Welcome everyone to Cathay Financial Holding Company's second quarter 2025 conference call. All lines have been placed to prevent background noise. After the presentation, there will be a question and answer session. Please follow the instructions given at the time if you would like to ask a question. Now I would like to introduce Mr. CK Lee, CEO of Cathay Financial Holding Company. Mr. Lee, please begin. Good afternoon and good morning to those in Europe. Welcome to Cathay Financial Holding 2025 second quarter analyst meeting. I'm CK Lee. Today I will host the meeting. Thank you for joining us. In the beginning, I would like to introduce these senior managers who are with us. We have Ms. Grace Chen, CFO of Cathay Financial Holdings. Ms. Sophia Cheng, CIO of Cathay Financial Holdings. Mr. Abel Lin, Managing Senior EVP of Cathay Life. Mr. Quincy Chen, EVP of Cathay United Bank. Before I begin the presentation, I would like to share some key highlights. Cathay Financial Holdings gave a solid performance in the first half with net income of TWD 60.8 billion. APE remains resilient, with Cathay United Bank, P&C Insurance and asset management subsidiaries, each delivering record high first half earnings. Cathay United Bank reported a 16% year-on-year earnings growth, supported by double digit growth in loans and net interest income, as well as a 20% growth in net fee income. Cathay Life's earnings for the year, reflecting 11% appreciation of the Taiwan dollar and a high capital gain base in the previous year. Nonetheless, with the annualized premium growth and recurring income all recorded solid growth. Cathay Century, our P&C Insurance subsidiary, maintained solid underwriting profitability, with net income up 45% year-on-year. Cathay SITE, our asset management subsidiary, posted 14% year-on-year earnings growth and continued to gain strong market recognition. Cathay Securities delivered its second-highest first-half earnings and further strengthened its position in the domestic brokerage market. Now I will hand over the call to Yajou from our IR team for the 2025 second quarter result presentation. Yajou, please. Thank you, CK. Let's start with the business overview on page 4, which provides a quick highlight on each subsidiary. Cathay United Bank delivered record high earnings for first half, with 16% year-on-year growth. Loans and deposits show double-digit growth. Net interest income grew 15% year-on-year. Net fee income grew 28% year-on-year, while wealth management and credit card fees rose 34% and 16% respectively. Cathay Life Insurance, first-year premium, annualized premium and value of new business all achieved a double-digit year-on-year growth. Pre-hedging recurring yield rose 11 basis points, supported by higher interest and dividend income. Capital position remains solid, with RBC ratio of 328% and equity-to-asset ratio above 8%. Cathay Century Insurance, the general insurance subsidiary, achieved the record high earnings. Premium income grew 11% year-on-year, and market share reached 13.5%. Asset management subsidiary, Cathay SITE, also delivered record high earnings. Assets under management reached TWD 2.2 trillion. Cathay Securities continued to gain market share in the domestic brokerage business and remained number one in sub-brokerage market share. In addition to solid business performance, Cathay Financial Holdings continue to advance its sustainability agenda. Please turn to page 5. In July, we hosted the ninth Cathay Sustainable Finance and Climate Change Summit, bringing together global client experts and industry leaders to share trends and best practices. The event attracted over 5,000 participants, including representatives from more than 700 listed companies, covering approximately 80% of Taiwan's market cap. Please look at page 6, Cathay Financial Holdings net income and EPS. Cathay Financial Holdings net income reached TWD 46 billion, down year-over-year, mainly due to the sharp Taiwan dollar appreciation in the second quarter and the high investment income base in the same period of last year, and its favorable markets, financial markets. Nevertheless, core business momentum across subsidiaries remained solid. EPS was 2.89 TWD. Page 7 shows the subsidiaries' net income and ROE. Cathay United Bank, Cathay Securities and Cathay SITE each delivered record high earnings for the first half, while Cathay Securities achieved the second highest year-to-date earnings. Cathay Life's earnings declined year-over-year, reflecting the sharp Taiwan dollar appreciation in the second quarter and the high capital gains base in the same period of last year. However, recurring income increased and underwriting profits remained steady. On the consolidated basis, the holding company's ROE was 10.9%, with the bank, P&C Insurance, SITE and Securities all recording double-digit ROE. Please turn to page 8 to see the book value of Cathay Financial Holdings. The consolidated book value of the holding company was TWD 781 billion, down year-on-year, reflecting lower marginal market value of financial assets and the sharp Taiwan dollar appreciation and financial market volatility. Book value per share was TWD 45.9. Page 9 for the business, Cathay United Bank has to establish Tokyo branch and Fukuoka sub-branch. For Cathay Life joint venture in China, the total premium grew 15% year-on-year. Please turn to page 11 for more details about our banking subsidiary. Cathay United Bank delivered robust loan growth, with mortgage and consumer loans showing double-digit growth. The total balance increased 11% year-on-year to TWD 2.7 trillion. Deposit grew 15% year-on-year to TWD 4 trillion and maintained an advantage of high demand deposit ratio of over 60%. Interest yield is shown on page 12. Net interest margin for the first half increased six basis points year-on-year to 1.56%. Benefiting from improved deposit mix rates. On a quarterly basis, both net interest margin and interest spread increased, supported by improved deposit mix and well-controlled funding costs. Page 13 shows the asset quality. Cathay United Bank maintained low NPL ratio at 14 basis points, coverage ratio at 1,200%. Growth provision was TWD 3.2 billion, and recovery was TWD 900 million. Please turn to page 14 for SME and foreign currency loans. SME loan balance increased to TWD 351 billion, accounted for 13% of the total loan. Foreign currency loans also continued to grow, reaching TWD 282 billion. Excluding the impact of Taiwan dollar appreciation, this represents 10% year-to-date growth. Page 15 shows offshore earnings. The offshore earnings rebounded to TWD 5.2 billion due to the recovery in deposits, loans, and investment income. Please turn to page 16 for net fee income. Net fee income reached TWD 7.8 billion, up 28% year-on-year, driven by over 30% increase in wealth management fees and 16% year-on-year growth in credit card fees, supported by higher spending. Page 17 shows the breakdown of wealth management fees. 34% to TWD 11 billion, with mutual funds and bancassurance fees up 35% and 53% year-on-year respectively. Both wealth management customers and AUM continue to show steady growth. Please move to premium performance. Total premium grew 18% to TWD 455 billion, driven by strong sales of investment-linked and U.S. dollar-denominated traditional products, while premium income from high CSM protection products grew 6%. On page 22, first-year premium, FYP, reached TWD 95 billion, up 82% year-on-year, supported by strong sales in investment policies and U.S. dollar-denominated traditional products. This also led to 13% growth in annualized premium, APE. Health and accident premium were affected by high base in 2024, which reflected a stop-selling effect ahead of the regulatory change. Page 21 shows the value of new business. Value of new business was TWD 18 billion, up 12% year-on-year. The growth aligns with the same drivers seen in our APE performance. Page 22 shows the cost of liability and breakeven SA yield. The cost of liability rose five basis points quarter-on-quarter to 3.84%, reflecting adjustments to reserve rates and mortality table for certain products, higher declare rates on interest-sensitive products, and Taiwan dollar appreciation. Breakeven SA yield was 2.95%. Please look at page 23 for the investment portfolio. Cathay Life's total investment was TWD 7.8 trillion, with overseas investment accounted for 68%. We increased to better navigate the financial market volatility. Please refer to the right-hand side for investment yield by each asset class. Overall investment yields are shown page 24 and 25. After hedging investment yield was 3.47%, down year-on-year due to higher hedging costs and reduced capital gains while recurring income increased. The pre-hedging recurring yield was 3.6, up 11 basis points, benefiting from higher interest income from continued expansion of fixed income position at elevated yields, along with increased cash dividend income. The annualized hedging cost was 1.45% and remained well controlled despite 11% appreciation of the Taiwan dollar in the second quarter. We have adopted the new FX volatility reserve mechanism and applied the FSC's forbearance measures, provisioning all released excess policy reserve into FX volatility reserve. This further enhanced our ability to absorb FX fluctuation and manage FX risks effectively. Please turn to page 26 for cash dividend income and regional breakdown of overseas fixed income. Cathay Life recognized cash dividend income of TWD 8.5 billion in the first half and TWD 14.8 billion in the first seven months, TWD 3 billion higher than the same period of last year. On the right-hand side, you can see we diversified our fixed income investment across regions to balance risk and return. Page 27 shows the book value and unrealized gains of financial assets. Cathay Life's book value was TWD 628 billion, down year-on-year to date due to lower mark-to-market valuations amid sharp Taiwan dollar appreciation and financial market volatility. However, the equity-to-asset ratio remains above 8%, indicating robust capital strength. Next, please turn to page 31 to 32 for the performance of Cathay Century. Cathay Century's premium income grew 11% year-on-year to TWD 21 billion. Market share was 13.5%. Page 33, the retained combined ratio improved to 87.8%, supported by higher retained premium as we adjusted the reinsurance structure to enhance underwriting capacity. In addition, large claim events decreased and the loss ratio remained stable. This is the end of the presentation. Now let's open for Q&A. Good afternoon. This is Grace Chen. Before we move into Q&A session, let me provide a brief recap of the key discussions and questions from our earlier Chinese session. The audience was particularly interested in our second quarter operation performance and outlook for key drivers. For banking side, our bank has remained resilient in the first half. Many questions centered on the potential impact of reciprocal tariffs on its quality. We have carefully reviewed for our corporate loan portfolio, and only 36 companies are affected with total loan balance less than TWD 5 billion, accounting for only 0.7% of the loan book. We are working closely with the clients to help them navigate the situation. Looking ahead, our guidance remains unchanged from the first quarter analyst meeting. We continue to expect high single-digit loan growth for the full year, with growth well balanced across all sectors. Net interest margin is expected to hold at around the 2024 full-year level, and fee income remains strong. We are targeting double-digit growth for the full year. For Cathay Life, life insurance has experienced volatile financial markets in the second quarter. Investors were particularly interested in our buffer for further Taiwan dollar appreciation and our outlook under IFRS 17. Since adopting the new FX volatility reserve mechanism in May, FX movements no longer affect earnings as long as we maintain sufficient FX volatility reserve balances. As of yesterday, our FX volatility reserve was over NT$56 billion, providing capacity to absorb an additional Taiwan dollar appreciation. In June, we provisioned TWD 50.8 billion excess policy reserves permitted by regulator into FX volatility reserve. Given this is part of our transition plan, it's just an early implementation step and does not change our IFRS 17 transition plan. We continue to expect a 10%-15% year-over-year increase in CSM release, a much lower cost of liability at around 2.3% on as adjusted basis. These are the key highlights. Yes. Thank you, Ms. Chen. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask the question, please press star key and number one on your telephone keypad, and you will enter the queue. After you are announced, please ask your question. Should you wish to cancel your question, you may press star key and number two. Thank you. Now, please press star one on your keypad if you would like to ask the question. Thank you. Our first question will be coming from Jimmy Huang, JP Morgan. Go ahead, please. Thanks for the presentation. Two questions from me. First one is for Cathay United Bank. You pointed out the potential impact on asset quality from tariffs. Is there any positive impacts that could result in for the banking operation because of the tariffs? The second question is for Cathay Life. If you look at unrealized loss for Cathay Life is large, roughly around TWD 60 billion quarter-on-quarter in second quarter, are we able to quantify how much is because of the currency movement and how much is because of the equity and bond price movement? Thanks. Yeah. Speaking of the positive impact from the reciprocal tariffs, I think currently we do have some kind of discussion with some of our corporate clients about their supply chain optimization. That's why I would say this is some kind of a positive impact on that 'cause they may need some, like, financing needs and also hedging needs as well. But it's still ongoing. The issue is that the uncertainty, you know, still kind of surprises the demand a little bit. But I think once the uncertainty is cleared up then we will see a lot more positive impact later. Yeah. Jimmy, actually, I think we didn't. The unrealized loss, I think that if you combine the asset value plus the currency, but we didn't separate these two in our accounting value. Actually, I think we did not have the correct number to provide to you. But actually you can estimate that by actually for example of the first quarter, you have our equity position. You have the number and also you, our Taiwan dollar bond ETF is also around like 640-650 billion TWD. So combine these two together, plus the currency, I think the movement, you have the numbers, so you can have this kind of estimate. But we didn't have, accounting-wise, we didn't have this specific number. Actually, although I also can provide this kind of estimate, but we didn't have this specific number at this moment. Actually, this is what I can provide. Okay. Thanks. Thank you. Please press star key and number one on your telephone keypad if you would like to ask a question. Thank you. We're 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. As a reminder, please press star key and number one on your keypad if you would like to ask the question. Thank you. 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. Okay. Any further question? If no further question, then, thank you so much for your participation in our conference call. If you have any further question, please feel free to contact our IR team. Thank you, Mr. Lee. Ladies and gentlemen, we thank you for your participation in Cathay Financial Holding's conference call. You may now disconnect. Thank you and goodbye. Thank you. Bye bye.