IBF — Interim / Quarterly Report 2020

Jul 14, 2020

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~~Business Review Conference~~

Agenda

 IBFFH Operation Highlights  IBFC Operation Highlights  IBFS Operation Highlights  IBF VC Operation Highlights  The Preparation Progress of RICB

IBFFH Operation Highlights

Organizational Chart of Affiliated Enterprises

Date ： 2020-06-30

IBF Financial Holdings Co., Ltd. Paid-in Capital: NT$ 28,480,645,960

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100% 100% 58.09% 49%
International Bills Finance Rakuten International
IBF Venture Capital Co., Ltd. IBF Securities Co., Ltd.
Corporation Commercial Bank Co., Ltd.
Paid-in Capital: Paid-in Capital:
Paid-in Capital: Paid-in Capital:
NT$ 1,540,000,000 NT$ 7,750,000,000
NT$ 16,390,000,000 NT$ 10,000,000,000
100% 99.88% 100% 100%
IBF Financial Holding (BVI) IBF Futures Co., Ltd. IBF Securities Investment Waterland Securities (BVI)
Co., Ltd. Paid-in Capital: Consulting Co., Ltd. Co., Ltd.
Paid-in Capital: US$ 30,100,000 NT$800,000,000 Paid-in Capital: NT$ 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

The core business of IBF Financial Holdings is direct finance, which offers funding service to corporate customers.

In the future IBF will include indirect finance in the core business, offering an all-

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IBFFH Operation Highlights

Operating Summary –Consolidated Financial Info

Operating Summary –Consolidated Financial Info
2018 2019 2020 Jan.~Jun. (Unaudited) 2019 Jan.~Jun. Growth Net Income- After Tax ( NT$mn ) 2,022 2,629 1,490 1,353 10.13% Stockholders’ Equity ( NT$mn) 32,436 35,688 35,879 34,054 5.36% Book Value Per Share (NT$) 11.58 12.53 13.25 (before ex-dividend) 12.08 4.30% EPS(NT$) 0.72 0.92 0.52 0.48 8.33%	2,022 2,629 0.72 0.92 2018 2019 Net Income-After Tax ( NT$mn ) EPS(NT$)
	1,353 1,490 0.48 0.52 2019/1-6 2020/1-6 Net Income-After Tax ( NT$mn ) EPS(NT$)

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The 2019 net Income after tax is NT$ 2.6 billion, which achieved a 30.02% growth over 2018, The 2020 Jan.~June net Income after tax is NT$ 1.5 billion, which achieved a 10.13% growth over the same period in 2019, with EPS reaching NT$ 0.52, and NT$ 13.25 Book Value Per Share. (Before ex-dividend)

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IBFFH Operation Highlights

Operating Summary –Financial Ratios

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2020 8.33
2019 7.92
2018 2019 Jan.~Jun.
Jan.~Jun.
(Unaudited)
5.94
ROA [1] (%) 0.79 1.07 - 1.06
ROE (%) 5.94 7.92 8.33 8.14
CAR (%) 160.86 128.10 121.54 144.87
DLR (%) 107.35 100.12 116.48 106.79
2018 2019 2020/1-6
ROE(%)
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Note ： ROE is based on consolidated financial statements.

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During Jan.~Jun. 2020, ROE has grown over the same period last year, and the DLR has increased from the same period last year due to the investment of Rakuten International Commercial Bank of 4.9 billion.

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IBFFH Operation Highlights

Subsidiaries Financial Info –IBFC

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2,222
1.26
1,895
2020
2019
2018 2019 Jan.~Jun. Growth 1.05
Jan.~Jun.
(Unaudited)
Net Profit
2,923 3,623 1,947 1,818 7.09%
( NT$mn )
2018 2019
Net Profit( NT$mn ) EPS(NT$)
Net Income
1,309
– After Tax 1,895 2,222 1,309 1,178 11.12%
( NT$mn ) 0.80
0.65
1,178
EPS(NT$)
1.05 1.26 0.8 0.65 23.07%
2019/1-6 2020/1-6
Net Profit( NT$mn )
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IBFC keeps aiming at loan cases with collateral and profit, and enhancing foreign bond position. The 2019 net Income after tax is NT$ 2.2 billion, which achieved a 17.25% growth over 2018. Net Income-After Tax of Jan.~Jun., 2020 is NT$ 1,309 million, a 11.12% growth over the same period in 2019.

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IBFFH Operation Highlights

Subsidiaries Financial Info –IBFS

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1.17
2020
2019
2018 2019 Jan.~Jun. Growth
Jan.~Jun.
(Unaudited)
910
0.42
Net Income
325
–After Tax 325 910 387 370 4.59%
( NT$mn ) Net Income-After Tax(NT$mn)2018 2019EPS(NT$)
0.50
EPS(NT$) 0.42 1.17 0.50 0.48 4.17% 387
0.48
370
2019/1~6 2020/1~6
Net Income-After Tax(NT$mn) EPS(NT$)
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IBFS’s Net Income-After Tax in 2019 is NT$ 910 million, delivering a 180% growth over the same period in 2018. In Jan.~Jun. 2020, IBFS’s Net Income-After Tax is NT$ 387 million, delivering a 4.59% growth over the same period in 2019.

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IBFFH Operation Highlights

Subsidiaries Financial Info –IBF VC

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2020
2019
2018 2019 Jan.~Jun. Growth 0.83
Jan.~Jun.
(Unaudited)
0.64
Net
Income –
98 128 81 70 15.71% 128
After Tax
( NT$mn ) 98
EPS(NT$) 0.64 0.83 0.53 0.45 17.78%
2018 2019
Net Income-After Tax( NT$mn ) EPS(NT$)
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IBF VC’s income of the first half year of 2020 is from investment asset disposal, mainly because of the recovery of stock price. Net Income-After Tax in 2019 increased 30.6% over the same period in 2018.

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IBFFH Operation Highlights

Subsidiaries –Financial Ratios

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IBFC
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2018
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2019
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2020 Jan.~June.
(Unaudited, annualized)
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ROA(%)	0.83	0.97	1.14
ROE(%)	6.69	7.84	9.03
CAR(%)	14.11	13.53	13.22
NPL(%)	0.00	0.17	0.05
IBFS	2018	2019	2020 Jan.~June. (Unaudited, annualized)
ROA(%)	0.87	2.17	1.56
ROE(%)	3.73	9.74	7.78
CAR(%)	329	272	259
IBF VC	2018	2019	2020 Jan.~June. (Unaudited, annualized)
ROA(%)	4.33	5.23	5.10
ROE(%)	7.05	8.84	10.82

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

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IBFFH Operation Highlights

Profit contribution from subsidiaries

Unit ： NT$mn

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Subsidiaries
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2018
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2019
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2020 Jan.~June
(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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IBFC	1,895	86.4%	2,222	77.4%	1,309	80.5%
IBFS	198	9.1%	531	18.5%	229	14.1%
IBF VC	99	4.5%	116	4.1%	88	5.4%
Total	2,193	100.0%	2,869	100.0%	1,626	100.0%

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A significant share of IBFFH’s profit came from the earnings of IBFC, and profit contribution from IBFS in 2019 also increased significantly.

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IBFFH Operation Highlights

Allotment Of Shares In Recent 5 Years

Year	2016	2017	2018	2019	2020
Cash Dividend(NT$)	0.26	0.55	0.65	0.45	0.65
Stock Dividend(NT$)	0.26	0.15	0.12	0.10	0.17
Total Dividend (NT$)	0.52	0.70	0.77	0.55	0.82
EPS for the previous year (NT$)	0.58	0.78	0.86	0.72	0.92
Dividend Payout Ratio	89.66%	89.74%	89.53%	76.39%	89.13%
The closing price prior to ex- dividend day(NT$)	8.16	9.64	11.45	10.90	11.01*
Cash Dividend Yield	3.19%	5.71%	5.68%	4.13%	5.90%

*During January ~ June 2020

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IBFFH plans to distribute NT$ 0.65 cash dividend in 2020, which makes a 5.90% dividend yield based on the average closing price from January to June 2020. The dividend yield is 5.53% based on end June closing price, NT$ 11.75. Higher proportion of cash dividend will be IBFFH’s preferred dividend policy in the foreseeable future.

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IBFFH Operation Highlights

Financial Holding Companies –1H20 Profit YoY

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Coupled with revenue growth from bills/ bonds business and decent securities proprietary trading, IBFFH Group had outstanding performance relatively to other peers.

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IBFFH Operation Highlights

Rating Outlook Remains Stable.

Company	IBFFH	IBFC	IBFS
Date of Rating	2020/6/8
Rating Company	Fitch Ratings
National LongTerm Rating	A+(twn)	A+(twn)	A+(twn)
National Short Term Rating	F1(twn)	F1(twn)	F1(twn)
LongTerm Issuer Default Rating	BBB	BBB	BBB
Short Term Issuer Default Rating	F3	F3	F3
RatingOutlook	Stable	Stable	Stable

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Fitch Ratings adjusted the industry and rating outlook for Taiwan’s banking industry to negative on 2020.4.20. The rating of IBFFH, its securities and securities subsidiaries remains unchanged, and the rating outlook remains stable.

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A enda g

 IBFFH Operating Highlights  IBFC Operating Highlights  IBFS Operating Highlights  IBF VC Operating Highlights  The Preparation Progress of RICB

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IBFC Operating Highlights

Revenue Breakdown

Revenue	Breakdown
						Unit：NT$ mn.
		2018		2019	2020	Jan.~Jun.
Bills	1,937	66.27%	2,055	56.72%	1,170	57.55%
Bonds	953	32.60%	1,402	38.70%	866	42.60%
Equity	41	1.40%	192	5.30%	(122)	(6.00)%
Other	(8)	(0.27)%	(26)	(0.72)%	119	5.85%
Total	2,923	100.00%	3,623	100.00%	2,033	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 rate spread
Unit:bp
1,400 220
1,155 1,150
1,114
1,200
170
1,000
120
800
119.23
600 107.79 108.27 70
400
20
200
0 -30
2018 2019 2020/1~6
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IBFC strives to develop businesses of the real estate, green energy and investment industries in order to increase the profit by adjusting the customer structures and rising the spread. The balance of IBFC’s guaranteed CP in 2019 was well-maintained. However, the capital reduction made in Nov. 2019 resulted in a decline of guaranteed CP balance in Jan.~Jun.2020, but the interest spread was increasing.

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IBFC Operating Highlights

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Trading volume in Bills – Secondary market trading

Unit: NT$ mn

Unit: NT$ mn
	2018 2019 2020/1~6 7,004,926 6,398,238 3,333,791 33.79% 30.57% 30.67% 0.00% 10.00% 20.00% 30.00% 40.00%
1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000
	2018	2019	2020/1~6
Trading volume	7,004,926	6,398,238	3,333,791
Market share	33.79%	30.57%	30.67%

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

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IBFC Operating Highlights

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Bonds Sales Performance

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Guaranteed
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IBFC investment portfolio of bonds in foreign currency are investment grade. Up to 30% are formed by Sovereign Bonds with anticipatable risk. FED makes emergency rate cut to 150bp in the 1[st] quarter and inject US dollar liquidity. Under the circumstance, profit and interest income of IBFC foreign currency bond are growing steadily, the bond valuations also stay high.

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IBFC Operating Highlights

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Jan.~June 2020 Overall Highlights-FRCP

Unit: NT$ 100 mn

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FRCP Sales Performance
1000
882
900
800 711
651
700
600
500
400
300
200
Green Energy 100
0
2018 2019 2020/1~6
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IBFC have deep-rooted in FRCP market which allow us to provide customised products for working capital from mid to long term helping corporates to reduce cost of capital raising notably. IBFC signed 88.2 billion in FRCP contracts and remain 75.7 billion available balance in first half of 2020 which has 24% more growth than 2019.

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IBFC Operating Highlights

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Jan.~June 2020 Overall Highlights-Foreign Currency Bonds

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Foreign Currency Bond amount Repurchase Agreement sales performance
Unit: NT$ mn 34,888
33,629
31,071
28,781
15,894
14,777
2018 2019 2020.06
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Domestic
Professional
Investor
Source
Of
Capital
Domestic Foreign
Green Energy Non-
Professional Financial
Investor Investor
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IBFC dedicate to develop foreign currency bond sales performance, and have multiple sources of capital which include foreign trading partners, domestic business and individuals. Moreover, IBFC is the best bills corporate in terms of the depth and breadth of secondary clients in foreign currency bonds.

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The profit of foreign currency bonds grow steadily, which is from 15.9 billion in 2018 to 34.9 billion in 2020. Furthermore, foreign currency bonds in the first half of 2020 have 34% more growth than last year.

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IBFC Operating Highlights

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Jan.~June 2020 Overall Highlights-Green Energy

Unit: NT$ mn

IBF is the first bills corporation join solar power station financing and market since 2017. programme addressing green energy industry From 2018 to 2020, the green energy notional amount and available balance increase 253% and 4404% respectively.

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A enda g

 IBFFH Operating Highlights  IBFC Operating Highlights  IBFS Operating Highlights  IBF VC Operating Highlights  The Preparation Progress of RICB

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IBFS Operating highlights

Operation Overview

Operation Overview					Unit：NT$ 100mn
			2020	2019
	2018	2019			Growth
			Jan.~Jun.	Jan.~Jun.
Volume of Brokerage	16,621	15,327	10,611	6,680	58.85%
Market share of Brokerage(%)	2.06	2.09	2.11	2.00	5.50%
Margin Loans	102.90	89.11	82.16	85.41	-3.81%
Market share of Margin Loan(%)	4.53	4.98	5.09	4.95	2.83%

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Under the impact of US-China trade war, the daily transaction volume and margin loans in TWSE in 2019 declined significantly. The brokerage volume and margin loans of IBFS are therefore affected.

In Jan.~Jun. 2020, due to the mitigation of Covid-19, IBFS’s trading volume increased more than 58.85% over the same period last year.

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IBFS Operating highlights

Revenue Breakdown

Unit: NT$ ‘000

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2018
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2019
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2020 Jan.~Jun.
(Unaudited)
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Brokerage	1,915,322	84.40%	1,751,627	59.02%	1,121,646	67.21%
Proprietary Trading	296,505	13.07%	1,068,892	36.01%	392,974	23.55%
Underwriting	38,326	1.69%	130,663	4.40%	144,098	8.64%
Others	19,124	0.84%	17,022	0.57%	10,024	0.60%
Total	2,269,277	100%	2,968,204	100.00%	1,668,742	100.00%

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In 2019, proprietary trading and underwriting business increased significantly, with combined revenue accounting for more than 40% of the total revenue. In Jan.~Jun. 2020, due to increased market turnover, IBFS’s revenue grow significantly, brokerage revenue accounted for approximately 67% of total revenue, proprietary trading and underwriting business revenue accounted for more than 30% of the total revenue. The three business grow steadily.

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We are not just a platform

－ branding in brokerage

￭ Keep recruiting talent and enrich the brokerage team. Enrich ￭ Accept the business transfer from Da-Din Securities and Team raise the brokerage market share.

￭ Provide effective order platform for continuous trading era.

￭ Develop borrowing securities business for investors to Multiple revitalize assets. Products

￭ Enable customer ledgers of settlement accounts to improve the efficiency of assets allocation.

Mobile ￭ Service app Invest ￭ Trading app

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We are not just a platform

－ branding in proprietary trading

• After coronavirus pandemic • We are active in ETF market and other black swan events as a participating dealer or in market, we lower the liquidity provider. Build up Stocks Futures stock exposure to reduce the arbitrage transactions to the volatile risk. lower the downside risk. •Due to quantitative easing Bonds Warrants •Since 2019, IBFS is rated by main central banks in the as a class A warrant issuer. We world, the foreign currency bond gather traders, analysts, and IT market is prosperous. We adjust programmers to become one of portfolio allocation effectively to earn the top warrant dealers in the the fixed income profit. market and keep ahead of it.

We are not just a platform

－ branding in underwriting

 We are not a giant securities house, yet we are good.

There are 40~50 members in underwriting team, and keep recruiting talents to strengthen the force. We polish our brand in every successful funding with our featured clients.

 IPO and SPO are our strengths We aim for potential corporations to provide financial consultant and IPO/SPO service.

 Experienced with KY-ticker companies in Taiwan capital market We have strong knowledge and experience to consult the offshore companies funding in Taiwan, also the fee income is profitable.

• Strengthen the corporation with IBF group

We tie with the IBF group members, and leverage the group resource to develop the long term and solid corporate relationship.

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A enda g

 IBFFH Operating Highlights  IBFC Operating Highlights  IBFS Operating Highlights  IBF VC Operating Highlights  The Preparation Progress of RICB

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IBF VC Operation Highlights

Revenue Breakdown

Unit: NT$ ‘000

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2018
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2019
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2020Jan.~June
(Unaudited)
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Gain on disposal of investments, net	64,139	43.25%	78,096	38.55%	81,376	63.87%
Equity in gain of affiliates, net	54,683	36.87%	100,328	49.53%	36,007	28.26%
Dividend income	29,281	19.74%	23,443	11.57%	9,765	7.66%
Other income	205	0.14%	699	0.35%	269	0.21%
Total	148,308	100.00%	202,566100.00%		127,417	100.00%

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The main income of IBF VC comes from the cash dividend and disposal of long-term investments, as well as profits of its subsidiary, Guo -Want.

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29

IBF VC Operation Highlights

Portfolio of Invested Industries

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E-Commerce, 5%
Electric Machinery, 10%
Chain Restaurant, 8%
Opto-electronics, 5%
Cultural and
Creative, 12%
Semi-Conductor,
16%
Traditional, 7%
Biotech, 7% Others, 23%
Electronic
Components, 7%
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As of Jun. 2020, total long-term investments amounted to NT$ 1.079 billion, most of which are in semi-conductor, cultural, creative industry, and electric machinery followed by chain restaurants.

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IBF VC Operation Highlights ─Guo Want

Financial Highlights

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Unit: RMB’000
950,000
82,998
68,002
900,000
850,000
800,000
732,434
750,000
34,396 700,000
692,545
650,000
604,630
21,740
600,000
11,465 550,000
9,276
500,000
2018 2019 2020/1~6
Revenue 68,002 82,998 34,396
Net Income 11,465 21,740 9,276
Loan Balance 692,545 732,434 604,630
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Guo-Want is performing great profitability of tens of millions RMB in recent years, and its revenue grows year by year. However, the outstanding loan balance in early 2020 decreases due to Guo-Want being cautious as COVID-19 epidemic impacts the market.

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IBF VC Operation Highlights ─ Guo Want

Industry Sectors of the Loan Portfolio

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18%
37%
14%
12%
8%
11%
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Real Estate

Metal Processing Service

Textile

Oil,gas and electricity ind Others

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The loan portfolio is mainly consisted of real estate, metal processing, service, textile and oil, gas and electricity industry, which take 63% of total credit extended.

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IBF VC Operation Highlights ─Guo Want

Non-Performing Loans

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From the end of 2017 to Jun. 2020, NPL ratio is well under 2.5%.

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Guo Want Operation Highlights

Unit: NT$’000

Paid-in Capital	Accumulated Outflow of Investment from Taiwan	Percentage of Ownership	2017 P&L	2018 P&L	2019 P&L	Carrying Amount 2019	Accumu-lated P&L*
904,543	904,543	100%	87,844	56,518	97,148	1,063,344	255,675

*Including exchange gain/loss

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Guo-Want recognized NT$ 87.8 million profit in 2017, NT$ 56.5 million profit in 2018, and NT$ 97.1 million in 2019, which, in accumulation, is NT$255.7 million. In terms of profit, IBF is still one of the top 3 domestic financial institutions that invest in leasing and financing service company in mainland China.

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34

IBF VC Operation Highlights

Accurate Targeting and Seeking Opportunities

• IBF Venture Capital’s profit contribution in 2020 is mainly from long-term investments in mainstream industries. The valuation of long-term investment and .

• the gain on disposal both increased substantially.

• While IBF Venture Capital's portfolio allocation stresses on public companies and upcoming IPOs, the Company still provides funding for seed and growth stage companies in specific cases.

• Looking to the future, the investment strategy will focus on maintaining core holdings and continue to buy in mainstream stocks (Biomedical Materials, Automotive Electronics, Artificial Intelligence, Internet of Things, and Big Data), reorganized enterprises, and e-commerce. For medium- to long-term investments, IBF Venture Capital will mainly focus on early stage companies relating to green energy, biotech, and medical devices, and a few companies in late stages.

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35

IBF VC Operation Highlights ─Guo Want

Guo Want contributes a significant share of profit.

• Comparing to the spread of domestic financial institutions, Guo Want’s profit margins (average spread at least 8%) still have potential.

• With strict credit policy and effective risk control, Guo Want’s NPL ratio is under

• 2% since 2018 .

 With strong industrial analysis capabilities and deeply cultivated in the mainland, Guo Want has advanced deployment on surveillance, 5G and other related industries before the COVID-19 outbreak. The impact of COVID-19 remains low so far.

• Guo Want remains at the top 3 for three consecutive years among the domestic

financial institutions invested on the leasing business in mainland China.

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36

A enda g

 IBFFH Operating Highlights  IBFC Operating Highlights  IBFS Operating Highlights  IBF VC Operating Highlights  The Preparation Progress of RICB

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The Preparation Progress of Rakuten International Commercial Bank (RICB)

• The preparatory office has completed company registration and keep working on bank opening project

• RICB have already applied for business license to FSC

• RICB expects to officially start business operation in the second half of 2020

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----- Start of picture text -----

2019/8 2020/5 2020/7 2020 2H
FSC approved MOEA Apply
Bank
business
to set up approved
internet-only RICB licensee opening
bank incorporation from FSC
----- End of picture text -----

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39

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