SITE's asset under management reached $2.4 trillion Taiwan dollars.

Cathay Securities delivered $4.5 billion Taiwan dollars in net income, continued to expand market share in the domestic brokerage business, and maintained its number one position in sub-brokerage market share. Next page, page 5 shows our outlook for 2026.

Cathay United Bank will deepen relationship with high-net-worth clients and optimize cross-asset wealth management to drive fee income growth; capitalize on supply chain realignment to expand cross-border financial services and accelerate business expansion in Asia; leverage AI and technologies to accelerate product innovation and improve efficiency. Cathay Life will focus on product with high CSM and capital contribution to support policyholders to achieve healthy living and prosperous retirement.

For investments, Cathay Life will seek opportunity in high-quality equities and bonds to enhance recurring income, while strengthening asset liability management and reducing currency mismatch risks. Cathay Century will grow business emphasizing on quality and scale, deepen digital application to enhance customer satisfaction and retention.

Cathay SITE will continue to develop asset management business as the group's third growth pillar. Cathay Securities will advance digital operations and leverage AI to enhance customer-centric experiences, aiming to become the investor's AI broker of choice.

Please look at page 6, Cathay Financial Holding's net income, EPS, and ROE. Cathay Financial Holding's net income reached $108 billion Taiwan dollars, EPS of $7.06 Taiwan dollars.

Core business momentum across subsidiaries remained solid. Net income at subsidiaries Cathay United Bank, Cathay Century, and Cathay Securities all reached record highs.

The decline in Cathay Life's net income was mainly due to the one-off additional provision of $21.7 billion Taiwan dollars to the foreign currency volatility reserve. If excluding this one-off impact, the group achieved its second highest net income on record.

On a consolidated basis, the holding company's ROE reached 11.7%. Please turn to page 7 to see the book value of Cathay Financial Holding.

The consolidated book value of holding company was $934 billion Taiwan dollars. Book value per share was $57 Taiwan dollars.

Page 8 shows our overseas expansion. For the banking business, Cathay United Bank continued to strengthen its operations through localization, digital transformation, and green finance.

The Hong Kong branch was relocated to 1 Causeway Bay building, further scaling up operations and enhanced both the depth and breadth of services. For the insurance business, Cathay Life's joint venture in China achieved 49% year-on-year growth in total premium, driven by the stop-selling effect ahead of the reduction in guarantee rate.

Please turn to page 10 for more detail about the banking subsidiaries. Cathay United Bank's total loan balance rose 8% year-on-year to $2.8 trillion, with growth across all segments.

Deposit rose 15% year-on-year to $4.3 trillion, maintaining the advantage of high demand deposit ratio of about 60%. Interest yield is shown on page 11.

The full-year net interest margin reached 1.55%, remaining flat year-on-year. Net interest margin and interest spread in the fourth quarter both increased quarter-on-quarter, supported by lower funding cost amid US rate cuts.

Page 12 shows the asset quality. Cathay United Bank maintains low NPL ratio at 15 basis points and coverage ratio at 1,060%.

Gross provision was $8.5 billion, and recovery was $1.6 billion, with credit cost of 25 basis points. Please turn to page 13 for SME and foreign currency loans.

SME loan balance grew 8% year-on-year to $362 billion. Foreign currency loans increased to $315 billion, up 12% year-on-year or 16% if excluding the impact of Taiwan dollar appreciation.

Page 14 shows offshore earnings. The offshore earnings reached $7.6 billion, up 19% year-on-year, driven by the recovery in deposits, loans, and investment income.

Please turn to page 15 for fee income. Fee income reached $34 billion, up 22% year-on-year.

Wealth management fees grew 28% year-on-year, while credit card fee increased 12%, supported by increased card spending. Page 16 shows the breakdown of wealth management fees.

Wealth management fees rose 28% year-on-year to $20 billion, with mutual funds and bancassurance fee up 21% and 44% year-on-year, respectively. Both wealth management customer numbers and asset under management continue to show steady growth.

Please move to page 18 and 19 for Cathay Life's premium performance. Cathay Life's total premium income reached $519 billion, up 6% year-on-year, driven by strong sales in investment-linked policies.

Total premiums on high-CSM protection products also show steady growth, up 5% year-on-year. On page 19, first year premium reached $191 billion Taiwan dollars, up 24% year-on-year, supported by strong momentum in investment-linked and US-denominated traditional products.

Annualized premium grew 5% year-on-year to $61 billion. Page 20 shows the value of new business.

Value of new business was $35 billion, up 5% year-on-year. This growth aligned with the same drivers seen in the APE performance.

Page 21 shows the cost of liability and break-even asset yield. The cost of liability remained flat quarter-on-quarter at 3.84%.

Break-even asset yield was 2.99%. Please look at page 22 for the investment portfolio.

Cathay Life's total investment was $8 trillion, with overseas investment accounting for 69%. Please refer to the right-hand side of the table for the investment yield by asset class.

Overall investment yield are shown on page 23. After-hedging investment yield was 3.94%, supported by the realized gains from the favorable financial market.

On the right-hand side, the pre-hedging recurring yield was 3.46%, up 3 basis points, driven by higher dividend income. The hedging cost was 1.57%, following adopting the new foreign currency volatility reserve mechanism, along with the regulatory forbearance measure in the second quarter.

The impact of the foreign currency fluctuation on earnings is fully absorbed by the foreign currency volatility reserve. The annualized compulsory provision ratio was raised to 1.5%.

In addition, effective January 2026, foreign currency gain or loss on overseas bond classified at amortized cost will be amortized over the remaining life of the bonds, which is expected to significantly reduce foreign currency volatility. Supported by the strong foreign currency volatility reserve buffer, Cathay Life has greater capacity to absorb foreign currency fluctuations and a reduced need for hedging, leading to a lower hedging ratio.

The foreign currency volatility reserve balance reached $114 billion as of last year-end. Please turn to page 24 for cash dividend income and regional breakdown of overseas fixed income.

Cathay Life recognized cash dividend income of $18.7 billion in 2025, up 11% year-on-year. On the right-hand side, Cathay Life continued to diversify fixed income investment across regions to mitigate risk, allocating 53% in North America, 17% in Europe, and the rest in Asia-Pacific and other countries.

Page 25 shows the book value and unrealized gain of financial asset. Cathay Life's book value reached $750 billion Taiwan dollars, up $32.6 billion year-on-year, supported by profit contribution, while partially offset by mark-to-market loss on financial assets amid Taiwan dollar appreciation.

The equity-to-asset ratio reached 9.4%, reflecting strong capital adequacy. Next, please turn to page 29 and 30 for the performance of Cathay Century.

Cathay Century's premium income grew 7% year-on-year to $40.6 billion, ranking number two by market share. Page 30, the gross combined ratio increased year-on-year due to higher natural catastrophe claims, while the retained combined ratio declined year-on-year, supported by effective reinsurance and higher retained premiums from expanded underwriting capacity.

This is the end of presentation.

Good afternoon, this is Grace Chen. There were many discussions and questions raised during our Chinese session.

Before we move into the Q&A, let me briefly recap some of the key topics and the highlights that may be helpful for our international investors. Overall, the audience showed particularly interest in our 2026 outlook, including key growth drivers and dividend policy.

Starting with banking, we are targeting double-digit loan growth, supported by broad-based momentum across corporate, mortgage, and consumer loans. Asset quality remains stable, and we expect credit costs stay at a benign level similar to last year, around 25 basis points.

For net interest margin, we expect full-year NIM to remain relatively stable, broadly around last year's level. Net fee income has been strong over the past two years, creating a higher base.

Therefore, we expect fee income to continue growing from a higher base, with wealth management remaining the primary driver. Meanwhile, we expect the cost-to-income ratio at around 51% this year, reflecting continued investment in digital and overseas expansion.

For Cathay Life, continuing to build CSM remains our top priority. We expect FYP growth in high CSM contribution health and accident products.

The US dollar-denominated interest-sensitive life products should also see continued growth, while investment-linked products will remain more sensitive to capital market conditions. On the investment side, we are focused on enhancing our recurring yield, with the full-year target at 3.5%.

On the hedging side, following the FX accounting change effective from January this year, gains and losses on foreign bonds measured at amortized cost will be amortized over the remaining life of the bonds, and this will significantly reduce FX volatility and lower hedging needs. As a result, we will be able to reallocate the savings to strengthening our FX volatility reserve and the overall capital buffer.

In addition, part of these savings can be redeployed into fixed income investments to further enhance our recurring income. Looking ahead, we expect hedging costs to be stable at around 1.2% to 1.3%, with the liability interest cost largely down to 2.2% to 2.3% following the IFRS 17 transition.

Together with the recurring yield around 3.5% and stable hedging costs, we expect to maintain a positive spread. In addition, we expect annual CSM release to grow at 10% going forward.

We were also asked about the source of earning volatility. The main sources would be, first, mark-to-market movement from bonds classified under fair value TPL, which cannot be designated under fair value OCI; and second, variances between actual and expected claims within the insurance service result.

Overall, under IFRS 17, our earnings should be more stable and predictable going forward. Finally, on dividend policy, this year's dividend payment will still be determined based on IFRS 4 accounting.

Our payout capacity remains solid. We will reflect our third highest earnings level, while taking into account including a peer's dividend yield, investors' expectations, and our future growth needs, while maintaining healthy financial metrics and capital levels.

Our goal remained to deliver a competitive dividend yield, and we will submit our proposal to the board for their consideration and approval. These are the key highlights.

Thank you.

Thanks for the presentation. Just a couple of question for life insurance for our own forecast.

The first thing is I think you mentioned that for other operating expense, the indirect expense, it could be only 50% of the normal level in the past. Can I confirm that is referring to roughly around 8.6 billion in 2025, and that it will be probably only around 50% of the level going forward?

The second question for life is if we look at the first two months, I think the effective tax rate for life also become relatively stable, roughly around 18%, 19% compared to in the past it was very volatile. Should we also assume that it will be a more normalized effective tax rate going forward for Cathay Life?

Then I think the third question is in the Chinese session, you did mention the rise in US yield, the impact on equity-to-asset ratio is actually positive if we assume 100 basis point and 30 basis point move on the US dollar and Taiwan dollar rates. If only the US dollar move, is there any sensitivity that we can use for reference if just assuming Taiwan dollar yield doesn't move, but only US dollar move by 100 bps?

What would be the sensitivity for the equity-to-asset ratio? Just one question on the banking side that you did mention the fee expenses.

In January, you made some assumption changes for the rebate program. You say it's one-time, but should we assume for the rest of the year the fee expenses will also be higher, or it's just in January?

Because if you assume the usage rate going up, then as long as you have more credit card consumption, and the fee expenses should also be higher compared to in the past. Thanks.

Hello, this is Robert Fuh from Cathay United Bank. I think that I will answer the question first about the credit card fee income related to the January accounting estimate about the rewarded point expense ratio.

I think this would be a one-off accounting estimation because in the past we just estimate that those reward point will not be fully utilized by the customer, and you know that the reward point for the credit card is a time-limited. Most of them probably 30% of them would be expired without using.

We found out that the program is so successful that most of our clients came to use this kind of reward point. In the beginning of the every year and especially in January, we were trying to estimate whether that we should increase this kind of expense ratio estimation.

In January, we find out that because the popularity of this kind of reward points usage, in January, we increasing the estimation for the going forward basis. This would be a one-time, one-off reversion from the fee income number.

As I mentioned that that means this would be a estimation if the reward point will not be used as we expected. For example, that would be lower exchange rate or exchange reward point in going forward, probably that we will reverse back as well.

That would be a one-off. Even though that in the remaining month of this year, I think that if the credit card consumption increases and our fee income will also increase as well.

That will be minimized and smoothed out the whole year of this kind of fee income contributions.

Hi, Jaime. I think the following three question about life.

The first one is our expense. Actually, I didn't say any kind of that information.

You just mentioned the 50%. They are come from I think it's Taiwan Life, their disclosure, but we didn't disclosure.

If on the same basis, actually our amortized to that kind is less than 50%. Actually, for our company, it's around the 40% to 45% around.

We are below them, that we didn't have that kind of 50%. The secondly, our tax.

I think that this, yes, is right. This is because from last year, this because the capital gain, especially from domestic capital gain, they didn't have tax that come to income statement.

The effective tax rate actually is below. Right now, actually mainly the capital gain from domestic market, actually they come to retained earnings.

They didn't have that kind of effect. You will see the first two months actually the tax rate stable.

The tax is that we still has a lot of issue like the minimum AMT and etc., still have a little bit some factor will effect. I cannot guarantee you that the 16% to 18% is the normal cases.

In most of cases, yes, they will comparison stable, comparison in the IFRS 4 cases. This is second question.

Third, about the rising interest rate, we didn't have this kind of US dollar up 100 basis point, but Taiwan dollar didn't change, because if on that cases, we don't want to disclose this kind of sensitivity, because you just take this month situation you want to send us this situation, I don't think this is just one month. We thinking in the long run, we thinking the Taiwan dollar interest volatility is just 1/3 of the US dollar volatility.

We tell you is the long-term cases, not just for one month. This is what I can tell you.

Sorry, I cannot disclose this kind of sensitivity. I tell you, yes, for I think you want to ask in March, yes, the interest rate, especially US dollar going up, hike, I think the huge, but the Taiwan dollar almost keep the stable cases.

This is just one month. I don't think this in the one-year cases that they have because maybe next month the US dollar will become much lower.

That I don't want to tell you that so sensitive situation. This is my answer.

Thank you.

Any questions?

Thank you.

Thank you. Goodbye.

Thank you. Goodbye.