FEIB - AGM Information 2015 | FinancialReports.eu

Far Eastern International Bank (FEIB) 2015 Annual General Shareholders’ Meeting Minutes

Date: Tuesday, 16 June 2015

Time: 9:00 a.m. Taipei time

Place: Auditorium in the Taipei Hero House, No. 20, Changsha Street, Section 1, Taipei, Taiwan

Shareholders at present:

Total outstanding shares of FEIB: 2,861,826,329 shares

Total shares represented by shareholders present: 1,736,805,445 shares

Percentage of shares held by shareholders present: 60.69%

Directors at present: Ms. Ching-Ing Hou, Representative of Yue Ding Industry Co., Ltd.

Mr. Douglas Tong Hsu.

Mr. Shaw Y. Wang, Representative of Oriental Union Chemical Corp.

Mr. Tsung-Ming Chung, Representative of Oriental Union Chemical Corp.
Mr. Eli Hong, Representative of Ta Chu Chemical Fiber Co., Ltd.
Mr. Thomas Chou, Representative of Asia Cement Corp.

Mr. Ben C.B. Chang of Independence Director

Mr. Bing Shen of Independence Director

Supervisors at present: Mr. Humphrey Cheng, Representative of Far Eastern New Century Corp. Chairman: Ching Ing Hou

Recorder: Chia Yu Lin

A. Reports (Non-Voting Items)

1. 2014 Business Report

The 2014 business report is attached as Attachment I.

2. 2014 Financial Statements

The 2014 financial statements and independent auditors’ report by Deloitte & Touche are attached as Attachment II. (The 2014 financial statements are available for access at http://mops.twse.com.tw )

3. Supervisor's Review report on the 2014 Business Report and Financial Statements

The Supervisors’ review report is attached as Attachment III.

4. Report of Subordinated Financial Debentures issued in 2014

The report of Subordinated Financial Debentures issued in 2014 is attached as Attachment IV.

B. Items for Acceptance (Voting Items)

1. 2014 Business Report and Financial Statements

The Board of Directors recommends shareholders vote FOR 2014 business report and financial statements.

Explanatory Notes:

i. The supervisors of the Bank have reviewed the business report, audited financial statements (by J.H. Chen, CPA and C.S. Yang, CPA of Deloitte & Touche) for the year ended 2014 and found them in order.
ii. The 2014 business report, independent auditors’ report, Supervisors’ report, and the aforesaid financial statements are attached as Attachments I, II, and III.
iii. Please vote FOR.

Resolutions ： The number of shares represented by the shareholders present at the time of voting (including e-voting) was 1,737,444,123 shares, where 1,686,972,121 votes (including e-voting) were cast FOR for the proposal, or 97.10% of the total votes, 1,687,422 votes were cast AGAINST; and 48,784,580 votes were ABSTAINED. The proposal hereby is approved.

2. 2014 Earnings Distribution Proposal

The Board of Directors recommends shareholders vote FOR 2014 earnings distribution. Explanatory Notes:

i. The 2014 earnings distribution of the Bank is as follows: (Unit: NT$) Unappropriated earnings – beginning 1,984,534 Net income 3,694,522,560 Legal reserve (1,108,356,768) Adjustment on retained earnings for investment under equity method 920,087 Reverse of special reserve 95,902,763 Distributable earnings 2,684,973,176 Earnings distribution: Shareholder dividends 2,681,531,270 Unappropriated earnings - ending 3,441,906

The distributable employee bonuses of $174,882,474 and remuneration to directors and supervisors of $58,294,158 have been deducted from the net income in accordance with the Articles of Incorporation.

ii. Shareholder dividends are allocated as follows: (Unit: NT$)

Per share Total amount Cash dividend 0.400 1,144,730,530 Stock dividend 0.537 1,536,800,740 Total 0.937 2,681,531,270

The cash dividend to each and every shareholder shall be paid in a whole number of New Taiwan Dollars. A fraction less than one New Taiwan Dollar shall be discarded. The odd amount shall be included in “other revenues” of the Bank.

iii. Dividend will be distributed on the ex-dividend (ex-right) date which is to be scheduled separately after 2015 annual shareholders’ meeting. Dividend per share referred to above is calculated in accordance with the outstanding 2,861,826,329 shares as on December 31, 2014. Please authorize the Board of Directors to adjust cash and stock dividend payout ratio within the total dividend amount when the number of actual outstanding shares differs from the expected number of shares on the ex-dividend (ex-right) date, due to impact of actual conversion of euro convertible bond and implementation of treasury shares.
iv. Please vote FOR.

Resolutions ： The number of shares represented by the shareholders present at the time of voting (including e-voting) was 1,737,444,123 shares, where 1,686,918,492 votes (including e-voting) were cast FOR for the proposal, or 97.09% of the total votes, 1,740,903 votes were cast AGAINST; and 48,784,728 votes were ABSTAINED. The proposal hereby is approved.

C. Discussions and Election (Voting Items)

1. Proposal for issuing new shares by capitalization of shareholder and employee bonus

The Board of Directors recommends shareholders vote FOR capitalization of 2014 stock dividend and employee bonus.

Explanatory Notes:

i. Capitalization of stock dividend:
(i) Capitalization purpose and funding sources: In order to support business needs, enhance operational capital base and improve capital structure, it is proposed to capitalize shareholder dividend of NT$1,536,800,740 from 2014 earnings distribution for issuing of 153,680,074 new shares at NT$10 per share at par.
(ii) Allotment method: The 153,680,074 new shares are distributed in accordance with the shareholding record of the shareholder’s register on the dividend exright date, that is, 53.7 shares per thousand shares. For odd share, two or more shareholders may, within the specific period of time, consolidate each of their respective shares into a round number of shares for one person’s shareholding only. For any odd share that is not consolidated before the deadline, or any remaining odd share after consolidation, cash will be distributed according to the face value of the share (rounded up to dollars).
The total accumulated odd shares will be subscribed at par by the employee shareholding trust of the Bank.
(iii) The distributed dividend shares referred above is calculated in accordance with total 2,861,826,329 outstanding shares on December 31, 2014. Please authorize the Board of Directors to adjust stock dividend payout ratio within the total dividend amount when the number of actual outstanding shares differs from the expected number of shares on the ex-right date due to impact of actual conversion of euro convertible bond and implementation of treasury shares.
ii. Capitalization of employee bonus:

New shares are issued for capitalization of $174,882,474 employee bonus.

The number of new shares is calculated based on the closing price prior to the shareholders’ meeting date after ex-right and ex-dividend effect, or cash will be paid for any odd share from employee bonus capitalization.

iii. The rights and obligations of new shares issued from the capitalization are the same as those of existing shares.
iv. The ex-right date of the capitalization will be scheduled separately after 2015 annual shareholders’ meeting.

v. Please vote FOR the proposal.

Resolutions ： The number of shares represented by the shareholders present at the time of voting (including e-voting) was 1,737,444,123 shares, where 1,687,047,757 votes (including e-voting) were cast FOR for the proposal, or 97.10% of the total votes, 1,712,744 votes were cast AGAINST; and 48,683,622 votes were ABSTAINED. The proposal hereby is approved.

Note: Employee bonus were NT$ 174,882,474 for year 2014. Based on the closing price on June 15, 2015 as NT$10.80/share, or NT$9.86/share per ex-right and ex-dividend, total 17,736,559 new shares will be issued on the distribution effective date.

2. Proposal for private placement - to issue common shares, preferred shares, convertible bonds or a combination of above securities to specific parties for a total amount not exceeding NT$10 billion or equivalent in foreign currencies

The Board of Directors recommends shareholders vote FOR issuing of common shares, preferred shares, convertible bonds or a combination of above securities to specific parties for a total amount not exceeding NT$10 billion or equivalent in foreign currencies.

Explanatory Notes:

i. The Bank’s Board of Directors was authorized in annual shareholders’ meeting on June 24, 2014 to proceed private placement for a total amount not exceeding NT$10 billion or equivalent in foreign currencies. This proposal is an extension of last shareholders’ approval for another year.
ii. The purpose of private placement is to seek domestic or foreign strategic alliance opportunities, to strengthen the Bank’s financial structure and capital adequacy ratio, and to facilitate the Bank’s long-term development. The preferred shares will be issued according to Article 4-1 of the Articles of Incorporation.
iii. According to Article 43-6 of the “Securities and Exchange Act”, the disclosure of private placement proposal shall include:
(i) The basis and reasonableness of private placement pricing
1. The common stock price per share shall be no less than 80% of the reference price. The reference price is set as the higher of the following two basis prices:
  - (1) The simple average closing price from either 1, 3 or 5 days before the pricing date, minus dividends adjustment, plus price discount adjustment due to capital reduction.
  - (2) The simple average price of 30 days before the pricing date, minus dividend adjustment, plus price discount adjustment due to capital reduction.
2. The issuing price of preferred shares and convertible bonds by private placement shall be no less than 80% of the theoretical price, which is the securities price determined by a price model applicable by the issuing terms and considering all options in the issuing terms.
3. The pricing date, reference price, theoretical price, and actual issuing price, based on provisions above, will be determined after taking into consideration of market conditions, and qualification of specific parties. If the below-par issuing price results in cumulative losses to the Bank, the Bank may, subject to operation status, engage in de-capitalization or reverse retained earnings or capital surplus to make up the losses.
4. The determination of private placement price, based on regulation of government authorities, reference price or theoretical price, and the 3-year lock-up period set by the Securities and Exchange Act, shall be reasonable.
(ii) The method and objectives of selecting the specific parties, necessity of selection, and anticipated benefits:
1. The method and objectives of selecting the specific parties: The selection is limited to strategic investors qualified by the rules in Article 43-6 of the “Securities and Exchange Act” and able to assist the Bank to expand sales channels, grow market shares, improve service quality, and reduce operating costs.
2. Necessity: The selection is necessary to improve the Bank’s capital adequacy upon Basel III implementation, to enhance the Bank’s risk asset capacity, and to support the Bank’s long-term

development.

  3. Anticipated benefits: The participation of the specific parties will enhance the Bank’s competitiveness and profitability.

(iii) The necessity of private placement:
1. Reason for not taking a public offering: In consideration of the cost and efficiency of capital raising, necessity of strategic investors, and the required 3-year lock-up period for ensuring a long-term relationship with the strategic partners, a public offering is not considered a recommendable approach for capital raising.
2. The amount of private placement: Without exceeding NT$10 billion or equivalent in foreign currencies, the amount will be raised by one or two tranches within 1 year from the shareholders’ meeting resolution date, subject to market conditions and strategic parties.
3. Capital usage plan and anticipated benefits of private placement: The capital raised by one or 2 tranches will be used to expand the scale of the Bank’s business operations and to pursue strategic alliance opportunities domestically and overseas. The anticipated benefits of private placement include strengthening of the Bank’s competitiveness, improvement of the Bank’s profitability, capital adequacy ratio, and shareholders’ equity.
iv. It is proposed to authorize the Board of Directors to determine the issuance plan of private placement, including issuing shares, price, terms and conditions, specific parties’ selection, record date, capital usage plan, anticipated benefits, and other matters related to the private placement. It is also proposed to authorize the Board of Directors to revise the issuance plan due to changes of law and regulations, market conditions, environmental, or if receiving instructions from government authorities.

v. Please vote FOR the proposal.

Resolutions ： The number of shares represented by the shareholders present at the time of voting (including e-voting) was 1,737,444,123 shares, where 1,579,507,529 votes (including e-voting) were cast FOR for the proposal, or 90.91% of the total votes, 109,135,528 votes were cast AGAINST; and 48,801,066 votes were ABSTAINED. The proposal hereby is approved.

3. Amendment to the Articles of Incorporation of Far Eastern International Bank

The Board of Directors recommends shareholders vote FOR the amendments of the Articles of Incorporation.

Explanatory Notes:

i. In compliance with Gin-Guan-Jheng-Fa-Zi No. 10200531121 Order, issued by Financial Supervisory Commission, dated December 31, 2013, the Bank shall establish an Audit Committee, started from the 9th term Board of Directors, to replace supervisors’ setting, and carry on supervisor’s responsibilities as required by laws and regulations. The related clauses in “Article of Incorporation” of the Bank pertaining to powers, duties and responsibilities of supervisors are therefore proposed for amendment.
ii. A comparison table of the “Articles of Incorporation of Far Eastern International Bank” summarized changes before and after amendments is attached as Attachment V.

iii. Please vote FOR the proposal.

Resolutions ： The number of shares represented by the shareholders present at the time of voting (including e-voting) was 1,737,444,123 shares, where 1,686,771,965 votes (including e-voting) were cast

FOR for the proposal, or 97.08% of the total votes, 1,840,903 votes were cast AGAINST; and 48,831,255 votes were ABSTAINED. The proposal hereby is approved.

4. Amendment to the Election Guidelines for Directors and Supervisors of Far Eastern International

Bank

The Board of Directors recommends shareholders vote FOR amendments of the Election Guidelines for Directors and Supervisors of the Bank.

Explanatory Notes:

i. In compliance with the Gin-Guan-Jheng-Fa-Zi No. 10200531121 Order, issued by Financial Supervisory Commission, dated December 31, 2013, the Bank shall establish an Audit Committee, started from the 9th term Board of Directors, to replace supervisors’ setting, and carry on supervisor’s responsibilities as required by laws and regulations. The related clauses in the “Election Guidelines for Directors and Supervisors” of the Bank are therefore proposed for amendment, and name of the Guidelines is proposed to be renamed as the “Election Guidelines for Directors of Far Eastern International Bank”.
ii. A comparison table of the “Election Guidelines for Directors and Supervisors of Far Eastern International Bank” summarized changes before and after amendments is attached as Attachment VI.

iii. Please vote FOR the proposal.

Resolutions ： The number of shares represented by the shareholders present at the time of voting (including e-voting) was 1,737,444,123 shares, where 1,686,903,521 votes (including e-voting) were cast FOR for the proposal, or 97.09% of the total votes, 1,706,781 votes were cast AGAINST; and 48,833,821 votes were ABSTAINED. The proposal hereby is approved.

5. Amendment to the Procedures of Asset Acquisition or Disposal of Far Eastern International

Bank

The Board of Directors recommends shareholders vote FOR amendments of the Procedures of Asset Acquisition or Disposal of the Bank.

Explanatory Notes:

i. In compliance with the Gin-Guan-Jheng-Fa-Zi No. 10200531121 Order, issued by Financial Supervisory Commission, dated December 31, 2013, the Bank shall establish an Audit Committee, started from the 9th term Board of Directors, to replace supervisors’ setting and carry on supervisor’s responsibilities as required by laws and regulations. The related clauses in the “Procedures of Asset Acquisition or Disposal” of the Bank pertaining to supervisors’ responsibilities are therefore proposed for amendment.
ii. The changes include 1) replacing “Supervisors” with “Audit Committee” in all related clauses; 2) replacing “acknowledged by Supervisors” with “ agreed by the Audit Committee” in all related clauses; 3) replacing approval process of “ Board approval followed by Supervisor’s acknowledgement” with “ Audit Committee’s approval followed by Board approval” or “ approval by 2/3 or more of directors present on the Board if no prior approval by Audit Committee” in all related clauses;
iii. Please vote FOR the proposal.

Resolutions ： The number of shares represented by the shareholders present at the time of voting (including e-voting) was 1,737,444,123 shares, where 1,686,892,524 votes (including e-voting) were cast

FOR for the proposal, or 97.09% of the total votes, 1,717,778 votes were cast AGAINST; and 48,833,821 votes were ABSTAINED. The proposal hereby is approved.

6. Cancelation of the Rules Governing the Scope of Powers of Supervisors of Far Eastern International Bank

The Board of Directors recommends shareholders vote FOR Cancelation of the “Rules Governing the Scope of Powers of Supervisors”.

Explanatory Notes:

i. In compliance with the Gin-Guan-Jheng-Fa-Zi No. 10200531121 Order, issued by Financial Supervisory Commission, dated December 31, 2013, the Bank shall establish an Audit Committee, started from the 9th term Board of Directors, to replace supervisors’ setting and carry on supervisor’s responsibilities as required by laws and regulations.
ii. After the Bank establishes an Audit Committee, relevant regulations related to supervisors will cease to apply. The “Rules Governing the Scope of Powers of Supervisors” are therefore proposed to be canceled.
iii. A summary table of the “Rules Governing the Scope of Powers of Supervisors of Far Eastern International Bank” is attached as Attachment VII.

iv. Please vote FOR the proposal.

Resolutions ： The number of shares represented by the shareholders present at the time of voting (including e-voting) was 1,737,444,123 shares, where 1,686,728,748 votes (including e-voting) were cast FOR for the proposal, or 97.08% of the total votes, 1,880,401 votes were cast AGAINST; and 48,834,974 votes were ABSTAINED. The proposal hereby is approved.

7. Election of the 9th term Board of Directors

The Board of Directors recommends shareholders vote FOR election of the 9th term Board of Directors as nominated.

Explanatory Notes:

i. The 8th term Board of Directors elected in 2012 Annual Shareholders’ meeting will end on June 15, 2015. Therefore, the 9th term Board of Directors is subject to election at 2015 Annual Shareholders’ Meeting.
ii. According to Article 15 and Article 16 of “Articles of Incorporation” of the Bank, directors and independent directors shall be elected by shareholders from the nominated candidate list.
iii. In the 2015 Annual Shareholders’ Meeting, the 9th term Board of Directors shall be elected for totaling 11 directors (including 3 independent directors), and an Audit Committee (comprised by 3 independent directors) will be established to replace supervisors. The Board will serve for 3-year term, started from June 16, 2015 to June 15, 2018, and all of incumbent directors are eligible for re-election.
iv. The candidate list of directors and independent directors are attached as Attachment VIII, which is approved in the 17th meeting of the 8th term Board of Directors on May 5, 2015 pursuant to Article 192-1 of the “Company Act”, and the “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”.
v. Please vote FOR the proposal.

Election: Newly Elected Directors list:

Shareholder NO.	Name	Votes Received	Legal Entity
0029779	Ms. Ching-Ing Hou	1,905,685,441 (including182,580,632 e-voting)	Yue Ding Industry Co., Ltd.
0000033	Mr. Douglas Tong Hsu	2,002,380,140 (including184,652,139 e-voting)	None
0000001	Mr. Shaw Y. Wang	1,639,416,154 (including182,058,999 e-voting)	Far Eastern New Century Corp.
0000001	Mr. Humphrey Cheng	1,630,529,331 (including182,028,493 e-voting)	Far Eastern New Century Corp.
000002	Mr. Tsung-Ming Chung	1,617,734,970 (including179,985,457 e-voting)	Asia Cement Corporation
000002	Dr. Shi-Chun Hsu	1,607,603,483 (including181,619,804 e-voting)	Asia Cement Corporation
0199818	Mr. Eli Hong	1,605,094,052 (including181,734,892 e-voting)	Ta Chu Chemical Fiber Co., Ltd.
0176537	Dr. Min-TehYu	1,592,406,657 (including182,192,367 e-voting)	U-Ming Marine Transport Corp.
D100***794	Mr. Ben C. B. Chang （Independent Director）	1,589,212,574 (including226,566,882 e-voting)	None
A110***552	Mr. Bing Shen （Independent Director）	1,561,433,685 (including227,618,587 e-voting)	None
E210***318	Ms. Susan S. Chang （Independent Director）	1,526,194,887 (including227,394,525 e-voting)	None

8. Release of non-competition binding to Directors

The Board of Directors recommends shareholders vote FOR release of non-competition binding to Directors

Explanatory Notes:

i. According to Paragraph I of Article 209 of the “Company Act”, any director who acts for himself or on behalf of any other person for business of the Company, the director shall clarify the essence of the act and seek approval in the Shareholders’ meeting.
ii. In considering the newly elected directors may act as directors or managers for a company of business similar to the Bank, a proposal is made to release noncompetition binding to directors by shareholders.

iii. Please vote FOR the proposal.

The positions held by directors in the companies of the same as or similar to business of FEIB’s is summarized in the table below.

Position	Name	Company/ Position	Major Business
Director	Mr. Douglas TongHsu	Director,Da ChungBills Finance Corp.	Bills Finance
Director	Mr. Shaw Y. Wang, Representative of Far Eastern New CenturyCorp.	Director, Far Eastern Asset Management Corp.	AMC
Director	Mr. Humphrey Cheng, Representative of Far Eastern New CenturyCorp.	Director, Deutsche Far Eastern Asset Management Company Ltd.	SITE / SICE
Director	Mr. Eli Hong, Representative of Ta Chu Chemical Fiber Co., Ltd.	1. Director,Far Eastern Asset Management Corp. 2. Director, Deutsche Far Eastern Asset Management CompanyLtd.	1.AMC 2.SITE / SICE
Independent Director	Ms. Susan S. Chang	Chairperson, Smart Catch International Co., Ltd.	3rd-party payment

Resolutions ： The number of shares represented by the shareholders present at the time of voting (including e-voting) was 1,737,444,123 shares, where 1,680,132,523 votes (including e-voting) were cast FOR for the proposal, or 96.70% of the total votes, 8,376,578 votes were cast AGAINST, 110,000 votes were cast INVALID; and 48,825,022 votes were ABSTAINED. The proposal hereby is approved.

D. Questions and Motions (Voting Items): None

E. Meeting adjourned

Attachment I

2014 Business report

Reflecting upon 2014, though the U.S. economy showed steady growth, euro-zone suffered from unemployment and disinfl ation, Japan’s domestic spending was impacted by the rise of consumption tax, coupled with economic slowdown in China due to structural adjustments, the world recovery became stagnant. On the other hand, with higher domestic consumption, private investments and export growth, Taiwan’s economy is expected to grow as well. Looking into 2015, as global economic growth is expecting to improve than that of 2014, falling oil prices will fuel growth both home and abroad to report moderate growth. Thanks to the Bank 3.0 digitized fi nancial trend and the implementation of third party payment services, Taiwan’s banking industry is welcoming the new blue ocean opportunities offered by the innovative mobile and e-banking services.

In 2014, thanks to joint efforts of all colleagues, Far Eastern International Bank (FEIB) continued to deliver outstanding performances and maintain its growth momentum. The fiscal year net profit was NT$3.695 billion with a remarkable year-over-year growth of 20.69%. While FEIB issued its global deposit receipt (GDR) to increase capital in early 2014, earnings per share (EPS) remained at NT$1.31, also grew 5.65% than a year ago. The total return on assets (ROA) was 0.73%, continued to register growth for the past fi ve years. The return on equity (ROE) was 11.33%, exceeding 10% in fi ve consecutive years, which demonstrated steady performance. In addition, the asset quality of FEIB has surpassed industry standards with the provision for bad debt coverage ratio at 371.93% and NPL ratio at 0.39%.

FEIB has been fervently engaged in Bank 3.0 restructuring blueprint to create its innovative internet and mobile banking services and continues to develop niche products. The Bank again received “Best Potential Award” of the Wealth Management Bank Review by the Business Today magazine and its small and medium-sized enterprise loan was rated excellent grade. In terms of credit card business, the number of the issued credit cards has exceeded 1 million and mobile payment was lunched with Trusted Service Manager (TSM) via Over-the-air (OTA) mobile credit card. In the consumer banking business, installment and automobile & motorcycle loans continued their market lead position. The international financial teams across Taiwan, Hong Kong and China under corporate banking not only provided capital market and structural fi nance products, but also completed many landmark

cross-border international syndicated loan projects. Furthermore, the online platform of convertible bond asset swap and FX margin trading were also developed in order to innovate trading channel and strengthen its niche position of fi nancial market.

The Bank has long been committed to promoting various philanthropic activities, fulfi lling corporate social responsibilities (CSR), and creating sustainable future growths. FEIB has long partnered with the Eden Social Welfare Foundation, through cash back program of cardholders’ expenditures, accumulated funds collected and donations amounted to more than NT$65 million. In addition, 15,000 baseballs were donated by the Bank to support the development of this sport to the indigenous baseball teams across middle and primary schools. To promote world-class cultural performance, FEIB co-sponsored “Cavalia” show in Taipei, which was touring in Asia for the fi rst time. The Bank published 2015 calendar titled “Tribute to Mountain and Sea, Celebrate a Prosperous Year” illustrating the wisdom and culture of Taiwan’s indigenous people. For the consumer data protection, FEIB achieved certification from the British Standards Institutions (BSI) that demonstrated the Bank is in line with the international standard. In addition, the Bank is awarded the Talent QualityManagement System (TTQS) bronze medal by the Ministry of Labor for its outstanding talent development program. The Bank has received subsidy for 12 consecutive years from the Workforce Development Agency, the Ministry of Labor.

In the future, FEIB will continue its innovative strength to develop various e-banking and mobile-banking business models in order to cultivate blue ocean strategies via mobile payment, third-party payment, O2O, and online application platform. With comprehensive application of Big Data, the Bank is dedicated to exploring niche market opportunities and aims to strengthen customer relations via joint and cross selling, plus joining forces with Far Eastern International Securities that provides premier private banking services to high networth customers. The Bank will expand the Greater China banking platform by establishing fi nancial leasing company in China in order to pursue opportunities in the ASEAN market so as to elevate overseas profi t to exceed by 40%. The Bank will further integrate HappyCash, Happy Go Card loyalty points, Far EasTone’s e-wallet to develop the Group’s digital payment services to create profi ts in this niche business. Adapting to the challenges and opportunities in the digital banking environment, following the managing principles of “Sincerity, Diligence, Thrift, Prudence and Innovation” all colleagues of FEIB are committed to creating maximum value for our customers, shareholders, and employees.

Operating Results

1. Operating Highlights

(1) Individual Banking Business

The wealth management business continues to grow. Trust assets were NT$61 billion in 2014, up 9.52% comparing to that of 2013. Wealth management income grew 10.5% (YoY).

(2) Consumer Banking and Credit Card Business
A. Consumer Banking

Pursuing quality asset growth, FEIB’s consumer loan outstanding in 2014 increased 3.33% (YoY) to reach NT$182.4 billion, and total net interest income grew 5.73% (YoY).

B. Credit Card

Credit cards in circulation stood at 1.488 million, up 4.99% (YoY), with total spending of NT$63.9 billion in 2014.

(3) Corporate Banking Business

After adopting steady growth strategy of quality asset, FEIB’s corporate loan outstanding in 2014 grew 12.88% (YoY) to reach NT$143.7 billion and deposits for 2014 were up 19.85%. As to Greater China region, overall operating income in China and Hong Kong increased 30.91%, net interest income jumped 29.13%, fee income surged 35.37% and overall operating income grew 14.35%.

(4) Financial Markets Business

Benefiting from the low interest rate and higher market fluctuation, overall pre-tax income of this section grew 28.59% than that of 2013. Profit gain from interestrelated transactions hiked 254.45%, profit gain from foreign currencies surged 96.20%, pre-tax revenues registered by the Treasury Marketing Unit (TMU) were up 59.48% than a year ago, and profi t from FX Margin Trading grew 16.94% from the increase of online transactions.

2. Business Overview

(1) Target Achievement

In 2014, FEIB’s total assets stood at NT$521.3 billion, achieved 101.05% of target; deposits amounted to NT$424.1 billion, achieved 100.11% of target; and loan outstanding amounted to NT$323.9 billion, achieved 95.56% of target.

(2) Analysis of Profi tability

FEIB’s net operating income in 2014 grew 14.21% (YoY) to NT$10.571 billion; among

which net interest income increased 10.05% (YoY) to NT$5.376 billion; net noninterest income was NT$5.195 billion, also up 18.87% (YoY).

The Bank’s net income after tax was NT$3.695 billion, up 20.69% than that of 2013. With capital injection of NT$4.076 billion in 2014 and an increase of 365 million shares, earnings per share was NT$1.31, still registering a growth of 5.65% (YoY).

3. Ratings

The Bank’s investment grade ratings were assessed by Fitch Ratings Limited to read as follows: National Rating Long-term A (twn), National Rating Short-term F1 (twn), Foreign Currency Rating Long-term BBB-, Foreign Currency Rating Short-term F3, and Foreign Currency Rating Outlook Stable. FEIB is considered a stable financial institution of investment grade.

4. Research and Development

In adoption with the development of mobile communication, social media, big data and cloud computing technologies, FEIB has engaged in creating the newly developed network/mobile fi nancial services together with e & M virtual channel service. In 2014, the Bank initiated various elevations of its digital service platform, such as led in launching FETP FX Margin Trading Online Platform, acquired approval to operate cross-border third-party payment, integrated Trusted Service Manager (TSM) to issue mobile credit cards via Over-the-Air (OTA) platform. Also, types of currencies for FX Margin Trading were added to enlarge business scale. More innovative and convenient e & M-banking services will be launched including mobile payment, domestic third-party payment, online application of service platform, fi nancial transactions via mobile devices, new generation network service platform, OTP non-contractual transfer service, allowing small and medium enterprises to have access of all-in-one internet banking, to not only enhance the operating effi ciency and market competitiveness of FEIB, but also provide excellent products to satisfy customer needs.

5. Structural Changes

(1) To comply with the modifi ed Article 32 of “Implementation Rules of Internal Audit and Internal Control System of Financial Holding Companies and Banking Industries”, FEIB renamed its “Legal Department” under the Administration & Support Group as “Legal Compliance Department” which is divided into “Legal Compliance Unit” and “Legal Unit” and appointed this Department to be directly under the Bank President so as to facilitate promotion of the whole Bank’s legal compliance system.
(2) In order to create innovative flagship financial service center with shopping mall

complex, FEIB established in 2014 Hsinchu BigCity Branch and Banqiao Chungben Branch, two boutique branches within the shopping mall complex to combine wealth management with lifestyle and provide customers omni products and caring services.

Impact of Outside Competitive, Legal and Overall Operating Environment

Financial Supervisory Commission fully activated the “Creating Digitized Financial Environment 3.0" program to open more online application of financial business and amend relevant regulatory measures which will benefit FEIB’s promotion of online application service platform. The Legislative Yuan granted several major fi nancial bills including the Electronics Payment Processing Institutions Act amendment, accelerating the development momentum of third-party payment; Banking Law eased the limit of reinvestment total amount and changed it to be calculated on net value basis to expand banks’ investment scales; Banking Law also lowered maximum revolving interest rate of credit card to be under 15%, which will affect interest income for the banks.

2014 saw the recession in real estate transactions which infl uenced the mortgage market, target customers for the loan market moved toward employed group and squeezed growth and profi t in the consumer banking market. While it is forecasted that real estate transactions will remain gloomy in 2015, thanks to dropping international oil prices, substantial devaluation of Japanese Yen, and the propensity to change automobiles in Taiwan, outlook for the car loan business is relatively optimistic.

Operating Goals

Operating Goals:

Operating outlook for 2015 is summarized as follows:

(1) Total asset: NT$551.0 billion
(2) Total deposit: NT$442.9 billion
(3) Total loan: NT$365.4 billion
Operating Highlights:
(1) Individual Banking Business

The Wealth Management business continues to cultivate customers from the acquired Chinfon Bank, focus on serving high net worth customers, continues to develop FE Direct, e & M innovative channels, and will provide OTP non-contractual accounts transfer, dollar-cost averaging FX swap, automatic notifications to accounts and open small and medium enterprise customers to have access to many convenient service on e-banking. FEIB has been authorized to operate cross-border

third-party payment, will also proactively development domestic third-party payment, seize blue ocean opportunities. The Bank’s small and medium enterprise service will continue to expand and cultivate teams to provide these customers fi nancing and wealth management services for their diversifi ed needs. FEIB not only maintain its number one position in Taiwan’s TDR market, but also proactively promotes new trust products to generate service fees.

(2) Consumer Banking and Credit Card Business
A. Consumer Banking Business

FEIB accelerates the developments of its e & M-banking business models, expands new opportunities and profit incomes through new channels. Based on Big Data to continue its cross sales and bundle sales to provide funds and wealth management services, enhance customer relations, continue to strengthen asset management for high net worth clients, seek for simultaneous growth of asset, quality and profi t. To cope with the highly competitive market situation and adjustment of relevant laws and regulations, the Bank will continue to improve its operating process and service effi ciency to consolidate its niche products and market leading position.

B. Credit Card Business

FEIB continues to integrate the Group’s diversified enterprise resources for synergy of cross-industry products. Taking advantage of the HAPPY GO bonus point program and with diversifi ed application of HAPPY GO points, FEIB is able to fortify customer loyalty. Aside from C’est Moi My Card, the Bank cooperates with SOGO Department Stores to elevate ratio of revolving spending, joins forces with Formosa co-brand and eTag cards to enlarge traffi c users. Integrate HAPPY GO points and top up eTag cards, coupled with the newly added Easy Card and HappyCash cards to issue the four-in-one credit card to elevate customer stickiness and enter the small amount payment market. FEIB plans to launch travel-oriented credit cards to explore this market, introduce mobile and virtual cards to engage in the mobile payment business, establish e & M channels to serve customers online, consolidate customer base through data warehouse system, improve risk management technique and customizing pricing to elevate product competitiveness and expand revenue income.

(3) Corporate Banking Business

Focusing on target market, seizing growth opportunities of industry value chain

and the needs for money fl ow, FEIB continues to develop new customers and new market, cultivate in depth the quality customers, understand their operational plans to seek new business opportunities, establish risk asset ceiling to optimize asset scale and composition. The Bank strengthens customer relations, adopts multi-products marketing, promotes e-commerce, builds up steady funding and deposit structure to gain steady funds, initiates fi nancial consulting business, deepen Corporate Finance business, establishes leasing company in China to develop opportunities in the Greater China region, further explores market outside this region to expand overseas market deployment to increase overseas revenues.

(4) Financial Markets Business

FEIB provides highly professional financial products and services to customers, focuses on its niche products, and thus secures its brand image and leadership position of its core products such as FX margin trading and convertible bond asset swap. The Bank cultivates existing customer relations, continues to develop new customer group, strengthens TMU business, and develops derivatives financial products to provide in depth services to its enterprise customers. FEIB also has a solid financial structure with excellent asset and liability management. The Bank enhances its asset quality by managing both profitability and risk management, thus, developing highly competitive fi nancial transaction products. FEIB commits to developing innovative fi nancial services, establishing online purchase system of FX margin trading and convertible bond option to offer customers with more convenient innovative transactions.