IBF — Interim / Quarterly Report 2019

Aug 8, 2019

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~~Business Review Conference~~

Agenda

 IBFFH Operation Highlights  IBFC Operation Highlights  IBFS Operation Highlights  IBF VC Operation Highlights  Guo Want Operation Highlights  Q & A

IBFFH Operation Highlights

Organizational Chart of Affiliated Enterprises

Date ： 2019-7-31

IBF Financial Holding Co., Ltd. Paid-in Capital: NT$ 28,198,659,440

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100% 100% 58.09%
IBF Venture Capital Co., Ltd. International Bills Finance Corporation IBF Securities Co., Ltd.
Paid-in Capital: NT$ 1,540,000,000 Paid-in Capital: NT$ 18,090,000,000 Paid-in Capital: NT$ 7,500,000,000
100% 99.88% 100% 100%
IBF Financial Holding Co., Ltd. IBF Futures Co., Ltd. IBF Securities Investment Waterland Securities (BVI)
(BVI) Paid-in Capital: NT$ Consulting Co., Ltd. Co., Ltd.
Paid-in Capital: US$ 30,100,000 600,000,000 Paid-in Capital: NT$ 90,000,000 Paid-in Capital: US$ 5,852,000
100%
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Guo Want International Leasing Corp. Paid-in Capital: US$ 30,000,000

Through consistent integrity and superior investment expertise, IBFFH strives to provide optimal financial solutions to our clients.

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3

IBFFH Operation Highlights

Operating Summary-Consolidated Financial Info

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0.86
2019 2018
2016 2017 2018 Jan.~Jul. Jan.~Jul. Growth
(Unaudited) (Unaudited)
0.78
Net Income-
0.72
After Tax 2,110 2,371 2,022 1,707 1,327 28.64%
( NT$mn ) 0.60
2,371
Stockholders’
2,110
2,022
Equity 30,935 32,308 32,436 34,594 31,708 9.10%
1,707
( NT$mn)
Book Value
Per Share 11.43 11.68 11.58 12.27 11.46 7.07%
(NT$)
2016 2017 2018 2019/1-7
EPS(NT$) 0.78 0.86 0.72 0.60 0.47 27.66%
Net Income-After Tax ( NT$mn ) EPS(NT$)
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The 2019 Jan.~Jul. net profit after tax is NT$ 1.7 billion, which achieved a 28.64% growth over the same period in 2018, with EPS reaching NT$ 0.60, and NT$ 12.27 Book Value Per Share.

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IBFFH Operation Highlights

Operating Summary-Financial Ratios

Operating Summary-Financial Ratios
2016 2017 2018 2019 Jan.~Jul. (Unaudited) 2018 Jan.~Jul. (Unaudited) Growth ROA1 (%) 0.85 0.97 0.79 - - - ROE (%) 6.33 7.17 5.94 8.73 7.11 22.78% CAR (%) 169.12 172.36 160.86 146.72 159.30 -7.90% DLR (%) 110.10 106.87 107.35 106.75 107.30 -0.51%
	6.33 7.17 5.94 8.73 2016 2017 2018 2019/1-7 ROE(%)

Note ： ROE is based on consolidated financial statements.

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ROE of Jan.~Jul. 2019 is higher over the same period in 2018, CAR and DLR are also maintained in an outstanding level.

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5

IBFFH Operation Highlights

Subsidiaries Financial Info - IBFC

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1.24
2019 2018 1.17
2016 2017 2018 Jan.~Jul. Jan.~Jul. Growth 1.05
(Unaudited) (Unaudited)
2,111
2,251
0.79
Net Profit
3,203 3,665 2,923 2,247 1,787 25.74%
( NT$mn ) 1,895
1,428
Net Income
-After Tax 2,111 2,251 1,895 1,428 1,170 22.05%
( NT$mn )
EPS(NT$) 1.17 1.24 1.05 0.79 0.65 22.05% 2016 2017 2018 2019/1-7
Net Income -After Tax ( NT$mn ) EPS(NT$)
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IBFC keeps aiming at loan cases with collateral and profit, and enhancing foreign bond position. Net Income-After Tax of Jan.~Jul. 2019 is NT$ 1.428 billion, a 22.05% growth over the same period in 2018.

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IBFFH Operation Highlights

Subsidiaries Financial Info - IBFS

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0.76
2019 2018
2016 2017 2018 Jan.~Jul. Jan.~Jul. Growth
(Unaudited) (Unaudited) 0.47 0.43
569
Net
Income –
211 413 325 569 318 78.93% 0.23 413
After Tax
325
( NT$mn )
211
EPS(NT$) 0.23 0.47 0.43 0.76 0.42 80.95%
2016 2017 2018 2019/1-7
Net Income-After Tax(NT$mn) EPS(NT$)
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With stable proprietary trading profit and increasing revenue from Financial Derivatives and Underwriting business, IBFS’s Net Income-After Tax in Jan.~Jul. 2019 is NT$ 569 million, delivering a 78.93% growth over the same period in 2018.

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7

IBFFH Operation Highlights

Subsidiaries Financial Info–IBF VC

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2019 2018
2016 2017 2018 Jan.~Jul. Jan.~Jul. Growth
(Unaudited) (Unaudited)
0.64
Net
Income- 0.53
After Tax 64 71 98 81 62 30.65% 0.41 0.46
98
( NT$mn )
81
71
64
EPS(NT$) 0.41 0.46 0.64 0.53 0.41 30.65%
2016 2017 2018 2019/1-7
Net Income-After Tax( NT$mn ) EPS(NT$)
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IBF VC’s Net Income-After Tax in Jan.~Jul. 2019 marked a 30.65% growth over the same period in 2018 due to income from asset disposal, valuation gain, and stable Guo Want profitability.

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IBFFH Operation Highlights

Subsidiaries -Financial Ratios

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IBFC
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2016
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2017
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2018
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2019 Jan.~Jul.
(Unaudited, annualized)
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ROA(%)	0.96	1.01	0.83	1.03
ROE(%)	7.87	8.16	6.69	8.43
CAR(%)	14.90	15.23	14.11	13.66
NPL(%)	0.01	0.39	0.00	0.16
IBFS	2016	2017	2018	2019 Jan.~Jul. (Unaudited, annualized)
ROA(%)	0.66	1.22	0.87	2.69
ROE(%)	2.17	4.48	3.73	10.56
CAR(%)	434	333	329	283
IBF VC	2016	2017	2018	2019 Jan.~Jul. (Unaudited, annualized)
ROA(%)	3.19	3.23	4.33	5.77
ROE(%)	4.63	5.13	7.05	9.64

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The Jan.~Jul. 2019 annualized ROA and ROE of IBFC, IBFS and IBF VC all marked growth over the same period in 2018.

9

IBFFH Operation Highlights

Profit contribution from subsidiaries

Unit ： NT$mn

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Subsidiaries
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2016
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2017
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2018
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2019 Jan.~Jul.
(Unaudited)
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Amount
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%
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Amount
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%
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Amount
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%
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Amount
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%
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IBFC	2,111	90.84%	2,251	88.00%	1,895	86.4%	1,428	77.5%
IBFS	123	5.29%	231	9.03%	198	9.1%	337	18.3%
IBF VC	90	3.87%	76	2.97%	99	4.5%	77	4.2%
Total	2,324	100%	2,558	100%	2,193	100%	1,842	100.0%

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The main profit of IBFFH came from the earnings of IBFC as usual, but profit contribution from IBFS and IBF VC also increased recently.

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IBFFH Operation Highlights

Summary of Jan.~Jul. 2019 Performance and Earnings

• Under Central Bank’s stabilizing monetary policy in 2019, excess liquidity in the money market intensifies competition in credit loan business. To cope with it, IBFC proactively adjusts customer structure to maintain spread, and develop new customers in order to increase income.

• As Fed initiated rate cut in July and China-US trade war intensified, capital transferred to bond market for hedge, which further lowered YTM. IBFC established foreign bond portfolio, and enjoyed increasing interest income and trading profit.

• Taiwan stock market performed 11% growth till end July. However, the daily average transaction volume and balance of margin trading fell in sync, which lowered IBFS brokerage income. But IBFS successfully formed Financial Derivatives and Securities Underwriting team in 2018, gained from proprietary trading in 2019, and hence boosted profit. IBFS was rated ‘A’ as warrant market maker in Q1 2019, and therefore enjoys elevated quota and exempted cost of warrant issuance.

• IBF VC’s Net Income-After Tax marked a 30.65% growth over the same period in 2018 due to income from valuation gain and IPO of portfolio holdings, and stable Guo Want profitability.

11

IBFFH Operation Highlights

Allotment Of Shares In Recent 5 Years

Year	2015	2016	2017	2018	2019
Cash Dividend(NT$)	0.29	0.26	0.55	0.65	0.45
Stock Dividend(NT$)	0.30	0.26	0.15	0.12	0.1
Total Dividend (NT$)	0.59	0.52	0.70	0.77	0.55
EPS for the previous year (NT$)	0.66	0.58	0.78	0.86	0.72
Dividend Payout Ratio	89.39%	89.66%	89.74%	89.53%	76.39%
The closing price prior to ex- dividend day(NT$)	8.23	8.16	9.64	11.45	10.90
Cash Dividend Yield	3.52%	3.19%	5.71%	5.68%	4.13%

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IBFFH plans to distribute NT$ 0.45 cash dividend in 2019, which makes a 4.13% dividend yield. Due to a sound and robust capital structure, higher proportion of cash dividend will be IBFFH’s preferred dividend policy in the foreseeable future.

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A enda g

 IBFFH Operating Highlights

 IBFC Operating Highlights  IBFS Operating Highlights  IBF VC Operating Highlights  Guo Want Operating Highlights  Q & A

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IBFC Operating Highlights

Revenue Breakdown

Unit ： NT$ mn.

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2016
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2017
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2018
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2019
Jan.~Jul.
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Bills	1,939	60.54%	1,831	49.96%	1,937	66.27%	1,229	54.67%
Bonds	1,003	31.31%	1,023	27.91%	953	32.60%	911	40.52%
Equity	81	2.53%	215	5.87%	41	1.40	125	5.56%
Other	180	5.62%	596	16.26%	(8)	(0.27)	(17)	(0.75)%
Total	3,203	100.00%	3,665	100.00%	2,923	100.00%	2,248	100.00%

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IBFC’s major profits come from bills and bonds business. Besides, since the inception of foreign currency bond business in 2014, IBFC has proactively built foreign bond position, which also generated good profits each year.

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IBFC Operating Highlights

Bills Revenue Composition

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NT$ 100mn Guaranteed CP Interest Spreads Unit:bp
1,400 220
1,155 1,157
1,200
1,065
170
1,010
1,000
137.26 120
800
119.15
107.75 108.13
600
70
400
20
200
0 (30)
2016 2017 2018 2019/1/7
Under Central Bank’s stabilizing monetary policy, excess liquidity in the
money market intensifies competition in credit loan business, IBFC strives
to stabilize spread for Jan.~Jul. 2019, and proactively develops green
energy projects, aiming to enhance spread, and consequently the overall
profitability.
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IBFC Operating Highlights

Asset Quality – NPL Ratio

TW Banks Average IBFC

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0.39%
0.24%
0.27% 0.28%
0.24%
0.16%
0.01%
0.00%
2016 2017 2018 2019/7
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*Updated as of May 2019

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In 2017, the 0.39% NPL ratio is caused by TransAsia Airways dissolution. IBFC has secured aircrafts in full debt and recover the loan in 2018, thus the NPL ratio fell to 0 by year end. NPL ratio of July 2019 is 0.16%, still below TW Banks average.

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IBFC Operating Highlights

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Underwriting Volume in Bills

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Guaranteed CP Guaranteed Bills

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Guarantee-Free Bills Market Share

Unit: NT$ 100 mn

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3500 24.36% 25.00%
3000 23.78%
24.00%
2500 23.73%
23.00%
1292
925
2000 697
1012 22.00%
21.13%
1500
499 445 505
190 21.00%
1000
500 1088 1120 1174 1159 20.00%
0 19.00%
2016 2017 2018 2019/7
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The underwriting volume in bills by July 2019 is NT$ 23.61 billion, which is 7.19% decline over NT$ 25.44 billion in 2018. It is because the market rate fluctuation during June to July makes IBFC to maintain capital level and stops cut-throat competition, leaving a downward market share at 21.13%. But IBFC still enjoys the status as 1 of the top 2 market leaders.

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17

IBFC Operating Highlights

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Underwriting volume in Bills – * FRCP

FRCP Underwriting Volume

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Unit: NT$ 100 mn FRCP Underwriting Volume
800
672
700 651
600
500
416
400 332
300
200
100
0
2016 2017 2018 2019/7
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*FRCP: Revolving bill of fixed/float rate with a term more than 1 year

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In the past 3 years, the underwriting volume of FRCP keeps growing, amounting to NT$ 67.2 billion by July 2019. IBFC will keep promoting FRCP business.

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IBFC Operating Highlights

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Trading volume in Bills – Secondary market trading

	2016 2017 2018 2019/1-6 5,811,034 6,449,522 7,004,926 3,045,542 23.07% 24.48% 23.66% 22.62% 0% 10% 20% 30% Unit：NT$ mn.	2016 2017 2018 2019/1-6 5,811,034 6,449,522 7,004,926 3,045,542 23.07% 24.48% 23.66% 22.62% 0% 10% 20% 30% Unit：NT$ mn.	2016 2017 2018 2019/1-6 5,811,034 6,449,522 7,004,926 3,045,542 23.07% 24.48% 23.66% 22.62% 0% 10% 20% 30% Unit：NT$ mn.	2016 2017 2018 2019/1-6 5,811,034 6,449,522 7,004,926 3,045,542 23.07% 24.48% 23.66% 22.62% 0% 10% 20% 30% Unit：NT$ mn.
1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000
	2016	2017	2018	2019/1-6
Trading Volume	5,811,034	6,449,522	7,004,926	3,045,542
Market Share	23.07%	24.48%	23.66%	22.62%

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Domestic banks ranked highest in the buy side of CP secondary market, followed by state funds, corporate customers, and mutual funds. The diversified funding sources secure enough liquidity. IBFC still upholds market leadership in trading CP secondary market.

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19

Agenda

 IBFFH Operation Highlights  IBFC Operation Highlights  IBFS Operation Highlights  IBF VC Operation Highlights  Guo Want Operation Highlights  Q & A

IBFS Operating highlights

Operation Overview

Operation Overv	iew				Unit：NT$ 100mn	Unit：NT$ 100mn
				2019	2018
	2016	2017	2018			Growth
				Jan.~Jul.	Jan.~Jul.
Volume of Brokerage	8,660	14,039	16,621	8,171	10,429	-21.65%
Market share of Brokerage(%)	1.83	2.10	2.06	2.03	2.09	-2.87%
Balance of Margin Loan	74.65	85.35	102.90	86.00	106.46	-19.22%
Market share of Margin Loan(%)	3.98	3.95	4.53	4.98	4.28	16.36%

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Under the impact of US-China trade war, the daily transaction volume and average balance of margin trading in TWSE in 2019 declined significantly. The brokerage volume and balance of margin loan of IBFS are therefore decreased. But market share of margin loan increases as IBFS’s decline is less severe than market average.

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21

IBFS Operating highlights

Revenue Breakdown

Unit: NT$ ‘000

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2016
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2017
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2018
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2019 Jan.~Jul.
(Unaudited)
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Brokerage	1,228,840	69.44%	1,727,547	69.76%	1,915,322	84.40%	953,572	58.60%
Proprietary Trading	538,858	30.45%	723,210	29.21%	296,505	13.07%	569,429	34.99%
Underwriting	(16,861)	-0.95%	11,983	0.48%	38,326	1.69%	92,281	5.67%
Others	18,774	1.06%	13,642	0.55%	19,124	0.84%	11,991	0.74%
Total	1,769,611	100%	2,476,382	100%	2,269,277	100%	1,627,273	100%

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In 2019 Taiwan stock market is under the impact of China-US trade war with fluctuating performance, IBFS’s brokerage business is therefore decreased. But its Financial Derivatives and Securities Underwriting teams delivered outstanding performance, which boosted proprietary trading and underwriting business figures.

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22

Agenda

 IBFFH Operation Highlights  IBFC Operation Highlights  IBFS Operation Highlights  IBF VC Operation Highlights  Guo Want Operation Highlights  Q & A

IBF VC Operation Highlights

Revenue Breakdown

Unit: NT$ ‘000

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2016
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2017
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2018
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2019
Jan.~Jul.
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Gain on disposal of investments, net	117,258	61.75%	100,683	50.44%	64,139	43.25%	49,097	38.66%
Equity in gain of affiliates, net	55,336	29.14%	82,781	41.48%	54,683	36.87%	59,802	47.09%
Dividend income	16,549	8.72%	15,933	7.98%	29,281	19.74%	17,581	13.85%
Other income	747	0.39%	202	0.10%	205	0.14%	511	0.40%
Total	189,890	100%	199,599	100%	148,308	100%	126,991	100.00%

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The main income of IBF VC comes from the disposal of longterm investments and profits of its subsidiary, Guo -Want.

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24

IBF VC Operation Highlights

Portfolio of Invested Industries

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Electric
Opto- E-Commerce,
Machinery, Chain
electronics, 5% 5%
10% Restaurant, 8%
Semi-
Conductor,
10%
Cultural and
Creative, 13%
Traditional, 6%
Biotech, 14%
Others, 23%
Electronic
Components,
6%
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In July 2019, total long-term investments amounted to NT$ 1.135 billion, most of which are in biotech, cultural and creative, electric machinery, and semi-conductors, followed by chain restaurants.

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25

Agenda

 IBFFH Operation Highlights  IBFC Operation Highlights  IBFS Operation Highlights  IBF VC Operation Highlights  Guo Want Operation Highlights

 Q & A

Guo Want Operation Highlights

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Unit: RMB’000
Financial Highlights
68,002
780,000
53,603 727,978
52,190
730,000
692,545 47,631
680,000
630,000
580,000
522,154
524,523
530,000
20,383
12,623 480,000
11,480 11,465
430,000
2016 2017 2018 2019/1-7
Revenue 52,190 53,603 68,002 47,631
Net Income 11,480 20,383 11,465 12,623
Loan Balance 524,523 522,154 692,545 727,978
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Guo-Want is performing great profitability of tens of millions RMB in recent years. The balance of credit extended also grew year by year.

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27

Guo Want Operation Highlights

Industry Sectors of the Loan Portfolio

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20%
32%
15%
9%
13%
11%
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Real Estate Metal Processing

Oil, Electricity and Gas Service Textile Others

The loan portfolio is mainly consisted of real estate, metal processing, oil, electricity and gas, service, and textile industries, which take 68% of total credit extended.

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28

Guo Want Operation Highlights

Non-Performing Loans

Unit:RMB'000

- 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000	Unit: RMB’000 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 2016.03 2016.06 2016.09 2016.12 2017.03 2017.06 2017.09 2017.12 2018.03 2018.06 2018.09 2018.12 2019.03 2019.06 2019.07 Loan Balance NPL NPL Ratio

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From 2017 to July 2019, NPL ratio is well under 2.5%.

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29

Guo Want Operation Highlights

Summary of WFH’s investment in Guo-Want

Guo-Want

Unit: NT$’000

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Accumulated Carrying
Percentage 2019 Accumu-
Paid-in Outflow of 2016 2017 2018 Amount
of H1 lated
Capital Investment P&L P&L P&L as of Q2
Ownership P&L P&L
from Taiwan 2019
904,543 904,543 100% 55,356 87,844 56,518 49,729 1,059,029 251,360
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*Including exchange gain/loss

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Guo-Want recognized NT$ 55.4 million profit in 2016, NT$ 87.8 million profit in 2017, NT$ 56.5 million profit in 2018 and NT$ 49.7 million in H1 2019, which, in accumulation, is NT$ 251.4 million.

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30

31

==> picture [720 x 112] intentionally omitted <==

==> picture [124 x 33] intentionally omitted <==

This is a translation of the Chinese version. If there is any discrepancy between the English and Chinese versions, the Chinese version shall prevail.