Cathay Financial Holding (2882.TW): Asia Financials Corporate Day Takeaways

Research evidence excerpt

Cathay Financial Holding (2882.TW): Asia Financials Corporate Day Takeaways

Goldman Sachs Cathay Financial Holding (2882.TW)

n 1Q26 hedging cost was 1.26%, and management maintained FY26 hedging cost

guidance of 1.2-1.3%. Hedging ratio has reduced to 36%, in line with the target

range of 30-35%.

Capital, dividend and M&A

n Cathay Life has applied for a 140% TIS ratio post transition, at the upper end of its

previous guidance (125-140%). Backed by strong internal capital generation

capabilities, mgmt expects the existing buffer to comfortably cover higher capital

amortization during the transition period, as well as capital upstream to FHC.

n Cathay Life has applied to the regulator to upstream NT$17.6bn (or 31% of FY25 net

profit) to FHC. Looking ahead, mgmt expects to receive more clarity on capital

upstream from life insurance subsidiary by early 2027.

n For FHC, double leverage ratio was 123.8% at 1Q26. But mgmt noted that this has

improved meaningfully, reflecting the strong equity investment gains since the end

of March.

n Cathay has been conservative regarding inorganic growth in recent years to prioritize

the transition of new accounting standards and capital regimes. Following the

successful transition, Cathay intends to become more proactive in exploring M&A

opportunities across banking, asset management and securities lines, to diversify

profit source. Both domestic and overseas opportunities will be evaluated, with

synergies, transaction size, corporate governance and valuation serving as key

considerations for any potential deals.

Bank loan growth and NIM outlook

n Mgmt reiterated double-digit loan growth target for FY26, driven by growth in

corporate lines. Mgmt expects single digit NIM expansion in 2026 (vs. 1.55% in