FEIB — Capital/Financing Update 2013

Feb 20, 2013

OFFERING MEMORANDUM

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(incorporated as a company limited by shares in Taiwan, the Republic of China)

18,250,000 Global Depositary Shares representing 365,000,000 Common Shares, par value NT$10 per share

We are offering 18,250,000 Global Depositary Shares (the “GDSs”), representing 365,000,000 new common shares, par value NT$10.00 per common share, of our company (the “Shares” or “Common Shares”), each GDS representing 20 Shares, through Deutsche Bank AG, Hong Kong Branch and UBS AG, Hong Kong Branch (the “Initial Purchasers”).

Subject to certain restrictions described in this offering memorandum, on or after the Share Listing Date (as defined herein), which is expected to be no later than the fourth business day in the Republic of China (the “ROC”) following the closing date of this offering, you may surrender GDSs and withdraw and hold the underlying Shares or Individual Scripless Certificates of Payment, as the case may be, or request the Depositary to sell or cause to be sold on your behalf the underlying Shares.

The Shares are currently listed under the trading code “2845” on the Taiwan Stock Exchange (the “TWSE”) in the ROC. The closing sale price per Share on the TWSE on January 23, 2014 was NT$12.15 (equivalent to US$0.3995 at the exchange rate of NT$30.41 to US$1.00 based on the Taipei Forex Inc. Taiwan Dollar Closing rate on January 23, 2014)

Investing in and holding the GDSs involve a high degree of risk. See “Risk Factors” beginning on page 16 for a discussion of certain factors to be considered in connection with an investment in, and the holding of, the GDSs. The GDSs are of a specialist nature and should only be bought and traded by investors particularly knowledgeable in investment matters.

Offering Price: US$7.40 per GDS

The GDSs and the Shares underlying the GDSs have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Prospective purchasers are hereby notified that sellers of the GDSs may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A under the Securities Act (“Rule 144A”). Outside the United States, the offering is being made in reliance on Regulation S under the Securities Act (“Regulation S”). The GDSs are not being directly or indirectly offered in the ROC. See “Transfer Restrictions” and “Plan of Distribution.”

Application has been made to admit the GDSs, which consist of the Rule 144A GDSs and Regulation S GDSs, to the Official List of the Luxembourg Stock Exchange and to trading on the Euro MTF market of the Luxembourg Stock Exchange.

Delivery of the GDSs is expected to be made in book-entry form through the facilities of The Depository Trust Company, Euroclear Bank, S.A./N.V., as operator of the Euroclear System (“Euroclear”) and Clearstream Banking, société anonyme (“Clearstream”) through their participant accounts on or about January 28, 2014 (the “Closing Date”).

Joint Global Coordinators and Joint Bookrunners

Offering Memorandum dated January 23, 2014.

No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this offering memorandum. You must not rely on any unauthorized information or representations. This offering memorandum is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. You should not assume that the information contained in this offering memorandum is accurate as of any date other than the date of this offering memorandum. Our business, financial condition, results of operations and prospects may have changed since that date.

No United States federal, state or foreign securities commission or regulatory authority has recommended the GDSs or reviewed, passed on, determined or confirmed the accuracy or adequacy of this offering memorandum. Any representation to the contrary may be a criminal offense.

Except as described below, we accept responsibility for the information contained in this offering memorandum. We, having made all reasonable enquiries, confirm that this offering memorandum contains all information with respect to us, our subsidiaries, the GDSs and our Common Shares that is material in the context of the issue and offering of the GDSs, that the information contained in this offering memorandum is true and accurate in all material respects and is not misleading, that the opinions and intentions expressed are honestly held and have been reached after considering all relevant circumstances and are based on reasonable assumptions, that there are no other facts, the omission of which would, in the context of the issue and offering of the GDSs, make this offering memorandum as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respects and that all reasonable enquiries have been made by us to verify the accuracy of such information and that this offering memorandum does not contain any untrue statement of a material fact or omit to state a material fact required to be stated or necessary in order to make the statements, in the light of the circumstances under which they are made, not misleading. We accept responsibility for and confirm that the information contained in each of the sections entitled “Appendix A: The Securities Markets of the ROC” and “Appendix B: Foreign Investment and Exchange Controls in the ROC” has been accurately extracted from the TWSE Monthly Review and the laws and regulations of the ROC. However, such information has not been verified by us, the Initial Purchasers or any of our or the Initial Purchasers’ affiliates or advisors in connection with this offering.

The distribution of this offering memorandum and the offering and sale of the GDSs in certain jurisdictions may be restricted by law. Persons into whose possession this offering memorandum comes are required by us and the Initial Purchasers to inform themselves about and to observe any such restrictions. For a description of certain further restrictions on offers and sales of the GDSs and distribution of this offering memorandum, see “Plan of Distribution” and “Transfer Restrictions.” This offering memorandum does not constitute an offer of, or an invitation by or on behalf of us or the Initial Purchasers to subscribe for or purchase any of the GDSs in any jurisdiction in which such offer or invitation would be unlawful. This offering memorandum may be used only for the purposes for which it has been published.

For New Hampshire Residents

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER RSA 421-B WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR TRANSACTION MEANS THAT THE SECRETARY OF STATE OF NEW HAMPSHIRE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

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Available Information

If, at any time, we are neither subject to Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934, as amended, (the “Exchange Act”) nor exempt from reporting pursuant to Rule 12g3-2(b) of the Exchange Act, we will furnish, upon request, to any person in whose name GDSs are registered on the books of the Depositary (as defined herein), any holder of any beneficial interest in GDSs or any prospective purchaser designated by a holder, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. Alternatively, a holder may obtain such information at the offices of our Luxembourg listing agent intermediary, The Bank of New York Mellon (Luxembourg) S.A., as such information will be provided free of charge to any person in Luxembourg who requests it.

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TABLE OF CONTENTS

PRESENTATION OF INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ENFORCEABILITY OF FOREIGN JUDGMENTS IN THE ROC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SUMMARY FINANCIAL AND OTHER DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . THE OFFERING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DIVIDENDS AND DIVIDEND POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EXCHANGE RATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MARKET PRICE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SELECTED FINANCIAL AND OTHER DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DESCRIPTION OF ASSETS AND LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . REGULATION OF THE ROC BANKING INDUSTRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SHARE OWNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CHANGES IN ISSUED SHARE CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TRANSACTIONS WITH RELATED PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DESCRIPTION OF THE SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DESCRIPTION OF THE GLOBAL DEPOSITARY SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TRANSFER RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SUMMARY OF CERTAIN DIFFERENCES BETWEEN ROC GAAP AND IFRSs . . . . . . . . . . . . . . . . . LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . INDEX TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX A: THE SECURITIES MARKETS OF THE ROC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX B: FOREIGN INVESTMENT AND EXCHANGE CONTROLS IN THE ROC . . . . . . . . . . .

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1 3 4 5 7 10 16 34 35 36 37 38 39 42 60 76 102 108 117 118 119 122 126 148 155 158 163 168 169 170 F-1 A-1 B-1

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PRESENTATION OF INFORMATION

The references to “the Company” in this offering memorandum refer to Far Eastern International Bank, and references to “we,” “us” and “our” in this offering memorandum refer to Far Eastern International Bank or Far Eastern International Bank and its subsidiaries, as the context requires, unless specifically indicated. The references to “Shares” refer to the common shares of the Company, par value NT$10 per common share. The references to “Taiwan” and “ROC” refer to Taiwan, the Republic of China. The references to “PRC” and “China” refer to the People’s Republic of China. The references to “the ROC Company Law” refer to the Company Law of the ROC. The references to “FSC” refer to the Financial Supervisory Commission of the ROC. The references to “TWSE” refer to the Taiwan Stock Exchange Corporation.

Unless expressly stated otherwise, all financial information, description and other information regarding our financial condition and results of operations as of and for the years ended December 31, 2010, 2011 and 2012 and as of and for the nine months ended September 30, 2012 and 2013 included in this offering memorandum are presented on a consolidated basis. Our consolidated financial statements as of and for the years ended December 31, 2010, 2011 and 2012 have been audited. Our consolidated financial statements as of and for the nine months ended September 30, 2012 and 2013 have been reviewed by our independent auditors.

The financial statements of the Company are published in New Taiwan dollars, the lawful currency of the ROC. All references to “United States dollars,” “US dollars” and “US$” are to United States dollars, all references to “New Taiwan dollars,” “NT dollars” and “NT$” are to New Taiwan dollars and all references to “HK$” are to Hong Kong dollars. Unless otherwise noted, all translations from NT dollars to US dollars were made at the exchange rate as set forth in the H.10 statistical release of the Federal Reserve Board (the “Noon Buying Rate”) as of September 30, 2013, which was NT$29.56 = US$1.00. All amounts translated into US dollars in this offering memorandum are provided solely for your convenience and no representation is made that the NT dollar or US dollar amounts referred to herein could have been or could be converted into US dollars or NT dollars, as the case may be, at any particular rate or at all. For further information relating to exchange rates, see “Exchange Rates”.

In this offering memorandum, where information has been presented in thousands, millions or billions of units, amounts may have been rounded up or down. Accordingly, the total of columns or rows of numbers in tables may not be equal to the apparent total of the individual items and actual numbers may differ from those contained herein due to rounding.

We have historically presented our consolidated financial statements, including our consolidated financial statements for the years ended December 31, 2010, 2011 and 2012, in accordance with accounting principles, procedures and reporting practices generally accepted in the ROC, or ROC GAAP. Effective from January 1, 2013, companies listed on the TWSE, including us, must report their financial statements under Taiwan International Financial Reporting Standards, or Taiwan-IFRSs, pursuant to the requirements of the Framework for Adoption of International Financial Reporting Standards by Companies in the ROC promulgated by the ROC Financial Supervisory Commission, or FSC, on May 14, 2009. Accordingly, our financial statements as of and for the years ended December 31, 2010, 2011 and 2012 are prepared under ROC GAAP, and our financial statements as of and for the nine months ended September 30, 2012 and 2013 are prepared in accordance with Taiwan-IFRSs. These financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in other countries and jurisdictions, including the United States. The material differences between ROC GAAP and IFRSs are discussed under the section entitled “Summary of Significant Differences between ROC GAAP and IFRSs.” Certain financial amounts presented herein may not correspond directly to our financial statements included elsewhere herein or may not add up due to rounding.

We have compiled all industry and market information and statistics contained in this offering memorandum from various published and private sources, which may be inconsistent with other information compiled

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elsewhere. Unless otherwise indicated, all industry and market information and statistics contained in this offering memorandum relate to Taiwan. We have reproduced such information correctly in this offering memorandum but neither we, nor the Initial Purchasers, have independently verified the accuracy of any of such information.

We have compiled information with regard to our market share and market size in this offering memorandum using statistics and other information made available largely in the Chinese language by the Banking Bureau at its website at http://www.banking.gov.tw. Information on this website was collected from filings made by reporting financial institutions to the Banking Bureau and may differ from any audited financial information of such financial institutions. We have not independently verified the accuracy and completeness of the information and we do not accept responsibility for such information.

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FORWARD-LOOKING STATEMENTS

All statements contained in this offering memorandum that may be made by us or our officers, directors, supervisors or employees acting on our behalf that are not statements of historical fact constitute “forward-looking statements”. You can identify some of these forward-looking statements by terms such as “expects,” “believes,” “plans,” “intends,” “estimates,” “anticipates,” “may,” “will,” “would” and “could” or similar words. However, you should note that these words are not the exclusive means of identifying forwardlooking statements. All statements regarding our expected financial position, business strategy, plans and prospects are forward-looking statements. These forward-looking statements, including statements as to:

• the intense competition in and other risks relating to the Taiwan banking industry in which we operate;

• statements regarding our future loan growth and asset quality;

• regulations and governmental policies in Taiwan which affect our businesses;

• general economic, political and social conditions and developments in Taiwan and other jurisdictions in which we operate our businesses;

• the impact of mergers and acquisitions in the financial services industry, competing demands for our capital and the risk of undisclosed liabilities;

• legal proceedings;

• other risks identified in “Risk Factors”; and

• other matters discussed in this offering memorandum regarding matters that are not historical facts,

are only forecasts based on information currently available to us. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These risks, uncertainties and other factors include, among others:

• changes in political, social and economic conditions and the regulatory environment in the ROC;

• changes in currency exchange rates;

• changes to credit environment and our ability to secure funding that may be required to meet our liquidity needs and investment objectives;

• our rate of growth and ability to meet the demands relating to our growth;

• changes in market prices for our products;

• changes in customer preferences;

• changes in competitive conditions and our ability to compete under these conditions; and

• other factors beyond our control.

Given the risks and uncertainties that may cause our actual future results, performance or achievements to be materially different than expected, expressed or implied by the forward-looking statements in this offering memorandum, we advise you not to place undue reliance on those statements. We are not representing or warranting to you that our actual future results, performance or achievements will be as discussed in those statements. Further, we disclaim any responsibility to update any of those forward-looking statements or publicly announce any revisions to those forward-looking statements to reflect future developments, events or circumstances.

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ENFORCEABILITY OF FOREIGN JUDGMENTS IN THE ROC

We are a company limited by shares and incorporated under the ROC Company Law. Most of our directors, executive officers and supervisors and certain of the experts named in this offering memorandum are residents of the ROC and substantially all of our assets and such persons are located in the ROC. As a result, it may be difficult for investors to enforce judgments obtained outside the ROC against us or such persons in the ROC, including those predicated upon the civil liability provisions of the federal securities laws of the United States. Any final judgment obtained against us or such persons in any court other than the courts of the ROC in respect of any legal suit or proceeding arising out of or relating to our Shares or GDSs will be enforced by the courts of the ROC without further review of the merits only if the court of the ROC in which enforcement is sought is satisfied that:

• the court rendering the judgment has jurisdiction over the subject matter according to the laws of the ROC;

• neither the judgment nor the court proceedings resulting in the judgment are contrary to the public order or good morals of the ROC;

• if the judgment was rendered by default by the court rendering the judgment, (i) process was duly served on us or such persons within a reasonable period of time within the jurisdiction of such court in accordance with the laws and regulations of such jurisdiction or (ii) process was served on us or such persons with judicial assistance of the ROC; and

• judgments of the courts of the ROC are recognized and enforceable in the jurisdiction of the court rendering the judgment on a reciprocal basis.

A party seeking to enforce a foreign judgment in the ROC would, except under limited circumstances, be required to obtain foreign exchange approval from the Central Bank of the Republic of China (Taiwan), or the CBC, for the remittance out of the ROC of any amounts exceeding US$100,000 or its equivalent recovered in respect of such judgment denominated in a currency other than NT dollars. See “Foreign Investment and Exchange Controls in the ROC.”

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SUMMARY

The following summary is qualified in its entirety by the more detailed information contained elsewhere in this offering memorandum. This summary may not contain all of the information you should consider before deciding to invest in the GDSs. We recommend that you read this offering memorandum carefully, including the financial statements and related notes which appear in the F-pages of this offering memorandum and “Risk Factors”.

Overview

Established in 1992 and listed on the TWSE in 1998, we are a leading full-service commercial bank in Taiwan. Through our four strategic business units, or SBUs, namely the Individual Banking Group, Consumer Banking & Credit Card Group, Corporate Banking Group and Financial Markets Group, we offer a broad range of financial products and banking services to over 2.5 million individual and corporate customers in Taiwan and abroad. On January 23, 2014, our market capitalization was NT$28.7 billion based on the closing price of NT$12.15 per share on the TWSE on that date. We are a member of the Far Eastern Group, one of the largest business conglomerates in Taiwan having a diversified group of companies engaging in activities including, among others, financial services, petrochemicals, cement production, manufacturing, retailing, shipping, transportation, telecommunications, investment and real estate. Our affiliation with this reputable conglomerate, as well as our use of the Far Eastern brand name, enhances our franchise and business opportunities.

Our long history, highly popular and competitive products and strong brand name makes us one of Taiwan’s premier financial services companies. We believe that our comprehensive product and service offerings have not only helped expand our customer base, but have also contributed to our high customer retention rate. Our large and loyal customer base has in turn strengthened our ability to cross sell products and services offered by our SBUs.

We leverage our extensive distribution and customer service network consisting of our head office and 54 domestic branches, one offshore banking unit, one Hong Kong branch, six corporate banking centers and 157 automated teller machines, or ATMs, to cross sell and serve our large customer base. As of September 30, 2013, we had more than 2.5 million individual banking and consumer banking customers and approximately three thousand corporate banking customers. In addition, we are one of Taiwan’s leading issuers of credit cards in terms of number of credit cards in-force and total credit card revolving balances. As of September 30, 2013, we had approximately 1.4 million credit cards in-force and outstanding credit card revolving balances of NT$10.5 billion.

As of September 30, 2013, we had total assets of NT$491.2 billion (US$16.6 billion), total gross discounts and loans of NT$321.0 billion (US$10.9 billion), deposits and remittances of NT$392.6 billion (US$13.3 billion) and shareholders’ equity of NT$28.5 billion (US$1.0 billion), as well as a standalone capital adequacy ratio of 10.16% and a standalone Tier I capital adequacy ratio of 7.54%.

Our executive offices are located at 27th Floor, No. 207, Section 2, Tun Hwa South Road, Taipei, Taiwan, the ROC.

Competitive Strengths

We believe that the following key competitive strengths contribute to our competitive position in the financial services industry in Taiwan:

• Differentiating business model leveraging synergy with Far Eastern Group;

• Outstanding consumer finance franchise focusing on product bundling;

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• Sophisticated corporate banking and financial market capabilities;

• Proven earnings generation capability and solid asset quality;

• Best-in-class execution capabilities; and

• Seasoned management team with proven track record.

Strategy

Our strategic goal is to become a premier specialized financial institution in both Taiwan and Greater China by providing a full range of financial products and unparalleled services to our customers. We plan to achieve our goal by implementing the following strategies:

• Further strengthen our leadership in niche/high margin markets;

• Continue to develop innovative financial products and services;

• Pursue cross-selling opportunities by leveraging Far Eastern Group and its affiliates;

• Enhance operational efficiency by integrating back offices and administration functions;

• Evaluate and selectively pursue strategic alliances and acquisitions to expand our scale and service and operational capabilities;

• Expand business coverage into Greater China to further support corporate customer needs; and

• Attract, motivate and develop talented and experienced professionals.

Recent Developments

As announced on the Market Observation Post System, our consolidated net profit for October, November and December 2013 were NT$794.7 million, NT$848.4 million and NT$731.9 million, respectively, and our income before income tax for 2013 was NT$3,554.9 million. The financial data for October, November and December 2013 and the year 2013 have not been audited nor reviewed by our auditor, and are subject to adjustments based upon, among other things, completion of applicable reporting processes. Actual results could differ materially from the financial data provided above.

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SUMMARY FINANCIAL AND OTHER DATA

The summary financial information as of and for the years ended December 31, 2010, 2011 and 2012 has been derived from our audited consolidated financial statements prepared in accordance with ROC GAAP included elsewhere in this offering memorandum. These consolidated financial statements have been audited by Deloitte & Touche, independent auditors. The summary unaudited consolidated financial information as of and for the nine months ended September 30, 2012 and 2013 has been derived from our unaudited consolidated financial statements for the same periods prepared in accordance with Taiwan-IFRSs, pursuant to the Regulations Governing the Preparation of Financial Reports by Public Banks, International Financial Reporting Standard 1 “First-time Adoption of International Financial Reporting Standards” and International Accounting Standard 34 “Interim Financial Reporting” endorsed by the Financial Supervisory Commission of the Republic of China included elsewhere in this offering memorandum. The unaudited consolidated financial statements include all adjustments, consisting only of normal and recurring adjustments, which we consider necessary for a fair presentation of our financial position and operating results for the periods presented. These consolidated financial statements have been reviewed by Deloitte & Touche, independent auditors.

Our financial statements as of and for the years ended December 31, 2010, 2011 and 2012 included in the F-pages of this offering memorandum have been prepared and presented in accordance with reporting requirements of the “Regulations Governing the Preparation of Financial Reports by Public Banks” and other applicable ROC laws and regulations and in accordance with ROC GAAP. Our financial statements as of and for the nine months ended September 30, 2012 and 2013 included in the F-pages of this offering memorandum have been prepared and presented in accordance with Taiwan-IFRSs, pursuant to the Regulations Governing the Preparation of Financial Reports by Public Banks, International Financial Reporting Standard 1 “First-time Adoption of International Financial Reporting Standards” and International Accounting Standard 34 “Interim Financial Reporting” endorsed by the Financial Supervisory Commission of the Republic of China included elsewhere in this offering memorandum. Those financial statements are not intended to present our financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in other countries and jurisdictions, including the United States. The summary financial data in the following tables have been derived from our financial statements included in the F-pages of this offering memorandum without material adjustment. Solely for your convenience, these summary data are presented in a different format from those financial statements. Neither these data nor the format in which they are presented should be viewed as comparable to information prepared in accordance with US GAAP or generally accepted accounting principles elsewhere.

accounting principles elsewhere.
Selected income statement data: Total net interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net service fee income and commission income . . . . . . Net gain on financial instruments(1) . . . . . . . . . . . . . . . . Net gain on reversal of provision (provision) for asset impairment loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recovery of written-off credits(2) . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total non-interest income and gains, net . . . . . . Net profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision (reversal of provision) for possible losses and guarantee obligations reserve(2) . . . . . . . . . . . . . . . . . . Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . Income before income tax . . . . . . . . . . . . . . . . . . . . . . Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated net income. . . . . . . . . . . . . . . . . . . . . . . .	Year	Ended December 31, Nine Months Ended September 30, 2011 2012 2012 2013 NT$ NT$ US$ NT$ (unaudited) NT$ US$ (in millions) 3,879.4 3,978.8 134.6 3,073.4 3,662.8 123.9 2,276.0 2,585.1 87.5 1,912.2 2,131.4 72.1 865.6 1,271.6 43.0 917.7 1,072.3 36.3 (2.8) 44.8 1.5 56.2 0.8 — 1,220.0 1,274.7 43.1 — — — 426.1 485.1 16.4 303.1 236.1 8.0 4,784.9 5,661.3 191.5 3,189.2 3,440.6 116.4 8,664.3 9,640.1 326.1 6,262.6 7,103.4 240.3 834.2 897.3 30.4 (587.1) (320.4) (10.8) 5,306.5 5,815.1 196.7 4,321.8 4,316.9 146.0 2,523.6 2,927.7 99.0 2,527.9 3,106.9 105.1 150.4 364.3 12.3 272.4 379.2 12.8 2,373.2 2,563.4 86.7 2,255.5 2,727.7 92.3	Nine Months Ended September 30,
	2010 NT$ 3,983.8 2,257.5 955.6 (6.1) 1,247.6 259.5 4,714.1 8,697.9 675.0 4,973.7 3,049.2 852.8 2,196.4	2011 NT$ 3,879.4 2,276.0 865.6 (2.8) 1,220.0 426.1 4,784.9 8,664.3 834.2 5,306.5 2,523.6 150.4 2,373.2		2013
				(unaudited) NT$ US$ 3,662.8 123.9 2,131.4 72.1 1,072.3 36.3 0.8 — — — 236.1 8.0 3,440.6 116.4 7,103.4 240.3 (320.4) (10.8) 4,316.9 146.0 3,106.9 105.1 379.2 12.8 2,727.7 92.3

Notes:

(1) Net gain on financial instruments includes net gain on financial assets and liabilities at fair value through profit or loss, net gain on available-for-sale financial assets, investment income (loss) recognized under the equity method and foreign exchange gain (loss). (2) While recovery of written-off credits are credited against provision for possible losses under Taiwan-IFRSs, it is recognized as other income under ROC GAAP in the years ended December 31, 2010, 2011 and 2012.

7

Selected balance sheet data: Assets Discounts and loans, net . . . . Due from the Central Bank and other banks . . . . . . . . . Other financial assets(1) . . . . . Total assets. . . . . . . . . . . . . . Liabilities Deposits and remittances . . . Bank debentures . . . . . . . . . . Due to the Central Bank and other banks . . . . . . . . . . . . Total liabilities . . . . . . . . . . . Total shareholder’s equity . . . . . . . . . . . . . . . . Total liabilities and shareholders’ equity . . . .		As of December 31, As of September 30, 2011 2012 2012 2013 NT$ NT$ US$ NT$ (unaudited) NT$ US$ (in millions) 269,460.4 280,219.4 9,479.7 280,051.3 316,949.8 10,722.3 86,739.2 82,818.6 2,801.7 81,359.1 79,374.3 2,685.2 75,773.4 96,592.0 3,267.7 89,364.0 89,305.4 3,021.2 438,455.1 465,498.3 15,747.6 456,748.0 491,166.7 16,615.9 369,998.6 391,933.3 13,258.9 377,867.0 392,644.4 13,283.0 20,230.3 23,072.1 780.5 23,094.5 25,055.6 847.6 11,785.7 11,675.0 395.0 15,327.3 25,027.4 846.7 413,800.7 438,897.0 14,847.7 430,459.1 462,674.7 15,652.0 24,654.4 26,601.3 899.9 26,288.9 28,492.0 963.9 438,455.1 465,498.3 15,747.6 456,748.0 491,166.7 16,615.9	As of September 30,	As of September 30,
	2010 NT$ 236,351.3 102,938.4 72,548.8 418,356.4 347,860.6 16,789.6 18,093.1 395,549.2 22,807.2 418,356.4	2011 NT$ 269,460.4 86,739.2 75,773.4 438,455.1 369,998.6 20,230.3 11,785.7 413,800.7 24,654.4 438,455.1		2013
				(unaudited) NT$ US$ 316,949.8 10,722.3 79,374.3 2,685.2 89,305.4 3,021.2 491,166.7 16,615.9 392,644.4 13,283.0 25,055.6 847.6 25,027.4 846.7 462,674.7 15,652.0 28,492.0 963.9 491,166.7 16,615.9

Notes:

(1) Other financial assets include cash and cash equivalents, financial assets at fair value through profit or loss, securities purchased under resale agreements, receivables-net, available-for-sale financial assets, held-to-maturity financial assets, investments accounted for by the equity method, debt investments with no active market, and other financial assets (including derivative financial assets for hedging).

8

	As of or for the Year Ended December 31, As of or for the Nine Months Ended September 30,
	2010 2011 2012 2012 2013
Selected credit data: Total loans(1) . . . . . . . . . . . NPLs . . . . . . . . . . . . . . . . . Allowance for possible losses . . . . . . . . . . . . . . . Credit card revolving balance . . . . . . . . . . . . . Allowance for possible losses—credit card receivables . . . . . . . . . . . Key financial ratios: Net interest margin(2) . . . . . Net gain on financial instruments ratio(3) . . . . . Net non-interest income and gains ratio(4) . . . . . . Provision (reversal of provision) for possible losses and guarantee obligations reserve ratio(5) . . . . . . . . . . . . . . Return on average equity(6) . . . . . . . . . . . . . Return on average assets(7) . . . . . . . . . . . . . Earnings per share . . . . . . . NT$ Cash dividends per share(8) . . . . . . . . . . . . . . NT$ Asset quality data: NPL ratio(9) . . . . . . . . . . . . Coverage ratio(10) . . . . . . . . Capital adequacy ratio(11) . . . . . . . . . . . . . .	(unaudited) (unconsolidated) NT$ NT$ NT$ US$ NT$ NT$ US$ (in millions, except percentages and per share data) 239,958.8 274,234.1 283,801.4 9,600.9 283,219.4 320,953.5 10,857.7 1,202.8 612.6 1,317.1 44.6 1,349.1 1,140.0 38.6 3,607.5 4,773.7 3,582.0 121.2 3,168.1 4,003.7 135.4 11,220.8 10,774.4 10,676.4 361.1 10,621.8 10,471.5 354.2 1,849.2 774.3 710.0 24.0 727.9 660.2 22.3 1.36% 1.19% 1.13% 1.17% 1.26% 10.99% 9.99% 13.19% 14.65% 15.10% 54.20% 55.23% 58.73% 50.92% 48.44% 7.76% 9.63% 9.31% (9.37%) (4.51%) 10.08% 10.00% 10.00% 11.84% 13.24% 0.55% 0.55% 0.57% 0.67% 0.76% 0.99 NT$ 1.07 NT$ 1.15 US$ 0.04 NT$ 0.96 NT$ 1.16 US$ 0.04 0.10 NT$ 0.25 NT$ 0.25 US$ 0.01 N/A N/A 0.50% 0.22% 0.46% 0.48% 0.36% 299.92% 779.32% 271.96% 234.84% 351.20% 13.36% 12.86% 12.71% 12.53% 10.16%

Notes:

• (1) Represents the gross amount of loans, discounts and bills purchased as of the dates indicated, without deducting any allowance for possible losses. See note 9 of the notes to our financial statements as of and for the years ended December 31, 2010, 2011 and 2012 and note 12 of the notes to our financial statements as of and for the nine months ended September 30, 2012 and 2013, both included in the F-pages of this offering memorandum.

• (2) Represents net interest income (without deducting amount booked as service fee income) divided by daily average interest earning assets. In order to enable a comparison with annual figures, net interest margin for each of the nine months ended September 30, 2012 and 2013 represents annualized net interest income divided by average interest-earning assets for the period.

• (3) Represents the ratio of net gain on financial instruments to net profit.

• (4) Represents the ratio of net non-interest income and gains to net profit. Net non-interest income includes service fees, gains on securities and other non-interest income.

• (5) Represents the ratio of provision (reversal of provision) for possible losses and guarantee obligations reserve to net profit.

• (6) Represents consolidated net income divided by average equity for the period (calculated by averaging the opening and ending balance of the period). In order to enable a comparison with annual figures, return on average equity for each of the nine months ended September 30, 2012 and 2013 represents annualized consolidated net income divided by average equity for the period.

• (7) Represents consolidated net income divided by average assets for the period. In order to enable a comparison with annual figures, return on average assets for each of the nine months ended September 30, 2012 and 2013 represents annualized consolidated net income divided by average assets for the period.

• (8) Represents cash dividends which were declared and paid in the year, but related to the earnings of the preceding year. (9) Represents NPLs divided by gross loans.

• (10) Represents total allowance for possible losses divided by total amount of nonperforming loans.

• (11) Determined in accordance with the requirements of the FSC. See “Descriptions of Assets and Liabilities—Capital Adequacy.”

9

THE OFFERING

The following is only a summary and is qualified in its entirety by reference to the “Description of the Global Depositary Shares.”

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||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|Issuer|. . . . . . . . . . . . . . . . . . . . . . . . . . .|Far Eastern International Bank.|
|The GDS Offering|. . . . . . . . . . . . . . . . .|18,250,000|GDSs|representing|365,000,000|new|common|shares,|or|
|Shares, to qualified|institutional|buyers, or QIBs, in the United States|
|in|reliance|on|Rule|144A|under|the|Securities|Act,|or|the|Rule|144A|
|GDSs,|and|outside|the|United|States|in|reliance|on|Regulation|S|
|under the Securities Act, or the Regulation S GDSs.|
|Shares Outstanding Immediately|2,362,118,264 Shares.|
|Before the GDS Offering|. . . . . . . . .|
|Shares Outstanding Immediately after|Immediately|after|this|offering,|there|will|be|2,727,118,264|Shares|
|the GDS Offering|. . . . . . . . . . . . . . .|issued and outstanding.|
|The GDSs|. . . . . . . . . . . . . . . . . . . . . . . .|Each GDS represents|20 Shares. The Rule 144A GDSs will be issued|
|pursuant to a Rule 144A deposit agreement, or the Rule 144A Deposit|
|Agreement,|and|the|Regulation|S|GDSs|will|be|issued|pursuant|to|a|
|Regulation|S|deposit|agreement,|or|the|Regulation|S|Deposit|
|Agreement,|and together with the Rule 144A Deposit Agreement, the|
|Deposit Agreements.|
|Offering Price|. . . . . . . . . . . . . . . . . . . .|US$7.40 per GDS.|
|Closing Date|. . . . . . . . . . . . . . . . . . . . . .|January 28, 2014|
|Use of Proceeds|. . . . . . . . . . . . . . . . . . .|The net proceeds to be received by us from this offering of the GDSs|
|will|be|approximately|US$133.0|million.|The|net|proceeds|are|
|calculated|after|deducting|underwriting|discounts|and|commissions|
|and related expenses of US$2.1 million. We will use the net proceeds|
|to|provide|us|with|additional|working|capital,|enhance|our|Tier-1|
|capital ratio and strengthen our capital structure.|
|Lockup Agreements|. . . . . . . . . . . . . . .|We have agreed that, subject to certain exceptions, until 90 days after|
|the|date|hereof,|we|will|not,|without|the|Initial|Purchasers’|prior|
|written consent, offer, sell, contract to sell or otherwise dispose of any|
|securities|of|us|that|are|substantially|similar|to|the|GDSs|or|the|
|Shares, including but not limited to any securities that are convertible|
|into|or|exchangeable|for,|or|that|represent|the|right|to|receive,|or|the|
|Shares|or|any|such|substantially|similar|securities|(other|than|
|(i)|pursuant|to|employee|stock|option|plans|existing|on|the|date|
|hereof,|(ii)|upon|the|conversion|or|exchange|of|convertible|or|
|exchangeable|securities|outstanding|as|of|the|date|hereof,|or|(iii)|the|
|issuance|of|additional|Shares|in|the|form|and|manner|and|within|the|
|quota|approved|in|our|2013|general|shareholder|meeting).|See|“Plan|
|of Distribution.”|

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Form and ROC Share Issuance On the Closing Date we will deliver a certificate of payment, or the
Procedure . . . . . . . . . . . . . . . . . . . . . . Certificate of Payment, evidencing the right to receive underlying
Shares to Citibank Taiwan Limited, as custodian, or the Custodian,
for Citibank, N.A., as the depositary, or the Depositary, which in turn
will deliver the GDSs. Upon receipt by the Custodian of the
Certificate of Payment, the Depositary will deliver (i) a Rule 144A
master global depositary receipt, or Rule 144A Master GDR,
certificate evidencing the Rule 144A GDSs, to be registered in the
name of Cede & Co., as nominee for The Depository Trust Company,
or DTC, and (ii) a Regulation S master global depositary receipt, or
Regulation S Master GDR, certificate evidencing the Regulation S
GDSs, to be registered in the name of a nominee of Citibank Europe
plc as common depository for Euroclear and Clearstream.
No later than the second business day in the ROC following the
Closing Date, we will apply to the TWSE for listing of certificates of
payment in scripless form, or the Individual Scripless Certificates of
Payment, in respect of the underlying Shares. It is expected that the
TWSE will approve the listing of the Individual Scripless Certificates
of Payment on the fourth business day in the ROC following the
Closing Date (such approval date being the “Share Listing Date”),
although there is no assurance that such approval will be obtained by
such date (if at all). Immediately upon such listing and the credit of
the number of Shares as represented by the Individual Scripless
Certificates of Payment into the Depositary’s account with its
Custodian through the book-entry system maintained by the Taiwan
Depository & Clearing Corporation, or the TDCC, the Certificate of
Payment we delivered to the Custodian on the Closing Date will be
replaced by the Individual Scripless Certificates of Payment. Except
where the context otherwise requires, all references in this offering
memorandum to the Shares represented by the GDSs assume that we
have received approval from the TWSE for the listing of the
Individual Scripless Certificates of Payment, and during the period
immediately prior to the Share Listing Date those references shall be
deemed as references to the Certificate of Payment initially delivered
to the Custodian.
For the avoidance of doubt, the first ROC business day after the
Closing Date is February 5, 2014.
We will issue and deliver the underlying Shares in scripless form in
respect of the Individual Scripless Certificates of Payment into the
Depositary’s account with its Custodian through the book-entry
system maintained by the TDCC on or about 60 to 80 calendar days
after the Closing Date, subject to obtaining approvals from the
relevant government authorities and the TWSE.
Withdrawal of Common Shares . . . . . . On or after the Share Listing Date, which is approximately the fourth
ROC business day following the Closing Date, subject to the listing
approval from the TWSE and the relevant provisions of the applicable
Deposit Agreement, a holder may apply to withdraw the underlying
Shares or, as the case may be, the Individual Scripless Certificates of
Payment. Under ROC market practice, you will not be able to receive
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the underlying Shares or, as the case may be, the Individual Scripless
Certificate of Payment until two ROC business days after the Share
Listing Date. Interests in the Individual Scripless Certificates of
Payment, without physical certificates and maintained in the
book-entry settlement system, carry the same rights and as those
attaching to the Shares and are eligible for trading on the TWSE in
the same manner as Shares. Delivery of the irrevocable right to
receive the underlying withdrawn Shares, evidenced by the Individual
Scripless Certificates of Payment, will only be made by the Custodian
through the book-entry system maintained by the TDCC. See
“Description of the Global Depositary Shares—Withdrawal of Shares
Upon Cancellation of GDSs.”
Issuance of Additional GDSs . . . . . . . . Under current ROC law and as provided in the Deposit Agreements,
after the closing of the offering, no deposits of shares may be made in
the depositary receipt facility, and no GDSs may be issued against
such deposits, without specific approval of the FSC, except for the
offering and the issuance of additional GDSs in connection with
(i) dividends on, or free distributions of, Shares, (ii) the exercise by
holders of existing GDSs of their pre-emptive rights in the event of
capital increases for cash, (iii) to the extent previously issued GDSs
have been canceled and as permitted under the Deposit Agreements,
the deposit of Shares owned or purchased directly by a person or
through the Depositary on the TWSE for the deposit in the deposit
receipt facility, but such that the total number of GDSs outstanding
after an issuance described in this clause does not exceed the number
of GDSs issued and previously approved by the FSC in connection
with this offering plus any GDSs created under clauses (i) and
(ii) described above, and (iv) upon the exchange of Rule 144A GDSs
for Regulation S GDSs and vice versa, subject to any adjustment to
the number of shares represented by each GDS. See “Description of
the Global Depositary Shares—Issuance of GDSs Upon Deposit of
Shares”.
Voting Rights . . . . . . . . . . . . . . . . . . . . . Subject to the applicable Deposit Agreement, if the Depositary timely
receives voting instructions from a holder of GDSs, it will endeavor
to vote the Shares represented by the holder’s GDSs in accordance
with such voting instructions. If the Depositary receives timely voting
instructions from a holder of GDSs which fail to specify the manner
in which the Shares represented by the holder’s GDSs are to be voted,
the Depositary will deem the holder of the GDSs to have instructed
the Depositary to vote in favor of the items set forth in such
instructions. Holders of GDSs from which the Depositary does not
receive timely voting instructions will be deemed to have instructed
the Depositary to authorize the Company’s Chairman of the Board of
Directors or his or her designated person to vote the Shares
represented by such GDSs in his or her discretion, provided that the
Depositary received notice of the meeting or solicitation of vote from
the Company in a timely manner as specified in the applicable
Deposit Agreement. No such authorization will be given with respect
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to any matter as to which the Company informs the Depositary that (i)
the Company does not wish such authorization to be given;
(ii) substantial opposition exists, or (iii) the rights of shareholders of
the Company will be materially adversely affected. See “Description
of the Global Depositary Shares—Voting Rights.”
Dividends . . . . . . . . . . . . . . . . . . . . . . . . Subject to the terms of the Deposit Agreements, holders of GDSs will
be entitled to receive dividends, to the same extent as the holders of
the Shares, less the fees, costs and expenses payable under the
Deposit Agreements and any ROC tax applicable to such dividends.
See “Dividends and Dividend Policy.”
ROC Tax . . . . . . . . . . . . . . . . . . . . . . . . Dividends (whether in cash or Common Shares) distributed by us out
of retained earnings and distributed to non-ROC holders in respect of
Common Shares represented by GDSs are subject to ROC
withholding tax. The current rate of withholding tax for non-ROC
holders is 20% of the amount of the distribution (in the case of cash
dividends) or the par value of the Common Shares (in the case of
stock dividends). Distributions of Common Shares declared by us out
of capital surplus are not subject to ROC tax.
Under ROC law, capital gains derived from sales of Common Shares
may be subject to income tax. Capital gains derived from sales of
GDSs are not subject to ROC income tax.
The Depositary is subject to a securities transaction tax on the gross
amount received upon sale of statutory subscription rights evidenced
by securities in a rights offering for cash. Holders of GDSs are
responsible for such taxes and any fees, costs and expenses in
connection therewith under the Deposit Agreements. See “Taxation—
ROC Taxation.”
Exchange Controls . . . . . . . . . . . . . . . . Under existing ROC laws and regulations relating to foreign
exchange controls, the Depositary or a holder of GDSs is not required
to obtain foreign exchange approval from the CBC, for the conversion
into foreign currencies of (i) any net proceeds realized from the sale
of any or all of the shares underlying the GDSs, or (ii) the proceeds
received from the sale of shares received as stock dividends in respect
of such shares and deposited into the depositary receipt facility. In
addition, the Depositary may convert inward remittances of payments
into NT dollars for purchase of shares for deposit in the depositary
receipt facility against the issuance of additional GDSs without
applying for any such approvals. A holder of GDSs, after becoming a
holder of shares, may without obtaining further approval from the
CBC convert NT dollars into other currencies, including US dollars,
from proceeds from the sale of any underlying shares withdrawn from
the depositary receipt facility or any cash dividends or distributions
received and the subscription payment for rights offering. However,
the Depositary or a holder of GDSs must obtain foreign exchange
approval from the CBC on a payment-by-payment basis for
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conversion from NT dollars into foreign currencies in respect of the
sale of subscription rights for the Shares if the proceeds are in excess
of US$100,000 per remittance.
Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . The Shares are listed on the TWSE under the trading code “2845.”
See “Market Price Information.” We have applied to list the GDSs,
which consist of the Rule 144A GDSs and Regulation S GDSs,
offered on the Official List of the Luxembourg Stock Exchange and
to trade the GDSs on the Euro MTF Market of the Luxembourg Stock
Exchange.
Rule 144A GDS Settlement The Rule 144A GDSs will be accepted into DTC’s book-entry
Procedures . . . . . . . . . . . . . . . . . . . . . settlement system and represented by a single Master Rule 144A
GDR certificate evidencing all Rule 144A GDSs. The Master
Rule 144A GDR certificate will be registered in the name of Cede &
Co., as nominee of DTC. As long as any Rule 144A GDSs are held in
book-entry form, Cede & Co. will be the holder of record of all such
Rule 144A GDSs. Accordingly, each person owning a beneficial
interest in the Master Rule 144A GDR certificate must rely upon the
procedures of DTC and institutions having accounts with DTC to
exercise or to be entitled to any rights of a Rule 144A GDS holder. So
long as any Rule 144A GDSs settle through DTC’s book-entry
settlement system or unless otherwise required by law, ownership of
beneficial interests in the Master Rule 144A GDR certificate will be
shown on, and the transfer of such ownership will be effected only
through, records maintained by (i) DTC or its nominee (with respect
to DTC participants’ interests) or (ii) DTC participants. See
“Description of Global Depositary Shares.”
Regulation S GDS Settlement Each of Euroclear and Clearstream will accept the Regulation S GDSs
Procedures . . . . . . . . . . . . . . . . . . . . . into its book-entry settlement system. The Regulation S GDSs will be
represented by a single Master Regulation S GDR certificate
evidencing all of the Regulation S GDSs. The Master Regulation S
GDR certificate will be registered by the Depositary in the name of a
nominee for a common depository for Euroclear and Clearstream.
Accordingly, each person owning a beneficial interest in the Master
Regulation S GDR certificate must rely upon the procedures of the
common depository, Euroclear and Clearstream and institutions
having accounts with Euroclear or Clearstream to exercise or to be
entitled to any rights of a Regulation S GDS holder. So long as any
Regulation S GDSs settle through the book-entry settlement systems
of Euroclear or Clearstream, or unless otherwise required by law,
ownership of beneficial interests in the Master Regulation S GDR
certificate will be shown on, and the transfer of such ownership will
be effected only through, records maintained by (i) Euroclear,
Clearstream and their common depository (and its nominee) with
respect to Euroclear and Clearstream participants’ interests) or
(ii) Euroclear and Clearstream participants. Settlement of the
Regulation S GDSs will take place through Euroclear and
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Clearstream or the common depository in accordance with the
settlement procedures applicable to equity securities in the
Euromarket. See “Description of Global Depositary Shares.”
Delivery of GDRs . . . . . . . . . . . . . . . . . . Delivery of the GDRs, against payment in same-day funds, is
expected on or about January 28, 2014.
Transfer restrictions . . . . . . . . . . . . . . . Neither the GDSs nor the Shares have been registered under the
Securities Act, and those securities are subject to restrictions on
transfer. See “Transfer Restrictions”.
Depositary . . . . . . . . . . . . . . . . . . . . . . . Citibank, N.A.
Custodian . . . . . . . . . . . . . . . . . . . . . . . . Citibank Taiwan Limited
Governing Law . . . . . . . . . . . . . . . . . . . Each Deposit Agreement will be governed by, and construed in
accordance with, the laws of the State of New York.
----- End of picture text -----

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RISK FACTORS

Investing in the GDSs and the Shares underlying GDSs involves risks. You should carefully consider the risks described below before making an investment decision. You should also carefully consider all of the information contained in this offering memorandum, including our financial statements and related notes. You should note that we are governed in the ROC by a legal and regulatory environment that in some material respects may be different from that prevailing in other countries.

Risks Relating to Our Business

Our results of operations are significantly affected by the ability of our borrowers to repay their loans and the adequacy of our allowance for possible losses.

Lending money is an essential part of the banking business. Borrowers do not always repay their loans. The risk of non-payment is affected by credit risks of a particular borrower, changes in economic and industry conditions, the duration of the loan and, in the case of a secured loan, uncertainties as to the future value of the collateral. According to the Regulations Governing the Procedures for Banks to Evaluate Assets and Deal with Nonperforming Loans/Nonaccrual Loans, or the NPL Regulations, banks are required to classify their loans into five different categories: Normal, Special Mention, Substandard, Doubtful and Loss. See “Regulation of the ROC Banking Industry—Asset Quality and Lending Requirements—Asset Quality”. As of September 30, 2013, 0.36% of our gross loans were classified as Nonperforming Loans, or NPLs, which means loans with respect to which the principal or interest has been overdue for three months or more from the payment date, or has not yet been overdue for more than three months but with regard to which the bank has sought payment from primary or subordinate debtors or has disposed of relevant collateral. As of the same date, 1.93% of our gross loans were non-Normal loans. See “Description of Assets and Liabilities—Asset Quality—Non-performing loans” for more information relating to NPLs.

Generally, commercial real estate and construction loans, loans to LCD panel and DRAM manufacturers as well as credit card revolving balances and other unsecured personal loans present a greater risk of non-payment by a borrower than other types of loans. Our significant exposure to these loans may make us more susceptible to the risk of non-payment than certain other banks in Taiwan.

Despite that we have made allowance for possible loan and other credit losses based on regulatory requirement, we cannot assure you that such allowance is or will be sufficient to absorb actual losses. An increase in our NPLs, or in provisions for possible losses, would have a material adverse effect on our financial condition, results of operations and total capital adequacy ratio.

If we do not succeed in competing in highly competitive markets, our results of operations may be adversely affected and we may cease to remain independent.

The financial services industry in Taiwan is highly fragmented and competitive. As of November 30, 2013, there were 55 banking institutions in Taiwan. We compete principally with other commercial banks in Taiwan as well as government-owned banks, specialized banks, and branches of foreign banks operating in Taiwan. Historically, the banking industry was largely dominated by government-owned banks. Beginning in 1988, the ROC government initiated a deregulation and privatization program, and from 1990 to 1992, granted 16 new banking licenses to encourage competition in the private sector. Since then, the new banks have gained market share at the expense of government-owned banks. We also compete with branches of foreign banks. As of September 30, 2013, the five largest banks in Taiwan accounted for more than 36% of Taiwan’s bank deposits. If we are unable to compete successfully, our results of operations and financial condition would be materially and adversely affected. In addition, due to the highly competitive and fragmented markets in which we compete, there has been, and will continue to be, a trend of consolidation in Taiwan’s financial services industry. There can be no assurances that we will not be the target of merger and acquisition activities or that we will be able to remain independent.

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Interest rate volatility could significantly affect our financial condition and results of operations.

A significant portion of our assets consists of, and a significant portion of our revenue is derived from, assets that are subject to interest rate risk. Our profitability depends to a large extent on our net interest income. Changes in interest rates, changes in the relationship between short-term and long-term interest rates, and changes in the relationship between different interest rate indices can affect the interest rates we charge on interest-earning assets or the interest rates we pay on interest-bearing liabilities.

Loan prepayments generally accelerate as interest rates fall. Prepayments in a declining interest rate environment will reduce our net interest income and adversely affect our earnings because the income we receive on our reinvested funds would generally be less.

We may be adversely affected by future regulatory changes or governmental policy developments, including those relating to the asset quality problems faced by banks in Taiwan.

We operate in a highly regulated industry. Our principal business activities are regulated by various ROC governmental agencies, including the CBC and the FSC, as well as numerous other governmental agencies. Compliance with all of the regulations by our businesses will continue to place a burden on our activities. In addition, these regulations may change from time to time and we cannot assure you that future legislative or regulatory changes, including deregulation, will not materially and adversely affect our businesses, financial performance and other results. Failure to comply with any of the myriad laws, rules and regulations to which we are subject could result in fines, suspension or expulsion, which could have a material adverse effect upon us. Additionally, deregulation could subject us to increased competitive pressures, which may have a material adverse effect upon us.

Certain of the regulations to which we are currently subject are described in the section entitled “Regulation of the ROC Banking Industry”. Compliance with all of the regulations that apply to us places limitations on our activities. In addition, we cannot assure you that future legislative or regulatory changes, including deregulation, will not have a material adverse effect on our results of operations. Failure to comply with any of the laws and regulations to which we are subject could result in fines, suspension or expulsion, which could have a material adverse effect upon us. Additionally, deregulation could subject us to increased competitive pressures, which could have a material adverse effect upon us.

Our financial condition may be adversely affected if we are unable to attract sufficient deposits to fund our anticipated loan growth and to grow our business.

Most of our funding requirements are met through short-term funding sources, primarily in the form of deposits of customers. As of September 30, 2013, 80.12% of our deposits and remittances had current maturities of less than one year or were payable on demand. In the past, a substantial portion of these deposits has been rolled over upon maturity and has been, over time, a stable source of funding for us. No assurance can be given, however, that this practice will continue. If we are unable to attract and maintain a level of deposits sufficient to fund our anticipated loan growth, we would need to raise additional funding from more expensive sources. No assurance can be given that we will succeed in obtaining these deposits on favorable terms, or at all. In addition, we have to compete for deposits with 39 other domestic banks and 24 credit cooperatives in the Taiwan market. No assurance can be given that in this highly competitive environment we will be able to grow our business at the same rate we have maintained in the past.

The trading positions we take as part of our proprietary trading activities may adversely affect our financial condition and results of operations.

In managing our treasury and investment operations, we engage in proprietary trading, mainly through maintaining positions in the fixed income, foreign exchange and equity markets. These assets are subject to the

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normal risks associated with proprietary investing activities, including the risk that a change in the level of one or more of market prices, rates, indices, volatilities, correlations, liquidity or other market factors will result in losses for a specific position or portfolio.

In 2011, 2012 and the nine months ended September 30, 2013, we realized net gains of approximately NT$322.7 million, NT$1,281.8 million and NT$1,957.2 million, respectively, in connection with our proprietary trading activities. No assurance can be given that our trading activities will continue to generate gains, or that those trading activities will not result in significant losses that materially adversely affect our financial condition and results of operations.

The concentrated positions in our loan portfolio may expose us to large losses.

As of September 30, 2013, our ten largest credit exposures to group customers (excluding governmental borrowers) totaled approximately NT$26.1 billion, representing 93% of our net worth as of that date. In addition, our largest group of non-governmental borrower as of September 30, 2013 accounted for credit exposure of approximately NT$5.3 billion, representing 19% of our total net worth as of that date. While our loan exposure is not concentrated in any particular industry or borrower, there can be no assurance that the concentration of our loan exposure will not increase in the future. Concentration of risk in particular industries and borrowers may increase the losses that we incur in our lending businesses. If loans to large borrowers become non-performing, the quality of our loan portfolio may be adversely affected.

A decline in the real estate market may result in losses or decreased profitability and may significantly affect our asset quality.

Declines in real estate values could have an adverse effect on our results of operations. In a declining real estate market, we may experience a higher loan delinquency rate and higher NPL ratios. The real property securing NPLs may also decrease in value, and as a result, we may not be able to recover the full amount of the loans extended.

In addition, the FSC adopts a more stringent approach in monitoring loans extended to borrowers in connection with real estate purchases, requiring any loan extended to purchase non-residential use to apply 100% risk weight of financial products. In particular, since June 2010, the FSC has imposed several new measures aimed to tighten credit extended to real estate developers and construction companies. Such measures include increasing the level of provision for the loan guaranteed by real estate not purchased for residential purpose. Furthermore, in order to deter the overheated housing market, the ROC government has implemented a series of measures since 2011 which have resulted in the decline in transaction volumes and housing prices of residential real estate. The weakened housing market has negatively impacted our mortgage business and also caused the decline in real property values, which may increase the risk of default with respect to our construction and real estate loans or loans secured by real estate. If government initiatives to lower house prices continue or are further implemented, the profitability of our mortgage business may deteriorate.

We may experience a decline in collateral values or may be unable to realize collateral value.

A substantial portion of our secured loans are secured by real estate, machinery and equipment, the values of which may fluctuate or decline due to factors beyond our control. While our general policy with respect to our secured lending has been to lend between 70% and 80% of the market or appraised value of the collateral, downturns in the Taiwan real estate market may result in periodic declines in the value of collateral securing a number of loans to levels below the outstanding principal balance of the loans which the collateral secures. We regularly and vigorously assess the value of collateral, security and guarantees and in certain instances request borrowers to provide additional collateral or to make loan repayments. We have also maintained a conservative loan-to-value ratio for mortgage loan products and implemented a stringent internal appraisal process for collateral. Despite these measures, portions of our outstanding secured loans may be under-collateralized at any given time. A future decline in the value of the collateral or our inability to obtain additional collateral in that situation may require us to make additional provision for possible losses.

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In Taiwan, foreclosure on collateral generally requires a written petition to a court. Foreclosure procedures may be subject to lengthy delays and administrative requirements that may result in lower levels of recovery on collateral compared to its market value. In addition, other factors such as fraudulent transfers by borrowers may hinder our ability to recover on collateral. Accordingly, there can be no assurance that we will be able to realize the full value of our collateral.

Our commercial banking operations are subject to delinquencies in credit card receivables and credit card fraud.

As of September 30, 2013, we had a total of 0.9 million active credit cards, and credit card receivables accounted for approximately 69.97% of our total receivables outstanding. In recent years, consumer debts have increased in Taiwan and may result in increases in the delinquency amount. While we reduced the 90-day delinquency rate of credit card receivables from 0.48% to 0.40%, from 2010 to 2012, there can be no assurance that the delinquency amount will not increase in the future. As of September 30, 2013, we had an aggregate 90-day delinquency rate of 0.29% for credit card receivables.

Any widespread occurrence of credit card fraud may have a material and adverse effect on our commercial banking operations. Banks in Taiwan have encountered an increase in the occurrence of credit card fraud as a result of certain organized criminal activities involving credit card forgery. We have not experienced any significant losses to credit card fraud in the past three years. Although we have implemented antifraud measures which we believe to be effective, we cannot assure you that these measures will continue to be effective in the prevention of future credit card forgery.

We may not succeed in establishing any future strategic alliances or completing any future acquisitions.

As part of our corporate strategy, we intend to carefully consider potential strategic alliances or acquisitions that would expand the size of our operations and supplement the range of products and services that we make available to our customers. Our ability to grow by strategic alliances or acquisitions is dependent upon, and may be limited by, the availability of suitable candidates, our ability to negotiate acceptable terms and our assessment of the characteristics of potential strategic partners or acquisition targets such as financial condition and results of operations, attractiveness of products and services, suitability of distribution channels and management ability.

Completion of potential acquisitions is subject to a number of uncertainties, including access to capital, restrictions contained in our debt instruments and uncertainties of the ROC laws and regulations relating to mergers and acquisitions. As a result, any proposed acquisition by us or our subsidiaries may be delayed or disapproved. See “Regulation of the ROC Banking Industry”. In addition, our strategy to pursue strategic alliances to broaden our customer base and expand into overseas markets, particularly in the PRC, may be subject to certain obstacles as a result of Taiwan’s unique position in international relations. See “—Risks Relating to ROC—Our business may be adversely affected by political risks associated with doing business in ROC”.

Strategic alliances and acquisitions involve risks that could have a material adverse effect on our results of operations, including difficulties in integrating operations and personnel, problems in implementing the business objectives of a strategic alliance and diversion of management attention from the operation of the existing businesses. We cannot assure you that we will be able to identify suitable strategic alliance or acquisition candidates or complete the strategic alliances or acquisitions on satisfactory terms.

We may be required to raise additional capital to maintain our capital adequacy ratio or for other reasons, which we may not be able to do on favorable terms or at all.

Under the ROC Banking Law and the Capital Regulations, all banks in Taiwan are currently required to maintain a capital adequacy ratio of at least 8%. In order to strengthen the financial structure of banks, the Capital Regulations were further amended on November 26, 2012 to serve as a guideline for banks to strengthen

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their capital adequacy to comply with Basel III requirements. A bank is “under-capitalized” when its capital adequacy ratio is at least 6% but below 8%, “substantially under-capitalized” when at least 2% but below 6%, and “critically under-capitalized” when under 2%. The FSC will take different correction measures based on the level of capital adequacy ratio. If the bank is “critically under-capitalized,” the FSC must take over the bank. If we are graded “under-capitalized”, “substantially under-capitalized” or “critically under-capitalized”, or if we are down-graded below adequately capitalized due to distribution of profits in cash or repurchase of our shares, we are not allowed to either distribute profits in cash or repurchase our Shares, or to make payment other than remunerations to our responsible persons. Violation of such restrictions, or failure to comply with the FSC’s correction measures may result in a fine of between NT$2 million and NT$10 million. The FSC may also impose, among others, additional fines on a daily basis, remove the responsible persons of the bank, or revoke its banking license, depending on the seriousness of the violation.

As of September 30, 2013, our standalone capital adequacy ratio was 10.16%. If our capital adequacy ratio deteriorates significantly, we may be required to obtain additional Tier I or Tier II capital in order to remain in compliance with the applicable capital adequacy requirements. We may not be able to obtain additional capital on favorable terms, or at all. Our ability to obtain additional capital at any time may be constrained to the extent that banks or other financial institutions in Taiwan or from other Asian countries are seeking to raise capital at the same time.

The Far Eastern Group may have potential conflicts of interest.

We are part of the Far Eastern Group, a diversified conglomerate based in Taiwan that has interests in the financial services, petrochemicals, cement production, manufacturing, retailing, shipping, transportation, telecommunications, investment and real estate businesses. We engage in a variety of transactions with other members of the Far Eastern Group on an ongoing basis. Our policy and the ROC Banking Law provide that transactions with related parties will be conducted on terms at least as favorable to us as we could obtain in a comparable arm’s-length transaction with a person who is not a related party. We may enter into additional transactions with our related parties in the future. We cannot assure you as to the terms of those transactions. See “Transactions with Related Parties” and “Regulation of the ROC Banking Industry—Financial Requirements— Restrictions on credit exposure to related parties”.

The Hsu family may have a significant voice in decisions affecting us.

The vice chairman of our board of directors, Mr. Douglas Tong Hsu, and members of his immediately family exert significant influence over a significant portion of our outstanding Shares. As long as Mr. Hsu and his immediate family continue to have influence over a significant portion of our Shares, they will continue to have significant influence over:

• the composition of our board of directors;

• merger or other business combinations;

• material acquisitions or dispositions of assets;

• future issuances of Shares or other securities;

• payment of dividends on Shares; and

• significant amendments to our Articles of Incorporation.

The interests of the Hsu family in voting on matters may be different from your interests should you become our shareholder.

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The Hsu family’s influence over our outstanding Shares could deter third parties from seeking to acquire control over us.

The influence over a significant portion of our Shares by the vice chairman of our board of directors, Mr. Douglas Tong Hsu, and members of his immediate family may have the effect of discouraging a third party from initiating a takeover bid for our Shares or otherwise attempting to gain control of us, including discouraging some transactions that may be economically beneficial to us and our shareholders.

Our business depends substantially on the continuing efforts of our executive directors, senior management, key personnel, and our ability to maintain a skilled labor force.

We are dependent on our respective board of directors and senior management for our daily business operations and for formulating and implementing our business strategies and future plans. Our success is, to a large extent, attributable to the experience, expertise and managerial skills of our board of directors and senior management. If one or more of our executive directors or senior management were unable or unwilling to continue in their present positions, we may be unable to identify and recruit suitable replacements in a timely manner, or at all. In addition, if any member of our senior management were to join a competitor or form a competing company, we may lose some of our know-how and customers. There is no assurance that any of our senior management members will not discontinue their service for whatever reason in the future.

Furthermore, recruiting and retaining capable personnel are vital to maintaining the quality of our services. We need to recruit personnel with relevant experience to maintain and strengthen our internal control systems and procedures. We may also need to employ and retain more management personnel to support our expansion in the future. We cannot assure you that we will be able to attract or retain qualified personnel. If we are unable to attract and retain qualified employees, key personnel and senior management, our business, financial condition and results of operations may be materially and adversely affected.

Decisions made by senior management with respect to related party transactions may not be considered by shareholders to be in their best interests.

We have engaged from time to time in a variety of transactions with related parties. Our policy and the ROC Banking Law provide that transactions with related parties will be conducted on terms at least as favorable to us as we could obtain in a comparable arm’s-length transaction with an unrelated party. We believe that all transactions we have entered into with related parties have benefited us. We may enter into additional transactions with related parties in the future. No assurance can be given as to the terms of those transactions or that all of our transactions will benefit us or be in the best interests of our shareholders. See “Transactions with Related Parties.”

Credit risk exposes us to losses caused by financial problems or other difficulties experienced by third parties.

We are exposed to the risk that third parties that owe us money, securities or other assets will not perform their obligations. These parties include our trading counterparties, customers, clearing agents, exchanges, clearing houses and other financial intermediaries, as well as issuers whose securities we hold. These parties may default on their obligations due to bankruptcy, lack of liquidity, operational failure or other reasons. This risk may arise from arrangements including holding securities of third parties; entering into swap or other derivative contracts under which counterparties have long-term obligations to make payments to us; executing securities, futures, currency or commodity trades that fail to settle at the required time due to non-delivery by the counterparty or system failures by clearing agents, exchanges, clearing houses or other financial intermediaries; and extending credit to our customers through guarantees, acceptances, letters of credit or other arrangements. No assurance can be given that these arrangements will not have a material adverse effect on our financial condition or results of operations.

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We may be subject to a downgrade in our credit rating which could limit our ability to market products, increase our borrowing costs or hurt our relationships with creditors or trading counterparties.

Currently, we have a foreign currency long-term credit rating of “BBB-” from Fitch Ratings Limited. Our credit rating, which is intended to measure our ability to meet our debt obligations, is an important factor affecting public confidence in most of our products and, as a result, our competitiveness. The interest rates on our borrowings are largely dependent on our credit rating. Currently, our credit rating has remained stable; however, we have a “negative” outlook, and we cannot assure you that our credit rating will not be subject to any downgrade in the future. A downgrade of our credit rating would likely increase our cost of borrowing and adversely affect our results of operations. Downgrading of our credit rating could also limit our ability to raise capital or conduct certain businesses.

Our businesses rely on data processing systems, the failure of which could materially affect these businesses.

All of our principal businesses are highly dependent on the ability to timely process a large number of financial transactions across numerous and diverse markets and products, at a time when transaction processes have become increasingly complex and are increasing in volume. The proper functioning of financial control, accounting or other data processing systems is critical to our businesses and to our ability to compete effectively. Although we have backup data centers that could be used in the event of catastrophe or failure of the primary systems, in the event of a partial or complete failure of any of these primary systems, significant portions of our businesses could be materially adversely affected, our reputation could suffer and our financial and other results could be materially and adversely affected.

In addition, we face the risk of human errors in connection with the data processing system, including inputting the wrong data in our system or inputting the data under a wrong entry. For example, in February 2011, our employee mistakenly input four transactions under a wrong entry, and consequently our system failed to report these transactions as required by the anti-money-laundering regulations. As a result, we were fined for NT$200,000 for non-compliance with the reporting requirement. While we have improved the system to prevent human errors, there can be no assurance that our employees will not make any mistake that would result in violations of laws in the future.

Our risk management policies and procedures may leave us exposed to unidentified or unanticipated risks, which could negatively affect our businesses or result in losses.

While our risk management policy is in strict compliance with the current ROC laws and regulations, our hedging strategies and other risk management techniques may not be fully effective in mitigating our risk exposure in all market environments or against all types of risk, including risks that are unidentified or unanticipated. Some methods of managing risk are based upon observed historical market behavior. As a result, these methods may not predict future risk exposures, which could be significantly greater than the historical measures indicated. Other risk management methods depend upon an evaluation of information regarding markets, clients or other matters. This information may not in all cases be accurate, complete, up-to-date or properly evaluated. Management of operational, legal or regulatory risk requires, among other things, policies and procedures to record properly and verify a large number of transactions and events. Although we have instituted these policies and procedures, they may not be fully effective. Meanwhile, our business, as well as the whole financial industry, is subject to certain systematic risks that are beyond our control. There can be no assurance that such systematic risks will not occur and therefore negatively affect our businesses or result in losses.

In addition, our risk management techniques may be subject to greater risks than financial institutions in other countries as a result of the fact that the Taiwan financial markets lack some of the financial products that are available in certain other markets for use in risk management. As a result, active balance sheet management is

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more difficult for us. In some instances, we can only change our pricing strategy and reshape our portfolio gradually in response to market conditions. If this lack of advanced risk management financial products in the Taiwan financial markets hinders our ability to react quickly to market conditions and manage our risks, our results of operations may be adversely affected.

Employee misconduct is difficult to detect and deter and could harm our business, results of operations or financial condition.

Employee misconduct could result in violations of law by us, regulatory sanctions and/or serious reputational or financial harm. Employee misconduct could include binding us to a transaction that exceeds authorized limits, hiding unauthorized or unsuccessful activities resulting in unknown and unmanaged risks or losses, improperly using or disclosing confidential information, recommending transactions that are not suitable, engaging in fraudulent or otherwise improper or illegal activity, engaging in unauthorized or excessive trading to the detriment of customers or ourselves, and/or otherwise not complying with laws, regulatory requirements or our control procedures.

We face risks related to health epidemics and other outbreaks of contagious diseases, such as swine flu, avian flu and SARS, which may have an adverse effect on the economies and financial markets of Taiwan and may adversely impact our operations and financial results.

Our business could be adversely affected by the effects of swine flu, avian flu, SARS or another epidemic or outbreak. Beginning in 2013, there were reports of outbreaks of highly pathogenic avian flu, caused by the H7N9 virus, in various parts of the PRC. An outbreak of swine or avian flu in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, particularly in Asia. Additionally, any recurrence of SARS, a highly contagious form of atypical pneumonia, similar to the occurrence in 2003 which affected China, Hong Kong, Taiwan, Singapore, Vietnam and certain other countries, would also have similar adverse effects. These outbreaks of contagious diseases, and other adverse public health developments in Taiwan and other areas where we operate, would have a material adverse effect on our business operations. These could include temporary closure of our facilities. Such closures would severely disrupt our business operations and adversely affect our financial condition and results of operations.

We have broad discretion over the use of the proceeds of this offering.

Consistent with our application to the FSC, we intend to use the proceeds of this offering to strengthen our capital structure. Accordingly, subject to approval by our board of directors and regulatory authorities, we will have broad discretion over the use of the proceeds of this offering. You will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. Moreover, you will not have the opportunity to evaluate the economic, financial or other information on which we base future decisions on how to use the proceeds of this offering. As a result, you may not agree with the actual use of the proceeds of this offering.

Changes in the PRC economic, political and social conditions, as well as government policies, could have a material adverse effect on our business, financial condition, results of operations and prospects.

Our growth plans include the expansion of our businesses in the PRC. Such plans are significantly exposed to economic, political and legal developments in China. The Chinese economy differs from the economies of most developed countries in many respects, including:

• the level of government involvement;

• the level of development;

• the growth rate;

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• the control of foreign exchange; and

• the allocation of resources.

While the Chinese economy has grown significantly in the past 20 years, the growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall Chinese economy, but may have a negative effect on us. For example, our financial condition and results of operations may be materially and adversely affected by government control over banking and other financial institutions, investments in the PRC by ROC companies or changes in tax regulations that are applicable to our operations in China.

In addition, we cannot assure you that the Chinese economy will continue to grow, or that if there is growth, such growth will be steady and uniform, or that if there is a slowdown, such slowdown will not have a negative effect on our expansion plans. For example, due in part to the impact of the global crisis in financial services and credit markets and other factors, the growth rate of China’s gross domestic product decreased to 7.9% in the second quarter of 2009, from 11.9% reached in the second quarter of 2007. As a result, beginning in September 2008, among other measures, the PRC government began to loosen macroeconomic measures and monetary policies by reducing interest rates and decreasing the statutory reserve rates for banks. In addition, in November 2008 the PRC government announced an economic stimulus package in the amount of US$586 billion. From the second half of 2009 to October 2011, the PRC government implemented a number of macroeconomic measures and moderately tight monetary policies to curb inflation in China. For example, People’s Bank of China lowered the required bank deposits reserve ratio by 0.5 percentage points on December 5, 2011 and further lowered the required bank deposits reserve ratio twice by 0.5 percentage points each time on February 24, 2012 and May 18, 2012. We cannot assure you that the various macroeconomic measures, monetary policies and economic stimulus package adopted by the PRC government to guide economic growth and the allocation of resources will be effective in sustaining the fast growth rate of the Chinese economy.

The Chinese economy has been transitioning from a planned economy to a more market-oriented economy. Although in recent years the PRC government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of the productive assets in the PRC is still owned by the PRC government. The continued control of these assets and other aspects of the national economy by the PRC government could materially and adversely affect our expansion plans. The PRC government also exercises significant control over Chinese economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.

Our investments in the PRC and the financial products and services we plan to provide in the PRC are highly regulated by both ROC and PRC governmental authorities. There can be no assurance that we will be able to obtain the necessary regulatory approvals to make additional investments or otherwise implement our expansion plans in the PRC. In addition, there are currency exchange risks associated with doing business in the PRC. Although PRC governmental policies were introduced in 1996 to allow greater convertibility of the RMB, the currency of the PRC, significant restrictions, including those relating to the repatriation of foreign currency denominated investments, still remain. No assurances can be made that the PRC regulatory authorities will not impose greater restrictions on the convertibility of the Renminbi.

Furthermore, our ability to expand into the PRC is subject to the political conditions between Taiwan and China. Ties between Taiwan and the PRC have improved rapidly since Taiwan President Ma Ying-jeou took office in May 2008, pledging to set aside longstanding political disputes and enhance exchanges. However, there can be no assurance that political conditions between Taiwan and the PRC will not deteriorate and that we will not be restricted or prohibited from implementing our expansion plans in the PRC.

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Any adverse change in the economic, political or legal conditions or government policies in the PRC could have a material adverse effect on the overall economic growth, which consequently have a material and adverse effect on our expansion plans in the PRC.

Changes in the ROC tax law could make some of our products less attractive to consumers and the amendment of the ROC Income Tax Act may affect our tax exemptions.

Changes in the ROC tax law could make some of our products less attractive to consumers. For example, changes in personal income tax and estate and gift tax law in Taiwan may reduce the attractiveness of certain of our insurance products, hinder its sales and result in the increased surrender of these products.

Moreover, according to the amendments to the ROC Income Tax Act, effective on January 1, 2013, capital gain of individuals from certain securities transactions exceeding certain threshold will be subject to income tax. Although we cannot assess the overall effect of such amendment to the ROC Income Tax Act, the levy of the securities capital gain tax may have a negative impact on the ROC securities market and thus we may experience reduced profitability or losses. We cannot predict the overall effect on the sales of our products of any tax law changes. According to the amendment of the ROC Income Tax Act, which was promulgated on May 27, 2009 and became effective as of January 1, 2010, enterprise income tax rate has been reduced from 25% to 20%. In addition, in accordance with the amendment to the ROC Income Tax Act, effective on June 15, 2010, the applicable income tax rate of the Company has been further reduced to 17% since 2010. We have recalculated deferred tax assets and liabilities according to the amendment and recorded the resulting differences as an one-off income tax expense in 2009. Such change may affect the tax benefits we enjoy on our deferred income tax assets. While we are unable to determine the future impact of the new enterprise income tax rate on our business operations, as such impact depends on our future financial condition, any such impact may be adverse to our financial condition.

We are subject to heightened consumer protection requirements under the new Financial Consumer Protection Act.

According to the newly enacted ROC Financial Consumer Protection Act, which became effective on December 30, 2011, financial service providers, such as banks, securities firms, futures brokerage firms and insurance companies (collectively, the “Financial Service Providers”), are subject to a set of heightened consumer protection requirements. The Act aims to strengthen the protection of, and provide an alternative dispute resolution to, consumers of financial products and services (excluding any professional institutional investor and any individual or legal entity with certain financial or professional ability). Under the ROC Financial Consumer Protection Act, before a Financial Service Provider enters into any agreements with consumers in connection with financial products or services, such Financial Service Provider is required to explain all the material content of the relevant financial product, service and agreement to the consumers and fully disclose any potential risks thereof. In addition, it prohibits a Financial Service Provider from providing financial products or services to any consumer without first conducting a risk tolerance evaluation. Furthermore, pursuant to the ROC Financial Consumer Protection Act and regulations promulgated thereunder, the Financial Ombudsman Institution (the “FOI”) was established to provide an alternative dispute resolution mechanism to consumers of financial products or services. We are subject to these heightened requirements under the ROC Financial Consumer Protection Act and thus will incur additional compliance costs. If we fails to comply with any of these requirements and a customer lodges a complaint with the FOI, the FOI may find the subsidiary liable for the damages and/or compensations incurred by the customer, which could have an adverse effect on us.

The Personal Data Protection Law could adversely affect our ability to collect and use personal data of our consumers and potentially subject us to liability for the collection and use of such data without proper authorization.

According to the Personal Data Protection Law, which became effective on October 1, 2012, unless otherwise permitted by the law, we generally may not, directly or indirectly, collect any personal data of any

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existing or potential customers without their written consent. We are generally required under the Personal Data Protection Law to inform such customers of their rights and the methods of exercising such rights. Pursuant to the Personal Data Protection Law, any use of any collected personal data is prohibited unless, among other things, (i) the use of personal data is permitted by relevant laws or regulations, (ii) the use of personal data is based on a contractual agreement or quasi-contractual agreement entered into by the data owner, (iii) personal data has been public, (iv) prior written consent by the data owner is obtained, (v) the use of personal data is in relation to public interest or (vi) the personal data is collected from a publicly available source. Our subsidiaries and ourselves have incurred costs to comply with the Personal Data Protection Law after it was enacted. Moreover, failure to comply with the requirements under the Personal Data Protection Law could result in administrative and/or criminal fines, which could have an adverse effect on us.

Risks Relating to ROC

Economic developments in Taiwan have a significant Impact on our business.

Substantially all of our assets are located in Taiwan, and substantially all of our revenue is derived from our operations in Taiwan. Accordingly, our financial condition and results of operations and the market price of our Shares may be affected by changes in ROC governmental policies, taxation, inflation, interest rates, currency exchange rates, social instability and other political, economic, diplomatic or social developments in or affecting Taiwan that are not within our control. In particular, the economic and political environment in Taiwan is significantly affected by the global economic and political environment. For example, in late 2008 and 2009, Taiwan, along with the rest of the world, experienced a severe financial and economic downturn from which it has yet to fully recover. Although Taiwan appears to have recovered from the 2008 financial crisis in certain respects, there can be no assurance that Taiwan’s economy will achieve full recovery or be immune in the future to conditions similar to those prevalent during the financial crisis, or that those conditions, should they recur, will not adversely affect our financial condition or results of operations.

In addition, a significant fluctuation of the NT dollar versus other currencies could have a material adverse effect on the performance of Taiwan’s economy and industries, including the financial services industry. As a result, there can be no assurance that any significant fluctuation in the value of the NT dollar would not have a material adverse effect on our financial condition or results of operations.

The value of the GDSs and the Shares may be adversely affected by the volatility of the ROC securities market.

The ROC securities market is smaller and more volatile than the securities markets in the United States and in certain European and other countries. The TWSE and the GreTai Securities Market have experienced substantial fluctuations in the prices and trading volumes of listed securities, and subject to limited exceptions, there are currently limits on the range of daily price movements on the TWSE and the GreTai Securities Market. From time to time, the ROC government, through certain funds, has intervened in the Taiwan stock market during periods of extreme volatility. In the past decade, the TWSE Index peaked at 10,393.59 in February 2000, and reached a low of 3,411.68 in September 2001. In 2013, the TWSE Weighted Index reached a low of 7,616.64 on January 17, 2013 and peaked at 8,623.43 on December 30, 2013. On January 23, 2014, the TWSE Index closed at 8,595.10. In addition, the TWSE and the GreTai Securities Market have experienced problems such as market manipulation, insider trading and payment defaults. The recurrence of these or similar problems could adversely affect the market price and liquidity of the securities of the ROC companies, including our Shares. See “Appendix A: The Securities Markets of the ROC”. On July 25, 2012, the ROC Legislative Yuan approved the amendment to the ROC Income Tax Act, according to which capital gain of certain persons from securities transactions exceeding certain thresholds will be subject to income tax. It is anticipated that the levy of the securities capital gain tax will have a negative impact on the ROC securities market.

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Our business may be adversely affected by political risks associated with doing business in the ROC.

The ROC has a unique international political status. The PRC asserts sovereignty over Taiwan. The government of the PRC does not recognize the legitimacy of the ROC government. Although significant economic and cultural relations have been established in the past decade between the ROC and the PRC, the PRC has refused to renounce the possibility that it may at some point use force to gain control over Taiwan. Although in recent years, relations between the ROC and the PRC have improved, certain past developments in relations between the ROC and the PRC have had, from time to time, an adverse effect on the value of the TWSE Index. These relations may also affect our results of operations and the market price and liquidity of our Shares.

We intend to expand our banking business in the greater China region by providing financial services to clients in Hong Kong and the PRC as well as Taiwan. However, our ability to find a suitable acquisition candidate or strategic alliance partner and do business may be limited by the unique political status of the ROC. In addition, ROC banks are strictly regulated by the authorities in Taiwan and PRC as well to make investments or do business in the PRC. We do not know when or if such laws and policies governing banks’ investment and business in the PRC will be amended, and we cannot assure you that any such amendments will permit us to make an investment or do business that we consider beneficial to us in the PRC. As a result, our growth prospects may be adversely affected if we are limited in our ability to find a strategic partner or do business in the PRC due to the political situation between the ROC and the PRC.

Our principal customers in Taiwan are vulnerable to a variety of natural disasters.

Taiwan is susceptible to earthquakes, typhoons, water shortages and other types of natural disasters which could directly or indirectly affect our business adversely. In the past three years, natural disasters have caused significant property damage and loss of lives in Taiwan. Although we did not suffer significant losses due to recent natural disasters, a major earthquake or other natural disasters could severely disrupt the business operations of our customers in Taiwan as well as ourselves. In addition, since a substantial portion of our loans are secured by real estate located in Taipei, a major earthquake or the occurrence of other natural disasters in the Taipei metropolitan area could impair the value of the collateral and thereby negatively affect our financial condition and results of operations even if our operations are not directly affected.

Financial reporting requirements and accounting standards in the ROC differ from those of other countries, which may be material to investors’ assessment of our results, prospects, financial condition and results of operations.

We are subject to financial reporting requirements in the ROC that differ in significant respects from those applicable to companies in certain other countries including the United States. We have historically presented our financial statements, including our financial statements for the year ended December 31, 2012, in accordance with ROC GAAP, which differ in certain material respects from U.S. GAAP. Effective from January 1, 2013, companies listed on the TWSE, including us, must report their financial statements under Taiwan-IFRSs pursuant to the requirements of the Framework for Adoption of International Financial Reporting Standards by Companies in the ROC promulgated by the FSC on May 14, 2009. Accordingly, we have adopted Taiwan-IFRSs for reporting in the ROC our annual financial statements beginning in 2013 and our interim quarterly unaudited earnings releases beginning in the first quarter of 2013. Taiwan-IFRSs differs from International Financial Reporting Standards, or IFRSs in certain significant respects, including to the extent that any new or amended standards or interpretations applicable under IFRSs may not be timely endorsed by the FSC.

Potential investors should consult their own professional advisers for an understanding of such differences and how they might affect the financial information contained herein. See “Summary of Certain Differences between ROC GAAP and IFRSs”.

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Risks Relating to the GDSs and the Shares

The value of a GDS holder’s investment may be reduced by possible future sales of GDSs or Shares by us or our shareholders.

As of the date of this offering memorandum, we had 2,362,118,264 Shares issued and outstanding. While we are not aware of any other plans by any major shareholders to dispose of significant numbers of Shares, we cannot assure you that one or more existing shareholders will not dispose of significant numbers of Shares or GDSs. We cannot predict the effect, if any, that future sales of GDSs or Shares, or the availability of GDSs or Shares for future sale, will have on the market price of GDSs or Shares prevailing from time to time. Sales of substantial amounts of GDSs or Shares in the public market, or the perception that such sales may occur, could depress the prevailing market prices of our GDSs or Shares.

Restrictions on the ability to deposit our Shares into our global depositary receipt facilities may adversely affect the liquidity and price of the GDSs.

The ability to deposit the Shares into our global depositary receipt facilities is restricted by ROC law. As a result, the prevailing market price of the GDSs may differ from the prevailing market price of our Shares on the TWSE. Under current ROC law and the Deposit Agreements, no person or entity, including the holders of GDSs and us, may deposit our Shares in our global depositary receipt facilities without specific approval of the FSC unless:

• (1) we pay stock dividends on, or make a free distribution of, our Shares;

• (2) the GDS holder exercises pre-emptive rights in the event of capital increases for cash; or

• (3) investors purchase our Shares, directly or through the Depositary, on the TWSE, and deliver our Shares to the Custodian for deposit into our global depositary receipt facility, or our existing shareholders deliver our Shares to the Custodian for deposit into our global depositary receipt facility; or

• (4) upon exchange of Rule 144A GDSs for Regulation S GDSs and vice versa.

With respect to (3) above, the Depositary may deliver GDSs against the deposit of those shares only if the total number of GDSs outstanding following the deposit will not exceed the number of GDSs previously approved by the FSC, plus any GDSs issued pursuant to the events described in items (1) and (2) above. Issuance of additional GDSs under item (3) above will be permitted to the extent that previously GDSs have been cancelled.

A holder of GDSs or its designee requesting the withdrawal of the Shares represented by the GDSs may be required to provide certain information to us, and failure to provide such information may result in a delay of the withdrawal.

A holder of GDSs or its designee requesting the withdrawal of the Shares represented by the GDSs may be required to provide certain information to us, including the name and nationality of the person to be registered as the shareholder and the number of the Shares to be acquired by such person and the number of Shares acquired by such person in the past through the date of the withdrawal of the Shares underlying the GDSs. Under applicable ROC laws, we are required to report to the FSC if the person to be registered as a shareholder (1) is a “related party” of ours as defined under the Regulations Governing the Preparation of Financial Reports by Securities Issuers or (2) will hold, immediately following such withdrawal, more than 10% of the Shares represented by GDSs. Failure to provide such information may cause the delay of such withdrawal of the Shares represented by the GDSs.

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Changes in exchange controls that restrict a GDS holder’s ability to convert proceeds received from ownership of GDSs may have an adverse effect on the value of the holder’s investment.

The imposition of foreign exchange controls may undermine a GDS holder’s ability to convert proceeds received from the holder’s ownership of GDSs. Under current ROC law, the Depositary, without obtaining further approval from the CBC or any other governmental authority or agency of the ROC, may convert NT dollars into other currencies, including U.S. dollars, for:

• the proceeds of the sale of Shares represented by GDSs or the proceeds of the sale of Shares received as stock dividends which have been deposited into the global depositary receipt facilities; and

• any cash dividends or distributions received on the Shares.

In addition, the Depositary may also convert into NT dollars incoming payments for purchases of Shares for deposit in the global depositary receipt facilities against the issuance of additional GDSs. The Depositary is required to obtain foreign exchange approval from the CBC on a payment-by-payment basis for conversion from NT dollars into foreign currencies of the proceeds from the sale of subscription rights for new Shares. Although it is expected that CBC will grant this approval as a routine matter, we cannot assure you that in the future any approval will be obtained in a timely manner, or at all.

Under current ROC law, a GDS holder, after becoming a holder of Shares upon presentation of GDSs to the Depositary for cancellation and withdrawal of the deposited securities, without obtaining further approval from CBC, may convert from NT dollars into other currencies, including U.S. dollars, for:

• the proceeds of the sale of any underlying Shares withdrawn from the global depositary receipt facilities or the proceeds of the sale of any Shares received as stock dividends; and

• any cash dividends or distributions received.

However, such holder may be required to obtain foreign exchange approval from CBC on a payment-bypayment basis for conversion from NT dollars into foreign currencies of the proceeds from the sale of subscription rights for new Shares. In addition, under the ROC Foreign Exchange Control Law, the Executive Yuan of the ROC government may, without prior notice but subject to subsequent legislative approval, impose foreign exchange controls for certain periods of time in the event of, among other things, a material change in international economic conditions. We cannot assure you that foreign exchange controls or other restrictions will not be introduced in the future.

Fluctuations in the exchange rate between the NT dollar and the US dollar may have a material adverse effect on the value of the GDSs or the Shares in US dollar terms.

The Shares are listed on the TWSE, where shares are quoted and traded in NT dollars. If there are any cash dividends on the Shares represented by GDSs, these dividends will be paid to the Depositary in NT dollars and then converted into US dollars by the Depositary, subject to certain conditions. Fluctuations in the exchange rate between the NT dollar and the US dollar will affect, among other things, the amount a holder of GDSs will receive from the Depositary for dividends paid by us, the US dollar value of the proceeds that a holder receives upon a sale in Taiwan of the Shares represented by the GDSs and the secondary market price of the GDSs. See “Exchange Rates.”

Certain individual holders will be subject to the income tax on net capital gains imposed by the ROC when they sell or dispose of the Shares withdrawn from the global depositary receipt facility, effective January 1, 2013.

The ROC Income Tax Act has been amended recently and starting from January 1, 2013, capital gains from the sale or other disposition of the Shares by any Non-ROC Individual Holder will be subject to ROC income

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tax. Capital gains realized by Non-ROC Entity Holders are exempt from such income tax. See “Taxation—ROC Taxation” for definitions of a Non-ROC Individual Holder and a Non-ROC Entity Holder. Capital loss incurred from the sale or disposition of Shares can be deducted from capital gains derived in the same calendar year when calculating the net capital gain and income tax liability but cannot be carried forward to subsequent years. Capital gains are taxed at a flat rate of 15% on Non-ROC Individual Holders. In addition, only 50% of the net capital gains are subject to income tax if the Non-ROC Individual Holder has held the Shares for one year or longer. Sales of GDSs are not regarded as sales of ROC securities and thus any gains generated therefrom by any nonROC holders are not subject to ROC income tax.

A liquid market for the GDSs may not develop and there are restrictions on the transfer of the GDSs.

Prior to this offering, there has been no market for the GDSs being offered. The Initial Purchasers have advised us that they currently intend to make a market for the GDSs. However, the Initial Purchasers are not obligated to make a market and may discontinue this market-making activity at any time without notice. Such market-making activity is limited by the anti-manipulation rules under the Securities Act and the Exchange Act. The GDSs are being offered pursuant to an exemption from registration under the Securities Act and, as a result, you will only be able to resell your GDSs in transactions that have been registered under the Securities Act or in transactions not subject to or exempt from registration under the Securities Act. Similarly, neither the GDSs nor the Shares underlying the GDSs are registered under the Exchange Act. Application has been made to list the GDSs on the Official List of the Luxembourg Stock Exchange and to trade on the Euro MTF Market. However, there can be no assurance that we will obtain or be able to maintain such listings or that, if listed, a trading market will develop on such exchanges.

In connection with any withdrawal of any Shares represented by GDSs, the GDSs will be surrendered to the Depositary. Unless additional GDSs are issued, the effect of such transactions will be to reduce the number of outstanding GDSs and, if, a significant number of transactions are effected, to reduce the liquidity of the GDSs. See “Description of the Global Depositary Shares—Deposits.” The GDSs or the Shares may not be publicly offered, sold, pledged or otherwise transferred in any jurisdiction where registration may be required. The Shares underlying the GDSs may only be publicly traded on the TWSE.

Preemptive rights and other rights offerings, may not be available to holders of GDSs in certain circumstances.

We may, from time to time, distribute rights to our shareholders, including rights to acquire securities. For example, the ROC Company Act, with some exceptions, requires us to offer our shareholders the right to subscribe for new shares in proportion to our existing ownership percentage whenever new shares are issued. If registration is required in any jurisdiction with respect to the offer of rights to GDS holders or the sale by the Depositary of such rights or the securities or other relevant property to which such rights relate, the Depositary will not affect such offer or sale with respect to the relevant tranche of GDSs unless we have obtained an exemption from or effected a registration in accordance with the requirements of such jurisdiction. However, under the Deposit Agreements, we are under no obligation to register such rights, securities or other property. Accordingly, GDS holders may be unable to participate in our rights offerings and may experience dilution of their holdings as a result. If the Depositary is unable to sell rights that are not exercised or not distributed or if the sale is not lawful or reasonably practicable, it will allow the rights to lapse, in which case you will receive no value for these rights.

Further issuance of our Shares, including pursuant to stock dividends and employee stock bonuses, could dilute your holdings and associated rights with respect to the Shares.

Our Articles of Incorporation provide that, after deducting prior year’s losses, paying outstanding taxes and setting aside legal reserves and special reserves (if any), the remaining portion of our income after tax, together with the retained earnings of previous years, shall be distributed to our shareholders as dividends, to our directors

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and supervisors as remuneration and to our employees as bonuses in the manner and percentages prescribed in our Articles of Incorporation, unless a part of such remaining portion is reserved for future distribution due to business conditions. See “Description of the Shares” and “Dividends and Dividend Policy”.

Such distributions to our shareholders and employees may be made in the form of cash or stock. Such distributions, if in the form of new Shares, or further issuances of new Shares, will effectively dilute the holdings and associated rights of holders of our Shares.

Non-ROC holders of GDSs who withdraw the Shares will be required to register with the Taiwan Stock Exchange and appoint a local custodian and agent and a tax guarantor in the ROC.

Under current ROC law, if a GDS holder is a non-ROC person (other than PRC persons, except for QDIIs, or a person with prior approval from the ROC Investment Commission of the MOEA) and wishes to withdraw and hold underlying Shares from a depositary receipt facility, the holder will be required to obtain a foreign investor investment identification issued by the TWSE. The holder will also be required to appoint an eligible agent in the ROC to open a securities trading account, a TDCC book-entry account and a bank account, to pay ROC taxes, remit funds, exercise shareholders’ rights and perform such other functions as the holder of GDSs may designate upon such withdrawal. In addition, such holder will be required to appoint a custodian bank to hold the securities in safekeeping, make confirmation and settle trades and report all relevant information. Without meeting these requirements, the non-ROC withdrawing holder would be unable to hold or subsequently sell the underlying Shares withdrawn from the depositary receipt facility on the TWSE or otherwise. There can be no assurance that such withdrawing holder will be able to obtain a foreign investor investment identification issued by the TWSE and open such accounts in a timely manner.

Non-ROC holders of GDSs (other than PRC persons, except for QDIIs, or a person with prior approval from the ROC Investment Commission of the MOEA) withdrawing the Shares represented by GDSs are also required under current ROC law and regulations to appoint an agent in the ROC for filing tax returns and making tax payments. Such agent must meet certain qualifications set by the ROC Ministry of Finance and, upon appointment, becomes a guarantor of such withdrawing holder’s ROC tax obligations. Generally, evidence of the appointment of such agent and the approval of such appointment by the ROC tax authorities may be required as conditions to such withdrawing holder’s repatriation of the proceeds from the sale of the withdrawn Shares. There can be no assurance that such withdrawing holder will be able to appoint and obtain approval for such agent in a timely manner.

There are legal restrictions on a PRC investor’s ability to withdraw and hold the underlying Shares represented by the GDSs

Pursuant to the Regulations Governing Mainland China Investor‘s Securities Investment and Futures Trading in Taiwan, or the PRC Regulations, a qualified institutional investor which has been approved by the competent authority regulating the securities industry in PRC, or QDII, is permitted to make securities investments or trade futures in the ROC. The total investment amount allowed to be remitted into the ROC by all QDIIs cannot exceed US$500 million, and by each QDII cannot exceed US$100 million. A custodian shall be appointed by each QDII to apply with the TWSE for the remittance. In addition, for a QDII to make investment in a financial institution, such as us, each QDII shall not hold 5% or more of the issued shares of the Company and all PRC investors (including QDIIs), in aggregate, shall not hold 10% or more of the issued shares of the Company. Subject to the compliance with the foregoing applicable laws and regulations of the ROC, a QDII may request withdrawal of, and holds the Common Shares represented by the GDSs.

Other than a QDII, a PRC person may, pursuant to the Regulations Governing the Approval of Investment in Taiwan by the Mainland China Investors, make an investment in the ROC with prior investment approval from the Investment Commission of the Ministry of Economic Affairs, or MOEA, and other competent authority. For such PRC investor, to make an investment in an ROC bank, such as us, the Regulations Governing the Banking Activities and the Investment Between Taiwan and the Mainland China, last amended on September 7, 2011 (the “PRC-ROC Banking Activities Regulations”) shall also apply. According to the PRC-ROC Banking Activities

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Regulations, currently, only a PRC bank meeting certain criteria and obtaining relevant approvals is allowed to invest in one ROC bank and the total investment in such ROC bank shall not exceed 5% of its total issued and outstanding voting shares. Additionally, PRC investors (including QDIIs) in the aggregate shall not hold 10% or more of such ROC bank’s issued and outstanding voting shares. Subject to the compliance with the foregoing laws and regulations of the ROC, a non-QDII PRC bank may request withdrawal of and hold, the Shares represented by the GDSs.

Due to the shareholding restrictions under the ROC Banking Law, you may not be able to withdraw and hold the underlying Shares represented by the GDSs

Under the ROC Banking Law, any person individually, or any group of related persons jointly, holding more than 5% of a bank’s total issued and outstanding voting shares, must report to the FSC within 10 days after reaching such threshold, and shall report for every 1% increase or decrease afterwards. In the event that any person individually, or any group of related persons jointly, proposes an acquisition of shares of a bank that will cause such person or persons to hold more than 10%, 25% or 50% of such bank’s total issued and outstanding voting shares, such person, or any such other related persons, respectively, must apply for the FSC approval in advance. For calculation purposes, any person that holds shares of a bank for another person or any group of related persons through trust, appointment, or any other contracts, agreements or authorizations, shall be deemed to be related persons. See “Regulation of the ROC Banking Industry—Ownership Restrictions—Shareholding restrictions.” Given such shareholding restrictions, when a holder of the GDSs wishes to withdraw and hold the underlying Shares, such holder must certify that the holder has complied with all applicable shareholding restrictions under the ROC Banking Law. If a holder of the GDSs is unable to certify that the applicable shareholding restrictions under the ROC Banking Law in connection with the withdrawal have been satisfied, the holder will not be permitted to withdraw the underlying Shares.

We may be classified as a passive foreign investment company, or PFIC, which could result in adverse U.S. federal income tax consequences to U.S. investors.

Based upon the projected composition of our income and valuation of our assets, including goodwill, we do not expect to be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for our taxable year ending December 31, 2014, and we do not expect to become one in the future. However, given that the determination of PFIC status with respect to both 2014 and future years depends on future facts and circumstances, including the nature of our income and the composition and value of our assets in each year, we cannot provide assurance with respect to our expectation regarding our PFIC status. In addition, this determination is based in part upon certain proposed United States Treasury regulations that are not yet in effect (the “Proposed Regulations”) and are subject to change in the future.

The Proposed Regulations and other administrative pronouncements from the Internal Revenue Service provide special rules for determining the character of income and assets derived in the banking, insurance and securities businesses for purposes of the PFIC rules. Although we believe we have adopted a reasonable interpretation of the Proposed Regulations and administrative pronouncements, there can be no assurance that the Internal Revenue Service will follow the same interpretation. If we were or were to become a PFIC, such characterization could result in adverse U.S. federal income tax consequences to you if you are a U.S. investor. For example, if we are a PFIC, our U.S. investors will become subject to increased tax liabilities under U.S. federal income tax laws and regulations and will become subject to burdensome reporting requirements. The determination of whether or not we are a PFIC is made on an annual basis and will depend on the composition of our income and assets from time to time. Specifically, we will be classified as a PFIC for U.S. federal tax purposes if either (i) 75% or more of our gross income in a taxable year is passive income or (ii) 50% or more of the value of our assets in a taxable year (based on an average of the quarterly values) is attributable to assets that produce or are held for the production of passive income (which includes cash). The calculation of the value of our assets will be based, in part, on the market price of our Shares and our GDSs, which is likely to fluctuate after this offering (and may fluctuate considerably given that the global capital markets have been experiencing

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extreme volatility). Accordingly, fluctuations in the market price of our Shares and GDSs may result in our becoming a PFIC in the current or any future taxable year. In addition, the composition of our income and assets will be affected by how, and how quickly, we spend the cash we raise in this offering. See “Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company.

We are incorporated in the ROC and because the rights of shareholders under ROC law differ from those under the laws of some other jurisdictions, you may have more difficulties protecting your shareholder rights than shareholders in some other jurisdictions.

Our corporate affairs are governed by our Articles of Incorporation and by the laws governing corporations incorporated in the ROC. The rights of shareholders and the responsibilities of management and the members of the board of directors under ROC law are different from those applicable to a corporation incorporated in some other jurisdictions. Directors of ROC companies are required to conduct business faithfully and to act with the care of a good administrator. However, such duty of care as required of ROC companies’ directors may not be the same as the fiduciary duty of directors of non-ROC companies. Therefore, public shareholders of ROC companies may have more difficulty in protecting their interests in connection with actions taken by management or members of the board of directors than they would as public shareholders in some other jurisdictions.

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USE OF PROCEEDS

The net proceeds to be received by us from this offering of the GDSs will be approximately US$133.0 million. The net proceeds are calculated after deducting underwriting discounts and commissions and related expenses of US$2.1 million. We will use the net proceeds to provide us with additional working capital, enhance our Tier-1 capital ratio and strengthen our capital structure.

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DIVIDENDS AND DIVIDEND POLICY

The following table sets forth cash and stock dividends declared and paid in each of the years indicated.

Dividends(1) 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Cash Dividends Per Share NT$ 0.250 0.250 0.230	Stock Dividends Per Share NT$ 0.515 0.534 0.493	Total Shares Issued as Stock Dividends
			(in millions) 103.4 113.1 110.5

Note:

(1) Represents cash and stock dividends which were declared and paid in the year, but related to the earnings of the preceding year.

Our dividend payments and distributions are generally governed by the ROC Company Law as well as our Articles of Incorporation. The ROC Company Law and our Articles of Incorporation restrict us from paying a dividend to holders of Shares unless we have current or retained earnings (excluding reserves). Our Articles of Incorporation provide that after we pay our income taxes, deduct prior year’s losses, set aside legal reserve and any special reserve pursuant to applicable laws and regulations, the remaining portion of our net income, together with the retained earnings of the previous years, shall be first applied in distribution of interest of preferred shares. Depending on our actual business needs, we may retain a part of the remaining portion from distribution. After the aforesaid retention, the remaining portion shall be distributed as:

• 92% shall be distributed to the shareholders as dividends; provided that in the year we increase our share capital, the dividends to the holders of the newly issued shares shall be resolved by the shareholders’ meeting;

• 2% shall be distributed to the directors and supervisors as remuneration in the manner determined by our board of directors; and

• 6% shall be distributed to the employees as bonuses.

Unless our legal reserve reaches our paid-in capital, our dividends to be distributed in the form of cash may not exceed 15% of our paid-in capital.

According to our Articles of Incorporation, cash dividends shall not be less than 10% of the dividends distributed in respect of the relevant year.

Under the ROC Banking Law and the Regulations Governing the Capital Adequacy Ratio and Capital Category of Banks, it is required that the consolidated capital adequacy ratio and the solo capital adequacy ratio of a bank shall not be less than 8%, respectively, and shall meet the minimum capital adequacy requirement. See “Regulation of the ROC Banking Industry—Financial Requirements—Capital Adequacy”. If we are graded under-capitalized, substantially under-capitalized or critically under-capitalized, or if we would be down-graded to become below adequate capitalized due to distribution of profits in cash or repurchase of our shares, we are not allowed for such distribution or repurchase. If we are graded under-capitalized, substantially under-capitalized or critically under-capitalized, we are prohibited from making payment other than remunerations to our responsible persons. A fine of between NT$2 million and NT$10 million be levied on us if we violate the above restrictions. In addition, the FSC will take prompt corrective actions against under-capitalized banks, substantially under-capitalized banks or critically undercapitalized banks. For information relating to ROC withholding taxes payable on cash and stock dividends, see “Taxation—ROC Taxation—Dividends”.

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EXCHANGE RATES

Fluctuations in the exchange rate between the NT dollar and the US dollar will affect the US dollar equivalent of the NT dollar price of our Shares on the TWSE.

The following table sets forth the average, high, low and period-end Noon Buying Rates between NT Dollars and US Dollars (in NT Dollars per US Dollar) for the periods indicated. No representation is made that the NT Dollar amounts actually represent such US Dollar amounts or could have been, or could be, converted into US Dollars at the rate indicated, at any other rate or at all.

2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . August . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . October . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 (through January 10) January (through January 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	NT Dollars/US Dollar Noon Buying Rate	NT Dollars/US Dollar Noon Buying Rate	NT Dollars/US Dollar Noon Buying Rate	NT Dollars/US Dollar Noon Buying Rate
	Average 32.51 32.85 31.52 33.02 31.50 29.38 29.55 29.70 29.94 29.62 29.38 29.52 29.72 30.02	High 33.31 33.41 33.58 35.21 32.43 30.67 30.28 30.20 30.04 29.81 29.49 29.65 30.03 30.11	Low 31.28 32.26 29.99 31.95 29.14 28.50 29.01 28.93 29.87 29.51 29.32 29.37 29.59 29.90	Period End(1)
				32.59 32.43 32.76 31.95 29.14 30.27 29.05 29.83 29.93 29.56 29.42 29.59 29.83 29.99

Source: For all periods prior to January 1, 2009, the exchange rate refers to the Noon Buying Rate as reported by the Federal Reserve Bank of New York. For periods beginning on or after January 1, 2009, the exchange rate refers to the Noon Buying Rate as set forth in the weekly H.10 statistical release of the Federal Reserve Board.

(1) Average of buying and selling exchange rates in Taipei for cable transfers in NT dollars per U.S. dollar as certified by the Bank of Taiwan.

36

MARKET PRICE INFORMATION

Our Shares have been listed on the TWSE since November 27, 1998. There has been no public market outside Taiwan for the Shares.

The table below sets forth, for the periods indicated, the high and low closing prices and the average daily volume of trading activity on the TWSE for our Shares and the highest and lowest of the daily closing values of the TWSE Index. The closing price for our Shares on the TWSE on January 23, 2014 was NT$12.15 per share.

2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . 2011 First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . 2012 First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . 2013 First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . 2014 First Quarter (through January 23) . . . . . . . . .	Closing Price per Share High NT$ Low NT$ 17.53 10.35 20.49 10.19 14.31 4.43 10.86 4.62 13.50 7.86 10.69 7.86 9.55 7.98 13.00 8.99 13.50 10.92 13.95 10.74 12.91 11.74 14.26 10.49 12.10 9.83 12.06 10.06 11.34 9.92 11.91 10.73 11.65 10.55 11.72 11.01 12.20 11.29 12.10 11.34 12.45 11.80 12.45 12.05	Average Daily Trading Volume in Shares (in thousands) 4,981.58 6,867.00 5,737.77 7,394.68 7,813.25 3,530.38 2,889.81 15,412.30 8,727.83 7,009.89 4,137.04 7,738.07 4,789.12 5,603.75 1,885.66 3,333.10 1,941.79 3,108.50 2,668.06 2,151.44 2,385.36 2,341.44	TWSE	Index
	High NT$ 17.53 20.49 14.31 10.86 13.50 10.69 9.55 13.00 13.50 13.95 12.91 14.26 12.10 12.06 11.34 11.91 11.65 11.72 12.20 12.10 12.45 12.45		High 7,823.72 9,809.88 9,295.70 8,188.11 8,972.50 8,356.89 8,171.94 8,240.89 8,972.50 9,145.35 9,062.35 8,824.44 7,622.01 8,144.04 7,862.90 7,781.91 7,757.09 8,038.72 8,398.84 8,299.12 8,623.43 8,625.30	Low
				6,257.80 7,344.56 4,089.93 4,242.61 7,071.67 7,212.87 7,071.67 7,254.06 8,046.23 8,234.78 8,478.86 6,877.12 6,633.33 6,952.21 6,894.66 6,970.69 7,088.49 7,616.64 7,663.23 7,814.38 8,099.45 8,500.01

Source: Bloomberg.

37

CAPITALIZATION

The following table sets forth our consolidated capitalization as of September 30, 2013 in accordance with Taiwan-IFRSs, as adjusted to give effect to this offering. You should read this table in conjunction with our unaudited consolidated financial statements as of and for the nine months ended September 30, 2012 and 2013, including the notes thereto, which appear in the F-pages of this offering memorandum.

As of September 30, 2013, our authorized share capital was NT$45,000,000,000, divided into 4,500,000,000 Shares, and our issued share capital was NT$23,621,182,640, divided into 2,362,118,264 Shares.

Bank debentures(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shareholders’ equity: Common stock, par value NT$10 per share,(2) 4,500,000,000 shares authorized, 2,362,118,264 shares issued and outstanding . . . . . . . . . Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exchange differences on translating foreign operations . . . . . . . . . . . . Unrealized gain (loss) on available-for-sale financial assets . . . . . . . . . Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	As of September 30, 2013	As of September 30, 2013	As of September 30, 2013
	Actual As Adjusted for Offering of GDSs NT$ US$ NT$ US$ (unaudited) (in millions) 25,055.6 847.6 25,055.6 847.6 23,621.2 799.1 27,271.2 922.6 34.9 1.2 427.6 14.5 5,261.0 178.0 5,261.0 178.0 11.2 0.4 11.2 0.4 (436.3) (14.8) (436.3) (14.8) 28,492.0 963.9 32,534.7 1,100.7 53,547.6 1,811.5 57,590.3 1,948.3	As Adjusted for Offering of GDSs
			US$ 847.6 922.6 14.5 178.0 0.4 (14.8) 1,100.7 1,948.3

Notes:

(1) Including outstanding convertible bonds due 2018 in the amount of NT$4,040.9 million (US$136.7 million).

(2) As of the date hereof, we had outstanding convertible bonds due 2018 in the amount of NT$4,040.9 million (US$136.7 million) that are convertible into the Shares.

38

SELECTED FINANCIAL AND OTHER DATA

The selected financial information as of and for the years ended December 31, 2010, 2011 and 2012 has been derived from our audited consolidated financial statements prepared in accordance with ROC GAAP included elsewhere in this offering memorandum. These consolidated financial statements have been audited by Deloitte & Touche, independent auditors. The summary unaudited consolidated financial information as of and for the nine months ended September 30, 2012 and 2013 has been derived from our unaudited consolidated financial statements for the same periods prepared in accordance with Taiwan-IFRSs, pursuant to the Regulations Governing the Preparation of Financial Reports by Public Banks, International Financial Reporting Standard 1 “First-time Adoption of International Financial Reporting Standards” and International Accounting Standard 34 “Interim Financial Reporting” endorsed by the Financial Supervisory Commission of the Republic of China included elsewhere in this offering memorandum. The unaudited consolidated financial statements include all adjustments, consisting only of normal and recurring adjustments, which we consider necessary for a fair presentation of our financial position and operating results for the periods presented. These consolidated financial statements have been reviewed by Deloitte & Touche, independent auditors.

Our financial statements as of and for the years ended December 31, 2010, 2011 and 2012 included in the F-pages of this offering memorandum have been prepared and presented in accordance with reporting requirements of the “Regulations Governing the Preparation of Financial Reports by Public Banks” and other applicable ROC laws and regulations and in accordance with ROC GAAP. Our financial statements as of and for the nine months ended September 30, 2012 and 2013 included in the F-pages of this offering memorandum have been prepared and presented in accordance with Taiwan-IFRSs, pursuant to the Regulations Governing the Preparation of Financial Reports by Public Banks, International Financial Reporting Standard 1 “First-time Adoption of International Financial Reporting Standards” and International Accounting Standard 34 “Interim Financial Reporting” endorsed by the Financial Supervisory Commission of the Republic of China included elsewhere in this offering memorandum. Those financial statements are not intended to present our financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in other countries and jurisdictions, including the United States. The selected financial data in the following tables have been derived from our audited financial statements included in the F-pages of this offering memorandum without material adjustment. Solely for your convenience, these selected data are presented in a different format from those financial statements. Neither these data nor the format in which they are presented should be viewed as comparable to information prepared in accordance with US GAAP or generally accepted accounting principles elsewhere.

Selected income statement data: Total net interest . . . . . . . . . . . . . . . . . . . . . . . . Net service fee income and commission income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net gain on financial instruments(1) . . . . . . . . . . Net gain on reversal of provision (provision) for asset impairment loss . . . . . . . . . . . . . . . . . . . Recovery of written-off credits(2) . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total non-interest income and gains, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision (reversal of provision) for possible losses and guarantee obligations reserve(2) . . . Total operating expenses . . . . . . . . . . . . . . . . . . . Income before income tax . . . . . . . . . . . . . . . . Income tax expense . . . . . . . . . . . . . . . . . . . . . . . Consolidated net income. . . . . . . . . . . . . . . . . .	Year	Ended December 31, Nine Months Ended September 30, 2011 2012 2012 2013 NT$ NT$ US$ NT$ (unaudited) NT$ US$ (in millions) 3,879.4 3,978.8 134.6 3,073.4 3,662.8 123.9 2,276.0 2,585.1 87.5 1,912.2 2,131.4 72.1 865.6 1,271.6 43.0 917.7 1,072.3 36.3 (2.8) 44.8 1.5 56.2 0.8 — 1,220.0 1,274.7 43.1 — — — 426.1 485.1 16.4 303.1 236.1 8.0 4,784.9 5,661.3 191.5 3,189.2 3,440.6 116.4 8,664.3 9,640.1 326.1 6,262.6 7,103.4 240.3 834.2 897.3 30.4 (587.1) (320.4) (10.8) 5,306.5 5,815.1 196.7 4,321.8 4,316.9 146.0 2,523.6 2,927.7 99.0 2,527.9 3,106.9 105.1 150.4 364.3 12.3 272.4 379.2 12.8 2,373.2 2,563.4 86.7 2,255.5 2,727.7 92.3	Nine Months Ended September 30,	Nine Months Ended September 30,
	2010 NT$ 3,983.8 2,257.5 955.6 (6.1) 1,247.6 259.5 4,714.1 8,697.9 675.0 4,973.7 3,049.2 852.8 2,196.4	2011 NT$ 3,879.4 2,276.0 865.6 (2.8) 1,220.0 426.1 4,784.9 8,664.3 834.2 5,306.5 2,523.6 150.4 2,373.2		2013
				(unaudited) NT$ US$ 3,662.8 123.9 2,131.4 72.1 1,072.3 36.3 0.8 — — — 236.1 8.0 3,440.6 116.4 7,103.4 240.3 (320.4) (10.8) 4,316.9 146.0 3,106.9 105.1 379.2 12.8 2,727.7 92.3

Notes:

(1) Net gain on financial instruments includes net gain on financial assets and liabilities at fair value through profit or loss, net gain on available-for-sale financial assets, investment income (loss) recognized under the equity method and foreign exchange gain (loss).

(2) While recovery of written-off credits are credited against provision for possible losses under Taiwan-IFRSs, it is recognized as other income under ROC GAAP in the years ended December 31, 2010, 2011 and 2012.

39

Selected balance sheet data: Assets Discounts and loans, net . . . . . . . . . . . . . . Due from the Central Bank and other banks . . . . . . . . . . . . Other financial assets(1) . . . . . . . . . . . Total assets . . . . . . . . . Liabilities Deposits and remittances . . . . . . . Bank debentures . . . . . Due to the Central Bank and other banks . . . . . . . . . . . . Total liabilities . . . . . . Total shareholder’s equity . . . . . . . . . . . Total liabilities and shareholders’ equity . . . . . . . . . . .		As of December 31, As of September 30, 2011 2012 2012 2013 NT$ NT$ US$ NT$ (unaudited) NT$ US$ (in millions) 269,460.4 280,219.4 9,479.7 280,051.3 316,949.8 10,722.3 86,739.2 82,818.6 2,801.7 81,359.1 79,374.3 2,685.2 75,773.4 96,592.0 3,267.7 89,364.0 89,305.4 3,021.2 438,455.1 465,498.3 15,747.6 456,748.0 491,166.7 16,615.9 369,998.6 391,933.3 13,258.9 377,867.0 392,644.4 13,283.0 20,230.3 23,072.1 780.5 23,094.5 25,055.6 847.6 11,785.7 11,675.0 395.0 15,327.3 25,027.4 846.7 413,800.7 438,897.0 14,847.7 430,459.1 462,674.7 15,652.0 24,654.4 26,601.3 899.9 26,288.9 28,492.0 963.9 438,455.1 465,498.3 15,747.6 456,748.0 491,166.7 16,615.9	As of September 30,	As of September 30,
	2010 NT$ 236,351.3 102,938.4 72,548.8 418,356.4 347,860.6 16,789.6 18,093.1 395,549.2 22,807.2 418,356.4	2011 NT$ 269,460.4 86,739.2 75,773.4 438,455.1 369,998.6 20,230.3 11,785.7 413,800.7 24,654.4 438,455.1		2013
				(unaudited) NT$ US$ 316,949.8 10,722.3 79,374.3 2,685.2 89,305.4 3,021.2 491,166.7 16,615.9 392,644.4 13,283.0 25,055.6 847.6 25,027.4 846.7 462,674.7 15,652.0 28,492.0 963.9 491,166.7 16,615.9

Notes:

(1) Other financial assets include cash and cash equivalents, financial assets at fair value through profit or loss, securities purchased under resale agreements, receivables-net, available-for-sale financial assets, held-to-maturity financial assets, investments accounted for by the equity method, debt investments with no active market, and other financial assets (including derivative financial assets for hedging).

40

Selected credit data: Total loans(1) . . . . . . . . . . . . . . . . . . . . . . . . . . NPLs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Allowance for possible losses . . . . . . . . . . . . . Credit card revolving balance . . . . . . . . . . . . . Allowance for possible losses—credit card receivables . . . . . . . . . . . . . . . . . . . . . . . . . Key financial ratios: Net interest margin(2) . . . . . . . . . . . . . . . . . . . Net gain on financial instruments ratio(3) . . . . Net non-interest income and gains ratio(4) . . . Provision (reversal of provision) for possible losses and guarantee obligations reserve ratio(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Return on average equity(6) . . . . . . . . . . . . . . . Return on average assets(7) . . . . . . . . . . . . . . . Earnings per share . . . . . . . . . . . . . . . . . . . . . . Cash dividends per share(8) . . . . . . . . . . . . . . . Asset quality data: NPL ratio(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . Coverage ratio(10) . . . . . . . . . . . . . . . . . . . . . . Capital adequacy ratio(11) . . . . . . . . . . . . . . . .	As of or for the Year Ended December 31, As of or for the Nine Months Ended September 30, 2010 2011 2012 2012 2013 (unaudited) NT$ NT$ NT$ US$ NT$ NT$ US$ (in millions, except percentages and per share data) 239,958.8 274,234.1 283,801.4 9,600.9 283,219.4 320,953.5 10,857.7 1,202.8 612.6 1,317.1 44.6 1,349.1 1,140.0 38.6 3,607.5 4,773.7 3,582.0 121.2 3,168.1 4,003.7 135.4 11,220.8 10,774.4 10,676.4 361.1 10,621.8 10,471.5 354.2 1,849.2 774.3 710.0 24.0 727.9 660.2 22.3 1.36% 1.19% 1.13% 1.17% 1.26% 10.99% 9.99% 13.19% 14.65% 15.10% 54.20% 55.23% 58.73% 50.92% 48.44% 7.76% 9.63% 9.31% (9.37%) (4.51%) 10.08% 10.00% 10.00% 11.84% 13.24% 0.55% 0.55% 0.57% 0.67% 0.76% NT$0.99 NT$1.07 NT$1.15 US$0.04 NT$0.96 NT$1.16 US$0.04 NT$0.10 NT$0.25 NT$0.25 US$0.01 N/A N/A 0.50% 0.22% 0.46% 0.48% 0.36% 299.92% 779.32% 271.96% 234.84% 351.20% 13.36% 12.86% 12.71% 12.53% 10.16%	As of or for the Nine Months Ended September 30,	As of or for the Nine Months Ended September 30,
	2010 NT$ 239,958.8 1,202.8 3,607.5 11,220.8 1,849.2 1.36% 10.99% 54.20% 7.76% 10.08% 0.55% NT$0.99 NT$0.10 0.50% 299.92% 13.36%		2013

Notes:

(1) Represents the gross amount of loans, discounts and bills purchased as of the dates indicated, without deducting any allowance for possible losses. See note 9 of the notes to our financial statements as of and for the years ended December 31, 2010, 2011 and 2012 and note 12 of the notes to our financial statements as of and for the nine months ended September 30, 2012 and 2013, both included in the F-pages of this offering memorandum.

(2) Represents net interest income (without deducting amount booked as service fee income) divided by daily average interest earning assets. In order to enable a comparison with annual figures, net interest margin for each of the nine months ended September 30, 2012 and 2013 represents annualized net interest income divided by average interest-earning assets for the period.

(3) Represents the ratio of net gain on financial instruments to net profit.

(4) Represents the ratio of net non-interest income and gains to net profit. Net non-interest income includes service fees, gains on securities and other non-interest income.

(5) Represents the ratio of provision (reversal of provision) for possible losses and guarantee obligations reserve to net profit.

(6) Represents consolidated net income divided by average equity for the period (calculated by averaging the opening and ending balance of the period). In order to enable a comparison with annual figures, return on average equity for each of the nine months ended September 30, 2012 and 2013 represents annualized consolidated net income divided by average equity for the period.

(7) Represents consolidated net income divided by average assets for the period. In order to enable a comparison with annual figures, return on average assets for each of the nine months ended September 30, 2012 and 2013 represents annualized consolidated net income divided by average assets for the period.

(8) Represents cash dividends which were declared and paid in the year, but related to the earnings of the preceding year. (9) Represents NPLs divided by gross loans.

(10) Represents total allowance for possible losses divided by total amount of nonperforming loans.

(11) Determined in accordance with the requirements of the FSC. See “Descriptions of Assets and Liabilities—Capital Adequacy.”

41

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion is based upon, and should be read in conjunction with, our audited annual consolidated financial statements as of and for the years ended December 31, 2010, 2011 and 2012 prepared in accordance with ROC GAAP and unaudited consolidated financial statements as of and for the nine months ended September 30, 2012 and 2013 prepared in accordance with Taiwan-IFRSs, including the notes thereto, included in the F-pages of this offering memorandum. Those financial statements are not intended to present our financial position and results of operations and cash flows in accordance with US GAAP, IFRS or generally accepted accounting principles in other jurisdictions.

We present certain financial information in the following discussion, solely for the convenience of readers, in a format which differs from the ROC GAAP-governed format or Taiwan-IFRSs government format used in our financial statements included in the F-pages of this offering memorandum. See “—Result of Operations” and “—Financial Condition”.

Overview

Established in 1992, we are a leading full-service commercial bank in Taiwan. Through our four strategic business units, or SBUs, namely the Individual Banking Group, Consumer Banking Group, Corporate Banking Group and Financial Markets Group, we offer a broad range of financial products and banking services to over 2.5 million individual and corporate customers in Taiwan and abroad. We are a member of the Far Eastern Group, one of the largest business conglomerates in Taiwan.

Our long history, market-leading products and strong brand name makes us one of Taiwan’s premier financial services companies. We believe that our comprehensive product and service offerings have not only helped expand our customer base, but also contribute to customer retention. Our strong and loyal customer base has in turn strengthened our ability to cross sell products and services offered by our SBUs.

We leverage our extensive distribution and customer service network consisting of our head office and 54 domestic branches, one offshore banking unit, one Hong Kong branch, six corporate banking centers and 157 ATMs, to cross sell and serve our large customer base. In addition, we are one of Taiwan’s leading issuers of credit cards. As of September 30, 2013, we had approximately 1.4 million credit cards in-force and outstanding credit card revolving balances of NT$10.5 billion, making us one of the largest credit card providers in Taiwan in terms of credit card revolving balances.

Our profitability and financial condition are affected by a number of factors which influence the business environment in which we operate. These factors include:

• general economic conditions in Taiwan;

• interest rates;

• competition;

• conditions in Taiwan’s securities markets;

• regulation;

• taxes; and

• foreign exchange rates.

42

We expect that economic conditions in Taiwan, the interest rate environment and competition will continue to be the principal factors affecting our financial performance in the near future. See “Risk Factors—Risks Relating to Our Business” and “—Risks Relating to ROC”.

Critical Accounting Policies

Our financial statements as of and for the years ended December 31, 2010, 2011 and 2012 have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Public Banks and accounting principles generally accepted in the ROC. Our financial statements as of and for the nine months ended September 30, 2012 and 2013 have been prepared in accordance with Taiwan IFRSs, pursuant to the Regulations Governing the Preparation of Financial Reports by Public Banks, International Financial Reporting Standard 1 “First-time Adoption of International Financial Reporting Standards” and International Accounting Standard 34 “Interim Financial Reporting” endorsed by the Financial Supervisory Commission of the Republic of China. Under these regulations and principles, certain estimates and assumptions have been used to determine fair value of certain financial instruments, allowance for possible losses, reserve for guarantee obligations, depreciation, impairment, pension, income taxes, contingent losses and bonuses to employees, directors and supervisors, etc. Actual results may differ from these estimates.

Critical Accounting Policies under ROC GAAP for the years ended December 31 2010, 2011 and 2012

Financial Instruments at Fair Value through Profit or Loss

Financial instruments at fair value through profit or loss (FVTPL) are financial assets and liabilities that are held for trading or those that are designated on initial recognition as measured at fair value through profit or loss. FVTPL instruments are initially measured at fair value. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately as expense. At each balance sheet date subsequent to initial recognition, financial assets and liabilities at FVTPL are remeasured at fair value, with changes in fair value recognized as gain or loss in the year. On the derecognition of financial assets and liabilities at FVTPL, differences between the carrying amount and the sum of the consideration received and receivable or consideration paid and payable are recognized as gain or loss. Acquisition and disposal of financial assets are recognized and derecognized on a trade date basis, except government bonds, for which the settlement date basis is used.

A derivative instrument that does not meet the criteria for hedge accounting is classified as a financial asset or a financial liability held for trading. If the fair value of the derivative is positive, the derivative is recognized as a financial asset; otherwise, the derivative is recognized as a financial liability.

Available-for-sale Financial Assets

Available-for-sale financial assets are initially measured at fair value plus transaction costs that are directly attributable to the acquisition. The difference between the initial cost of a debt instrument and its maturity amount is amortized using the effective interest method. At each balance sheet date subsequent to initial recognition, available-for-sale financial assets are remeasured at fair value, with changes in fair value recognized in equity until the financial assets are derecognized or impaired, at which time, the cumulative gain or loss previously recognized in equity is included in profit or loss for the year. Acquisition and disposal of financial assets are recognized and derecognized on a trade date basis, except government bonds, for which the settlement date basis is used.

An impairment loss is recognized when there is objective evidence that the investment is impaired. Any decrease in impairment loss on an equity instrument classified as available-for-sale is recognized directly in equity. If the fair value of a debt instrument classified as available-for-sale increases as a result of an event that occurred after the impairment loss was recognized, the decrease in impairment loss is reversed as gain of the year.

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Nonaccrual Loans

Under the NPL Regulations, overdue loans and other credits extended by the Bank, including their respective accrued interests, are classified as nonaccrual loans within six months after the expiration of the repayment period.

Nonaccrual loans arising from loans are classified as discounts and loans; others arising from guarantees, acceptances, accounts receivable—factoring and credit card receivables are classified as other financial assets.

Allowance for Possible Losses and Reserve for Guarantee Obligations

In determining the allowance for possible losses and reserve for guarantee obligations, we evaluate the risks on specific loans and assess the collectability of loans, discounts, receivables, other financial assets and guarantee obligations on a portfolio basis.

We evaluate possible losses on specific loans on the basis of the borrowers’ financial situation, their ability to repay principals and interests, and the values of collaterals in accordance with the NPL Regulations. The NPL Regulations require that loans should be categorized by collectability and specify the minimum allowance for possible losses and reserve for guarantee obligations using prescribed percentages. However, as required by the Banking Bureau’s letter (Ref No. 10010006830), loan coverage ratio should be more than 1%.

When a loan or receivable is considered uncollectible, it may be written off on the approval of our Board of Directors or Managing Directors. The subsequent collections of written-off loans are credited against the allowance account or recognized as other income.

Effective from January 1, 2011, we adopted the third revised Statement of Financial Accounting Standards (SFAS) No. 34—“Financial Instruments: Recognition and Measurement.” The main revisions is that loans and receivables originated should be covered by SFAS No. 34. Loans and accounts receivable are assessed for impairment at the end of each reporting period and are considered impaired when there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the loans and accounts receivable, and the estimated future cash flows of the loans and accounts receivable have been affected. Objective evidence of impairment could, among others, include:

• Significant financial difficulty of the debtor;

• Accounts receivable becoming overdue; or

• It becoming probable that the debtor will enter bankruptcy or financial reorganization.

Loans and accounts receivable that are assessed not to be impaired individually are assessed for impairment by portfolio. Objective evidence of impairment for a portfolio of loans and accounts receivable could include our past experience of collecting payments, an increase in the number of delayed payments in the portfolio, as well as changes in national or local economic conditions that correlate with defaults on loans and receivables.

The amount of the impairment loss recognized is the difference between the carrying amount of the loan and account receivable and the present value of estimated future cash flows discounted at the original effective interest rate after taking into consideration the collaterals and guarantees obtained. The carrying amount of the loans and accounts receivable is reduced through the use of an allowance account.

Held-to-maturity Financial Assets

Held-to-maturity financial assets are initially measured at fair value plus transaction costs that are directly attributable to the acquisition. At each balance sheet date subsequent to initial recognition, held-to-maturity financial assets are measured at amortized cost using the effective interest method. Acquisition and disposal of financial assets are recognized and derecognized on a settlement date basis.

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An impairment loss is recognized when there is objective evidence that the investment is impaired. The impairment loss is reversed if an increase in the investment’s recoverable amount is due to an event that occurred after the impairment loss was recognized; however, the adjusted carrying amount of the investment may not exceed the carrying amount that would have been determined had no impairment loss been recognized for the investment in prior years.

Debt Instrument Investments with No Active Market

Debt instrument investments which with no active market are carried at amortized cost. The accounting treatment for these debt instrument investments is the same as that for held-to-maturity financial assets, except for the absence of restriction on the timing of the disposal of these debt instruments. An impairment loss is recognized when there is objective evidence that the investment is impaired.

Intangible Assets

Intangible assets arising from mergers or acquisitions are initially recorded at fair value. Assets that are determined to have definite useful lives are amortized on a straight-line basis over 4 to 15 years, and those assets that are determined to have indefinite useful lives are tested for impairment annually. Events and circumstances are evaluated annually to determine whether the useful lives of intangible assets remain indefinite.

Income Tax

The inter-year allocation method is applied to income taxes, whereby deferred income tax assets and liabilities are recognized for the tax effects of temporary differences, unused loss carryforwards and unused tax credits. Valuation allowances are provided to the extent, if any, that it is more likely than not that deferred income tax assets will not be realized.

Income tax credits for research and development expenditures and personnel training expenditures are recognized when the expenses are incurred.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

An additional tax at 10% of unappropriated earnings is provided for as income tax in the year the shareholders approve the retention of earnings.

Income Recognition

Interest income from discounts and loans is recorded on the accrual basis. For nonaccrual loans, interest income is recognized only when collections on these obligations are made. Under the regulations of the Banking Bureau, the interest income on credits covered by agreements that extend their maturity is recorded as deferred income and recognized upon collection.

Service fee income is recognized as cash receipts when the related services have been substantially completed.

Commission income is recognized when the significant risks have been transferred and the economic benefits associated with the transaction have been realized or are realizable.

The gain or loss on the disposal or recovery of acquired receivables is accounted for by the cost-recovery method. The administration revenue from managing acquired loans is recognized monthly on an accrual basis. The advance administration revenue is amortized on a straight-line method over the estimated recovery period.

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Impairment of Assets

The carrying amount of investments accounted for by the equity method, properties, intangible assets and buildings and land held for sale is estimated based on its respecting recoverable amount. When an indication of significant impairment is identified, the excess of carrying amount of an asset over its recoverable amount is recognized as an impairment loss. If the recoverable amount increases in a subsequent period, the amount previously recognized as impairment would be reversed and recognized as a gain. However, the adjusted carrying amount may not exceed the carrying amount that would have been determined, net of depreciation and amortization, if no impairment loss had been recognized for the asset in prior years.

Acquisition of Another Financial Institution’s Business

The accounting for our acquisition of another financial institution’s business is based on the Statement of Financial Accounting Standards No. 25—“Business Combinations.” The identifiable net assets and liabilities obtained through the acquisition are measured at the fair value at the transaction date. Goodwill arising from the acquisition cost exceeding the fair value of the identifiable net assets acquired has to be tested for impairment annually instead of being amortized. If the fair value of the identifiable net assets exceeds the acquisition cost, the excess is used to reduce the fair value of each of the noncurrent assets acquired in proportion to the respective fair values of the noncurrent assets, with any remaining excess recognized as an extraordinary gain.

Critical Accounting Policies under Taiwan-IFRSs for the nine months ended September 30, 2012 and 2013

Financial instruments

Financial assets and financial liabilities are recognized when we become a party to the contractual provisions of the instruments. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place.

Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately as expense.

Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

• 1) Measurement category

Financial assets are classified into the following specified categories: Financial assets at fair value through profit or loss, held-to-maturity investments, available-for-sale financial assets and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

• a) Financial assets at fair value through profit or loss

Financial assets are classified as at fair value through profit or loss when the financial asset is either held for trading or it is designated as at fair value through profit or loss. A financial asset is classified as held for trading if:

• It has been acquired principally for the purpose of selling it in the near term; or

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• On initial recognition it is part of a portfolio of identified financial instruments that the Bank and its subsidiaries manage together and has a recent actual pattern of short-term profit-taking; or

• It is a derivative that is not financial guarantee contract or designated and effective as a hedging instrument.

A financial asset other than a financial asset held for trading may be designated as at fair value through profit or loss upon initial recognition when doing so results in more relevant information and if:

• Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

• The financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with our documented risk management or investment strategy, and information about the grouping is provided internally on that basis.

In addition, if a contract contains one or more embedded derivatives, the entire combined contract (asset or liability) can be designated as at fair value through profit or loss.

Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss, including any dividend or interest earned on the financial asset.

• b) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity dates that we have the positive intent and ability to hold to maturity other than those are designated as at fair value through profit or loss, or as available for sale, or meet the definition of loans and receivables upon initial recognition.

Subsequent to initial recognition, held-to-maturity investments are measured at amortized cost using the effective interest method less any impairment.

c) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated as available-forsale or are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss.

Interest income of available-for-sale bond investments calculated using the effective interest method and dividends on available-for-sale equity investments are recognized in profit or loss. Other changes in the carrying amount of available-for-sale financial assets are recognized in other comprehensive income. When the investment is disposed of or is determined to be impaired, the cumulative gain or loss that was previously accumulated in other comprehensive income is reclassified to profit or loss.

Dividends on available-for-sale equity instruments are recognized in profit or loss when our right to receive the dividends is established.

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Available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity investments are measured at cost less any identified impairment loss and are recognized in a separate line item as Financial assets measured at cost. If, in a subsequent period, the fair value of the financial assets can be reliably measured, the financial assets are remeasured at fair value. The difference between carrying amount and fair value is recognized in profit or loss or other comprehensive income on financial assets.

d) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables (including cash and cash equivalents, receivables, discounts and loans, nonaccrual loans other than discounts and loans, and debt investments with no active market) are measured at amortized cost using the effective interest method, less any impairment.

2) Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For all financial assets, objective evidence of impairment could include:

• Significant financial difficulty of the issuer or counterparty; or

• Breach of contract, such as a default or delinquency in interest or principal payments; or

• It is becoming probable that the borrower will enter bankruptcy or financial re-organization; or

• Disappearance of an active market for that financial asset because of financial difficulties.

• a) Financial assets carried at amortized cost

For discounts and loans and receivables, assets are assessed for impairment on a collective basis even if they were assessed as not impaired individually. Objective evidence of impairment for a portfolio of loans and receivables could include the our past experience of collecting payments, an increase in the number of delayed payments in the portfolio, as well as observable changes in national or local economic conditions that correlate with default on loans and receivables.

For financial assets carried at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate. If the amount of the impairment loss decreases in a subsequent period and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

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b) Available-for-sale financial assets

For available-for-sale equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income are reclassified to profit or loss in the period.

In respect of available-for-sale equity securities, impairment loss previously recognized in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income. In respect of available-for-sale debt securities, impairment loss are subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

• c) Financial assets measured at cost

For financial assets that are measured at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of discounts and loans, receivables and nonaccrual loans other than discounts and loans, where the carrying amount is reduced through an allowance account.

We evaluate possible losses on specific loans on the basis of the borrowers’ financial situation, their ability to repay principals and interests, and the values of collaterals in accordance with “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/ Nonaccrual Loans” (the “Regulations”). The Regulations require that loans should be categorized by collectability and specify the minimum allowance for possible losses and reserve for guarantee obligations using prescribed percentages.

When a loan or receivable is considered uncollectible, it may be written off on the approval of our Board of Directors or Managing Directors. The subsequent collections of written-off loans are credited against provision for possible losses.

• 3) Derecognition of financial assets

We derecognize a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers substantially all the risks and rewards of ownership of the financial asset to another party.

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss.

Intangible Assets

Intangible assets acquired in a business combination are initially recognized at their fair value at the acquisition date. Subsequent to initial recognition, intangible assets are reported at cost less accumulated amortization and accumulated impairment loss.

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Euro Convertible Bonds

Euro convertible bonds that contain both liability and conversion option derivative components are classified separately into respective items on initial recognition. The conversion option that will be settled other than by the exchange of a fixed amount of cash or other financial asset for a fixed number of our own equity instruments is classifies as a conversion option derivative. At the date of issue, both the liability and conversion option derivative components are recognized at fair value.

In subsequent periods, the liability component of the Euro Convertible Bonds is measured at amortized cost using the effective interest method. The conversion option derivative is measured at fair value and the changes in fair value are recognized in profit or loss.

Transaction costs related to the issuance of Euro Convertible Bonds are included in the carrying amount of the liability component and are amortized over the lives of Euro Convertible Bonds using the effective interest method.

Income Tax

Income tax expense represents the sum of tax currently payable and deferred tax expense.

• 1) Current tax expense

Interim period income tax expense is calculated by applying to an interim period’s pre-tax income with the tax rate that would be applicable to expected total annual earnings.

An additional tax at 10% of unappropriated earnings is provided for as income tax in the year the shareholders approve to retain the earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

• 2) Deferred tax expense

Deferred tax expense represents adjustments to deferred tax assets and liabilities.

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which we expect, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, unused loss carryforwards, and unused tax credits for research and development expenditures and personnel training expenditures to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be recovered.

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• 3) Current and deferred tax for the period

Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.

Income Recognition

Interest income from discounts and loans is recorded on the accrual basis. For nonaccrual loans, interest income is recognized only when collections on these obligations are made. Under the regulations of the Banking Bureau under the Financial Supervisory Commission, the interest income on credits covered by agreements that extend their maturity is recorded as deferred income and recognized upon collection.

Service fee income is recognized as loans are provided or services have been completed.

The gain or loss on the disposal or recovery of acquired receivables is accounted for by the effective interest method. The administration revenue from managing acquired loans is recognized monthly on an accrual basis. The advance administration revenue is amortized on a straight-line method over the estimated recovery period.

Impairment of Assets

At the end of each reporting period, we review the carrying amounts of their tangible and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, we estimate the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to the individual cashgenerating units; otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount.

When the recoverable amount increases in a subsequent period, the reversal of an impairment loss is recognized immediately in profit or loss. The carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years.

Acquisition of Another Financial Institution’s Business

Acquisitions of another financial institution are accounted for using the purchase method if acquisitions comply with business combination. The consideration transferred in acquisitions of another financial institution is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by us, liabilities incurred by us to the former owners of the acquiree and the equity interests issued by us in exchange for control of the acquiree.

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Average Balance Sheets and Interest Rates

The following table sets forth our daily average balances, interest income and expense, and average interest rates for the periods indicated.

Interest-earning assets: Cash and cash equivalents— deposit due from other banks . . . . . . . . . . . . . . . . . . . . . . . . . Due from the Central Bank and other banks . . Financial assets at fair value through profit or loss—government bonds . . . . . . . . . . . . . . . Securities purchased under resale agreements . . . . . . . . . . . . . . . . . . . . . . . . . Receivables—credit card revolving balances . . . . . . . . . . . . . . . . . . . . . . . . . . . Discounts and loans . . . . . . . . . . . . . . . . . . . . Available-for-sale financial assets (excluding stocks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Held-to-maturity financial assets . . . . . . . . . . . Debt investments with no active market . . . . . Guarantee deposits for financial instrument agreements . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total interest-earning assets . . . . . . . . . . . . . . . . . Less: booked as service fee income . . . . . . . . . . . . . Total interest income . . . . . . . . . . . . . . . . . . . . . . Less: allowance for possible losses . . . . . . . . . . . . . Total interest-earning assets (net) . . . . . . . . . . . . . . Noninterest earning assets . . . . . . . . . . . . . . . . . . . . Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest-bearing liabilities: Due to banks . . . . . . . . . . . . . . . . . . . . . . . . . . Short-term loans . . . . . . . . . . . . . . . . . . . . . . . Demand deposits . . . . . . . . . . . . . . . . . . . . . . . Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . Negotiable certificates of deposit . . . . . . . . . . . Domestic bank debentures . . . . . . . . . . . . . . . Euro convertible bonds . . . . . . . . . . . . . . . . . . Other financial liabilities—principal of structured notes . . . . . . . . . . . . . . . . . . . . . . Other financial liabilities—securities sold under repurchase agreements . . . . . . . . . . . . Automobile financing obligations . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total interest-bearing liabilities . . . . . . . . . . . . . . Noninterest-bearing liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total liabilities and shareholders’ equity . . . . . . . 52	As of and for the Year Ended December 21,	As of and for the Year Ended December 21,	As of and for the Year Ended December 21,	As of and for the Nine Months Ended September 30,	As of and for the Nine Months Ended September 30,
	2010	2011	2012	2012	2013
	Average Balance Interest Income Expense Average Rate(1)	Average Balance Interest Income Expense Average Rate(1)	Average Balance Interest Income Expense Average Rate(1)	Average Balance Interest Income Expense Average Rate(1)	Average Balance Interest Income Expense Average Rate(1)
	(Unaudited) (NT$ in millions, except for percentage) 1,311.0 0.9 0.07% 2,079.1 4.6 0.22% 1,615.6 3.9 0.24% 1,647.1 3.5 0.28% 1,648.4 1.1 0.09% 77,320.3 455.0 0.59% 83,822.0 667.0 0.80% 83,144.4 714.1 0.86% 84,883.4 545.2 0.86% 75,099.5 479.5 0.85% 1,909.8 37.5 1.95% 2,062.8 39.3 1.91% 1,590.7 28.3 1.78% 1,572.6 20.6 1.75% 2,081.3 24.9 1.60% 541.9 1.3 0.24% 169.0 1.2 0.69% 8,274.3 60.8 0.74% 5,313.3 29.7 0.74% 18,447.3 86.6 0.63% 11,773.8 1,445.5 12.28% 10,801.7 1,274.1 11.80% 10,622.3 1,209.9 11.39% 10,655.3 910.5 11.39% 10,515.4 856.9 10.87% 222,454.1 5,242.3 2.36% 255,376.9 6,302.6 2.48% 280,506.8 7,763.4 2.77% 279,786.6 5,736.9 2.73% 301,474.8 6,913.0 3.06% 14,384.7 197.6 1.37% 15,811.8 208.7 1.32% 9,889.0 117.3 1.19% 9,695.0 86.9 1.20% 13,752.6 119.5 1.16% 2,543.2 52.5 2.06% 3,299.7 87.4 2.65% 2,850.2 78.4 2.75% 3,111.1 62.4 2.67% 2,365.7 40.1 2.26% 4,181.7 71.0 1.70% 3,696.5 62.7 1.70% 4,417.6 85.9 1.94% 4,484.4 68.2 2.03% 3,748.0 57.6 2.05% 1,400.1 1.1 0.08% 2,081.7 1.1 0.05% 1,840.5 1.6 0.09% 1,829.9 1.1 0.08% 1,983.7 1.1 0.08% — 161.0 — — 63.7 — — 90.5 — — 155.5 — — 169.4 — 337,820.6 7,665.7 2.27%379,201.2 8,712.4 2.30%404,751.4 10,154.1 2.51%402,978.7 7,620.5 2.52%431,116.7 8,749.7 2.71% 603.1 633.1 614.6 475.1 423.4 7,062.6 8,079.3 9,539.5 7,145.4 8,326.3 5,470.0 5,497.5 5,035.4 5,247.0 4,841.8 332,350.6 373,703.7 399,716.0 397,731.7 426,274.9 44,312.5 46,744.8 48,703.0 48,609.2 49,132.1 376,663.1 420,448.5 448,419.0 446,340.9 475,407.0 8,923.2 68.5 0.77% 12,784.2 138.0 1.08% 14,102.0 150.8 1.07% 13,903.6 125.3 1.20% 21,320.8 94.1 0.59% 1,258.7 10.6 0.84% 1,212.1 13.5 1.12% 1,182.2 15.5 1.31% 1,238.9 12.1 1.30% 468.0 4.7 1.35% 66,339.0 143.9 0.22% 78,174.9 193.6 0.25% 81,139.2 241.7 0.30% 80,931.1 142.2 0.23% 89,658.8 153.5 0.23% 236,570.7 1,868.1 0.79% 254,973.3 2,705.3 1.06% 271,371.4 3,186.9 1.17% 270,990.8 2,405.7 1.18% 280,903.8 2,272.8 1.08% 13,217.0 64.1 0.49% 20,255.7 177.5 0.88% 22,029.0 208.5 0.95% 21,283.9 153.4 0.96% 16,963.8 107.2 0.84% 15,756.8 209.6 1.33% 17,030.3 264.9 1.56% 21,481.8 364.1 1.70% 21,007.4 266.1 1.69% 21,528.1 276.0 1.71% — — — — — — — — — — — — 4,136.8 70.3 2.63% — — — 368.1 3.6 0.97% 748.4 20.8 2.78% 718.8 15.3 2.84% 653.2 13.0 2.66% 411.9 0.5 0.12% 36.1 — 0.10% 25.7 0.1 0.54% 24.5 0.1 0.54% 232.5 0.3 0.19% — 636.4 — — 701.7 — 1,367.7 — 953.7 — 1,673.2 — — 77.1 — — 1.8 — 4.6 — -1.9 — -1.6 — 342,477.3 3,078.8 0.90%384,834.7 4,199.9 1.09%412,079.7 5,560.7 1.35%410,099.0 4,072.0 1.32%435,865.8 4,663.5 1.43% 34,185.8 35,613.8 36,339.3 36,241.9 39,541.2 376,663.1 420,448.5 448,419.0 446,340.9 475,407.0

Note:

(1) Average rate represents interest income or expense, as the case may be, divided by the daily average balance of the related asset or liability.

Results of Operations

The table below sets forth certain data relating to our results of operations for the periods indicated.

Interest income: Cash and cash equivalents—deposit due from other banks . . . . . . . . . . . . . Due from the Central Bank and other banks . . . . . . . . . . . . . . . . . . . . . . . . . Financial assets at fair value through profit or loss—government bonds . . . Securities purchased under resale agreements . . . . . . . . . . . . . . . . . . . . . Receivables—credit card revolving balances . . . . . . . . . . . . . . . . . . . . . . . Discounts and loans . . . . . . . . . . . . . . . . Available-for-sale financial assets (excluding stocks) . . . . . . . . . . . . . . . Held-to-maturity financial assets . . . . . Debt investments with no active market . . . . . . . . . . . . . . . . . . . . . . . . Guarantee deposits for financial instrument agreements . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . Total interest income. . . . . . . . . . . . . . Interest cost: Due to banks . . . . . . . . . . . . . . . . . . . . . Short-term loans . . . . . . . . . . . . . . . . . . Demand deposits . . . . . . . . . . . . . . . . . . Time deposits . . . . . . . . . . . . . . . . . . . . Negotiable certificates of deposit . . . . . Domestic bank debentures . . . . . . . . . . Euro convertible bonds . . . . . . . . . . . . . Other financial liabilities—securities sold under repurchase agreements . . Automobile financing obligations . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . Total interest cost . . . . . . . . . . . . . . . . Net interest income . . . . . . . . . . .	Year	Ended December 31, Nine Months Ended September 30, 2011 2012 2012 2012 2013 2013 NT$ NT$ US$ NT$ (unaudited) NT$ US$ (in millions) 4.6 3.9 0.1 3.5 1.1 — 667.0 714.1 24.1 545.2 479.5 16.3 39.3 28.3 1.0 20.6 24.9 0.8 1.2 60.8 2.1 29.7 86.6 2.9 995.5 936.6 31.6 698.1 704.7 23.9 5,948.1 7,422.1 251.0 5,474.2 6,641.8 224.8 208.7 117.3 4.0 86.9 119.5 4.0 87.4 78.4 2.7 62.4 40.1 1.4 62.7 85.9 2.9 68.2 57.6 1.9 1.1 1.6 0.1 1.1 1.1 — 63.7 90.5 3.1 155.5 169.4 5.7 8,079.3 9,539.5 322.7 7,145.4 8,326.3 281.7 138.0 150.8 5.1 125.3 94.1 3.2 13.5 15.5 0.5 12.1 4.7 0.2 193.6 241.7 8.2 142.2 153.5 5.2 2,705.3 3,186.9 107.7 2,405.7 2,272.8 76.9 177.5 208.5 7.1 153.4 107.2 3.6 264.9 364.1 12.3 266.1 276.0 9.3 — — — — 70.3 2.4 — 0.1 — 0.1 0.3 — 701.7 1,367.7 46.3 953.7 1,673.2 56.6 5.4 25.4 0.9 13.4 11.4 0.4 4,199.9 5,560.7 188.1 4,072.0 4,663.5 157.8 3,879.4 3,978.8 134.6 3,073.4 3,662.8 123.9	Nine Months Ended September 30,	Nine Months Ended September 30,	Nine Months Ended September 30,
	2010 NT$ 0.9 455.0 37.5 1.3 1,184.5 4,900.2 197.6 52.5 71.0 1.1 161.0 7,062.6 68.5 10.6 143.9 1,868.1 64.1 209.6 — 0.5 636.4 77.1 3,078.8 3,983.8	2011 NT$ 4.6 667.0 39.3 1.2 995.5 5,948.1 208.7 87.4 62.7 1.1 63.7 8,079.3 138.0 13.5 193.6 2,705.3 177.5 264.9 — — 701.7 5.4 4,199.9 3,879.4		2013 (unaudited) NT$ 1.1 479.5 24.9 86.6 704.7 6,641.8 119.5 40.1 57.6 1.1 169.4 8,326.3 94.1 4.7 153.5 2,272.8 107.2 276.0 70.3 0.3 1,673.2 11.4 4,663.5 3,662.8	2013
					US$
					— 16.3 0.8 2.9 23.9 224.8 4.0 1.4 1.9 — 5.7 281.7 3.2 0.2 5.2 76.9 3.6 9.3 2.4 — 56.6 0.4 157.8 123.9

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The following table sets forth certain information in respect of our net interest income, interest-earning assets and interest-bearing liabilities for the periods indicated:

Net interest margin(1) . . . . . . . . . . . . . . . . . . . . . . . . Interest spread(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . Average interest-earning assets(3) . . . . . . . . . . . . . . Average interest-bearing liabilities(4) . . . . . . . . . . .	As of or for the Year Ended December 31, As of or for the Nine Months Ended September 30, 2010 2011 2012 2012 2013 (NT$ in millions, except percentages) 1.36% 1.19% 1.13% 1.17% 1.26% 1.37% 1.21% 1.16% 1.20% 1.28% 337,820.6 379,201.2 404,751.4 402,978.7 431,116.7 342,477.3 384,834.7 412,079.7 410,099.0 435,865.8

Notes:

(1) Net interest margin represents net interest income (without deducting amount booked as service fee income) divided by daily average interest-earning assets. In order to enable a comparison with annual figures, net interest margin for each of the nine months ended September 30, 2012 and 2013 represents annualized net interest income divided by average interest-earning assets for the period.

(2) Interest spread represents the yield on average interest-earning assets minus the funding cost of average interest-earning liabilities.

(3) See the “Average Balance Sheets and Interest Rates” table above for a breakdown of average interest-earning assets. (4) See the “Average Balance Sheets and Interest Rates” table above for a breakdown of average interest-bearing liabilities.

Nine Months Ended September 30, 2012 Compared to Nine Months Ended September 30, 2013

Interest income . Interest income increased 16.5% to NT$8,326.3 million (US$281.7 million) for the nine months ended September 30, 2013 from NT$7,145.4 million for the nine months ended September 30, 2012, primarily due to an increase in the volume of our interest-earning assets primarily attributable to an increase in our business loans and an increase in the average interest rate. Average interest-earning assets increased 7.0% to NT$431.1 billion (US$14.6 billion) for the nine months ended September 30, 2013 from NT$403.0 billion for the same period in 2012. The yield on interest-earning assets increased 19 basis points to 2.71% for the nine months ended September 30, 2013 from 2.52% for the same period in 2012, primarily due to an increase in the interest rate for our loans.

Interest cost . Interest cost increased 14.5% to NT$4,663.5 million (US$157.8 million) for the nine months ended September 30, 2013 from NT$4,072.0 million for the nine months ended September 30, 2012, primarily due to an increase in the volume of our automobile loans attributable to an increase in the balance of our automobile financing obligations and our issuance of convertible bonds in January 2013, partially offset by a decrease in time deposit interest expense as a result of a decrease in time deposit interest rates. Average interestbearing liabilities increased 6.3% to NT$435.9 billion (US$14.7 billion) for the nine months ended September 30, 2013 from NT$410.1 billion for the ended September 30, 2012. The cost of interest-bearing liabilities increased 11 basis points to 1.43% for the nine months ended September 30, 2013 from 1.32% for the same period in 2012, primarily due to an increase in the balance of our automobile financing obligations.

Net interest income . As a result of the foregoing, net interest income increased 19.2% to NT$3,662.8 million (US$123.9 million) for the nine months ended September 30, 2013 from NT$3,073.4 million for the nine months ended September 30, 2012.

Net interest margin . Net interest margin increased nine basis points to 1.26% for the nine months ended September 30, 2013 from 1.17% for the nine months ended September 30, 2012. This increase was primarily due to an increase in the interest rate for our loans and an decrease in interest rate paid to time depositors.

Net service fee income and commission income . Net service fee income and commission income increased 11.5% to NT$2,131.4 million (US$72.1 million) for the nine months ended September 30, 2013 from

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NT$1,912.2 million for the nine months ended September 30, 2012, primarily due to an increase in service fee income from loans, insurance and sale of funds, partially offset by a decrease in service fee income from credit cards.

Noninterest income and gains, net . Noninterest income and gains increased 7.9% to NT$3,440.6 million (US$116.4 million) for the nine months ended September 30, 2013 from NT$3,189.2 million for the nine months ended September 30, 2012, primarily due to an increase in net service fee income and commission income and an increase in net foreign exchange gain resulting from depreciation of Taiwan dollars, partially offset by a decrease in our net gain on available-for-sale financial assets due to loss derived from sale of certain bonds and equity stocks held by us, and a decrease in net gain on reversal of provision for asset impairment loss.

Net profit . As a result of the foregoing, our net profit increased 13.4% to NT$7,103.4 million (US$240.3 million) for the nine months ended September 30, 2013 from NT$6,262.6 million for the nine months ended September 30, 2012.

Reversal of provision for possible losses and guarantee obligations reserve . Reversal of provision for possible losses and guarantee obligations reserve decreased 45.4% to NT$320.4 million (US$10.8 million) for the nine months ended September 30, 2013 from NT$587.1 million for the same period in 2012, reflecting an increase in provision for possible losses of normal credit assets as a result of increase in coverage ratio. Our NPL ratio was 0.36% at September 30, 2013, compared to 0.48% at September 30, 2012, primarily because we wrote off our NPL to ProMos in March 2013.

Operating expenses . Operating expenses decreased 0.1% to NT$4,316.9 million (US$146.0 million) for the nine months ended September 30, 2013 from NT$4,321.8 million for the nine months ended September 30, 2012.

Income before income tax . As a result of the foregoing, the income before income tax increased 22.9% to NT$3,106.9 million (US$105.1 million) for the nine months ended September 30, 2013 from NT$2,527.9 million for the nine months ended September 30, 2012.

Income tax expense . Income tax expense increased 39.2% to NT$379.2 million (US$12.8 million) for the nine months ended September 30, 2013 from NT$272.4 million for the nine months ended September 30, 2012. The effective tax rate was 12.2% for the nine months ended September 30, 2013 compared to 10.8% for the same period in 2012 as a result of an increase in our deferred income tax expense.

Consolidated net income . As a result of the foregoing, consolidated net income increased 20.9% to NT$2,727.7 million (US$92.3 million) for the nine months ended September 30, 2013 from NT$2,255.5 million for the nine months ended September 30, 2012.

Year Ended December 31, 2012 Compared to Year Ended December 31, 2011

Interest income . Interest income increased 18.1% to NT$9,539.5 million (US$322.7 million) in 2012 from NT$8,079.3 million in 2011, primarily due to an increase in the volume of our interest-earning assets primarily attributable to an increase in our business loans and an increase in the average interest rate. Average interestearning assets increased 6.8% to NT$404.8 billion (US$13.7 billion) in 2012 from NT$379.2 billion in 2011. The yield on interest-earning assets increased 21 basis points to 2.51% in 2012 from 2.30% in 2011 as a result of an increase in the interest rate for our loans.

Interest cost . Interest cost increased 32.4% to NT$5,560.7 million (US$188.1 million) in 2012 from NT$4,199.9 million in 2011, primarily due to an increase in our time deposit and an increase in time deposit rates and an increase in the volume of our automobile loans attributable to an increase in the balance of our automobile financing obligations. Average interest-bearing liabilities increased 7.1% to NT$412.1 billion (US$13.9 billion)

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in 2012 from NT$384.8 billion in 2011. The cost of interest-bearing liabilities increased 26 basis points to 1.35% in 2012 from 1.09% in 2011, primarily due to an increase in time deposit interest rate and an increase in automobile financing obligations.

Net interest income . As a result of the foregoing, net interest income increased 2.6% to NT$3,978.8 million (US$134.6 million) in 2012 from NT$3,879.4 million in 2011.

Net interest margin . Net interest margin decreased six basis points to 1.13% in 2012 from 1.19% in 2011. The decrease in net interest margin in 2012 was primarily due to an increase in interest rate paid to time depositors.

Net service fee income and commission income . Net service fee income and commission income increased 13.6% to NT$2,585.1 million (US$87.5 million) in 2012 from NT$2,276.0 million in 2011, primarily due to an increase in service fee income from credit cards and insurance and sale of funds, partially offset by a decrease in service fee income from loans.

Noninterest income and gain, net . Noninterest income and gain increased 18.3% to NT$5,661.3 million (US$191.5 million) in 2012 from NT$4,784.9 million in 2011, primarily due to an increase in net service fee income and commission income and an increase in our net gain on financial assets and liabilities at fair value through profits or loss and net gain on available-for-sale financial assets.

Net profit . As a result of the foregoing, our net profit increased 11.3% to NT$9,640.1 million (US$326.1 million) in 2012 from NT$8,664.3 million in 2011.

Provision for possible losses and guarantee obligations reserve . Our provision for possible losses and guarantee obligations reserve increased 7.6% to NT$897.3 million (US$30.4 million) in 2012 from NT$834.2 million in 2011, so that we were able to improve our coverage ratio. Our NPL ratio was 0.46% at December 31, 2012 compared to 0.22% at December 31, 2011, primarily because our loan to ProMos were reported as NPL beginning in April 2012.

Operating expenses . Operating expenses increased 9.6% to NT$5,815.1 million (US$196.7 million) in 2012 from NT$5,306.5 million in 2011, primarily due to an increase in our personnel expenses.

Income before income tax . As a result of the foregoing, our income before income tax increased 16.0% to NT$2,927.7 million (US$99.0 million) in 2012 from NT$2,523.6 million in 2011.

Income tax expense . Income tax expense increased significantly to NT$364.3 million (US$12.3 million) in 2012 from NT$150.4 million in 2011. The effective tax rate was 12.4% in 2012 compared to 6.0% in 2011 as a result of reversal of provision for deferred income tax asset valuation.

Consolidated net income . As a result of the foregoing, net income increased 8.0% to NT$2,563.4 million (US$86.7 million) in 2012 to NT$2,373.2 million in 2011.

Year Ended December 31, 2011 Compared to Year Ended December 31, 2010

Interest income . Interest income increased 14.4% to NT$8,079.3 million in 2011 from NT$7,062.6 million in 2010, primarily due to an increase in the volume of our interest-earning assets as a result of an increase in our business of loans. Average interest-earning assets increased 12.3% to NT$379.2 billion in 2011 from NT$337.8 billion in 2010. The yield on interest-earning assets increased 3 basis points to 2.30% in 2011 from 2.27% in 2010 as a result of an increase in the interest rates for our discounts and loans and amounts due from CBC and other banks.

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Interest cost . Interest cost increased 36.4% to NT$4,199.9 million in 2011 from NT$3,078.8 million in 2010, primarily due to an increase in the volume of and interest rate on deposits. Average interest-bearing liabilities increased 12.4% to NT$384.8 billion in 2011 from NT$342.5 billion in 2010. The cost of interestbearing liabilities increased 19 basis points to 1.09% in 2011 from 0.90% in 2010, primarily due to a general increase in deposit interest rates.

Net interest income . As a result of the foregoing, net interest income decreased 2.6% to NT$3,879.4 million in 2011 from NT$3,983.8 million in 2010.

Net interest margin . Net interest margin decreased 17 basis points to 1.19% in 2011 from 1.36% in 2010. The decrease in net interest margin in 2011 was primarily due to an increase in interest rates we paid to our depositors.

Net service fee income and commission income . Net service fee income and commission income increased 0.8% to NT$2,276.0 million in 2011 from NT$2,257.5 million in 2010.

Noninterest income and gain, net . Noninterest income and gain increased 1.5% to NT$4,784.9 million in 2011 from NT$4,714.1 million in 2010, primarily due to the recovery of NPL from AIG Credit Card and an increase in income from derivative trading and stock trading, partially offset by our net foreign exchange loss and the loss on our equity-method investments.

Net profit . As a result of the foregoing, our net profit decreased 0.4% to NT$8,664.3 million in 2011 from NT$8,697.9 million in 2010.

Provision for possible losses and guarantee obligations reserve . Our provision for possible losses and guarantee obligations reserve increased 23.6% to NT$834.2 million in 2011 from NT$675.0 million in 2010, so that we were able to improve our coverage ratio. Our NPL ratio was 0.22% at December 31, 2011 compared to 0.50% at December 31, 2010.

Operating expenses . Operating expenses increased 6.7% to NT$5,306.5 million in 2011 from NT$4,973.7 million in 2010, primarily due to an increase in wages and salaries, an increase in advertisement and other expenses in connection with the promotion of our credit card business as well as an increase in the total number of our branches.

Income before income tax . As a result of the foregoing, our income before income tax decreased 17.2% to NT$2,523.6 million in 2011 from NT$3,049.2 million in 2010.

Income tax expense . Income tax expense decreased significantly to NT$150.4 million in 2011 from NT$852.8 million in 2010. The effective tax rate was 6.0% in 2011 compared to 28.0% in 2010 as a result of decrease in our taxable income and provision for deferred income tax asset valuation.

Consolidated net income . As a result of the foregoing, net income increased 8.0% to NT$2,373.2 million in 2011 to NT$2,196.4 million in 2010.

Financial Condition

Assets

Total assets . Our total assets as of September 30, 2013 was NT$491.2 billion (US$16.6 billion). Total assets increased 6.2% to NT$465.5 billion (US$15.7 billion) as of December 31, 2012 from NT$438.5 billion as of December 31, 2011. Total assets increased 4.8% to NT$ 438.5 billion as of December 31, 2011 from NT$418.4 billion as of December 31, 2010.

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Financial assets . Financial assets consist of financial assets at fair value through profit or loss, available-forsale financial assets, held-to-maturity financial assets, investments accounted for by the equity method, debt investments with no active market and other financial assets. Our financial assets as of September 30, 2013 was NT$52.1 billion (US$1.8 billion). Financial assets decreased 3.3% to NT$46.5 billion (US$1.6 billion) as of December 31, 2012 from NT$48.1 billion as of December 31, 2011, primarily due to the sale of government bonds, foreign corporate bonds, foreign bank debentures and credit-linked notes we held, partially offset by our purchases of convertible bonds, negotiable certificates of deposit, commercial paper and master agreement related to convertible bonds asset swap. Financial assets decreased 2.6% to NT$48.1 billion as of December 31, 2011 from NT$49.4 billion as of December 31, 2010, primarily due to the sales of the convertible bonds, government bonds and stocks we held, partially offset by our purchases of foreign corporate bonds and credit-linked notes.

Discounts and loans, net . Our discounts and loans as of September 30, 2013 was NT$316.9 billion (US$10.7 billion). Discounts and loans increased 4.0% to NT$280.2 billion (US$9.5 billion) as of December 31, 2012 from NT$269.5 billion as of December 31, 2011. This increase was due to an increase in consumer loans, partially offset by a decrease in corporate loans and an increase in allowance for possible losses. Discounts and loans increased 14.0% to NT$269.5 billion as of December 31, 2011 from NT$236.4 billion as of December 31, 2010, reflecting a significant increase in corporate loans as well as consumer loans.

Liabilities

Total liabilities . Our total liabilities as of September 30, 2013 was NT$462.7 billion (US$15.7 billion). Total liabilities increased 6.1% to NT$438.9 billion (US$14.8 billion) as of December 31, 2012 from NT$413.8 billion as of December 31, 2011, primarily due to an increase in deposits and remittances an increase in bank debentures as a result of our issuance of bank debentures in June 2012. Total liabilities increased 4.6% to NT$413.8 billion as of December 31, 2011 from NT$395.5 billion as of December 31, 2010, primarily due to a significant increase in deposits and remittances.

Deposits and remittances . Our deposits and remittances as of September 30, 2013, was NT$392.6 billion (US$13.3 billion). Of our domestic interest-bearing deposits as of September 30, 2013, consumer deposits accounted for 34.0% and corporate deposits accounted for 66.0%. Deposits and remittances increased 5.9% to NT$391.9 billion (US$13.3 billion) as of December 31, 2012 from NT$370.0 billion as of December 31, 2011, primarily reflecting a 5.7% increase in our demand deposits, and a 5.6% increase in our time deposits. Of our domestic interest-bearing deposits as of December 31, 2012, consumer deposits accounted for 34.2% and corporate deposits accounted for 65.8%. Deposits and remittances increased 6.4% to NT$370.0 billion as of December 31, 2011 from NT$347.9 billion as of December 31, 2010, primarily reflecting a 6.1% decrease in our demand deposits and a 6.4% increase in our time deposits. Of our domestic interest-bearing deposits as of December 31, 2011, consumer deposits accounted for 34.9% and corporate deposits accounted for 65.1%.

Contingent liabilities and commitments

As of September 30, 2013 contingent liabilities and commitments included NT$11.0 billion (US$372.3 million) in irrevocable loan commitments, NT$12.4 billion (US$420.5 million) in financial guarantees and standby letters of credit, NT$150.0 billion (US$5.1 billion) in unused credit card credit limits, NT$11.6 billion (US$392.1 million) in commitments to repurchase or resale bonds and securities and NT$1,007.5 million (US$34.1 million) in rentals payable for the next five years. We anticipate that not all of the above commitments will be utilized before the agreed upon expiration or other termination clauses. The amount of unused commitments therefore does not necessarily represent future funding requirements. We typically allow credit card commitments to be renewed in the absence of delinquencies or other credit deterioration.

In addition to the credit commitments outlined above, we also have credit exposure to our counterparties in connection with our trading activities. This includes the exposure which arises when we enter into swap or other

58

derivative contracts with counterparties that have long-term obligations to make payments to us. We manage this credit exposure separately from our other credit exposures, including through the use of counterparty limits. Collateral or guarantees may also be required, depending on the counterparty’s credit standing. Transactions with other banks are made within the trading limit set for each bank based on its credit rating.

No Significant Interruptions

There has been no interruption in our business that has a material adverse effect on our financial position and results of operations in the 36 months period prior to the date of this offering memorandum.

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DESCRIPTION OF ASSETS AND LIABILITIES

The financial and operating data set forth in the following discussion is presented in a format which differs in certain respects from the presentation format we use when preparing our financial statements in accordance with ROC GAAP or Taiwan-IFRSs, as the case may be. Accordingly, certain of the financial information contained in the following discussion is not directly comparable to the financial information contained in our financial statements included in the F-pages of this offering memorandum.

Credit Exposure

Our total credit exposure is comprised of funded credit exposure, consisting of loans, credit card revolving balances and other credit card receivables, and contingent liabilities in respect of other credit commitments, consisting principally of undrawn committed lines of credit, unused credit card credit limits and obligations to honor guarantees, acceptances, letters of credit, repurchase agreements and the like.

The following table sets forth our loan exposure by product as of the dates indicated:

Loan exposure Mortgage loans . . . . . . Personal loans(1) . . . . . Automobile loans . . . . Other . . . . . . . . . . . . . . Total consumer loans . . . . . . . . Corporate loans—NT dollar . . . . . . . . . . . . Corporate loans— foreign currencies . . . . . . . . Total corporate loans . . . . . . . . Total loans(2) . . . Credit card revolving balances(3) . . . . . . . SME loans(4) . . . . . . .	As of December 31,	As of December 31,	As of December 31,	As of December 31,	As of December 31,	As of December 31,	As of September 30,	As of September 30,	As of September 30,	As of September 30,
	2010		2011		2012		2012		2013
	NT$ 110,009.7 6,794.3 5,841.9 5,214.9	% 45.9 2.8 2.4 2.2								% 41.9 3.1 8.4 1.9
	127,860.8 85,404.3 26,693.7	53.3 35.6 11.1	147,540.6 96,938.0 29,755.5	53.8 35.3 10.9	162,511.1 95,160.9 26,129.4	57.3 33.5 9.2	158,939.3 97,386.7 26,893.4	56.1 34.4 9.5	177,382.8 114,393.4 29,177.3	55.3 35.6 9.1
	112,098.0	**46.7 **	126,693.5	**46.2 **	121,290.3	**42.7 **	124,280.1	**43.9 **	143,570.7	44.7
	239,958.8 11,220.8 10,495.9	100.0 4.4	274,234.1 10,774.4 10,612.5	100.0 3.9	283,801.4 10,676.4 14,119.6	100.0 5.0	283,219.4 10,621.8 12,154.3	100.0 4.3	320,953.5 10,471.5 16,295.7	100.0 5.1

Notes:

(1) Represents unsecured personal loans and secured personal loans.

(2) Total loans represent gross loans without deduction for allowance for possible losses. (3) Booked as receivables.

(4) SME loans balances are included in Corporate loans—NT dollar.

As of September 30, 2013, our total contingent liabilities in respect of guarantees and letters of credit were NT$12.4 billion (US$420.5 million).

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Borrower concentration

Under FSC policies pursuant to the ROC Banking Law, Taiwan banks are restricted from maintaining financial exposure to any single person or related persons in excess of certain prescribed percentages of the bank’s total net worth. The amount of the percentage limitation is based on whether the customer is a stateowned entity, a corporate entity or an individual, and whether the loans are secured or unsecured. See “Regulation of the ROC Banking Industry—Asset Quality and Lending Requirements—Restrictions on credit exposure to non-related parties”.

The following tables set forth information on our ten largest credit exposures to customer groups as of the dates indicated.

Borrower concentration— by customer group Customer group A . . . . . . . . Customer group B . . . . . . . . . Customer group C . . . . . . . . . Customer group D . . . . . . . . Customer group E . . . . . . . . . Customer group F . . . . . . . . . Customer group G . . . . . . . . Customer group H . . . . . . . . Customer group I . . . . . . . . . Customer group J . . . . . . . . . Total . . . . . . . . . . . . . . .	As of September 30, 2013
	Industry Steel rolling and extruding Non-categorized and other financial intermediaries Ocean freight transportation forwarding services Semiconductor packaging and testing industry Artificial fiber Petroleum and coal product manufacturing Non-categorized and other financial intermediaries Automobile manufacturing Non-categorized and other financial intermediaries Non-categorized and other parts and components manufacturing	Total Balances of Credit Extensions % of Net Worth NT$ % (unaudited) (in millions, except percentages) 5,342.8 19 3,166.5 11 2,747.9 10 2,436.5 9 2,272.1 8 2,252.6 8 2,250.0 8 1,979.4 7 1,907.3 7 1,712.9 6 26,068.0 93	% of Net Worth

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As of December 31, 2012

	As of December 31, 2012
Borrower concentration— by customer group Customer group A . . . . . . . . Customer group C . . . . . . . . . Customer group B . . . . . . . . . Customer group F . . . . . . . . . Customer group G . . . . . . . . Customer group E . . . . . . . . . Customer group K . . . . . . . . Customer group L . . . . . . . . . Customer group M . . . . . . . . Customer group N . . . . . . . . Total . . . . . . . . . . . . . . .	Industry Non-categorized and other basic metal manufacturing Ocean freight transportation forwarding services Non-categorized and other financial intermediaries Petroleum and coal product manufacturing Non-categorized and other financial intermediaries Artificial fiber Non-categorized and other financial intermediaries Liquid crystal panel and components manufacturing Non-categorized and other financial intermediaries Liquid crystal panel and components manufacturing	Total Balances of Credit Extensions % of Net Worth NT$ % (unaudited) (in millions, except percentages) 4,217.4 16 2,973.8 11 2,639.0 10 2,479.7 9 2,418.7 9 2,014.8 8 1,860.3 7 1,736.4 7 1,716.0 6 1,690.0 6 23,746.1 89	% of Net Worth

Loans by principal amount

We extend loans of varying principal amounts. As of September 30, 2013, 69.92% of our total loans were comprised of loans with principal amounts of less than NT$100 million. Loans with principal amounts of less than NT$50 million consist primarily of consumer loans, while loans with principal amounts of more than NT$100 million consist primarily of corporate loans.

The following table sets forth information on our total loans by principal amount as of the dates indicated.

Loans—by principal amounts Up to NT$1 million . . . . . . . . . . . . . . . . . . . . . . NT$1 million to NT$5 million . . . . . . . . . . . . . . NT$5 million to NT$10 million . . . . . . . . . . . . . NT$10 million to NT$50 million . . . . . . . . . . . . NT$50 million to NT$100 million . . . . . . . . . . . NT$100 million to NT$500 million . . . . . . . . . . Over NT$500 million . . . . . . . . . . . . . . . . . . . . . Total loans(1) . . . . . . . . . . . . . . . . . . . . . . .	Loans—by principal amounts Up to NT$1 million . . . . . . . . . . . . . . . . . . . . . . NT$1 million to NT$5 million . . . . . . . . . . . . . . NT$5 million to NT$10 million . . . . . . . . . . . . . NT$10 million to NT$50 million . . . . . . . . . . . . NT$50 million to NT$100 million . . . . . . . . . . . NT$100 million to NT$500 million . . . . . . . . . . Over NT$500 million . . . . . . . . . . . . . . . . . . . . . Total loans(1) . . . . . . . . . . . . . . . . . . . . . . .	As of December 31, 2012 As of September 30, 2013 Number of Loans Loan Balance % of Total Number of Loans Loan Balance Loan Balance % of Total (unaudited) NT$ % NT$ US$ % (in millions, except percentages and number of loans) 230,033 44,212 17.10 252,013 53,416 1,807 18.20 38,376 82,045 31.73 39,606 85,339 2,887 29.06 3,934 26,471 10.24 4,340 29,102 985 9.91 1,237 23,482 9.08 1,357 25,540 864 8.70 128 10,096 3.90 154 11,902 403 4.05 167 40,940 15.83 185 43,975 1,488 14.98 26 31,340 12.12 32 44,348 1,500 15.10 273,901 258,586 100.00 297,687 293,622 9,934 100.00	As of September 30, 2013	As of September 30, 2013	As of September 30, 2013	As of September 30, 2013
			Number of Loans	Loan Balance	Loan Balance	% of Total
						100.00

Note:

(1) Excluding offshore banking unit loans, overseas branch loans, inward and outward documentary bills and NALs.

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Loans by maturity

As of September 30, 2013, approximately 20.6% of our total loans had maturities of one year or less. Substantially all of our short-term loans are renewed at maturity, subject to relevant loan review procedures. We actively manage the maturity profile of our loan portfolio as part of the management of our exposure to changes in market interest rates and our funding and liquidity requirements. Although a significant percentage of our total loans have original maturities of more than one year, substantially all of our loans are typically either floating rate loans or loans that re-price within a period of less than one year. See “Description of Assets and Liabilities—Risk management—Market risk”.

The following table sets forth an analysis of our loans by original maturity as of the dates indicated.

Loan Maturity Short-term(1) . . . . . . . . . . . . . . . . Medium-term(2) . . . . . . . . . . . . . Long-term(3) . . . . . . . . . . . . . . . . Total Loans(4) . . . . . . . . . . . . . .	Loan Maturity Short-term(1) . . . . . . . . . . . . . . . . Medium-term(2) . . . . . . . . . . . . . Long-term(3) . . . . . . . . . . . . . . . . Total Loans(4) . . . . . . . . . . . . . .	As of December 31,	As of December 31,	As of December 31,	As of December 31,	As of December 31,	As of December 31,	As of September 30,	As of September 30,	As of September 30,	As of September 30,
		2010		2011		2012		2012		2013
		NT$ 56,373 50,263 110,451	% 26.0 23.1 50.9								% 20.6 34.1 45.3
		**217,087 **	**100.0 **	**246,510 **	**100.0 **	**258,586 **	**100.0 **	**256,731 **	**100.0 **	**293,622 **	100.0

Notes:

(1) Original maturity of one year or less.

(2) Original maturity of more than one year or seven years or less.

(3) Original maturity of more than seven years.

(4) Excluding offshore banking unit and overseas branch loans, inward and outward documentary bills and NALs.

Secured loans by collateral type

As of September 30, 2013, we had loans of NT$213,433.6 million, or 66.5% of our total loans, that were fully secured by collateral. We typically obtain a first priority security interest in collateral, although we may, in limited circumstances, accept a junior ranked security interest. The types of collateral we accept include real estate, marketable securities, machinery and other movable property, deposits and other appraisable items. Typically, we use an in-house appraisal team, which applies various valuation methodologies, to appraise collateral. We generally lend up to 70 to 80% of the appraised value of real estate and up to 60% of the market value of publicly traded marketable securities. We generally do not lend against non-publicly traded securities.

We monitor the value of our borrowers’ collateral and perform appraisal valuations to determine the value of such collateral. The frequency of such appraisal valuations depends on the collateral type. For example, listed equity securities are appraised on a daily basis. When we believe there has been a significant drop in the value of mortgage loan collateral, we will reassess and mark-to-market the value of the collateral. We typically require borrowers whose collateral value declines to a certain level to provide us with additional collateral or to repay a portion or the entire amount of the loan.

We generally do not perform periodic appraisal valuations of collateral which secures syndicated loans for which we are not the collateral agent, since we are unable to exercise control over the collateral. For these syndicated loans, we typically value the collateral at its appraised value at the time the loan was made.

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The following table sets forth information on the amount of our secured loans by collateral type as of the dates indicated. Loans that are only partially secured by collateral are reflected in the table to the extent of the secured portion.

Types of collateral Real estate . . . . . . . . . Movable property . . . . Marketable securities . . . . . . . . . Deposits . . . . . . . . . . . Other . . . . . . . . . . . . . . Total secured loans . . . . . . . . . . . . Secured loans as percentage of total loans . . . . . . . . . . . .	As of December 31,	As of December 31,	As of December 31,	As of December 31,	As of December 31,	As of December 31,	As of September 30,	As of September 30,	As of September 30,	As of September 30,
	2010		2011		2012		2012		2013
	NT$ 121,960.4 18,878.1 11,428.2 7,274.0 1,919.8	% 75.5 11.7 7.1 4.5 1.2								% 72.4 16.7 7.7 1.9 1.3
	**161,460.5 **	**100.0 **	**183,032.8 **	**100.0 **	**194,564.2 **	**100.0 **	**190,307.1 **	**100.0 **	**213,433.6 **	100.0
		67.3		66.7		68.6		67.2		66.5

Corporate loan exposure

We report our industry concentration exposure to the CBC on a monthly basis, using the industry classification guidelines prescribed by the CBC.

Loans to the manufacturing sector and financial sector constituted the two largest areas of concentration as of September 30, 2013, representing 32.08% and 15.23% of our total domestic loans, respectively. We have established internal policies on maintaining a diversified portfolio. We set internal guidelines annually which limit our exposure to certain sectors, and monitor those exposures periodically.

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The following table sets forth information on our corporate loan exposure as of the dates indicated, classified in accordance with the CBC industry classifications.

Corporate loans—by industry Electronics . . . . . . . . . Petrochemicals . . . . . . Steel . . . . . . . . . . . . . . Textiles . . . . . . . . . . . Others . . . . . . . . . . . . Manufacturing . . . . . Financial . . . . . . . . . . Government enterprises . . . . . . . Government . . . . . . . . Trading and retail . . . Services . . . . . . . . . . . Real estate and construction . . . . . . Others . . . . . . . . . . . . Total domestic loans . . . . . . .	As of December 31, As of September 30, 2010 2011 2012 2012 2013 (unaudited) Amount NT$ % Amount NT$ % Amount NT$ % Amount NT$ % Amount NT$ % (in millions, except percentages) 19,836 22.81 21,576 22.39 19,598 20.65 18,963 19.76 17,259 15.04 3,526 4.06 4,582 4.75 4,028 4.24 5,184 5.40 4,734 4.13 3,168 3.64 3,508 3.64 4,227 4.45 3,354 3.49 3,460 3.02 826 0.95 1,266 1.31 963 1.02 1,169 1.22 2,687 2.34 4,878 5.61 5,554 5.76 6,142 6.47 6,169 6.43 8,670 7.55 32,234 37.07 36,486 37.85 34,958 36.83 34,839 36.30 36,810 32.08 17,136 19.70 16,910 17.54 15,156 15.97 15,042 15.67 17,480 15.23 12,700 14.60 14,100 14.63 14,400 15.17 19,500 20.32 14,100 12.29 5,000 5.75 5,000 5.19 5,500 5.79 4,450 4.63 5,500 4.79 4,179 4.81 5,587 5.80 5,225 5.50 4,680 4.87 7,287 6.35 4,372 5.03 4,916 5.10 4,535 4.78 4,345 4.53 5,303 4.62 1,839 2.11 1,964 2.04 2,747 2.89 1,889 1.97 2,966 2.59 9,504 10.93 11,420 11.85 12,407 13.07 11,236 11.71 25,309 22.05 86,964 100.00 96,383 100.00 94,928 100.00 95,981 100.00 114,755 100.00	As of December 31, As of September 30, 2010 2011 2012 2012 2013 (unaudited) Amount NT$ % Amount NT$ % Amount NT$ % Amount NT$ % Amount NT$ % (in millions, except percentages) 19,836 22.81 21,576 22.39 19,598 20.65 18,963 19.76 17,259 15.04 3,526 4.06 4,582 4.75 4,028 4.24 5,184 5.40 4,734 4.13 3,168 3.64 3,508 3.64 4,227 4.45 3,354 3.49 3,460 3.02 826 0.95 1,266 1.31 963 1.02 1,169 1.22 2,687 2.34 4,878 5.61 5,554 5.76 6,142 6.47 6,169 6.43 8,670 7.55 32,234 37.07 36,486 37.85 34,958 36.83 34,839 36.30 36,810 32.08 17,136 19.70 16,910 17.54 15,156 15.97 15,042 15.67 17,480 15.23 12,700 14.60 14,100 14.63 14,400 15.17 19,500 20.32 14,100 12.29 5,000 5.75 5,000 5.19 5,500 5.79 4,450 4.63 5,500 4.79 4,179 4.81 5,587 5.80 5,225 5.50 4,680 4.87 7,287 6.35 4,372 5.03 4,916 5.10 4,535 4.78 4,345 4.53 5,303 4.62 1,839 2.11 1,964 2.04 2,747 2.89 1,889 1.97 2,966 2.59 9,504 10.93 11,420 11.85 12,407 13.07 11,236 11.71 25,309 22.05 86,964 100.00 96,383 100.00 94,928 100.00 95,981 100.00 114,755 100.00	As of September 30,	As of September 30,	As of September 30,
	2010 Amount NT$ % 19,836 22.81 3,526 4.06 3,168 3.64 826 0.95 4,878 5.61 32,234 37.07 17,136 19.70 12,700 14.60 5,000 5.75 4,179 4.81 4,372 5.03 1,839 2.11 9,504 10.93 86,964 100.00			2013
	Amount NT$ 19,836 3,526 3,168 826 4,878 32,234 17,136 12,700 5,000 4,179 4,372 1,839 9,504 **86,964 **	Amount NT$ 21,576 4,582 3,508 1,266 5,554 36,486 16,910 14,100 5,000 5,587 4,916 1,964 11,420 **96,383 **			% 15.04 4.13 3.02 2.34 7.55
				36,810 17,480 14,100 5,500 7,287 5,303 2,966 25,309	32.08 15.23 12.29 4.79 6.35 4.62 2.59 22.05
				**114,755 **	100.00

Asset Quality

Loan classification

According to the NPL/NAL Regulations, banks are required to classify their loans into the following five categories: “Normal”, “Special Mention”, “Substandard”, “Doubtful”, and “Loss”. See “Regulation of the ROC Banking Industry—Asset Quality and Lending Requirements—Asset quality”.

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In classifying our loans, we consider relevant quantitative and qualitative factors, including the borrower’s financial condition and earnings capabilities, the borrower’s management and operation of business, the payment history of the loan, the status of any collateral or guarantees and the market conditions affecting the borrower. For partially secured loans that do not meet the Class I criteria, we classify the secured portion as a Class II or Class III loan and the unsecured portion as a Class IV or Class V loan, depending on the circumstances. The following table sets forth our loan classification as of the dates indicated.

Loan classification Class I . . . . . . . . . . . . . . . Class II . . . . . . . . . . . . . . . Class III . . . . . . . . . . . . . . Class IV . . . . . . . . . . . . . . Class V . . . . . . . . . . . . . . Total Loans . . . . . .	As of December 31,	As of December 31,	As of December 31,	As of December 31,	As of December 31,	As of December 31,	As of September 30,	As of September 30,	As of September 30,	As of September 30,
	2010		2011		2012		2012		2013
	NT$ 232,266 6,017 1,318 188 170	% 96.79 2.51 0.55 0.08 0.07								% 98.07 0.99 0.60 0.26 0.08
	**239,959 **	**100.00 **	**274,234 **	**100.00 **	**283,801 **	**100.00 **	**283,219 **	**100.00 **	**320,954 **	100.00

Non-performing loans

We define NPLs as loans which are overdue and are required to be reported to the FSC in accordance with the NPL Regulations. See “Regulation of the ROC Banking Industry-Asset Quality and Lending Requirements— Definition of NPLs”.

The following table sets forth information relating to provisions for possible losses, allowance for possible losses and write-offs for the periods indicated.

Key data on allowances and NPLs: Allowance for possible losses at beginning of period . . . . Provisions for possible losses(1) . . . . . . . . . . . . . . . . . . . . . Acquisition from the bid on Chinfon Bank . . . . . . . . . . . . Amounts written off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effects of exchange rate changes(2) . . . . . . . . . . . . . . . . . . Allowance for possible losses at end of period . . . . . . . . . Total loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NPLs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NPLs as a percentage of total loans . . . . . . . . . . . . . . . . . Allowance for possible losses at end of period as a percentage of total loans . . . . . . . . . . . . . . . . . . . . . . . . Allowance for possible losses at end of period as a percentage of NPLs . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loans written off as a percentage of total loans . . . . . . . . Provisions for possible losses as a percentage of pre- provision profit(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Year Ended December 31,	Year Ended December 31,	Year Ended December 31,	Year Ended December 31,
	2010	2011	2012	2012

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Notes:

(1) Represents provisions for possible losses on a gross basis (without deducting for recoveries of prior period write-offs).

(2) Represents the effects of exchange rate changes on loans denominated in currencies other than the NT dollar.

(3) Represents provision for possible losses on a gross basis (without deducting for recoveries of prior period write-offs) divided by income before income tax (without deducting provision (reversal of provision) for possible losses and guarantee obligations reserve).

The following table sets forth our NPLs, broken down between consumer and corporate NPLs, as of the dates indicated.

NPLs—by customer type Consumer loan NPLs . . . . . . . Corporate loan NPLs . . . . . . . Total NPLs.. . . . . . . . . . . . . .	As of December 31,	As of December 31,	As of December 31,	As of September 30,	As of September 30,
	2010	2011	2012	2012	2013
	Amount NT$ % 680 56.5 523 43.5 1,203 100.0

The following tables set forth, as of the dates indicated, information regarding our ten largest nonperforming loans by customer.

As of September 30, 2013

NPLs—by customer Customer A . . . . . . . . . . . . . . . . . . Customer B . . . . . . . . . . . . . . . . . . Customer C . . . . . . . . . . . . . . . . . . Customer D . . . . . . . . . . . . . . . . . . Customer E . . . . . . . . . . . . . . . . . . Customer F . . . . . . . . . . . . . . . . . . Customer G . . . . . . . . . . . . . . . . . . Customer H . . . . . . . . . . . . . . . . . . Customer I . . . . . . . . . . . . . . . . . . Customer J . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . .	Industry Electronic communications Service trade Electronic communications Construction Individual Financial Individual Individual Individual Electronic communications	Principal Outstanding % of Total Non- Performing Loans Amount of Allowance as % of Principal Outstanding (unaudited) NT$ % % (in millions, except percentages) 622 54.6% 10.00% 52 4.6% 100.00% 31 2.7% 10.00% 27 2.4% 10.00% 22 1.9% 9.91% 11 1.0% 87.82% 6 0.5% 10.00% 5 0.4% 2.00% 5 0.4% 2.00% 3 0.3% 29.38% 784 68.8%	Amount of Allowance as % of Principal Outstanding

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NPLs—by customer Customer A . . . . . . . . . . . . . . . . . . Customer B . . . . . . . . . . . . . . . . . . Customer C . . . . . . . . . . . . . . . . . . Customer D . . . . . . . . . . . . . . . . . . Customer E . . . . . . . . . . . . . . . . . . Customer F . . . . . . . . . . . . . . . . . . Customer G . . . . . . . . . . . . . . . . . . Customer H . . . . . . . . . . . . . . . . . . Customer I . . . . . . . . . . . . . . . . . . . Customer J . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . .	As of December 31, 2012	As of December 31, 2012
	Industry Electronic communications Electronic communications Construction Individual Financial Individual Individual Individual Service trade Individual	Principal Outstanding % of Total Non- Performing Loans Amount of Allowance as % of Principal Outstanding NT$ % % (in millions, except percentages) 802 60.9% 29.38% 31 2.4% 10.00% 27 2.1% 10.00% 22 1.7% 2.00% 13 1.0% 79.13% 7 0.5% 2.00% 6 0.5% 10.00% 6 0.5% 2.00% 3 0.2% 2.00% 3 0.2% 10.00% 920 70.0%	Amount of Allowance as % of Principal Outstanding

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The following table sets forth information regarding our corporate non-performing loans, broken down by industry, as of the dates indicated.

Corporate NPLs—by industry Securities and futures . . . Manufacturing . . . . . . . . . Financial . . . . . . . . . . . . . Service trade . . . . . . . . . . Electronic communications . . . . . . Construction . . . . . . . . . . Investment . . . . . . . . . . . . Private business . . . . . . . . Total corporate NPLs . . 69	As of December 31, As of September 30,	As of December 31, As of September 30,	As of December 31, As of September 30,	As of December 31, As of September 30,	As of December 31, As of September 30,
	2010 2011 2012 2012 2013
	Loan Amount Allowance % of Total Non- Performing Corporate Loans Loan Amount Allowance % of Total Non- Performing Corporate Loans Loan Amount Allowance % of Total Non- Performing Corporate Loans Loan Amount Allowance % of Total Non- Performing Corporate Loans Loan Amount Allowance % of Total Non- Performing Corporate Loans
	NT$ NT$ — — 50 5 15 1 345 44 39 4 28 3 — — 46 5 523 62	% NT$ NT$ — — — 9.56 48 5 2.87 15 1 65.97 23 44 7.46 36 4 5.35 27 3 — — — 8.79 1 — 100.00 150 57	% NT$ NT$ % NT$ NT$ (in millions, except percentages) — — — — — — 32.00 1 — 0.11 10 1 10.00 13 10 1.47 13 10 15.33 8 — 0.91 21 2 24.00 833 239 94.34 856 245 18.00 27 3 3.06 27 3 — — — — — — 0.67 1 — 0.11 1 — 100.00 883 252 100.00 928 261	% NT$ NT$ (unaudited) — — — 1.08 — — 1.40 12 10 2.26 52 52 92.24 653 65 2.91 31 3 — — — 0.11 1 1 100.00 749 131	% — — 1.60 6.94 87.18 4.14 — 0.14 100.00

On June 30, 2010, we entered into an assignment agreement with Goldman Sachs Lending Partners LLC, or Goldman Sachs Lending, under which Goldman Sachs Lending as assignee agrees that it shall accept the assignment of the assigned assets, including all the rights and benefits under or in respect of the credit agreements entered into between us and Lehman Brothers Asia Holdings Limited as debtor. Under this agreement, we assigned to Goldman Sachs Lending our claims under the credit agreements which amounted to US$17.0 million for NT$139.4 million. The record date of such assignment was July 2, 2010.

On December 23, 2010, we entered into a purchase agreement with Taishin Asset Management Co., Ltd., under which we assigned our claims, including the principal of NT$438.3 million, interests, liquidated damages and prepayments under or in respect with the credit agreements entered into between us and Junguo Construction Co., Ltd. for NT$510.0 million. The record date of such assignment was December 31, 2010.

Restructured loans

As of September 30, 2013, NT$1,951 million of our outstanding loans had been reported to the FSC as restructured loans, consisting of NT$973 million of corporate loans and NT$978 million of consumer loans. As of December 31, 2012, NT$2,234 million of our outstanding loans had been reported to the FSC as restructured loans, consisting of NT$1,211 million of corporate loans and NT$1,023 million of consumer loans.

Funding

Commercial banks were prohibited from issuing financial debentures prior to the 2000 amendments to the ROC Banking Law. As a result, deposits have traditionally been the principal source of our funding for use in lending and other general business purposes. Our other sources of funding include inter-bank placements (borrowings) from the domestic markets and, since 2001, borrowings in the public debt markets.

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The following table sets forth information on the outstanding balances of our deposits by type as of the dates indicated.

Deposits Domestic deposits: Checking deposits . . . . . Demand deposits . . . . . . Foreign currency demand deposits . . . . . . . . . . . . Demand savings deposits . . . . . . . . . . . . Total demand deposits . . Time deposits . . . . . . . . . Postal deposits . . . . . . . . Foreign currency time deposits . . . . . . . . . . . . Time savings deposits . . Total time deposits . . . . . Total domestic deposits . . . . . . . . . . . . Offshore banking unit and overseas branch deposits: Checking deposits . . . . . Demand deposits . . . . . . Time deposits . . . . . . . . . Total offshore banking unit and overseas branch deposits . . . . . . Total deposits(1) . . . . . . .	As of December 31,	As of December 31,	As of December 31,	As of December 31,	As of December 31,	As of December 31,	As of September 30,	As of September 30,	As of September 30,	As of September 30,
	2010		2011		2012		2012		2013
	Amount NT$ 2,520.1 17,405.6 7,576.5 47,673.5	% 0.7 5.0 2.2 13.7								% 0.7 6.3 3.2 14.0
	75,175.7	21.6	80,349.1	21.7	84,359.5	21.6	83,601.1	22.1	95,119.8	24.2
	131,067.5 20,382.6 10,172.6 87,564.6	37.6 5.9 2.9 25.2	155,098.3 13,887.6 9,669.5 86,199.3	41.9 3.8 2.6 23.3	171,751.5 10,573.5 14,127.4 87,548.6	43.8 2.7 3.6 22.3	155,776.4 10,573.5 13,591.8 89,370.6	41.3 2.8 3.6 23.7	168,002.2 10,622.2 15,625.9 82,998.3	42.9 2.7 4.0 21.1
	249,187.3	71.6	264,854.7	71.6	284,001.0	72.4	269,312.3	71.4	277,248.6	70.7
	324,363.0 9.2 2,659.1 20,793.8	93.2 — 0.8 6.0	345,203.8 2.5 2,247.9 22,539.2	93.3 — 0.6 6.1	368,360.5 7.8 3,181.9 20,358.4	94.0 0.0 0.8 5.2	352,913.4 7.5 2,430.5 22,510.1	93.5 0.0 0.6 5.9	372,368.4 10.4 3,223.4 17,022.4	94.9 0.0 0.8 4.3
	23,462.1	6.8	24,789.6	6.7	23,548.1	6.0	24,948.1	6.5	20,256.2	5.1
	**347,825.1 **	**100.0 **	**369,993.4 **	**100.0 **	**391,908.6 **	**100.0 **	**377,861.5 **	**100.0 **	**392,624.6 **	100.0

Note:

(1) Excludes inward and outward remittances.

As of September 30, 2013, approximately 80.12% of our deposits and remittances had current maturities of less than one year or were payable on demand. However, a substantial portion of these deposits historically have been rolled over upon maturity or has otherwise been retained by us. Deposits have been a stable source of funding for us. There can be no assurance, however, that deposits will continue to be rolled over in the future, and, to the extent that such deposits are not rolled over, we will be required to obtain other sources of funding. See “Risk Factors—Risks—Relating to Our Business—Our financial condition may be adversely affected if we are unable to attract sufficient deposits to fund anticipated loan growth and to grow our business”.

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Following the lifting of regulatory restrictions on the issuance of debentures by banking institutions, we issued NT$2 billion of subordinated debentures in May 2010, NT$2 billion of subordinated debentures in September 2010, NT$3.5 billion of subordinated debentures in November 2011 and NT$3 billion of subordinated debentures in June 2012.

Capital Adequacy

Under the Capital Regulations last amended on November 26, 2012, currently all banks in Taiwan are required to maintain a minimum capital adequacy ratio of 8%. A bank’s capital adequacy ratio represents the ratio of the sum of eligible Tier I capital and eligible Tier II capital against total risk-weighted assets. For the purpose of calculating capital adequacy ratio:

Eligible Tier I capital means the sum of Common Equity Tier I capital and Additional Tier I capital.

Total risk-weighted assets means the sum of the risk-weighted assets for credit risk and the capital requirements for market risk and operational risk, multiplied by 12.5. Those already deducted from eligible capital, however, will no longer be counted into the total risk-weighted assets.

Common Equity Tier I capital means the Common Equity (as defined below) after deduction of (i) the intangible assets; (ii) the deferred tax assets due to losses from the previous year; (iii) the insufficiency of operation reserves and provision for possible loss; (iv) the revaluation surplus of real estate; (v) unamortized losses on sales of NPLs; and (vi) the statutory adjustment items calculated in accordance with other rules for calculation methods. Common Equity means the sum of (i) common stock and capital premium; (ii) capital collected in advance; (iii) capital reserves; (iv) statutory surplus reserves; (v) special reserves; (vi) accumulated profit or loss; (vii) non-controlling interests; and (viii) other items of interest.

Additional Tier 1 capital means the sum of the following items after deduction of the total amount of the deductible items in accordance with the rules for calculation methods: (i) non-cumulative perpetual preferred stock and its capital premium; (ii) non-cumulative perpetual subordinated debts; (iii) non-cumulative perpetual preferred stock and its capital premium; and (iv) non-cumulative perpetual subordinated debts which are issued by banks’ subsidiaries, and are not directly or indirectly held by banks.

Eligible Tier II capital means the sum of the following items after deduction of the total amount of the deductible items in accordance with the rules for calculation methods: (i) cumulative perpetual preferred stock and its capital premium; (ii) cumulative perpetual subordinated debts; (iii) convertible subordinated debts; (iv) long-term subordinated debts; (v) non-perpetual preferred stock and its capital premium; (vi) when real estate was adopted by IFRS for the first time and used the fair value or the re-estimated value as the deemed cost, the difference in amount between the deemed cost and the book value which was recognized in retained earnings, the 45% of unrealized gain on available-for-sale financial assets, as well as operational reserves and loan-loss provisions; (vii) cumulative perpetual preferred stock and its capital premium, cumulative perpetual subordinated debts, convertible subordinated debts, long-term subordinated debts, and the non-perpetual preferred stock and its capital premiums, which are issued by banks’ subsidiaries, and are not directly or indirectly held by banks.

The loan-loss reserves and provisions as provided in the preceding section (vi) to be included in eligible Tier II capital means the amount of the reserves and provisions that the bank lists in excess of the expected loss assessed according to its historical loss experience.

When a bank is graded as “under-capitalized”, “substantially under-capitalized” or “critically undercapitalized” by the FSC’s examination, the FSC shall take prompt correct actions pursuant to the ROC Banking Law. See “Risk Factors—Risks Relating to Our Business—We may be required to raise additional capital to maintain our capital adequacy ratio or for other reasons, which we may not be able to do on favorable terms or at all.”

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As of December 31, 2012 and September 30, 2013, our capital adequacy ratio was 12.71% and 10.16%, respectively. See “Regulation of the ROC Banking Industry” for a more detailed discussion of the capital adequacy regulations affecting us.

The following table sets forth a summary of our capital base and our capital adequacy ratios as of the dates indicated.

Tier I capital Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capital Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Legal Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Special Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unappropriated Earnings . . . . . . . . . . . . . . . . . . . . . . . . Other Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . Minus: Capital Allowance . . . . . . . . . . . . . . . . . . . . . . . Total Tier I capital . . . . . . . . . . . . . . . . . . . . . . . . . Tier II capital 45% of Unrealized Gain on Financial Assets in Available-for-Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating Reserve and Provision for Possible Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-Term Subordinated Debts . . . . . . . . . . . . . . . . . . . Minus: Capital Allowance . . . . . . . . . . . . . . . . . . . . . . . Total Tier II capital . . . . . . . . . . . . . . . . . . . . . . . . . Total Eligible Capital . . . . . . . . . . . . . . . . . . . . . . . . . . Total risk-weighted assets . . . . . . . . . . . . . . . . . . . . . . Capital adequacy ratios: Tier I Capital Adequacy Ratio . . . . . . . . . . . . . . . . . . . . Total Capital Adequacy Ratio (BIS) . . . . . . . . . . . . . . . .

As of December

Risk Management

The primary objective of our risk management policies and practices is to maximize earnings and return on capital with acceptable and controllable levels of credit risk, liquidity risk, market risk, operational risk and legal risk. We believe that the risk control system in use should allow management to effectively measure, monitor and report risks adequately and effectively. The principal risks relevant for us that are addressed in the following discussion are liquidity risk, credit risk, market risk, operational risk and legal risk.

Risk management system

We have implemented a system designed to analyze and evaluate our liquidity and interest rate risk exposure. This system assists us to monitor and manage our funding position and liquidity status, price our interest rates for deposit and lending products, and analyze the relationship between our assets and liabilities. We expect our risk management system will assist us to achieve the following goals:

• to closely monitor the funding sources and cash outflow of money market transactions by using the “maturity analysis” method;

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• to obtain evaluation of the potential effect on profit and loss of fluctuations in interest rates, by using trial pricing calculations to enhance the accuracy of pricing adjustments;

• to avoid losses resulting from our interest rate sensitivity gap by managing interest rate risk; and

• to monitor the costs and benefits of using various funding sources to enhance the profitability of our banking business.

Asset and Liability Management Committee

Currently, our risk management process is overseen by our Asset and Liability Management Committee. The functions of the Asset and Liability Management Committee include:

• evaluating domestic and overseas economic and financial markets and establishing corresponding strategies;

• reviewing and establishing our asset-liability structure and overall risk profile; and

• reviewing other relevant major asset and liability management issues. Market risk

Market risk

Interest rate sensitivity analysis . The fair values of bonds, bills, loans and other similar financial instruments which the bank used will fluctuate as market interest rates change.

Net positions on foreign currencies.

U.S. dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . JPY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CNY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	As of December 31, As of September 30, 2010 2011 2012 2013 (unaudited) (in millions) 35.3 42.0 37.5 38.1 11.3 8.6 6.3 3.0 3.9 5.7 4.9 5.3	As of September 30,
	2010 35.3 11.3 3.9	2013

Credit risk

Maximum credit exposure . We are exposed to credit risk if counter-parties or other parties default on contracts. To manage the risk, we make credit commitments and issue financial guarantees and standby letters of credit only after careful evaluation of customers’ creditworthiness. Collaterals, mostly in the form of cash, marketable securities and other assets, may be required depending on the evaluation result. If the customers default, we will execute our right on the collaterals to decrease our credit risk.

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Our maximum credit exposure of commitments and guarantees held by the Bank were as follows (values of collaterals were not considered):

Unused portion of credit card lines . . . . . . . . . . . . . . . . . . . Financial guarantees and standby L/Cs . . . . . . . . . . . . . . . Irrevocable loan commitments . . . . . . . . . . . . . . . . . . . . . .	As of December
	2010 124,586.3 10,701.6 15,243.3

Significant concentration of credit risk . The concentration of credit risk exists when counter-parties of financial transactions are individuals or groups engaging in similar activities or activities in the same region. The similarity would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. To manage this risk, we maintain a diversified portfolio, limit our exposure to any single geographic region, country or industry and closely monitor its exposure. Our significant credit risk concentrations as of December 31, 2010, 2011 and 2012 and September 30, 2013 are summarized as follows:

Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Finance and insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transportation and warehousing . . . . . . . . . . . . . . . . . . . . . . . .	As of December 31, As of September 30, 2010 2011 2012 2013 (unaudited) (NT$ in millions) 38,667.5 44,012.1 41,015.6 43,714.5 26,986.0 32,456.6 28,376.5 29,573.3 10,660.3 14,229.8 13,434.7 13,955.8 76,313.8 90,698.5 82,826.8 87,243.6	As of September 30,
	2010 38,667.5 26,986.0 10,660.3 76,313.8	2013

Liquidity risk

As of December 31, 2010, 2011 and 2012, our NT dollar liquidity reserve ratios were 38.37%, 31.32% and 31.10%, respectively. We have sufficient paid-in capital and working capital to meet all contract obligations. The possibility of our derivative financial instruments not being liquidated quickly in value is low. Also, we are able to enter into derivative financial contracts at reasonable market terms. Thus, we do not expect significant cash flow demand to settle these contracts.

Our management policy is to match the contractual maturity profile with the interest rates for our assets and liabilities. Because of uncertainties in their contractual terms and the difference in their nature, however, the maturities and interest rates for assets and liabilities cannot fully match with each other, resulting in gaps that may potentially give rise to gain or loss.

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BUSINESS

Overview

Established in 1992 and listed on the TWSE in 1998, we are a leading full-service commercial bank in Taiwan. Through our four strategic business units, or SBUs, namely the Individual Banking Group, Consumer Banking & Credit Card Group, Corporate Banking Group and Financial Markets Group, we offer a broad range of financial products and banking services to over 2.5 million individual and corporate customers in Taiwan and abroad. On January 23, 2014, our market capitalization was NT$28.7 billion based on the closing price of NT$12.15 per share on the TWSE on that date. We are a member of the Far Eastern Group, one of the largest business conglomerates in Taiwan having a diversified group of companies engaging in activities including, among others, financial services, petrochemicals, cement production, manufacturing, retailing, shipping, transportation, telecommunications, investment and real estate. Our affiliation with this reputable conglomerate, as well as our use of the Far Eastern brand name, enhances our franchise and business opportunities.

Our long history, highly popular and competitive products and strong brand name makes us one of Taiwan’s premier financial services companies. We believe that our comprehensive product and service offerings have not only helped expand our customer base, but have also contributed to our high customer retention rate. Our large and loyal customer base has in turn strengthened our ability to cross sell products and services offered by our SBUs.

We leverage our extensive distribution and customer service network consisting of our head office and 54 domestic branches, one offshore banking unit, one Hong Kong branch, six corporate banking centers and 157 ATMs to cross sell and serve our large customer base. As of September 30, 2013, we had more than 2.5 million individual banking and consumer banking customers and approximately three thousand corporate banking customers. In addition, we are one of Taiwan’s leading issuers of credit cards in terms of number of credit cards in-force and total credit card revolving balances. As of September 30, 2013, we had approximately 1.4 million credit cards in-force and outstanding credit card revolving balances of NT$10.5 billion.

As of September 30, 2013, we had total assets of NT$491.2 billion (US$16.6 billion), total gross discounts and loans of NT$321.0 billion (US$10.9 billion), deposits and remittances of NT$392.6 billion (US$13.3 billion) and shareholders’ equity of NT$28.5 billion (US$1.0 billion), as well as a standalone capital adequacy ratio of 10.16% and a standalone Tier I capital adequacy ratio of 7.54%.

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The following table sets forth the revenue contributions from our various business lines for the periods indicated.

Interest income Consumer banking . . . . . . . . Corporate banking . . . . . . . . Credit cards . . . . . . . . . . . . . Financial markets . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . Noninterest income Individual banking . . . . . . . . Consumer banking . . . . . . . . Corporate banking . . . . . . . . Credit cards . . . . . . . . . . . . . Financial markets . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . Total income . . . . . . . . . . . . .	Year	Year	Ended December 31,	Ended December 31,	Ended December 31,	Ended December 31,	Nine Months Ended September 30,	Nine Months Ended September 30,	Nine Months Ended September 30,	Nine Months Ended September 30,
	2010		2011		2012		2012		2013
	NT$ 3,404.7 1,519.6 1,204.9 900.5 32.9	% 29.0 13.0 10.2 7.6 0.3	NT$ (in 4,031.4 1,853.6 1,029.2 1,099.1 66.0							% 41.3 14.8 6.9 6.9 1.0
	7,062.6	60.1	8,079.3	62.7	9,539.5	62.8	7,145.4	69.1	8,326.3	70.9
	912.2 855.6 745.9 1,356.1 839.8 4.5	7.7 7.3 6.3 11.5 7.1 0.0	910.2 7.2 1,105.0 7.3 835.1 8.1 946.6 1,038.6 8.1 946.7 6.2 366.9 3.6 405.1 597.4 4.6 879.9 5.8 374.0 3.6 356.4 1,490.6 11.6 1,663.6 10.9 766.2 7.4 669.1 966.2 7.5 1,237.3 8.1 1,024.3 9.9 1,001.5 (218.1) (1.7) (171.2) (1.1) (177.3) (1.7) 61.9 4,784.9 37.3 5,661.3 37.2 3,189.2 30.9 3,440.6 12,864.2 100.0 15,200.8 100.0 10,334.6 100.0 11,766.9							8.0 3.4 3.0 5.7 8.5 0.5
	4,714.1	39.9	4,784.9	37.3	5,661.3	37.2	3,189.2	30.9	3,440.6	29.1
	11,776.7	100.0	12,864.2	100.0	15,200.8	100.0	10,334.6	100.0	11,766.9	100.0

Competitive Strengths

We believe that the following key strengths contribute to our competitive position in the financial services industry in Taiwan:

Differentiating business model leveraging synergy with Far Eastern Group

We are a member of the Far Eastern Group, one of the leading diversified conglomerates in Taiwan. We believe that our affiliation with this reputable conglomerate, as well as our use of the Far Eastern brand name, enhance our franchise and business opportunities. In order to effectively provide comprehensive “one-stop” financial services to our customers, we cross sell with our affiliated financial institutions under the Far Eastern Group umbrella, including Far Eastern Life Insurance Agency, Far Eastern International Leasing Corporation, Deutsche Far Eastern Asset Management and Oriental Securities Corporation, to provide banking, investment, brokerage and other financial services from a single point of contact. We and other Far Eastern Group members, including Far Eastern Life Insurance Agency, Far Eastern International Leasing Corporation, Deutsche Far Eastern Asset Management and Oriental Securities Corporation, collaborate closely and have strategically located our branches adjacent to one another to better serve our customers.

In addition, our affiliation with the Far Eastern Group enables us to launch innovative products, such as the mobile banking services in collaboration with Far EasTone Telecommunications. In August 2013, we launched the “FEIB HappyGo Credit Card NFC Program” for the staff members of FEIB to make credit card payment via Far EasTone NFC mobile phone. FEIB is the first bank to adopt the SIM Base solution of NFC project and we are working with Far EasTone to introduce the program to the public in the near future.

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We continue to penetrate the large customer bases of Far Eastern Group’s strong retail businesses, including Far Eastern Department Store, Sogo Department Store and Far Eastern Geant, to identify synergistic collaboration opportunities. In particular, we leverage the HappyGo program to access Far Eastern Group’s retail channels and customer bases. HappyGo is the first and number one membership rewards program in Taiwan to enable members to accumulate bonus points from purchases made through merchants with whom the Far Eastern Group partners. HappyGo currently partners with over 900 merchants in over 10,000 locations across Taiwan and has accumulated more than 11 million memberships. Via building in HappyGo program into our credit cards, we are able to not only differentiate our credit card products but also penetrate the high quality customers across different retail vendors. We started the initiative to convert HappyGo members to FEIB credit card customers since 2009 and currently have achieved around 9% conversion rate

Outstanding consumer finance franchise focusing on product bundling

Our deep understanding of customers’ needs has enabled us to identify and successfully position ourselves into niche consumer finance products:

• We are currently the market leader for consumer installment finance and also have the largest market share of automobile loans made through several strategic alliances in 2013. In 2010, we were the second commercial bank in Taiwan to launch motor scooter loans to accommodate the vast number of motor scooter owners in Taiwan.

• We also have a strong market position in credit card business. As of September 30, 2013, our market share in credit card revolving balance is at 5.2% and we rank second among standalone banks and seventh among the 36 banks in Taiwan. In terms of number of cards-in-force, we rank second among standalone banks and eighth among all banks with a market share of 4.1%.

• Our individual banking SBU has been demonstrating strong growth after acquiring additional branches from Chinfon Bank in 2010 and ING Securities (now renamed Far Eastern Securities) in 2011. As of September 30, 2013, our funds and insurance under management increased by 10.1% as compared with the end of 2012, and our fee income for the nine months ended September 30, 2013 grew by 20.3% as compared with our fee income for the corresponding period in 2012. We launched SME business in 2010 to fill the gap between our existing corporate banking business and consumer lending and the initiative is gradually bearing fruit. Our outstanding SME loan included in our individual backing SBU grew by 81.5% to NT$4,590.2 million as of September 30, 2013 and accounts for 1.4% of our overall loan exposure.

• In addition to strength in individual retail products, we have been able to achieve industry-leading bundle selling capabilities to further deepen our relationships with customers as well as enhance profitability. For each newly acquired mortgage and deposit customer, we on average bundle sell 4.6 and 3.2 products, respectively

Sophisticated corporate banking and financial market capabilities

One of our key strengths is the capability to provide value-added, high-end corporate banking services to our corporate customers. We are a pioneer in structure financing solutions among Taiwanese banks and have established strong Greater China financing track records via coverage of our Hong Kong branch and two China desks (based in Hong Kong and Taipei, respectively). Our recent credentials include financing the privatization of Sound Global, China’s largest private wastewater treatment solutions provider, and subsequently arranging the US$110 million syndicate loan to the company. In the nine months ended September 30, 2013, our OBU and Hong Kong branch accounted for 27.2% of our total profits before tax.

The financial markets SBU provides diversified and sophisticated instruments to our customers and our competitive strength lies on understanding customer needs and making swift product adjustments in response to

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change in market condition. We are able to maintain consistent market leadership in the high-margin CB asset swaps and FX margin trading business and are also a pioneer in launching internet trading platform for the two products

Proven earnings generation capability and solid asset quality

Despite the intensely competitive banking environment, we have been able to capitalize on niche products and deliver steady earnings growth to our shareholders. For the nine months ended September 30, 2013, our net interest income and fee income continued to trend up and grew by 19% and 11% from the corresponding period in 2012, respectively. We also achieved annualized return on average equity ratio and return on average asset ratio of 13.24% and 0.76%, respectively, for the nine months ended September 30, 2013, exceeding the industry average of 10.60% and 0.69%.

In recent years, we have maintained strong asset quality primarily through stringent risk management and internal control capabilities coupled with our diversified corporate loan portfolio. Our independent, centralized and integrated risk management system is the foundation of our business operations. We have established a sound framework and stringent procedures for this system, in order to prudently manage the risks to which each of our SBUs is exposed, while ensuring the sustainable growth of our business lines. In particular, we have taken the following steps in order to improve our credit risk management and overall asset quality:

• We have centralized our credit decision-making and tightened our credit approval processes; and

• We have reduced our loan exposure to real estate developers in Taiwan in order to enhance the diversification of our loan portfolio.

As a result of our prudent risk management strategy, we currently maintain a diversified loan portfolio that limits our exposure to any particular industry or borrower. For example, as of September 30, 2013, our ten largest credit exposures by customer group, (excluding governmental borrowers) totaled approximately NT$26.1 billion and our largest credit exposure to a non-governmental customer group amounted to approximately NT$5.3 billion, while our total gross discounts and loans amounted to NT$321.0 billion (US$10.9 billion).

We believe that our efforts in strengthening our risk management have allowed us to improve and maintain a superior asset quality. Our NPL ratio declined from 0.50% as of December 31, 2010, to 0.36% as of September 30, 2013, while our allowance for possible losses to NPLs ratio, or coverage ratio, increased from 299.92% as of December 31, 2010, to 351.20% as of September 30, 2013. We believe that our strong asset quality and stringent risk management reduced impact on our businesses of the global financial crisis that started in 2008 and may make us less vulnerable to credit risks in the future.

Best-in-class execution capabilities

Our top-notch execution capabilities have driven our expansion in recent years. Since 2009, we have successfully completed acquisitions of AIG Credit Card, Chinfon Bank and ING Securities and smoothly integrated these businesses into our platform. The AIG Credit Card acquisition enhanced the scale of our credit card portfolio and set an important foundation for us to introduce other innovative products (e.g. “HappyGo Inside”) and get to current leading position.

The acquisition of Chinfon Bank’s 19 branches greatly strengthened our distribution channels. Post the transaction, we have gradually enhanced operational efficiency and profitability of these branches via relevant cost initiatives, branch relocation as well as growth in individual banking business. In the nine months ended September 30, 2013, our cost-income ratio declined to 60.8% from 69.0% for the corresponding period in 2012 and we expect the ratio to continue improving with ongoing In 2011, we acquired ING Securities which focuses on asset management and private banking. We have recently opened a new branch in Taipei 101 Building to utilize the platform in serving high net worth individuals and SME clientele.

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Seasoned management team with proven track record

We have a highly experienced team of senior managers who bring extensive industry knowledge to our operations. Our senior managers have an average of more than 30 years of experience working in the financial services industry, having held senior positions at leading multinational and domestic financial institutions. For example, our president, Mr. Eli Hong, possesses over 40 years of banking experience and was the former head of the financial institutions group at Citigroup in Taiwan. We also seek to supplement our existing management team by recruiting talented and experienced managers and have a proven track record of integrating outside talent into our operations.

Strategy

Our strategic goal is to become a premier specialized financial institution in both Taiwan and Greater China by providing a full range of financial products and unparalleled services to our customers. We plan to achieve our goal by implementing the following strategies:

Further strengthen our leadership in niche/high margin markets

We plan to solidify our leadership in niche markets, which tend to command higher margins than traditional lending products. In order to maintain our leading position in niche markets, we plan to continue our track record of pioneering the development of innovative, value-added products and services to our customers. Such innovative product offerings that we have developed in the past include, among others, multi-currency investments, or MCI, for our wealth management customers, motorcycle loans, personal installment finance and cash advances with flexible tenors for our consumer banking customers. Furthermore, in 2012 and 2013 we launched Refund Personal Loan and Happy Go Personal Loan respectively.

By continuing to focus on product and service innovations, we intend to expand our market share among our core customers, including medium-to-high-income customers, and target customers who we believe to have high earning potential. Furthermore, we plan to continue closely monitoring market trends and consumer preferences to develop new products and adapt existing products to effectively meet our customers’ needs.

In addition to expanding our product and services portfolio, we also intend to adopt a more sophisticated pricing mechanism by taking into account several factors, including market competition and customer risk profiles. We believe that these efforts will enable us to increase our revenues and profitability.

Continue to develop innovative financial products and services

We believe that our wealth management services, transactional banking and treasury capabilities create many opportunities to cross sell products and services to existing and new customers and further diversify our revenue sources beyond traditional lending activities. Among other actions, we intend to:

• Create multi-product relationships with our mortgage loan customers, the largest segment of our consumer loan customers, by introducing wealth management products, such as property and casualty insurance policies, that meet their needs and promoting other products, such as unsecured personal loans;

• Increase our penetration of the small- and medium-sized enterprise, or SME, market by promoting transactional-based products and services, such as factoring and trade financing; and

• Develop hedging solutions for our corporate customers by offering a range of financial derivative products.

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Pursue cross-selling opportunities by leveraging Far Eastern Group and its affiliates

We plan to further expand synergistic collaboration efforts across various Far Eastern Group affiliates. For example, we plan to continue to leverage our relationships with Far Eastern Group’s retail businesses to increasingly market our products and services to their customers. In addition, we plan to promote our financial products and services to other affiliates within the Far Eastern Group, including the corporate and retail customers of Far Eastern Life Insurance, Oriental Securities and Far Eastern International Leasing. We believe that these arrangements have the potential to contribute significantly to our revenue growth, by enabling us to reach a broader base of potential customers.

Enhance operational efficiency by integrating back offices and administration functions

We plan to further enhance our operational efficiency through effective use of our technology investments. For example, we intend to leverage FE Direct, our highly integrated online banking platform, to improve the cost-efficiency of our consumer banking business, as well as to increase customer loyalty and enhance our penetration of this market. As part of our initiative to provide computerized services and enhance our operational efficiency, we also launched our mobile banking platform in 2011. In addition, we plan to enhance the operational efficiency of our branch operations by continuing to centralize our back-office and other administrative functions, thereby allowing our branches to focus on customer sales and service. Moreover, we have introduced process automation technology for establishing an end-to-end straight through process to automate our major banking processes, such as loan applications, FX trading and settlement, and import and export activities.

Evaluate and selectively pursue strategic alliances and acquisitions to expand our scale and service and operational capabilities

We intend to carefully evaluate potential strategic alliances or acquisitions that would enhance the scale of our operations and complement the range of products and services that we offer to our customers such as we have done in the past. For example, following the successful acquisition and integration of AIG Credit Card, Chinfon Bank and ING Securities, we were able to enhance the scale of our credit card business, strengthen our distribution channels, expand our customer base and improve our operating efficiency and profitability. When considering strategic alliance and acquisition opportunities, we will continue to focus primarily on opportunities that will:

• enable us to enhance our operational efficiency through synergies and improve our competitive positioning by increasing the scale of our operations;

• allow us to increase the breadth of our product mix and service capabilities in the Greater China region; and

• enhance our distribution and operational capabilities.

Expand business coverage into Greater China to further support corporate customer needs

We plan to deepen our presence in high growth financial markets outside of Taiwan. In order to capitalize on the strong growth in Greater China, particularly in the PRC, we have integrated our Taiwan branches with our offshore banking unit, or OBU, and our Hong Kong branch to efficiently provide value-added corporate banking services aimed at better serving the financial needs of our clients, especially Taiwanese enterprises, in China. We have also assembled a dedicated team in Hong Kong to serve Taiwanese enterprises in China. We also plan to leverage Far Eastern Group’s strong presence and broad customer base as well as our online banking platform to extend our reach in Greater China. Following the relaxation of control on cross-strait financial regulation, we will

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continue to evaluate potential strategic alliance opportunities with commercial banks in China, as well as seek opportunities to establish branches or subsidiaries in the PRC, to make equity investments in financial institutions in the PRC or to cooperate with Third Party Payment Companies for E-banking business in the PRC.

Attract, motivate and develop talented and experienced professionals

We believe our ability to recruit, retain, motivate and develop talented and experienced professionals is a key to our success. In particular, we intend to:

• Continue to focus on recruiting and cultivating a high-quality and professional workforce;

• Provide training and development programs for our employees to enhance their professional knowledge and capabilities; and

• Foster a collegial culture that promotes our employees’ personal and professional development.

Consumer Banking & Credit Card

We provide a broad range of consumer banking products and services to our individual customers, consisting principally of mortgage loans, personal loans, automobile loans, savings and time deposit-taking, checking accounts, ATM services and electronic and Internet banking. Our distribution channels include our branch network, our Internet platform, our ATM network, telemarketing sales, customer service representatives and direct sales, as well as through co-branding and other strategic alliances. In 2010, we started our online banking platform FE Direct to provide better services to our customers and increase our market penetration. See “—Distribution—Technology-based distribution channels.”

We maintain a conservative lending policy. As of September 30, 2013, we had outstanding consumer loans of NT$177.4 billion, representing 55.3% of our total loans, as well as NT$10.5 billion of credit card revolving balances. As of September 30, 2013, our Consumer Banking & Credit Card Group had 927 employees, of which 425 were dedicated to the sales of our consumer loan products.

Consumer Loan Products

Mortgage Loans

We provide a wide range of mortgage loan products to finance the purchase of residential properties primarily for self-use, including traditional mortgage loans, adjustable rate mortgage loans, governmentsubsidized mortgage loans, revolving mortgage loans and offset mortgage loans. We continue to develop new mortgage loan products to address the particular needs of our customers, and we aim to cross sell high-margin consumer loan products such as unsecured personal loans and re-financing loans to our existing mortgage loan customers, since these products typically carry higher yields. The weighted average interest rate charged on mortgage loans in 2012 was 2.18% per annum. As of September 30, 2013, we had NT$134.5 billion of mortgage loans outstanding, which represented 41.9% of our total loans outstanding.

Traditional mortgage loans . Traditional mortgage loans are secured by the property being purchased, which we typically require to be for residential purpose. We typically lend 70% of the appraised value of the property based on our evaluation of a particular customer’s credit and risk profile. These products carry a floating rate based on a variety of indices. Monthly payments are typically based on a 20-year amortization and maturity schedule. Under certain circumstances, we charge a pre-payment penalty for loans paid in full within a year of the initial drawdown. In addition, we charge an origination fee on mortgage loans.

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Government-subsidized mortgage loans . Under the ROC government-sponsored programs which provide for these subsidized loans, the government either pays us a portion of the interest rate on the mortgage loans rate on a monthly basis (in effect subsidizing the borrowers) or causes Postal Bureau deposits to be made with us (in effect providing us with stable funding for the mortgage loans).

Adjustable rate mortgage loans . In October 2002, we began offering adjustable rate mortgage loans. The adjustable rate is typically based on the average of time deposit rates quoted by ten major banks in Taiwan as the base index plus an interest rate spread which is determined based on the risk profile of the borrower and nature and use of the property. The base index is adjusted per month or every three months. We believe that adjustable rate mortgage loans have proven particularly attractive to our affluent customers, since they are able to borrow at lower interest rates as a result of the risk-based pricing feature.

Revolving mortgage loans . We also offer revolving mortgage loans to fulfill the personal finance needs of our mortgage loan customers. The borrower of a revolving mortgage loan typically, in addition to the original mortgage loan, obtains a revolving personal loan, the credit line of which is equal to the amount of the repayment under the mortgage loans.

Offset mortgage loans . In July 2003, we began offering offset mortgage loans, which enable customers to “offset” their deposits with us against their mortgage loan balance for purposes of calculating their monthly interest payments on their mortgage loan. This product allows customers to lower their mortgage loan interest payments and better manage their cash flow position, and also provides them with an incentive to deposit larger amounts with us.

Installment Finance

We provide installment finance to customers who use our strategic alliances’ channels, services or products. In 2012, installment finance maturities average approximately 21 months and the weighted average interest rate charged for installment finance was 2.42% per annum. Installment finance is high spread product. As of September 30, 2013, we had NT$3.21 billion of installment finance outstanding, which represented 1.0% of our total loans outstanding.

Automobile Loans

We provide automobile loans for both new and used automobiles. Automobile loan maturities average approximately 16 months. In 2012, the weighted average interest rate charged for automobile loans was 2.42% per annum. Automobile loans are typically sourced from automobile dealers and are secured by the automobile purchased. We generally lend up to 85% of the value of the automobile. We have formed strategic alliances with the Taiwan-based automobile finance lease providers, including the financing arms of Nissan Motor Co., and Toyota Motor Corporation, and Chailease Finance Co., and Jih Sun Auto Leasing Co., under which these financing providers introduce borrowers to us, perform payment collection and servicing on our behalf and make payments to us on behalf of delinquent borrowers, all in return for commissions that we pay to the financing arms. We also receive credit support for these automobile loans from these finance lease providers companies, enabling us to minimize our credit risk in making these loans. In addition, in 2010, we launched motor scooter loans to accommodate the vast number of motor scooter owners in Taiwan. As of September 30, 2013, we had NT$26.9 billion of automobile loans outstanding, which represented 8.4% of our total loans.

Personal Loans

We provide a range of personal loan products, primarily unsecured loans and, to a much lesser extent, secured loans. We also offer different product options to different client groups: (i) specific loans available to public servants, teachers, and employees of companies ranked among the top 5,000 in Taiwan in terms of annual sales turnover, as compiled by China Credit Information Service; and (ii) special loans available to employees

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with over half a year of service at most enterprises and organizations in Taiwan. Personal loans have maturities ranging from one to seven years and are made at either a fixed or a floating rate of interest. As of September 30, 2013, we had NT$10.1 billion of personal loans outstanding, which represented 3.1% of our total loans.

Credit Cards

Our credit card business is an important part of our consumer banking business and has been a major factor in our growth and profitability in recent years. We believe that we are one of the largest credit card providers in Taiwan in terms of credit card revolving balances, with NT$10.5 billion of credit card revolving balances as of September 30, 2013. As of the same date, we were also the eighth largest credit card issuer among all banks in Taiwan in terms of the number of credit cards, with approximately 1.4 million cards in-force.

We offer various bank cards and co-branded cards and related services. We believe that extensive marketing and innovative product offerings have contributed to the growth of our credit card business.

Our bank cards include Far Eastern New Century World Card, Infinite Card, Platinum Card, Gold Card, Classic Card, and Combo Card. Our co-branded cards include Esprit co-branded card, FETC co-branded card, Formosa Petrochemical Corporation Card and eTag Card. In addition, we periodically launch card spending and usage promotion activities in cooperation with merchants. For example, the Happy Go Card reward program allows customers to accumulate bonus points through use of our credit cards and from Happy Go Card merchants. Bonus points can be redeemed for merchandise or used to make utilities payments. They also offer card holders preferential services, among other offerings. In August 2013, we launched a new redemption channel “FEIB HAPPY GO Redemption APP” to make points redemption more convenient. Following the launch of MasterCard inControl (Secure pay for EC transactions) in September 2013. FEIB has become the inControl pilot bank in Taiwan.

In October 2006, we began to issue the Formosa Petrochemical Corporation co-branded credit cards. We grant benefits to the holders of our co-branded credit cards and record their Happy Go bonus points while Formosa Petrochemical Corporation also grants rewards and cash discounts to them. Double benefits provided by Formosa and us are especially attractive to car owners. In August 2011, we renewed our cooperation agreement with the Formosa Petrochemical Corporation under similar terms and conditions in order to continue our success strategic partnership. As of September 30, 2013, there were approximately 0.5 million Formosa Petrochemical Corporation co-branded cards in-force.

In 2009, we acquired the credit card business and certain identified assets and liabilities of AIG Credit Card, an indirect wholly-owned subsidiary of the American International Group, Inc. We are entitled to assume the purchased assets, including the credit card receivables and any other accounts receivable of the business which arise in the ordinary course of business, certain contracts and agreements entered into with a third party, its fixed assets, furniture, equipment, computer hardware and other tangible assets, and all claims, causes of action and other rights against third parties primarily relating to the purchased assets. We are also obliged to assume all liabilities and obligations with respect to the assumed assets and assumed agreements and any similar liabilities incurred by AIG Credit Card in the ordinary course of business, and all liabilities arising out of the employment of the transferred personnel. Our acquisition of AIG Credit Card’s credit card business and its related accounts receivable has enabled us to reach economies of scale for our credit card business.

In 2009, following the acquisition of AIG Credit Card’s credit card business and account receivable businesses, we entered into a five-year cooperation agreement with Nan Shan, who used to cooperate with AIG Credit Card for the Nan Shan Life Insurance credit card. Under this cooperation agreement, we issue Nan Shan co-branded cards. Holders of the Nan Shan Life Insurance co-branded cards are entitled to certain discounts if they use the card to pay insurance fees to Nan Shan. Our cooperation with Nan Shan has also enabled us to gain cross-selling opportunities to its four million insurance customers. In addition, we grant Happy Go bonus points to the holders of the Nan Shan Life Insurance co-branded cards as we do for our own credit card holders. As of September 30, 2013, we had approximately 0.1 million Nan Shan Life Insurance co-branded cards in-force.

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In November 2011, we launched the “C’est Moi” credit card targeting affluent female consumers. We offer exclusive benefits tailored to these female consumers’ needs as well as bonus Happy Go points for spending through the card. As of September 30, 2013, we had approximately 0.1 million C’est Moi credit cards in-force and the average spending amount of these cards was higher than the average spending amount of our other credit cards. In addition, the C’est Moi credit cards accounted for a substantial portion of the significant growth in the spending amount of our credit cards in the Far Eastern Department Store and Sogo Department Store.

In October 2013, we launched the “eTag co-brand cards” with Far Eastern Electronic Toll Collection Co. We offer exclusive product benefits with transportation-related products, as well as 100 KM free roadside assistance service. We also reward NT$100 cash rebate in pre-stored value of eTag account to the cardholder who applies the eTag account link service for the first time. By integrating the FET inter-group resource, we plan to revamp the C’est Moi credit cards and Formosa Petrochemical Corporation co-branded cards into the eTag credit cards so that FEIB cardholders can enjoy the diversity of service being provided.

Marketing and Promotion

We believe that extensive marketing and innovative product offerings have contributed to the growth of our credit card business. We have introduced a number of high-profile credit cards, including:

• In the fourth quarter of 2013, we launched the “eTag co-brand cards” with Far Eastern Electronic Toll Collection Co.

• In the second quarter of 2013, we launched the new event in order to raise penetration rate of Happy Go card members into FEIB HAPPY GO Credit Card member with Far Eastern Department Store and Ding Ding Integrated Marketing Service Co.

• In the fourth quarter of 2013, we launched the “Far Eastern Plaza Hotel Firework” campaign, “FEIB Travel Happy Go part II” campaign and “HAPPY GO Redemption APP part II” campaign.

• In the third quarter of 2013, we launched the “HAPPY GO Redemption APP”.

• In the second quarter of 2013, we launched the “Income tax installment” campaign and “FEIB Travel Happy Go” campaign.

• In the first quarter of 2013, we sponsored the “World Baseball Classic” baseball contests.

• In the fourth quarter of 2011, we launched the “C’est Moi” credit card targeting affluent female consumers.

• In the first quarter of 2011, we introduced the “HAPPYGO Redeem platform” and Chinese New Year dinner auction campaign.

• In the fourth quarter of 2010, we launched the “Taipei 101 Firework” campaign.

• In the third quarter of 2010, we launched the “Happy Gold” campaign.

• In the second quarter of 2010, we launched the “FE Symphonies” campaign.

• In the first quarter of 2010, we sponsored the opera “Turandot” and the Los Angeles Dodgers baseball game show.

• In the fourth quarter of 2009, we launched the “Nan Shan Life Insurance” co-branded card.

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• In the fourth quarter of 2006, we launched the “Formosa Petrochemical Corporation” co-branded card; and

• In the third quarter of 2005, we launched the “ETC (Electronic Toll Collection)” co-branded card.

Going forward, we plan to continue to offer new products and benefits to our cardholders and to further refine our credit card business. For example, we plan to further capitalize on the synergies from our Happy Go card and Far Eastern group’s leading retail and distribution channel.

Products

Revenues from our credit card business consist principally of interest paid by cardholders on revolving balances, interchange fees paid by merchants in connection with purchases, fees paid by cardholders for cash advances and late payments. The average interest rate charged on revolving balances outstanding were 12.28%, 11.80%, 11.39% and 10.87%, respectively, in 2010, 2011, 2012 and the nine months ended September 30, 2013. Cardholders also have the option to pay a fixed minimum payment and allow the balance on their accounts to revolve. Interchange fees are approximately 1.28% of the amount of each transaction. As of September 30, 2013, we had NT$10.5 billion of credit card revolving balances.

We monitor the delinquency of all credit card accounts by the number of days overdue. We start the payment collection process as soon as a payment is past due and, when necessary, seek repayment with the assistance of outside collection agencies. We collect receivables that are overdue from 30 to 180 days, while the portion of receivables more than 180 days overdue and least likely to be collected are outsourced to external agents for collection. The 180-day delinquency rate on our credit card receivable balances was 0.12% as of September 30, 2013.

The following table sets forth certain information regarding our credit card business for the periods indicated.

Credit card data Interest income . . . . . . . . . . . . . . . . . . . . . . . . . Fee income(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit card transaction volume . . . . . . . . . . . . . Credit card revolving balances . . . . . . . . . . . . . Credit card receivables(2) . . . . . . . . . . . . . . . . . . Interest rate on credit card revolving balances(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . 90-day delinquency rate(4) . . . . . . . . . . . . . . . . . Gross write-off ratio(5) . . . . . . . . . . . . . . . . . . . . Number of credit cards in-force (in thousands)(6) . . . . . . . . . . . . . . . . . . . . . . . . . . Market share by cards in force(7) . . . . . . . . . . . .	Year Ended December 31, Nine Months Ended September 30, 2010 2011 2012 2012 2013 (NT$ in millions except for percentages and card numbers) 1,185 996 937 698 705 1,003 963 1,040 768 737 51,279 55,114 60,320 45,017 47,399 11,221 10,774 10,676 10,622 10,472 15,631 15,530 15,414 15,148 15,329 12.28% 11.80% 11.39% 11.39% 10.87% 0.48% 0.22% 0.40% 0.40% 0.29% 0.23% 0.13% 0.13% 0.14% 0.14% 1,192 1,286 1,436 1,404 1,418 3.88% 3.91% 4.21% 4.17% 4.06%	Nine Months Ended September 30,	Nine Months Ended September 30,
			2013

Notes:

(1) Represents interchange fees, cash advance fees, annual fees, late charge fees, deferred payment fees and other fees.

(2) Represents credit card revolving balances plus credit card receivables for current 30-day billing cycle.

(3) Represents interest income from credit card revolving balances divided by the daily average of credit card revolving balances for the period.

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• (4) Represents the balance of delinquent credit card debt over 90 days divided by total credit card debt.

• (5) Represents gross write-offs divided by the average monthly balance of total credit card debt for the period.

• (6) Represents the number of credit cards that are valid as of the end of the period.

• (7) Based on the number of credit cards in force as reported by the FSC.

Corporate Banking

We provide a broad range of products and services to our corporate customers, including governmental agencies and government enterprises. Our principal products and services include loans, deposits, guarantees and acceptances, cash management, factoring, revolving credit facilities, overdraft facilities, bills discounting, payment remittances, foreign exchange transactions, loan syndication and letters of credit.

Historically, our corporate lending has focused on providing corporate loans to medium- to large-sized companies in Taiwan, as they tend to have lower credit risk compared to smaller companies. As more and more Taiwanese companies build their manufacturing facilities overseas, we have strengthened our transactional banking services and expanded our cross-border banking products and services, with high value-added fee-based niche products such as factoring and trade financing. To capitalize on the strong growth in Greater China, particularly in the PRC, we have integrated our Taiwan branches with our offshore banking unit, or OBU, and Hong Kong branch to efficiently provide value-added corporate banking services to better serve the financial needs of our clients, especially Taiwanese enterprises, in the PRC. We believe that we will be able to leverage our existing relationships with our corporate customers to expand our products and services in the Greater China region. Starting 2010, due to the lifting of restraints on exposure to the PRC and growing volume of cross-strait financial business, we established a China-HK Regional Corporate Finance Center in Hong Kong to provide direct and efficient banking services to corporations located in the PRC, in order to achieve the expansion of our business in the Greater China region.

Our corporate banking products and services are provided through our six corporate banking centers in Taiwan, our offshore banking unit, our Hong Kong branch, and our Internet platform. See “—Distribution”. As of September 30, 2013, our Corporate Banking Group had 172 employees.

We impose strict asset quality controls and have strengthened our risk management to reduce operating risk. As of September 30, 2013, our outstanding corporate loan totaled NT$143.6 billion. Our corporate deposits as of September 30, 2013 were NT$245.6 billion. As of September 30, 2013, our major factoring business stood at NT$17.4 billion, while import value reached US$98.2 million and export volume was US$148.1 million.

Corporate Loans

Corporate loans include (i) short-term loan facilities, most of which are unsecured revolving lines of credit for working capital purposes, and (ii) medium-term and long-term loan facilities on a term basis, which are generally secured. We also participate in syndicated loan facilities. As of September 30, 2013, we had NT$31.1 billion in syndication loans outstanding, representing 27.1% of our corporate loans or 9.7% of our total loans. Approximately 79.7% of the loans outstanding as of that date were denominated in NT dollars, with the remainder denominated in foreign currencies, principally the US dollars.

In order to maintain our asset quality, we have pursued a policy of diversification by lending to corporate borrowers in a wide range of industry sectors across different geographic regions in Taiwan. Our largest concentration of corporate loans as of September 30, 2013 was to companies in the electronics industry, which accounted for 15.0% of our total corporate loans as of such date. See “Description of Assets and Liabilities— Credit Exposure—Corporate loan exposure”.

Guarantees and Acceptances

We act as a surety for our corporate customers by issuing guarantees for commercial paper, corporate bonds, deferred payment of customs and duties on imported raw materials and machinery, and repayment of loans made

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to these customers by local and foreign banks. Guarantees and acceptances are provided to corporate banking customers, usually as part of an overall credit facility, including a loan facility. We receive a fee for providing guarantees and acceptances and receive interest income on amounts that we are required to pay on behalf of a customer in connection with a guarantee or acceptance. Once a payment is made in connection with a guarantee or acceptance, that guarantee or acceptance is treated as funded credit exposure. Fees earned on guarantees and acceptances can range from 0.5% to 2.0% of the guaranteed obligation per annum. Guarantees are treated as off-balance sheet liabilities. As of September 30, 2013, we had a total of NT$12.5 billion in guarantees and acceptances outstanding.

Trade Financing

We provide trade financing for bilateral trades between the ROC and other countries, as well as tripartite trade financing for trades between two countries which are routed through a third country. We receive service fees for providing trade finance facilities and interest income on amounts that are drawn under the facilities. We plan to continue to focus on trade financing business, particularly for ROC technology companies that have production facilities in eastern and southern China. We generated import and export finance-related fees of NT$11.5 million for the nine months ended September 30, 2013.

Factoring

We offer factoring facility services which enable our corporate customers to transfer their account receivables to us, with or without recourse. We receive service fees for providing these services and receive interest income in the form of discounted bills and receivables which we purchase. Our turnover of factored invoices amounted to NT$18.0 billion for the nine months ended September 30, 2013. We plan to expand our factoring business domestically and internationally to support ROC companies exporting into international markets.

Cash Management

Cash management services enable customers to expedite their receivable collection processes and make payments to suppliers more efficiently, thereby optimizing liquidity and reducing operating costs. Cash management services provide us with accounts receivable financing opportunities. Our cash management services consist of the following:

• a web-based collection service through which corporate banking customers can direct us to collect payments on their behalf;

• a web-based payment service which enables customers to transfer funds via the Internet under a secured system. Distinctive features include inter-bank fund transfers, real time e-mail notifications to subscribers, forward dated (up to 365 days and 30 days for NT dollars and foreign currency, respectively) remittance services and a designated user web-page; and

• an automated check writing service or web-based bundle transfer through automated clearing house, through which corporate banking customers can direct us to make dividend payments on their behalf.

Corporate Finance

We established the Corporate Finance Department, or the CFD, to undertake syndication loan, structured finance, corporate trust, financial advisory and other similar businesses. The CFD focuses on transaction opportunities with higher fee incomes or innovative embedded structures. As a result of growing market demands in the past three years, gross fee income of CFD increased from NT$66.6 million in 2010 to NT$62.2 million in 2011 and further to NT$65.2 million in 2012. Gross fee income of CFD amounted to NT$98.3 million in the nine months ended September 30, 2013.

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Financial Markets

After the global economic recession, the CBC terminated the expansionary monetary policy and maintained the interest rate at the same level. Under this changing policy, we have adjusted our product mix to increase niche products, such as convertible bonds asset swap, foreign exchange margin trading and credit linked derivatives. As of September 30, 2013, our balance of government bonds purchased accounted to NT$17.3 billion. Our investments in derivatives focus primarily on foreign exchange forward contracts (forward purchase and forward sale), swaps and options reached NT$335.8 billion as of September 30, 2013. Convertible bond asset swaps undertaken by us as of September 30, 2013 totaled NT$21.4 billion. Our convertible bond asset swap, foreign exchange margin trading, and credit derivatives investments all ranked first in Taiwan in 2012.

Treasury Department

Our Treasury Department’s principal function is to manage our liquidity and foreign exchange positions through commercial deposits, fixed-income instruments and repurchase obligations and through active participation in the foreign exchange and interbank money markets. Its investments in fixed-income instruments are made primarily for the purpose of managing our legal reserve and are comprised primarily of government bonds, commercial paper and corporate debt that are guaranteed by financial institutions. The Treasury Department also engages in proprietary trading activities from time to time. The Treasury Department monitors our daily local and foreign currency cash flows and liquidity positions and reports these positions, as well as money market conditions, interest and exchange rate movements and loan to deposit ratios, to the Asset and Liability Management Committee.

As of September 30, 2013, the Treasury Department is comprised of 51 professionals and is divided into eight functional units:

Foreign Exchange Unit . The foreign exchange unit manages our foreign exchange exposure and offers foreign exchange products to our customers. The unit trades in currencies and derivative instruments, primarily through spot and forward exchange contracts, currency swaps and cross currency swaps. The foreign exchange unit also engages in hedging transactions relating to our exchange rate risks and in local and foreign currency derivative transactions. The principal goal of these trading activities is to minimize the impact of currency exchange fluctuations on our financial position. Traders are subject to counterparty, per trade, stop loss and total exposure limits.

Money Market Unit . The money market unit manages inter-bank lending for both local and foreign currencies, monitoring reserve positions, trading in various securities to meet funding requirements, setting interest rates for negotiable time deposit certificates and foreign currency lending and deposit, and cooperating with the Central Bank of China for our open market operations.

Debt Securities Trading Unit . The debt securities trading unit’s activities principally involve trading for our own account using the portion of our liquidity reserve in excess of the minimum regulatory requirement. The purpose of such trading is to realize trading gain and to provide liquidity to our reserve position. The unit typically trades in debt securities, such as commercial paper, government bonds and bond repurchase transactions. Traders are subject to counterparty, per trade, stop loss and total exposure limits.

Treasury Marketing Unit . The treasury marketing unit promotes new financial products to our consumer and corporate banking customers. The desk focuses on developing asset-liability management products to meet the investment, financing and hedging needs of our customers. The desk also provides tailor-made solutions in order to provide value-added products and services to our customers.

Asset Swap Unit . We began our asset swap business in October 2002. Our asset swap unit exchange the interest payment on fixed income convertible bonds for floating rate interest and sell the stock options on the

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convertible bonds in the option market. Our asset swap/structured product unit facilitates the bond issuance efficiency and liquidity in the secondary market. Meanwhile, our asset swap/structured product unit enjoys a leading market share.

Foreign Exchange Margin Unit . Our foreign exchange margin unit conduct foreign exchange margin trading for our customers. Our foreign exchange margin unit enjoys a leading market share for foreign exchange margin trading.

Financial Institution Unit . Our financial institution unit focuses on financial products including short term borrowing to domestic and foreign financial institutions and mid- to long-term international syndication loans. Our financial institution unit also provides other financial holding companies, life and property insurance companies and other financial institutions with deposit services and hedging products for their derivative products.

Credit Derivatives Unit . Our credit derivatives unit focuses on domestic and international credit derivatives products, including euro convertible bond or euro exchangeable bond asset swaps, credit linked loans, credit link notes and credit default swaps.

Investment Department

The Investment Department is divided into a long-term investment team and a short-term investment team. The long-term investment team manages and processes our investments in subsidiaries and affiliates. The shortterm investment team manages, on a proprietary basis, our investment in equity securities and equity mutual funds. The Investment Department sets the internal trading guidelines and it approves the guidelines for day-today trading, including total investment amount and daily trading limits for each stock. All securities trading are subject to stop loss limits and these limitations and guidelines are reviewed on a regular basis.

Deposit Products

We offer four basic types of deposit products—checking, demand, savings and time deposits—in NT dollars, US dollars and other foreign currencies. We offer varying interest rates on our interest-bearing deposit products depending upon market interest rates, the rate of the return on our interest-earning assets and interest rates offered by other commercial banks. We offer deposit products to both corporate and consumer banking customers. As of September 30, 2013, corporate deposits accounted for 66.0% and consumer deposits accounted for 34.0% of our total domestic deposits. Interest rates on corporate deposit products are typically lower than those on consumer deposits.

Checking . Checking accounts do not bear interest and allow accountholders to deposit or withdraw funds at any time without penalty. Checking accounts appear as demand deposits, noninterest bearing in our financial statements.

Demand deposits . Demand deposits bear interest and allow accountholders to withdraw funds at any time without penalty. Demand deposits accrue interest at a floating rate.

Savings deposits . We offer two types of savings deposit products: “time” savings deposits and “demand” savings deposits. Time savings deposits require the customer to maintain a deposit for a fixed term, during which interest accrues at a fixed or floating rate, and withdrawals are allowed prior to maturity only upon payment of a penalty. The minimum maturity for time savings deposits is one year. Demand savings deposits bear interest at a floating rate, and accountholders may withdraw funds at any time without a penalty. As of September 30, 2013, time savings deposits and demand savings deposits constituted approximately 35.09% of our deposits.

Time deposits . Time deposit accounts generally require the customer to maintain a deposit for a fixed term, during which interest accrues at a fixed and floating rate, and only allow withdrawals prior to maturity upon

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payment of a penalty. Currently, we offer time deposit products with maturities of up to three years. Our time deposit products include certificates of deposit in NT dollars and certain foreign currencies.

In addition to deposits from consumer and corporate customers, we receive deposits from the ROC Postal Bureau, which places deposits with ROC banks that meet certain credit requirements. These deposits are excluded from our deposits for the purpose of meeting reserve requirements. See “Regulation of the ROC Banking Industry—Financial Requirements—Reserve requirement”.

The following tables set forth information regarding our consumer deposits, by amount and as a percentage of total consumer deposits, as of the dates indicated.

Consumer deposits(1) Savings-demand deposits . . . . . . . . . . Checking deposits . . . Demand deposits . . . . Foreign currency demand deposits . . . Total demand deposits . . . . . . . . . . Savings-time deposits . . . . . . . . . . Time deposits . . . . . . . Foreign currency time deposits . . . . . . . . . . Total time deposits . . . Total consumer deposits . . . . . . . . . Number of consumer accounts . . . . . . . . .	As of December 31,	As of December 31,	As of December 31,	As of September 30,	As of September 30,
	2010	2011	2012	2012	2013
	NT$ % (in 45,659.2 38.5 385.1 0.3 1,116.5 0.9 4,807.2 4.2 51,968.0 43.9 56,255.3 47.5 5,809.6 4.9 4,412.7 3.7 66,477.6 56.1 118,445.6 100.0 897,909

Note:

(1) Domestic deposits only.

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The following tables set forth information regarding our corporate deposits, by amount and as a percentage of total corporate deposits, as of the dates indicated.

Corporate deposits(1) Demand deposits . . . . Checking deposits . . . Foreign currency demand deposits . . . Total demand deposits . . . . . . . . . . Time deposits . . . . . . . Postal deposits . . . . . . Foreign currency time deposits . . . . . . . . . . Total time deposits . . . Total corporate deposits . . . . . . . . . Number of corporate accounts . . . . . . . . . Note:	As of December 31,	As of December 31,	As of December 31,	As of September 30,	As of September 30,
	2010	2011	2012	2012	2013
	NT$ % (in 18,303.4 8.9 2,135.0 1.0 2,769.3 1.4 23,207.7 11.3 156,567.2 76.0 20,382.6 9.9 5,759.9 2.8 182,709.7 88.7 205,917.4 100.0 23,553

(1) Domestic deposits only.

Individual Banking

Our Individual Banking Group has enjoyed rapid growth since its inception in 2004. As of September 30, 2013, our individual banking group had 747 employees, of which 233 were a dedicated sales force for wealth management products.

Wealth Management

We offer a variety of investment, insurance and trust products and services to our customers. Trust products and services include mutual funds, fixed-income and structured investment products and custodial services. We also provide our customers with deposit services, financial planning and a platform to access mutual funds, structured investment products, bonds, ETF, securities and insurance products. In addition, we are dedicated to developing a comprehensive and friendly wealth-management business on the concept of one-stop service that complements our traditional banking services. To supplement our network of 55 branches, we endeavor to promote our electronic banking services including e-commerce fund custody and online payment service via Web-ATM. We have combined the branding value found in traditional branches with the security and convenience of online payment service.

We also provide customized wealth management services to customers with investable assets of at least NT$300,000 with us. These customers typically purchase more products and services from us than other customers. Our customized wealth management services include financial planning and investment advice tailored to such customer’s needs, as well as individual financial advisors.

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Despite the economic downturn beginning in the second half of 2008, our wealth management business reported strong growth. Our funds and insurance under management totaled NT$33.6 billion, NT$47.1 billion and NT$53.4 billion as of December 31, 2010, 2011 and 2012, respectively. As of September 30, 2013, we had NT$58.8 billion of funds and insurance under management. Moreover, with strong investment product promotions, our total investment fee income (including insurance) totaled NT$580.8 million and NT$668.6 million as of December 31, 2011 and 2012, respectively. Our total investment fee income (including insurance) increased 20% to NT$588.4 million for the nine months ended September 30, 2013, from the same period in 2012. Our total investment fee income (including insurance) is expected to increase 20% to NT$800.0 million for the year ended 2013, from the same period in 2012.

Depositary Banking Services

In 2003, we began our depositary banking services, and have served as the depository of TDRs for several famous foreign corporations, including Sandmartin International Holdings Limited from China, Cal-Comp Electronics Pub Co Ltd. from Thailand and Oceanus Group Limited from Singapore. Under the deposit agreements with these issuers, we provide international depositary banking services regarding the conversion, sale and re-issuance of TDRs. Our depositary banking services ranked first in Taiwan in 2011 and 2012.

SME

We established the SME department in April 2010 and accomplished the first new case in July 2010. As of September 30, 2013, the new drawdown to SME customers was NT$4.0 billion while the loan outstanding to SME customers was approximately NT$4.6 billion, representing an increase of 81.9% compared with the year ended December 31, 2012. We consider SME one of our growth areas, which helps us to grow new customer base as well as increase our profit margins.

Risk Management

Credit Risk

Corporate Banking . We engage in stipulating stable, precise corporate banking lending and after-loan management processes to control asset quality. We also maintain an appropriate ratio of lending industries, centralize management of corporate lending risk and regularly adjust when necessary industry or corporate ratios in accordance with economic performance, industry trends and our operating policy to diversify and reduce risk. In addition, through after-loan management, interim credit line granting process and lending pre-warning systems, we aim to impose real time risk monitoring to take early responsive measures against potential problematic loans.

Consumer Banking and Credit Card Business . Our lending policy takes into consideration the principle of risk dispersal, and defines the lending ratio of mortgage, unsecured loans and credit card receivables in order to ensure proper distribution of asset portfolio risk. We strengthen the operation of credit cycle, through Product Profit Report (PPR) and Net Credit Loss (NCL) evaluations to expound on product risk limits. We also implement additional approval management, interim credit line granting and second review mechanisms in order to trace risk and re-evaluate risk. Business managers and risk managers hold meetings regularly to examine lending portfolios and credit risk to ensure steady growth.

SME Business . To control our asset quality in connection with loans to our SME customers, we mainly focus on loans that are guaranteed by the Small and Medium Enterprise Credit Guarantee Fund of Taiwan, or loans that are otherwise secured by real estate mortgage. Also, we aim to avoid concentration to single customers and thereby divert the risks. We set up our target NPL ratio based on the estimated return as well as potential credit risk. In addition, we adjust our risk management policy based on quarterly evaluation on the operation performance and asset quality, as well as overall economic condition and market competition.

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Operational Risk

With independent internal auditing, we examine execution of our operations risk management. We set up follow-up mechanisms regarding areas for improvement, and presents verification checking results in a timely manner to the Board of Directors. In order to strengthen our internal controls and prevent damages, each business unit has established a self-auditing system and requires the Auditing Department to implement general auditing and special auditing at each business unit. We also employ a Compliance Officer system to ensure that we strictly abide by all regulations.

To manage operational and management process risk, we evaluate the frequency and severity of macro events, and strive to lower asset loss and impact by way of insurance, outsourcing, and/or write-offs. We have also set up information safety control guidelines conforming to the requirements of BS7799 Information Security Management Systems, including IT safety policies, process, supervision, audit and educational training to mitigate information risk.

Market Risk

We control trading risk held by every trading unit around various financial instruments and even whole trading room risk by setting up certain positions from specific clerk, stop-loss limits for all positions to different financial instruments and products to control market risk within a reasonable range. Special staff and teams check twice daily at noontime and end of day to review results, immediately square positions when reaching limits, and evaluate each day’s gains or losses of un-squared positions.

Risk management personnel from the Middle Office, work independently from Front Office and Back Office staff, yet belong to the Risk Management Department. They monitor trading exposure positions and maintain risk control mechanisms, and directly report to high-level managers, if not executives, who are not involved in the trading business.

Liquidity Risk.

We control and reduce liquidity risks by maintaining access to stable, low-cost and adequate deposits and liquid assets. We also monitor adequacy of liquidity and conducts periodical stress test and reviews on risk management goals to minimize liquidity risks.

Credit Administration and Policy

Consistent with our prudent approach to credit risk management, we believe we have maintained stringent credit standards since our inception. As of December 31, 2010, 2011 and 2012, we had an NPL ratio of 0.50%, 0.22% and 0.46%, respectively. As of September 30, 2013, our NPL ratio was 0.36%, compared to the industry average of 0.45% for all banks in Taiwan as of September 30, 2013.

Our credit risk management function is independent of our sales and marketing function. We manage credit risk by lending to a diverse base of consumer and corporate customers in various industrial and geographic sectors. To improve asset quality, we delegate lending authority to credit approval officers based not only on rank and experience but also on annual performance appraisals and individual track records.

Under our independent risk management department, two specialized teams, namely the corporate banking team and consumer banking team, directly manage risk with regard to the respective business groups. Meanwhile, we have instituted both department-specific and bank-wide general lending guidelines for use in the review of loan applications. Our general lending guidelines require a review of the “5P” categories of information:

• People —for an individual customer, the integrity and the financial background of the applicant; for a corporate customer, the integrity, background and experience of key members of the applicant’s management team;

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• Purpose —the proposed use of the loans;

• Payment —the applicant’s ability to pay interest and repay principal based on an analysis of current and forecasted cash flow, the ability and willingness to make payment and other items;

• Protection —in the case of secured loans, the value of proposed collateral; and

• Perspective —for an individual customer, the applicant’s employment potential; for a corporate customer, the business prospects of the applicant and its industry.

We strictly follow the restrictions on credit concentration on non-related parties or affiliates (as defined in the ROC Banking Law) set forth in the guidelines issued by the FSC on January 28, 2010. See “Regulation of the ROC Banking Industry—Asset Quality and Lending Requirements—Restrictions on credit exposure to nonrelated parties”.

Consumer Credit Administration

The consumer banking credit control unit under the risk management department is responsible for the consumer loan approval process. As of September 30, 2013, the consumer banking credit control unit had 37 credit approval officers responsible for the review and approval of all consumer loan applications. In addition, the consumer banking credit control unit has a separate team of qualified appraisers responsible for appraising the value of collateral. Credit approval policies are based on written guidelines, which are periodically reviewed and revised by our board of directors. These guidelines require a review of a variety of factors, including customer type, the customer’s ability to repay, payment records, use of proceeds, collateral requirements and the length of time a borrower has been our customer. As part of our consumer loan application process, we conduct telephonic interviews with all applicants and contact personal references provided by the applicants. We also refer to any credit history information on applicants that is available from the Joint Credit Information Center of Taiwan.

Credit Card Credit Administration

The credit card control unit under the risk management department is responsible for the credit card approval process. As of September 30, 2013, the credit card control unit had 30 credit approval officers responsible for the review and approval of all credit card applications.

When considering credit card applications, we refer to information on applicants, including payment records and credit lines that are available from the Joint Credit Information Center of Taiwan.

Consistent with our strategy of focusing on developing good quality credit card revolving balances and enlarging the total number of active credit cards in force, we selectively approve new credit card applications. For the nine months ended September 30, 2013, our approval rate for new credit card applications was approximately 80.69%.

Corporate Credit Administration

The credit risk management (corporate banking) department and the credit committee are responsible for corporate credit risk management. The credit risk management (corporate banking) department reviews and investigates loan applicants, and, based on such review and investigation, the credit risk management (corporate banking) department submits a written recommendation to the credit committee for further action. The credit committee, whose members consist of two executive vice presidents, the head of the credit risk management (corporate banking) department and various managers in the Corporate Banking Group, meets weekly to review large credit applications and the status of our credit exposure. We require at least five senior managers,

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representing senior management, credit risk management and corporate banking, to be present for such weekly meeting of the credit committee. From time to time, we review credit policies to manage our exposure to different industries, groups and individual borrowers.

Our corporate loan application, review and approval process generally consists of three stages. In the first stage, a loan officer interviews the loan applicant and prepares a loan application for the applicant. This loan application includes a credit analysis on such applicant. The credit risk management (corporate banking) department then conducts a review of the loan application and the credit analysis included therein and makes a recommendation In the second stage, the loan application, together with all supporting documentation and the written recommendation of the credit administration department, is submitted to the credit committee for review. The credit committee makes a recommendation on each loan application, but does not itself approve the making of loans. In the final stage, after taking into account the credit committee’s recommendation, loans are approved by an executive vice president, the general manager, our board of managing directors or our board of directors, depending on the authority.

We conduct on-going monitoring and periodical formal reviews of our outstanding corporate loans. Approximately two months after a corporate loan is disbursed, a group of personnel who were not involved in the original review and approval of the corporate loan will conduct a comprehensive review and check to confirm that the loan documentation is complete and that all collateral is in place. We conduct formal reviews of loans exceeding NT$10 million on a semi-annual basis to determine the borrower’s compliance with the loan agreement and the borrower’s financial and business condition. We also conduct quarterly reviews of loans with an inferior risk rating that are on our watch list. Special reviews are conducted immediately for loans to borrowers whose creditworthiness has deteriorated due to changes in the market or industry conditions or whose financial status or business condition has reportedly declined.

Distribution

We recognize the importance of utilizing a broad network of distribution channels to increase our sources of income and enhance our reputation and brand recognition. Our distribution network includes full branches, minibranches, Internet banking platform, mobile banking platform, automated service machines and 24-hour phone banking. As part of our long-term strategy for developing and integrating both our traditional and technologybased channels, we aim to offer customers convenient access while enhancing our overall operating efficiency.

The following table sets forth the percentage of banking transactions conducted for the nine months ended September 30, 2013 through our different types of distribution channels, measured in number of transactions. The number of transactions conducted through the technology-based platform represented 60.9% of the total transactions.

Banking transactions by type Automated service machines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Phone banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Internet banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total technology-based banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total branch walk-in . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total banking transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	As of September 30, 2013	As of September 30, 2013
	Number of Transactions % of Total Transactions (in thousands, except percentages) 14,037 55.3% 55 0.2% 1,373 5.4% 15,465 60.9% 9,919 39.1% 25,384 100.0%	% of Total Transactions

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Branch network

As a result of the Chinfon Bank acquisition in 2010, we acquired 19 operating units as our new branches. In addition, given the rapid growth of our business, we were approved in 2010 to establish one new branch in Taipei. As of September 30, 2013, we had 54 domestic branches, about half of which are located in the greater Taipei metropolitan area. We also have an offshore banking unit. We work closely with companies within the Far Eastern Group in selecting branch locations. Seven of our branches are adjacent to offices of Oriental Securities and three are located within Far Eastern A-Mart stores and Far Eastern Department Stores in Panchiao, Taoyuan and Kaohsiung. We believe that these locations are advantageous as they facilitate customer spending and crossselling. We increasingly use our branches to provide wealth management services to our affluent customers and to cross sell different products. For example, in collaboration with Far Eastern International Securities Company Ltd., our branch located in Taipei 101 aims to provide wealth management services to high net worth individuals.

ROC government regulations prohibit banks in Taiwan from opening more than three branches each year. In 2000, the ROC government began to allow banks to establish mini-branches, which are smaller in location size and staff numbers compared to regular branches, and are only equipped to perform simple and less time-intensive transactions. Mini-branches primarily cater to consumer customers and can also be used as marketing offices and service centers.

In 2010, in view of the growing cross-strait financial businesses, we established a China-HK Regional Corporate Finance Center under our Hong Kong branch to provide direct and efficient banking services to Taiwanese corporations located in the PRC and to achieve the expansion of our business in the greater China region.

Technology-based distribution channels

We believe that technology based distribution channels are an important part of our distribution network. We are developing a number of technological solutions to improve customer service and lower operating costs. These technology based channels include Internet-based solutions for both individual and corporate customers, automated service machines, call centers, mobile banking and automated telephone banking.

In January 2010, we established our online banking platform, FE Direct, to offer an integrated online services package, including NT-dollar deposits, foreign currency deposits, Happy Go inside debit card, fund investments and Web ATM. We also provide the customer who subscribes to FE Direct service with a debit card which contains all functions of a normal debit card and a Happy Go bonus point account. FE Direct is positioned to provide a more convenient services package to our existing customers and generate additional business by attracting customers who are accustomed to handle matters through Internet. As of September 30, 2013, FE Direct had successfully acquired 22,035 customers in force with total NT$3.7 billion outstanding deposits, equivalent to one well-established branch scale.

Customer Relationship Management

We use our customer relationship management, or CRM, system to promote cross-selling of products and services, improve services and manage credit risks. Our centralized database is shared by all of our business units and branches. Our CRM system enables us to collect and consolidate customer information from our distribution channels and store that information in a high-capacity database where it can be accessed for analysis.

We have built a bank-wide data warehouse and data marts. Using the data warehouse, we develop customer segmentation models for micro-segment marketing strategy setting and predictive models to increase product holdings. In the coming years, we aim to use a campaign management system to automate the campaign management process. Furthermore, the data warehouse will be linked to our CRM system to facilitate data exchange and will be fully integrated with our CRM system to enhance and further leverage our relationships

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with our customers. We have formed the business analytical teams across SBUs, and have more than 25 big data specialists that have been trained for data mining. By utilizing statistics, econometrics, computer modeling and industry expertise, we believe that the following benefits can be achieved:

• creating 360 degree customer view;

• improving customer analysis, marketing activity plan and credit risk analysis ability;

• leveraging new relationships with customers;

• improving new product acceptance rates;

• decreasing time-to-market;

• increasing advertising effectiveness;

• decreasing marketing expenses; and

• better identifying cross-selling opportunities within different groups.

We have built a state-of-the-art call center system which enables our customer service staff to provide high quality service to our customers and to engage in cross-selling appropriate products and services to our customers.

Information Technology

To remain competitive and to sustain our future growth, we are committed to the ongoing development, maintenance and use of technology throughout the organization to improve our service quality and management efficiency.

Electronic banking and mobility is our IT strategy focus. We have retail internet banking, corporate internet banking and FEIB Direct banking to serve different customer segments for many years. In October 2013, we launched internet margin trade platform and CB option platform for financial market customers. In September 2013, we cooperated with Mastercard and launched an exclusive pilot member project that adopted MasterCard-in-control mechanism for internet credit card payment. We also encourage customer to use QR code for credit card bill payment. In August 2013, we successfully launched the NFC pilot and happy-go loyalty redeem app for iOS and Android platform. This app can support location-based campaign and online-to-offline, or O2O, business model.

Understanding that we are in the big data era, we redesigned our data warehouse architecture to support cross sales and risk management in June 2013. We use the SAS analytical platform as the analytical facility for our business analytical teams and management information system (“MIS”) team across SBUs. We are also improving and further developing our customer segmentation model and cross-sell and up-sell predict model in order to improve product penetration rate of our retail customers.

To leverage the technology of cloud computing, we started to use virtualization technology in 2011 and launched several system consolidated projects to build cloud-enabled data center and hybrid IT.

We are committed to providing secured and reliable information services. We implement ISO information security control norms and best practice. We were certified with ISO/IEC 28001 in 2006, and continued to receive BSI international organization semi-annual reassessments certification.

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Employees

We had 2,778 employees as of September 30, 2013, including 751 employees in individual banking, 172 employees in corporate banking, 927 employees in consumer banking and credit cards, 52 employees in finance markets and 876 employees in other business activities. The 2,778 employees included 320 employees from service dispatching company as of September 30, 2013. We had 2,689, 2,926 and 2,849 employees as of December 31, 2010, 2011 and 2012, respectively. During the past three years, we have not experienced any material changes in the number of our employees. We believe that our employees are the most important element of our company and that professional training is one of our key responsibilities. We have devoted significant attention and resources to recruit and train our employees in order to enhance their professional capabilities and to instill the qualities that are essential to enable us to realize our long-term goals.

We provide on the job training as well as training in classrooms. Training programs are aimed at capabilities management, which include professional competencies, human competencies and business competencies. From January 2011 to September 2013, we have conducted 650 in-house training sessions and 533 outside training programs. We recruit from the top universities in Taiwan as well as from other financial institutions. We believe that a high degree of customer satisfaction can only be achieved by satisfied employees. We provide benefits that include staff loans and medical, educational and other allowances. We believe that we have created an attractive work environment for our employees. Our employees are not unionized. We currently do not have any employee stock option plan.

Properties

Our headquarters and our registered office are located at 1st Floor, No. 205, No. 207 and No. 209 and 2nd Floor, No. 203 and No. 207, Section 2, Tun Hwa South Road, Taiwan, ROC. We currently lease properties with an aggregate floor area of approximately 59,930 square meters, including our registered office, and we own properties with an aggregate floor area of approximately 45,420 square meters. Of our 55 locations, we currently own seventeen and lease the remainder. All our owned and leased properties are covered by insurance covering risks, including fire, typhoon and floods, up to their respective replacement values. We also maintain occupier’s liability insurance in relation to our properties. We believe that our owned and leased properties are adequate for the conduct of our businesses for the foreseeable future.

Insurance

We have maintained insurances in line with our industry practice, including electronic equipment insurance, public liability insurance, commercial fire insurance, banker blanket bonds insurance, bankers deposit box liability insurance and liability insurance for directors and supervisors.

Legal Proceedings

We are engaged in certain routine legal actions incidental to our businesses. We are not or have not been involved in any litigation, arbitration or administrative proceedings, whether pending or threatened, which may have or have had during the previous 12 months a significant effect on our financial position.

Credit Rating

For foreign currency borrowings, Fitch Ratings Limited has given us a long-term credit rating of “BBB-” and a short-term credit rating of “F3”, with a “negative” outlook (applies to “long-term foreign-currency IDR”). For national rating, we have been given a long-term credit of “A(twn)” and a short-term credit rating of “F1(twn)”, with a “negative” outlook (applies to “ national long-term rating”).

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Subsidiaries

The following table sets forth certain information as of December 31, 2012, regarding our subsidiaries (all issued shares in these subsidiaries and affiliates are fully paid and non-assessable):

Name and registered address Far Eastern Life Insurance Agency Co., Ltd (“Far Eastern Life Insurance”) 6F-3, No. 189 Yan Ping South Road, Taipei, Taiwan . . . . . . . . . . . Far Eastern Property Insurance Agency Co., Ltd.(“Far Eastern Property Insurance”) 6F-3, No. 189 Yan Ping South Road, Taipei, Taiwan . . . . . . . . . . . Far Eastern Asset Management Co., Ltd.(“FEAMC”) 4F- 1, No. 267 Dun Hwa South Road, Sec. 2, Taipei, Taiwan . . . . . Far Eastern International Securities Co., Ltd.(“FEIS”) 51F, No. 7, Xinyi Road, Sec. 5, Taipei, Taiwan . . . . . . . . . . . Far Eastern Insurance Brokerage Co., Ltd.(“FEI Brokerage”) 51F, No. 7, Xinyi Road, Sec. 5, Taipei, Taiwan . . . . . . . . . . .	Carrying amount of our investments as of December 31, 2012 (in NT$ thousands) 356,360 17,356 595,756 211,104 4,686	Percentage of common shares owned by us as of December 31, 2012 % 100.00 100.00 100.00 100.00 100.00	Date of incorporation July 21, 1999 March 3, 2003 January 29, 2004 June 26, 2008 February 9, 2009	Main business
				Life insurance agent Property insurance agent Purchase, evaluation, auction and management of creditor’s rights to financial institutions Foreign securities broker, wealth management and offshore fund consulting Insurance brokerage

As of and for the nine months ended September 30, 2013, our participating interest in each of our subsidiaries represented less than 10% of our share capital and reserve, and the profit from each of our subsidiaries accounted for less than 10% of our net profit.

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Competition

We face substantial competition in each of our product and service lines. We compete principally with other domestic commercial banks in Taiwan, but also face competition from a number of other financial institutions including foreign banks and, to a lesser extent, various other types of domestic banking institutions.

The Taiwan banking industry comprises of banking institutions of various sizes and functions, including domestic commercial banks, domestic specialized banks, domestic medium business banks, foreign banks, credit cooperatives, credit departments of farmers’ and fishermen’s associations and bills finance companies. Despite this highly fragmented market structure, we will seize the opportunities of cross-strait financial business, continue to pursue the developments with our four pillar strategies: “steady growth, niche market, portfolio management, and new initiatives”, maintain leadership position of our niche products, develop civilian-economy products, focus on high net worth clients, increase capital level and strengthen asset quality. Through integrating Group synergies, we are committed to develop new business models of mobile payments and aggressively seek market growth momentum. We are ready to enter the Greater China market with new branches for RMB businesses. Faced by the upcoming challenges and opportunities, we strive to create greatest possible value for our customers, shareholders, and employees.

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MANAGEMENT

General

The ROC Company Law and our Articles of Incorporation provide that (1) our board of directors is to be elected by our shareholders in a shareholders’ meeting at which a quorum, consisting of a majority of all the issued shares having voting rights, is present, and (2) our managing directors are to be elected by the majority of our directors at a meeting at which two-thirds of our directors are present.

Our directors and supervisors are elected at the same time for a three-year term unless one-third or more of the directorships are vacant, at which time a shareholders’ meeting is convened to elect directors to fill the vacancies. The current term of our directors and supervisors expires on June 26, 2015. Directors may serve any number of consecutive terms and may be removed from office at any time by a resolution adopted at a shareholders’ meeting.

The Chairman is a director elected by the managing directors, who in turn have been elected by the board of directors. The Chairman of our board of directors presides at meetings of our shareholders, meetings of our board of directors and also represents us in connection with external matters.

The board of directors is responsible for the management of our business and the members of the board of directors have fiduciary duties to our Company and our shareholders. Our Articles of Incorporation provides that the board of directors shall meet once per quarter.

Our Articles of Incorporation provide for three to five supervisors. According to the ROC Company Law, our supervisors are elected by our shareholders and cannot concurrently serve as our directors or officers or have any staff position with us. Their duty is to oversee our activities and the activities of the board of directors. They have the power to, among other things, investigate our business and financial condition, inspect corporate records, verify statements prepared by the board of directors prior to the annual general shareholders’ meeting, call shareholders’ meetings if they deem it necessary, and represent us in negotiations with directors. In addition, supervisors have the power to request the board of directors to cease acting in contravention of applicable laws or regulations or in contravention of the Articles of Incorporation or any resolution adopted by our shareholders. When conducting investigations, supervisors may engage independent experts at our cost.

Six out of nine of our directors and all of our three supervisors serve in their capacity as representatives of the corporate entities which hold the board or supervisor seats and do not serve in their individual capacities. Consequently, if any of the individuals who serves in the capacity as representative of the corporate entity who holds the board or supervisor seat withdraws, dies or otherwise becomes unable to serve, the corporate entity he or she represents has the ability to replace that person with a different representative of its choice.

Our Articles of Incorporation provide for nine to fifteen directors. In addition, at least two directors and not less than one-fifth of our directors shall be independent. Our board of directors is currently comprised of nine board seats. We also have three supervisors. Two of our directors are independent directors. Independent directors of a public company shall have working experience of five years or more and meet one of the following qualification requirements:

• An instructor or higher level in a department of commerce, law, finance, accounting, or other academic department related to the business of the company in a public or private junior college, college, or university;

• A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the company; and

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• Having work experience in the area of commerce, law, finance, or accounting, or otherwise necessary for the business of the company.

To be qualified as an independent director of a public company, one shall not concurrently serve as independent director of more than three other public companies. In addition, directors will be deemed “independent” only if, for at least two years prior to their election, they (1) are not employed by our Company or our affiliates; (2) are not directors or supervisors (other than as independent directors or supervisors) of company affiliates; (3) do not directly or indirectly hold over 1% of our Shares and are not ranked among the top ten individual shareholders of our Company; (4) are not married or related within the second degree or lineally related within third degree of employees of our Company or our affiliates, directors and supervisors of our company’s affiliates, holders (directly or indirectly) of over 1% of our Shares or shareholders who are ranked among the top ten individual shareholders of our Company; (5) are not directors, supervisors or employees of corporate shareholders which directly or indirectly hold more than 5% of our Shares or ranked among the top five corporate shareholders of our Company; (6) are not directors or supervisors, managers or holders of more than 5% of shares of a company or institution with which our Company has a financial or business relationship; and (7) are not a (or a spouse of a) partner, director, supervisor or manager of providers of financial, commercial or legal services to our Company or our affiliates. In addition, to be deemed as “independent,” directors must be elected in their individual capacities.

Each of our directors, supervisors and senior executive officers listed below can be reached at our representative office located at 27F., No. 207, Sec. 2, Tun Hwa South Road, Da-an District, Taipei City 106, Taiwan.

Directors and Supervisors

The following table sets forth, for each of our directors and supervisors, their name, position held and age as of September 30, 2013.

Name Ching-Ing Hou(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Douglas Tong Hsu . . . . . . . . . . . . . . . . . . . . . . . . . . . Shaw Y. Wang(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tsung-Ming Chung(3) . . . . . . . . . . . . . . . . . . . . . . . . . Eli Hong(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thomas Chou(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Min-Teh Yu(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ben C.B. Chang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bing Shen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Humphrey Cheng(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . Shi-Chun Hsu (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Linin Day(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Position Age Chairperson 81 Vice Chairman 72 Executive Director 74 Executive Director 64 Director 67 Director 63 Director 52 Independent Director, Managing Director 67 Independent Director 64 Resident Supervisor 57 Supervisor 76 Supervisor 75

Notes:

(1) Representative of Yu Ding Industrial Co., Ltd.

(2) Representative of Oriental Union Chemical Corp.

(3) Representative of Oriental Union Chemical Corp.

(4) Representative of Ta Juh Chemical Fiber Co., Ltd.

(5) Representative of Asia Cement Corp.

(6) Representative of Asia Cement Corp.

(7) Representative of Far Eastern New Century Corp.

(8) Representative of Far Eastern New Century Corp.

(9) Representative of YDT Technology International Company.

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Set forth below is a short biography of each of our directors and supervisors:

Ching-Ing Hou is the chairperson of our board of directors. Ms. Hou is also a director of Southern Taiwan University of Science and Technology. Formerly, Ms. Hou served as the chairperson of Taiwan Academy of Banking and Finance, a supervisor of Far Eastern New Century Corporation, and a professor in the Department of Money and Banking at National Chengchi University. She holds a master’s degree in economics from Vanderbilt University, and another master’s degree in economics from National Taiwan University.

Douglas Tong Hsu is the vice chairman of our board of directors. He is also the chairman of Far Eastern New Century Corporation, Far Eastern Department Stores Ltd., Oriental Union Chemical Corp., Far EasTone Telecommunications Co., Ltd., Asia Cement Corporation, and U-Ming Marine Transport Corporation. Mr. Hsu has 25 years of experience in the banking industry and holds a masters degree in arts from Notre Dame University and also studied economics at Columbia University. Mr. Hsu holds an honorary doctorate degree in management from National Chiao Tung University.

Shaw Y. Wang is our managing director. Mr. Wang is also a director and the first senior executive vice president of Far Eastern New Century Corporation, a director of Yuan Ze University, and a resident supervisor of Asia Cement Corporation. Mr. Wang has 20 years of experience in the banking industry and holds a bachelor’s degree from the National Chung Hsing University and studied business administration at the National Taiwan University.

Tsung-Ming Chung is our executive director. Mr. Chung is also the chairman of DynaPack Corporation, a director of Unity Opto Technology Co., Ltd., an independent director of Taiwan Mobile Co., Ltd., and an independent director of Chroma Ate Inc. Mr. Chung is a CPA in Taiwan and the United States. He holds a master’s degree in business administration from National Chengchi University and a bachelor’s degree from National Taiwan University.

Eli Hong is our director and president. Mr. Hong is also a supervisor of Far EasTone Telecommunications Co., Ltd., a director of FEAMC, and a director of Deutsche Far Eastern Asset Management Co., Ltd. Prior to joining us in 1996, he served as a vice president at Citibank Taipei Branch and an executive vice president at International Bank of Taipei. Mr. Hong has more than 40 years of experience in the banking industry. Mr. Hong holds a bachelor’s degree in economics from National Chung Hsing University. Mr. Hong also studied in the business administration program at the Darden School of the University of Virginia and attended Financial Institutions for Private Enterprise Development at Harvard University.

Thomas Chou is our director and chief executive vice president. Mr. Chou is also the chairman of the board of directors of Far Eastern Life and Property Insurance Agency Company, a director of Dah Chung Bills Finance Corporation, FEAMC, Far Eastern International Securities Co., Ltd., Yuan Lung Stainless Steel Co., Ltd., Ding Ding Integrated Marketing Service Company, and Cosmos Foreign Exchange International Co., Ltd. Prior to joining us in 1996, Mr. Chou served as the vice president of American Continent Bank and the vice president of the regional credit control office of ABN AMRO Bank, N.E. Asia and head of the Kaohsiung Branch of ABN AMRO Bank. Mr. Chou has 38 years of experience in the banking industry and holds a bachelor’s degree in banking from National Chengchi University.

Min-Teh Yu is our director. Dr. Yu is also a chair professor and a director at the Graduate Institute of Finance of the National Chiao Tung University, and an independent director of JMicron Technology Corporation. Formerly, Dr. Yu was the president of Providence University, and served as the dean and professor at the College of Management, Yuan Ze University and a consultant at the Asian Development Bank. Dr. Yu has 17 years of experience in the banking industry and holds a Ph.D. and a master’s degree in economics from the Ohio State University and a bachelor’s degree in economics from the National Taiwan University.

Ben C.B. Chang is our independent director and managing director. Mr. Chang is also a director of Polytronics Technology Corporation, a director of Topology Research Inc., an independent director of Raydium

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Semiconductor Corporation, Pegatron Corporation, and Scientech Corporation, and a supervisor of Dynapack Corporation. He is also a lecturer at National Chengchi University and Fu Jen Catholic University. He also served as an executive director of Hotung Investment Holdings Limited, the general manager of Hotung International Co., Ltd., and the executive vice president of China Development Industrial bank. Mr. Chang holds a master’s degree in statistics from National Chengchi University.

Bing Shen is our independent director. Mr. Shen is also an independent director of Far Eastern New Century, a supervisor and chairman of the audit committee of CTCI Corporation, and an independent non-executive director and chairman of the audit committee of Delta Networks (Cayman) Inc. and an independent director of the Taiwan Fund, Inc. Prior to his current positions, Mr. Shen served as a vice president and executive director of Morgan Stanley, an executive vice president of China Development Industrial Bank, and the president of CDIB & Partners Investment Holding. Mr. Shen holds a master’s degree in business administration from Harvard Business School.

Humphrey Cheng is our resident supervisor. Mr. Cheng is also the executive vice president of Far Eastern New Century Corporation, the chairman and Ding Ding Integrated Marketing Service Company of Deutsche Far Eastern Asset Management Company Limited, a director of Oriental Union Chemical Corporation, and a supervisor of FEAMC. He holds a bachelor’s degree in laws from National Chung Hsing University.

Shi-Chun Hsu , is our supervisor. Dr. Hsu is also the Far Eastern Distinguished Professor of Management at Yuan Ze University, the president of Chinese Management Association, the founding dean of the College of Management at National Taiwan University, and an independent director of United Microelectronics Corporation and Faraday Technology Corporation and a director of Chi Chang Enterprise Co., Ltd. He has also served as chairman of Bank of Kaohsiung. Dr. Hsu has 17 years of experience in the banking industry and holds a Ph.D. degree in economics and a master’s degree in business administration from the University of Michigan, a master’s degree from National Chengchi University, and a bachelor’s degree from National Taiwan University.

Linin Day is our supervisor. Mr. Day is also a director of Yuan Ze University, Taiwan Navigation Co., Ltd., and Firich Enterprise Co., Ltd. Prior to his current positions, Mr. Day served as the vice Minister of the Ministry of Finance of ROC, and the chairman of Bank of Overseas Chinese. He holds a master’s degree in law from Harvard University.

Executive Officers

The following table sets forth certain information relating to our executive officers, each of whom is appointed to serve in that capacity by our board of directors.

Name Eli Hong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thomas Chou . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.C. Huang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jiann-Jong Lin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ben Liao-Ru . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Alan Lee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Joanna Yang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lonnie Liu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kung-Ping Wu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Roy Lu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Position Age President 67 Chief Executive Vice President 63 Executive Vice President 63 Executive Vice President and Head of Corporate Banking Group 57 Executive Vice President and Head of Financial Markets Group 57 Executive Vice President and Head of Consumer Banking and Credit Card Group 58 Executive Vice President and Head of Individual Banking Group 44 Special Assistant, Head of O & T Group and Head of Operation Service Department 54 Chief Auditor 68 Senior Deputy Executive Vice President and Head of Risk Management Department 60

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Set forth below is a short biography of each of our executive officers, other than Eli Hong and Thomas Chou, whose biographies are set forth under “—Directors and Supervisors”:

G.C. Huang is our executive vice president. Mr. Huang is also the chairman of FEAMC. Prior to joining us in 1996, MR. Huang was a deputy manager of Chinfon Commercial Bank Co., Ltd., and a deputy manager of Citibank N.A., Taipei Branch. Mr. Huang holds a bachelor’s degree in business from National Taiwan University.

Jiann-Jong Lin is our executive vice president and the head of the Corporate Banking Group. He is also a director of Hsu Wei Industry Co., Ltd. and a director of Far Eastern Property Insurance Agency Company. Prior to joining us in 2003, Mr. Lin was a senior vice president of International Bank of Taipei, an assistant vice president of First Interstate Bank of California, Taipei Branch, and an assistant manager of Citibank N.A., Taipei Branch. He holds a master’s degree from Louisiana State University.

Ben Liao-Ru is our executive vice president and the head of Financial Markets Group. Prior to joining us in 1998, Mr. Liao-Ru was the head of the Treasury Department at Kredietbank N.V. Taipei Branch, a vice president at Toronto Dominion Bank Taipei Branch and an assistant division chief at the Export-Import Bank of the ROC. He holds a master’s degree in business administration from the American Graduate School of Business Administration of International Management of the Thunderbird University.

Alan Lee is our executive vice president and the head of Consumer banking and Credit Card Group. Mr. Lee is also a director of Far Eastern Life Insurance Agency Company. Prior to joining us in 2008, Mr. Lee was an executive vice president of Nan Shan, a vice president of the Hongkong and Shanghai Banking Corporation, and an assistant vice president of Citibank N.A., Taipei Branch. He holds a master’s degree in business administration from the National Chengchi University.

Joanna Yang is our executive vice president and the head of the Individual Banking Group. Ms. Yang is also a director of Far Eastern Life and Property Insurance Agency Company and a director of Far Eastern International Securities Co., Ltd. Prior to joining us in 2008, Ms. Yang was a senior vice president of the Hongkong and Shanghai Banking Corporation, a deputy executive vice president of the Chinatrust Commercial Bank, and a manager of Citibank, N.A., Taipei Branch. Ms. Yang holds a master’s degree in integrated marketing communications from Northwestern University.

Lonnie Liu is our executive vice president, the head of O & T Group and the head of Operation Service Department. Prior to joining us in 2004, Mr. Liu served as an executive vice president of Nan Shan, a manager of KPMG Consulting, Asia Pacific, a manager of New York Bank, and a project manager of Bankers Trust. He holds a master’s degree in information systems from New York University.

Kung-Ping Wu is our chief auditor. Prior to joining us in 1996, Mr. Wu was the president of the Seven Credit Cooperative of Taipei, a special committee member of Standard Bank, a manager of Han-Hua Securities, and a deputy manager of Taipei Bank. Mr. Wu holds a bachelor’s degree in economics from National Chung Hsing University.

Roy Lu is the senior deputy executive vice president, and the head of Risk Management Department. Prior to joining us in 1999, Mr. Lu was a deputy manager of CTBC Bank Co., Ltd., a vice president of Credit Lyonnais SA, a manager of Grindlays Bank, and a deputy manager of Banque Paribas. Mr. Lu holds a master’s degree in business administration from the National Chengchi University.

Compensation

The aggregate remuneration paid and benefits in kind granted by us to our directors, supervisors and executive officers in their capacity as such during 2012 was NT$112.7 million, including NT$28.5 million paid to our directors, NT$5.1 million paid to our supervisors and NT$79.0 million paid to our executive officers. We have not granted any stock options for our management and employees.

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Interests of Management in Certain Transactions

We have from time to time provided loans or loan guarantees to our directors, supervisors and executive officers. As of September 30, 2013, the aggregate amount of these outstanding loans and loan guarantees, including transactions with other related parties defined by the Regulations Governing the Preparation of Financial Reports by Securities Issuers, was NT$52.66 million. In addition, certain of our directors, supervisors and executive officers also serve as directors, supervisors or executive officers of companies with which we do business. These companies include our affiliates and other related parties. See “Transactions with Related Parties” and Note 30 of the notes to our financial statements as of and for the years ended December 31, 2010, 2011 and 2012 and Note 40 of the notes to our financial statements as of and for the nine months ended September 30, 2012 and 2013, both included in the F-pages of this offering memorandum. We conduct these transactions on an arms’ length commercial basis.

None of our directors who are not representatives of our controlling shareholders, or supervisors or executive officers have or have had interests in transactions which are or were unusual in their nature or conditions or significant in relation to our business or any of our subsidiaries and which were effected by us during the current or immediately preceding fiscal year or were effected during an earlier year and remain in any respect outstanding or unperformed.

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REGULATION OF THE ROC BANKING INDUSTRY

The following is a summary of the significant laws and regulations of the ROC relating to banks. Unless otherwise noted, all of the governmental authorities referred to below are governmental authorities of the ROC.

Regulatory Authorities

The banking industry in Taiwan is primarily subject to the legal framework under the ROC Banking Law. The ROC Banking Law sets forth the general regulations that govern the banking business, provides protection to depositors, facilitates the development of productive enterprises and coordinates the operation of bank credit with the national financial policy of Taiwan.

The FSC and the CBC supervise the banking industry under the ROC Banking Law as follows:

FSC

The FSC is the single financial regulator that supervises the financial industries in Taiwan, including banking, insurance and securities and futures markets. The FSC is in charge of the development, regulation and supervision of the banks, which is also responsible for bank licensing and establishing and enforcing rules on lending, investment and other banking activities. It has quasi-judicial powers based on the Financial Supervisory Commission Organization Act to conduct financial examination and submit the cases that involve criminal violations to the district prosecutors for further action.

CBC

The CBC regulates monetary and credit policy via open market operations, reserve ratios, and certain credit controls that are used to channel funds to particular economic sectors. The CBC also manages official foreign exchange reserves, issues currency, and acts as the fiscal agent of the government. Support can be extended to banks through a lender-of-last-resort facility provided by the CBC. The Governor of the CBC is appointed for a term of five years.

Licensing of Taiwan’s commercial banks

Under the ROC Banking Law, in order to commence a commercial banking business, an applicant must first obtain a special permit from the FSC. After obtaining a special permit, an applicant must then incorporate as a company limited by shares and register with the MOEA.

Subsequently, the applicant must apply to the FSC for a commercial banking license. The Standards for the Establishment of Commercial Banks issued by the FSC provide that commercial banks must have a minimum paid-in capital of NT$10 billion.

Restrictions on scope of business

Under the ROC Banking Law, a bank may only engage in businesses specifically permitted within its approved scope of business. In order to engage in foreign exchange business, a bank must obtain separate licenses or approval from the CBC. Pursuant to the ROC Banking Law, a bank must establish separate departments to conduct trust business and securities business.

Subject to the approval of the FSC and the limit set forth in the ROC Banking Law and regulations, a commercial bank may invest in non-financial related businesses but shall not engage in the operations of non-financial related businesses in which it invests. The aggregate amount of a commercial bank’s investment in

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financial related and non-financial related businesses is restricted to a maximum of 40% of its paid-in capital less cumulative losses, of which, the investment amount in nonfinancial related businesses is restricted to a maximum of 10% of the commercial bank’s paid-in capital, less cumulative losses.

Financial Requirements

Minimum capital requirement

The minimum capital requirement for commercial banks is NT$10 billion.

Capital adequacy

Under the ROC Banking Law and the Regulations Governing the Capital Adequacy Ratio and Capital Category of Banks, or the Capital Regulations, it is currently required that the consolidated capital adequacy ratio and the solo capital adequacy ratio of a bank shall not be less than 8%, respectively, and shall meet the minimum capital adequacy requirement. Pursuant to the ROC Banking Law and the Capital Regulations, banks are currently divided into the following grades:

• Adequate capitalized banks: the capital adequacy ratio is higher than 8% (inclusive) and in compliance with the minimum capital adequacy requirement;

• Under-capitalized banks: the capital adequacy ratio is higher than 6% (inclusive) but lower than 8%, or not in compliance with the minimum capital adequacy requirement set by FSC;

• Substantially under-capitalized banks: the capital adequacy ratio is higher than 2% (inclusive) but lower than 6%; and

• Critically under-capitalized banks: the capital adequacy ratio is lower than 2%. In addition, a bank will be deemed as critically under-capitalized if its net worth to total asset ratio is lower than 2%.

The FSC shall take prompt corrective actions against under-capitalized banks, substantially undercapitalized banks and critically under-capitalized banks.

Reserve requirement

Reserve requirement against deposits and other liabilities must be established in accordance with the ratios prescribed by the CBC. Effective from January 1, 2011, the reserve requirement ratios for deposits are as follows:

• Checking deposits: 10.75%

• Demand deposits: 9.775%

• Demand savings deposits: 5.50%

• Time savings deposits: 4.00%

• Time deposits: 5.00%

• Foreign currency deposits: 0.125%

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Liquidity reserve

Under the ROC Banking Law, the CBC is empowered, after consultation with the FSC, to set a minimum ratio of a bank’s liquid assets to total liabilities. The current minimum liquidity reserve ratio set by the CBC is 10%. As of September 30, 2013, our liquidity reserve ratio was 27.80%.

Solvency ratio

Under the ROC Banking Law, the FSC may, when it deems necessary, consult with the CBC to prescribe a minimum ratio of a bank’s major assets to major liabilities as well as a minimum ratio of a bank’s major liabilities to net worth. To date, the FSC has not prescribed such ratios for commercial banks.

Legal reserve

Under the ROC Banking Law, a bank must set aside at least 30% of its profit after tax of a fiscal year, after deduction of prior years’ losses and any payment of taxes, as legal reserve. A bank may be exempted from the above requirement if the accumulated legal reserve has amounted to its paid-in capital or the bank has sound financial and business condition and has set aside legal reserve in accordance with the ROC Company Act. In general, a bank shall not distribute cash dividends in excess of 15% of its paid in capital unless its legal reserve equals to or exceeds its paid-in capital.

Interest rates

Under the ROC legal framework, commercial banks are free to set and adjust their interest rates. However, pursuant to the ROC Civil Code, a creditor may not enforce payment of interest in excess of 20% per annum.

Asset Quality and Lending Requirements

Asset quality

The asset quality of financial institutions is of great concern to the ROC supervisory authorities. Generally, the evaluation process involves identifying and classifying problem assets and then assessing possible losses. Banks are required to make sufficient provisions against estimated potential losses. Banks failing to do so are subject to regulatory disciplinary actions.

According to the NPL Regulations, banks are required to classify their loans into the following five categories:

Class I . . . . . . . . . . . . . . . II . . . . . . . . . . . . . . III . . . . . . . . . . . . .	Category Normal Special Mention Substandard	Classification
		Normal loans with no payment difficulties. Fully-secured loans with respect to which principal or interest payments are overdue for more than one month but less than 12 months (inclusive); unsecured loans with respect to which principal or interest payments are overdue for more than one month but less than 3 months (inclusive); or loans not yet matured with the counterparty defaulting in other credits. Fully-secured loans with respect to which principal or interest payments are overdue for more than 12 months; unsecured loans with respect to which principal or interest payment are overdue for more than 3 months but less than 6 months (inclusive).

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Class IV . . . . . . . . . . . . . V . . . . . . . . . . . . . .	Category Doubtful Loss	Classification
		Unsecured loans with respect to which principal or interest payments are overdue for more than 6 months but less than 12 months (inclusive). Unsecured loans with respect to which principal or interest payments are overdue for more than 12 months; or the recovery of which is extremely unlikely.

Definition of NPLs

NPLs as defined under the NPL Regulations are loans with respect to which the principal or interest has been overdue for three months or more from the payment date, or has not yet been overdue for more than three months but with regard to which the bank has sought payment from primary or subordinate debtors or has disposed of relevant collateral.

If a loan, which is overdue but the borrower has agreed to repay such loan by installments, meets certain criteria and the borrower has paid such installments for over six months, and the new interest rate is not lower than that of the original loan or other loans in the same risk category, such loan may be exempted from being reported as an NPL. However, if the repayment of such loan is overdue for three months or more during the period of exemption, it shall still be reported as NPL.

The NPLs are required to be reported to the FSC.

The NPL ratio is defined as the value of a bank’s NPLs divided by total loans:

NPLs NPL ratio = Total outstanding loans

Allowance for possible losses

The NPL Regulations provide that banks must set aside a minimum allowance for possible losses as follows: 0.5% of the outstanding balance of normal loans excluding assets that represent claims against the ROC government, 2% of the balance of special mention loans, 10% of the balance of the substandard loans, 50% of the balance of doubtful loans and 100% of the balance of loss.

Effective from January 1, 2011, we prospectively adopted the third-time revised Statement of Financial Accounting Standards (SFAS) No. 34, “Financial Instruments: Recognition and Measurement.” One of the main revisions is that the impairment of loans and receivables originated should be covered by SFAS No. 34. Loans and accounts receivable are assessed for impairment at the end of each reporting period and considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the loans and accounts receivable, the estimated future cash flows of the asset have been affected. Objective evidence of impairment could, among others, include:

• Significant financial difficulty of the debtor;

• Loans or accounts receivable become overdue;

• Due to certain economic or legal considerations, the creditor has compromised to the debtor in financial difficulties; or

• The probability that the debtor will enter into bankruptcy or undergo financial re-organization.

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Loans and accounts receivable that are assessed not to be impaired individually are further assessed collectively for impairment. Factors to evaluate impairment for a portfolio of loans and accounts receivable could include our past difficulty collecting payments an increase in the number of delayed payments as well as observable changes in national or local economic conditions that correlate with defaults on loans and receivables.

The amount of the impairment loss recognized is the difference between the asset carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate of the loans and receivables after taking into account the related collaterals and guarantees. The carrying amount of the loans and accounts receivable is reduced through the use of an allowance account.

Restrictions on credit exposure

Under the ROC Banking Law, the “credit” extended by a bank includes loans, overdrafts, discounts, guarantees, bank acceptances and other business activities specified by the FSC.

Restrictions on credit exposure to related parties

In order to ensure the transparency of lending practices of banks, the ROC Banking Law regulates the extension of credit by banks to their related parties. Subject to the exceptions described below, a bank may not extend unsecured credit to a company in which the bank holds 3% or more of such company’s paid-in capital, to its responsible person, staff members or major shareholders, or to any person who is an interested party of a responsible person or a credit officer of the bank.

Under the ROC Banking Law, the term “major shareholders” means any shareholder holding 1% or more of a bank’s outstanding shares. When such shareholder is an individual, then any shares held by his or her spouse and minor children are considered as shares held by that shareholder. In addition, the “responsible person” means the responsible person as defined under the ROC Company Law, including but not limited to the directors, supervisors and managerial staff members. Finally, under the ROC Banking Law, the term “interested party” denotes one of the following categories of persons:

• (1) spouse, a relative by blood within the third degree or a relative by marriage within the second degree of the responsible person or a credit officer of the bank;

• (2) a sole proprietorship or partnership which is managed by the responsible person or by a credit officer of the bank or by an interested party referred to in (1) above;

• (3) an enterprise of which the responsible person or a credit officer of the bank or an interested party referred to in (1) above, individually or in aggregate holds or owns 10% or more of its outstanding shares or its capital;

• (4) an enterprise of which the responsible person or a credit officer of the bank or an interested party referred to in (1) above is a director, supervisor or manager, unless such office was acquired by virtue of an investment by the bank with the approval of the MOF; or

• (5) a corporate entity or other form of organization of which the responsible person or a credit officer of the bank or an interested party referred to in (1) above serves as a legal representative or administrator.

Consumer loans and loans to government enterprises are exempt from this rule. The FSC prescribes a maximum amount under which a consumer loan or revolving credit card debt will be exempted. Currently, the maximum amount for such consumer loan, including the credit card revolving debt, is NT$1,000,000. Under the ROC Banking Law, when applying the 3% rule described above, the shares owned by a bank’s affiliated

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companies, which include companies with mutual investment with the bank, companies under the bank’s control and companies in control of the bank, as defined under the ROC Company Law, or by a third-party nominee of the bank or the bank’s affiliated companies, will be taken into consideration.

Where a bank extends secured credit to its responsible person, staff members, major shareholders, any person considered to be an interested party in relation to its responsible person or credit officer or a company in which the bank holds 5% or more of the paid-in capital, the credit must be secured in full and the terms and conditions of the credit may not be more favorable to the borrower than those extended to other customers under similar conditions. In addition, among the above secured credits to related parties, the secured credits to each legal entity may not exceed 10% of its net worth and to each individual may not exceed 2% of its net worth, and the aggregate balance of the secured credits shall not exceed 150% of its net worth (such 10%, 2% or 150% ceiling, collectively, as “Credit Ceiling Limit”). Where the bank plans to extend to any of the above related parties a secured credit which would cause the aggregate credits to such person to equal or exceed the lower of NT$100 million or 1 % of its net worth, then the bank must first obtain super-majority approval at a meeting of its board of directors attended by more than two-thirds of all directors and at which at least three-fourths of the votes held by the directors present are cast in favor of such proposed loan. Under the ROC Banking Law, when applying this 5% rule, the shares owned by a bank’s affiliated companies, which include companies with mutual investment with the bank, companies under the bank’s control and companies in control of the bank, as defined under the ROC Company Law, or by a third-party nominee of the bank or the bank’s affiliated company, will be taken into consideration.

Where a bank breaches the above restrictions (other than the Credit Ceiling Limit) on the extension of credit to related persons, the person responsible for the breaching act shall be subject to imprisonment of up to three years and/or a fine between NT$5 million and NT$25 million. Where a bank breaches the Credit Ceiling Limit, the person responsible for the breaching act shall be subject to a fine between NT$2 million and NT$10 million.

Restrictions on credit exposure to non-related parties

In addition to provisions restricting bank loans to related parties, the ROC Banking Law provides that the FSC may promulgate restrictions on credits or other transactions to the same person, the same concerned party or the same affiliate as defined in the ROC Banking Law. The FSC has issued a guideline with respect to the above restrictions, last amended on January 28, 2010.

The current ceilings for extending credit to non-related parties provided by the aforesaid guideline are outlined as follows:

outlined as follows:
Borrowerprofile Each individual Each legal entity Each government-owned enterprise Each individual, together with the credit extended to his/her spouse, relatives by blood within second degree, or a company in which such individual or his/her spouse is the responsible person (excluding government-owned enterprise) Each legal entity, together with its affiliates defined under ROC Company Law (excluding government-owned enterprise)	Ceiling on Total Secured and Unsecured Credit to Net Worth of a Bank 3% 15% 100% 40% (provided that the aggregate credit extended to such individual, his/her spouse and relatives by blood within second degree shall be no more than 6%) 40%	Ceiling on Unsecured Credit to Net Worth of a Bank
		1% 5% 10% (provided that the aggregate unsecured credit extended to such individual, his/her spouse and relatives by blood within second degree shall be no more than 2%) 15%

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Other Requirements

Restrictions on investments in property

Under the ROC Banking Law, a bank may not invest in real property, except where the real property is to be used for its own business (with certain limited exceptions) and where the value of real properties (other than warehouses) does not exceed its net worth (its total assets less total liabilities) at the time of the investment. In addition, due to the wide use of warehouses by Taiwan banks for storage purposes, the ROC Banking Law specifically stipulates that a bank may invest in warehouses, provided that the total investment value does not exceed 5% of the total deposits of such bank at the time of the investment.

Under the ROC Banking Law, any real property acquired by a bank through foreclosures pursuant to mortgages must be disposed of within four years from the date of such acquisition except in certain limited circumstances.

Issuance of preferred shares and debentures

Issuance of preferred stock by a bank must be approved by its shareholders at a shareholders’ meeting. Issuance of financial debentures by a bank must be approved by its board of directors. The period of the financial debenture shall be not less than two years. Subordinated debentures are allowed. The proposed issuance must then be approved by the FSC.

Disclosure of management performance and inspections

The ROC bank disclosure regime consists mainly of compulsory periodic reporting requirements. These requirements are mandated by various rules issued by the FSC and the CBC pursuant to the ROC Banking Law. Under these rules, a bank must issue reports relating to various aspects of its operations at daily, weekly, monthly, quarterly and annual intervals to allow the FSC and the CBC to monitor the operations and financial soundness of the bank.

The ROC Banking Law and the Financial Supervisory Commission Organization Act. authorize the FSC to inspect a bank from time to time with respect to its business operations and financial conditions of the bank or its related parties, and to require the bank or its related parties to disclose financial statements and other information requested by the FSC. The Financial Examination Bureau of the FSC is in charge of the above inspections.

Deposit insurance requirement

The ROC Deposit Insurance Act provides that financial institutions having been duly approved to accept deposits, postal savings or to be consigned to manage trust funds used for the purpose designated by the financial institutions with guaranteed principal and interest shall apply to the ROC Central Deposit Insurance Corporation, or the CDIC, to participate in deposit insurance, and become insured institutions upon the review and approval by the CDIC. Banks are required to pay an insurance premium to the CDIC every six months at a rate determined by the CDIC in accordance with certain criteria. Starting from January 1, 2011, the CDIC has enacted a program to further enhance the risk-based premium system with respect to determination of the insurance premium of a bank’s insurable deposits based on the bank’s capital adequacy ratio or the minimum capital adequacy ratio. Since January 1, 2011, the maximum insurance coverage is NT$3 million, including principal and interest of deposit in New Taiwan Dollar or non-New Taiwan Dollar per depositor per insured financial institution.

Laws and regulations governing foreign exchange activities

Under the Regulations Governing Foreign Exchange Business of Banking Enterprises issued by the CBC to govern foreign exchange businesses of banking enterprises, a bank must obtain a certificate of authorization or

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letter of approval from the CBC in addition to its banking license. Upon obtaining the foreign exchange certificate, the bank may, subject to other CBC regulations, conduct businesses involving the outward and inward remittance of foreign exchange, foreign deposits and foreign lending.

Banking branches

Under the rules issued by the FSC, a commercial bank may establish up to two branches (or three branches, if certain requirements are met) per year within Taiwan, subject to the approval of the FSC. The current policy of the FSC is to freeze the banking license. Further, the branch license will only be approved under very limited circumstances.

In order to establish an offshore banking unit, a bank must obtain a special permit from the FSC, where FSC would consult with the CBC for issuing such permit.

Derivatives transactions

Under the ROC Banking Law and the Guidelines Governing Derivatives Transactions by Banks issued by the FSC, a bank may conduct derivatives transactions after obtaining a special approval from the FSC for conducting such business, provided that the bank also need to obtain separate approval from the FSC for certain derivatives products. The bank must also obtain approval from the CBC for each type of foreign currency-related derivatives product.

Electronic banking

Currently, the principal rule regarding Internet banking is the Safe Administration of Electronic Banking Business by Financial Institutions issued by the Bankers Association of the Republic of China, which provides for the monitoring and safety design of Internet banking operations. An approval from the FSC is required for any proposed banking services offered over the Internet.

ATMs

Under rules issued by the FSC, a bank must apply to the FSC to install new ATMs for any given year. The application must state the number of ATMs the bank plans to set up within that year and must be submitted to the FSC by the end of November of the previous year. There is no quota on the number of ATMs which a bank may apply to set up.

In the event that the bank seeks to set up ATMs in excess of the number approved in its application of the previous November, the bank may apply to the FSC for an approval for such additional ATMs. However, such application for additional ATMs may be made only once a year. There is no quota on the number of additional ATMs.

Prevention of money laundering

Banks are required to adopt anti-money laundering measures and keep records of transactions that the bank suspects may be money laundering transactions. In addition, the bank must have proof of identification of any customer that enters into cash transactions of which the accumulative amount equals to NT$500,000 or more in any one transaction, and make a record of such transaction.

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Ownership Restrictions

Shareholding restrictions

Under the ROC Banking Law, any person individually, or any group of related persons jointly, holding more than 5% of a bank’s total issued and outstanding voting shares, must report to the FSC within 10 days after reaching such threshold, and shall so report for every 1% increase or decrease afterwards. In the event that any person individually, or any group of related persons jointly, proposes to hold a bank’s total issued and outstanding voting shares for more than 10%, 25% or 50%, such person, or any such other related persons, respectively, must apply for the FSC approval in advance. For calculation purposes, any person that holds shares of a bank for another person or any group of related persons through trust, appointment, or any other contracts, agreements or authorizations, shall be deemed to be related persons.

Any violation of the said restrictions to the share ownership would cause the voting rights of the portion of shareholding exceeding such percentage restriction suspended, and shall be disposed of within the period prescribed by the FSC. In addition, such shareholder may be imposed a fine of NT$2 million or more, but not exceeding NT$10 million.

Further, any person, or jointly with his or her spouse or minor child, holds 1% or more of a bank’s total issued and outstanding voting shares shall notify the bank. Failure to report may cause the shareholder to be imposed a fine of NT$500,000 or more, but not exceeding NT$2.5 million.

Foreign investor participation

Except as described above and except for the regulations on foreign investments and investment restrictions on PRC investors, there are no restrictions on foreign shareholdings of Taiwan banks. See “Appendix B: Foreign Investment and Exchange Controls in the ROC”.

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SHARE OWNERSHIP

The ROC Securities and Exchange Law requires our directors, supervisors, managers and any shareholders holding more than 10% of our outstanding shares (including shares held through such person’s spouse, minor children and nominees) to report their shareholdings to us and we shall in turn report to the competent authority and make public announcement on a monthly basis.

The following table sets forth certain share ownership information as of September 17, 2013 with respect to the ten largest holders of record of our Shares and our board of directors, supervisors and executive officers as a group.

Name Yu Yuan Investment Co., Ltd.(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yue-Li Investment Company(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Asia Investment Corp.(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Der Ching Investment Corp.(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yue-Tung Investment Corp.(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yuan Ding Investment Corp.(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kai Yuan International Investment Corp.(1) . . . . . . . . . . . . . . . . . . . . . . . . . . Ding Yuan International Investment Corp.(1) . . . . . . . . . . . . . . . . . . . . . . . . . Far Eastern New Century Corporation(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Asia Cement Corporation(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total top 10 shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Directors, supervisors and executive officers as a group(2) . . . . . . . . . . . . . .	Number of Shares 137,206,683 121,516,290 111,576,837 111,563,413 107,800,242 98,577,104 88,929,067 73,250,389 72,458,863 65,120,828 987,999,716 221,198,061	Percentage of Total Issued Shares
		5.81% 5.14% 4.72% 4.72% 4.56% 4.17% 3.76% 3.10% 3.07% 2.76% 41.83% 9.36%

Notes:

(1) An affiliate of the Far Eastern Group.

(2) Shareholdings of directors, supervisors and executive officers as shown on this line include shareholdings of the ten largest holders of record of our Shares, who also act as our directors or supervisors. For information on such directors and supervisors, as well as their representatives, see “Management”.

None of the major holders of our Shares has different voting rights from those of the other holders of our Shares.

In accordance with the ROC Banking Law, our chairperson, Ching-Ing Hou, obtained approval from the FSC in 2010 to hold, together with her related parties (as defined in the ROC Banking Law), more than 15% but not more than 25% of our total issued and outstanding voting shares. See “Regulation of the ROC Banking Industry—Ownership Restrictions—Shareholding restrictions”. As of September 17, 2013, Chairperson Hou and her related parties (as defined in the ROC Banking Law) collectively owned approximately 0.0006% of our outstanding Shares.

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CHANGES IN ISSUED SHARE CAPITAL

According to our Articles of Incorporation, we have common shares with a par value of NT$10 per share and we may also issue preferred shares within our authorized share capital. Currently, our Articles of Incorporation provide that our authorized share capital is NT$45,000,000,000, divided into 4,500,000,000 Shares. Except for the Shares issuable upon conversion of our convertible bonds due 2018, there are no Shares issuable upon exercise of options within 60 days of the date of the offering memorandum. All issued shares are in registered form.

The following table sets forth the changes in our issued share capital as at the dates indicated:

Date December 1995 . . . . . . . August 1996 . . . . . . . . . December 1997 . . . . . . . November 1998 . . . . . . August 1999 . . . . . . . . . August 2000 . . . . . . . . . August 2004 . . . . . . . . . March 2005 . . . . . . . . . . June 2005 . . . . . . . . . . . August 2005 . . . . . . . . . September 2005 . . . . . . November 2005 . . . . . . April 2006 . . . . . . . . . . . October 2006 . . . . . . . . April 2007 . . . . . . . . . . . July 2007 . . . . . . . . . . . January 2008 . . . . . . . . . January 2009 . . . . . . . . . July 2009 . . . . . . . . . . . September 2010 . . . . . . September 2011 . . . . . . October 2012 . . . . . . . . September 2013 . . . . . .	Description Capitalization of retained earnings Capitalization of retained earnings (1) Issuance of 99,170,000 shares for cash; and (2) Issuance of 36,080,000 shares: capitalization of retained earnings. (1) Issuance of 150,000,000 shares for cash; (2) Issuance of 17,850,000 shares: capitalization of capital reserve; and (3) Issuance of 43,173,500 Shares: capitalization of retained earnings (1) Issuance of 26,619,446 shares: capitalization of capital reserve; and (2) Issuance of 52,077,054 Shares: capitalization of retained earnings (1) Issuance of 22,195,800 shares: capitalization of capital reserve; and (2) Issuance of 22,899,600 Shares: capitalization of retained earnings (1) Cancellation of 26,579,000 shares: capital reduction; and (2) Issuance of 10,407,594 Shares: conversion of convertible bonds Conversion of convertible bonds Conversion of convertible bonds Capitalization of retained earnings Conversion of convertible bonds Conversion of convertible bonds Conversion of convertible bonds (1) Issuance of 18,312,584 shares: capitalization of capital reserve; and (2) Issuance of 68,274,088 Shares: capitalization of retained earnings Conversion of convertible bonds Conversion of convertible bonds Conversion of convertible bonds Issuance of shares for cash Capital reduction Capitalization of retained earnings Capitalization of retained earnings Capitalization of retained earnings Capitalization of retained earnings	Number of shares issued 25,000,000 29,750,000 135,250,000 211,023,500 78,696,500 45,095,400 (16,171,406) 78,056,834 47,914,226 109,562,504 4,958,329 37,038,723 5,075,280 86,586,672 215,969 647,907 1,079,849 461,538,000 (407,520,824) 73,351,503 111,411,487 123,699,218 119,858,593	Number of total issued shares after issue
			1,025,000,000 1,054,750,000 1,190,000,000 1,401,023,500 1,479,720,000 1,524,815,400 1,508,643,994 1,586,700,828 1,634,615,054 1,744,177,558 1,749,135,887 1,786,174,610 1,791,249,890 1,877,836,562 1,878,052,531 1,878,700,438 1,879,780,287 2,341,318,287 1,933,797,463 2,007,148,966 2,118,560,453 2,242,259,671 2,362,118,264

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TRANSACTIONS WITH RELATED PARTIES

General

We have from time to time engaged in a variety of transactions with our related parties (as defined under the Regulations Governing the Preparation of Financial Reports by Securities Issuers). Unless it can be established that no control or significant influence exists, a party falling within any of the following shall be deemed to have a substantive related party relationship:

1. An affiliated enterprise within the meaning given in Chapter VI-I of the ROC Company Law, and any of its directors, supervisors, and managerial officers.

2. A company or institution governed by the same general management office as the issuer, and any of its directors, supervisors, and managerial officers.

3. A person holding the position of manager or higher in the general management office.

4. A company or institution shown as an affiliated enterprise in the issuer’s publications or public announcements.

Under Chapter VI-1 the ROC Company Law, the term “affiliated enterprises” as used in this Law shall refer to enterprises which are independent in existence but are interrelated in either of the following relations:

• Companies having controlling and subordinate relation between them;

• Companies having made investment in each other.

In considering whether a counterparty is a related party, attention shall be directed to the substance of the relationship in addition to the legal form.

Restrictions on credit exposure to related parties

In order to ensure the transparency of lending practices of the banks, the ROC Banking Law sets forth restriction on extension of credit by banks to their related parties. See “Regulation of the ROC Banking Industry—Financial Requirements—Restrictions on credit exposure to related parties”. We have established standard operational procedures for compliance with respect to transactions with related parties. Our policy is that transactions with related parties will be conducted on terms at least as favorable to us as we could obtain in a comparable arm’s-length transaction with a person who is not a related party. We may enter into additional transactions with our related parties in the future. No assurance, however, can be given that the terms of such transactions with our related parties will benefit us.

Transactions with related parties

Our related parties include Yuan Long Stainless Steel Co., Ltd., which is an equity method investee of Far Eastern Asset Management Co., Ltd., Far Eastern New Century Corp., Asia Cement Corp., Far Eastern Department Store Corp., Yuan Ding Co., Ltd., Far Eastern Geant Co., Ltd., Bai Ding Investment Co., Ding Ding Hotel Co., Ltd., New Century InfoComm Tech Co., Ltd., Yuan Ding Investment Ltd., U-Ming Marine Transport Corp., Ding Ding Integrated Marketing Service Co., Far Eastern Resource Development Co., Ltd. and Oriental Union Chemical Corp., whose chairman is our vice-chairman; U-Ming Marine Transport (Singapore) Ltd., the chairman of whose parent company is our vice-chairman; Dah Chung Bills Finance Corp., or Dah Chung, which is our investee under the equity method; Oriental Securities Corp., Yue-Tung Investment Corp., Yue-Yuan Investment Corp. and Oriental Securities Corp., the chairman of whose major shareholder is our vice-chairman;

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Bai Yang Investment Co., whose director is our vice-chairman; Everest Textile Co., Ltd. and City Super Company; whose chairman is a second-degree relative of our vice-chairman; Far Eastern General Construction Inc., the chairman of whose ultimate parent company is our vice-chairman; Far Eastern International Leasing Corp., the chairman of whose major shareholder is our vice-chairman and certain of our supervisors and managers and relatives of our chairman and vice-chairman.

Call loans . We have provided call loans to Dah Chung. The total outstanding amount of such loans was nil, NT$425.0 million, NT$570.0 million (US$19.3 million) and nil as of December 31, 2010, 2011 and 2012 and September 30, 2013, respectively. Interest derived from such loans amounted to NT$0.9 million, NT$1.3 million, NT$3.0 million (US$0.1 million) and NT$0.8 million (US$27.0 thousand) for the years ended December 31, 2010, 2011 and 2012, and for the nine months ended September 30, 2013, respectively.

Loans . We have provided loans to certain related parties. The total outstanding amount of such loans was NT$2,550.3 million, NT$4,027.3 million, NT$2,970.2 million (US$100.5 million) and NT$5,181.4 million (US$175.3 million) as of December 31, 2010, 2011 and 2012 and September 30, 2013, respectively. Interest derived from such loans amounted to NT$22.6 million, NT$30.1 million, NT$42.1 million (US$1.4 million) and NT$31.4 million (US$1.1 million) for the years ended December 31, 2010, 2011 and 2012, and for the nine months ended September 30, 2013, respectively.

Guarantees . We have provided guarantees to certain related parties. The balance of guarantees provided to such related parties amounted to NT$991.3 million, NT$395.2 million, NT$398.7 million (US$13.5 million) and NT$84.5 million (US$2.9 million) as of December 31, 2010, 2011 and 2012 and September 30, 2013, respectively.

Letters of credit . We have provided letters of credit to certain related parties. The balance of letters of credit provided to such related parties amounted to NT$44.0 million, nil, NT$11.0 million (US$0.4 million) and NT$15.4 million (US$0.5 million) as of December 31, 2010, 2011 and 2012, and September 30, 2013, respectively.

Securities transactions . In 2010, we bought investment securities from Dah Chung, including (i) securities held for trading purpose in the aggregate amount of NT$300.0 million; (ii) available-for-sale securities in the aggregate amount of NT$100.0 million; (iii) short sales securities in the aggregate amount of NT$50.0 million; and (iv) bonds with resale agreements in the aggregate amount of NT$10,062.5 million. We also sold investment securities to Dah Chung, including (i) securities held for trading purpose in the aggregate amount of NT$200.0 million; and (ii) short sales securities in the aggregate amount of NT$50.0 million. In 2011, we bought investment securities from Dah Chung, including (i) securities held for trading purpose in the aggregate amount of NT$450.0 million; (ii) available-for-sale securities in the aggregate amount of NT$50.0 million; (iii) short sales securities in the aggregate amount of NT$50.0 million; and (iv) bonds with resale agreements in the aggregate amount of NT$1,100.1 million. We also sold investment securities to Dah Chung, including (i) securities held for trading purpose in the aggregate amount of NT$250.0 million; and (ii) available-for-sale securities in the aggregate amount of NT$100.0 million. In 2012, we bought investment securities from Dah Chung, including (i) securities held for trading purpose in the aggregate amount of NT$500.0 million (US$16.9 million); (ii) available-for-sale securities in the aggregate amount of NT$100.0 million (US$3.4 million); (iii) short sales securities in the aggregate amount of NT$350.0 million (US$11.8 million); and (iv) bonds with resale agreements in the aggregate amount of NT$26,344.2 million (US$891.2 million). We also sold investment securities to Dah Chung, including (i) securities held for trading purpose in the aggregate amount of NT$550.0 million (US$18.6 million); and (ii) short sales securities in the aggregate amount of NT$300.0 million (US$10.1 million). For the nine months ended September 30, 2013, we bought investment securities from Dah Chung, including (i) securities held for trading purpose in the aggregate amount of NT$1,600.0 million (US$54.1 million); (ii) available-for-sale securities in the aggregate amount of NT$50.0 million (US$1.7 million); (iii) short sales securities in the aggregate amount of NT$100.0 million (US$3.4 million); and (iv) bonds with resale agreements in the aggregate amount of NT$4,698.2 million

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(US$158.9 million). We also sold investment securities to Dah Chung, including (i) securities held for trading purpose in the aggregate amount of NT$800.0 million (US$27.1 million); (ii) short sales securities in the aggregate amount of NT$200.0 million (US$6.8 million); and (iii) bonds with repurchase agreements in the aggregate amount of NT$248.7 million (US$8.4 million).

Derivative financial instruments . We entered into convertible bonds for asset swap contracts with Dah Chung which resulted in a valuation gain of NT$0.7 million, a valuation gain of NT$0.7 million, a valuation loss of NT$1.1 million (US$37.0 thousand) and a valuation gain of NT$1.3 million (US$43.0 thousand) for the years ended December 31, 2010, 2011 and 2012, and for the nine months ended September 30, 2013, respectively.

Deposits . We have accepted deposits from certain related parties. The balance of deposits accepted from such related parties amounted to NT$38.4 billion, NT$33.6 billion, NT$35.4 billion (US$1.2 billion) and NT$38.0 billion (US$1.3 billion) as of December 31, 2010, 2011 and 2012 and September 30, 2013, respectively. Interest expenses incurred from such deposits amounted to NT$267.6 million, NT$366.1 million, NT$460.4 million (US$15.6 million) and NT$301.9 million (US$10.2 million) for the years ended December 31, 2010, 2011 and 2012, and for the nine months ended September 30, 2013, respectively.

Operating expenses . We have rented office space from certain related parties. We have paid service fee for stock affairs to Oriental Securities Corp, and telecommunication to New Century InfoComm Tech Co., Ltd. We have also paid advertising expense and rental to certain of our related parties. The operating expenses to such related parties amounted to NT$324.1 million, NT$279.9 million, NT$355.6 million (US$12.0 million) and NT$275.4 million (US$9.3 million) for the years ended December 31, 2010, 2011 and 2012 and the nine months ended September 30, 2013, respectively.

Disposal of buildings and land held for sale. In June 2012, FEAM sold buildings and land held for sale, with book value of NT$278.0 million (US$9.4 million), to Far Eastern Resources Development Co., Ltd. for NT$278.1 million (US$9.4 million). FEAM recognized a loss of NT$1.9 million (US$66.0 thousand) after deducting the land value increment tax of NT$2.1 million (US$70.0 thousand).

Compensation of directors, supervisors and management personnel . We paid salaries, bonus and special compensation to our directors, supervisors and management personnel. The amount to such related parties amounted to NT$93.2 million, NT$116.5 million, NT$124.7 million (US$4.2 million) and NT$106.1 million (US$3.6 million) for the years ended December 31, 2010, 2011 and 2012 and for the nine months ended September 30, 2013, respectively.

For more information on the transactions with related parties, see Note 30 to our consolidated financial statements as of and for the years ended December 31, 2010, 2011 and 2012 and Note 40 to our consolidated financial statements as of and for the nine months ended September 30, 2012 and 2013, which appear in the F-pages of this offering memorandum.

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DESCRIPTION OF THE SHARES

Set forth below is certain information relating to our share capital, including brief summaries of certain provisions of our Articles of Incorporation, the ROC Securities and Exchange Law, the regulations promulgated under the ROC Securities and Exchange Law, the ROC Banking Law and the ROC Company Law as of the date of this offering memorandum.

Share Capital

We were established on January 11, 1992 and commenced our operations on April 11, 1992. As of September 30, 2013, our authorized capital was NT$45,000,000,000, divided into 4,500,000,000 Shares, with par value of NT$10 for each share and our issued share capital was NT$23,621,182,640, divided into 2,362,118,264 Shares. Our Articles of Incorporation currently authorize Shares and preferred shares. As of the date hereof, we have not issued any preferred shares. All of our issued and outstanding Shares are fully paid and in registered form.

Dividends and Distributions

Except in limited circumstances, the ROC Company Law does not permit us to distribute dividends or make any other distributions to shareholders in respect of any year in which we have no net income or retained earnings (excluding reserve). We are required to set aside legal reserve in accordance the ROC Banking Law. See “Regulation Of The Roc Banking Industry—Legal Reserve.” In addition, unless our legal reserve reaches our paid-in capital, our dividends to be distributed in the form of cash shall not exceed 15% of our paid-in capital. See “Dividends And Dividend Policy.”

In addition to permitting dividends to be paid out of earnings, the ROC Company Law also permits us to make distributions to our shareholders of additional Shares (if the Company does not have losses) by capitalizing our reserves (including the legal reserve and capital surplus of premium from issuing stock and earnings from gifts received). However, the capitalized portion payable out of our legal reserve is limited to excessive amount of the accumulated legal reserve exceeding 25% of our paid-in capital.

Cash dividends which are unclaimed for a period of five years from the date of the relevant notice of distribution may no longer be claimed. Such unclaimed cash dividends will, upon expiry of such five-year period, revert to property of the Company. However, stock dividends are not subject to any prescription period under ROC law. Thus, uncollected stock dividends will remain in our safekeeping and continue to be claimable by the relevant shareholders.

For information on the dividends paid by us in recent years, see “Dividends and Dividend Policy”. For information as to ROC taxes on dividends and other distributions, see “Taxation—ROC Taxation”.

Changes in Share Capital and Pre-emptive Rights

The ROC Company Law and the ROC Securities and Exchange Law provide that any change in the authorized share capital of a company limited by shares, such as ours, requires an amendment to the company’s articles of incorporation approved by the shareholders at a shareholders’ meeting. In addition, for a public company such as ours, the approval of the FSC is required if the paid-in capital is increased. The MOEA requires us to register changes of our authorized and paid-in share capital. Our authorized but unissued Shares may be issued at such times and, subject to the provisions of the ROC Company Law and the ROC Securities and Exchange Law and the approval of the FSC and registration with the MOEA, upon such terms as our Board of Directors may determine.

According to the ROC Company Law, when a company issues new common shares for cash, 10% to 15% of the issue must be offered to its employees. In addition, the Securities and Exchange Law and the relevant

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securities regulations require that, if a public company listed on the TWSE or whose shares are traded on the GreTai Securities Market intends to offer new shares for cash, at least 10% of the issue must be offered to the public, except under certain circumstances or when exempted by the FSC. This percentage can be increased by a resolution passed at a shareholders’ meeting, thereby reducing the number of new shares subject to the preemptive rights of existing shareholders. Unless the percentage of shares to be offered to the public is increased by the shareholders, existing shareholders who are listed on the shareholders’ register as of the record date have a pre-emptive right to acquire the remaining 75% to 80% of the issue. The shares not subscribed for by the employees and shareholders at the expiration of the period for the exercise of their rights may be sold to the public or specified persons at the direction of our Board of Directors. The pre-emptive rights provisions will not apply to offering of new shares through a private placement approved at a shareholders’ meeting.

Meetings of Shareholders

Meetings of our shareholders may be ordinary or extraordinary meetings. Ordinary meetings of our shareholders are generally held in Taipei, Taiwan, within six months following the end of each fiscal year. Extraordinary meetings may be convened by our Board of Directors by passing a board resolution or by our Board of Directors upon the written request of any shareholder or shareholders who has or have held 3% or more of our issued and outstanding Shares for a period exceeding one year, or may be convened by such shareholder or shareholders. Notice in writing of meetings of shareholders, stating the place, time, date and agenda must be dispatched to each shareholder of record at least 30 days prior to an ordinary meeting and 15 days prior to an extraordinary meeting. Except in certain circumstances as described below, a majority of the holders of all issued and outstanding Shares present at a shareholders’ meeting constitutes quorum.

Voting Rights

The ROC Company Law provides that a holder of Shares has one vote for each Share held. The election of directors and supervisors is by means of cumulative voting. Directors and supervisors are elected by our shareholders at our shareholders’ meeting at which ballots for the election are cast. Ballots for the election of directors are cast separately from those for the election of supervisors.

Except as otherwise provided by law and our Articles of Incorporation, a resolution can be adopted by the holders of at least a majority of the Shares represented at our shareholders’ meeting at which the holders representing 50% of all issued and outstanding Shares are present. Under the ROC Company Law, however, to approve certain major corporate actions, including any amendment to the articles of incorporation (which is required, among other things, for any increase in the authorized share capital), the dissolution or amalgamation of a company or spin-off, the transfer of the whole or an important part of a company’s business, the taking over of the whole of the business of another company which would have a significant impact on the acquiring company’s operations, the execution or, modification or termination of any contracts or agreements relating to the leasing of all of the company’s business, any joint ventures or mandate of the company’s operations to other persons or the distribution of any stock dividend, a meeting of the shareholders must be convened with a quorum of holders of at least two-thirds of all issued and outstanding shares at which the shareholders of at least a majority of the shares represented at the meeting vote in favor of the corporate action. Alternatively, the ROC Company Law provides that in the case of a public company, such as ours, a resolution to approve these major corporate actions may be adopted by the holders of at least two-thirds of the shares represented at a shareholders’ meeting at which holders of at least a majority of issued and outstanding shares are present.

A shareholder may be represented at our ordinary or extraordinary meetings by proxy if a valid proxy form is delivered to us at least five days prior to the commencement of the ordinary or extraordinary meeting. Voting rights attached to our Shares that are exercised through proxy shall be subject to ROC proxy regulations.

Any shareholder who has a personal interest in a matter to be discussed at our shareholders’ meeting, the outcome of which may impair our interests, shall not vote or exercise voting rights on behalf of another shareholder on such matter.

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Register of Shareholders and Record Dates

Oriental Securities Co. Ltd. is our share registrar, maintains our share register at its offices at 2F, 86, Chung Ching S. Road, Section 1, Taipei, Taiwan, ROC, and enters transfers of our Shares in our share register upon presentation of, among other documents, certificates in respect of the Shares transferred.

Under the ROC Company Law, we may, by giving advance public notice, set a record date and close our share register for a specified period (60 days, 30 days and 5 days, respectively, immediately before each ordinary meeting of shareholders, extraordinary meeting of shareholders and the relevant record date) in order for us to determine the shareholders who are entitled to certain rights pertaining to the Shares.

Other Rights of Shareholders

Under the ROC Company Law, dissenting shareholders are entitled to appraisal rights in certain major corporate actions such as a proposed amalgamation by the company. A dissenting shareholder who is entitled to the appraisal rights may request the company to redeem all of the shares owned by the shareholder at a fair price determined by mutual agreement or determined by a court order if an agreement cannot be reached. Shareholders may exercise their appraisal rights by serving written notice on the company prior to the related shareholders’ meeting and/or by raising and registering an objection at the shareholders’ meeting. In addition, shareholders have the right to sue for the annulment of any resolution adopted at a shareholders’ meeting if the procedures of convening the shareholders’ meeting or the methods of adopting such resolution were legally defective within 30 days after the date of the shareholders’ meeting. If a company’s shareholders’ meeting fails to discharge a director who caused any material damage to the company or who violated laws, regulations or the articles of incorporation of the company in material respect when performing his/her duties, one or more shareholders who have held more than 3% of the issued and outstanding shares of the company may, within 30 days after the shareholders’ meeting, bring an action against the directors.

Financial Statements

For a period of at least ten days prior to our annual ordinary shareholders’ meeting, our annual financial statements must be available at our principal office in Taipei and our share registrar in Taipei for inspection by our shareholders.

Transfer of Shares

Under the ROC Company Law, the transfer of shares is effected by endorsement and delivery of the related share certificates. However, in order to exercise shareholder rights, a transferee of our Shares must have his name and address registered on our share register. Our shareholders are also required to file their respective specimen seals with us. The settlement of trading of shares on the TWSE is carried out on the book-entry system maintained by TDCC.

Acquisitions of Our Own Shares

With limited exceptions, we may not purchase our Shares under the ROC Company Law.

Under the Securities and Exchange Law, we may, by a board resolution adopted by majority consent at a meeting with two-thirds of our directors present, purchase our Shares on the TWSE or by a tender offer, in accordance with the procedures prescribed by the FSC, for the following purposes: (i) to transfer Shares to our employees; (ii) to convert bonds with warrants, preferred shares with warrants, convertible bonds, convertible preferred shares or certificates of warrants issued by us into Shares; and (iii) if necessary, to maintain our credit and our shareholders’ equity; provided that the Shares purchased pursuant to (iii) shall be cancelled thereafter. Shares purchased by us pursuant to (i) and (ii) above shall be transferred to the intended transferees within three

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years after the purchase date; otherwise, such Shares shall be cancelled. For Shares to be cancelled pursuant to (iii) above, we are required to complete the amendment registration within six months after the purchase date.

We are not allowed to purchase more than 10% of our total issued and outstanding Shares. In addition, we may not spend more than the aggregate amount of the retained earnings, the premium from issuing Shares and the realized portion of the capital reserve to purchase our Shares.

We may not pledge or hypothecate any purchased Shares. In addition, we may not exercise any shareholders’ rights attaching to such Shares. In the event that we purchase our Shares on the TWSE, our affiliates (as defined in Article 369-1 of the ROC Company Law), directors, supervisors, managers and their respective spouses and minor children and/or nominees are prohibited from selling any of our Shares during the period in which we purchase our Shares.

In addition, effective from November 14, 2001, under the revised ROC Company Law, our subsidiaries may not acquire our Shares. This restriction does not, however, affect any of our Shares acquired by our subsidiaries prior to November 14, 2001.

Liquidation Rights

In the event of our liquidation, the assets remaining after payment of all our debts, liquidation expenses and taxes will be distributed pro rata to our shareholders in accordance with the ROC Company Law.

Transfer Restrictions

The ROC Securities and Exchange Law requires that except for certain exceptions or with the approval of the FSC, each director, supervisor, manager or shareholder (together with its spouse, minor children and nominee) holding more than 10% of the shares of a public company should report their intent to transfer any shares on the TWSE to the FSC at least three days before the intended transfer.

Reporting Obligations and Shareholding Restrictions

The ROC Securities and Exchange Law requires that each director, supervisor, manager or shareholder (together with its spouse, minor children and nominee) holding more than 10% of the shares of a public company report on a monthly basis any changes in that person’s shareholding to the company.

Under the ROC Banking Law, any person or group of related persons that acquires more than 5% of a bank’s total issued and outstanding voting shares must report to the FSC within ten days from the date of acquisition, and any person or group of related persons that proposes to hold more than 10%, 25% or 50% of a bank’s total issued and outstanding voting shares must seek prior approval from the FSC for such shareholding. For violations of these restrictions, the violating shareholder will be subject to a fine in an amount from NT$2 million to NT$10 million, and will be restricted from exercising the voting rights of the portion exceeding the above percentages.

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DESCRIPTION OF THE GLOBAL DEPOSITARY SHARES

Citibank, N.A., or Citibank, has agreed to act as the Depositary for the Global Depositary Shares, or GDSs. Citibank’s depositary offices are located at 388 Greenwich Street, 14th Floor, New York, 10013, USA. Rule 144A and Regulation S Global Depositary Shares are referred to as “Rule 144A GDSs” and “Regulation S GDSs”, respectively. In this summary, we intend to use the term “GDSs” to refer to the Rule 144A GDSs and to the Regulation S GDSs. Unless we otherwise state, you should assume that the term “GDSs” encompasses both Rule 144A GDSs and Regulation S GDSs. GDSs are evidenced by Global Depositary Receipt, or GDR, certificates. The GDSs we are selling in the United States are referred to and will be issued as Rule 144A GDSs, and the GDSs we are selling outside the United States are referred to and will be issued as Regulation S GDSs. GDSs represent ownership interests in securities that are on deposit with the Depositary.

The Depositary has appointed a Custodian to hold the securities on deposit in safekeeping. In this case, the Custodian is Citibank Taiwan Limited, having its principal office at 9F, No.16 Nan Jing East Road Sec.4, Taipei, Taiwan, ROC.

We will appoint Citibank as Depositary pursuant to two separate Deposit Agreements, both to be dated as of the Closing Date, one for the Rule 144A GDSs, or the Rule 144A Deposit Agreement, and one for the Regulation S GDSs, or the Regulation S Deposit Agreement. A copy of the Deposit Agreements and any supplements or amendments thereto may be obtained from the Depositary. This is a summary description of the material terms of the GDSs and of your material rights as an owner of GDSs. Please remember that summaries by their nature lack the precision of the information summarized and that the rights and obligations of an owner of GDSs will be determined by reference to the terms of the applicable Deposit Agreement and not by this summary. We urge you to review the Deposit Agreements in their entirety. Statements printed in italics in this description are provided for your information but may not be contained in the Deposit Agreements.

Each GDS represents the right to receive, and to exercise the beneficial ownership interests in, 20 Shares, or evidence of the right to receive, and to exercise the beneficial ownership interests in, 20 Shares, on deposit with the Custodian. A GDS will also represent the right to receive, and to exercise the beneficial ownership interests in, any other property received by the Depositary or the Custodian on behalf of the owner of the GDS but that has not been distributed to the owner of the GDSs because of legal restrictions or practical considerations.

On the date that we receive proceeds from this offering, or the Closing Date, we will deliver to the Custodian a Certificate of Payment evidencing the irrevocable right to receive the underlying Shares until the Individual Scripless Certificates of Payment are listed on the TWSE. No later than the second ROC Business Day following the Closing Date, we will apply to the TWSE for listing of the Individual Scripless Certificates of Payment. It is expected that the TWSE will approve the listing of the Individual Scripless Certificates of Payment on the fourth ROC Business Day following the Closing Date, such approval date being the “Share Listing Date”, although there is no assurance that such approval will be obtained by such date, if at all. (For the avoidance of doubt, the first ROC Business Day after the Closing Date is February 5, 2014.) Immediately upon the listing of the Individual Scripless Certificates of Payment on the TWSE, the Certificate of Payment we deliver to the Custodian on the Closing Date will be replaced by the Individual Scripless Certificates of Payment. As used herein, “ROC Business Day” means a day (other than a Saturday or Sunday) on which the commercial banks are open for business in Taipei, ROC.

If you become an owner of GDSs, you will become a party to the applicable Deposit Agreement and therefore will be bound to its terms and to the terms of the GDR certificate that evidences your GDSs. The Deposit Agreements and the GDR certificates specify our rights and obligations as well as your rights and obligations as an owner of GDSs and those of the Depositary. As a GDS owner you appoint the Depositary to act on your behalf for the Shares represented by your GDSs, either upon (1) your specific instructions when we call a meeting of shareholders, distribute an elective dividend (if permitted by ROC laws) or make a rights offering, or (2) the specific terms of the applicable Deposit Agreement to receive any dividends we distribute or Shares. The

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Deposit Agreements are governed by New York law. However, our obligations to the holders of Shares will continue to be governed by ROC laws, which may be different from the laws in the United States. In addition, we note that ROC laws and regulations may restrict the deposit and withdrawal of the Shares into or from the depositary receipt facilities.

Under the laws and regulations of the ROC and as provided in the Deposit Agreements, as currently in effect, after the Initial Deposit (as defined below), without obtaining regulatory approval from the FSC, no shares may be accepted for deposit and no GDSs may be issued under the terms of the Deposit Agreements except in the following circumstances:

• 1) upon a stock dividend on, or a free distribution of, Shares to existing shareholders;

• 2) upon the exercise by existing shareholders of their pre-emptive rights in connection with capital increases for cash;

• 3) as permitted under the Deposit Agreements, to the extent previously issued GDSs have been cancelled, the purchase directly by a person or through the Depositary of Shares on the TWSE or the delivery by any person of Shares held by such person for deposit in the depositary receipt facility; and

• 4) upon the exchange of Rule 144A GDSs for Regulation S GDSs and vice versa;

provided that the total number of GDSs outstanding after an issuance described in clause (3) does not exceed the number of GDSs issued and previously approved by the FSC in connection with the offering plus any GDSs created under clauses (1) and (2) described above and subject to any adjustment on the number of Shares represented by each GDS.

Under the laws and regulations of the ROC, the Shares deposited under the Deposit Agreements may be withdrawn upon cancellation of the corresponding GDSs pursuant to the respective Deposit Agreement subject to the following conditions:

• the appointment of an eligible agent in the ROC to open (1) a securities trading account with an ROC brokerage firm with ROC approval and (2) a bank account to pay ROC taxes, remit funds, exercise shareholders’ rights and perform such other functions as you may designate upon such withdrawal;

• the appointment of a tax guarantor in the ROC; and

• the appointment of a custodian bank to hold the securities in safekeeping, make confirmations, settle trades and report relevant information.

In addition, you will be required to register with the TWSE for making investments in the ROC securities market prior to withdrawing Shares.

Presently, you may hold your GDSs only through a brokerage or safekeeping account. As such, you must rely on the procedures of your broker or bank to assert your rights as a GDS owner. Please consult with your broker or bank to determine what those procedures are. When we refer to “you”, we assume the reader owns GDSs and will own GDSs at the relevant time. When we refer to a “holder”, we assume the person owns GDSs and such person’s agent, which may be a broker, custodian, bank or trust company, is the holder of the applicable GDR certificate.

The registration of the Shares in the name of the Depositary or the Custodian shall, to the maximum extent permitted by applicable law, vest in the Depositary or the Custodian the record ownership in the applicable Shares with the beneficial ownership rights and interests in such Shares being at all times vested with the beneficial owners of the GDSs representing the Shares. The Depositary or the Custodian shall at all times be entitled to exercise the beneficial ownership rights in all deposited property, in each case only on behalf of the holders and beneficial owners of the GDSs representing the deposited property.

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Distinctions Between Rule 144A GDSs and Regulation S GDSs

The Rule 144A GDSs and the Regulation S GDSs are similar in many ways but are different primarily on account of the requirements of the U.S. securities laws. The Rule 144A GDSs are “restricted securities” under the U.S. securities laws and as such are subject to limitations on their issuance, transfer and cancellation.

The differences between the Rule 144A GDSs and the Regulation S GDSs and the restrictions imposed on the Rule 144A GDSs and the Regulation S GDSs cover primarily the following:

• The persons who may own and trade the GDSs:

• only “Qualified Institutional Buyers” (as defined in Rule 144A) and persons located outside of the United States other than “U.S. persons” (as defined in Regulation S) may own and trade Rule 144A GDSs; and

• any person may own and trade Regulation S GDSs offered herein.

• The persons who may create additional GDSs:

• only persons located outside of the United States other than “U.S. persons” (as defined in Regulation S) may deposit Shares to receive Regulation S GDSs; and

• only “Qualified Institutional Buyers” (as defined in Rule 144A) and persons located outside of the United States other than “U.S. persons” may deposit Shares to receive Rule 144A GDSs.

• The persons to whom you may transfer the GDSs, upon sale or otherwise:

• you may transfer Rule 144A GDSs only to “Qualified Institutional Buyers” (as defined in Rule 144A) or outside of the United States in accordance with Rule 903 and 904 of Regulation S; and

• you may transfer the Regulation S GDSs offered herein to any person.

• The restrictions on the transfers and withdrawal of the Shares represented by the GDSs:

• Please refer to “—Legends” below.

• The eligibility for book-entry transfer:

• Please refer to “—Clearance, Settlement and Safekeeping” below.

These distinctions and the requirements of the U.S. securities laws may require us and the Depositary to treat the Regulation S GDSs and the Rule 144A GDSs differently at any time in the future. There can be no guarantee that holders of Rule 144A GDSs will receive the same entitlements as holders of Regulation S GDSs and vice versa.

Clearance, Settlement and Safekeeping

Rule 144A GDSs

The Depositary has made arrangements with DTC to act as securities depository for the Rule 144A GDSs. All Rule 144A GDSs issued in this offering will be registered in the name of Cede & Co., DTC’s nominee. One Master Rule 144A GDR certificate will represent all Rule 144A GDSs issued to and registered in the name of

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Cede & Co. Transfers of ownership interests in Rule 144A GDSs are to be accomplished by entries made on the books of DTC and of the participants in DTC acting on behalf of Rule 144A GDS owners. Owners of Rule 144A GDSs will not receive physical certificates evidencing their ownership interests in the Rule 144A GDSs, except in the event that DTC no longer acts as securities depository and a successor securities depository cannot be appointed. The laws of some jurisdictions require that certain persons take physical delivery of securities in definitive form. Consequently, the ability to transfer Rule 144A GDSs evidenced by the Master Rule 144A GDR certificate to such persons may be limited. Because DTC can only act on behalf of direct participants (“Direct Participants”), who in turn act on behalf of indirect participants (“Indirect Participants”), the ability of a person owning Rule 144A GDSs evidenced by the Master Rule 144A GDR certificate to pledge such interest to persons or entities that do not participate in the DTC system, or otherwise take action in respect of such interest, may be affected by the lack of physical individual definitive securities in respect of such interest .

So long as DTC, or its nominee, is the registered holder of the Master Rule 144A GDR certificate, DTC or such nominee, as the case may be, will be considered the sole holder of the Rule 144A GDSs evidenced thereby for all purposes under the Rule 144A Deposit Agreement and the Rule 144A GDSs.

DTC may discontinue providing its services as securities depository with respect to the Rule 144A GDSs at any time by giving reasonable notice to the Depositary. Under such circumstances, in the event that a successor securities depository cannot be appointed, Rule 144A GDR certificates will be printed and delivered to the applicable Rule 144A GDS owners.

DTC is a limited-purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities that the Direct Participants deposit and facilitates the clearance and settlement of securities transactions among Direct Participants in such securities through electronic computerized book-entry changes in accounts of Direct Participants, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations, some of whom own DTC, and may include the Managers (and/or their respective affiliates). Indirect access to the DTC system is also available to others that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly, or the Indirect Participants. Transfers of ownership or other interests in DTC are to be accomplished by entries made on the books of Direct Participants or Indirect Participants acting on behalf of beneficial owners of GDSs. In addition, beneficial owners of GDSs in DTC will receive all distributions of dividends, GDSs, shares, rights and other distributions, if any, on the GDSs from the Depositary through Direct Participants and Indirect Participants.

Regulation S GDSs

The Regulation S GDSs are not eligible for settlement in DTC. Arrangements have been made with Euroclear and Clearstream to act as securities depositories for the Regulation S GDSs. All Regulation S GDSs issued in this offering will be registered in the name of a nominee of Citibank Europe plc as, common depository for Euroclear and Clearstream (the “Common Depository”). One Master Regulation S GDR certificate will represent all Regulation S GDSs issued to and registered in the name of a nominee of the Common Depository (initially “Citivic Nominees Limited”). Euroclear and Clearstream will hold the Regulation S GDSs on behalf of their participants through their respective depositories, and transfers will be permitted only within Euroclear and Clearstream in accordance with usual rules and operating procedures of the relevant system. Transfers of ownership interests in Regulation S GDSs are to be accomplished by entries made on the books of Clearstream and Euroclear and of participants in Clearstream and Euroclear, acting in each case on behalf of Regulation S GDS owners. Owners of Regulation S GDSs will not receive physical certificates representing their ownership interests in the Regulation S GDSs, except in the event that use of the Euroclear and Clearstream book-entry systems for the Regulation S GDSs is discontinued. The laws of some jurisdictions require that certain persons take physical delivery of securities in definitive form. Consequently, the ability to transfer Regulation S GDSs

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evidenced by the Master Regulation S GDR certificate to such persons may be limited. Because Euroclear and Clearstream can only act on behalf of direct participants in their book-entry systems, who in turn act on behalf of indirect participants, the ability of a person owning Regulation S GDSs evidenced by the Master Regulation S GDR certificate to pledge such interest to persons or entities that do not participate in the Euroclear and Clearstream systems, or otherwise take action in respect of such interest, may be affected by the lack of physical individual definitive securities in respect of such interest.

So long as the Common Depository (as nominee for Euroclear and Clearstream) is the registered holder of the Master Regulation S GDR certificate, the Common Depository will be considered the sole holder of the Regulation S GDSs evidenced thereby for all purposes under the Regulation S Deposit Agreement.

If at any time Euroclear or Clearstream, as the case may be, ceases to make its respective book-entry settlement systems available for the Regulation S GDSs, we and the Depositary will attempt to make other arrangements for book-entry settlement. If alternative book-entry settlement arrangements cannot be made, the Depositary will make available Regulation S GDSs in physical certificate form.

Settlement

So long as the Rule 144A GDSs are evidenced by Master GDR certificates registered in the name of DTC or its nominee, the Rule 144A GDSs will settle in DTC’s Same-Day Funds Settlement System and secondary market trading activity in the Rule 144A GDSs will be required by DTC to settle in immediately available funds. So long as the Regulation S GDSs are represented by Master GDR certificates registered in the name of the Common Depository or its nominee, the Regulation S GDSs will settle in Euroclear and Clearstream in accordance with their respective rules and operating procedures.

Subject to compliance with the transfer restrictions applicable to the GDSs described below, in crossmarket transfers from the account of a DTC participant to the account of a Euroclear or Clearstream accountholder, the DTC participant will deliver instructions for delivery to the relevant Euroclear or Clearstream account-holder to DTC by 3:00 p.m., New York City time, on the settlement date. On the settlement date, the Depositary will (1) decrease the amount of the Rule 144A GDSs registered in the name of DTC or its nominee and evidenced by the Master Rule 144A GDR certificate and (2) increase the amount of Regulation S GDSs registered in the name of the Common Depository or its nominee and evidenced by the Master Regulation S GDR certificate. Book-entry interests will be delivered to Euroclear or Clearstream, as the case may be, for credit to the relevant account-holder on the first business day following the settlement date.

Subject to compliance with the transfer restrictions applicable to the GDSs described below, when beneficial interests in the GDSs represented by the relevant Master GDR certificate are to be transferred from the account of a Euroclear or Clearstream account-holder holding a beneficial interest in the Regulation S GDSs represented by the Master Regulation S GDR certificate to the account of a DTC participant wishing to hold a beneficial interest in the Rule 144A GDSs represented by the Master Rule 144A GDR certificate, the Euroclear or Clearstream account-holder must send delivery instructions to Euroclear by 10:00 a.m., Brussels time, for custody exchange instructions received by telex, and by 3:00 p.m., Brussels time, for custody exchange instructions through SWIFT or Euclid, and to Clearstream by 7:45 p.m., Luxembourg time, one business day prior to the settlement date. Euroclear or Clearstream, as the case may be, will in turn transmit an appropriate instruction to the Depositary to arrange delivery to the DTC participant on the settlement date. On the settlement date, the Depositary will (1) deliver such Rule 144A GDSs by book-entry transfer to the relevant account of the DTC participant and (2)(a) decrease the amount of Regulation S GDSs registered in the name of the Common Depository or its nominee and evidenced by the Master Regulation S GDR certificate and (b) increase the amount of Rule 144A GDSs registered in the name of DTC or its nominee and evidenced by the Master Rule 144A GDR certificate.

DTC will take any action permitted to be taken by an owner of Rule 144A GDSs only at the direction of one or more DTC participants to whose account or accounts with DTC interests in the Rule 144A GDSs evidenced by

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the Master Rule 144A GDR certificate are credited and only in respect of such portion of the number of Rule 144A GDSs as to which such DTC participant or DTC participants has or have given such direction. Owners of indirect interests in securities evidenced by the Master Rule 144A GDR certificate through DTC participants have no direct rights to enforce such interests while the securities are in global form.

The Common Depository will take any action permitted to be taken by an owner of Regulation S GDSs only at the direction of one or more participants of Euroclear or Clearstream to whose account or accounts are credited with interests in the Regulation S GDSs evidenced by the Master Regulation S GDR certificate held by the Common Depository and only in respect of such portion of the number of Regulation S GDSs as to which such participant or participants has or have given such direction. Owners of indirect interests in securities evidenced by the Master Regulation S GDR certificate through the participants of Euroclear and Clearstream have no direct rights to enforce such interests while the securities are in global form.

Although DTC, Clearstream and Euroclear have procedures in order to facilitate the transfer of interests in the Master GDR certificates among participants in their respective settlement systems, they are under no obligation to perform or continue to perform such procedures and such procedures may be discontinued at any time. None of us, the Depositary, the Custodian or any of their agents will have any responsibility for the performance by DTC, Clearstream or Euroclear or their respective participants of their respective obligations under the rules and procedures governing their operations.

Transfer Restrictions

The GDSs may be resold, pledged or otherwise transferred only in compliance with the U.S. securities laws and are subject to the following restrictions:

Rule 144A GDSs The Rule 144A GDSs may be resold, pledged or otherwise transferred only:	Regulation S GDSs
	The Regulation S GDSs offered herein shall be freely transferable.

(i) outside the United States to a person other than a U.S. person (as defined in Regulation S under the Securities Act) in accordance with Regulation S;

Or

(ii) to a “Qualified Institutional Buyer” (as defined in Rule 144A) in a transaction meeting the requirements of Rule 144A;

Or

• (iii) pursuant to Rule 144 under the Securities Act, if available;

Or

• (iv) pursuant to an effective registration statement under the Securities Act.

If the Regulation S GDSs are transferred to a “Qualified Institutional Buyer” in a transaction meeting the requirements of Rule 144A, the transferor is required to convert the Regulation S GDSs into Rule 144A GDSs and make delivery of the Rule 144A GDSs to the transferee.

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Regulation S GDSs

Rule 144A GDSs

Restrictions Upon Deposit

• Shares will be accepted for deposit only if delivered by, or on behalf of, a person that is:

• Shares will be accepted for deposit only if delivered by, or on behalf of, a person that is:

• (a) not us or our affiliate or a person acting on behalf of us or our affiliate, and

• (a) not us or our affiliate or a person acting on behalf of us or our affiliate, and

• (b) is (i) a “Qualified Institutional Buyer” (as defined in Rule 144A), or (ii) a person located outside the United States.

(b) is a person other than a “U.S. person” (as defined in Regulation S) and located outside the United States.

Restrictions Upon Withdrawal

Shares may be withdrawn from the Rule 144A Deposit agreement only by:

Shares may be withdrawn under the Regulation S Deposit Agreement by any person and are freely transferable.

(i) a person other than a “U.S. person” (as defined in Regulation S) located outside of the United States who will be the beneficial owner of the Shares upon withdrawal;

Or

(ii) a “Qualified Institutional Buyer” (as defined in Rule 144A) who:

(x) has sold the Rule 144A GDSs to another “Qualified Institutional Buyer” (as defined in Rule 144A), in a transaction meeting the requirements of Rule 144A, or outside the United States to a person other than a “U.S. person” (as defined in Regulation S) in accordance with Regulation S,

Or

(y) will be the beneficial owner of the Shares and agrees to observe the transfer restrictions applicable to Rule 144A GDSs in respect of the Shares so withdrawn.

Dividends and Distributions

As a holder, you generally have the right to receive the distributions we make on the securities deposited with the Custodian. Your receipt of these distributions may be limited, however, by practical considerations and legal limitations. Holders will receive such distributions under the terms of the Deposit Agreements in proportion to the number of GDSs held as of a specified record date.

Distributions of Cash

Subject always to the laws and regulations of the ROC, whenever we make a cash distribution for the securities on deposit with the Custodian, we will notify the Depositary and deposit the funds with the Custodian.

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Upon receipt of such notice and of confirmation of the deposit of the requisite funds, the Depositary will arrange for the funds to be converted into US dollars, if necessary and for the distribution of the US dollars to the holders, subject to the laws and regulations of the ROC.

The conversion into US dollars will take place only if necessary and practicable and if the US dollars are transferable to the United States. The amounts distributed to holders will be net of the fees, expenses, taxes and governmental charges payable by holders under the terms of the Deposit Agreements. The Depositary will apply the same method for distributing the proceeds of the sale of any property (such as undistributed rights) held by the Custodian in respect of securities on deposit.

Distributions of Shares

Subject always to the laws and regulations of the ROC, whenever we make a free distribution of Shares for the securities on deposit with the Custodian, we will notify the Depositary and deposit the applicable number of Shares with the Custodian. Upon receipt of notice of such deposit, the Depositary will either distribute to holders new GDSs representing the Shares deposited or to the extent permitted by applicable law modify the GDS-to-Shares ratio, in which case each GDS you hold will represent rights and interests in the additional Shares so deposited. Only whole new GDSs will be distributed. Fractional entitlements will be sold and the proceeds of such sale will be distributed as in the case of a cash distribution.

The distribution of new GDSs or, to the extent permitted by applicable law, the modification of the GDS-to-Shares ratio upon a distribution of Shares will be made net of the fees, expenses, taxes and governmental charges payable by holders under the terms of the Deposit Agreements. In order to pay such taxes or governmental charges, the Depositary may sell all or a portion of the new Shares so distributed.

No such distribution of new GDSs will be made if it would violate U.S. law, including the U.S. securities laws, or if it is not lawful or reasonably practicable. If the Depositary does not distribute new GDSs as described above, it will use its best efforts to sell the Shares received and will distribute the proceeds of the sale as in the case of a distribution of cash.

Distributions of Rights

Subject always to the laws and regulations of the ROC, whenever we intend to distribute rights to purchase additional Shares, we will give prior notice to the Depositary and will indicate whether we wish the distribution of rights to be made available to you. In such case, we will assist the Depositary in determining whether it is lawful and reasonably practicable to distribute rights to purchase additional GDSs to holders.

The Depositary, with our assistance, will establish procedures to distribute rights to purchase additional GDSs to holders and to enable such holders to exercise such rights if it is lawful and reasonably practicable to make the rights available to holders of GDSs, and if we provide all of the documentation contemplated in the applicable Deposit Agreement (such as opinions to address the lawfulness of the transaction). You may have to pay fees, expenses, taxes and other governmental charges to subscribe for the new GDSs upon the exercise of your rights. The Depositary is not obligated to establish procedures to facilitate the distribution and exercise by holders of rights to purchase new Shares other than in the form of GDSs.

The Depositary will not distribute the rights to you if:

• We do not timely request that the rights be distributed to you; or

• We fail to deliver satisfactory documents to the Depositary; or

• It is not lawful or reasonably practicable to distribute the rights.

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If registration of the rights or the securities to which such rights relate may be required under the Securities Act or any other applicable law in order for us to offer such rights or such securities to holders and to sell the securities represented by such rights, the Depositary will not distribute rights to holders of GDSs unless and until a registration statement under the Securities Act covering such offering is in effect. We have no obligation under the Deposit Agreements to prepare and file a registration statement for any purpose.

The Depositary will sell the rights that are not exercised or not distributed if such sale is lawful and reasonably practicable. The proceeds of such sale will be distributed to holders as in the case of a cash distribution. If the Depositary is unable to sell the rights, it will allow the rights to lapse.

Other Distributions

Subject always to the laws and regulations of the ROC, whenever we intend to distribute property other than cash, Shares or rights to purchase additional Shares, we will notify the Depositary in advance and will indicate whether we wish such distribution to be made to you. If so, we will assist the Depositary in determining whether such distribution to holders is lawful and reasonably practicable.

If it is lawful and reasonably practicable to distribute such property to you and if we provide all of the documentation contemplated in the Deposit Agreements, the Depositary will distribute the property to the holders in a manner it deems practicable.

The distribution will be made net of fees, expenses, taxes and governmental charges payable by holders under the terms of the Deposit Agreements. In order to pay such taxes and governmental charges, the Depositary may sell all or a portion of the property received.

The Depositary will not distribute the property to you and will sell the property if:

• We do not request that the property be distributed to you; or

• We do not deliver satisfactory documents to the Depositary; or

• The Depositary determines that all or a portion of the distribution to you is not lawful or reasonably practicable.

The proceeds of such a sale will be distributed to holders as in the case of a cash distribution. If the Depositary is unable to sell such property, the Depositary may dispose of such property in any way it deems practicable under the circumstances.

Redemption

To the extent permitted by applicable laws, whenever we decide to redeem any of the securities on deposit with the Custodian, we will notify the Depositary. If it is reasonably practicable and if we provide all of the documentation contemplated in the Deposit Agreements, the Depositary will distribute notice of the redemption to the holders.

The Custodian will be instructed to surrender the Shares being redeemed against payment of the applicable redemption price. The Depositary will convert the redemption funds received into US dollars upon the terms of the Deposit Agreements and will establish procedures to enable holders to receive the net proceeds from the redemption upon surrender of their GDSs to the Depositary. You may have to pay fees, expenses, taxes and other governmental charges upon the redemption of your GDSs. If less than all GDSs are being redeemed, the GDSs to be retired will be selected by lot or on a pro rata basis, as the Depositary may determine.

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Changes Affecting Shares

The Shares held on deposit for your GDSs are subject to change from time to time. For example, there may be a change in nominal or par value, a split-up, cancellation, consolidation or reclassification of such Shares or a recapitalization, reorganization, merger, consolidation or sale of assets.

If any such change were to occur, your GDSs would, to the extent permitted by law, represent the right to receive the property received or exchanged in respect of the Shares held on deposit. The Depositary may in such circumstances deliver new GDR certificates to you or call for the exchange of your existing GDR certificates for new GDR certificates. If the Depositary may not lawfully distribute such property to you or the distribution is not reasonably practicable, the Depositary may sell such property and distribute the net proceeds to you as in the case of a cash distribution.

Deposits

In connection with the issuance by an ROC company of new shares for cash, such as the Shares underlying the GDSs being offered in this offering, settlement is initially made by delivery to the persons purchasing the new shares of a Certificate of Payment representing the right to receive the definitive share certificates evidencing such shares. The initial deposit of the Shares offered in connection with this offering will be made by the delivery to the Custodian of a Certificate of Payment evidencing the right to receive the definitive share certificates evidencing the Shares offered by us, which Shares will be registered in the name of the Depositary or its nominee, as representatives of the holders of the GDSs. No later than the second ROC Business Day following the Closing Date, we will apply to the TWSE for listing of the Individual Scripless Certificates of Payment. It is expected that the TWSE will approve the listing of the Individual Scripless Certificates of Payment on the fourth ROC Business Day following the Closing Date. Immediately upon such listing, the Certificate of Payment we deliver to Custodian on the Closing Date will be replaced by the Individual Scripless Certificates of Payment. The initial deposit of the Certificate of Payment and the subsequent deposit of Shares in exchange therefore by us in connection with this offering are collectively referred to herein as the “Initial Deposit”.

Under the ROC Securities and Exchange Law and applicable regulations, we are required to deliver the underlying Shares in physical certificate form or scripless form to the Custodian within 30 days after receiving approval from the relevant governmental authority of our corporate amendment registration. We are required under the ROC Company Act to file an amendment to our corporate registration within 15 days after receiving the proceeds from this offering. Prior to the issue of the underlying Shares in physical certificate form or scripless form, we will apply for and obtain approval to list the underlying Shares on the TWSE. We have agreed to issue and deliver the underlying Shares in scripless form in respect of the Individual Scripless Certificates of Payment in connection with this offering on or about 60-80 days after the Closing Date, subject to obtaining approvals from the relevant governmental authority and the TWSE. Until the underlying Shares have been so issued and delivered, the GDSs will represent Shares evidenced by the Certificate of Payment (from the Closing Date to the date immediately prior to the listing of the Individual Scripless Certificates of Payment) or the Individual Scripless Certificates of Payment on or after the date of listing of the Individual Scripless Certificates of Payment. Immediately after the listing of the Individual Scripless Certificates of Payment, a holder may apply to withdraw the Individual Scripless Certificates of Payment or underlying Shares, as the case may be. In case of a withdrawal of the Individual Scripless Certificates of Payment, such holders will be entitled to the same rights as if the Depositary were holding the underlying Shares in scripless form. The Individual Scripless Certificates of Payment, which are without physical form and are issued only in book-entry form through TDCC, the book-entry settlement system of the ROC, carry the same rights as those attaching to the Shares in respect of dividends and are eligible for trading on the TWSE in the same manner as the Shares.

Subject to limitations set forth in the Deposit Agreements and the GDR certificates, after the Initial Deposit, the Depositary may create GDSs on your behalf if you or your broker deposits Shares with the Custodian. The Depositary will deliver these GDSs to the person you indicate only after you pay any applicable issuance fees

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and any charges and taxes payable for the transfer of the Shares to the Custodian and you provide the applicable deposit certification. Your ability to deposit Shares and receive GDSs may be limited by U.S. and ROC legal considerations applicable at the time of deposit.

Under current ROC law and as provided in the Deposit Agreements, after the Initial Deposit, no deposits of Shares may be made in a depositary receipt facility, and no GDSs may be issued against such deposits, without specific approval of the FSC, except in connection with the offering and the issuance of additional GDSs in connection with (i) stock dividends on, or free distributions of, Shares, (ii) the exercise by holder of existing GDSs of the preemptive rights in the event of capital increases for cash, (iii) as permitted under the Deposit Agreements, to the extent that previously issued GDSs have been canceled, the purchase directly by a person or through the Depositary of Shares on the TWSE or the delivery by any person of Shares held by such person for deposit in the depositary receipt facility or (iv) the exchange of Rule 144A GDSs for Regulation S GDSs and vice versa, provided that the total number of GDSs outstanding after an issuance described in clause (iii) does not exceed the number of GDSs issued and previously approved by the FSC in connection with the offering plus any GDSs created under clauses (i) and (ii) described above and subject to any adjustment on the number of Shares represented by each GDS.

The Depositary and the Custodian will refuse to accept Shares for deposit whenever they are notified in writing that such deposit would result in any violation of applicable laws, including ownership restrictions under the laws of the ROC. The Depositary will also refuse (i) to accept certain Shares for deposit under the Rule 144A Deposit Agreement if notified in writing that such Shares are listed on a U.S. securities exchange or quoted on a U.S. automated inter-dealer quotation system, unless accompanied by evidence satisfactory to the Depositary that any Shares presented for deposit are eligible for resale pursuant to Rule 144A, or (ii) to issue GDSs representing the new Shares that are separate and distinct from GDSs representing the existing Shares.

The issuance of GDSs may be delayed until the Depositary or the Custodian receives confirmation that all required approvals have been given and that the Shares have been duly transferred to the Custodian. The Depositary will only issue GDSs in whole numbers.

When you make a deposit of Shares, you will be responsible for transferring good and valid title to the Depositary. As such, you will be deemed to represent and warrant that:

• Such Shares are duly authorized, validly issued, fully paid, non-assessable and legally obtained.

• All pre-emptive (and similar) rights, if any, with respect to such Shares have been validly waived or exercised.

• You are duly authorized to deposit such Shares.

• The Shares presented for deposit are free and clear of any lien, encumbrance, security interest, charge, mortgage or adverse claim, and, in the case of Regulation S GDSs, are not, and the Regulation S GDSs issuable upon such deposit will not be, “restricted securities” (as defined in the Regulation S Deposit Agreement).

• The Shares presented for deposit have not been stripped of any rights or entitlements.

If any of the representations or warranties is incorrect in any way, we and the Depositary may, at your cost and expense, take any and all actions necessary to correct the consequences of the misrepresentations.

When you deposit Shares to receive Rule 144A GDSs, you will be required to provide the Depositary with a deposit certification stating, inter alia, that:

• you acknowledge that the Shares and the Rule 144A GDSs have not been and will not be registered under the Securities Act or with any securities regulatory authority in any state or other jurisdiction in the United States; and

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• you are not an “affiliate” of ours and you are not acting on behalf of us or one of our “affiliates”; and

• you certify that you are, or are acting on behalf of, (i) a “Qualified Institutional Buyer” (as defined in Rule 144A), or (ii) a person other than a “U.S. person” (as defined in Regulation S) and located outside the United States and will acquire the Shares to be deposited outside the United States; and

• you agree, as the owner of the Rule 144A GDSs, to offer, sell, pledge and otherwise transfer the Rule 144A GDSs or the Shares represented by the Rule 144A GDSs in accordance with the applicable U.S. state securities laws and only

• (a) to a “Qualified Institutional Buyer” (as defined in Rule 144A) in a transaction meeting the requirements of Rule 144A, or

• (b) outside the United States to a person other than a “U.S. person” (as defined in Regulation S) in accordance with Regulation S, or

• (c) in accordance with Rule 144 under the Securities Act, if available, or

• (d) pursuant to an effective registration statement under the Securities Act.

A copy of the form of deposit certification for Rule 144A GDSs is attached to the Rule 144A Deposit Agreement and may be obtained from the Depositary upon request.

When you deposit Shares to receive Regulation S GDSs, you will be required to provide the Depositary with a deposit certificate stating, inter alia, that:

• you acknowledge that the Shares and the Regulation S GDSs have not been and will not be registered under the Securities Act or with any securities regulatory authority in any state or other jurisdiction in the United States; and

• you are not an “affiliate” of ours and you are not acting on behalf of us or one of our “affiliates”; and

• you certify that you are, or are acting on behalf of, (i) a person other than a U.S. person (as defined in Regulation S) and are located outside the United States and (ii) a person that is not in the business of buying and selling securities, or, if you or such person is in such business, you or such person did not acquire the Shares to be deposited from us or any affiliate in the initial distribution of Regulation S GDSs, Shares and Rule 144A GDSs; and

• you agree, as the owner of the Regulation S GDSs (or the person you are acting on behalf of has confirmed its agreement to you), to offer, sell, pledge and otherwise transfer the Regulation S GDSs or the Shares represented by the Regulation S GDSs in accordance with the applicable U.S. state securities laws.

A copy of the form of deposit certification for Regulation S GDSs is attached to the Regulation S Deposit Agreement and may be obtained from the Depositary upon request.

Withdrawal of Shares Upon Cancellation of GDSs

On or after approximately the fourth ROC Business Day following the Closing Date, with regard to the GDSs issued on the Closing Date pursuant to this Offering, subject to the approval from the TWSE of the listing of the Individual Scripless Certificates of Payment and the relevant provisions of the Deposit Agreements, a holder may apply to withdraw the underlying Shares or, as the case may be, the Individual Scripless Certificates

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of Payment. The Individual Scripless Certificates of Payment, which are without physical form and settle through the book-entry system, carry the same rights as those attaching to underlying Shares in respect of dividends and are eligible for trading on the TWSE in the same manner as the underlying Shares. Your ability to withdraw the Shares may be limited by U.S. and ROC law considerations applicable at the time of withdrawal.

Under current ROC law, if you (other than PRC persons, except for QDIIs, or a person with prior approval from the ROC Investment Commission of the MOEA ) wish to withdraw and hold underlying Individual Scripless Certificates of Payment or Shares, as the case may be, from a depositary receipt facility, you will be required to appoint an eligible agent in the ROC to open a securities trading account with a local brokerage firm (after receiving an approval from the TWSE) and a bank account (the securities trading account and the bank account collectively, the “Accounts”), to pay ROC taxes, remit funds, exercise shareholders’ rights and perform such other functions as you may designate upon such withdrawal. In addition, you will be required to appoint a custodian bank to hold the securities in safekeeping, make confirmation and settle trades and report all relevant information. Without the opening of such Accounts, the withdrawing holder would be unable to hold or subsequently sell the underlying Shares withdrawn from the depositary receipt facility on the TWSE or otherwise. In addition, you will be required to register with the TWSE for making investments in the ROC securities market prior to withdrawing Shares. These laws may change from time to time. We cannot assure you that current ROC law will remain in effect or that future changes in ROC law will not adversely affect your ability to withdraw the Shares from the applicable GDS facility.

Holders of GDSs withdrawing Individual Scripless Certificates of Payment or Shares represented by GDSs are also required under current ROC law and regulations to appoint an agent in the ROC for filing tax returns and making tax payments. Such agent must meet certain qualifications set by the FSC and, upon appointment, becomes a guarantor of such withdrawing holder’s ROC tax obligations. Evidence of the appointment of such agent and the approval of such appointment by the ROC tax authorities may be required as conditions to such withdrawing holder’s repatriation of the proceeds from the sale of the withdrawn Individual Scripless Certificates of Payment or Shares. There can be no assurance that such withdrawing holder will be able to appoint and obtain approval for such agent in a timely manner.

Pursuant to the Regulations Governing Mainland China Investor‘s Securities Investment and Futures Trading in Taiwan, or the PRC Regulations, a qualified institutional investor which has been approved by the competent authority regulating the securities industry in PRC, or QDII, is permitted to make securities investments or trade futures in the ROC. The total investment amount allowed to be remitted into the ROC by all QDIIs cannot exceed US$500 million, and by each QDII cannot exceed US$100 million. A custodian shall be appointed by each QDII to apply with the TWSE for the remittance. In addition, for a QDII to make investment in a financial institution, such as us, each QDII shall not hold 5% or more of the issued shares of the Company and all PRC investors (including QDIIs), in aggregate, shall not hold 10% or more of the issued shares of the Company. Subject to the compliance with the foregoing applicable laws and regulations of the ROC, a QDII may request withdrawal of, and holds the Shares represented by the GDSs.

Other than a QDII, a PRC person may, pursuant to the Regulations Governing the Approval of Investment in Taiwan by the Mainland China Investors, make an investment in the ROC with prior investment approval from the Investment Commission of the Ministry of Economic Affairs, or MOEA, and other competent authority. For such PRC investor, to make an investment in an ROC bank, such as us, the PRC-ROC Banking Activities Regulations shall also apply. According to the PRC-ROC Banking Activities Regulations, currently, only a PRC bank meeting certain criteria and obtaining relevant approvals is allowed to invest in one ROC bank and the total investment in such ROC bank shall not exceed 5% of its total issued and outstanding voting shares. Additionally, PRC investors (including QDIIs) in the aggregate shall not hold 10% or more of such ROC bank’s issued and outstanding voting shares. Subject to the compliance with the foregoing laws and regulations of the ROC, a non-QDII PRC bank may request withdrawal of and hold, the Shares represented by the GDSs.

If the withdrawal of Individual Scripless Certificates of Payment or Shares by a holder of GDSs would cause such holder, individually or together with its group of related persons jointly, to hold more than 10%, 25%

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or 50% of our total issued and outstanding voting shares, such holder must apply to the FSC for approval in advance of such withdrawal. Prior to making such withdrawal, such holder will be required to certify that the applicable shareholding restrictions under the ROC Banking Law have been satisfied in connection with such withdrawal, including the obtaining of such approval from the FSC.

Subject to the withdrawal of deposited property being permitted under ROC laws and regulations, you may also request that our Shares or Individual Scripless Certificates of Payment represented by your GDSs be sold on your behalf. The Depositary may require that you deliver your request for sale in writing. Any sale of the Individual Scripless Certificate of Payment or Shares will be conducted according to applicable ROC law through a securities company in the ROC on the TWSE or in another manner as is permitted under applicable ROC law. Any sale will be at your risk and expense. You may also be required to enter into a separate agreement to cover the terms of the sale of our Shares or Individual Scripless Certificates of Payment.

Upon receipt of any proceeds from any sale, subject to any restrictions imposed by ROC law and regulations, the Depositary shall convert the proceeds into US dollars and distribute the proceeds to you, net of any fees, expenses, taxes or governmental charges (including, without limitation, any ROC and U.S. taxes) incurred in connection with the sale. Although sales of GDSs by a non-resident individual or corporation that has no fixed place of business or other permanent establishment or business agent in the territory of the ROC are not currently subject to ROC taxation on capital gains, sales of our Shares or Individual Scripless Certificates of Payment by a non-resident individual holder is subject to ROC taxation on capital gains.

In order to withdraw or instruct the sale of the Shares or Individual Scripless Certificates of Payment represented by your GDSs, you will be required to pay the fees for cancellation of GDSs and any charges and taxes payable upon the transfer of the Shares or Individual Scripless Certificates of Payment being withdrawn and you will be required to provide to the Depositary the applicable withdrawal certification. You assume the risk for delivery of all funds and securities upon withdrawal. Once canceled, the GDSs will not have any rights under the corresponding Deposit Agreement.

You will not be entitled to withdraw or instruct the sale of interests in Individual Scripless Certificate(s) of Payment underlying the GDSs issued in this offering until on or about the fourth ROC Business Day following the Closing Date. In addition, under ROC market practice, you will not be able to receive the underlying Individual Scripless Certificate of Payment or the Shares for an additional two ROC Business Days.

If you hold a GDR certificate registered in your name, the Depositary may ask you to provide proof of identity and genuineness of any signature and such other documents as the Depositary may deem appropriate before it will cancel your GDSs. The withdrawal of the Shares or Individual Scripless Certificates of Payment represented by your GDSs may be delayed until the Depositary receives satisfactory evidence of compliance with all applicable laws and regulations. Please keep in mind that the Depositary will only accept GDSs for cancellation that represent a whole number of securities on deposit.

We have reporting obligations under ROC law in respect of the GDS facilities. In order to enable us to gather the information necessary for these reporting obligations, you will be asked to complete a certification upon withdrawal of Shares or Individual Scripless Certificates of Payment from the applicable GDS facility. In this certification you will be asked to disclose, among other information, the name, nationality and address of the beneficial owner of the GDSs presented for cancellation, the number of Shares owned by the beneficial owner and whether certain affiliations exist between the beneficial owner and us. The Depositary will refuse to release the Shares or Individual Scripless Certificates of Payment to you until you deliver a completed and signed certification to it.

In addition, the Depositary shall not deliver interests in Individual Scripless Certificate(s) of Payment or Shares to a surrendering holder of GDSs unless such holder presents evidence of payment of any securities transaction tax which may be imposed under ROC law unless we shall have advised the Depositary that no such

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tax is assessable in connection with the withdrawal of the Individual Scripless Certificate(s) of Payment or Shares hereunder.

If the Shares or Individual Scripless Certificates of Payment are withdrawn from the depositary facility, such holder will be required to provide information to enable our compliance with our obligations set forth under the laws and regulations of the ROC, including a certification to the Depositary that:

• the holder is or is not a “related person”, as such term is defined in the applicable Deposit Agreement, to us;

• the holder will own a certain number of the Shares after cancellation of the GDSs surrendered thereby, as well as a certain number of GDSs representing the Shares after cancellation of the GDSs surrendered thereby;

• the holder, or the person on whose account he acts, is the beneficial owner of the GDSs surrendered to the Depositary thereby;

• the name, address and nationality of the beneficial owner of the GDSs, as included upon presentation of GDSs for cancellation, is true and correct;

• the number of GDSs surrendered and the number of Shares withdrawn, as included upon presentation of GDSs for cancellation, is true and correct;

• if the presenter is a broker-dealer, the owner of the account for which he is acting has confirmed the accuracy of the above representations;

• the holder is or is not a PRC person meeting the qualifications required under the laws of the ROC (“Qualified PRC Person”), as such term is defined in the applicable laws of the ROC; and

• if the holder is a Qualified PRC Person, or will hold 10%, 25% or 50% of the total issued and outstanding voting Shares or Individual Scripless Certificates of Payment, it has made all registrations and/or obtained all government approvals required under the laws of the ROC to hold the Shares or Individual Scripless Certificates of Payment underlying the GDSs submitted for cancellation and withdrawal and its ownership of Shares will not result in a violation of applicable laws of the ROC.

The Deposit Agreements may not be modified to impair your right to withdraw the securities represented by your GDSs unless there are:

• temporary delays because (1) the transfer books for the Shares or GDSs are closed, or (2) register of shareholders is closed due to a shareholders’ meeting or a payment of dividends;

• obligations to pay fees, taxes and similar charges; and

• restrictions imposed by law or regulation.

When you request the withdrawal of the Shares represented by your Rule 144A GDSs, you will be required to provide the Depositary with a withdrawal certification stating, inter alia, that:

• you acknowledge that the Shares represented by your Rule 144A GDSs have not been and will not be registered under the Securities Act or with any securities regulatory authority in any state or other jurisdiction in the United States; and

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• you certify that either:

• (X) you are a “Qualified Institutional Buyer” (as defined in Rule 144A) who is the beneficial owner of the Rule 144A GDSs presented for cancellation, or you are acting on behalf of a Qualified Institutional Buyer who is the beneficial owner of the Rule 144A GDSs presented for cancellation and

  • (i) you have, or the person on whose behalf you are acting has, sold or agreed to sell the Rule 144A GDSs or Shares to a person other than a “U.S Person (as defined in Regulation S) in accordance with Regulation S, or

  • (ii) you have, or the person on whose behalf you are acting has, sold or agreed to sell the Rule 144A GDSs or Shares to another “Qualified Institutional Buyer” (as defined in Rule 144A) in a transaction meeting the requirements of Rule 144A, or

  • (iii) you (or the person on whose behalf you are acting) will be the beneficial owner of the Shares upon withdrawal and you (or the person on whose behalf you are acting) (x) will not deposit the Shares in any depositary receipt facility that is not a “restricted” depositary receipt facility and (y) will sell the Shares only

    • (a) to another Qualified Institutional Buyer (as defined in Rule 144A) in a transaction meeting the requirements of Rule 144A, or

    • (b) outside the United States to a person other than “U.S. Person” (as defined in Regulation S) in accordance with Regulation S, or

    • (c) in accordance with Rule 144 (if available), or

    • (d) pursuant to an effective registration statement under the Securities Act; or

• (Y) you are a person other than a “U.S. Person” (as defined in Regulation S) and are located outside the United States and you acquired or agreed to acquire the Rule 144A GDSs or Shares outside the United States and will be the beneficial owner of the Rule 144A GDSs or Shares upon withdrawal.

When you request the withdrawal of the shares represented by your Regulation S GDSs, you may be required to provide the Depositary with a withdrawal certification as we and the Depositary may require.

Voting Rights

You may instruct the Depositary to exercise the voting rights for the Shares represented by your GDSs only in accordance with the Deposit Agreements and as described below. The voting rights of holders of Shares are described in “Description of Our Share Capital—Voting Rights”

The Depositary will distribute to you any notice of shareholders’ meeting received from us together with information explaining how to instruct the Depositary to exercise the voting rights of the securities represented by GDSs. If we fail to provide in a timely manner the Depositary with an English language translation of our notice of meeting or other materials related to any meeting of owners of Shares, the Depositary will endeavor to cause all the deposited securities represented by GDSs to be present at the applicable meeting, insofar as practicable and permitted under applicable law, but will not cause those securities to be voted.

Subject to the applicable Deposit Agreement, if the Depositary timely receives voting instructions from a holder of GDSs, it will endeavor to vote the Shares or other securities represented by the holder’s GDSs in accordance with such voting instructions. If the Depositary receives timely voting instructions from a holder of GDSs which fail to specify the manner in which the Shares or other securities represented by the holder’s GDSs

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are to be voted, the Depositary will deem the holder of the GDSs to have instructed the Depositary to vote in favor of the items set forth in such voting instructions. Holders of GDSs in respect of which the Depositary does not receive timely voting instructions will be deemed to have instructed the Depositary to authorize the Company’s Chairman of the Board of Directors or his/her designated person to vote the Shares or other securities represented by such GDSs in his or her discretion, provided that the Depositary received notice of the meeting or solicitation of vote from the Company in a timely manner as specified in the applicable Deposit Agreement. No such authorization will be given with respect to any matter as to which the Company informs the Depositary that (i) the Company does not wish such authorization to be given; (ii) substantial opposition exists, or (iii) the rights of the shareholders of the Company will be materially adversely affected.

By accepting and continuing to hold GDSs or any interest therein, a holder will be deemed to have agreed to the voting provisions set forth in the applicable Deposit Agreement, as such provisions may be amended from time to time to comply with applicable ROC law.

Please note that the ability of the Depositary to carry out voting instructions may be limited by practical and legal limitations and the terms of the securities on deposit. We cannot assure you that you will receive voting materials in time to enable you to return voting instructions to the Depositary in a timely manner.

Fees and Charges

As a GDS holder, you will be required to pay the following service fees under the terms of the applicable Deposit Agreement:

Service Issuance of GDSs Cancellation of GDSs Distribution of GDSs pursuant to securities dividends, free securities distributions or exercise of rights Distribution of cash dividends or other cash distributions Distribution of securities other than GDSs or rights to purchase additional GDSs Depositary services fee Transfer of GDR certificates	Fees
	Up to US$0.05 per GDS issued Up to US$0.05 per GDS canceled Up to US$0.05 per GDS held Up to US$0.05 per GDS held Up to US$0.05 per GDS held US$0.05 per GDS held as of any record date established by the Depositary US$1.50 per certificate presented for transfer

As a GDS holder you will also be responsible to pay certain charges such as:

• fees for the transfer and registration of Shares charged by the registrar and transfer agent for the Shares in the ROC upon deposits and withdrawals of Shares;

• expenses incurred for converting foreign currency into US dollars;

• expenses for cable, telex and fax transmissions and for delivery of securities;

• taxes and duties upon the transfer of securities when Shares are deposited or withdrawn from deposit;

• Fees and expenses incurred in connection with the delivery or servicing of Shares on deposit.

We have agreed to pay certain other charges and expenses of the Depositary. Note that the fees and charges you may be required to pay may vary over time and may be changed by us and by the Depositary. You will receive prior notice of such changes.

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Amendments and Termination

We may agree with the Depositary to modify the Deposit Agreements at any time without your consent. We undertake to give GDS holders 30 days’ prior notice of any modifications that would materially prejudice any of their substantial rights under the Deposit Agreements. We will not consider to be materially prejudicial to your substantial rights any modifications or supplements that are reasonably necessary for the (i) GDSs to be registered under the Securities Act, and (ii) GDSs to be settled in electronic book-entry form, in each case without imposing or increasing the fees and charges you are required to pay. In addition, we may not be able to provide you with prior notice of any modifications or supplements that are required to accommodate compliance with applicable provisions of law.

You will be bound by the modifications to the Deposit Agreements if you continue to hold your GDSs after the modifications to the applicable Deposit Agreements become effective. The Deposit Agreements cannot be amended to prevent you from withdrawing the Individual Scripless Certificate of Payment or Shares represented by your GDSs (except as permitted by law).

We have the right to direct the Depositary to terminate the Deposit Agreements. Similarly, the Depositary may in certain circumstances on its own initiative terminate the Deposit Agreements. In either case, the Depositary must give notice to the holders at least 30 days before termination.

After termination, the Depositary will continue to collect distributions received (but will not distribute any such property until you request the cancellation of your GDSs) and may sell the securities held on deposit. After the sale, the Depositary will hold the proceeds from such sale and any other funds then held for the holders of GDS in a non-interest bearing account. At that point, the Depositary will have no further obligations to holders other than to account for the funds then held for the holders of GDSs still outstanding (after deduction of applicable fees, taxes and expenses).

Books of the Depositary

The Depositary will maintain GDS holder records at its depositary office. You may inspect such records at such office during regular business hours but solely for the purpose of communicating with other holders in the interest of business matters relating to the GDSs and the Deposit Agreements.

The Depositary will maintain in New York facilities to record and process the issuance, cancellation, combination, split-up and transfer of GDSs. These facilities may be closed from time to time, to the extent not prohibited by law.

Limitations on Obligations and Liabilities

The Deposit Agreements limit our obligations and the Depositary’s obligations to you. Please note the following:

We and the Depositary are obligated only to take the actions specifically stated in the Deposit Agreements without negligence or bad faith.

The Depositary disclaims any liability for any failure to carry out voting instructions, for any manner in which a vote is cast or for the effect of any vote, provided it acts in good faith and in accordance with the terms of the Deposit Agreements.

The Depositary disclaims any liability for any failure to determine the lawfulness or practicality of any action, for the content of any document forwarded to you on our behalf or for the accuracy of any translation of such a document, for the investment risks associated with investing in Shares, for the validity or worth of the

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Shares, for any tax consequences that result from the ownership of GDSs, for the credit-worthiness of any third party, for allowing any rights to lapse under the terms of the Deposit Agreements or for the timeliness of any of our notices or for our failure to give notice.

• We and the Depositary will not be obligated to perform any act that is inconsistent with the terms of the Deposit Agreements.

• We and the Depositary disclaim any liability if we are prevented or forbidden from acting on account of any law or regulation, any provision of our Articles of Incorporation, any provision of any securities on deposit or by reason of any act of God or war or terrorism or other circumstances beyond our control.

• We and the Depositary disclaim any liability by reason of any exercise of, or failure to exercise, any discretion provided for in the Deposit Agreements or in our Articles of Incorporation or in any provisions of securities on deposit.

• We and the Depositary further disclaim any liability for any action or inaction in reliance on the advice or information received from legal counsel, accountants, any person presenting Shares for deposit, any holder of GDSs or authorized representatives thereof, or any other person believed by either of us in good faith to be competent to give such advice or information.

• We and the Depositary also disclaim liability for the inability by a holder to benefit from any distribution, offering, right or other benefit which is made available to holders of Shares but is not, under the terms of the Deposit Agreements, made available to you.

• We and the Depositary may rely without any liability upon any written notice, request or other document believed to be genuine and to have been signed or presented by the proper parties.

• We and the Depositary also disclaim any liability for consequential or punitive damages for any breach of the terms of the applicable Deposit Agreements.

Pre-Release Transactions

To the extent permitted by applicable laws and regulations, the Depositary may, in certain circumstances, issue GDSs before receiving a deposit of Shares or release Shares before receiving GDSs for cancellation. These transactions are commonly referred to as “pre-release transactions”. The Deposit Agreements limit the aggregate size of pre-release transactions and impose a number of conditions on such transactions, including the need to receive collateral, the type of collateral required and the representations required from brokers. The Depositary may retain the compensation received from the pre-release transactions.

Taxes

You will be responsible for the taxes and other governmental charges payable on the GDSs and the securities represented by the GDSs. We, the Depositary and the Custodian may deduct from any distribution the taxes and governmental charges payable by holders and may sell any and all property on deposit to pay the taxes and governmental charges payable by holders. You will be liable for any deficiency if the sale proceeds do not cover the taxes that are due.

The Depositary may refuse to issue GDSs, to deliver, transfer, split and combine GDR certificates or to release securities on deposit until all taxes and charges are paid by the applicable holder. The Depositary and the Custodian may take reasonable administrative actions to obtain tax refunds and reduced tax withholding for any distributions on your behalf. However, you may be required to provide to the Depositary and to the Custodian

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proof of taxpayer status and residence and such other information as the Depositary and the Custodian may require to fulfill legal obligations. You are required to indemnify us, the Depositary and the Custodian for any claims with respect to taxes based on any tax benefit obtained for you.

Foreign Currency Conversion

Subject to ROC law, the Depositary will arrange for the conversion of all foreign currency received into US dollars if such conversion is practicable, and it will distribute the US dollars in accordance with the terms of the Deposit Agreements. You may have to pay fees and expenses incurred in converting foreign currency, such as fees and expenses incurred in complying with currency exchange controls and other governmental requirements.

If the conversion of foreign currency is not practicable or lawful, or if any required approvals are denied or not obtainable at a reasonable cost or within a reasonable period, the Depositary may take the following actions in its discretion:

• convert the foreign currency to the extent practicable and lawful and distribute the US dollars to the holders for whom the conversion and distribution is lawful and practicable;

• distribute the foreign currency to holders for whom the distribution is lawful and practicable; or

• hold the foreign currency (without liability for interest) for the applicable holders.

Legends

The Rule 144A GDRs issued to represent the Rule 144A GDSs offered for sale herein shall contain, and all owners of Rule 144A GDSs shall be bound by the terms of, the following legend:

NEITHER THIS RULE 144A GDR, NOR THE RULE 144A GDSs EVIDENCED HEREBY, NOR THE RULE 144A DEPOSITED SECURITIES REPRESENTED THEREBY HAVE BEEN OR WILL BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE OFFER, SALE, PLEDGE OR OTHER TRANSFER OF THIS RULE 144A GDR, THE RULE 144A GDSs EVIDENCED HEREBY AND THE RULE 144A DEPOSITED SECURITIES REPRESENTED THEREBY IS SUBJECT TO CERTAIN CONDITIONS AND RESTRICTIONS. THE HOLDERS AND THE BENEFICIAL OWNERS HEREOF, BY PURCHASING OR OTHERWISE ACQUIRING THIS RULE 144A GDR AND THE RULE 144A GDSs EVIDENCED HEREBY, ACKNOWLEDGE THAT SUCH RULE 144A GDR, THE RULE 144A GDSs EVIDENCED HEREBY AND THE RULE 144A DEPOSITED SECURITIES REPRESENTED THEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND AGREE FOR THE BENEFIT OF THE COMPANY AND THE DEPOSITARY THAT THIS RULE 144A GDR, THE RULE 144A GDSs EVIDENCED HEREBY AND THE RULE 144A DEPOSITED SECURITIES REPRESENTED THEREBY MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE LAWS OF THE STATES, TERRITORIES AND POSSESSIONS OF THE UNITED STATES GOVERNING THE OFFER AND SALE OF SECURITIES AND ONLY (1) OUTSIDE THE UNITED STATES TO A PERSON OTHER THAN A U.S. PERSON (AS SUCH TERMS ARE DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) TO A PERSON WHOM THE HOLDER AND THE BENEFICIAL OWNER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PROVIDED BY RULE 144 UNDER THE SECURITIES ACT

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(IF AVAILABLE), OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT.

THE BENEFICIAL OWNER OF RULE 144A DEPOSITED SECURITIES RECEIVED UPON CANCELLATION OF ANY RULE 144A GDS MAY NOT DEPOSIT OR CAUSE TO BE DEPOSITED SUCH SECURITIES INTO ANY DEPOSITARY RECEIPT FACILITY ESTABLISHED OR MAINTAINED BY A DEPOSITARY BANK, OTHER THAN A RULE 144A RESTRICTED DEPOSITARY RECEIPT FACILITY, SO LONG AS SUCH SECURITIES ARE “RESTRICTED SECURITIES” WITHIN THE MEANING OF RULE 144(a)(3) UNDER THE SECURITIES ACT. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR RESALE OF THE RULE 144A DEPOSITED SECURITIES OR THE RULE 144A GDSs.

EACH HOLDER AND BENEFICIAL OWNER, BY ITS ACCEPTANCE OF THIS RULE 144A GDR OR A BENEFICIAL INTEREST IN THE RULE 144A GDSs EVIDENCED HEREBY, AS THE CASE MAY BE, REPRESENTS THAT IT UNDERSTANDS AND AGREES TO THE FOREGOING RESTRICTIONS.

The Regulation S GDRs issued to represent the Regulation S GDSs offered for sale herein shall contain, and all owners of Regulation S GDSs shall be bound by the terms of, the following legend:

NEITHER THIS REGULATION S GDR, NOR THE REGULATION S GDSs EVIDENCED HEREBY, NOR THE REGULATION S DEPOSITED SECURITIES REPRESENTED THEREBY HAVE BEEN OR WILL BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE OFFER, SALE, PLEDGE OR OTHER TRANSFER OF THIS REGULATION S GDR, THE REGULATION S GDSs EVIDENCED HEREBY AND THE REGULATION S DEPOSITED SECURITIES REPRESENTED THEREBY EACH IS SUBJECT TO CERTAIN CONDITIONS AND RESTRICTIONS. THE HOLDERS AND THE BENEFICIAL OWNERS HEREOF, BY PURCHASING OR OTHERWISE ACQUIRING THIS REGULATION S GDR AND THE REGULATION S GDSs EVIDENCED HEREBY, ACKNOWLEDGE THAT SUCH REGULATION S GDR, THE REGULATION S GDSs EVIDENCED HEREBY AND THE REGULATION S DEPOSITED SECURITIES REPRESENTED THEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT.

Information Relating To the Depositary

Citibank, N.A. (“Citibank”) has been appointed as Depositary pursuant to the Deposit Agreements. Citibank is an indirect wholly owned subsidiary of Citigroup Inc., a Delaware corporation. Citibank is a commercial bank that, along with its subsidiaries and affiliates, offers a wide range of banking and trust services to its customers throughout the United States and the world.

Citibank was originally organized on June 16, 1812, and is now a national banking association organized under the National Bank Act of 1864 of the United States of America. Citibank is primarily regulated by the United States Office of the Comptroller of the Currency. Its principal executive office is at 399 Park Avenue, New York, NY 10043.

Citibank’s Consolidated Balance Sheets are set forth in Citigroup’s most recent Annual Report (audited balance sheet) and Quarterly Report (unaudited), each on file on Form 10K and Form 10Q, respectively, with the United States Securities and Exchange Commission.

Citibank’s Articles of Association and By-laws, each as currently in effect, together with Citigroup’s Annual Report on Form 10-K and Quarterly Report on Form 10-Q are available for inspection at the Depositary Receipt office of Citibank, 388 Greenwich Street, New York, New York 10013.

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A copy of the Depositary’s Articles, as amended, together with copies of Citibank’s most recent quarterly financial statements and annual report are also available for inspection, free of charge, at the offices of the Luxembourg Intermediary, The Bank of New York Mellon (Luxembourg) S.A., located at Vertigo Building-Polaris, 2-4, rue Eugène Ruppert, L-2453 Luxembourg.

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TAXATION

Prospective investors should consult their own advisers concerning the tax consequences of an investment in the GDSs or Shares.

ROC Taxation

The following summary addresses the principal ROC tax consequences of the ownership and disposition of the Shares or GDSs by a non-resident individual or non-resident entity that holds such Shares or GDSs (each a “Non-ROC Holder”). A “non-resident individual” (a “Non-ROC Individual Holder”) is a foreign national individual who is not physically present in the ROC for 183 days or more during any calendar year in which he or she owns the Shares or GDSs and a ‘‘non-resident entity’’ (a “Non-ROC Entity Holder”) is a corporation or a non-corporate body that is organized under the laws of a jurisdiction other than the ROC and does not have a fixed place of business or business agent in the ROC.

Dividends

Dividends (whether in cash or Shares) declared by the Company out of its retained earnings and distributed to a Non-ROC Holder in respect of the Shares are subject to ROC withholding tax, currently at the rate of 20%, on the amount of the distribution (in the case of cash dividends) or on the par value of the Shares (in the case of stock dividends) unless a lower withholding rate is provided under an applicable tax treaty between the ROC and the jurisdiction where the Non-ROC Holder is a resident. A 10% retained earnings tax is imposed on an ROC company’s after-tax earnings generated after January 1, 1998 that are not distributed in the following year. The retained earnings tax so paid reduces the retained earnings available for future distribution. When the Company declares a dividend out of those retained earnings, a maximum amount of up to 10% of the declared dividend is credited against the 20% withholding tax imposed on a dividend to the Non-ROC Holders so that the actual withholding tax imposed on the non-ROC Holders may be less than 20%. Distributions of stock dividends declared by the Company out of its capital reserves are not subject to withholding tax, except under limited circumstances.

Capital Gains

Sales of the GDSs by Non-ROC Holders are regarded as transactions relating to property located outside the ROC and thus any resultant gains are currently not subject to ROC income tax.

Starting from January 1, 2013, Non-ROC Entity Holders remain exempt from income tax on capital gains from the sale or disposal of the Shares. However, Non-ROC Individual Holders are now subject to ROC income tax on capital gains from the sale or disposal of the Shares. Capital loss incurred therefrom can be deducted from capital gains in calculating the net capital gain and income tax liability, but cannot be carried forward to subsequent years. Capital gains are taxed at a flat rate of 15%. In addition, only 50% of the net capital gains are subject to income tax if the Non-ROC Individual Holder has held the underlying Shares for one year or longer. As a result, the tax agent of each Non-ROC Individual Holder should pay the income tax payable, if any, and file an income tax return in May 2014 for the capital gains that the Non-ROC Individual Holder generates in year 2013.

Securities Transaction Tax

Securities transaction tax will be withheld at the rate of 0.3% of the transaction price upon a sale of the Shares. Nevertheless, transfers of the GDSs by Non-ROC Holders are not subject to ROC securities transaction tax.

Pre-emptive Rights

Distributions of statutory subscription rights for the Shares in compliance with the ROC Company Law are not subject to ROC tax. Proceeds derived from sales of statutory subscription rights evidenced by securities are

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subject to securities transaction tax, currently at the rate of 0.3% of the gross amount received. Non-ROC Entity Holders remain exempt, after January 1, 2013, from income tax on capital gains from such sale. However, Non-ROC Individual Holders are now subject to ROC income tax on capital gains from such sale. Proceeds derived from sales of statutory subscription rights which are not evidenced by securities are subject to income tax at the rate of 20% of the gains realized. Subject to compliance with ROC laws, the Company has the sole discretion to determine whether statutory subscription rights shall be evidenced by the issuance of securities.

Estate Tax and Gift Tax

Subject to allowable exclusions, deductions and exemptions, ROC estate tax is payable on any property located within the ROC of a deceased Non-ROC Individual Holder, and ROC gift tax is payable on any property located within the ROC donated by a Non-ROC Individual Holder. Estate tax and gift tax are currently imposed at the rate of 10%. Under ROC estate and gift tax law, the Shares are deemed located within the ROC regardless of the location of the owner. Nevertheless, it is unclear whether a holder of the GDSs will be considered to own the Shares for this purpose.

Tax Treaties

At present, the ROC has income tax treaties with Australia, Gambia, Indonesia, Malaysia, Macedonia, the United Kingdom, the Netherlands, New Zealand, Singapore, South Africa, Swaziland, Vietnam, Senegal, Belgium, Sweden, Denmark, Israel, Paraguay, Hungary, France, India, Slovakia, Switzerland, Germany and Thailand which limit the rate of withholding tax on dividends or interest paid by ROC companies to residents of these countries. Holders of the Shares or GDSs should consult their own tax advisers concerning their eligibility for benefits under an income tax treaty with respect to the Shares or GDSs.

United States Federal Income Tax Considerations

To ensure compliance with Internal Revenue Service Circular 230, you are hereby notified that any discussion of tax matters set forth in this offering memorandum was written in connection with the promotion or marketing of the transactions or matters addressed herein and was not intended or written to be used, and cannot be used by any prospective investor, for the purpose of avoiding tax-related penalties under federal, state or local tax law. Each prospective investor should seek advice based on its particular circumstances from an independent tax advisor.

The following discussion describes certain United States federal income tax consequences of the ownership of our Common Shares or GDSs as of the date hereof. The discussion is only applicable to United States Holders (as defined below) who hold our Common Shares or GDSs as capital assets, who do not have a fixed place of business or other permanent establishment in the ROC, who are not citizens of the ROC and who are not physically present in the ROC for 183 days or more within a calendar year. As used herein, the term “United States Holder” means a beneficial owner of a Common Share or GDS that is for United States federal income tax purposes:

• an individual citizen or resident of the United States;

• a corporation (or other entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

• an estate, the income of which is subject to United States federal income taxation regardless of its source; or

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• a trust, if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust, or (2) has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person.

This discussion does not represent a detailed description of the United States federal income tax consequences applicable to you if you are subject to special treatment under the United States federal income tax laws, including if you are:

• a dealer in securities or currencies;

• a financial institution;

• a regulated investment company;

• a real estate investment trust;

• an insurance company;

• a tax-exempt organization;

• a person holding our Common Shares or GDSs as part of a hedging, integrated or conversion transaction, a constructive sale or a straddle;

• a trader in securities that has elected the mark-to-market method of accounting for your securities;

• a person liable for alternative minimum tax;

• a person who owns or is deemed to own 10% or more of our voting stock;

• a partnership or other pass-through entity for United States federal income tax purposes; or

• a person whose “functional currency” is not the United States dollar.

The discussion below is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be replaced, revoked or modified so as to result in United States federal income tax consequences different from those discussed below. In addition, this discussion is based, in part, upon representations made by the Depositary to us and assumes that the Deposit Agreements, and all other related agreements, will be performed in accordance with their terms.

If a partnership holds Common Shares or GDSs, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our Common Shares or GDSs, you should consult your tax advisors.

This discussion does not contain a detailed description of all the United States federal income tax consequences to you in light of your particular circumstances and does not address the effects of any state, local or non-United States tax laws. If you are considering the purchase, ownership or disposition of our Common Shares or GDSs, you should consult your own tax advisors concerning the United States federal income tax consequences to you in light of your particular situation as well as any consequences arising under the laws of any other taxing jurisdiction.

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GDSs

If you hold GDSs, for United States federal income tax purposes, you generally will be treated as the owner of the underlying Common Shares that are represented by such GDSs. Accordingly, deposits or withdrawals of Common Shares for GDSs will not be subject to United States federal income tax.

Taxation of Dividends

Subject to the discussion under “—Passive Foreign Investment Company” below, the gross amount of distributions on Common Shares or GDSs (including any net amounts withheld to reflect ROC withholding taxes) will be taxable as dividends, to the extent paid out of our current or accumulated earnings and profits, as determined under United States federal income tax principles. In determining the net amounts withheld in respect of ROC taxes, any reduction in the amount withheld on account of an ROC credit in respect of the 10% retained earnings tax imposed on us is not considered a withholding tax and will not be treated as distributed to you or creditable by you against your United States federal income tax. Such income (including any withheld taxes) will be includable in your gross income as ordinary income on the day actually or constructively received by you, in the case of Common Shares, or by the Depositary, in the case of GDSs. Such dividends will not be eligible for the dividends received deduction allowed to corporations under the Code.

Under current law, dividends received by non-corporate United States investors on shares (or GDSs backed by such shares) of certain foreign corporations may be subject to United States federal income tax at lower rates than other types of ordinary income if certain conditions are met. We do not believe that dividends that we pay currently meet these conditions. You should consult your own tax advisors regarding the application of these rules given your particular circumstances.

The amount of any dividend paid in NT dollars will equal the United States dollar value of the NT dollars you receive, calculated by reference to the exchange rate in effect on the date you actually or constructively receive the dividend, which in the case of a GDS will be the date actually or constructively received by the Depositary, regardless of whether the NT dollars are actually converted into United States dollars. If the NT dollars received as a dividend are converted into United States dollars on the date of receipt, you generally will not be required to recognize foreign currency gain or loss in respect of the dividend income. If the NT dollars received as a dividend are not converted into United States dollars on the date of receipt, you will have a basis in the NT dollars equal to their United States dollar value on the date of receipt. Any gain or loss you realize on a subsequent conversion or other disposition of the NT dollars will be ordinary income or loss from sources within the United States for foreign tax credit limitation purposes.

Subject to certain conditions and limitations, ROC withholding taxes on dividends may be treated as foreign taxes eligible for credit against your United States federal income tax liability. For purposes of calculating the foreign tax credit, dividends paid on Common Shares or GDSs will be treated as income from sources outside the United States and will generally constitute passive category income. Further, in certain circumstances, if you:

• have held Common Shares or GDSs for less than a specified minimum period during which you are not protected from risk of loss, or

• are obligated to make payments related to the dividends,

you will not be allowed a foreign tax credit for foreign taxes imposed on dividends paid on the Common Shares or GDSs. The rules governing the foreign tax credit are complex. You are urged to consult your tax advisors regarding the availability of the foreign tax credit under your particular circumstances.

To the extent that the amount of any distribution exceeds our current and accumulated earnings and profits for a taxable year, as determined under United States federal income tax principles, the distribution will first be

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treated as a tax-free return of capital, causing a reduction in the adjusted basis of the Common Shares or GDSs, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain recognized on a sale or exchange. We do not expect to determine earnings and profits in accordance with United States federal income tax principles. Therefore, you should expect that a distribution will generally be treated as a dividend (as discussed above).

Distributions of Common Shares, GDSs or rights to subscribe for Common Shares that are received as part of a pro rata distribution to all of our shareholders generally will not be subject to United States federal income tax.

As discussed above under the caption “ROC Taxation—Dividends,” the ROC imposes a 20% withholding tax on the par value of any Common Shares distributed by us as a stock dividend to a United States Holder of Common Shares or GDSs. However, the amount of ROC taxes withheld on a distribution is determined based on the 20% withholding tax reduced by a credit for any retained earnings tax paid by us. Subject to certain significant conditions and limitations set forth in the Code, actual ROC taxes withheld on such stock dividends may be treated as foreign taxes eligible for credit against a United States Holder’s United States federal income tax liability. However, as discussed above, such stock dividends may not be subject to United States federal income tax (provided such stock dividends are pro rata). Consequently, a United States Holder may not be able to use the credit attributable to such ROC taxes unless it can be applied to other foreign source income in the appropriate limitation category.

Passive Foreign Investment Company

Based on the projected composition of our income and valuation of our assets, including goodwill, we do not expect to be a passive foreign investment company (a “PFIC”) for our taxable year ending December 31, 2014, and we do not expect to become one in the future, although there can be no assurance in this regard. Given that the determination of PFIC status with respect to both 2014 and future years depends on future facts and circumstances, including the nature of our income and the composition and value of our assets in each year, we cannot provide assurance with respect to our expectation regarding our PFIC status. In addition, this determination is based in part upon certain proposed United States Treasury regulations that are not yet in effect (the “Proposed Regulations”) and are subject to change in the future. The Proposed Regulations and other administrative pronouncements from the Internal Revenue Service provide special rules for determining the character of income and assets derived in the banking, insurance and securities businesses for purposes of the PFIC rules. Although we believe we have adopted a reasonable interpretation of the Proposed Regulations and administrative pronouncements, there can be no assurance that the Internal Revenue Service will follow the same interpretation.

In general, we will be a PFIC for any taxable year in which:

• at least 75% of our gross income is passive income; or

• at least 50% of the value (determined on a quarterly basis) of our assets is attributable to assets that produce or are held for the production of passive income.

For this purpose, passive income generally includes dividends, interest, royalties and rents (other than royalties and rents derived in the active conduct of a trade or business and not derived from a related person). If we own at least 25% (by value) of the stock of another corporation, we will be treated, for purposes of the PFIC tests, as owning our proportionate share of the other corporation’s assets and receiving our proportionate share of the other corporation’s income. The determination of whether we are a PFIC is made annually. Accordingly, it is possible that we may become a PFIC in the current or any future taxable year due to changes in our asset or income composition. Because we have valued our goodwill based on the market value of our equity, a decrease in the price of our Common Shares or GDSs may also result in our becoming a PFIC. In addition, the

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composition of our income and assets will be affected by how, and how quickly, we spend the cash we raise in this offering. If we are a PFIC for any taxable year during which you hold our Common Shares or GDSs, you will be subject to special tax rules discussed below. If we are a PFIC for any taxable year during which you hold our Common Shares or GDSs, you will be subject to special tax rules with respect to any “excess distribution” received and any gain realized from a sale or other disposition, including a pledge, of Common Shares or GDSs. Distributions received in a taxable year that are greater than 125% of the average annual distributions received during the shorter of the three preceding taxable years or your holding period for the Common Shares or GDSs will be treated as excess distributions. Under these special tax rules:

• the excess distribution or gain will be allocated ratably over your holding period for the Common Shares or GDSs;

• the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, will be treated as ordinary income; and

• the amount allocated to each other year will be subject to tax at the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

You will be required to file Internal Revenue Service Form 8621 if you hold our Common Shares or GDSs in any year in which we are classified as a PFIC.

If we are a PFIC for any taxable year during which you hold our Common Shares or GDSs and any of our non-United States subsidiaries is also a PFIC, you would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules. You are urged to consult your tax advisors about the application of the PFIC rules to any of our subsidiaries.

In certain circumstances, in lieu of being subject to the excess distribution rules discussed above, you may make an election to include gain on the stock of a PFIC as ordinary income under a mark-to-market method, provided that such stock is regularly traded on a qualified exchange. The Common Shares are listed on the TWSE, and it is intended that the GDSs will be listed on the Luxembourg Stock Exchange, each of which must meet certain trading, listing, financial disclosure and other requirements to be treated as qualified exchanges under applicable Treasury regulations for purposes of the mark-to-market election, and no assurance can be given that the Common Shares or the GDSs will be “regularly traded” for purposes of the mark-to-market election.

If you make an effective mark-to-market election, you will include in each year that we are a PFIC as ordinary income the excess of the fair market value of your Common Shares or GDSs at the end of the year over your adjusted tax basis in the Common Shares or GDSs. You will be entitled to deduct as an ordinary loss in each such year the excess of your adjusted tax basis in the Common Shares or GDSs over their fair market value at the end of the year, but only to the extent of the net amount previously included in income as a result of the mark-tomarket election. If you make an effective mark-to-market election, in each year that we are a PFIC any gain you recognize upon the sale or other disposition of your Common Shares or GDSs will be treated as ordinary income and any loss will be treated as ordinary loss, but only to the extent of the net amount previously included in income as a result of the mark-to-market election.

Your adjusted tax basis in the Common Shares or GDSs will be increased by the amount of any income inclusion and decreased by the amount of any deductions under the mark-to-market rules. If you make a mark-tomarket election it will be effective for the taxable year for which the election is made and all subsequent taxable years unless the Common Shares or GDSs are no longer regularly traded on a qualified exchange or the Internal Revenue Service consents to the revocation of the election. You are urged to consult your tax advisors about the availability of the mark-to-market election, and whether making the election would be advisable in your particular circumstances.

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Alternatively, you can sometimes avoid the rules described above by electing to treat a PFIC as a “qualified electing fund” under Section 1295 of the Code. This option is not available to you because we do not intend to comply with the requirements necessary to permit you to make this election.

You are urged to consult your tax advisors concerning the United States federal income tax consequences of holding Common Shares or GDSs if we are considered a PFIC in any taxable year.

Taxation of Capital Gains

For United States federal income tax, you will recognize taxable gain or loss on any sale or exchange of Common Shares or GDSs in an amount equal to the difference between the amount realized for the Common Shares or GDSs and your tax basis in the Common Shares or GDSs. Subject to the discussion under “—Passive Foreign Investment Company” above, such gain or loss will generally be capital gain or loss. Capital gains of non-corporate United States Holders (including individuals) derived with respect to capital assets held for more than one year are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations. Any gain or loss recognized by you will generally be treated as United States source gain or loss. Consequently, you may not be able to use the foreign tax credit arising from any ROC tax imposed on the sale or exchange of Common Shares or GDSs unless such credit can be applied (subject to applicable limitations) against tax due on other income treated as derived from foreign sources.

You should note that any ROC securities transaction tax will not be treated as a creditable foreign tax for United States federal income tax purposes, although you may be entitled to deduct such taxes, subject to applicable limitations under the Code.

Information Reporting and Backup Withholding

In general, information reporting will apply to dividends in respect of our Common Shares or GDSs and the proceeds from the sale, exchange or redemption of our Common Shares or GDSs that are paid to you within the United States (and in certain cases, outside the United States), unless you are an exempt recipient. A backup withholding tax may apply to such payments if you fail to provide a taxpayer identification number or certification of other exempt status or fail to report in full dividend and interest income. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your United States federal income tax liability provided the required information is timely furnished to the Internal Revenue Service.

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TRANSFER RESTRICTIONS

The GDSs and the Shares represented by such GDSs have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, United States persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

The GDSs are not being offered or sold in the United States except through the U.S. selling agents of certain of the Initial Purchasers only to qualified institutional buyers, as defined in Rule 144A, in reliance on the exemption from the registration requirements of the Securities Act provided by Rule 144A.

The GDSs sold outside the United States and the ROC will be offered by the Initial Purchasers in offshore transactions in reliance on Regulation S under the Securities Act.

Except in certain limited circumstances, interests in the GDSs may only be held through owning beneficial interests in the master global depositary receipts, or master GDRs. Such interests in the master GDRs will be shown on, and transfers thereof will be effected only through, records maintained by DTC and its direct and indirect participants, including Euroclear and Clearstream, Luxembourg.

Any resale or other transfer, or attempted resale or other transfer, made other than in compliance with the restrictions described below will not be recognized by us or the Depositary, as the case may be.

Transfer Restrictions on the Rule 144A GDSs

Each owner of an interest in Rule 144A GDSs, by its acceptance thereof, will be deemed to have acknowledged and represented to and agreed with us, the Depositary and the Initial Purchasers that (terms used herein that are defined in Rule 144A or Regulation S are used as defined therein):

1. the Rule 144A GDSs and the Shares represented thereby have not been and are not expected to be registered under the Securities Act or with any securities regulatory authority of any state of the United States and are subject to significant restrictions on transfer;

2. such owner is purchasing the Rule 144A GDSs for:

3. its own account or an account and it is a QIB, or

4. an account with respect to which it exercises sole investment discretion or for transfer to an account as it may lawfully direct the Depositary and that such account is a QIB;

5. such owner is aware that the transferor of such securities is relying on the exemption from registration under the Securities Act provided by Rule 144A for the transfer;

6. such owner will not offer, sell, pledge or otherwise transfer any interest in the Rule 144A GDSs or Shares represented thereby except as permitted by the applicable legend set forth in paragraph (5) below;

7. the Rule 144A GDRs will bear legends to the following effect, unless we and the Depositary determine otherwise in compliance with applicable law, and that such owner will observe the restrictions contained therein:

NEITHER THIS RULE 144A GDR, NOR THE RULE 144A GDSs EVIDENCED HEREBY, NOR THE RULE 144A DEPOSITED SECURITIES REPRESENTED THEREBY HAVE BEEN OR WILL BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR WITH ANY SECURITIES REGULATORY AUTHORITY

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OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE OFFER, SALE, PLEDGE OR OTHER TRANSFER OF THIS RULE 144A GDR, THE RULE 144A GDSs EVIDENCED HEREBY AND THE RULE 144A DEPOSITED SECURITIES REPRESENTED THEREBY IS SUBJECT TO CERTAIN CONDITIONS AND RESTRICTIONS. THE HOLDERS AND THE BENEFICIAL OWNERS HEREOF, BY PURCHASING OR OTHERWISE ACQUIRING THIS RULE 144A GDR AND THE RULE 144A GDSs EVIDENCED HEREBY, ACKNOWLEDGE THAT SUCH RULE 144A GDR, THE RULE 144A GDSs EVIDENCED HEREBY AND THE RULE 144A DEPOSITED SECURITIES REPRESENTED THEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND AGREE FOR THE BENEFIT OF THE COMPANY AND THE DEPOSITARY THAT THIS RULE 144A GDR, THE RULE 144A GDSs EVIDENCED HEREBY AND THE RULE 144A DEPOSITED SECURITIES REPRESENTED THEREBY MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE LAWS OF THE STATES, TERRITORIES AND POSSESSIONS OF THE UNITED STATES GOVERNING THE OFFER AND SALE OF SECURITIES AND ONLY (1) OUTSIDE THE UNITED STATES TO A PERSON OTHER THAN A U.S. PERSON (AS SUCH TERMS ARE DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) TO A PERSON WHOM THE HOLDER AND THE BENEFICIAL OWNER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT.

THE BENEFICIAL OWNER OF RULE 144A DEPOSITED SECURITIES RECEIVED UPON CANCELLATION OF ANY RULE 144A GDS MAY NOT DEPOSIT OR CAUSE TO BE DEPOSITED SUCH SECURITIES INTO ANY DEPOSITARY RECEIPT FACILITY ESTABLISHED OR MAINTAINED BY A DEPOSITARY BANK, OTHER THAN A RULE 144A RESTRICTED DEPOSITARY RECEIPT FACILITY, SO LONG AS SUCH SECURITIES ARE “RESTRICTED SECURITIES” WITHIN THE MEANING OF RULE 144(a)(3) UNDER THE SECURITIES ACT. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR RESALE OF THE RULE 144A DEPOSITED SECURITIES OR THE RULE 144A GDSs.

EACH HOLDER AND BENEFICIAL OWNER, BY ITS ACCEPTANCE OF THIS RULE 144A GDR OR A BENEFICIAL INTEREST IN THE RULE 144A GDSs EVIDENCED HEREBY, AS THE CASE MAY BE, REPRESENTS THAT IT UNDERSTANDS AND AGREES TO THE FOREGOING RESTRICTIONS.

Transfer Restrictions on the Regulation S GDSs

Each owner of an interest in Regulation S GDSs, by its acceptance thereof, will be deemed to have acknowledged and represented to and agreed with us, the Depositary and the Initial Purchasers that (terms used herein that are defined in Rule 144A or Regulation S are used as defined therein):

1. the Regulation S GDSs and the Shares represented thereby have not been and are not expected to be registered under the Securities Act or with any securities regulatory authority of any state of the United States and are subject to significant restrictions on transfer;

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1. such owner will not offer, sell, pledge or otherwise transfer any interest in the Regulation S GDSs or Shares represented thereby except as permitted by the applicable legend set forth in paragraph (3) below;

2. the Regulation S GDRs will bear legends to the following effect, unless we and the Depositary determine otherwise in compliance with applicable law, and that such owner will observe the restrictions contained therein:

NEITHER THIS REGULATION S GDR, NOR THE REGULATION S GDSs EVIDENCED HEREBY, NOR THE REGULATION S DEPOSITED SECURITIES REPRESENTED THEREBY HAVE BEEN OR WILL BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE OFFER, SALE, PLEDGE OR OTHER TRANSFER OF THIS REGULATION S GDR, THE REGULATION S GDSs EVIDENCED HEREBY AND THE REGULATION S DEPOSITED SECURITIES REPRESENTED THEREBY EACH IS SUBJECT TO CERTAIN CONDITIONS AND RESTRICTIONS. THE HOLDERS AND THE BENEFICIAL OWNERS HEREOF, BY PURCHASING OR OTHERWISE ACQUIRING THIS REGULATION S GDR AND THE REGULATION S GDSs EVIDENCED HEREBY, ACKNOWLEDGE THAT SUCH REGULATION S GDR, THE REGULATION S GDSs EVIDENCED HEREBY AND THE REGULATION S DEPOSITED SECURITIES REPRESENTED THEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT.

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PLAN OF DISTRIBUTION

We and the Initial Purchasers named below have entered into a purchase agreement dated January 23, 2014 with respect to the GDSs, or the Purchase Agreement Deutsche Bank AG, Hong Kong Branch and UBS AG, Hong Kong Branch are acting as the representatives of the Initial Purchasers. Subject to certain conditions set out in the Purchase Agreement, each of the Initial Purchasers has, severally but not jointly, agreed to purchase from us, and we have agreed to sell to each of the Initial Purchasers, the amount of GDSs indicated in the following table.

Initial Purchasers Deutsche Bank AG, Hong Kong Branch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . UBS AG, Hong Kong Branch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Number of GDSs	Number of GDSs
		9,125,000 9,125,000 18,250,000

The Purchase Agreement provides that the obligations of the initial purchasers to purchase the GDSs included in this offering are subject to certain conditions, including receipt of certain legal opinions. The initial purchasers are obligated to purchase all the GDSs if they purchase any of the GDSs. We have agreed to indemnify each of the Initial Purchasers against certain losses, claims, damages or liabilities under the Securities Act in accordance with the Purchase Agreement.

The Initial Purchasers propose to resell the GDSs at the offering price set forth on the cover page of this offering memorandum within the United States to qualified institutional buyers (as defined in Rule 144A) in reliance on Rule 144A and outside the United States in reliance on Regulation S. The GDSs and the Shares have not been and will not be registered under the Securities Act or any state securities laws and may not be offered or sold within the United States except in transactions exempt from, or not subject to, the registration requirements of the Securities Act. See “Transfer Restrictions.” The GDSs will not be offered or sold directly or indirectly in the ROC, or to, or for the account or benefit of, any ROC person.

The purchase price for the GDSs will be the initial offering price set forth on the cover page of this offering memorandum, or the offering price, less an underwriting commission equal to 1.0% of the gross proceeds of the GDS offering. We may, at our sole discretion, pay the all or any of the initial purchasers an incentive fee of up 0.3% of the gross proceeds of the GDS offering. The initial purchasers propose to offer the GDSs at the offering price. After the GDSs are released for sale, the offering price and other selling terms may from time to time be varied by the initial purchasers.

We have applied to have the GDSs listed on the Luxembourg Stock Exchange. However, we cannot assure you that the prices at which the GDSs will sell in the market after this offering will not be lower than the initial offering price or that an active trading market for the GDSs will develop and continue after this offering. The initial purchasers have advised us that they currently intend to make a market in the GDSs. However, they are not obligated to do so and they may discontinue any market-making activities with respect to the GDSs at any time without notice. Accordingly, we cannot assure you as to the liquidity of, or the trading market for, the GDSs. In connection with the offering, the initial purchasers may purchase and sell the GDSs in the open market. Purchases and sales in the open market may include short sales, purchases to cover short positions, and stabilizing purchases.

• Short sales involve secondary market sales by the initial purchasers of a greater number of securities than they are required to purchase in the offering.

• Covering transactions involve purchases of securities in the open market after the distribution has been completed in order to cover short positions.

• Stabilizing transactions involve bids to purchase securities so long as the stabilizing bids do not exceed a specified maximum.

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Purchases to cover short positions and stabilizing purchases, as well as other purchases by the initial purchasers for their own accounts, may have the effect of preventing or retarding a decline in the market price of the GDSs. It may also cause the price of the GDSs to be higher than the price that would otherwise exist in the open market in the absence of these transactions. The initial purchasers may conduct these transactions in the over-the-counter market or otherwise. If the initial purchasers commence any of these transactions, it may discontinue them at any time.

We expect to deliver the GDSs against payment for the GDSs on or about the date specified in the last paragraph of the cover page of this offering memorandum, which will be the third business day following the date of the pricing of the GDSs. Since trades in the secondary market generally settle in three business days, purchasers who wish to trade the GDSs on the date of pricing or the next succeeding business day will be required, by virtue of the fact that the GDSs initially will settle in T+2, to specify alternative settlement arrangements to prevent a failed settlement.

We have agreed that until 90 days after the date hereof, we will not, without the Initial Purchasers’ prior written consent, offer, sell, contract to sell or otherwise dispose of any securities of us that are substantially similar to the GDSs or the Shares, including but not limited to any securities that are convertible into or exchangeable for, or that represent the right to receive, or the Shares or any such substantially similar securities (other than (i) pursuant to employee stock option plans existing on the date hereof, (ii) upon the conversion or exchange of convertible or exchangeable securities outstanding as of the date hereof, or (iii) the issuance of additional Shares in the form and manner and within the quota approved in our 2013 general shareholder meeting).

The Initial Purchasers have performed commercial banking, investment banking and advisory services for us from time to time for which they have received customary fees and reimbursement of expenses. The Initial Purchasers may, from time to time, engage in transactions with and perform services for us in the ordinary course of its business for which it may receive customary fees and reimbursement of expenses. In addition, affiliates of the Initial Purchasers are lenders, and in some cases agents or managers for the lenders, under our credit facility.

Notice to prospective investors in the ROC and restriction on related party subscription under ROC law

The GDSs may not be offered or sold directly or indirectly in the ROC, or to, or for the account or benefit of, any ROC person.

Under applicable ROC laws and regulations, we and the Initial Purchasers are prohibited from offering and selling the GDSs to the “related parties” as defined in the IAS 24 or the Regulations Governing Preparation of Financial Reports by Securities Issuers, or any person specified in Section 36 of the ROC Securities Association Rules Governing Underwriting and Resale of Securities by Securities Firms. Unless it can be established that no control or significant influence exists, a party falling within any of the following shall be deemed to have a substantive related party relationship:

1. An affiliated enterprise within the meaning given in Chapter VI-I of the ROC Company Law, and any of its directors, supervisors, and managerial officers.

2. A company or institution governed by the same general management office as the issuer, and any of its directors, supervisors, and managerial officers.

3. A person holding the position of manager or higher in the general management office.

4. A company or institution shown as an affiliated enterprise in the issuer’s publications or public announcements.

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Under Chapter VI-1 the ROC Company Law, the term “affiliated enterprises” as used in this Law shall refer to enterprises which are independent in existence but are interrelated in either of the following relations:

• Companies having controlling and subordinate relation between them.

• Companies having made investment in each other.

In considering whether a counterparty is a related party, attention shall be directed to the substance of the relationship in addition to the legal form.

Notice to prospective investors in the United States

The GDSs have not been and will not be registered under the Securities Act for offer or sale as part of their distribution and may not be offered or sold in the United States except pursuant to an effective registration statement or in accordance with an applicable exemption from the registration requirements of the Securities Act. Accordingly, the GDSs are being offered and sold by the Initial Purchasers only (1) in the United States to QIBs pursuant to Rule 144A and (2) outside the United States in reliance upon Regulation S under the Securities Act.

The Initial Purchasers have agreed that they will not offer, sell or deliver any GDS as part of its distribution at any time within the United States except to persons whom it reasonably believes to be qualified institutional buyers pursuant to Rule 144A, and that it will have sent to each dealer to which it sells the GDSs a confirmation or other notice setting forth the restriction on offers and sales of GDSs within the United States.

Notice to prospective investors in the European Economic Area

In relation to each member state of the European Economic Area that has implemented the Prospectus Directive (each, a relevant member state), with effect from and including the date on which the Prospectus Directive is implemented in that relevant member state (the relevant implementation date), an offer of securities described in this offering memorandum may not be made to the public in that relevant member state prior to the publication of a prospectus in relation to the securities that has been approved by the competent authority in that relevant member state or, where appropriate, approved in another relevant member state and notified to the competent authority in that relevant member state, all in accordance with the Prospectus Directive, except that, with effect from and including the relevant implementation date, an offer of securities may be offered to the public in that relevant member state at any time:

• (a) to any legal entity that is authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

• (b) to any legal entity that has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000, and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;

• (c) to fewer than 100 natural or legal persons (other than qualified investors as defined below) subject to obtaining the prior consent of the representatives for any such offer; or

• (d) in any other circumstances that do not require the publication of a prospectus pursuant to Article 3 of the Prospectus Directive.

Each purchaser of securities described in this offering memorandum located within a relevant member state will be deemed to have represented, acknowledged and agreed that it is a “qualified investor” within the meaning of Article 2(1)(e) of the Prospectus Directive.

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For purposes of this provision, the expression an “offer to the public” in any relevant member state means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe the securities, as the expression may be varied in that member state by any measure implementing the Prospectus Directive in that member state, and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each relevant member state.

The sellers of the securities have not authorized and do not authorize the making of any offer of securities through any financial intermediary on their behalf, other than offers made by the Initial Purchasers with a view to the final placement of the securities as contemplated in this offering memorandum. Accordingly, no purchaser of the securities, other than the Initial Purchasers is authorized to make any further offer of the securities on behalf of the sellers or the Initial Purchasers.

Notice to prospective investors in the United Kingdom

This offering memorandum is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), or (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (each such person being referred to as a “relevant person”). This offering memorandum and its contents should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its contents.

Notice to prospective investors in Singapore

Each of the Initial Purchasers has acknowledged that this Offering Memorandum has not been, and will not be, registered as a prospectus with the Monetary Authority of Singapore. Accordingly, each of the Initial Purchasers has represented, warranted and agreed that it has not offered or sold any GDSs or caused the GDSs to be made the subject of an invitation for subscription or purchase and will not offer or sell any GDSs or cause the GDSs to be made the subject of an invitation for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, this offering memorandum or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the GDSs, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

This Offering Memorandum has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this Offering Memorandum and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of notes may not be circulated or distributed, nor may notes be offered or sold, or be made the subject of an invitation for subscription or purchase whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the SFA, (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the GDSs are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

• (a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)), the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

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• (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,

securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the GDSs pursuant to an offer made under Section 275 of the SFA except:

• (i) to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;

• (ii) where no consideration is or will be given for the transfer;

• (iii) where the transfer is by operation of law;

• (iv) as specified in Section 276(7) of the SFA; or

• (v) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore.

Notice to prospective investors in Hong Kong

The securities may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong), and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating to the securities may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to securities which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

Notice to prospective investors in Japan

The securities offered in this offering memorandum have not been registered under the Securities and Exchange Law of Japan. The securities have not been offered or sold and will not be offered or sold, directly or indirectly, in Japan or to or for the account of any resident of Japan, except (i) pursuant to an exemption from the registration requirements of the Securities and Exchange Law, and (ii) in compliance with any other applicable requirements of Japanese law.

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SUMMARY OF CERTAIN DIFFERENCES BETWEEN ROC GAAP AND IFRSs

The consolidated financial statements of Far Eastern International Bank are prepared and presented in accordance with ROC GAAP and Taiwan-IFRSs, as the case may be. ROC GAAP and IFRSs differ in certain significant respects. A brief description of certain significant differences between ROC GAAP and IFRSs is set forth below. The regulatory organizations that promulgate ROC GAAP and IFRSs have projects ongoing that could affect future comparisons such as the comparison below. The summary does not and is not intended to provide a comprehensive listing of all existing or future differences between ROC GAAP and IFRSs, including those specifically related to Far Eastern International Bank or to the industries in which we operate. No attempt has been made to identify (a) future differences between ROC GAAP and IFRSs as a result of prescribed changes in accounting standards, or (b) disclosure, presentation or classification differences that would affect the manner in which transactions and events are reflected in the financial statements of Far Eastern International Bank or the notes thereto. Further, had we undertaken to identify the differences specifically affecting the financial statements presented in this offering memorandum, other potentially significant differences which are not in the following summary may have come to our attention. Accordingly, there can be no assurance that this summary provides a complete description of all differences which may have a significant impact on our financial statements. IFRSs is generally more restrictive and comprehensive than ROC GAAP regarding the recognition and measurement of transactions, account, classifications and disclosure requirements. Management has not quantified the effects of the differences between ROC GAAP and IFRSs on any of the financial results of Far Eastern International Bank.

Subject Deferred tax valuation allowance Time deposits with a maturity of more than three months Regular way transactions	ROC GAAP Under ROC GAAP, deferred tax assets are reduced by a valuation allowance if some portion or all of the deferred tax assets will not be realized probably. Under ROC GAAP, cash and cash equivalents include cash on hand, demand deposits, checking deposits, time deposits and certificates of deposit which can be redeemed or sold immediately without any loss of principal. Under ROC GAAP, trade date accounting or settlement date accounting is applied consistently to all purchases and sales of financial assets that belong to either (1) the same category of financial assets, or (2) the same financial instruments.	IFRSs
		Under IFRSs, deferred tax assets shall be recognized only when it is probable that related taxable profits will be available. A valuation allowance is not used. Under IFRSs, cash equivalents are investments that are readily convertible to known amount of cash and that are subject to an insignificant risk of changes in value. Only short-term investments that have a maturity of three months or less from the date of acquisition normally meet the definition of cash equivalents under IFRSs. Under IFRSs, trade date accounting or settlement date accounting should be applied consistently to all purchases and sales of financial assets that belong to the same category of financial assets.

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Subject Acquired receivables Capital surplus arising from equity- method investments	ROC GAAP Under ROC GAAP, receivables acquired are accounted for by the cost recovery method. Income shall not be recognized to the extent that the amounts received exceed the carrying amount of the acquired receivables. Under ROC GAAP, when an investor subscribes for its investee’s newly issued shares at a percentage different from its percentage of ownership in the investee, the investor records the change in its equity in the investee’s net assets as an adjustment to investments, with a corresponding amount credited or charged to capital surplus.	IFRSs
		Under IFRSs, acquired receivables are measured at amortized cost. Interest income is recognized using the effective interest rate method over the relevant period. If an investor’s ownership interest in an associate is reduced, but the investment continues to be an associate, such transaction is treated as deemed acquisition or deemed disposal.

Under IFRS, if an investor’s ownership interest in an associate is reduced, but the investment continues to be an associate, the investor should reclassify to profit or loss only a proportionate amount of the gain or loss previously recognized in other comprehensive income. Therefore, a reduction in investor’s ownership interest resulting from not purchasing new shares issued by the associate proportionately would be treated as a deemed disposal, with the related gain or loss recognized in profit or loss.

Customer loyalty programs Under ROC GAAP, the liabilities arising from credit card reward points are recognized when the reward points are granted.

Employee benefit—short-term ROC GAAP does not address the cumulative compensated absences treatment of compensated absences. Companies usually recognize the cost when absences actually occur.

Under IFRSs, some of the consideration received is allocated to award credits. The consideration allocated to the award credits should be measured by reference to their fair value and recognized as income when the obligations to supply the award is fulfilled.

Under IFRSs, an entity should recognize the expected cost of compensated absences as the employees render services that increase their entitlement to future compensated absences.

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Subject Employee benefit—actuarial gain and loss of defined benefit plan Employee benefit—employees’ saving accounts with preferential interest rate on employees’ deposits Interest income and cost derived from financial instruments at fair value through profit and loss (FVTPL) Fair value measurement Presentation of items of other comprehensive income Disclosure of interests in other entities	ROC GAAP Under ROC GAAP, actuarial gains and losses arising from defined benefit plan are amortized in profits or losses using corridor approach. Under ROC GAAP, interest cost on saving accounts of financial institutions’ employees with preferential interest rate are recognized on an accruals basis. Under ROC GAAP, interest income and cost derived from financial instruments at FVTPL could be classified as interest income and expense. There are no such requirements. There are no such requirements. There are no such requirements.	IFRSs
		Under IFRSs effective January 1, 2013, actuarial gains and losses should be recognized in other comprehensive income. Changes in defined benefit obligations and plan assets are recognized when they occur, and the corridor approach is eliminated. Under IFRSs, the preferential interest rate costs in excess of the market interest rate costs are recognized as employee benefits expense. Under IFRSs, items in the statement of other comprehensive income are classified on the basis of nature; thus, interest income and cost derived from financial instruments at FVTPL should be reclassified as gain or loss on financial instruments at FVTPL. IFRSs established a single source of guidance for fair value measurements. It defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. Under IFRSs, an entity should group items presented in other comprehensive income based on whether they are potentially reclassifiable to profit or loss subsequently. i.e. those that might be reclassified and those that will not be reclassified. Under IFRSs, an entity is required to disclose information that enables users of financial statements to evaluate the nature of, and risks associated with, its interests in other entities; and the effects of those interests on its financial position, financial performance and cash flows.

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Subject Special reserve Methodology for calculation of the allowance for loan losses	ROC GAAP Under ROC GAAP, an entity should appropriate to a special reserve an amount that was the same as these of unrealized revaluation increment and cumulative translation differences (gains) transferred to retained earnings as a result of an entity’s use of exemptions under IFRS 1. However, at the date of transitions to IFRSs, if the increase in retained earnings that resulted from all IFRSs adjustments is not sufficient for this appropriation, only the increase in retained earnings that resulted from all IFRSs adjustments will be appropriated to special reserve. The special reserve appropriated may be reversed to retained earnings in proportion to the usage, disposal or reclassification of the related assets and thereafter distributed. Under ROC GAAP, when calculating allowance for loan losses, the amount should be the higher one of the following: a) Pursuant to “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- performing/ Nonaccrual Loans” (the “Regulations”) issued by the authority, an entity assesses the recoverability of credit assets on the basis of a customer’s financial position, delinquency in interest or principal payments, and an entity’s internal valuation of collaterals. Under the regulations, the entity categorizes the credit assets into Normal, Special Mention, Substandard, Doubtful, and Loss, and then make minimum provisions for 0.5% of the normal credits (other than those loans to ROC government), 2% of special mention, 10% of substandard, 50% of doubtful, and 100% of loss.	IFRSs
		Under IFRSs, there is no such requirement. Under IFRSs, loans are assessed for impairment on a collective basis even if they were assessed not to be impaired individually. Objective evidence of impairment for a portfolio of loans could include an entity’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past experience, as well as observable changes in national or local economic conditions that correlate with default on discounts and loans and receivables. The amount of the impairment loss of loans recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

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Subject	ROC GAAP b) Loans are assessed for impairment at the end of each reporting period and considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition, the estimated future cash flows of these assets have been affected. Loans that are assessed not to be individually impaired are further assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of loans could include the Bank’s past experience of collecting payments and an increase in the number of delayed payments, as well as observable changes in national or local economic conditions that correlate with defaults on loans. The amount of the impairment loss recognized is the difference between the asset carrying amount and the present value of estimated future cash flows, after taking into account the related collateral and guarantees, discounted at the original effective interest rates of the loans. In addition, in accordance with Rule No. 10010006830 issued by FSC, the coverage ratio of loans should be more than 1%.	IFRSs

167

LEGAL MATTERS

Certain legal matters in connection with this offering as to ROC law will be passed upon for us by Lee and Li, Attorneys-at-Law. Certain legal matters in connection with this offering as to New York state and United States federal law will be passed upon for the Initial Purchasers by Simpson Thacher & Bartlett.

168

INDEPENDENT AUDITORS

Our consolidated financial statements as of and for the years ended December 31, 2010, 2011 and 2012 included in this Offering Memorandum have been audited by Deloitte & Touche, independent auditors, as indicated in their report with respect thereto included herein. Such report expresses an unqualified opinion on the financial statements and includes explanatory paragraph relating to convenience translation of New Taiwan dollar amounts into U.S. dollar amounts. Deloitte & Touche are located at 12th Floor, Hung Tai Financial Plaza, No. 156, Section 3, Min Sheng East Road, Taipei, Taiwan. They are a member of the Taiwan CPA Association.

With respect to our unaudited consolidated interim financial statements as of and for the nine-months period ended September 30, 2012 and 2013 including in this Offering Memorandum, Deloitte & Touche, independent accountants, have reported that they have applied limited procedures in accordance with professional standards for a review of such financial statements in accordance with ROC Statement of Auditing Standards No. 36, “Review of Financial Statements.” Such review report is unqualified with an explanatory paragraph referring to the convenience translation of New Taiwan dollar amounts into U.S. dollar amounts. However, the separate review report included in this Offering Memorandum states that they did not audit and do not express an opinion on such interim financial statements. Accordingly, the degree of reliance on their report on such financial statements should be restricted in light of the limited nature of the review procedures applied.

ROC GAAP differ from generally accepted accounting principles in the United States, and from the IFRSs. For more information, please see “Summary of Significant Differences Between ROC GAAP and IFRSs.”

169

GENERAL INFORMATION

We are incorporated in the ROC on January 11, 1992. Our registered office is located at 27F., No. 207, Sec. 2, Tun Hwa South Road, Da-an District, Taipei City 106, Taiwan. According to paragraph II of our Articles of Incorporation, the scope of our business is banking and other related financial services. Our registration number is 86517096. As at September 30, 2013, our authorized share capital was NT$45,000,000,000, divided into 4,500,000,000 Shares with a par value of NT$10 per Share, and our paid-in share capital was NT$23,621,182,640, divided into 2,362,118,264 Shares. In February 2013, we issued unsecured zero coupon convertible bonds with an aggregate principal amount of US$150 million denominated in US dollars with maturity in 2018. The convertible bonds were issued at 100% of their principal amount and will mature on February 7, 2018. Holders of the convertible bonds have the right under the terms of these bonds to convert the bonds into shares from March 20, 2013 to January 28, 2018. The bondholders are entitled to a put option exercisable on August 7, 2015, or in the event of change of control or delisting, while we have a call option for taxation reason or the outstanding principal amount is less than 10% of the principal amount we issued. As of September 30, 2013, we had outstanding convertible bonds in the amount of NT$4,040.9 million (US$136.7 million). We are not the subsidiary of any entity.

The Regulation S GDSs and Rule 144A GDSs have been accepted for clearance and settlement by DTC, Euroclear and Clearstream. Relevant trading information is set forth below.

The GDSs: Regulation S GDSs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rule 144A GDSs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ISIN US30733T2069 US30733T1079	Common Code 102501373 102500539	CUSIP
			30733T206 30733T107

Application has been made to admit the GDSs on the Official List of the Luxembourg Stock Exchange and to trading on the Euro MTF market of the Luxembourg Stock Exchange. As long as the GDSs are listed on the Luxembourg Stock Exchange, The Bank of New York Mellon (Luxembourg) S.A. will serve as intermediary between the Luxembourg Stock Exchange and persons connected with the issuance and listing of the GDSs.

We will apply to the TWSE for the listing of the Shares underlying the GDSs as soon as practicable after the Closing Date. It is expected that the TWSE will approve the listing of the Shares on the fourth business day in the ROC following the Closing Date, although there is no assurance that such listing approval will be obtained by such date (if at all).

We have obtained all necessary consents, approvals and authorizations in connection with the issue of the Shares and the GDSs. The issue of the Shares and GDSs was authorized by the shareholders at a meeting held on October 16, 2013 and by the resolutions of our board of directors passed on August 26, 2013. Our shareholders waived their pre-emptive rights in respect of the Shares to be represented by the GDSs pursuant to a resolution passed at the same shareholders’ meeting held on October 16, 2013.

Except as disclosed, there has been no significant change in our financial or trading position since September 30, 2013 or any material adverse change in our financial position or prospects since September 30, 2013.

Except as disclosed at “Our Business—Legal Proceedings”, neither we nor any of its subsidiaries is involved in any litigation or arbitration proceedings which may have, or have had during the period recently preceding the date of this offering memorandum, a material adverse effect on our financial position, nor, so far as any of them is aware, are any such proceedings pending or threatened except as may be otherwise disclosed or referred to herein.

In 2013, no public takeovers relating to us have taken place.

170

No company in which we have a direct or indirect holding of more than 50% of capital or issued shares holds any Shares.

Copies (and certified English translations where the documents are not in English) of the following documents may be inspected, free of charge, at the specified offices of the Depositary and the Luxembourg Intermediary, The Bank of New York Mellon (Luxembourg) S.A. in Luxembourg, so long as the GDSs remain outstanding:

• our Articles of Incorporation;

• the Deposit Agreements relating to the GDSs;

• the Purchase Agreement relating to the GDSs;

• this offering memorandum; and

• a copy of the audit reports of the independent accountants and our audited financial statements as of and for the year ended December 31, 2010, 2011 and 2012 and our consolidated financial statements as of and for the nine months ended September 30, 2012 and 2013.

In addition, copies of this offering memorandum, the most recent annual audited consolidated financial statements of the Company and any semi-annual financial statements and first-quarter and second-quarter summary financial information published by the Company will be available for collection free of charge at the specified office of the Depositary and the Luxembourg Intermediary, The Bank of New York Mellon (Luxembourg) S.A. in Luxembourg, so long as the GDSs are listed on the Luxembourg Stock Exchange. The Company publishes both its annual and interim financial statements. For as long as the GDSs are traded on the Euro MTF Market, we will publish all notices to holders of GDSs on the website of the Luxembourg Stock Exchange, which is www.bourse.lu .

171

INDEX TO FINANCIAL STATEMENTS

Consolidated Financial Statements for the Years Ended December 31, 2010, 2011 and 2012 and Independent Auditors’ Report INDEPENDENT AUDITORS’ REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CONSOLIDATED BALANCE SHEETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CONSOLIDATED STATEMENTS OF INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY . . . . . . . . . . . . . . . CONSOLIDATED STATEMENTS OF CASH FLOWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Financial Statements for the Nine Months Ended September 30, 2012 and 2013 and Independent Auditors’ Review Report INDEPENDENT ACCOUNTANTS’ REVIEW REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CONSOLIDATED BALANCE SHEETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CONSOLIDATED STATEMENTS OF CASH FLOWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

F-2 F-3 F-5 F-7 F-9 F-13 F-105 F-106 F-108 F-110 F-112 F-115

F-1

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and the Shareholders Far Eastern International Bank Ltd.

We have audited the accompanying consolidated balance sheets of Far Eastern International Bank Ltd. (the “Bank”) and its subsidiaries as of December 31, 2010, 2011 and 2012 and the related consolidated statements of income, changes in shareholders’ equity and cash flows for the years then ended, all expressed in New Taiwan dollars. These consolidated financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements of Financial Institutions by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Bank and its subsidiaries as of December 31, 2010, 2011 and 2012, and the results of their operations and their cash flows for the years then ended, in conformity with the Regulations Governing the Preparation of Financial Reports by Public Banks and accounting principles generally accepted in the Republic of China.

Our audits also comprehended the translation of New Taiwan dollar amounts into U.S. dollar amounts, and, in our opinion, such translation has been made in conformity with the basis stated in Note 2. Such U.S. dollar amounts are presented solely for the convenience of readers.

Deloitte & Touche Taipei, Taiwan Republic of China

March 20, 2013, except for translations into U.S. dollars at the exchange rate as of September 30, 2013, as stated in Note 2

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China.

The auditors’ report and the accompanying consolidated financial statements were originally presented in more than one set of Chinese financial reports. For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

F-2

FAR EASTERN INTERNATIONAL BANK, LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2010, 2011 AND 2012 (In Thousands, Except Par Value)

Notes ASSETS CASH AND CASH EQUIVALENTS . . . . . 4 DUE FROM THE CENTRAL BANK AND OTHER BANKS . . . . . . . . . . . . . . . . . . . 5, 30, 31 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS . . . . . . . . 2, 6, 30, 34 SECURITIES PURCHASED UNDER RESALE AGREEMENTS . . . . . . . . . . . . 2, 7, 30 RECEIVABLES, NET . . . . . . . . . . . . . . . . . 2, 3, 8, 9 DISCOUNTS AND LOANS, NET . . . . . . . 2, 3, 9, 30, 34 AVAILABLE-FOR-SALE FINANCIAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 10, 27, 30, 31, 34 HELD-TO-MATURITY FINANCIAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 11, 34 INVESTMENTS ACCOUNTED FOR BY THE EQUITY METHOD . . . . . . . . . . . . . 2, 12, 27 DEBT INVESTMENTS WITH NO ACTIVE MARKET . . . . . . . . . . . . . . . . . 2, 13, 34 OTHER FINANCIAL ASSETS . . . . . . . . . . 2, 9, 14, 32, 34 PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . 2, 15 Cost Land . . . . . . . . . . . . . . . . . . . . . . . Buildings and improvements . . . . Computer equipment . . . . . . . . . . Transportation equipment . . . . . . . Miscellaneous equipment . . . . . . . Total cost . . . . . . . . . . . . . . . Less: Accumulated depreciation . . . . . . Prepayments for properties . . . . . . . . . . Net properties . . . . . . . . . . . . INTANGIBLE ASSETS . . . . . . . . . . . . . . . . 2, 16 OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . 2, 17, 26 TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2010	2011	2012	2012
	NT$ $ 4,274,832	NT$ $ 6,005,214	NT$ $ 5,599,451 82,818,608 16,110,835 23,741,992 20,726,506 280,219,426 11,865,864 2,224,301 2,372,398 10,713,828 3,236,853 1,581,625 1,236,633 1,371,103 6,234 1,389,864 5,585,459 2,727,842 2,857,617 22,076 2,879,693 1,868,048 1,120,509 $465,498,312	US$ (Note 2) $ 189,427 2,801,712 545,022 803,180 701,167 9,479,683 401,416 75,247 80,257 362,443 109,501 53,505 41,835 46,384 211 47,018 188,953 92,281 96,672 747 97,419 63,195 37,906 $15,747,575
	102,938,352	86,739,190
	16,724,890	13,806,866
	—	850,505
	18,880,350	20,855,894
	236,351,285	269,460,381
	16,855,460	15,674,659
	2,789,768	3,927,905
	2,623,908	2,474,458
	7,125,474	9,293,780
	3,274,132	2,884,083
	1,581,625 1,226,082 1,165,157 10,228 1,254,999	1,581,625 1,232,272 1,288,640 7,975 1,347,700
	5,238,091 2,381,870	5,458,212 2,565,983
	2,856,221 20,025	2,892,229 51,444
	2,876,246	2,943,673
	1,942,335	1,905,193
	1,699,318	1,633,309
	$418,356,350	$438,455,110

(Continued)

F-3

Notes LIABILITIES AND SHAREHOLDERS’ EQUITY LIABILITIES Due to the Central Bank and other banks . . . . . . . . . . . . . . . . . . . . . . . . . 18 Short-term loans . . . . . . . . . . . . . . . . . . 19 Financial liabilities at fair value through profit or loss . . . . . . . . . . . . 2, 6, 30, 34 Payables . . . . . . . . . . . . . . . . . . . . . . . . 20, 26 Deposits and remittances . . . . . . . . . . . 21, 30, 34 Bank debentures . . . . . . . . . . . . . . . . . . 2, 22, 34 Other financial liabilities . . . . . . . . . . . 23, 30, 34 Other liabilities . . . . . . . . . . . . . . . . . . . 2, 9, 24, 25, 30 Total liabilities . . . . . . . . . . . . . . . SHAREHOLDERS’ EQUITY . . . . . . . . . . . 2, 10, 12, 27 Capital stock, NT$10.00 par value, Authorized—4,500,000 thousand shares in 2010, 2011 and 2012 . . . . . . . . . . . . . . . . . . . . . Issued and outstanding— 2,007,149 thousand shares in 2010; 2,118,560 thousand shares in 2011 and 2,242,260 thousand shares in 2012 . . . . . . Capital surplus Additional paid-in capital in excess of par . . . . . . . . . . . . . . . Arising from equity-method investment . . . . . . . . . . . . . . . . . Total capital surplus . . . . . . . Retained earnings . . . . . . . . . . . . . . . . . Legal reserve . . . . . . . . . . . . . . . . . Special reserve . . . . . . . . . . . . . . . Unappropriated earnings . . . . . . . . Total retained earnings . . . . . Equity adjustments . . . . . . . . . . . . . . . . Cumulative translation adjustments . . . . . . . . . . . . . . . . Unrealized valuation gain (loss) on available-for-sale financial assets . . . . . . . . . . . . . . . . . . . . . Total equity adjustments . . . . Total shareholders’ equity . . CONTINGENT LIABILITIES AND COMMITMENTS . . . . . . . . . . . . . . . . . . 2, 30, 32, 34 TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2010	2011	2012	2012
	NT$ $ 18,093,079 1,049,804 6,445,235 4,487,792 347,860,583 16,789,596 146,449 676,701	NT$ $ 11,785,731 1,369,929 4,081,035 4,691,225 369,998,562 20,230,280 854,450 789,520	NT$ $ 11,674,958 969,980 3,745,032 5,708,177 391,933,266 23,072,123 950,909 842,522 438,896,967 22,422,596 22,348 9,302 31,650 1,742,672 4,554 2,564,542 4,311,768 9,131 (173,800) (164,669) 26,601,345 $465,498,312	US$ (Note 2) $ 394,958 32,814 126,693 193,105 13,258,906 780,518 32,169 28,502 14,847,665 758,545 756 315 1,071 58,954 154 86,757 145,865 309 (5,880) (5,571) 899,910 $15,747,575
	395,549,239	413,800,732
	20,071,489	21,185,604
	— 9,302	19,706 9,302
	9,302	29,008
	372,276 — 2,194,754	1,030,702 4,554 2,374,090
	2,567,030	3,409,346
	11,264 148,026	12,762 17,658
	159,290	30,420
	22,807,111	24,654,378
	$418,356,350	$438,455,110

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche audit report dated March 20, 2013, except for translations into U.S. dollars at the exchange rate as of September 30, 2013, as stated in Note 2)

(Concluded)

F-4

FAR EASTERN INTERNATIONAL BANK, LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2010, 2011 AND 2012 (In Thousands, Except Earnings Per Share)

Notes INTEREST INCOME . . . . . . . . . . . . . . . . . . . . . 2, 30, 34 INTEREST COST . . . . . . . . . . . . . . . . . . . . . . . . 30, 34 NET INTEREST INCOME . . . . . . . . . . . . . . . . . NONINTEREST INCOME AND GAINS, NET Service fee income . . . . . . . . . . . . . . . . . . . 2, 30 Service charges . . . . . . . . . . . . . . . . . . . . . . Net service fee income . . . . . . . . . . . . . . . . Net gain on financial assets and liabilities at fair value through profit or loss . . . . . . 2, 6, 30, 34 Net gain on available-for-sale financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 27 Investment income (loss) recognized under the equity method . . . . . . . . . . . . . . . . . . 2, 12 Net foreign exchange gain (loss) . . . . . . . . . 2 Net gain on reversal of provision (provision) for asset impairment loss . . . 2, 13, 14 Gain on nonperforming receivables acquired . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 8 Commission income . . . . . . . . . . . . . . . . . . 2 Recovery of written-off credits . . . . . . . . . . 2 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13, 30 Total noninterest income and gains, net . . . . . . . . . . . . . . . . . . . . . . . . . . NET PROFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . PROVISION FOR POSSIBLE LOSSES . . . . . . 2, 9 OPERATING EXPENSES . . . . . . . . . . . . . . . . . 2, 25, 27, 28, 30 Personnel expense . . . . . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total operating expenses . . . . . . . . . . . INCOME BEFORE INCOME TAX . . . . . . . . . . INCOME TAX EXPENSE . . . . . . . . . . . . . . . . . 2, 26 CONSOLIDATED NET INCOME . . . . . . . . . . . ATTRIBUTABLE TO: Shareholders of the parent company . . . . . . Minority interest . . . . . . . . . . . . . . . . . . . . .	2010	2011	2012
	NT$ $7,062,599 3,078,795	NT$ $8,079,256 4,199,879
	3,983,804	3,879,377
	2,458,659 533,785	2,360,438 488,526
	4,714,057	4,784,899
	8,697,861	8,664,276
	675,026	834,135
	2,831,006 243,891 1,898,787	2,985,371 257,102 2,064,053
	4,973,684	5,306,526
	3,049,151 852,773	2,523,615 150,384
	$2,196,378	$2,373,231
	$2,196,378 —	$2,373,231 —
	$2,196,378	$2,373,231

(Continued)

F-5

		2010	2010	2011	2011			2012
		Before	After	Before	After	Before			After
		Income	Income	Income	Income	Income		Income
		Tax	Tax	Tax	Tax		Tax		Tax
	Notes	NT$	NT$	NT$	NT$	NT$	US$	NT$	US$
							(Note 2)		(Note 2)
EARNINGS PER
SHARE . . . . . . . . .	29
Basic . . . . . . . . .		$1.35	$0.99	$1.11	$1.07	$1.28	$0.04	$1.15	$0.04
Diluted . . . . . . . .		$1.35	$0.99	$1.10	$1.06	$1.27	$0.04	$1.14	$0.04

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche audit report dated March 20, 2013, except for translations into U.S. dollars at the exchange rate as of September 30, 2013 as stated in Note 2)

(Concluded)

F-6

FAR EASTERN INTERNATIONAL BANK, LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY YEARS ENDED DECEMBER 31, 2010, 2011 AND 2012 (In Thousands, Except Par Value and Per Share Amounts)

BALANCE, JANUARY 1, 2010 . . . . . . Appropriations of the 2009 earnings Legal reserve . . . . . . . . . . . . . . . . . Cash dividends—NT$0.100 per share . . . . . . . . . . . . . . . . . . . . . . Stock dividends—NT$0.349 per share . . . . . . . . . . . . . . . . . . . . . . Employees’ bonus—stock . . . . . . . . . . . Translation adjustments—offshore banking unit and overseas branch . . . Change in unrealized valuation gain on available-for-sale financial assets . . . Change in equity-method investees . . . . Consolidated net income in 2010 . . . . . . BALANCE, DECEMBER 31, 2010 . . . Appropriations of the 2010 earnings Legal reserve . . . . . . . . . . . . . . . . . Cash dividends—NT$0.250 per share . . . . . . . . . . . . . . . . . . . . . . Stock dividends—NT$0.515 per share . . . . . . . . . . . . . . . . . . . . . . Employees’ bonus—stock . . . . . . . . . . . Translation adjustments—offshore banking unit and overseas branch . . . Change in unrealized valuation loss on available-for-sale financial assets . . . Change in equity-method investees . . . . Consolidated net income in 2011 . . . . . . F-7	Capital Stock (NT$10.00 Par Value) (Note 27)	Capital Stock (NT$10.00 Par Value) (Note 27)	Capital Stock (NT$10.00 Par Value) (Note 27)		Capital Surplus (Notes 2 and 27)	Capital Surplus (Notes 2 and 27)	Capital Surplus (Notes 2 and 27)	Retaine	d Earnings (Note 27)	d Earnings (Note 27)	d Earnings (Note 27)	Equity Adjustments	Equity Adjustments	Equity Adjustments	Equity Adjustments	Total Shareholders’ Equity
												Cumulative Translation Adjustments (Notes 2 and 12)		Unrealized Valuation Gain (Loss) on Available-for-sale Financial Assets (Notes 2, 10, 12 and 27)
					Additional Paid-in Capital in Excess of Par	Arising from Equity-method Investment
	Authorized	Issued and Outstanding						Legal Reserve	Special Reserve	Unappropriated Earnings
	Shares	Shares	Amount
	4,500,000,000 — — — — — — — —	1,933,797,463 — — 67,489,532 5,861,971 — — — —	$19,337,974 — — 674,895 58,620 — — — —		$ — — — — — — — — — — — — — 19,706 — — — —		$9,302 — — — — — — — — 9,302 — — — — — — — —	$ — 372,276 — — — — — — —	$ — — — — — — — — —		$1,240,920 (372,276) (193,380) (674,895) (1,993) — — — 2,196,378 2,194,754 (658,426) (501,787) (1,033,682) — — — — 2,373,231		$14,122 — — — — (2,858) — — — 11,264 — — — — 1,498 — — —		$ 160,586 — — — — — 6,133 (18,693) — 148,026 — — — — — (116,630) (13,738) —	$20,762,904 — (193,380) — 56,627 (2,858) 6,133 (18,693) 2,196,378
	4,500,000,000 — — — — — — — —	2,007,148,966 — — 103,368,172 8,043,315 — — — —	20,071,489 — — 1,033,682 80,433 — — — —					372,276 658,426 — — — — — — —	— — — — — — — 4,554 —							22,807,111 — (501,787) — 100,139 1,498 (116,630) (9,184) 2,373,231

(Continued)

Capital Stock (NT$10.00 Par Value) (Note 27) Authorized Issued and Outstanding Shares Shares Amount BALANCE, DECEMBER 31, 2011 . . .$4,500,000,000$2,118,560,453 $21,185,604 Appropriations of the 2011 earnings Legal reserve . . . . . . . . . . . . . . . . . — — — Cash dividends—NT$0.250 per share . . . . . . . . . . . . . . . . . . . . . . — — — Stock dividends—NT$0.534 per share . . . . . . . . . . . . . . . . . . . . . . — 113,131,129 1,131,311 Employees’ bonus—stock . . . . . . . . . . . — 10,568,089 105,681 Translation adjustments—offshore banking unit and overseas branch . . . — — — Change in unrealized valuation loss on available-for-sale financial assets . . . — — — Change in equity-method investees . . . . — — — Consolidated net income in 2012 . . . . . . — — — BALANCE, DECEMBER 31, 2012 . . . 4,500,000,000 2,242,259,671 $22,422,596 BALANCE, DECEMBER 31, 2012 (IN U.S. DOLLARS) . . . . . . . . . . . . . . . . 4,500,000,000 2,242,259,671 $ 758,545 F-8	Capital Stock (NT$10.00 Par Value) (Note 27)	Capital Stock (NT$10.00 Par Value) (Note 27)	Capital Stock (NT$10.00 Par Value) (Note 27)		Capital Surplus (Notes 2 and 27)	Capital Surplus (Notes 2 and 27)	Capital Surplus (Notes 2 and 27)	Retaine	d Earnings (Note 27)	d Earnings (Note 27)	d Earnings (Note 27)	Equity Adjustments	Equity Adjustments	Equity Adjustments	Equity Adjustments	Total Shareholders’ Equity
												Cumulative Translation Adjustments (Notes 2 and 12)		Unrealized Valuation Gain (Loss) on Available-for-sale Financial Assets (Notes 2, 10, 12 and 27)
					Additional Paid-in Capital in Excess of Par	Arising from Equity-method Investment
	Authorized	Issued and Outstanding						Legal Reserve	Special Reserve	Unappropriated Earnings
	Shares	Shares	Amount
			$21,185,604 — — 1,131,311 105,681 — — — —		$19,706 — — — 2,642 — — — — $22,348 $ 756		$9,302 — — — — — — — — $9,302 $ 315	$1,030,702 711,970 — — — — — — —	$4,554 — — — — — — — —		$2,374,090 (711,970) (529,640) (1,131,311) — — — — 2,563,373 $2,564,542 $ 86,757		$12,762 — — — — (3,631) — — — $ 9,131 $ 309		$ 17,658 — — — — — (180,043) (11,415) — $(173,800) $ (5,880)	$24,654,378 — (529,640) — 108,323 (3,631) (180,043) (11,415) 2,563,373
	4,500,000,000	2,242,259,671	$22,422,596					$1,742,672	$4,554							$26,601,345
	4,500,000,000	2,242,259,671	$ 758,545					$ 58,954	$ 154							$ 899,910

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche audit report dated March 20, 2013, except for translations into U.S. dollars at the exchange rate as of September 30, 2013, as stated in Note 2)

(Concluded)

FAR EASTERN INTERNATIONAL BANK, LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2010, 2011 AND 2012 (In Thousands)

CASH FLOWS FROM OPERATING ACTIVITIES Consolidated net income . . . . . . . . . . . . . . . . . . Adjustments to reconcile consolidated net income to net cash provided by operating activities Provision for possible losses . . . . . . . . . . . Recovery of written-off credits . . . . . . . . . Depreciation . . . . . . . . . . . . . . . . . . . . . . . . Amortization . . . . . . . . . . . . . . . . . . . . . . . . Amortization of premium on financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net valuation loss (gain) on financial assets and liabilities at fair value through profit or loss . . . . . . . . . . . . . . . Net gain on available-for-sale financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reversal of employees’ bonus payable . . . Investment loss (income) recognized under the equity method . . . . . . . . . . . . . . . . . . Cash dividends received from investments accounted for by the equity method . . . . Net loss (gain) on disposal of properties . . Net loss on disposal of collaterals assumed . . . . . . . . . . . . . . . . . . . . . . . . . Gain on the disposal of an equity-method investment . . . . . . . . . . . . . . . . . . . . . . . Provision (net gain on reversal of provision) for asset impairment loss . . . Decrease (increase) in financial assets at fair value through profit or loss . . . . . . . Decrease (increase) in receivables . . . . . . . Decrease (increase) in deferred income tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase (decrease) in financial liabilities at fair value through profit or loss . . . . . Increase (decrease) in accrued pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase in payables . . . . . . . . . . . . . . . . . . Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . .	2010 NT$ $ 2,196,378 675,026 383,742 216,328 27,563 96,259 (312,526) (139,700) — (100,131) 72,574 1,943 1,646 (1,576) 6,117 (6,241,470) 2,215,744 578,572 2,460,158 16,174 213,049 2,365,870	2011 NT$ $ 2,373,231 834,135 86,692 216,992 40,110 144,856 (361,498) (262,309) (4,585) 67,692 72,574 492 — — 2,830 1,522,341 (1,457,634) (103,889) (607,019) 886 563,945 3,129,842	2012
			NT$ US$ (Note 2) $ 2,563,373 $ 86,718 897,341 30,356 52,906 1,790 212,395 7,185 40,956 1,386 66,246 2,241 254,491 8,609 (310,517) (10,505) — — 88,047 2,979 58,250 1,971 (18) (1) — — — — (44,803) (1,516) (2,558,402) (86,549) 146,563 4,958 186,112 6,296 (336,061) (11,369) (5,388) (182) 963,692 32,601 2,275,183 76,968

(Continued)

F-9

CASH FLOWS FROM INVESTING ACTIVITIES Decrease (increase) in due from the Central Bank and other banks . . . . . . . . . . . . . . . . . . . Increase in discounts and loans . . . . . . . . . . . . . Decrease (increase) in securities purchased under resale agreements . . . . . . . . . . . . . . . . . Decrease in available-for-sale financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Decrease (increase) in held-to-maturity financial assets . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from the disposal of an equity-method investment . . . . . . . . . . . . . . . . . . . . . . . . . . . Decrease (increase) in debt investments with no active market . . . . . . . . . . . . . . . . . . . . . . . . . Decrease (increase) in other financial assets . . . Acquisition of properties . . . . . . . . . . . . . . . . . . Proceeds of the disposal of properties . . . . . . . . Proceeds of the disposal of collaterals assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds of the disposal of building and land held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . Decrease (increase) in other assets . . . . . . . . . . . Liquidated sum of financial assets carried at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash acquired from the acquisition of Chinfon Bank’s certain branches . . . . . . . . . . . . . . . . . Increase in an investment accounted for by equity method . . . . . . . . . . . . . . . . . . . . . . . . . Net cash used in the acquisition of subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash used in investing activities . . . . . CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in due to the Central Bank and other banks . . . . . . . . . . . . . . . . . . . . . . . . Increase (decrease) in short-term loans . . . . . . . Increase in deposits and remittances . . . . . . . . . Issuance of bank debentures . . . . . . . . . . . . . . . . Redemption of bank debentures . . . . . . . . . . . . . Increase (decrease) in other financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase (decrease) in other liabilities . . . . . . . . Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . EFFECTS OF EXCHANGE RATE CHANGES . . . .	2010 NT$ $(15,989,535) (19,828,036) 1,310,002 4,347,197 (1,306,540) 32,315 923,875 (536,539) (169,295) 856 338,864 — 126,652 — 20,272,270 — — (10,477,914) 2,374,475 (510,158) 8,305,878 4,000,000 (5,085,900) (999,826) (46,614) (193,380) 7,844,475 9,359	2011 NT$ $ 16,199,162 (34,467,060) (850,505) 1,295,903 (1,197,877) — (2,162,729) 76,820 (274,906) 1,131 — 16,104 158,019 — — — (40,293) (21,246,231) (6,307,348) 320,125 22,183,123 3,500,000 (85,780) 665,214 69,480 (501,787) 19,843,027 3,744	2012
			NT$ US$ (Note 2) $ 3,920,582 $ 132,631 (11,516,907) (389,611) (22,891,487) (774,408) 3,864,911 130,748 1,711,718 57,907 — — (1,370,505) (46,364) (488,302) (16,519) (149,895) (5,071) 709 24 — — 373,213 12,626 (217) (7) 1,408 48 — — (55,652) (1,883) (9,819) (332) (26,610,243) (900,211) (110,773) (3,747) (399,949) (13,530) 21,934,704 742,040 3,000,000 101,488 (86,440) (2,924) 96,733 3,272 27,465 929 (529,640) (17,917) 23,932,100 809,611 (2,803) (95)

(Continued)

F-10

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CASH AND CASH EQUIVALENTS, END OF YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SUPPLEMENTAL CASH FLOW INFORMATION Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax paid . . . . . . . . . . . . . . . . . . . . . . . . . NONCASH INVESTING AND FINANCING ACTIVITIES Stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . Employees’ bonus—stock . . . . . . . . . . . . . . . . .	2010 NT$ $ (258,210) 4,533,042 $ 4,274,832	2011 NT$ $ 1,730,382 4,274,832 $ 6,005,214	2012
			NT$ US$ (Note 2) $ (405,763) $ (13,727) 6,005,214 203,154 $ 5,599,451 $ 189,427 $ 5,429,726 $ 183,685 $ 198,367 $ 6,711 $ 1,131,311 $ 38,272 $ 108,323 $ 3,665
	$ 2,845,260 $ 225,008 $ 674,895 $ 56,627	$ 4,214,325 $ 311,805 $ 1,033,682 $ 100,139	$ 5,429,726 $ 198,367 $ 1,131,311 $ 108,323

Fair values of the assets and liabilities acquired on, and the net effect on cash of, the acquisition of ING Securities Co., Ltd. and ING Insurance Brokers Co., Ltd. on December 14, 2011 was as follows (Note 1):

Assets Deposits in other banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Properties, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash paid for the acquisition of subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net effect on cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	NT$
	$185,008 12,148 10,542 82,946
	290,644
	46,722 8,802
	55,524
	235,120 185,008
	$ (50,112)

Fair values of the assets and liabilities acquired from Chinfon Bank on April 3, 2010 were as follows (Note 37):

Assets Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Due from other banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discounts and loans, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Properties, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	NT$
	$ 387,307 365,143 17,298 3,872,667 684,152 190,252 1,967,097
	7,483,916

(Continued)

F-11

Liabilities Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deposits and remittances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bank debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Compensation from Resolution Trust Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Direct cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash acquired, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

NT$ $ 279,451 26,769,884 262,820 60,626 27,372,781 19,888,865 387,307 (3,902) $20,272,270

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche audit report dated March 20, 2013, except for translations into U.S. dollars at the exchange rate as of September 30, 2013, as stated in Note 2)

(Concluded)

F-12

FAR EASTERN INTERNATIONAL BANK, LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2010, 2011 AND 2012 (In Thousands, Unless Stated Otherwise)

1. ORGANIZATION AND OPERATIONS

Far Eastern International Bank Ltd. (“the Bank”) obtained its license on January 11, 1992 and started its business on April 11, 1992. The Bank (a) accepts deposits and extends loans and guarantees; (b) issues letters of credit, handles domestic and foreign remittances, and accepts commercial drafts; (c) invests in securities and acts as an agent for trading government bonds, corporate bonds and bank debentures; and (d) conducts relevant businesses that are authorized by the relevant authorities.

The operations of the Bank’s Trust Department include pecuniary trust, securities trust, real estate trust, creditor’s right of money or guarantee, movable property trust and ground right trust and related operations. These operations are regulated under the Banking Act and Trust Enterprise Act.

As of December 31, 2012, the Bank’s operating units included the Business Department, International Banking Department, Trust Department, Credit Card Department, Offshore Banking Unit (OBU), and 53 domestic branches, as well as an overseas branch in Hong Kong.

The Bank’s stocks are listed on the Taiwan Stock Exchange.

The subsidiaries controlled directly by the Bank were as follows:

Investor Company Investee Company Nature of Businesses The Bank Far Eastern Asset Management Co., Ltd. (“FEAMC”) Purchase, evaluation, auction and management of rights of financial institution creditors Far Eastern Life Insurance Agency Co., Ltd. (“FELIA”) Insurance agent Far Eastern Property Insurance Agency Co., Ltd. (“FEPIA”) Insurance agent Far Eastern International Securities Co., Ltd. (“FEIS”) Foreign securities broker, wealth management and offshore fund consulting Far Eastern International Securities Co., Ltd. Far Eastern Insurance Brokerage Co., Ltd. (“FEI Brokerage”) Insurance broker	Percentage of Ownership	Percentage of Ownership	Percentage of Ownership
	December 31
	2010 100 100 100 — —	2011 100 100 100 100 100	2012
			100 100 100 100 100

On August 29, 2011, the Bank acquired 100% of the common stock of ING Securities Co., Ltd. and its subsidiary ING Insurance Brokers Co., Ltd. from ING Insurance International B.V. for NT$235,120 thousand to expand the Bank’s business, elevate operating efficiency and strengthen competitiveness; this transaction was settled on December 14, 2011. On January 3 and January 10, 2012, ING Securities Co., Ltd. and ING Insurance Brokers Co., Ltd. was renamed as Far Eastern International Securities Co., Ltd. and Far Eastern Insurance Brokerage Co., Ltd., respectively.

F-13

Fair values of the assets and liabilities acquired from Far Eastern International Securities Co., Ltd. and Far Eastern Insurance Brokerage Co., Ltd. on December 14, 2011 were as follows:

Assets Deposits in other banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Properties, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	NT$
	$185,008 12,148 10,542 82,946
	290,644
	46,722 8,802
	55,524
	$235,120

The operating results of Far Eastern International Securities Co., Ltd. and Far Eastern Insurance Brokerage Co., Ltd. started from December 14, 2011 were included in the consolidated income statements for the years ended December 31, 2011 and 2012. For comparison purposes, the following unaudited pro forma consolidated income statements for the years ended December 31, 2010 and 2011 were prepared assuming the acquisition occurred on January 1, 2010:

Item Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Noninterest income and gains, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision for possible losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Year Ended December 31	Year Ended December 31
	2010 NT$ $ 3,984,520 4,873,341 8,857,861 (675,026) (5,194,254) 2,988,581 (848,152) $ 2,140,429	2011
		NT$ $ 3,880,147 4,938,417
		8,818,564 (834,135) (5,500,903)
		2,483,526 (150,384)
		$ 2,333,142

As of December 31, 2010, 2011 and 2012, the Bank and its subsidiaries had 2,422, 2,648 and 2,606 employees, respectively.

2. SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Public Banks and accounting principles generally accepted in the Republic of China.

The accompanying consolidated financial statements were originally presented in more than one set of Chinese financial reports. For the convenience of readers, the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language consolidated financial statements shall prevail.

F-14

The Bank and its subsidiaries’ significant accounting policies are summarized as follows:

Principles of Consolidation

In compliance with the Statement of Financial Accounting Standards (SFAS) No. 7—“Consolidated Financial Statements,” the consolidated financial statements as of and for the years ended December 31, 2010, 2011 and 2012 included all the direct and indirect subsidiaries of the Bank and other investees over which the Bank has control. All significant intercompany transactions have been eliminated upon consolidation.

Translation of New Taiwan Dollar Amounts into U.S. Dollars

The accompanying consolidated financial statements are stated in New Taiwan dollars. The New Taiwan dollar amounts have been translated into U.S. dollars amounts solely for the convenience of readers, using the noon buying rate of NT$29.56 to US$1.00 published by the Federal Reserve Bank of New York on September 30, 2013. The convenience translation should not be construed as a representation that the New Taiwan dollar amounts have been, could have been or could in the future be, converted into U.S. dollars at this or any other rate of exchange.

Foreign-currency Transactions

Foreign-currency assets and liabilities are recorded in a currency other than the New Taiwan dollars, the Bank’s functional or local currency. Foreign-currency items in income statements of domestic operating units are translated into New Taiwan dollars at prevailing exchange rates at the dates of the transactions. For overseas branches (including the OBU), income or losses from transactions settled in nonlocal currencies are translated into the local currency at exchange rates prevailing in the local exchange market at the date of the transactions.

At the balance sheet date, foreign-currency monetary assets and liabilities are translated at prevailing exchange rates, and the exchange differences are recognized as gain or loss.

At the balance sheet date, foreign-currency nonmonetary assets and liabilities (such as equity instruments) that are measured at fair value are translated at prevailing exchange rates, with the exchange differences treated as follows:

• a. Recognized in shareholders’ equity if the changes in fair value are recognized in shareholders’ equity;

• b. Recognized as gain or loss if the changes in fair value are recognized in gain or loss.

Foreign-currency nonmonetary assets and liabilities that are carried at cost continue to be stated at the exchange rates of the trade dates.

When foreign-currency assets and liabilities are settled, exchange differences arising from the application of different exchange rates are recognized as gain or loss for the current year.

Translation of Foreign Branches’ Financial Statements

The financial statements of foreign branches (including the OBU) are translated into New Taiwan dollars at the following exchange rates:

• a. Assets and liabilities—at exchange rates prevailing on the balance sheet date;

• b. The beginning balance of current year’s earnings not yet remitted to the head office—the same as the ending balance of the prior years’ earnings; and

• c. Income and expenses—at average exchange rates for the year.

F-15

Exchange differences arising from the translation of the financial statements of foreign branches are recognized as a cumulative translation adjustment under shareholders’ equity.

Accounting Estimates

In accordance with the above regulations, laws and principles, certain estimates and assumptions have been used to determine the fair value of certain financial instruments, allowance for possible losses, reserve for guarantee obligations, depreciation, impairment, pension, income taxes, contingent losses and employees’ bonus, remuneration to directors and supervisors, etc. Actual results may differ from these estimates.

Current and Noncurrent Assets and Liabilities

Accounts included in the consolidated balance sheets are not classified as current or noncurrent since the major components of the consolidated financial statements are from the banking sector, whose operating cycle cannot be reasonably identified. Nevertheless, accounts are properly categorized in accordance with their nature and sequenced by their liquidity. Please refer to Note 34 for the maturity analysis of assets and liabilities.

Financial Instruments at Fair Value through Profit or Loss

Financial instruments at fair value through profit or loss (FVTPL) are financial assets and liabilities that are held for trading or those that are designated on initial recognition as measured at fair value through profit or loss. FVTPL instruments are initially measured at fair value. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately as expense. At each balance sheet date subsequent to initial recognition, financial assets and liabilities at FVTPL are remeasured at fair value, with changes in fair value recognized as gain or loss in the year. On the derecognition of financial assets and liabilities at FVTPL, differences between the carrying amount and the sum of the consideration received and receivable or consideration paid and payable are recognized as gain or loss. Acquisition and disposal of financial assets are recognized and derecognized on a trade date basis, except government bonds, for which the settlement date basis is used.

A derivative instrument that does not meet the criteria for hedge accounting is classified as a financial asset or a financial liability held for trading. If the fair value of the derivative is positive, the derivative is recognized as a financial asset; otherwise, the derivative is recognized as a financial liability.

Available-for-sale Financial Assets

Available-for-sale financial assets are initially measured at fair value plus transaction costs that are directly attributable to the acquisition. The difference between the initial cost of a debt instrument and its maturity amount is amortized using the effective interest method. At each balance sheet date subsequent to initial recognition, available-for-sale financial assets are remeasured at fair value, with changes in fair value recognized in equity until the financial assets are derecognized or impaired, at which time, the cumulative gain or loss previously recognized in equity is included in profit or loss for the year. Acquisition and disposal of financial assets are recognized and derecognized on a trade date basis, except government bonds, for which the settlement date basis is used.

An impairment loss is recognized when there is objective evidence that the investment is impaired. Any decrease in impairment loss on an equity instrument classified as available-for-sale is recognized directly in equity. If the fair value of a debt instrument classified as available-for-sale increases as a result of an event that occurred after the impairment loss was recognized, the decrease in impairment loss is reversed as gain of the year.

F-16

Held-to-maturity Financial Assets

Held-to-maturity financial assets are initially measured at fair value plus transaction costs that are directly attributable to the acquisition. At each balance sheet date subsequent to initial recognition, held-to-maturity financial assets are measured at amortized cost using the effective interest method. Acquisition and disposal of financial assets are recognized and derecognized on a settlement date basis.

An impairment loss is recognized when there is objective evidence that the investment is impaired. The impairment loss is reversed if an increase in the investment’s recoverable amount is due to an event that occurred after the impairment loss was recognized; however, the adjusted carrying amount of the investment may not exceed the carrying amount that would have been determined had no impairment loss been recognized for the investment in prior years.

Hedge Accounting

The Bank engages non-trading derivatives primarily as a tool for hedging against risks to financial assets and liabilities due to adverse market changes in interest rates, exchange rates and credit. The Bank’s hedge accounting qualifies as a fair value hedge. The fair value hedge is mainly used to avoid the risk of adverse changes in fair value of interest-earning assets and interest-bearing liabilities due to fluctuations of interest rates or exchange rates. At the start of the hedge, there must be a formal designation of the derivative as a hedging instrument and documentation of the hedging relationship between the hedging instrument and the hedged item, the risk management objective, hedging strategies and how the Bank will assess the hedging instrument effectiveness.

Once the hedge is determined as a fair value hedge, the effect of changes in fair value of the hedged items will be offset by the gain or loss recognized from remeasuring the derivative hedging instrument at fair value, and the carrying amount of the hedged item is adjusted through the corresponding gain or loss on the hedging instrument.

Financial Assets Carried at Cost

Investments in equity instruments with no quoted market prices in an active market and with fair values that cannot be reliably measured, such as non-publicly traded stocks, are carried at their original cost. An impairment loss is recognized when there is objective evidence that the asset is impaired. No reversal of this impairment loss is allowed.

Debt Investments with No Active Market

Debt investments which with no active market are carried at amortized cost. The accounting treatment for these debt investments is the same as that for held-to-maturity financial assets, except for the absence of restriction on the timing of the disposal of these debt instruments. An impairment loss is recognized when there is objective evidence that the investment is impaired.

Nonaccrual Loans

Under the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/Nonaccrual Loans” issued by the Banking Bureau under the Financial Supervisory Commission, overdue loans and other credits extended by the Bank, including their respective accrued interests, are classified as nonaccrual loans within six months after the expiration of the repayment period.

Nonaccrual loans arising from loans are classified as discounts and loans; others arising from guarantees, acceptances, accounts receivable—factoring and credit card receivables are classified as other financial assets.

F-17

Acquired Receivables

The aggregate purchase price and all necessary charges on loan acquisition are booked as the cost of the acquired receivables, and the fair value of each individual loan is the basis for cost allocation.

Marketing and handling expenses incurred after the acquisition date are expensed, including the expenses for applying for participating in auctions, court fees for collateral auctions, and appraisal expenses.

Allowance for Possible Losses and Reserve for Guarantee Obligations

In determining the allowance for possible losses and reserve for guarantee obligations, the Bank evaluates the risks on specific loans and assesses the collectability of loans, discounts, receivables, other financial assets and guarantee obligations on a portfolio basis.

The Bank evaluates possible losses on specific loans on the basis of the borrowers’ financial situation, their ability to repay principals and interests, and the values of collaterals in accordance with “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/Nonaccrual Loans” (the “Regulations”). The Regulations require that loans should be categorized by collectability and specify the minimum allowance for possible losses and reserve for guarantee obligations using prescribed percentages. However, as required by the Banking Bureau’s letter (Ref. No. 10010006830), loan coverage ratio should be more than 1 percent.

When a loan or receivable is considered uncollectible, it may be written off on the approval of the Bank’s Board of Directors or Managing Directors. The subsequent collections of written-off loans are credited against the allowance account or recognized as other income.

Loans and accounts receivable are assessed for impairment at the end of each reporting period and are considered impaired when there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the loans and accounts receivable, and the estimated future cash flows of the loans and accounts receivable have been affected. Objective evidence of impairment could include:

• Significant financial difficulty of the debtor;

• Accounts receivable becoming overdue; or

• It becoming probable that the debtor will enter bankruptcy or financial reorganization.

Loans and accounts receivable that with no individual evidence of impairment are assessed for impairment by portfolio. Objective evidence of the impairment of a portfolio of loans and accounts receivable could include the Bank’s past experience of collecting payments and an increase in the number of delayed payments in the portfolio, as well as changes in national or local economic conditions that correlate with defaults on loans and receivables.

The amount of the impairment loss recognized is the difference between the carrying amount of the loan and account receivable and the present value of estimated future cash flows discounted at the original effective interest rate after taking into consideration the collaterals and guarantees obtained. The carrying amount of the loans and accounts receivable is reduced through the use of an allowance account.

Securities Purchased/Sold Under Resale/Repurchase Agreements

Securities purchased under resale agreements and securities sold under repurchase agreements are generally treated as collateralized financing transactions.

F-18

Impairment of Assets

The carrying amount of investments accounted for by the equity method, properties, intangible assets and buildings and land held for sale is estimated based on its respecting recoverable amount. When an indication of significant impairment is identified, the excess of carrying amount of an asset over its recoverable amount is recognized as an impairment loss. If the recoverable amount increases in a subsequent period, the amount previously recognized as impairment would be reversed and recognized as a gain. However, the adjusted carrying amount may not exceed the carrying amount that would have been determined, net of depreciation and amortization, if no impairment loss had been recognized for the asset in prior years.

Investments Accounted for by the Equity Method

Equity investments of 20 percent or more of the investees’ voting shares are accounted for by the equity method. The investments are stated at cost plus (or minus) a proportionate share in net income (losses) of the investees.

The acquisition cost is allocated to the assets acquired and liabilities assumed on the basis of their fair values at the date of acquisition, and the acquisition cost in excess of the fair value of the identifiable net assets acquired is recognized as goodwill. Goodwill has to be tested for impairment annually instead of amortized. The fair value of the net identifiable assets acquired in excess of the acquisition cost is used to reduce the fair value of each of the noncurrent assets acquired in proportion to the respective fair values of the noncurrent assets, with any excess recognized as an extraordinary gain.

When the Bank and its subsidiaries do not subscribe for an investee’s newly issued shares at the original percentage of ownership in the investee, the change in equity in the investee’s net assets should be recorded as an adjustment to investments, with a corresponding amount debited or credited to capital surplus. When the adjustment should be debited to capital surplus, but the capital surplus arising from equity-method investments is insufficient, the shortage is debited to retained earnings.

Cash dividends received are treated as a reduction of carrying amounts. Stock dividends received are recorded as an increase in the number of shares. The cost per share will be recalculated on the basis of the new number of shares held. Cost of shares sold is calculated at moving-average cost.

Properties

Properties are stated at cost less accumulated depreciation and accumulated impairment losses. Major additions and improvements to properties are capitalized, while repairs and maintenance are expensed as incurred.

Depreciation is provided on a straight-line basis over estimated useful lives as follows: buildings and improvements, 5 to 55 years; computer equipment, 3 to 7 years; transportation equipment, 3 to 7 years; and miscellaneous equipment, 3 to 20 years. Properties still in use beyond their original estimated useful lives are further depreciated over their newly estimated useful lives.

Upon disposal of properties, the related cost, accumulated depreciation and accumulated impairment losses of the properties are derecognized. Any gain or loss is included in net profit of the year of disposal.

Intangible Assets

Intangible assets arising from mergers or acquisitions are initially recorded at fair value. Assets that are determined to have definite useful lives are amortized on a straight-line basis over 4 to 15 years, and those assets that are determined to have indefinite useful lives are tested for impairment annually. Events and circumstances are evaluated annually to determine whether the useful lives of intangible assets remain indefinite.

F-19

Buildings and Land Held for Sale

Buildings and land held for sale are carried at cost, and their recoverable amount is assessed at the end of each reporting period. If the recoverable amount of buildings and land held for sale is estimated to be less than their carrying amount, an impairment loss is recognized and charged to earnings. The reversal of an impairment loss is recognized under earnings. However, the adjusted carrying amount may not exceed the carrying amount that would have been determined had no impairment loss been recognized for these assets in prior years.

Collaterals Assumed

Collaterals assumed are carried at cost and evaluated at the recoverable amount. If the recoverable amount of collaterals assumed is estimated to be less than its carrying amount, an impairment loss is recognized and charged to earnings. The reversal of an impairment loss is recognized under earnings. However, the adjusted carrying amount may not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years.

Deferred Charges

Deferred charges are carried at cost, and are amortized on a straight-line basis over the period of economic life.

Pension Cost

Pension cost under the defined benefit plan is determined by actuarial valuations. Unrecognized net transition obligations and unrecognized prior service cost are amortized over 26 and 24 years, respectively.

Under the defined contribution plan, monthly contributions to employees’ individual pension accounts at a specific percentage of salaries and wages are made. These payments are recognized as pension costs.

Income Tax

The inter-year allocation method is applied to income taxes, whereby deferred income tax assets and liabilities are recognized for the tax effects of temporary differences, unused loss carryforwards and unused tax credits. Valuation allowances are provided to the extent, if any, that it is more likely than not that deferred income tax assets will not be realized.

Income tax credits for research and development expenditures and personnel training expenditures are recognized when the expenses are incurred.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

An additional tax at 10% of unappropriated earnings is provided for as income tax in the year the shareholders approve the retention of earnings.

Income Recognition

Interest income from discounts and loans is recorded on the accrual basis. For nonaccrual loans, interest income is recognized only when collections on these obligations are made. Under the regulations of the Banking Bureau under the Financial Supervisory Commission, the interest income on credits covered by agreements that extend their maturity is recorded as deferred income and recognized upon collection.

Service fee income is recognized as cash receipts when the earnings process has been completed and service fee have been realized or are realizable.

F-20

Commission income is recognized when the significant risks have been transferred and the economic benefits associated with the transaction have been realized or are realizable.

The gain or loss on the disposal or recovery of acquired receivables is accounted for by the cost-recovery method. The administration revenue from managing acquired loans is recognized monthly on an accrual basis. The advance administration revenue is amortized on a straight-line method over the estimated recovery period.

Contingencies

A loss should be recognized when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. If a loss or liability due to a certain event is possible but the amount of loss cannot be reasonably estimated, a footnote disclosure of the circumstance that might give rise to the possible loss should be made.

Acquisition of Another Financial Institution’s Business

The accounting for the Bank’s acquisition of another financial institution’s business is based on the SFAS No. 25—“Business Combinations.” The identifiable net assets and liabilities obtained through the acquisition are measured at the fair value at the transaction date. Goodwill arising from the acquisition cost exceeding the fair value of the identifiable net assets acquired has to be tested for impairment annually instead of being amortized. If the fair value of the identifiable net assets exceeds the acquisition cost, the excess is used to reduce the fair value of each of the noncurrent assets acquired in proportion to the respective fair values of the noncurrent assets, with any remaining excess recognized as an extraordinary gain.

Reclassifications

Certain accounts in the consolidated financial statements as of and for the years ended December 31, 2010 and 2011 have been reclassified to conform to the presentation of the consolidated financial statements as of and for the year ended December 31, 2012.

3. EFFECTS OF CHANGE IN ACCOUNTING PRINCIPLES

Financial Instruments

On January 1, 2011, the Bank and its subsidiaries adopted the third revised SFAS No. 34—“Financial Instruments: Recognition and Measurement.” The main revisions include (1) finance lease receivables are now covered by SFAS No. 34; (2) the scope of the applicability of SFAS No. 34 to insurance contracts is amended; (3) loans and receivables originated are now covered by SFAS No. 34; (4) additional guidelines on impairment testing of financial assets carried at amortized cost if the asset issuer or obligor has financial difficulties and the terms of obligations been modified; and (5) accounting treatment by a debtor for modifications in the terms of obligations.

4. CASH AND CASH EQUIVALENTS

Cash on hand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes and checks for clearing . . . . . . . . . . . . . . . . . . . . . Deposits due from other banks . . . . . . . . . . . . . . . . . . . . Balance with other banks . . . . . . . . . . . . . . . . . . . . . . . . .		December 31	December 31
	2010 NT$ $2,211,882 613,382 1,422,599 26,969 $4,274,832	2011 NT$ $2,448,923 817,187 2,540,823 198,281 $6,005,214	2012
			NT$ US$ (Note 2) $2,727,134 $ 92,258 1,671,862 56,558 1,110,865 37,580 89,590 3,031 $5,599,451 $189,427

F-21

5. DUE FROM THE CENTRAL BANK AND OTHER BANKS

Due from the Central Bank—certificates of deposit (Note 31) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loans to other banks . . . . . . . . . . . . . . . . . . . . . . . . New Taiwan dollar reserve deposits—Type A . . . . New Taiwan dollar reserve deposits—Type B . . . . Foreign-currency reserve deposits . . . . . . . . . . . . . .		December 31	December 31
	2010 NT$ $ 84,000,000 5,548,500 5,651,740 7,710,130 27,982 $102,938,352	2011 NT$ $69,400,000 3,570,480 5,019,759 8,705,369 43,582 $86,739,190	2012
			NT$ US$ (Note 2) $63,190,000 $2,137,686 4,819,462 163,040 5,835,631 197,417 8,931,969 302,164 41,546 1,405 $82,818,608 $2,801,712

The reserve deposits are required by law and determined at a prescribed percentage of the monthly average balances. The Type B reserve deposits can be withdrawn only when the balances are adjusted monthly. The Type A and foreign-currency reserve deposits can be withdrawn on demand but bear no interest.

6. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets held for trading Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . Convertible bond option contracts . . . . . . . . . . . . . . Convertible bond asset swap contracts . . . . . . . . . . . Interest rate swap contracts . . . . . . . . . . . . . . . . . . . . Foreign-currency swap contracts . . . . . . . . . . . . . . . . Currency option contracts . . . . . . . . . . . . . . . . . . . . . Cross-currency swap contracts . . . . . . . . . . . . . . . . . Credit default swap contracts . . . . . . . . . . . . . . . . . . Listed and OTC stocks . . . . . . . . . . . . . . . . . . . . . . . Beneficiary certificates . . . . . . . . . . . . . . . . . . . . . . . Forward exchange contracts . . . . . . . . . . . . . . . . . . . Non-deliverable forward contracts . . . . . . . . . . . . . . Financial assets designated as at fair value through profit or loss—convertible bonds . . . . . . . . . . . . . . . . . . . . . . Total financial assets at fair value through profit or loss . . Financial liabilities held for trading Convertible bond option contracts . . . . . . . . . . . . . . Foreign-currency swap contracts . . . . . . . . . . . . . . . . Convertible bond asset swap contracts . . . . . . . . . . . Interest rate swap contracts . . . . . . . . . . . . . . . . . . . . Currency option contracts . . . . . . . . . . . . . . . . . . . . . Cross-currency swap contracts . . . . . . . . . . . . . . . . . Non-deliverable forward contracts . . . . . . . . . . . . . . Forward exchange contracts . . . . . . . . . . . . . . . . . . . Credit default swap contracts . . . . . . . . . . . . . . . . . . Short sales of bonds payable . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total financial liabilities at fair value through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31	December 31
	2010	2011	2012
	NT$ $ 2,225,184 284,440 16,670 56,058 378,526 41,932 523,826 24,172 141,628 25,000 28,161 —	NT$ $ 1,722,733 317,057 26,918 358,907 460,509 49,016 4,801 32,090 36,819 57,286 51,235 32,985	NT$ US$ (Note 2) $ 1,334,349 $ 45,140 983,182 33,261 601,833 20,360 351,567 11,893 304,672 10,307 187,732 6,351 184,828 6,253 145,330 4,917 130,962 4,430 107,521 3,637 59,995 2,029 39,306 1,330 4,431,277 149,908 11,679,558 395,114 $16,110,835 $545,022 $ 2,342,711 $ 79,253 465,775 15,757 307,521 10,403 203,635 6,889 184,378 6,237 140,767 4,762 40,218 1,361 32,030 1,084 27,798 940 — — 199 7 $ 3,745,032 $126,693
	3,745,597 12,979,293	3,150,356 10,656,510
	$16,724,890	$13,806,866
	$ 4,427,702 1,313,356 142,607 130,678 41,915 230,427 6,885 135,219 16,446 — —	$ 1,971,854 260,861 127,769 182,081 48,384 719,979 17,481 67,853 35,221 649,552 —
	$ 6,445,235	$ 4,081,035

F-22

The Bank engages in derivative transactions mainly to trade, to accommodate customers’ needs and to manage exposures due to exchange rate and interest rate fluctuations. The Bank’s financial risk management strategy is to hedge most of its exposure to market risk.

Arising on the remeasurement of financial assets and liabilities at fair value through profit or loss, net gains of NT$312,526 thousand, net gains of NT$361,498 thousand, and net losses of NT$254,491 thousand (approximately US$8,609 thousand) were recognized in 2010, 2011 and 2012, respectively. Net disposal gains on financial assets and liabilities at fair value through profit or loss were NT$263,626 thousand in 2010; NT$322,744 thousand in 2011; and NT$1,281,761 thousand (approximately US$43,361 thousand) in 2012.

Outstanding derivative contract (nominal) amounts as of December 31, 2010, 2011 and 2012 were as follows:

Foreign-currency swap contracts . . . . . . . . . . . . . . . Interest rate swap contracts . . . . . . . . . . . . . . . . . . . Convertible bond option contracts . . . . . . . . . . . . . Cross-currency swap contracts . . . . . . . . . . . . . . . . Convertible bond asset swap contracts . . . . . . . . . . Currency option contracts . . . . . . . . . . . . . . . . . . . . Credit default swap contracts . . . . . . . . . . . . . . . . . Non-deliverable forward contracts . . . . . . . . . . . . . Forward exchange contracts . . . . . . . . . . . . . . . . . .		December 31	December 31
	2010 NT$ $36,692,289 19,437,500 21,552,450 7,879,600 17,937,104 1,811,066 6,874,732 147,500 7,959,689	2011 NT$ $47,007,582 44,438,500 33,499,262 17,706,190 28,113,195 4,665,684 14,496,297 8,036,471 7,583,875	2012
			NT$ US$ (Note 2) $103,946,913 $3,516,472 87,925,783 2,974,485 30,852,021 1,043,708 27,471,165 929,336 26,963,297 912,155 23,028,114 779,030 18,608,724 629,524 11,036,127 373,347 7,886,180 266,786

7. SECURITIES PURCHASED UNDER RESALE AGREEMENTS

As of December 31, 2011 and 2012, securities acquired for NT$850,505 thousand and NT$23,741,992 thousand (approximately US$803,180 thousand) under resale agreements would be sold for NT$850,565 thousand and NT$23,749,718 thousand (approximately US$803,441 thousand) by January 2, 2012 and February 19, 2013, respectively. (2010: Nil)

8. RECEIVABLES, NET

Credit card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Factoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from the disposal of acquired receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acceptances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Spot exchange transactions . . . . . . . . . . . . . . . . . . . . Proceeds from disposal of securities . . . . . . . . . . . . . Acquired receivables . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Allowance for possible losses (Note 9) . . . . . .		December 31	December 31
	2010 NT$ $15,618,049 2,633,984 509,274 — 653,475 647,971 101,332 228,901 366,720 20,759,706 1,879,356 $18,880,350	2011 NT$ $15,523,234 3,412,000 603,691 — 332,333 595,616 70,918 747,619 389,198 21,674,609 818,715 $20,855,894	2012
			NT$ US$ (Note 2) $15,521,385 $525,081 2,830,761 95,763 640,301 21,661 602,540 20,384 503,574 17,036 481,948 16,304 415,243 14,047 145,553 4,924 338,913 11,465 21,480,218 726,665 753,712 25,498 $20,726,506 $701,167

F-23

In August 2009, the Bank acquired the credit card business of AIG Credit Card Co. (Taiwan), Ltd. for NT$2.67 billion. The acquired credit card business included accounts receivable amounting to NT$6.83 billion and written-off nonperforming receivables amounting to NT$12.68 billion. The gains on recovery of written-off nonperforming receivables were NT$116,253 thousand in 2010, NT$250,299 thousand in 2011 and NT$238,799 thousand (approximately US$8,078 thousand) in 2012.

Far Eastern Asset Management Co., Ltd. disposed of its acquired receivables in 2012, and related proceeds from the disposal of acquired receivables and compensation for early settlement amounting to NT$602,540 thousand (approximately US$20,384 thousand) were collected in January 2013.

9. DISCOUNTS AND LOANS, NET

9. DISCOUNTS AND LOANS, NET
Negotiations, discounts and overdraft . . . . . . . . . Short-term loans . . . . . . . . . . . . . . . . . . . . . . . . . Medium-term loans . . . . . . . . . . . . . . . . . . . . . . . Long-term loans . . . . . . . . . . . . . . . . . . . . . . . . . . Nonaccrual loans . . . . . . . . . . . . . . . . . . . . . . . . . Less: Allowance for possible losses . . . . . . . . . .		December 31
	2010 NT$ $ 268,387 63,956,391 64,377,763 110,724,229 632,058 239,958,828 3,607,543 $236,351,285	2011 NT$ $ 176,576 67,654,241 84,002,593 122,135,928 264,778 274,234,116 4,773,735 $269,460,381	2012
			NT$ US$ (Note 2) $ 211,493 $ 7,155 62,306,524 2,107,798 92,298,012 3,122,395 128,002,420 4,330,258 982,983 33,254 283,801,432 9,600,860 3,582,006 121,177 $280,219,426 $9,479,683

As of December 31, 2010, 2011 and 2012, the balances of nonaccrual loans were NT$632,058 thousand; NT$264,778 thousand; and NT$982,983 thousand (approximately US$33,254 thousand), respectively. The unrecognized interest incomes on nonaccrual loans were NT$21,242 thousand in 2010; NT$3,349 thousand in 2011; and NT$33,608 thousand (approximately US$1,137 thousand) in 2012.

Movements of allowance for possible losses on discounts and loans and others (including receivables and other financial assets) were as follows:

2010 Balance, January 1, 2010 . . . . . . . . . . . . . . . . . . . . . Provision (reversal of provision) for possible losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquired from the acquisition of Chinfon Bank . . . . Amounts written-off . . . . . . . . . . . . . . . . . . . . . . . . . Amounts recovered . . . . . . . . . . . . . . . . . . . . . . . . . . Effects of exchange rate changes . . . . . . . . . . . . . . . Balance, December 31, 2010 . . . . . . . . . . . . . . . . . . 2011 Balance, January 1, 2011 . . . . . . . . . . . . . . . . . . . . . . . Provision (reversal of provision) for possible losses . Amounts written-off . . . . . . . . . . . . . . . . . . . . . . . . . .	Others NT$ $2,603,643 42,252 3,389 (751,015) 52,021 — $1,950,290 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Discounts and Loans Specific Risk General Risk NT$ NT$ $ 757,183 $1,590,835 672,636 (39,862) 2,627,693 — (2,323,937) — 331,721 — — (8,726) $ 2,065,296 $1,542,247 Discounts and Loans Others NT$ NT$ . . . . $3,607,543 $1,950,290 . . . . 1,305,454 (515,595) . . . . (191,772) (231,407)	Discounts and Loans Specific Risk General Risk NT$ NT$ $ 757,183 $1,590,835 672,636 (39,862) 2,627,693 — (2,323,937) — 331,721 — — (8,726) $ 2,065,296 $1,542,247 Discounts and Loans Others NT$ NT$ . . . . $3,607,543 $1,950,290 . . . . 1,305,454 (515,595) . . . . (191,772) (231,407)	Total	Total
		. . .		NT$ $ 4,951,661 675,026 2,631,082 (3,074,952) 383,742 (8,726)
				$ 5,557,833
			. . . . . . . . .		Total
					NT$ $5,557,833 789,859 (423,179)

(Continued)

F-24

Amounts recovered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effects of exchange rate changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balance, December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Discounts and Loans NT$ $ 44,800 7,710 $4,773,735	Others NT$ $ 41,892 190 $1,245,370	Total NT$ $ 86,692 7,900 $6,019,105

2012 Balance, January 1, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision for possible losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amounts written-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amounts recovered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effects of exchange rate changes . . . . . . . . . . . . . . . . . . . . . . . . . . . Balance, December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 Balance, January 1, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision for possible losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amounts written-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amounts recovered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effects of exchange rate changes . . . . . . . . . . . . . . . . . . . . . . . . . . Balance, December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(Concluded) Discounts and Loans Others Total NT$ NT$ NT$ . . . $ 4,773,735 $1,245,370 $ 6,019,105 . . . 765,001 116,947 881,948 . . . (1,965,455) (219,069) (2,184,524) . . . 15,982 36,924 52,906 . . . (7,257) (71) (7,328) . . . $ 3,582,006 $1,180,101 $ 4,762,107 Discounts and Loans Others Total US$ (Note 2) US$ (Note 2) US$ (Note 2) $161,493 $42,130 $203,623 25,880 3,956 29,836 (66,490) (7,411) (73,901) 541 1,249 1,790 (247) (2) (249) $121,177 $39,922 $161,099	(Concluded) Discounts and Loans Others Total NT$ NT$ NT$ . . . $ 4,773,735 $1,245,370 $ 6,019,105 . . . 765,001 116,947 881,948 . . . (1,965,455) (219,069) (2,184,524) . . . 15,982 36,924 52,906 . . . (7,257) (71) (7,328) . . . $ 3,582,006 $1,180,101 $ 4,762,107 Discounts and Loans Others Total US$ (Note 2) US$ (Note 2) US$ (Note 2) $161,493 $42,130 $203,623 25,880 3,956 29,836 (66,490) (7,411) (73,901) 541 1,249 1,790 (247) (2) (249) $121,177 $39,922 $161,099	(Concluded) Total
			NT$ $ 6,019,105 881,948 (2,184,524) 52,906 (7,328)
			$ 4,762,107
			Total
		US$ (Note 2) $203,623 29,836 (73,901) 1,790 (249) $161,099

For the years ended December 31, 2010, 2011 and 2012, the Bank had no written-off credits for which legal proceedings had not been initiated.

The provision for possible losses was as follows:

Provision for possible losses—discounts and loans . . . . . . . Provision (reversal of provision) for possible losses—others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision for possible losses—reserve for guarantee obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		Year Ended	December 31
	2010 NT$ $632,774 42,252 — $675,026	2011 NT$ $1,305,454 (515,595) 44,276 $ 834,135	2012
			NT$ US$ (Note 2) $765,001 $25,880 116,947 3,956 15,393 520 $897,341 $30,356

F-25

The Bank’s financial assets, which are covered by the SFAS No. 34—“Financial Instruments: Recognition and Measurement,” were assessed for impairment loss on the basis of credit risk characteristics of financial assets. The results were as follows:

Discounts and loans

Item With objective evidence of individual impairment Assessed individually . . . Assessed by portfolio . . . Without objective evidence of individual impairment Assessed individually . . . Assessed by portfolio . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item With objective evidence of individual impairment Assessed individually . . . Assessed by portfolio . . . Without objective evidence of individual impairment Assessed individually . . . Assessed by portfolio . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	December	December	31, 2011
	Discounts and Loans		Allowance for Possible Losses
		NT$ $ 5,188,537 2,143,385 3,105,077 263,797,117 $274,234,116 December	NT$ $3,373,260 450,059 — 950,416 $4,773,735 31, 2012
	Discounts and Loans		Allowance for Possible Losses
	NT$ US$ (Note 2) $ 4,581,612 $ 154,994 1,837,366 62,157 2,619,004 88,599 274,763,450 9,295,110 $283,801,432 $9,600,860		NT$ US$ (Note 2) $1,449,349 $ 49,031 718,466 24,305 — — 1,414,191 47,841 $3,582,006 $121,177

Others (including receivables, other financial assets and debt investments with no active market)

Item With objective evidence of individual impairment Assessed individually . . . Assessed by portfolio . . . Without objective evidence of individual impairment Assessed individually . . . Assessed by portfolio . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item With objective evidence of individual impairment Assessed individually . . . Assessed by portfolio . . . Without objective evidence of individual impairment Assessed individually . . . Assessed by portfolio . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December	31, 2011
		Others	Allowance for Possible Losses
		NT$ $ 621,930 3,345,018 9,204,321 16,256,145 $29,427,414 December	NT$ $ 438,556 556,138 — 245,349 $1,240,043 31, 2012
		Others	Allowance for Possible Losses
	NT$ US$ (Note 2) $ 530,751 $ 17,955 2,774,987 93,877 12,600,812 426,279 16,367,731 553,712 $32,274,281 $1,091,823		NT$ US$ (Note 2) $ 440,925 $14,916 609,478 20,618 — — 124,461 4,211 $1,174,864 $39,745

F-26

10. AVAILABLE-FOR-SALE FINANCIAL ASSETS

Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . Listed and OTC stocks—domestic . . . . . . . . . . . . . . —overseas . . . . . . . . . . . . . . . Negotiable certificates of deposit . . . . . . . . . . . . . . . Commercial papers . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31	December 31
	2010 NT$ $15,696,295 1,159,165 — — — $16,855,460	2011 NT$ $14,773,521 776,673 124,465 — — $15,674,659	2012 NT$ US$ (Note 2) $10,355,436 $350,319 807,991 27,334 — — 452,394 15,304 250,043 8,459 $11,865,864 $401,416

The terms of government bonds are summarized as follows:

				December 31	December 31
		2010		2011		2012
		NT$		NT$		NT$		US$ (Note 2)
Aggregate par value . . . . . . . .	$	15,376,400	$	14,369,900	$	10,154,600	$	343,525
Coupon interest rates . . . . . . .		0.88%-7.10%		0.88%-6.90%		0.88%-2.75%		0.88%-2.75%
Effective interest rates . . . . . .		0.41%-6.39%		0.91%-9.45%		0.91%-1.98%		0.91%-1.98%
Maturity . . . . . . . . . . . . . . . . .		2011.01-2030.08		2012.01-2031.08	2013.01-2022.05		2013.01-2022.05

The terms of negotiable certificates of deposit are summarized as follows:

Aggregate par value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Coupon interest rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effective interest rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			December 31 2012 NT$ US$ (Note 2) $ 451,400 $ 15,271 0.87%-0.88% 0.87%-0.88% 0.74%-0.76% 0.74%-0.76% 2013.01 2013.01
	2010 NT$ $— — — —	2011 NT$ $— — — —

The terms of commercial papers are summarized as follows:

Aggregate par value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Coupon interest rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effective interest rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			December 31 2012 NT$ US$ (Note 2) $ 250,000 $ 8,457 0.76%-1.06% 0.76%-1.06% 0.74%-0.75% 0.74%-0.75% 2013.01 2013.01
	2010 NT$ $— — — —	2011 NT$ $— — — —

The assets pledged as collateral are shown in Note 31.

F-27

11. HELD-TO-MATURITY FINANCIAL ASSETS

Foreign corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . Foreign bank debentures . . . . . . . . . . . . . . . . . . . . . . . . . Foreign certificates of deposit . . . . . . . . . . . . . . . . . . . . . Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31	December 31
	2010 NT$ $ 470,428 2,170,233 147,500 1,607 $2,789,768	2011 NT$ $2,374,459 1,400,397 151,450 1,599 $3,927,905	2012
			NT$ US$ (Note 2) $ 989,133 $33,462 797,129 26,966 437,040 14,785 999 34 $2,224,301 $75,247

The terms of foreign corporate bonds are summarized as follows:

Aggregate par value—USD . . . . . . . . . . . . . . . . . . —AUD . . . . . . . . . . . . . . . . . . Coupon interest rates . . . . . . . . . . . . . . . . . . . . . . . . Effective interest rates . . . . . . . . . . . . . . . . . . . . . . . Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31

The terms of foreign bank debentures are summarized as follows:

Aggregate par value—USD . . . . . . . . . . . . . . . . . . —AUD . . . . . . . . . . . . . . . . . . Coupon interest rates . . . . . . . . . . . . . . . . . . . . . . . . Effective interest rates . . . . . . . . . . . . . . . . . . . . . . . Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31

The terms of foreign certificates of deposit are summarized as follows:

Aggregate par value—USD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Coupon interest rates (floating interest rates) . . . . . . . . . . . . . . . . . . . . . . . . . . Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	December 31 2010 2011 2012 $ 5,000 $ 5,000 $ 15,000 1.39% 1.54% 1.97% 2012.08 2012.08 2015.03

The terms of government bonds are summarized as follows:

Aggregate par value—NTD . . . . . . . . . . . . . . . . . . . . Coupon interest rates . . . . . . . . . . . . . . . . . . . . . . . . . Effective interest rates . . . . . . . . . . . . . . . . . . . . . . . . Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31

F-28

12. INVESTMENTS ACCOUNTED FOR BY THE EQUITY METHOD

Dah Chung Bills Finance Corp. . . . . . . . . . . . . . . . . . . . . Yuan Long Stainless Steel Corp. . . . . . . . . . . . . . . . . . . . . Deutsche Far Eastern Asset Management Co., Ltd. . . . . . .			December 31	December 31	December 31
	2010		2011		2012
	Carrying Value	% of Owner- ship	Carrying Value	% of Owner- ship	Carrying Value	% of Owner- ship
	NT$ $1,413,899 1,084,677 125,332	22.06 49.00 40.00	NT$ $1,414,579 939,327 120,552	22.06 49.00 40.00	NT$ US$ (Note 2) $1,416,008 $47,903 796,544 26,947 159,846 5,407 $2,372,398 $80,257	22.06 49.00 40.00
	$2,623,908		$2,474,458

In February 2010, Far Eastern Asset Management Co., Ltd. sold 2,165 thousand shares of Dah Chung Bills Finance Corp. to Yuan Ding Investment Corp. for NT$32,315 thousand, resulting in a disposal gain of NT$1,576 thousand.

In July 2012, Deutsche Far Eastern Asset Management Co., Ltd. (“Deutsche”) decreased its capital to offset the deficit and issued new shares for cash. The Bank acquired some of these new shares for NT$55,652 thousand (approximately US$1,883 thousand) at its current percentage of ownership of Deutsche.

Investment income (loss) recognized under the equity method was as follows:

Yuan Long Stainless Steel Corp. . . . . . . . . . . . . . . . . . . . . . . Dah Chung Bills Finance Corp. . . . . . . . . . . . . . . . . . . . . . . . Deutsche Far Eastern Asset Management Co., Ltd. . . . . . . .		Year Ended December 31	Year Ended December 31
	2010 NT$ $ 17,318 103,984 (21,171) $100,131	2011 NT$ $(146,280) 83,368 (4,780) $ (67,692)	2012
			NT$ US$ (Note 2) $(143,879) $(4,867) 72,190 2,442 (16,358) (554) $ (88,047) $(2,979)

13. DEBT INVESTMENTS WITH NO ACTIVE MARKET

Convertible bond asset swap contracts—master agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit-linked notes—master agreement . . . . . . . . . . . . Floating rate notes, net . . . . . . . . . . . . . . . . . . . . . . . . . Convertible bonds, net . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31	December 31
	2010 NT$ $4,859,320 1,423,132 762,215 80,807 $7,125,474	2011 NT$ $4,647,900 3,331,234 1,232,798 81,848 $9,293,780	2012
			NT$ US$ (Note 2) $ 6,966,012 $235,656 2,563,968 86,738 1,183,848 40,049 — — $10,713,828 $362,443

As of December 31, 2010, 2011 and 2012, the accumulated impairment losses on floating rate notes and convertible bonds were NT$232,719 thousand; NT$225,638 thousand; and NT$160,567 thousand (approximately US$5,432 thousand), respectively. For the year ended December 31, 2012, a recovery of convertible bonds through redemption was recognized as (a) a gain of NT$57,306 thousand (approximately US$1,939 thousand) on reversal of impairment losses and (b) other income of NT$56,174 thousand (approximately US$1,900 thousand).

F-29

14. OTHER FINANCIAL ASSETS

Nonaccrual loans other than discounts and loans . . . . . . Less: Allowance for possible losses (Note 9) . . . . . . . . . Guarantee deposits for financial instrument agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Refundable deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interbank clearing account . . . . . . . . . . . . . . . . . . . . . . . Derivative instruments held for hedging (Note 34) . . . . . Financial assets carried at cost . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31	December 31
	2010 NT$ $ 507,409 70,934 436,475 1,566,155 673,357 205,074 228,126 158,385 6,560 $3,274,132	2011 NT$ $ 507,131 426,655 80,476 1,669,282 509,539 207,369 252,233 103,846 61,338 $2,884,083	2012
			NT$ US$ (Note 2) $ 498,012 $ 16,847 426,389 14,424 71,623 2,423 1,892,383 64,018 513,971 17,387 404,877 13,697 180,242 6,097 101,379 3,430 72,378 2,449 $3,236,853 $109,501

Financial assets carried at cost were as follows:

Domestic unquoted common stocks ERA Communications Co., Ltd. . . Financial Information Service Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . An Feng Enterprise Co., Ltd. . . . . . Sunshine Asset Management Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . Taipei Forex Inc. . . . . . . . . . . . . . . Taiwanpay Corp. . . . . . . . . . . . . . . Overseas unquoted common stock VISA Inc., Class C . . . . . . . . . . . . .		December 31	December 31	December 31
	2010 Carrying Value % of Owner- ship NT$ $ 50,006 1.76 45,500 1.14 3,000 10.00 2,073 3.46 800 0.40 2,467 3.35 103,846 54,539 $158,385	2011		2012
	Carrying Value	Carrying Value	% of Owner- ship 1.76 1.14 10.00 3.46 0.40 3.35	Carrying Value	% of Owner- Ship 1.76 1.14 10.00 3.46 0.40 —
	NT$ $ 50,006 45,500 3,000 2,073 800 2,467 103,846 54,539 $158,385	NT$ $ 50,006 45,500 3,000 2,073 800 2,467		NT$ US$ (Note 2) $ 50,006 $1,692 45,500 1,539 3,000 102 2,073 70 800 27 — — 101,379 3,430 — — $101,379 $3,430
		103,846 —
		$103,846

The above equity investments, which had no quoted prices in an active market nor fair values that could be reliably measured, or which had transfer restrictions, were carried at cost.

VISA Inc.’s Class C shares were reclassified into available-for-sale financial assets at the end of 2011, because the transfer restrictions on those shares had expired and quoted prices in an active market on these shares became available.

In February 2012, the shareholders of Taiwanpay Corp. resolved that it should be liquidated and dissolved, and its residual properties were distributed in March 2012 and June 2012. As a result, the Bank received a total amount of NT$1,408 thousand (approximately US$48 thousand), which was treated as a reduction of investment cost, and recognized an impairment loss of NT$1,059 thousand (approximately US$36 thousand).

F-30

15. PROPERTIES

Accumulated depreciation was as follows:

Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . Computer equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transportation equipment . . . . . . . . . . . . . . . . . . . . . . . . Miscellaneous equipment . . . . . . . . . . . . . . . . . . . . . . . .		December 31	December 31
	2010 NT$ $ 450,703 832,916 8,704 1,089,547 $2,381,870	2011 NT$ $ 479,089 920,001 6,939 1,159,954 $2,565,983	2012
			NT$ US$ (Note 2) $ 504,648 $17,072 998,036 33,763 5,841 197 1,219,317 41,249 $2,727,842 $92,281

As of December 31, 2010, 2011 and 2012, properties had been insured for NT$1,834,486 thousand; NT$3,884,952 thousand; and NT$3,853,072 thousand (approximately US$130,347 thousand), respectively.

16. INTANGIBLE ASSETS

Operating rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fair value of core deposits . . . . . . . . . . . . . . . . . . . . . . . . Less: Accumulated amortization . . . . . . . . . . . . . . . . . . .		December 31	December 31
	2010 NT$ $1,538,210 428,887 1,967,097 24,762 $1,942,335	2011 NT$ $1,538,210 428,887 1,967,097 61,904 $1,905,193	2012
			NT$ US$ (Note 2) $1,538,210 $52,037 428,887 14,509 1,967,097 66,546 99,049 3,351 $1,868,048 $63,195

In April 2010, the Bank acquired the assets and liabilities, classified as Package B of the Chinfon Bank, through a bidding process. The acquired management and operation rights of Chinfon Bank’s branches have indefinite useful life, while the fair value of core deposits are amortized over 4 to 15 years.

17. OTHER ASSETS

Buildings and land held for sale . . . . . . . . . . . . . . . . . . . Less: Accumulated impairment . . . . . . . . . . . . . . . . . . . . Deferred income tax, net (Note 26) . . . . . . . . . . . . . . . . . Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31	December 31
	2010 NT$ $ 486,204 41,152 445,052 976,659 144,468 83,018 45,312 4,809 $1,699,318	2011 NT$ $ 467,389 41,271 426,118 1,080,548 103,397 49 20,692 2,505 $1,633,309	2012
			NT$ US$ (Note 2) $ 48,429 $ 1,638 6,968 235 41,461 1,403 894,437 30,258 163,731 5,539 34 1 19,819 670 1,027 35 $1,120,509 $37,906

F-31

18. DUE TO THE CENTRAL BANK AND OTHER BANKS

Call loans from banks . . . . . . . . . . . . . . . . . . . . . . . . Due to banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Overdraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31	December 31
	2010 NT$ $17,514,617 567,491 10,971 $18,093,079	2011 NT$ $11,236,270 544,952 4,509 $11,785,731	2012 NT$ US$ (Note 2) $11,259,482 $380,903 316,051 10,692 99,425 3,363 $11,674,958 $394,958

19. SHORT-TERM LOANS

			December	December	31
		2010	2011		2012
		NT$	NT$		NT$	US$	(Note 2)
Bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	600,000	$ 1,120,000	$	920,000	$	31,123
Commercial papers, net . . . . . . . . . . . . . . . . . . . . . .		449,804	249,929		49,980		1,691
	$	1,049,804	$ 1,369,929	$	969,980	$	32,814
Interest rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1.23%-1.35%	1.30%-1.56%	1.32%-1.41%		1.32%-1.41%

The status of commercial papers as of December 31, 2010, 2011 and 2012 was as follows:

International Financial Securities Co. . . . . . . . . . . . Ta Chong Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shanghai Commercial & Savings Bank . . . . . . . . . Taishin Securities Co., Ltd. . . . . . . . . . . . . . . . . . . . E. Sun Securities Co., Ltd. . . . . . . . . . . . . . . . . . . . Less: Unamortized discount on commercial papers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31	December 31	December 31
	2010 2011 NT$ NT$ $ — $ 50,000 200,000 200,000 130,000 — 70,000 — 50,000 — 450,000 250,000 196 71 $ 449,804 $ 249,929 1.28%-1.30% 0.77%-0.86%			2012
				NT$ US$ (Note 2) $50,000 $1,692 — — — — — — — — 50,000 1,692 20 1 $49,980 $1,691 1.38% 1.38%

F-32

20. PAYABLES

Checks for clearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acceptances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Payables on factoring business . . . . . . . . . . . . . . . . . . . . Taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Securities settlement payables . . . . . . . . . . . . . . . . . . . . . Payables on consigned funds . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31	December 31
	2010 NT$ $ 613,383 1,262,005 801,959 653,475 197,294 233,890 115,458 286,504 323,824 $4,487,792	2011 NT$ $ 817,187 1,444,275 864,256 332,333 457,695 180,063 102,244 137,291 355,881 $4,691,225	2012
			NT$ US$ (Note 2) $1,671,862 $ 56,558 1,252,816 42,382 997,766 33,754 503,574 17,036 499,185 16,887 176,701 5,978 166,815 5,643 111,972 3,788 327,486 11,079 $5,708,177 $193,105

21. DEPOSITS AND REMITTANCES

Checking deposits . . . . . . . . . . . . . . . . . . . . . . . . Demand deposits . . . . . . . . . . . . . . . . . . . . . . . . . Demand savings . . . . . . . . . . . . . . . . . . . . . . . . . . Time savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . Negotiable certificates of deposit . . . . . . . . . . . . Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . Remittances . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31	December 31	December 31
	2010 NT$ $ 2,529,351 27,641,295 47,673,495 87,564,567 25,136,500 157,280,008 35,367 $347,860,583	2011 NT$ $ 3,695,949 28,301,271 50,602,247 86,199,374 24,478,500 176,716,076 5,145 $369,998,562	2012 NT$ US$ (Note 2) $ 2,974,630 $ 100,630 31,614,166 1,069,491 52,960,380 1,791,623 87,548,604 2,961,726 23,138,500 782,764 193,672,326 6,551,838 24,660 834 $391,933,266 $13,258,906
				US$ (Note 2) $ 100,630 1,069,491 1,791,623 2,961,726 782,764 6,551,838 834 $13,258,906

22. BANK DEBENTURES

Item Senior bank debentures—10-year maturity; fourth issue in 2005 . . . . . . . . . . . . . . . Subordinated bank debentures—seven-year maturity; first issue in 2006 . . . . . . . . . . . . . . . Subordinated bank debentures—seven-year maturity; first issue in 2007 . . . . . . . . . . . . . . . Subordinated bank debentures—seven-year maturity; second issue in 2007 . . . . . . . . . . . . .	Issuance Period 2005.08.26- 2015.08.26 2006.12.27- 2013.12.27 2007.02.13- 2014.02.13 2007.03.12- 2014.03.12	Note Interest payable on August 26 each year; fixed interest rate at 2.30% Interest payable on December 27 each year; floating interest rate; associated press 90 days interest plus 0.45% A coupons: Interest payable on February 13 each year; floating interest rate B coupons: Interest payable on February 13 each year; fixed interest rate at 2.55% Interest payable on March 12 each year; floating interest rate		Decem	ber 31
			2010 NT$ $3,000,000 2,000,000 2,000,000 1,000,000	2011 NT$ $3,000,000 2,000,000 2,000,000 1,000,000	2012
					NT$ US$ (Note 2) $3,000,000 $101,488 2,000,000 67,659 2,000,000 67,659 1,000,000 33,830

(Continued)

F-33

Item Subordinated bank debentures—five and a half years’ maturity; third issue in 2007 . . . . . . . . . . . . . . . . . . . Subordinated bank debentures—seven-year maturity; first issue in 2008 . . . . . . . . . . . . . . . . . . . Subordinated bank debentures—seven-year maturity; first issue in 2010 . . . . . . . . . . . . . . . . . . . Subordinated bank debentures—seven-year maturity; second issue in 2010 . . . . . . . . . . . . . . . . . . . Subordinated bank debentures—seven-year maturity; first issue in 2011 . . . . . . . . . . . . . . . . . . . Subordinated bank debentures—seven-year maturity; first issue in 2012 . . . . . . . . . . . . . . . . . . . Subordinated bank debentures—seven-year maturity; 1-1 issue in 2005; acquired from Chinfon Bank . . . . . . . . . . . . . . . . . . . Subordinated bank debentures—seven-year maturity; 1-1 issue in 2002; acquired from Chinfon Bank . . . . . . . . . . . . . . . . . . . Total bank debentures . . . . . . . Add: Unrealized valuation loss (Notes 14, 23 and 34) . . . . . .	Issuance Period 2007.09.26- 2013.03.26 2008.06.17- 2015.06.17 2010.05.18- 2017.05.18 2010.09.29- 2017.09.29 2011.11.10- 2018.11.10 2012.06.27- 2019.06.27 2005.06.28- 2012.06.28 Matured on 2009.06.28	Note Interest payable on September 26 each year (will be paid on March 26 in the last year); floating interest rate A coupons: Interest payable on June 17 each year; 3.90% fixed interest rate B coupons: Interest payable on June 17 each year; floating interest rate Interest payable on May 18 each year; fixed interest rate at 2.98% Interest payable on September 29 each year; fixed interest rate at 2.10% Interest payable on November 10 each year; fixed interest rate at 1.95% Interest payable on June 27 each year; fixed interest rate at 1.75% Interest payable on simple interest every half year; floating interest rate; repayable in five equal annual installments from the third year of issuance		Decem	ber 31
			2010 NT$ $ 2,000,000 2,400,000 2,000,000 2,000,000 — — 176,620 300 16,576,920 212,676 $16,789,596	2011 NT$ $ 2,000,000 2,400,000 2,000,000 2,000,000 3,500,000 — 90,900 240 19,991,140 239,140 $20,230,280	2012
					NT$ US$ (Note 2) $ 2,000,000 $ 67,659 2,400,000 81,191 2,000,000 67,659 2,000,000 67,659 3,500,000 118,404 3,000,000 101,488 4,460 151 240 8 22,904,700 774,855 167,423 5,663 $23,072,123 $780,518

(Concluded)

The hedging transactions with regard to the above bank debentures are shown in Note 34.

23. OTHER FINANCIAL LIABILITIES

23. OTHER FINANCIAL LIABILITIES
Principal of structured notes . . . . . . . . . . . . . . . . . . . . . . . . . . . Deposits received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative instruments held for hedging (Note 34) . . . . . . . . . Lease payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appropriations loan funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . Securities sold under repurchase agreements . . . . . . . . . . . . . .		December 31
	2010 NT$ $ — 130,382 15,450 257 360 — $146,449	2011 NT$ $459,005 168,404 13,093 78 — 213,870 $854,450	2012
			NT$ US$ (Note 2) $730,962 $24,728 207,093 7,006 12,819 434 35 1 — — — — $950,909 $32,169

F-34

Under related laws and regulations, effective January 1, 2011, the principal received on structured financial instruments should not be classified as deposits. Thus, such principal is no longer included in the mandatory reserve deposit, in calculating various ratios or statutory limits.

24. OTHER LIABILITIES

Accrued pension cost (Note 25) . . . . . . . . . . . . . . . . . . . . . . . . Advance receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reserve for guarantee obligations (Note 9) . . . . . . . . . . . . . . . Temporary receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31	December 31
	2010 NT$ $407,511 202,154 20,660 28,324 18,052 $676,701	2011 NT$ $408,397 270,537 65,454 32,486 12,646 $789,520	2012
			NT$ US$ (Note 2) $403,009 $13,633 277,618 9,392 80,673 2,729 49,119 1,662 32,103 1,086 $842,522 $28,502

25. PENSION PLANS

Under a defined benefit plan based on the Labor Standards Law (LSL), the Bank recognizes pension liabilities based on the actuarial report. The Bank contributes amounts equal to 2% of total monthly salaries and wages to a pension fund. The pension fund is deposited in the Bank of Taiwan in the committee’s name.

Far Eastern Life Insurance Agency Co., Ltd. contributes amounts equal to 2% of total monthly salaries and wages to a pension fund which is deposited in the Bank of Taiwan. Because the balance of the pension fund as of September 30, 2010 is sufficient for paying pension obligations, further contributions to the pension fund have been suspended since October 2010 with the approval of the Department of Labor.

The pension plan under the Labor Pension Act (LPA) is a defined contribution plan. For employees subject to the LPA, the Bank and its subsidiaries make contributions to their individual pension accounts at 6% of their salaries and wages monthly. Related pension costs were NT$81,019 thousand in 2010; NT$93,076 thousand in 2011; and NT$104,747 thousand (approximately US$3,544 thousand) in 2012.

Other information on the Bank’s defined benefit pension is summarized as follows:

a. Net pension cost

Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Projected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2010 NT$ $18,058 19,292 7,226 (3,521) $41,055	2011 NT$ $12,685 17,798 3,408 (5,068) $28,823	2012
			NT$ US$ (Note 2) $11,858 $ 401 16,175 547 4,056 137 (5,386) (182) $26,703 $ 903

F-35

• b. Reconciliation of the funded status of the plan and accrued pension cost as of December 31, 2010, 2011 and 2012:

Benefit obligation Vested benefit obligation . . . . . . . . . . . . . . . . . . . . . . . Non-vested benefit obligation . . . . . . . . . . . . . . . . . . . Accumulated benefit obligation . . . . . . . . . . . . . . . . . . Additional benefit based on future salaries . . . . . . . . . Projected benefit obligation . . . . . . . . . . . . . . . . . . . . . Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . Funded status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unrecognized net transitional obligation . . . . . . . . . . . . . . . Unrecognized prior service cost . . . . . . . . . . . . . . . . . . . . . . Unrecognized net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vested benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31	December 31
	2010 NT$ $ (61,057) (483,897) (544,954) (252,248) (797,202) 245,390 (551,812) 7,226 (25,644) 162,719 $(407,511) $ 71,718	2011 NT$ $ (90,935) (488,400) (579,335) (246,662) (825,997) 260,879 (565,118) 6,570 (24,444) 174,595 $(408,397) $ 103,424	2012
			NT$ US$ (Note 2) $(105,785) $ (3,579) (576,302) (19,496) (682,087) (23,075) (285,699) (9,665) (967,786) (32,740) 279,571 9,458 (688,215) (23,282) 5,914 200 (23,244) (786) 302,536 10,235 $(403,009) $(13,633) $ 119,130 $ 4,030

c. Actuarial assumptions on pension obligation

Discount rate used in determining present values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Future salary increase rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected rate of return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	December	December	31 2012 1.80% 2.50% 1.50%
	2010 2.25% 2.50% 2.00%	2011 2.00% 2.50% 2.00%

d. Summary of changes in the pension fund

Balance, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Payments during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balance, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31	December 31
	2010 NT$ $225,688 18,502 3,681 (2,481) $245,390	2011 NT$ $245,390 18,290 2,983 (5,784) $260,879	2012
			NT$ US$ (Note 2) $260,879 $8,825 18,614 630 2,598 88 (2,520) (85) $279,571 $9,458

F-36

26. INCOME TAX

• a. A reconciliation of income tax expense based on income (loss) before income tax at the statutory rate of 17% and income tax expense was as follows:

2010 Income tax expense at the 17% statutory rate . . . . . . . . . . . . . . . . . . . . . Tax effects of the net income of the OBU . . . . . . . . . . . . . . . . . . . . . . . Tax effect of adjusting items: Permanent differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Temporary differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax payable before loss carryforwards . . . . . . . . . . . . . . . . . . . . Loss carryforwards used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additional income tax under the Alternative Minimum Tax Act . . . . . . Current income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income tax adjustments Temporary differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effect of tax law changes on deferred income tax . . . . . . . . . . . . . Provision for valuation loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustments for prior years’ tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Overseas branch income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Bank NT$ 2011 Income tax expense at the 17% statutory rate . . . . . . . . . $ 418,930 Tax effects of the net income of the OBU . . . . . . . . . . . . (36,115) Tax effect of adjusting items: Permanent differences . . . . . . . . . . . . . . . . . . . . . . . (359,152) Temporary differences . . . . . . . . . . . . . . . . . . . . . . . (28,120) Income tax payable before loss carryforwards . . . . . . . . (4,457) Loss carryforwards (used) . . . . . . . . . . . . . . . . . . . . . . . . 4,457 Additional income tax under the Alternative Minimum Tax Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197,692 Current income tax expense . . . . . . . . . . . . . . . . . . . . . . 197,692 Deferred income tax adjustments Temporary differences . . . . . . . . . . . . . . . . . . . . . . . 28,120 Loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . 11,008 Investment tax credits . . . . . . . . . . . . . . . . . . . . . . . 4,641 Provision (reversal of provision) for valuation loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (156,588) Adjustments for prior years’ tax . . . . . . . . . . . . . . . . . . . (2,277) Overseas branch income tax . . . . . . . . . . . . . . . . . . . . . . 8,468 Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 91,064	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FEAMC NT$ $(10,636) — 25,350 (56) 14,658 (13,013) — 1,645 56 13,013 — — (4,139) — $ 10,575	The Bank FEAMC FELIA FEPIA NT$ NT$ NT$ NT$ $ 510,702 $ 1,726 $36,704 $1,750 (71,636) — — — (426,599) (1,452) 1,275 255 228,052 (34) — — 240,519 240 37,979 2,005 (240,519) (240) — — 226,257 — — — 226,257 — 37,979 2,005 (228,052) 34 — — 285,661 240 — — 5,634 — — — 283,905 4,773 — — 226,377 — — — 2,309 (7) — — 5,658 — — — $ 807,749 $ 5,040 $37,979 $2,005 FELIA FEPIA FEIS FEI Brokerage NT$ NT$ NT$ NT$ $45,410 $1,465 $(7,330) $(428) — — — — 1,275 595 428 — — — 559 18 46,685 2,060 (6,343) (410) — — 6,343 410 — — — — 46,685 2,060 — — — — (559) (18) — — (6,343) (410) — — — — — — 6,874 428 — — 28 — — — — — $46,685 $2,060 $ — $ —	Total NT$ $ 550,882 (71,636) (426,521) 228,018 280,743 (240,759) 226,257 266,241 (228,018) 285,901 5,634 288,678 226,377 2,302 5,658 $ 852,773 Total NT$ $447,411 (36,115) (331,504) (27,599) 52,193 (1,803) 197,692 248,082 27,599 17,268 4,641 (149,286) (6,388) 8,468 $150,384

(Continued)

F-37

2012 Income tax expense at the 17% statutory rate . . . . . . . . . . . . . . Tax effects of the net income of the OBU . . . . . . . . . . . . . . . . . Tax effect of adjusting items: Permanent differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . Temporary differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax payable before loss carryforwards . . . . . . . . . . . . . Loss carryforwards (used) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additional income tax under the Alternative Minimum Tax Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income tax adjustments Temporary differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision (reversal of provision) for valuation loss . . . . . . Adjustments for prior years’ tax . . . . . . . . . . . . . . . . . . . . . . . . Overseas branch income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	The Bank	FEAMC	FELIA NT$ $59,803 — (85) — 59,718 — — 59,718 — — — — — — $59,718	FEPIA	FEIS	FEI Brokerage	Total
	NT$ $ 486,967 (112,212) (169,730) 106,343	NT$ $(22,705) — 24,211 (15) 1,491 — — 1,491 15 — — — (131) — $ 1,375		NT$ $2,094 — — — 2,094 — — 2,094 — — — — — — $2,094			NT$ $522,879 (112,212) (145,892) 106,344
	311,368 (311,368) 133,180						371,119 (307,816) 133,180
	133,180 (106,343) 288,593 3,428 (50,326) 3,866 28,738						196,483 (106,344) 285,041 3,428 (46,730) 3,707 28,738
	$ 301,136						$364,323

(Concluded)

2012 Income tax expense at the 17% statutory rate . . Tax effects of the net income of the OBU . . . . . Tax effect of adjusting items: Permanent differences . . . . . . . . . . . . . . . . Temporary differences . . . . . . . . . . . . . . . . Income tax payable before loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . Loss carryforwards (used) . . . . . . . . . . . . . . . . . Additional income tax under the Alternative Minimum Tax Act . . . . . . . . . . . . . . . . . . . . . Current income tax expense . . . . . . . . . . . . . . . . Deferred income tax adjustments Temporary differences . . . . . . . . . . . . . . . . Loss carryforwards . . . . . . . . . . . . . . . . . . . Investment tax credits . . . . . . . . . . . . . . . . Provision (reversal of provision) for valuation loss . . . . . . . . . . . . . . . . . . . . . Adjustments for prior years’ tax . . . . . . . . . . . . Overseas branch income tax . . . . . . . . . . . . . . . Income tax expense . . . . . . . . . . . . . . . . . . . . . .	The Bank	FEAMC US$ (Note 2) $(768) — 819 — 51 — — 51 — — — — (4) — $ 47	FELIA	FEPIA	FEIS	FEI Brokerage	Total
	US$ (Note 2) $ 16,474 (3,796) (5,742) 3,597 10,533 (10,533) 4,505 4,505 (3,597) 9,763 116 (1,702) 130 972 $ 10,187		US$ (Note 2) $2,023 — (3) — 2,020 — — 2,020 — — — — — — $2,020	US$ (Note 2) $71 — — — 71 — — 71 — — — — — — $71	US$ (Note 2) $(121) — (10) 1 (130) 130 — — — (130) — 131 (1) — $ —	US$ (Note 2) $ 10 — — — 10 (10) — — — 10 — (10) — — $ —	US$ (Note 2) $ 17,689 (3,796) (4,936) 3,598 12,555 (10,413) 4,505 6,647 (3,597) 9,643 116 (1,581) 125 972 $ 12,325

F-38

b. Deferred income tax net assets were as follows:

Unused loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unused investment tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Allowance for possible losses in excess of the limit . . . . . . . . . . . . . . . . . . Amortization of premium on bonds investment . . . . . . . . . . . . . . . . . . . . . . Unrealized loss on derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pension cost in excess of the limit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unrealized loss on impairment of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	December 31, 2010	December 31, 2010	December 31, 2010
	The Bank NT$ $1,182,301 9,755 147,456 87,188 73,174 46,821 2,541 11,703 1,560,939 594,115 $ 966,824	FEAMC NT$ $8,874 — 961 — — — — — 9,835 — $9,835	Total
			NT$ $1,191,175 9,755 148,417 87,188 73,174 46,821 2,541 11,703
			1,570,774 594,115
			$ 976,659

Unused loss carryforwards . . . . . . . . . . . . . . . . . Unused investment tax credits . . . . . . . . . . . . . . Allowance for possible losses in excess of the limit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pension cost in excess of the limit . . . . . . . . . . . Unrealized gain on derivatives . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Valuation allowance . . . . . . . . . . . . . . . . .		December 31, 2011	December 31, 2011	December 31, 2011
	The Bank NT$ $1,171,293 5,114 244,420 46,957 (50,091) 12,288 1,429,981 350,338 $1,079,643	FEAMC NT$ $ — — 905 — — — 905 — $905	FEIS NT$ $45,196 — — 301 — 1,123 46,620 46,620 $ —	FEI Brokerage NT$ $ 977 — — 44 — — 1,021 1,021 $ —	Total
					NT$ $1,217,466 5,114 245,325 47,302 (50,091) 13,411
					1,478,527 397,979
					$1,080,548

Unused loss carryforwards . . . . . . . . . . . . . . . . . Unused investment tax credits . . . . . . . . . . . . . . Allowance for possible losses in excess of the limit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pension cost in excess of the limit . . . . . . . . . . . Unrealized gain on derivatives . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Valuation allowance . . . . . . . . . . . . . . . . .		December 31, 2012	December 31, 2012	December 31, 2012
	The Bank NT$ $ 882,700 1,686 286,491 46,261 (67,012) 12,380 1,162,506 268,959 $ 893,547	FEAMC NT$ $ — — 890 — — — 890 — $890	FEIS NT$ $49,171 — — 479 — 854 50,504 50,504 $ —	FEI Brokerage NT$ $685 — — 48 — — 733 733 $ —	Total
					NT$ $ 932,556 1,686 287,381 46,788 (67,012) 13,234
					1,214,633 320,196
					$ 894,437

F-39

Unused loss carryforwards . . . . . . . . Unused investment tax credits . . . . . Allowance for possible losses in excess of the limit . . . . . . . . . . . . . Pension cost in excess of the limit . . Unrealized gain on derivatives . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . Less: Valuation allowance . . . . . . . .		December 31, 2012	December 31, 2012	December 31, 2012
	The Bank	FEAMC	FEIS	FEI Brokerage	Total US$ (Note 2) $31,548 57 9,722 1,583 (2,267) 447 41,090 10,832 $30,258
	US$ (Note 2) $29,861 57 9,692 1,565 (2,267) 419 39,327 9,099 $30,228	US$ (Note 2) $— — 30 — — — 30 — $30	US$ (Note 2) $1,664 — — 16 — 28 1,708 1,708 $ —	US$ (Note 2) $23 — — 2 — — 25 25 $—

• c. Information on the Bank’s integrated income tax is as follows:

As of December 31, 2010, 2011 and 2012, the balances of imputation credits allocable to the shareholders were NT$36,417 thousand; NT$23,184 thousand; and NT$11,122 thousand (approximately US$376 thousand), respectively.

The creditable ratios for the distribution of the earnings of 2010, 2011 and 2012 were 13.77%, 10.02% and 5.63% (estimated), respectively.

There were no unappropriated earnings generated before 1997.

• d. As of December 31, 2012, the Bank and its subsidiaries had unused loss carryforwards, with expiry years as follows:

The Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Far Eastern International Securities Co., Ltd. . . . . . . . . . . . . . . . Far Eastern Insurance Brokerage Co., Ltd. . . . . . . . . . . . . . . . . .	Unused Amount NT$ US$ (Note 2) $478,475 $16,187 (assessed) 381,450 12,904 (assessed) 22,775 770 (declared) $882,700 $29,861 $ 11,329 $ 383 (assessed) 18,418 623 (assessed) 9,106 308 (assessed) 6,474 219 (declared) 3,844 130 (estimated) $ 49,171 $ 1,663 $ 275 $ 9 (assessed) 410 14 (assessed) $ 685 $ 23	Expiry Year
		2017 2018 2021 2018 2019 2020 2021 2022 2020 2021

• e. The income tax returns of the Bank, Far Eastern Asset Management Co., Ltd., Far Eastern Property Insurance Agency Co., Ltd., Far Eastern Life Insurance Agency and Far Eastern International Securities Co., Ltd. through 2010 had been assessed by the tax authorities. The income tax returns of Far Eastern Insurance Brokerage Co., Ltd. through 2011 had been assessed by the tax authorities.

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27. SHAREHOLDERS’ EQUITY

Appropriation of Earnings and Dividend Policy

The Bank’s Articles of Incorporation provide that the appropriations from the Bank’s annual earnings less its losses and all taxes and dues must be in the following order:

• a. 30% as legal reserve;

• b. Special reserve based on the relevant law or regulations; and

• c. A portion to be retained on the basis of operational needs.

• d. Any remainder:

Shareholders’ bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Remuneration to directors and supervisors . . . . . . . . . . . . . . . . . . . . . . . Employees’ bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	%
	92 2 6 100

The dividend policy of the Bank will be evaluated and adjusted after taking into account such factors as the present environment and future operation plans, and its cash dividends should not be less than 10% of total dividends distributed.

The Banking Law provides that, unless legal reserve reached the Bank’s paid-in capital, cash dividends are limited to 15% of paid-in capital.

Under the Company Law, legal reserve should be appropriated until it has reached the Bank’s paid-in capital. This reserve may be used to offset a deficit. According to an amendment to the Company Law, when the Bank has no deficit and its legal reserve has exceeded 25% of its paid-in capital, the excess may be distributed in the form of stocks or cash.

The appropriations of earnings for the 2009, 2010 and 2011, which were approved in the shareholders’ meetings on June 21, 2010, June 15, 2011 and June 26, 2012, respectively, were as follows:

Legal reserve . . . . . . . . . . Cash dividends . . . . . . . . Stock dividends . . . . . . . .	Appropriation of Earnings	Appropriation of Earnings	Appropriation of Earnings	Dividends Per Share(Dollars)	Dividends Per Share(Dollars)	Dividends Per Share(Dollars)
	2009	2010	2011	2009	2010	2011
	NT$ $ 372,276 193,380 674,895	NT$ $ 658,426 501,787 1,033,682	NT$ US$ (Note 2) $ 711,970 $24,086 529,640 17,917 1,131,311 38,272 $2,372,921 $80,275	NT$ $0.100 0.349	NT$ $0.250 0.515	NT$ US$ (Note 2) $0.250 $0.008 0.534 0.018
	$1,240,551	$2,193,895

The employees’ bonus (in stocks) and the remuneration to directors and supervisors approved in the foregoing shareholders’ meetings were NT$75,502 thousand, NT$133,519 thousand and NT$144,431 thousand (approximately US$4,886 thousand) on the earnings of 2009, 2010 and 2011, respectively, and had no difference from the related estimates shown in the 2009, 2010 and 2011 financial statements.

The employees’ stock bonus for 2009 of 5,862 thousand shares was determined at NT$9.66 per share, the closing price of the Bank’s common stock (after considering the effect of cash and stock dividends) of the day preceding the shareholders’ meeting. As a result, the retained earnings of 2010 decreased by NT$1,993 thousand. The employees’ stock bonus for 2010 of 8,043 thousand shares was determined at NT$12.45 per share, the

F-41

closing price of the Bank’s common stock (after considering the effect of cash and stock dividends) of the day preceding the shareholders’ meeting. As a result, the retained earnings of 2011 decreased by NT$19,706 thousand. The employees’ stock bonus for 2011 of 10,568 thousand shares was determined at NT$10.25 per share, the closing price of the Bank’s common stock (after considering the effect of cash and stock dividends) of the day preceding the shareholders’ meeting. As a result, the additional paid-in capital of 2012 increased by NT$2,642 thousand (approximately US$89 thousand).

The appropriations of earnings for 2012 proposed by the Board of Directors on March 20, 2013 were as follows:

Legal reserve . . . . . . . . . . . . . . . . . . . . . . Special reserve . . . . . . . . . . . . . . . . . . . . . Cash dividends . . . . . . . . . . . . . . . . . . . . . Stock dividends . . . . . . . . . . . . . . . . . . . .	Appropriation of Earnings NT$ US$ (Note 2) $ 769,012 $26,015 173,800 5,880 515,720 17,447 1,105,434 37,396 $2,563,966 $86,738	Dividends Per Share(Dollars)
		NT$ US$ (Note 2) $0.230 $0.008 0.493 0.017

The employees’ bonus (in stocks) and the remuneration to directors and supervisors proposed in the foregoing Board of Directors meetings were NT$105,727 thousand (approximately US$3,577 thousand) and NT$35,243 thousand (approximately US$1,192 thousand), respectively, on earnings of 2012. The proposed amounts were the same as the estimates made in 2012 according to the Bank’s Article of Incorporation. If the actual amounts approved by the shareholders differ from the proposed amounts, the differences are recorded in the year of shareholders’ resolution as a change in accounting estimate.

Under the Integrated Income Tax System, ROC-resident shareholders will be allocated a tax credit for the distribution of earnings that the Bank generated after January 1, 1998, the balance of which is maintained in the imputation credits account (ICA). The allocation of income tax credits is based on a creditable tax ratio, which is determined on the dividend ex-right date.

The Bank’s foreign shareholders are not entitled to the foregoing tax credits, except those related to the 10% income tax on unappropriate earnings actually paid by the Bank. If dividends distributed to foreign shareholders are from the earnings subject to an additional 10% income tax, the tax can be used by the foreign shareholders to reduce the final withholding tax on their dividends income.

Information on the employees’ bonus and remuneration to directors and supervisors is available on the Market Observations Post System Website of the Taiwan Stock Exchange.

Capital Surplus

The capital surplus from shares issued in excess of par (including treasury stock transactions) may be used to offset deficit, or, if the Bank has no deficit, distributed as cash dividends or transferred to capital (limited to a certain percentage of the Bank’s paid-in capital and once a year). However, capital surplus arising from equitymethod investments may not be used for any purpose.

F-42

Unrealized Valuation Gain (Los s ) on Available-for-sale Financial Assets

The movements of unrealized gain or loss on financial instruments included in shareholders’ equity on December 31, 2010, 2011 and 2012 were as follows:

Year ended December 31, 2010 Balance, beginning of year . . . . . . . . . Change in fair value . . . . . . . . . . . . . . Transferred to profit or loss . . . . . . . . . Equity-method investments . . . . . . . . . Balance, end of year . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Available- for-sale Financial Assets NT$ $ 97,958 145,833 (139,700) — $ 104,091	Available- for-sale Financial Assets NT$ $ 97,958 145,833 (139,700) — $ 104,091	Equity-method Investments NT$ $ 62,628 — — (18,693) $ 43,935	Equity-method Investments NT$ $ 62,628 — — (18,693) $ 43,935	Equity-method Investments NT$ $ 62,628 — — (18,693) $ 43,935
Year ended December 31, 2011
	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Available-for-sale Financial Assets		$ 104,091 145,679 (262,309) — $ (12,539) Equity-method Investments
	NT$ US$ (Note 2) $ (12,539) $ (424) 130,474 4,414 (310,517) (10,505) — — $(192,582) $ (6,515)	NT$ US$ (Note 2) $ 30,197 $1,021 — — — — (11,415) (386) $ 18,782 $ 635

F-43

29. EARNINGS PER SHARE

The calculation of basic and diluted earnings per share (EPS) was based on the net income of the Bank’s shareholders; the numerators and denominators used in calculating basic and diluted earnings per share were as follows:

Year ended December 31, 2010 Basic EPS Income attributable to common shareholders . . . . . . . . . . . . . . . . . . . . . . . Effect of dilutive potential common stock Employees’ bonus . . . . . . . . . . . . . . . . . . . . . Diluted EPS Income attributable to common shareholders plus effect of potential dilutive common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Year ended December 31, 2010 Basic EPS Income attributable to common shareholders . . . . . . . . . . . . . . . . . . . . . . . Effect of dilutive potential common stock Employees’ bonus . . . . . . . . . . . . . . . . . . . . . Diluted EPS Income attributable to common shareholders plus effect of potential dilutive common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Year ended December 31, 2010 Basic EPS Income attributable to common shareholders . . . . . . . . . . . . . . . . . . . . . . . Effect of dilutive potential common stock Employees’ bonus . . . . . . . . . . . . . . . . . . . . . Diluted EPS Income attributable to common shareholders plus effect of potential dilutive common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Year ended December 31, 2010 Basic EPS Income attributable to common shareholders . . . . . . . . . . . . . . . . . . . . . . . Effect of dilutive potential common stock Employees’ bonus . . . . . . . . . . . . . . . . . . . . . Diluted EPS Income attributable to common shareholders plus effect of potential dilutive common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	NT$(Numerator)	NT$(Numerator)	NT$(Numerator)	NT$(Numerator)	NT$(Numerator)	NT$(Numerator)	NT$(Numerator)	Shares (Denominator) (In Thousands)	Shares (Denominator) (In Thousands)	Shares (Denominator) (In Thousands)	EPS(Dollars)	EPS(Dollars)	EPS(Dollars)	EPS(Dollars)	EPS(Dollars)
														Before Income Tax			After Income Tax
				Before Income Tax			After Income Tax
					NT$ $3,004,127 — $3,004,127			NT$ $2,196,378 — $2,196,378					2,218,949 9,503 2,228,452		NT$ $1.35 $1.35			NT$ $0.99 $0.99 $1.07 $1.06
Year ended December 31, 2011
Basic EPS Income attributable to co shareholders . . . . . . . Effect of dilutive potential co Employees’ bonus . . . . . Diluted EPS Income attributable to co plus effect of potential stock . . . . . . . . . . . . . Year ended December 31, 2012 Basic EPS Income attributable to common shareholders . . . . . . . . . . . . . Effect of dilutive potential common stock Employees’ bonus . . . . . . . . . . Diluted EPS Income attributable to common shareholders plus effect of potential dilutive common stock . . . . . . . . . . . . . . . . . . .	mmon . . . . . . . . . . . . . . . . $2,464,295 mmon stock . . . . . . . . . . . . . . . . — mmon shareholders dilutive common . . . . . . . . . . . . . . . . $2,464,295 Amount (Numerator)												2,226,120 $1.11 13,264 2,239,384 $1.10 EPS (Dollars)
	Before Income Tax		After Income Tax									Before Income Tax				After Income Tax
	NT$ $2,864,509 — $2,864,509	US$ (Note 2) $96,905 — $96,905	NT$ $2,563,373 — $2,563,373			US$ (Note 2) $86,718 — $86,718				2,234,521 14,186 2,248,707		NT$ US$ (Note 2) $1.28 $0.04 $1.27 $0.04				NT$ US$ (Note 2) $1.15 $0.04 $1.14 $0.04

F-44

The weighted average number of shares outstanding for EPS calculation was retroactively adjusted for the issuance of stock dividends. This adjustment caused decreases in (a) the basic and the diluted after income tax EPS from NT$1.10 and NT$1.09 to NT$0.99 and NT$0.99 in 2010; and (b) the basic and diluted after income tax EPS from NT$1.12 and NT$1.12 to NT$1.07 and NT$1.06 in 2011.

Based on Interpretation 2008-169 issued by the Accounting Research and Development Foundation, employees’ bonus for the current year should be considered in calculating the weighted-average number of shares outstanding used for calculating diluted EPS, and the number of bonus shares is estimated by dividing the entire amount of the bonus by the closing share price at the balance sheet date. The dilutive effect of the potential shares should be included in the calculation of diluted EPS until the shareholders resolve the number of shares to be distributed as employees’ bonus at their meeting in the following year.

30. RELATED-PARTY TRANSACTIONS

The Bank and its subsidiaries had business transactions with the following related parties:

Related Party Yuan Long Stainless Steel Co., Ltd. . . . . . . . . . . . . . . . . Far Eastern New Century Corp. . . . . . . . . . . . . . . . . . . . . Ding Ding Integrated Marketing Service Co. . . . . . . . . . Asia Cement Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Far Eastern Department Store Corp. . . . . . . . . . . . . . . . . Yuan Ding Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Far Eastern Geant Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . Bai Ding Investment Co. . . . . . . . . . . . . . . . . . . . . . . . . . Ding Ding Hotel Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . New Century InfoComm Tech Co., Ltd. . . . . . . . . . . . . . U-Ming Marine Transport Corp. . . . . . . . . . . . . . . . . . . . Far Eastern Resource Development Co., Ltd. . . . . . . . . . Oriental Union Chemical Corp. . . . . . . . . . . . . . . . . . . . . Bai Yang Investment Co. . . . . . . . . . . . . . . . . . . . . . . . . . Dah Chung Bills Finance Corp. . . . . . . . . . . . . . . . . . . . . Oriental Securities Corp. (“Oriental”) . . . . . . . . . . . . . . . Everest Textile Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . Far Eastern City Super Co., Ltd. . . . . . . . . . . . . . . . . . . . Far Eastern General Construction Inc. (“FEGC”) . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relationship with the Bank and Its Subsidiaries

Equity-method investee of Far Eastern Asset Management Co., Ltd. Chairman is the vice-chairman of the Bank Chairman is the vice-chairman of the Bank Chairman is the vice-chairman of the Bank Chairman is the vice-chairman of the Bank Chairman is the vice-chairman of the Bank Chairman is the vice-chairman of the Bank Chairman is the vice-chairman of the Bank Chairman is the vice-chairman of the Bank Chairman is the vice-chairman of the Bank Chairman is the vice-chairman of the Bank Chairman is the vice-chairman of the Bank Chairman is the vice-chairman of the Bank Director of the Board is the vice-chairman of the Bank Equity-method investee The chairman of Oriental’s major shareholder is the vice-chairman of the Bank Chairman is a second-degree relative of the vice- chairman of the Bank Chairman is a second-degree relative of the vice- chairman of the Bank The chairman of FEGC’s ultimate parent company is the vice-chairman of the Bank The Bank’s supervisors, managers, chairman, vice- chairman, or their second-degree relatives

F-45

The significant transactions and account balances with the above parties (in addition to those disclosed in other notes) are summarized as follows:

a. Loans to other banks

Related Party Dah Chung Bills Finance Corp. Year ended December 31, 2010—NT$ . . . . . . . . . . . . . . . Year ended December 31, 2011—NT$ . . . . . . . . . . . . . . . Year ended December 31, 2012—NT$ . . . . . . . . . . . . . . . —US$ (Note 2) . . . . . . .	Ending Balance $ — $425,000 $570,000 $ 19,283	Interest Rates Interest Income 0.11%-0.41% $ 879 0.40%-0.78% $1,263 0.41%-0.72% $2,999 0.41%-0.72% $ 101	Interest Income	Interest Income
				$ 879 $1,263 $2,999 $ 101

b. Loans

Category Year ended December 31, 2010 Consumer loan Loans for residential mortgage Others	Related Party	Highest Balance in Current Period	Ending Balance	Normal Loans	Nonperforming Loans	Collateral	Transactions Terms Different from Those for Unrelated Parties
	One individual Eight individuals Yuan Long Stainless Steel Co., Ltd. Asia Cement Corp. Far Eastern New Century Corp. Bai Ding Investment Co. Far Eastern Geant Co., Ltd. Far Eastern Department Store Corp. U-Ming Marine Transport Corp. Everest Textile Co., Ltd. Oriental Union Chemical Corp.	NT$ $ 684 96,174 1,752,374 980,000 785,483 495,000 460,000 450,000 150,000 81,853 40,000	NT$ $ 528 77,096 1,740,000 530,000 106,680 96,000 — — — — —	NT$ $ 528 77,096 1,740,000 530,000 106,680 96,000 — — — — —	NT$ $— — — — — — — — — — — $—	Unsecured loan Real estate Real estate and machinery Listed and OTC stock Machinery Listed, OTC and unquoted stock Real estate Listed, OTC and unquoted stock Listed stock Real estate Listed stock	Note Note Note Note Note Note Note Note Note Note Note
			$2,550,304	$2,550,304

F-46

Category Year ended December 31, 2011 Consumer loan Loans for residential mortgage Others	Related Party	Highest Balance in Current Period	Ending Balance	Normal Loans	Nonperforming Loans	Collateral	Transactions Terms Different from Those for Unrelated Parties
	Two individuals Eight individuals Yuan Long Stainless Steel Co., Ltd. U-Ming Marine Transport Corp. Far Eastern Department Store Corp. Bai Ding Investment Co. Far Eastern New Century Corp. Everest Textile Co., Ltd. Asia Cement Corp. Far Eastern Geant Co., Ltd. Oriental Union Chemical Corp.	NT$ $ 1,101 78,810 1,850,000 1,315,000 850,000 449,000 219,217 88,457 995,000 460,000 40,000	NT$ $ 832 60,224 1,820,000 1,270,000 550,000 322,000 4,048 170 — — —	NT$ $ 832 60,224 1,820,000 1,270,000 550,000 322,000 4,048 170 — — —	NT$ $— — — — — — — — — — — $—	Unsecured loan Real estate Real estate and machinery Listed stock Listed, OTC and unquoted stock Listed, OTC and unquoted stock Machinery Real estate Listed and OTC stock Real estate Listed stock	Note Note Note Note Note Note Note Note Note Note Note
			$4,027,274	$4,027,274

F-47

																		Transactions
																		Terms
																		Different
																		from Those
																		for
				Highest	Balance in													Unrelated
	Category	Related Party		Current Period				Ending Balance				Normal Loans			Nonperforming Loans		Collateral	Parties
				NT$	US$	(Note 2)		NT$	US$	(Note 2)		NT$	US$	(Note 2)	NT$	US$ (Note 2)
	Year ended December 31, 2012
	Consumer loan	Three individuals	$	1,257	$	43	$	556	$	19	$	556	$	19	$ —	$—	Unsecured loan	Note
	Loans for residential
	mortgage	Nine individuals		72,358		2,448		48,013		1,624		48,013		1,624	—	—	Real estate	Note
	Others	Yuan Long Stainless															Real estate and
		Steel Co., Ltd.	1,850,000		62,585		1,845,000			62,415		1,845,000		62,415	—	—	machinery	Note
																	Listed, OTC
																	and unquoted
		Bai Ding Investment Co.		454,000	15,359			454,000		15,359		454,000		15,359	—	—	stock	Note
																	Unquoted
		Bai Yang Investment Co.		383,000	12,957			383,000		12,957		383,000		12,957	—	—	stock	Note
		U-Ming Marine
		Transport Corp.	2,000,000		67,659			200,000		6,766		200,000		6,766	—	—	Listed stock	Note
		Far Eastern Geant Co.,
F-48		Ltd. Far Eastern New Century Corp.		100,000 37,701		3,383 1,275		30,000 5,264		1,015 178		30,000 5,264		1,015 178	— —	— —	Real estate Machinery	Note Note
		Everest Textile Co., Ltd.		90,899		3,075		4,413		149		4,413		149	—	—	Real estate	Note
																	Listed, OTC
		Far Eastern Department															and unquoted
		Store Corp.		550,000	18,606			—		—		—		—	—	—	stock	Note
																	Listed and
		Asia Cement Corp.		30,000		1,015		—		—		—		—	—	—	OTC stock	Note
							$2,970,246		$100,482		$2,970,246		$100,482		$ —	$—

Note: The terms of the loans were no superior to those for unrelated parties.

Interest incomes on loans were NT$22,562 thousand in 2010, NT$30,118 thousand in 2011 and NT$42,118 thousand (approximately US$1,425 thousand) in 2012, with interest rates of 0.60% to 2.67%, 0.73% to 2.74%, and 1.10% to 2.28%, respectively.

c. Guarantees

Related Party Year ended December 31, 2010 Everest Textile Co., Ltd. . . . . U-Ming Marine Transport Corp. . . . . . . . . . . . . . . . . . . Far Eastern Geant Co., Ltd. . . Yuan Long Stainless Steel Co., Ltd. . . . . . . . . . . . . . . . Ding Ding Hotel Co., Ltd. . . . Yuan Ding Co., Ltd. . . . . . . . . Far Eastern City Super Co., Ltd. . . . . . . . . . . . . . . . . . . . Far Eastern New Century Corp. . . . . . . . . . . . . . . . . . . New Century InfoComm Tech Co., Ltd. . . . . . . . . . . . . . . .	Highest Balance in Current Period	Ending Balance	Reserve for Guarantees	Reserve for Guarantees	Interest Rates 0.60%-0.80% 0.40% 0.40% 0.60% 0.50% 0.50% 0.60% 0.60% 0.60% 0.60%-0.75% 0.50% 0.60% 0.50% 0.60% 0.40% 0.40% 0.60% 0.60%	Collateral
	NT$ $305,250 300,000 300,000 60,000 43,000 14,500 3,000 782 325	NT$ $305,250 300,000 300,000 30,000 43,000 9,000 3,000 782 295		NT$ $ — — — — — — — — — $ — $1,536 205 150 70 15 — — — — $1,976		Real estate Listed stock Real estate Real estate and machinery Certificates of deposit Unquoted stock Certificates of deposit Machinery Certificates of deposit Real estate Certificates of deposit Real estate and machinery Unquoted stock Certificates of deposit Listed stock Real estate Machinery Certificates of deposit
		$991,327
Year ended December 31,
2011 Everest Textile Co., Ltd. . . . . Ding Ding Hotel Co., Ltd. . . . Yuan Long Stainless Steel Co., Ltd. . . . . . . . . . . . . . . . Yuan Ding Co., Ltd. . . . . . . . . Far Eastern City Super Co., Ltd. . . . . . . . . . . . . . . . . . . . U-Ming Marine Transport Corp. . . . . . . . . . . . . . . . . . . Far Eastern Geant Co., Ltd. . . Far Eastern New Century Corp. . . . . . . . . . . . . . . . . . . New Century InfoComm Tech Co., Ltd. . . . . . . . . . . . . . . .	307,200 43,000 60,000 16,000 3,000 300,000 300,000 782 302	$307,200 41,000 30,000 14,000 3,000 — — — —
		$395,200

F-49

Related Party Year ended December 31, 2012 Everest Textile Co., Ltd. . . . . . Ding Ding Hotel Co., Ltd. . . . Yuan Long Stainless Steel Co., Ltd. . . . . . . . . . . . . . . . Yuan Ding Co., Ltd. . . . . . . . . Far Eastern City Super Co., Ltd. . . . . . . . . . . . . . . . . . . .	Highest Balance in Current Period Ending Balance Reserve for Guarantee Obligations Interest Rates NT$ US$ (Note 2) NT$ US$ (Note 2) NT$ US$ (Note 2) $311,676 $10,544 $311,676 $10,544 $1,558 $53 0.60%-0.75% 46,000 1,556 43,000 1,455 215 7 0.50% 60,000 2,030 30,000 1,015 150 5 0.60% 14,000 474 11,000 372 55 2 0.50% 3,000 101 3,000 101 15 1 0.60% $398,676 $13,487 $1,993 $68	Highest Balance in Current Period Ending Balance Reserve for Guarantee Obligations Interest Rates NT$ US$ (Note 2) NT$ US$ (Note 2) NT$ US$ (Note 2) $311,676 $10,544 $311,676 $10,544 $1,558 $53 0.60%-0.75% 46,000 1,556 43,000 1,455 215 7 0.50% 60,000 2,030 30,000 1,015 150 5 0.60% 14,000 474 11,000 372 55 2 0.50% 3,000 101 3,000 101 15 1 0.60% $398,676 $13,487 $1,993 $68	Highest Balance in Current Period Ending Balance Reserve for Guarantee Obligations Interest Rates NT$ US$ (Note 2) NT$ US$ (Note 2) NT$ US$ (Note 2) $311,676 $10,544 $311,676 $10,544 $1,558 $53 0.60%-0.75% 46,000 1,556 43,000 1,455 215 7 0.50% 60,000 2,030 30,000 1,015 150 5 0.60% 14,000 474 11,000 372 55 2 0.50% 3,000 101 3,000 101 15 1 0.60% $398,676 $13,487 $1,993 $68	Highest Balance in Current Period Ending Balance Reserve for Guarantee Obligations Interest Rates NT$ US$ (Note 2) NT$ US$ (Note 2) NT$ US$ (Note 2) $311,676 $10,544 $311,676 $10,544 $1,558 $53 0.60%-0.75% 46,000 1,556 43,000 1,455 215 7 0.50% 60,000 2,030 30,000 1,015 150 5 0.60% 14,000 474 11,000 372 55 2 0.50% 3,000 101 3,000 101 15 1 0.60% $398,676 $13,487 $1,993 $68	Highest Balance in Current Period Ending Balance Reserve for Guarantee Obligations Interest Rates NT$ US$ (Note 2) NT$ US$ (Note 2) NT$ US$ (Note 2) $311,676 $10,544 $311,676 $10,544 $1,558 $53 0.60%-0.75% 46,000 1,556 43,000 1,455 215 7 0.50% 60,000 2,030 30,000 1,015 150 5 0.60% 14,000 474 11,000 372 55 2 0.50% 3,000 101 3,000 101 15 1 0.60% $398,676 $13,487 $1,993 $68	Collateral
	NT$ US$ (Note 2) $311,676 $10,544 46,000 1,556 60,000 2,030 14,000 474 3,000 101	NT$ $311,676 43,000 30,000 11,000 3,000	US$ (Note 2) $10,544 1,455 1,015 372 101		NT$ US$ (Note 2) $1,558 $53 215 7 150 5 55 2 15 1 $1,993 $68	Real estate Certificates of deposit Real estate and machinery Unquoted stock Certificates of deposit
		$398,676	$13,487

d. Letters of credit issued

Asia Cement Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Everest Textile Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yuan Long Stainless Steel Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31	December 31
	2010 NT$ $ — 32,643 11,322 $43,965	2011 NT$ $— — — $—	2012
			NT$ US$ (Note 2) $ 7,118 $241 3,864 131 — — $10,982 $372

e. Securities transactions—buy and sell

Dah Chung Bills Finance Corp. Year ended December 31, 2010—NT$ . . . . . . . . . . . . . . . . . Year ended December 31, 2011—NT$ . . . . . . . . . . . . . . . . . Year ended December 31, 2012—NT$ . . . . . . . . . . . . . . . . . Year ended December 31, 2012—US$ (Note 2) . . . . . . . . . .	Held for	Trading	Available-for-Sale	Available-for-Sale	Short	Sales Sell $ 50,000 $ — $300,000 $ 10,149	Resale Agreements Bonds $10,062,479
	Buy $300,000	Sell $200,000	Buy $100,000	Sell $ —	Buy $ 50,000
	$450,000	$250,000	$ 50,000	$100,000	$ 50,000		$ 1,100,110
	$500,000	$550,000	$100,000	$ —	$350,000		$26,344,203
	$ 16,915	$ 18,606	$ 3,383	$ —	$ 11,840		$ 891.211

F-50

f. Derivative financial instruments—convertible bond asset swap contracts

Dah Chung Bills Finance Corp. Year ended December 31, 2010—NT$ . . . . . . . . . . . . Year ended December 31, 2011—NT$ . . . . . . . . . . . . Year ended December 31, 2012—NT$ . . . . . . . . . . . . Year ended December 31, 2012—US$ (Note 2) . . . . .	Contract Period 2010.01.06- 2012.08.10 2010.08.10- 2014.09.15 2011.01.14- 2015.07.12 2011.01.14- 2015.07.12	Nominal Amount $205,000 372,000 360,000 12,179	Valuation Gain(Loss) $ 712 686 (1,095) (37)	Balance Sheet
				Account Balance Financial assets at fair value through profit or loss $ 104 Financial liabilities at fair value through profit or loss 1,838 Financial assets at fair value through profit or loss 80 Financial liabilities at fair value through profit or loss 1,128 Financial assets at fair value through profit or loss 29 Financial liabilities at fair value through profit or loss 2,173 Financial assets at fair value through profit or loss 1 Financial liabilities at fair value through profit or loss 74

g. Deposits

Deposits of related parties (each account balance did not exceed 5% of total deposits) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31 2011 2012 NT$ NT$ US$ (Note 2) $33,585,755 $35,424,892 $1,198,406 0%-6.37% 0%-6.37% 0%-6.37% $ 366,124 $ 460,404 $ 15,575
	2010 NT$ $38,408,223 0%-6.15% $ 267,597	2011 NT$ $33,585,755 0%-6.37% $ 366,124

F-51

h. Operating expenses

Rental—Yuan Ding Co., Ltd. . . . . . . . . . . Rental—Far Eastern Geant Co., Ltd. . . . . Rental—Far Eastern General Construction Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Telecommunication—New Century InfoComm Tech Co., Ltd. . . . . . . . . . . . Service fee for stock affairs—Oriental Securities Corp. . . . . . . . . . . . . . . . . . . . Advertising expense—Ding Ding Integrated Marketing Service Co. . . . . . Advertising expense—Far Eastern Department Store Corp. . . . . . . . . . . . . Advertising expense—Ding Ding Hotel Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . .		Year Ended December 31	Year Ended December 31
	2010	2011	2012
	NT$ % to Total $ 86,901 2 3,877 — 540 — 46,631 1 7,188 — 163,164 3 7,515 — 8,324 — $324,140 6	NT$ % to Total $ 75,851 1 3,389 — 360 — 49,399 1 8,280 — 109,959 2 23,675 1 8,948 — $279,861 5	NT$ US$ (Note 2) % to Total $ 75,403 $ 2,551 1 5,511 186 — 878 30 — 48,873 1,653 1 8,143 275 — 137,139 4,639 2 67,988 2,300 1 11,701 396 — $355,636 $12,030 5

The Bank and its subsidiaries rented part of their office premises from Yuan Ding Co., Ltd., Far Eastern Geant Co., Ltd. and Far Eastern General Construction Inc. The lease agreements were entered between both parties and the rents are paid on a monthly basis.

i. Disposal of buildings and land held for sale

In June 2012, Far Eastern Asset Management Co., Ltd. sold buildings and land held for sale, with book value of NT$278,000 thousand (approximately US$9,405 thousand), to Far Eastern Resources Development Co., Ltd. for NT$278,131 thousand (approximately US$9,409 thousand). Far Eastern Asset Management Co., Ltd. recognized a loss of NT$1,945 thousand (approximately US$66 thousand) after deducting the land value increment tax of NT$2,076 thousand (approximately US$70 thousand).

• j. Compensation of directors, supervisors and management personnel

Salaries and bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Employees’ bonus and remuneration to directors and supervisors . . . Special compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Year Ended December 31	Year Ended December 31	Year Ended December 31
	2010	2011	2012
	NT$ $75,559 17,122 526	NT$ $ 81,593 34,434 436	NT$ US$ (Note 2) $ 88,090 $2,980 35,802 1,211 794 27 $124,686 $4,218
	$93,207	$116,463

F-52

31. PLEDGED ASSETS

Due from the Central Bank and other banks—certificates of deposit . . . . . . . . . . . . . . . . . . . Available-for-sale financial assets- government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31	December 31
	2010 NT$ $2,500,000 1,017,300 $3,517,300	2011 NT$ $2,500,000 671,100 $3,171,100	2012
			NT$ US$ (Note 2) $3,000,000 $101,488 2,647,600 89,567 $5,647,600 $191,055

The certificates of deposit issued by the Central Bank have been pledged as collaterals to back the extension of intraday credit in the Central Bank’s real-time gross settlement system. The balance of intraday credit and the amount of collateral may be varied at any time. The terms of government bonds had been provided as the reserve for compensation of Trust Department as well as security bond for provisional seizures of the debtors’ properties.

32. SIGNIFICANT COMMITMENTS AND CONTINGENCIES

In addition to those mentioned in Note 34, the Bank and its subsidiaries’ contingency liabilities and commitments resulting from operating activities as of December 31, 2012 are summarized as follows:

a. Leasing Agreement

Some sections of the Bank and its subsidiaries’ office premises are held under operating leases (the refundable deposit as of December 31, 2012 amounted to NT$84,481 thousand, approximately US$2,858 thousand). Rentals are payable monthly and the leasing arrangements will expire between 2012 and 2022.

Minimum rental payments for the next five years are summarized as follows, excluding imputed interest:

Year								NT$	US$ (Note 2)
2013	(January	1,	2013	to December	31,	2013)	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$308,277	$10,429
2014	(January	1,	2014	to December	31,	2014)	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	276,609	9,358
2015	(January	1,	2015	to December	31,	2015)	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	173,925	5,884
2016	(January	1,	2016	to December	31,	2016)	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	119,575	4,045
2017	(January	1,	2017	to December	31,	2017)	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	51,823	1,753

F-53

b. Balance sheets and income statements of trust accounts and the trust assets lists were as follows:

Balance Sheets of Trust Accounts

Assets Deposits in banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Common stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Real estate, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Marketable securities in custody . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31	December 31	December 31
	2010 NT$ $ 2,585,595 35,965,552 5,697,606 7,560 — 502,339 — 79,878 $44,838,530	2011 NT$ $ 2,834,585 37,582,196 4,860,825 1,704 — 464,334 3,592,151 119,055 $49,454,850	2012
			NT$ US$ (Note 2) $ 4,022,155 $ 136,067 38,729,267 1,310,192 4,662,675 157,736 2,217 75 15,841 536 274,663 9,292 2,159,304 73,048 207,256 7,011 $50,073,378 $1,693,957 $ 2,088 $ 71 134 4 2,159,304 73,048 47,335,993 1,601,353 575,859 19,481 $50,073,378 $1,693,957
Liabilities
Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax payable . . . . . . . . . . . . . . . . . . . . . . . . . . Marketable securities in custody payable . . . . . . . . . Trust capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reserve and earnings . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$ 1,083 81 — 42,624,348 2,213,018 $44,838,530	$ 1,119 101 3,592,151 45,161,450 700,029 $49,454,850	$ 2,088 134 2,159,304 47,335,993 575,859 $50,073,378

Income Statements of Trust Accounts

Trust revenue Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Realized investment gain . . . . . . . . . . . . . . . . . . . . . Unrealized investment gain . . . . . . . . . . . . . . . . . . . Revenue from stock lending . . . . . . . . . . . . . . . . . . Trust expenses Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Supervision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Service charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Service fee for stock affairs . . . . . . . . . . . . . . . . . . . Service fee for stock lending . . . . . . . . . . . . . . . . . . Realized investment loss . . . . . . . . . . . . . . . . . . . . . Unrealized investment loss . . . . . . . . . . . . . . . . . . .		Year Ended	December 31
	2010 NT$ $ 16,678 971,054 596,182 1,130,683 — 2,714,597 30,306 470 667 806 — — — — 32,249	2011 NT$ $ 22,173 1,148,730 — — — 1,170,903 26,548 260 890 28,652 — — 147,498 1,598,954 1,802,802	2012
			NT$ US$ (Note 2) $ 26,105 $ 883 1,163,338 39,355 — — — — 2,978 101 1,192,421 40,339 27,065 916 314 11 563 19 333 11 50 2 15 1 518,791 17,550 257,732 8,719 804,863 27,229

(Continued)

F-54

Income (loss) before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Year Ended December 31	Year Ended December 31	Year Ended December 31
	2010 NT$ $2,682,348 11,961 $2,670,387	2011 NT$ $(631,899) 15,422 $(647,321)	2012
			NT$ US$ (Note 2) $387,558 $13,110 1,979 67 $385,579 $13,043

(Concluded)

Trust Asset Lists

Investment Portfolio Deposits in banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Common stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Real estate, net Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Construction in progress . . . . . . . . . . . . . . . . . . Marketable securities in custody . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31	December 31
	2010 NT$ $ 2,585,595 35,965,552 5,697,606 7,560 — 353,094 43,913 105,332 — 79,878 $44,838,530	2011 NT$ $ 2,834,585 37,582,196 4,860,825 1,704 — 304,025 28,648 131,661 3,592,151 119,055 $49,454,850	2012
			NT$ US$ (Note 2) $ 4,022,155 $ 136,067 38,729,267 1,310,192 4,662,675 157,736 2,217 75 15,841 536 122,832 4,155 20,170 682 131,661 4,455 2,159,304 73,048 207,256 7,011 $50,073,378 $1,693,957

As of December 31, 2010, 2011 and 2012, funds amounting to NT$636,532 thousand, NT$683,506 thousand and NT$726,776 thousand (approximately US$24,586 thousand), respectively, consisted of investments in overseas securities through Non-discretionary Pecuniary Trust of the OBU, were recognized in the OBU’s books.

33. SUBSEQUENT EVENTS

On February 7, 2013 (the “Issue Date”), the Bank issued five-year zero coupon convertible bonds (the “Bonds”) with an aggregate principal of US$150,000 thousand which were listed on the Singapore Exchange Securities Trading Limited. The minimum lot size for the Bonds trading is US$200 thousand; other terms and conditions of the Bonds are described below:

• a. Redemption at maturity

Unless the Bonds have been previously redeemed, converted or repurchased and canceled, the Bank shall redeem the Bonds at 101.89% of their principal amount in U.S. dollars on February 7, 2018 (the “Maturity Date”). But if this day is not a business day, bond redemption will be on the preceding business day.

• b. Redemption at the option of the Bank

• 1) At any time on or after August 7, 2015, the Bank may redeem the Bonds in whole or piecemeal (being US$200 thousand in principal amount and integral multiples thereof) at the early redemption amount which represents the principal amount of the Bonds plus a gross yield of the principal amount of the Bonds if the closing price on the Taiwan Stock Exchange

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(the “TWSE”) of the common shares, translated into U.S. dollars at the prevailing rate, within 20 out of 30 consecutive trading days, is at least 130% of the quotient of the early redemption amount divided by the number of common shares to be issued upon conversion of the Bonds on the applicable trading day based on the conversion price then in effect, translated into U.S. dollars at the fixed exchange rate.

• 2) The Bank may redeem all, but not a portion of, the Bonds at the early redemption amount if more than 90% of the principal amount of the Bonds has already been redeemed, converted or repurchased and canceled.

• 3) The Bank is obliged to pay additional amounts as a result of any change relating to taxation in the relevant jurisdiction or any change in the general application or official interpretation of tax laws or regulations, and this obligation cannot be avoided by the Bank even by taking reasonable measures.

The early redemption amount for the Bonds is so calculated to represent the bondholder a gross yield of 0.375% semi-annually.

• c. Details of conversion

• 1) Converted shares: Newly issued common shares of the Bank (the “Shares”)

• 2) Conversion period: Unless the Bonds have been previously redeemed, converted or repurchased and canceled, the Bonds are convertible, at the option of the bondholder at any time on or after March 20, 2013, which is the 41st calendar day after the Issue Date, and prior to the close of business on January 28, 2018, which is the 10th calendar day prior to the Maturity Date for bond conversion into Shares. In addition, conversion rights shall not be exercised during the following closed periods: (a) 60 days prior to the date of the annual general shareholders’ meeting, 30 days prior to the date of the special general shareholders’ meeting, or on the date at least 5 days prior to the record date for determination of shareholders entitled to receive annual dividend, bonus, or other benefits and rights; (b) from the date at least 15 business days prior to the record date for any free distribution of shares, cash dividend, or rights to subscribe for new shares in a rights offering until the distribution of these rights, or from the record date for capital reduction until 1 day prior to the resumption of trading of the reissued shares following the capital reduction; and (c) any other period as determined by ROC laws.

• 3) Conversion price: NT$15.24 per share (at the fixed exchange rate of NT$29.569 to US$1.00)

• 4) Adjustments to conversion price: On any stock dilution or events stated in the Offering Memorandum that occur after the Issue Date, the conversion price shall be adjusted in accordance with the formula stated in the Offering Memorandum.

• 5) Redemption at the option of the bondholders:

  • a) Unless the Bonds have been early redeemed, converted or repurchased, each bondholder has a put right to require the Bank to redeem in whole or in part only (being US$200 thousand in principal amount and integral multiples thereof) the Bonds at the early redemption amount on August 7, 2015.

  • b) In the event that Bank’s shares cease to be listed or admitted to trading on the TWSE (a “Delisting”), the Bank shall notify the bondholders accordingly, and each bondholder shall have the right to require the Bank to redeem the Bondholder’s Bonds, in whole or in

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part only (being US$200 thousand in principal amount and integral multiples thereof) at the Early Redemption Amount on the 20th business day after the date of this notice.

• c) If the Bank has a change of control, the Bank shall notify the bondholders, and each bondholder shall have the right to require the Bank to redeem all or a part of the Bonds (being US$200 thousand in principal amount and integral multiples thereof) at the Early Redemption Amount on the 20th business day after the date of this notice.

34. FINANCIAL INSTRUMENTS

• a. Methods and assumptions used to estimate the fair values of financial instruments were as follows:

• 1) The carrying amounts of the following short-term financial instruments approximate their fair value because of their short maturities: cash and cash equivalents; due from the Central Bank and other banks; securities purchased under resale agreements; receivables, excluding income tax receivables; due to the Central Bank and other banks; short-term loans; payables, excluding income tax payables; and securities sold under repurchase agreements.

• 2) The fair values of financial instruments at fair value through profit or loss, available-for-sale financial assets and held-to-maturity investments are based on their quoted prices in an active market. For those instruments with no quoted market prices, their fair values are determined using valuation techniques incorporating estimates and assumptions consistent with those generally used by other market participants to price financial instruments. Fair values of derivative financial instruments are estimated on the basis of quotations from the pricing system of Reuters.

• 3) Discounts and loans, deposits, bank debentures and principal on structured notes are interest-earning assets or interest-bearing liabilities. Their carrying amounts approximate their fair values. The fair values of nonaccrual accounts and acquired receivables are based on their carrying amounts, net of allowance for possible losses.

• 4) Financial assets carried at cost are investments in unquoted stocks, which have no quoted prices in an active market and entail an unreasonably high cost to determine their fair values. Thus, no fair value of these assets is presented.

• 5) On financial assets and liabilities other than those listed above, their estimated future cash flows are equal to their carrying amounts. Thus, the carrying amounts of these assets and liabilities represent their fair value.

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• b. Fair values of financial assets and liabilities based on quoted market prices or on estimates determined by valuation techniques were as follows:

Financial assets Financial assets at fair value through profit or loss . . . Available-for-sale financial assets . . . . . . . . . . . . . . . . Other financial assets— derivative instruments held for hedging . . . . . . . Financial liabilities Financial liabilities at fair value through profit or loss . . . . . . . . . . . . . . . . . Other financial liabilities—derivative instruments held for hedging . . . . . . . . . . . . . . Bank debentures (applying hedge accounting) . . . . . .		Quoted M	arket Prices	Estimat	es Based on	Valuation Techniques
		Decem	ber 31		Dece	mber 31
	2010	2011	2012	2010	2011	2012
	NT$ $15,371,105 16,855,460 — — — —	NT$ $12,465,101 15,674,659 — 1,698 — —	NT$ US$ (Note 2) $13,231,813 $447,626 11,163,427 377,653 — — — — — — — —	NT$ $1,353,785 — 228,126 6,445,235 15,450 4,812,676	NT$ $1,341,765 — 252,233 4,079,337 13,093 4,839,140	NT$ US$ (Note 2) $2,879,022 $97,396 702,437 23,763 180,242 6,097 3,745,032 126,693 12,819 434 4,767,423 161,279

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• c. In addition to the fair values of financial assets and liabilities using quoted market prices or estimates based on valuation techniques, other fair values of financial instruments were as follows:

20 Carrying Amount NT$ Financial assets Discounts and loans . . . . . $236,351,285 Held-to-maturity financial assets . . . . . . . . . . . . . . 2,789,768 Debt investments with no active market . . . . . . . . 7,125,474 Other financial assets—financial assets carried at cost . . . . . . . . 158,385 Other financial assets—nonaccrual loans other than discounts and loans . . . 436,475 Other financial assets—interbank clearing account . . . . . . 205,074 Other financial assets—guarantee deposits for financial instrument agreements . . . . . . . . . . 1,566,155 Other financial assets—refundable deposits . . . . . . . . . . . . 673,357 Financial liabilities Deposits and remittances . . . . . . . . . . 347,860,583 Bank debentures (not applying hedge accounting) . . . . . . . . . 11,976,920 Other financial liabilities—principal of structured notes . . . . . . — Other financial liabilities—lease payable . . . . . . . . . . . . . 257 Other financial liabilities—appropriations loan funds . . . . . . . . . . . 360 Other financial liabilities—deposits received . . . . . . . . . . . . 130,382				Decem	ber 31
	20	10	20	11	20	12
	Carrying Amount	Estimated Fair Value	Carrying Amount	Estimated Fair Value	Carrying Amount	Estimated Fair Value
		NT$ $236,351,285 2,789,354 7,125,474 158,385 436,475 205,074 1,566,155 673,357 347,860,583 11,976,920 — 257 360 130,382	NT$ $269,460,381 3,927,905 9,293,780 103,846 80,476 207,369 1,669,282 509,539 369,998,562 15,391,140 459,005 78 — 168,404	NT$ $269,460,381 3,871,314 9,293,780 103,846 80,476 207,369 1,669,282 509,544 369,998,562 15,391,140 459,005 78 — 168,404	NT$ US$ (Note 2) $280,219,426 $ 9,479,683 2,224,301 75,247 10,713,828 362,443 101,379 3,430 71,623 2,423 404,877 13,697 1,892,383 64,018 513,971 17,387 391,933,266 13,258,906 18,304,700 619,239 730,962 24,728 35 1 — — 207,093 7,006	NT$ US$ (Note 2) $280,219,426 $ 9,479,683 2,235,526 75,627 10,713,828 362,443 101,379 3,430 71,623 2,423 404,877 13,697 1,892,383 64,018 514,002 17,388 391,933,266 13,258,906 18,304,700 619,239 730,962 24,728 35 1 — — 207,093 7,006

• d. On the valuation of financial instruments with fair value determined by valuation techniques, there were a loss of NT$1,942,203 thousand in 2010; a gain of NT$3,183,100 thousand in 2011; and a gain of NT$502,119 thousand (approximately US$16,986 thousand) in 2012.

• e. Interest incomes of financial assets other than those at fair value through profit or loss were NT$7,021,672 thousand in 2010; NT$8,024,283 thousand in 2011; and NT$9,486,582 thousand (approximately US$320,926 thousand) in 2012. Interest costs of financial liabilities other than those at fair value through profit or loss were NT$3,074,380 thousand in 2010; NT$4,198,910 thousand in 2011; and NT$5,551,182 thousand (approximately US$187,794 thousand) in 2012.

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• f. The fair value hierarchy of financial instruments was as follows:

Financial Instruments Nonderivative financial instruments Assets Financial assets at fair value through profit or loss Held for trading Government bonds . . . . . . . . . . Listed and OTC stocks . . . . . . . Beneficiary certificates . . . . . . . Financial assets designated as at fair value through profit or loss . . . . . . . . . . . . . . . . . . . . . Available-for-sale . . . . . . . . . . . . . . . Government bonds . . . . . . . . . . Listed and OTC stocks . . . . . . . Liabilities Financial liabilities at fair value through profit or loss . . . . . . . . . . . Derivative financial instruments Assets Financial assets at fair value through profit or loss Held for trading . . . . . . . . . . . . . Other financial assets . . . . . . . . . . . . Derivative instruments held for hedging . . . . . . . . . . . . . . . . . Liabilities Financial liabilities at fair value through profit or loss . . . . . . . . . . . Held for trading . . . . . . . . . . . . . Other financial liabilities . . . . . . . . . . Derivative instruments held for hedging . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31, 2011	December 31, 2011	Level 3 NT$ $ — — — — — — — $ 48,097 — (107,369) — $ (59,272)
	Total NT$ $ 1,722,733 36,819 57,286 10,656,510 14,773,521 901,138 (1,698) $ 1,333,518 252,233 (4,079,337) (13,093) $25,639,630	Level 1 NT$ $ 1,722,733 36,819 57,286 10,648,263 14,773,521 901,138 (1,698) $ — — — — $28,138,062	Level 2 NT$ $ — — — 8,247 — — — $ 1,285,421 252,233 (3,971,968) (13,093) $(2,439,160)

F-60

Financial Instruments Nonderivative financial instruments Assets Financial assets at fair value through profit or loss Held for trading Government bonds . . . . . . . . . . Listed and OTC stocks . . . . . . . Beneficiary certificates . . . . . . . Financial assets designated as at fair value through profit or loss . . . . . . Available-for-sale Government bonds . . . . . . . . . . . . . . Listed and OTC stocks . . . . . . . . . . . Negotiable certificates of deposit . . . Commercial papers . . . . . . . . . . . . . . Derivative financial instruments Assets Financial assets at fair value through profit or loss Held for trading . . . . . . . . . . . . . . . . . Other financial assets Derivative instruments held for hedging . . . . . . . . . . . . . . . . . . . . . Liabilities Financial liabilities at fair value through profit or loss Held for trading . . . . . . . . . . . . . . . . . Other financial liabilities Derivative instruments held for hedging . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31, 2012	December 31, 2012
	Total	Level 1	Level 2	Level 3
	NT$ US$ (Note 2) $ 1,334,349 $ 45,140 130,962 4,430 107,521 3,637 11,679,558 395,114 10,355,436 350,319 807,991 27,334 452,394 15,304 250,043 8,459 2,858,445 96,701 180,242 6,097 (3,745,032) (126,693) (12,819) (434) $24,399,090 $ 825,408	NT$ US$ (Note 2) $ 1,334,349 $ 45,140 130,962 4,430 107,521 3,637 11,658,981 394,418 10,355,436 350,319 807,991 27,334 — — — — — — — — — — — — $24,395,240 $825,278	NT$ US$ (Note 2) $ — $ — — — — — 20,577 696 — — — — 452,394 15,304 250,043 8,459 2,680,152 90,668 180,242 6,097 (3,677,723) (124,416) (12,819) (434) $ (107,134) $ (3,626)	NT$ US$ (Note 2) $ — $ — — — — — — — — — — — — — — — 178,293 6,033 — — (67,309) (2,277) — — $110,984 $ 3,756

Note a: The above table shows the ways to determine the fair value of certain financial assets and liabilities at fair value through profit or loss, available-for-sale financial assets, hedging derivative financial assets and liabilities under other financial assets, etc. in terms of level of input to the entire fair value measurement of these financial instruments.

Note b: Level 1 inputs are observable inputs that reflect quoted prices for identical financial instruments in an active market. Based on paragraph 5 of the SFAS No. 34—“Financial Instruments: Recognition and Measurement,” a market is active if it has these characteristics: (1) products traded in the market are homogeneous; (2) willing buyers and sellers can be found immediately; and (3) the price information is publicly available.

Note c: Level 2 inputs are observable inputs other than quoted prices for identical assets or liabilities in active markets and consist of direct inputs (such as market prices) or indirect inputs (such as prices derived from market prices), for example:

• 1) Quoted prices for similar financial instruments in active markets—The fair values of financial instruments owned by the Bank are derived from prices of similar financial instruments that had been most recently traded. The determination of similarity is based on the characteristics and transaction conditions of financial instruments. Fair value measurement should be adjusted in accordance with the observable prices of similar financial instruments. The adjustment factors include the time-lag of the last trading prices of similar financial instruments, the differences in transaction conditions, transactions involving related parties, the relevance between the observable prices of similar financial instruments and prices of owned financial instruments.

• 2) Quoted prices of identical or similar financial instruments in non-active markets;

• 3) Valuation techniques with observable inputs (such as interest rates, curves of yield rates, volatility, etc.), which are based on market data and can reflect the expectation of most market participants.

• 4) Inputs mostly derived from the observable market data or inputs that can be corroborated by observable market data.

Note d: Level 3 inputs are unobservable items such as inputs derived through extrapolation or interpolation and thus cannot be corroborated by observable market data. For example, the fair values of credit derivative instruments with no active market are derived from the latest quoted prices of itself or similar instruments.

Note e: The classification of the financial instruments shown in the fair value hierarchy table should be consistent with the classification of these instruments in the balance sheet.

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• Note f: When using valuation techniques that include both observable and unobservable inputs, the Bank should assess whether the inputs have a significant effect on the fair value measurement results. If the unobservable inputs are significant to the fair value measurement results in its entirety, the fair values of these financial instruments should be categorized into Level 3.

Note g: If the valuation techniques or the fair value hierarchy of a financial instrument significantly change from previous reporting periods (for example, the fair value hierarchy changes from Level 1 to Level 2 or the unobservable inputs change, and thus changing the fair value measurement significantly, the significance of the change should be judged in terms of the investment amount, and the effect of current measurement on profits or losses, related assets and liabilities, or equity), the changes and reasons for making those changes should be disclosed.

Movement of Level 3 financial assets:

December 31, 2011

Item Financial assets at fair value through profit or loss Held for trading— derivative instruments . . . Item Financial assets at fair value through profit or loss Held for trading— derivative instruments . . .	Beginning Balance	Valuation	Increase in the Current Period	Increase in the Current Period	Decrease in the Current Period	Decrease in the Current Period	Ending Balance
			Purchase or Issue	Transfer-in	Sale, Disposition or Settlement	Transfer-out from Level 3
	NT$ $39,722 Beginning Balance	NT$ $8,375 Valuation	NT$ NT$ $ — $ — December 31, 2012 Increase in the Current Period		NT$ NT$ $ — $ — Decrease in the Current Period		NT$ $48,097 Ending Balance
			Purchase or Issue	Transfer-in	Sale, Disposition or Settlement	Transfer-out from Level 3
	NT$ $48,097	NT$ $130,196	NT$ $ —	NT$ $ —	NT$ $ —	NT$ $ —	NT$ $178,293

December 31, 2012

Item Financial assets at fair value through profit or loss Held for trading— derivative instruments . . .	Beginning Balance	Valuation	Increase in the Current Period	Increase in the Current Period	Decrease in the Current Period	Decrease in the Current Period	Ending Balance
			Purchase or Issue	Transfer-in	Sale, Disposition or Settlement	Transfer-out from Level 3
	US$ (Note 2) $1,627	US$ (Note 2) $4,406	US$ (Note 2) $ —	US$ (Note 2) $ —	US$ (Note 2) $ —	US$ (Note 2) $ —	US$ (Note 2) $6,033

Movement of Level 3 financial liabilities:

December 31, 2011

Item Financial liabilities at fair value through profit or loss Held for trading— derivative instruments . . .	Beginning Balance	Valuation	Increase in the Current Period	Increase in the Current Period	Decrease in the Current Period	Decrease in the Current Period	Ending Balance
			Purchase or Issue	Transfer-in	Sale, Disposition or Settlement	Transfer-out from Level 3
	NT$ $16,446	NT$ $52,214	NT$ $38,780	NT$ $ —	NT$ $71	NT$ $ —	NT$ $107,369

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December 31, 2012

Item Financial liabilities at fair value through profit or loss Held for trading— derivative instruments . . .	Beginning Balance	Valuation	Increase in the Current Period	Increase in the Current Period	Decrease in the Current Period	Decrease in the Current Period	Ending Balance
			Purchase or Issue	Transfer-in	Sale, Disposition or Settlement	Transfer-out from Level 3
	NT$ $107,369	NT$ $(40,060)	NT$ $ —	NT$ $ —	NT$ $ —	NT$ $ —	NT$ $67,309

December 31, 2012

Item Financial liabilities at fair value through profit or loss Held for trading— derivative instruments . . .	Beginning Balance	Valuation	Increase in the Current Period	Increase in the Current Period	Decrease in the Current Period	Decrease in the Current Period	Ending Balance
			Purchase or Issue	Transfer-in	Sale, Disposition or Settlement	Transfer-out from Level 3
	US$ (Note 2) $3,632	US$ (Note 2) $(1,355)	US$ (Note 2) $ —	US$ (Note 2) $ —	US$ (Note 2) $ —	US$ (Note 2) $ —	US$ (Note 2) $2,277

• g. Financial risks

• 1) Market risk

  • a) Interest rate sensitivity analysis

The fair values of bonds, bills, loans and other similar financial instruments held by the Bank will fluctuate as market interest rates change. The related interest rate sensitivity analysis is shown in Note 38.

• b) Net positions on foreign currencies

U.S. dollars . . . . . . . . . . . . . . . . . . . . . . . . JPY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CNY . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31	December 31
	2010 NT$ $35,314 11,284 3,890	2011 NT$ $41,986 8,568 5,678	2012
			NT$ US$ (Note 2) $37,485 $1,268 6,335 214 4,882 165

• 2) Credit risk

• a) Maximum credit exposure

The Bank is exposed to credit risk if counter-parties or other parties default on contracts. To manage the risk, the Bank makes credit commitments and issues financial guarantees and standby letters of credit (L/C) only after careful evaluation of customers’ creditworthiness. As of December 31, 2010, 2011 and 2012, about 67.13%, 66.69%, and 68.44%, respectively, of total loans granted, and about 48.83%, 47.59% and 51.36%, respectively, of the aggregate guarantees were secured. Collaterals, mostly in the form of cash, marketable securities and other assets, may be required depending on the evaluation result. If the customers default, the Bank will execute its right on the collaterals to decrease its credit risk.

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The maximum credit exposure of the Bank’s off balance sheet commitments and guarantees were as follows (values of collaterals were not considered):

Items Unused portion of credit card lines . . . . . . . . . . . . . Financial guarantees and standby L/Cs . . . . . . . . . . Irrevocable loan commitments . . . . . . . . . .		December 31	December 31
	2010 NT$ $124,586,343 10,701,616 15,243,285	2011 NT$ $133,113,662 10,031,345 7,351,171	2012
			NT$ US$ (Note 2) $149,717,675 $5,064,874 12,389,045 419,115 9,681,305 327,514

b) Significant concentration of credit risk

The concentration of credit risk exists when counter-parties to financial transactions are individuals or groups engaging in similar activities or activities in the same region. The similarity would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. There was no significant concentration risk of the Bank’s loans in a single customer or counter-party, but there were some risks from similar industries, and related information as of December 31, 2010, 2011 and 2012 is summarized as follows:

Credit Risk Profile by Industry Sector Manufacturing . . . . . . . . . . . . . . Finance and insurance . . . . . . . . Transportation and warehousing . . . . . . . . . . . . . .		December 31	December 31
	2010 NT$ $38,667,490 26,985,968 10,660,359 $76,313,817	2011 NT$ $44,012,107 32,456,609 14,229,779 $90,698,495	2012
			NT$ US$ (Note 2) $41,015,594 $1,387,537 28,376,562 959,965 13,434,668 454,488 $82,826,824 $2,801,990

• 3) Liquidity risk

As of December 31, 2010, 2011 and 2012, the Bank’s NTD liquidity reserve ratios were 38.37%, 31.32% and 31.10%, respectively. The Bank has sufficient paid-in capital and working capital to meet all contract obligations. Therefore, the liquidity risk of funding of the Bank is low. In addition, the possibility of the Bank’s derivative financial instruments, except for hedging contracts, not being liquidated quickly in value is low.

To match the contractual maturity profile with the interest rates for assets and liabilities is one of the Bank’s basic management policies. Because of the uncertainties in their contractual terms and the difference in their nature, however, the maturities and interest rates for assets and liabilities cannot fully match with each other, resulting in gaps that may give rise to gain or loss.

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The Bank’s assets and liabilities were appropriately categorized by maturity dates for managing liquidity risk, as follows:

Assets Cash and cash equivalents . . . . . . Due from the Central Bank and other banks . . . . . . . . . . . . . . . . Financial assets at fair value through profit or loss . . . . . . . . Receivables . . . . . . . . . . . . . . . . . Discounts and loans . . . . . . . . . . . Available-for-sale financial assets . . . . . . . . . . . . . . . . . . . . Held-to-maturity financial assets . . . . . . . . . . . . . . . . . . . . Debt investments with no active market . . . . . . . . . . . . . . . . . . . . Other financial assets . . . . . . . . . .		December 31, 2010	December 31, 2010	December 31, 2010
	Due within One Year	Due Between One Year and Seven Years		Due after Seven Years	Total
	NT$ $ 4,274,832 102,938,352 6,316,491 16,984,474 78,240,583 1,314,460 58,250 3,892,952 2,102,295		NT$ $ — — 10,408,399 3,775,232 57,768,597 11,322,924 2,731,518 3,232,522 1,084,386 90,323,578	NT$ $ — — — — 103,949,648 4,218,076 — — —	NT$ $ 4,274,832 102,938,352 16,724,890 20,759,706 239,958,828 16,855,460 2,789,768 7,125,474 3,186,681
	216,122,689			108,167,724	414,613,991
Liabilities
Due to the Central Banks and other banks . . . . . . . . . . . . . . . . Short-term loans . . . . . . . . . . . . . . Financial liabilities at fair value through profit or loss . . . . . . . . Payables . . . . . . . . . . . . . . . . . . . . Deposits and remittances . . . . . . . Bank debentures . . . . . . . . . . . . . . Other financial liabilities . . . . . . . Gap . . . . . . . . . . . . . . . . . . . . . . . .	18,093,079 1,049,804 4,795,568 4,487,792 289,493,591 89,520 617		— — 1,649,667 — 58,366,992 16,700,076 145,832 76,862,567 $13,461,011	— — — — — — —	18,093,079 1,049,804 6,445,235 4,487,792 347,860,583 16,789,596 146,449
	318,009,971			—	394,872,538
				$108,167,724	$ 19,741,453

(Continued)

F-65

Assets Cash and cash equivalents . . . . . . Due from the Central Bank and other banks . . . . . . . . . . . . . . . . Financial assets at fair value through profit or loss . . . . . . . . Securities purchased under resale agreements . . . . . . . . . . . . . . . . Receivables . . . . . . . . . . . . . . . . . Discounts and loans . . . . . . . . . . . Available-for-sale financial assets . . . . . . . . . . . . . . . . . . . . Held-to-maturity financial assets . . . . . . . . . . . . . . . . . . . . Debt investments with no active market . . . . . . . . . . . . . . . . . . . . Other financial assets . . . . . . . . . .		December 31, 2011	December 31, 2011	December 31, 2011
	Due within One Year	Due Between One Year and Seven Years		Due after Seven Years	Total
	NT$ $ 6,005,214 86,739,190 4,070,964 850,505 18,479,388 90,982,875 966,392 1,950,601 1,847,024 1,048,252		NT$ $ — — 9,735,902 — 3,195,221 67,838,543 13,617,595 1,977,304 7,446,756 2,158,640 105,969,961	NT$ $ — — — — — 115,412,698 1,090,672 — — —	NT$ $ 6,005,214 86,739,190 13,806,866 850,505 21,674,609 274,234,116 15,674,659 3,927,905 9,293,780 3,206,892
	212,940,405			116,503,370	435,413,736
Liabilities
Due to the Central Bank and other banks . . . . . . . . . . . . . . . . . . . . Short-term loans . . . . . . . . . . . . . . Financial liabilities at fair value through profit or loss . . . . . . . . Payables . . . . . . . . . . . . . . . . . . . . Deposits and remittances . . . . . . . Bank debentures . . . . . . . . . . . . . . Other financial liabilities . . . . . . . Gap . . . . . . . . . . . . . . . . . . . . . . . .	$ 11,785,731 1,369,929 2,300,497 4,691,225 303,965,022 91,140 703,427		$ — — 1,780,538 — 66,033,540 20,139,140 151,023 88,104,241 $ 17,865,720	$ — — — — — — —	$ 11,785,731 1,369,929 4,081,035 4,691,225 369,998,562 20,230,280 854,450
	324,906,971			—	413,011,212
				$116,503,370	$ 22,402,524

(Concluded)

F-66

Assets Cash and cash equivalents . . . . . . Due from the Central Bank and other banks . . . . . . . . . . . . . . . . Financial assets at fair value through profit or loss . . . . . . . . Securities purchased under resale agreements . . . . . . . . . . . . . . . . Receivables . . . . . . . . . . . . . . . . . Discounts and loans . . . . . . . . . . . Available-for-sale financial assets . . . . . . . . . . . . . . . . . . . . Held-to-maturity financial assets . . . . . . . . . . . . . . . . . . . . Debt investments with no active market . . . . . . . . . . . . . . . . . . . Other financial assets . . . . . . . . . .		December 31, 2012	December 31, 2012	December 31, 2012
	Due within One Year	Due Between One Year and Seven Years		Due after Seven Years	Total
	NT$ $ 5,599,451 82,818,608 4,971,108 23,741,992 21,480,218 82,447,159 3,830,832 448,710 1,660,752 1,434,100		NT$ $ — — 11,139,727 — — 80,382,660 6,427,306 1,775,591 9,053,076 2,127,763 110,906,123	NT$ $ — — — — — 120,971,613 1,607,726 — — —	NT$ $ 5,599,451 82,818,608 16,110,835 23,741,992 21,480,218 283,801,432 11,865,864 2,224,301 10,713,828 3,561,863
	228,432,930			122,579,339	461,918,392
Liabilities
Due to the Central Bank and other banks . . . . . . . . . . . . . . . . Short-term loans . . . . . . . . . . . . . Financial liabilities at fair value through profit or loss . . . . . . . . Payables . . . . . . . . . . . . . . . . . . . . Deposits and remittances . . . . . . . Bank debentures . . . . . . . . . . . . . Other financial liabilities . . . . . . . Gap . . . . . . . . . . . . . . . . . . . . . . .	11,674,958 969,980 2,380,614 5,708,177 315,090,895 4,004,700 730,997		— — 1,364,418 — 76,842,371 19,067,423 219,912 97,494,124 $ 13,411,999	— — — — — — —	11,674,958 969,980 3,745,032 5,708,177 391,933,266 23,072,123 950,909
	340,560,321			—	438,054,445
				$122,579,339	$ 23,863,947

F-67

Assets Cash and cash equivalents . . . Due from the Central Bank and other banks . . . . . . . . . Financial assets at fair value through profit or loss . . . . . Securities purchased under resale agreements . . . . . . . . Receivables . . . . . . . . . . . . . . Discounts and loans . . . . . . . . Available-for-sale financial assets . . . . . . . . . . . . . . . . . Held-to-maturity financial assets . . . . . . . . . . . . . . . . . Debt investments with no active market . . . . . . . . . . . Other financial assets . . . . . . .		December 31, 2012	December 31, 2012	December 31, 2012	December 31, 2012
	Due within One Year US$ (Note 2) $ 189,427 2,801,712 168,170 803,180 726,665 2,789,146 129,595 15,180 56,182 48,514 7,727,771	Due Between One Year and Seven Years US$ (Note 2) $ — — 376,852 — — 2,719,305 217,432 60,067 306,261 71,981 3,751,898		Due after Seven Years US$ (Note 2) $ — — — — — 4,092,409 54,389 — — — 4,146,798		Total
						US$ (Note 2) $ 189,427 2,801,712 545,022 803,180 726,665 9,600,860 401,416 75,247 362,443 120,495 15,626,467 394,958 32,814 126,693 193,105 13,258,906 780,518 32,169 14,819,163 $ 807,304
Liabilities
Due to the Central Banks and other banks . . . . . . . . . . . . . Short-term loans . . . . . . . . . . Financial liabilities at fair value through profit or loss . . . . . . . . . . . . . . . . . . . Payables . . . . . . . . . . . . . . . . . Deposits and remittances . . . . Bank debentures . . . . . . . . . . Other financial liabilities . . . . Gap . . . . . . . . . . . . . . . . . . . .	394,958 32,814 80,535 193,105 10,659,367 135,477 24,729 11,520,985 $ (3,793,214)		— — 46,158 — 2,599,539 645,041 7,440 3,298,178 $ 453,720		— — — — — — — — $4,146,798

• 4) Cash flow risk on the interest rate fluctuations

Cash flow risk is the risk to future cash flows of the Bank’s interest-earning assets and interest-bearing liabilities, which are affected by interest rate fluctuations. The Bank periodically assesses the interest rate risk and enters in interest rate swap contracts taking into account of the extent of risk and its business need, in order to mitigate cash flow risk on interest rate fluctuations.

F-68

The analysis of the Bank’s interest-earning assets and interest-bearing liabilities categorized by the earlier of contractual maturity or repricing date is as follows:

Assets Cash and cash equivalents- deposit due from other banks . . . . . . . . . . . . . . . Due from the Central Bank and other banks . . . . . . . Financial assets at fair value through profit or loss . . . . . . . . . . . . . . . . Receivables . . . . . . . . . . . . Discounts and loans (excluding nonaccrual loans) . . . . . . . . . . . . . . . Available-for-sale financial assets . . . . . . . Held-to-maturity financial assets . . . . . . . . . . . . . . . Debt investments with no active market . . . . . . . . . Other financial assets— guarantee deposits for financial instrument agreements . . . . . . . . . .			December 31, 2010	December 31, 2010	December 31, 2010	December 31, 2010
	Between One Month and Three Months		Between Three Months and Six Months		Between Six Months and One Year		After One Year	Total
		NT$ $ 1,356,915 97,258,630 83,879 8,900,047 147,700,340 150,095 2,788,161 6,496,152 1,566,155 266,300,374		NT$ $ — — 1,181,945 3,919,651 91,587,987 — — — — 96,689,583		NT$ $ — — 1,621,828 — 38,443 5,201 — 523,800 — 2,189,272	NT$ $ — — 12,316,825 — — 15,540,999 — 105,522 —	NT$ $ 1,356,915 97,258,630 15,204,477 12,819,698 239,326,770 15,696,295 2,788,161 7,125,474 1,566,155
							27,963,346	393,142,575
Liabilities
Due to the Central Bank and other banks . . . . . . . Deposits and remittances . . . . . . . . . . Bank debentures . . . . . . . . Other financial liabilities . . . . . . . . . . . . Gap . . . . . . . . . . . . . . . . . .		17,677,088 156,919,952 7,976,920 118 182,574,078 $ 83,726,296		415,991 113,102,159 — 88 113,518,238 $ (16,828,655)		— 74,147,320 — 154 74,147,474 $(71,958,202)	— 1,437,116 8,600,000 —	18,093,079 345,606,547 16,576,920 360
							10,037,116	380,276,906
							$17,926,230	$ 12,865,669

F-69

Assets Cash and cash equivalents—deposit due from other banks . . . . . . . . . . . . Due from the Central Bank and other banks . . . . . . . . . . . . Financial assets at fair value through profit or loss . . . . . . . . . . . . Securities purchased under resale agreements . . . . . . . . Receivables . . . . . . . . . Discounts and loans (excluding nonaccrual loans) . . . Available-for-sale financial assets . . . . . Held-to-maturity financial assets . . . . . Debt investments with no active market . . . . Other financial assets— guarantee deposits for financial instrument agreements . . . . . . . .			December 31, 2011	December 31, 2011	December 31, 2011	December 31, 2011
	Between One Month and Three Months		Between Three Months and Six Months		Between Six Months and One Year		After One Year	Total
		NT$ $ 2,462,528 81,675,849 951,007 850,505 9,240,564 170,580,296 62,081 3,465,136 9,190,733 1,669,282 280,147,981		NT$ $ — — 793,230 — 3,801,022 102,720,396 — 461,170 — — 107,775,818		NT$ $ — — 693,303 — — 274,876 3,173 — — — 971,352	NT$ $ — — 9,941,703 — — 393,770 14,708,267 — 103,047 —	NT$ $ 2,462,528 81,675,849 12,379,243 850,505 13,041,586 273,969,338 14,773,521 3,926,306 9,293,780 1,669,282
							25,146,787	414,041,938
Liabilities
Due to the Central Bank and other banks . . . . . . . . . . . . Deposits and remittances . . . . . . . . Bank debentures . . . . . Other financial liabilities . . . . . . . . . Gap . . . . . . . . . . . . . . . .		11,539,779 163,407,728 7,803,740 672,875 183,424,122 $ 96,723,859		245,952 134,153,257 87,400 — 134,486,609 $ (26,710,791)		— 67,205,226 — — 67,205,226 $(66,233,874)	— 1,906,339 12,100,000 —	11,785,731 366,672,550 19,991,140 672,875
							14,006,339	399,122,296
							$11,140,448	$ 14,919,642

F-70

Assets Cash and cash equivalents—deposit due from other banks . . . . . . . . . . . . . . Due from the Central Bank and other banks . . . . . . . . . . . . . . Financial assets at fair value through profit or loss . . . . . . . . . . . . . . . Securities purchased under resale agreements . . . . . . . . . Receivables . . . . . . . . . . . Discounts and loans (excluding nonaccrual loans) . . . . . . . . . . . . . Available-for-sale financial assets . . . . . . Held-to-maturity financial assets . . . . . . Debt investments with no active market . . . . . . . . Other financial assets— guarantee deposits for financial instruments agreement . . . . . . . . . .			December 31, 2012	December 31, 2012	December 31, 2012	December 31, 2012
	Between One Month and Three Months		Between Three Months and Six Months		Between Six Months and One Year		After One Year	Total
		NT$ $ 810,850 74,441,431 372,393 23,741,992 8,779,864 173,980,068 1,002,601 2,223,302 10,695,420 1,892,383 297,940,304		NT$ $ — — 860,376 — 3,097,468 108,367,052 — — — — 112,324,896		NT$ $ — 2,500,000 986,317 — — 92,341 2,020,014 — — — 5,598,672	NT$ $ — — 10,794,821 — — 378,988 8,035,258 — 18,408 —	NT$ $ 810,850 76,941,431 13,013,907 23,741,992 11,877,332 282,818,449 11,057,873 2,223,302 10,713,828 1,892,383
							19,227,475	435,091,347
Liabilities
Due to the Central Bank and other banks . . . . . . Deposits and remittances . . . . . . . . . Bank debentures . . . . . . . Other financial liabilities . . . . . . . . . . . Gap . . . . . . . . . . . . . . . . .		11,657,907 167,985,870 7,804,700 730,962 188,179,439 $109,760,865		17,051 138,415,626 — — 138,432,677 $ (26,107,781)		— 79,236,494 — — 79,236,494 $(73,637,822)	— 3,804,580 15,100,000 —	11,674,958 389,442,570 22,904,700 730,962
							18,904,580	424,753,190
							$ 322,895	$ 10,338,157

F-71

Assets Cash and cash equivalents- deposit due from other banks . . . . . . . . . . . . . . Due from the Central Bank and other banks . . . . . . . . . . . . . . Financial assets at fair value through profit or loss . . . . . . . . . . . . . . . . Securities purchased under resale agreements . . . . . . . . . . Receivables . . . . . . . . . . . Discounts and loans (excluding nonaccrual loans) . . . . . . . . . . . . . . Available-for-sale financial assets . . . . . . . Held-to-maturity financial assets . . . . . . . . . . . . . . Debt investments with no active market . . . . . . . . Other financial assets— guarantee deposits for financial instrument agreements . . . . . . . . . .			December 31, 2012	December 31, 2012	December 31, 2012	December 31, 2012
	Between One Month and Three Months		Between Three Months and Six Months		Between Six Months and One Year		After One Year		Total
		US$ (Note 2) $ 27,431 2,518,316 12,598 803,180 297,018 5,885,658 33,917 75,213 361,820 64,018 10,079,169	US$ (Note 2) $ — — 29,106 — 104,786 3,666,003 — — — — 3,799,895			US$ (Note 2) $ — 84,574 33,367 — — 3,124 68,336 — — — 189,401	US$ (Note 2) $ — — 365,183 — — 12,821 271,829 — 623 — 650,456		US$ (Note 2) $ 27,431 2,602,890 440,254 803,180 401,804 9,567,606 374,082 75,213 362,443 64,018
									14,718,921
Liabilities
Due to the Central Bank and other banks . . . . . . Deposits and remittances . . . . . . . . . . Bank debentures . . . . . . . Other financial liabilities . . . . . . . . . . . Gap . . . . . . . . . . . . . . . . .		394,381 5,682,878 264,028 24,728 6,366,015 $ 3,713,154		577 4,682,531 — — 4,683,108 $ (883,213)		— 2,680,531 — — 2,680,531 $(2,491,130)		— 128,707 510,826 — 639,533 $ 10,923	394,958 13,174,647 774,854 24,728
									14,369,187
									$ 349,734

F-72

h. Fair value hedges

The fair values of bank debentures issued by the Bank were exposed to the risk on interest rate fluctuations. The Bank used interest rate swap contracts to hedge against the risk. The terms of the interest rate swap contracts were as follows:

Hedged Item Hedging Instrument Bank debentures . . . . . . . . . .Interest rate swap contracts NT$ US$ (Note 2) . . . . . . . . . . . . . . . . . . . .		December 31
	2010	2011	2012
	Nominal Amount Fair Value $4,600,000 $212,676	Nominal Amount Fair Value $4,600,000 $239,140	Nominal Amount Fair Value $4,600,000 $167,423 $ 155,616 $ 5,663

35. MAJOR RISK MANAGEMENT STRATEGIES

The Bank’s risk management policy is to form a risk management-orientated culture. The Bank has set up an independent risk control unit to implement and monitor a risk management system, to ensure every risk is under a tolerable level and to maximize the value to shareholders.

A Risk Management Committee has been formed to examine and manage the Bank’s risks, to evaluate risk acceptance and to assess the execution of risk management. Furthermore, the Bank has an independent risk management department, which is responsible for the establishment of risk management strategies and rules, statistical analysis of risk, and information management and reporting. The department consists of teams that directly manage risks with regard to their respective areas: Corporate banking and financial markets, consumer banking and credit card business groups, and small and medium enterprises. For integrated risk management, each operating unit of the Bank is required to present, first to the management department for review and then to the top Bank management for approval, all the related documents, including the credit authorization principles and procedures, new product development, levels and degree of authorization, etc.

F-73

36. CAPITAL ADEQUACY

Eligible capital Tier I capital . . . . . . . . . . . . . . . . . . . . . Tier II capital . . . . . . . . . . . . . . . . . . . . Tier III capital . . . . . . . . . . . . . . . . . . . . Total eligible capital . . . . . . . . . . . . . . . Risk- weighted assets Credit risk Standardized approach . . . . . . . . . . Internal rating-based approach . . . . . . . . . . Asset securitization . . . . . . . Operational risk Basic indicator approach . . . . . . . . . . Standardized approach/alternative standardized approach . . . . . . . . . . Advanced measurement approach . . . . . . . . . . Market risk Standardized approach . . . . . . . . . . Internal models approach . . . . . . . . . . Total risk-weighted assets . . . . . . . . . . . Capital adequacy ratio . . . . . . . . . . . . . . . . . . . . . . . . Ratio of Tier I capital to risk-weighted assets . . . . . . Ratio of Tier II capital to risk-weighted assets . . . . . . Ratio of Tier III capital to risk-weighted assets . . . . . Ratio of common shareholders’ equity to total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Leverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	December 31, 2010	December 31, 2010	December 31, 2010
	The Bank	Consolidation	The Bank

F-74

Eligible capital Tier I capital . . . . . . . . . . . . . . . . . . . . . Tier II capital . . . . . . . . . . . . . . . . . . . . Tier III capital . . . . . . . . . . . . . . . . . . . Total eligible capital . . . . . . . . . . . . . . Risk-weighted assets Credit risk Standardized approach . . . . . . . . . . Internal rating-based approach . . . . . . . . . . Asset securitization . . . . . . Operational risk Basic indicator approach . . . . . . . . . . Standardized approach/alternative standardized approach . . . . . . . . . . Advanced measurement approach . . . . . . . . . . Market risk Standardized approach . . . . . . . . . . Internal models approach . . . . . . . . . . Total risk-weighted assets . . . . . . . . . . Capital adequacy ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . Ratio of Tier I capital to risk-weighted assets . . . . . . . . . Ratio of Tier II capital to risk-weighted assets . . . . . . . . . Ratio of Tier III capital to risk-weighted assets . . . . . . . . Ratio of common shareholders’ equity to total assets . . . Leverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	December 31, 2012	December 31, 2012
	The Bank	Consolidation
	NT$ US$(Note 2) $ 25,122,063 $ 849,867 11,154,742 377,359 — — 36,276,805 1,227,226 268,086,022 9,069,216 — — — — 12,326,475 416,998 — — — — 10,578,788 357,875 — — 290,991,285 9,844,089 12.47% 8.63% 3.84% — 4.82% 5.59%	NT$ US$(Note 2) $ 25,712,352 $ 869,836 11,750,266 397,506 — — 37,462,618 1,267,342 272,198,189 9,208,328 — — — — 11,876,975 401,792 — — — — 10,578,788 357,875 — 294,653,952 9,967,995 12.71% 8.72% 3.99% — 4.82% 5.70%

Note a: Eligible capital and risk-weighted assets are calculated under the “Regulations Governing the Capital Adequacy Ratio of Banks” and the “Explanation of Methods for Calculating the Eligible Capital and Risk-weighted Assets of Banks”.

• Note b: An annual report should include both the current year’s and prior year’s capital adequacy ratio, but a semiannual report should include the capital adequacy ratio of the most recent year.

Note c: Formulas used were as follows:

• 1) Eligible capital = Tier I capital + Tier II capital + Tier III capital.

• 2) Total risk-weighted assets = Risk-weighted assets for credit risk + (Capital requirements for operational risk and market risk) × 12.5.

• 3) Capital adequacy ratio = Eligible capital/Total risk-weighted assets.

• 4) Ratio of Tier I capital to risk-weighted assets = Tier I capital/Total risk-weighted assets.

• 5) Ratio of Tier II capital to risk-weighted assets = Tier II capital/Total risk-weighted assets.

• 6) Ratio of Tier III capital to risk-weighted assets = Tier III capital/Total risk-weighted assets.

• 7) Ratio of common stock to total assets = Common stock/Total assets.

• 8) Leverage ratio = Tier I capital/Adjusted average total asset (the average total asset excludes goodwill, deferred losses on the sale of nonperforming loans and items deducted from Tier I capital because of ineligibility as defined under the “Explanation of Methods for Calculating the Eligible Capital and Risk-Weighted Assets of Banks”).

Note d: Capital adequacy ratios have to be disclosed in the notes to consolidated financial statements, except those for the first and the third quarters.

F-75

37. AVERAGE AMOUNT AND AVERAGE INTEREST RATE OF INTEREST-EARNING ASSETS AND INTEREST-BEARING LIABILITIES (DISCLOSURES OF THE BANK)

2010 Average Balance Average Rate(%) NT$ Interest-earning assets Cash and cash equivalents—deposit due from other banks . . . . . . . . . . . . $ 1,310,995 0.07 Due from the Central Bank and other banks . . . . . . . . . . . . 77,320,250 0.59 Financial assets at fair value through profit or loss—government bonds . . . . . . . . . . . . 1,909,784 1.95 Securities purchased under resale agreements . . . . . . . . 541,864 0.24 Receivables—credit card revolving balances . . . . . . . . . . 11,773,771 12.28 Discounts and loans . . . 222,454,084 2.36 Available-for-sale financial assets (excluding stocks) . . 14,384,657 1.37 Held-to-maturity financial assets . . . . . 2,543,249 2.06 Debt investments with no active market . . . . 4,181,662 1.70 Guarantee deposits for financial instrument agreements . . . . . . . . 1,400,051 0.08 Interest-bearing liabilities Due to banks . . . . . . . . . 8,923,171 0.77 Demand deposits . . . . . 66,338,962 0.22 Time deposits . . . . . . . . 236,570,654 0.79 Negotiable certificates of deposit . . . . . . . . . 13,217,044 0.49 Bank debentures . . . . . . 15,756,841 1.33 Other financial liabilities—principal of structured notes . . — — Other financial liabilities—securities sold under repurchase agreements . . . . . . . . 411,937 0.12			Year Ended December 31	Year Ended December 31	Year Ended December 31
	2010		2011		2012
	Average Balance	Average Rate(%)	Average Balance	Average Rate(%)	Average Balance	Average Rate(%)
		0.07 0.59 1.95 0.24 12.28 2.36 1.37 2.06 1.70 0.08 0.77 0.22 0.79 0.49 1.33 — 0.12	NT$ $ 2,079,147 83,821,989 2,062,837 168,978 10,801,663 255,376,853 15,811,816 3,299,654 3,696,513 2,081,673 12,784,226 78,174,864 254,973,343 20,255,713 17,030,287 368,166 36,069	0.22 0.80 1.91 0.69 11.80 2.48 1.32 2.65 1.70 0.05 1.08 0.25 1.06 0.88 1.56 0.97 0.10	NT$ US$ (Note 2) $ 1,615,605 $ 54,655 83,144,387 2,812,733 1,590,743 53,814 8,274,351 279,917 10,622,283 359,347 280,506,789 9,489,404 9,889,048 334,542 2,850,195 96,421 4,417,589 149,445 1,840,518 62,264 14,102,027 477,065 81,139,191 2,744,898 271,371,411 9,180,359 22,028,867 745,226 21,481,842 726,720 748,398 25,318 25,677 869	0.24 0.86 1.78 0.74 11.39 2.77 1.19 2.75 1.94 0.09 1.07 0.30 1.17 0.95 1.70 2.78 0.54

The above average balances were calculated at the average daily balance of interest-earning assets and interest-bearing liabilities for the year.

F-76

38. ASSET QUALITY OF LOANS, CONCENTRATION OF CREDIT EXTENSIONS, INTEREST RATE SENSITIVITY, PROFITABILITY AND MATURITY ANALYSIS OF ASSETS AND LIABILITIES (DISCLOSURES OF THE BANK)

• a. Asset quality of loans

Nonperforming loans and nonperforming receivables

Item Business Corporate banking Secured . . . . . . . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . . . . . . . Consumer banking Residential mortgage (Note d) . . . . Cash card . . . . . . . . . . . . . . . . . . . . Small-scale credit loans (Note e) . . Others (Note f) Secured . . . . . . . Unsecured . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable factored without recourse (Note g) . . . . . . . Item Business Corporate banking Secured . . . . . . . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . . . . . . . Consumer banking Residential mortgage (Note d) . . . . Cash card . . . . . . . . . . . . . . . . . . . . Small-scale credit loans (Note e) . . Others (Note f) Secured . . . . . . . Unsecured . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable factored without recourse (Note g) . . . . . . . Item Business Corporate banking Secured . . . . . . . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . . . . . . . Consumer banking Residential mortgage (Note d) . . . . Cash card . . . . . . . . . . . . . . . . . . . . Small-scale credit loans (Note e) . . Others (Note f) Secured . . . . . . . Unsecured . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable factored without recourse (Note g) . . . . . . .		December 31, 2010	December 31, 2010		Coverage Ratio (Note c) 383.35% 2,258.53% 185.59% — 308.08% 187.53% 139.35% 299.92% Coverage Ratio 2,462.47% — Coverage Ratio (Note c) 1,831.83% 16,940.30% 362.61% — 188.18% 851.74% 104.36% 779.32% Coverage Ratio 2,266.26% — Coverage Ratio (Note c) 114.94% 8,564.38% 530.21% — 189.61% 683.42% 310.63% 271.96% Coverage Ratio 1,155.46% —
	Nonperforming Loans (Note a)	Loans	Ratio of Nonperforming Loans (Note b)	Allowance for Possible Losses
	NT$ $ 445,960 12,500 413,043 — 200,741 101,042 29,560 $1,202,846 Nonperforming Receivables	NT$ $ 33,929,433 77,840,015 99,560,848 — 11,897,392 15,359,069 1,372,071	1.31% 0.02% 0.41% — 1.69% 0.66% 2.15% 0.50% Ratio of Nonperforming Receivables	NT$ $1,709,565 282,316 766,556 — 618,435 189,479 41,192 $3,607,543 Allowance for Possible Losses
		$239,958,828
		Accounts Receivable
	75,095 —	15,631,166 0.48% 2,633,984 — December 31, 2011		1,849,193 3,007
	Nonperforming Loans (Note a)	Loans	Ratio of Nonperforming Loans (Note b)	Allowance for Possible Losses
	NT$ $133,629 5,303 227,571 — 192,345 24,666 29,036 $612,550 Nonperforming Receivables	NT$ $ 35,675,055 89,851,175 105,697,900 — 13,805,008 26,989,102 2,215,876	0.37% 0.01% 0.22% — 1.39% 0.09% 1.31% 0.22% Ratio of Nonperforming Receivables	NT$ $2,447,853 898,344 825,201 — 361,946 210,089 30,302 $4,773,735 Allowance for Possible Losses
		$274,234,116
		Accounts Receivable
	$ 34,168 —	$ 15,530,088 0.22% 3,412,000 — December 31, 2012		$ 774,335 17,151
	Nonperforming Loans (Note a)	Loans	Ratio of Nonperforming Loans (Note b)	Allowance for Possible Losses
	NT$ $ 863,888 10,006 186,867 — 192,776 48,320 15,250 $1,317,107 Nonperforming Receivables	NT$ $ 32,947,720 86,306,591 108,423,628 — 14,971,799 37,077,113 4,074,581	2.62% 0.01% 0.17% — 1.29% 0.13% 0.37% 0.46% Ratio of Nonperforming Receivables	NT$ $ 992,934 855,151 990,792 — 365,529 330,229 47,371 $3,582,006 Allowance for Possible Losses
		$283,801,432
		Accounts Receivable
	$ 61,453 —	$ 15,413,670 2,830,761	0.40% —	$ 710,066 13,863

F-77

Item Business Corporate banking Secured . . . . . . . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . . . . . . . Consumer banking Residential mortgage (Note d) . . . . Cash card . . . . . . . . . . . . . . . . . . . . Small-scale credit loans (Note e) . . Others (Note f) Secured . . . . . . . Unsecured . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable factored without recourse (Note g) . . . . . . .		December 31, 2012	December 31, 2012	December 31, 2012		Coverage Ratio (Note c) 114.94% 8,564.38% 530.21% — 189.61% 683.42% 310.63% 271.96% Coverage Ratio 1,155.46% —
	Nonperforming Loans (Note a)	Loans		Ratio of Nonperforming Loans (Note b)	Allowance for Possible Losses
	US$ (Note 2) $29,225 338 6,322 — 6,521 1,635 516 $44,557 Nonperforming Receivables	US$ (Note 2) $1,114,605 2,919,709 3,667,917 — 506,488 1,254,300 137,841 $9,600,860 Accounts Receivable		2.62% 0.01% 0.17% — 1.29% 0.13% 0.37% 0.46% Ratio of Nonperforming Receivables	US$ (Note 2) $ 33,590 28,929 33,518 — 12,366 11,171 1,603 $121,177 Allowance for Possible Losses
	$ 2,079 —		$ 521,437 95,763	0.40% —	$ 24,021 469

Note a: Nonperforming loans represent the amounts of nonperforming loans reported to the authorities and disclosed to the public, as required by the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/Non-accrued Loans.”

Nonperforming credit cards receivables represent the amounts of nonperforming receivables reported to the authorities and disclosed to the public, as required by the Banking Bureau’s letter dated July 6, 2005 (Ref. No. 0944000378).

Note b: Ratio of nonperforming loans: Nonperforming loans/Outstanding loan balance.

Ratio of nonperforming credit cards receivables: Nonperforming credit cards receivables ÷ Outstanding credit cards receivables balance.

Note c: Coverage ratio of allowance for possible losses for loans: Allowance for possible losses for loans ÷ Nonperforming loans.

Coverage ratio of allowance for possible losses for credit cards receivables: Allowance for possible losses for credit cards receivables ÷ Nonperforming credit cards receivables.

Note d: Residential mortgage is a loan given to the borrower who provides a house, to be purchased (or already owned) by the borrower or the spouse or the minor children of the borrower, as a mortgage to the Bank and will use the loan for house purchase or refurbishment.

Note e: Small-scale credit loans refer to the loans under the Banking Bureau’s regulation, dated December 19, 2005 (Ref. No. 09440010950), excluding small-scale unsecured loans obtained through credit cards and cash cards.

Note f: Other loans of consumer banking refer to secured or unsecured loans, excluding residential mortgage, cash card, small-scale credit loans and credit card.

Note g: As required by the Banking Bureau’s letter dated July 19, 2005 (Ref. No. 0945000494), factoring without recourse is disclosed as nonperforming receivables in three months upon the factors’ or insurance companies’ rejection of claims.

F-78

Nonperforming loans and nonperforming receivables excluded from the information stated above

Item Business Loans not classified as NPL upon debt restructuring and performed as agreed (Note a) . . . . . . . . . . . . . . . Loans upon performance of a debt discharge program and rehabilitation program (Note b) . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . .	Decembe	r 31, 2010	r 31, 2010	Decembe	Decembe	r 31, 2011	r 31, 2011	Decembe	r 31, 2012
	Nonperforming Loans Excluded	Nonperforming Receivables Excluded		Nonperforming Loans Excluded		Nonperforming Receivables Excluded		Nonperforming Loans Excluded	Nonperforming Receivables Excluded
	NT$ $ 850,251 551,802 $1,402,053		NT$ $2,067,269 1,382,899 $3,450,168		NT$ $ 643,243 535,484 $1,178,727		NT$ $1,575,374 1,415,117 $2,990,491	NT$ US$ (Note 2) $ 458,950 $15,526 563,620 19,067 $1,022,570 $34,593	NT$ US$ (Note 2) $1,157,342 $39,152 1,368,460 46,295 $2,525,802 $85,447

Note a: Supplementary disclosure related to the loans which need not be classified as NPL upon debt restructuring and performed as agreed, as stipulated in the Banking Bureau’s letter dated April 25, 2006 (Ref. No. 09510001270).

Note b: Supplementary disclosure related to the loans which need not be classified as NPL upon performance of a debt discharge program and rehabilitation program, as stipulated in the Banking Bureau’s letter dated September 15, 2008 (Ref. No. 09700318940).

b. Concentration of credit extensions

December 31, 2010

Ranking (Note a) 1 2 3 4 5 6 7 8 9 10	Group Entity (Note b) Industry and Code(Note a) A Group—2413—steel rolling and extruding D Group—5010—ocean water transportation K Group—2611—integrated circuits manufacturing H Group—2641—liquid crystal panel and components manufacturing L Group—2630—printed circuits manufacturing N Group—4210—highway and street construction J Group—2641—liquid crystal panel and components manufacturing O Group—6611—securities F Group—1850—artificial fiber M Group—6499—non-categorized and other financial intermediaries	Total Balances of Credit Extensions (Note c) NT$ $4,256,010 3,360,950 3,243,465 2,753,070 2,482,995 2,472,335 2,466,649 2,073,383 1,957,931 1,919,873	Ratio of Credit Extensions to Net Worth(%)
			19% 15% 14% 12% 11% 11% 11% 9% 9% 8%

F-79

December 31, 2011

	December 31, 2011
Ranking (Note a) 1 2 3 4 5 6 7 8 9 10	Group Entity (Note b) Industry and Code(Note a)	Total Balances of Credit Extensions (Note c)	Ratio of Credit Extensions to Net Worth(%)
	A Group—2413—steel rolling and extruding D Group—5010—ocean water transportation K Group—2611—integrated circuit manufacturing H Group—2641—liquid crystal panel and components manufacturing F Group—1850—artificial fiber L Group—2630—printed circuits manufacturing M Group—6499—non-categorized and other financial intermediaries J Group—2641—liquid crystal panel and components manufacturing C Group—6499—non-categorized and other financial intermediaries G Group—6499—non-categorized and other financial intermediaries	NT$ $5,566,747 3,493,631 2,823,382 2,485,091 2,259,714 2,248,242 2,046,291 2,002,101 1,863,045 1,811,764	23% 14% 11% 10% 9% 9% 8% 8% 8% 7%

December 31, 2012

Ranking (Note a) 1 2 3 4 5 6 7 8 9 10	Group Entity (Note b) Industry and Code(Note a)	Total Balances of Credit Extensions (Note c)	Ratio of Credit Extensions to Net Worth(%)
	A Group—2499—non-categorized and other basic metal manufacturing B Group—5232- ocean freight transportation forwarding services C Group—6499—non-categorized and other financial intermediaries D Group—1700—petroleum and coal product manufacturing E Group—6499—non-categorized and other financial intermediaries F Group—1850—artificial fiber G Group—6499—non-categorized and other financial intermediaries H Group—2641—liquid crystal panel and components manufacturing I Group—6499—non-categorized and other financial intermediaries J Group—2641—liquid crystal panel and components manufacturing	NT$ US$ (Note 2) $4,217,402 $142,673 2,973,840 100,604 2,639,001 89,276 2,479,719 83,888 2,418,693 81,823 2,014,731 68,157 1,860,285 62,933 1,736,418 58,742 1,716,021 58,052 1,690,020 57,173	16% 11% 10% 9% 9% 8% 7% 7% 6% 6%

Note a: The rankings above represent the top 10 corporate entities except for government or state-owned enterprises, based on the total balance of credit extension granted by the Bank. The amount of credit extensions should be disclosed in aggregate for each group entity, the code and industry of which are also required. The industry of the group entities is designated as the industry of the individual group entity with the greatest risk exposure. The lines of industry should conform to the industry sub-categorization of the Standard Industrial Classification System of the Republic of China published by the Directorate-General of Budget, Accounting and Statistics under the Executive Yuan.

F-80

Note b: “Group Entity” is defined in Article 6 of “Supplementary Provisions to the Taiwan Stock Exchange Corporation Rules for Review of Securities Listings.”

Note c: Credit extension balance includes various loans (import and export negotiations, discounted, overdrafts, unsecured and secured short-term loans, margin loans receivable, unsecured and secured medium-term loans, unsecured and secured long-term loans, and nonaccrual loans), bills purchased, factored accounts receivable without recourse, acceptances and guarantees.

c. Interest rate sensitivity

Table 1: For New Taiwan dollar items

Interest Rate Sensitivity Analysis December 31, 2010

	(In Thousands of New Taiwan Dollars, %)	(In Thousands of New Taiwan Dollars, %)	(In Thousands of New Taiwan Dollars, %)
			181 Days to Over
Items	1 to 90 Days	91 to 180 Days	One Year One Year	Total
Interest rate—sensitive assets . . . . . . . . . $225,402,024		$94,431,786	$ 2,150,829 $27,857,825 $349,842,464
Interest rate-sensitive liabilities . . . . . . .	155,414,581	98,616,368	60,981,203 10,037,116	325,049,268
Interest rate sensitivity gap . . . . . . . . . . .	69,987,443	(4,184,582)	(58,830,374) 17,820,709	24,793,196
Net worth . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . .	23,446,757
Ratio of interest rate-sensitive assets to liabilities . . . . .		. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . .	107.63%
Ratio of the interest-rate sensitivity gap to	net worth . .	. . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . .	105.74%

Interest Rate Sensitivity Analysis December 31, 2011

(In Thousands of New Taiwan Dollars, %)

Items 1 to 90 Days Interest rate—sensitive assets . . . . . . . . . $231,853,494 Interest rate—sensitive liabilities . . . . . . 150,954,515 Interest rate sensitivity gap . . . . . . . . . . . 80,898,979 Net worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ratio of interest rate—sensitive assets to liabilities . . . Ratio of the interest—rate sensitivity gap to net worth .	1 to 90 Days	91 to 180 Days	181 Days to One Year	Over One Year	Total $361,944,055 343,927,597 18,016,458 24,542,500 105.24% 73.41%
		$104,937,888 118,967,341 (14,029,453) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$ 696,476 $24,456,197 59,999,402 14,006,339 (59,302,926) 10,449,858 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest Rate Sensitivity Analysis December 31, 2012

(In Thousands of New Taiwan Dollars, %)

Items 1 to 90 Days Interest rate—sensitive assets . . . . . . . $253,480,225 Interest rate—sensitive liabilities . . . . 156,809,605 Interest rate sensitivity gap . . . . . . . . . 96,670,620 Net worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ratio of interest rate—sensitive assets to liabilities . . Ratio of the interest—rate sensitivity gap to net worth	1 to 90 Days	91 to 180 Days	181 Days to One Year Over One Year $ 5,506,331 $19,502,917 70,706,563 18,904,581 (65,200,232) 598,336 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Over One Year	Total $388,591,067 365,967,145 22,623,922 26,353,494 106.18% 85.85%
		$110,101,594 119,546,396 (9,444,802) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-81

Interest Rate Sensitivity Analysis December 31, 2012

(In Thousands of U.S. Dollars, %, Note 2) Items 1 to 90 Days 91 to 180 Days 181 Days to One Year Over One Year Interest rate—sensitive assets . . . . . . $8,575,109 $3,724,682 $ 186,276 $659,774 Interest rate—sensitive liabilities . . . 5,304,790 4,044,195 2,391,967 639,533 Interest rate sensitivity gap . . . . . . . . 3,270,319 (319,513) (2,205,691) 20,241 Net worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ratio of interest rate—sensitive assets to liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ratio of the interest—rate sensitivity gap to net worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	(In Thousands of U.S. Dollars, %, Note 2)	(In Thousands of U.S. Dollars, %, Note 2)	(In Thousands of U.S. Dollars, %, Note 2)	(In Thousands of U.S. Dollars, %, Note 2)	Total $13,145,841 12,380,485 765,356 891,526 106.18% 85.85%
		91 to 180 Days $3,724,682 4,044,195 (319,513) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	181 Days to One Year $ 186,276 2,391,967 (2,205,691) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Over One Year $659,774 639,533 20,241 . . . . . . . . . . . . . . . . . . . . . . . . . . .

Table 2: For U.S. dollar items

Interest Rate Sensitivity Analysis December 31, 2010

Items 1 to 90 Days Interest rate—sensitive assets . . . . . . . $1,146,240 Interest rate—sensitive liabilities . . . . 745,971 Interest rate sensitivity gap . . . . . . . . . 400,269 Net worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ratio of interest rate—sensitive assets to liabilities . . . . Ratio of the interest—rate sensitivity gap to net worth .		(In Thousands of U.S. Dollars, %)	(In Thousands of U.S. Dollars, %)	(In Thousands of U.S. Dollars, %)	Total $1,224,051 1,639,591 (415,540) 4,201 74.66% (9,891.45%)
		91 to 180 Days $ 72,931 456,529 (383,598) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	181 Days to One Year $ 1,303 437,091 (435,788) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Over One Year $3,577 — 3,577 . . . . . . . . . . . . . . . . . . . . . . . .

Interest Rate Sensitivity Analysis December 31, 2011

Items 1 to 90 Days Interest rate—sensitive assets . . . . . . . $1,256,664 Interest rate—sensitive liabilities . . . . 749,276 Interest rate sensitivity gap . . . . . . . . . 507,388 Net worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ratio of interest rate—sensitive assets to liabilities . . . . Ratio of the interest—rate sensitivity gap to net worth . .		(In Thousands of U.S. Dollars, %)	(In Thousands of U.S. Dollars, %)	(In Thousands of U.S. Dollars, %)	Total $1,381,067 1,450,384 (69,317) 4,837 95.22% (1,433.06%)
		91 to 180 Days $ 92,529 471,641 (379,112) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	181 Days to One Year $ 9,075 229,467 (220,392) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Over One Year $22,799 — 22,799 . . . . . . . . . . . . . . . . . . . . . . . .

F-82

Interest Rate Sensitivity Analysis December 31, 2012

Items Interest rate—sensitive assets . . . . . . . Interest rate—sensitive liabilities . . . . Interest rate sensitivity gap . . . . . . . . . Net worth . . . . . . . . . . . . . . . . . . . . . . . Ratio of interest rate-sensitive assets to liabilities . . . . . . . . . . . . . . . . . . . Ratio of the interest-rate sensitivity gap to net worth . . . . . . . . . . . . . . . .		(In Thousands of U.S. Dollars, %)	(In Thousands of U.S. Dollars, %)	(In Thousands of U.S. Dollars, %)	Total $1,241,670 1,680,275 (438,605) 12,894 73.90% (3,401.62%)
	1 to 90 Days $1,151,415 842,195 309,220	91 to 180 Days $ 73,165 576,977 (503,812)	181 Days to One Year $ 3,169 261,103 (257,934)	Over One Year $13,921 — 13,921

• Note a: Table 1 refers only to the New Taiwan dollar amounts held by the head office and domestic branches (i.e., excluding foreign currencies).

• Note b: Table 2 refers to the total U.S. dollar amounts held by the head office, domestic branches, OBU and overseas branches, excluding contingent assets and liabilities.

• Note c: Interest rate-sensitive assets and liabilities refer to interest-earning assets and interest-bearing liabilities that were affected by interest rate changes.

• Note d: Interest rate sensitivity gap = Interest rate-sensitive assets�Interest rate-sensitive liabilities.

• Note e: Ratio of interest rate-sensitive assets to liabilities = Interest rate-sensitive assets/Interest rate-sensitive liabilities.

• d. Profitability

Items Return on total assets Before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . After tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Return on equity Before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . After tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2010 0.77% 0.55% 14.00% 10.08% 25.25%	2011 0.59% 0.55% 10.63% 10.00% 27.39%	2012 0.65% 0.57% 11.42% 10.00% 26.59%

Note a: Return on total assets = Income before (after) income tax/Average total assets.

Note b: Return on equity = Income before (after) income tax/Average equity.

Note c: Net income ratio = Income after income tax/Total net revenues.

F-83

e. Maturity analysis of assets and liabilities

• 1) For New Taiwan dollar items

December 31, 2010

			(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
					Amount for Remaining Period to Maturity
	Total		1 to 30 Days		From 31 Days to 90 Days		From 91 Days to 180 Days		From 181 Days to One Year		Over One Year
Main capital inflow on maturity . . . Main capital outflow on maturity . . Gap . . . . . . . . . . . . . . . . . . . . . . . . . Main capital inflow on maturity . . . . Main capital outflow on maturity . . . Gap . . . . . . . . . . . . . . . . . . . . . . . . . . Main capital inflow on maturity . . . Main capital outflow on maturity . . Gap . . . . . . . . . . . . . . . . . . . . . . . . . Main capital inflow on maturity . . . . . Main capital outflow on maturity . . . . Gap . . . . . . . . . . . . . . . . . . . . . . . . . . .	$389,487,428 395,795,821 (6,308,393) Total $416,967,038 420,134,673 (3,167,635)		$114,290,286 $ 39,177,042 $ 27,438,622 $ 32,367,109 65,066,081 55,950,784 64,009,435 116,529,934 49,224,205 (16,773,742) (36,570,813) (84,162,825) December 31, 2011 (In Thousands of New Taiwan Dollars)								$176,214,369 94,239,587 81,974,782
			Amount for Remaining Period to Maturity 1 to 30 Days From 31 Days to 90 Days From 91 Days to 180 Days From 181 Days to One Year $94,487,890 $54,911,668 $ 31,082,913 $ 36,074,818 58,045,403 64,376,666 77,596,601 114,959,051 36,442,487 (9,464,998) (46,513,688) (78,884,233) December 31, 2012 (In Thousands of New Taiwan Dollars)		Amount for Remaining Period to Maturity
											Over One Year
											$200,409,749 105,156,952 95,252,797
	Total Amount for Remaining Period to Maturity 1 to 30 Days From 31 Days to 90 Days From 91 Days to 180 Days From 181 Days to One Year Over One Year $472,950,337 $141,398,187 $ 43,401,150 $ 29,079,834 $ 37,661,583 $221,409,583 479,803,703 86,260,569 88,694,541 72,943,294 109,832,711 122,072,588 (6,853,366) 55,137,618 (45,293,391) (43,863,460) (72,171,128) 99,336,995 December 31, 2012 (In Thousands of U.S. Dollars, Note 2) Total Amount for Remaining Period to Maturity 1 to 30 Days From 31 Days to 90 Days From 91 Days to 180 Days From 181 Days to One Year Over One Year . . $15,999,673 $4,783,430 $ 1,468,239 $ 983,756 $ 1,274,073 $7,490,175 . . 16,231,519 2,918,152 3,000,492 2,467,635 3,715,586 4,129,654 . . (231,846) 1,865,278 (1,532,253) (1,483,879) (2,441,513) 3,360,521				Amount for Remaining Period to Maturity
			1 to 30 Days $141,398,187 86,260,569 55,137,618 December		From 31 Days to 90 Days From 91 Days to 180 Days From 181 Days to One Year $ 43,401,150 $ 29,079,834 $ 37,661,583 88,694,541 72,943,294 109,832,711 (45,293,391) (43,863,460) (72,171,128) 31, 2012 (In Thousands of U.S. Dollars, Note 2)						Over One Year
											$221,409,583 122,072,588 99,336,995
		Total				Amount for Remaining Period				to Maturity
				1 to 30 Days $4,783,430 2,918,152 1,865,278		From 31 Days to 90 Days $ 1,468,239 3,000,492 (1,532,253)		From 91 Days to 180 Days $ 983,756 2,467,635 (1,483,879)		From 181 Days to One Year $ 1,274,073 3,715,586 (2,441,513)		Over One Year
												$7,490,175 4,129,654 3,360,521

Note: This table includes only the New Taiwan dollar amounts held by the head office and domestic branches.

2) For U.S. dollar items

December 31, 2010

Main capital inflow on maturity . . . . . . . . Main capital outflow on maturity . . . . . . . Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			(In Thousands of U.S. Dollars)	(In Thousands of U.S. Dollars)	(In Thousands of U.S. Dollars)
	Total $2,401,506 2,376,235 25,271	1 to 30 Days $ 874,660 998,603 (123,943)	Amount for Remaining Period to Maturity
			From 31 Days to 90 Days $473,557 384,184 89,373	From 91 Days to 180 Days $314,321 222,346 91,975	From 181 Days to One Year $ 376,126 664,519 (288,393)	Over One Year $362,842 106,583 256,259

F-84

December 31, 2011

(In Thousands of U.S. Dollars)

			(In Thousands of U.S. Dollars)	(In Thousands of U.S. Dollars)	(In Thousands of U.S. Dollars)
Main capital inflow on maturity . . . . . . . . Main capital outflow on maturity . . . . . . . Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Total $2,776,536 2,784,337 (7,801)		Amount for Remaining Period to Maturity
		1 to 30 Days $975,097 771,715 203,382	From 31 Days to 90 Days $566,879 554,010 12,869	From 91 Days to 180 Days $ 174,925 439,863 (264,938)	From 181 Days to One Year $ 480,132 717,083 (236,951)	Over One Year
						$579,503 301,666 277,837

December 31, 2012

Main capital inflow on maturity . . . . . . . . Main capital outflow on maturity . . . . . . . Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			(In Thousands of U.S. Dollars)	(In Thousands of U.S. Dollars)	(In Thousands of U.S. Dollars)
	Total $4,046,574 4,028,405 18,169		Amount for Remaining Period to Maturity
		1 to 30 Days $1,296,990 1,440,646 (143,656)	From 31 Days to 90 Days $974,256 778,882 195,374	From 91 Days to 180 Days $607,656 688,030 (80,374)	From 181 Days to One Year $ 391,131 653,831 (262,700)	Over One Year
						$776,541 467,016 309,525

Note: This table includes only the total U.S. dollar amounts held by the head office, domestic branches and OBU.

39. ACQUISITION OF ANOTHER FINANCIAL INSTITUTION’S ASSETS, LIABILITIES AND OPERATIONS

The Bank acquired some of the assets, liabilities and operations (mainly 19 domestic branches), classified as Package B of the Chinfon Bank, to expand the Bank’s branches and business and strengthen the Bank’s operations, market position and competitiveness. The Bank made this acquisition at a price of NT$19.103 billion through a bidding process on October 27, 2009, which was subsidized by the Resolution Trust Corporation (RTC) fund. This acquisition was approved by the shareholders’ interim meeting on January 19, 2010 and by the Financial Supervisory Commission on March 4, 2010. On April 3, 2010, the Bank took over the entire assets, liabilities and operations of Chinfon Bank’s Package B. In accordance with the provision for price adjustment in the contract between the Bank and the RTC, the actual subsidies that Bank received were NT$19,888,865 thousand.

Under the Statement of Financial Accounting Standards No. 25—“Business Combinations,” the Bank allocated the acquisition cost on the basis of the fair values of the related assets and liabilities; the allocated amounts were as follows:

Assets Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Due from other banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discounts and loans, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Properties, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deposits and remittances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bank debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subsidy payment by the Central Deposit Insurance Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . .	NT$
	$ 387,307 365,143 17,298 3,872,667 684,152 190,252 1,967,097
	7,483,916
	279,451 26,769,884 262,820 60,626
	27,372,781
	$19,888,865

F-85

40. SEGMENT INFORMATION

Information provided to the Bank and its subsidiaries’ chief operating decision makers for resource allocation and segment performance assessment focuses on nature of operation and profits. Based on Statement of Financial Reporting Standards No. 41—“Operating Segments,” the reportable segments were as follows:

• a. Individual banking: Mainly includes consumer banking loans such as mortgages, credit loans, car loans, installment, etc.; credit cards; individual deposits; and wealth management;

• b. Corporate banking: Mainly includes corporate-related business, foreign-currency business and financial market business;

• c. Others: Any business not included in individual and corporate banking.

The accounting policies of each operating segment are the same as those stated in Note 2 to the consolidated financial statements.

Income and operating results

The income and operating results of the reportable segments of the Bank and its subsidiaries were as follows:

Year ended December 31, 2010 Net interest income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Noninterest income and gains, net Net service fee income (loss) . . . . . . . . . . . . . . . . . . . . . Other net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reversal of provision (provision) for possible losses . . . . . . . Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment income (loss) before income tax . . . . . . . . . . . . . . .	Individual Banking	Corporate Banking (Including Overseas Branches)	Others
	NT$ $ 3,411,253 1,686,670 1,437,145	NT$ $1,674,787 238,272 1,347,436
	$ 2,619,000	$1,933,370

Year ended December 31, 2011 Net interest income (loss) . . . . . . . . . . . . . . . . . . . . . . . Noninterest income and gains, net Net service fee income . . . . . . . . . . . . . . . . . . . . . . Other net income (loss) . . . . . . . . . . . . . . . . . . . . . Net profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reversal of provision (provision) for possible losses . . Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment income (loss) before income tax . . . . . . . . . . .	Individual Banking NT$ $ 3,592,315 1,628,753 1,810,654 7,031,722 446,729 (4,154,527) $ 3,323,924	Corporate Banking (Including Overseas Branches) NT$ $ 1,532,439 237,150 1,326,451 3,096,040 (1,948,328) (913,011) $ 234,701	Others NT$ $(1,245,377) 6,009 (224,118) (1,463,486) 667,464 (238,988) $(1,035,010)	Total NT$ $ 3,879,377 1,871,912 2,912,987 8,664,276 (834,135) (5,306,526) $ 2,523,615

F-86

Year ended December 31, 2012 Net interest income (loss) . . . . . Noninterest income and gains, net Net service fee income . . . . Other net income (loss) . . . Net profit (loss) . . . . . . . . . . . . . Reversal of provision (provision) for possible losses . . . . . . . . . . . . . . . . . . . Operating expenses . . . . . . . . . . Segment income (loss) before income tax . . . . . . . . . . . . . . .	Individual Banking	Corporate Banking (Including Overseas Branches)	Others	Total
	NT$ US$ (Note 2) $ 3,632,863 $ 122,898 1,616,889 54,698 2,098,425 70,989 7,348,177 248,585 (809,479) (27,384) (4,399,174) (148,822) $ 2,139,524 $ 72,379	NT$ US$ (Note 2) $ 1,656,285 $ 56,031 229,000 7,747 1,888,162 63,876 3,773,447 127,654 (471,168) (15,939) (1,002,282) (33,907) $ 2,299,997 $ 77,808	NT$ US$ (Note 2) $(1,310,402) $(44,330) 151,692 5,132 (322,838) (10,922) (1,481,548) (50,120) 383,306 12,967 (413,583) (13,991) $(1,511,825) $(51,144)	NT$ US$ (Note 2) $3,978,746 $ 134,599 1,997,581 67,577 3,663,749 123,943 9,640,076 326,119 (897,341) (30,356) (5,815,039) (196,720) $2,927,696 $ 99,043

Segment assets information

The Bank and its subsidiaries’ measure of the assets and liabilities by segment is limited to the average amounts of deposits and loans. Thus, based on Interpretation 2010-151 issued by the Accounting Research and Development Foundation, segment assets information need not be disclosed.

Geographical information

The Bank and its subsidiaries did not disclose geographical information because the operating income generated from overseas branches was less than 10% of the operating income of the Bank and its subsidiaries.

41. INFORMATION ON FOREIGN-CURRENCY FINANCIAL ASSETS AND LIABILITIES

The significant financial assets and liabilities denominated in foreign currencies were as follows:

Financial assets Monetary item USD . . . . . . . . . . . . . . . . . . HKD . . . . . . . . . . . . . . . . . AUD . . . . . . . . . . . . . . . . . CNY . . . . . . . . . . . . . . . . . EUR . . . . . . . . . . . . . . . . . . JPY . . . . . . . . . . . . . . . . . . SGD . . . . . . . . . . . . . . . . . . CAD . . . . . . . . . . . . . . . . . Nonmonetary item USD . . . . . . . . . . . . . . . . . . Financial liabilities Monetary item USD . . . . . . . . . . . . . . . . . . HKD . . . . . . . . . . . . . . . . . CNY . . . . . . . . . . . . . . . . . AUD . . . . . . . . . . . . . . . . . JPY . . . . . . . . . . . . . . . . . . EUR . . . . . . . . . . . . . . . . . . SGD . . . . . . . . . . . . . . . . . . GBP . . . . . . . . . . . . . . . . . . NZD . . . . . . . . . . . . . . . . . CAD . . . . . . . . . . . . . . . . .		December 31
	2010	2011	2012
	Foreign Currencies Exchange Rate New Taiwan Dollars $1,243,554 29.50 $36,684,843 1,441,850 3.794 5,470,379 69,579 30.06 2,091,543 3,890 4.480 17,426 6,597 39.42 260,046 5,091,936 0.3627 1,846,845 657 23.00 15,100 162 29.53 4,796 1,731 31.51 54,539 1,671,447 29.50 49,307,688 1,349,425 3.794 5,119,720 — — — 36,246 30.06 1,089,554 1,434,280 0.3627 520,213 40,228 39.42 1,585,786 660 23.00 15,172 11,534 45.71 527,211 17,888 22.84 408,552 2,403 29.53 70,972	Foreign Currencies Exchange Rate New Taiwan Dollars $1,386,155 30.29 $41,986,632 1,477,083 3.899 5,759,147 61,625 30.75 1,894,955 282,881 4.812 1,361,223 20,954 39.20 821,408 2,745,405 0.3904 1,071,806 318 23.31 7,409 492 29.66 14,588 4,109 30.29 124,465 1,475,987 30.29 44,707,646 711,700 3.899 2,774,919 437,493 4.812 2,105,217 62,694 30.75 1,924,846 4,473,755 0.3904 1,746,554 40,225 39.20 1,576,810 28,188 23.31 657,067 8,872 46.74 414,673 14,786 23.41 346,135 4,445 29.66 131,842	Foreign Currencies Exchange Rate New Taiwan Dollars U.S. Dollars (Note 2) $1,267,880 29.136 $36,940,940 $1,249,694 2,153,765 3.759 8,096,003 273,884 42,597 30.27 1,289,420 43,620 226,826 4.678 1,061,095 35,896 16,212 38.61 625,936 21,175 1,583,772 0.3375 534,523 18,083 783 23.83 18,659 631 65 29.30 1,909 65 — — — — 1,721,852 29.136 50,167,884 1,697,154 679,135 3.759 2,552,870 86,362 477,941 4.678 2,235,810 75,636 67,537 30.27 2,044,353 69,159 5,527,286 0.3375 1,865,459 63,108 24,726 38.61 954,664 32,296 722 23.83 17,203 582 5,013 46.95 235,339 7,961 8,795 23.94 200,541 6,784 2,567 29.30 75,222 2,545

F-87

42. PRE-DISCLOSURE OF ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs)

Under Rule No. 0990004943 issued by the Financial Supervisory Commission (FSC) on February 2, 2010, the Bank prepared its pre-disclosure for the adoption of International Financial Reporting Standards (IFRSs) in the 2012 consolidated financial report as follows:

• a. On May 14, 2009, the FSC announced the “Framework for the Adoption of International Financial Reporting Standards by Companies in the ROC.” In this framework, starting 2013, companies with shares listed on the TSE or traded on the Taiwan GreTai Securities Market or Emerging Stock Market should prepare their financial statements in accordance with the Regulations Governing the Preparation of Financial Statements of Issuers of Securities and IFRSs. IFRSs as used herein include the International Financial Reporting Standards, International Accounting Standards (IAS), and International Financial Reporting Interpretations Committee (IFRIC) Interpretations translated by the Accounting Research and Development Foundation (ARDF) and issued by the FSC. To comply with this framework, the Bank has set up a project team and made a plan to adopt the IFRSs. The implementation of this plan is led by the IFRS project team. The main contents of the plan and schedule, and status of execution as of December 31, 2012 are as follows:

Contents of Plan and Schedule 1) Setting up a cross-functional project team 2) Setting up a plan for IFRSs adoption 3) Identifying differences between ROC GAAP and IFRSs 4) Identifying the consolidated entities 5) Evaluating the effect of applications and exemptions based on IFRS 1—“First-time Adoption of International Financial Reporting Standards” 6) Evaluating the adjustments that should be made on information systems 7) Evaluating the adjustments that should be made on internal controls 8) Selecting accounting policies based on IFRSs 9) Selecting applications and exemptions based on IFRS 1 10) Preparing an opening IFRS statement of financial position 11) Preparing the comparative financial statements for 2012 12) Modifying related internal control systems (including the financial reporting process and related information systems) and the operating manual	Responsible Department IFRS project team IFRS project team IFRS project team IFRS project team IFRS project team IFRS project team IFRS project team IFRS project team IFRS project team IFRS project team IFRS project team IFRS project team	Status of Execution
		Completed Completed Completed Completed Completed Completed Completed Completed Completed Completed Completed Completed

F-88

• b. The Bank and its subsidiaries have assessed that some significant differences exist between ROC GAAP and IFRSs, as follows:

• 1) Reconciliation of consolidated balance sheet as of January 1, 2012:

ROC GAAP		Effect of Transition to IFRSs	Effect of Transition to IFRSs		IFRSs Item Note Cash and cash equivalents 6) a) Due from the Central Bank and other banks Financial assets at fair value through profit or loss Derivative financial assets for hedging 6) 1) Securities purchased under resale agreements Receivables, net 6) b), 6) c) Discounts and loans, net Available-for-sale financial assets 6) b) Held-to-maturity financial assets Investments accounted for by the equity method 6) d) Debt investments with no active market Other financial assets 6) a), 6) l) Property and equipment, net Intangible assets Deferred income tax assets 6) c), 6) h), 6) l) Other assets 6) l) Total Due to the Central Bank and other banks Short-term loans Financial liabilities at fair value through profit or loss 6) b) Derivative financial liabilities for hedging 6) l) Payables 6) f), 6) g), 6) l) Income tax payable 6) l) Deposits and remittances Bank debentures Other financial liabilities 6) l) Provisions 6) h), 6) l) Other liabilities 6) f), 6) l) Total liabilities Capital stock Capital surplus 6) e) Retained earnings 6) k) Equity adjustments Exchange differences resulting from translating the financial statements of foreign operations Unrealized valuation gain on available-for- sales financial assets 6) b) Total shareholders’ equity Total
Item	Amount			Amount
Cash and cash equivalents Due from the Central Bank and other banks Financial assets at fair value through profit or loss Securities purchased under resale agreements Receivables, net Discounts and loans, net Available-for-sale financial assets Held-to-maturity financial assets Investments accounted for by the equity method Debt investments with no active market Other financial assets Properties Intangible assets Other assets Total Due to the Central Bank and other banks Short-term loans Financial liabilities at fair value through profit or loss Payables Deposits and remittances Bank debentures Other financial liabilities Other liabilities Total liabilities Capital stock Capital surplus Retained earnings Equity adjustments Cumulative translation adjustments Unrealized valuation gain on available-for-sale financial assets Total shareholders’ equity Total	NT$ $ 6,005,214 86,739,190 13,806,866 — 850,505 20,855,894 269,460,381 15,674,659 3,927,905 2,474,458 9,293,780 2,884,083 2,943,673 1,905,193 — 1,633,309		NT$ $ (2,900) — — 252,233 — 1,094,919 — (729,247) — (2,071) — (249,333) — — 1,098,026 (1,080,548) $ 381,079 $ — — 303,805 $ 13,093 (195,905) 124,723 — — (13,093) 690,680 (379,819) 543,484 — (9,302) (145,697) — (7,406) (162,405) $ 381,079	NT$ $ 6,002,314 86,739,190 13,806,866 252,233 850,505 21,950,813 269,460,381 14,945,412 3,927,905 2,472,387 9,293,780 2,634,750 2,943,673 1,905,193 1,098,026 552,761
	$438,455,110			$438,836,189
	$ 11,785,731 1,369,929 4,081,035 $ — 4,691,225 — 369,998,562 20,230,280 854,450 — 789,520			$ 11,785,731 1,369,929 4,384,840 $ 13,093 4,495,320 124,723 369,998,562 20,230,280 841,357 690,680 409,701
	413,800,732			414,344,216
	21,185,604 29,008 3,409,346 12,762 17,658			21,185,604 19,706 3,263,649 12,762 10,252
	24,654,378			24,491,973
	$438,455,110			$438,836,189

F-89

2) Reconciliation of consolidated balance sheet as of December 31, 2012:

ROC GAAP		Effect of Transition to IFRSs	Effect of Transition to IFRSs		IFRSs Item Note Cash and cash equivalents 6) a) Due from the Central Bank and other banks Financial assets at fair value through profit or loss Derivative financial assets for hedging 6) l) Securities purchased under resale agreements Receivables, net 6) c) Discounts and loans, net Available-for-sale financial assets Held-to-maturity financial assets Investments accounted for by the equity method 6) d) Debt investments with no active market Other financial assets 6) a), 6) l) Property and equipment, net Intangible assets Deferred income tax assets 6) c), 6) h), 6) l) Other assets 6) l) Total Due to the Central Bank and other banks Short-term loans Financial liabilities at fair value through profit or loss Derivative financial liabilities for hedging 6) l) Payables 6) f), 6) g), 6) l) Income tax payable 6) l) Deposits and remittances Bank debentures Other financial liabilities 6) l) Provisions 6) h), 6) l) Other liabilities 6) f), 6) l) Total liabilities Capital stock Capital surplus 6) e) Retained earnings 6) k) Equity adjustments Exchange differences resulting from translating the financial statements of foreign operations Unrealized valuation loss on available-for sales financial assets Total shareholders’ equity Total
Item	Amount			Amount NT$ $ 5,596,551 82,818,608 16,110,835 180,242 23,741,992 20,781,182 280,219,426 11,865,864 2,224,301 2,368,548 10,713,828 3,059,511 2,879,693 1,868,048 912,046 226,072 $465,566,747 $ 11,674,958 969,980 3,745,032 12,819 5,560,371 113,131 391,933,266 23,072,123 938,090 697,845 415,845 439,133,460 $ 22,422,596 22,348 4,153,012 9,131 (173,800) 26,433,287 $465,566,747
Cash and cash equivalents Due from the Central Bank and other banks Financial assets at fair value through profit or loss Securities purchased under resale agreements Receivables, net Discounts and loans, net Available-for-sale financial assets Held-to-maturity financial assets Investments accounted for by the equity method Debt investments with no active market Other financial assets Properties Intangible assets Other assets Total Due to the Central Bank and other banks Short-term loans Financial liabilities at fair value through profit or loss Payables Deposits and remittances Bank debentures Other financial liabilities Other liabilities Total liabilities Capital stock Capital surplus Retained earnings Equity adjustments Cumulative translation adjustments Unrealized valuation loss on available-for-sale financial assets Total shareholders’ equity Total	NT$ $ 5,599,451 82,818,608 16,110,835 — 23,741,992 20,726,506 280,219,426 11,865,864 2,224,301 2,372,398 10,713,828 3,236,853 2,879,693 1,868,048 — 1,120,509		NT$ $ (2,900) — — 180,242 — 54,676 — — — (3,850) — (177,342) — — 912,046 (894,437) $ 68,435 $ — — — 12,819 (147,806) 113,131 — — (12,819) 697,845 (426,677) 236,493 $ — (9,302) (158,756) — — (168,058) $ 68,435
	$465,498,312
	$ 11,674,958 969,980 3,745,032 — 5,708,177 — 391,933,266 23,072,123 950,909 — 842,522
	438,896,967

F-90

ROC GAAP		Effect of Transition to IFRSs		IFRSs Item Note Cash and cash equivalents 6) a) Due from the Central Bank and other banks Financial assets at fair value through profit or loss Derivative financial assets for hedging 6) l) Securities purchased under resale agreements Receivables, net 6) c) Discounts and loans, net Available-for-sale financial assets Held-to-maturity financial assets Investments accounted for by the equity method 6) d) Debt investments with no active market Other financial assets 6) a), 6) l) Property and equipment, net Intangible assets Deferred income tax assets 6) c), 6) h), 6) l) Other assets 6) l) Total Due to the Central Bank and other banks Short-term loans Financial liabilities at fair value through profit or loss Derivative financial liabilities for hedging 6) l) Payables 6) f), 6) g), 6) l) Income tax payable 6) l) Deposits and remittances Bank debentures Other financial liabilities 6) l) Provisions 6) h), 6) l) Other liabilities 6) f), 6) l) Total liabilities Capital stock Capital surplus 6) e) Retained earnings 6) k) Equity adjustments Exchange differences resulting from translating the financial statements of foreign operations Unrealized valuation loss on available-for sales financial assets Total shareholders’ equity Total
Item	Amount		Amount
Cash and cash equivalents Due from the Central Bank and other banks Financial assets at fair value through profit or loss Securities purchased under resale agreements Receivables, net Discounts and loans, net Available-for-sale financial assets Held-to-maturity financial assets Investments accounted for by the equity method Debt investments with no active market Other financial assets Properties Intangible assets Other assets Total Due to the Central Bank and other banks Short-term loans Financial liabilities at fair value through profit or loss Payables Deposits and remittances Bank debentures Other financial liabilities Other liabilities Total liabilities Capital stock Capital surplus Retained earnings Equity adjustments Cumulative translation adjustments Unrealized valuation loss on available-for-sale financial assets Total shareholders’ equity Total	US$ (Note 2) $ 189,427 2,801,712 545,022 — 803,180 701,167 9,479,683 401,416 75,247 80,257 362,443 109,501 97,419 63,195 — 37,906		US$ (Note 2) $ 189,329 2,801,712 545,022 6,097 803,180 703,017 9,479,683 401,416 75,247 80,127 362,443 103,502 97,419 63,195 30,853 7,648 $15,749,890 $ 394,958 32,814 126,693 434 188,105 3,827 13,258,906 780,518 31,735 23,608 14,067 14,855,665 758,545 756 140,495 309 (5,880) 894,225 $15,749,890
	$15,747,575
	$ 394,958 32,814 126,693 — 193,105 — 13,258,906 780,518 32,169 — 28,502
	14,847,665

F-91

• 3) Reconciliation of the statement of comprehensive income for the year ended December 31, 2012

ROC GAAP		Effect of Transition to IFRSs	Effect of Transition to IFRSs		IFRSs Item Note Interest income 6) c), 6) j), 6) l) Interest cost 6) i), 6) j) Net interest income Net service fee income 6) f) Net gain on financial assets and liabilities at fair value through profit or loss 6) j) Net gain on available-for- sale financial assets 6) b) Share of the loss of associates accounted for by the equity method 6) d) Foreign exchange gain Recovery of written-off credits 6) l) Others 6) c) Total noninterest income and gains, net Net profit Reversal of provision for possible losses and reserve for guarantee obligations 6) l) Employee benefits 6) g), 6) h), 6) i) Depreciation and amortization Others 6) f) Total operating expenses Income before income tax Income tax expense 6) c), 6) h) Consolidated net income Other comprehensive income Exchange differences resulting from translating the financial statements of foreign operations 6) l) Unrealized valuation losses on available-for-sale financial assets 6) l) Share of the other comprehensive loss of associates accounted for by the equity method 6) d), 6) l) Other comprehensive income for the period, net of tax effect Total comprehensive income for the period
Item	Amount			Amount NT$ $9,644,265 5,499,120 4,145,145 1,984,362 1,070,616 303,111 (89,375) 21,830 — 1,072,218 4,362,762 8,507,907 (257,746) 3,415,377 253,351 2,181,968 5,850,696 2,914,957 364,192 2,550,765 (3,631) (172,637) (11,866) (188,134) $2,362,631
Interest income Interest cost Net interest income Noninterest income and gains, net Net service fee income Net gain on financial assets and liabilities at fair value through profit or loss Net gain on available-for- sale financial assets Investment loss recognized by the equity method Foreign exchange gain Recovery of written-off credits Others Total noninterest income and gains, net Net profit Provision for possible losses Operating expenses Personnel expense Depreciation and amortization Others Total operating expenses Income before income tax Income tax expense Consolidated net income	NT$ $9,539,494 5,560,748		NT$ $ 104,771 (61,628) 166,399 (13,219) 43,346 (7,406) (1,328) — (1,274,721) (45,240) (1,298,568) (1,132,169) (1,155,087) 48,876 — (13,219) 35,657 (12,739) (131) $ (12,608)
	3,978,746

(Continued)

F-92

ROC GAAP		Effect of Transition to IFRSs		IFRSs Item Note Interest income 6) c), 6) j), 6) l) Interest cost 6) i), 6) j) Net interest income Net service fee income 6) f) Net gain on financial assets and liabilities at fair value through profit or loss 6) j) Net gain on available- for-sale financial assets 6) b) Share of the loss of associates accounted for by the equity method 6) d) Foreign exchange gain Recovery of written-off credits 6) l) Others 6) c) Total noninterest income and gains, net Net profit Reversal of provision for possible losses and reserve for guarantee obligations 6) l) Employee benefits 6) g), 6) h), 6) i) Depreciation and amortization Others 6) f) Total operating expenses Income before income tax Income tax expense 6) c), 6) h) Consolidated net income Other comprehensive income Exchange differences resulting from translating the financial statements of foreign operations 6) l) Unrealized valuation losses on available-for-sale financial assets 6) l) Share of the other comprehensive loss of associates accounted for by the equity method 6) d), 6) l) Other comprehensive income for the period, net of tax effect Total comprehensive income for the period
Item	Amount		Amount
Interest income Interest cost Net interest income Noninterest income and gains, net Net service fee income Net gain on financial assets and liabilities at fair value through profit or loss Net gain on available-for- sale financial assets Investment loss recognized by the equity method Foreign exchange gain Recovery of written-off credits Others Total noninterest income and gains, net Net profit Provision for possible losses Operating expenses Personnel expense Depreciation and amortization Others Total operating expenses Income before income tax Income tax expense Consolidated net income	US$ (Note 2) $322,716 188,117 134,599 67,577 34,752 10,505 (2,979) 739 43,123 37,803 191,520 326,119 30,356 $113,887 8,571 74,262 196,720 99,043 12,325 $ 86,718	US$ (Note 2) $ 3,544 (2,085) 5,629 (447) 1,466 (251) (45) — (43,123) (1,530) (43,930) (38,301) (39,076) $ 1,653 — (447) 1,206 (431) (4) $ (427)	US$ (Note 2) $326,260 186,032 140,228 67,130 36,218 10,254 (3,024) 739 — 36,273 147,590 287,818 (8,720) $115,540 8,571 73,815 197,926 98,612 12,321 86,291 (123) (5,840) (401) (6,364) $ 79,927

(Concluded)

F-93

• 4) Special reserve from cumulative translation adjustments and unrealized revaluation increments at the date of transition to IFRSs

Under Rule No. 1010012865 issued by the FSC on April 6, 2012, the total amount of cumulative translation adjustments and unrealized revaluation increments credited to retained earnings should be reclassified to special reserve. However, if the amount of the increase in retained earnings that resulted from all IFRSs adjustments is smaller than the amount of unrealized revaluation increment and gain on cumulative translation differences reset to retained earnings, only the amount of the increase in retained earnings that resulted from all IFRSs adjustments will be reclassified to special reserve. Upon the use, disposal or reclassification of the related asset, the special reserve is reversed to retained earnings on a proportionate basis.

The Bank and its subsidiaries did not have any unrealized revaluation increment and did not elect the exemption to reset cumulative translation difference; thus, they did not reclassify any amount to special reserve in the first time adoption of IFRSs.

• 5) The elected exemptions under IFRS 1

An entity applying IFRSs for the first time to its consolidated financial statements should follow IFRS 1—“First-time Adoption of International Financial Reporting Standards.” Under IFRS 1, the Bank and its subsidiaries should establish accounting policies in compliance with IFRSs and retrospectively apply those accounting policies to prepare an initial balance sheet as of January 1, 2012, the date of transition to IFRSs. IFRS 1 grants limited exemptions from these retrospectively applied policies in specified areas. The Bank and its subsidiaries elected the following exemptions:

Business combinations

The Bank and its subsidiaries elected not to apply IFRS 3—“Business Combination” retrospectively to past business combinations (i.e., those occurred before January 1, 2012). Thus, goodwill, other assets, liabilities and non-controlling interests related to past business combinations were recorded in accordance with previous GAAP.

This exemption also applies to past acquisitions of investments in associates by the consolidated entity.

Employee benefits

The Bank and its subsidiaries elected to recognize all cumulative actuarial gains and losses in retained earnings at the date of transition to IFRSs.

Compound financial instruments

The Bank and its subsidiaries elected not to separate the components of compound financial instruments retrospectively because the liability component was no longer outstanding at the date of transition to IFRSs.

The descriptions of the effects of aforementioned exemptions are shown in item 6) below.

F-94

6) The descriptions of material reconciliation items on IFRSs transition

The material differences between the Bank and its subsidiaries’ existing accounting policies and the accounting policies to be adopted under IFRSs are as follows:

a) Time deposits with a maturity of more than three months

Under ROC GAAP, cash and cash equivalents include cash on hand, demand deposits, checking deposits, time deposits and certificates of deposit which can be redeemed or sold immediately without any loss of principal. Under IFRSs, cash equivalents are investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. Therefore, only short-term investments that have a maturity of three months or less from the date of acquisition normally meet the definition of cash equivalents under IFRSs. Thus, time deposits with a maturity of more than three months are reclassified as other financial assets on IFRSs transition.

As of January 1, 2012 and December 31, 2012, the Bank and its subsidiaries reclassified the time deposits with a maturity of more than three months of NT$2,900 thousand (approximately US$98 thousand) to other financial assets.

b) Regular way transactions

Before applying IFRSs, the Bank applies settlement date accounting to government bonds and trade date accounting to the rest of its financial assets when recording financial asset transactions. Under IFRSs, trade date accounting or settlement date accounting should be applied consistently to all purchases and sales of financial assets that belong to the same category of financial assets. The Bank applies trade date accounting to all regular way purchase or sale of financial assets. As of January 1, 2012, accounts receivable increased by NT$1,033,052 thousand; available-for-sale financial assets decreased by NT$729,247 thousand; financial liabilities at fair value through profit or loss increased by NT$303,805 thousand; and equity adjustments decreased by NT$7,406 thousand. As of December 31, 2012, no adjustments should be made. In 2012, realized gain on available-for-sale financial assets decreased by NT$7,406 thousand (approximately US$251 thousand).

c) Acquired receivables

Under ROC GAAP, receivables acquired by an asset management company are accounted for by the cost recovery method. Income shall not be recognized to the extent that the amounts received exceed the carrying amount of the acquired receivables. Under IFRSs, acquired receivables are measured at amortized cost. Interest income is recognized using the effective interest method over the relevant period.

As of January 1, 2012 and December 31, 2012, accounts receivables increased by NT$61,867 thousand and NT$54,676 thousand (approximately US$1,850 thousand), respectively; and deferred income tax assets decreased by NT$10,517 thousand and NT$9,295 thousand (approximately US$314 thousand), respectively. In 2012, income tax expense and noninterest income and gains—others decreased by NT$1,222 thousand (approximately US$41 thousand) and NT$45,240 thousand (approximately US$1,530 thousand), respectively; and interest income increased by NT$38,049 thousand (approximately US$1,287 thousand).

F-95

d) Investments accounted for by the equity method

To comply with the requirements of IFRSs, the Bank and its subsidiaries’ associates accounted for by the equity method have also assessed the material differences between the existing accounting policies and the accounting policies to be adopted under IFRSs.

As of January 1, 2012 and December 31, 2012, investments accounted for by the equity method decreased by NT$2,071 thousand and NT$3,850 thousand (approximately US$130 thousand), respectively, to comply with the requirements of IFRSs. In 2012, share of the loss of associates accounted for by the equity method and share of the other comprehensive loss of associates accounted for by the equity method increased by NT$1,328 thousand (approximately US$45 thousand) and NT$451 thousand (approximately US$15 thousand), respectively.

e) Capital surplus arising from equity-method investments

Under ROC GAAP, when an investor subscribes for its investee’s newly issued shares at a percentage different from its percentage of ownership in the investee, the investor records the change in its equity in the investee’s net assets as an adjustment to investments, with a corresponding amount credited or charged to capital surplus. In compliance with the “Questions and Answers on IFRSs adoption” issued by the Taiwan Stock Exchange, the Bank reclassified aforementioned capital surplus to retained earnings. As a result, the capital surpluses all decreased by NT$9,302 thousand (approximately US$315 thousand) as of January 1, 2012 and December 31, 2012.

f) Customer loyalty programs

Under ROC GAAP, the liabilities arising from reward points are recognized when the reward points are granted. Under IFRIC 13—“Customers Loyalty Programs”, some of the consideration received is allocated to award credits. The consideration allocated to the award credits should be measured by reference to their fair value and recognized as income when the obligations to supply award is fulfilled.

As of January 1, 2012 and December 31, 2012, payables decreased by NT$106,517 thousand and NT$73,244 thousand (approximately US$2,478 thousand), respectively; other liabilities—deferred income increased by NT$106,517 thousand and NT$73,244 thousand (approximately US$2,478 thousand), respectively. In 2012, both other expenses and service fee income decreased by NT$13,219 thousand (approximately US$447 thousand).

g) Employee benefits—short-term accumulating compensated absences

ROC GAAP does not address the treatment of compensated absences. Companies usually recognize the cost when absences actually occur. Under IFRSs, such cost is recognized when employees render services that increase their entitlement to future compensated absences.

As of January 1, 2012 and December 31, 2012, accrued expenses increased by NT$35,335 thousand and NT$38,569 thousand (approximately US$1,305 thousand), respectively. In 2012, salary expense increased by NT$3,234 thousand (approximately US$109 thousand).

F-96

h) Employee benefits—actuarial gains and losses on the defined benefit plan

In compliance with IAS 19—“Employee Benefits” and IFRS 1—“First-time Adoption of International Financial Reporting Standards,” the Bank had revalued its defined benefit plan. As a result, accrued pension liabilities and deferred income tax assets increased by NT$212,468 thousand and NT$36,119 thousand, respectively, as of January 1, 2012. As of December 31, 2012, accrued pension liabilities and deferred income tax assets increased by NT$206,048 thousand (approximately US$6,971 thousand) and NT$35,028 thousand (approximately US$1,185 thousand), respectively. In 2012, pension cost decreased by NT$6,420 thousand (approximately US$217 thousand) and income tax expense increased by NT$1,091 thousand (approximately US$37 thousand).

i) Employee benefits—employees’ savings accounts with preferential interest rate

In compliance with IAS 19—“Employee Benefits” and “Regulations Governing the Preparation of Financial Reports by Public Banks,” the preferential interest rate costs in excess of the market interest rate costs is recognized as employee benefits expense.

For the year ended December 31, 2012, the Bank and its subsidiaries reclassified interest cost of NT$52,062 thousand (approximately US$1,761 thousand), the preferential interest rate in excess of the market interest rate, to employee benefit expense.

• j) Interest income and cost derived from financial instruments at fair value through profit and loss (FVTPL)

Under IFRSs, items in the statement of comprehensive income are classified on the basis of their nature; thus, interest income and cost derived from financial instruments at FVTPL should be reclassified as gain or loss on financial instruments at FVTPL.

In 2012, gain on financial assets and liabilities at fair value increased by NT$43,346 thousand (approximately US$1,466 thousand); and the corresponding interest income and interest cost decreased by NT$52,912 thousand (approximately US$1,790 thousand) and NT$9,566 thousand (approximately US$324 thousand), respectively.

• k) Reconciliation of retained earnings

The retained earnings under IFRSs as of January 1, 2012 decreased by NT$145,697 thousand compared with those under ROC GAAP, mainly resulted from (a) an increase of NT$7,406 thousand in regular way transactions; (b) an increase of NT$51,350 thousand in acquired receivables; (c) a decrease of NT$2,071 thousand in investments accounted for by the equity method; (d) an increase of NT$9,302 thousand in capital surplus arising from equity-method investments; (e) a decrease of NT$35,335 thousand in employee benefits—short-term accumulating compensated absences; and (f) a decrease of NT$176,349 thousand in employee benefits—actuarial gains and losses of the defined benefit plan.

l) Differences in presentation

In compliance with Regulations Governing the Preparation of Financial Reports by Public Banks, effective 2013, certain line items in the balance sheet and the statement of comprehensive income will be presented in accordance with IFRSs on or after the date of transitions to IFRS.

F-97

• c. The above assessments are prepared in accordance with (a) the 2010 version of IFRSs translated by the ARDF and endorsed by the FSC and (b) the Regulations Governing the Preparation of Financial Reports by Public Banks amended and issued by the FSC on December 26, 2011. These assessments may be changed as the FSC may issue new rules governing the adoption of IFRSs, and as other laws and regulations may be amended to comply with the requirements of IFRSs. Actual results may differ from these assessments.

43. ADDITIONAL DISCLOSURES

• a. Following are the additional disclosures required by the Securities and Futures Bureau for the Bank and its investees:

• 1) Financings provided: Nil

• 2) Endorsement/guarantee provided: Nil

• 3) Marketable securities held: Table 1 (attached)

• 4) Marketable securities acquired and disposed of at cost or prices at least NT$300 million or 10% of the paid-in capital: Nil

• 5) Acquisition of individual real estate at cost of at least NT$300 million or 10% of the paid-in capital: Nil

• 6) Disposal of individual real estate at prices of at least NT$300 million or 10% of the paid-in capital: Nil

• 7) Service charge discounts on transactions with related parties in aggregated amount of at least NT$5 million: Nil

• 8) Receivables from related parties amounting to at least NT$300 million or 10% of the paid-in capital: Nil

• 9) Sales of nonperforming loans: Nil

• 10) Related information of investees on which the Bank and its subsidiaries exercises significant influence: Table 2 (attached)

• 11) Derivative transactions: Notes 6 and 34

• 12) Intercompany relationships and significant intercompany transactions: Table 3 (attached)

• b. Investments in Mainland China

• 1) Names of the investees in Mainland China, main businesses and products, paid-in capital, method of investment, information on inflow or outflow of capital, percentage of ownership, investment income or loss, ending balance of investment, dividends remitted by the investee, and the limit of investment in Mainland China: Nil

• 2) Significant direct or indirect transactions with the investees, prices and terms of payment, unrealized gain or loss: Nil

F-98

TABLE 1

FAR EASTERN INTERNATIONAL BANK LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2012 (In Thousands of New Taiwan Dollars)

Holding Company Far Eastern Asset Management Co., Ltd. . .	Type and Issuer of Securities Held	Security Issuer’s Relationship with the Holding Company	Financial Statement Account	December 31, 2012	December 31, 2012	December 31, 2012	Market Value or Net Asset Value $796,544 (approximately US$ 26,947)	Note
				Shares/Units (In Thousands) Carrying Amount		Percentage of Ownership
	Common stock Yuan Long Stainless Steel Co., Ltd.	Equity-method investee	Investment accounted for by the equity method	98,000	$796,544 (approximately US$ 26,947)	49.00

TABLE 2

FAR EASTERN INTERNATIONAL BANK LTD. AND SUBSIDIARIES

RELATED INFORMATION OF INVESTEES DECEMBER 31, 2012

(In Thousands)

F-100	Investee Company Financial business Deutsche Far Eastern Asset Management Co., Ltd. . . Far Eastern Life Insurance Agency Co., Ltd. . . . . . . Far Eastern Property Insurance Agency Co., Ltd. . . . . . . . . . . . . . . . . . Dah Chung Bills Finance Corp. . . . . . . . . . . . . . . . . Far Eastern Asset Management Co., Ltd. . . Far Eastern International Securities Co., Ltd. . . . . . Far Eastern Insurance Brokerage Co., Ltd. . . . . Taipei Foreign Exchange Agency Co., Ltd. . . . . . . Sunshine Asset Management Co., Ltd. . . Financial Information Service Co., Ltd. . . . . . . . Nonfinancial business An Feng Enterprise Co., Ltd. . . . . . . . . . . . . . . . . . ERA Communications Co., Ltd. . . . . . . . . . . . . . . . . . Yuan Long Stainless Steel Co., Ltd . . . . . . . . . . . . . .	Location	Main Businesses and Products	Percentage of Ownership	Carrying Amount	Carrying Amount	Investment Income (Loss) Recognized	Investment Income (Loss) Recognized	The Proportionate Its Affiliat	The Proportionate Its Affiliat	Share of The Ba es in Investees	nk and Note al Percentage of Ownership
									Present Shares (In Thousands)	Pro Forma Shares	Tot
					NT$	US$ (Note 2)	NT$	US$ (Note 2)			Shares (In Thousands)
		7F, No. 207 Dun Hwa South Road, Sec. 2, Taipei, Taiwan 6F-3, No. 189 Yan Ping South Road, Taipei, Taiwan 6F-3, No. 189 Yan Ping South Road, Taipei, Taiwan 12F, No. 116 Nanking East Road, Sec. 2, Taipei, Taiwan 4F-1, No. 267 Dun Hwa South Road, Sec. 2, Taipei, Taiwan 51F, No. 7, Xinyi Road, Sec. 5, Taipei, Taiwan 51F, No. 7, Xinyi Road, Sec. 5, Taipei, Taiwan 8F., No. 400, Bade Road, Sec. 2, Taipei, Taiwan 15F., No. 218, Dun Hwa South Road, Sec. 2, Taipei, Taiwan No. 81, Kangning Road, Sec. 3, Taipei, Taiwan 3F., No. 139, Jhengjhou Road, Taipei, Taiwan 2F., No. 39, Rueihu Road, Taipei, Taiwan No. 28, Daye South Road, Kaohsiung, Taiwan	Securities investment trust funds Life insurance agent Property insurance agent Underwriting, dealing and brokering of short-term bills Purchase, evaluation, auction and management of creditor’s rights to financial institutions Foreign securities broker, wealth management and offshore fund consulting Insurance brokerage Foreign exchange, cross— currency swaps, etc. Management of creditor’s rights and rendering of commercial detective services Data processing service and electronic information supply ATM maintenance, replacement and repair Cable TV network offering news, variety shows, etc. Iron and steel rolls over extends and crowding, and secondary processing of steel products	40.00 100.00 100.00 22.06 100.00 100.00 100.00 0.40 3.46 1.14 10.00 1.76 49.00	$ 159,846 356,360 17,356 1,416,008 595,756 211,104 4,686 800 2,073 45,500 3,000 50,006 796,544	$ 5,407 12,055 587 47,903 20,154 7,142 159 27 70 1,539 101 1,692 26,947	$ (16,358) $(554) 292,067 9,880 10,220 346 72,190 2,442 (134,933) (4,565) (20,990) (710) 1,693 57 — — — — — — — — — — (143,879) (4,867)		12,000 3,000 350 95,524 120,000 20,000 900 80 207 5,119 300 2,238 200,000	— — — — — — — — — — — — —	12,000 3,000 350 95,524 120,000 20,000 900 80 207 5,119 300 2,238 200,000	40.00 100.00 100.00 22.07 100.00 100.00 100.00 0.40 3.46 1.14 10.00 1.76 49.00

TABLE 3-1

FAR EASTERN INTERNATIONAL BANK LTD. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS YEAR ENDED DECEMBER 31, 2010 (In Thousands of New Taiwan Dollars)

No. (Note a)	Company Name	Counterparty	Flow of Transaction	Transaction Details	Transaction Details	Transaction Details
				Financial Statement Account	Amount	Terms	Percentage of Consolidated Net Profit or Consolidated Total Assets (Notes b)
0 1 2 3	Far Eastern International Bank Ltd. Far Eastern Asset Management Co., Ltd. Far Eastern Life Insurance Agency Co., Ltd. Far Eastern Property Insurance Agency Co., Ltd.	Far Eastern Asset Management Co., Ltd. Far Eastern Life Insurance Agency Co., Ltd. Far Eastern Life Insurance Agency Co., Ltd. Far Eastern Life Insurance Agency Co., Ltd. Far Eastern Property Insurance Agency Co., Ltd. Far Eastern International Bank Ltd. Far Eastern International Bank Ltd. Far Eastern International Bank Ltd. Far Eastern International Bank Ltd. Far Eastern International Bank Ltd.	From parent company to subsidiary From parent company to subsidiary From parent company to subsidiary From parent company to subsidiary From parent company to subsidiary From subsidiary to parent company From subsidiary to parent company From subsidiary to parent company From subsidiary to parent company From subsidiary to parent company	Deposits and remittances Deposits and remittances Service fee income Interest cost Deposits and remittances Cash and cash equivalents Cash and cash equivalents Advertising expense Interest income Cash and cash equivalents	$ 16,835 276,894 39,909 1,250 16,954 16,835 276,894 39,909 1,250 16,954	Note c Note c Note c Note c Note c — — — — —	— 0.07 0.44 0.01 — — 0.07 0.44 0.01 —

Note a: Transacting parties are identified as follows: Number 0 - parent company; and number 1 and the following numbers - subsidiaries.

Note b: The ratio is calculated as follows: For asset and liability accounts = Transaction amount/Consolidated total assets; and for income and expenses = Transaction amount/Consolidated net profit.

Note c: The terms of intercompany transactions are not significantly different from those to third parties.

TABLE 3-2

FAR EASTERN INTERNATIONAL BANK LTD. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS YEAR ENDED DECEMBER 31, 2011 (In Thousands of New Taiwan Dollars)

No. (Note a) 0 1 2 3	Company Name Far Eastern International Bank Ltd. Far Eastern Asset Management Co., Ltd. Far Eastern Life Insurance Agency Co., Ltd. Far Eastern Property Insurance Agency Co., Ltd.	Counterparty Far Eastern Asset Management Co., Ltd. Far Eastern Life Insurance Agency Co., Ltd. Far Eastern Life Insurance Agency Co., Ltd. Far Eastern Life Insurance Agency Co., Ltd. Far Eastern Life Insurance Agency Co., Ltd. Far Eastern Property Insurance Agency Co., Ltd. Far Eastern International Bank Ltd. Far Eastern International Bank Ltd. Far Eastern International Bank Ltd. Far Eastern International Bank Ltd. Far Eastern International Bank Ltd. Far Eastern International Bank Ltd.	Flow of Transaction From parent company to subsidiary From parent company to subsidiary From parent company to subsidiary From parent company to subsidiary From parent company to subsidiary From parent company to subsidiary From subsidiary to parent company From subsidiary to parent company From subsidiary to parent company From subsidiary to parent company From subsidiary to parent company From subsidiary to parent company	Transaction Details	Transaction Details	Transaction Details
				Financial Statement Account Deposits and remittances Deposits and remittances Receivables Service fee income Interest cost Deposits and remittances Cash and cash equivalents Cash and cash equivalents Payables Advertising expense Interest income Cash and cash equivalents	Amount $ 32,861 327,440 4,592 65,657 3,191 14,780 32,861 327,440 4,592 65,657 3,191 14,780	Terms Note c Note c Note c Note c Note c Note c — — — — — —	Percentage of Consolidated Net Profit or Consolidated Total Assets (Notes b)
							0.01 0.07 — 0.75 0.04 — 0.01 0.07 — 0.75 0.04 —

Note a: Transacting parties are identified as follows: Number 0 - parent company; and number 1 and the following numbers - subsidiaries.

Note b: The ratio is calculated as follows: For asset and liability accounts = Transaction amount/Consolidated total assets; and for income and expenses = Transaction amount/Consolidated net profit.

Note c: The terms of intercompany transactions are not significantly different from those to third parties.

TABLE 3-3

FAR EASTERN INTERNATIONAL BANK LTD. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS YEAR ENDED DECEMBER 31, 2012

(In Thousands)

F-103	No. (Note a)	Company Name	Counterparty	Flow of Transaction	Financial Statement Account	Transaction Details	Transaction Details	Transaction Details	Percentage of Consolidated Net Profit or Consolidated Total Assets (Note b)
						Amount		Terms
						NT$	US$(Note 2)
	0 1 2 3	Far Eastern International Bank Ltd. Far Eastern Asset Management Co., Ltd. Far Eastern Life Insurance Agency Co., Ltd. Far Eastern Property Insurance Agency Co., Ltd.	Far Eastern Asset Management Co., Ltd. Far Eastern Life Insurance Agency Co., Ltd. Far Eastern Life Insurance Agency Co., Ltd. Far Eastern Life Insurance Agency Co., Ltd. Far Eastern Life Insurance Agency Co., Ltd. Far Eastern Property Insurance Agency Co., Ltd. Far Eastern Property Insurance Agency Co., Ltd. Far Eastern International Securities Co., Ltd. Far Eastern Insurance Brokerage Co., Ltd. Far Eastern International Bank Ltd. Far Eastern International Bank Ltd. Far Eastern International Bank Ltd. Far Eastern International Bank Ltd. Far Eastern International Bank Ltd. Far Eastern International Bank Ltd. Far Eastern International Bank Ltd.	From parent company to subsidiary From parent company to subsidiary From parent company to subsidiary From parent company to subsidiary From parent company to subsidiary From parent company to subsidiary From parent company to subsidiary From parent company to subsidiary From parent company to subsidiary From subsidiary to parent company From subsidiary to parent company From subsidiary to parent company From subsidiary to parent company From subsidiary to parent company From subsidiary to parent company From subsidiary to parent company	Deposits and remittances Deposits and remittances Receivables Service fee income Interest cost Deposits and remittances Service fee income Deposits and remittances Deposits and remittances Cash and cash equivalents Cash and cash equivalents Payables Advertising expense Interest income Cash and cash equivalents Advertising expense	$ 14,157 401,356 6,085 160,298 4,636 18,328 2,305 72,778 1,977 14,157 401,356 6,085 160,298 4,636 18,328 2,305	$ 479 13,578 206 5,423 157 620 78 2,462 67 479 13,578 206 5,423 157 620 78	Note c Note c Note c Note c Note c Note c Note c Note c Note c — — — — — — —	— 0.09 — 1.66 0.05 — 0.02 0.02 — — 0.09 — 1.66 0.05 — 0.02

(Continued)

No. (Note a)	Company Name	Counterparty	Flow of Transaction	Financial Statement Account	Transaction Details	Transaction Details	Transaction Details	Percentage of Consolidated Net Profit or Consolidated Total Assets (Note b)
					Amount		Terms
					NT$	US$(Note 2)
4 5	Far Eastern International Securities Co., Ltd. Far Eastern Insurance Brokerage Co., Ltd.	Far Eastern International Bank Ltd. Far Eastern International Bank Ltd.	From subsidiary to parent company From subsidiary to parent company	Cash and cash equivalents Cash and cash equivalents	$72,778 1,977	$2,462 67	— —	0.02 —

Note a: Transacting parties are identified as follows: Number 0 - parent company; and number 1 and the following numbers - subsidiaries.

Note b: The ratio is calculated as follows: For asset and liability accounts = Transaction amount/Consolidated total assets; and for income and expenses = Transaction amount/Consolidated net profit.

Note c: The terms of intercompany transactions are not significantly different from those to third parties.

(Concluded)

INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

The Board of Directors and Shareholders

Far Eastern International Bank Ltd.

We have reviewed the accompanying consolidated balance sheets of Far Eastern International Bank Ltd. (the “Bank”) and its subsidiaries as of January 1, 2012, September 30, 2012, December 31, 2012, and September 30, 2013 and the related consolidated statements of comprehensive income for the three months ended September 30, 2012 and 2013, nine months ended September 30, 2012 and 2013, and changes in equity and cash flows for the nine months ended September 30, 2012 and 2013. These consolidated financial statements are the responsibility of the Bank’s management. Our responsibility is to issue a report on these consolidated financial statements based on our reviews.

We conducted our reviews in accordance with Statement of Auditing Standards No. 36 “Review of Financial Statements” issued by the Auditing Standards Committee of the Accounting Research and Development Foundation of the Republic of China. A review consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the Republic of China, the objective of which is the expression of an opinion regarding the consolidated financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with the Regulations Governing the Preparation of Financial Reports by Public Banks, International Financial Reporting Standard 1 “First-time Adoption of International Financial Reporting Standards” and International Accounting Standard 34 “Interim Financial Reporting” endorsed by the Financial Supervisory Commission of the Republic of China.

Our reviews also comprehended the translation of New Taiwan dollar amounts into U.S. dollar amounts, and such translation has been made in conformity with the basis stated in Note 4. Such U.S. dollar amounts are presented solely for the convenience of readers.

Deloitte & Touche Taipei, Taiwan Republic of China

November 1, 2013

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financial statements are those generally accepted and applied in the Republic of China.

For the convenience of readers, the independent accountants’ review report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent accountants’ review report and consolidated financial statements shall prevail.

F-105

FAR EASTERN INTERNATIONAL BANK LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (In Thousands) (Reviewed, Not Audited)

ASSETS CASH AND CASH EQUIVALENTS (Note 6) . . . . . . DUE FROM THE CENTRAL BANK AND OTHER BANKS (Notes 7, 40 and 41) . . . . . . . . . . . FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 4, 5, 8, 40 and 46) . . . . . . . . . . . . . . . . . . . . . DERIVATIVE FINANCIAL ASSETS FOR HEDGING (Notes 4, 9, 24 and 46) . . . . . . . . . . . . . . SECURITIES PURCHASED UNDER RESALE AGREEMENTS (Notes 4, 10 and 40) . . . . . . . . . . . . . . . . . . . . . RECEIVABLES, NET (Notes 4, 5, 11, 12 and 46) . . . . . . . . . . . . . . . DISCOUNTS AND LOANS, NET (Notes 4, 5, 12, 40 and 46) . . . . . . AVAILABLE-FOR-SALE FINANCIAL ASSETS (Notes 4, 13, 29, 40, 41 and 46) . . . . . . . . . HELD-TO-MATURITY FINANCIAL ASSETS (Notes 4, 5, 14 and 46) . . . . . . . . . . . . . . . . INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD (Notes 4, 15 and 29) . . . . . . . . . . . . . . . . . . . . . DEBT INVESTMENTS WITH NO ACTIVE MARKET (Notes 4, 16 and 46) . . . . . . . . . . . . . . . . . . . . . OTHER FINANCIAL ASSETS, NET (Notes 4, 12, 17 and 46) . . . PROPERTY AND EQUIPMENT, NET (Notes 4 and 18) . . . . . . . . . INTANGIBLE ASSETS, NET (Notes 4, 5 and 19) . . . . . . . . . . . . DEFERRED TAX ASSETS (Notes 4 and 5) . . . . . . . . . . . . . . . OTHER ASSETS, NET (Notes 4 and 20) . . . . . . . . . . . . . . . . . . . . . TOTAL . . . . . . . . . . . . . . . . . . . . . .	January 1, 2012 NT$ $ 6,002,314 86,739,190 13,806,866 252,233 850,505 21,950,813 269,460,381 14,945,412 3,927,905 2,472,387 9,293,780 2,634,750 2,943,673 1,905,193 1,115,762 552,761 $438,853,925	September 30, 2012 NT$ $ 5,817,166 81,359,053 16,726,462 199,464 16,096,724 19,968,264 280,051,291 11,433,334 1,942,472 2,392,046 11,938,829 2,849,217 2,887,403 1,877,334 912,324 296,613 $456,747,996	December	31, 2012 US$ (Note 4) $ 189,329 2,801,712 545,022 6,097 803,180 703,017 9,479,683 401,416 75,247 80,127 362,443 103,502 97,419 63,195 31,413 7,648 $15,750,450	September 30, 2013	September 30, 2013
			NT$ $ 5,596,551 82,818,608 16,110,835 180,242 23,741,992 20,781,182 280,219,426 11,865,864 2,224,301 2,368,548 10,713,828 3,059,511 2,879,693 1,868,048 928,575 226,072 $465,583,276		NT$ $ 4,488,898 79,374,297 18,635,068 120,853 11,003,406 21,604,064 316,949,779 16,639,829 2,647,545 2,331,771 8,637,624 3,196,354 2,817,135 1,840,190 669,368 210,504 $491,166,685	US$ (Note 4) $ 151,857 2,685,193 630,415 4,088 372,240 730,855 10,722,252 562,917 89,566 78,883 292,206 108,131 95,302 62,253 22,644 7,121 $16,615,923

(Continued)

F-106

LIABILITIES AND EQUITY LIABILITIES Due to the Central Bank and other banks (Note 21) . . . . . Financial liabilities at fair value through profit or loss (Notes 4, 5, 8, 40 and 46) . . . Derivative financial liabilities for hedging (Notes 4, 9, 24 and 46) . . . . . . . . . . . . . . . . . Payables (Notes 22 and 27) . . . Current tax liabilities (Note 4) . . . . . . . . . . . . . . . . Deposits and remittances (Notes 23, 40 and 46) . . . . . . Bank debentures (Notes 4, 9, 24 and 26) . . . . . . . . . . . . . . Other financial liabilities (Notes 8, 13, 25, 40 and 46) . . . . . . . . . . . . . . . . . Provisions (Notes 4, 5, 12, 26 and 27) . . . . . . . . . . . . . . . . . Other liabilities (Note 28) . . . . Total liabilities . . . . . . . . . EQUITY ATTRIBUTABLE TO OWNERS OF THE BANK (Notes 4, 13, 15 and 29) Share capital . . . . . . . . . . . . . . . Capital surplus . . . . . . . . . . . . . Retained earnings Legal reserve . . . . . . . . . . Special reserve . . . . . . . . . Unappropriated earnings . . . . . . . . . . . . Total retained earnings . . . . . . . . Other equity Exchange differences on translating foreign operations . . . . . . . . . . . Unrealized gain (loss) on available-for-sale financial assets . . . . . . . Total other equity . . . Total equity . . . . . . . TOTAL . . . . . . . . . . . . . . . . . . . . . .	January 1, 2012 NT$ $ 11,785,731 4,384,840 13,093 4,495,320 124,723 369,998,562 20,230,280 2,211,286 690,680 427,437 414,361,952 21,185,604 19,706 1,030,702 4,554 2,228,393 3,263,649 12,762 10,252 23,014 24,491,973 $438,853,925	September 30, 2012 NT$ $ 15,327,277 4,874,929 10,521 6,103,555 40,292 377,866,960 23,094,543 2,007,647 691,225 442,122 430,459,071 22,422,596 22,348 1,742,672 4,554 2,110,989 3,858,215 11,482 (25,716) (14,234) 26,288,925 $456,747,996	December	31, 2012 US$ (Note 4) $ 394,958 126,693 434 188,105 3,827 13,258,906 780,518 64,549 23,608 14,627 14,856,225 758,545 756 58,954 154 81,387 140,495 309 (5,880) (5,571) 894,225 $15,750,450	September 30, 2013	September 30, 2013
			NT$ $ 11,674,958 3,745,032 12,819 5,560,371 113,131 391,933,266 23,072,123 1,908,070 697,845 432,374 439,149,989 22,422,596 22,348 1,742,672 4,554 2,405,786 4,153,012 9,131 (173,800) (164,669) 26,433,287 $465,583,276		NT$ $ 25,027,428 5,708,838 10,320 11,477,111 60,296 392,644,362 25,055,638 1,486,065 714,972 489,645 462,674,675 23,621,182 34,923 2,511,684 179,722 2,569,566 5,260,972 11,201 (436,268) (425,067) 28,492,010 $491,166,685	US$ (Note 4) $ 846,665 193,127 349 388,265 2,040 13,282,962 847,620 50,273 24,187 16,565 15,652,053 799,093 1,181 84,969 6,080 86,927 177,976 379 (14,759) (14,380) 963,870 $16,615,923

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche review report dated November 1, 2013)

(Concluded)

F-107

FAR EASTERN INTERNATIONAL BANK LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands, Except Earnings Per Share) (Reviewed, Not Audited)

INTEREST INCOME (Notes 4, 30 and 40) . . . . . . . . . . . . . . . . . . . . . . . . . INTEREST COST (Notes 30 and 40) . . . NET INTEREST INCOME . . . . . . . . . . . NONINTEREST INCOME AND GAINS, NET Net service fee income (Notes 4 and 31) . . . . . . . . . . . . . . . . . . . . . Net gain on financial assets and liabilities at fair value through profit or loss (Notes 4, 8, 9, 32, 40 and 46) . . . . . . . . . . . . . . . . . . . . . Net gain on available-for-sale financial assets (Notes 4, 29 and 33) . . . . . . . . . . . . . . . . . . . . . Net foreign exchange gain (loss) (Note 4) . . . . . . . . . . . . . . . . . . . . Net gain on reversal of provision for asset impairment loss (Notes 4, 16, 17 and 40) . . . . . . . . . . . . . . . . Share of profit (loss) of associates (Notes 4 and 15) . . . . . . . . . . . . . . Gain on nonperforming receivables acquired . . . . . . . . . . . . . . . . . . . . Others (Notes 16, 34 and 40) . . . . . . Total noninterest income and gains, net . . . . . . . . . . . . . . . NET PROFIT . . . . . . . . . . . . . . . . . . . . . . PROVISION (REVERSAL OF PROVISION) FOR POSSIBLE LOSSES AND GUARANTEE OBLIGATIONS RESERVE (Notes 4 and 12) . . . . . . . . . . . . . . . . . . . . . . . . . OPERATING EXPENSES Employee benefits expense (Notes 4, 27, 29 and 35) . . . . . . . . Depreciation and amortization (Notes 4 and 36) . . . . . . . . . . . . . . Other general and administrative expenses (Notes 37 and 40) . . . . . Total operating expenses . . . . .	Three Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $2,438,938 $2,919,374 $98,761 1,397,541 1,638,368 55,425 1,041,397 1,281,006 43,336 655,442 717,922 24,287 361,266 261,461 8,845 71,269 74,017 2,504 (34,287) 13,739 465 — — — (32,812) (3,349) (113) 60,470 60,202 2,036 9,987 19,945 675 1,091,335 1,143,937 38,699 2,132,732 2,424,943 82,035 (156,476) 3,153 107 857,656 852,587 28,842 63,816 57,735 1,953 532,001 519,033 17,559 1,453,473 1,429,355 48,354	Three Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $2,438,938 $2,919,374 $98,761 1,397,541 1,638,368 55,425 1,041,397 1,281,006 43,336 655,442 717,922 24,287 361,266 261,461 8,845 71,269 74,017 2,504 (34,287) 13,739 465 — — — (32,812) (3,349) (113) 60,470 60,202 2,036 9,987 19,945 675 1,091,335 1,143,937 38,699 2,132,732 2,424,943 82,035 (156,476) 3,153 107 857,656 852,587 28,842 63,816 57,735 1,953 532,001 519,033 17,559 1,453,473 1,429,355 48,354	Nine Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $7,145,378 $8,326,266 $281,673 4,071,982 4,663,513 157,764 3,073,396 3,662,753 123,909 1,912,168 2,131,446 72,106 785,078 866,851 29,325 207,391 79,066 2,675 (5,587) 98,884 3,345 56,247 780 26 (69,186) 27,554 932 188,491 186,568 6,312 114,649 49,448 1,673 3,189,251 3,440,597 116,394 6,262,647 7,103,350 240,303 (587,131) (320,523) (10,843) 2,543,469 2,603,074 88,061 191,824 174,179 5,892 1,586,537 1,539,685 52,087 4,321,830 4,316,938 146,040	Nine Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $7,145,378 $8,326,266 $281,673 4,071,982 4,663,513 157,764 3,073,396 3,662,753 123,909 1,912,168 2,131,446 72,106 785,078 866,851 29,325 207,391 79,066 2,675 (5,587) 98,884 3,345 56,247 780 26 (69,186) 27,554 932 188,491 186,568 6,312 114,649 49,448 1,673 3,189,251 3,440,597 116,394 6,262,647 7,103,350 240,303 (587,131) (320,523) (10,843) 2,543,469 2,603,074 88,061 191,824 174,179 5,892 1,586,537 1,539,685 52,087 4,321,830 4,316,938 146,040
	2012 NT$ $2,438,938 1,397,541 1,041,397 655,442 361,266 71,269 (34,287) — (32,812) 60,470 9,987 1,091,335 2,132,732 (156,476) 857,656 63,816 532,001 1,453,473		2012 NT$ $7,145,378 4,071,982 3,073,396 1,912,168 785,078 207,391 (5,587) 56,247 (69,186) 188,491 114,649 3,189,251 6,262,647 (587,131) 2,543,469 191,824 1,586,537 4,321,830
		NT$ $2,919,374 1,638,368 1,281,006 717,922 261,461 74,017 13,739 — (3,349) 60,202 19,945 1,143,937 2,424,943 3,153 852,587 57,735 519,033 1,429,355		NT$ $8,326,266 4,663,513 3,662,753 2,131,446 866,851 79,066 98,884 780 27,554 186,568 49,448 3,440,597 7,103,350 (320,523) 2,603,074 174,179 1,539,685 4,316,938

(Continued)

F-108

	Three Months Ended	Three Months Ended	Three Months Ended	Three Months Ended	Three Months Ended		Nine Months Ended	Nine Months Ended	Nine Months Ended	Nine Months Ended
		September 30					September 30
	2012		2013				2012	2013
	NT$		NT$		US$		NT$	NT$		US$
				(Note 4)					(Note 4)
INCOME BEFORE INCOME TAX . . . . $	835,735 $		992,435	$33,574		$2,527,948 $3,106,935			$105,106
INCOME TAX EXPENSE (Notes 4
and 38) . . . . . . . . . . . . . . . . . . . . . . . . .	129,947		119,269		4,035		272,431	379,189		12,828
NET INCOME FOR THE PERIOD . . . .	705,788		873,166	29,539		2,255,517		2,727,746		92,278
OTHER COMPREHENSIVE INCOME
Exchange differences on translating
foreign operations . . . . . . . . . . . . .	(3,980)		(2,218)		(75)		(1,280)	2,070		70
Unrealized gain (loss) on available-
for-sale financial assets . . . . . . . .	53,397		(203,449)		(6,883)		(27,411)	(247,381)		(8,369)
Share of other comprehensive loss
of associates . . . . . . . . . . . . . . . . .	(2,611)		(8,057)		(272)		(8,557)	(15,087)		(510)
Other comprehensive income
(loss) for the period . . . . . . .	46,806		(213,724)		(7,230)		(37,248)	(260,398)		(8,809)
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD . . . . . . . . . . . . . . . $	752,594 $		659,442	$22,309		$2,218,269 $2,467,348			$	83,469
NET INCOME ATTRIBUTABLE TO:
Owners of the Bank . . . . . . . . . . . . . $	705,788 $		873,166	$29,539		$2,255,517 $2,727,746			$	92,278
Non-controlling interests . . . . . . . . . $		— $	—	$	—	$	— $	—	$	—
TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO:
Owners of the Bank . . . . . . . . . . . . . $	752,594 $		659,442	$22,309		$2,218,269 $2,467,348			$	83,469
Non-controlling interests . . . . . . . . . $		— $	—	$	—	$	— $	—	$	—
	For the Three Months Ended						For the Nine Months		Ended
		September 30					September 30
	2012		2013				2012	2013
					US$					US$
	NT$		NT$	(Note 4)			NT$	NT$	(Note 4)
EARNINGS PER SHARE (Note 39)
Basic . . . . . . . . . . . . . . . . . . . . . . . . .	$0.30		$0.37	$0.01			$0.96	$1.16		$0.04
Diluted . . . . . . . . . . . . . . . . . . . . . . .	$0.30		$0.36	$0.01			$0.96	$1.07		$0.04

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche review report dated November 1, 2013)

(Concluded)

F-109

FAR EASTERN INTERNATIONAL BANK LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Thousands)

(Reviewed, Not Audited)

Equity Attributable to Owners of the Bank

BALANCE, JANUARY 1, 2012 . . . . . Appropriation of the 2011 earnings Legal reserve . . . . . . . . . . . . . . . . . Cash dividends—NT$ 0.250 per share . . . . . . . . . . . . . . . . . . Stock dividends—NT$ 0.534 per share . . . . . . . . . . . . . . . . . . Net income for the nine months ended September 30, 2012 . . . . . . . . . . . . . Other comprehensive loss for the nine months ended September 30, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . Total comprehensive income (loss) for the nine months ended September 30, 2012 . . . . . . . . . . . . . Employees’ bonus—stock . . . . . . . . . . BALANCE, SEPTEMBER 30, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . F-110	Share Capital (Note 29)	Capital Surplus (Note 29)	Capital Surplus (Note 29)	Retained Earnings	Retained Earnings	Retained Earnings	Retained Earnings	Other Equity	Other Equity	Other Equity	Other Equity	Total Equity $24,491,973 — (529,640) — (529,640) 2,255,517 (37,248) 2,218,269 108,323 $26,288,925
								Exchange Differences on Translating Foreign Operations (Note 4)		Unrealized Gain (Loss) on Available-for-sale Financial Assets (Notes 4, 13, 15 and 29)
				Legal Reserve	Special Reserve	Unappropriated Earnings
	$21,185,604 — — 1,131,311 1,131,311 — — — 105,681 $22,422,596		$19,706 — — — — — — — 2,642 $22,348	$1,030,702	$ 4,554		$ 2,228,393 (711,970) (529,640) (1,131,311) (2,372,921) 2,255,517 — 2,255,517 — $ 2,110,989		$12,762 — — — — — (1,280) (1,280) — $11,482		$ 10,252 — — — — — (35,968) (35,968) — $ (25,716)
				711,970 — —	— — —
				711,970	—
				— —	— —
				—	—
				—	—
				$1,742,672	$ 4,554

(Continued)

Equity Attributable to Owners of the Bank

BALANCE, JANUARY 1, 2013 . . . . . Share of special reserve of an associate . . . . . . . . . . . . . . . . . . . . . . Appropriation of the 2012 earnings Legal reserve . . . . . . . . . . . . . . . . . Special reserve . . . . . . . . . . . . . . . Cash dividends—NT$ 0.230 per share . . . . . . . . . . . . . . . . . . Stock dividends—NT$ 0.493 per share . . . . . . . . . . . . . . . . . . Net income for the nine months ended September 30, 2013 . . . . . . . . . . . . . Other comprehensive income (loss) for the nine months ended September 30, 2013 . . . . . . . . . . . . . Total comprehensive income (loss) for the nine months ended September 30, 2013 . . . . . . . . . . . . . Employees’ bonus—stock . . . . . . . . . . BALANCE, SEPTEMBER 30, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . BALANCE, SEPTEMBER 30, 2013 (IN U.S. DOLLARS) . . . . . . . . . . . . F-111	Share Capital (Note 29)	Capital Surplus (Note 29)	Capital Surplus (Note 29)	Retained Earnings	Retained Earnings	Retained Earnings	Retained Earnings	Other Equity	Other Equity	Other Equity	Other Equity	Total Equity $26,433,287 1,368 — — (515,720) — (515,720) 2,727,746 (260,398) 2,467,348 105,727 $28,492,010 $ 963,870
								Exchange Differences on Translating Foreign Operations (Note 4)		Unrealized Gain (Loss) on Available-for-sale Financial Assets (Notes 4, 13, 15 and 29)
				Legal Reserve	Special Reserve	Unappropriated Earnings
	$22,422,596 — — — — 1,105,434 1,105,434 — — — 93,152 $23,621,182 $ 799,093		$22,348 — — — — — — — — — 12,575 $34,923 $ 1,181	$1,742,672	$ 4,554		$ 2,405,786 — (769,012) (173,800) (515,720) (1,105,434) (2,563,966) 2,727,746 — 2,727,746 — $ 2,569,566 $ 86,927		$ 9,131 — — — — — — — 2,070 2,070 — $11,201 $ 379		$(173,800) — — — — — — — (262,468) (262,468) — $(436,268) $ (14,759)
				—	1,368
				769,012 — — —	— 173,800 — —
				769,012	173,800
				— —	— —
				—	—
				—	—
				$2,511,684	$179,722
				$ 84,969	$ 6,080

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche review report dated November 1, 2013)

(Concluded)

FAR EASTERN INTERNATIONAL BANK LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands)

(Reviewed, Not Audited)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustments for: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reversal of provision for possible losses and guarantee obligations reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . Net valuation loss (gain) on financial assets and liabilities at fair value through profit or loss . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividends income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shares of loss (profit) of associates . . . . . . . . . . . . . . . . Net loss on disposal of buildings and land held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net gain on reversal of provision for asset impairment loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recovery of written-off credits . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Changes in operating assets and liabilities . . . . . . . . . . . Increase in due from the Central Bank and other banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase in financial assets at fair value through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . Decrease (increase) in receivables . . . . . . . . . . . . . Increase in discounts and loans . . . . . . . . . . . . . . . Decrease (increase) in available-for-sale financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Decrease (increase) in held-to-maturity financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Decrease (increase) in debt investments with no active market . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase in due to the Central Bank and other banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase in financial liabilities at fair value through profit or loss . . . . . . . . . . . . . . . . . . . . . Increase in payables . . . . . . . . . . . . . . . . . . . . . . . . Increase in deposits and remittances . . . . . . . . . . . Interest received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividends received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash generated from (used in) operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Nine Months Ended September 30	Nine Months Ended September 30
	2012 NT$ $ 2,527,948 161,100 30,724 (587,131) (162,993) 4,071,982 (7,145,378) (70,846) 69,186 4,867 (56,247) 991,375 (24,123) (776,754) (2,749,229) 1,867,269 (10,863,943) 3,510,922 1,990,183 (2,587,742) 3,541,546 490,085 1,045,400 7,868,398 7,215,995 70,810 (3,869,580) (155,199) 6,408,625	2013
		NT$ US$ (Note 4) $ 3,106,935 $ 105,106 143,269 4,847 30,910 1,045 (320,523) (10,843) 1,090,357 36,886 4,663,513 157,764 (8,326,266) (281,673) (60,713) (2,054) (27,554) (932) — — (780) (26) 1,197,761 40,520 (21,163) (716) (1,568,349) (53,056) (3,606,547) (122,008) (1,068,518) (36,148) (37,468,829) (1,267,552) (5,008,275) (169,427) (430,881) (14,576) 2,076,984 70,263 13,352,470 451,707 1,533,443 51,876 5,891,820 199,317 711,096 24,056 8,335,681 281,992 58,763 1,988 (4,718,705) (159,631) (150,017) (5,075) (20,584,118) (696,350)

(Continued)

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CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of buildings and land held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition of property and equipment . . . . . . . . . . . . . . . . . Proceeds from disposal of property and equipment . . . . . . . . Increase in other financial assets . . . . . . . . . . . . . . . . . . . . . . Increase in other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase in an investment accounted for using equity method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividends received from associates . . . . . . . . . . . . . . . . . . . . Return of investment settlement measured at cost . . . . . . . . . Net cash used in investing activities . . . . . . . . . . . CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of Euro Convertible Bonds . . . . . . . Proceeds from issuance of bank debentures . . . . . . . . . . . . . Redemption of bank debentures . . . . . . . . . . . . . . . . . . . . . . . Decrease in other financial liabilities . . . . . . . . . . . . . . . . . . . Increase in other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash generated from financing activities . . . . . EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CASH AND CASH EQUIVALENTS, END OF THE PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Nine Months Ended September 30	Nine Months Ended September 30
	2012 NT$ $ 331,410 (105,399) 672 (385,439) (82,994) (55,652) 58,250 1,408 (237,744) — 3,000,000 (85,540) (203,639) 29,475 2,740,296 (6,997) 8,904,180 82,386,640 $ 91,290,820	2013
		NT$ US$ (Note 4) $ 18,140 $ 614 (80,300) (2,717) 66 2 (311,792) (10,548) (5,624) (190) — — 50,612 1,712 — — (328,898) (11,127) 4,481,250 151,598 — — (2,000,500) (67,676) (422,005) (14,276) 59,411 2,010 2,118,156 71,656 (64,039) (2,166) (18,858,899) (637,987) 100,225,182 3,390,568 $ 81,366,283 $ 2,752,581

(Concluded)

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FAR EASTERN INTERNATIONAL BANK LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Reviewed, Not Audited)

Reconciliation of the amounts in the consolidated statements of cash flows with the equivalent items reported in the consolidated balance sheets is as follows:

Cash and cash equivalents in consolidated balance sheets . . . . . . . . . Due from the Central Bank and other banks in compliance with IAS 7 definition of “cash and cash equivalents” . . . . . . . . . . . . . . . . . . . . . Securities purchased under resale agreements in compliance with IAS 7 definition of “cash and cash equivalents” . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents in consolidated statements of cash flows . . . . . . . . . . . . . . . . . . . . . . . . . .	January 1, 2012	January 1, 2012	September 30, 2012	September 30, 2012	December 31, 2012	September 30, 2013
		NT$ $ 6,002,314 75,533,821 850,505 $82,386,640		NT$ $ 5,817,166 69,376,930 16,096,724 $91,290,820	NT$ US$ (Note 4) $ 5,596,551 $ 189,329 70,886,639 2,398,059 23,741,992 803,180 $100,225,182 $3,390,568	NT$ US$ (Note 4) $ 4,488,898 $ 151,857 65,873,979 2,228,484 11,003,406 372,240 $81,366,283 $2,752,581

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche review report dated November 1, 2013)

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FAR EASTERN INTERNATIONAL BANK LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2013 (In Thousands, Unless Stated Otherwise) (Reviewed, Not Audited)

1. ORGANIZATION AND OPERATIONS

Far Eastern International Bank Ltd. (the “Bank”) obtained its license on January 11, 1992 and started its business on April 11, 1992. The Bank (a) accepts deposits and extends loans and guarantees; (b) issues letters of credit, handles domestic and foreign remittances, and accepts commercial drafts; (c) invests in securities and acts as an agent for trading government bonds, corporate bonds and bank debentures; and (d) conducts relevant businesses that are authorized by the relevant authorities.

The operations of the Bank’s Trust Department include pecuniary trust, securities trust, real estate trust, creditor’s right of money or guarantee, movable property trust and ground right trust and related operations. These operations are regulated under the Banking Act and Trust Enterprise Act.

As of September 30, 2013, the Bank’s operating units included the Business Department, International Banking Department, Trust Department, Credit Card Department, Offshore Banking Unit (OBU), and 54 domestic branches, as well as an overseas branch in Hong Kong.

The functional currency of the Bank and its subsidiaries is New Taiwan dollars.

The Bank’s shares are listed on the Taiwan Stock Exchange.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Board of Directors and authorized for issue on November 1, 2013.

3. APPLICATION OF NEW AND REVISED STANDARDS, AMENDMENTS AND INTERPRETATIONS

• a. New, amended and revised standards and interpretations in issue but not yet effective

As of the date that the consolidated financial statements were authorized for issue, the Bank and its subsidiaries have not applied the following International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) issued by the International Accounting Standards Board (IASB) because the Financial Supervisory Commission (the “FSC”) has not announced the effective dates for the following new, amended and revised standards and interpretations.

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New, Amended or Revised Standards and Interpretations

Effective Date Announced by IASB (Note)

Endorsed by the FSC but not yet
announced the effective dates
Amendments to IFRSs	Improvements to IFRSs (2009)—amendment	January 1, 2009 and
	to IAS 39	January 1, 2010, as
		appropriate
IFRS 9 (2009)	Financial Instruments	January 1, 2015
Amendment to IAS 39	Embedded Derivatives	Effective for annual
		periods ending on or after
		June 30, 2009
Not yet endorsed by the FSC
Amendments to IFRSs	Improvements to IFRSs (2010)—amendment	July 1, 2010 and
	to IAS 39	January 1, 2011, as
		appropriate
Amendments to IFRSs	Annual Improvements to IFRSs 2009-2011	January 1, 2013
	Cycle
Amendments to IFRS 1	Limited Exemption from Comparative IFRS 7	July 1, 2010
	Disclosures for First-time Adopters
Amendments to IFRS 1	Severe Hyperinflation and Removal of Fixed	July 1, 2011
	Dates for First-time Adopters
Amendments to IFRS 1	Government Loans	January 1, 2013
Amendments to IFRS 7	Disclosure—Offsetting Financial Assets and	January 1, 2013
	Financial Liabilities
Amendments to IFRS 9 and IFRS	Mandatory Effective Date of IFRS 9 and	January 1, 2015
7	Transition Disclosures
Amendments to IFRS 7	Disclosure—Transfer of Financial Assets	July 1, 2011
IFRS 9 (2010)	Financial Instruments	January 1, 2015
IFRS 10	Consolidated Financial Statements	January 1, 2013
IFRS 11	Joint Arrangements	January 1, 2013
IFRS 12	Disclosure of Interests in Other Entities	January 1, 2013
Amendments to IFRS 10, IFRS 11	Consolidated Financial Statements, Joint	January 1, 2013
and IFRS 12	Arrangements and Disclosure of Interests
	in Other Entities: Transition Guidance
Amendments to IFRS 10 and	Investment Entities	January 1, 2014
IFRS 12 and IAS 27
IFRS 13	Fair Value Measurement	January 1, 2013
Amendments to IAS 1	Presentation of Other Comprehensive Income	July 1, 2012
Amendments to IAS 12	Deferred Tax: Recovery of Underlying Assets	January 1, 2012
IAS 19 (Revised 2011)	Employee Benefits	January 1, 2013
IAS 27 (Revised 2011)	Separate Financial Statements	January 1, 2013
IAS 28 (Revised 2011)	Investments in Associates and Joint Ventures	January 1, 2013
Amendments to IAS 32	Offsetting Financial Assets and Financial	January 1, 2014
	Liabilities
Amendment to IAS 36	Impairment of Assets: Recoverable Amount	January 1, 2014
	Disclosures for Non-financial Assets
Amendment to IAS 39	Novation of Derivatives and Continuation of	January 1, 2014
	Hedge Accounting
IFRIC 20	Stripping Costs in Production Phase of a	January 1, 2013
	Surface Mine
IFRIC 21	Levies	January 1, 2014

Note: Unless stated otherwise, the above new, amended and revised standards and interpretations are effective for annual periods beginning on or after the respective effective dates.

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• b. Significant impending changes in accounting policy resulted from new, amended and revised standards and interpretations in issue but not yet effective

Except for the following, the initial application of the above new, amended and revised standards and interpretations have not had any material impact on the Bank and its subsidiaries’ accounting policies:

1) IFRS 9 “Financial Instruments”

With regards to financial assets, all recognized financial assets that are within the scope of IAS 39 “Financial Instruments: Recognition and Measurement” to be subsequently measured at amortized cost or fair value. Specifically, financial assets that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortized cost at the end of subsequent accounting periods. All other financial assets are measured at their fair values at the balance sheet date.

As for financial liabilities, the main changes in the measurement relate to the subsequent measurement of financial liabilities designated as at fair value through profit or loss. The amount of change in the fair value of such financial liability attributable to changes in the credit risk of that liability, is presented in other comprehensive income and the remaining amount of change in the fair value of that liability is presented in profit or loss, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit or loss. If the above accounting treatment would create or enlarge an accounting mismatch in profit or loss, the Bank and its subsidiaries present all gains or losses on that liability in profit or loss.

2) IFRS 13 “Fair Value Measurement”

IFRS 13 establishes a single source of guidance for fair value measurements. It defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. The disclosure requirements in IFRS 13 are more extensive than those required in the current standards. For example, the disclosure based on the three-level fair value hierarchy currently required for financial instruments only will be extended by IFRS 13 to cover all assets and liabilities within its scope.

3) Amendments to IAS 1 “Presentation of Items of Other Comprehensive Income”

The amendments to IAS 1 require items of other comprehensive income to be grouped into those that (1) will not be reclassified subsequently to profit or loss; and (2) will be reclassified subsequently to profit or loss when specific conditions are met. Income taxes on related items of other comprehensive income are grouped on the same basis. Previously, there were no such requirements.

• 4) Revision to IAS 19 “Employee Benefits”

The amendments eliminate the “corridor approach” permitted under the previous version of IAS 19 and accelerate the recognition of past service costs.

• 5) Amendments to IAS 36 “Impairment of Assets”

The IASB made some amendments to the disclosure requirements of recoverable amount for non-financial assets in IAS 36 “Impairment of Assets”, introducing a requirement to disclose

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in every reporting period the recoverable amount of an asset or each cash-generating unit. The amendment clarifies that the disclosure of such recoverable amount is required during the period when an impairment loss has been recognized or reversed. Furthermore, the discount rate used in current and previous measurements of the recoverable amount based on fair value less costs of disposal measured by a present value technique are required to disclose.

• c. Material impact on consolidated financial statements resulted from new and revised standards, amendments and interpretations in issue but not yet effective

As of the date that the consolidated financial statements were authorized for issue, the Bank and its subsidiaries are in the process of estimating the impact of the initial application of the standards, amendments and interpretations on its financial position and financial performance. Disclosures will be provided when the Bank completes the evaluation.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

On May 14, 2009, the FSC announced the “Framework for the Adoption of IFRSs by Companies in the ROC.” In this framework, starting 2013, companies with shares listed on the Taiwan Stock Exchange or traded on the Taiwan GreTai Securities Market or Emerging Stock Market, and financial institutions under the supervision of FSC should prepare their consolidated financial statements in accordance with IFRS, IAS, IFRIC, and SIC as well as related guidance endorsed by the FSC with the effective dates (collectively referred to as “Taiwan-IFRSs”). The date of transition to Taiwan-IFRSs is January 1, 2012, for the Bank and its subsidiaries, and effects of Taiwan-IFRSs transition are disclosed in Note 50.

The accompanying consolidated financial statements were originally presented in Chinese financial reports. For convenience of readers, the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language consolidated financial statements shall prevail.

The accompanying consolidated financial statements are stated in New Taiwan dollars. The New Taiwan dollar amounts have been translated into U.S. dollars amounts solely for the convenience of the readers, using the noon buying rate of NT$29.56 to US$1.00 published by the Federal Reserve Bank of New York on September 30, 2013. The convenience translation should not be construed as a representation that the New Taiwan dollar amounts have been, could have been or could in the future be, converted into U.S. dollars at this or any other rate of exchange.

• a. Statement of compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Public Banks, IFRS 1 “First-time Adoption of International Financial Reporting Standards” and IAS 34 “Interim Financial Reporting” as endorsed by the FSC. According to the regulation mentioned above, disclosure information included in interim financial reports is less than disclosures required in a full set of annual financial reports.

• b. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair values, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

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The opening consolidated balance sheet as of the date of transition to Taiwan-IFRSs was prepared in accordance with IFRS 1 “First-time Adoption of International Financial Reporting Standards”. The applicable Taiwan-IFRSs have been applied retrospectively by the Bank and its subsidiaries except for some aspects where other Taiwan-IFRSs prohibit retrospective application and specified areas where IFRS 1 grants limited exemptions from the requirements of other Taiwan-IFRSs. For the exemptions that the Bank and its subsidiaries elected, refer to Note 50. The significant accounting policies are set out as below.

c. Classification of current and noncurrent assets and liabilities

Accounts included in the consolidated balance sheets are not classified as current or noncurrent since the major components of the consolidated financial statements are from the banking sector, whose operating cycle cannot be reasonably identified. Nevertheless, accounts are properly categorized in accordance with their nature and sequenced by their liquidity. Please refer to Note 47 for the maturity analysis of assets and liabilities.

• d. Basis of consolidation

• 1) Principles of preparing consolidated financial statements

The consolidated financial statements incorporate the financial statements of the Bank and its subsidiaries.

Intercompany transactions, balances, income and expenses between the Bank and its subsidiaries have been eliminated upon consolidation.

• 2) Subsidiaries included in consolidated financial statements

The consolidated entities were as follows:

Investor Company The Bank Far Eastern International Securities Co., Ltd.	Investee Company Far Eastern Asset Management Co., Ltd. (“FEAMC”) Far Eastern Life Insurance Agency Co., Ltd. (“FELIA”) Far Eastern Property Insurance Agency Co., Ltd. (“FEPIA”) Far Eastern International Securities Co., Ltd. (“FEIS”) Far Eastern Insurance Brokerage Co., Ltd. (“FEI Brokerage”)	Nature of Businesses Purchase, evaluation, auction and management of rights of financial institution creditors Insurance agent Insurance agent Foreign securities broker, wealth management and offshore fund consulting Insurance brokers		% of Ownership	% of Ownership
			January 1, 2012 100 100 100 100 100	September 30, 2012 100 100 100 100 100	December 31, 2012 100 100 100 100 100	September 30, 2013
						100 100 100 100 100

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The financial statements of subsidiaries included in the consolidated financial statements as of and for the period ended September 30, 2012 and 2013 are not reviewed by independent accountants. The Bank’s management believes the investment in such subsidiaries has no material effect on the Bank’s consolidated financial statements.

• e. Acquisition of another financial institution’s business

Acquisitions of another financial institution are accounted for using the purchase method if acquisitions comply with business combination. The consideration transferred in acquisitions of another financial institution is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Bank, liabilities incurred by the Bank to the former owners of the acquiree and the equity interests issued by the Bank in exchange for control of the acquiree.

• f. Foreign currency

Foreign-currency assets and liabilities are recorded in a currency other than the New Taiwan dollars, the Bank’s functional or local currency. Foreign-currency items in income statements of domestic operating units are translated into New Taiwan dollars at prevailing exchange rates at the dates of the transactions. For overseas branches (including the OBU), income or losses from transactions settled in nonlocal currencies are translated into the local currency at exchange rates prevailing in the local exchange market at the dates of the transactions.

At the balance sheet date, foreign-currency monetary assets and liabilities are translated at prevailing exchange rates, and the exchange differences are recognized as gain or loss.

At the balance sheet date, foreign-currency nonmonetary assets and liabilities (such as equity instruments) that are measured at fair value are translated at prevailing exchange rates, with the exchange differences treated as follows:

• 1) Recognized in comprehensive income if the changes in fair value are recognized in comprehensive income;

• 2) Recognized as gain or loss if the changes in fair value are recognized in gain or loss.

Foreign-currency nonmonetary assets and liabilities that are measured at cost continue to be stated at the exchange rates of the trade dates.

When foreign-currency assets and liabilities are settled, exchange differences arising from the application of different exchange rates are recognized as gain or loss for the current year.

The financial statements of foreign branches (including the OBU) are translated into New Taiwan dollars at the following exchange rates:

• 1) Assets and liabilities—at exchange rates prevailing on the balance sheet date;

• 2) The beginning balance of current year’s earnings not yet remitted to the head office—the same as the ending balance of the prior years’ earnings; and

• 3) Income and expenses—at average exchange rates for the period.

Exchange differences arising from the translation of the financial statements of foreign branches are recognized as exchange differences on translating foreign operations.

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g. Investment in associates

An associate is an entity over which the Bank and its subsidiaries has significant influence and that is not a subsidiary. Significant influence is the power to participate in the financial and operating policy decisions of the investee without having control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting. An investment in an associate is initially recognized at cost and adjusted thereafter to recognize the Bank and its subsidiaries’ share of the profit or loss and other comprehensive income of the associate. The Bank and its subsidiaries also recognize the changes in the Bank and its subsidiaries’ share of equity of associates.

h. Property and equipment

Property and equipment are tangible items that are held for supply of services, for rental to others, or for administrative purposes, and are expected to be used during more than one period. Property and equipment are stated at cost, less subsequent accumulated depreciation and subsequent accumulated impairment loss when it is probable that future economic benefits associated with the item will flow to the Bank and its subsidiaries and the cost of the item can be measured reliably.

Depreciation is recognized so as to write off the cost of assets less their residual values over their estimated useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each year, with the effect of any changes in estimate accounted for on a prospective basis in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”.

An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

i. Intangible assets

Intangible assets acquired in a business combination are initially recognized at their fair value at the acquisition date. Subsequent to initial recognition, intangible assets are reported at cost less accumulated amortization and accumulated impairment loss.

j. Buildings and land held for sale

Buildings and land held for sale are carried at cost, and their recoverable amount is assessed at the end of each reporting period. If the recoverable amount is estimated to be less than its carrying amount, an impairment loss is recognized immediately in profit or loss. A reversal of an impairment loss is recognized in profit or loss when an impairment loss subsequently is reduced.

k. Impairment of tangible and intangible assets other than goodwill

At the end of each reporting period, the Bank and its subsidiaries review the carrying amounts of their tangible and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Bank and its subsidiaries estimate the recoverable amount of the cash-generating unit to which the asset

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belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to the individual cash-generating units; otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount.

When the recoverable amount increases in a subsequent period, the reversal of an impairment loss is recognized immediately in profit or loss. The carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years.

l. Securities Purchased/Sold Under Resale/Repurchase Agreements

Securities purchased under resale agreements and securities sold under repurchase agreements are generally treated as collateralized financing transactions.

m. Financial instruments

Financial assets and financial liabilities are recognized when the Bank becomes a party to the contractual provisions of the instruments. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place.

Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately as expense.

Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

• 1) Measurement category

Financial assets are classified into the following specified categories: Financial assets at fair value through profit or loss, held-to-maturity investments, available-for-sale financial assets and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

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• a) Financial assets at fair value through profit or loss

Financial assets are classified as at fair value through profit or loss when the financial asset is either held for trading or it is designated as at fair value through profit or loss. A financial asset is classified as held for trading if:

• It has been acquired principally for the purpose of selling it in the near term; or

• On initial recognition it is part of a portfolio of identified financial instruments that the Bank and its subsidiaries manage together and has a recent actual pattern of shortterm profit-taking; or

• It is a derivative that is not financial guarantee contract or designated and effective as a hedging instrument.

A financial asset other than a financial asset held for trading may be designated as at fair value through profit or loss upon initial recognition when doing so results in more relevant information and if:

• Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

• The financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Bank and its subsidiaries’ documented risk management or investment strategy, and information about the grouping is provided internally on that basis.

In addition, if a contract contains one or more embedded derivatives, the entire combined contract (asset or liability) can be designated as at fair value through profit or loss.

Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss, including any dividend or interest earned on the financial asset. Fair value is determined in the manner described in Note 46.

• b) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Bank and its subsidiaries have the positive intent and ability to hold to maturity other than those are designated as at fair value through profit or loss, or as available for sale, or meet the definition of loans and receivables upon initial recognition.

Subsequent to initial recognition, held-to-maturity investments are measured at amortized cost using the effective interest method less any impairment.

c) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated as available-for-sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss. Fair value is determined in the manner described in Note 46.

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Interest income of available-for-sale bond investments calculated using the effective interest method and dividends on available-for-sale equity investments are recognized in profit or loss. Other changes in the carrying amount of available-for-sale financial assets are recognized in other comprehensive income. When the investment is disposed of or is determined to be impaired, the cumulative gain or loss that was previously accumulated in other comprehensive income is reclassified to profit or loss.

Dividends on available-for-sale equity instruments are recognized in profit or loss when the Bank’s right to receive the dividends is established.

Available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity investments are measured at cost less any identified impairment loss and are recognized in a separate line item as Financial assets measured at cost. If, in a subsequent period, the fair value of the financial assets can be reliably measured, the financial assets are remeasured at fair value. The difference between carrying amount and fair value is recognized in profit or loss or other comprehensive income on financial assets.

d) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables (including cash and cash equivalents, receivables, discounts and loans, nonaccrual loans other than discounts and loans, and debt investments with no active market) are measured at amortized cost using the effective interest method, less any impairment.

2) Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For all financial assets, objective evidence of impairment could include:

• Significant financial difficulty of the issuer or counterparty; or

• Breach of contract, such as a default or delinquency in interest or principal payments; or

• It is becoming probable that the borrower will enter bankruptcy or financial reorganization; or

• Disappearance of an active market for that financial asset because of financial difficulties.

a) Financial assets carried at amortized cost

For discounts and loans and receivables, assets are assessed for impairment on a collective basis even if they were assessed as not impaired individually. Objective evidence of impairment for a portfolio of loans and receivables could include the Bank’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio, as well as observable changes in national or local economic conditions that correlate with default on loans and receivables.

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For financial assets carried at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate. If the amount of the impairment loss decreases in a subsequent period and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

b) Available-for-sale financial assets

For available-for-sale equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income are reclassified to profit or loss in the period.

In respect of available-for-sale equity securities, impairment loss previously recognized in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income. In respect of available-for-sale debt securities, impairment loss are subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

c) Financial assets measured at cost

For financial assets that are measured at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of discounts and loans, receivables and nonaccrual loans other than discounts and loans, where the carrying amount is reduced through an allowance account.

The Bank evaluates possible losses on specific loans on the basis of the borrowers’ financial situation, their ability to repay principals and interests, and the values of collaterals in accordance with “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/Nonaccrual Loans” (the “Regulations”). The Regulations require that loans should be categorized by collectability and specify the minimum allowance for possible losses and reserve for guarantee obligations using prescribed percentages.

When a loan or receivable is considered uncollectible, it may be written off on the approval of the Bank’s Board of Directors or Managing Directors. The subsequent collections of writtenoff loans are credited against provision for possible losses.

3) Derecognition of financial assets

The Bank and its subsidiaries derecognize a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers substantially all the risks and rewards of ownership of the financial asset to another party.

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On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss.

Equity instruments

Debt and equity instruments issued by the Bank are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments are recognized at the proceeds received, net of transaction costs.

Financial liabilities

• 1) Subsequent measurement

Except the following situation, all the financial liabilities are measured at amortized cost using the effective interest method:

• a) Financial liabilities at fair value through profit or loss

Financial liabilities are classified as at fair value through profit or loss when the financial liability is held for trading. A financial liability is classified as held for trading if:

• It has been acquired principally for the purpose of repurchasing it in the near term; or

• On initial recognition it is part of a portfolio of identified financial instruments which is managed as a whole and has a recent actual pattern of short-term profit-taking; or

• It is a derivative that is not financial guarantee contract or designated and effective as a hedging instrument.

Financial liabilities at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividend or interest paid on the financial liability. Fair value is determined in the manner described in Note 46.

b) Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.

Financial guarantee contracts if not designated as at fair value through profit or loss, are measured at the higher of the amount of the obligation under the contract and the amount initially recognized less cumulative amortization recognized.

• 2) Derecognition of financial liabilities

Financial liabilities are derecognized when, and only when, related obligations are discharged, cancelled or expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

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Euro convertible bonds

Euro convertible bonds that contain both liability and conversion option derivative components are classified separately into respective items on initial recognition. The conversion option that will be settled other than by the exchange of a fixed amount of cash or other financial asset for a fixed number of the Bank’s own equity instruments is classifies as a conversion option derivative. At the date of issue, both the liability and conversion option derivative components are recognized at fair value.

In subsequent periods, the liability component of the Euro Convertible Bonds is measured at amortized cost using the effective interest method. The conversion option derivative is measured at fair value and the changes in fair value are recognized in profit or loss.

Transaction costs related to the issuance of Euro Convertible Bonds are included in the carrying amount of the liability component and are amortized over the lives of Euro Convertible Bonds using the effective interest method.

Derivative financial instruments

Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss. When the fair value of derivative financial instruments is positive, the derivative is recognized as a financial asset; when the fair value of derivative financial instruments is negative, the derivative is recognized as a financial liability.

Derivatives embedded in non-derivative host contracts are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics are not closely related to those of the host contracts and the contracts are not measured at fair value through profit or loss.

n. Hedge accounting

The Bank engages non-trading derivatives primarily as a tool for hedging against risks of financial assets and liabilities due to adverse market changes in interest rates, exchange rates and credit. The Bank’s hedge accounting qualifies as a fair value hedge. The fair value hedge is mainly used to avoid the risk of adverse changes in fair value of interest-earning assets and interest-bearing liabilities due to fluctuations of interest rates or exchange rates. At the start of the hedge, there must be a formal designation of the derivative as a hedging instrument and documentation of the hedging relationship between the hedging instrument and the hedged item, the risk management objective, hedging strategies and how the Bank will assess the hedging instrument effectiveness.

Once the hedge is determined as a fair value hedge, the effect of changes in fair value of the hedged items will be offset by the gain or loss recognized from remeasuring the derivative hedging instrument at fair value. Gains and losses measured at fair value of hedging instruments are recognized immediately. The carrying amount of the hedged item is adjusted through the corresponding gain or loss on the hedging instrument.

o. Provisions

Provisions are recognized when the Bank and its subsidiaries have a present obligation as a result of a past event, it is probable that the Bank and its subsidiaries will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

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Provisions are measured at the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

p. Income recognition

Interest income from discounts and loans is recorded on the accrual basis. For nonaccrual loans, interest income is recognized only when collections on these obligations are made. Under the regulations of the Banking Bureau under the Financial Supervisory Commission, the interest income on credits covered by agreements that extend their maturity is recorded as deferred income and recognized upon collection.

Service fee income is recognized as loans are provided or services have been completed.

The gain or loss on the disposal or recovery of acquired receivables is accounted for by the effective interest method. The administration revenue from managing acquired loans is recognized monthly on an accrual basis. The advance administration revenue is amortized on a straight-line method over the estimated recovery period.

q. Retirement benefit costs

Contributions to defined contribution plans are recognized as expenses when employees have rendered service entitling them to the contributions.

For defined benefit plans, the cost of providing benefits is measured using the projected unit credit method. Actuarial gains and losses that exceed 10% of the greater of the present value of the Bank’s defined benefit obligation and the fair value of plan assets as at the end of the prior year are amortized over the expected average remaining working lives of the participating employees. Past service cost is recognized immediately to the extent that the benefits are already vested, and otherwise is amortized on a straight-line basis over the average period until the benefits become vested.

The retirement benefit obligation recognized in the consolidated balance sheets represents the present value of the defined benefit obligation as adjusted for unrecognized actuarial gains and losses and unrecognized past service cost, and as reduced by the fair value of plan assets.

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant onetime events.

r. Income tax

Income tax expense represents the sum of tax currently payable and deferred tax expense.

1) Current tax expense

Interim period income tax expense is calculated by applying to an interim period’s pre-tax income with the tax rate that would be applicable to expected total annual earnings.

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An additional tax at 10% of unappropriated earnings is provided for as income tax in the year the shareholders approve to retain the earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

• 2) Deferred tax expense

Deferred tax expense represents adjustments to deferred tax assets and liabilities.

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Bank and its subsidiaries expect, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, unused loss carryforwards, and unused tax credits for research and development expenditures and personnel training expenditures to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be recovered.

• 3) Current and deferred tax for the period

Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of accounting policies, management is required to make essential judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

• a. Held-to-maturity financial assets

Management has reviewed the Bank’s held-to-maturity financial assets in light of its capital maintenance and liquidity requirements and has confirmed the Bank’s positive intention and ability to hold those assets to maturity.

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b. Estimated impairment of discounts and loans and receivables

When there is objective evidence of impairment loss, the Bank and its subsidiaries take into consideration the estimation of future cash flows. The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. Where the actual future cash flows are less than expected, an additional impairment loss may arise.

c. Estimated impairment of operation rights

Determining whether operation rights are impaired requires an estimation of the value in use of the cash-generating units to which operation rights have been allocated. The value in use calculation requires management to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Where the actual future cash flows are less than expected, an impairment loss may arise.

d. Fair value of financial instruments

As described in Note 46, the Bank’s management uses its judgment in selecting an appropriate valuation technique for financial instruments that do not have quoted market price in an active market. Valuation techniques commonly used by market practitioners are applied. For derivative financial instruments, assumptions were based on quoted market rates adjusted for specific features of the instruments. Other financial instruments were valued using a discounted cash flow analysis based on assumptions supported, where possible, by observable market prices or rates. The estimation of fair value of unlisted equity instruments was based on assumptions supported by unobservable market prices or rates. Note 46 provides detailed information about the key assumptions used in the determination of the fair value of financial instruments. The Bank’s management believes that the chosen valuation techniques and assumptions used are appropriate in determining the fair value of financial instruments.

e. Income tax

As of January 1, 2012, September 30, 2012, December 31, 2012 and September 30, 2013, the carrying amount of the deferred tax assets in relation to unused tax losses was NT$820,955 thousand, NT$751,371 thousand, NT$613,741 thousand (approximately US$20,763 thousand) and NT$235,446 thousand (approximately US$7,965 thousand), respectively. As of January 1, 2012, September 30, 2012, December 31, 2012 and September 30, 2013, deferred tax assets have not been recognized on the tax loss of NT$2,333,193 thousand, NT$1,475,079 thousand, NT$1,875,385 thousand (approximately US$63,443 thousand) and NT$1,152,785 thousand (approximately US$38,998 thousand), respectively, due to the unpredictability of future profit streams. The realizability of the deferred tax asset mainly depends on whether sufficient future profits or taxable temporary differences will be available. In cases where the actual future profits generated are materially different from expected, an adjustment to deferred tax assets and income tax expense may arise.

f. Recognition and measurement of defined benefit plans

Provision for employee benefits and the resulting post-employment benefits under defined benefit pension plans are calculated using the projected unit credit method. Actuarial assumptions comprise the discount rate, rate of employee turnover, and long-term average future salary increase. Changes in economic circumstances and market conditions will affect these assumptions and may have a material impact on the amount of the expense and the liability.

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6. CASH AND CASH EQUIVALENTS

Cash on hand . . . . . . . . . . . . . Deposits due from other banks . . . . . . . . . . . . . . . . . Notes and checks for clearing . . . . . . . . . . . . . . . Balance with other banks . . . .	January 1, 2012	January 1, 2012	September 30, 2012	September 30, 2012	December 31, 2012	September 30, 2013
		NT$ $2,448,923 2,540,823 817,187 195,381 $6,002,314		NT$ $2,608,456 2,030,174 1,119,589 58,947 $5,817,166	NT$ US$ (Note 4) $2,727,134 $ 92,258 1,110,865 37,580 1,671,862 56,558 86,690 2,933 $5,596,551 $189,329	NT$ US$ (Note 4) $2,940,429 $ 99,473 1,013,808 34,296 479,157 16,210 55,504 1,878 $4,488,898 $151,857

7. DUE FROM THE CENTRAL BANK AND OTHER BANKS

Due from the Central Bank—certificates of deposit (Note 41) . . . . . . . Loans to other banks . . . . . . New Taiwan dollar reserve deposits—Type A . . . . . . New Taiwan dollar reserve deposits—Type B . . . . . . . Foreign-currency reserve deposits . . . . . . . . . . . . . .	January 1, 2012	January 1, 2012	September 30, 2012	December 31, 2012	December 31, 2012	September 30, 2013	September 30, 2013
		NT$ $69,400,000 3,570,480 5,019,759 8,705,369 43,582 $86,739,190	NT$ $61,990,000 5,598,254 4,746,461 8,982,123 42,215 $81,359,053	NT$ $63,190,000 4,819,462 5,835,631 8,931,969 41,546 $82,818,608	US$ (Note 4) $2,137,686 163,040 197,417 302,164 1,405 $2,801,712	NT$ $61,930,000 2,727,860 5,165,325 9,500,318 50,794 $79,374,297	US$ (Note 4) $2,095,061 92,282 174,741 321,391 1,718 $2,685,193

The reserve deposits are required by law and determined at a prescribed percentage of the monthly average balances. The Type B reserve deposits can be withdrawn only when the balances are adjusted monthly. The Type A and foreign-currency reserve deposits can be withdrawn on demand but bear no interest.

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8. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets held for trading Government bonds . . . . . . . . . . . Convertible bond asset swap contracts . . . . . . . . . . . . . . . . . Listed and OTC stocks . . . . . . . . Foreign-currency swap contracts . . . . . . . . . . . . . . . . . Interest rate swap contracts . . . . . Currency option contracts . . . . . . Beneficiary certificates . . . . . . . . Convertible bond option contracts . . . . . . . . . . . . . . . . . Cross-currency swap contracts . . Credit default swap contracts . . . Forward exchange contracts . . . . Others . . . . . . . . . . . . . . . . . . . . . Financial assets designated as at fair value through profit or loss Convertible bonds . . . . . . . . . . . . Total financial assets at fair value through profit or loss . . . . . . . .	January 1, 2012	January 1, 2012	September 30, 2012	September 30, 2012	December 31, 2012	December 31, 2012	September 30, 2013	September 30, 2013
		NT$ $ 1,722,733 26,918 36,819 460,509 358,907 49,016 57,286 317,057 4,801 32,090 51,235 32,985 3,150,356 10,656,510 $13,806,866		NT$ $ 1,740,978 30,437 81,258 361,369 377,046 115,271 82,828 464,287 174,724 116,744 62,992 57,432 3,665,366 13,061,096 $16,726,462	NT$ US$ (Note 4) $ 1,334,349 $ 45,140 1,421,828 48,100 130,962 4,430 304,672 10,307 351,567 11,893 187,732 6,351 107,521 3,637 163,187 5,521 184,828 6,253 145,330 4,917 59,995 2,029 39,306 1,330 4,431,277 149,908 11,679,558 395,114 $16,110,835 $545,022		NT$ US$ (Note 4) $ 2,921,134 $ 98,821 1,849,446 62,566 344,935 11,669 343,952 11,636 324,451 10,976 233,507 7,899 189,114 6,398 111,925 3,786 98,227 3,323 85,989 2,909 50,837 1,720 27,238 921 6,580,755 222,624 12,054,313 407,791 $18,635,068 $630,415 $ 3,819,932 $129,226 594,574 20,114 442,825 14,981 271,809 9,195 233,736 7,907 179,991 6,089 67,316 2,277 58,870 1,992 7,146 242 — — 32,639 1,104 $ 5,708,838 $193,127
Financial liabilities held for
trading Convertible bond option contracts . . . . . . . . . . . . . . . . . Foreign-currency swap contracts . . . . . . . . . . . . . . . . . Conversion option derivative of Euro Convertible Bonds (Note 24) . . . . . . . . . . . . . . . . . Interest rate swap contracts . . . . . Currency option contracts . . . . . . Cross-currency swap contracts . . Convertible bond asset swap contracts . . . . . . . . . . . . . . . . . Forward exchange contracts . . . . Credit default swap contracts . . . Short sale of bonds payable . . . . Others . . . . . . . . . . . . . . . . . . . . . Total financial liabilities at fair value through profit or loss . . .		$ 1,971,854 260,861 — 182,081 48,384 719,979 127,769 67,853 35,221 953,357 17,481 $ 4,384,840		$ 2,346,741 728,905 — 234,592 114,490 178,787 121,279 100,702 45,121 951,784 52,528 $ 4,874,929	$ 2,109,083 465,775 — 203,635 184,378 140,767 541,149 32,030 27,798 — 40,417 $ 3,745,032	$ 71,349 15,757 — 6,889 6,237 4,762 18,307 1,084 940 — 1,368 $126,693	$ 3,819,932 594,574 442,825 271,809 233,736 179,991 67,316 58,870 7,146 — 32,639 $ 5,708,838

The Bank engages in derivative transactions mainly to trade, to accommodate customers’ needs and to manage exposures due to exchange rate and interest rate fluctuations. The Bank’s financial risk management strategy is to hedge most of its exposure to market risk.

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Outstanding derivative contract (nominal) amounts were as follows:

Currency option contracts . . . . . . . . . . . . Foreign-currency swap contracts . . . . . . . . . . . . Interest rate swap contracts . . . . . . . . . . . . Cross-currency swap contracts . . . . . . . . . . . . Convertible bond option contracts . . . . . . . . . . . . Credit default swap contracts . . . . . . . . . . . . Convertible bond asset swap contracts . . . . . . . Forward exchange contracts . . . . . . . . . . . . Non-deliverable forward contracts . . . . . . . . . . . . Commodity forward contracts . . . . . . . . . . . .	January 1, 2012	September 30, 2012	December 31, 2012	September 30, 2013 NT$ US$ (Note 4) $168,186,738 $5,689,673 152,786,764 5,168,670 133,694,821 4,522,829 27,433,475 928,061 26,654,079 901,694 21,984,469 743,724 21,448,193 725,582 12,361,005 418,167 2,151,881 72,797 822,286 27,818
	NT$ $ 4,665,684 47,007,582 44,438,500 17,706,190 33,499,262 14,496,297 28,113,195 7,583,875 8,036,471 —	NT$ $ 32,100,576 110,121,618 87,530,674 28,346,295 32,352,588 18,502,708 28,236,290 10,898,601 16,380,488 —	NT$ US$ (Note 4) $ 23,028,114 $ 779,030 103,946,913 3,516,472 87,925,783 2,974,485 27,471,165 929,336 30,852,021 1,043,708 18,608,724 629,524 26,963,297 912,155 7,886,180 266,786 11,036,127 373,347 45,219 1,530

The net gain on financial instruments at fair value through profit or loss was as follows:

Net gain (loss) on financial instruments held for trading . . . . . . . . . . . . . . . . . Net gain on financial assets designated as at fair value through profit or loss . . . . . .	Three Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $142,483 $(173,061) $ (5,855) 218,783 434,522 14,700 $361,266 $ 261,461 $ 8,845	Nine Months Ended September 30	Nine Months Ended September 30
	2012 NT$ $142,483 218,783 $361,266	2012 NT$ $577,935 207,143 $785,078	2013
			NT$ US$ (Note 4) $ (235,154) $ (7,955) 1,102,005 37,280 $ 866,851 $29,325

One of the financial assets held for trading was traded with repurchased agreement, and the carrying amount was NT$55,546 thousand (approximately US$1,879 thousand) as of September 30, 2013.

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9. DERIVATIVE FINANCIAL INSTRUMENTS FOR HEDGING

Derivative financial assets Fair value hedging—interest rate swap contracts . . . . . . . . . . . . . Derivative financial liabilities Fair value hedging—interest rate swap contracts . . . . . . . . . . . . .	January 1, 2012	January 1, 2012	September 30, 2012	September 30, 2012	December 31, 2012	September 30, 2013
		NT$ $252,233 $ 13,093		NT$ $199,464 $ 10,521	NT$ US$ (Note 4) $180,242 $6,097 $ 12,819 $ 434	NT$ US$ (Note 4) $120,853 $4,088 $ 10,320 $ 349

The Bank uses interest rate swap contracts to hedge against the risk of changes in fair value of domestic bank debentures arising from interest rate fluctuations. The nominal amount of interest rate swap contracts for hedging was NT$4,600,000 thousand (approximately US$155,616 thousand) all as of January 1, 2012, September 30, 2012, December 31, 2012 and September 30, 2013.

The net gain (loss) on hedging financial instruments and hedged items were as follows:

Net loss on hedging financial instruments . . . . . . . . . . . . . . . . . Net gain on hedged items . . . . . . . .	Three Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $(16,787) $(19,395) $(656) $ 16,787 $ 19,395 $ 656	Nine Months Ended September 30	Nine Months Ended September 30
	2012 NT$ $(16,787) $ 16,787	2012 NT$ $(50,197) $ 50,197	2013
			NT$ US$ (Note 4) $(56,890) $(1,923) $ 56,890 $ 1,923

10. SECURITIES PURCHASED UNDER RESALE AGREEMENTS

Government bonds . . . Negotiable certificates of deposit . . . . . . . . . Commercial papers . . . Treasury securities . . . . Resale date . . . . . . . . . . Resale price . . . . . . . . .	January 1, 2012 NT$ $ 850,505 — — — $ 850,505 2012.01.02 $ 850,565	September 30, 2012	December 31, 2012	December 31, 2012	September 30, 2013	September 30, 2013
		NT$ $ 12,788,055 — — 3,308,669 $ 16,096,724 2012.10.01- 2012.10.25 $ 16,100,902	NT$ $ 15,166,522 4,206,422 1,008,383 3,360,665	US$ (Note 4) $ 513,076 142,301 34,113 113,690	NT$ $ 7,980,712 1,459,247 1,406,379 157,068	US$ (Note 4) $ 269,983 49,366 47,577 5,314
			$ 23,741,992	$ 803,180	$ 11,003,406	$ 372,240
			2013.01.02- 2013.02.19 $ 23,749,718	2013.01.02- 2013.02.19 $ 803,441	2013.10.01- 2013.12.26 $ 11,006,337	2013.10.01- 2013.12.26 372,339

F-134

11. RECEIVABLES, NET

Credit card . . . . . . . . . . . . . Factoring . . . . . . . . . . . . . . Proceeds from disposal of securities . . . . . . . . . . . . Interest . . . . . . . . . . . . . . . . Spot exchange transactions . . . . . . . . . . Acceptances . . . . . . . . . . . . Acquired receivables . . . . . Proceeds from disposal of acquired receivables . . . Others . . . . . . . . . . . . . . . . . Less: Allowance for possible losses (Note 12) . . . . . . . . . . . .	January 1, 2012 NT$ $15,523,234 3,412,000 1,103,970 603,691 595,616 332,333 809,486 — 389,198 22,769,528 818,715 $21,950,813	September 30, 2012	December 31, 2012	September 30, 2013
		NT$ $15,257,629 2,184,609 775,015 583,308 605,462 271,449 805,071 — 251,613 20,734,156 765,892 $19,968,264	NT$ US$ (Note 4) $15,521,385 $525,081 2,830,761 95,763 415,243 14,047 640,301 21,661 481,948 16,304 503,574 17,036 200,229 6,774 602,540 20,384 338,913 11,465 21,534,894 728,515 753,712 25,498 $20,781,182 $703,017	NT$ US$ (Note 4) $15,609,590 $528,065 2,713,456 91,795 2,119,554 71,703 678,122 22,941 409,526 13,854 232,452 7,864 193,306 6,539 — — 352,313 11,919 22,308,319 754,680 704,255 23,825 $21,604,064 $730,855

Far Eastern Asset Management Co., Ltd. disposed of its acquired receivables in December 2012, and the related proceeds from disposal of acquired receivables and compensation for early settlement amounting to NT$602,540 thousand (approximately US$20,384) were collected in January 2013.

12. DISCOUNTS AND LOANS, NET

Negotiations, discounts and overdraft . . . . . . . Short-term loans . . . . . . Medium-term loans . . . . Long-term loans . . . . . . Nonaccrual loans . . . . . . Less: Allowance for possible losses . . . . . .	January 1, 2012	January 1, 2012	September 30, 2012	December 31, 2012	December 31, 2012	September 30, 2013	September 30, 2013
		NT$ $ 176,576 67,654,241 84,002,593 122,135,928 264,778 274,234,116 4,773,735 $269,460,381	NT$ $ 167,422 65,424,741 89,214,038 127,415,360 997,846	NT$ $ 211,493 62,306,524 92,298,012 128,002,420 982,983 283,801,432 3,582,006 $280,219,426	US$ (Note 4) $ 7,155 2,107,798 3,122,395 4,330,258 33,254 9,600,860 121,177 $9,479,683	NT$ $ 141,508 68,728,971 117,990,696 133,284,263 808,071	US$ (Note 4) $ 4,787 2,325,067 3,991,566 4,508,940 27,336
			283,219,407 3,168,116			320,953,509 4,003,730	10,857,696 135,444
			$280,051,291			$316,949,779	$10,722,252

F-135

Movements of allowance for possible losses on discounts and loans and others (including receivables and other financial assets) were as follows:

Nine months ended September 30, 2012 Balance, January 1, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reversal of provision for possible losses . . . . . . . . . . . . . . . . . . . . Amounts written-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amounts recovered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effects of exchange rate changes . . . . . . . . . . . . . . . . . . . . . . . . . . Balance, September 30, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		Discounts and Loans NT$ $ 4,773,735 (366,510) (1,878,651) 645,930 (6,388) $ 3,168,116		Others NT$ $1,245,370 (230,131) (168,547) 345,445 367 $1,192,504		Total
						NT$ $ 6,019,105 (596,641) (2,047,198) 991,375 (6,021) $ 4,360,620 $ 4,762,107 (336,777) (488,198) 1,197,761 2,911 $ 5,137,804 Total
Nine months ended September 30, 2013
Balance, January 1, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reversal of provision for possible losses . . . . . . . . . . . . . . . . . . . . Amounts written-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amounts recovered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effects of exchange rate changes . . . . . . . . . . . . . . . . . . . . . . . . . . Balance, September 30, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balance, January 1, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reversal of provision for possible losses . . . . . . . . . . . . . . . . . . . . Amounts written-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amounts recovered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effects of exchange rate changes . . . . . . . . . . . . . . . . . . . . . . . . . . Balance, September 30, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
					US$ (Note 4) $161,099 (11,393) (16,515) 40,520 99 $173,810

The provision (reversal of provision) for possible losses and guarantee obligations reserve were as follows:

Provision (reversal of provision) for possible losses—discounts and loans . . . . . . . . . . . . . . . . . . . . . . . . . Reversal of provision for possible losses—others . . . . . . . . . . . . . . . . . . Provision (reversal of provision) for possible losses—reserve for guarantee obligations . . . . . . . . . . . .	Three Months Ended September 30	Three Months Ended September 30	Nine Months Ended September 30	Nine Months Ended September 30
	2012	2013	2012	2013

For the nine months ended September 30, 2012 and 2013, the Bank had no written-off credits for which legal proceedings had not been initiated.

F-136

The Bank’s financial assets were assessed for impairment loss on the basis of credit risk characteristics of financial assets. The results were as follows:

Discounts and loans

Item With objective evidence of individual impairment Assessed individually . . . . Assessed by portfolio . . . . Without objective evidence of individual impairment Assessed individually . . . . Assessed by portfolio . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item With objective evidence of individual impairment Assessed individually . . . . Assessed by portfolio . . . . Without objective evidence of individual impairment Assessed individually . . . . Assessed by portfolio . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item With objective evidence of individual impairment Assessed individually . . . . Assessed by portfolio . . . . Without objective evidence of individual impairment Assessed individually . . . . Assessed by portfolio . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	January 1, 2012 Discounts and Loans Allowance for Possible Losses NT$ NT$ $ 5,188,537 $3,373,260 2,143,559 450,059 3,105,077 — 263,796,943 950,416 $274,234,116 $4,773,735	January 1, 2012 Discounts and Loans Allowance for Possible Losses NT$ NT$ $ 5,188,537 $3,373,260 2,143,559 450,059 3,105,077 — 263,796,943 950,416 $274,234,116 $4,773,735	January 1, 2012 Discounts and Loans Allowance for Possible Losses NT$ NT$ $ 5,188,537 $3,373,260 2,143,559 450,059 3,105,077 — 263,796,943 950,416 $274,234,116 $4,773,735	September 30, 2012	September 30, 2012	September 30, 2012
	Discounts and Loans			Discounts and Loans	Allowance for Possible Losses
	NT$ $ 5,188,537 2,143,559 3,105,077 263,796,943 $274,234,116			NT$ $ 4,672,803 1,872,999 2,930,820 273,742,785 $283,219,407		NT$ $1,482,582 454,536 — 1,230,998 $3,168,116
			December	31, 2012
	Discounts	and Loans Allowance for US$ (Note 4) NT$ $ 154,994 $1,449,349 62,157 718,466 88,599 — 9,295,110 1,414,191 $9,600,860 $3,582,006 September 30, 2013		Allowance for	Possible Losses
	NT$ $ 4,581,612 1,837,366 2,619,004 274,763,450 $283,801,432				US$ (Note 4) $ 49,031 24,305 — 47,841 $121,177
	Discounts	and Loans US$ (Note 4) $ 120,393 57,831 90,219 10,589,253 $10,857,696		Allowance for	Possible Losses
	NT$ $ 3,558,823 1,709,485 2,666,859 313,018,342 $320,953,509			NT$ $1,100,615 864,718 — 2,038,397 $4,003,730	US$ (Note 4) $ 37,233 29,253 — 68,958 $135,444

Others (including receivables, other financial assets and debt investments with no active market)

Item With objective evidence of individual impairment Assessed individually . . . . Assessed by portfolio . . . . Without objective evidence of individual impairment Assessed individually . . . . Assessed by portfolio . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item With objective evidence of individual impairment Assessed individually . . . . Assessed by portfolio . . . . Without objective evidence of individual impairment Assessed individually . . . . Assessed by portfolio . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	January 1, 2012 September 30, 2012 Others Allowance for Possible Losses Others Allowance for Possible Losses NT$ NT$ NT$ NT$ $ 847,568 $ 664,194 $ 693,108 $ 602,160 3,345,018 556,138 2,903,743 624,172 9,204,321 — 13,890,992 — 16,256,145 245,349 15,089,693 122,626 $29,653,052 $1,465,681 $32,577,536 $1,348,958 December 31, 2012	January 1, 2012 September 30, 2012 Others Allowance for Possible Losses Others Allowance for Possible Losses NT$ NT$ NT$ NT$ $ 847,568 $ 664,194 $ 693,108 $ 602,160 3,345,018 556,138 2,903,743 624,172 9,204,321 — 13,890,992 — 16,256,145 245,349 15,089,693 122,626 $29,653,052 $1,465,681 $32,577,536 $1,348,958 December 31, 2012	January 1, 2012 September 30, 2012 Others Allowance for Possible Losses Others Allowance for Possible Losses NT$ NT$ NT$ NT$ $ 847,568 $ 664,194 $ 693,108 $ 602,160 3,345,018 556,138 2,903,743 624,172 9,204,321 — 13,890,992 — 16,256,145 245,349 15,089,693 122,626 $29,653,052 $1,465,681 $32,577,536 $1,348,958 December 31, 2012	September 30, 2012	September 30, 2012	September 30, 2012
	Others			Others	Allowance for Possible Losses
	NT$ $ 847,568 3,345,018 9,204,321 16,256,145 $29,653,052			NT$ $ 693,108 2,903,743 13,890,992 15,089,693 $32,577,536		NT$ $ 602,160 624,172 — 122,626 $1,348,958
			December 31, 2012
	Others NT$ US$ (Note 4) $ 691,318 $ 23,387 2,774,987 93,877 12,600,812 426,279 16,367,731 553,712 $32,434,848 $1,097,255			Allowance for	Possible Losses
				NT$ $ 601,492 609,478 — 124,461 $1,335,431	US$ (Note 4) $20,348 20,618 — 4,211 $45,177

F-137

Item With objective evidence of individual impairment Assessed individually . . . . Assessed by portfolio . . . . Without objective evidence of individual impairment Assessed individually . . . . Assessed by portfolio . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		September 30, 2013	September 30, 2013	September 30, 2013
		Others	Allowance for Possible Losses
		NT$ US$ (Note 4) $ 650,577 $ 22,009 2,446,913 82,778 10,646,205 360,156 16,263,126 550,173 $30,006,821 $1,015,116		NT$ US$ (Note 4) $ 590,828 $19,987 600,201 20,305 — — 86,205 2,916 $1,277,234 $43,208

13. AVAILABLE-FOR-SALE FINANCIAL ASSETS

Government bonds . . . . . . . . Listed and OTC stocks— domestic . . . . . . . . . . . . . . —overseas . . . . . . . . . . Commercial papers . . . . . . . Foreign bank debentures . . . Treasury security . . . . . . . . . Negotiable certificates of deposit . . . . . . . . . . . . . . .	January 1, 2012	January 1, 2012	September 30, 2012	December 31, 2012	September 30, 2013
		NT$ $14,044,274 776,673 124,465 — — — — $14,945,412	NT$ $10,371,277 903,035 159,022 — — — — $11,433,334	NT$ US$ (Note 4) $10,355,436 $350,319 807,991 27,334 — — 250,043 8,459 — — — — 452,394 15,304 $11,865,864 $401,416	NT$ US$ (Note 4) $14,380,514 $486,486 1,109,356 37,529 — — 479,835 16,233 470,286 15,909 199,838 6,760 — — $16,639,829 $562,917

The terms of government bonds are summarized as follows:

Aggregate par value . . . . . . . . Coupon interest rates . . . . . . . Effective interest rates . . . . . . Maturity . . . . . . . . . . . . . . . . .	January 1, 2012	September 30, 2012	December 31, 2012	September 30, 2013
	NT$ $13,319,000 0.88%-6.90% 0.91%-9.45% 2012.01-2031.08	NT$ $10,157,600 0.88%-6.88% 0.91%-5.54% 2012.12-2022.05	NT$ US$ (Note 4) $10,154,600 $343,525 0.88%-2.75% 0.88%-2.75% 0.91%-1.98% 0.91%-1.98% 2013.01-2022.05 2013.01-2022.05	NT$ US$ (Note 4) $14,604,600 $494,066 0.88%-2.38% 0.88%-2.38% 0.91%-1.99% 0.91%-1.99% 2014.01-2043.02 2014.01-2043.02

The terms of commercial papers are summarized as follows:

Aggregate par value . . . . . . . . Coupon interest rates . . . . . . . Effective interest rates . . . . . . Maturity . . . . . . . . . . . . . . . . .	January 1, 2012	September 30, 2012	December 31, 2012	September 30, 2013
	NT$ $— — — —	NT$ $— — — —	NT$ US$ (Note 4) $250,000 $8,457 0.76%-1.06% 0.76%-1.06% 0.74%-0.75% 0.74%-0.75% 2013.01 2013.01	NT$ US$ (Note 4) $480,000 $16,238 0.70%-0.80% 0.70%-0.80% 0.65% 0.65% 2013.10 2013.10

The terms of foreign bank debentures are summarized as follows:

Aggregate par value . . . . . . . . Coupon interest rates . . . . . . . Effective interest rates . . . . . . Maturity . . . . . . . . . . . . . . . . .	January 1, 2012	September 30, 2012	December 31, 2012	September 30, 2013
	NT$ $— — — —	NT$ $— — — —	NT$ US$ (Note 4) $— $— — — — — — —	NT$ US$ (Note 4) $469,710 $15,890 3.56%-3.65% 3.56%-3.65% 3.89%-4.29% 3.89%-4.29% 2016.03-2017.09 2016.03-2017.09

F-138

The terms of treasury security are summarized as follows:

Aggregate par value . . . . . . . . Coupon interest rate . . . . . . . . Effective interest rate . . . . . . . Maturity . . . . . . . . . . . . . . . . .	January 1, 2012	September 30, 2012	December 31, 2012	September 30, 2013
	NT$ $— — — —	NT$ $— — — —	NT$ US$ (Note 4) $— $— — — — — — —	NT$ US$ (Note 4) $200,000 $6,766 0.66% 0.66% 0.67% 0.67% 2013.11 2013.11

The terms of negotiable certificates of deposit are summarized as follows:

Aggregate par value . . . . . . . . Coupon interest rates . . . . . . . Effective interest rates . . . . . . Maturity . . . . . . . . . . . . . . . . .	January 1, 2012	September 30, 2012	December 31, 2012	September 30, 2013
	NT$ $— — — —	NT$ $— — — —	NT$ US$ (Note 4) $451,400 $15,271 0.87%-0.88% 0.87%-0.88% 0.74%-0.76% 0.74%-0.76% 2013.01 2013.01	NT$ US$ (Note 4) $— $— — — — — — —

Some of the available-for-sale financial assets were traded with repurchase agreements, and the carrying amounts were NT$210,105 thousand and NT$572,510 thousand (approximately US$19,368 thousand) as of January 1, 2012 and September 30, 2013, respectively.

The assets pledged as collateral are shown in Note 41.

14. HELD-TO-MATURITY FINANCIAL ASSETS

Foreign corporate bonds . . . . . . . . . . Foreign bank debentures . . . . . . . . . Foreign certificates of deposit . . . . . Government bonds . . . . . . . . . . . . . .	January 1, 2012 NT$ $2,374,459 1,400,397 151,450 1,599 $3,927,905	September 30, 2012 NT$ $ 994,295 507,048 440,130 999 $1,942,472	December 31, 2012 NT$ US$ (Note 4) $ 989,133 $33,462 797,129 26,966 437,040 14,785 999 34 $2,224,301 $75,247	September 30, 2013
				NT$ US$ (Note 4) $1,135,830 $38,425 1,066,665 36,085 445,050 15,056 — — $2,647,545 $89,566

The terms of foreign corporate bonds are summarized as follows:

Aggregate par value—USD . . . . . . AUD . . . . . . Coupon interest rates . . . . . . . . . . . Effective interest rates . . . . . . . . . . Maturity . . . . . . . . . . . . . . . . . . . . .	January 1, 2012 $59,000 $20,000 0.51%-7.00% 0.46%-6.75% 2012.01-2014.03	September 30, 2012 $24,000 $10,000 0.53%-3.93% 1.70%-6.66% 2013.01-2014.03	December 31, 2012 $24,000 $10,000 (approximately US$10,240) 0.44%-3.64% 1.70%-6.63% 2013.01-2014.03	September 30, 2013
				$39,000 — 0.38%-2.50% 1.90%-3.85% 2014.01-2018.05

F-139

The terms of foreign bank debentures are summarized as follows:

Aggregate par value—USD . . . . . . AUD . . . . . . Coupon interest rates . . . . . . . . . . . Effective interest rates . . . . . . . . . . Maturity . . . . . . . . . . . . . . . . . . . . .	January 1, 2012 $40,000 $6,000 0.66%-6.50% 0.61%-5.91% 2012.01-2015.03	September 30, 2012 $11,000 $6,000 1.17%-4.63% 1.55%-5.57% 2014.06-2015.03	December 31, 2012 $21,000 $6,000 (approximately US$6,144) 1.06%-4.20% 1.55%-5.57% 2014.06-2015.08	September 30, 2013
				$21,000 $15,900 (approximately US$14,862) 1.01%-4.02% 1.55%-5.72% 2014.06-2016.05

The terms of foreign certificates of deposit are summarized as follows:

Aggregate par value—USD . . . . . . . . . . . Coupon interest rates (floating interest rates) . . . . . . . . . . . . . . . . . . . . . . . . . . . Maturity . . . . . . . . . . . . . . . . . . . . . . . . . .	January 1, 2012 $ 5,000 1.54% 2012.08	September 30, 2012 $ 15,000 2.02% 2015.03	December 31, 2012 $ 15,000 1.97% 2015.03	September 30, 2013
				$ 15,000 1.86% 2015.03

The terms of government bonds are summarized as follows:

Aggregate par value—NTD . . . . . . . . . . Coupon interest rates . . . . . . . . . . . . . . . Effective interest rates . . . . . . . . . . . . . . Maturity . . . . . . . . . . . . . . . . . . . . . . . . .	January 1, 2012 $1,600 1.88%-6.90% 1.89%-5.70% 2012.01-2013.03	September 30, 2012 $1,000 1.88% 1.89% 2013.03	December 31, 2012 $1,000 (approximately US$34) 1.88% 1.89% 2013.03	September 30, 2013
				— — — —

15. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

• a. Investments in associates:

Dah Chung Bills Finance Corp. . Yuan Long Stainless Steel Corp. Deutsche Far Eastern Asset Management Co., Ltd. . . . . . . Dah Chung Bills Finance Corp. . . . . . . . . . . . . . . . . . . . Yuan Long Stainless Steel Corp. . . . . . . . . . . . . . . . . . . . Deutsche Far Eastern Asset Management Co., Ltd. . . . . .	January 1, 2012 September 30, 2012 December 31, 2012 September 30, 2013 % of Ownership % of Ownership % of Ownership % of Ownership . . . . . . 22.06 22.06 22.06 22.06 . . . . . . 49.00 49.00 49.00 49.00 . . . . . . 40.00 40.00 40.00 40.00 January 1, 2012 September 30, 2012 December 31, 2012 September 30, 2013 NT$ NT$ NT$ US$ (Note 4) NT$ US$ (Note 4) $1,412,508 $1,397,696 $1,412,336 $47,779 $1,388,281 $46,965 939,327 824,713 796,544 26,947 795,284 26,904 120,552 169,637 159,668 5,401 148,206 5,014 $2,472,387 $2,392,046 $2,368,548 $80,127 $2,331,771 $78,883	January 1, 2012 September 30, 2012 December 31, 2012 September 30, 2013 % of Ownership % of Ownership % of Ownership % of Ownership . . . . . . 22.06 22.06 22.06 22.06 . . . . . . 49.00 49.00 49.00 49.00 . . . . . . 40.00 40.00 40.00 40.00 January 1, 2012 September 30, 2012 December 31, 2012 September 30, 2013 NT$ NT$ NT$ US$ (Note 4) NT$ US$ (Note 4) $1,412,508 $1,397,696 $1,412,336 $47,779 $1,388,281 $46,965 939,327 824,713 796,544 26,947 795,284 26,904 120,552 169,637 159,668 5,401 148,206 5,014 $2,472,387 $2,392,046 $2,368,548 $80,127 $2,331,771 $78,883	January 1, 2012 September 30, 2012 December 31, 2012 September 30, 2013 % of Ownership % of Ownership % of Ownership % of Ownership . . . . . . 22.06 22.06 22.06 22.06 . . . . . . 49.00 49.00 49.00 49.00 . . . . . . 40.00 40.00 40.00 40.00 January 1, 2012 September 30, 2012 December 31, 2012 September 30, 2013 NT$ NT$ NT$ US$ (Note 4) NT$ US$ (Note 4) $1,412,508 $1,397,696 $1,412,336 $47,779 $1,388,281 $46,965 939,327 824,713 796,544 26,947 795,284 26,904 120,552 169,637 159,668 5,401 148,206 5,014 $2,472,387 $2,392,046 $2,368,548 $80,127 $2,331,771 $78,883	January 1, 2012 September 30, 2012 December 31, 2012 September 30, 2013 % of Ownership % of Ownership % of Ownership % of Ownership . . . . . . 22.06 22.06 22.06 22.06 . . . . . . 49.00 49.00 49.00 49.00 . . . . . . 40.00 40.00 40.00 40.00 January 1, 2012 September 30, 2012 December 31, 2012 September 30, 2013 NT$ NT$ NT$ US$ (Note 4) NT$ US$ (Note 4) $1,412,508 $1,397,696 $1,412,336 $47,779 $1,388,281 $46,965 939,327 824,713 796,544 26,947 795,284 26,904 120,552 169,637 159,668 5,401 148,206 5,014 $2,472,387 $2,392,046 $2,368,548 $80,127 $2,331,771 $78,883	January 1, 2012 September 30, 2012 December 31, 2012 September 30, 2013 % of Ownership % of Ownership % of Ownership % of Ownership . . . . . . 22.06 22.06 22.06 22.06 . . . . . . 49.00 49.00 49.00 49.00 . . . . . . 40.00 40.00 40.00 40.00 January 1, 2012 September 30, 2012 December 31, 2012 September 30, 2013 NT$ NT$ NT$ US$ (Note 4) NT$ US$ (Note 4) $1,412,508 $1,397,696 $1,412,336 $47,779 $1,388,281 $46,965 939,327 824,713 796,544 26,947 795,284 26,904 120,552 169,637 159,668 5,401 148,206 5,014 $2,472,387 $2,392,046 $2,368,548 $80,127 $2,331,771 $78,883	January 1, 2012 September 30, 2012 December 31, 2012 September 30, 2013 % of Ownership % of Ownership % of Ownership % of Ownership . . . . . . 22.06 22.06 22.06 22.06 . . . . . . 49.00 49.00 49.00 49.00 . . . . . . 40.00 40.00 40.00 40.00 January 1, 2012 September 30, 2012 December 31, 2012 September 30, 2013 NT$ NT$ NT$ US$ (Note 4) NT$ US$ (Note 4) $1,412,508 $1,397,696 $1,412,336 $47,779 $1,388,281 $46,965 939,327 824,713 796,544 26,947 795,284 26,904 120,552 169,637 159,668 5,401 148,206 5,014 $2,472,387 $2,392,046 $2,368,548 $80,127 $2,331,771 $78,883	September 30, 2013
		NT$ $1,412,508 939,327 120,552 $2,472,387		NT$ $1,397,696 824,713 169,637 $2,392,046	NT$ US$ (Note 4) $1,412,336 $47,779 796,544 26,947 159,668 5,401 $2,368,548 $80,127	NT$ US$ (Note 4) $1,388,281 $46,965 795,284 26,904 148,206 5,014 $2,331,771 $78,883

In July 2012, Deutsche Far Eastern Asset Management Co., Ltd. (“Deutsche”) decreased its capital to offset the deficit and issued new shares for cash. The Bank acquired some of these new shares for NT$55,652 thousand (approximately US$1,883 thousand) at its current percentage of ownership of Deutsche.

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The summarized financial information in respect of the Bank and its subsidiaries’ associates was as follows:

January 1, 2012 S NT$ Total assets . . . . . . . . . $51,209,603 Total liabilities . . . . . . $42,590,927 Net profit for the period . . . . . . . . . . . . . . . Net income for the period . . . . . . . . . . . . . . Other comprehensive income for the period . . . . . . . . . . . . . . . . . . . . . . . . . . .

eptember 30, 2012 December 31, 2012 September 30, 2013 NT$ NT$ US$ (Note 4) NT$ US$ (Note 4) $51,262,830 $47,081,049 $1,592,728 $48,390,559 $1,637,028 $42,819,186 $38,653,435 $1,307,626 $40,103,230 $1,356,672 Three Months Ended September 30 Nine Months Ended September 30 2012 2013 2012 2013 NT$ NT$ US$ (Note 4) NT$ NT$ US$ (Note 4) $114,045 $178,782 $ 6,048 $373,517 $612,882 $20,733 $ (29,318) $ 23,078 $ 781 $ (12,128) $154,071 $ 5,212 $ (16,181) $ (35,440) $(1,199) $ (41,272) $ (68,331) $ (2,312)

2012 NT$ $114,045 $ (29,318) $ (16,181)

• b. Share of profit (loss) of associates was as follows:

Dah Chung Bills Finance Corp. . . . . . . . . . Yuan Long Stainless Steel Corp. . . . . . . . . Deutsche Far Eastern Asset Management Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . .	Three Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $ 16,002 $ 12,821 $ 434 (44,495) (11,731) (397) (4,319) (4,439) (150) $(32,812) $ (3,349) $(113)	Nine Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $ 52,989 $ 41,617 $1,408 (115,607) (1,234) (42) (6,568) (12,829) (434) $ (69,186) $ 27,554 $ 932
	2012 NT$ $ 16,002 (44,495) (4,319) $(32,812)	2012 NT$ $ 52,989 (115,607) (6,568) $ (69,186)

Investments accounted for using equity method, share of profit (loss) of associates and other comprehensive income are not reviewed by independent accountants. The Bank’s management believes the investment in such subsidiaries has no material effect on the Bank’s consolidated financial statements.

16. DEBT INVESTMENTS WITH NO ACTIVE MARKET

Convertible bond asset swap contracts—master agreement . . . . . . . . . . . . . . . . Credit-linked notes—master agreement . . . . . . . . . . . . . . . . Floating rate notes, net . . . . . . . . Convertible bonds, net . . . . . . . .	January 1, 2012 NT$ $4,647,900 3,331,234 1,232,798 81,848 $9,293,780	September 30, 2012	December 31, 2012	September 30, 2013 NT$ US$ (Note 4) $5,284,914 $178,786 2,610,960 88,327 741,750 25,093 — — $8,637,624 $292,206
		NT$ $ 7,519,636 3,226,975 1,192,218 — $11,938,829	NT$ US$ (Note 4) $ 6,966,012 $235,656 2,563,968 86,738 1,183,848 40,049 — — $10,713,828 $362,443

As of January 1, 2012, September 30, 2012, December 31, 2012 and September 30, 2013, the accumulated impairment losses, reducing the carrying amount, on floating rate notes and convertible bonds were NT$225,638 thousand, NT$161,702 thousand, NT$160,567 thousand (approximately US$5,432 thousand) and NT$148,350 thousand (approximately US$5,019 thousand), respectively. In February 2012, a recovery of convertible bonds through redemption was recognized as (a) a gain of NT$57,306 thousand (approximately

F-141

US$1,939 thousand) on reversal of impairment losses and (b) other income of NT$56,174 thousand (approximately US$1,900 thousand). In April 2013, a recovery of convertible bonds through redemption was recognized as a gain of NT$780 thousand (approximately US$26 thousand) on reversal of impairment losses.

17. OTHER FINANCIAL ASSETS, NET

Nonaccrual loans other than discounts and loans . . . . . . Less: Allowance for possible losses (Note 12) . . . . . . . . . Guarantee deposits for financial instrument agreements . . . . . . . . . . . . Refundable deposits . . . . . . . Deposits with original maturity more than 3 months . . . . . . . . . . . . . . Interbank clearing account . . Financial assets measured at cost . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . .	January 1, 2012	September 30, 2012	September 30, 2012	December 31, 2012	September 30, 2013
	NT$ $ 507,131 426,655		NT$ $ 498,600 426,612 71,988 1,940,093 511,774 2,900 211,884 101,379 9,199 $2,849,217	NT$ US$ (Note 4) $ 498,012 $ 16,847 426,389 14,424 71,623 2,423 1,892,383 64,018 513,971 17,387 2,900 98 404,877 13,697 101,379 3,430 72,378 2,449 $3,059,511 $103,502	NT$ US$ (Note 4) $ 490,627 $ 16,598 429,819 14,541 60,808 2,057 2,038,949 68,976 549,081 18,575 245,250 8,297 200,887 6,796 101,379 3,430 — — $3,196,354 $108,131
	80,476 1,669,282 509,539 2,900 207,369 103,846 61,338
	$2,634,750

Financial assets measured at cost were as follows:

Domestic unquoted common stocks ERA Communications Co., Ltd. . . . . . . . . . . . . . . Financial Information Service Co., Ltd. . . . . . . . . . . . . . . An Feng Enterprise Co., Ltd. . . . . . . . . . . . . . . Sunshine Asset Management Co., Ltd. . . . . . . . . . . . . . . Taipei Forex Inc. . . . . . . . . . . Taiwanpay Corp. . . . . . . . . . .	January 1, 2012	January 1, 2012	September 30, 2012	September 30, 2012		December 31, 2012		September 30, 2013
		NT$ $ 50,006 45,500 3,000 2,073 800 2,467 $103,846		NT$ $ 50,006 45,500 3,000 2,073 800 — $101,379		NT$ US$ (Note 4) $ 50,006 $1,692 45,500 1,539 3,000 102 2,073 70 800 27 — — $101,379 $3,430		NT$ US$ (Note 4) $ 50,006 $1,692 45,500 1,539 3,000 102 2,073 70 800 27 — — $101,379 $3,430

The above equity investments, which had no quoted prices in active market nor fair values that could be reliably measured, were measured at cost.

F-142

In February 2012, the shareholders of Taiwanpay Corp. resolved that it should be liquidated and dissolved, and its residual properties were distributed in March 2012 and June 2012. As a result, the Bank received a total amount of NT$1,408 thousand (approximately US$48 thousand), which was treated as a reduction of investment cost, and recognized an impairment loss of NT$1,059 thousand (approximately US$36 thousand).

18. PROPERTY AND EQUIPMENT, NET

Carrying amounts of each class Land . . . . . . . . . . . . . . . . . . . Buildings and improvements . . . . . . . . . . Computer equipment . . . . . . . Transportation equipment . . . Miscellaneous equipment . . . Equipment prepayment . . . . .	January 1, 2012	September 30, 2012	September 30, 2012	December 31, 2012	September 30, 2013
	NT$ $1,581,625 753,183 368,639 1,035 187,972 51,219		NT$ $1,581,625 737,502 364,772 460 178,083 24,961 $2,887,403	NT$ US$ (Note 4) $1,581,625 $53,505 731,985 24,763 356,761 12,069 393 14 186,853 6,321 22,076 747 $2,879,693 $97,419	NT$ US$ (Note 4) $1,581,625 $53,505 716,569 24,241 344,061 11,641 247 9 162,560 5,498 12,073 408 $2,817,135 $95,302
	$2,943,673

The above items of property and equipment were depreciated on a straight-line basis over the following estimated useful lives:

Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5 to 55 years
Computer equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3 to 7 years
Transportation equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3 to 7 years
Miscellaneous equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3 to 20 years

Movements of property and equipment were as follows:

Cost Beginning balance . . . . . . . . . . Additions . . . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . Ending balance . . . . . . . . . . . . .				Nine Months Ended September 30, 2012	Nine Months Ended September 30, 2012	Nine Months Ended September 30, 2012	Nine Months Ended September 30, 2012	Nine Months Ended September 30, 2012
	Land	Buildings and Improvements		Computer Equipment	Transportation Equipment		Miscellaneous Equipment		Equipment Prepayment		Total
	NT$ $1,581,625 — — —		NT$ $1,232,272 3,171 — 340 1,235,783			NT$ $ 7,975 56 (1,677) — 6,354		NT$ $1,347,926 42,093 (4,168) (152) 1,385,699		NT$ $ 51,219 19,711 — (45,969) 24,961	NT$ $5,509,657 105,399 (9,693 (1,137
	1,581,625										5,604,226
Accumulated depreciation
Beginning balance . . . . . . . . . . Depreciation . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . Ending balance . . . . . . . . . . . . . Net ending balance . . . . . . . . . .	— — — —		479,089 19,177 — 15 498,281 $ 737,502	920,001 89,389 (3,846) (512) 1,005,032 $ 364,772		6,940 536 (1,582) — 5,894 $ 460		1,159,954 51,998 (4,147) (189) 1,207,616 $ 178,083		— — — — — $ 24,961	2,565,984 161,100 (9,575 (686
	—										2,716,823
	$1,581,625										$2,887,403

F-143

Cost Beginning balance . . . . . . . . Additions . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . Ending balance . . . . . . . . . . .	. . . . . . . . . .	. . . . . . . . . .					Nine Months Ended September 30, 2013	Nine Months Ended September 30, 2013	Nine Months Ended September 30, 2013	Nine Months Ended September 30, 2013	Nine Months Ended September 30, 2013	Nine Months Ended September 30, 2013	Nine Months Ended September 30, 2013	Nine Months Ended September 30, 2013
			Land NT$ $1,581,625 — — — 1,581,625		Buildings and Improvements		Computer Equipment		Transportation Equipment			Miscellaneous Equipment			Equipment Prepayment		Total
					NT$ $1,236,633 3,243 (550) 299 1,239,625					NT$ $6,234 — (296) — 5,938			NT$ $1,406,170 13,948 (11,538) 7,962 1,416,542			NT$ $ 22,076 15,316 — (25,319) 12,073	NT$ $5,607,535 80,300 (150,774 737
																	5,537,798
Accumulated depreciation
Beginning balance . . . . . . . . Depreciation . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . Ending balance . . . . . . . . . . . Net ending balance . . . . . . . . Cost Beginning balance . . . . . . . . Additions . . . . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . Ending balance . . . . . . . . . .	. . . . . . . . . . . .		— — — — — $1,581,625		504,648 18,935 (550) 23 523,056 $ 716,569		998,036 78,055 (138,388) 231 937,934 $ 344,061			5,841 147 (297) — 5,691 $ 247			1,219,317 46,132 (11,537) 70 1,253,982 $ 162,560			— — — — — $ 12,073	2,727,842 143,269 (150,772 324
													1,253,982				2,720,663
													$ 162,560				$2,817,135
						Nine Months Ended September 30, 2013
			Land	Buildings and Improvements		Computer Equipment		Transportation Equipment			Miscellaneous Equipment			Equipment Prepayment US$ (Note 4) $ 747 518 — (857) 408			Total
	US$ (Note 4) $53,505 — — — 53,505			US$ (Note 4) $41,835 110 (19) 10 41,936		US$ (Note 4) $45,832 1,617 (4,682) 603 43,370		US$ (Note 4) $211 — (10) — 201			US$ (Note 4) $47,570 472 (390) 269 47,921						US$ (Note 4) $189,700 2,717 (5,101) 25 187,341 92,281 4,847 (5,101) 12 92,039 $ 95,302
Accumulated depreciation
Beginning balance . . . . . . . . Depreciation . . . . . . . . . . . . Disposals . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . Ending balance . . . . . . . . . . Net ending balance . . . . . . .		— — — — — $53,505			17,072 641 (19) 1 17,695 $24,241		33,763 2,640 (4,682) 8 31,729 $11,641	197 5 (10) — 192 $ 9					41,249 1,561 (390) 3 42,423 $ 5,498			— — — — — $ 408

19. INTANGIBLE ASSETS, NET

Operating rights . . . . . . . . . . . . Fair value of core deposits . . . . Less: Accumulated amortization . . . . . . . . . . . . .	January 1, 2012	September 30, 2012	September 30, 2012	December 31, 2012	September 30, 2013
	NT$ $1,538,210 428,887		NT$ $1,538,210 428,887 1,967,097 89,763 $1,877,334	NT$ US$ (Note 4) $1,538,210 $52,037 428,887 14,509 1,967,097 66,546 99,049 3,351 $1,868,048 $63,195	NT$ US$ (Note 4) $1,538,210 $52,037 428,887 14,509 1,967,097 66,546 126,907 4,293 $1,840,190 $62,253
	1,967,097 61,904
	$1,905,193

In April 2010, the Bank acquired the assets and liabilities, classified as Package B of the Chinfon Bank, through a bidding process. The acquired management and operation rights of Chinfon Bank’s branches have indefinite useful life, while the fair value of core deposits is amortized over 4 to 15 years.

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20. OTHER ASSETS, NET

Buildings and land held for sale . . . . . . . . . . . . . Less: Accumulated impairment . . . . . . . . . Prepaid expenses . . . . . . . Others . . . . . . . . . . . . . . .	January 1, 2012 NT$ $467,389 41,271 426,118 123,584 3,059 $552,761	September 30, 2012 NT$ $101,150 11,309 89,841 196,826 9,946 $296,613	December 31, 2012 NT$ US$ (Note 4) $ 48,429 $1,638 6,968 235 41,461 1,403 183,045 6,192 1,566 53 $226,072 $7,648	September 30, 2013
				NT$ US$ (Note 4) $ 27,567 $ 933 4,246 144 23,321 789 175,272 5,929 11,911 403 $210,504 $7,121

21. DUE TO THE CENTRAL BANK AND OTHER BANKS

Call loans from banks . . . Due to banks . . . . . . . . . . Overdraft . . . . . . . . . . . . .	January 1, 2012	September 30, 2012	September 30, 2012	December 31, 2012	September 30, 2013
	NT$ $11,236,270 544,952 4,509		NT$ $14,722,772 562,388 42,117 $15,327,277	NT$ US$ (Note 4) $11,259,482 $380,903 316,051 10,692 99,425 3,363 $11,674,958 $394,958	NT$ US$ (Note 4) $24,648,252 $833,838 315,355 10,668 63,821 2,159 $25,027,428 $846,665
	$11,785,731

22. PAYABLES

Securities settlement payables . . . . . . . . . . . . . . Receipts under custody . . . . Accrued expenses . . . . . . . . Accrued interest . . . . . . . . . Dividend and bonus . . . . . . Payables on factoring business . . . . . . . . . . . . . . Checks for clearing . . . . . . . Payables on consigned funds . . . . . . . . . . . . . . . . Acceptances . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . .	January 1, 2012	September 30, 2012	September 30, 2012	December 31, 2012	September 30, 2013
	NT$ $ 102,244 34,929 1,373,093 864,256 122 457,695 817,187 137,291 332,333 376,170 $4,495,320		NT$ $ 186,000 517,633 1,311,970 1,066,658 529,762 434,942 1,119,589 349,739 271,449 315,813 $6,103,555	NT$ US$ (Note 4) $ 166,815 $ 5,643 35,622 1,205 1,218,141 41,209 997,766 33,754 145 5 499,185 16,887 1,671,862 56,558 111,972 3,788 503,574 17,036 355,289 12,020 $5,560,371 $188,105	NT$ US$ (Note 4) $ 5,314,331 $179,781 1,478,132 50,004 1,373,623 46,469 883,815 29,899 515,865 17,452 487,956 16,507 479,157 16,210 371,698 12,574 232,452 7,864 340,082 11,505 $11,477,111 $388,265

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23. DEPOSITS AND REMITTANCES

Checking deposits . . . . . Demand deposits . . . . . . Demand savings . . . . . . Time savings . . . . . . . . . Negotiable certificates of deposit . . . . . . . . . Time deposits . . . . . . . . Remittances . . . . . . . . . .	January 1, 2012	January 1, 2012	September 30, 2012 NT$ $ 3,943,475 29,189,645 52,906,010 89,370,577 17,414,500 185,037,335 5,418 $377,866,960	December	31, 2012	September 30, 2013	September 30, 2013
		NT$ $ 3,695,949 28,301,271 50,602,247 86,199,374 24,478,500 176,716,076 5,145 $369,998,562		NT$ $ 2,974,630 31,614,166 52,960,380 87,548,604 23,138,500 193,672,326 24,660	US$ (Note 4) $ 100,630 1,069,491 1,791,623 2,961,726 782,764 6,551,838 834	NT$ $ 2,871,238 40,693,261 54,789,134 82,998,287 20,437,500 190,835,201 19,741	US$ (Note 4) $ 97,133 1,376,633 1,853,489 2,807,790 691,390 6,455,859 668
				$391,933,266	$13,258,906	$392,644,362	$13,282,962

24. BANK DEBENTURES

Domestic bank debentures . . . . . . . . . . Euro Convertible Bonds . . . . . . . . . . . . . .	January 1, 2012 NT$ $20,230,280 — $20,230,280	September 30, 2012	September 30, 2012	December 31, 2012	September 30, 2013
			NT$ $23,094,543 — $23,094,543	NT$ US$ (Note 4) $23,072,123 $780,518 — — $23,072,123 $780,518	NT$ US$ (Note 4) $21,014,733 $710,918 4,040,905 136,702 $25,055,638 $847,620

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Domestic bank debentures

				January 1,	September 30,
	Item	Issuance Period	Note	2012	2012	December 31, 2012		September 30, 2013
				NT$	NT$	NT$	US$ (Note 4)	NT$	US$ (Note 4)
	Senior bank debentures—10-year	2005.08.26-2015.08.26	Interest payable on August 26 each	$ 3,000,000	$ 3,000,000	$ 3,000,000	$101,488	$ 3,000,000	$101,488
	maturity; fourth issue in 2005		year; fixed interest rate at 2.30%
	Subordinated bank debentures—seven-	2006.12.27-2013.12.27	Interest payable on December 27 each	2,000,000	2,000,000	2,000,000	67,659	2,000,000	67,659
	year maturity; first issue in 2006		year; floating interest rate
	Subordinated bank debentures—seven-	2007.02.13-2014.02.13	A coupons: Interest payable on	2,000,000	2,000,000	2,000,000	67,659	2,000,000	67,659
	year maturity; first issue in 2007		February 13 each year; floating
			interest rate
			B coupons: Interest payable on
			February 13 each year; fixed interest
			rate at 2.55%
	Subordinated bank debentures—seven-	2007.03.12-2014.03.12	Interest payable on March 12 each	1,000,000	1,000,000	1,000,000	33,830	1,000,000	33,830
	year maturity; second issue in 2007		year; floating interest rate
	Subordinated bank debentures—five	2007.09.26-2013.03.26	Interest payable on September 26 each	2,000,000	2,000,000	2,000,000	67,659	—	—
	and a half years’ maturity; third issue		year (will be paid on March 26 in the
	in 2007		last year); floating interest rate
	Subordinated bank debentures—seven-	2008.06.17-2015.06.17	A coupons: Interest payable on June	2,400,000	2,400,000	2,400,000	81,191	2,400,000	81,191
	year maturity; first issue in 2008		17 each year; 3.90% fixed interest
			rate;
F-147	Subordinated bank debentures—seven-	2010.05.18-2017.05.18	B coupons: Interest payable on June 17 each year; floating interest rate Interest payable on May 18 each year;	2,000,000	2,000,000	2,000,000	67,659	2,000,000	67,659
	year maturity; first issue in 2010		fixed interest rate at 2.98%
	Subordinated bank debentures—seven-	2010.09.29-2017.09.29	Interest payable on September 29 each	2,000,000	2,000,000	2,000,000	67,659	2,000,000	67,659
	year maturity; second issue in 2010		year; fixed interest rate at 2.10%
	Subordinated bank debentures—seven-	2011.11.10-2018.11.10	Interest payable on November 10 each	3,500,000	3,500,000	3,500,000	118,404	3,500,000	118,403
	year maturity; first issue in 2011		year; fixed interest rate at 1.95%
	Subordinated bank debentures—seven-	2012.06.27-2019.06.27	Interest payable on June 27 each year;	—	3,000,000	3,000,000	101,488	3,000,000	101,488
	year maturity; first issue in 2012		fixed interest rate at 1.75%
	Subordinated bank debentures—seven-	2005.06.28-2012.06.28	Interest payable on simple interest	90,900	5,360	4,460	151	3,960	134
	year maturity; 1-1 issue in 2005;		every half year; floating interest rate;
	acquired from Chinfon Bank		repayable in five equal annual
			installments from the third year of
			issuance
	Subordinated bank debentures—seven-	Matured on		240	240	240	8	240	8
	year maturity; 1-1 issue in 2002;	2009.06.28
	acquired from Chinfon Bank
	Total bank debentures			19,991,140	22,905,600	22,904,700	774,855	20,904,200	707,178
	Add: Unrealized valuation loss (Note 9)			239,140	188,943	167,423	5,663	110,533	3,740
				$20,230,280	$23,094,543	$23,072,123	$780,518	$21,014,733	$710,918

The hedging transactions with regard to the above bank debentures are shown in Note 9.

Euro convertible bonds

On February 7, 2013 (the “Issue Date”), the Bank issued five-year unsecured zero coupon convertible bonds (the “Bonds”) with an aggregate principal of US$150,000 thousand which were listed on the Singapore Exchange Securities Trading Limited. The minimum lot size for the Bonds trading is US$200 thousand. On the Issue Date, the liability component of the Bonds was NT$4,009,661 thousand (approximately US$135,645 thousand) (net of transaction costs of NT$38,252 thousand (approximately US$1,294 thousand)). The initial interest effective rate of the liability component was 2.63%. The conversion option derivative component of the Bonds was NT$433,337 thousand (approximately US$14,660 thousand). Other terms and conditions of the Bonds are described below:

• a. Redemption at maturity

Unless the Bonds have been previously redeemed, converted or repurchased and canceled, the Bank shall redeem the Bonds at 101.89% of their principal amount in U.S. dollars on February 7, 2018 (the “Maturity Date”). But if this day is not a business day, bond redemption will be on the preceding business day.

• b. Redemption at the option of the Bank

• 1) At any time on or after August 7, 2015, the Bank may redeem the Bonds in whole or piecemeal (being US$200 thousand in principal amount and integral multiples thereof) at the early redemption amount which represents the principal amount of the Bonds plus a gross yield of the principal amount of the Bonds if the closing price on the Taiwan Stock Exchange (the “TWSE”) of the common shares, translated into U.S. dollars at the prevailing rate, within 20 out of 30 consecutive trading days, is at least 130% of the quotient of the early redemption amount divided by the number of common shares to be issued upon conversion of the Bonds on the applicable trading day based on the conversion price then in effect, translated into U.S. dollars at the fixed exchange rate.

• 2) The Bank may redeem all, but not a portion of, the Bonds at the early redemption amount if more than 90% of the principal amount of the Bonds has already been redeemed, converted or repurchased and canceled.

• 3) The Bank is obliged to pay additional amounts as a result of any change relating to taxation in the relevant jurisdiction or any change in the general application or official interpretation of tax laws or regulations, and this obligation cannot be avoided by the Bank even by taking reasonable measures.

The early redemption amount for the Bonds is so calculated to provide the bondholder a gross yield of 0.375% semi-annually.

• c.

• Details of conversion

• 1) Converted shares: Newly issued common shares of the Bank (the “Shares”)

• 2) Conversion period: Unless the Bonds have been previously redeemed, converted or repurchased and canceled, the Bonds are convertible, at the option of the bondholder at any time on or after March 20, 2013, which is the 41st calendar day after the Issue Date, and prior to the close of business on January 28, 2018, which is the 10th calendar day prior to the Maturity Date for bond conversion into Shares. In addition, conversion rights shall not be exercised during the following closed periods:

• a) 60 days prior to the date of the annual general shareholders’ meeting, 30 days prior to the date of the special general shareholders’ meeting, or on the date at least 5 days prior to the record date for determination of shareholders entitled to receive annual dividend, bonus, or other benefits and rights;

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• b) from the date at least 15 business days prior to the record date for any free distribution of shares, cash dividend, or rights to subscribe for new shares in a rights offering until the distribution of these rights, or from the record date for capital reduction until one day prior to the resumption of trading of the reissued shares following the capital reduction; and

• c) any other period as determined by ROC laws.

• 3) Adjustments to conversion price: On any stock dilution or events stated in the Offering Memorandum that occur after the Issue Date, the conversion price shall be adjusted in accordance with the formula stated in the Offering Memorandum.

• 4) Conversion price: The original conversion price was NT$15.24 per share and was adjusted to NT$14.24 per share since September 9, 2013 because of dividends (at the fixed exchange rate of NT$29.569 to US$1.00)

• 5) Redemption at the option of the bondholders:

• a) Unless the Bonds have been early redeemed, converted or repurchased, each bondholder has a put right to require the Bank to redeem in whole or in part only (being US$200 thousand in principal amount and integral multiples thereof) the Bonds at the early redemption amount on August 7, 2015.

• b) In the event that Bank’s shares cease to be listed or admitted to trading on the TWSE (a “Delisting”), the Bank shall notify the bondholders accordingly, and each bondholder shall have the right to require the Bank to redeem the Bondholder’s Bonds, in whole or in part only (being US$200 thousand in principal amount and integral multiples thereof) at the Early Redemption Amount on the 20th business day after the date of this notice.

• c) If the Bank has a change of control, the Bank shall notify the bondholders, and each bondholder shall have the right to require the Bank to redeem all or a part of the Bonds (being US$200 thousand in principal amount and integral multiples thereof) at the Early Redemption Amount on the 20th business day after the date of this notice.

25. OTHER FINANCIAL LIABILITIES

Securities sold under repurchase agreements . . . Short-term loans . . . . . . . . . . Principal of structured notes . . . . . . . . . . . . . . . . . Deposits received . . . . . . . . . Lease payable . . . . . . . . . . . .	January 1, 2012	September 30, 2012	September 30, 2012	December 31, 2012	September 30, 2013
	NT$ $ 213,870 1,369,929 459,005 168,404 78		NT$ $ — 1,039,977 770,627 197,008 35 $2,007,647	NT$ US$ (Note 4) $ — $ — 969,980 32,814 730,962 24,728 207,093 7,006 35 1 $1,908,070 $64,549	NT$ US$ (Note 4) $ 582,621 $19,710 399,926 13,529 319,056 10,794 184,427 6,239 35 1 $1,486,065 $50,273
	$2,211,286

Under related laws and regulations, effective January 1, 2011, the principal received on structured financial instruments should not be classified as deposits. Thus, such principal is no longer included in the mandatory reserve deposit, in calculating various ratios or statutory limits.

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The short-term loans are as follows:

Bank loans . . . . . . . . . . . . . . Commercial papers, net . . . . Interest rates on bank loans . . . . . . . . . . . . . . . . .	January 1, 2012	September 30, 2012	December 31, 2012	December 31, 2012	September 30, 2013	September 30, 2013
	NT$ $ 1,120,000 249,929	NT$ $ 990,000 49,977	NT$ $ 920,000 49,980	US$ (Note 4) $ 31,123 1,691	NT$ $ 350,000 49,926	US$ (Note 4) $ 11,840 1,689
	$ 1,369,929	$ 1,039,977	$ 969,980	$ 32,814	$ 399,926	$ 13,529
	1.30%-1.56%	1.30%-1.42%	1.32%-1.41%	1.32%-1.41%	1.35%-1.38%	1.35%-1.38%

The status of commercial papers is as follows:

International Bills Finance Corp. . . . . . . . . . . . . . . . . . . . Ta Chong Bank . . . . . . . . . . . . . Less: Unamortized discount on commercial paper . . . . . . . . . Interest rates . . . . . . . . . . . . . . .	January 1, 2012 NT$ $ 50,000 200,000 250,000 71 $ 249,929 0.77%-0.86%	September 30, 2012	September 30, 2012	December 31, 2012	September 30, 2013
			NT$ $50,000 — 50,000 23 $49,977 1.39%	NT$ US$ (Note 4) $50,000 $1,692 — — 50,000 1,692 20 1 $49,980 $1,691 1.38% 1.38%	NT$ US$ (Note 4) $50,000 $1,692 — — 50,000 1,692 74 3 $49,926 $1,689 1.39% 1.39%

The securities sold under repurchase agreements are as follows:

Government bonds . . . . . . . . . . . Foreign bank debentures . . . . . . Repurchase date . . . . . . . . . . . . . Repurchase price . . . . . . . . . . . .	January 1, 2012 NT$ $ 213,870 — $ 213,870 2012.01.02 $ 213,870	September 30, 2012 NT$ $ — — $ — — $ —	December 31, 2012 NT$ US$ (Note 4) $ — $ — — — $ — $ — — — $ — $ —	September 30, 2013	September 30, 2013
				NT$ $ 155,000 427,621 $ 582,621 2013.10.02- 2013.10.25 $ 583,599	US$ (Note 4) $ 5,244 14,466
					$ 19,710
					2013.10.02- 2013.10.25 $ 19,743

26. PROVISIONS

Employee benefits . . . . . . . . . . . . Reserve for guarantee obligations . . . . . . . . . . . . . . . . Contingency reserve . . . . . . . . . .	January 1, 2012 NT$ $620,865 65,454 4,361 $690,680	September 30, 2012 NT$ $609,391 74,818 7,016 $691,225	December 31, 2012	September 30, 2013
			NT$ US$ (Note 4) $609,057 $20,604 80,673 2,729 8,115 275 $697,845 $23,608	NT$ US$ (Note 4) $607,853 $20,563 96,988 3,281 10,131 343 $714,972 $24,187

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27. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The pension plan under the Labor Pension Act (LPA) is a defined contribution plan. For employees subjected to LPA, the Bank and its subsidiaries make contributions to their individual pension accounts in the Department of Labor at 6% of their monthly salaries and wages. Contributions to defined contribution plan recognized as expenses in comprehensive income statement were NT$26,403 thousand and NT$26,318 thousand (approximately US$891 thousand) for the three months ended September 30, 2012 and 2013, respectively; NT$78,307 thousand and NT$80,674 thousand (approximately US$2,729 thousand) for the nine months ended September 30, 2012 and 2013, respectively.

b. Defined benefit plans

Under a defined benefit plan based on the Labor Standards Law (LSL), the Bank recognizes pension liabilities based on the actuarial report. The Bank contributes amounts equal to 2% of total monthly salaries and wages to a pension fund. The pension fund is deposited in the Bank of Taiwan in the committee’s name.

Far Eastern Life Insurance Agency Co., Ltd. contributes amounts equal to 2% of total monthly salaries and wages to a pension fund which is deposited in the Bank of Taiwan. Because the balance of the pension fund as of September 30, 2010 is sufficient for paying pension obligations, further contributions to the pension fund have been suspended since October 2010 with the approval of the Department of Labor.

The Bank’s most recent actuarial valuation of plan assets and the present value of defined benefit obligation were carried out on February 20, 2013 by Towers Watson & Co. The present value of defined benefit obligation and related current and past service costs were measured using the projected unit credit method. The Bank recognized employee benefits expense of NT$5,071 thousand and NT$6,131 thousand (approximately US$207 thousand) for the three months ended September 30, 2012 and 2013, respectively; NT$15,212 thousand and NT$18,391 thousand (approximately US$622 thousand) for the nine months ended September 30, 2012 and 2013, respectively, which calculated using the actuarially determined pension cost rate as of December 31, 2012 and January 1, 2012, respectively.

The principal assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected rate of return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected rate of salary increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Measurement Date	Measurement Date
	January 1, 2012 1.75% 2.00% 2.50%	December 31, 2012
		1.75% 1.50% 2.50%

F-151

The amount included in the consolidated statement of financial position arising from the Bank’s obligation in respect of its defined benefit plans was as follows:

Present value of funded defined benefit obligation . . . . . . . . . . . . Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unrecognized actuarial loss, net . . . . . . . . . . . . . . . . . . . . . . . . . . Unrecognized past service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . Employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	January 1, 2012 NT$ $ 857,300 (260,879) 596,421 — 24,444 $ 620,865	December 31, 2012	December 31, 2012	December 31, 2012
		NT$ $ 978,015 (279,571) 698,444 (112,631) 23,244 $ 609,057	US$(Note 4)
				$33,086 (9,458) 23,628 (3,810) 786 $20,604

The plan assets refer to the pension fund deposited in the Bank of Taiwan.

The major categories of plan assets at the end of the reporting period for each category were as follows:

Equity instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Debt instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deposits in banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	January 1, 2012 40.75% 35.25% 23.87% 0.13% 100.00%	December 31, 2012	December 31, 2012
			39.42% 36.82% 23.69% 0.07% 100.00%

28. OTHER LIABILITIES

Advanced receipts . . . . . . . . . . . . Deferred revenue—customer loyalty programmes . . . . . . . . Temporary receipts . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . .	January 1, 2012	January 1, 2012	September 30, 2012 NT$ $270,170 92,336 44,816 34,800 $442,122	September 30, 2012 NT$ $270,170 92,336 44,816 34,800 $442,122	December 31, 2012	September 30, 2013
		NT$ $270,537 106,517 32,486 17,897 $427,437		NT$ $270,170 92,336 44,816 34,800 $442,122	NT$ US$ (Note 4) $277,618 $ 9,392 73,244 2,478 49,119 1,662 32,393 1,095 $432,374 $14,627	NT$ US$ (Note 4) $264,116 $ 8,935 102,527 3,469 92,709 3,136 30,293 1,025 $489,645 $16,565

29. EQUITY

• a. Share capital

Ordinary shares

Number of shares authorized (in thousands) . . . . . . . . . . Shares authorized . . . . . . . . . Number of shares issued and fully paid (in thousands) . . . . . . . . . . . . Shares issued . . . . . . . . . . . .	January 1, 2012 NT$ 4,500,000 $45,000,000 2,118,560 $21,185,604	September 30, 2012	December 31, 2012	December 31, 2012	September 30, 2013 NT$ US$ (Note 4) 4,500,000 $45,000,000 $1,522,327 2,362,118 $23,621,182 $ 799,093	September 30, 2013 NT$ US$ (Note 4) 4,500,000 $45,000,000 $1,522,327 2,362,118 $23,621,182 $ 799,093
		NT$ 4,500,000 $45,000,000 2,242,260 $22,422,596	NT$ 4,500,000 $45,000,000 2,242,260 $22,422,596	US$ (Note 4) $1,522,327		US$ (Note 4) $1,522,327 $ 799,093
				$ 758,545

F-152

Ordinary common shares issued, which have a par value of $10, carry one vote per share and carry a right to dividends.

• b. Capital surplus

The capital surplus arising from shares issued in excess of par and treasury stock transactions may be used to offset a deficit, or, if the Bank has no deficit, distributed as cash dividends or transferred to capital (limited to a certain percentage of the Bank’s paid-in capital and once a year). However, capital surplus arising from investments accounted for using equity method may not be used for any purpose.

• c. Retained earnings and dividend policy

The Bank’s Articles of Incorporation provide that the appropriations from the Bank’s annual earnings less its losses and all taxes and dues must be in the following order:

• 1) 30% as legal reserve;

• 2) Special reserve based on the relevant law or regulations; and

• 3) A portion to be retained on the basis of operational needs.

• 4) Any remainder:

	%
Shareholders’ bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	92
Remuneration to directors and supervisors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
Employees’ bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
	100

The dividend policy of the Bank will be evaluated and adjusted after taking into account such factors as the present environment and future operation plans, and its cash dividends should not be less than 10% of total dividends distributed.

The Banking Law provides that, unless legal reserve reached the Bank’s paid-in capital, cash dividends are limited to 15% of paid-in capital.

Under the Company Law, legal reserve should be appropriated until it has reached the Bank’s paidin capital. This reserve may be used to offset a deficit. According to an amendment to the Company Law, when the Bank has no deficit and its legal reserve has exceeded 25% of its paid-in capital, the excess may be distributed in the form of stocks or cash.

The appropriations of earnings for the 2011 and 2012, which were approved in the shareholders’ meetings on June 26, 2012 and June 19, 2013, respectively, were as follows:

Legal reserve . . . . . . . . . . . . . . . . . . . . . . . . . Special reserve . . . . . . . . . . . . . . . . . . . . . . . . Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . Stock dividends . . . . . . . . . . . . . . . . . . . . . . .	Appropriation of Earnings 2011 2012 NT$ NT$ US$ (Note 4) $ 711,970 $ 769,012 $26,015 — 173,800 5,880 529,640 515,720 17,447 1,131,311 1,105,434 37,396 $2,372,921 $2,563,966 $86,738	Appropriation of Earnings 2011 2012 NT$ NT$ US$ (Note 4) $ 711,970 $ 769,012 $26,015 — 173,800 5,880 529,640 515,720 17,447 1,131,311 1,105,434 37,396 $2,372,921 $2,563,966 $86,738	Dividends Per Share (Dollars)	Dividends Per Share (Dollars)
	2011 NT$ $ 711,970 — 529,640 1,131,311 $2,372,921		2011 NT$ $0.250 0.534	2012
		NT$ $ 769,012 173,800 515,720 1,105,434 $2,563,966		NT$ US$ (Note 4) $0.230 $0.008 0.493 0.017

F-153

The employees’ bonus (in stocks) and the remuneration to directors and supervisors approved in the foregoing shareholders’ meetings were NT$144,431 thousand and NT$140,970 thousand (approximately US$4,769 thousand) on the earnings of 2011 and 2012, respectively, and were not different from the accrual amount recognized in the 2011 and 2012 financial statements.

The employees’ stock bonus for 2011 of 10,568 thousand shares was determined at NT$10.25 per share, the closing price of the Bank’s ordinary share (after considering the effect of cash and stock dividends) of the day preceding the shareholders’ meeting. As a result, the capital surplus of 2012 increased by NT$2,642 thousand. The employees’ stock bonus for 2012 of 9,315 thousand shares was determined at NT$11.35 per share, the closing price of the Bank’s ordinary share (after considering the effect of cash and stock dividends) of the day preceding the shareholders’ meeting. As a result, the capital surplus of 2013 increased by NT$12,575 thousand (approximately US$425 thousand).

Under the Integrated Income Tax System, ROC-resident shareholders will be allocated imputation credit for the distribution of earnings that the Bank generated after January 1, 1998, the balance of which is maintained in the imputation credits account (ICA). The allocation of imputation credits is based on a creditable tax ratio, which is determined on the dividend ex-right date.

The Bank’s foreign shareholders are not entitled to the imputation credits, except those related to the 10% income tax on unappropriated earnings actually paid by the Bank. If dividends distributed to foreign shareholders are from the earnings subject to an additional 10% income tax, the tax can be used by the foreign shareholders to reduce the final withholding tax on their dividends income.

According to the Bank’s Articles of Incorporation, based on the net income for the period, employees’ bonus and the remuneration to directors and supervisors were estimated to be NT$103,000 thousand and NT$134,000 thousand (approximately US$4,533 thousand) for the nine months ended September 30, 2012 and 2013, respectively, which were not estimated amounts for the whole year. Material difference between such estimated amounts and the amounts proposed by the Board of Directors in the following year are adjusted for in the current year. If the actual amounts subsequently resolved by the shareholders differ from the proposed amounts, the differences are recorded in the year of shareholders’ resolution as a change in accounting estimate.

Information on the employees’ bonus and the remuneration to directors and supervisors is available on the Market Observations Post System Website of the Taiwan Stock Exchange.

d. Special reserve appropriated following first-time adoption of Taiwan-IFRSs

Under Rule No. 1010012865 issued by the FSC on April 6, 2012, on the first-time adoption of Taiwan-IFRSs, a company should appropriate to special reserve the amounts of unrealized revaluation increment and cumulative translation adjustments transferred to retained earnings as a result of the company’s use of exemptions under IFRS 1. However, at the date of transitions to Taiwan-IFRSs, if the increase in retained earnings that resulted from all Taiwan-IFRSs adjustments is not enough for this appropriation, only the increase in retained earnings that resulted from all Taiwan-IFRSs adjustments will be appropriated to special reserve. The special reserve appropriated as above may be reversed to retained earnings in proportion to the usage, disposal or reclassification of the related assets and thereafter distributed.

The Bank had no unrealized revaluation increment, and cumulative translation adjustments had not been elected the use of exemptions under IFRS 1; therefore, no special reserve was appropriated on the first-time adoption of Taiwan-IFRSs.

F-154

e. Other equity items

Movements of unrealized gain (loss) on available-for-sale financial assets under equity attributable to owners of the Bank were as follows:

Balance, beginning of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unrealized gain (loss) on available-for-sale financial assets . . . . . . . . . . Cumulative gain reclassified to profit or loss on sale of available-for- sale financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Share of unrealized loss on available-for-sale financial assets of associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balance, end of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Nine Months Ended September 30	Nine Months Ended September 30
	2012 NT$ $ 10,252 116,504 (143,915) (8,557) $ (25,716)	2013
		NT$ US$ (Note 4) $(173,800) $ (5,880) (220,985) (7,476) (26,396) (893) (15,087) (510) $(436,268) $(14,759)

30. NET INTEREST INCOME

Interest income Discounts and loans . . . . . . . Credit cards . . . . . . . . . . . . . Due from the Central Bank . . . . . . . . . . . . . . . . . Bonds . . . . . . . . . . . . . . . . . . Recovered amount over written-off loans . . . . . . . . Others . . . . . . . . . . . . . . . . . . Interest cost Deposits and remittances . . . Automobile financing obligations . . . . . . . . . . . . Bank debentures . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . Net interest income . . . . . . . . . . .	Three Months Ended September 30	Three Months Ended September 30	Nine Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $5,490,915 $6,647,300 $224,875 698,035 704,621 23,837 520,696 454,506 15,375 217,506 212,678 7,195 86,483 162,544 5,499 131,743 144,617 4,892 7,145,378 8,326,266 281,673 2,682,543 2,516,138 85,120 953,748 1,673,184 56,603 266,071 346,220 11,712 169,620 127,971 4,329 4,071,982 4,663,513 157,764 $3,073,396 $3,662,753 $123,909	Nine Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $5,490,915 $6,647,300 $224,875 698,035 704,621 23,837 520,696 454,506 15,375 217,506 212,678 7,195 86,483 162,544 5,499 131,743 144,617 4,892 7,145,378 8,326,266 281,673 2,682,543 2,516,138 85,120 953,748 1,673,184 56,603 266,071 346,220 11,712 169,620 127,971 4,329 4,071,982 4,663,513 157,764 $3,073,396 $3,662,753 $123,909
	2012	2013		2013
	NT$ $1,889,496 237,757 155,487 69,521 34,986 51,691	NT$ US$ (Note 4) $2,374,480 $80,327 234,249 7,925 152,446 5,157 83,200 2,815 42,448 1,436 32,551 1,101 2,919,374 98,761 822,729 27,833 653,011 22,091 116,924 3,955 45,704 1,546 1,638,368 55,425 $1,281,006 $43,336		NT$ US$ (Note 4) $6,647,300 $224,875 704,621 23,837 454,506 15,375 212,678 7,195 162,544 5,499 144,617 4,892 8,326,266 281,673 2,516,138 85,120 1,673,184 56,603 346,220 11,712 127,971 4,329 4,663,513 157,764 $3,662,753 $123,909
	2,438,938
	896,161 351,801 97,725 51,854
	1,397,541
	$1,041,397

F-155

31. NET SERVICE FEE INCOME

Service fee income Consigned funds and insurance . . . . . . . . . . . . Credit business . . . . . . . . . Credit cards . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . Service fee expense Visa and Master . . . . . . . . Agency service fee . . . . . . National Credit Card Center fee . . . . . . . . . . . Outsourcing fee for collection . . . . . . . . . . . Credit investigation . . . . . Interbank service fee . . . . . Others . . . . . . . . . . . . . . . . Net service fee income . . . . . . .	Three Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $317,135 $276,962 $ 9,369 155,280 266,096 9,002 229,228 218,974 7,408 82,571 93,088 3,149 784,214 855,120 28,928 23,439 29,303 991 23,585 25,878 875 18,274 20,440 692 18,419 19,693 666 11,443 10,942 370 8,708 8,562 290 24,904 22,380 757 128,772 137,198 4,641 $655,442 $717,922 $24,287	Nine Months Ended September 30	Nine Months Ended September 30
	2012 NT$ $317,135 155,280 229,228 82,571 784,214 23,439 23,585 18,274 18,419 11,443 8,708 24,904 128,772 $655,442	2012 NT$ $ 828,403 490,800 727,784 246,108 2,293,095 64,664 69,913 53,939 58,758 34,662 27,184 71,807 380,927 $1,912,168	2013
			NT$ US$ (Note 4) $ 933,298 $31,573 647,274 21,897 680,684 23,027 272,290 9,211 2,533,546 85,708 80,326 2,718 75,564 2,556 65,398 2,212 56,559 1,913 33,117 1,120 26,568 899 64,568 2,184 402,100 13,602 $2,131,446 $72,106

32. NET GAIN ON FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

Net interest income . . . . . . . . . . Dividends . . . . . . . . . . . . . . . . . Realized gains (losses) Convertible bonds . . . . . . . Derivative instruments . . . Others . . . . . . . . . . . . . . . . Gains (losses) on valuation Convertible bonds . . . . . . . Derivative instruments . . . Others . . . . . . . . . . . . . . . . Net gains . . . . . . . . . . . . . . . . . .	Three Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $ 16,592 $ 10,640 $ 360 7,370 8,043 272 9,890 289,137 9,781 300,942 232,710 7,872 (146) 1,731 59 310,686 523,578 17,712 200,121 142,413 4,818 (175,071) (445,347) (15,066) 1,568 22,134 749 26,618 (280,800) (9,499) $ 361,266 $ 261,461 $ 8,845		Nine Months Ended September 30	Nine Months Ended September 30
	2012 NT$ $ 16,592 7,370 9,890 300,942 (146) 310,686 200,121 (175,071) 1,568 26,618 $ 361,266		2012 NT$ $ 29,296 7,370 22,315 606,067 (42,963) 585,419 168,837 (15,955) 10,111 162,993 $785,078	2013
				NT$ US$ (Note 4) $ 47,814 $ 1,617 8,043 272 298,016 10,082 1,602,920 54,226 414 14 1,901,350 64,322 781,031 26,422 (1,865,067) (63,094) (6,320) (214) (1,090,356) (36,886) $ 866,851 $ 29,325

F-156

33. NET GAIN ON AVAILABLE-FOR-SALE FINANCIAL ASSETS

Dividends . . . . . . . . . . . . . . . . . . . Stocks . . . . . . . . . . . . . . . . . . . . . . Bonds . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . .	Three Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $63,476 $52,670 $1,782 9,235 25,770 872 (1,442) (4,422) (150) — (1) — $71,269 $74,017 $2,504	Nine Months Ended September 30	Nine Months Ended September 30
		2012 NT$ $ 63,476 57,951 85,964 — $207,391	2013
			NT$ US$ (Note 4) $52,670 $1,782 31,585 1,069 (5,187) (176) (2) — $79,066 $2,675

34. NONINTEREST INCOME AND GAINS—OTHERS

Rental . . . . . . . . . . . . . . . . . . . . . . Gains on recovered debt investments with no active market . . . . . . . . . . . . . . . . . . . . Gains on recovered security deposits . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . .	Three Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $3,223 $ 2,224 $ 75 — — — — — — 6,764 17,721 600 $9,987 $19,945 $675	Nine Months Ended September 30	Nine Months Ended September 30
		2012 NT$ $ 8,546 56,174 18,627 31,302 $114,649	2013
			NT$ US$ (Note 4) $ 6,958 $ 235 — — — — 42,490 1,438 $49,448 $1,673

35. EMPLOYEE BENEFITS EXPENSE

Salaries and bonus . . . . . . . . Employee insurance . . . . . . . Temporary employee . . . . . . Employee’s bonus, remuneration to directors and supervisors . . . . . . . . . Post-employment benefits . . Others . . . . . . . . . . . . . . . . . .	Three Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $632,902 $647,337 $21,899 48,535 48,250 1,632 62,929 43,138 1,459 32,943 36,786 1,244 31,474 32,449 1,098 48,873 44,627 1,510 $857,656 $852,587 $28,842	Nine Months Ended September 30	Nine Months Ended September 30
	2012 NT$ $632,902 48,535 62,929 32,943 31,474 48,873 $857,656	2012 NT$ $1,863,129 144,600 197,476 108,445 93,519 136,300 $2,543,469	2013
			NT$ US$ (Note 4) $1,948,487 $65,916 154,583 5,230 128,495 4,347 139,532 4,720 99,065 3,351 132,912 4,497 $2,603,074 $88,061

36. DEPRECIATION AND AMORTIZATION

Depreciation . . . . . . . . . . . . . . . . Amortization . . . . . . . . . . . . . . . .	Three Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $53,575 $47,316 $1,601 $10,241 $10,419 $ 352	Nine Months Ended September 30	Nine Months Ended September 30
	2012 NT$ $53,575 $10,241	2012 NT$ $161,100 $ 30,724	2013
			NT$ US$ (Note 4) $143,269 $4,847 $ 30,910 $1,045

F-157

37. OTHER GENERAL AND ADMINISTRATIVE EXPENSES

Rental . . . . . . . . . . . . . . . . . . Taxation and government fees . . . . . . . . . . . . . . . . . . Advertising . . . . . . . . . . . . . Software . . . . . . . . . . . . . . . . Telecommunication . . . . . . . Others . . . . . . . . . . . . . . . . . .	Three Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $104,148 $104,164 $ 3,524 83,095 97,760 3,307 100,698 81,385 2,753 38,884 38,273 1,295 41,995 42,928 1,452 163,181 154,523 5,228 $532,001 $519,033 $17,559	Nine Months Ended September 30	Nine Months Ended September 30
	2012 NT$ $104,148 83,095 100,698 38,884 41,995 163,181 $532,001	2012 NT$ $ 309,524 242,297 317,697 110,748 128,196 478,075 $1,586,537	2013
			NT$ US$ (Note 4) $ 312,086 $10,558 276,789 9,364 275,708 9,327 112,621 3,810 126,645 4,284 435,836 14,744 $1,539,685 $52,087

38. INCOME TAX EXPENSE

• a. Income tax recognized in profit or loss

The major components of tax expenses were as follows:

Current tax expense (benefit) In respect of the current period . . . . . . . . . . . . . . . . In respect of the prior period . . . . . . . . . . . . . . . . Deferred tax expense . . . . . . . . . . Income tax expense recognized in profit or loss . . . . . . . . . . . .	Three Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $ 47,413 $ 54,062 $1,829 264 — — 47,677 54,062 1,829 82,270 65,207 2,206 $129,947 $119,269 $4,035	Nine Months Ended September 30	Nine Months Ended September 30
	2012 NT$ $ 47,413 264 47,677 82,270 $129,947	2012 NT$ $132,691 3,970 136,661 135,770 $272,431	2013
			NT$ US$ (Note 4) $129,452 $ 4,379 (2,444) (82) 127,008 4,297 252,181 8,531 $379,189 $12,828

F-158

A reconciliation of accounting income and income tax expense is as follows:

Income before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax expense at the 17% statutory rate . . . . . . . . . . . . . . . . . . . . Tax effect of the net income of the OBU . . . . . . . . . . . . . . . . . . . . . . . Tax effect of adjusting items: Permanent differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Temporary differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loss carryforwards used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additional income tax under the Alternative Minimum Tax Act . . . . . Overseas branch income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income tax expense Loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Temporary differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustments for prior years’ tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax expense recognized in profit or loss . . . . . . . . . . . . . . . . . .	Nine Months Ended September 30	Nine Months Ended September 30
	2012 NT$ $2,527,948 $ 450,977 (81,021) (51,147) (31,087) (234,194) 62,744 16,419 132,691 81,786 53,953 31 3,970 $ 272,431	2013
		NT$ US$ (Note 4) $3,106,935 $105,106 $ 550,742 $ 18,631 (93,902) (3,177) (54,204) (1,834) 120,100 4,063 (494,103) (16,715) 79,627 2,694 21,192 717 129,452 4,379 371,164 12,556 (118,983) (4,025) — — (2,444) (82) $ 379,189 $ 12,828

b. Integrated income tax

Unappropriated earnings Generated before January 1, 1998 . . . . . Generated after January 1, 1998 . . . . . Imputation credits accounts . . . . . . . . . . . . . . .	January 1, 2012	September 30, 2012	September 30, 2012	December 31, 2012	September 30, 2013
	NT$ $ — 2,228,393		NT$ $ — 2,110,989 $2,110,989 $ 8,029	NT$ US$ (Note 4) $ — $ — 2,405,786 81,387 $2,405,786 $81,387 $ 11,122 $ 376	NT$ US$ (Note 4) $ — $ — 2,569,566 86,927 $2,569,566 $86,927 $ 25,033 $ 847
	$2,228,393
	$ 23,184

The actual creditable ratios for the distribution of earnings of 2011 and 2012 were 10.02% and 8.25%, respectively.

For distribution of earnings generated after January 1, 1998, the ratio for the imputation credits allocated to shareholders of the Company was based on the balance of the ICA as of the date of dividend distribution.

According to legal interpretation No. 10204562810 announced on October 17, 2013 by the Taxation Administration of the Ministry of Finance on October 17, 2013, when calculating imputation credits in the year of first-time adoption of Taiwan-IFRSs, the cumulative retained earnings include the net increase or net decrease in retained earnings arising from first-time adoption of Taiwan-IFRSs.

F-159

c. Income tax assessment

The income tax returns of the Bank through 2010 had been assessed by the tax authorities. The income tax returns of Far Eastern Asset Management Co., Ltd., Far Eastern Property Insurance Agency Co., Ltd., Far Eastern Life Insurance Agency Co., Ltd., Far Eastern International Securities Company Ltd. and Far Eastern Insurance Brokerage Co., Ltd. through 2011 had been assessed by the tax authorities.

39. EARNINGS PER SHARE

The calculation of basic and diluted earnings per share (EPS) was based on the net income attributable to the Bank’s shareholders; the numerators and denominators used in calculating basic and diluted earnings per share were as follows:

Basic EPS . . . . . . . . . . . . . . . . . Diluted EPS . . . . . . . . . . . . . . .	Three Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $0.30 $0.37 $0.01 $0.30 $0.36 $0.01	Three Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $0.30 $0.37 $0.01 $0.30 $0.36 $0.01	Three Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $0.30 $0.37 $0.01 $0.30 $0.36 $0.01	Nine Months Ended September 30	Nine Months Ended September 30	Nine Months Ended September 30	Nine Months Ended September 30
		2012 NT$ $0.30 $0.30			2012 NT$ $0.96 $0.96		2013
							NT$ US$ (Note 4) $1.16 $0.04 $1.07 $0.04

The net income and weighted average number of ordinary shares outstanding for EPS calculation were as follows:

Net income for the period

Net income attributable to owners of the Bank . . . . . . . . . . . . . . . . Effect of dilutive potential ordinary shares Interest and valuation of derivative on Euro Convertible Bonds . . . . . . Net income used in the computation of diluted EPS . . .	Three Months Ended September 30	Three Months Ended September 30	Three Months Ended September 30	Three Months Ended September 30	Nine Months Ended September 30	Nine Months Ended September 30
		2012		2013	2012	2013
		NT$ $705,788 — $705,788		NT$ US$ (Note 4) $873,166 $29,539 84,599 2,862 $957,765 $32,401	NT$ $2,255,517 —	NT$ US$ (Note 4) $2,727,746 $92,278 82,909 2,805 $2,810,655 $95,083
					$2,255,517

Weighted average number of ordinary shares outstanding (in thousand shares)

Weighted average number of ordinary shares in the computation of basic EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effect of dilutive potential ordinary shares Euro Convertible Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . Employees’ bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Weighted average number of ordinary shares used in the computation of diluted EPS . . . . . . . . . . . . . . . . . . . . . . . . . . .	Three Months Ended September 30 2012 2013 2,341,957 2,353,554 — 311,471 2,004 2,152 2,343,961 2,667,177	Nine Months Ended September 30	Nine Months Ended September 30
	2012 2,341,957 — 2,004 2,343,961	2012 2,341,957 — 13,486 2,355,443	2013 2,353,554 269,257 14,247
			2,637,058

F-160

The weighted average number of ordinary shares outstanding for EPS calculation was retroactively adjusted for the issuance of stock dividends. The basic and diluted after-tax EPS were adjusted retrospectively as follows:

		After Adjustment	After Adjustment			Before Adjustment	Before Adjustment
	Three Months Ended		Nine Months Ended		Three Months Ended		Nine Months Ended
	September	30, 2012	September	30, 2012	September	30, 2012	September	30, 2012
	NT$	US$	NT$	US$	NT$	US$	NT$	US$
		(Note 4)		(Note 4)		(Note 4)		(Note 4)
Basic EPS . .	$0.30	$0.01	$0.96	$0.03	$0.32	$0.01	$1.00	$0.03
Diluted
EPS . . . . .	$0.30	$0.01	$0.96	$0.03	$0.32	$0.01	$1.00	$0.03

Employees’ bonus for the current year should be considered in calculating the weighted-average number of shares outstanding used for calculating diluted EPS, and the number of bonus shares is estimated by dividing the entire amount of the bonus by the closing share price at the balance sheet date. The dilutive effect of the potential shares should be included in the calculation of diluted EPS until the shareholders resolve the number of shares to be distributed as employees’ bonus at their meeting in the following year.

40. RELATED-PARTY TRANSACTIONS

The Bank and its subsidiaries had business transactions with the following related parties:

Relationship with the Bank and Its Subsidiariesp with the Bank and Its Subsidiaries with the Bank and Its Subsidiaries

Related Party Relationship with the Bank and Its Subsidiariesp with the Bank and Its Subsidiaries with the Bank and Its Subsidiaries Yuan Long Stainless Steel Co., Ltd. Equity-method investee of Far Eastern Asset Management Co., Ltd. Far Eastern New Century Corp. Chairman is the vice-chairman of the Bank Ding Ding Integrated Marketing Service Co. Chairman is the vice-chairman of the Bank Asia Cement Corp. Chairman is the vice-chairman of the Bank Far Eastern Department Store Corp. Chairman is the vice-chairman of the Bank Yuan Ding Co., Ltd. Chairman is the vice-chairman of the Bank Far Eastern Geant Co., Ltd. Chairman is the vice-chairman of the Bank Bai Ding Investment Co. Chairman is the vice-chairman of the Bank Ding Ding Hotel Co., Ltd. Chairman is the vice-chairman of the Bank New Century InfoComm Tech Co., Ltd. Chairman is the vice-chairman of the Bank U-Ming Marine Transport Corp. Chairman is the vice-chairman of the Bank Yuan Ding Investment Co. Chairman is the vice-chairman of the Bank Bai Yang Investment Co. Director of the Board is the vice-chairman of the Bank Dah Chung Bills Finance Corp. Equity-method investee Oriental Securities Corp. (“Oriental”) The chairman of Oriental’s major shareholder is the vice-chairman of the Bank Far Eastern International Leasing Corp. (“FEIL”) The chairman of FEIL’s major shareholder is the vice-chairman of the Bank Everest Textile Co., Ltd. Chairman is a second-degree relative of the vice chairman of the Bank Far Eastern City Super Co., Ltd. Chairman is a second-degree relative of the vice chairman of the Bank Others The Bank’s supervisors, managers, chairman, vicechairman, or their second-degree relatives

F-161

The significant transactions and account balances with the above parties (in addition to those disclosed in other notes) are summarized as follows:

a. Loans to other banks

Related Party Dah Chung Bills Finance Corp. Three months ended September 30 2012 NT$ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 NT$ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US$ (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nine months ended September 30 2012 NT$ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 NT$ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US$ (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Highest Balance in Current Period $990,000 $ — $ — $990,000 $625,000 $ 21,143	Ending Balance $990,000 $ — $ — $990,000 $ — $ —	Interest Income $1,018 $ — $ — $1,825 $ 808 $ 27	Interest Rates
				0.50%-0.70% — — 0.50%-0.72% 0.40%-0.44% 0.40%-0.44%

b. Loans

Related Party	Highest Balance in Current Period	Ending Balance	N	ormal Loans	Nonperforming Loans	Collateral	Transactions Terms Different from Those for Unrelated Parties
		NT$ $ 975 56,157 1,850,000 1,030,000 847,000 30,888 22,000 4,272 — —

F-162

F-163	Category Nine months ended September 30, 2013 Consumer loan Loans for residential mortgage Others	Related Party	Highest Balance in Current Period	Ending Balance	Normal Loans	Nonperforming Loans	Collateral	Transactions Terms Different from Those for Unrelated Parties
		Three individuals Thirteen individuals Yuan Long Stainless Steel Co., Ltd. Asia Cement Corp. Far Eastern International Leasing Corp. Far Eastern New Century Corp. Yuan Ding Co., Ltd. Bai Yang Investment Co. Yuan Ding Investment Co. U-Ming Marine Transport Corp. Everest Textile Co., Ltd. Bai Ding Investment Co. Far Eastern Geant Co., Ltd.	NT$ US$ (Note 4) $ 1,332 $ 45 90,502 3,062 1,845,000 62,415 800,000 27,064 847,000 28,654 616,777 20,865 450,000 15,223 383,000 12,957 200,000 6,766 200,000 6,766 194,305 6,573 500,000 16,915 200,000 6,766	NT$ US$ (Note 4) $ 1,110 $ 38 82,536 2,792 1,845,000 62,415 800,000 27,064 650,000 21,989 610,725 20,661 450,000 15,223 242,000 8,187 200,000 6,766 200,000 6,766 100,000 3,383 — — — — $5,181,371 $175,284	NT$ US$ (Note 4) $ 1,110 $ 38 82,536 2,792 1,845,000 62,415 800,000 27,064 650,000 21,989 610,725 20,661 450,000 15,223 242,000 8,187 200,000 6,766 200,000 6,766 100,000 3,383 — — — — $5,181,371 $175,284	NT$ US$ (Note 4) $— $— — — — — — — — — — — — — — — — — — — — — — — — — $— $—	Unsecured loan Real estate Real estate and machinery Listed and OTC stock Real estate Machinery Unquoted stock Unquoted stock Unquoted stock Listed stock Real estate Listed, OTC and unquoted stock Real estate	Note Note Note Note Note Note Note Note Note Note Note Note Note

Note: The terms of the loans were no superior to those for unrelated parties.

Three months ended September 30 2012 NT$ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 NT$ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US$ (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nine months ended September 30 2012 NT$ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 NT$ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US$ (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Interest Income $13,413 $11,275 $ 381 $38,393 $31,417 $ 1,063	Interest Rates
		1.03%-2.38% 1.08%-2.38% 1.08%-2.38% 1.03%-2.38% 1.08%-2.38% 1.08%-2.38%

c. Guarantees

Related Party Nine months ended September 30, 2012 Everest Textile Co., Ltd. . . . . . . . . . . . . . . Ding Ding Hotel Co., Ltd. . . . . . . . . . . . . Yuan Long Stainless Steel Co., Ltd. . . . . . Yuan Ding Co., Ltd. . . . . . . . . . . . . . . . . . Far Eastern City Super Co., Ltd. . . . . . . .	Highest Balance in Current Period	Ending Balance	Reserve for Guarantee Obligations	Reserve for Guarantee Obligations	Interest Rates 0.60%-0.75% 0.50% 0.60% 0.50% 0.60%	Collateral
	NT$ $307,200 41,000 60,000 14,000 3,000	NT$ $306,000 33,000 30,000 12,000 3,000		NT$ $1,530 165 150 60 15 $1,920		Real estate Certificates of deposit Real estate and machinery Unquoted stock Certificates of deposit
		$384,000

Related Party Nine months ended September 30, 2013 Yuan Long Stainless Steel Co., Ltd. . . . . . . . . . . . . . Ding Ding Hotel Co., Ltd. . . . . . . . . . . . . . Everest Textile Co., Ltd. . . . Yuan Ding Co., Ltd. . . . . . . Far Eastern City Super Co., Ltd. . . . . . . . . . . . . .	Highest Balance in Current Period	Ending Balance	Ending Balance	Reserve for Guarantee Obligations	Interest Rates	Collateral
	NT$ US$ (Note 4) $ 60,000 $ 2,030 43,000 1,455 311,676 10,544 11,000 372 3,000 101	NT$ $30,000 28,000 12,514 11,000 3,000 $84,514	US$ (Note 4) $1,015 947 423 372 101 $2,858	NT$ US$ (Note 4) $150 $ 5 140 5 63 2 55 2 15 1 $423 $15	0.60% 0.50% 0.75% 0.50% 0.60%	Real estate and machinery Certificates of deposit Real estate Unquoted stock Certificates of deposit

F-164

d. Letters of credit issued

Everest Textile Co., Ltd. . . . . . . . . . . Asia Cement Corp. . . . . . . . . . . . . . . Far Eastern Geant Co., Ltd. . . . . . . . .	January 1, 2012 NT$ $ — — — $ —	September 30, 2012 NT$ $ 3,362 7,116 612 $11,090	December 31, 2012 NT$ US$ (Note 4) $ 3,864 $131 7,118 241 — — $10,982 $372	September 30, 2013
				NT$ US$ (Note 4) $15,434 $522 — — — — $15,434 $522

e. Securities transactions—buy and sell

Dah Chung Bills Finance Corp. Three months ended September 30 2012 NT$ . . . . . . . . . . 2013 NT$ . . . . . . . . . . US$ (Note 4) . . . Nine months ended September 30 2012 NT$ . . . . . . . . . . 2013 NT$ . . . . . . . . . . US$ (Note 4) . . .	Held for Trading Available-for-sale Short Sales Buy Sell Buy Sell Buy Sell $ — $150,000 $ — $— $ — $ 50,000 $ 800,000 $400,000 $ — $— $ — $100,000 $ 27,064 $ 13,532 $ — $— $ — $ 3,383 $ 500,000 $550,000 $100,000 $— $350,000 $250,000 $1,600,000 $800,000 $ 50,000 $— $100,000 $200,000 $ 54,127 $ 27,064 $ 1,691 $— $ 3,383 $ 6,766	Held for Trading Available-for-sale Short Sales Buy Sell Buy Sell Buy Sell $ — $150,000 $ — $— $ — $ 50,000 $ 800,000 $400,000 $ — $— $ — $100,000 $ 27,064 $ 13,532 $ — $— $ — $ 3,383 $ 500,000 $550,000 $100,000 $— $350,000 $250,000 $1,600,000 $800,000 $ 50,000 $— $100,000 $200,000 $ 54,127 $ 27,064 $ 1,691 $— $ 3,383 $ 6,766	Held for Trading Available-for-sale Short Sales Buy Sell Buy Sell Buy Sell $ — $150,000 $ — $— $ — $ 50,000 $ 800,000 $400,000 $ — $— $ — $100,000 $ 27,064 $ 13,532 $ — $— $ — $ 3,383 $ 500,000 $550,000 $100,000 $— $350,000 $250,000 $1,600,000 $800,000 $ 50,000 $— $100,000 $200,000 $ 54,127 $ 27,064 $ 1,691 $— $ 3,383 $ 6,766	Held for Trading Available-for-sale Short Sales Buy Sell Buy Sell Buy Sell $ — $150,000 $ — $— $ — $ 50,000 $ 800,000 $400,000 $ — $— $ — $100,000 $ 27,064 $ 13,532 $ — $— $ — $ 3,383 $ 500,000 $550,000 $100,000 $— $350,000 $250,000 $1,600,000 $800,000 $ 50,000 $— $100,000 $200,000 $ 54,127 $ 27,064 $ 1,691 $— $ 3,383 $ 6,766	Held for Trading Available-for-sale Short Sales Buy Sell Buy Sell Buy Sell $ — $150,000 $ — $— $ — $ 50,000 $ 800,000 $400,000 $ — $— $ — $100,000 $ 27,064 $ 13,532 $ — $— $ — $ 3,383 $ 500,000 $550,000 $100,000 $— $350,000 $250,000 $1,600,000 $800,000 $ 50,000 $— $100,000 $200,000 $ 54,127 $ 27,064 $ 1,691 $— $ 3,383 $ 6,766	Resale Agreements Bonds Repurchase Agreements Bonds $ 7,302,824 $ — $ 1,858,772 $ 48,853 $ 62,881 $ 1,653 $15,826,414 $ — $ 4,698,159 $248,683 $ 158,936 $ 8,413
	Buy $ —	Sell $150,000	Buy Sell $ — $— $ — $— $ — $— $100,000 $— $ 50,000 $— $ 1,691 $—	Buy $ —	Sell $ 50,000
	$ 800,000	$400,000		$ —	$100,000
	$ 27,064	$ 13,532		$ —	$ 3,383
	$ 500,000	$550,000		$350,000	$250,000
	$1,600,000	$800,000		$100,000	$200,000
	$ 54,127	$ 27,064		$ 3,383	$ 6,766

F-165

f. Derivative financial instruments—convertible bond asset swap contracts

Dah Chung Bills Finance Corp.	Dah Chung Bills Finance Corp.	Dah Chung Bills Finance Corp.	. . . . . .	. . . . . .	Contract Period	Contract Period	Contract Period	Contract Period	Nominal Amount	Nominal Amount	Valuation Gain(Loss)	Valuation Gain(Loss)	Balance Sheet	Balance Sheet	Balance Sheet	Balance Sheet	Balance Sheet
													Account					Balance
					2011.01.07 - 2015.07.12 2011.01.14 - 2016.07.10 2011.01.14 - 2016.07.10 2011.01.07 - 2015.07.12 2011.01.14 - 2016.07.10 2011.01.14 - 2016.07.10 September 30, 2012				$345,000 275,000 9,303 345,000 275,000 9,303		$ (798) 3 — (1,145) 1,276 43 December 31, 201		Financial liabilities at fair value through profit or loss Financial assets at fair value through profit or loss Financial liabilities at fair value through profit or loss Financial assets at fair value through profit or loss Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss Financial assets at fair value through profit or loss Financial liabilities at fair value through profit or loss Financial assets at fair value through profit or loss Financial liabilities at fair value through profit or loss 2 September 30, 20					$2,193 84 950 3 32 2,193 84 950 3 32 13
Three months ended September 30 2012 NT$ . . . . . . . . . . . . . 2013 NT$ . . . . . . . . . . . . . US$ (Note 4) . . . . . . Nine months ended September 30 2012 NT$ . . . . . . . . . . . . . 2013 NT$ . . . . . . . . . . . . . US$ (Note 4) . . . . . . g. Deposits January 1, 2012 Amount Interest Rates NT$ Deposits of related parties (each account balance did not exceed 5% of total deposits) . . $33,585,755 0%-6.37% Interest expense . . . . . . . . . . .
	Amount	Interest Rates			Amount	Interest Ra			tes	A	mount	In	terest Rates	Amount			I	nterest Rates
	NT$ $33,585,755	0%-6.37% . . . . . . . .	NT$ $35,760,454										NT$ US$ (Note 4) 0%-6.37% $37,954,383 $1,283,978 0%-6.36% Nine Months Ended September 30
				2012 NT$ $123,694				2013					2012 NT$ $348,926			2013
																NT$ US$ (Note 4) $301,938 $10,214

F-166

h. Operating expenses

Rental—Yuan Ding Co., Ltd. . . . . . . . . . . . . . . . Rental—Far Eastern Geant Co., Ltd. . . . . . . . . . . . . . . . Telecommunication—New Century InfoComm Tech Co., Ltd. . . . . . . . . . . . . . . . Service fee for stock affairs— Oriental Securities Corp. . . Advertising expense—Ding Ding Integrated Marketing Service Co. . . . . . . . . . . . . . Advertising expense—Far Eastern Department Store Corp. . . . . . . . . . . . . . . . . . . Advertising expense—Ding Ding Hotel Co., Ltd. . . . . .	Three Months Ended September 30	Three Months Ended September 30	Three Months Ended September 30	Three Months Ended September 30	Three Months Ended September 30	Nine Months Ended September 30	Nine Months Ended September 30	Nine Months Ended September 30	Nine Months Ended September 30	Nine Months Ended September 30
	2012		2013			2012		2013
	Amount	% to Total	Amount		% to Total	Amount	% to Total	Amount		% to Total
	NT$ $22,068 1,794 12,376 2,032 29,732 4,790 2,678	2 — 1 — 2 — — 5	NT$ $18,442 1,773 11,721 2,007 26,576 7,398 3,197 $71,114	US$ (Note 4) $ 624 60 397 68 899 250 108 $2,406	1 — 1 — 2 1 — 5	NT$ $ 66,101 3,783 36,752 5,972 107,845 59,194 8,387	2 — 1 — 3 1 — 7	NT$ $ 54,259 5,259 34,040 5,984 143,459 22,323 10,110 $275,434	US$ (Note 4) $1,836 178 1,152 202 4,853 755 342 $9,318	1 — 1 — 3 1 — 6
	$75,470					$288,034

The Bank and its subsidiaries rented part of their office premises from Yuan Ding Co., Ltd., Far Eastern Geant Co., Ltd. The lease agreements were entered between both parties and the rents are paid on a monthly basis.

i. Disposal of buildings and land held for sale

In June 2012, Far Eastern Asset Management Co., Ltd. sold buildings and land held for sale, with book value of NT$278,000 thousand, to Far Eastern Resources Development Co., Ltd. for NT$278,131 thousand. Far Eastern Asset Management Co., Ltd. recognized a loss of NT$1,945 thousand after deducting the land value increment tax of NT$2,076 thousand.

• j. Compensation of key management personnel

Short-term employee benefits . . . . . . . . . . . . . . . . Post-employment benefits . . . .	Three Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $29,842 $32,811 $1,110 439 528 18 $30,281 $33,339 $1,128	Three Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $29,842 $32,811 $1,110 439 528 18 $30,281 $33,339 $1,128	Three Months Ended September 30 2012 2013 NT$ NT$ US$ (Note 4) $29,842 $32,811 $1,110 439 528 18 $30,281 $33,339 $1,128		Nine Months Ended September 30	Nine Months Ended September 30
		2012 NT$ $29,842 439 $30,281			2012 NT$ $91,527 1,316 $92,843	2013
						NT$ US$ (Note 4) $104,538 $3,536 1,557 53 $106,095 $3,589

The compensation of managers was determined by reference to a comprehensive consideration of the market level of payments in banking industry, personal performance, the Bank’s long-term operating performance and future operational risk, etc. The remuneration committee evaluated the reasonableness of the compensation of management, and made recommendations to the Board of Directors.

F-167

41. PLEDGED ASSETS

Due from the Central Bank and other banks— certificates of deposit . . . . . Available-for-sale financial assets—government bonds . . . . . . . . . . . . . . . . . .	January 1, 2012 NT$ $2,500,000 671,100 $3,171,100	September 30, 2012 NT$ $3,000,000 2,648,300 $5,648,300	December 31, 2012 NT$ US$ (Note 4) $3,000,000 $101,488 2,647,600 89,567 $5,647,600 $191,055	September	30, 2013
			NT$ $3,000,000 2,647,600 $5,647,600	NT$ $4,000,000 2,626,400 $6,626,400	US$ (Note 4) $135,318 88,850
					$224,168

The certificates of deposit issued by the Central Bank have been pledged as collaterals to back the extension of intraday credit in the Central Bank’s real-time gross settlement system. The balance of intraday credit and the amount of collateral may be varied at any time. The terms of government bonds had been provided as the reserve for compensation of Trust Department as well as security bond for provisional seizures of the debtors’ properties.

42. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those mentioned in Note 46, the Bank and its subsidiaries’ contingency liabilities and commitments resulting from operating activities as of January 1, 2012, September 30, 2012, December 31, 2012 and September 30, 2013 are summarized as follows:

a. Operating leases

The maturity analysis of rental payments under non-cancellable operating leases was as follows:

Within one year . . . . . . . After one year but within five years . . . . . . . . . . After five years . . . . . . .	January 1, 2012 NT$ $ 333,389 799,907 66,678 $1,199,974	September 30, 2012 NT$ $ 317,387 712,075 100,147 $1,129,609	December 31, 2012 NT$ US$ (Note 4) $ 308,276 $10,429 621,932 21,040 119,872 4,055 $1,050,080 $35,524	September 30, 2013
				NT$ US$ (Note 4) $ 340,445 $11,517 667,047 22,566 117,190 3,964 $1,124,682 $38,047

F-168

b. Balance sheets and income statements of trust accounts and trust assets lists were as follows:

Balance Sheets of Trust Accounts

Assets Deposits in banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Common stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Real estate, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Marketable securities in custody . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Marketable securities in custody payable . . . . . . . . . . . . . . . . . . . . . . . Trust capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reserve and earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	September 30	September 30	September 30
	2012 NT$ $ 3,676,453 12,912 6,121 38,410,328 4,706,026 262,242 2,163,289 190,504 $49,427,875 $ 13,142 84 2,163,289 46,386,301 865,059 $49,427,875	2013
		NT$ $ 6,306,036 14,694 16,940 39,961,810 5,598,158 323,025 2,196,648 278,316 $54,695,627 $ 3,340 108 2,196,648 51,255,660 1,239,871 $54,695,627	US$ (Note 4) $ 213,330 497 573 1,351,888 189,383 10,928 74,312 9,415
			$1,850,326
			$ 113 4 74,312 1,733,953 41,944
			$1,850,326

F-169

Income Statements of Trust Accounts

Trust revenue Interest . . . . . . . . . . . . . . . . . . Cash dividends . . . . . . . . . . . Realized investment gain . . . Unrealized investment gain . . . . . . . . . . . . . . . . . . Revenue from stock lending . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . Trust expenses Management . . . . . . . . . . . . . Supervision . . . . . . . . . . . . . . Service charges . . . . . . . . . . . Taxes . . . . . . . . . . . . . . . . . . . Service fee for stock affairs . . . . . . . . . . . . . . . . Service fee for stock lending . . . . . . . . . . . . . . . . Realized investment loss . . . . Unrealized investment loss . . . . . . . . . . . . . . . . . . Income before tax . . . . . . . . . . . . . Income tax . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . Investment Portfolio Deposits in banks . . . . . . . . . . . . . . Accounts receivable . . . . . . . . . . . . Prepayment . . . . . . . . . . . . . . . . . . . Funds . . . . . . . . . . . . . . . . . . . . . . . . Common stocks . . . . . . . . . . . . . . . . Real estate, net Land . . . . . . . . . . . . . . . . . . . . . Building . . . . . . . . . . . . . . . . . . Construction in progress . . . . . Marketable securities in custody . . . Others . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . .	Three Months Ended September 30 Nine Months Ended September 30 2012 2013 2012 2013 NT$ NT$ US$ (Note 4) NT$ NT$ US$ (Note 4) $ 6,654 $ 9,560 $ 323 $ 19,101 $ 26,682 $ 903 444,765 509,935 17,251 906,857 1,108,466 37,499 — — — — 69,766 2,360 258,545 113,384 3,836 — 288,478 9,759 443 298 10 1,990 2,505 85 54 179 6 — — — 710,461 633,356 21.426 927,948 1,495,897 50,606 7,122 6,234 211 19,569 27,197 920 — 6 — — 18 1 197 633 21 357 2,768 94 — — — 165 125 4 7 5 — 33 42 1 2 1 — 10 13 — 93,775 48,337 1,635 406,590 — — — — — 207,186 — — 101,103 55,216 1,867 633,910 30,163 1,020 609,358 578,140 19,559 294,038 1,465,734 49,586 499 572 19 1,479 1,681 57 $608,859 $577,568 $19,540 $292,559 $1,464,053 $49,529 Trust Asset Lists September 30 2012 2013 NT$ NT$ US$ (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,676,453 $ 6,306,036 $ 213,330 . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,912 14,694 497 . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,121 16,940 573 . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,410,328 39,961,810 1,351,888 . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,706,026 5,598,158 189,383 . . . . . . . . . . . . . . . . . . . . . . . . . . . 109,235 145,936 4,937 . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,346 45,428 1,537 . . . . . . . . . . . . . . . . . . . . . . . . . . . 131,661 131,661 4,454 . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,163,289 2,196,648 74,312 . . . . . . . . . . . . . . . . . . . . . . . . . . . 190,504 278,316 9,415 . . . . . . . . . . . . . . . . . . . . . . . . . . . $49,427,875 $54,695,627 $1,850,326	Three Months Ended September 30 Nine Months Ended September 30 2012 2013 2012 2013 NT$ NT$ US$ (Note 4) NT$ NT$ US$ (Note 4) $ 6,654 $ 9,560 $ 323 $ 19,101 $ 26,682 $ 903 444,765 509,935 17,251 906,857 1,108,466 37,499 — — — — 69,766 2,360 258,545 113,384 3,836 — 288,478 9,759 443 298 10 1,990 2,505 85 54 179 6 — — — 710,461 633,356 21.426 927,948 1,495,897 50,606 7,122 6,234 211 19,569 27,197 920 — 6 — — 18 1 197 633 21 357 2,768 94 — — — 165 125 4 7 5 — 33 42 1 2 1 — 10 13 — 93,775 48,337 1,635 406,590 — — — — — 207,186 — — 101,103 55,216 1,867 633,910 30,163 1,020 609,358 578,140 19,559 294,038 1,465,734 49,586 499 572 19 1,479 1,681 57 $608,859 $577,568 $19,540 $292,559 $1,464,053 $49,529 Trust Asset Lists September 30 2012 2013 NT$ NT$ US$ (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,676,453 $ 6,306,036 $ 213,330 . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,912 14,694 497 . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,121 16,940 573 . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,410,328 39,961,810 1,351,888 . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,706,026 5,598,158 189,383 . . . . . . . . . . . . . . . . . . . . . . . . . . . 109,235 145,936 4,937 . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,346 45,428 1,537 . . . . . . . . . . . . . . . . . . . . . . . . . . . 131,661 131,661 4,454 . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,163,289 2,196,648 74,312 . . . . . . . . . . . . . . . . . . . . . . . . . . . 190,504 278,316 9,415 . . . . . . . . . . . . . . . . . . . . . . . . . . . $49,427,875 $54,695,627 $1,850,326	Nine Months Ended September 30	Nine Months Ended September 30	Nine Months Ended September 30
			2012 2013 NT$ NT$ US$ (Note 4) $ 19,101 $ 26,682 $ 903 906,857 1,108,466 37,499 — 69,766 2,360 — 288,478 9,759 1,990 2,505 85 — — — 927,948 1,495,897 50,606 19,569 27,197 920 — 18 1 357 2,768 94 165 125 4 33 42 1 10 13 — 406,590 — — 207,186 — — 633,910 30,163 1,020 294,038 1,465,734 49,586 1,479 1,681 57 $292,559 $1,464,053 $49,529 September 30	2013
				2013
				NT$ $ 6,306,036 14,694 16,940 39,961,810 5,598,158 145,936 45,428 131,661 2,196,648 278,316 $54,695,627	US$ (Note 4) $ 213,330 497 573 1,351,888 189,383 4,937 1,537 4,454 74,312 9,415
					$1,850,326

F-170

As of September 30, 2012 and 2013, funds amounting to NT$688,821 thousand and NT$894,093 thousand (approximately US$30,247 thousand), respectively, consisted of investments in overseas securities through Nondiscretionary Pecuniary Trust of the OBU, were recognized in the OBU’s books.

43. SIGNIFICANT LOSSES FROM DISASTER

None.

F-171

44. EXCHANGE RATE OF FINANCIAL ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The significant financial assets and liabilities denominated in foreign currencies were as follows:

F-172	Financial asset	January 1, 2012	September 30, 2012	December 31, 2012	September 30, 2013
			Foreign Currencies Exchange Rate New Taiwan Dollars $1,243,414 29.342 $36,484,251 2,335,196 3.784 8,836,382 149,866 4.67 699,876 42,529 30.66 1,303,936 17,583 37.94 667,100 1,178,190 0.3782 445,591 247 23.96 5,914 377 47.64 17,944 69 29.96 2,081 — — — 5,420 29.342 159,022 1,875,189 29.342 55,021,810 518,305 4.67 2,420,484 354,384 3.784 1,340,988 61,758 30.66 1,893,493 4,809,573 0.3782 1,818,981 29,146 37.94 1,105,802 5,931 47.64 282,575 8,579 24.47 209,928 2,444 29.96 73,229 154 31.36 4,822 362 23.96 8,669	Foreign Currencies Exchange Rate New Taiwan Dollars U.S. Dollars (Note 4) $1,270,092 29.136 $37,005,170 $1,251,866 2,153,765 3.759 8,096,003 273,884 226,826 4.678 1,061,095 35,896 42,597 30.27 1,289,420 43,620 16,212 38.61 625,936 21,175 1,583,772 0.3375 534,523 18,083 783 23.83 18,659 631 259 46.95 12,144 411 65 29.30 1,909 65 706 3.431 2,422 82 — — — — 1,721,852 29.136 50,167,884 1,697,154 477,941 4.678 2,235,810 75,636 679,135 3.759 2,552,870 86,362 67,537 30.27 2,044,353 69,159 5,527,286 0.3375 1,865,459 63,108 24,726 38.61 954,664 32,296 5,013 46.95 235,339 7,961 8,795 23.94 210,541 7,122 2,567 29.30 75,222 2,545 205 31.94 6,556 222 722 23.83 17,203 582	Foreign Currencies Exchange Rate New Taiwan Dollars U.S. Dollars (Note 4) $1,360,003 29.67 $40,351,287 $1,365,064 1,344,027 3.826 5,142,248 173,960 339,836 4.847 1,647,183 55,723 41,891 27.63 1,157,440 39,156 14,690 40.06 588,462 19,907 1,861,917 0.303 564,161 19,085 10,373 23.62 245,004 8,288 118 47.88 5,640 191 131 28.78 3,777 128 — — — — — — — — 1,836,696 29.67 54,494,760 1,843,530 498,768 4.847 2,417,528 81,784 617,525 3.826 2,362,652 79,927 70,817 27.63 1,956,673 66,193 4,750,398 0.303 1,439,371 48,693 28,826 40.06 1,154,753 39,065 5,068 47.88 242,645 8,209 8,041 24.55 197,407 6,678 3,878 28.78 111,595 3,775 2,240 32.76 73,379 2,482 1,165 23.62 27,526 931

45. SIGNIFICANT EVENTS AFTER REPORTING PERIOD

On October 16, 2013, a special shareholders’ meeting approved the proposal of raising capital by issuing new shares through public offering or issuing new shares to sponsor overseas Global Depository Receipts offering, with size up to NT$5,000,000 thousand (approximately US$169,147 thousand). On the same date, the Board of Directors resolved on capital raising through the issuance of Global Depository Receipts.

46. FINANCIAL INSTRUMENTS

a. Fair values of financial instruments were as follows:

Financial assets Cash and cash equivalents . . . . . . . . . . . . . . . . . . Due from the Central Bank and other banks . . . . Financial assets at fair value through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative financial assets for hedging . . . . . . . . Securities purchased under resale agreements . . Receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . Discounts and loans, net . . . . . . . . . . . . . . . . . . . Available-for-sale financial assets . . . . . . . . . . . Held-to-maturity financial assets . . . . . . . . . . . . Debt investments with no active market . . . . . . . Financial assets measured at cost . . . . . . . . . . . . Other financial assets, net . . . . . . . . . . . . . . . . . . Financial liabilities Due to the Central Bank and other banks . . . . . . Financial liabilities at fair value through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative financial liabilities for hedging . . . . . Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deposits and remittances . . . . . . . . . . . . . . . . . . . Bank debentures (applying hedge accounting) . . . . . . . . . . . . . . . . . . . . . . . . . . . Bank debentures (not applying hedge accounting) . . . . . . . . . . . . . . . . . . . . . . . . . . . Other financial liabilities . . . . . . . . . . . . . . . . . . .	**January **	1, 2012 Fair Value NT$ $ 6,002,314 86,739,190 13,806,866 252,233 850,505 21,950,813 269,460,381 14,945,412 3,871,314 9,293,780 103,846 2,530,909 11,785,731 4,384,840 13,093 4,495,320 369,998,562 4,839,140 15,391,140 2,211,286	September 30, 2012	September 30, 2012
	Carrying Amount NT$ $ 6,002,314 86,739,190 13,806,866 252,233 850,505 21,950,813 269,460,381 14,945,412 3,927,905 9,293,780 103,846 2,530,904 11,785,731 4,384,840 13,093 4,495,320 369,998,562 4,839,140 15,391,140 2,211,286		Carrying Amount NT$ $ 5,817,166 81,359,053 16,726,462 199,464 16,096,724 19,968,264 280,051,291 11,433,334 1,942,472 11,938,829 101,379 2,747,838 15,327,277 4,874,929 10,521 6,103,555 377,866,960 4,788,943 18,305,600 2,007,647	Fair Value
				NT$ $ 5,817,166 81,359,053 16,726,462 199,464 16,096,724 19,968,264 280,051,291 11,433,334 1,950,560 11,938,829 101,379 2,747,874 15,327,277 4,874,929 10,521 6,103,555 377,866,960 4,788,943 18,305,600 2,007,647

F-173

Financial assets Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . Due from the Central Bank and other banks . . . . . . Financial assets at fair value through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative financial assets for hedging . . . . . . . . . . Securities purchased under resale agreements . . . . Receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discounts and loans, net . . . . . . . . . . . . . . . . . . . . . Available-for-sale financial assets . . . . . . . . . . . . . Held-to-maturity financial assets . . . . . . . . . . . . . . Debt investments with no active market . . . . . . . . . Financial assets measured at cost . . . . . . . . . . . . . . Other financial assets, net . . . . . . . . . . . . . . . . . . . . Financial liabilities Due to the Central Bank and other banks . . . . . . . . Financial liabilities at fair value through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative financial liabilities for hedging . . . . . . . Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deposits and remittances . . . . . . . . . . . . . . . . . . . . . Bank debentures (applying hedge accounting) . . . . Bank debentures (not applying hedge accounting) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other financial liabilities . . . . . . . . . . . . . . . . . . . . . Financial assets Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . Due from the Central Bank and other banks . . . . . . Financial assets at fair value through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative financial assets for hedging . . . . . . . . . . Securities purchased under resale agreements . . . . Receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discounts and loans, net . . . . . . . . . . . . . . . . . . . . .	December 31, 2012	December 31, 2012
	Carrying Amount Fair Value NT$ US$ (Note 4) NT$ US$ (Note 4) $ 5,596,551 $ 189,329 $ 5,596,551 $ 189,329 82,818,608 2,801,712 82,818,608 2,801,712 16,110,835 545,022 16,110,835 545,022 180,242 6,097 180,242 6,097 23,741,992 803,180 23,741,992 803,180 20,781,182 703,017 20,781,182 703,017 280,219,426 9,479,683 280,219,426 9,479,683 11,865,864 401,416 11,865,864 401,416 2,224,301 75,247 2,235,526 75,627 10,713,828 362,443 10,713,828 362,443 101,379 3,430 101,379 3,430 2,958,132 100,072 2,958,163 100,073 11,674,958 394,958 11,674,958 394,958 3,745,032 126,693 3,745,032 126,693 12,819 434 12,819 434 5,560,371 188,105 5,560,371 188,105 391,933,266 13,258,906 391,933,266 13,258,906 4,767,423 161,279 4,767,423 161,279 18,304,700 619,239 18,304,700 619,239 1,908,070 64,549 1,908,070 64,549 September 30, 2013	Fair Value
	Carrying Amount NT$ US$ (Note 4) $ 4,488,898 $ 151,857 79,374,297 2,685,193 18,635,068 630,415 120,853 4,088 11,003,406 372,240 21,604,064 730,855 316,949,779 10,722,252	Fair Value
		NT$ US$ (Note 4) $ 4,488,898 $ 151,857 79,374,297 2,685,193 18,635,068 630,415 120,853 4,088 11,003,406 372,240 21,604,064 730,855 316,949,779 10,722,252

(Continued)

F-174

September 30, 2013

Available-for-sale financial assets . . . . . . . . . . . . . Held-to-maturity financial assets . . . . . . . . . . . . . . Debt investments with no active market . . . . . . . . . Financial assets measured at cost . . . . . . . . . . . . . . Other financial assets, net . . . . . . . . . . . . . . . . . . . . Financial liabilities Due to the Central Bank and other banks . . . . . . . . Financial liabilities at fair value through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative financial liabilities for hedging . . . . . . . Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deposits and remittances . . . . . . . . . . . . . . . . . . . . . Bank debentures (applying hedge accounting) . . . . Bank debentures (not applying hedge accounting) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other financial liabilities . . . . . . . . . . . . . . . . . . . . .	Carrying Amount NT$ US$ (Note 4) $ 16,639,829 $ 562,917 2,647,545 89,566 8,637,624 292,206 101,379 3,430 3,094,975 104,701 25,027,428 846,665 5,708,838 193,127 10,320 349 11,477,111 388,265 392,644,362 13,282,962 4,710,533 159,355 20,345,105 688,265 1,486,065 50,273	Fair Value
		NT$ US$ (Note 4) $ 16,639,829 $ 562,917 2,662,597 90,074 8,637,624 292,206 101,379 3,430 3,094,937 104,700 25,027,428 846,665 5,708,838 193,127 10,320 349 11,477,111 388,265 392,644,362 13,282,962 4,710,533 159,355 20,345,105 688,265 1,486,065 50,273

(Concluded)

• b. Methods and assumptions used to estimate the fair values of financial instruments were as follows:

• 1) The carrying amounts of the following short-term financial instruments approximate their fair value because of their short maturities: Cash and cash equivalents; due from the Central Bank and other banks; securities purchased under resale agreements; receivables, net; due to the Central Bank and other banks; payables; and securities sold under repurchase agreements.

• 2) The fair values of financial instruments at fair value through profit or loss, derivative financial instruments for hedging, available-for-sale financial assets and held-to-maturity financial assets are based on their quoted prices in an active market. For those instruments with no quoted market prices, their fair values are determined using valuation techniques incorporating estimates and assumptions consistent with those generally used by other market participants to price financial instruments. Fair values of derivative financial instruments are estimated on the basis of quotations from the pricing system of Reuters.

• 3) Discounts and loans, deposits, bank debentures and principal of structured notes are interestearning assets or interest-bearing liabilities. Their carrying amounts approximate their fair values. The fair values of nonaccrual loans and acquired receivables are based on their carrying amounts, net of allowance for possible losses.

• 4) Financial assets measured at cost are investments in unquoted stocks, which have no quoted prices in an active market. Thus, no fair value of these assets is presented.

• 5) On financial assets (excluding financial assets measured at cost) and liabilities other than those listed above are valued by using their estimated future cash flows as their carrying amounts. Thus, the carrying amounts of these assets and liabilities represent their fair value.

• c. The definition of three levels of financial instruments at fair value

• 1) Level 1 inputs are observable inputs that reflect quoted prices for identical financial instruments in an active market. A market is active if it has these characteristics: Products

F-175

traded in the market are homogeneous; willing buyers and sellers can be found immediately and the price information is publicly available. Listed and OTC stocks, beneficiary certificates, central government bonds, domestic convertible bonds, treasury security and derivative instruments with quoted prices in active markets are categorized into Level 1.

• 2) Level 2 inputs are observable inputs other than quoted prices for identical assets or liabilities in active markets, including direct inputs (such as market prices) or indirect inputs (such as prices derived from market prices). Commercial papers, negotiable certificates of deposit, foreign convertible bonds and most derivative instruments at fair value are categorized into Level 2.

• 3) Level 3 inputs are unobservable items such as inputs derived through extrapolation or interpolation and thus cannot be corroborated by observable market data. Some derivative instruments are categorized into Level 3.

• d. The fair value hierarchy of financial instruments was as follows:

Financial Instruments Nonderivative financial instruments Assets Financial assets at fair value through profit or loss Held for trading Government bonds . . . . . . . . . . . . . . . . . . . . . . Listed and OTC stocks . . . . . . . . . . . . . . . . . . Beneficiary certificates . . . . . . . . . . . . . . . . . . Financial assets designated as at fair value through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Available-for-sale Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . Listed and OTC stocks . . . . . . . . . . . . . . . . . . . . . . Liabilities Financial liabilities at fair value through profit or loss Held for trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative financial instruments Assets Financial assets at fair value through profit or loss Held for trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative instruments held for hedging . . . . . . . . . . . . . Liabilities Financial liabilities at fair value through profit or loss Held for trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative instruments held for hedging . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		January 1, 2012	January 1, 2012	Level 3 NT$ $ — — — — — — — 48,097 — (107,369) — $ (59,272)
	Total NT$ $ 1,722,733 36,819 57,286 10,656,510 14,044,274 901,138 (953,357) 1,333,518 252,233 (3,431,483) (13,093) $24,606,578	Level 1 NT$ $ 1,722,733 36,819 57,286 10,648,263 14,044,274 901,138 (953,357) — — — — $26,457,156	Level 2 NT$ $ — — — 8,247 — — — 1,285,421 252,233 (3,324,114) (13,093) $(1,791,306)

F-176

September 30, 2012 Financial Instruments Total Level 1 Level 2 NT$ NT$ NT$ Nonderivative financial instruments Assets Financial assets at fair value through profit or loss Held for trading Government bonds . . . . . . . . . . . . . . . . . . . . . . $ 1,740,978 $ 1,740,978 $ — Listed and OTC stocks . . . . . . . . . . . . . . . . . . . 81,258 81,258 — Beneficiary certificates . . . . . . . . . . . . . . . . . . . 82,828 82,828 — Financial assets designated as at fair value through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,061,096 13,052,672 8,424 Available-for-sale Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . 10,371,277 10,371,277 — Listed and OTC stocks . . . . . . . . . . . . . . . . . . . . . . . 1,062,057 1,062,057 — Liabilities Financial liabilities at fair value through profit or loss Held for trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (951,784) (951,784) — Derivative financial instruments Assets Financial assets at fair value through profit or loss Held for trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,760,302 — 1,622,684 Derivative instruments held for hedging . . . . . . . . . . . . . 199,464 — 199,464 Liabilities Financial liabilities at fair value through profit or loss Held for trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,923,145) — (3,839,573) Derivative instruments held for hedging . . . . . . . . . . . . . (10,521) — (10,521) Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $23,473,810 $25,439,286 $(2,019,522) December 31, 2012 Financial Instruments Total Level 1 Level 2 NT$ NT$ NT$ Nonderivative financial instruments Assets Financial assets at fair value through profit or loss Held for trading Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,334,349 $ 1,334,349 $ — Listed and OTC stocks . . . . . . . . . . . . . . . . . . . . . . . . 130,962 130,962 — Beneficiary certificates . . . . . . . . . . . . . . . . . . . . . . . 107,521 107,521 — Financial assets designated as at fair value through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,679,558 11,658,981 20,577 Available-for-sale Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,355,436 10,355,436 — Listed and OTC stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 807,991 807,991 —			September 30, 2012	September 30, 2012	September 30, 2012	Level 3 NT$ $ — — — — — — — 137,618 — (83,572) — $ 54,046 Level 3 NT$ $— — — — — —
			Level 1 Level 2 NT$ NT$ $ 1,740,978 $ — 81,258 — 82,828 — 13,052,672 8,424 10,371,277 — 1,062,057 — (951,784) — — 1,622,684 — 199,464 — (3,839,573) — (10,521) $25,439,286 $(2,019,522) December 31, 2012
		Total NT$ $ 1,334,349 130,962 107,521 11,679,558 10,355,436 807,991		Level 1 NT$ $ 1,334,349 130,962 107,521 11,658,981 10,355,436 807,991	Level 2
					NT$ $ — — — 20,577 — —

(Continued)

F-177

					December 31, 2012	December 31, 2012	December 31, 2012	December 31, 2012	December 31, 2012	December 31, 2012	December 31, 2012
Financial Instruments		Total			Level		1			Level 2		Level 3
		NT$				NT$				NT$			NT$
Negotiable certificates of deposit . . . . . . . . . . . . . . .	$	452,394			$		—		$		452,394	$		—
Commercial papers . . . . . . . . . . . . . . . . . . . . . . . . . .		250,043					—				250,043			—
Derivative financial instruments
Assets
Financial assets at fair value through profit or loss
Held for trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		2,858,445					—			2,680,152			178,293
Derivative instruments held for hedging . . . . . . . . . . . . .		180,242					—				180,242			—
Liabilities
Financial liabilities at fair value through profit or loss
Held for trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		(3,745,032)					—			(3,677,723)			(67,309)
Derivative instruments held for hedging . . . . . . . . . . . . .		(12,819)					—				(12,819)			—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$24,399,090				$24,395,240				$ (107,134)			$110,984
											(Concluded)
						December 31, 2012
Financial Instruments				Total		Level		1		Level 2		Level 3
				US$		US$					US$			US$
			(Note 4)			(Note		4)		(Note 4)		(Note 4)
Nonderivative financial instruments
Assets
Financial assets at fair value through profit or loss
Held for trading
Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			$	45,140		$ 45,140				$	—		$	—
Listed and OTC stocks . . . . . . . . . . . . . . . . . . . . . . . . . .					4,430		4,430				—			—
Beneficiary certificates . . . . . . . . . . . . . . . . . . . . . . . . .					3,637		3,637				—			—
Financial assets designated as at fair value through profit or
loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				395,114		394,418					696			—
Available-for-sale
Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				350,319		350,319					—			—
Listed and OTC stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				27,334		27,334					—			—
Negotiable certificates of deposit . . . . . . . . . . . . . . . . . . . . .				15,304				—			15,304			—
Commercial papers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					8,459			—			8,459			—
Derivative financial instruments
Assets
Financial assets at fair value through profit or loss
Held for trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				96,701				—			90,668			6,033
Derivative instruments held for hedging . . . . . . . . . . . . . . . . . . . .					6,097			—			6,097			—
Liabilities
Financial liabilities at fair value through profit or loss
Held for trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			(126,693)					—			(124,416)			(2,277)
Derivative instruments held for hedging . . . . . . . . . . . . . . . . . . . .					(434)			—			(434)			—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			$	825,408		$825,278				$	(3,626)	$		3,756

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September 30, 2013 Financial Instruments Total Level 1 Level 2 NT$ NT$ NT$ Nonderivative financial instruments Assets Financial assets at fair value through profit or loss Held for trading Government bonds . . . . . . . . . . . . . . . . . . . . . . $ 2,921,134 $ 2,921,134 $ — Listed and OTC stocks . . . . . . . . . . . . . . . . . . 344,935 344,935 — Beneficiary certificates . . . . . . . . . . . . . . . . . . 189,114 189,114 — Financial assets designated as at fair value through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,054,313 12,045,529 8,784 Available-for-sale Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . 14,380,514 14,380,514 — Listed and OTC stocks . . . . . . . . . . . . . . . . . . . . . . 1,109,356 1,109,356 — Commercial papers . . . . . . . . . . . . . . . . . . . . . . . . . 479,835 — 479,835 Foreign bank debentures . . . . . . . . . . . . . . . . . . . . . 470,286 470,286 — Treasury security . . . . . . . . . . . . . . . . . . . . . . . . . . . 199,838 199,838 — Derivative financial instruments Assets Financial assets at fair value through profit or loss Held for trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,125,572 — 3,026,917 Derivative instruments held for hedging . . . . . . . . . . . . . 120,853 — 120,853 Liabilities Financial liabilities at fair value through profit or loss Held for trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,708,838) — (5,248,873) Derivative instruments held for hedging . . . . . . . . . . . . . (10,320) — (10,320) Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $29,676,592 $31,660,706 $(1,622,804) September 30, 2013 Financial Instruments Total Level 1 Level 2 US$ (Note 4) US$ (Note 4) US$ (Note 4) Nonderivative financial instruments Assets Financial assets at fair value through profit or loss Held for trading Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 98,821 $ 98,821 $ — Listed and OTC stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,669 11,669 — Beneficiary certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,398 6,398 — Financial assets designated as at fair value through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407,791 407,494 297 Available-for-sale Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486,486 486,486 — Listed and OTC stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,529 37,529 — Commercial papers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,233 — 16,233 Foreign bank debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,909 15,909 — Treasury security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,760 6,760 —			September 30, 2013	September 30, 2013	September 30, 2013	Level 3 NT$ $ — — — — — — — — — 98,655 — (459,965) — $(361,310) Level 3 US$ (Note 4) $— — — — — — — — —
			Level 1 Level 2 NT$ NT$ $ 2,921,134 $ — 344,935 — 189,114 — 12,045,529 8,784 14,380,514 — 1,109,356 — — 479,835 470,286 — 199,838 — — 3,026,917 — 120,853 — (5,248,873) — (10,320) $31,660,706 $(1,622,804) September 30, 2013
		Total US$ (Note 4) $ 98,821 11,669 6,398 407,791 486,486 37,529 16,233 15,909 6,760		Level 1 US$ (Note 4) $ 98,821 11,669 6,398 407,494 486,486 37,529 — 15,909 6,760	Level 2
					US$ (Note 4) $ — — — 297 — — 16,233 — —

(Continued)

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Financial Instruments Derivative financial instruments Assets Financial assets at fair value through profit or loss Held for trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative instruments held for hedging . . . . . . . . . . . . . . . . . Liabilities Financial liabilities at fair value through profit or loss Held for trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative instruments held for hedging . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		September 30, 2013	September 30, 2013
	Total US$ (Note 4) $ 105,736 4,088 (193,127) (349) $1,003,944	Level 1 US$ (Note 4) $ — — — — $1,071,066	Level 2 US$ (Note 4) $ 102,399 4,088 (177,567) (349) $ (54,899)	Level 3
				US$ (Note 4) $ 3,337 — (15,560) —
				$(12,223)

(Concluded)

Movement of Level 3 financial assets:

Item Financial assets at fair value through profit or loss Held for trading-derivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . Item Financial assets at fair value through profit or loss Held for trading-derivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . . .	. .					September 30, 2012	September 30, 2012	September 30, 2012	September 30, 2012	September 30, 2012
		Beginning Balance		Valuation		Increase in the Current Period			Decrease in the Current Period		Ending Balance
						Purchase or Issue		Transfer-in	Sale, Disposition or Settlement	Transfer-out from Level 3
		NT$ $48,097		NT$ $89,521		NT$ NT$ NT$ $— $— $— September 30, 2013				NT$ $—	NT$ $137,618
	Beginning Balance		Valuation			Increase in the Current Period			Decrease in the Current Period		Ending Balance NT$ $98,655
					Purchase or Issue		Transfer-in		Sale, Disposition or Settlement	Transfer-out from Level 3
	NT$ $178,293		NT$ $(79,638)		NT$ $—		NT$ $—		NT$ $—	NT$ $—

Item Financial assets at fair value through profit or loss Held for trading-derivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . . .			September 30, 2013	September 30, 2013	September 30, 2013	September 30, 2013
	Beginning Balance	Valuation	Increase in the Current Period		Decrease in the Current Period		Ending Balance US$ (Note 4) $3,337
			Purchase or Issue	Transfer-in	Sale, Disposition or Settlement	Transfer-out from Level 3
	US$ (Note 4) $6,033	US$ (Note 4) $(2,696)	US$ (Note 4) $—	US$ (Note 4) $—	US$ (Note 4) $—	US$ (Note 4) $—

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Movement of Level 3 financial liabilities:

Item Financial liabilities at fair value through profit or loss Held for trading-derivative financial instruments . . . . . . . . . . . . . . . . . Item Financial liabilities at fair value through profit or loss Held for trading-derivative financial instruments . . . . . . . . . Item Financial liabilities at fair value through profit or loss Held for trading-derivative financial instruments . . . . . . . . . . . . . . . . . .	Beginning Balance NT$ $107,369	Beginning Balance NT$ $107,369			September 30, 2012	September 30, 2012	September 30, 2012	September 30, 2012	September 30, 2012
			Valuation NT$ $(23,797)		Increase in the Current Period Decrease in the Current Period Purchase or Issue Transfer-in Sale, Disposition or Settlement Transfer-out from Level 3 NT$ NT$ NT$ NT$ $— $— $— $— September 30, 2013					Ending Balance NT$ $83,572
	Beginning Balance Valuation Increase in the Current Period Decrease in the Current Period Purchase or Issue Transfer-in Sale, Disposition or Settlement Transfer-out from Level 3 NT$ NT$ NT$ NT$ NT$ NT$ $67,309 $(40,681) $433,337 $— $— $— September 30, 2013 Beginning Balance Valuation Increase in the Current Period Decrease in the Current Period Purchase or Issue Transfer-in Sale, Disposition of Level 3 or Settlement Transfer-out from Level 3 US$ (Note 4) US$ (Note 4) US$ (Note 4) US$ (Note 4) US$ (Note 4) US$ (Note 4) $2,277 $(1,376) $14,659 $— $— $—		Valuation NT$ $(40,681)		Increase in the Current Period Decrease Current Purchase or Issue Transfer-in Sale, Disposition or Settlement NT$ NT$ NT$ $433,337 $— $— September 30, 2013		Decrease Current		in the Period Transfer-out from Level 3 NT$ $—	Ending Balance
										NT$ $459,965
		Beginning Balance US$ (Note 4) $2,277		Valuation US$ (Note 4) $(1,376)		Increase in the Current Period Purchase or Issue Transfer-in US$ (Note 4) US$ (Note 4) $14,659 $—		Decrease in the Current Period Sale, Disposition of Level 3 or Settlement Transfer-out from Level 3 US$ (Note 4) US$ (Note 4) $— $—		Ending Balance US$ (Note 4) $15,560
						Purchase or Issue US$ (Note 4) $14,659		Sale, Disposition of Level 3 or Settlement US$ (Note 4) $—

• e. Transfers between Level 1 and Level 2

There is no transfer between Level 1 and Level 2 for the three months ended September 30, 2012 and 2013 and the nine months ended September 30, 2012 and 2013.

• f. The sensitivity analysis of reasonably possible alternative assumptions for fair value measurements categorized within Level 3

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The Bank’s fair value measurement of the financial instruments is reasonable; nevertheless, changes in the valuation parameter underlying the fair value measurement may result in different measurement. If the valuation parameter underlying the fair value measurement of the financial instruments categorized within Level 3 had been 0.01% higher/lower, the impact on the profit or loss for the period would be as follows:

Items Assets Financial assets at fair value through profit or loss Derivative instruments held for trading . . . . . . . . . Liabilities Financial liabilities at fair value through profit or loss Derivative instruments held for trading . . . . . . . . . Items Assets Financial assets at fair value through profit or loss Derivative instruments held for trading . . . . . . . . . . Liabilities Financial liabilities at fair value through profit or loss Derivative instruments held for trading . . . . . . . . . . Items Assets Financial assets at fair value through profit or loss Derivative instruments held for trading . . . . . . . . . . Liabilities Financial liabilities at fair value through profit or loss Derivative instruments held for trading . . . . . . . . . .	The Impacts on Gains and Losses	The Impacts on Gains and Losses	The Impacts on Gains and Losses	The Impacts on Gains and Losses	The Impacts on Gains and Losses	The Impacts on Gains and Losses
	January 1, 2012 September 30, 2012 Favorable Unfavorable Favorable Unfavorable NT$ NT$ NT$ NT$ $ 910 $ (889) $3,516 $(3,516) 1,654 (1,732) 1,069 (1,069) The Impacts on Gains and Losses December 31, 2012 Favorable Unfavorable NT$ US$ (Note 4) NT$ US$ (Note 4) . . . . . . . . . . . . $3,770 $128 $(3,770) $(128) . . . . . . . . . . . . 996 34 (996) (34) The Impacts on Gains and Losses September 30, 2013 Favorable Unfavorable NT$ US$ (Note 4) NT$ US$ (Note 4) . . . . . . . . . . . . $1,994 $67 $(1,994) $(67) . . . . . . . . . . . . 1,743 59 (2,633) (89)			September 30, 2012
	Favorable NT$ $ 910 1,654 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					Unfavorable
		. . . .
			December 31, 2012
			Favorable Unfavorable NT$ US$ (Note 4) NT$ US$ (Note 4) $3,770 $128 $(3,770) $(128) 996 34 (996) (34) The Impacts on Gains and Losses		Unfavorable
			September 30, 2013
			Favorable NT$ US$ (Note 4) $1,994 $67 1,743 59		Unfavorable
					NT$ US$ (Note 4) $(1,994) $(67) (2,633) (89)

The favorable and unfavorable movement refers to the fluctuation of fair value measurement, which is calculated based on valuation techniques that use input parameters. The above table only reflects the impact of changes in a single input parameter, without consideration of the correlations between different input parameters and its volatility.

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47. FINANCIAL RISK MANAGEMENT

a. Overview

The Bank’s risk management policy is to form a risk management-oriented culture, and to use both qualitative and quantitative indexes from internal and external risk management regulations as operating strategies.

The Bank has set up an independent risk control department to implement and monitor risk management policies.

The Bank’s risk management policies are established to identify and measure the risks faced by the Bank, to set appropriate risk limits and controls, to monitor risks and adherence to limits, and to achieve the target profit.

b. Risk management framework

The Board of Directors, the highest decision department of the Bank, has overall responsibility for the establishment and oversight of the Bank’s risk management framework.

Asset and Liability Management Committee and Risk Management Committee have been formed to examine and manage the Bank’s risks, to assess the execution of risk management and to evaluate risk tolerance. The general manager is the convener, and is responsible for appointing members of committees.

Furthermore, the Bank has an independent Risk Management Department comprising of corporate banking and consumer banking groups which directly manage credit extension risks with regard to their respective areas: corporate banking, financial markets, individual banking, consumer banking and credit card business groups. For integrated risk management, each business unit of the Bank is required to present, first, to the Risk Management Department for review and then to the Bank’s top management for approval, all the related documents, including the credit extension principles and procedures, new product development, levels and degree of authorization, etc.

Internal Audit Department undertakes regular reviews of risk management controls and procedures, including risk management framework, operating procedures of risk management, and provides timely suggestion and improvement.

c. Credit risk

• 1) Definition and scope of credit risk

Credit risk is the risk of financial loss to the Bank if a borrower, issuer or counterparty to a financial instrument fails to meet its contractual obligations due to its credit deterioration or other factors, such as a dispute between the borrower and its counterparty.

Credit risk includes all risks derived from on- and off-balance sheet business, and all credit risk related to products, businesses and positions.

• 2) Management policies on credit risk

The Bank shall identify risk factors and consider appropriate risk evaluation and control process prior to taking the existing or new business. For all credit risks identified on- and offbalance sheet, adequate credit limits are set based on the same borrower, counterparty, related

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party, group, or industry. The Bank shall establish review mechanism to track and assess changes in each borrower’s or issuer’s financial position; regularly assess and manage asset quality, also strengthen the management of unusual borrowers and make appropriate allowance for possible losses if applicable.

The credit risk management processes and valuation methods for credit extension (including loan commitments and guarantees) are as follows:

a) Classification of credit assets

Credit assets are grouped into 5 different categories according to the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/Non-accrual Loans.” Normal credit assets shall be classified as “Category One”, the remaining credit assets shall be further classified based on the collateral for loans and past due status as follows: Category Two- Special Mention loans; Category Three-Substandard; Category FourDoubtful, and Category FiveUnrecoverable. Moreover, the Bank establishes internal requirements, such as the “Principles Governing the Procedures to Evaluate Assets and Deal with Nonperforming/ Non-accrual Loans,” to manage problematic credit extension and credit collection and management.

b) Credit quality

Discounts and loans and receivables

The Bank sets credit quality grades according to product features, business types, operating conditions, collaterals and credit rating. Credit risk from corporate banking is categorized according to the business types, collaterals, credit rating and financial position of borrowers; credit risk from consumer banking is assessed on a case-by-case basis, except for unsecured loans and credit card products, which are assessed by internal credit rating models.

Inter-bank facilities, derivative financial instruments and investments in debt instruments

Total trading limits are determined each year by reference to financial institutions’ operating results, credit rating, rating on THE BANKER, net worth and background of shareholders, with summaries submitted to the Credit Committee, and to the Managing Directors for approval. In the month following the end of each quarter, reports on transaction limits for each financial institution and the quarterly balance are submitted to Credit Committee, and then to the general manager for approval.

Derivative financial instruments transactions entered into counterparties from banking sectors are those categorized as investment grade, and they are controlled using relevant transaction limits for each counterparty. For individual counterparty, its credit exposure is controlled using the limits placed on derivative instruments by both amounts and terms in the general credit approval process.

Credit risk for debt instruments is carried out by identifying the risk using the credit rating received external institutions, credit quality, geographic situations and counterparty credit risk.

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• 3) Credit risk hedging and mitigation policies

• a) To effectively reduce credit risk, terms of credit facilities are determined in the light of assessments of probability and amounts of default, collateral and guarantees are obtained, including bank deposit receipts, securities (such as treasury securities, government bonds, bank debentures, stocks and bonds guaranteed by financial institutions) and real estate such as land and buildings. Listed and OTC stocks are marked to market day to day, and changes in the value of their collaterals are monitored all the time; values of land and buildings are examined every time the contract is renewed.

According to the Bank’s “Principles for Acceptance and Disposal of Collaterals”, collateral of nonperforming loans secured through compulsory enforcement or participating distribution, if the minimum auction price or liquidation price of the collateral is too low and damage the Bank’s credit right, the Bank will participate in the auction or declare to undertake, for example, the minimum auction price is too low to compensate the principal and interest of loans but the collateral is not difficult to dispose in the future. For collaterals tender or undertaken, the Bank should actively seek buyers, and if the collateral is real estate, the Bank should dispose it within the period regulated by the Banking Law.

• b) Reduce loans to non-target customers to mitigate credit risk occurring.

• c) Understand, control and monitor risks on a timely basis via credit limits prior to the credit being committed to customers, restrictive clauses in contracts, loans management, review mechanism to view changes of each case. Understand credit portfolios and overall credit risks the use of periodic reports and feedbacks.

• d) Master netting arrangement

Most of the Bank’s transactions are settled on a gross basis; however, it sometimes enters into transactions to settle on a net basis, or enters into netting arrangements to the extent that if a default occurs, all amounts with the counterparty are terminated and settled on a net basis to further reduce its credit risk.

4) Maximum credit exposure

The Bank is exposed to credit risk arising from counterparties or other parties fail to fulfill their contractual obligation. To manage the risk, the Bank extends loans, loan commitments, and guarantees only after careful evaluation of customers’ creditworthiness. Credit risk can be effectively mitigated by taking possession of deposit receipts, marketable securities and other assets. As of January 1, 2012, September 30, 2012, December 31, 2012 and September 30, 2013, about 66.69%, 67.16%, 68.44% and 66.46%, respectively, of total loans granted, and about 47.59%, 44.58%, 51.36% and 52.43%, respectively, of the aggregate guarantees were secured.

F-185

The maximum credit exposures of the off-balance sheet commitments and guarantees were as follows (values of collaterals were not considered):

Items Unused portion of credit card lines . . . . . . . . . . . Financial guarantees and standby L/Cs . . . . . . . . Irrevocable loan commitments . . . . . . . . . . . . . .	January 1, 2012 NT$ $133,113,662 10,031,345 7,351,171	September 30, 2012	December 31, 2012	September 30, 2013
		NT$ $144,901,466 11,691,546 7,495,066	NT$ US$ (Note 4) $149,717,675 $5,064,874 12,389,045 419,115 9,681,305 327,514	NT$ US$ (Note 4) $150,033,395 $5,075,555 12,431,413 420,548 11,004,536 372,278

5) Concentration of credit risk

The concentration of credit risk exists when counterparties to financial transactions are individuals or groups engaging in similar business activities and having similar economic features. The similarity would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. The Bank’s concentrations of credit risk by industries, geographies and types of collaterals were as follows:

a) Industries

There was no significant concentration risk of the Bank’s loans in a single customer or counterparty, but there were some risks in relation to specific industries as follows:

Credit Risk Profile by Industry Sector Manufacturing . . . . . . . . . . . . . . . . . . . . . . . Finance and insurance . . . . . . . . . . . . . . . . . Transportation and warehousing . . . . . . . . .	January 1, 2012 NT$ $44,012,107 32,456,609 14,229,779 $90,698,495	September 30, 2012 NT$ $41,998,839 33,404,024 14,592,709 $89,995,572	December 31, 2012 NT$ US$ (Note 4) $41,015,594 $1,387,537 28,376,562 959,965 13,434,668 454,488 $82,826,824 $2,801,990	September	30, 2013
			NT$ $41,015,594 28,376,562 13,434,668 $82,826,824	NT$ $43,714,529 29,573,299 13,955,776 $87,243,604	US$ (Note 4) $1,478,840 1,000,450 472,117
					$2,951,407

b) Geographies

The main businesses and customers of the Bank are in Taiwan; therefore, there is no significant geographic concentration risk.

c) Types of collaterals

Types of Collaterals Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Secured Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Movable property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	January 1, 2012 NT$ % $ 91,201,331 33 137,796,356 50 21,125,139 8 18,683,902 7 5,427,388 2 $274,234,116 100	September 30, 2012 NT$ % $ 92,912,354 33 143,729,895 51 23,857,892 8 15,943,723 6 6,775,543 2 $283,219,407 100

F-186

Types of Collaterals Unsecured . . . . . . . . . . . . . . . . . . . . . . . Secured Real estate . . . . . . . . . . . . . . . . . . . Movable property . . . . . . . . . . . . . Financial collateral . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . .	December 31, 2012 NT$ US$ (Note 4) % $ 89,237,277 $3,018,852 31 146,103,263 4,942,600 52 26,453,020 894,892 9 15,599,652 527,728 6 6,408,220 216,788 2 $283,801,432 $9,600,860 100	September 30, 2013	September 30, 2013
	NT$ $ 89,237,277 146,103,263 26,453,020 15,599,652 6,408,220 $283,801,432	NT$ $107,519,889 154,408,065 35,732,485 18,086,912 5,206,158 $320,953,509	US$ (Note 4) % $ 3,637,344 33 5,223,548 48 1,208,812 11 611,871 6 176,122 2 $10,857,697 100

6) Credit quality and impairment assessment

Some of financial assets held by the Bank and its subsidiaries, such as cash and cash equivalents, due from the central bank and other banks, financial assets at fair value through profit or loss, securities purchased under resale agreements, refundable deposits and operating deposits, are assessed with low credit risk due to the good credit rating of their counterparties.

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An analysis of credit quality of financial assets other than those listed above is shown below:

• a) Credit quality analysis of discounts and loans and receivables

(In Thousands of New Taiwan Dollars)

January 1, 2012 Discounts and loans . . . . . . . . . . . . . . . . . . Receivables Credit card . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . .	Neither Past due Nor Impaired Amount	Neither Past due Nor Impaired Amount	Neither Past due Nor Impaired Amount	Neither Past due Nor Impaired Amount	Neither Past due Nor Impaired Amount	Past due but not Impaired Amount (B)	Impaired Amount (C)	Total (A)+(B)+(C)	Allowance for Possible Losses (D)	Allowance for Possible Losses (D)	Net Amount (A)+(B)+(C)-(D)
	Excellent	Good	Moderate	Special Mention	Subtotal (A)				With Objective Evidence of Individual Impairment	Without Objective Evidence of Individual Impairment
	$155,317,979 4,804,794 788,192	$70,397,282 2,034,691 526,463	$38,392,151 4,933,859 2,429,678	$132,076 85,350 —	$264,239,488 11,858,694 3,744,333	$2,662,532 335,240 —	$7,332,096 3,336,154 507,032	$274,234,116 15,530,088 4,251,365	$3,823,319 547,807 426,594	$950,416 226,528 18,821	$269,460,381 14,755,753 3,805,950

(In Thousands of New Taiwan Dollars)

September 30, 2012 Discounts and loans . . . . . . . . . . . . . . . . . . Receivables Credit card . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . .	Neither Past due Nor Impaired Amount Excellent Good Moderate Special Mention Subtotal (A) $165,846,344 $72,908,889 $34,883,176 $84,166 $273,722,575 4,821,502 2,030,369 4,733,501 63,286 11,648,658 112,142 428,632 1,915,284 — 2,456,058	Neither Past due Nor Impaired Amount Excellent Good Moderate Special Mention Subtotal (A) $165,846,344 $72,908,889 $34,883,176 $84,166 $273,722,575 4,821,502 2,030,369 4,733,501 63,286 11,648,658 112,142 428,632 1,915,284 — 2,456,058	Neither Past due Nor Impaired Amount Excellent Good Moderate Special Mention Subtotal (A) $165,846,344 $72,908,889 $34,883,176 $84,166 $273,722,575 4,821,502 2,030,369 4,733,501 63,286 11,648,658 112,142 428,632 1,915,284 — 2,456,058	Neither Past due Nor Impaired Amount Excellent Good Moderate Special Mention Subtotal (A) $165,846,344 $72,908,889 $34,883,176 $84,166 $273,722,575 4,821,502 2,030,369 4,733,501 63,286 11,648,658 112,142 428,632 1,915,284 — 2,456,058	Neither Past due Nor Impaired Amount Excellent Good Moderate Special Mention Subtotal (A) $165,846,344 $72,908,889 $34,883,176 $84,166 $273,722,575 4,821,502 2,030,369 4,733,501 63,286 11,648,658 112,142 428,632 1,915,284 — 2,456,058	Past due but not Impaired Amount (B)	Impaired Amount (C)	Total (A)+(B)+(C)	Allowance for Possible Losses (D)	Allowance for Possible Losses (D)	Net Amount (A)+(B)+(C)-(D)
		Good	Moderate	Special Mention	Subtotal (A)				With Objective Evidence of Individual Impairment	Without Objective Evidence of Individual Impairment
		$72,908,889 2,030,369 428,632	$34,883,176 4,733,501 1,915,284	$84,166 63,286 —	$273,722,575 11,648,658 2,456,058	$2,951,030 603,203 —	$6,545,802 2,895,885 498,011	$283,219,407 15,147,746 2,954,069	$1,937,118 616,824 426,386	$1,230,998 111,050 11,576	$280,051,291 14,419,872 2,516,107

(In Thousands of New Taiwan Dollars)

December 31, 2012 Discounts and loans . . . . . . . . . . . . . . . . . . Receivables Credit card . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . .	Neither Past due Nor Impaired Amount	Neither Past due Nor Impaired Amount	Neither Past due Nor Impaired Amount	Neither Past due Nor Impaired Amount	Neither Past due Nor Impaired Amount	Past due but not Impaired Amount (B)	Impaired Amount (C)	Total (A)+(B)+(C)	Allowance for Possible Losses (D)	Allowance for Possible Losses (D)	Net Amount (A)+(B)+(C)-(D)
	Excellent	Good	Moderate	Special Mention	Subtotal (A)				With Objective Evidence of Individual Impairment	Without Objective Evidence of Individual Impairment
	$162,132,274 4,812,165 704,870	$75,445,980 1,994,985 388,220	$36,652,230 4,761,431 2,241,245	$226,827 59,368 —	$274,457,311 11,627,949 3,334,335	$2,925,143 1,018,057 —	$6,418,978 2,767,664 498,011	$283,801,432 15,413,670 3,832,346	$2,167,815 601,627 426,386	$1,414,191 108,439 16,022	$280,219,426 14,703,604 3,389,938

(In Thousands of U.S. Dollars, Note 4)

December 31, 2012 Discounts and loans . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables Credit card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Neither Past due Nor Impaired Amount	Neither Past due Nor Impaired Amount	Neither Past due Nor Impaired Amount	Neither Past due Nor Impaired Amount	Neither Past due Nor Impaired Amount	Past due but not Impaired Amount (B)	Impaired Amount (C)	Total (A)+(B)+(C)	Allowance for Possible Losses (D)	Allowance for Possible Losses (D)	Net Amount (A)+(B)+(C)-(D)
	Excellent	Good	Moderate	Special Mention	Subtotal (A)				With Objective Evidence of Individual Impairment	Without Objective Evidence of Individual Impairment
	$5,484,854 162,793 23,846	$2,552,300 67,489 13,133	$1,239,926 161,077 75,820	$7,673 2,009 —	$9,284,753 393,368 112,799	$98,956 34,440 —	$217,151 93,629 16,847	$9,600,860 521,437 129,646	$73,336 20,353 14,424	$47,841 3,668 543	$9,479,683 497,416 114,679

(In Thousands of New Taiwan Dollars)

F-189	September 30, 2013 Discounts and loans . . . . . . . . . . . . . . . . . . Receivables Credit card . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . .	Neither Past due Nor Impaired Amount	Neither Past due Nor Impaired Amount	Neither Past due Nor Impaired Amount	Neither Past due Nor Impaired Amount	Neither Past due Nor Impaired Amount	Past due but not Impaired Amount (B)	Impaired Amount (C)	Total (A)+(B)+(C)	Allowance for Possible Losses (D)	Allowance for Possible Losses (D)	Net Amount (A)+(B)+(C)-(D)
		Excellent	Good	Moderate	Special Mention	Subtotal (A)				With Objective Evidence of Individual Impairment	Without Objective Evidence of Individual Impairment
		$182,082,224 5,043,201 154,692	$89,714,770 2,218,375 328,063	$39,478,458 5,127,882 2,463,153	$282,927 47,782 —	$311,558,379 12,437,240 2,945,908	$4,126,822 451,999 —	$5,268,308 2,439,713 498,011	$320,953,509 15,328,952 3,443,919	$1,965,333 590,971 426,386	$2,038,397 69,225 16,980	$316,949,779 14,668,756 3,000,553

(In Thousands of U.S. Dollars, Note 4)

September 30, 2013 Discounts and loans . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables Credit card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Neither Past due Nor Impaired Amount	Neither Past due Nor Impaired Amount	Neither Past due Nor Impaired Amount	Neither Past due Nor Impaired Amount	Neither Past due Nor Impaired Amount	Past due but not Impaired Amount (B)	Impaired Amount (C)	Total (A)+(B)+(C)	Allowance for Possible Losses (D)	Allowance for Possible Losses (D)	Net Amount (A)+(B)+(C)-(D)
	Excellent	Good	Moderate	Special Mention	Subtotal (A)				With Objective Evidence of Individual Impairment	Without Objective Evidence of Individual Impairment
	$6,159,750 170,609 5,233	$3,035,006 75,047 11,098	$1,335,537 173,474 83,327	$9,571 1,616 —	$10,539,864 420,746 99,658	$139,608 15,291 —	$178,224 82,534 16,847	$10,857,696 518,571 116,505	$66,486 19,992 14,424	$68,958 2,342 574	$10,722,252 496,237 101,507

b) An analysis of credit quality of discounts and loans neither past due nor impaired by business types

January 1, 2012 Corporate banking Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumer banking Housing mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . Credit loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September 30, 2012 Corporate banking Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumer banking Housing mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 31, 2012 Corporate banking Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumer banking Housing mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
			Neither Past due Nor			Impaired
	Excellent $ 16,664,474 28,920,785 105,880,837 2,988,199 863,684 $155,317,979 Excellent $ 15,595,266 34,840,076 111,363,583 3,437,271 610,148 $165,846,344 Excellent $ 16,654,306 29,627,570 111,516,500 3,521,335 812,563 $162,132,274		Good Moderate Special Mention $12,515,380 $ 3,016,360 $ — 32,899,496 27,462,695 — — 10,145,112 3,970,087 3,914,833 1,700,138 132,076 10,922,461 2,242,871 — $70,397,282 $38,392,151 $132,076 (In Thousands of New Taiwan Dollars)				Total
							$ 32,196,214 89,282,976 119,996,036 8,735,246 14,029,016
							$264,239,488
				Neither	Past due Nor Impaired
		Excellent		Good Moderate Special Mention $12,685,913 $ 2,272,410 $ — 29,515,162 24,674,955 — 10,595,155 4,023,530 — 4,604,524 1,768,846 84,166 15,508,135 2,143,435 — $72,908,889 $34,883,176 $84,166 (In Thousands of New Taiwan Dollars)			Total
		$ 15,595,266 34,840,076 111,363,583 3,437,271 610,148					$ 30,553,589 89,030,193 125,982,268 9,894,807 18,261,718
		$165,846,344					$273,722,575
				Neither	Past due Nor Impaired
		Excellent		Good $13,335,427 28,246,993 10,688,334 4,863,959 18,311,267 $75,445,980	Moderate Special Mention $ 2,080,020 $ 661 26,584,640 147,320 4,064,897 — 1,868,261 78,846 2,054,412 — $36,652,230 $226,827		Total
		$ 16,654,306 29,627,570 111,516,500 3,521,335 812,563					$ 32,070,414 84,606,523 126,269,731 10,332,401 21,178,242
		$162,132,274					$274,457,311

December 31, 2012 Corporate banking Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumer banking Housing mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)
			Neither	Past due Nor Impaired
		Excellent $ 563,407 1,002,286 3,772,547 119,125 27,489 $5,484,854	Good $ 451,131 955,582 361,581 164,545 619,461 $2,552,300	Moderate Special Mention $ 70,366 $ 22 899,345 4,984 137,513 — 63,202 2,667 69,500 — $1,239,926 $7,673		Total
						$1,084,926 2,862,197 4,271,641 349,539 716,450 $9,284,753

F-190

September 30, 2013 Corporate banking Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumer banking Housing mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
		Neither	Past due Nor Impaired
	Excellent $ 19,403,603 42,143,168 115,991,529 3,589,192 954,732 $182,082,224	Good $14,203,564 32,944,726 11,826,270 5,459,250 25,280,960 $89,714,770	Moderate $ 1,798,403 29,246,864 4,227,397 1,954,780 2,251,014 $39,478,458	Special Mention $ 19,840 153,175 — 109,912 — $282,927	Total
					$ 35,425,410 104,487,933 132,045,196 11,113,134 28,486,706
					$311,558,379

September 30, 2013 Corporate banking Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumer banking Housing mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)
			Neither	Past due Nor Impaired
		Excellent $ 656,414 1,425,682 3,923,935 121,421 32,298 $6,159,750	Good $ 480,499 1,114,504 400,077 184,684 855,242 $3,035,006	Moderate $ 60,839 989,407 143,011 66,129 76,151 $1,335,537	Special Mention $ 671 5,182 — 3,718 — $9,571	Total
						$ 1,198,423 3,534,775 4,467,023 375,952 963,691 $10,539,864

F-191

c) An analysis of credit quality of securities investment

	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
	Neither Past due Nor Impaired					Allowance for Possible Losses (D)	Net Amount (A)+(B)+(C)-(D)
Excellent	Good	Moderate	Special Mention	Subtotal (A)
$14,044,274 448,675 1,089,159 — 4,300,514	$ — 238,442 2,838,746 — 2,090,010	$ — 214,021 — 103,846 2,800,210		$14,044,274 901,138 3,927,905 103,846 9,190,734

							(In	Thousands of	New Taiwan Dollars)	New Taiwan Dollars)	New Taiwan Dollars)
			Neither Past			due Nor Impaired			Past due but Not				Allowance for
							Special	Subtotal	Impaired	Impaired		Total	Possible	Net Amount
F-192	September 30, 2012 Available-for-sale financial assets Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Excellent $10,371,277	$	Good —	Moderate $ —		Mention $—	(A) $10,371,277	(B) $—	$	(C) —	(A)+(B)+(C) $10,371,277	Losses (D) $ —	(A)+(B)+(C)-(D) $10,371,277
	Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	558,586		500,070		3,401	—	1,062,057	—		—	1,062,057	—	1,062,057
	Held-to-maturity financial assets
	Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	762,891	1,178,581			—	—	1,941,472	—		—	1,941,472	—	1,941,472
	Financial assets measured at cost . . . . . . . . . . . . . . . . . . . . . .	—		—		101,379	—	101,379	—		—	101,379	—	101,379
	Debt investments with no active market . . . . . . . . . . . . . . . . .	3,202,765		6,106,088		2,611,438	—	11,920,291	—		180,240	12,100,531	161,702	11,938,829
	Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$14,895,519	$7,784,739		$2,716,218		$—	$25,396,476	$—	$180,240		$25,576,716	$161,702	$25,415,014

	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
	Neither Past due Nor Impaired				Past due but Not Impaired (B)	Impaired (C)		Allowance for Possible Losses (D)	Net Amount (A)+(B)+(C)-(D)
	Good	Moderate	Special Mention	Subtotal (A)
	$ — 177,792 702,437 1,171,043 — 3,651,300	$ — 224,196 — — 101,379 2,382,360		$10,355,436 807,991 702,437 2,224,301 101,379 10,695,420

(In Thousands of U.S. Dollars, Note 4)

			Neither Past due Nor	Neither Past due Nor	Neither Past due Nor	Neither Past due Nor	Impaired		Past due but Not				Allowance for
							Special	Subtotal	Impaired	Impaired		Total	Possible	Net Amount
	December 31, 2012	Excellent		Good	Moderate		Mention	(A)	(B)		(C)	(A)+(B)+(C)	Losses (D)	(A)+(B)+(C)-(D)
F-193	Available-for-sale financial assets Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$350,319 13,735	$	— 6,015	$	— 7,584	$— —	$350,319 27,334	$— —	$	— —	$350,319 27,334	$ — —	$350,319 27,334
	Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	—		23,763		—	—	23,763	—		—	23,763	—	23,763
	Held-to-maturity financial assets
	Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	35,631		39,616		—	—	75,247	—		—	75,247	—	75,247
	Financial assets measured at cost . . . . . . . . . . . . . . . . . . . . . .	—		—		3,430	—	3,430	—		—	3,430	—	3,430
	Debt investments with no active market . . . . . . . . . . . . . . . . .	157,705		123,522		80,594	—	361,821	—		6,054	367,875	5,432	362,443
	Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$557,390	$192,916		$91,608		$—	$841,914	$—	$6,054		$847,968	$5,432	$842,536

	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
	Neither Past due Nor Impaired				Past due but Not Impaired (B)	Impaired (C)		Allowance for Possible Losses (D)	Net Amount (A)+(B)+(C)-(D)
Excellent	Good	Moderate	Special Mention
$14,850,800 600,353 679,673 1,070,577 — 1,661,520	$ — 509,003 — 1,576,968 — 4,841,024	$ — — — — 101,379 2,135,080

(In Thousands of U.S. Dollars, Note 4)

			Neither Past due Nor	Neither Past due Nor	Neither Past due Nor	Neither Past due Nor	Impaired		Past due but Not				Allowance for
							Special	Subtotal	Impaired			Total	Possible	Net Amount
	September 30, 2013	Excellent		Good	Moderate		Mention	(A)	(B)	Impaired (C)		(A)+(B)+(C)	Losses (D)	(A)+(B)+(C)-(D)
F-194	Available-for-sale financial assets Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$502,395 20,310	$	— 17,219	$	— —	$— —	$502,395 37,529	$— —	$	— —	$502,395 37,529	$ — —	$502,395 37,529
	Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22,993		—		—	—	22,993	—		—	22,993	—	22,993
	Held-to-maturity financial assets
	Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	36,217		53,349		—	—	89,566	—		—	89,566	—	89,566
	Financial assets measured at cost . . . . . . . . . . . . . . . . . . . . . . . . . .	—		—		3,430	—	3,430	—		—	3,430	—	3,430
	Debt investments with no active market . . . . . . . . . . . . . . . . . . . .	56,208	163,769			72,229		292,206	—		5,019	297,225	5,019	292,206
	Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$638,123	$234,337		$75,659		$—	$948,119	$—	$5,019		$953,138	$5,019	$948,119

• d) Loans and receivables past due but not impaired

Financial assets past due 90 days or less are not considered impaired unless there is objective evidence that an impairment loss has been incurred. Financial assets might become past due but not impaired by reasons of borrowers’ late processing or other administrative delays.

Aging analysis of loans and receivables past due but not impaired are as follows:

Items Discounts and loans Corporate banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumer banking Housing mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables Credit card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Items Discounts and loans Corporate banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumer banking Housing mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables Credit card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Items Discounts and loans Corporate banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumer banking Housing mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables Credit card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . .	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
		January 1, 2012
		Past Due Up to 1 Month Past due 1 to 3 Months Total $ 4,762 $ 80 $ 4,842 1,516,399 236,659 1,753,058 229,022 58,589 287,611 572,557 44,464 617,021 287,402 47,838 335,240 (In Thousands of New Taiwan Dollars)		Total
		September 30, 2012
	Past Due Up to 1 Month Past due 1 to 3 Months Total $ 2,519 $ 86 $ 2,605 1,599,003 231,461 1,830,464 260,967 60,565 321,532 730,648 65,781 796,429 548,105 55,098 603,203 (In Thousands of New Taiwan Dollars)			Total
	December 31, 2012
	Past Due Up to 1 Month $ 13,460 1,532,987 270,212 758,548 960,036		Past due 1 to 3 Months $ — 226,531 61,670 61,735 58,021	Total
				$ 13,460 1,759,518 331,882 820,283 1,018,057

F-195

(In Thousands of U.S. Dollars, Note 4)

Items Discounts and loans Corporate banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumer banking Housing mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables Credit card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	December 31, 2012	December 31, 2012
	Past Due Up to 1 Month $ 455 51,860 9,141 25,661 32,478	Past due 1 to 3 Months $ — 7,664 2,086 2,089 1,962	Total
			$ 455 59,524 11,227 27,750 34,440

(In Thousands of New Taiwan Dollars)

Items Discounts and loans Corporate banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumer banking Housing mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables Credit card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	September 30, 2013	September 30, 2013
	Past Due Up to 1 Month $ 72,138 1,729,189 324,059 1,624,104 391,885	Past due 1 to 3 Months $ 1,338 246,043 71,669 58,282 60,114	Total
			$ 73,476 1,975,232 395,728 1,682,386 451,999

(In Thousands of U.S. Dollars, Note 4)

Items Discounts and loans Corporate banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumer banking Housing mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables Credit card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	September 30, 2013	September 30, 2013
	Past Due Up to 1 Month $ 2,441 58,498 10,963 54,943 13,257	Past due 1 to 3 Months $ 45 8,323 2,424 1,971 2,034	Total
			$ 2,486 66,821 13,387 56,914 15,291

d. Liquidity risk

1) Sources and definition of liquidity risk

Liquidity risk is the risk that the Bank is unable to liquidate assets or obtain loans to meet its obligations when they fall due as a result of customer deposits being early withdrawn, deteriorating access to and terms of inter-bank facilities, deteriorating delinquency by borrowers, or financial instruments not easily liquidated. Such outflows would deplete available cash resources for client lending, trading activities and investments. In extreme circumstances, lack of liquidity could result in reductions in the consolidated statement of financial position and sales of assets, or potentially an inability to fulfill lending commitments. The risk that the Bank will be unable to do so is inherent in all banking

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operations and can be affected by a range of institution-specific and market-wide events including, but not limited to, credit events, merger and acquisition activities, systemic shocks and natural disasters.

• 2) Risk management policies on liquidity risk

The Bank’s liquidity management processes, which are managed by an independent department, include:

• a) Day-to-day funding, managed by monitoring future cash flows to ensure that requirements can be met;

• b) Maintaining a portfolio of highly marketable assets that can easily be liquidated as protection against any unforeseen interruption to cash flow;

• c) Monitoring the liquidity ratios of the consolidated balance sheet against internal and regulatory requirements; and

• d) Managing the concentration and profile of debt maturities.

Monitoring and reporting take the form of cash flow measurement and projections for the next ten days, one month, two months.…, one year and over one year respectively. The starting point for those projections is an analysis of the contractual maturity of the financial liabilities and the expected collection date of the financial assets.

Related information is submitted regularly to the Bank’s Asset and Liability Management Committee and the Board of Directors.

• 3) Financial assets held for liquidity risk management purposes

To support payment obligation and contingent funding in a stresses market environment, the Bank holds high-quality highly-liquid interest-earning assets comprising cash and cash equivalent, due from the central bank and other banks, financial assets at fair value through profit or loss, available-for-sale financial assets for which there is an active and liquid market.

• 4) Maturity analysis of non-derivative financial liabilities

The table below presents the cash flows payable by the Bank under non-derivative financial liabilities by remaining contractual maturities at the date of the consolidated balance sheet. The amounts disclosed in the table are the contractual undiscounted cash flows, some of which does not reconcile to the corresponding items in the consolidated balance sheet.

January 1, 2012 Due to the Central Bank and other banks . . . . . . . . . . Financial liabilities at fair value through profit or loss—short sales of bonds payable . . . . . . . . . . . . . Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deposits and remittances . . . . . . . . . . . . . . . . . . . . . . . Bank debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other financial liabilities . . . . . . . . . . . . . . . . . . . . . . .		(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
	Due in 30 Days	Due Between 31 Days and 90 Days	Due Between 91 Days and 180 Days	Due Between 181 Days and One Year	Due After One Year	Total
	$ 3,676,780 953,357 1,603,410 55,651,514 3,740 1,524,406	$ 7,654,092 — 587,690 67,119,820 — 518,469	$ 258,487 — 329,253 79,767,411 87,400 —	$ 196,372 — 390,166 112,228,611 — —	$ — — 1,584,801 55,231,206 19,900,000 168,482	$ 11,785,731 953,357 4,495,320 369,998,562 19,991,140 2,211,357

F-197

September 30, 2012 Due to the Central Bank and other banks . . . . . . . . . . Financial liabilities at fair value through profit or loss—short sales of bonds payable . . . . . . . . . . . . . Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deposits and remittances . . . . . . . . . . . . . . . . . . . . . . . Bank debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other financial liabilities . . . . . . . . . . . . . . . . . . . . . . . December 31, 2012 Due to the Central Bank and other banks . . . . . . . . . . . Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deposits and remittances . . . . . . . . . . . . . . . . . . . . . . . Bank debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other financial liabilities . . . . . . . . . . . . . . . . . . . . . . . December 31, 2012 Due to the Central Bank and other banks . . . . . . . . . . . Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deposits and remittances . . . . . . . . . . . . . . . . . . . . . . . Bank debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other financial liabilities . . . . . . . . . . . . . . . . . . . . . . . September 30, 2013 Due to the Central Bank and other banks . . . . . . . . . . . Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deposits and remittances . . . . . . . . . . . . . . . . . . . . . . . Bank debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other financial liabilities . . . . . . . . . . . . . . . . . . . . . . .				(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
	Due in 30 Days			Due Between 31 Days and 90 Days Due Between 91 Days and 180 Days Due Between 181 Days and One Year Due After One Year $ 9,331,680 $ 195,677 $ 307,050 $ 8,853 — — — — 703,167 317,990 912,929 1,469,066 80,517,092 64,802,000 89,684,422 64,544,822 — 2,000,000 — 20,900,000 44,644 — 210,174 250,606 (In Thousands of New Taiwan Dollars)			Due Between 91 Days and 180 Days		Due Between 181 Days and One Year		Due After One Year		Total
													$ 15,327,277 951,784 6,103,555 377,866,960 22,905,600 2,007,670
		Due in 30 Days			Due Between 31 Days and 90 Days		Due Between 91 Days and 180 Days		Due Between 181 Days and One Year		Due After One Year		Total
		$ 6,404,392 $ 4,961,049 $ 204,104 $ 104,794 $ 619 $ 11,674,958 2,501,457 967,341 297,810 387,785 1,405,978 5,560,371 76,046,351 77,727,152 66,656,403 105,877,150 65,626,210 391,933,266 4,700 2,000,000 — 2,000,000 18,900,000 22,904,700 907,794 532,785 — 260,383 207,128 1,908,090 (In Thousands of U.S. Dollars, Note 4) Due in 30 Days Due Between 31 Days and 90 Days Due Between 91 Days and 180 Days Due Between 181 Days and One Year Due After One Year Total . . . $ 216,657 $ 167,830 $ 6,905 $ 3,545 $ 21 $ 394,958 . . . 84,623 32,725 10,075 13,119 47,563 188,105 . . . 2,572,610 2,629,470 2,254,953 3,581,771 2,220,102 13,258,906 . . . 159 67,659 — 67,659 639,377 774,855 . . . 30,710 18,024 — 8,809 7,007 64,550 (In Thousands of New Taiwan Dollars)			$ 4,961,049 $ 204,104 $ 104,794 $ 619 967,341 297,810 387,785 1,405,978 77,727,152 66,656,403 105,877,150 65,626,210 2,000,000 — 2,000,000 18,900,000 532,785 — 260,383 207,128 (In Thousands of U.S. Dollars, Note 4)								$ 11,674,958 5,560,371 391,933,266 22,904,700 1,908,090
			Due in 30 Days			Due Between 31 Days and 90 Days		Due Between 91 Days and 180 Days		Due Between 181 Days and One Year		Due After One Year		Total
			$ 216,657 84,623 2,572,610 159 30,710			$ 167,830 $ 6,905 $ 3,545 $ 21 32,725 10,075 13,119 47,563 2,629,470 2,254,953 3,581,771 2,220,102 67,659 — 67,659 639,377 18,024 — 8,809 7,007 (In Thousands of New Taiwan Dollars)								$ 394,958 188,105 13,258,906 774,855 64,550
		Due in 30 Days			Due Between 31 Days and 90 Days		Due Between 91 Days and 180 Days		Due Between 181 Days and One Year		Due After One Year			Total
		$18,107,615 8,196,698 57,084,969 4,200 1,201,199			$ 6,568,862 674,307 102,307,646 2,000,000 38,172		$ 150,951 238,486 84,110,064 3,000,000 —		$ 200,000 791,958 71,090,466 — 62,306		$ — 1,575,662 78,051,217 20,350,500 184,462		$ 25,027,428 11,477,111 392,644,362 25,354,700 1,486,139

September 30, 2013 Due to the Central Bank and other banks . . . . . . . . . . . . Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deposits and remittances . . . . . . . . . . . . . . . . . . . . . . . . Bank debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other financial liabilities . . . . . . . . . . . . . . . . . . . . . . . .	Due in 30 Days $ 612,571 277,290 1,931,156 142 40,637	(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)
		Due Between 31 Days and 90 Days	Due Between 91 Days and 180 Days $ 5,107 8,068 2,845,401 101,489 —	Due Between 181 Days and One Year $ 6,766 26,792 2,404,955 — 2,108	Due After One Year	Total
		$ 222,221 22,811 3,461,016 67,659 1,291			$ — 53,304 2,640,434 688,447 6,240	$ 846,665 388,265 13,282,962 857,737 50,276

In the maturity analysis of “Deposits and remittance” disclosed in the previous table, the cash flows are split into the maturity buckets in which the cash flows occur based on historical experience. If demand deposits are expected to be drawn down in the earliest period, cash outflows due in 30 days bucket might increase NT$70,966,075 thousand, NT$74,535,113 thousand, NT$76,138,866 thousand (approximately US$2,575,740 thousand) and NT$85,955,796 thousand (approximately US$2,907,842 thousand) as of January 1, 2012, September 30, 2012, December 31, 2012 and September 30, 2013, respectively.

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• 5) Maturity analysis of derivative financial liabilities

Derivative instruments settled on a net basis

• a) Foreign exchange derivatives: Foreign exchange options, non-deliverable forwards; and

• b) Interest rate derivatives: Interest rate swap options, interest rate swaps and other interest rate contracts for which net cash flows are exchanges.

Maturity analysis of derivative financial liabilities that will be settled on a net basis is as follows:

(In Thousands of New Taiwan Dollars) January 1, 2012 Due in 30 Days Due Between 31 Days and 90 Days Due Between 91 Days and 180 Days Due Between 181 Days and One Year Due After One Year Total Derivative financial liabilities at fair value through profit or loss Foreign exchange derivatives . . . . . . . . . . . . . . . . . . . . . . . $ 771 $ 177 $ 2,707 $13,826 $ — $ 17,481 Interest rate derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,810 303,360 462,768 17,082 265,702 1,050,722 Derivative financial liabilities held for hedging Interest rate derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — 13,093 13,093 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,581 $303,537 $465,475 $30,908 $278,795 $1,081,296 September 30, 2012 Due in 30 Days Due Between 31 Days and 90 Days Due Between 91 Days and 180 Days Due Between 181 Days and One Year Due After One Year Total Derivative financial liabilities at fair value through profit or loss Foreign exchange derivatives . . . . . . . . . . . . . . . . . . . . . . . . $16,738 $12,590 $13,825 $10,729 $ — $ 53,882 Interest rate derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,077 2,341 6,245 28,079 307,129 355,871 Derivative financial liabilities held for hedging Interest rate derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — 10,521 10,521 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $28,815 $14,931 $20,070 $38,808 $317,650 $420,274			(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
	Due in 30 Days		Due Between 31 Days and 90 Days			Due Between 91 Days and 180 Days			Due Between 181 Days and One Year			Due After One Year		Total
		$ 771 1,810 — $2,581 Due in 30 Days		$ 177 303,360 — $303,537 Due Between 31 Days and 90 Days			$ 2,707 462,768 — $465,475 Due Between 91 Days and 180 Days			$13,826 $ — $ 17,481 17,082 265,702 1,050,722 — 13,093 13,093 $30,908 $278,795 $1,081,296 Due Between 181 Days and One Year Due After One Year Total		$ — 265,702 13,093		$ 17,481 1,050,722 13,093
												$278,795		$1,081,296
															Total
		$16,738 12,077 — $28,815			$12,590 2,341 — $14,931			$13,825 6,245 — $20,070			$10,729 28,079 — $38,808		$ — 307,129 10,521		$ 53,882 355,871 10,521
													$317,650		$420,274

December 31, 2012 Derivative financial liabilities at fair value through profit or loss Foreign exchange derivatives . . . . . . . . . . . . . . . . . . . . . . . . Interest rate derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative financial liabilities held for hedging Interest rate derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 31, 2012 Derivative financial liabilities at fair value through profit or loss Foreign exchange derivatives . . . . . . . . . . . . . . . . . . . . . . . . Interest rate derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative financial liabilities held for hedging Interest rate derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Due in 30 Days	Due Between 31 Days and 90 Days	Due Between 31 Days and 90 Days	Due Between 91 Days and 180 Days	Due Between 91 Days and 180 Days	Due Between 181 Days and One Year	Due Between 181 Days and One Year	Due Between 181 Days and One Year	Due Between 181 Days and One Year	Due After One Year	Due After One Year	Total	Total
	$ 423 3,292 — $3,715 Due in 30 Days . $ 14 . 112 . — . $126		$ 9,774 $22,750 712 21,238 — — $10,486 $43,988 (In Thousands of U.S.					$ 8,697 $ — 32,287 263,682 — 12,819 $40,984 $276,501 Dollars, Note 4)		$ — 263,682 12,819		$ 41,644 321,211 12,819
										$276,501		$375,674
		Due Between 31 Days and 90 Days		Due Between 91 Days and 180 Days			Due Between 181 Days and One Year			Due After One Year			Total
		$331 24 — $355			$ 770 718 — $1,488				$ 294 1,092 — $1,386		$ — 8,920 434 $9,354		$ 1,409 10,866 434
													$12,709

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September 30, 2013 Derivative financial liabilities at fair value through profit or loss Foreign exchange derivatives . . . . . . . . . . . . . . . . . . . . . . . . Interest rate derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative financial liabilities held for hedging Interest rate derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
	Due in 30 Days	Due Between 31 Days and 90 Days		Due Between 91 Days and 180 Days		Due Between 181 Days and One Year		Due After One Year	Total
	$ 5,799 7,475 —		$4,848 4,389 — $9,237		$ — 27,664 — $27,664		$ 3,445 24,999 5,193 $33,637	$ 36 558,006 5,127	$ 14,128 622,533 10,320
	$13,274							$563,169	$646,981

September 30, 2013 Derivative financial liabilities at fair value through profit or loss Foreign exchange derivatives . . . . . . . . . . . . . . . . . . . . . . . . Interest rate derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative financial liabilities held for hedging Interest rate derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Due in 30 Days . $196 . 253 . — . $449	(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)
		Due Between 31 Days and 90 Days	Due Between 91 Days and 180 Days	Due Between 181 Days and One Year		Due After One Year		Total
		$164 148 — $312	$ — 936 — $936		$ 117 846 175 $1,138		$ 1 18,877 174 $19,052	$ 478 21,060 349
								$21,887

Note: The amounts disclosed in the previous table are the contractual undiscounted cash flows, some of which may not reconcile to the corresponding items in the consolidated balance sheet.

Derivative instruments on a gross basis

• a) Foreign exchange derivatives: Foreign exchange swaps, foreign exchange options; and

b) Interest rate derivatives: Cross currency swaps.

Maturity analysis of derivative financial liabilities that will be settled on a gross basis is as follows:

January 1, 2012 Derivative financial liabilities at fair value through profit or loss Foreign exchange derivatives Cash outflow . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash inflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subtotal of cash outflow . . . . . . . . . . . . . . . . . . . . . . . . . . . Subtotal of cash inflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
	Due in 30 Days	Due Between 31 Days and 90 Days		Due Between 91 Days and 180 Days		Due Between 181 Days and One Year		Due After One Year	Total
	$14,337,613 15,139,119		$8,656,727 9,199,652 8,656,727 9,199,652 $ 542,925		$2,217,486 2,297,900 2,217,486 2,297,900 $ 80,414		$4,238,000 4,781,826 4,238,000 4,781,826 $ 543,826	$ — 1,208,923	$29,449,826 32,627,420
	14,337,613 15,139,119							— 1,208,923	29,449,826 32,627,420
	$ 801,506							$1,208,923	$ 3,177,594

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September 30, 2012 Derivative financial liabilities at fair value through profit or loss Foreign exchange derivatives Cash outflow . . . . . . . . . . . . . . . . . . . . . . . . . . Cash inflow . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest rate derivatives Cash outflow . . . . . . . . . . . . . . . . . . . . . . . . . . Cash inflow . . . . . . . . . . . . . . . . . . . . . . . . . . . Subtotal of cash outflow . . . . . . . . . . . . . . . . . . . . . . . . . . Subtotal of cash inflow . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 31, 2012 Derivative financial liabilities at fair value through profit or loss Foreign exchange derivatives Cash outflow . . . . . . . . . . . . . . . . . . . . . . . . . . Cash inflow . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest rate derivatives Cash outflow . . . . . . . . . . . . . . . . . . . . . . . . . . Cash inflow . . . . . . . . . . . . . . . . . . . . . . . . . . . Subtotal of cash outflow . . . . . . . . . . . . . . . . . . . . . . . . . . Subtotal of cash inflow . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Due in 30 Days	Due in 30 Days	Due Between 31 Days and 90 Days	Due Between 91 Days and 180 Days	Due Between 181 Days and One Year	Due Between 181 Days and One Year	Due After One Year	Due After One Year	Total
	$35,806,600 36,452,718 — — 35,806,600 36,452,718 $ 646,118 Due in 30 Days . $29,966,083 . 31,445,448 . — . — . 29,966,083 . 31,445,448 . $ 1,479,365		$13,098,958 13,746,088 — — 13,098,958 13,746,088 $ 647,130 Due Between 31 Days and 90 Days	$10,100,177 10,465,138 — —		$11,025,690 $ 95,109 15,586,630 2,888,336 — 11,261,795 — 11,235,160 11,025,690 11,356,904 15,586,630 14,123,496 $ 4,560,940 $ 2,766,592 Due Between 181 Days and One Year Due After One Year	$ 95,109 2,888,336 11,261,795 11,235,160		$70,126,534 79,138,910 11,261,795 11,235,160
				10,100,177 10,465,138			11,356,904 14,123,496		81,388,329 90,374,070
				$ 364,961			$ 2,766,592		$ 8,985,741
	. . . . . . .							Due After One Year	Total
		$29,966,083 31,445,448 — —	$19,173,401 19,857,803 — — 19,173,401 19,857,803 $ 684,402	$ 9,861,603 10,327,491 — — 9,861,603 10,327,491 $ 465,888		$ 7,438,804 13,148,617 — — 7,438,804 13,148,617 $ 5,709,813		$ 93,134 2,234,381 7,635,145 7,429,680	$66,533,025 77,013,740 7,635,145 7,429,680
		29,966,083 31,445,448						7,728,279 9,664,061	74,168,170 84,443,420
		$ 1,479,365						$1,935,782	$10,275,250

December 31, 2012 Derivative financial liabilities at fair value through profit or loss Foreign exchange derivatives Cash outflow . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash inflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest rate derivatives Cash outflow . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash inflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subtotal of cash outflow . . . . . . . . . . . . . . . . . . . . . . . . . . Subtotal of cash inflow . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		(In Thousands of U.S. Dollars, Note	(In Thousands of U.S. Dollars, Note	(In Thousands of U.S. Dollars, Note	(In Thousands of U.S. Dollars, Note	(In Thousands of U.S. Dollars, Note	4)
	Due in 30 Days	Due Between 31 Days and 90 Days		Due Between 91 Days and 180 Days $333,613 349,374 — — 333,613 349,374 $ 15,761		Due Between 181 Days and One Year $251,651 444,811 — — 251,651 444,811 $193,160	Due After One Year	Total
	$1,013,738 1,063,784 — —		$648,627 671,780 — — 648,627 671,780 $ 23,153		$333,613 349,374 — — 333,613 349,374 $ 15,761		$ 3,150 75,588 258,293 251,342 261,443 326,930 $ 65,487	$2,250,779 2,605,337 258,293 251,342
	1,013,738 1,063,784							2,509,072 2,856,679
	$ 50,046							$ 347,607

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September 30, 2013 Derivative financial liabilities at fair value through profit or loss Foreign exchange derivatives Cash outflow . . . . . . . . . . . . . . . . . . . . . . . . . Cash inflow . . . . . . . . . . . . . . . . . . . . . . . . . . Interest rate derivatives Cash outflow . . . . . . . . . . . . . . . . . . . . . . . . . Cash inflow . . . . . . . . . . . . . . . . . . . . . . . . . . Subtotal of cash outflow . . . . . . . . . . . . . . . . . . . . . . . . . Subtotal of cash inflow . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
	Due in 30 Days	Due Between 31 Days and 90 Days	Due Between 91 Days and 180 Days	Due Between 181 Days and One Year		Due After One Year	Total
	$31,863,267 33,545,540 890,100 882,000	$41,152,791 41,759,780 445,050 438,900 41,597,841 42,198,680 $ 600,839	$15,930,784 16,788,437 11,372,800 11,248,795		$ 7,473,021 25,757,223 1,793,550 1,780,200 9,266,571 27,537,423 $18,270,852	$ 128,275 18,106,624 — —	$ 96,548,138 135,957,604 14,501,500 14,349,895
	32,753,367 34,427,540		27,303,584 28,037,232			128,275 18,106,624	111,049,638 150,307,499
	$ 1,674,173		$ 733,648			$17,978,349	$ 39,257,861

September 30, 2013 Derivative financial liabilities at fair value through profit or loss Foreign exchange derivatives Cash outflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash inflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest rate derivatives Cash outflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash inflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subtotal of cash outflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subtotal of cash inflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)
	Due in 30 Days	Due Between 31 Days and 90 Days		Due Between 91 Days and 180 Days		Due Between 181 Days and One Year		Due After One Year	Total
	$1,077,918 1,134,829 30,112 29,838		$1,392,178 1,412,712 15,056 14,848 1,407,234 1,427,560 $ 20,326		$538,930 567,944 384,736 380,541 923,666 948,485 $ 24,819		$252,809 871,354 60,675 60,223 313,484 931,577 $618,093	$ 4,338 612,538 — —	$3,266,173 4,599,377 490,579 485,450
	1,108,030 1,164,667							4,338 612,538	3,756,752 5,084,827
	$ 56,637							$608,200	$1,328,075

Note: The amounts disclosed in the previous table are the contractual undiscounted cash flows, some of which may not reconcile to the corresponding items in the consolidated balance sheet.

6) Maturity analysis of off-balance sheet items

Maturity analysis of issued financial guarantee contracts on the basis of their earliest possible contractual maturity:

January 1, 2012 Developed and irrevocable loan commitments . . . . . . . Irrevocable credit card commitments . . . . . . . . . . . . . . . Issued but unused letters of credit . . . . . . . . . . . . . . . . . Other guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
	Due in 30 Days	Due Between 31 Days and 90 Days		Due Between 91 Days and 180 Days	Due Between 181 Days and One Year	Due After One Year	Total
	$ 7,351,171 133,113,662 1,059,748 4,554,762		$ — — — 1,556,000 $1,556,000	$— — — — $—	$— — — — $—	$ — — — 2,860,835	$ 7,351,171 133,113,662 1,059,748 8,971,597
	$146,079,343					$2,860,835	$150,496,178

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			Due Between	Due Between	Due Between	Due Between	Due Between	Due Between	Due Between
	Due in			31 Days and		91 Days and			181 Days and	Due After
September 30, 2012	30 Days			90 Days			180 Days		One Year	One Year		Total
Developed and irrevocable loan commitments . . . . . . .	$ 7,495,066			$ —			$—		$ —	$ —	$	7,495,066
Irrevocable credit card commitments . . . . . . . . . . . . . . .	144,901,466			—			—		—	—	144,901,466
Issued but unused letters of credit . . . . . . . . . . . . . . . . .	860,030			—			—		—	—		860,030
Other guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5,070,341			1,663,500			—		200,000	3,897,675		10,831,516
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$158,326,903			$1,663,500			$—		$200,000	$3,897,675	$164,088,078
		Due Between			Due Between			Due Between
	Due in	31 Days and			91		Days and	181 Days and		Due After
December 31, 2012	30 Days			90 Days		180 Days			One Year	One Year		Total
Developed and irrevocable loan commitments . . . . $	9,681,305	$		—		$	—		$ —	$ —	$	9,681,305
Irrevocable credit card commitments . . . . . . . . . . . . 149,717,675				—			—		—	—	149,717,675
Issued but unused letters of credit . . . . . . . . . . . . . .	766,439			—			—		—	—		766,439
Other guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4,990,451		1,908,500				627,000		200,000	3,896,655		11,622,606
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $165,155,870		$1,908,500				$627,000			$200,000	$3,896,655	$171,788,025

December 31, 2012 Developed and irrevocable loan commitments . . . . . . . . . Irrevocable credit card commitments . . . . . . . . . . . . . . . . Issued but unused letters of credit . . . . . . . . . . . . . . . . . . . Other guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		(In Thousands of U.S. Dollars, Note	(In Thousands of U.S. Dollars, Note	(In Thousands of U.S. Dollars, Note	(In Thousands of U.S. Dollars, Note	4)
	Due in 30 Days $ 327,514 5,064,874 25,928 168,824 $5,587,140	Due Between 31 Days and 90 Days		Due Between 91 Days and 180 Days $ — — — 21,211 $21,211	Due Between 181 Days and One Year $ — — — 6,766 $6,766	Due After One Year	Total
			$ — — — 64,564 $64,564			$ — — — 131,822 $131,822	$ 327,514 5,064,874 25,928 393,187
							$5,811,503

		(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
		Due Between	Due Between	Due Between
	Due in	31 Days and	91 Days and	181 Days and	Due After
September 30, 2013	30 Days	90 Days	180 Days	One Year	One Year	Total
Developed and irrevocable loan commitments . . . . . . .	$ 11,004,536	$ —	$ —	$ —	$ —	$ 11,004,536
Irrevocable credit card commitments . . . . . . . . . . . . . . .	150,033,395	—	—	—	—	150,033,395
Issued but unused letters of credit . . . . . . . . . . . . . . . . .	686,352	—	—	—	—	686,352
Other guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5,791,530	2,091,000	441,500	620,481	2,800,550	11,745,061
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$167,515,813	$2,091,000	$441,500	$620,481	$2,800,550	$173,469,344

September 30, 2013 Developed and irrevocable loan commitments . . . . . . . . . . . . Irrevocable credit card commitments . . . . . . . . . . . . . . . . . . . Issued but unused letters of credit . . . . . . . . . . . . . . . . . . . . . . Other guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)
	Due in 30 Days	Due Between 31 Days and 90 Days		Due Between 91 Days and 180 Days		Due Between 181 Days and One Year		Due After One Year		Total
	$ 372,278 5,075,555 23,219 195,924		$ — — — 70,737 $70,737		$ — — — 14,936 $14,936		$ — — — 20,991 $20,991		$ — — — 94,741 $94,741	$ 372,278 5,075,555 23,219 397,329
	$5,666,976									$5,868,381

e. Market risk

• 1) Definition and scope of market risk

Market risk is the risk that unfavorable changes in market prices, such as interest rates, foreign exchange rates, equity prices and commodity prices will affect the Bank’s income or its holdings of on- and off-balance sheet positions. The Bank’s market risk mainly comes from

F-203

equity investment securities, interest rates and foreign exchange rates. Equity investment securities risk positions include domestic listed and OTC stocks and domestic convertible bonds; interest rate risk positions include bonds and interest rate derivative instruments, such as fixed and floating interest rate swap; foreign exchange rate risk positions include foreign currencies and related derivative instruments, such as spot exchange, forward exchange, foreign currency swap and option.

2) Management policies of market risk

The Bank develops appropriate management process to identify, measure and monitor market risk, and to effectively manage and control credit limits, valuation of profits and losses, sensitivities analysis and stress tests of each financial instrument positions. Besides, the Bank takes appropriate risk management strategy while facing market risk in its daily operating activities and management processes.

The Bank separates its exposure to market risk between trading and non-trading portfolios, which are managed, monitored and disclosed by the Risk Management Department. A summary report, including suggestion, is submitted regularly to the Risk Management Committee and the Board of Directors.

• 3) Management process of market risk

• a) Identification and measurement of market risk

The Bank’s risk measurement system, firstly, identifies market risk factors of exposure positions, and then, measures risks on- and off-balance sheet trading positions by examining the movement of the identified risk factors, such as interest rates, stock prices, foreign exchange rates and commodity prices.

The Bank’s risk measurement system also applies sensitivity analysis (DV01, Delta and Vega) or different scenarios analysis to assess value changes of asset portfolios, and performs stress tests, as required by the authority, to measure exceptional losses incurred during extreme, but plausible, conditions.

b) Monitoring and reporting

To fully understand the management of market risk, information for execution of market risk management objectives, management of positions and profits and losses, sensitivity analysis and stress tests is submitted regularly to Risk Management Committee and the Board of Directors by the Risk Management Department. The Bank has explicit management process. It imposes trading limits and stop loss order on each transaction.

A stop loss order would be executed once a given stop price has been reached; otherwise, the trading unit should report, including reasons for not executing stop loss order and corresponding remedial action taken, to top management for approval.

• 4) Management of interest rate risk

Interest rate risk is the risk loss or changes in the fair values resulting from interest rate fluctuations. It includes interest rate related securities and derivative instruments.

The Bank separates the interest rate risk positions between trading book and banking book. Financial instruments and commodity positions held for trading purpose or to hedge against

F-204

trading book positions are carried in trading book. Positions held for trading purpose are those held with the intention of profiting from actual or forecast spread. Positions not belonging to trading book are carried in banking book.

Management of interest rate risk in trading book

a) Management process

To limit the loss within acceptable range, the Bank imposes trading limits and stop loss limits on trading room, traders and commodity; it also imposes monthly maximum loss limit on trading positions.

b) Valuation methods

Securities are marked-to-market, and the risk of interest rate related derivative instruments are measured using DV01 and Vega. Both stop loss limits are controlled on a daily basis.

Management of interest rate risk in banking book

Interest rate risk management of banking book is to improve interest risk management, capital efficiency and business operations.

a) Strategies

To improve its capacity to adapt to changes, the Bank measures, manages and hedges changes in its profits and losses and economic values of balance sheet items arising from interest rate fluctuations.

b) Management process

Prior to undertaking interest rates related business, the Bank identifies re-pricing and yield curve risks, and measures the possible impact of changes in interest rate on profits and losses. The Bank analyzes and monitors position limits and various risk management objectives in respect of interest rates on a quarterly basis, and the results are submitted regularly to the Asset and Liability Management Committee and the Board of Directors.

If the risk management objectives are found to be in excess of designated limits during the monitoring process, the Bank will report to the Asset and Liability Management Committee and propose remedial action to be taken.

c) Valuation methods

Interest rate risk measures the re-pricing risk arising from different maturity or re-pricing dates of assets and liabilities carried in the banking book. To stabilize long-term profitability taken into account of business growth, the Bank sets up various monitoring indexes, such as the ratio of interest rate sensitivity gap over total assets, for key holding periods. Those indexes are reported to and reviewed by management periodically.

• 5) Management of foreign exchange risk

• a) Definition of foreign exchange risk

Foreign exchange risk is the risk of loss or changes in fair value arising from open positions in currency due to exchange rate fluctuations. Foreign exchange transactions

F-205

include spot exchange, forward exchange, non-deliverable forward and foreign currency option between New Taiwan dollars and a foreign currency or between two foreign currencies.

• b) Foreign exchange risk management policies, process and valuation methods

To manage foreign exchange risk and limit the loss within acceptable range, the Bank imposes trading limits and stop loss limits on trading room, traders and commodity; it also imposes monthly maximum loss limit on trading positions. Spot exchange, forward exchange, non-deliverable forward and foreign currency option are controlled collectively using Delta; foreign currency option is controlled using Vega. The stop loss limits are controlled on a daily basis.

• 6) Management of equity securities market risk

• a) Definition of equity price risk

Equity price risk is the risk arising from open positions in equity securities as a result of fluctuations in the market prices of individual securities.

• b) Management processes of equity price risk

The Bank sets gross limits on overall positions, by industries, and by groups. For listed and OTC stocks and beneficiary certificates, the Bank sets the limit of investment in each stock and stop loss/gain limits on overall and particular positions, which are monitored daily.

A stop loss/gain order would be executed once a given stop price has been reached; otherwise, traders should report to the manager of its department, including reasons for not executing stop loss/gain order.

• c) Measurement

The Bank manages price risk on the basis of closing prices of equity securities.

• 7) Valuation techniques of market risk

Stress tests

Stress tests are performed by the Risk Management Department at least once a year to assess the impact of risk factors that have become extremely volatile on asset portfolios carried in trading books and risk tolerance, and to ensure that the Bank will be able to handle potential losses incurred during extreme, but plausible, events.

The Bank applies market risk factors sensitivities analysis to analyze the impact on asset that could arise under extreme scenarios:

• a) Interest rate: Evaluate impacts on the values of interest-rate-based securities if yield curves move in parallel manner.

• b) Foreign exchange: Evaluate impacts on changes in foreign exchange rates.

• c) Equity securities: Evaluate impacts on changes in stock prices and its related derivatives volatility.

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• d) Commodity: Evaluate impacts on changes in commodity prices and its related derivatives volatility.

The Bank will submit the results of stress tests to the Board of Directors as a reference of the Bank’s ability to encounter adverse economic conditions.

Sensitivity analysis

a) Interest rate risk

Interest rate factor sensitivities (DV01 or PVBP) are, at the balance sheet date, the impact on the discounted future cash flows of bonds and interest-rate-based derivative instruments for 1 basis points (bps) parallel shift in all yield curves.

Assuming all other variables remain constant, there would be a decrease (increase) in pre-tax profits of NT$74 thousand for the nine months ended September 30, 2012, where the interest rate increases (decreases) by 1 bps. There would be a decrease in pre-tax profits of NT$3,362 thousand (approximately US$114 thousand) or an increase of NT$2,917 thousand (approximately US$99 thousand) for the nine months ended September 30, 2013. There would be a decrease (increase) of NT$3,264 thousand and NT$7,934 thousand (approximately US$268 thousand) in other comprehensive income for the nine months ended September 30, 2012 and 2013, respectively.

b) Foreign exchange risk

Foreign exchange rate factor sensitivities (FX Delta) are, at the balance sheet date, the impact on the values of foreign exchange positions for a 1% change in foreign exchange rates.

Where the foreign exchange increases (decreases) by 1%, assuming all other variables remain constant, there would be an increase (decrease) in pre-tax profits of NT$372,318 thousand for the nine months ended September 30, 2012. There would be an increase in pre-tax profits of NT$305,236 thousand (approximately US$10,326 thousand) or decrease of NT$306,127 thousand (approximately US$10,356 thousand) for the nine months ended September 30, 2013.

c) Equity securities price risk

Equity price factor sensitivities are, at the balance sheet date, the impact on the values of open positions in equity securities for a 1% change in stock market prices.

Where the equity prices increase (decrease) by 1%, assuming all other variables remain constant, there would be an increase (decrease) in pre-tax profits of NT$156,319 thousand for the nine months ended September 30, 2012. There would be an increase in pre-tax profits of NT$135,194 thousand (approximately US$4,574 thousand) or decrease of NT$136,085 thousand (approximately US$4,604 thousand) for the nine months ended September 30, 2013. There would be an increase (decrease) of NT$8,996 thousand and NT$11,094 thousand (approximately US$375 thousand) in other comprehensive income for the nine months ended September 30, 2012 and 2013, respectively.

8) Concentration of foreign exchange risk

For information of concentration of foreign currency exposures at the balance sheet date are shown in Note 44.

F-207

• f. Disclosures required by the Regulations Governing the Preparation of Financial Reports by Public Banks

• 1) Asset quality of loans

Nonperforming loans and nonperforming receivables

Item Business Corporate Banking Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumer Banking Residential mortgage (Note d) . . . . . . . . . . . . Cash card . . . . . . . . . . . . . . . . . . . . . . . . . . . . Small-scale credit loan (Note e) . . . . . . . . . . . Others (Note f) Secured . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable factored without recourse (Note g) . . .		January 1, 2012	January 1, 2012		Coverage Ratio (Note c) 1,794.89% 7,147.83% 361.01% — 186.96% 954.34% 119.57% 779.32% Coverage Ratio 2,266.26% —
	Nonperforming Loans (Note a) NT$ $136,993 12,654 227,571 — 192,345 21,302 21,685 $612,550 Nonperforming Receivables $ 34,168 —	Loans NT$ $ 36,541,927 90,151,628 105,671,044 — 13,805,008 26,149,086 1,915,423 $274,234,116 Accounts Receivable $ 15,530,088 3,412,000	Ratio of Nonperforming Loans (Note b) 0.37% 0.01% 0.22% — 1.39% 0.08% 1.13% 0.22% Ratio of Nonperforming Receivables 0.22% —	Allowance for Possible Losses NT$ $2,458,868 904,487 821,554 — 359,604 203,293 25,929 $4,773,735 Allowance for Possible Losses $ 774,335 17,151

Item Business Corporate Banking Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumer Banking Residential mortgage (Note d) . . . . . . . . . . . . Cash card . . . . . . . . . . . . . . . . . . . . . . . . . . . . Small-scale credit loan (Note e) . . . . . . . . . . . Others (Note f) Secured . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable factored without recourse (Note g) . . .		September 30, 2012	September 30, 2012		Coverage Ratio (Note c) 80.39% 2,743.06% 498.48% — 182.72% 629.52% 123.24% 234.84% Coverage Ratio 1,189.47% —
	Nonperforming Loans (Note a) NT$ $ 892,103 35,879 166,765 — 194,899 40,718 18,703 $1,349,067 Nonperforming Receivables $ 61,193 —	Loans NT$ $ 33,136,114 91,143,935 108,990,576 — 14,712,319 33,883,166 1,353,297 $283,219,407 Accounts Receivable $ 15,147,747 2,184,609	Ratio of Nonperforming Loans (Note b) 2.69% 0.04% 0.15% — 1.32% 0.12% 1.38% 0.48% Ratio of Nonperforming Receivables 0.40% —	Allowance for Possible Losses NT$ $ 717,152 984,182 831,286 — 356,119 256,328 23,049 $3,168,116 Allowance for Possible Losses $ 727,874 10,241

F-208

Item Corporate Banking Consumer Banking Total . . . . . .	Business Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . Residential mortgage (Note d) . . . . . . . . . . . . Cash card . . . . . . . . . . . . . . . . . . . . . . . . . . . . Small-scale credit loan (Note e) . . . . . . . . . . . Others (Note f) Secured . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		December 31, 2012	December 31, 2012		Coverage Ratio (Note c) 115.35% 7,657.33% 529.87% — 188.98% 787.97% 291.05% 271.96%
		Nonperforming Loans (Note a) NT$ $ 871,834 11,271 186,867 — 192,776 40,374 13,985 $1,317,107	Loans NT$ $ 34,597,922 86,692,419 108,257,443 — 14,971,798 35,593,097 3,688,753 $283,801,432	Ratio of Nonperforming Loans (Note b) 2.52% 0.01% 0.17% — 1.29% 0.11% 0.38% 0.46%	Allowance for Possible Losses NT$ $1,005,640 863,058 990,155 — 364,313 318,136 40,704 $3,582,006

Credit card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable factored without recourse (Note g) . . . Item Business Corporate Banking Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumer Banking Residential mortgage (Note d) . . . . . . . . . . . . Cash card . . . . . . . . . . . . . . . . . . . . . . . . . . . . Small-scale credit loan (Note e) . . . . . . . . . . . Others (Note f) Secured . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Credit card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable factored without recourse (Note g) . . . Item Business Corporate Banking Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumer Banking Residential mortgage (Note d) . . . . . . . . . . . . Cash card . . . . . . . . . . . . . . . . . . . . . . . . . . . . Small-scale credit loan (Note e) . . . . . . . . . . . Others (Note f) Secured . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Nonperforming Receivables $ 61,453 — Nonperforming Loans (Note a)	Accounts Receivable Ratio of Nonperforming Receivables $ 15,413,670 0.40% 2,830,761 — December 31, 2012	Accounts Receivable Ratio of Nonperforming Receivables $ 15,413,670 0.40% 2,830,761 — December 31, 2012	Accounts Receivable Ratio of Nonperforming Receivables $ 15,413,670 0.40% 2,830,761 — December 31, 2012	Allowance for Possible Losses $ 710,066 13,863
						$ 710,066 13,863
			Loans	Ratio of Nonperforming Loans (Note b)	Allowance for Possible Losses
	Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . Residential mortgage (Note d) . . . . . . . . . . . . Cash card . . . . . . . . . . . . . . . . . . . . . . . . . . . . Small-scale credit loan (Note e) . . . . . . . . . . . Others (Note f) Secured . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	US$ (Note 4) . $29,494 . 381 . 6,322 . — . 6,522 . 1,366 . 473 . $44,558	US$ (Note 4) $1,170,430 2,932,761 3,662,295 — 506,488 1,204,097 124,789 $9,600,860	2.52% 0.01% 0.17% — 1.29% 0.11% 0.38% 0.46%	US$ (Note 4) $ 34,020 29,197 33,496 — 12,325 10,762 1,377 $121,177

Credit card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable factored without recourse (Note g) . . . .

Accounts Receivable	Ratio of Nonperforming Receivables	Allowance for Possible Losses	Coverage Ratio 1,155.46% —
$ 521,437 95,763	0.40% —	$ 24,021 469

Item Business Corporate Banking Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumer Banking Residential mortgage (Note d) . . . . . . . . . . . . Cash card . . . . . . . . . . . . . . . . . . . . . . . . . . . . Small-scale credit loan (Note e) . . . . . . . . . . . Others (Note f) Secured . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable factored without recourse (Note g) . . .		September 30, 2013	September 30, 2013		Coverage Ratio (Note c) 121.83% 1,869.20% 756.35% — 188.20% 844.66% 2,338.57% 351.20% Coverage Ratio 1,485.12% —
	Nonperforming Loans (Note a)	Loans	Ratio of Nonperforming Loans (Note b)	Allowance for Possible Losses
	NT$ $ 684,561 64,031 145,664 — 197,620 41,935 6,199 $1,140,010 Nonperforming Receivables	NT$ $ 37,902,302 105,668,412 110,292,816 — 15,919,426 36,828,825 14,341,728	1.81% 0.06% 0.13% — 1.24% 0.11% 0.04% 0.36% Ratio of Nonperforming Receivables	NT$ $ 834,031 1,196,869 1,101,733 — 371,919 354,210 144,968 $4,003,730 Allowance for Possible Losses
		$320,953,509
		Accounts Receivable
	$ 44,454 —	$ 15,328,952 2,713,456	0.29% —	$ 660,196 15,291

F-209

Business Item Corporate Banking Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consumer Banking Residential mortgage (Note d) . . . . . . . . . . . . Cash card . . . . . . . . . . . . . . . . . . . . . . . . . . . . Small-scale credit loan (Note e) . . . . . . . . . . . Others (Note f) Secured . . . . . . . . . . . . . . . . Unsecured . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable factored without recourse (Note g) . . .	Item		September 30, 2013	September 30, 2013		Coverage Ratio (Note c) 121.83% 1,869.20% 756.35% — 188.20% 844.66% 2,338.57% 351.20% Coverage Ratio 1,485.12% —
		Nonperforming Loans (Note a)	Loans	Ratio of Nonperforming Loans (Note b)	Allowance for Possible Losses
		US$ (Note 4) $23,158 2,166 4,928 — 6,685 1,419 210 $38,566 Nonperforming Receivables	US$ (Note 4) $ 1,282,216 3,574,709 3,731,151 — 538,546 1,245,901 485,173 $10,857,696 Accounts Receivable	1.81% 0.06% 0.13% — 1.24% 0.11% 0.04% 0.36% Ratio of Nonperforming Receivables	US$ (Note 4) $ 28,215 40,489 37,271 — 12,582 11,983 4,904 $135,444 Allowance for Possible Losses
		$ 1,504 —	$ 518,571 91,795	0.29% —	$ 22,334 517

Note a: Nonperforming loans represent the amounts of nonperforming loans reported to the authorities and disclosed to the public, as required by the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/ Non-accrual Loans.”

Nonperforming credit cards receivables represent the amounts of nonperforming receivables reported to the authorities and disclosed to the public, as required by the Banking Bureau’s letter dated July 6, 2005 (Ref. No. 0944000378).

Note b: Ratio of nonperforming loans: Nonperforming loans ÷Outstanding loan balance.

Ratio of nonperforming credit cards receivables: Nonperforming credit cards receivables ÷ Outstanding credit cards receivables balance.

Note c: Coverage ratio of allowance for possible losses for loans: Allowance for possible losses for loans ÷ Nonperforming loans.

Coverage ratio of allowance for possible losses for credit cards receivables: Allowance for possible losses for credit cards receivables ÷ Nonperforming credit cards receivables.

Note d: Residential mortgage is a loan given to the borrower who provides a house, to be purchased (or already owned) by the borrower or the spouse or the minor children of the borrower, as a mortgage to the Bank and will use the loan for house purchase or refurbishment.

Note e: Small-scale credit loans refer to the loans under the Banking Bureau’s regulation, dated December 19, 2005 (Ref. No. 09440010950), excluding small-scale unsecured loans obtained through credit cards and cash cards.

Note f: Other loans of consumer banking refer to secured or unsecured loans, excluding residential mortgage, cash card, small-scale credit loans and credit card.

Note g: As required by the Banking Bureau’s letter dated July 19, 2005 (Ref. No. 0945000494), factoring without recourse is disclosed as nonperforming receivables in three months upon the factors’ or insurance companies’ rejection of claims.

F-210

Nonperforming loans and nonperforming receivables excluded from the information stated above

Item Business January 1, 2012 September 30, 2012 Non- performing Loans Excluded Non- performing Receivables Excluded Non- performing Loans Excluded Non- performing Receivables Excluded NT$ NT$ NT$ NT$ Loans not classified as NPL upon debt restructuring and performed as agreed (Note a) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 643,243 $1,575,374 $ 500,899 $1,256,472 Loans upon performance of a debt discharge program and rehabilitation program (Note b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 535,484 1,415,117 549,788 1,378,396 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,178,727 $2,990,491 $1,050,687 $2,634,868 Item Business December 31, 2012 December 31, 2012 Non-performing Loans Excluded Non-performing Receivables Excluded NT$ US$ (Note 4) NT$ US$ (Note 4) Loans not classified as NPL upon debt restructuring and performed as agreed (Note a) . . . . . . . . . . . . . . $ 458,950 $15,526 $1,157,342 $39,152 Loans upon performance of a debt discharge program and rehabilitation program (Note b) . . . . . . . . . . . . 563,620 19,067 1,368,460 46,294 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,022,570 $34,593 $2,525,802 $85,446 Item Business September 30, 2013 September 30, 2013 Non-performing Loans Excluded Non-performing Receivables Excluded NT$ US$ (Note 4) NT$ US$ (Note 4) Loans not classified as NPL upon debt restructuring and performed as agreed (Note a) . . . . . . . . . . . . . . . . $363,697 $12,304 $ 930,943 $31,493 Loans upon performance of a debt discharge program and rehabilitation program (Note b) . . . . . . . . . . . . . . 614,609 20,792 1,344,386 45,480 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $978,306 $33,096 $2,275,329 $76,973	Item Business January 1, 2012 September 30, 2012 Non- performing Loans Excluded Non- performing Receivables Excluded Non- performing Loans Excluded Non- performing Receivables Excluded NT$ NT$ NT$ NT$ Loans not classified as NPL upon debt restructuring and performed as agreed (Note a) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 643,243 $1,575,374 $ 500,899 $1,256,472 Loans upon performance of a debt discharge program and rehabilitation program (Note b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 535,484 1,415,117 549,788 1,378,396 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,178,727 $2,990,491 $1,050,687 $2,634,868 Item Business December 31, 2012 December 31, 2012 Non-performing Loans Excluded Non-performing Receivables Excluded NT$ US$ (Note 4) NT$ US$ (Note 4) Loans not classified as NPL upon debt restructuring and performed as agreed (Note a) . . . . . . . . . . . . . . $ 458,950 $15,526 $1,157,342 $39,152 Loans upon performance of a debt discharge program and rehabilitation program (Note b) . . . . . . . . . . . . 563,620 19,067 1,368,460 46,294 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,022,570 $34,593 $2,525,802 $85,446 Item Business September 30, 2013 September 30, 2013 Non-performing Loans Excluded Non-performing Receivables Excluded NT$ US$ (Note 4) NT$ US$ (Note 4) Loans not classified as NPL upon debt restructuring and performed as agreed (Note a) . . . . . . . . . . . . . . . . $363,697 $12,304 $ 930,943 $31,493 Loans upon performance of a debt discharge program and rehabilitation program (Note b) . . . . . . . . . . . . . . 614,609 20,792 1,344,386 45,480 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $978,306 $33,096 $2,275,329 $76,973	Item Business January 1, 2012 September 30, 2012 Non- performing Loans Excluded Non- performing Receivables Excluded Non- performing Loans Excluded Non- performing Receivables Excluded NT$ NT$ NT$ NT$ Loans not classified as NPL upon debt restructuring and performed as agreed (Note a) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 643,243 $1,575,374 $ 500,899 $1,256,472 Loans upon performance of a debt discharge program and rehabilitation program (Note b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 535,484 1,415,117 549,788 1,378,396 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,178,727 $2,990,491 $1,050,687 $2,634,868 Item Business December 31, 2012 December 31, 2012 Non-performing Loans Excluded Non-performing Receivables Excluded NT$ US$ (Note 4) NT$ US$ (Note 4) Loans not classified as NPL upon debt restructuring and performed as agreed (Note a) . . . . . . . . . . . . . . $ 458,950 $15,526 $1,157,342 $39,152 Loans upon performance of a debt discharge program and rehabilitation program (Note b) . . . . . . . . . . . . 563,620 19,067 1,368,460 46,294 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,022,570 $34,593 $2,525,802 $85,446 Item Business September 30, 2013 September 30, 2013 Non-performing Loans Excluded Non-performing Receivables Excluded NT$ US$ (Note 4) NT$ US$ (Note 4) Loans not classified as NPL upon debt restructuring and performed as agreed (Note a) . . . . . . . . . . . . . . . . $363,697 $12,304 $ 930,943 $31,493 Loans upon performance of a debt discharge program and rehabilitation program (Note b) . . . . . . . . . . . . . . 614,609 20,792 1,344,386 45,480 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $978,306 $33,096 $2,275,329 $76,973	September 30, 2012	September 30, 2012	September 30, 2012	September 30, 2012
						Non- performing Receivables Excluded
						NT$ $1,256,472 1,378,396 $2,634,868 31, 2012
	Non-performing Loans Excluded				Non-performing Receivables Excluded
	NT$ US$ (Note 4) $ 458,950 $15,526 563,620 19,067 $1,022,570 $34,593 September 30, 2013 Non-performing Loans Excluded NT$ US$ (Note 4) $363,697 $12,304 614,609 20,792 $978,306 $33,096				NT$ US$ (Note 4) $1,157,342 $39,152 1,368,460 46,294 $2,525,802 $85,446 September 30, 2013
		Non-performing Loans Excluded			Non-performing Receivables Excluded
		NT$ US$ (Note 4) $363,697 $12,304 614,609 20,792 $978,306 $33,096			NT$ US$ (Note 4) $ 930,943 $31,493 1,344,386 45,480 $2,275,329 $76,973

Note a: Supplementary disclosure related to the loans which need not be classified as NPL upon debt restructuring and performed as agreed, as stipulated in the Banking Bureau’s letter dated April 25, 2006 (Ref. No. 09510001270).

Note b: Supplementary disclosure related to the loans which need not be classified as NPL upon performance of a debt discharge program and rehabilitation program, as stipulated in the Banking Bureau’s letter dated September 15, 2008 (Ref. No. 09700318940).

F-211

2) Concentration of credit extensions

January 1, 2012

Ranking (Note a) 1 2 3 4 5 6 7 8 9 10	Group Entity (Note b) Industry and Code(Note a) A Group—2413—steel rolling and extruding F Group—5010—ocean water transportation P Group—2611—integrated circuits manufacturing L Group—2641—liquid crystal panel and components manufacturing E Group—1850—artificial fiber D Group—2630—printed circuits manufacturing I Group—6499—non-categorized and other financial intermediaries N Group—2641—liquid crystal panel and components manufacturing B Group—6499—non-categorized and other financial intermediaries K Group—6499—non-categorized and other financial intermediaries	Total Balances of Credit Extensions (Note c) NT$ $5,566,747 3,493,631 2,823,382 2,485,091 2,259,714 2,248,242 2,046,291 2,002,101 1,863,045 1,811,764	Ratio of Credit Extensions to Net Worth (%) 23% 14% 12% 10% 9% 9% 8% 8% 8% 7%

September 30, 2012

Ranking (Note a) 1 2 3 4 5 6 7 8 9 10	Group Entity (Note b) Industry and Code(Note a) A Group—2413—steel rolling and extruding C Group—5232—ocean freight transportation forwarding services F Group—1700—petroleum and coal product manufacturing B Group—6499—non-categorized and other financial intermediaries E Group—1850—artificial fiber D Group—2630—printed circuits manufacturing K Group—6499—non-categorized and other financial intermediaries L Group—2641—liquid crystal panel and components manufacturing O Group—3010—automobile manufacturing G Group—6499—non-categorized and other financial intermediaries	Total Balances of Credit Extensions (Note c) NT$ $4,660,239 2,856,930 2,620,653 2,518,540 2,215,893 2,197,297 1,902,845 1,864,092 1,854,840 1,780,508	Ratio of Credit Extensions to Net Worth (%) 18% 11% 10% 10% 8% 8% 7% 7% 7% 7%

December 31, 2012

	December 31, 2012
Ranking (Note a) 1 2 3 4 5 6 7 8 9 10	Group Entity (Note b) Industry and Code(Note a)	Total Balances of Credit Extensions(Note c) NT$ US$ (Note 4) $4,217,402 $142,673 2,973,840 100,604 2,639,001 89,276 2,479,719 83,888 2,418,693 81,823 2,014,731 68,157 1,860,285 62,933 1,736,418 58,742 1,716,021 58,052 1,690,020 57,173	Ratio of Credit Extensions to Net Worth (%)
	A Group—24 99—non-categorized and other basic metal manufacturing C Group—5232—ocean freight transportation forwarding services B Group—6499—non-categorized and other financial intermediaries F Group—1700—petroleum and coal product manufacturing G Group—6499—non-categorized and other financial intermediaries E Group—1850—artificial fiber K Group—6499—non-categorized and other financial intermediaries L Group—2641—liquid crystal panel and components manufacturing M Group—6499—non-categorized and other financial intermediaries N Group—2641—liquid crystal panel and components manufacturing		16% 11% 10% 9% 9% 8% 7% 7% 6% 6%

F-212

September 30, 2013

	September 30, 2013
Ranking (Note a) 1 2 3 4 5 6 7 8 9 10	Group Entity (Note b) Industry and Code(Note a)	Total Balances of Credit Extensions(Note c)	Ratio of Credit Extensions to Net Worth (%)
	A Group—2413—steel rolling and extruding B Group—6499—non-categorized and other financial intermediaries C Group—5232—ocean freight transportation forwarding services D Group—2613 -semiconductor packaging and testing industry E Group—1850—artificial fiber F Group—1700—petroleum and coal product manufacturing G Group—6499—non-categorized and other financial intermediaries H Group—3010—automobile manufacturing I Group—6499—non-categorized and other financial intermediaries J Group—2699—non-categorized and other parts and components manufacturing	NT$ US$ (Note 4) $5,342,833 $180,745 3,166,481 107,120 2,747,850 92,958 2,436,520 82,426 2,272,093 76,864 2,252,589 76,204 2,250,041 76,118 1,979,400 66,962 1,907,282 64,522 1,712,862 57,945	19% 11% 10% 9% 8% 8% 8% 7% 7% 6%

Note a: The rankings above represent the top 10 corporate entities except for government or state-owned enterprises, based on the total balance of credit extension granted by the Bank. The amount of credit extensions should be disclosed in aggregate for each group entity, the code and industry of which are also required. The industry of the group entities is designated as the industry of the individual group entity with the greatest risk exposure. The lines of industry should conform to the industry sub-categorization of the Standard Industrial Classification System of the Republic of China published by the Directorate-General of Budget, Accounting and Statistics under the Executive Yuan.

Note b: “Group Entity” is defined in Article 6 of “Supplementary Provisions to the Taiwan Stock Exchange Corporation Rules for Review of Securities Listings.”

• Note c: Credit extension balance includes various loans (import and export negotiations, discounted, overdrafts, unsecured and secured short-term loans, margin loans receivable, unsecured and secured medium-term loans, unsecured and secured long-term loans; and nonaccrual loans), bills purchased, factored accounts receivable without recourse, acceptances and guarantees.

3) Interest rate sensitivity

Table 1: For New Taiwan dollar items

Interest Rate Sensitivity Analysis January 1, 2012

Items Interest rate-sensitive assets . . . . . . . . . . . . . . . . . . . . . . . . Interest rate-sensitive liabilities . . . . . . . . . . . . . . . . . . . . . Interest rate sensitivity gap . . . . . . . . . . . . . . . . . . . . . . . . Net worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ratio of interest rate-sensitive assets to liabilities . . . . . . . Ratio of interest rate-sensitivity gap to net worth . . . . . . .		(In Thousands of New Taiwan Dollars, %)	(In Thousands of New Taiwan Dollars, %)	(In Thousands of New Taiwan Dollars, %)	Total $361,944,055 343,927,597 18,016,458 24,542,500 105.24% 73.41%
	1 to 90 Days $231,853,494 150,954,515 80,898,979	91 to 180 Days $104,937,888 118,967,341 (14,029,453)	181 Days to One Year $ 696,476 59,999,402 (59,302,926)	Over One Year $24,456,197 14,006,339 10,449,858

F-213

Interest Rate Sensitivity Analysis September 30, 2012

Items Interest rate-sensitive assets . . . . . . . . . . . . . . . . . . . . . . . . Interest rate-sensitive liabilities . . . . . . . . . . . . . . . . . . . . . Interest rate sensitivity gap . . . . . . . . . . . . . . . . . . . . . . . . Net worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ratio of interest rate-sensitive assets to liabilities . . . . . . . Ratio of interest rate -sensitivity gap to net worth . . . . . . .		(In Thousands of New Taiwan Dollars, %)	(In Thousands of New Taiwan Dollars, %)	(In Thousands of New Taiwan Dollars, %)	Total $381,487,441 350,645,189 30,842,252 26,365,782 108.80% 116.98%
	1 to 90 Days $249,216,601 166,743,736 82,472,865	91 to 180 Days $108,360,325 116,442,346 (8,082,021)	181 Days to One Year $ 3,212,679 49,431,574 (46,218,895)	Over One Year $20,697,836 18,027,533 2,670,303

Interest Rate Sensitivity Analysis December 31, 2012

Items Interest rate-sensitive assets . . . . . . . . . . . . . . . . . . . . . . . . Interest rate-sensitive liabilities . . . . . . . . . . . . . . . . . . . . . Interest rate sensitivity gap . . . . . . . . . . . . . . . . . . . . . . . . Net worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ratio of interest rate-sensitive assets to liabilities . . . . . . . Ratio of interest rate-sensitivity gap to net worth . . . . . . .		(In Thousands of New Taiwan Dollars, %)	(In Thousands of New Taiwan Dollars, %)	(In Thousands of New Taiwan Dollars, %)	Total $388,591,067 365,967,145 22,623,922 26,353,494 106.18% 85.85%
	1 to 90 Days $253,480,225 156,809,605 96,670,620	91 to 180 Days $110,101,594 119,546,396 (9,444,802)	181 Days to One Year $ 5,506,331 70,706,563 (65,200,232)	Over One Year $19,502,917 18,904,581 598,336

Interest Rate Sensitivity Analysis December 31, 2012

Items Interest rate-sensitive assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest rate-sensitive liabilities . . . . . . . . . . . . . . . . . . . . . . . . . Interest rate sensitivity gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ratio of interest rate-sensitive assets to liabilities . . . . . . . . . . . Ratio of interest rate-sensitivity gap to net worth . . . . . . . . . . .		(In Thousands of U.S. Dollars, %, Note 4)	(In Thousands of U.S. Dollars, %, Note 4)	(In Thousands of U.S. Dollars, %, Note 4)	Total $13,145,841 12,380,485 765,356 891,526 106.18% 85.85%
	1 to 90 Days $8,575,109 5,304,790 3,270,319	91 to 180 Days $3,724,682 4,044,195 (319,513)	181 Days to One Year $ 186,276 2,391,967 (2,205,691)	Over One Year $659,774 639,533 20,241

Interest Rate Sensitivity Analysis September 30, 2013

Items Interest rate-sensitive assets . . . . . . . . . . . . . . . . . . . . . . . . Interest rate-sensitive liabilities . . . . . . . . . . . . . . . . . . . . . Interest rate sensitivity gap . . . . . . . . . . . . . . . . . . . . . . . . Net worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ratio of interest rate-sensitive assets to liabilities . . . . . . . Ratio of interest rate-sensitivity gap to net worth . . . . . . .		(In Thousands of New Taiwan Dollars, %)	(In Thousands of New Taiwan Dollars, %)	(In Thousands of New Taiwan Dollars, %)	Total $413,189,147 373,875,804 39,313,343 28,192,676 110.52% 139.45%
	1 to 90 Days $254,140,508 172,449,385 81,691,123	91 to 180 Days $130,764,774 139,465,493 (8,700,719)	181 Days to One Year $ 5,409,913 42,971,278 (37,561,365)	Over One Year $22,873,952 18,989,648 3,884,304

F-214

Interest Rate Sensitivity Analysis September 30, 2013

Items Interest rate-sensitive assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest rate-sensitive liabilities . . . . . . . . . . . . . . . . . . . . . . . . . Interest rate sensitivity gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ratio of interest rate-sensitive assets to liabilities . . . . . . . . . . . Ratio of interest rate-sensitivity gap to net worth . . . . . . . . . . .		(In Thousands of U.S. Dollars, %, Note 4)	(In Thousands of U.S. Dollars, %, Note 4)	(In Thousands of U.S. Dollars, %, Note 4)	Total $13,977,982 12,648,031 1,329,951 953,744 110.52% 139.45%
	1 to 90 Days $8,597,446 5,833,876 2,763,570	91 to 180 Days $4,423,707 4,718,048 (294,341)	181 Days to One Year $ 183,015 1,453,697 (1,270,682)	Over One Year $773,814 642,410 131,404

Note a: The New Taiwan dollar amounts held by the Bank.

Note b: Interest rate-sensitive assets and liabilities refer to interest-earning assets and interest-bearing liabilities that were affected by interest rate changes.

Note c: Interest rate sensitivity gap = Interest rate-sensitive assets�Interest rate-sensitive liabilities. Note d: Ratio of interest rate-sensitive assets to liabilities = Interest rate-sensitive assets ÷ Interest rate-sensitive liabilities.

Table 2: For U.S. dollar items

Interest Rate Sensitivity Analysis January 1, 2012

Items Interest rate-sensitive assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest rate-sensitive liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . Interest rate sensitivity gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ratio of interest rate-sensitive assets to liabilities . . . . . . . . . . . . Ratio of interest rate-sensitivity gap to net worth . . . . . . . . . . . .	1 to 90 Days $1,256,664 749,276 507,388	(In Thousands of U.S. Dollars, %)	(In Thousands of U.S. Dollars, %)	(In Thousands of U.S. Dollars, %)	Total $1,381,067 1,450,384 (69,317) 4,837 95.22% (1,433.06%)
		91 to 180 Days $ 92,529 471,641 (379,112)	181 Days to One Year $ 9,075 229,467 (220,392)	Over One Year $22,799 — 22,799

Interest Rate Sensitivity Analysis September 30, 2012

Items Interest rate-sensitive assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest rate-sensitive liabilities . . . . . . . . . . . . . . . . . . . . . . . . . Interest rate sensitivity gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ratio of interest rate-sensitive assets to liabilities . . . . . . . . . . . Ratio of interest rate-sensitivity gap to net worth . . . . . . . . . . . .		(In Thousands of U.S. Dollars, %)	(In Thousands of U.S. Dollars, %)	(In Thousands of U.S. Dollars, %)	Total $ 1,231,622 1,842,599 (610,977) 5,980 66.84% (10,217.01%)
	1 to 90 Days $1,088,688 907,157 181,531	91 to 180 Days $ 129,015 580,068 (451,053)	181 Days to One Year $ — 355,374 (355,374)	Over One Year $13,919 — 13,919

Interest Rate Sensitivity Analysis December 31, 2012

Items Interest rate-sensitive assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest rate-sensitive liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . Interest rate sensitivity gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ratio of interest rate-sensitive assets to liabilities . . . . . . . . . . . . Ratio of interest rate-sensitivity gap to net worth . . . . . . . . . . . .	1 to 90 Days $1,151,415 842,195 309,220	(In Thousands of U.S. Dollars, %)	(In Thousands of U.S. Dollars, %)	(In Thousands of U.S. Dollars, %)	Total $1,241,670 1,680,275 (438,605) 12,894 73.90% (3,401.62%)
		91 to 180 Days $ 73,165 576,977 (503,812)	181 Days to One Year $ 3,169 261,103 (257,934)	Over One Year $13,921 — 13,921

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Interest Rate Sensitivity Analysis September 30, 2013

Items Interest rate-sensitive assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest rate-sensitive liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . Interest rate sensitivity gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ratio of interest rate-sensitive assets to liabilities . . . . . . . . . . . . Ratio of interest rate -sensitivity gap to net worth . . . . . . . . . . . .		(In Thousands of U.S. Dollars, %)	(In Thousands of U.S. Dollars, %)	(In Thousands of U.S. Dollars, %)	Total $1,337,059 1,929,422 (592,363) 18,512 69.30% (3,199.89%)
	1 to 90 Days $1,193,756 949,235 244,521	91 to 180 Days $ 98,748 673,383 (574,635)	181 Days to One Year $ 33,412 156,804 (123,392)	Over One Year $ 11,143 150,000 (138,857)

Note a: The total U.S. dollar amounts held by the Bank, excluding contingent assets and liabilities.

Note b: Interest rate-sensitive assets and liabilities refer to interest-earning assets and interest-bearing liabilities that were affected by interest rate changes.

Note c: Interest rate sensitivity gap = Interest rate-sensitive assets�Interest rate-sensitive liabilities.

Note d: Ratio of interest rate-sensitive assets to liabilities = Interest rate-sensitive assets/Interest rate-sensitive liabilities.

4) Profitability

Items Return on total assets Before tax . . . . . . . . . . . . . . . . . . . . . . . . . After tax . . . . . . . . . . . . . . . . . . . . . . . . . . Return on equity Before tax . . . . . . . . . . . . . . . . . . . . . . . . . After tax . . . . . . . . . . . . . . . . . . . . . . . . . . Net income ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Note a: Return on total assets = Income before (after) income tax/Average total asse Note b: Return on equity = Income before (after) income tax/Average equity.	Nine months ended September 30, 2012 0.56% 0.50% 9.96% 8.88% 36.02% ts.	Nine months ended September 30, 2013
		0.65% 0.57% 11.31% 9.93% 38.40%

Note c: Net income ratio = Income after income tax/Total net revenues.

5) Maturity analysis of assets and liabilities

• a) For New Taiwan dollar items

January 1, 2012

Main capital inflow on maturity . . . . . . . . . . . . . . . Main capital outflow on maturity . . . . . . . . . . . . . . . Gap . . . . . . . . . . . . . . . . . . . . .			(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
	Total		Amount for Remaining Period to Maturity
		0 to 10 Days	11 to 30 Days	From 31 Days to 90 Days	From 91 Days to 180 Days	From 181 Days to one Year	Over one Year
			$50,774,880 40,013,387 10,761,493	$54,911,668 64,376,666 (9,464,998)	$ 31,082,913 77,596,601 (46,513,688)	$ 36,074,818 114,959,051 (78,884,233)	$200,409,749 105,156,952 95,252,797

F-216

September 30, 2012

Main capital inflow on maturity . . . . . . . . . . . . . . . . . Main capital outflow on maturity . . . . . . . . . . . . . . . . . Gap . . . . . . . . . . . . . . . . . . . . . . Main capital inflow on maturity . . . . . . . . . . . . . . . . . Main capital outflow on maturity . . . . . . . . . . . . . . . . . Gap . . . . . . . . . . . . . . . . . . . . . . Main capital inflow on maturity Main capital outflow on maturity Gap . . . . . . . . . . . . . . . . . . . . . . Main capital inflow on maturity . . . . . . . . . . . . . . . . . Main capital outflow on maturity . . . . . . . . . . . . . . . . . Gap . . . . . . . . . . . . . . . . . . . . . .					(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
	Total				Amount for Remaining Period to Maturity
			0 to 10 Days		11 to 30 Days		From 31 Days to 90 Days	From 91 Days to 180 Days	From 181 Days to one Year		Over one Year
									$ 39,270,368 92,766,292 (53,495,924)		$215,015,169 124,003,719 91,011,450
	Total				Amount for Remaining Period to Maturity
			0 to 10 Days		11 to 30 Days		From 31 Days to 90 Days	From 91 Days to 180 Days	From 181 Days to one Year		Over one Year
									$ 37,661,583 109,832,711 (72,171,128)		$221,409,583 122,072,588 99,336,995
		Total				Amount for Remaining Period to Maturity
				0 to 10 Days		11 to 30 Days				From 181 Days to one Year		Over one Year
										$ 1,274,072 3,715,585 (2,441,513)		$7,490,176 4,129,655 3,360,521
		Total			Amount for Remaining Period to Maturity
			0 to 10 Days		11 to 30 Days		From 31 Days to 90 Days	From 91 Days to 180 Days	From 181 Days to one Year			Over one Year
							$ 66,846,576 131,692,849 (64,846,273) 2013	$ 39,762,348 106,312,397 (66,550,049)	$ 34,011,479 78,385,080 (44,373,601)		$237,961,412 129,816,009 108,145,403

Main capital inflow on maturity . . . . . . . . . . . . . . . . . . Main capital outflow on maturity . . . . . . . . . . . . . . . . . . Gap . . . . . . . . . . . . . . . . . . . . . . . .			(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)	(In Thousands of U.S. Dollars, Note 4)
	Total		Amount for Remaining Period to Maturity
			11 to 30 Days $2,575,156 1,494,166 1,080,990	From 31 Days to 90 Days $ 2,261,386 4,455,103 (2,193,717)	From 91 Days to 180 Days	From 181 Days to one Year	Over one Year
					$ 1,345,140 3,596,495 (2,251,355)	$ 1,150,591 2,651,728 (1,501,137)	$8,050,116 4,391,611 3,658,505

Note: This table refers to the New Taiwan dollar amounts held by the Bank.

F-217

b) For U.S. dollar items

January 1, 2012

Main capital inflow on maturity . . . . . . . . . Main capital outflow on maturity . . . . . . . . Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Main capital inflow on maturity . . . . . . . . . Main capital outflow on maturity . . . . . . . . Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Main capital inflow on maturity . . . . . . . . . Main capital outflow on maturity . . . . . . . . Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Main capital inflow on maturity . . . . . . . . . Main capital outflow on maturity . . . . . . . . Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			(In Thousands of U.S. Dollars)	(In Thousands of U.S. Dollars)	(In Thousands of U.S. Dollars)
	Total Amount for Remaining Period to Maturity 1 to 30 Days From 31 Days to 90 Days From 91 Days to 180 Days From 181 Days to one Year $3,091,512 $1,078,065 $ 596,969 $ 216,338 $ 521,166 3,113,858 886,681 747,768 440,660 717,083 (22,346) 191,384 (150,799) (224,322) (195,917) September 30, 2012 (In Thousands of U.S. Dollars)		Amount for Remaining Period to Maturity
					From 181 Days to one Year $ 521,166 717,083 (195,917)	Over one Year
						$678,974 321,666 357,308
	Total Amount for Remaining Period to Maturity 1 to 30 Days From 31 Days to 90 Days From 91 Days to 180 Days From 181 Days to one Year $4,621,977 $1,728,203 $ 632,749 $584,967 $ 706,177 4,592,331 1,352,303 1,095,850 626,590 1,076,417 29,646 375,900 (463,101) (41,623) (370,240) December 31, 2012 (In Thousands of U.S. Dollars)		Amount for Remaining Period to Maturity
					From 181 Days to one Year $ 706,177 1,076,417 (370,240)	Over one Year
						$969,881 441,171 528,710
	Total Amount for Remaining Period to Maturity 1 to 30 Days From 31 Days to 90 Days From 91 Days to 180 Days From 181 Days to one Year $4,284,117 $1,395,021 $974,256 $619,656 $ 401,131 4,267,959 1,532,606 885,793 688,615 653,929 16,158 (137,585) 88,463 (68,959) (252,798) September 30, 2013 (In Thousands of U.S. Dollars)		Amount for Remaining Period to Maturity
					From 181 Days to one Year $ 401,131 653,929 (252,798)	Over one Year
						$894,053 507,016 387,037
	Total $5,268,986 5,294,598 (25,612)		Amount for Remaining Period to Maturity
		1 to 30 Days $1,478,624 1,864,615 (385,991)	From 31 Days to 90 Days $1,500,040 1,529,186 (29,146)	From 91 Days to 180 Days $1,118,377 852,698 265,679	From 181 Days to one Year $603,735 682,591 (78,856)	Over one Year
						$568,210 365,508 202,702

Note: This table refers to the total U.S. dollar amounts held by the Bank.

48. CAPITAL MANAGEMENT

The Bank shall include all risks in the capital adequacy assessment according to the “Regulations Governing the Capital Adequacy and Capital Category of Banks”. The Bank makes the capital planning based on the operating plans and budget target approved by the Board of Directors, the developing strategies, capital adequacy, dividend policy and etc. The capital planning, including stress tests and forecasts of capital adequacy, aims to achieve the capital adequacy target and to consolidate the capital structure.

To monitor the capital adequacy, the execution and changes in the parameters of the capital planning are reviewed quarterly by the Bank’s Assets and Liabilities Management Committee. To maintain appropriate capital adequacy, the Bank will find the causes and propose remedial action when the actual capital adequacy might get lower than the target.

The authority classifies banks’ level of capital into different categories based on the common equity tier 1 ratio, Tier 1 capital ratio and total capital adequacy ratio reported by the banks. If a bank’s level of capital is graded “under-capitalized”, “substantially under-capitalized” or “critically under-capitalized”, the authority will take correction measures in accordance with Paragraph 1 to 3 of Article 44-2 of the Banking Law.

F-218

49. SEGMENT INFORMATION

Information provided to the Bank’s and its subsidiaries’ chief operating decision makers for resource allocation and segment performance assessment focuses on nature of operation and profits. Based on IFRS 8—“Operating Segments,” the reportable segments were as follows:

• a. Individual banking: Mainly includes consumer banking loans such as mortgages, credit loans, car loans, installment, etc.; credit cards; individual deposits; and wealth management;

• b. Corporate banking: Mainly includes corporate-related business, foreign-currency business and financial market business;

• c. Others: Any business not included in individual and corporate banking.

The accounting policies of the reportable segments are the same as those stated in Note 4 to the consolidated financial statements.

Segment income and operating results

The income and operating results of the reportable segments of the Bank and its subsidiaries were as follows:

Nine months ended September 30, 2012 Net interest income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . Noninterest income and gains, net Net service fee income . . . . . . . . . . . . . . . . . . . . . . . . Other net income (loss) . . . . . . . . . . . . . . . . . . . . . . . Net profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reversal of provision for possible losses . . . . . . . . . . . . . . Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment income (loss) before income tax . . . . . . . . . . . . .	Individual Banking NT$ $2,799,493 1,644,671 323,446 4,767,610 286,195 3,296,507 $1,757,298	Corporate Banking (Including Overseas Branches) NT$ $1,254,591 153,560 1,244,818 2,652,969 133,898 738,045 $2,048,822	Others NT$ $ (980,688) 113,937 (291,181) (1,157,932) 167,038 287,278 $(1,278,172)	Total
				NT$ $3,073,396 1,912,168 1,277,083
				6,262,647 587,131 4,321,830
				$2,527,948
Nine months ended September 30, 2013
Net interest income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . Noninterest income and gains, net Net service fee income . . . . . . . . . . . . . . . . . . . . . . . . Other net income (loss) . . . . . . . . . . . . . . . . . . . . . . . Net profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reversal of provision (provision) for possible losses . . . . Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment income (loss) before income tax . . . . . . . . . . . . .	$3,122,573 1,749,615 271,132 5,143,320 (16,279) 3,247,481 $1,879,560	$1,382,534 260,919 1,096,949 2,740,402 259,400 756,266 $2,243,536	$ (842,354) 120,912 (58,930) (780,372) 77,402 313,191 $(1,016,161)	$3,662,753 2,131,446 1,309,151
				7,103,350 320,523 4,316,938
				$3,106,935

F-219

Nine months ended September 30, 2013 Net interest income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Noninterest income and gains, net Net service fee income . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . Net profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reversal of provision (provision) for possible losses . . . . . . . . Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment income (loss) before income tax . . . . . . . . . . . . . . . . .	Individual Banking US$ (Note 4) $105,635 59,189 9,172 173,996 (551) 109,861 $ 63,584	Corporate Banking (Including Overseas Branches) US$ (Note 4) $46,770 8,827 37,109 92,706 8,776 25,584 $75,898	Others US$ (Note 4) $(28,496) 4,090 (1,993) (26,399) 2,618 10,595 $(34,376)	Total
				US$ (Note 4) $123,909 72,106 44,288
				240,303 10,843 146,040
				$105,106

Geographical information

The Bank and its subsidiaries did not disclose geographical information because the operating income generated from overseas branches was less than 10% of the operating income of the Bank and its subsidiaries.

Major customers information

The Bank and its subsidiaries did not disclose major customers information because revenues from transactions with a single external customer were less than 10% of revenues of the Bank and its subsidiaries.

50. FIRST-TIME ADOPTION OF TAIWAN-IFRSs

• a. Basis of the preparation of financial information under Taiwan-IFRSs

The Bank and its subsidiaries’ consolidated financial statements for the nine months ended September 30, 2013 not only follows the significant accounting policies stated in Note 4 but also applies the requirements under IFRS 1 “First-time Adoption of IFRS” as the basis for the preparation.

F-220

b. Impact on the transition to Taiwan-IFRSs

The impact on the transition to Taiwan-IFRSs on the consolidated balance sheets and consolidated statements of comprehensive income were as follows:

1) Reconciliation of consolidated balance sheet as of January 1, 2012

ROC GAAP		Effect of Transition to Taiwan-IFRSs	Effect of Transition to Taiwan-IFRSs		Taiwan-IFRSs	Note
Item	Amount			Amount	Item
Cash and cash equivalents . . . . . . . . . Due from the Central Bank and other banks . . . . . . . . . . . . . . . . . . . . . . . . Financial assets at fair value through profit or loss . . . . . . . . . . . . . . . . . . Securities purchased under resale agreements . . . . . . . . . . . . . . . . . . . Receivables, net . . . . . . . . . . . . . . . . . Discounts and loans, net . . . . . . . . . . . Available-for-sale financial assets . . . Held-to-maturity financial assets . . . . Investments accounted for by the equity method . . . . . . . . . . . . . . . . . Debt investments with no active market . . . . . . . . . . . . . . . . . . . . . . . Other financial assets . . . . . . . . . . . . . Properties . . . . . . . . . . . . . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . Due to the Central Bank and other banks . . . . . . . . . . . . . . . . . . . . . . . . Financial liabilities at fair value through profit or loss . . . . . . . . . . . Payables . . . . . . . . . . . . . . . . . . . . . . . Deposits and remittances . . . . . . . . . . Bank debentures . . . . . . . . . . . . . . . . . Other financial liabilities . . . . . . . . . . Other liabilities . . . . . . . . . . . . . . . . . . Total liabilities . . . . . . . . . . . . . . . . . . Capital stock . . . . . . . . . . . . . . . . . . . . Capital surplus . . . . . . . . . . . . . . . . . . Retained earnings . . . . . . . . . . . . . . . . Equity adjustments Cumulative translation adjustments . . . . . . . . . . . . . . . Unrealized valuation gain on available-for-sale financial assets . . . . . . . . . . . . . . . . . . . . Total shareholders’ equity . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . .	NT$ $ 6,005,214 86,739,190 13,806,866 — 850,505 20,855,894 269,460,381 15,674,659 3,927,905 2,474,458 9,293,780 2,884,083 2,943,673 1,905,193 — 1,633,309		NT$ $ (2,900) — — 252,233 — 1,094,919 — (729,247) — (2,071) — (249,333) — — 1,115,762 (1,080,548) $ 398,815 $ — 303,805 13,093 (195,905) 124,723 — — (13,093) 690,680 (362,083) 561,220 — (9,302) (145,697) — (7,406) (162,405) $ 398,815	NT$ $ 6,002,314 86,739,190 13,806,866 252,233 850,505 21,950,813 269,460,381 14,945,412 3,927,905 2,472,387 9,293,780 2,634,750 2,943,673 1,905,193 1,115,762 552,761	Cash and cash equivalents Due from the Central Bank and other banks Financial assets at fair value through profit or loss Derivative financial assets for hedging Securities purchased under resale agreements Receivables, net Discounts and loans, net Available-for-sale financial assets Held-to-maturity financial assets Investments accounted for using equity method Debt investments with no active market Other financial assets, net Property and equipment, net Intangible assets, net Deferred tax assets Other assets, net Total Due to the Central Bank and other banks Financial liabilities at fair value through profit or loss Derivative financial liabilities for hedging Payables Current tax liabilities Deposits and remittances Bank debentures Other financial liabilities Provisions Other liabilities Total liabilities Share capital Capital surplus Retained earnings Other equity Exchange differences on translating foreign operations Unrealized gain on available-for- sale financial assets Total equity Total	8) a) 8) 1) 8) b), 8) c) 8) b) 8) d) 8) a), 8) l) 8) c), 8) h), 8) l) 8) l) 8) b) 8) l) 8) f), 8) g), 8) l) 8) l) 8) l) 8) h), 8) l) 8) f), 8) l) 8) e) 8) k) 8) b)
	$438,455,110			$438,853,925
	$ 11,785,731 4,081,035 — 4,691,225 — 369,998,562 20,230,280 2,224,379 — 789,520			$ 11,785,731 4,384,840 13,093 4,495,320 124,723 369,998,562 20,230,280 2,211,286 690,680 427,437
	413,800,732			414,361,952
	21,185,604 29,008 3,409,346 12,762 17,658			21,185,604 19,706 3,263,649 12,762 10,252
	24,654,378			24,491,973
	$438,455,110			$438,853,925

F-221

2) Reconciliation of consolidated balance sheet as of September 30, 2012

ROC GAAP		Effect of Transition to Taiwan-IFRSs	Effect of Transition to Taiwan-IFRSs		Taiwan-IFRSs	Note
Item	Amount			Amount	Item
Cash and cash equivalents . . . . . . . . . . . Due from the Central Bank and other banks . . . . . . . . . . . . . . . . . . . . . . . . . Financial assets at fair value through profit or loss . . . . . . . . . . . . . . . . . . . Securities purchased under resale agreements . . . . . . . . . . . . . . . . . . . . Receivables, net . . . . . . . . . . . . . . . . . . Discounts and loans, net . . . . . . . . . . . . Available-for-sale financial assets . . . . Held-to-maturity financial assets . . . . . Investments accounted for by the equity method . . . . . . . . . . . . . . . . . . . . . . . . Debt investments with no active market . . . . . . . . . . . . . . . . . . . . . . . . Other financial assets . . . . . . . . . . . . . . Properties . . . . . . . . . . . . . . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . Due to the Central Bank and other banks . . . . . . . . . . . . . . . . . . . . . . . . . Financial liabilities at fair value through profit or loss . . . . . . . . . . . . . Payables . . . . . . . . . . . . . . . . . . . . . . . . Deposits and remittances . . . . . . . . . . . Bank debentures . . . . . . . . . . . . . . . . . . Other financial liabilities . . . . . . . . . . . . Other liabilities . . . . . . . . . . . . . . . . . . . Total liabilities . . . . . . . . . . . . . . . . . . . Capital stock . . . . . . . . . . . . . . . . . . . . . Capital surplus . . . . . . . . . . . . . . . . . . . . Retained earnings . . . . . . . . . . . . . . . . . Equity adjustments Cumulative translation adjustments . . . . . . . . . . . . . . . . Unrealized valuation loss on available-for-sale financial assets . . . . . . . . . . . . . . . . . . . . . Total shareholders’ equity . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . .	NT$ $ 5,820,066 81,359,053 16,726,462 — 16,096,724 19,428,136 280,051,291 11,433,334 1,942,472 2,394,533 11,938,829 3,045,781 2,887,403 1,877,334 — 1,178,312		NT$ $ (2,900) — — 199,464 — 540,128 — — — (2,487) — (196,564) — — 912,324 (881,699) $ 568,266 $ — 449,764 10,521 (95,110) 40,292 — — (10,521) 691,225 (380,550) 705,621 — (9,302) (128,053) — — (137,355) $ 568,266	NT$ $ 5,817,166 81,359,053 16,726,462 199,464 16,096,724 19,968,264 280,051,291 11,433,334 1,942,472 2,392,046 11,938,829 2,849,217 2,887,403 1,877,334 912,324 296,613		8) a) 8) l) 8) b), 8) c) 8) d) 8) a), 8) l) 8) c), 8) h), 8) l) 8) l) 8) b) 8) l) 8) f), 8) g), 8) l) 8) l) 8) l) 8) h), 8) l) 8) f), 8) l) 8) e)
	$456,179,730			$456,747,996
	$ 15,327,277 4,425,165 — 6,198,665 — 377,866,960 23,094,543 2,018,168 — 822,672			$ 15,327,277 4,874,929 10,521 6,103,555 40,292 377,866,960 23,094,543 2,007,647 691,225 442,122
	429,753,450			430,459,071

F-222

3) Reconciliation of consolidated balance sheet as of December 31, 2012

ROC GAAP		Effect of Transition to Taiwan-IFRSs	Effect of Transition to Taiwan-IFRSs		Taiwan-IFRSs	Note 8) a) 8) l) 8) c) 8) d) 8) a), 8) l) 8) c), 8) h), 8) l) 8) l) 8) l) 8) f), 8) g), 8) l) 8) l) 8) l) 8) h), 8) l) 8) c), 8) f), 8) l) 8) e)
Item	Amount			Amount	Item
Cash and cash equivalents . . . . . . . . . . . Due from the Central Bank and other banks . . . . . . . . . . . . . . . . . . . . . . . . . Financial assets at fair value through profit or loss . . . . . . . . . . . . . . . . . . . Securities purchased under resale agreements . . . . . . . . . . . . . . . . . . . . Receivables, net . . . . . . . . . . . . . . . . . . Discounts and loans, net . . . . . . . . . . . . Available-for-sale financial assets . . . . Held-to-maturity financial assets . . . . . Investments accounted for by the equity method . . . . . . . . . . . . . . . . . . . . . . . . Debt investments with no active market . . . . . . . . . . . . . . . . . . . . . . . . Other financial assets . . . . . . . . . . . . . . Properties . . . . . . . . . . . . . . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . Due to the Central Bank and other banks . . . . . . . . . . . . . . . . . . . . . . . . . Financial liabilities at fair value through profit or loss . . . . . . . . . . . . . Payables . . . . . . . . . . . . . . . . . . . . . . . . Deposits and remittances . . . . . . . . . . . Bank debentures . . . . . . . . . . . . . . . . . . Other financial liabilities . . . . . . . . . . . . Other liabilities . . . . . . . . . . . . . . . . . . . Total liabilities . . . . . . . . . . . . . . . . . . . Capital stock . . . . . . . . . . . . . . . . . . . . . Capital surplus . . . . . . . . . . . . . . . . . . . . Retained earnings . . . . . . . . . . . . . . . . . Equity adjustments Cumulative translation adjustments . . . . . . . . . . . . . . . . Unrealized valuation loss on available-for-sale financial assets . . . . . . . . . . . . . . . . . . . . . Total shareholders’ equity . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . .	NT$ $ 5,599,451 82,818,608 16,110,835 — 23,741,992 20,726,506 280,219,426 11,865,864 2,224,301 2,372,398 10,713,828 3,236,853 2,879,693 1,868,048 — 1,120,509		NT$ $ (2,900) — — 180,242 — 54,676 — — — (3,850) — (177,342) — — 928,575 (894,437) $ 84,964 $ — — 12,819 (147,806) 113,131 — — (12,819) 697,845 (410,148) 253,022 — (9,302) (158,756) — — (168,058) $ 84,964	NT$ $ 5,596,551 82,818,608 16,110,835 180,242 23,741,992 20,781,182 280,219,426 11,865,864 2,224,301 2,368,548 10,713,828 3,059,511 2,879,693 1,868,048 928,575 226,072
	$465,498,312			$465,583,276
	$ 11,674,958 3,745,032 — 5,708,177 — 391,933,266 23,072,123 1,920,889 — 842,522			$ 11,674,958 3,745,032 12,819 5,560,371 113,131 391,933,266 23,072,123 1,908,070 697,845 432,374
	438,896,967			439,149,989

F-223

ROC GAAP	Amount US$ (Note 4) $ 189,427 2,801,712 545,022 — 803,180 701,167 9,479,683 401,416 75,247 80,257 362,443 109,501 97,419 63,195 — 37,906 $15,747,575 $ 394,958 126,693 — 193,105 — 13,258,906 780,518 64,983 — 28,502 14,847,665 758,545 1,071 145,865 309 (5,880) 899,910 $15,747,575	Effect of Transition to Taiwan-IFRSs US$ (Note 4) $ (98) — — 6,097 — 1,850 — — — (130) — (5,999) — — 31,413 (30,258) $ 2,875 $ — — 434 (5,000) 3,827 — — (434) 23,608 (13,875) 8,560 — (315) (5,370) — — (5,685) $ 2,875		Taiwan-IFRSs Amount Item US$ (Note 4) $ 189,329 Cash and cash equivalents 2,801,712 Due from the Central Bank and other banks 545,022 Financial assets at fair value through profit or loss 6,097 Derivative financial assets for hedging 803,180 Securities purchased under resale agreements 703,017 Receivables, net 9,479,683 Discounts and loans, net 401,416 Available-for-sale financial assets 75,247 Held-to-maturity financial assets 80,127 Investments accounted for using equity method 362,443 Debt investments with no active market 103,502 Other financial assets, net 97,419 Property and equipment, net 63,195 Intangible assets, net 31,413 Deferred tax assets 7,648 Other assets, net $15,750,450 Total $ 394,958 Due to the Central Bank and other banks 126,693 Financial liabilities at fair value through profit or loss 434 Derivative financial liabilities for hedging 188,105 Payables 3,827 Current tax liabilities 13,258,906 Deposits and remittances 780,518 Bank debentures 64,549 Other financial liabilities 23,608 Provisions 14,627 Other liabilities 14,856,225 Total liabilities 758,545 Share capital 756 Capital surplus 140,495 Retained earnings Other equity 309 Exchange differences on translating foreign operations (5,880) Unrealized loss on available-for-sale financial assets 894,225 Total equity $15,750,450 Total	Note
Item Cash and cash equivalents . . . . . Due from the Central Bank and other banks . . . . . . . . . . . . . . Financial assets at fair value through profit or loss . . . . . . . Securities purchased under resale agreements . . . . . . . . . Receivables, net . . . . . . . . . . . . . Discounts and loans, net . . . . . . Available-for-sale financial assets . . . . . . . . . . . . . . . . . . . Held-to-maturity financial assets . . . . . . . . . . . . . . . . . . . Investments accounted for by the equity method . . . . . . . . . Debt investments with no active market . . . . . . . . . . . . . . . . . . Other financial assets . . . . . . . . Properties . . . . . . . . . . . . . . . . . . Intangible assets . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . Due to the Central Bank and other banks . . . . . . . . . . . . . . Financial liabilities at fair value through profit or loss . . . . . . . Payables . . . . . . . . . . . . . . . . . . . Deposits and remittances . . . . . . Bank debentures . . . . . . . . . . . . Other financial liabilities . . . . . . Other liabilities . . . . . . . . . . . . . Total liabilities . . . . . . . . . . . . . . Capital stock . . . . . . . . . . . . . . . Capital surplus . . . . . . . . . . . . . . Retained earnings . . . . . . . . . . . Equity adjustments Cumulative translation adjustments . . . . . . . . . . . . Unrealized valuation loss on available-for-sale financial assets . . . . . . . . . . . . . . . . . Total shareholders’ equity . . . . . Total . . . . . . . . . . . . . . . . . . . . .				Amount US$ (Note 4) $ 189,329 2,801,712 545,022 6,097 803,180 703,017 9,479,683 401,416 75,247 80,127 362,443 103,502 97,419 63,195 31,413 7,648 $15,750,450 $ 394,958 126,693 434 188,105 3,827 13,258,906 780,518 64,549 23,608 14,627 14,856,225 758,545 756 140,495 309 (5,880) 894,225 $15,750,450
					8) a) 8) l) 8) c) 8) d) 8) a), 8) l) 8) c), 8) h), 8) l) 8) l) 8) l) 8) f), 8) g), 8) l) 8) l) 8) l) 8) h), 8) l) 8) c), 8) f), 8) l) 8) e)

F-224

• 4) Reconciliation of the consolidated statement of comprehensive income for the three months ended September 30, 2012

ROC GAAP		Effect of Transition to Taiwan-IFRSs	Effect of Transition to Taiwan-IFRSs		Taiwan-IFRSs	Note
Item	Amount			Amount	Item
Interest income . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . Net interest income . . . . . . . . . . . . . . . . . . . Noninterest income and gains, net Net service fee income . . . . . . . . . . . . Net gain on financial assets and liabilities at fair value through profit or loss . . . . . . . . . . . . . . . . . . Net gain on available-for-sale financial assets . . . . . . . . . . . . . . . . Investment loss recognized under the equity method . . . . . . . . . . . . . . . . . Net foreign exchange loss . . . . . . . . . Gain on nonperforming receivables recovered . . . . . . . . . . . . . . . . . . . . Recovery of written-off credits . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . Total noninterest income and gains, net . . . . . . . . . . . . . . . . . . . . . . . . . . Net profit . . . . . . . . . . . . . . . . . . . . . . . . . . Provision for possible losses . . . . . . . . . . . Operating expenses Personnel expense . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . Total operating expenses . . . . . . . . . . Income before income tax . . . . . . . . . . . . . Income tax expense . . . . . . . . . . . . . . . . . . Consolidated net income . . . . . . . . . . . . . .	NT$ $2,458,966 1,412,223		NT$ $ (20,028) (14,682) (5,346) (18,470) 16,592 — — — — (289,744) — (291,622) (296,968) (301,251) 11,492 — (18,470) (6,978) 11,261 1,900 $ 9,361	NT$ $2,438,938 1,397,541		8) c), 8) j), 8) l) 8) i), 8) j) 8) f) 8) j) 8) l) 8) l) 8) g), 8) h), 8) i) 8) f) 8) c), 8) h) 8) l) 8) l) 8) d)
	1,046,743			1,041,397

F-225

• 5) Reconciliation of the consolidated statement of comprehensive income for the nine months ended September 30, 2012

ROC GAAP		Effect of Transition to Taiwan-IFRSs	Effect of Transition to Taiwan-IFRSs		Taiwan-IFRSs	Note
Item	Amount			Amount NT$ $7,145,378 4,071,982 3,073,396 1,912,168 785,078 207,391 (69,186) (5,587) 56,247 188,491 — 114,649 3,189,251 6,262,647 (587,131) 2,543,469 191,824 1,586,537 4,321,830 2,527,948 272,431 2,255,517 (1,280) (27,411) (8,557) (37,248) $2,218,269	Item
Interest income . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . Net interest income . . . . . . . . . . . . . . . . . Noninterest income and gains, net Net service fee income . . . . . . . . . . Net gain on financial assets and liabilities at fair value through profit or loss . . . . . . . . . . . . . . . . Net gain on available-for-sale financial assets . . . . . . . . . . . . . . Investment loss recognized under the equity method . . . . . . . . . . . . Net foreign exchange loss . . . . . . . Net gain on reversal of provision for asset impairment loss . . . . . . Gain on nonperforming receivables recovered . . . . . . . . . . . . . . . . . . Recovery of written-off credits . . . Others . . . . . . . . . . . . . . . . . . . . . . . Total noninterest income and gains, net . . . . . . . . . . . . . . . . . . . . . . . . Net profit . . . . . . . . . . . . . . . . . . . . . . . . Provision for possible losses . . . . . . . . . Operating expenses Personnel expense . . . . . . . . . . . . . Depreciation and amortization . . . . Others . . . . . . . . . . . . . . . . . . . . . . . Total operating expenses . . . . . . . . Income before income tax . . . . . . . . . . . Income tax expense . . . . . . . . . . . . . . . . Consolidated net income . . . . . . . . . . . .	NT$ $7,113,489 4,118,219		NT$ $ 31,889 (46,237) 78,126 (32,311) 29,296 (7,406) (416) — — — (1,002,333) — (1,013,170) (935,044) (962,342) 36,301 — (32,311) 3,990 23,308 5,663 $ 17,645		Interest income Interest cost Net interest income Net service fee income Net gain on financial assets and liabilities at fair value through profit or loss Net gain on available-for-sale financial assets Share of loss of associates Net foreign exchange loss Net gain on reversal of provision for asset impairment loss Gain on nonperforming receivables recovered Others Total noninterest income and gains, net Net profit Provision (reversal of provision) for possible losses and guarantee reserve Employee benefits expense Depreciation and amortization Other general and administrative expenses Total operating expenses Income before income tax Income tax expense Net income for the period Other comprehensive income Exchange differences on translating foreign operations Unrealized loss on available-for- sale financial assets Share of other comprehensive loss of associates Other comprehensive loss for the period Total comprehensive income for the period	8) c), 8) j), 8) l) 8) i), 8) j) 8) f) 8) j) 8) b) 8) d) 8) l) 8) l) 8) g), 8) h), 8) i) 8) f) 8) c), 8) h) 8) l) 8) l) 8) d)
	2,995,270

F-226

• 6) Reconciliation of the consolidated statement of comprehensive income for the year ended December 31, 2012

ROC GAAP	Amount NT$ $9,539,494 5,560,748 3,978,746 2,585,141 1,027,270 310,517 (88,047) 21,830 44,803 289,342 1,274,721 195,753 5,661,330 9,640,076 897,341 3,366,501 253,351 2,195,187 5,815,039 2,927,696 364,323 $2,563,373	Effect of Transition to Taiwan-IFRSs NT$ $ 104,771 (61,628) 166,399 (13,219) 43,346 (7,406) (1,328) — — — (1,274,721) (45,240) (1,298,568) (1,132,169) (1,155,087) 48,876 — (13,219) 35,657 (12,739) (131) $ (12,608)		Taiwan-IFRSs Item Interest income Interest cost Net interest income Net service fee income Net gain on financial assets and liabilities at fair value through profit or loss Net gain on available-for-sale financial assets Share of loss of associates Net foreign exchange gain Net gain on reversal of provision for asset impairment loss Gain on nonperforming receivables recovered Other general and administrative expenses Total noninterest income and gains, net Net profit Provision (reversal of provision) for possible losses and guarantee reserve Employee benefits expense Depreciation and amortization Others Total operating expenses Income before income tax Income tax expense Net income for the period Other comprehensive income Exchange differences on translating foreign operations Unrealized loss on available- for-sale financial assets Share of other comprehensive loss of associates Other comprehensive loss for the period Total comprehensive income for the period	Note
Item Interest income . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . Net interest income . . . . . . . . . . . . . . . . Noninterest income and gains, net Net service fee income . . . . . . . . . Net gain on financial assets and liabilities at fair value through profit or loss . . . . . . . . . . . . . . . . Net gain on available-for-sale financial assets . . . . . . . . . . . . . . Investment loss recognized by the equity method . . . . . . . . . . . . . . Net foreign exchange gain . . . . . . . Net gain on reversal of provision for asset impairment loss . . . . . . Gain on nonperforming receivables recovered . . . . . . . . Recovery of written-off credits . . . Others . . . . . . . . . . . . . . . . . . . . . . Total noninterest income and gains, net . . . . . . . . . . . . . . . . . . Net profit . . . . . . . . . . . . . . . . . . . . . . . . Provision for possible losses . . . . . . . . . Operating expenses Personnel expense . . . . . . . . . . . . . Depreciation and amortization . . . Others . . . . . . . . . . . . . . . . . . . . . . Total operating expenses . . . . . . . . Income before income tax . . . . . . . . . . . Income tax expense . . . . . . . . . . . . . . . . Consolidated net income . . . . . . . . . . . .			Amount NT$ $9,644,265 5,499,120 4,145,145 2,571,922 1,070,616 303,111 (89,375) 21,830 44,803 289,342 — 150,513 4,362,762 8,507,907 (257,746) 3,415,377 253,351 2,181,968 5,850,696 2,914,957 364,192 2,550,765 (3,631) (172,637) (11,866) (188,134) $2,362,631
					8) c), 8) j), 8) l) 8) i), 8) j) 8) f) 8) j) 8) b) 8) d) 8) l) 8) c) 8) l) 8) g), 8) h), 8) i) 8) f) 8) c), 8) h) 8) l) 8) l) 8) d), 8) l)

F-227

7) The elected exemptions under IFRS 1

IFRS 1 establishes the procedures for the Bank and its subsidiaries’ first consolidated financial statements prepared in accordance with Taiwan-IFRSs. According to IFRS 1, the Bank and its subsidiaries are required to determine the accounting policies under Taiwan-IFRSs and retrospectively apply those accounting policies in its opening balance sheet at the date of transition to Taiwan-IFRSs, January 1, 2012; except for optional exemptions and mandatory exceptions to such retrospective application provided under IFRS 1.

The Bank and its subsidiaries retrospectively apply those accounting policies such as deemed cost and cumulative translation differences except for the following main exemptions. There were no differences after the retrospective adjustment.

The major optional exemptions the Bank and its subsidiaries adopted are summarized as follows:

Business combinations

The Bank and its subsidiaries elected not to apply IFRS 3—“Business Combinations” retrospectively to business combinations that occurred before the date of transition. Therefore, in the opening balance sheet, the amount of assets and liabilities related to past business combinations remains the same compared with the one under ROC GAAP as of December 31, 2011.

The exemption of not elected to apply IFRS 3—“Business Combinations” also applied to investments in associates acquired in the past.

Employee benefits

The Bank and its subsidiaries elected to recognize all cumulative actuarial gains and losses in retained earnings as of the date of transition to Taiwan-IFRSs.

Compound financial instruments

As the liability component was no longer outstanding at the date of transition to TaiwanIFRSs, the Bank and its subsidiaries elected not to split the compound financial instruments issued before the date of transition to Taiwan-IFRSs into separate retained earnings and equity component.

The effect of the abovementioned optional exemptions elected by the Bank and its subsidiaries was stated in item 8) below.

• 8) Explanations of significant reconciling items in the transition to Taiwan-IFRSs

Material differences between the accounting policies under ROC GAAP and the accounting policies adopted under Taiwan-IFRSs were as follows:

• a) Time deposits with a maturity of more than three months

Under ROC GAAP, cash and cash equivalents include cash on hand, demand deposits, checking deposits, time deposits and certificates of deposit which can be redeemed or sold immediately without any loss of principal. Under Taiwan-IFRSs, cash equivalents

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are investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. Therefore, only short-term investments that have a maturity of three months or less from the date of acquisition normally meet the definition of cash equivalents under Taiwan-IFRSs. Thus, time deposits with a maturity of more than three months are reclassified as other financial assets on Taiwan-IFRSs transition.

As of January 1, 2012, September 30, 2012 and December 31, 2012, the Bank and its subsidiaries reclassified the time deposits with a maturity of more than three months of NT$2,900 thousand (approximately US$98 thousand) to other financial assets.

b) Regular way transactions

Before applying IFRSs, the Bank applies settlement date accounting to government bonds and trade date accounting to the rest of its financial assets when recording financial asset transactions. Under IFRSs, trade date accounting or settlement date accounting should be applied consistently to all purchases and sales of financial assets that belong to the same category of financial assets. The Bank applies trade date accounting to all regular way purchase or sale of financial assets. As of January 1, 2012, accounts receivable increased by NT$1,033,052 thousand; available-for-sale financial assets decreased by NT$729,247 thousand; financial liabilities at fair value through profit or loss increased by NT$303,805 thousand; and other equity decreased by NT$7,406 thousand. As of September 30, 2012, accounts receivable and financial liabilities at fair value through profit or loss all increased by NT$449,764 thousand. As of December 31, 2012, no adjustments should be made. For the nine months ended September 30, 2012 and for the year ended December 31, 2012, realized gain on available-for-sale financial assets decreased by NT$7,406 thousand.

c) Acquired receivables

Under ROC GAAP, receivables acquired by an asset management company are accounted for by the cost recovery method. Income shall not be recognized to the extent that the amounts received exceed the carrying amount of the acquired receivables. Under Taiwan-IFRSs, acquired receivables are measured at amortized cost. Interest income is recognized using the effective interest method over the relevant period.

As of January 1, 2012, September 30, 2012, and December 31, 2012, accounts receivables increased by NT$61,867 thousand, NT$90,364 thousand, and NT$54,676 thousand (approximately US$1,850 thousand), respectively; deferred tax assets decreased by NT$10,517 thousand, NT$15,362 thousand, and NT$9,295 thousand (approximately US$314 thousand), respectively; and deferred tax liabilities increased by NT$9,613 thousand, NT$10,686 thousand, and NT$8,405 thousand (approximately US$284 thousand), respectively. For the three months ended September 30, 2012, the interest income and income tax expense increased by NT$9,573 thousand and NT$1,628 thousand, respectively. For the nine months ended September 30, 2012, the interest income and income tax expense increased by NT$28,498 thousand and NT$4,845 thousand, respectively. For the year ended December 31, 2012, the interest income increased by NT$38,049 thousand, income tax expense decreased by NT$1,222 thousand, and noninterest income and gains—others decreased by NT$45,240 thousand.

d) Investments accounted for using equity method

To comply with the requirements of Taiwan-IFRSs, the Bank and its subsidiaries’ associates accounted for using equity method have also assessed the material differences between previous accounting policies under ROC GAAP and the accounting policies adopted under Taiwan-IFRSs.

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As of January 1, 2012, September 30, 2012, and December 31, 2012, investments accounted for using equity method decreased by NT$2,071 thousand, NT$2,487 thousand, and NT$3,850 thousand (approximately US$130 thousand), respectively, to comply with the requirements of Taiwan-IFRSs. For the three months ended September 30, 2012, the share of other comprehensive loss of associates increased by NT$2,611 thousand. For the nine months ended September 30, 2012, the share of loss of associates and the share of other comprehensive loss of associates increased by NT$416 thousand and NT$8,557 thousand, respectively. For the year ended December 31, 2012, the share of loss of associates and the share of other comprehensive loss of associates increased by NT$1,328 thousand and NT$451 thousand, respectively.

e) Capital surplus arising from investments accounted for using equity method

Under ROC GAAP, when an investor subscribes for its investee’s newly issued shares at a percentage different from its percentage of ownership in the investee, the investor records the change in its equity in the investee’s net assets as an adjustment to investments, with a corresponding amount credited or charged to capital surplus. In compliance with the “Questions and Answers on IFRSs adoption” issued by the Taiwan Stock Exchange, the Bank reclassified such capital surplus to retained earnings. As a result, the capital surplus decreased by NT$9,302 thousand (approximately US$315 thousand) as of January 1, 2012, September 30, 2012, and December 31, 2012, respectively.

f) Customer loyalty programmes

Under ROC GAAP, the liabilities arising from reward points are recognized when the reward points are granted. Under IFRIC 13—“Customers Loyalty Programmes”, some of the consideration received is allocated to award credits. The consideration allocated to the award credits should be measured by reference to their fair value and recognized as income when the obligations to supply the award is fulfilled.

As of January 1, 2012, September 30, 2012, and December 31, 2012, payables decreased by NT$106,517 thousand, NT$92,336 thousand, and NT$73,244 thousand (approximately US$2,478 thousand), respectively; other liabilities—deferred revenue increased by NT$106,517 thousand, NT$92,336 thousand, and NT$73,244 thousand (approximately US$2,478 thousand), respectively. For the three months ended September 30, 2012, other general and administration expenses and service fee income decreased by NT$18,470 thousand. For the nine months ended September 30, 2012, other general and administration expenses and service fee income decreased by NT$32,311 thousand. For the year ended December 31, 2012, other general and administration expenses and service fee income decreased by NT$13,219 thousand.

g) Employee benefits—short-term accumulating compensated absences

ROC GAAP does not address the treatment of compensated absences. Companies usually recognize the cost when absences actually occur. Under Taiwan-IFRSs, such cost is recognized when employees render services that increase their entitlement to future compensated absences.

As of January 1, 2012, September 30, 2012, and December 31, 2012, accrued expenses increased by NT$35,335 thousand, NT$37,518 thousand, and NT$38,569 thousand (approximately US$1,305 thousand), respectively, to comply with the accounting treatment of short-term accumulating compensated absences. The salaries and bonus

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decreased by NT$85 thousand for the three months ended September 30, 2012, increased by NT$2,182 thousand for the nine months ended September 30, 2012, and increased by NT$3,234 thousand for the year ended December 31, 2012.

h) Employee benefits—actuarial gains and losses on the defined benefit plan

In compliance with IAS 19—“Employee Benefits” and IFRS 1—“First-time Adoption of International Financial Reporting Standards,” the Bank had revalued its defined benefit plan and recognized actuarial gains and losses immediately. As a result, accrued pension liabilities and deferred tax assets increased by NT$212,468 thousand and NT$36,119 thousand, respectively, as of January 1, 2012. As of September 30, 2012 and December 31, 2012, accrued pension liabilities increased by NT$207,653 thousand and NT$206,048 thousand (approximately US$6,971 thousand), respectively; deferred tax assets increased by NT$35,301 thousand and NT$35,028 thousand (approximately US$1,185 thousand), respectively. For the three months ended September 30, 2012, pension cost decreased by NT$1,605 thousand and income tax expense increased by NT$273 thousand. For the nine months ended September 30, 2012, pension cost decreased by NT$4,815 thousand and income tax expense increased by NT$819 thousand. For the year ended December 31, 2012, pension cost decreased by NT$6,420 thousand and income tax expense increased by NT$1,091 thousand.

• i) Employee benefits—employees’ savings accounts with preferential interest rate

In compliance with IAS 19—“Employee Benefits” and “Regulations Governing the Preparation of Financial Reports by Public Banks,” the preferential interest rate costs in excess of the market interest rate costs is recognized as employee benefits expense.

For the three months ended September 30, 2012 and for the nine months ended September 30, 2012, the Bank and its subsidiaries reclassified interest cost of NT$13,181 thousand and NT$38,933 thousand, respectively, the preferential interest rate in excess of the market interest rate, to employee benefits expense. For the year ended December 31, 2012, the Bank and its subsidiaries reclassified interest cost of NT$52,062 thousand, the preferential interest rate in excess of the market interest rate, to employee benefits expense.

• j) Interest income and cost derived from financial instruments at fair value through profit and loss (FVTPL)

Under Taiwan-IFRSs, items in the statement of other comprehensive income are classified on the basis of their nature; thus, interest income and cost derived from financial instruments at FVTPL should be reclassified as gain or loss on financial instruments at FVTPL.

For the three months ended September 30, 2012 and for the nine months ended September 30, 2012, gain on financial assets and liabilities at FVTPL increased by NT$16,592 thousand and NT$29,296 thousand, respectively; the interest income decreased by NT$18,093 thousand and NT$36,600 thousand, respectively; and the interest cost decreased by NT$1,501 thousand and NT$7,304 thousand, respectively. For the year ended December 31, 2012, gain on financial assets and liabilities at FVTPL increased by NT$43,346 thousand, the interest income decreased by NT$52,912 thousand, and the interest cost decreased by NT$9,566 thousand.

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k) Reconciliation of retained earnings

The retained earnings under IFRSs as of January 1, 2012 decreased by NT$145,697 thousand compared with those under ROC GAAP, mainly resulted from (a) an increase of NT$7,406 thousand in regular way transactions; (b) an increase of NT$51,350 thousand in acquired receivables; (c) a decrease of NT$2,071 thousand in investments accounted for by the equity method; (d) an increase of NT$9,302 thousand in capital surplus arising from equity-method investments; (e) a decrease of NT$35,335 thousand in employee benefits—short-term accumulating compensated absences; and (f) a decrease of NT$176,349 thousand in employee benefits—actuarial gains and losses of the defined benefit plan.

• l) Differences in presentation

In compliance with the Regulations Governing the Preparation of Financial Reports by Public Banks, effective 2013, certain line items in the balance sheet and the statement of comprehensive income will be presented in accordance with Taiwan-IFRSs on and after the date of transitions to IFRS.

• 9) Reconciliation of consolidated statement of cash flows.

Under ROC GAAP, interest paid and received and dividends received are classified as operating activities, while dividends paid are classified as financing activities. Additional disclosure is required for interest paid when reporting cash flow using indirect method. Under IAS 7—“Statement of Cash Flows”, cash flows from interest and dividends received and paid shall be classified in a consistent manner from period to period as operating, investing or financing activities. Therefore, interest received and paid and dividends received by the Bank and its subsidiaries’ of NT$7,215,995 thousand, NT$3,869,580 thousand, and NT$58,250 thousand, respectively, for the nine months ended September 30, 2012, were presented separately at the date of transition to Taiwan-IFRSs.

Except for the above differences, there are no other significant differences between ROC GAAP and Taiwan-IFRSs in the consolidated statement of cash flows.

51. ADDITIONAL DISCLOSURES

• a. Following are the additional disclosures required by the Securities and Futures Bureau for the Bank and its investees:

• 1) Financings provided: Nil

• 2) Endorsement/guarantee provided: Nil

• 3) Marketable securities held: Table 1 (attached)

• 4) Marketable securities acquired and disposed of at cost or prices at least NT$300 million or 10% of the paid-in capital: Nil

• 5) Acquisition of individual real estate at cost of at least NT$300 million or 10% of the paid-in capital: Nil

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• 6) Disposal of individual real estate at prices of at least NT$300 million or 10% of the paid-in capital: Nil

• 7) Service charge discounts on transactions with related parties in aggregated amount of at least NT$5 million: Nil

• 8) Receivables from related parties amounting to at least NT$300 million or 10% of the paid-in capital: Nil

• 9) Sale of nonperforming loans: Nil

• 10) Related information of investees on which the Bank and its subsidiaries exercises significant influence: Not applicable

• 11) Derivative transactions: Notes 8, 9 and 46

• 12) Intercompany relationships and significant intercompany transactions: Table 2 (attached)

• 13) The type and related information of any securitization product that has been approved in accordance with the Financial Asset Securitization Act or the Real Estate Securitization Act: Nil

• b. Information about branches and investments in mainland China: Nil

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TABLE 1

FAR EASTERN INTERNATIONAL BANK LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD SEPTEMBER 30, 2013 (In Thousands)

Security Issuer’s Relationship September 30, 2013 Type and Issuer with the Financial Market Value Holding of Securities Holding Statement Shares/Units Carrying Percentage of or Net Asset Company Held Company Account (In Thousands) Amount Ownership Value Note Common stock Investment Far Eastern Asset Yuan Long accounted for $795,284 $795,284 Management Stainless Steel Equity-method using equity (approximately (approximately Co., Ltd. . . . . . . Co., Ltd. investee method 98,000 US$26,904) 49.00 US$26,904)

TABLE 2

FAR EASTERN INTERNATIONAL BANK LTD. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS NINE MONTHS ENDED SEPTEMBER 30, 2013 (In Thousands)

No. (Note a)	Company Name	Counterparty	Flow of Transaction		Tran	saction Details
				Financial Statement Account	A	mount	Terms	Percentage of Consolidated Net Profit or Consolidated Total Assets (Note b)
					NT$	US$ (Note 4)
0 1 2 3 4 5	Far Eastern International Bank Ltd. Far Eastern Asset Management Co., Ltd. Far Eastern Life Insurance Agency Co., Ltd. Far Eastern Property Insurance Agency Co., Ltd. Far Eastern International Securities Co., Ltd. Far Eastern Insurance Brokerage Co., Ltd.	Far Eastern Asset Management Co., Ltd. Far Eastern Life Insurance Agency Co., Ltd. Far Eastern Life Insurance Agency Co., Ltd. Far Eastern Life Insurance Agency Co., Ltd. Far Eastern Property Insurance Agency Co., Ltd. Far Eastern Property Insurance Agency Co., Ltd. Far Eastern International Securities Co., Ltd. Far Eastern Insurance Brokerage Co., Ltd. Far Eastern International Bank Ltd. Far Eastern International Bank Ltd. Far Eastern International Bank Ltd. Far Eastern International Bank Ltd. Far Eastern International Securities Co., Ltd. Far Eastern International Bank Ltd. Far Eastern International Bank Ltd. Far Eastern International Bank Ltd. Far Eastern Life Insurance Agency Co., Ltd. Far Eastern International Bank Ltd.	From parent company to subsidiary From parent company to subsidiary From parent company to subsidiary From parent company to subsidiary From parent company to subsidiary From parent company to subsidiary From parent company to subsidiary From parent company to subsidiary From subsidiary to parent company From subsidiary to parent company From subsidiary to parent company From subsidiary to parent company From subsidiary to subsidiary From subsidiary to parent company From subsidiary to parent company From subsidiary to parent company From subsidiary to subsidiary From subsidiary to parent company	Deposits and remittances $ 29,663 Deposits and remittances 197,846 Service fee income 221,346 Interest cost 1,468 Deposits and remittances 17,089 Service fee income 4,242 Deposits and remittances 86,139 Deposits and remittances 2,161 Cash and cash equivalents 29,663 Cash and cash equivalents 197,846 Advertising expenses 221,346 Interest income 1,468 Advertising expenses 2,869 Cash and cash equivalents 17,089 Advertising expenses 4,242 Cash and cash equivalents 86,139 Service fee income 2,869 Cash and cash equivalents 2,161		$1,003 6,693 7,488 50 578 144 2,914 73 1,003 6,693 7,488 50 97 578 144 2,914 97 73	Note c Note c Note c Note c Note c Note c Note c Note c — — — — — — — — — —	0.01 0.04 3.12 0.02 — 0.06 0.02 — 0.01 0.04 3.12 0.02 0.04 — 0.06 0.02 0.04 —

Note a: Transacting parties are identified as follows: Number 0 - parent company; and number 1 and the following numbers - subsidiaries.

Note b: The ratio is calculated as follows: For asset and liability accounts = Transaction amount/Consolidated total assets; and for income and expenses = Transaction amount/Consolidated net profit.

Note c: The terms of intercompany transactions are not significantly different from those to third parties.

APPENDIX A—THE SECURITIES MARKETS OF THE ROC

The information presented in this section has been extracted from publicly available documents which have not been prepared or independently verified by us, the Initial Purchasers or any of our respective affiliates or advisors in connection with this offering. References to the FSC in this section include both ROC Securities and Futures Commission and the ROC Securities and Exchange Commission, the predecessors of the Securities and Futures Bureau of the FSC.

In September 1960, the ROC government established the ROC Securities and Exchange Commission to supervise and control all aspects of the existing domestic securities market and the TWSE began to take shape soon thereafter. In the 1970s and the early 1980s, the ROC government implemented a number of steps designed to upgrade the quality and importance of the ROC securities markets, such as encouraging listing on the TWSE and establishing an over-the-counter securities exchange. In the mid-1980s, the ROC government began to revise its laws and regulations in a manner designed to facilitate the gradual internationalization of the ROC securities markets. In 1997, the ROC Securities and Exchange Commission was renamed the ROC Securities and Futures Commission. On July 1, 2004, the ROC Securities and Futures Commission was renamed the ROC Securities and Futures Bureau (‘‘ROC SFB’’) and was reassigned to the jurisdiction of a new regulatory body under the Executive Yuan, namely the Financial Supervisory Commission, or the FSC.

The TWSE

In 1961, the ROC SFB, working together with private interests, established the TWSE to provide a marketplace for securities trading. The TWSE is a corporation owned by government-controlled and private banks and enterprises. The TWSE is independent of the entities transacting business through it, each of which pays to the TWSE a user’s fee. Subject to limited exceptions, all transactions in listed securities by brokers, traders and integrated securities firms (firms which are permitted to combine the activities of brokerage, dealing and underwriting) must be made through the TWSE.

The TWSE commenced operations in 1962 and during the remainder of the 1960’s grew at a slow pace, largely due to lack of experience among issuers and investors and an unwillingness on the part of ROC businesses to offer their shares to the public. During the early 1980’s, the ROC SFB more actively encouraged new listings on the TWSE and the number of listed companies grew from 119 in 1983 to 809 as of December 31, 2012. As of December 31, 2012 the total market value of shares listed on the TWSE was approximately NT$21.4 trillion.

Historically the ROC companies have listed only common shares and bonds. However, the FSC has encouraged companies to list other types of securities. In 1988, the Ministry of Finance permitted the issue of the ROC’s first exchangeable bonds (such bonds being exchangeable at the option of the bondholders into shares of companies owned by the issuers). Since 1989, there have been offerings of domestic convertible bonds and convertible preferred shares. In addition, beneficiary units evidencing beneficiary interests in closed-end investment funds and bonds issued by super-national financial institutions are also listed on the TWSE and traded on the ROC GreTai Securities Market, or GTSM (formerly the Over-The-Counter Securities Exchange, or the OTC Exchange) (see below). The FSC has promulgated regulations that would permit foreign issuers to list their equity securities or Taiwan depositary receipts evidencing their equity securities on the TWSE. The TWSE has established specific requirements for listing mainly based on the number and distribution of a company’s shareholders, years in existence, amount of paid-in capital and profitability. However, special listing criteria apply to technology companies and key business engaging in national economic development.

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The following table shows for the periods indicated information relating to the TWSE Index.

Period 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	No. of Listed Companies at Period End 375 404 437 462 531 584 638 669 697 691 688 698 718 741 758 790 801 838	Stock Trading Values (in NT$ billions) 12,907.6 37,241.2 29,619.0 29,291.0 30,526.6 18,354.9 21,874.0 20,333.2 23,875.4 18,818.9 23,900.4 33,043.9 26,115.4 29,680.5 28,218.7 26,197.4 20,238.2 18,940.9	Index High 6,982.81 10,116.84 9,277.09 8,608.91 10,202.20 6,104.20 6,462.30 6,142.32 7,034.10 6,575.53 7,823.72 9,809.88 9,295.20 8,188.11 8,972.50 9,145.35 8,144.04 8,623.43	Index Low 4,690.22 6,820.35 6,251.38 5,475.00 4,614.60 3,446.30 3,850.04 4,139.50 5,316.87 5,632.97 6,257.80 7,344.56 4,089.93 4,242.61 7,071.67 6,633.33 6,894.66 7,616.64	Index at Period End
					6,933.94 8,187.27 6,418.43 8,448.84 4,739.09 5,551.24 4,452.45 5,890.69 6,139.69 6,548.34 7,823.70 8,506.28 4,592.22 8,188.11 8,972.50 7,072.08 7,699.50 8,611.51

Source: TWSE .

As indicated above, the performance of the TWSE has in recent years been characterized by extreme price volatility.

The GTSM

To complement the TWSE, the GTSM was established in September 1982 on the initiative of the FSC to encourage the trading of securities of companies who do not qualify for listing on the TWSE. As of December 31, 2012, the market capitalization of companies listed on the GTSM was approximately NT$1.7 trillion.

The GTSM has established specific requirements for trading securities on the GTSM based on the history of a company, the number and distribution of a company’s shareholders, amount of capital and profitability.

Price Limits, Commissions, Transaction Tax and other Matters

The TWSE has placed limits on block trading and on the range of daily price movements. Transactions that involve 500 or more trading lots, that is 500,000 shares, of one class of securities, or trading amount exceeding NT$15 million for one class of securities or securities of five or more different classes and trading amounts exceeding NT$15 million must be registered and executed under TWSE block trade guidelines. Except for initial publically offered shares within certain period of time as provided in accordance with the TWSE rules, fluctuations in the price of securities traded on the TWSE is restricted to 7.0% above and below the previous day’s closing price in the case of equity securities, and 7.0% in the case of convertible bonds. However, the FSC has modified these restrictions from time to time based on market conditions.

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Securities brokers may set the brokerage commission at any rate subject to reporting to the TWSE, and, if the rate is higher than 0.1425% of the transaction price, shall notify their customers of the rate in advance.

A securities transaction tax of 0.3% of the transaction price is payable by the seller of equity securities. This securities transaction tax is withheld at the time of the transaction. No securities transaction tax will be imposed on the transfer of corporate bonds until December 31, 2016. Sales of shares of listed companies on the TWSE are generally sold in round lots of 1,000 shares. Investors who desire to sell less than 1,000 shares of a listed company occasionally experience delays in making these sales.

Regulation and Supervision

The FSC has extensive regulatory authority over companies listed on the TWSE, companies listed on the GTSM and unlisted public issuing companies generally. Such companies are generally required to obtain approval from, or register with, the FSC for all securities offerings. The FSC has promulgated regulations requiring, unless otherwise exempted, periodic reporting of financial and operating information by all public companies. In addition, the FSC is responsible for the establishment of standards for financial reporting and carries out licensing and supervision with respect to the other participants in the ROC securities market.

The FSC has responsibility for implementation of the Securities and Exchange Law and for overall administration of governmental policies in the ROC securities market. It has extensive regulatory authority over the offering, issue and trading of securities. In addition, the Securities and Exchange Law specifically empowers the FSC to promulgate rules under certain circumstances. The Securities and Exchange Law prohibits market manipulation. It permits an issuer to recover certain short-term trading profits made through purchases and sales within six months by directors, managerial personnel, supervisors, as well as the spouses, minor children and nominees of these parties, and shareholders (together with their spouses, minor children and nominees) holding more than 10% of the issued shares of the issuer. The Securities and Exchange Law prohibits trading of equity or debt securities by “insiders” based on non-public information that materially affects the price movements of equity securities or the issuer’s ability to repay the principal amount or interest of the debt securities, after the information is precise, prior to publication of such information and within 18 hours after publication of such information. Pursuant to the Securities and Exchange Law, the term “insiders” includes:

• directors, supervisors, managerial personnel, as well as the spouses, minor children and nominees of these parties, and shareholders (together with their spouses, minor children and nominees) who hold more than 10% of the outstanding shares of the issuer and any individual designated by a governmental or corporate director or supervisor to act on its behalf;

• any person who has learned material, non-public information due to occupational or controlling relationship with the issuer;

• any person who has discharged from the status or position in the first and second bullet points for less than six months; and

• any person who has learned material, non-public information from any of the above.

Sanctions include prison terms. In addition, damages may be awarded to persons injured by the transaction. Notwithstanding these regulatory requirements, there have been recurring press reports on insider trading and manipulation of stock prices in the ROC.

The Securities and Exchange Law also imposes criminal liability on certified public accountants and lawyers who make false certifications in their examination and audit of an issuer’s contracts, reports and other evidentiary documents that are related to securities transactions. The FSC regulations require that financial reports of listed companies be audited by accounting firms consisting of at least three certified public accountants and be signed by at least two certified public accountants.

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In addition, the Securities and Exchange Law provides for civil liability for material misstatements or omissions made by issuers and regulation of tender offers. The FSC does not have criminal or civil enforcement powers under the Securities and Exchange Law. Criminal actions may be pursued only by the district prosecutors located in the district where the defendant is domiciled or where the violation occurred. Under ROC law, civil actions may only be brought by plaintiffs who assert that they have suffered damage. The FSC is directly empowered to curb abuses and violations of applicable laws and regulations only through administrative measures such as the issuance of warnings, temporary suspension of operation, imposition of administrative fines and revocation of licenses.

In addition to providing a market for securities trading, the TWSE has primary responsibility for reviewing applications by ROC issuers to list securities on the TWSE. In addition, the FSC reviews all securities offerings by listed companies. If issuers of listed securities violate relevant laws and regulations or encounter significant difficulties, the TWSE may, with the approval of the FSC, delist the securities of these issuers.

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APPENDIX B—FOREIGN INVESTMENT AND EXCHANGE CONTROLS IN THE ROC

The information presented in this section has been extracted from publicly available documents which have not been prepared or independently verified by us, the Initial Purchasers or any of our respective affiliates or advisors in connection with this offering.

General

Historically, foreign investments in the securities market of Taiwan were restricted. However, beginning in 1983, the Taiwan government has from time to time enacted legislation and adopted regulations to make foreign investment in the Taiwan securities market possible.

Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals (the “Foreign Regulations”), which was approved by the Executive Yuan on May 26, 1983 and has been amended from time to time, and the Regulations Governing Mainland China Investors’ Securities Investments and Futures Trading in Taiwan (the “PRC Regulations”), which was announced by the FSC on April 30, 2009, are two of the major regulations governing foreign investment in securities and future trading in Taiwan.

Under the Foreign Regulations, foreign investors (other than PRC persons) are classified as either “onshore foreign investors” or “offshore foreign investors” according to their respective geographical location. Unless otherwise specified in the laws and regulations, both onshore and offshore foreign investors are allowed to invest in ROC securities after they register with the TWSE. The Foreign Regulations further classify foreign investors into foreign institutional investors and foreign individual investors. “Foreign institutional investors” refer to those investors incorporated and registered in accordance with foreign laws outside of the ROC (i.e., offshore foreign institutional investors) or their branches set up and recognized within the ROC (i.e., onshore foreign institutional investors). Offshore overseas Chinese and foreign individual investors may be subject to a maximum investment ceiling as separately determined by the FSC after consultation with the CBC.

Currently, there is no maximum investment ceiling for offshore overseas Chinese and foreign individual investors. On the other hand, foreign institutional investors are not subject to any ceiling for investment in the ROC securities market.

In the past, PRC persons were prohibited from investing, whether directly or indirectly, in the ROC. On April 30, 2009, the FSC promulgated the PRC Regulations allowing PRC institutional investors that meet the qualifications imposed by PRC securities regulators for Qualified Domestic Institutional Investors (“QDII”) and certain other PRC persons to invest in securities of ROC companies.

The total investment amount allowed to be remitted into Taiwan by QDIIs cannot exceed US$500 million. The custodians of each QDII must apply with the TWSE for the remittance amount of the QDII, which cannot exceed US$100 million for each QDII. In addition, QDIIs are currently prohibited from investing in certain industries, and their investment in a given company is restricted to a certain percentage pursuant to a list promulgated by the FSC and relevant authorities and amended from time to time (including banking industry that we currently operate). For a QDII to make investment in a financial institution, such as us, each QDII shall not hold 5% or more of the issued shares of our Company and all PRC investors (including QDIIs), in aggregate, shall not hold 10% or more of the issued shares of our Company.

Foreign Investment Approval

In addition to investments permitted under the Foreign Regulations and PRC Regulations, foreign investors (other than PRC persons) who wish to make (i) direct investments in the shares of ROC private companies or (ii) investment in 10% or more of the equity interest of an ROC company listed on the TWSE or the GTSM in any single transaction and PRC investors who wish to make (i) direct investment in the shares of ROC private companies or (ii) investments, individually or aggregately, in 10% or more (or other percentage applicable to

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certain restricted industries) of the equity interest of an ROC company listed on the TWSE or the GTSM in certain industries on the Positive List, as promulgated by the Executive Yuan are required to submit an investment approval application to the Investment Commission of the ROC Ministry of Economic Affairs (“MOEA”) or other government authority. The Investment Commission or such other government authority reviews investment approval application and approves or disapproves each application after consultation with other governmental agencies (such as the CBC and the FSC). PRC investors other than QDII, unless with approval from the Investment Commission of the MOEA are prohibited from making investments in an ROC company listed on the TWSE or the GTSM if the investment is less than 10% (or other percentage applicable to certain restricted industries) of the equity interest of such ROC company. Under current law, any non-ROC person possessing an investment approval may remit capital for the approved investment and is entitled to repatriate annual net profits, interest and cash dividends attributable to such investment. Dividends attributable to such investment may be repatriated upon submitting certain required documents to the remitting bank, and investment capital and capital gains attributable to such investment may be repatriated after approvals of the Investment Commission or other authorities have been obtained.

In addition to the general restriction against direct investment by foreign investors in securities of ROC companies, foreign investors are currently prohibited from investing in certain industries in the ROC pursuant to a Negative List, as amended by the Executive Yuan. The prohibition on foreign investment in the prohibited industries specified in the Negative List is absolute in the absence of specific exemption from the application of the Negative List. Pursuant to the Negative List, certain other industries are restricted so that foreign investors may invest in such industries only up to a specified level and with the specific approval of the relevant competent authority which is responsible for enforcing the relevant legislation which the Negative List is intended to implement.

On the other hand, in addition to the general restriction against direct investment by PRC investors in securities of ROC companies, PRC investors may only invest in certain industries in the Positive List, as promulgated by the Executive Yuan. A PRC investor (other than QDII) to make an investment in an ROC bank, such as us, should be a PRC bank meeting certain criteria and obtaining relevant approvals and the total investment in such ROC bank shall not exceed 5% of its total issued and outstanding voting shares. Additionally, PRC investors (including QDIIs) in the aggregate shall not hold 10% or more of such ROC bank’s issued and outstanding voting shares. In addition, PRC investor who wishes to be elected as an ROC company’s director or supervisor shall also submit an investment approval application to the Investment Commission of the MOEA or other government authority for approval.

Depositary Receipts

In April 1992, the ROC SFB began allowing Taiwan companies listed on the TWSE to sponsor the issuance and sale of depositary receipts evidencing shares of its capital stock. In December 1994, the ROC Ministry of Finance began allowing companies whose shares are traded on the GTSM also to sponsor the issuance and sale of depositary receipts evidencing depositary shares representing shares of its capital stock. Approvals for these issuances are still required. On October 24, 2002, the ROC SFB began allowing public companies that are not listed on the TWSE and the GTSM to sponsor the issuance and sale of depositary receipts by way of private placement outside the ROC. Immediately after the issuance of a depositary receipt (if the deposited shares are existing shares) or after the shares are issued and delivered (if the deposited shares are new shares), a holder of the depositary receipt may request the depositary to cause the underlying shares to be sold in Taiwan and to distribute the proceeds of the sale to or to withdraw the shares and deliver the shares to the depositary receipt holder.

Under existing laws and regulations relating to foreign exchange control, a depositary or a holder of depositary receipts may, without obtaining further approvals from the CBC or any other governmental authority or agency of the ROC, convert NT dollars into other currencies, including U.S. dollars, in respect of the following: (1) proceeds of the sale of shares represented by depositary receipts, (2) proceeds of the sale of shares received as stock dividends and deposited into the depositary receipt facility and (3) any cash dividends or cash distributions received. In addition, a depositary, also without any of these approvals, may convert inward

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remittances of payments into NT dollars for purchases of underlying shares for deposit into the depositary receipt facility against the creation of additional depositary receipts. A depositary may be required to obtain foreign exchange approval from the CBC on a payment-by-payment basis for conversion from NT dollars into foreign currencies relating to the sale of subscription rights for new shares if the proceeds are in excess of US$100,000 per remittance. Proceeds from the sale of the underlying shares withdrawn from the depositary receipt facility may be used for reinvestment in the TWSE or the GTSM securities, subject to relevant regulations.

Under current ROC laws, a non-ROC holder of depositary receipts (other than PRC persons, except for QDIIs, or a person with prior approval from the ROC Investment Commission of the MOEA), when withdrawing the shares underlying the depositary receipts, will be required to register with the TWSE and appoint a local agent to open a securities trading account with a local brokerage firm and an NT dollar bank account, pay taxes, remit funds, exercise rights relating to the securities and perform such other matters as may be designated by such holder of depositary receipts on behalf of and as an agent for such holder of depositary receipts. Any such holder of depositary receipts is also required to appoint a custodian bank to hold the securities and any cash proceeds in safekeeping, to make confirmations, to settle trades and to report all relevant information. In addition, such holder of depositary receipts is required to appoint a tax guarantor for filing tax returns and making tax payments. Without meeting the foregoing requirements, the withdrawing holder of depositary receipts would be unable to hold and subsequently sell or otherwise transfer the underlying shares withdrawn from the depositary receipt facility on the TWSE or otherwise.

Unless under limited circumstances, a PRC holder of the depositary receipt may not withdraw shares unless (i) it is a QDII or (ii) if all the businesses of the issuer are in the Positive List promulgated by the Executive Yuan, the holder withdraws shares which accounts for 10% or more (or other percentage applicable to certain restricted industries) of the issuer’s issued shares and it otherwise obtains the approval of the Investment Commission of the MOEA. However, QDIIs are currently prohibited from investing in certain industries, and their investment in certain other industries in a given company is restricted to a certain percentage pursuant to a list promulgated by the FSC and relevant authorities and amended from time to time (including banking industry that we currently operate). In addition, there are restrictions on the remittance amount to or from Taiwan by QDIIs, separately and jointly. Accordingly, the qualification criteria for a PRC person to make investment, the restrictions on investment in certain industries and the investment threshold imposed by the FSC might cause a holder of depositary shares who is a PRC person to be unable to withdraw and hold the underlying shares.

Overseas Corporate Bonds

Since 1989, the FSC has approved a series of overseas bonds issued by ROC companies listed on the TWSE in offerings outside the ROC. The relevant regulations also permit public issuing companies to issue corporate debt in offerings outside the ROC. Under current ROC law, such overseas corporate bonds (i) can be converted by bondholders into shares of ROC companies or (ii) subject to FSC approval, may be converted into depositary receipts issued by the same ROC company or by the issuing company of the exchange shares, in the case of exchangeable bonds.

Proceeds from the sale of the shares converted or exchanged from overseas convertible or exchangeable bonds may be used for reinvestment in securities listed on the TWSE or traded on the GTSM, subject to relevant regulations.

Unless otherwise limited by the CBC, an ROC company may, without obtaining further approvals from the CBC or any other government authority of the ROC, convert NT dollars to other non-ROC currencies, including U.S. dollars, for making payments in respect of redemption of the bonds or repayment of principal of and interest on the bonds. A non-ROC converting or exchanging bondholder may, through its local agent and without obtaining prior approval from the CBC, convert into foreign currencies net proceeds realized from the sale of converted or exchanged common shares or any stock dividends relating to such shares, or any cash dividend or other cash distribution in respect of such common shares and, after becoming a shareholder, convert into NT dollars inward remittances of subscription payments in connection with a rights offering. However, a converting

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or exchanging bondholder must obtain prior approval from the CBC on a payment-by-payment basis for conversion from NT dollars into other currencies in respect of the proceeds from the sale of subscription rights for newly issued shares if the proceeds are in excess of US$100,000 per remittance.

Under current ROC law, a non-ROC converting or exchanging bondholder (other than PRC persons, except for QDIIs, or a person with prior approval from the ROC Investment Commission of the MOEA), when exercising his conversion or exchange right to convert or exchange bonds into common shares, is required to register with the TWSE and appoint a local agent to open a securities trading account with a local brokerage firm and an NT dollar bank account, pay taxes, remit funds, exercise rights relating to the securities and perform such other matters as may be designated by such converting or exchanging bondholder on behalf of and as an agent for such converting or exchanging bondholder. Also, any such converting or exchanging bondholder is also required to appoint a custodian bank to hold the securities and any cash proceeds in safekeeping, to make confirmations, to settle trades and to report all relevant information. In addition, such converting or exchanging bondholder is required to appoint a tax guarantor for filing tax returns and making tax payments. Without meeting these requirements, the converting or exchanging holder would not be able to receive, hold, or subsequently sell or otherwise transfer the shares into which the overseas bonds may have been converted or exchanged on the TWSE or otherwise.

Unless under limited circumstances, a PRC holder of convertible or exchangeable bonds may not convert or exchange bonds into shares unless (i) it is a QDII or (ii) if all the businesses of the issuer are in the Positive List promulgated by the Executive Yuan, the shares converted from overseas convertible bonds which accounts for 10% or more (or other percentage applicable to certain restricted industries) of the issuer’s issued shares and it otherwise obtains the approval of the Investment Commission of the MOEA. However, QDIIs are currently prohibited from investing in certain industries, and their investment of certain other industries in a given company is restricted to a certain percentage pursuant to a list promulgated by the FSC and amended from time to time (including banking industry that we currently operate). In addition, there are restrictions on the amount remitted to Taiwan for investments by QDIIs, separately and jointly. Accordingly, the qualification criteria for a PRC person to make investment, the restrictions on investment in certain industries and the investment threshold imposed by the FSC might accordingly cause a holder of the overseas corporate bonds who is a PRC person to be unable to convert or exchange the bonds and hold the shares.

Exchange Controls

Taiwan’s Foreign Exchange Control Statute and related regulations provide that all foreign exchange transactions must be executed by banks designated to handle foreign exchange transactions by the FSC and by the CBC. Current regulations favor trade or services related foreign exchange transactions. Consequently, foreign currency earned from exports of merchandise and services may now be retained and used freely by exporters. All foreign currency needed for the importation of merchandise and services may be purchased freely from the designated foreign exchange banks.

Aside from trade-related or service-related foreign exchange transactions, ROC companies and individual residents of the ROC may, without foreign exchange approval, remit to and from Taiwan foreign currencies of up to US$50 million, or its equivalent, and US$5 million, or its equivalent, respectively, in each calendar year. These limits apply to remittances involving a conversion between NT dollars and U.S. dollars or other foreign currencies. In addition, all private enterprises are required to register all medium- and long-term foreign debt with the CBC. In addition, a foreign person may, subject to certain requirements but without foreign exchange approval, remit to and from Taiwan foreign currencies of up to US$100,000 (or its equivalent) per remittance if the required documentation is provided to the ROC authorities. This limit applies to remittances involving a conversion between NT dollars and U.S. dollars or other foreign currencies.

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ISSUER

Far Eastern International Bank

No. 207, Section 2, Tun Hwa South Road Taipei 106 Taiwan ROC

DEPOSITARY

CUSTODIAN IN ROC

Citibank, N.A. 388 Greenwich Street, 14th Floor New York, NY 10013, U.S.A.

Citibank Taiwan Limited 9th Floor, No.16 Nan Jing East Road Sec.4 Taipei, Taiwan, ROC

ROC LEGAL ADVISERS TO THE ISSUER

as to ROC law

Lee and Li, Attorneys-at-Law

7/F, 201 Tun Hua N. Road Taipei, Taiwan ROC

INTERNATIONAL LEGAL ADVISERS TO THE INITIAL PURCHASERS

as to United States law

Simpson Thacher & Bartlett

35/F, ICBC Tower 3 Garden Road, Central Hong Kong

INDEPENDENT ACCOUNTANTS OF THE ISSUER

Deloitte & Touche

12th Floor, Hung Tai Financial Plaza No. 156, Sec.3, Min Sheng East Road Taipei, Taiwan, ROC

LUXEMBOURG INTERMEDIARY

LUXEMBOURG LISTING AGENT

The Bank of New York Mellon (Luxembourg) S.A. Vertigo Building-Polaris 2-4, rue Eugène Ruppert L-2453 Luxembourg

The Bank of New York Mellon (Luxembourg) S.A. Vertigo Building-Polaris 2-4, rue Eugène Ruppert L-2453 Luxembourg