Cathay Financial Holding ( 2882-TW) held its Q4 2025 earnings conference today (27th), personally hosted by General Manager Lee Chang-Keng. Regarding the dividend policy, which is of great concern to the public, the management clearly stated that the current distribution capacity at the financial holding level is "very sufficient," and based on the current accounts, it is not a problem to distribute at least last year's cash dividend level of NT$3.5. As the pressure on Cathay Life Insurance eases, General Manager Lee Chang-Keng revealed that they will follow Chairman Tsai Hung-Tu's directive to "accelerate growth," restart the merger and acquisition pace that has slowed in recent years, and actively assess opportunities, prioritizing targets in securities and investment trust that have synergies, with relatively larger opportunities overseas.

Cathay Financial Holding (2882-TW) held its Q4 2025 earnings conference today (27th), personally hosted by General Manager Lee Chang-Keng. (Photo by Juheng News reporter Chen Yu-Ching)

Cathay Financial achieved a good performance in 2025, with a net profit after tax reaching NT$107.6 billion; Chief Financial Officer Chen Yan-Ru specifically pointed out that if the one-time allocation of NT$21.7 billion to the foreign exchange price fluctuation reserve at the end of last year is excluded, the actual net profit after tax reaches NT$125 billion, second only to 2021, marking the second-highest record in history.

The market is highly concerned about the dividend policy. According to the announcement, Cathay Life Insurance has applied to the regulatory authority to remit approximately 30% of its surplus according to current regulations. In this regard, Chen Yan-Ru stated that the dual leverage ratio (DLR) at the end of last year was 120.68%, and the distribution capacity at the financial holding level is "very sufficient." As for whether it will at least maintain last year's cash dividend level of NT$3.5, she frankly said, "Based on the current accounts, there is no problem."

Lee Chang-Keng reiterated that the dividend policy is the board's authority, but the management team fully understands shareholders' expectations for yield and will reference industry levels to strive to provide a competitive distribution plan to reward long-term supportive investors.

Cathay Life General Manager Lin Chao-Ting added that the Cathay Life Board announced that approximately 30% of the surplus will be remitted to the financial holding, strictly in accordance with current insurance regulatory regulations, calculating the distributable surplus after deducting statutory surplus reserves and various special surplus reserves. This 30% is not a fixed target set by the company or a future norm, but purely a result of accounting settlement.

Due to the significant impact of unrealized gains and losses on the allocation of special surplus reserves, the amount to be remitted each year will still need to be recalculated based on the financial situation and reserve regulations at that time, and investors should not expect future distribution rates based on this ratio In addition, it still needs to be reviewed by the Financial Supervisory Commission, which has the authority to require a reduction in the remittance amount based on supervisory considerations.

However, the life insurance sector has already undergone reclassification this year, and capital gains from FVOCI can be transferred to retained earnings after disposal, which is expected to further enhance Cathay Financial Holding's visibility in distributing cash dividends. Lin Chao-ting revealed that future quarterly earnings calls will disclose the amount of OCI disposals transferred to earnings, demonstrating to investors that despite facing the new system, they still possess stable dividend distribution capabilities.

In recent years, several financial holding companies have initiated mergers and acquisitions, actively expanding their territories. There is public interest in whether Cathay Financial Holding will also begin to actively assess this year. In response, Li Chang-geng revealed that in terms of long-term development strategy, Chairman Tsai Hung-tu officially issued the command to "accelerate growth" during the spring gathering this year. In addition to organic growth, with the life insurance sector successfully aligning with the new IFRS 17 and ICS systems, Cathay Financial will restart the merger and acquisition pace that has slowed in recent years.

Li Chang-geng admitted that the core operational goal over the past few years has been the successful alignment of life insurance, which has relatively slowed the overall expansion pace of the financial holding company. Now, with the pressure of alignment easing, the management team will demonstrate a more proactive attitude than before, fully seeking expansion opportunities.

In terms of selecting merger and acquisition targets, Li Chang-geng analyzed that the opportunities and synergy potential for overseas acquisitions are relatively greater than those domestically. He emphasized that Cathay Financial has rich experience in cross-border mergers and acquisitions. Although they encountered setbacks in the Indonesian market, they have learned valuable lessons, which has made the team more cautious and precise in selecting targets, assessing cooperation structures, and avoiding risks.

At this stage, the group's merger and acquisition focus may be on the securities and investment trust industries. Although there are currently no specific expansion considerations for banking and life insurance, as long as it can generate strong synergies with Cathay and enhance long-term profitability, the management team will actively pursue opportunities