Welcome everyone to Cathay Financial Holding Co., Ltd.'s first half 2023 conference call. All lines have been placed on mute to prevent background noise. After the presentation, there will be a question and answer session. Please follow the instructions given at that time if you would like to ask the question. Now I would like to introduce Ms. Sophia Cheng, the CIO of Cathay Financial Holding Co., Ltd. Ms. Cheng, please begin. Thank you. Good afternoon, and good morning to investors in Europe. Welcome to Cathay Financial Holdings 2023 second quarter analyst meeting. My name is Sophia Cheng. I'm the Chief Investment Officer of Cathay Financial Holdings. Today, I will host the conference call and thank you very much for joining us today. In the beginning, I would like to introduce the senior managers who are with us on the line. Today we have Mr. CK Lee, CEO of Cathay Financial Holdings; Ms. Grace Chang, Chief Financial Officer of Cathay Financial Holdings; Mr. Abel Lin, Managing Senior Executive Vice President of Cathay Life; and Mr. Kevin Hu, Senior Executive Vice President of Cathay United Bank. In today's conference call, I will ask our CEO, CK, to give us some opening remarks, and after that, Charlie from IR Team will present the second quarter results. After the presentation, we are open for Q&A session, in which senior management will answer your questions. Let me pass the call over to CK for the opening remarks. Thanks. Good afternoon, everyone. Thank you for joining us on this call to discuss our second quarter performance. Before we begin the presentation, I would like to share some highlights with you. In the second quarter, Cathay Financial Holdings earnings strongly picked up, driven by the sustained growth in recurring income, well managed hedging cost, and diminishing impact of pandemic insurance policy. Our net income for the first half, which is TWD 333 billion, accounted for 87% of the full year earnings in 2020, 2022. Our core businesses maintain the resilience but then achieve record high first half earnings with a ROE of 14%. We also see robust loan growth and uptick in fee income. The quality of earnings in life insurance continue strength, with most recurring income and value of new business showing robust growth. Our general insurance has successfully come back after the challenges posed by the pandemic. Additionally, our securities and asset management business have performed very well, each achieving their second highest earnings in the first half. As we discuss our result today, we look forward to providing insight into the driving factors behind our performance. Once again, thank you for taking the time to join us today. With that, I will now turn the call over to Charlie. Thank you. Thank you. Let's start with the business overview on page three, which provides a quick highlight on each subsidiary. Cathay United Bank first-half net income to a new record high for the same period with 30% growth year-on-year for double-digit growth in deposits and loans. Asset quality remained benign. Net interest income grew 18% year-on-year. Fee income showed double-digit growth driven by growth in credit card fees. Cathay Life hedging costs were well managed. Recurring yield continues to improve. Interest income showed double-digit year-on-year growth, maintains solid capital position with RBC ratio of 312% and equity to asset ratio of 7.6%. Cathay Century, the general insurance subsidiary, premium income rose 9% year-on-year. Market share was 13%. Net income for the second quarter recovered through fading impact of pandemic insurance and continued business quality control. Asset management subsidiary, Cathay, AUM reached a new record of TWD 1.5 trillion, ranked number one in the industry. Lastly, Cathay Securities expanded its domestic brokerage market share and ranked number one market share position in the brokerage business. In addition to solid business performance, Cathay Financial Holdings continue to be at the forefront of leading the industry in climate action. Please turn to page four. Cathay held the seventh Cathay Sustainable Finance and Climate Change Summit in July 2023, bringing together domestic and international leaders to share insight on global climate trends and sustainability strategies. Over 4,000 people registered for the summit. Attending companies represented 75% of Taiwan's market cap, accounting for over 50% of total greenhouse gas emission in Taiwan. Please look at page five. Cathay Financial Holdings net income and EPS. Cathay Financial Holdings net income was TWD 33 billion. The year-on-year earnings decline was due to the high base effect and the benefit from Taiwan dollar depreciation and higher capital gains. Earnings for the first half of 2023 reflected moderate capital gains, while recurring income show a meaningful increase. Page six shows the subsidiaries' net income and ROE. Cathay United Bank set a record high earnings of TWD 17.5 billion for the first half, grew 30% year-on-year, driven by strong core earnings. Cathay Life and Cathay Securities each delivered their second highest historical first half record. Cathay Life, year-on-year earnings decline reflected the high base effect. The income for the second quarter has rebounded quarter-on-quarter, driven by lower hedging costs and double-digit year-on-year growth in recurring income. Cathay Century's profit turned positive in the first half with pandemic insurance fading out. Please turn to page seven to see the book value of Cathay Financial Holdings. The consolidated book value of holding company rebounded more than TWD 100 billion year-to-date to TWD 721 billion as of the end of first half. Book value per share increased to 41.9 TWD. Page nine and 10 shows our overseas expansion. Cathay Financial Holdings continue to expand overseas business through deepening business operations and digital transformation. Our Cambodia subsidiary launched new mobile banking app, providing payment and account opening services. Ho Chi Minh City branch plan to launch digital consumer business in the second half of 2023. Premium income for Cathay Life Vietnam and Cathay Century Vietnam both grew steadily. As for the subsidiaries operation in China, Cathay United Bank's China subsidiary launched escrow account and U.S. dollar green deposit in the second quarter, providing corporate customer with more comprehensive services. For Cathay Life joint venture in China, the total premium grew 72% year-on-year. Please turn to page 12 for more detail about the banking subsidiary. Cathay United Bank delivered strong loan growth with double-digit growth across all loan segments. In total, the loan balance increased 12% year-on-year to TWD 2.1 trillion as at the end of the first half. Deposit grew 15% to TWD 3.45 trillion. Interest yield is shown on page 13. First half 2023, net interest margin increased 12 basis points year-on-year to 1.39%. Net interest margin and interest spread declined quarter-over-quarter due to increase in foreign currency deposits amid rising interest rates. Page 14 shows the asset quality. Cathay United Bank maintained low NPL ratio at nine basis points, and coverage ratio was over 1,800%. Loan provision was TWD 3.1 billion. Recovery was TWD 2.2 billion. Please turn to page 15 for SME and foreign currency loans. SME loan balance showed robust growth to TWD 315 billion, accounted for 15% of the total loan. Foreign currency loan balance was TWD 226 billion. Cathay United Bank aims to grow foreign currency loans while ensuring asset quality. Page 16 shows offshore earnings. The offshore earnings declined due to lower year-on-year investment income. Please turn to page 17 for fee income. Fee income grew 19% to TWD 10.5 billion in the first half of 2023, driven by strong growth in credit card fees. Page 18 shows the breakdown of wealth management fees. Wealth management fee income was TWD 5.9 billion, declined 2% year-on-year. The year-on-year decline magnitude was notably smaller than that of the first quarter this year. Security fees saw significant growth year-on-year, largely offsetting the decline in fees from other wealth management products. Number of customer and AUM both showed steady growth. Please move to page 20 and 21 for Cathay Life premium performance. Total premium was TWD 234 billion in the first half of 2023, declined 4% year-on-year, a small decline magnitude compared to the first quarter. The premium of protection type policy grew 5% year-on-year, supporting the contractual service margins. On page 21, first year premium, FYP, and annualized premium, APE, was TWD 70 billion and TWD 24 billion respectively. FYP decline year-on-year was due to a high base in the first quarter of 2022. Annualized premium, APE, grew 9%, driven by higher FYP for traditional long-term regular premium products. Page 22 shows the value for new business. Value for new business for the first half was TWD 13.9 billion, grew 5% year-on-year due to higher sales volume from traditional long-term regular premium products. Page 23 shows the cost of liability and breakeven asset yield. The cost of liability rose slightly quarter-on-quarter due to the discount rate increase for interest-sensitive policies. The breakeven asset yield improved year-to-date. Please look at page 24 for the investment portfolio. Cathay Life's total investment reached TWD 7.5 trillion as of end of first half. Overseas investment accounted for around 70%. Please refer to the table for investment returns on each asset class. Overall investment yield are shown on page 25 and 26. After hedging investment yield was 3.44%, declined year-on-year as there were higher capital gains in the first quarter of 2022 and substantial foreign currency gains on Taiwan dollar depreciation in the first half of 2022. On page 26, left-hand side, the pre-hedging recurring yield increased 20 basis points to 3.36%, with interest income showing double-digit year-on-year growth. The annualized hedging cost improved significantly quarter-on-quarter to 0.87%, resulting from Taiwan dollar depreciation and effective proxy hedging in the second quarter. Please look at page 27 for cash dividend income and regional breakdown of overseas fixed income. Cathay Life recognized dividend income of TWD 9.9 billion and TWD 13.7 billion in the first half and for the first seven months of 2023 respectively, lower than the same period of last year due to lower position and dynamic adjustment in equity. For overseas fixed income position, Cathay Life sees opportunity from rising rates to increase position in US bonds, leading to an increase in proportion of overseas fixed income investments in North America at 51%. Page 28 shows the book value and unrealized gain of financial assets. The consolidated book value of Cathay Life increased to TWD 568 billion. Equity to asset ratio reached 7.6%. The unrealized gain or loss balance of financial assets increased TWD 88 billion year to date as the stock and bond market rebounded in the first half. Next, please turn to page 32-34 for the performance of Cathay Century. Cathay Century's premium income grew 9% year-on-year to TWD 16.3 billion. Market share was 13%. Page 34, the gross combined ratio and retained combined ratio each declined resulting from the fading impact of pandemic insurance in the second quarter of 2023. This is the end of presentation. Now let's open for Q&A. Thank you, Charlie. Jason, we are ready for Q&A session. Thank you. Now first question was coming from Jamie Wan of JP Morgan. Go ahead, please. Hi, Jamie. Hi. Hi, Sophia. Thanks for taking the questions. Some questions from me. The first one is, I think in the training session you mentioned about ATB and lending exposure to China. Is there any rough split between mainland enterprises and non-mainland enterprises? Second question is in terms of the loan growth momentum. I think you are guiding for high single digit to low teens. Apart from mortgages, on the corporate lending side, just trying to understand the growth strategy or the growth outlook in any key drivers for the loan growth this year and maybe in the next six-12 months that you feel comfortable to grow. The third question is for life, the unrealized loss of around TWD 130 billion. Is that 100% related to the bonds or, if any rough split between the bond and also equities? Thanks. Hi, Jamie, this is Kevin. Regarding the TWD 80 billion loan exposure, roughly is around for those mainland enterprise, roughly around 30%. That's the answer to you. Regarding the second question, the loan growth strategy, we always take a balanced approach across all the loan product, including the corporate loan, mortgage loan and the personal loan. The overall target, I would say since the first half of the year, we have already reached 12%. I think overall for the full year, we're still shooting for the high single-digit growth target. About the unrealized losses for the Cathay Life for the first half, actually the equity part, actually total equity right now is positive, around like TWD 30 billion. The other are the equity, including domestic equity and international equity. Other is the bond. Right now still is negative. Okay. The equity is already carrying TWD 30 billion unrealized gains, right? Yes. May I follow up one question is on the hedging side for the new money overseas. Most of your hedging for the new money currently done by proxy hedge and also NDF instead of currency swap, right? I think for the new money actually right now most of is the foreign currency. For the Taiwan dollar currency actually is very limited. I see. Actually, it's the older hedging is the older import. I see. For the existing fixing of portfolio or position, will you intend to lower the currency swap proportion or you will. Here you cannot, right? For the currency swap. For this one actually, except you dispose your asset. Otherwise I see. It will be rolled over again. Yeah. I see. Got it. We can adjust it between the NDF and proxy hedge. Yeah. All right. Thank you. Thank you. Thank you. As a reminder, please press star one on your keypad if you would like to ask a question. Thank you. Ladies and gentlemen, we are now in question and answer session. If you would like to ask the question, please press star key and number one on your keypad. Thank you. Thank you. If no further question, maybe I can just give the quick highlight from the Chinese section. Overall in the Chinese section there were many questions asked regarding those, the operation for banking, for insurance, and also for the recent economic development in China market. For the bank, we are very happy to see year-to-date very strong deposit and loan growth. As Kevin has just mentioned, that we are very positive on the loan growth, looking for high single digit growth for this year that would be possible. We are also seeing the net interest margin year-to-date has softened a little bit, but overall looking for at least the same level, slightly better than last year, that is feasible. We are also very happy with the asset quality so far. There has been question asked about the exposure on China and how we feel about the economy. CK, our CEO, has highlighted that in the past three years, given the pandemic and the regional uncertainty, our overexposure to China-related has reduced dramatically. So far we are very happy on the quality that cherry-picking when we do the decisions. As we highlight many times, nothing compete with asset quality. Our life insurance company for Cathay Life, you can see that annualized first year premium in first half has grown at 9%. We're very happy to see the VNB business grew by 5% year-over-year. Rachel has mentioned that whole year we are looking for high possibility that we can reach the target for VNB growth. At the same time, the return yield has improved in first half, compared with last year. The 20 basis point increase is quite meaningful. We are also satisfied that year-to-date, with the dynamic hedging works, our first half hedging cost, especially in second quarter, has showed quite nice improvement from first quarter. Keeping this course, we'll do very hard to make sure we still keep cautious on global development and try to do as best as we can to maintain the current resilience in operations and earnings. Jason, do we have more questions standby? No, not at the moment. Thank you. Okay. CK, we can conclude the session for today? Sure. Okay. Thank you so much for joining us on the investor meeting. If there's no more question, then I will thank you so much. Thank you. The IR team will stand by. Yaro and the team will be here for you. Any question, please come to them. Thank you. Thank you. Thank you, Ms. Cheng Thank you. Ladies and gentlemen, thank you for your participation in Cathay Financial Holding Company's conference call. You may now disconnect. Thank you and goodbye.