Cathay Financial Holdings January 29, Management Presentation

2 Agenda  Cathay Financial Holdings 2002 Operation Profile  Subsidiaries’ Operation Profile  Cathay Financial Holdings 2003 Forecast & Strategy

3 CFH Operating Performance 2002 Operations Organization Cathay United Bank and Cathay Century Insurance joined Cathay Financial Holdings on 22th April. UWCCB joined Cathay Financial Holdings on 18th Dec. Integrated Marketing cross-selling ： U-Life cash card 、 mutual fund 、 P&C 、 Bond-linked product 、 ATM policy loan 、 bancassurance Financial Activities S&P credit rating 「 BBB+ 」 on 13th May. 700 Million ECB on 15th May A successful bid for 650 million shares of Chunghwa Telecom with amount of NT$32.7 Billion Financials

4 Profit Analysis – 2002 ROE ROE of Cathay Financial Holdings and Subsidiaries Note: UWCCB merged into Cathay Financial Holdings on December 18, 2002

5 Profit Analysis – 2002 ROA ROA of Cathay Financial Holdings and Subsidiaries Note: UWCCB merged into Cathay Financial Holdings on December 18, 2002

6 Subsidiary Contribution Analysis – Sales & Income Sales Contribution 2002 Total Sales : NT$506.3bn Income Contribution 2002 Total Income : NT$13.1bn Cathay FHC merged UWCCB on Dec. 18, 2002, recognizing sales and income for 14 days

7 Agenda  Cathay Financial Holdings 2002 Operation Profile  Subsidiaries’ Operation Profile  Cathay Financial Holdings 2003 Forecast & Strategy

8 Financials 2003 Operating Focus Operating profile of Cathay Life 2002 Operations Increase in FYP and total premium income Stopping selling high guaranteed products Market share in terms of total premium 31.5% Expenses ratio trending down Continuing development of innovative products  Focus on resources re-allocation and back-office integration to facilitate cross-selling  Leverage on external resources via strategic alliance to expand market share  Recruiting high quality personnel and sales force for re-organization purposes  Capitalizing on CRM to enhance cross selling opportunities  Rolling out incentive plan for sales forces to encourage cross-selling

9 The Operation of Subsidiary – Decreasing Expense Ratio for Cathay Life 1.Expense ratio ＝（ underwriting expense+salesman subsidy+sales,general & administrative expense ） / total premium 2.The expense ratio of cathay life in 2002 is 14.6%(excluding Ginhowyi-single premium- product) 3.Other source of data: The Association of Life Insurance

10 Cathay Life – Long Term and Short Term Investments NT$bn

Operating Focus The Operation of Subsidiaries – Cathay Century Insurance 2002 Operations (1) Revenues ： Underwriting premium ： NT$5.8B ， YoY Growth Rate ： 23.2% (2) New products ： personal casualty insurance 、 group casualty insurance 、 Personal comprehensive insurance 、 marriage insurance etc. Financials The total underwriting premium of 2003 is NT$6.6B ， the business plans as follows: Leverage the resources of FHC to create synergy and enhance investment yield Strengthen product innovation and marketing performance Promote group business Strategic alliance

Operating Focus The Operation of Subsidiaries – UWCCB 2002 Operations  Deposits:NT$539B Loan:NT$385B Outstanding Credit Cards:0.86M cards  Write-off of NPL:NT$22.2B ， NPL rate as of Dec : 3.04%  Electronic financial service ： Investment account M Debit card : 2.13M cards (increase by 0.16M cards) Automatic transaction - 86% Financials Collaborate with FHC in business plans and cross selling Promote corporate banking ， and develop business of Greater China according to government policy Promote retailing banking and private banking Promote e - banking

13 The Operation of Subsidiaries – Cathay United Bank 2002 Operations Total deposit NT$158.8bn 、 Total loan NT$130.7bn. Launched CUB Platinum card in Numbers of cards issued : 1.8mm Financial service centers established, developing private banking market EPS (NT$) Financials NI (NT$ bn) ROE 9.63% 9.01% ROA 0.79% 0.67% NPL ratio 3.47% 4.36% Sales / NPL Loan/ Deposit 83% 78% 2003 Operating Focus Head office will move to Cathay Financial Building at Shin-Yi District on Feb. 17 th, The opening party will be held on Feb. 20 th. Establish wealth management system, leverage integrated synergy. Provide superior offshore bonds, foreign currency deposits and other products and services. U-Life cash cards, vehicle loans and housing loans, to enhance the consumer banking business. Enlarge the credit card business for fee income.

14 Agenda  Cathay Financial Holdings 2002 Operation Profile  Subsidiaries’ Operation Profile  Cathay Financial Holdings 2003 Forecast & Strategy

15 Cathay Financial Holdings: 2003 Financial Forecast

16 Future Plans and Operating Strategies  For Cathay Financial Holdings Enlarge integration synergy Provide extensive financial services Develop Greater China market For Subsidiaries Improve investment performance of Cathay Life and Cathay Century Insurance Enlarge the growth of consumer banking for UWCCB and CUB

Thank You