B.O.K — Interim / Quarterly Report 2018

Apr 26, 2019

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Financial Review of 2018 Q4

2019.4.26

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Disclaimer

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• ➢ This presentation is provided by Bank of Kaohsiung Co., Ltd. (‘BOK’).The information contained within is not reviewed by any accountant or any independent third party. Users should read this material in conjunction with all other public financial and operational information filed to the competent authorities by BOK. While we endeavor to provide accurate, complete and consistent information herein, BOK makes no guarantee or warranties to the accuracy or correctness of all the information contained. After this presentation is released to the public, we undertake no obligation to update any relevant data to reflect any change hereafter.

• ➢ Users should also notice that this presentation may contain forward-looking statements. Statements that are not historical facts, including statements relating to the implementation of strategic initiatives, future business development and economic performance are forward-looking statements. By their nature, forward-looking statements involve uncertainties, risks, assumptions and other factors that could cause actual developments and results to differ materially from our statement in this presentation. These factors include, but not limited to, regulatory developments, competitive conditions, technological developments, general economic conditions and management changes.

• ➢ The information, statements or opinions in this presentation do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to buy any securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments. BOK and its affiliates representatives, no matter for their negligence or any other reasons, should not be liable for any loss or damages arising from the use of or interpretation by others of information contained within this presentation or any matter related to this document.

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Summary

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➢ Operations Review of 2018 Q4

➢ Financial Performance of 2018 Q4

➢ Prospects

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Operations Review of 2018 Q4

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Operations Review of 2018 Q4

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• With the aftermath of Ching Fu Shipbuilding Co., Ltd gone, credit rating remains stable and the bank is on positive track.

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• Received honorable conferment of "New Innovation Award" from the Ministry of Economic Affairs.

• Received honor of the "Best Service Innovation Award for Electronic Business" from FISC.

• Awarded the "Gold Award - Credit Card Information" from JCIC.

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• Granted the "Taiwan Corporate Sustainability Awards Financial and Insurance Group - Bronze Award“ from TCSA.

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Financial Performance of 2018 Q4

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Operating Result

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FY ITEMS	2014	2015	2016	2017	2018
Pre-tax income(in NT mn)	500	641	691	499	488
Net income(in NT mn)	508	591	648	452	480
EPS after-tax (in NT$ dollar)	0.66	0.72	0.79	0.45	0.46
ROA(%) (After-tax)	0.20	0.22	0.25	0.17	0.18
ROE(%) (After-tax)	4.61	5.09	5.32	3.39	3.35
FY ITEMS	**2014.12.31 **	**2015.12.31 **	**2016.12.31 **	**2017.12.31 **	2018.12.31
Assets(in NT 100mn)	2,691	2,631	2,563	2,634	2,680

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Profit Trend

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800 3.2
691
641 648
591
600 508
500 499 488
480
452
400 1.7
0.79
200 0.66 0.72
0.45
0.46
0 0.2
2014 2015 2016 2017 2018
Pre-tax income Net income EPS after-tax
FY
2014 2015 2016 2017 2018
ITEMS
Pre-tax income(in NT mn) 500 641 691 499 488
Net income(in NT mn) 508 591 648 452 480
EPS after-tax (in NT$ dollar) 0.66 0.72 0.79 0.45 0.46
Unit: in NT mn
Unit: in NT dollar
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Note: Due to the influence of NPLs from Ching Fu Shipbuilding Co. and needs to further the robustness of our financi ~~al~~ structure, the allowance for uncollectible accounts was increased in 2017 and 2018, hence leading to the drastic sliding of after-tax net income and EPS during the time.

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-2.20% 6.19%
499
480
488
452
Pre-tax Net income
income
2017 2018
2.22%
0.45 0.46
2017 2018
EPS after-tax
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Net Revenue Breakdown

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4,000 1000 Unit: in NT mn
3,500 6.32%
3,365 3,264 3,310 3,292
3,500 3.83%
3,000 800 3,292
2,632
2,535
2,481 2,522
2,468 2,632
2,535
2,000 600
504
484
465 458
429
10.04%
1,000 400
504
458
0 200
Net Revenue Net Interest Net Fee
2014 2015 2016 2017 2018
Income Income
Net Revenue Net Interest Income Net Fee Income
2017 2018
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FY ITEMS	2014	2015	2016	2017	2018
Net Revenue	3,365	3,264	3,310	3,292	3,500
Net Interest Income	2,468	2,481	2,522	2,535	2,632
Net Fee Income	429	465	484	458	504

Note ： Net fee income shows declination as a result of both the lowered interest rate on the reserve of insurance policy and the fact that insurance companies are no longer able to pose loading minus, resulting in a sharp dive on commission.

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Stockholders’ Equity
160 1.82% 3.70%
141.87 144.45
119.02 124.65 23.00 141.87 144.45
113.21
120 104.03
104.03
100.32 100.32
77.89 82.32
80 74.04
18.00
40 15.29 15.28 15.14
14.14 Stockholders’ Equity Common Stock
13.88
2017.12.31 2018.12.31
0 13.00
2014.12.31 2015.12.31 2016.12.31 2017.12.31 2017.12.31
Stockholders’ Equity Common Stock BVPS
-1.84%
FY
2014.12.31 2015.12.31 2016.12.31 2017.12.31 2018.12.31 14.14
ITEMS 13.88
Stockholders’ Equity 113.21 119.02 124.65 141.87 144.45
Common Stock 74.04 77.89 82.32 100.32 104.03
BVPS (in NT$ dollar) 15.29 15.28 15.14 14.14 13.88
2017.12.31 2018.12.31
BVPS
Unit: in NT mn
Unit: in NT dollar
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Note: Capital increased by 1.8 billion in cash and shares increased by 180 million in March 2017, resulting in the reduction of book value per share on December 31, 2017 and 2018.

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Capital Adequacy Ratio

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Unit:%
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13
11.05
11 10.61
BIS
10.11
9.81 9.74
9 8.45 8.51
Tier 1 Ratio
7.25
7.04
7
6.40
5
2014.12.31 2015.12.31 2016.12.31 2017.12.31 2018.12.31
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、 Assets Liabilities and Stockholders’ Equity

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Assets

Liabilities

Unit: in NT mn Stockholders’ Equity

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Financial
assets Other Financial Other Other
assets Liabilities Capital items
65,377 Liabilities
24% 2,688 1% Financial 10,6314% 4,642 reserve1,487 equityin
Debentures 2%
10% 458
Premises 6,300
3%
and 3%
equipment
Legal
2,888
1% reserve
2,097
Loans Due to
15%
Cash 181,244 Central
and 68% Bank
Common
cash and
Stock
equivalents Due other
10,403
2,939 from banks
1% Central 8,695 Deposits 72%
And
Bank 3%
Remittances
and
other 223,286
88%
banks
12,863
5%
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Net Revenue Breakdown

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Unit: in NT mn

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Net Revenue
Net Income
Net Other
Income Income
from 19
Pre-tax Financial 1%
Income Instruments
488 345
14% 10%
Net Fee
Income
Net Revenue 504
Provisions 14%
718 3,500
20% Operating 100% Net
Expenses Interest
2,294 Income
66%
2,632
75%
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Fee Income Breakdown

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10.89%

Unit: in NT mn

2018 Fee income

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336
303
Others
34
FX 7.58%
6%
22
4%
Deposit 142
132
21
0% 4.76% -2.86%
4%
Loan 35 34
21 21 21 22
142
25%
Loan Wealth Deposit FX Others
Management
2017 2018
FY
2017 2018
Wealth ITEMS
Management Loan 132 142
336
61% Wealth Management 303 336
Deposit 21 21
FX 21 22
Others 35 34
Total 512 555
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Operating Expenses

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3,500 3,365 3,264 3,310 3,292 3,500 90 6.32%
3,500 4.13%
3,292
2,500 2,174 2,252 2,254 2,203 2,294 2,294
80 2,203
1,500
69.00
68.10 70
66.92
500 65.54
64.61
Net Revenue Operating Expenses
2017 2018
-500 2014 2015 2016 2017 2018 60
Net Revenue Operating Expenses Percentage(%)
66.92
-1.38%
65.54
FY
2014 2015 2016 2017 2018
ITEMS
Net Revenue 3,365 3,264 3,310 3,292 3,500
Operating Expenses 2,174 2,252 2,254 2,203 2,294
2017 2018
Percentage(%) 64.61 69.00 68.10 66.92 65.54 Percentage(%)
Unit: in NT mn Unit: in NT dollar
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、 Loan Deposit and FX Volumes

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2.88% -2.81%
2,500 2,370.08 2,298.44 2,255.77 2,297.47 2,232.86 2,297.47
2,232.86
1,834.55
100
2,000 1,783.22
1,847.32 1,776.50 [1,783.22] 1,834.55
1,679.63
1,500 87.80
80
1,000
65.51 60
500
53.47 53.65 53.21
Loans Deposits
0 40
2014.12.31 2015.12.31 2016.12.31 2017.12.31 2018.12.31 2017.12.31 2018.12.31
Loans Deposits FX Volumes
34.03%
87.8
FY
2014.12.31 2015.12.31 2016.12.31 2017.12.31 2018.12.31 65.51
ITEMS
Loans 1,847.32 1,679.63 1,776.50 1,783.22 1,834.55
Deposits 2,370.08 2,298.44 2,255.77 2,297.47 2,232.86
2017 2018
FX Volumes 53.47 53.65 53.21 65.51 87.80 FX Volumes
Unit: in NT mn
Unit: in US 100 mn
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Loan Breakdown

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0.54% By currency
By customer
7.40% 1,602.75
-1.30% 1,594.08 Unit: in NT/US 100 mn
979.07
911.57
-3.38%
639.15
630.83
22.55%
232.50
231.80
224.65
189.14
Government Corporates Consumers NTD Loans FCY Loans
2017.12.31 2018.12.31 2017.12.31 2018.12.31
FCY
2018.12.31 Government 2018.12.31
Loans
224.65
231.8
12%
13%
Consumers
630.83
35%
Corporates NTD
979.07 Loans
53% 1,602.75
87%
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Deposit Breakdown

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-6.48% By currency
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By time -7.29%
1,373.51
3.85%
1,273.36
959.50
923.96
2.75%
42.97
40.22
Demand Deposits Time Deposits Demand Deposits
Ratio
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2,054.71
Unit: in NT/US 100 mn
1,921.58
28.23%
311.28
242.76
NTD Deposits FCY Deposits
2017.12.31 2018.12.31
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2017.12.31 2018.12.31
2018.12.31
Demand
Time Deposits
Deposits 959.50
43%
1,273.36
57%
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FCY 2018.12.31
Deposits
311.28
14%
NTD
Deposits
1,921.58
86%
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0.80 0.90 1.00 1.10 1.20 1.30 1.40 1.50 unit：%	Interest Spread and NIM 18 1.30 1.39 1.43 1.40 1.39 1.40 1.05 1.02 0.97 1.02 1.03 0.99 2013 2014 2015 2016 2017 2018 Interest Spread NIM

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Assets Quality

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16 300
270.97 14.95
249.73 253.64
14 Coverage Ratio
250
220.67
12 NPL
200
10 9.08
8.38
8.08 8.02 147.92
8 150
6
100
4
50
2 0.81
0.45 0.48 0.45 0.51
NPL Ratio
0 0
2014.12.31 2015.12.31 2016.12.31 2017.12.31 2018.12.31
FY
2014.12.31 2015.12.31 2016.12.31 2017.12.31 2018.12.31
ITEMS
NPL(in NT 100mn) 8.38 8.08 8.02 9.08 14.95
NPL Ratio(%) 0.45 0.48 0.45 0.51 0.81
Coverage Ratio(%) 220.67 249.73 253.64 270.97 147.92
unit:%
Unit : in NT 100 mn ,%
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Note: The increment of NPL ratio and decrement of coverage ratio are again due to the impact of the NPLs from Ching Fu Shipbuilding Co., Ltd. in 2018.

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Credit Ratings National National Fitch Outlook Long-Term Short-Term 2016 A+(twn) F1+(twn) Stable 2017 AA-(twn) F1+(twn) Stable 2018 AA-(twn) F1+(twn) Stable 2019 AA-(twn) F1+(twn) Stable Fitch Long-Term IDR Short-Term IDR Outlook 2018 BBB+ F2 Stable 2019 BBB+ F2 Stable

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After-tax EPS and Dividend Policy

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0.47 0.52 0 0.37 0.39
EPS After-Tax
0.79
0.72
0.66 94% 95% 74% 78%
0.5 0.5
0.5 0.55 0.6 0.45 0.46
Dividend per share 6% 5% 100% 26% 22%
0.03 0.03 0.60 0.13 0.11
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
Cash dividend Stock dividend
Unit : in NT dollar
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FY ITEMS	2014	2015	2016	2017	2018
EPS After-Tax	0.66	0.72	0.79	0.45	0.46
Dividendper share	0.50	0.55	0.60	0.50	0.50
Cash dividend	0.03	0.03	0.60	0.13	0.11
Stock dividend	0.47	0.52	0.00	0.37	0.39

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Prospects

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Prospects

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• Increase SME loans and fully support 5+2 industries and local enterprises.

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• Increase demand deposits and reduce capital costs.

• Strengthen foreign currency deposits , loans and foreign exchange business. Expand interest margin.

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• Enforce NPL collection and reduce NPL Ratio.

• Enhance legal compliance, anti-money laundry and counter-terrorist financing.

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Thanks for Listening

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