This article first appeared on GuruFocus .
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Net Income:TWD31.7 billion for Q1 2026.
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Adjusted Net Income:TWD48.6 billion for Q1 2026.
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EPS:TWD2.15 for Q1 2026.
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Adjusted EPS:TWD3.31 for Q1 2026.
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ROE:16.9% on a consolidated basis.
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Cash Dividend:TWD3.5 per share, 49.6% payout ratio, 4.7% dividend yield.
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Cathay United Bank Net Income:Up 8% year-on-year.
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Net Interest Income:Increased 13% year-on-year.
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Wealth Management Fees:Grew 13% year-on-year.
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Loan Growth:Total loans nearly TWD3 trillion, up 10% year-on-year.
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Deposit Growth:Deposits grew 17% year-on-year to TWD4.5 trillion.
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Net Interest Margin:1.59% for Q1 2026.
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Interest Spread:1.91% for Q1 2026.
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NPL Ratio:16 basis points.
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Coverage Ratio:10.31%.
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Annualized Credit Cost:25 basis points.
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Cathay Life Net Income:TWD17.4 billion, adjusted net income TWD33.9 billion.
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First Year Premium (FYP):TWD94 billion, up 71% year-on-year.
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Annualized Premium:TWD20.7 billion, up 23% year-on-year.
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CSM Balance:TWD532.4 billion.
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Investment Yield (After-Hedging):3.72% including FVOCI equity disposal gains.
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FX Volatility Reserve:Increased by TWD10.1 billion to TWD123.9 billion.
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Cathay Century Retail Premium:TWD10 billion, market share 12.8%.
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Adjusted Book Value Per Share:TWD79 after deducting preferred shares.
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Release Date: May 29, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Cathay Financial Holding Co Ltd ( TPE:2882 ) reported a strong start to 2026 with a net income of TWD31.7 billion and an adjusted net income of TWD48.6 billion.
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Cathay United Bank achieved a new first-quarter record for net income, with an 8% year-on-year increase, supported by solid loan and deposit growth.
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Cathay Life's adjusted net income reached the second highest first-quarter level historically, driven by robust new business and a stable positive spread.
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The company's subsidiaries, including Cathay Century, Cathay SITE, and Cathay Securities, delivered record high first-quarter earnings, reflecting steady premium growth and market share gains.
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A cash dividend of TWD3.5 per share was approved, representing a 49.6% payout ratio and a 4.7% dividend yield, highlighting the company's focus on shareholder returns.
Negative Points
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The adoption of IFRS 17 has led to changes in the presentation of valuation gains and losses, reducing comparability with previous financial figures.
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Net fee income decreased by 2% year-on-year, primarily due to a one-off adjustment related to credit card reward redemption.
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Offshore earnings slightly declined year-on-year to TWD2.6 billion, attributed to a higher investment income base last year.
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The annualized credit cost increased to 25 basis points, mainly due to a higher recovery base last year and increased general provisions on strong loan growth.
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The FX hedging cost increased to 1.26%, higher year-on-year, due to changes in FX accounting and the absence of the FX validity reserve accounts in the previous year.
Q & A Highlights
Q: Could you provide details on the swap revenue for the first quarter and how your consumer loan book is exposed to the equity market? A: Robert Fuh, CEO of Private Banking at Cathay United Bank, explained that the swap position is used to adjust currency exposure and enhance interest income, contributing to the net interest margin increase. Regarding consumer loans, the bank monitors loan purposes and has observed that most loans are for conservative investments like fixed income bonds, not significantly impacting the equity market.
Q: Is the TWD27 billion CSM for this quarter a comparison to TWD24 billion last year, and what caused the decline in CSM margin? A: An unidentified company representative clarified that the decline in CSM margin is due to increased investment-linked product sales. However, the traditional CSM margin is higher than last year, driven by longer payment periods for US dollar interest credit products.
Q: Should CSM be included in the calculation of the equity-to-asset ratio, considering regulatory requirements? A: The company is in communication with regulators about including after-tax CSM in the equity-to-asset ratio calculation. A decision is expected by the end of the year.
Q: What is the outlook for Cathay United Bank's loan growth and net interest margin for 2026? A: Grace Chen, CFO, stated that Cathay United Bank targets double-digit loan growth for the year, with foreign currency loans expected to remain strong. The net interest margin is anticipated to expand due to recent economic developments.
Q: How does Cathay Life's book value and dividend capacity look for this year? A: Grace Chen mentioned that Cathay Life's book value rebounded significantly, increasing by over TWD200 billion in the first four months. The company is confident in its dividend capacity, supported by sizable FVOCI equity disposal gains and strong adjusted earnings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
