Release Date: November 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cathay Financial Holding Co Ltd (TPE:2882, Financial) reported earnings of TWD103 billion for the first nine months of 2024, marking the second highest in its history.
- Cathay United Bank and Cathay Securities achieved all-time high earnings, surpassing their full-year figures from 2023.
- Cathay Life's annualized premium and value of new business grew by 14% and 20% year-on-year, respectively.
- The company's asset management subsidiary, Cathay SITE, reached a record AUM of TWD2.1 trillion.
- Cathay Financial Holding Co Ltd maintained a robust capital position with an RBC ratio above 350% and an equity-to-asset ratio of 9.6%.
Negative Points
- Cathay Life's total premium decreased by 3% year-on-year, primarily due to regulatory changes affecting investment-linked policies.
- The pre-hedging recurring yield slightly decreased by 2 basis points, reflecting lower cash dividend income.
- Cathay Century's gross combined ratio increased due to higher gross loss ratio from earthquake claim payments.
- The equity-to-asset ratio may slightly decline upon the adoption of IFRS 17, although the adjusted ratio is expected to remain robust.
- Cathay Life's cash dividend income was lower than the previous year due to portfolio adjustments in favorable equity markets.
Q & A Highlights
Q: How sustainable is Cathay United Bank's funding cost management, and should we expect similar trends into 2025?
A: Kevin, an unidentified company representative, explained that the full-year net interest margin (NIM) for 2024 is around 1.56%. While it's early to provide specific guidance for 2025, the goal is to maintain the NIM at the same level as this year, despite market volatility. Sophia Cheng, Chief Investment Officer, added that while deposit growth was minimal, the increase in funding costs was offset by a higher return on interest-earning assets, maintaining a stable spread.
Q: How should investors view Cathay Life's absolute operating profit levels under IFRS 17?
A: An unidentified company representative noted that under IFRS 17, equity trading gains will not contribute to net income but will be reflected in OCI. While specific numbers were not disclosed, the company is positive about net income post-IFRS 17, expecting it to be more predictable and stable.
Q: With IFRS 17 making earnings more predictable, how will this affect dividend upstream from Cathay Life?
A: An unidentified company representative expressed optimism that after adopting IFRS 17, Cathay Life will be able to upstream dividends to Cathay Financial Holding. However, the exact amount will depend on regulatory calculations and approvals, with more clarity expected by 2026.
Q: What types of loans are driving the strong growth in consumer loans at Cathay United Bank, and how is asset quality being managed?
A: An unidentified company representative explained that the growth in personal loans is primarily from secured loans, which account for over 60% of the growth. This focus on secured loans helps manage asset quality risks effectively.
Q: Given the strong earnings performance, what is the outlook for Cathay Financial Holding's dividend policy?
A: Grace Chen, Chief Financial Officer, stated that the dividend policy considers multiple factors, including earnings, peer dividend yields, payout ratios, and investor expectations. With strong year-to-date earnings, the company remains optimistic about delivering a favorable dividend policy, potentially more favorable than the current year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
