Cathay Financial Holdings

2003 1H Financial Results Updates

2

Cathay FHC - Strong Financial Performance

Income & EPS

13.8

21.0

13.110.6

1.85

2.23

2.83

1.81

0.0

5.0

10.0

15.0

20.0

25.0

2001 2002 2003E 2003 1H

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Net income EPS

NT$bn

Total Shareholders’ Equity & ROAE

Total Assets & ROAA

151

75 136151

19.2%14.7%12.4%

0

50

100

150

200

2001 2002 2003E 2003 1H

0%

5%

10%

15%

20%

25%Total assets ROAA

113.4124.5110.974.8

24.6%17.9%14.1%

0

50

100

150

2001 2002 2003E 2003 1H

0%5%10%15%20%25%30%

Book value ROE

Note: Non-consolidated basis

Source: Company reports

NT$bn

NT$bn

3

Cathay FHC – Operational Results

Financial Figures ($NT bn) 2002 FY 2002 1H 2003 1H

Insurance Premiums $ 286.7 $ 141.6 $ 123.3

Investment Income $ 11.0 $ 6.0 $ 6.2

Net Policy Reserve $ 157.2 $ 82.7 $ 59.2

Commission & Fee Income $ 3.6 $ 1.6 $ 2.6

Interest Income $ 82.3 $ 41.4 $ 39.2

Interest Expense $ 15.1 $ 8.5 $ 5.3

Benefits & Claims $ 125.9 $ 59.3 $ 66.8

Net Income (after tax) $ 13.1 $ 5.3 $ 13.8

EPS (NT $) $ 2.23 $ 0.92 $ 1.85

4

NT$bn

0.29

1.3

6.5

13.1

21.0

0.23 (78%)

0.9 (64.3%)

3.6 (55%)

9.4 (71.8%)

13.8 (65.5%)

Cathay Century

CUB

UWCCB

Cathay Life

Cathay CFH

2003 1H Achievement Ratio

2003 FY Proforma Target

2003 2Q - Performance Achievement

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Subsidiary Contribution Analysis – 2003 1H

Earning Contribution 2003 1H Asset Allocation 2003 1H

Total Earning of subsidiaries: NT$14.0Bn Total Revenue: NT $247.8Bn Total Asset: NT$2,214Bn

Revenue Contribution 2003 1H

CUB7.0%

UWCCB25.1%

Cathay Century

1.5%Cathay

Life 66.4%

CUB2.4%

UWCCB5.7%

Cathay Century

3.2%

CathayLife

88.7%

CUB8.6%

UWCCB30.1%

CathayCentury

0.5%

CathayLife

60.8%

6

19.2%

1.4%

4.7%

1.1%0.9%

CFH CathayLife

CathayCentury

CUB UWCCB

Profit Analysis – 2003 1H

ROAE Analysis

ROAA Analysis

24.6%26.5%

17.0%

12.9%12.7%

CFH CathayLife

CathayCentury

CUB UWCCB

Note: ROA, ROE have been annualized.

7

81.4 76.2

48.6 44.1 35.5

1999 2000 2001 2002 2003 1H

42.3 37.7 36.8 34.2 33.3

1999 2000 2001 2002 2003 1H

18.6 17.6 16.614.6 13.6

1999 2000 2001 2002 2003 1H

% Expense Ratio of Cathay Life

% Expense Ratio of UWCCB

93.6

70.3

95.0

62.7 57.9

1999 2000 2001 2002 2003 1H

%

Combined Ratio of Cathay Century

Source: Company Report

Expense Ratio of CUB

Cathay FHC has been focusing on improving operation efficiency

%

8

Appendix

2003 1H Subsidiary Performance

Cathay Life Cathay Century UWCCB CUB

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Cathay Life – Operational Results

Financial Figures ($NT Bn) 2002 FY 2002 1H 2003 1H

Total Premium Income $ 280.6 $ 138.6 119.9$ FYP $ 84.5 $ 43.2 28.3$

Claim & Benefit Expense $ 122.9 $ 57.9 65.2$

Net Commission Expense $ 21.5 $ 11.5 10.9$ Net Provision in Policy Reserve $ 156.8 $ 82.5 58.9$ General & Admin Expense $ 14.2 $ 5.6 5.5$

Net Income (after tax) 12.9$ 5.7$ 9.4$

Financial Ratio 2002 FY 2002 1H 2003 1H13 mo. Persistency Ratio 90.1% 90.8% 90.7%25 mo. Persistency Ratio 84.1% 83.1% 84.6%Expense Ratio 14.6% 14.0% 13.6%ROAE (after tax) 17.9% 15.7% 26.5%ROAA (after tax) 1.1% 1.0% 1.4%NPL ratio 1.9% 1.9% 1.8%

Note 1: 2003 1H FYP’s $28.3bn, compared with 2001 1H FYP’s $23.7bn has exhibited growth. 2002 1H FYP’s $43.2bn is mostly attributed to the phenomenal sales of single premium products. 2: Net Provision in Policy Reserve = policy reserve – policy reserve writeback. 3: ROA, ROE have been annualized.

1

2

33

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Cathay Century – Operational Results

Note 1: Other operating cost include general & admin expense. 2: ROA, ROE have been annualized.

Financial Figure (NT$ mm) 2002 FY 2002 1H 2003 1H

Premium income $ 6,184 $ 3,053 $ 3,547

Recovered reserve $ 3,337 $ 1,684 $ 3,572

Other operating revenues $ 1,630 $ 754 $ 720

Insurance claims payment $ 3,056 $ 1,380 $ 1,542

Provision for reserve $ 3,728 $ 1,945 $ 3,830

Other operating costs $ 4,019 $ 1,936 $ 2,164

Net Income (after tax) $ 235 $ 156 $ 233

Financial Ratio 2002 FY 2002 1H 2003 1H

Net Expense Ratio 25.0% 24.7% 25.6%

Net Combined Ratio 62.7% 58.7% 57.9%

Solvency Margin 125.9% 123.1% 106.2%

Retention Ratio 60.9% 61.8% 63.1%

ROAA (after tax) 2.6% 3.5% 4.7%

ROAE (after tax) 8.6% 11.6% 17.0%

1

22

11

UWCCB – Operational Results

Note 1: Gross Loans = Loans + Revolving - Credit Card 2: ROA, ROE have been annualized.

Financial Figure (NT$ mm) 2002 FY 2002 1H 2003 1H

Interest Income $ 29,256 15,354$ 11,832$

Interest Expense 11,124$ 6,434$ 3,416$

Net Interest Income 18,132$ 8,920$ 8,416$

Provision for loan losses 24,736$ 20,477$ 2,215$

Non Interest Income 3,591$ 2,186$ 2,345$

Non Interest Expense 7,756$ 3,779$ 3,737$

Net Income (after tax) -$ 8,807 9,831-$ 3,586$

Financial Ratio 2002 FY 2002 1H 2003 1H

Net Interest Margin 3.9% 2.9% 2.8%

Gross Loan / Deposit Ratio 76.3% 68.9% 74.9%

Fee Income to Revenue Ratio 5.9% 4.8% 8.6%

Efficiency Ratio (Cost / Income) 34.2% 29.5% 33.3%

ROAA (after tax) -1.3% -2.8% 1.1%

ROAE (after tax) -14.8% -33.3% 12.9%

NPL Ratio (6mo.) 3.0% 6.1% 2.3%

NPL Ratio (3mo.) 5.0% 9.2% 4.5%

Coverage Ratio 52.2% 62.4% 58.4%

BIS Ratio 11.4% 10.0% 11.0%

1

22

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Cathay United Bank – Operational Results

Note 1: ROA, ROE have been annualized.

Financial Figure (NT$ mm) 2002 FY 2002 1H 2003 1H

Interest Income 8,839 4,343 4,570

Interest Expense 3,877 2,107 1,521

Net Interest Income 4,961 2,236 3,049

Provision for loan losses 2,041 725 1,756

Non Interest Income 1,665 610 1,431

Non Interest Expense 3,230 1,385 1,799

Net Income (after tax) 1,118 583 854

Financial Ratio 2002 FY 2002 1H 20031H

Net Interest Margin 3.4% 3.1% 3.7%

Gross Loan / Deposit Ratio 78.5% 79.7% 80.7%

Fee Income to Revenue Ratio 12.5% 10.7% 14.5%

Efficiency Ratio (Cost / Income) 44.1% 44.7% 35.5%

ROAA (after tax) 0.7% 0.7% 0.9%

ROAE (after tax) 9.0% 9.8% 12.7%

NPL Ratio (6mo.) 4.4% 4.9% 3.6%

NPL Ratio (3mo.) 10.2% 12.3% 8.5%

Coverage Ratio 40.5% 36.2% 45.1%

BIS Ratio 9.1% 9.2% 10.1%

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