Welcome everyone to Cathay Financial Holding Company first quarter 2026 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 Mr. C.K. Lee, CEO of Cathay Financial Holding Company. Mr. Lee, please begin. Okay. Thank you. Good afternoon and good morning to those joining us from Europe. Welcome to Cathay Financial Holding 2026 first quarter analyst meeting. I am C.K. Lee, CEO of Cathay Financial Holding, and I will host today's meeting. Thank you all for joining us. Let me begin by introducing the senior executives with us today. Ms. Grace Chen, CFO of Cathay Financial Holding, Mr. Abel Lin, President of Cathay Life, Mr. Robert Fuh, EVP of Cathay United Bank. Before I begin the presentation, let me share some key highlights. We delivered a solid start to the year. In the first quarter, Cathay Financial Holding reported net income of TWD 31.7 billion, and adjusted net income reached TWD 48.6 billion. Core businesses momentum remains strong across the group. Cathay United Bank reached a new first quarter earnings record, driven by solid loan and deposit growth, higher net interest income, and wealth management fee growth. Cathay Life adjusted net income reached the second highest first quarter level on record, while robust new business CSM generation and the stable positive spread continue to support future earnings. Cathay Century, Cathay SITE, and Cathay Securities also delivered record high first quarter earnings. This reflects steady premium growth and well-contained loss ratio at Cathay Century. AUM expansion at Cathay SITE, and active Taiwan equity market turnover, with continued brokerage market share gains at Cathay Securities. In addition, our board approved a cash dividend of TWD 3.5 per share on April 28, representing a 49.6% payout ratio and a 4.7 dividend yield based on the share price at announcement, reflecting our continued focus on shareholders' returns. Now I will hand over the call to Yajou from our IR team for the 2026 first quarter results presentation. Yajou, please. Thank you, C.K. Let's start with business overview on page four, which provides an highlight on each subsidiary. Cathay United Bank net income reached a new first quarter record, up 8% year-on-year. Loans and deposits both posted solid growth, while net interest income increased 13% year-on-year. Wealth management fees also grew solidly, up 13% year-on-year. Cathay Life new business CSM reached TWD 27.1 billion, and CSM balance increased to TWD 532.4 billion. Liability interest costs declined significantly to 2.11%, supporting a stable positive spread. Net worth rebounded by TWD 121 billion, with adjusted equity to asset ratio reaching 13.5%. Cathay Century, the general insurance subsidiary. Retained premium continued to grow, with market share reaching 12.8%. Net income also reached a first quarter record, supported by business growth and well-contained loss ratios across product lines. Asset management subsidiaries, Cathay SITE AUM reached TWD 2.8 trillion, while discretionary mandate AUM ranks number one in the industry. The company also continued to expand its ETF product offerings. Cathay Securities continued to gain market share in the domestic brokerage, supported by digital optimization and group synergies. Please turn to page five. Cathay Financial Holding net income and EPS. Starting from 2026, Taiwan insurance industry adopted IFRS 17. As the overlay approach for financial assets no longer applies, certain valuation gains and losses are presented differently in the IFRS 17 restated figures, reducing comparability. For a more meaningful year-on-year comparison, we continue to use IFRS 4 figures for the same period of last year. After the transition, most equity investments were reclassified as fair value through other comprehensive income, FVOCI. We also disclose adjusted earnings, including FVOCI equity disposal gains, as these gains are reflected in retained earnings and remain distributable. In the first quarter of 2026, Cathay Financial Holding reported net income of TWD 31.7 billion, adjusted net income of TWD 48.6 billion, EPS of 2.15, and adjusted EPS of 3.31. Overall, core business momentum remains strong across all subsidiaries year to date. Page six shows our subsidiaries' net income and ROE. Cathay United Bank, Cathay Century, Cathay SITE, and Cathay Securities all delivered record high earnings for the first quarter. For Cathay Life, adjusted net income, including FVOCI equity disposal gains, reached TWD 33.9 billion, the second highest first quarter level historically. On a consolidated basis, the holding company's ROE reached 16.9%, and all major subsidiaries delivered double-digit ROE. Please turn to page seven to see the book value of Cathay Financial Holding. The holding company's consolidated net worth increased by TWD 136 billion year-to-date to TWD 817 billion, supported by earnings contribution and strong recovery in OCI asset and liability valuations. To better reflect economic value, we also disclose adjusted net worth, which include after-tax CSM. Adjusted book value per share reached TWD 1.26 trillion. After deducting preferred shares, adjusted book value per share was TWD 79. Page eight shows our ongoing overseas expansion. We continue to deepen our regional presence through localization, digitalization, and green finance. Key highlights include the merchant apps launched in Cambodia and strong premium growth from Lujiazui Cathay Life in China, with total premium up 80% year-on-year. Now let's move to the performance of our major subsidiaries. Please note all the figures in this section are presented on a standalone basis. Please turn to page 10 for more details about the banking subsidiary. Cathay United Bank's total loans reached nearly TWD 3 trillion, up 10% year-on-year, with solid growth across all segments. Corporate loans increased 12% year-on-year, mortgage loans grew 7% year-on-year, and consumer loans were up 11% year-on-year. Deposits grew 17% year-on-year to TWD 4.5 trillion and maintained the advantage of high demand deposit ratio of around 60%. Interest yield is shown on page 11. In the first quarter, net interest margin reached 1.59%, and interest spread reached 1.91%, both improving year-on-year and quarter-on-quarter, mainly supported by U.S. rate cuts and well-contained funding costs. Page 12 shows the asset quality. Asset quality remains sound with NPL ratio at 16 basis points and coverage ratio at 1031%. Annualized credit costs was 25 basis points up year-on-year, mainly due to a higher recovery base last year and increased general provision from the strong loan growth. Please turn to page 13 for SME and foreign currency loans. SME loans grew 9% year-on-year to TWD 371 billion, accounting for 13% of the total loans. Foreign currency loans increased 21% year-on-year to TWD 348 billion. The bank continued to pursue prudent growth while maintaining disciplined asset quality management. Page 14 shows offshore earnings. The offshore earnings slightly declined year-on-year to TWD 2.6 billion. The decline was mainly due to higher investment income base last year. Please turn to 15 for net fee income. Net fee income was TWD 10 billion, down 2% year-on-year, mainly due to a one-off adjustment related to credit card reward redemption. Underlying momentum remained healthy, with strong card spending and 13% growth in wealth management fees. Page 16 shows the breakdown of wealth management fees. Wealth management fees rose 13% to TWD 7.5 billion. Mutual fund fees increased 41% year-over-year. Both wealth management consumers and AUM continue to show steady growth, supporting sustainable fee income growth. Please move to page 18 for Cathay Life's earnings breakdown. Under IFRS 17, earnings are mainly presented through insurance service results, financial results, and other operating results. In the first quarter, insurance service result was TWD 11.6 billion, supported by steady CSM release, while financial result was TWD 10.8 billion, mainly driven by positive spread. Overall, Cathay Life reported net income of TWD 17.4 billion, including FVOCI equity disposal gains, adjusted net income reached TWD 33.9 billion, the second highest level historically. Please move to page 19 for Cathay Life's premium performance. First-year premium, FYP, reached TWD 94 billion, up 71% year-on-year, while annualized premium reached TWD 20.7 billion, up 23% year-on-year, supported by strong sales momentum in investment-linked products amid favorable financial markets. Page 20 shows the new business CSM. New business CSM reached TWD 27.1 billion in the first quarter. Health and accident products contributed more than half of new business CSM, while tied agent channel remained the key contributor, accounting for nearly 90%. Please turn to page 21 for CSM balance movement. CSM balance reached TWD 532.4 billion, up TWD 20.5 billion year-to-date, mainly supported by new businesses CSM. CSM release with TWD 8.5 billion, providing stable support to insurance service results. Page 22 shows the liability interest cost and breakeven asset yield. After transition to IFRS 17, insurance liabilities are measured using market-based discount rates. Cathay Life's liability interest cost declined significantly by 129 basis points to 2.11%, while the breakeven asset yield also declined to 2.02%. Please look at page 23 for the investment portfolio. Following the IFRS 17 transition, financial assets were re-designated and policy loans were reclassified under insurance liabilities. Total investment was TWD 7.7 trillion at quarter end, with overseas investments accounting for 70%. Please refer to the right-hand side for investment yield by each asset class. Please turn to page 24 for investment performance. In the first quarter of 2026, after hedging investment yield was 3.72%, including FVOCI equity disposal gains. On a P&L basis, excluding these gains, after hedging investment yield was 2.85%. Pre-hedging recurring yield was 3.41%, and we also provide a detailed breakdown in the appendix for your reference. Please turn to page 25 for FX hedging strategy. Annualized, the hedging cost was 1.26%, higher year-on-year. This was mainly because the FX volatility reserve mechanism was not yet applied in the first quarter last year, and the benefit from Taiwan dollar appreciation was reflected in the P&L, and compulsory provision was also lower. After adopting the new FX volatility reserve mechanism and FX amortization for bonds classified as amortized cost, volatility in FX gains and losses has been significantly reduced and is now fully absorbed by the FX volatility reserve. Hedging costs become quite stable. The FX volatility reserve increased by TWD 10.1 billion during the quarter, reaching TWD 123.9 billion at the quarter-end. Please turn to page 26 for cash dividend income and regional breakdown of overseas bonds. This page provides historical cash dividend income and regional breakdown of overseas bonds. We continue to diversify overseas bond investment across regions to balance risk and returns. Please turn to page 27 for the net worth and OCI valuation changes. Cathay Life, the net worth increased by TWD 121 billion in the first quarter, mainly supported by earnings contribution and a strong recovery in OCI asset and liability valuations. OCI asset and liability valuations improved by TWD 86.2 billion, reflecting favorable equity markets and lower liability valuations from rising Taiwan interest rates, which helped offset the impact of higher U.S. rates on bond valuations. Equity to asset ratio reached 8.2%, and the adjusted equity to asset ratio reached 13.5%, indicating a solid capital position. Page 29. This page summarizes Cathay Life's key operating and financial indicators after the IFRS 17 transition for your reference. Please turn to page 31 to 33 for the performances of Cathay Century. Cathay Century's retained premium reached TWD 10 billion with market share at 12.8%, ranking second in the industry. Page 33, the retained combined ratio improved by 2.5 percentage points year-on-year, driven by lower loss ratio across product lines, as well as the higher insurance revenue supported by increased underwriting capacity. This concludes the presentation. We will now open the floor for Q&A. Yes, thank you. 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. Please press star one on your keypad if you would like to ask the question. Thank you. Good afternoon. This is Grace Chen. Before we move into the Q&A, let me briefly recap some of the key topics discussed during our Chinese session, which may be helpful for our international investors. The discussion mainly focused on our 2026 outlook, key growth drivers, and dividend policy. For banking business, Cathay United Bank remained resilient. We continue to target double-digit loan growth for the full year, supported by broad-based momentum across all segments, with foreign currency loans expected to remain strong. On net interest margins, we were more conservative at the last analyst meeting. Given recent economic developments, we now see room for NIM to expand this year. Asset quality remains stable, and we expect credit costs to stay around last year's level of 25 basis points. Wealth management and credit card spending also remain solid, which should support healthy fee income growth this year. For life insurance, performance was strong on both the insurance and investment sides. New business CSM reached TWD 27 billion in the first quarter, representing a 36% achievement rate against the full-year target of TWD 75 billion. This puts us well on track toward our full-year target. In terms of hedging, with the FX accounting changes, the hedging cost will be quite stable. For this year, it is likely around 1.2%, which is toward the lower end of our previous guidance range of 1.2%-1.3%. The hedging ratio may also gradually decline by a few percentage points in the next five years, which should further help reduce hedging costs. In addition to sizable FVOCI equity disposal gains, Cathay Life's book value also rebounded significantly, increasing by more than TWD 200 billion in the first four months to over TWD 720 billion as of the end of April, with the equity to asset ratio further improving to 9.3%. On dividend capacity, as we explained earlier, FVOCI equity disposal gains are reflected directly in retained earnings and remain distributable. FVOCI equity disposal gains have been sizable so far this year. For Cathay Life, adjusted earnings for the first four months were approaching TWD 60 billion, and the recent unrealized equity gain balance is above TWD 270 billion. FVOCI equity disposal gains momentum have continued into May, supporting strong adjusted earnings. Overall, these factors give us more confidence in dividend capacity this year. For dividend policy, we will consider adjusted earnings, business development needs, and peer dividend yield levels while maintaining healthy capital and financial metrics. Our goal remains to provide a competitive dividend yield. These are the key highlights. Thank you, Grace. Ladies and gentlemen, you may press star key and number one on your keypad if you would like to ask the question. Thank you. First question will be coming from Jemmy Huang of JP Morgan. Go ahead, please. Thanks for the presentation. Couple of questions from me. For banks, could we get swap revenue in the first quarter? Also, I think on the consumer banking side, we know that the retailers also gain access to the equity markets through home equity, unsecured personal loan or other personal loans. How exactly you know that your consumer loan book is exposed to the equity market? How do you do the risk management for different types of lending? For life insurance, is the TWD 27 billion CSM this quarter, April to April, comparison to TWD 24 billion in first quarter last year? If that's the case, the decline in CSM margin, is that largely due to the investment link product sales this year or any other reason? I think the final question is, should we include CSM into the calculation of E to A ratio? This ratio is a regulatory ratio, and I'm not sure whether the regulators already changed the definition or not. I remember when this ratio was introduced back in 2018 or 2019, I think the greatest reason at that time was because the basic equity leverage, the balance sheet leverage was too high for life insurance companies. Aside from the RBC ratio, regulators introduced additional requirement to control the balance sheet leverage. Even though CSM is a qualified capital but is still a liability item. I'm just wondering whether in the future we should include or exclude CSM into the calculation for regulatory requirement. Thanks. This is Robert speaking from Cathay United Bank. The first question is about the swap position is that from our bank's perspective, the swap position is only to help us to adjust our currency exposure and to make sure that we can have a higher interest income to contribute to our net interest income. From our observations in the first quarter, I think the swap still would be relatively resilient when we talk about the market gain or loss, which is relatively small, but relatively we use the swap position to increase our foreign currency investment positions. That would give us a very higher interest income. That's why our net interest margin increasing in the first quarter of this year. That's the explanation about our swap position. The other part is about the retail, especially for the credit facility, and whether we observed that kind of credit facility will be for the purpose of the equity market investment. When our client to deliver the application to the loans from us to establish the credit facility, we will monitor based on the regulations requirement to understand whether the purpose of the investment. From our observation right now, that the major purpose for this kind of loan would be more on a more conservative investment, for example, like a fixed income bond, something like that. Relatively, we didn't see a very high surge for the equity market purpose, the credit facility. Still, we also observed that will be some of demand from the client as well, but from our CUB's perspective, we're relatively conservative about that, and we will make sure that the credit quality or the leverage ratio would be relatively safe. I think that portion which is now, right now would be not significant according to our balance sheet. Again, this is Abel. The first one, the CSM margin this year, yes, comparison last year. This is mainly as you know, that the first quarter, our investment income is so huge. This investment income, mainly when we calculate it include this investment income like VL, which classifies insurance contract that will be combined to calculate the margin. Because the VL at the first quarter actually increased quite a lot, so the margin, I think that compared to the same period that reduced. If we exclude the investment income contract, actually for the traditional contract, the CSM margin, which is higher, and higher pretty large comparison last year. This is because this year for numerator, especially for the U.S. dollar interest credit product, actually their premium paying period is much longer compared to last same period. If we consider only traditional CSM margin, which is higher, but total because the investment income, so their CSM margin is lower. The second part is, yes, I think that right now regulatory, we're still in the communication with our regulator to pursue maybe in the regulatory that they have the 3%, the calculation should be include this after-tax CSM. At this moment, I think they didn't finalize these regulatory changes. We're still in the communication. We think about maybe at the end of this year should we have a clear answer. Okay. Thank you. Thank you. If you would like to ask the question, please press star one on your telephone keypad. 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 telephone keypad. Thank you. Okay, there appears to be no further questions at the point. Mr. Lee, can we close the conference call now? Yes. Thank you for participation for the analyst meeting. Should you have any question, please contact our IR team. Thank you. Thank you, Mr. Lee. Ladies and gentlemen, we thank you for your participation in Cathay Financial Holding Company's conference call. You may now disconnect. Thank you again. Goodbye.