Stock Code ： 2834

Taiwan Stock Exchange Market Observation Post System ： http://mops.twse.com.tw

TBB’s annual report is available at ： http://www.tbb.com.tw

中華民國一○三年年報

NOTICE TO READERS

This English version annual report is a summary translation of the Chinese version and is not an official document of the shareholders’ meeting. If there is any discrepancy between the English version and Chinese version, the Chinese version shall prevail.

PUBLISHED IN MARCH 2015

Taiwan Business Bank Head Office

Address: No. 30, Ta Cheng St., Taipei, Taiwan, R.O.C. Tel: 886-2-2559-7171 Web Site: http://www.tbb.com.tw

Spokesperson

Name: Chang-Yi Chen Title: Executive Vice President Tel: 886-2-2559-7222 / 886-2-2559-7171 ext:1711 E-mail Address: [email protected]

Deputy Spokesperson

Name: Wesley T. Tsai Title: V.P & Chief Secretary Tel: 886-2-2550-5726 / 886-2-2559-7171 ext: 1511 E-mail Address: [email protected]

Deputy Spokesperson

Name: Chih-Chien Chang Title: Executive Vice President Tel: 886-2-2550-9179 / 886-2-2559-7171 ext: 1411 E-mail Address: [email protected]

Stock Registration Agent

Name: Capital Securities Corp. Address: B2, No. 97, Sec. 2, Tun-Hua South Road, Taipei, Taiwan, R.O.C. Tel :886-2-2702-3999 Web Site: http://www.capital.com.tw

Rating Agency

Name: Taiwan Ratings Corp. Address: 49F, No.7, Sec.5, Xinyi Road., Taipei, Taiwan, R.O.C. Tel: 886-2-8722-5800 Web Site: http://www.taiwanratings.com

The CPA-auditor of the Financial Report

Name: Fung-Huei Lee, Fu-Wei Chen Name of Employer: KPMG Certified Public Accountants Address: 68F, No.7, Sec. 5, Xinyi Road, Taipei, Taiwan, R.O.C. Tel: 886-2- 8101-6666 Web Site: http://www.kpmg.com.tw

Flotation at Overseas Stock Exchange and Information Inquiry: None

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We can be the best !

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04	I	Message from the Management
06	II	Bank Profile
09	III	Organizational Framework

10 1. Organization Chart 11 2. Directors Information
11 3. List of Major Shareholders
12 4. Operations of Major TBB Units
13 IV Business Performance in 2014 14 1. The Domestic and Overseas Financial Environment 14 2. Restructure of TBB's Organization
15 3. Results of Operating Plans and Strategies
17 4. Budget Implementation
17 5.
17 6. Research and Development

18 V Business Plans for 2015

19 1. Operating Directions and Policies 20 2. Business Targets 20 3. Future Development Strategies 21 4. The Impact of Intensifying Competition, Government Regulation, and the Overall Operating Environment
21 5. Results of Latest Credit Rating

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22 VI Financial Statements

23 1. Statement of Compliance 24 2. Independent Accountants' Audit Report 25 3. Financial Statement in FY2014 and notes to Financial Statement

116 VII Corporate Social Responsibility

129 VIII Directory of Head Office and Branch Units

Taiwan Business Bank Annual Report 2014

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Message from I the Management

Although global economic performance failed to meet expectations because of the weakness of the recovery in Europe, Japan, and other major economies, Taiwan's economy continued growing at a moderate rate in 2014. Thanks to the support of our shareholders and customers, and the strenuous efforts of our staff, the Taiwan Business Bank registered growth in both profitability and business expansion during the year.

With the stable growth of the American economy, the drop in international oil prices, and quantitative easing policies in Europe and Japan, major international forecasting institutions predict that global economic performance in 2015 will be better than the previous year, and Taiwan's economy is expected to continue its stable recovery under the influence of the global economic upturn and the decline in international oil prices. The government has constantly implemented financial liberalization and expanded deregulation of the financial industry in recent years, and has vigorously helped financial businesses deploy throughout Asia while promoting financial import substitution, expanding market scope, and enhancing competitiveness, thereby expanding the space for development of the banking industry. In this year, which marks the 100th anniversary of the establishment of the TBB, we will continue strengthening our three-pillar business development strategy focused on small and medium enterprises, wealth management, and the foreign exchange business so as to carry forward with last year's profit growth momentum, reinforce operating performance, and enhance the loan-deposit interest gap and fee income with the aim of achieving our profit growth target and realizing our four main operating principles—pursuit of business performance, heightening of employee value-added, emphasis on shareholders' interests, and fulfillment of corporate social responsibility—as we advance toward the ranks of outstanding banks and create another record of brilliant business performance.

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Chairman
President
Tien- Chang Huang
Tzeng-Show Lin
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Taiwan Business Bank Annual Report 2014

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Executive Vice President Executive Vice President Executive Vice President Executive Vice President Chief Auditor Chang-Yi Chen Chih-Chien Chang Chang-Hsiao Huang (Chief Compliance officer) Chien-Hwa Tu Tsan-Huang Chou

1. Establishment and History

The forerunners of the Taiwan Business Bank were two private cooperative savings institutions, one established in Taipei in June of 1915 and the other in Tainan the following month. The Taipei institution was merged into another company in 1920 and the Tainan institution was reorganized under a different name in 1926.

Following the restoration of Taiwan to China on Oct. 25, 1945, these two savings institutions, along with two others, were taken over by the Taiwan Provincial Government and, on Sep. 1, 1946 were combined and reorganized into the Taiwan Mutual Financial Co. On May 31 the following year this new financial institution absorbed the Tokiwa Real Estate Co., bringing its capitalization to NT$10 million. Its name was changed to the Taiwan Provincial Loans and Savings Co. on June 1, 1947 and again to the Taiwan Mutual Loans and Savings Co. in January 1948.

The government moved to promote Taiwan's economic development and boost the growth of its small and medium enterprises (SMEs) in 1975 by revising the Banking Law and writing in an additional provision for a specialized SME bank. In line with this government policy, the Taiwan Mutual Loans and Savings Co. was reorganized into the Medium Business Bank of Taiwan (later to be known as the Taiwan Business Bank, or TBB) on July 1, 1976, whereupon it became a specialized bank charged with the provision of financial assistance and guidance to SMEs. It has been cultivating the SME financial services field now for more than 30 years.

To adapt to the liberalized and internationalized financial environment, and work toward the government's vision of building Taiwan into an Asia-Pacific operations center, the TBB was converted into a private bank on Jan. 22, 1998 and entered a brand-new era of operation. At the time of its reorganization in 1976 the Bank had a capitalization of only NT$500 million, 50 branches, and 58 sub-branches; repeated capital increases, undertaken to augment operating funds and strengthen the Bank's operating foundation, have boosted capitalization to NT$52,979.14 million today. The Bank has also continuously restructured its organizational framework in response to business needs and the changing financial environment. Today, in addition to the Auditing Department and Secretarial Department that operate under the Board of Directors, the Bank's headquarters management units include 18 departments under three major business groups and three major management centers. Domestic business units number 125, including the Banking Department; besides the Offshore Banking Unit, there are also five overseas branches: Hong Kong, Los Angeles, Sydney, Brisbane and Shanghai branch. Regional Operation Centers were set up to handle business development and supervision, centralized business management, operational services, and other kinds of business support so as to upgrade business development capability and strengthen the control of asset quality. Domestic Processing Centers have also been established in northern, central, and southern Taiwan to enhance operating efficiency through the centralized handling of domestic remittances and bills collection and withdrawal.

Taiwan Business Bank Annual Report 2014

2. Bank M&A, reinvestment in related enterprises, and reorganization in 2014 and up to the end of February 2015

The Bank has undertaken no M&A or reorganization during this period. The Bank has reinvested in 4 enterprises, including the Taiwan Business Bank Life Insurance Agency Co., Ltd. and Taiwan Business Bank Property Insurance Agency Co., Ltd., TBB International Leasing Co., Ltd., and TBB International Leasing Co., Ltd. reinvests in Taiwan Business Bank International Leasing Co., Ltd. in which it owns 100% of shares.

3. Membership in a designated financial holding company, and date of membership: None

4. Major exchanges or transfers of shares by directors and others required to report shareholdings under Article 25, Paragraph 3 of the Banking Law: None

5. Major changes in operating rights, operating methods, or business content; Other major events of sufficient import to affect shareholder rights; and their

Organizational III Framework

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1. Organization Chart

2. Directors information

3. List of major shareholders

4. Operations of Major TBB Units

Taiwan Business Bank Annual Report 2014

1. Organization Chart

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Compliance and Legal Compliance
Affair Center 人力資源處 and Legal Dept.
人力資源處 Human
Resources Dept.
Administration General Affairs 總務處
Management Center Dept.
會計處
Accounting Dept.
Personal Information
Protection Management Risk Management 風險管理部
Committee Dept.
Loan Supervision 授信管理部
Audit Committee Dept.
Risk
Remuneration 風險管理中心 Management Center
Committee Credit Investigation 徵信部 Dept. 國內作業中心 Domestic
Processing Center
債權管理部 Overdue Loan &
Control Dept.
Risk Management
Committee Regional
Operation Center
Business
Management Dept. Business Banking Dept.
營運管理中心 Operating Development Div. Domestic Branches
Management Center
Chief Compliance Information Loan Supervision Div.
Offcer Technology Dept. Appraisal Div.
SharehoMeetinglders' DirectorsBoard of Chairman of the Board President Loan Review Div.
Executive Vice Overdue Loan
President & Control Div.
財務運籌事業群財務部
Treasury Group Treasury Dept.
國際部 Corporate
Banking D ept.
ALM Committee 企業金融事業群 B anCor ki ng porate G roup Banking BranchOffshore
International
Business Strategy Banking Dept.
Committee
Overseas Branches
個人金融部 Banking Dept.Personal
Credit Card Dept. 信用卡部
Loan Supervision Committee
NPL Management Committee 個人金 Banking GroupPe 融事業群 rsonal Wealth Management 財富管理部 Dept.
Trust Asset Evaluation Committee
Personnel Evaluation Committee
Securities Dept. 證券部 S 證券分公司 ecurities Branches
IT Planning & Development
Committee
Trust Dept. 信託部
董 Secretarial Dept. 事會秘書處
General Auditor 總稽核董事會稽核處 Auditing Dept.
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III

2. Directors information

Dec.31 2014

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Title Name
Acting Chairman of the Board Tien-Chang Huang
Managing Director Tsai, Tzong-Rong
Managing Director Lillian L. Lin
Independent Managing Director Chih Yu Cheng
Director Lin Shiu Yen
Director Wang Wen-Chieh
Director Wan Fu Lin
Director Lee Hong-Yen
Director Huang Chung-Min
Director Huang Chin Ting
Director Kau Jong-Jyr
Director Wang Che Nan
Independent Director Chau-Chen Yang
3. List of major shareholders
Dec.31 2014
Name Shares %
Bank of Taiwan 912,520,417 17.22%
Hua Nan Commercial Bank Trustee Account- exchangeable stock
636,481,677 12.01%
of Mega Financial Holding Company
Land Bank of Taiwan 128,609,392 2.43%
Ministry of Finance 116,878,200 2.21%
Lin Chen Hai 99,636,160 1.88%
Kin Ming Investment Co., Ltd. 97,566,514 1.84%
Vanguard Emerging Markets Stock Index Fund, A Series Of
67,182,808 1.27%
Vanguard International Equity Index Funds
CitiBank Taiwan was commissioned and management investor
60,083,410 1.13%
account of Dimension emerging market estimate fund
Shi Chun Jin 54,957,042 1.037%
BES Engineering Corporation 52,868,608 0.998%
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Note: The holding shares accords with the book records of last ex-dividend date. Hua Nan Commercial Bank Trustee Accountexchangeable/ non-exchangeable stock is a trust property of Mega Financial Holding Company which was trusted on April 16, 2013. Mega Financial Holding Company remains the right of deposal.

Taiwan Business Bank Annual Report 2014

4. Operations of Major TBB Units

(1) Corporate Banking Group

This unit handles financial services for corporate customers, including business planning, promotion, and improvement in respect to loan products, forex products, and corporate financial planning products. It understands customers' needs and proactively carries out marketing, and is responsible for development and service in regard to the Group's products and customers as well as for improvement of the Bank's asset quality, operating income, and profit. The Corporate Banking Dept. and International Banking Dept. operate under the Corporate Banking Group.

(2) Personal Banking Group

This unit handles planning, promotion, and improvement of the Bank's personal loan products, financial planning for customers, and marketing services for financial planning products. It carries out proactive marketing based on an understanding of customers' needs, is responsible for development and service in regard to the Group's products and customers, and maintains improvement of the Bank's asset quality, operating income, and profit. The Personal Banking Dept., Credit Card Dept., Wealth Management Dept., Securities Dept . , and Trust Dept. operate under the Personal Banking Group.

(3) Treasury Group

The Treasury Group handles planning, promotion, and improvement of the Bank's financial businesses, and is responsible for development and service in regard to the Group's products and customers as well as for maintaining improvement of the Bank's asset quality, operating income, and profit. The Treasury Dept. operates under the Treasury Group.

(4) Risk Management Center

The Risk Management Center handles risk control, maintenance of the quality of the Bank's loan assets, and investigation and review of loan cases and products, middle-office risk control for financial planning, economic and financial are search and industry investigation, and the collection of overdue loans. The Loan Supervision Dept., Credit Investigation Dept., Overdue Loan & Control Dept., and Risk Management Dept. operate under the Risk Management Center.

(5) Operating Management Center

The Operating Management Center is charged with bank-wide performance analysis, management and planning for operational management and information operations, provision of full and necessary support for business development, and simplification of the planning process, so as to achieve operational centralization and upgrade operational efficiency. The Center also handles planning and implementation of bank-wide operating strategy formulation, confidential matters, and public relations. The Business Management Dept. and Information Technology Dept. operate under the Center.

(6) Administration Management Center

This Center handles the planning and implementation of document administration, human resources, and accounting systems, as well as other matters not assigned to other units. The Human Resources Dept., General Affairs Dept., and Accounting Dept. operate under the Center.

(7) Compliance and Legal Affair Center

Compliance and Legal Department handles the planning, management and implementation of legal compliance system and legal affair conduct.

Business IV Performance in 2014

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14 14

1. The Domestic and Overseas Financial Environment

2. Restructure of TBB's Organization

3. Results of Operating Plans and Strategies

4. Budget Implementation

6. Research and Development

Taiwan Business Bank Annual Report 2014

1. The Domestic and Overseas Financial Environment

Despite the support for continued global economic recovery in 2014 provided by such positive factors as the stable growth of the American economy, the fall in oil prices, and continued loose-money policies in the major economies, the impact of abnormal weather early in the year, the Ukraine crisis and other geopolitical conflicts, faltering recovery in the euro zone, the blow to domestic demand in Japan caused by the consumption tax hike, and the slowdown in economic growth in China encumbered the momentum for economic expansion and global growth for the year fell below expectations. According to data released by Global Insight in February 2015, the global economy grew by only 2.8% in 2014.

In the first quarter of 2014, the upturn in domestic corporate profits and the payment of increased year-end and performance bonuses bolstered stock-market transactions in the first quarter of 2014, and income and wealth effects stimulated a growth in private consumption; this, plus a growth in exports of electronic products, machinery, and basic metals, pushed Taiwan's economic growth rate for the quarter to 3.41%. The rate rose to 3.87% in the second quarter, mainly because of a gradual improvement in employment and a continued rise in salaries. In addition, both the value and volume of stock-market transactions increased, supporting an ongoing warming up of private consumption, and the addition of new flight routes along with the establishment of new budget airlines by the aviation industry led to a continuing increase in private investment. There was also an ongoing growth in exports of electronic products, machinery, and basic metals. In the third quarter car dealers marketed their products vigorously, adding impetus to car sales, and the first half's momentum for growth in private consumption continued. In the area of private investment, domestic airlines continued increasing their fleets and semiconductor companies vigorously expanded capacity, pushing the economic growth rate to 4.32%. In the fourth quarter, consumer confidence suffered a short-term setback from a rash of food safety incidents; but an increase in employment fostered a stable growth in private consumption, and investment in advanced processes by semiconductor companies and in the installation of 4G network equipment by telecoms operators brought about an increased growth in private investment and the continuation of growth momentum, resulting in a growth rate of 3.35%. According to the Directorate General of Budget, Accounting and Statistics, Taiwan's economic growth rate for the year as a whole was 3.74%. With the global economy growing at a moderate rate and commodity prices remaining stable, the Central Bank kept the policy interest rate unchanged in 2014. The New Taiwan dollar evidenced a slight rising trend against the U.S. dollar in the first half of 2014, but the U.S. dollar strengthened in the fourth quarter following the announcement that the policy of quantitative easing (QE) would come to an end in America. In addition, the depreciation of the Japanese yen brought on a depreciation of other Asian currencies. At the end of the year the NT dollar was trading at NT$31.718 to the U.S. dollar, a 5.57% depreciation compared with the end of 2013. The average exchange rate for all of 2014 was NT$30.368:US$1, down 1.97% compared with the previous year.

2. Restructure of TBB's Organization

In accordance with the provisions of Articles 32 and 34 of the "Implementation Rules of Internal Audit and Internal Control System of Financial Holding Companies and Banking Industries" as revised by the Financial Supervisory Commission, the TBB's head office chief compliance officer, whose post is equivalent to that of executive vice president, conducts compliance affairs and does not hold internal posts other than that of chief legal officer. The Bank's former Legal Affairs Department has been renamed as Compliance and Legal Department, and has been placed under the supervision of the head office chief compliance officer.

3. Results of Operating Plans and Strategies

(1) Profitability

Profitability and the different areas of business have recorded stable growth. After-tax net profit in 2014 was NT$5.315 billion (before-tax net profit came to NT$5.486 billion, the best profit performance since the Bank was privatized (17 years ago). Pre-distribution (2013) annual dividends per share were NT$0.4.

(2) Corporate Governance
A. Passed certificate of corporate governance CG6009 general assessment by the Taiwan Corporate Governance Association.
B. Won the highest rating of A++ in the Securities and Futures Institute's 11[th] Listed Company Information Disclosure Evaluation. The TBB is the only government-owned bank to have received this honor for six years in a row.
(3) Core Business

Enhance the development of "corporation banking," "foreign exchange and trade financing," and "wealth management":

A. Corporate Banking
a. The Bank's performance in SME financing services was excellent, winning a "Credit Guarantee Partner Award," "Outstanding Direct Guarantee Award," and "Young Dream Startup Award" from the Outstanding Bank for the SME Credit Guarantee Loan Business program operated by the Ministry of Economic Affairs. The Bank topped the nation in the extension of Young Dream Startup Loans and Micro-Business Startup Phoenix Loans.
b. In the handling of small and medium enterprise loans, the TBB scored first place in Taiwan in the value of loans transferred to the Small and Medium Enterprise Credit Guarantee Fund for guarantee.

B. Foreign Exchange and Trade Financing

Enhancing the absorption of RMB deposit and expanding business scales, the balance of RMB deposit in 2014 grew 78% compared with 2013.

C. Wealth Management

Expanding wealth management business vigorously, the service charges of wealth management business in 2014 grew 13.95% compared with 2013.

(4) Products Innovation
A. Made plans for the installation of a cross-border online collection and payment (third-party payment) system designed to provide e-commerce customers with cross-strait collection services.
B. Inaugurated cross-border (including cross-strait) US Dollar remittance services, enhancing the efficiency of remittance and foreign-currency collection and payment.
C. Introduced "How Convenient Revolving Overdraft Facility" medium-term secured facility products to expand the scale of the TBB's personal wealth-management loan market and lessen rollover time and cost for borrowers.
D. Inaugurated the QR Code mobile payment business to provide TBB cardholders with convenient and secure card services.

Taiwan Business Bank Annual Report 2014

E. Issued the co-branded EASYCARD combine Debit card, National Palace Museum Signature Card (EASYCARD), and Affinity card with Qing-Xi (EASYCARD), and inaugurated the telephone time payment business in order to expand the TBB's service scope and provide customers with full financial-management services.
(5) Expansion of Scope of Channel Services
A. The TBB continued its vigorous move toward international deployment, opening the Brisbane Branch on May 14, 2014 to provide Taiwanese businesses there with deposit, loan, and remittance services, participate actively in the local syndicated loan market, and work with the Sydney Branch to provide customers in Australia with a more complete range of financial services. The Financial Supervisory Commission has also given permission for the TBB to establish a branch in New York and a representative office in Yangon, Myanmar.
B. The TBB, through its subsidiary, the TBB International Leasing Co. Ltd., invested in the establishment of the Taiwan Business Bank International Leasing Co. Ltd. in China. This company, which opened for business on June 16, 2014, is the first Taiwanese financial institution to operate in the Shanghai Pilot Free Trade Zone.
C. To expand services to Taiwanese businesses operating across the Taiwan Straits and provide better and more comprehensive financial services, on Nov. 10, 2014 the TBB moved its South Chia Yi Branch to Kinmen and changed its name to "Kinmen Branch." The business originally handled by the South Chia Yi Branch was turned over to the Chia Yi Branch, and the new Kinmen Branch not only provides outstanding financial services to Kinmen residents, but will also help the TBB to move on westward and develop Western Taiwan Straits Economic Zone business opportunities in Xiamen, Quanzhou, Zhangzhou, and other places, thereby expanding the territory and value of the TBB's channels.
(6) Information Operations
A. Received Information Governance Endurance award from the British Standards Institution.
B. Passed the British Standards Institution's BS10012:2009 international standards certification for personal information management.
C. Performance in the promotion of electronic fund-flow business was excellent, winning the "Outstanding Fund-Flow Promotion Award" and "Excellence in Fund-Flow Innovation Award".
(7) Corporate Social Responsibility
A. To realize the principle of care for society and fulfill its CSR, the Bank organized "Bring Warmth in the Chill Winter" donation activities to provide help for 35 disadvantaged groups and sponsor breakfasts at primary schools in remote areas as a means of participating in public-benefit work.
B. Responding to the call for environmental protection, the Bank's green procurement spending topped NT$40 million, winning citations from the Environmental Protection Administration and the Taipei City Government for outstanding performance in green procurement.
C. The Bank went into the campus and the community to hold financial knowledge educational activities and publicize financial planning know-how and fraud prevention with the aim of rooting financial education.

4 . Budget Implementation

(1) Average deposits was NT$1,137.997 billion, an increase of 2.31% over 2013.
(2) Average loans outstanding for the year amounted to NT$954.361 billion, a decreasing of 0.93% due to adjust the proportion between large enterprise and SME, thus increasing the Bank's corporate banking loan interest rate.
(3) Foreign exchange transactions undertaken during the year totaled US$62.204 billion, a growth of 14.04% over 2013.
(4) Trust fee income amounted to NT$545 million, an increase of 21.65% over 2013.
(5) Life and non-life insurance fee income totaled NT$1.005 billion, a growth of 18.37% over 2013.
(6) The target achievement ratios for the businesses noted above ranged from 86.69% to 99.71%.

5 . Revenues, Expenditures, and Profitability

(1) Consolidated net income for 2014 was NT$18.994 billion; consolidated costs related to bad loans and provision for guarantee liabilities amounted to NT$2.538 billion; and consolidated operating costs were NT$10.97 billion. Consolidated before-tax net profit from continuing operations was NT$5.486 billion, consolidated after-tax net profit was NT$5.315 billion, consolidated return on assets was 0.39%, consolidated return on equity was 8.86%, consolidated net profit margin was 27.98%, and consolidated after-tax earnings per share was NT$1.0.
(2) Consolidated pre-provision, pre-tax net income (including recovered bad debt) of NT$9.150 billion for 2014 showed a huge improvement over the NT$1.09 billion recorded in 2013; and due to additional bad-debt provision of NT$3.664 billion made in order to strengthen credit risk appetite, the coverage ratio rose from 141.61% in 2013 to 236.78% in 2014. NT$3.044 billion worth of bad loans was also written off, bringing the non-performing loan ratio down from 0.76% in 2013 to 0.46% in 2014. Pre-tax net income rose from NT$3.857 billion in 2013 to NT$5.486 billion in 2014 due to increasing NT$1.196 billion and NT$0.19 billion on net interest income and net service charges respectively. The healthy improvement in the financial structure, however, has a substantial beneficial effect on the Bank's development of new types of business and the heightening of its competitiveness.

6. Research and Development

(1) The Bank has established a unit charged exclusively with research and analysis in regard to the status of and trends in major industries, and with compiling industry reports for publication in the Bank's e-library.
(2) To strengthen the Bank's business competitiveness, employees are encouraged to innovate and to propose new financial products and business improvement programs in line with the needs of business development. A total of 48 such proposals were adopted and rewarded in 2014.

Taiwan Business Bank Annual Report 2014

Business V Plans for 2015

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19 1. Operating Directions and Policies

2. Business Targets

3. Future Development Strategies

4. The Impact of Intensifying Competition, Government Regulation, and the Overall Operating Environment

21 5. Results of Latest Credit Rating

1. Operating Directions and Policies

(1) Learning and Growth
A. Manpower training was strengthened to enhance professional competence, and KPI evaluation was reinforced to upgrade employee output capacity.
B. Investment in IT equipment was upgraded to boost the performance of information systems, and data meta-analysis capability and information security awareness and skills were reinforced to support business promotion in all areas.
C. The leadership capability of management was reinforced to stimulate employees to strive together to reach the goal of building the TBB into an outstanding bank.
D. A "learning organization" was molded through the employee training and evaluation system, and a corporate culture of learning and knowledge sharing was established.

(2) Internal Procedure

A. The linkage between targets, evaluation, and stimulus was firmly established, and dynamic management was implemented in line with the PDCA cycle. Graded management was carried out and management density was strengthened to stimulate production and upgrade performance.
B. Risk management measures were carried out in order to enhance asset quality, and the liquidity coverage ratio (LCR) was monitored in order to carefully manage liquidity risk.
C. The use of big data analysis was accelerated and target marketing using CRM systems was strengthened so as to upgrade the contribution of target customers through superior services.
D. Focus was placed on the core small and medium enterprise, wealth management, and foreign exchange businesses, and attention was paid to the pulse of the market and to policy directions in the simplification and innovation of operating procedures so as to provide customized services and differentiated products.
E. Regulatory compliance and corporate governance were strengthened, and the spirit of the Equator Principles was introduced for the handling of loan cases and the realization of consumer protection, thereby fulfilling the Bank's corporate social responsibility.
(3) Customer
A. Overseas market deployment was expanded and the profit contribution of overseas branches raised to 38%, and business resources were combined in the establishment of diversified channel integration services.
B. Full efforts were devoted to the creation of a digital financial environment in line with the Bank 3.0 development trend, strategic alliances were strengthened and cooperative business relationships were deepened, and a diverse range of innovative financial services and products were developed.
C. Wealth management customers were further developed and customer assets were helped to grow at a stable rate, and world-of-mouth marketing was used to boost customer satisfaction.
D. The structure of corporate loans was readjusted and the SME niche market was further developed, core competitive advantages were reinforced, planned visits to customers were developed, the TBB flag was hoisted in industrial estates to boost market share there, and the image of the TBB brand as Taiwan's only specialized SME bank was burnished.
E. In line with the Bank's 100th anniversary, a series of large celebratory activities was held, marketing campaigns were mounted, and product image advertisements were placed to strengthen the Bank's media coverage and burnish its value as a century-old enterprise.

Taiwan Business Bank Annual Report 2014

(4) Financial Structure

A. The Bank's operating indices were strengthened and its rate of return on capital upgraded, and capital planning was carried out in conformity with the demands of the authorities and of Basel III in order to augment equity capital and enhance business development capability.
B. Operating performance was reinforced and market share and operating performance indices were heightened in preparation for entering the ranks of outstanding banks.
C. Operating expenses were retrenched to reduce the cost ratio and a loan-loss reserve allocation policy was mapped out to reinforce the Bank's risk-bearing capability.
D. SME loans (with foreign exchange) and the wealth management business were taken as the twin engines of profit, with the deposit-loan interest spread and the proportion of fee income increased.
E. The DuPont analysis chart was used to disassemble the various constituent elements of the bank-wide financial situation and branch profit budget targets, and digital management was strengthened with the aim of helping the headquarters and branch offices formulate business promotion strategies and implementation programs so as to achieve bank-wide profit targets.

2. Business Targets

The following budget targets have been set primarily to protect shareholders' interest and comply with the demands of the competent authority for the strengthening of credit risk appetite and the heightening of allocations (badloan provisions), and in reference to the 2015 economic growth forecast announced by the Directorate General of Budget, Accounting and Statistics as well as growth trends in different fields of business by the different business departments, market share, and relative data from benchmark banks, using future operating income and profit projections as the main forecasting bases:

(1) Average deposits of NT$1,201.137 billion.
(2) Average loans outstanding of NT$1,036.258 billion.
(3) Foreign exchange transactions of US$71.761 billion.

3. Future Development Strategies

(1) The small and medium enterprise and wealth management businesses were used as twin profit engines, and focus was placed on the three axes of small and medium enterprises, wealth management, and the foreign exchange business.
(2) The core SME businesses will be cultivated and the Bank will commit itself to the role of specialized bank for SME financing and services so as to maintain its advantage in this niche.
(3) Integrated business marketing will be strengthened and management by objectives will be carried out; crossmarketing will be used to expand core-customer business relations, enhance profitability, and create corporate value and shareholder equity.
(4) Core customers will be cultivated and attention will be focused on core products; the spirit of all-staff marketing will be translated into action, expanding the scale of key businesses while boosting business competitiveness and market share.
(5) The Bank engaged in in-depth development of the Asia-Pacific and deployment around the globe in order to enhance the share of overseas markets in total profits.

(6) Adjustment of the quality of the asset structure to upgrade income from risk-based capital, and upgrading of the ratio of fee income to improve the revenue structure.
(7) Strengthening of risk controls to maintain asset quality and lower the non-performing-loan ratio, and increasing of coverage against bad debt so as to boost operating performance and propel the Bank into the ranks of quality banks.

4. The Impact of Intensifying Competition, Government Regulation, and the Overall Operating Environment

Foreign Account Tax Compliance Act (FATCA)

The U.S. government apply Foreign Account Tax Compliance Act (FATCA) since January 2013. It affects the account holders of deposit, custodian, security and derivative investments and wealth management. In line with FATCA regulations, we've registered on the internet and acquired the certificate of Global Intermediary Identification Number (GIIN). We also increased related SOP of opening new account to identify our customers and fulfill our obligation on withholding and submission.

5. Results of Latest Credit Rating

Date of Rating	Rating Company	Ratings	Ratings	Outlook
		Long-term Credit	Short-term Credit
Feb. 13, 2015	Taiwan Ratings	twA+	twA-1	Stable

Taiwan Business Bank Annual Report 2014

Financial Statements VI

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23 24

1. Statement of Compliance

2. Independent Accountants' Audit Report

3. Financial Statement in FY2014 and notes to Financial

Statement

Ⅵ

1. STATEMENT OF COMPLIANCE

For the year ended December 31, 2014 (from January 1, 2014 to December 31, 2014), the enterprises which the Company should include in the consolidated financial statements of the Company in accordance with Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises are the same as the enterprises which the Company should include in the consolidated financial statements prepared in accordance with IAS 27 which is accepted by the Financial Supervisory Commissions. The required disclosure of the financial statements of affiliated enterprise is disclosed in the abovementioned consolidated financial statements and the Company does not prepare financial statements for affiliated enterprises separately.

We hereby certify that the above is true and faithful.

Company Name: Taiwan Business Bank Ltd. Chairman of the Board: Huang Tian Chang

Date: March 18, 2015

Taiwan Business Bank Annual Report 2014

2. Independent Accountants' Audit Report

The Board of Directors

Taiwan Business Bank, Ltd.

We have audited the accompanying consolidated balance sheets of Taiwan Business Bank, Ltd. and its subsidiaries as of December 31, 2014 and 2013, and the related consolidated statements of comprehensive incomeas well as changes in consolidated equity and cash flows for the year ended December 31, 2014 and 2013. These consolidated financial statements are the responsibility of the Bank's management. Our responsibility is to issue a report on these financial statements based on our audits.

We conducted our audits in accordance with the Rules Governing Auditing and Certification of Financial Statements of Financial Institutions by Certified Public Accountants and generally accepted auditing standards in the Republic of China.Those rules and standards require that we plan and performthe audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Taiwan Business Bank, Ltd. as of December 31, 2014 and 2013, and the results of its operations and cash flows for the year then ended, in conformity with the Regulations Governing the Preparation of Financial Reports by Public Held Banks, International Financial Reporting Standards(IFRSs), International Accounting Standards and the explanations of the Standing Interpretations Committee and the International Financial Reporting Interpretations Committee accepted by the FSC.

We have also audited the financial report which was prepared separately for the year of 2014 and 2013 of Taiwan Business Bank Ltd. and expressed an unqualified opinion.

KPMG

Taipei, Taiwan, R.O.C.

March 18, 2015

Notice to Readers

The accompanying consolidated financial statements are intended only to present the financial position, financial performance and cash flows in accordance with IFRSs accepted by the Financial Supervisory Commission and not those of any other jurisdictions. The standards, procedures, and practices to audit such financial statements are those generally accepted and applied in the Republic of China.

the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of, the English and Chinese language accountants' audit report and financial statements, the Chinese version shall prevail.

Ⅵ

3. Financial Statement in FY2014 and notes to Financial Statement

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2014 AND 2013

(Expressed In Thousands of New Taiwan Dollars)

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December 31, 2014 December 31, 2013
Assets
Amount ％ Amount ％
Cash and cash equivalents (Notes 6(A) and 7) $ 64,242,245 5 32,244,163 3
Due from the Central Bank and call loans to banks (Notes 6(B) and 7) 61,844,444 5 68,296,127 5
Financial assets at fair value through profit or loss (Note 6(C)) 2,610,707 - 2,974,594 -
Securities purchased under resell agreements (Note 6(D)) 5,527,837 - 20,870,025 2
Receivables-net (Note 6(E)) 21,821,960 2 14,303,296 1
Current Income tax assets 235,755 - 546,319 -
Discounts and loans-net (Notes 6(F) and 7) 1,001,234,570 72 958,077,590 72
Available-for-sale financial assets-net (Notes 6(G) and (N)) 16,043,539 1 13,045,318 1
Held-to-maturity financial assets-net (Notes 6(H)) 194,541,571 14 194,434,171 15
Other financial assets-net (Note 6(I)) 3,268,115 - 3,325,207 -
Premises and equipment-net (Note 6(J)) 14,101,430 1 14,298,731 1
Intangible assets-net 150,029 - 180,839 -
Deferred income tax assets-net (Note 6(V)) 2,125,784 - 2,021,651 -
Other assets-net (Note 6(K)) 4,642,581 - 1,750,045 -
Total assets $ 1,392,390,567 100 1,326,368,076 100
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Taiwan Business Bank Annual Report 2014

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December 31, 2014 December 31, 2013
Liabilities and equity
Amount % Amount %
Liabilities
Deposits from the Central Bank and other banks (Note 6(L) and 7) $ 80,595,072 6 79,079,753 6
Due to the Ceatral Bank and other banks - - 13,000 -
Financial liabilities at fair value through profit or loss (Note 6(M)) 303,213 - 280,882 -
Securities sold under repurchase agreements (Note 6(N)) 3,895,308 - 4,199,242 -
Payables (Note 6(O)) 30,556,802 3 19,752,202 1
Deposits and remittances (Notes 6(P) and 7) 1,152,156,998 83 1,095,420,273 83
Financial debentures (Note 6(Q)) 41,800,000 3 51,450,000 5
Other financial liabilities (Note 6(R)) 15,739,260 1 14,153,582 1
Provision for liabilities (Note 6(S)) 3,018,791 - 3,113,241 -
Deferred income tax liabilities 898,420 - 880,712 -
Other liabilities (Note 6(T)) 688,786 - 771,621 -
Total liabilities 1,329,652,650 96 1,269,114,508 96
Equity parent company
Common stock (Note 6(U)) 52,979,141 4 50,941,482 4
Retained earnings:
Legal reserve (Note 6(U)) 4,032,090 - 3,423,455 -
Special reserve (Note 6(U)) 281,365 - 956,088 -
Undistributed earnings (Note 6(U)) 5,381,104 - 2,028,781 -
Other items in equity 64,217 - (96,238) -
Total equity 62,737,917 4 57,253,568 4
Total liability and equity $ 1,392,390,567 100 1,326,368,076 100
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Ⅵ

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED DECEMBER 31, 2014 AND 2013

(Expressed In Thousands of New Taiwan Dollars)

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For the year ended December 31,
Percent
2014 2013
Change%
Amount ％ Amount ％
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	2014	2014	2014	2014	2013	2013	2013	2013	2013
	Amount		％		Amount		％
Interest revenue (Note 6(Y) and 7) Less: Interest expenses(Note 6(Y) and 7) Net interest income Non-interest income Service fee and commission income (Note 6(Z) and 13) Gains (losses) on fnancial assets or liabilities at fair value through proft or loss-net (Note 6(AA)) Realized gains on available-for-sale fnancial assets- net (Note 6(AB)) Foreign exchange gains Reversal of impairment loss on assets Other net non-interest income (Note 6(AC) and 7) Net proft or loss on fnancial assets measured at cost Securities brokerage incomes-net Net revenue Provisions for bad debt expenses and quarantee reserve (miscellaneous provision) (Note 6 (AD)) Operating expenses: Employee beneft expenses (Note 6 (AE) and 12) Depreciation and amortization expenses (Note 6 (AF) and 12) Other general and administrative expenses (Note 6(AG)) Total operating expenses Income from continuing operations before income tax Income tax expenses (Note 6 (V)) Net income Other comprehensive income: Difference of foreign exchange in translating fnancial statements of foreign operating units Unrealized valuation (losses) gains on available-for-sale fnancial assets Defned beneft plans actuarial gains (losses) Plus: Income tax related to the components of other comprehensive income (Note 6(V)) Other comprehensive income (net amount after tax) Total comprehensive income Net Income Attributable to:： Parent company Comprehensive Income Attributable to： Parent company Earnings per share (in NT dollar) (Note 6 (X)) Basic earnings per share (in NT dollar) Diluted earnings per share (in NT dollar)		$ 25,259,678 (10,469,421 ) 14,790,257 2,779,820 326,010 53,078 846,166 641 ( 121,326 ) 117,346 202,333 18,994,325 (2,538,587 ) ( 7,034,153 ) ( 408,087 ) (3,527,782 ) (10,970,022 ) 5,485,716 (170,579 ) 5,315,137 244,690 ( 43,745 ) 10,550 (42,283)		133 (55 ) 78 15 2 - 4 - ( 1 ) 1 1 100 (13) ( 37 ) ( 2 ) (19 ) (58 ) 29 (1 ) 28 1 - - - 1 29 28 29 1.00 1.00		23,293,357 (9,698,855 ) 13,594,502 2,590,002 829,423 35,660 255,354 - 68,746 186,968 162,586 17,723,241 (3,000,139 ) ( 7,305,886 ) ( 439,203 ) (3,121,263 ) (10,866,352 ) 3,856,750 (246,548 ) 3,610,202 ( 57,199 ) 101,179 ( 66,365 ) 21,006 (1,379 ) 3,608,823 3,610,202 3,608,823		132 (55) 77 15 5 - 1 - - 1 1 100 (17 ) ( 42 ) ( 3 ) (18 ) (63 ) 20 (1 ) 19 - 1 - - 1 20 19 20 0.68 0.68	8 8 9 7 ( 61 ) 49 231 - ( 276 ) ( 37 ) 24 7 ( 15 ) ( 4 ) ( 7 ) 13 1 42 ( 31 ) 47 528 ( 143 ) 116 ( 301 ) 12,371 52 47 52
		$

Taiwan Business Bank Annual Report 2014

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY CHANGE

FOR THE YEAR ENDED DECEMBER 31, 2014 AND 2013

(Expressed In Thousands of New Taiwan Dollars)

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Equity attributed to the parent company
Stock Retained earnings Other item in equity
Difference
of foreign Unrealized
exchange in gains and loss Total
Common Special Undistributed translating on available
Legal reserve Total
stock reserve earnings financial -for-sale
statements finanical
of foreign assets
operating units
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	Equity attributed to the parent company	Equity attributed to the parent company	Equity attributed to the parent company	Equity attributed to the parent company	Equity attributed to the parent company	Equity attributed to the parent company	Equity attributed to the parent company	Total
	Stock	Retained earnings				Other item in equity
	Common stock	Legal reserve	Special reserve	Undistributed earnings	Total	Difference of foreign exchange in translating fnancial statements of foreign operating units	Unrealized gains and loss on available -for-sale fnanical assets
Balance─January 1, 2013 Net Income for the year ended December 31, 2013 Other comprehensive income (losses) for the year ended December 31, 2013 Total comprehensive income for the year ended December 31, 2013 Earnings appropriation and distribution Legal reserve Special reserve Common stock dividend Balance - December 31, 2013 Net Income for the year ended December 31, 2014 Other comprehensive income (losses) for the year ended December 31, 2014 Total comprehensive income for the year ended December 31, 2014 Earnings appropriation and distribution Legal reserve Reversal of special reserve Common stock dividend Balance─December 31, 2014	$ 48,982,194 - - - - - 1,959,288 50,941,482 - - - - - 2,037,659 $ 52,979,141	2,402,303 - - - 1,021,152 - - 3,423,455 - - - 608,635 - - 4,032,090	591,203 - - - - 364,885 - 956,088 - - - - (674,723) - 281,365	1,818,987 3,610,202 (55,083) 3,555,119 (1,021,152) (364,885) (1,959,288) 2,028,781 5,315,137 8,757 5,323,894 (608,635) 674,723 (2,037,659) 5,381,104	4,812,493 3,610,202 (55,083) 3,555,119 - - (1,959,288) 6,408,324 5,315,137 8,757 5,323,894 - - (2,037,659) 9,694,559	(63,760) - (47,475) (47,475) - - - (111,235) - 203,093 203,093 - - - 91,858	(86,182) - 101,179 101,179 - - - 14,997 - (42,638) (42,638) - - - (27,641)	53,644,745 3,610,202 (1,379) 3,608,823 - - - 57,253,568 5,315,137 169,212 5,484,349 - - - 62,737,917

Ⅵ

TAIWAN BUSINESS BANK, LTD.AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2014 AND 2013

(Expressed In Thousands of New Taiwan Dollars)

	For the year ended December 31,	For the year ended December 31,
	2014	2013
Cash fows from operating activities: Net income before tax Adjustments: Accounts that do not affect cash fow Depreciation expenses Amortization expenses Provision of bad debt expenses Net gain on fnancial assets and liabilities at fair value through proft or loss Interest expenses Interest revenues Net change of provision for guarantee reserve Net change of other miscellaneous liability reserve Losses on disposal and retirement of premises and equipment Losses on disposal of investments Other Total Change in assets and liabilities related to operating activities: Net change in assets related to operating activities: Decrease (increase) in due from the Central Bank and call loans to banks Decrease in fnancial assets at fair value through proft or loss Decrease (increase) in securities purchased under resale agreements (Increase) decrease in receivables Increase in discounts and loans Decrease (increase) in other fnancial assets Total Net change in liabilities related to operating activities: Increase in deposits from the Central Bank and other banks Decrease in fnancial liabilities at fair value through proft or loss Decrease in bills and bonds sold under repurchase agreements		3,856,750 363,327 75,876 2,994,205 ( 65,412 ) 9,698,855 ( 23,293,357 ) 5,934 - 754 - 41,994 (10,177,824 ) ( 878,872 ) 2,952,825 ( 7,630,075 ) 6,639,456 ( 7,304,050 ) (236,229 ) (6,456,945 ) 963,493 ( 2,921 ) ( 2,043,798 )
	$ 5,485,716


	324,023
	84,064
	2,493,093
	( 147,424 )
	10,469,421
	( 25,259,678 )
	45,494
	( 76,428 )
	386
	10,218
	328,905
	(11,727,926 )


	6,451,683
	553,535
	15,342,188
	( 7,069,389 )
	( 45,767,194 )
	54,785
	(30,434,392 )

	1,515,319
	( 19,893 )
	( 303,934 )

Taiwan Business Bank Annual Report 2014

	For the year ended December 31,	For the year ended December 31,
	2014	2013
Increase (decrease) in payables Increase in deposits and remittances Increase in other fnancial liabilities (Decrease) increase in provision for employee benefts Total Total Change in assets and liabilities related to operating activities Total adjustments Cash provided by operating activities Interest collected Interest paid Income tax paid Net cash provided by operating activities Cash fows from investing activities: Purchase of available-for-sale fnancial assets Purchase of hold-to-maturity fnancial assets Acquisition of fnancial assets measured at cost Proceeds from capital dedudtion of fnancial assests carried at cost Purchase of premises and equipment Proceeds from disposition of premises and equipments Increase in guarantee deposits paid Purchase of intangible assets (Increase) decrease in other assets Net cash used in investing activities Cash fows from fnancing activities: (Decrease) increase in due to the Central Bank and other banks Issuance of fnancial debentures Redemption of fnancial debentures Increase (decrease) in guarantee deposits received Increase in lease payable (Decrease) increase in other liabilities Net cash (used in) provided by fnancing activities Foreign exchange effect Net increase in cash and cash equivalents Cash and cash equivalents, at the beginning of the period Cash and cash equivalents, at the end of the period	10,922,593	( 18,200,309 ) 40,179,052 2,720,141 157,478 23,773,136 17,316,191 7,138,367 10,995,117 23,090,841 ( 9,861,150 ) (177,937 ) 24,046,871 ( 485,150 ) ( 26,920,003 ) - 253,070 ( 205,273 ) 321 ( 30,133 ) ( 49,434 ) 1,727,013 (25,709,589 ) 13,000 11,000,000 ( 3,450,000 ) ( 28,491 ) 32,904 153,753 7,721,166 36,300 6,094,748 26,149,415 32,244,163
	56,736,725
	1,580,485
	(34,290 )
	70,397,005
	39,962,613
	28,234,687
	33,720,403
	24,886,771
	( 10,587,414 )
	(289,315 )
	47,730,445

	( 3,040,859 )
	( 107,400 )
	( 6,000 )
	3,122
	( 149,365 )
	265
	( 71,018 )
	( 30,487 )
	(2,618,677)
	(6,020,419 )

	( 13,000 )
	-
	( 9,650,000 )
	51,996
	5,193
	(120,861 )
	(9,726,672 )
	14,728
	31,998,082
	32,244,163
	$ 64,242,245

Ⅵ

TAIWAN BUSINESS BANK, LTD.AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014 and 2013

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Stated)

1. COMPANY HISTORY

TAIWAN BUSINESS BANK, LTD. (the "Bank") was formerly a general savings union known as "Taiwan Mutual Financing Bank" or "Tai-Shio Mutual Financing Bank" when it was established in 1915. After several mergers and acquisitions, it was renamed Taiwan Business Bank, Ltd. to serve as a financier and provider of banking assistance to small and medium-size businesses on July 1, 1976. The Bank's major lines of business are the following:

(A) As prescribed by the Banking Law, provides professional services tailored to the needs of small and medium‑size businesses;
(B) Trust and securities brokerage businesses as approved by the relevant authority;
(C) International banking business; and
(D) Other relevant businesses as authorized by the relevant authority in‑charge.

As of December 31, 2014, the Bank not only set up the banking dept., international dept., securities dept. and trust dept. under head office but also has 124 domestic branches, 1 offshore banking unit, 5 overseas branches, and 18 securities brokerage locations.

The Bank became listed on the Taiwan Stock Exchange on January 3, 1998.

Under the"Statute for Privatization of State Enterprises" and upon the approval of Taiwan Province Government, the shares of the Bank owned by the provincial government were sold to the public. In line with privatization of the three other major Taiwan province government owned run commercial banks, the Bank had completed its own privatization on January 22, 1998.

The Bank passed the 「 CG6009(General Version) Corporate Governance System evaluation certification 」 of Taiwan Corporate Governance Association on June 23, 2014.

2. FINANCIAL STATEMENTS AUTHORISATION DATE AND AUTHORISATION PROCESS

3. NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED

(A) The effect of 2013 version of the International Financial Reporting Standards not yet en‑ dorsed by the FSC:

According to Ruling No. 1030010325 issued by the Financial Supervisory Commissions R.O.C. ("FSC") on April 3, 2014, started from 2015, listed companies 、 companies that is traded in the OTC companies and emerging stock companies should adopt IFRS which is approved and published in 2013 (excluding IFRS 9 「 Financial Instrument 」 ) to prepare for financial reports. Relevant new standards and interpretations which are newly releaserd, modified and amended are as follows:

Taiwan Business Bank Annual Report 2014

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IASB released of
New Standards And Interpretations Not Yet Adopted
effective date
Amendment to IFRS 1 「 Limited Exemption from Comparative IFRS 7 Disclosures
July 1, 2010
for First-time Adopters 」
Amendment to IFRS 1 「 Severe Hyperinflation and Removal of Fixed Dates for
July 1, 2011
First-time Adopters issued 」
Amendment to IFRS 1 「 Government loans 」 January 1, 2013
Amendment to IFRS 7 「 Disclosures-Transfers of Financial Assets 」 July 1, 2011
Amendment to IFRS 7 「 Disclosures-Offsetting Financial Assets and Financial
January 1, 2013
Liabilities 」
January 1, 2013
IFRS 10 「 Consolidated Financial Statements 」 (Investment entity is
effective on January 1,
2014)
IFRS 11 「 Joint Arrangements 」 January 1, 2013
IFRS 12 「 Disclosure of Interest in Other Entities 」 January 1, 2013
IFRS 13 「 Fair Value measurement 」 January 1, 2013
Amendment to IAS 1 「 Changes to the presentation of other comprehensive
July 1, 2012
income 」
Amendment to IAS 12 「 Deferred Tax Recovery of Underlying Assets 」 January 1, 2012
Amendment to IAS 19 「 Employee Benefits 」 January 1, 2013
Amendment to IAS 27 「 Separate Financial Statement 」 January 1, 2013
Amendment to IAS 32 「 Offsetting Financial Assets and Financial Liabilities 」 January 1, 2014
IFRIC 20 「 Stripping Costs in the Production Phase of a Surface Mine 」 January 1, 2013
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The impact, after the evaluation, from the adoption of IFRS 2013 is as follows ：

1. IFRS 13-Fair value measurement

disclosure of fair value measurement. The evaluation shows that adoption of the standard poses no significant influence over the Group's financial status and operating result. The Group is going to increase disclosure in terms of fair value measurement.

(B) The effect of International Financial Reporting Standards issued by the IASB but not yet endorsed by the FSC:

A summary of the 2013 version new standards and amendments issued by the IASB that may have an impact on the consolidated financial statements not yet endorsed by the FSC:

Ⅵ

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IASB released
New Standards And Interpretations Not Yet Adopted
of effective date
IFRS 9 「 Financial Instruments 」 January 1, 2018
Amendments to IFRS 10 and IAS 28 「 Sales or contributions of assets between January 1, 2016
an investor and its associate/joint venture 」
Amendments to IFRS 10, IFRS 12 and IAS 28 「 Investment entities: Applying the January 1, 2016
consolidation exception 」
Amendment to IFRS 11 「 Acquisition of an interest in a joint operation 」 January 1, 2016
IFRS 14 「 Regulatory Deferral Accounts 」 January 1, 2016
IFRS 15 「 Revenue from Contracts with Customers 」 January 1, 2017
Amendments to IAS 1 「 Disclosure initiative 」 January 1, 2016
Amendments to IAS 16 and IAS 38 「 Acceptable methods of depreciation and January 1, 2016
amortisation 」
Amendments to IAS 16 and IAS 41 「 Bearer Plants 」 January 1, 2016
Amendment to IAS 19 「 Defined Benefit Plans: Employee Contributions 」 July 1, 2014
Amendments to IAS 27 「 Equity Method in Separate Financial Statements 」 January 1, 2016
Amendment to IAS 36 「 Recoverable Amount Disclosures for Non-Financial January 1, 2014
Assets 」
Amendment to IAS 39 「 Novation of Derivatives and Continuation of Hedge January 1, 2014
Accounting 」
IFRIC 21 「 Levies 」 January 1, 2014
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standards and interpretation. Relevant influence will be disclosed when the evaluation is completed.

4. SIGNIFICANT ACCOUNTING POLICIES

(A) Statement of compliance

the Preparation of Financial Reports by Public Held Banks (hereinafter referred to as the Regulations), Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations endorsed by the FSC (hereinafter referred to as the IFRS endorsed by the FSC).

(B) Basis of preparation

(a) Basis of measurement

material items in the statement of financial position:

derivative instruments);

Taiwan Business Bank Annual Report 2014

present value of the defined benefit obligation.

branches and its subsidiaries. The internal transactions within the headquarter, the domestic branches and the foreign branches are offset when preparing the consolidated financial statement.

(c) Functional and presentation currency

The functional currency of each Group entities is determined based on the primary economic environment in which the entities operate. The Group consolidated financial statements are presented in New Taiwan Dollar, which is the Company’s functional currency. All financial information presented in New Taiwan Dollar has been rounded to the nearest thousand.

(C) Basis of consolidation

(a) Subsidiary

in the consolidated financial statements from the date that control commences until the date that control ceases.

Gains or losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

(b) Elimination of inter-group transaction

Intra‑group balances and transactions, and any unrealized income and expenses arising from intra‑group transactions are eliminated in preparing the consolidated financial statements. The unrealized profits arising from the transactions with the investments under the equity method are eliminated to the extent of the percentage of shares possessed by the group over the investee. The unrealized losses are eliminated in the same way as the unrealized profit, but only under the circumstances that there are no evidences of impairment.

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Stockholder's equity
(Holding %)
Established December 31, December 31,
location 2014 2013
Taiwan Business Bank Insurance Agency Co., Ltd. Taiwan 100 100
Taiwan Business Bank Property Insurance Agency Co., Ltd. Taiwan 100 100
Taiwan Business Bank International Leasing Co., Ltd. Taiwan 100 100
Taiwan Business Bank International Financing Leasing Co., Ltd. China 100 -
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(D) Foreign currency

(a) Foreign currency transaction

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies on the reporting date are retranslated to the functional currency at the exchange rate of Bank of Taiwan at 10 AM. The foreign currency gain or loss on monetary items is the difference between

Ⅵ

amortised cost in the functional currency at the beginning of the year adjusted for the effective interest and payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured based on historical cost are translated using the exchange rate at the date of translation. Foreign currency differences arising on retranslation are recognized in profit or loss, except for the available-for-sale equity investment which are recognized in other comprehensive income arising on the retranslation.

(b) Foreign operations

The income and expenses of foreign operations, excluding foreign operations in hyperinflationary econo‑ mies, are translated to the Group’s functional currency by the following procedures:

(1) Assets and liabilities are translated to the Group’s functional currency at exchange rates at the reporting date;
(2) Profit and loss are translated to the Group’s functional currency by the average rate (unless the exchange rate of the period fluctuates intensively, then it applies the exchange rate on the trade date);
(3) Foreign currency differences are recognized in other comprehensive income.

All the translation differences arising from above procedures are presented in the foreign currency translation reserve in equity. The exchange difference from translating net investments in foreign operations is recognized in other comprehensive income. When a foreign operation is wholly or partially disposed, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.

(E) Cash and cash equivalent

Cash and cash equivalent comprise cash on hand, petty cash, foreign currency on hand and cash in banks, but excludes those items which are designated for specific purposes or restricted by contracts and law.

(F) Financial Instruments

and financial assets and liabilities designated as at fair value through profit or loss on initial recognition. Financial instrument is classified in this category if acquired principally for the purpose of selling or repurchasing in the short term. This type of financial asset is measured at fair value at the time of initial recognition, and attributable transaction costs are recognised in profit or loss as incurred. A regular way purchase or sale of financial assets shall be recognised and derecognised, as applicable, using trade-date accounting. The derivative financial instruments held by the Bank, except for those designated as hedging instruments, are classified under this account. In addition, the Group designates financial assets, other than ones classified as held-for-trading, as at fair value through profit or loss at initial recognition under one of the following situations:

(1) A hybrid instrument contains one or more embedded derivatives;
(2) Designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; and
(3) In accordance with the Bank and its subsidiaries’ risk control policy or investment strategy, a set of financial assets or liabilities and its components managed are also designated at fair value.

Taiwan Business Bank Annual Report 2014

Financial assets are measured at fair value and unrealized gains and losses thereon are recognized as an adjustment item of equity. Financial instruments held by the Bank and its subsidiary are recorded on the trade dates. Financial instruments are initially recognized at fair value plus transaction costs. The impairment loss is recognized if there is evidence indicating that a decline in the value of an investment is other than temporary. If the impairment loss in the following period is reduced, reversal of loss for equity investments is adjusted to equity, and reversal of loss for debt instrument is credited to current income if the reduction of impairment loss resulted from a subsequent event.

Financial assets are measured at amortized cost and its interest income via effective rate. Financial assets held by the Bank and its subsidiary are recorded on the trade dates and are initially recognized at fair value plus transaction costs. The impairment loss is recognized if there is evidence indicating that a decline in the value of an investment is other than temporary. If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previous recognized impairment loss is reversed through the profit or loss. The carrying value after the reversal should not exceed the amortized balance of the assets assuming no impairment loss was recognized.

(d) Financial assets measured at cost

Equity instruments with no quoted market price and whose fair value cannot be reliably measured are stated at cost. The impairment loss is recognized if there is evidence indicating that a decline in the value of an investment is other than temporary, and the impairment loss is irreversible.

(e) Debt instrument with no active market

These are debt instruments with no active market quote and measured at amortized cost. The impairment loss is recognized if there is evidence indicating that a decline in the value of an investment is other than temporary. If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previous recognized impairment loss is reversed through the profit or loss .The carrying value after the reverse should not exceed the amortized balance of the assets assuming no impairment loss was recognized.

(f) Loans and advances

Loans and advances are recorded as initial fair value (including direct transaction cost), and the subse‑ quent measurement recognizes interest income via effective interest rate method (if there is not much difference then it can adopt straight line method) and is booked as per amortized cost deducted by impair‑ ment loss.

Interest accrual on loans and advances is suspended if either of the following occurs:

(1) Payment of principal or interest is very likely not to be redeemed as per contracts.

(2) Non-performing loans are categorized as overdue loans in six months after the settlement period ends.

(g) Allowance for bad debts and reserve for guarantee

Adequate allowance for bad debts is provided for loans and receivables by assessing whether there is evidence indicating that a single financial asset or a group of financial assets are impaired per the "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-Performing and Non-Accrual Loans," and the "Regulations Governing Institutions Engaging in Credit Card Business".

Ⅵ

For loans and receivables , the objective evidence should be identified first to reveal any impairment existing for financial assets that are individually significant, and individual or collective impairment for financial assets that are not individually significant. If no objective evidence of impairment exists in an individually assessed financial asset, it should be included in a group of financial assets with similar credit risk characteristics and collectively assessed for impairment. For assets which have recognized impairment lossess or continue to recognize impairment losses, the aforementioned assessment method is not required.

of the loss is recognized and measured via the difference between the asset's carrying amount and the present value of the estimated future cash flows discounted at the financial asset's original effective interest rate; the amount of the loss should be recognized as bad debt expenses in profit or loss of the current period. The estimate of future cash flows includes the recoverable amount of collaterals and related insurances when determining the amount of the loss.

Above evidences of impairment loss usually include the following:

(2) There are already default circumstances occur to the issuer or debtor, for example: default or overdue payment of interest or principal.
(3) The creditor give in to the debtor due to commercial or legal concern.
(5) The issuer has financial difficulty and the financial assets can not be traded in the active market.
(6) The payment status of the debtor worsens.
(7) The national and regional situation related to the default of the asset changes.

The Bank and its subsidiaries should recognize bad debt expenses when there is an impairment loss on the financial assets measured at amortized cost.

The impaired amount is the difference between the book value of the financial asset and the sum of es‑ timated future cash flows discounted by the original effective rate. The book value of the financial assets is reduced by the allowance account and the amount of impairment losses shall be recognized as current gains and losses. When deciding the amount of the impairment loss, the estimate of future cash flows should include the collaterals and the recoverable amount of relevant insurances.

According to “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non‑Performing and Non‑Accrual Loans “, the Bank shall provide the sum of the following to be the allowance for bad debts:

(2) 2% of the second class credit assets.
(3) 10% of the third class credit assets.
(4) 50% of the fourth class credit assets.

The allowance for bad debts assessed by the previously stated method shall not be less than the amount regulated by “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non‑Performing and Non‑Accrual Loans “.

Taiwan Business Bank Annual Report 2014

The Bank provides reserve for guarantee liabilities for off‑balance‑sheet non‑credit assets taking into ac‑ count the regulation of “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non‑Performing and Non‑Accrual Loans".

Unrecoverable overdue loans and bad debts, which are not able to be recovered after the overdue collection process, are written-off after deducting the recoverable portion. Upon approval by the board of directors and notification to supervisors, the excess amount of written off loans over such allowance or

Above amounts provided are booked under the account of bad debt expenses.

(G) Impairment loss on non‑financial assets

The recoverable amount for an individual asset or a cash-generating unit is the higher of its fair value less costs to sell or its value in use. If, and only if, the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount. That reduction is an impairment loss. An impairment loss shall be recognized immediately in profit or loss.

An impairment loss recognized in prior periods for an asset other than goodwill shall be reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If this is the case, the carrying amount of the asset shall be increased to its recoverable amount, as a reversal of a previously recognised impairment loss.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(H) Property, Plant and Equipment

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributed to the acquisition of the asset.

with the expenditure will flow to the Group. The carrying amount of those parts that are replaced is derecognized. Ongoing repairs and maintenance is expensed as incurred.

Land has an unlimited useful life and therefore is not depreciated.The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows:

(a) buildings	35‑50 years
(b) Equipment and machine	3‑8 years
(c) Lease asset	5 years

year. Whenever there is evidence indicating that the carrying amount is unable to be recovered due to environmental activities or changes, the Group evaluate the impairment loss of assets.

If the carrying amount is higher than the recoverable amount, the carrying amount is adjusted to the recoverable amount. The recoverable amount is the fair value or the use value deducted by the disposition expense.

The gain or loss on disposal is the difference between the carrying amount amd net disposal proceeds, and gain or loss on disposal shall be recognized as net gain or loss on non-other interest of consolidated comprehensive income.

Ⅵ

When purchasing machinery equipment and computer software, the education fee implied in the contract is not recognized as the cost of machinery equipment and is recognized as expense.

For the lease contracts which regulate the Group to restore the property to the original status, the Group reviews the terms of each contract and calculated the prsesnt value of the restoration expenses when signing the contracts. The decommissioning liability reserve is provided based on the calculation and the discount rate is determined based on the Bank's policy.

(I) Leasehold

Leases contract can be divided into operating lease contracts and financing (capital) lease contracts. If a lease contract transfers almost all the risk and reward comes with the leasehold, the leasehold is considered financing (capital) lease. If a lease contract does not transfers almost all the risk and reward comes with the leasehold, the leasehold is considered operating lease.

Depreciation is calculated per the regulation of IAS 16 “Property, Plant and Equipment” and IAS 38 “Intangible Assets”. If there is no reason to be sure that the lessee will obtain the ownership of the assets at the end of the lease period for financing leasehold, the assets shall be depreciated within the lease period or the dura‑ ble service time, whichever is shorter. The lease contracts of the Bank and its subsidiaries include operating lease and financing lease.

(J) Deferred assets

The costs of installation for utilities, including electricity and water, as well as security facilities, are capitalized and amortized equally over 5 years.

(K) Collateral assumed

Collaterals assumed are stated at the lower of net book value or net realizable value; i.e., the amount the Bank receives when creditors cannot meet obligations and the collaterals and salvages are auctioned off. Under FSC Letter Ruling (2)0948010856 on July 11, 2005, collateral assumed must be disposed before December 31, 2005. If the Bank is unable to dispose the collateral assumed before December 31, 2005, it reserves a provision for loss equal to the carrying value of the collateral assumed. On disposition of collateral, the related provision is reversed. The selling price deducts the original book value of collateral assumed is recognized as gain on sale of collateral assumed.

(L) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probably that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. Amortization of the discount is recognized as interest expense. Future operating loss can not be recognized as liability reserve.

Contingent liability refers to the possible obligation results from past events. The existence of contingent liability can only be proved by whether one or more uncertain events which can not be controlled by the Bank and its subsidiaries occurs or not. Contingent liability also refers to the current obligation results from a past event, but not likely to cause outflow of economic resource to redeem the obligation or the amount of the obligation can not be measured reliably. The Bank and its subsidiaries do not recognized contingent liability and disclose it per related regulations.

Taiwan Business Bank Annual Report 2014

(M) Employee benefit

the related service is provided.

benefit plan. For the personnel of foreign offices, the Bank provides pension fund per the regulations of the local authorities.

amount of money to funds to fulfill the obligation. The Bank and its subsidiaries provide pension based on compulsory obligation, contracts or voluntary will to public or private managed pension funds. If certain pension fund fail to pay the employees the benefit which they deserve for the service they provided, the Bank and its subsidiary do not hold legal or constructive obligation to pay additional provision. The Bank and its subsidiaries recognize the pension fund provided as current pension cost on accrual basis. Prepaid pension asset can only be recognized under the circumstance that there is cash refund or the future pension payable can be deducted.

Defined benefit plan refers to the plan that is established according to the amount of pension an employee shall receive on the retirement date. The amount is based on age, year of service and salary compensation.

The Bank recognize pension asset or liability on the consolidated balance sheet base on the actuari‑ al present value of defined benefit obligation deducted by the fair value of pension fund and adjust the amount with the net value of unrecognized pension profit or loss and prior service cost recognized as liability. The defined benefit obligation is calculated annually by a qualified actuary using the projected unit credit method. The actuarial present value is calculated by taking the market yield rates of high quality corporate bond or government bond which have the same maturity date and currency as the retirement benefit obligation into consideration to discount and estimate future cash flows.

Actuarial profit or loss results from experiences or changes in actuarial assumption is recognized under the account of other comprehensive income. Prior service cost, except for the part that the Bank and its subsidiaries shall amortize it via straight line method within the vesting period in which the employees pro‑ vide their service due to the modification of the retirement plan, are all recognized as current profit or loss.

The Bank and its subsidiaries adopt the pension cost ratio, based on prior fiscal year’s actuarial result, to calculate the defined benefit plans pension fund. In addition, the pension fund is adjusted based on significant market fluctuation, significant curtailment or settlement and other one-time event.

(c) Deposits with favorable rate

deposits with favorable rate and retired employee fix amount deposits with favorable rate. The rate difference between the favorable rate and the market rate belongs to the category of employee benefit.

According to article 28 of “Regulations Governing the Preparation of Financial Report by Public Banks”, the additional interests result from the difference between deposit with favorable rate and the desposits with market interest rate shall be calculated by actuary per the regulations related to defined benefit plan in IAS 19 . The parameters of actuarial assumptions shall follow the regulations of the competent authority.

Ⅵ

In accordance with the regulation of “Discussion of the employee benefit actuarial assumption related matter for adopting IAS 19 with respect to the additional interest of employee deposits with favorable rate” issued by the Banking Bureau, the difference between the actual payment and the estimated retirement benefit obligation is deemed as changes in accounting estimate and is recognized in profit or loss.

Termination benefits are recognised as an obligation when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the nor‑ mal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. The Bank and its subsidiaries recognize liabilities when an formal unrevokable termination project is undertaken or when benefit is provided for encouraging voluntary resignation. If benefits are payable more than 12 months after the reporting period, then they are discounted to their present value.

(N) Income tax

Income tax expenses refer to current and deferred income taxes. Current and deferred income taxes shall be recognized as profit or loss except for the items related to corporate merger or recognized under the equity and other comprehensive income. Current income tax includes expected tax payable or tax refundable calculated based on the taxable income (loss) multipled by the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period and the adjustments of tax payables from prior years.

Deferred income tax is measured and recognized based on the temporary difference between the carrying amount of the assets and liabilities for financial reporting purpose and the amount served as the taxable basis. It is measured by the tax rate which the assets expected to be realized or liabilities to be settled and is based on tax rates that have been enacted or substantively enacted on the balance sheet date.

The land incremental tax results from the revaluation per relavent regulations is categorized as taxable temporary difference and is recognized as deferred tax liabilities.

Deferred tax assets are recognized for loss carried forward, unused tax credit and deductible temporary differences to the extent that the future taxable income is likely to be available to apply against the deferred tax assets. The carrying amount of deferred tax assets should be reviewed at the end of each reporting period and the amount is reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of partial or entire deferred tax asset to be utilized.

The 10% surtax on undistributed earnings is recognized as current expense on the date when the stockholders decide not to distribute the earnings in the annual meeting.

(O) Revenue recognition

Interest is recognized according to interest method. Interest accrual is suspended from the date when the loan is reclassified to non-performing loan and only when the Bank and its subsidiaries receive cash, the revenue is recognized.

completed. In addition, for the individual loan which does not belong to labor service and the handling fee is over 1% of the principal, the interest rate shall be adjusted from the original agreed interest rate to the effective interest rate. For the individual loan which does not belong to the service and the handling fee is less that 1% of the principal, the recognition of the revenue should be deferred and be recognized as revenue during the loan period.

Taiwan Business Bank Annual Report 2014

(P) Operating segments

Operating segment is the component of the Bank and its subsidiaries that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Bank and its subsidiaries). The segament’s operating results are reviewed regularly by the Bank’s chief operating decision maker to make decisions pertaining to the allocation of resources to the segment and to assess the performance for which discrete financial information is available.

(Q) Earnings per share (EPS)

EPS is based on the weighted-average number of shares outstanding. In the event of capital increase through capitalization of retained earnings, capital surplus, or employee bonuses, EPS is retroactively adjusted based on the percentage of capital increase, regardless of the period when the incremental shares are outstanding.

The employee bonuses of the Bank and its subsidiaries issued by stocks were dilutive potential common shares. If the potential common shares have a non-dilutive effect, the Bank and its subsidiaries should only disclose the basic earnings per share. On the contrary, if the potential common shares have a dilutive effect, the Bank and its subsidiaries should disclose both the basic and diluted earnings per share. In calculating the diluted earnings per share, it is based on the assumption that all dilutive potential common shares are outstanding, and therefore the net income and the shares outstanding shall be adjusted in accordance with the calculation.

5. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATIONS, ASSUMPTIONS,

AND SOURCES OF ESTIMATION UNCERTAINTY

judgments, estimates and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

The management inspects estimates and basic assumptions continuously, changes in accounting estimate will be recognized in the periods which the change occurred and future periods effected.

Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements is included in the following notes:

(A) Impairment losses on loans

The Bank and its subsidiaries review loan portfolios quarterly to evaluate impairment losses. When deciding whether to recognize impairment or not, the Bank and its subsidiaries observe evidences indicating the possibilities of impairment. The observable evidence may include the unfavorable changes of payment status or the economic conditions of the countries or areas related to the default loan. The management applies past loss experience of assets with similar credit risk characteristic to analyze the expected cash flows. The Bank and its subsidiary regularly review the methods and assumptions applied for calculating the amount and timing of the expected cash flows in order to diminish the difference between the estimated amount and the actual amount.

(B) Retirement benefit

Any change of the assumptions may influence the carrying amount of the retirement benefit obligation.

The assumptions applied to determine net pension cost (revenue) include the discount rate. The Bank and its subsidiaries determine the appropriate discount rate at the end of each year and apply it to calculate the present value of the future cash outflows which are to be paid to the retirement benefit obligation. To

Ⅵ

determine the appropriate discount rate, the Bank and its subsidiaries should consider the interest rate of high quality corporate bonds and government bonds. The currency of the retirement benefit shall be the same as that of the high quality corporate bond or government bonds and the duration till maturity date shall comply with the duration of the related pension obligation. Other significant assumptions of retirement benefit obligation are based on the current market situation.

6. EXPLANATION OF SIGNIFICANT ACCOUNTS

(A) Cash and cash equivalents

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December 31, 2014 December 31, 2013
Petty cash and revolving fund $ 9,377,085 8,710,699
Foreign currencies on hand 1,006,821 932,269
Checks for clearing 7,654,077 3,750,838
Due from other banks 46,204,262 18,850,357
Total $ 64,242,245 32,244,163
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(B) Due from the Central Bank and call loans to banks

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December 31, 2014 December 31, 2013
Due from the Central Bank $ 42,756,826 47,442,644
Deposits transferred to the Central Bank 110,523 137,212
Call loans to banks 18,977,095 20,716,271
Trust fund indemnity reserve deposited 70,000 70,000
Securities served as trust fund indemnity reserve deposited ( 70,000 ) ( 70,000 )
Total $ 61,844,444 68,296,127
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As of December 31, 2014 and 2013, in accordance with the Banking Law and the Central Bank Law, the required reserve deposited by the Bank with the Central Bank amounted to $42,602,403 and $47,422,260, of which $30,304,020 and $29,940,478 respectively, were restricted and such restriction may only be lifted when the required reserve is adjusted to a lower amount.

Effective December 2000, in accordance with the amended "Rules Governing Adjustments to and Review of Deposits in Financial Institutions and Reserve for Other Liabilities", the Bank provides the required additional reserve on foreign currency deposits. As of December 31, 2014 and 2013, the required reserve with the Central Bank amounted to $154,423 and $20,384 respectively, and its use is unrestricted.

As of December 31, 2014 and 2013, deposits collected on behalf of the armed forces, prisons, and other national deposits are restricted.

Effective January 20, 2001, in accordance with the requirement of the Central Bank of China, the Bank complies with Clause 34 of the Trust Law to treat the discretionary trust of investments in overseas marketable securities as a default loss reserve. As of December 31, 2014 and 2013, the Bank deposited marketable securities of both $70,000 as trust fund reserves.

Taiwan Business Bank Annual Report 2014

(C) Financial assets at fair value through profit or loss

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December 31, 2014 December 31, 2013
Financial assets held for trading:
Commercial paper $ 79,949 -
Foreign exchange forward contracts 59,331 40,584
Currency swap contracts 484,148 357,671
Interest swap contracts 1,261 6,768
Foreign currency options‑call 66,340 62,640
Structured product options‑call 148 88
Stock index futures 27,285 27,243
Sub‑total 718,462 494,994
Financial assets designated at fair value through profit or loss:
Overseas bonds 1,892,245 2,479,600
Total $ 2,610,707 2,974,594
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As of December 31, 2014 and 2013, the nominal amounts of unsettled financial derivative instrument contracts were as follows:

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December 31, 2014 December 31, 2013
Foreign exchange forward contracts $ 5,132,526 6,604,125
Currency swap contracts 52,982,358 57,031,954
Interest swap contracts 4,600,200 7,457,320
Option contracts-call 1,726,731 2,253,187
Option contracts-put 1,726,731 2,253,187
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(D) Securities purchased under resell agreements

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December 31, 2014 December 31, 2013
Securities under resell agreements $ 5,527,837 20,870,025
Face amount 5,534,000 20,904,900
Resell period 2015.1.5~2015.1.21 2014.1.3~2014.1.29
Range of resell interest rate 0.6%~0.75% 0.6%~0.62%
Resell price
Securities purchased under resell agreement $ 5,529,181 20,878,977
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Please refer to Note 6(N) for information with regard to repurchase conditions for securities purchased under resell agreements shown above.

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(E) Receivables–net

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December 31, 2014 December 31, 2013
Interest receivable $ 2,329,291 1,897,207
Acceptances receivable 1,608,642 1,550,304
Accrued incomes 77,984 62,593
Accounts receivable 128,124 25,442
Spot exchange receivable-foreign currencies 14,456,636 7,430,615
Refinancing guaranty deposits 3,026 403
Guaranteed proceeds receivable from refinancing 3,340 448
Receivable from credit card 1,429,914 1,464,990
Receivable from security brokerage 122,211 93,826
Settlement fund 741,365 1,098,212
Installment receivables and leases 655,661 415,958
Other receivables 381,901 396,624
Sub-total 21,938,095 14,436,622
Less: Allowance for bad debts ( 116,135 ) ( 133,326 )
Net $ 21,821,960 14,303,296
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The change in allowance for bad debts is as follows:

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For the year ended December 31,
Receivables
2014 2013
Beginning balance $ 133,326 317,249
Reversal ( 17,495 ) ( 130,269 )
Transfer out - ( 53,719 )
Foreign exchange 304 65
Ending balance $ 116,135 133,326
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Taiwan Business Bank Annual Report 2014

(F) Discounts and loans–net

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December 31, 2014 December 31, 2013
Import/export bills negotiated $ 448,466 340,780
Bills and notes discounted 1,476,099 1,499,993
Overdrafts 16,835 12,444
Secured overdrafts 877,478 1,316,563
Short-term loans 231,437,942 203,693,834
Short-term secured loans 146,168,111 135,567,135
Margin loans receivable 2,221,662 1,793,827
Medium-term loans 143,601,507 143,962,695
Medium-term secured loans 132,804,405 123,077,337
Long-term loans 16,957,020 18,449,510
Long-term secured loans 331,799,385 331,727,694
Account receivable financing 463,313 475,282
Overdue loans 4,162,467 6,829,899
Sub-total 1,012,434,690 968,746,993
Less: Adjustment of discount and premium ( 266,459 ) ( 207,282 )
Less: Allowance for bad debts ( 10,933,661 ) ( 10,462,121 )
Net $ 1,001,234,570 958,077,590
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The change in allowance for bad debts is as follows:

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For the year ended December 31,
Loan
2014 2013
Beginning balance $ 10,462,121 8,301,460
Provision
2,545,394 3,001,387
Transfer out
( 29,773 ) ( 29,155 )
Write-off
( 3,165,160 ) ( 1,988,187 )
Foreign exchange
35,416 17,386
Written-off recovered
1,085,663 1,159,230
Ending balance $ 10,933,661 10,462,121
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(G) Available‑for‑sale financial assets–net

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December 31, 2014 December 31, 2013
Government bonds $ 4,130,829 5,031,655
Corporate bonds 5,076,756 5,207,083
Overseas bonds 5,071,057 1,999,785
Listed and OTC stocks 1,764,897 806,795
Total $ 16,043,539 13,045,318
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Please refer to Note 6(N) for the information with regard to repurchase conditions for available-for-sale

Ⅵ

(H) Held‑to‑maturity financial assets–net

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December 31, 2014 December 31, 2013
Certificates of deposit with the Central Bank $ 171,700,000 177,800,000
Government bonds 4,354,399 3,467,755
Corporate bonds 7,743,667 5,503,197
Overseas bonds 10,676,998 7,415,760
Banker's acceptance - 184,921
Negotiable certificates of deposit 66,507 62,538
Total $ 194,541,571 194,434,171
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As of December 31, 2014 and 2013, held-to-maturity financial assets provided and deposited as reserve for provisional seizure by the court, international card payment reserve, trust claim reserve and operating guaranty funds amounted to $707,800 and $799,200, respectively. As of December 31, 2014 and 2013, the three overseas branches have provided $66,507 and $247,459, respectively, for the reserve of overdraft guarantee.

In order to comply with the immediate tax settlements mechanism of Central Bank and the interbank funds transfer system, the Bank provided time deposits with the Central Bank amounting to $12,000,000 and $2,000,000 as overdraft guarantee as of December 31, 2014 and 2013, respectively. The amount of the guarantee can be modified anytime and the remaining amount could be served as liquid reserves.

As of December 31, 2014 and 2013, in compliance with the item 16 of “Guidelines Governing Financial Institution in Conducting Treasury Affairs Authorized by Central Bank”, the Bank provided secured central bank certificates of deposit with face value of $800,000 and $15,900,000, respectively to the Central Bank. When certain conditions are satisfied, the Bank will be returned the certificates without interest from Central Bank.

$17,000,000 to serve as a guarantee for borrowing US dollars from Central bank.

(I) Other financial assets–net

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December 31, 2014 December 31, 2013
Non-accrual loans transferred from non-loan financial assets $ 333,205 376,894
Less: Allowance for bad debts-non-accrual loans transferred from ( 273,317 ) ( 268,283 )
non-loan financial assets
Non-accrual loans transferred from non-loan financial assets-net 59,888 108,611
Exchange bills negotiated 1,222 2,250
Less: Allowance for bad debt-exchange bills negotiated ( 12 ) ( 11 )
Exchange bills negotiated-net 1,210 2,239
Financial assets carried at cost 1,707,017 1,714,357
Debts investment without active market 1,500,000 1,500,000
Total $ 3,268,115 3,325,207
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Taiwan Business Bank Annual Report 2014

(a) Financial assets carried at cost are as follows:

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December 31, 2014 December 31, 2013
Investee
Amount % Amount %
Taiwan Power Company $ 11,427 - 11,427 -
Taiwan Sugar Corporation 58,294 0.30 58,294 0.30
Sunysino Development Associated Inc. 17,440 3.12 17,440 3.12
Taiwan Small & Medium Enterprises Devel. 29,000 4.84 29,000 4.84
Co., Ltd.
Taipei Forex Incorporation 7,000 3.53 7,000 3.53
Financial Information Service Co., Ltd. 45,500 1.14 45,500 1.14
Evernight Investment Co., Ltd 500,000 4.95 500,000 4.95
Taiwan Stock Exchange Corp. 198,012 0.95 198,012 0.95
Taiwan Futures Exchange Co., Lt 20,000 1.00 20,000 1.00
Taiwan Asset Management Corp 750,000 5.68 750,000 5.68
Taiwan Finance Asset Service Corp 50,000 2.94 50,000 2.94
Financial E-Solution Co., Ltd 9,245 4.12 19,285 5.13
Taiwan Depository and Clearing Corp 4,639 0.08 4,639 0.08
Taiwan Integrated Shareholder's Service - - 3,300 1.10
Company
Yand Guang Asset Management Corp. 460 0.77 460 0.77
Taiwan Trusted Service Manager Co., Ltd. 6,000 1.00 - -
Total $ 1,707,017 1,714,357
----- End of picture text -----

The investees of the Bank, Taiwan Sugar Corporation and Taiwan Asset Management Corp., refunded proceeds which was a total of $315,456 from capital deduction and recognized gain on investments a total of $62,386 for 2013.

The investees of the Bank,Taiwan Integrated Shareholder's Service Company has been purchased and mergered by Taiwan Depository and Clearing Corp,which is the extended company after the merger, on March 24, 2014. Taiwan Business Bank received cash which amounted to $3,122 and recognized an investment loss of $178.

The investee Financial E-Solution Co., Ltd. executed capital reduction on April 16, 2014 to recover the loss. The Bank recognized $10,040 as investment loss based on the proportion of the capital reduction.

(b) Debt instrument with no active market are as follows:

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Investee December 31, 2014 December 31, 2013
Taiwan High Speed Rail Corp. preferred Stock $ 1,500,000 1,500,000
(c) The change in allowance for bad debts is as follows:
For the year ended For the year ended
Other financial assets
December 31, 2014 December 31, 2013
Beginning balance $ 268,294 49,673
(Reversal) Provision ( 34,806 ) 123,087
Transfer in 29,773 82,874
Write-off ( 29,773 ) ( 31,300 )
Written-off recovered 39,841 43,960
Ending balance $ 273,329 268,294
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Ⅵ

(J) Premises and equipment–net

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Revaluation Accumulated Accumulated
December 31, 2014 Cost Total
appreciation depreciation impairment
Land $ 6,678,952 2,986,161 - 14,156 9,650,957
Buildings 7,420,356 31,184 3,356,676 21,411 4,073,453
Machinery 1,908,648 - 1,754,836 - 153,812
Transportation equipment 293,201 - 250,246 - 42,955
Miscellaneous equipment 577,301 - 519,885 - 57,416
Leasehold improvement 79,605 - 49,810 - 29,795
Construction in progress 11,105 - - - 11,105
Prepayment for equipment 36,622 - - - 36,622
Leased assets 55,222 - 9,907 - 45,315
Total $ 17,061,012 3,017,345 5,941,360 35,567 14,101,430
Revaluation Accumulated Accumulated
December 31, 2013 Cost Total
appreciation depreciation impairment
Land $ 6,678,952 2,986,161 - 14,156 9,650,957
Buildings 7,407,745 31,184 3,193,055 21,411 4,224,463
Machinery 1,920,537 - 1,703,670 - 216,867
Transportation equipment 296,526 - 262,116 - 34,410
Miscellaneous equipment 579,970 - 522,361 - 57,609
Leasehold improvement 91,087 - 54,399 - 36,688
Construction in progress 51 - - - 51
Prepayment for equipment 42,455 - - - 42,455
Leased assets 37,933 - 2,702 - 35,231
Total $ 17,055,256 3,017,345 5,738,303 35,567 14,298,731
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Change of cost

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January 1, 2014 Foreign December 31,
Increase Decrease
Exchange 2014
Land $ 9,665,113 - - - 9,665,113
Buildings 7,438,929 12,611 - - 7,451,540
Machinery 1,920,537 44,750 58,177 1,538 1,908,648
Transportation equipment 296,526 20,140 23,512 47 293,201
Miscellaneous equipment 579,970 16,548 19,726 509 577,301
Leasehold improvement 91,087 10,757 22,444 205 79,605
Construction in progress 51 11,105 51 - 11,105
Prepayment for equipment 42,455 18,974 24,807 - 36,622
Leased assets 37,933 17,289 - - 55,222
Total $ 20,072,601 152,174 148,717 2,299 20,078,357
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Taiwan Business Bank Annual Report 2014

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January 1, Foreign December
Increase Decrease
2013 Exchange 31, 2013
Land $ 9,611,988 53,125 - - 9,665,113
Buildings 7,421,892 17,037 - - 7,438,929
Machinery 1,920,902 50,134 49,304 ( 1,195 ) 1,920,537
Transportation equipment 316,643 12,253 33,583 1,213 296,526
Miscellaneous equipment 579,981 23,777 24,076 288 579,970
Leasehold improvement 96,577 19,980 25,852 382 91,087
Construction in progress - 51 - - 51
Prepayment for equipment 61,518 - 19,063 - 42,455
Leased assets 3,282 34,651 - - 37,933
Total $ 20,012,783 211,008 151,878 688 20,072,601
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Change of depreciation

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

January 1, 2014 Foreign December 31,
Increase Decrease
Exchange 2014
Buildings $ 3,193,055 163,621 - - 3,356,676
Machinery 1,703,670 108,031 57,703 838 1,754,836
Transportation equipment 262,116 11,441 23,411 100 250,246
Miscellaneous equipment 522,361 16,838 19,650 336 519,885
Leasehold improvement 54,399 16,898 22,444 957 49,810
Leased assets 2,702 7,194 - 11 9,907
Total $ 5,738,303 324,023 123,208 2,242 5,941,360
January 1, Foreign December
Increase Decrease
2013 Exchange 31, 2013
Buildings $ 3,022,204 170,851 - - 3,193,055
Machinery 1,621,836 132,021 48,801 ( 1,386 ) 1,703,670
Transportation equipment 283,772 11,952 33,394 ( 214 ) 262,116
Miscellaneous equipment 529,022 17,319 23,740 ( 240 ) 522,361
Leasehold improvement 46,854 29,441 22,304 408 54,399
Leased assets 969 1,744 - ( 11 ) 2,702
Total $ 5,504,657 363,328 128,239 ( 1,443 ) 5,738,303
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Accumulated impairment

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

January 1, 2014 Foreign December 31,
Increase Decrease
Exchange 2014
Land $ 14,156 - - - 14,156
Buildings 21,411 - - - 21,411
Total $ 35,567 - - - 35,567
January 1, Foreign December
Increase Decrease
2013 Exchange 31, 2013
Land $ 14,156 - - - 14,156
Buildings 21,411 - - - 21,411
Total $ 35,567 - - - 35,567
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Ⅵ

GAAP of R.O.C as the original cost on the transition date.

As of December 31, 2014 and 2013, the appreciation from revaluation of properties all amounted to $3,017,345. Reserve for land incremental tax all amounted to $879,056 (Recognized under deferred tax liabilities). The difference of revaluation is recognized as retained earnings.

As of December 31, 2014 and 2013, land which was illegally occupied both amounted to $69,321 was illegally occupied. Part of the illegally occupied land would be disposed after the Bank received the certificate of legal costs and the rest would be auctioned at appropriate time.

(K) Other assets

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December 31, 2014 December 31, 2013
Office supplies $ 28,820 29,721
Prepayments 3,659,021 1,431,578
Operating guaranty deposits and settlement fund 30,531 32,678
Guarantee deposits paid 262,394 220,086
Less: Accumulated impairment ( 28,710 ) ( 28,710 )
Guarantee deposits paid-net 233,684 191,376
Collateral assumed 2,509 3,150
Less: Accumulated impairment ( 2,509 ) ( 3,150 )
Collateral assumed-net - -
Deferred assets 381 631
Temporary payments and suspense accounts 690,047 -
Proceeds of settlement and credit transaction 97 64,061
Total $ 4,642,581 1,750,045
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(L) Deposits from the Central Bank and other banks

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December 31, 2014 December 31, 2013
Deposits from the Central Bank $ 209,486 261,413
Call loans from the Central Bank 3,167,000 5,658,200
Deposits from banks 179,062 148,543
Call loans from banks 36,719,823 22,533,465
Overdrafts on banks 1,274,988 1,217,031
Deposits transferred from Chunghwa Post Co., Ltd. 39,044,713 49,261,101
Total $ 80,595,072 79,079,753
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(M) Financial liabilities at fair value through profit or loss

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December 31, 2014 December 31, 2013
Foreign exchange forward contracts $ 114,662 25,483
Currency swap contracts 110,554 144,430
Interest swap contracts 11,509 48,241
Foreign currency option-put 66,340 62,640
Structured product option-put 148 88
Total $ 303,213 280,882
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Taiwan Business Bank Annual Report 2014

Please refer to 6(C) for the nominal amount of unsettled financial derivatives instrument contracts of December 31, 2014 and 2013.

(N) Securities sold under repurchase agreements

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December 31, 2014
Selling Price
Assets (Recognzied in securities Designated Designated
Par value repurchase
sold under repurchase repurchase date
amount
agreements)
Available-for-sale financial Prior to June 18,
$ 3,695,500 3,895,308 3,898,081
assets 2015
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Assets	December 31, 2013	December 31, 2013	December 31, 2013	December 31, 2013
	Par value	Selling Price (Recognzied in securities sold under repurchase agreements)	Designated repurchase amount	Designated repurchase date
Securities purchased under resell agreements	$ 20,000	20,000	20,002	Prior to January 6, 2014
Available-for-sale fnancial assets	4,051,500	4,179,242	4,183,219	Prior to June 20, 2014
Total	$ 4,071,500	4,199,242	4,203,221

(O) Payables

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December 31, 2014 December 31, 2013
Interest payable $ 1,738,931 1,856,924
Accounts payable 7,654,291 3,751,039
Acceptances 1,721,714 1,590,039
Accrued expenses 2,296,894 2,046,733
Collection payable 739,057 790,147
Deposits received from securities borrowers 138,078 77,136
Guaranteed price deposits received from securities borrowers 152,437 93,746
Spot exchange payable-foreign currencies 14,455,510 7,430,012
Other payables 765,262 916,695
Trusted security payable 190,919 244,400
Settlement 668,386 941,768
Others 35,323 13,563
Total $ 30,556,802 19,752,202
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(P) Deposits and remittances

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December 31, 2014 December 31, 2013
Savings deposits $ 563,162,499 537,895,214
Time deposits 298,713,140 277,350,286
Demand deposits 265,176,426 254,030,378
Checking account deposits 24,671,227 25,739,079
Remittances 433,706 405,316
Total $ 1,152,156,998 1,095,420,273
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Ⅵ

(Q) Financial debentures

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

Terms of Transactions Bond Issued
Amount
Bonds Maturity
Issue date date Interest Rate & repayment Type December December
31, 2014 31, 2013
2007-1 08/23/2007 08/23/2014 The debentures bear annual interest rate, Unsecured $ - 5,000,000
which is the index rate plus 0.49%. The subordinated
index rate is the average offer of 90-days long-term financial
CP which is indicated in Reuters page debentures
6165 at 11 A.M Taipei time, 2 operation
days prior to the interest commencement
date. Simple interest is accrued quarterly
and paid annually. The principal will be
repaid in full at maturity.
2008-1 C 03/13/2008 03/13/2014 The debentures bear annual interest rate of 〞 - 1,100,000
3.15%. Simple interest is accrued and paid
twice a year. The principal will be repaid in
full at maturity.
2008-2 04/30/2008 04/30/2015 (A) The debentures bear annual interest 〞 5,200,000 5,200,000
rate, which is the index rate plus 1.02%.
The index rate is the average offer
of 90-days CP which is indicated in
Reuters page 6165 at 11 A.M Taipei
time, 2 operation days prior to the
interest commencement date.
(B) The Republic of China 104 years
since January 1, according to various
indicators of interest rate changes
during the value date two business
days before the pricing (FIXING) Bank
of the Republic of China Business
Association National Union RCAs
website "Taipei fixing the financial
sector call loan rate (TAIBOR)"
three-month interest rate fixing.Four
simple interest per year, paid, payback
time expired.
2008-3 12/30/2008 06/30/2014 The debentures bear annual interest rate of 〞 - 2,150,000
3.2%. Simple interest is accrued and paid
twice a year. The principal will be repaid in
full at maturity.
2009-1 06/10/2009 12/10/2014 The debentures bear annual interest rate of 〞 - 1,400,000
2.45%. Simple interest is accrued and paid
twice a year. The principal will be repaid in
full at maturity.
2009-2 08/27/2009 08/27/2015 The debentures bear annual interest rate 〞 1,000,000 1,000,000
of 2.35%. Simple interest is accrued and
paid annually. The principal will be repaid
in full at maturity
2009-1P 10/23/2009 None The debentures bear annual interest rate Perpetual 12,000,000 12,000,000
which is the seven Banks' board floating accumulated
average interest rate for 1-year time subordinated
deposit plus 1.29% for the seven years financial
after the issue date. The interest rate debentures
will be the seven Banks' board floating
average interest rate for 1-year time
deposit plus 2.29% from the eighth year.
The bond is redeemable per face at the
interest payment date after seven years
from the issue date under the consent of
the competent authority.
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Taiwan Business Bank Annual Report 2014

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

Terms of Transactions Bond Issued
Amount
Bonds Maturity
Issue date date Interest Rate & repayment Type December December
31, 2014 31, 2013
2009-3 12/18/2009 12/18/2016 The debentures bear an annual interest Unsecured 1,550,000 1,550,000
rate of 2.5%. Simple interest rate is subordinated
accrued and paid annually. The principal long-term financial
will be repaid in full at maturity. debentures
2010-1 03/05/2010 03/05/2017 The debentures bear an annual interest 〞 1,050,000 1,050,000
rate of 2.32%. Simple interest is accrued
and paid annually. The principal will be
repaid in full at maturity.
2010-2 09/02/2010 09/02/2017 The debentures bear an annual interest 〞 6,000,000 6,000,000
rate of 1.92%. Simple interest is accrued
and paid annually. The principal will be
repaid in full at maturity.
2010-1P A 09/23/2010 None The debentures bear annual interest Perpetual 3,200,000 3,200,000
rate which is the Chunghwa post's board non-accumulated
average interest rate for 1-year time subordinated
deposit plus 1.34% for the ten years after financial
the issue date. The interest rate will be debentures
the Chunghwa post's board interest rate
for 1-year time deposit plus 2.34% from
the eleventh year. The debentures is
redeemable per face value plus accrued
interest at the interest payment date after
ten years from the issue date under the
consent of the competent authority.
2010-1P B 9/23/2010 None The debentures bear an interest rate of 〞 800,000 800,000
3.05% for the first ten years. The interest
rate will be 4.05% from the eleventh year.
The debentures is redeemable per face
value plus accrued interest at the interest
payment date after ten years from the issue
date under the consent of the competent
authority.
2013-1 03/25/2013 03/25/2020 The debentures bear an annual interest Unsecured $ 5,000,000 5,000,000
rate of 1.68%. Simple interest is accrued subordinated
and paid annually. The principal will be long-term financial
repaid in full at maturity. debentures
2013-2A 11/25/2013 11/25/2020 (A) The debentures bear annual interest 〞 3,100,000 3,100,000
rate, which is the index rate plus 0.52%.
The index rate is the average offer
of 90-days CP which is indicated in
Reuters page 6165 at 11 A.M Taipei
time, 2 operation days prior to the
interest commencement date.
(B) The Republic of China 104 years
since January 1, according to various
indicators of interest rate changes
during the value date two business
days before the pricing (FIXING) Bank
of the Republic of China Business
Association National Union RCAs
website "Taipei fixing the financial
sector call loan rate (TAIBOR)"
three-month interest rate fixing.Four
simple interest per year, paid, payback
time expired.
2013-2B 11/25/2013 11/25/2020 The debentures bear an annual interest 〞 2,900,000 2,900,000
rate of 1.92%. Simple interest is accrued
and paid annually. The principal will be
repaid in full at maturity.
$ 41,800,000 51,450,000
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Ⅵ

(R) Other financial liabilities

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December 31, 2014 December 31, 2013
Appropriated loans funds $ 15,698,870 14,027,323
Lease payable 40,390 35,197
Other - 91,062
Total $ 15,739,260 14,153,582
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Cumulative earnings on appropriated loan fund is the project contract signed by National Development Council, Small and Medium Enterprise Administration, Ministry of Economic Affairs, and the Bank. The Bank appropriates the fund to the companies which meet the conditions for loans. The fund is classified as principal account, interest yielding account, loaned account and un-loaned account. The interests paid to the government are calculated respectively.

(S) Liability reserve

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December 31, 2014 December 31, 2013
Reserve for guarantee liabilities $ 93,009 47,344
Reserve for lawsuit 444,135 541,203
Other-Employee benefit 2,481,647 2,524,694
Total $ 3,018,791 3,113,241
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Change of reserves

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

January 1, Foreign December
Increase Decrease Use Reversal
2014 exchange 31, 2014
Reserve for guarantee liabilities $ 47,344 71,758 - - 26,264 171 93,009
Reserve for lawsuit 541,203 - 76,428 - - ( 20,640 ) 444,135
Reserve for emplolyee benefit 2,524,694 271,954 244,635 59,816 10,550 - 2,481,647
obligation
Total $ 3,113,241 343,712 321,063 59,816 36,814 ( 20,469 ) 3,018,791
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	January 1, 2013	Increase	Decrease	Use	Reversal	Foreign exchange	December 31, 2013
Reserve for guarantee liabilities Reserve for lawsuit Reserve for emplolyee beneft obligation Total	$ 41,379	20,001	-	-	14,067	31	47,344
	520,230	-	-	-	-	20,973	541,203
	2,312,133	516,855	242,027	62,267	-	-	2,524,694
	$ 2,873,742	536,856	242,027	62,267	14,067	21,004	3,113,241

(T) Other liabilities

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

December 31, 2014 December 31, 2013
Advance interest receipts $ 5,255 5,031
Unearned revenue 105,320 102,732
Other advances receipts 57,484 34,099
Guarantee deposits received 515,248 463,252
Temporary receipts and suspense accounts - 165,745
Other 5,479 762
Total $ 688,786 771,621
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Taiwan Business Bank Annual Report 2014

(U) Equity

(a) Common stock

As of December 31, 2014 and 2013, the Bank’s authorized capital were all $60,000,000 and the paid‑in capital for common shares of the Bank were $52,979,141 and $50,941,482 and the face value of each share is NTD $10. The outstanding shares were 5,297,914 thousand shares, and 5,094,148 thousand shares, respectively.

Pursuant to the resolution approved by the stockholders’ meeting of the Bank on June 20, 2014, the Bank increased its capital from retained earnings by $2,037,659 and issued 203,766 thousands shares. The capital increase has been approved by Financial Supervisory Commission and came into effect on July 24, 2014. The base date of the capital increase is set on August 18, 2014.The Bank has completed the registration of change in paid‑in capital on October 9, 2014.

Pursuant to the resolution approved by the stockholders’ meeting of the Bank on June 21, 2013, the Bank increased its capital from retained earnings by $1,959,288 and issued 195,929 thousands shares. The capital increase has been approved by Financial Supervisory Commission and came into effect on July 15, 2013. The base date of the capital increase is set on August 19, 2013 and the legal registration proce‑ dures was completed on August 28, 2013.

(b) Capital surplus

Pursuant to the amendment of the Company Act which was published in January 2012, the Company can only transfer realized capital surplus into capital or distribute cash dividends after the capital surplus be used to offset a deficient. In compliance with the resolution, realized capital surplus includes the income derived from the issuance of new shares at a premium and the income from endowments received by the company. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, the total amount of capital surplus to be used to increase capital shall not exceed 10% of total paid-in capital.

(c) Earnings distribution and dividend policy

Under the Bank’s Articles of Incorporation, earnings are used initially to pay for income taxes and restore cumulative losses, and 30% of the remaining earnings is set aside as legal reserve. Special reserve is ap‑ propriated from or reversed to earnings per other regulations.

The remaining balance of these earnings, if any, is distributed as follows:

(1) Add accumulated retained earnings from previous years as distributable dividends and the amount of dividends is resolved by the annual stockholders’ meeting according to the proposal submitted by the Board of Directors.
(2) Employees bonus: 1% to 8% (recognized as expense).

(3) Remuneration to directors: 1% (recognized as expense).

budget plan, adopts residual dividend policy and primarily distributes stock dividend to eusure the capital is sufficient. When there is surplus of capital, the remaining capital can be distributed by cash dividend. Cash dividend shall not be lower than 10% of the total dividend distributed. If the cash dividend distributed per share is lower than NTD$ 0.1, except for otherwise resolved by the shareholder’s meeting, it is

Ⅵ

not distributed. If there is any situation conforms to that is regulated in article 44 item 1 of the Banking Act of The Republic of China, the Bank is not allowed to distribute earnings by cash or purchase shares outstanding. Employee bonus can be issued by new shares or by cash per the resolution of the board meeting. The maximum cash earning distribution is not allowed to be over 15% of the total paid in capital unless the legal reserve reaches the total paid-in capital.

In compliance with the amendment of Company Act published in January 2012, if the Company incurs no loss, under the consent of the shareholder’s meeting, the Company is allowed to distribute new shares or cash dividends from legal reserve to the extent that the legal reserve issued is the surplus exceeding 25% of the paid in capital.

Under the Ruling No. 1010012865 issued on April 6, 2012 by the FSC , special reserve is appropriated from retained earnings based on the equivalent amounts of the contra accounts in equity. This special reserve may not be distributed as dividends to stockholders until the balances of these contra accounts in equity are reversed.

Employee bonuses and directors and supervisors remuneration are calculated based on the amount of income after tax deducted by legal reserve and special reserve, and multiplied by the estimated percentage, which is 8% for employee bonuses and 1% for directors and supervisors remuneration. The estimated employee bonuses are $305,347 and $167,590 and the directors and supervisors remuneration are $38,168 and $20,949 forthe year ended December 31, 2014 and 2013, respectively. The shares of stock dividends were calculated based on the closing price of the date before the stockholder’s meeting and it also took into consideration the effect of stock dividends exclusion.

The resolved amounts of $167,590 and $20,949 of the employee bonuses and directors and supervisors remuneration which were determined by the shareholder’s meeting on June 20, 2014

The employee bonus, director's and supervisors remuneration and related dividends which will be distributed to shareholders is pending for the resolution of the shareholders.

The related information regarding the earnings distribution decision of the shareholders’ meeting can be acquired on Market Observation Post System or other sites. Difference between the amount actually distributed to the shareholders and the amount estimated in the financial statement is accounted for as changes in accounting estimates and is recognized in the year which the shareholders' meeting deciding the actual distribution takes place.

The Bank resolved the earning distribution for the earnings of 2013 and 2012 in the shareholder’s meeting on June 20, 2014 and June 21, 2013. The dividends distributed are as follows:

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

2013 2012
Distribution rate Distribution rate
Amount Amount
(NT dollar) (NT dollar)
Dividends to common share holders
Share $ 0.40 2,037,659 0.40 1,959,288
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Taiwan Business Bank Annual Report 2014

(d) Other equity items

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

Difference of
Unrealized gains
foreign exchange in
and losses of
avaliable-for-sale translating financial Total
statements of foreign
financial assets
operating unit
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	Unrealized gains and losses of avaliable-for-sale fnancial assets	Unrealized gains and losses of avaliable-for-sale fnancial assets	Difference of foreign exchange in translating fnancial statements of foreign operating unit	Difference of foreign exchange in translating fnancial statements of foreign operating unit	Total	Total
January 1, 2014 Available-for-sale fnancial assets -Valuation adjustment -Realized amount Currency translation difference -Current exchange difference December 31, 2014 January 1, 2013 Available-for-sale fnancial assets -Valuation adjustment -Realized amount Currency translation difference -Current exchange difference December 31, 2013		$ 14,997 ( 65,133 ) 22,495 - $ ( 27,641 ) $ ( 86,182 ) 85,317 15,862 - $ 14,997		( 111,235 ) - - 203,093 91,858 ( 63,760 ) - - (47,475) ( 111,235)		( 96,238 ) ( 65,133 ) 22,495 203,093 64,217 ( 149,942 ) 85,317 15,862 (47,475) ( 96,238 )

(V) Income taxes

(a) The amount of income tax for the year 2014 and 2013 were as follows:

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

For the year ended December 31,
2014 2013
Current tax expense
Current period $ 239,498 79,632
Adjustment for prior periods 9,941 30,082
Basic tax 49,848 98,395
299,287 208,109
Deferred tax expense
Origination and reversal of temporary different ( 128,708 ) 38,439
Income tax expenses 170,579 246,548
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(b) The amount of income tax recognised in other comprehensive income for the year 2014 and 2013 were as follows:

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

For the year ended December 31,
2014 2013
Foreign exchange difference in translating financial statements of $ ( 41,597 ) 9,724
foreign operations
Unrealized valuation gains on available-for-sale financial assets 1,107 -
Defined benefit plan actuarial (gains) loss ( 1,793 ) 11,282
Total $ ( 42,283 ) 21,006
----- End of picture text -----

17%. The Bank calculates base tax based on Income Basic Tax Act. The income tax of the Bank for the year 2014 and 2013 is as follows:

Ⅵ

	For the year ended December 31,	For the year ended December 31,
	2014	2013
Income tax computed on net income before tax Permanent differences: - Tax-exempt securities transaction loss (income) - Net income from offshore banking unit - Valuation gain from financial assets and liabilities at fair value through proft or loss - Cash Dividend - Reversal of impairment gain on assets - Non-deductible temporary difference Temporary differences: -Difference between allowance for uncollectible accounts and tax law - Reversal of losses on lawsuit -Difference between the actual pension amount and the statutory pension amount regulated in the Tax Law - Other Taxable income Duduct: Loss carryforward Income tax payable (current) Decrease(increase) in deferred income tax assets Additional tax resulted from Alternative Minimum Tax Overseas branch income tax expenses Underestimate(overestimate) prior income tax expense Income tax expense (gains)	$ 932,572	655,648 ( 6,692 ) ( 139,477 ) ( 11,907 ) ( 25,382 ) - - 332,354 - ( 28,963 ) - 775,581 (768,467 ) 7,114 38,439 98,395 72,518 30,082 246,548

	411
	( 70,703 )
	( 23,784 )
	( 28,405 )
	( 109 )
	36

	13,370
	( 12,993 )
	( 12,425 )
	264
	798,234
	(783,709 )
	14,525
	( 128,708 )
	49,848
	224,953
	9,961
	$ 170,579

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For the year ended December 31, 2014
Recognized
Recognized
Beginning in other Ending
balance in profit or comprehensive balance
loss
income
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	Beginning balance	Beginning balance	Recognized in proft or loss	Recognized in proft or loss	Recognized in other comprehensive income	Recognized in other comprehensive income	Recognized in other comprehensive income	Recognized in other comprehensive income
Temporary difference Deferred tax assets resulted from allowance for bad debts exceeding the limit regulated in Tax Law Loss on assets impairment Indemnity reserve Reserve for employee beneft liabilities Land value increment tax Exchange differences from the translation of financial statements of foreign operations Unrealized valuation profit or loss on available-for-sale fnancial assets Actuarial loss Other Subtotal Losses carried forward Net deferred tax assets (liabilities) The information stated on the balance sheet is as follows: Deferred tax assets Deferred tax liabilities		$ 332,354 46,627 88,439 411,017 ( 879,056 ) 22,783 ( 1,656 ) 63,266 - 83,774 1,057,165 $ 1,140,939 $ 2,021,651 $ 880,712		13,370 - ( 12,993 ) ( 12,425 ) - - - - 264 ( 11,784 ) 140,492 128,708		- - - - - ( 41,597 ) 1,107 ( 1,793 ) - ( 42,283 ) - ( 42,283)		345,724 46,627 75,446 398,592 ( 879,056 ) ( 18,814 ) ( 549 ) 61,473 264 29,707 1,197,657 1,227,364 2,125,784 898,420

Taiwan Business Bank Annual Report 2014

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For the year ended December 31, 2013
Recognized
Recognized
Beginning in other Ending
balance in profit or comprehensive balance
loss
income
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	For the year ended December 31, 2013	For the year ended December 31, 2013	For the year ended December 31, 2013	For the year ended December 31, 2013	For the year ended December 31, 2013	For the year ended December 31, 2013	For the year ended December 31, 2013	For the year ended December 31, 2013
	Beginning balance		Recognized in proft or loss		Recognized in other comprehensive income		Ending balance
Temporary difference Deferred tax assets resulted from allowance for bad debts exceeding the limit regulated in Tax Law Loss on assets impairment Indemnity reserve Reserve for employee beneft liabilities Land value increment tax Exchange differences from the translation of fnancial statements of foreign operations Unrealized valuation proft or loss on available-for-sale fnancial assets Actuarial loss Subtotal Losses carried forward Investment tax credits Net deferred tax assets (liabilities) The information stated on the balance sheet is as follows: Deferred tax assets Deferred tax liabilities		$ - 46,627 88,439 439,980 ( 879,056 ) 13,059 ( 474 ) 51,984 ( 239,441 ) 1,387,749 10,064		332,354 - - ( 28,963 ) - - ( 1,182 ) - 302,209 ( 330,584 ) (10,064 ) ( 38,439)		- - - - - 9,724 - 11,282 21,006 - - 21,006		332,354 46,627 88,439 411,017 ( 879,056 ) 22,783 ( 1,656 ) 63,266 83,774 1,057,165 - 1,140,939 2,021,651 880,712
		$ 1,158,372 $ 2,037,902 $ 879,530

As of December 31, 2014, the tax losses which are to be carried forward for deducting future income and which are not yet recognized as deferred tax assets are as follows:

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Loss on not recognized as Available for
Loss for the year No loss carryforwards
deferred income tax assets carryforward year
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Loss for the year	No loss carryforwards	No loss carryforwards	Loss on not recognized as deferred income tax assets	Available for carryforward year
2005 2006 2009		$ 5,517,673 1,021,326 1,565,648 $ 8,104,647	1,059,605 - -	2006 ~ 2015 2007 ~ 2016 2010 ~ 2019

Tax losses are the losses incurred within the first 10 years from the start‑up which is approved by the tax authority and can be applied to reduce net income of the year, and the net amount is used to calculate the amount of income tax. The amount which is not recognized as deferred income tax assets is $180,133, and this is because the Bank and its subsidiaries are not likely to have such amount of taxable income for the temporary difference to apply.

The income tax returns of the subsidiaries Taiwan Business Bank Insurance Agency Co., Ltd. and Taiwan Business Bank Property Insurance Agency Co., Ltd. have been approved until 2012 by the Tax authority. The income tax return of Taiwan Business Bank International Leasing Co., Ltd. has not been approved yet.

Ⅵ

(d) Imputation Credit Account and Tax Deductible Ratio are summarized below:

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December 31, 2014 December 31, 2013
Stockholders' imputation credit account $ 209,990 260
2014(expected) 2013(actual)
Stockholders' tax deductible ratio 9.93% 3.78%
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As of December 31, 2013 and 2012 , all of the ending balance of undistributed retained earnings arose from earnings in 1998 and thereafter. The above imputation information is calculated based on the Decree No.10204562810 issued by the Ministry of Finance, R.O.C on October 17, 2013.

(W) Employee benefit liability reserve

subsidiaries were as follows:

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December 31, 2014 December 31, 2013
Recognized on the balance sheet
Defined benefit plan $ 1,751,221 1,798,431
Employee deposit with favorable rate 730,426 726,263
Total $ 2,481,647 2,524,694
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Composition of plan assets:

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December 31, 2014 December 31, 2013
Present value of defined benefit obligation $ 6,864,745 6,808,683
Less: Fair value of defined benefit plan assets ( 5,113,524 ) ( 5,010,252 )
Liabilities recognized in consolidated financial statement $ 1,751,221 1,798,431
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provides pensions for employees upon retirement. The plans (covered by the Labour Standards Law) entitle a retired employee to receive an annual payment based on years of service and average salary for the six months prior to retirement.

(1) Composition of plan assets

The Group allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Labour Pension Fund Supervisory Committee. With regard to the utilization of the funds, minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with interest rates offered by local banks.

The Group’s Bank of Taiwan labour pension reserve account balance amounted to $5,113,524 at the end of the reporting period. For information on the utilisation of the labour pension fund assets including the asset allocation and yield of the fund, please refer to the website of the Labour Pension Fund Supervisory Committee.

2013 were as follows:

Taiwan Business Bank Annual Report 2014

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For the year ended December 31,
2014 2013
Defined benefit obligation on January 1 $ 6,808,683 7,262,790
Benefits paid by the plan ( 297,253 ) ( 847,299 )
Current service costs and interest 333,638 346,859
Actuarial losses 19,677 46,537
Defined benefit obligation on December 31 $ 6,864,745 6,808,887
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were as follows：

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For the year ended December 31,
2014 2013
Fair value of plan assets on Junuary 1 $ 5,010,252 5,488,138
Contributions made 281,175 304,294
Benefits paid by the plan ( 297,253 ) ( 847,299 )
Expected return on plan assets 89,123 84,947
Actuarial gain (loss) 30,227 ( 19,828 )
Fair value of plan assets on December 31 $ 5,113,524 5,010,252
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：

	For the year ended	December 31,
	2014	2013
Current service costs Interest cost Expected return on plan assets Actual return on plan assets	$ 215,317	238,517 108,342 ( 84,947) 261,912 65,119
	118,321
	( 89,123)
	$ 244,515
	$ 119,350

(5) Actuarial gains and losses recognized in other comprehensive income

Actuarial gains and losses recognised in other comprehensive income for the year 2014 and 2013 were as follows：

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For the year ended December 31,
2014 2013
Amount on January 1 $ 372,152 305,787
Recognised during the period ( 10,550 ) 66,365
Amount on December 31 $ 361,602 372,152
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(6) Actuarial assumptions

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For the year ended December 31,
2014 2013
Discount rate of defined benefit plan 1.75% 1.75%
Expected return on plan assets 1.75% 1.75%
Future salary increase rate 1.50% 1.50%
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Ⅵ

(7) Historical information

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December 31, December 31, December 31,
January 1, 2012
2014 2013 2012
Present value of the defined benefit obligation $ 6,864,745 6,808,683 7,262,790 6,551,442
Fair value of plan assets ( 5,113,524 ) ( 5,010,252 ) ( 5,488,138 ) ( 5,066,674 )
Net liabilities (assets) of defined benefit obligation $ 1,751,221 1,798,431 1,774,652 1,484,768
Experience adjustments arising on the present value of
plan obligation $ 19,677 46,537 263,113 -
Experience adjustments arising on the net fair value of
plan assets $ ( 30,227 ) 19,828 42,674 -
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The expected allocation payment made by the Bank to the defined benefit plans for the one year period after the reporting dates is $264,000 in 2014. The expected rate of return of long-term assets is based on the overall portfolio performance instead of the sum of respective assets' performance. The rate of return is purely based on historical rate of return and is not adjusted.

(8) Sensitivity analysis

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December 31, 2014
Discount rate 1.50% 1.75% 2.00%
Defined benefit plan obligation $ 7,035,548 6,864,745 6,700,214
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The Group allocates 6% of each employee’s monthly wages to the labour pension personal account at the Bureau of the Labour Insurance in accordance with the provisions of the Labour Pension Act. Under this defined contribution plan, the Group allocates a fixed amount to the Bureau of the Labour Insurance with‑ out additional legal or constructive obligations.

The Bank and its subsidiaries’s pension costs under the defined contribution method were $75,767 and $72,013 for the year ended December 31 2014 and 2013, respectively. Payment was made to the Bureau of Labour Insurance or the competent authority of labour management of foreign branches.

(c) Employee deposit with favorable rate

	December 31, 2014	December 31, 2013
Present value of defned beneft obligation (Liabilities recognized in separate fnancial statement)	730,426	726,263

The Bank and its subsidiaries conducted the obligation of time deposit with favorable rate for retired and current employees based on the internal regulation "Saving Deposits for Employees".

2013 were as follows：

Taiwan Business Bank Annual Report 2014

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For the year ended December 31,
2014 2013
Defined benefit obligation on January 1 $ 726,263 537,481
Benefits paid by the plan ( 161,314 ) ( 159,403 )
Interest cost 27,439 19,842
Actuarial losses 138,038 328,343
Defined benefit obligation on December 31 $ 730,426 726,263
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were as follows:

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For the year ended December 31,
2014 2013
Fair value of plan assets on January 1 $ - -
Contributions made 161,314 159,403
Benefits paid by the plan ( 161,314 ) ( 159,403 )
Fair value of plan assets on December 31 $ - -
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：

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For the year ended December 31,
2014 2013
Interest cost $ 27,439 19,842
Actuarial loss 138,038 328,343
$ 165,477 348,185
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(4) Primary actuarial assumption

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For the year ended December 31,
2014 2013
Discount rate of employee deposit with favorable rate 4.0% 4.0%
Rate of return for capital deposited 2.0% 2.0%
Annual Diminishing rate of account balance 1.0% 1.0%
Possibility that employee deposit with favorable rate be modified 50.0% 50.0%
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(5) Historical information

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December 31, December 31, December 31,
January 1, 2012
2014 2013 2012
Present value of defined benefit plan $ 730,426 726,263 537,481 554,409
Adjustments on the present value of defined benefit plans
based on past experiences $ 138,038 328,343 108,619 -
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Ⅵ

(6) Sensitivity analysis

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December 31, 2014
Discount rate 3.75% 4.00% 4.25%
Defined benefit plan obligation $ 740,684 730,426 712,364
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(X) Earnings per share

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For the year ended December 31,
2014 2013
Net income $ 5,315,137 3,610,202
Weighted average number of common stock shares outstanding (in 5,297,914 5,297,914
thousands) (Note 1)
Basic earnings per shares (in dollars) $ 1.00 0.68
Dilutive potential common shares (in thousands) (Note 2) 33,226 18,477
Weighted average number of shares outstanding for diluted EPS (in 5,331,140 5,317,130
thousands)
Diluted earnings per shares (in dollars) $ $1.00 0.68
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Note 1: The basic earnings per share of 2013 has applied retrospective adjustments. Note 2: The shares were calculated based on the stock price on the balance sheet date.

(Y) Net interest income

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For the year ended For the year ended
December 31, 2014 December 31, 2013
Interest revenue:
Loan $ 6,286,694 6,235,271
Secured loans 14,228,496 13,790,831
Bills negotiated 5,509 7,376
Bank overdraft 18,327 14,450
Discount 27,776 26,716
Time deposit from Central Bank 1,547,684 1,505,047
Due from the Central Bank 175,964 177,848
Call loans to banks 233,894 306,489
Bond 575,042 422,954
International credit card 75,030 82,571
Overdue loans 307,898 353,333
Bills 161,920 77,150
Due from other Banks 1,437,534 164,763
Other 177,910 128,558
Subtotal 25,259,678 23,293,357
Interest expense:
Deposits 8,913,450 8,273,493
Deposits from banks 178 216
Call loans from banks 469,449 265,357
Fund 27,912 32,317
Financial debentures 1,031,029 1,056,949
Bond sold under repurchase agreement 26,367 69,780
Other 1,036 743
Subtotal 10,469,421 9,698,855
Total $ 14,790,257 13,594,502
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Taiwan Business Bank Annual Report 2014

(Z) Net service charge income

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For the year ended December 31,
2014 2013
Service charge income:
Remittance service fee $ 105,523 95,906
Import bills negotiated service fee 71,094 69,600
Export bills negotiated service fee 24,949 29,366
Letter of credit service fee 12,474 14,587
Certification service fee 1,120 1,058
Acceptance service fee 2,172 1,720
Trust service fee 545,281 447,974
Guarantee service fee 77,558 78,306
Agency service fee 37,770 39,894
Interbank service fee 68,590 68,398
Card service fee 134,789 173,454
Commission revenue of insurance premium 1,186,491 1,076,914
Custodian service fee 125,570 116,150
Foreign currency service fee 119,202 125,150
Commission of futures 5,094 8,914
Loan service fee 145,908 160,267
Miscellaneous fees 400,228 349,027
Subtotal 3,063,813 2,856,685
Service fee expense:
Foreign currency service fee 20,968 21,486
Interbank service fee 126,319 122,079
Trust service fee 8,768 7,752
Agency service fee 3,547 2,975
IC card service fee 57,621 50,992
Check clearing service fee 14,652 14,784
Remittance service fee 2,162 1,322
Custodian service fee 27,925 24,132
Call loans service fee 1,163 1,773
Miscellaneous fees 20,868 19,388
Subtotal 283,993 266,683
Total $ 2,779,820 2,590,002
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(AA) Gains (losses) on financial assets and liabilities at fair value through profit or loss

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For the year ended December 31,
2014 2013
Valuation profit and loss:
Government bonds $ 821 ( 1,789 )
Corporate bonds ( 9,953 ) 4,268
Financial debentures 35,913 ( 11,305 )
-
Stock of listed company ( 2,069 )
-
Beneficiary certificates ( 4,668 )
Commercial paper 3 155
Option contracts ( 1,847 ) 491
Interest swap contracts 32,614 54,391
Foreign exchange forward contracts ( 70,479 ) ( 37,217 )
Currency swap contracts 160,352 63,154
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Ⅵ

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For the year ended December 31,
2014 2013
Subtotal 147,424 65,411
Disposition profit and loss:
Government bond 1 591
Financial debentures ( 50,448 ) -
Stock of listed company ( 4,488 ) 2,298
Beneficiary certificates ( 3,285 ) 2,815
Option contracts 18,299 33,417
Interest swap contracts ( 39,313 ) ( 54,721 )
Foreign exchange forward contracts ( 212,611 ) 197,311
Currency swap contracts 418,348 498,808
Non-delivery forward contracts ( 1,524 ) ( 3,566 )
Subtotal 124,979 676,953
Dividend revenue 8,944 4,922
Interest income 44,663 82,137
Total $ 326,010 829,423
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(AB) Realized gains (losses) on available‑for‑sale financial assets

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For the year ended December 31,
2014 2013
Gain on disposition of government bond $ 64 6,412
Gains on disposition of corporate bonds 12,535 7,070
Gains (losses) from disposition of financial debentures 9,896 (56 )
Gains from disposition of listed and OTC stocks - 2,436
Dividend revenue 30,583 19,798
Total $ 53,078 35,660
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(AC) Other non‑interest income

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For the year ended December 31,
2014 2013
Rental revenue of operating assets $ 8,204 8,076
Loss from disposition of premises and equipments ( 386 ) ( 754 )
Loss of account error ( 151 ) ( 111 )
Gold deposit book 6,009 13,553
Gain (loss) on sale of non-performing loans 21,824 -
-
Miscellaneous income of dormant account recategorized as expense ( 206,140 )
Other oprating expense ( 22,870 ) ( 44,986 )
Other miscellaneous income 72,184 92,968
Total $ ( 121,326 ) 68,746
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(AD) Bad debt expenses and provision for guarantee reserve

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For the year ended December 31,
2014 2013
Discounts and loans $ 2,545,394 3,001,387
Receivables and other financial assets ( 52,301 ) ( 7,182 )
Subtotal 2,493,093 2,994,205
Guarantee reserve 45,494 5,934
Total $ 2,538,587 3,000,139
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Taiwan Business Bank Annual Report 2014

(AE) Employee benefit expense

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For the year ended December 31,
2014 2013
Salary expense $ 5,578,887 5,587,989
Labor and health insurance 391,191 389,939
Pension expense 320,282 333,925
Other employee benefit 743,793 994,033
Total $ 7,034,153 7,305,886
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(AF) Depreciation and amortization

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For the year ended December 31,
2014 2013
Property and equipment $ 324,023 363,327
Amortization
Computer software 83,812 75,649
Other deferred charges 252 227
Total $ 408,087 439,203
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(AG) Other operation and management expense

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For the year ended December 31,
2014 2013
Compensation loss $ 835 176
Water and electricity fee 110,208 104,424
Postage and telecommunication 152,674 150,145
Transportation fee 30,907 30,176
Printing and advertisement fee 156,723 203,271
Maintainence fee 34,862 36,892
Insurance fee 377,102 410,341
Professional service fee 163,814 161,036
Materials and supplies 96,617 94,617
Rental expenses 587,640 548,877
Duties and levies 1,097,537 672,701
Membership, donation and partaking 517,214 494,347
Storage, packing and processing 39,852 40,607
Cash transit 103,400 110,090
Other 58,397 63,563
Total $ 3,527,782 3,121,263
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(AH) Financial Instruments

(a) Fair value information
- assets and financial liabilities measured at amortised cost to be a reasonable approximation of fair value in the consolidated financial report:

were as follows:

Ⅵ

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December 31, 2014
Book value Fair value
Hold-to-maturity financial assets-net $ 194,541,571 194,577,231
December 31, 2013
Book value Fair value
Hold-to-maturity financial assets-net $ 194,434,171 194,458,002
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Financial products measured at fair value through proft or loss	December 31, 2014	December 31, 2014	December 31, 2014	December 31, 2014
	Total	1st Tier	2nd Tier	3rd Tier
Non-derivative fnancial assets Assets: Financial assets at fair value through proft or loss Financial assets held for trading Other Financial assets measured at fair value on initial recognition Available-for-Sale Financial Assets Security Investment Bond Investment Derivative fnancial assets Assets: Financial assets at fair value through proft or loss Liabilities: Financial liabilities at fair value through proft or loss	$ 79,949 1,892,245 1,764,897 14,278,642 $ 638,513 303,213	- - 1,764,897 - 27,285 -	79,949 1,892,245 - 14,278,642 611,228 303,213	- - - - - -
	December 31, 2013
Financial products measured at fair value through proft or loss
	Total	1st Tier	2nd Tier	3rd Tier
Non-derivative fnancial assets Assets: Financial assets at fair value through proft or loss Financial assets held for trading Financial assets measured at fair value on initial recognition Available-for-Sale Financial Assets Security Investment Bond Investment Derivative fnancial assets Assets: Financial assets at fair value through proft or loss Liabilities: Financial liabilities at fair value through proft or loss	$ 2,479,600 806,795 12,238,523 $ 494,994 280,882	- 806,795 - 27,243 -	2,479,600 - 12,238,523 467,751 280,882	- - - - -

For the year ended December 31, 2013, the stocks possessed by the Bank which amounted to

public on August 5, 2013.

Taiwan Business Bank Annual Report 2014

				For the year ended December 31, 2013	For the year ended December 31, 2013	For the year ended December 31, 2013
				Increase			Decrease
Name	Balance at the beginning of the year	Net income or stockholder's equity	Purchase or issue	Transfer to the 3rd tier from other tiers	From the 3rd tier fnancial liabilities to the 3rd tier fnancial asset	Sale, disposal or settlement	Transferring to other tiers from the 3rd tier	From the 3rd tier fnancial assets to the 3rd tier fnancial liabilities	Balance at the end of the year
Financial asset at fair value through proft or loss Financial asset measured at fair value on initial recognition Available-for-sale fnancial assets Total	$ 1,557,880 737,983	41,376 24,869	887,100 445,165 1,332,265	- - -	- - -	1,598,916 317,889 1,916,805	887,440 890,128 1,777,568	- - -	- - -
	$ 2,295,863	66,245

tier of bond investments in 2013. The amount transferred from the third tier to the second tier was$1,777,568.

measured at fair value through profit or loss, and available-for-sale and held-to-maturity, the quoted price is regarded as its fair value. If there is no quoted price in an active market for the financial asset, its fair value is estimated on the basis of the result of a valuation technique that refers to quoted prices provided by financial institutions. Ask (bid) is used to evaluate the selling (buying) position by the Bank if the quoted price include ask and bid price. If there is not a quoted price for the financial asset, transaction price close to the balance sheet date is the fair value.
(2) Fair value of financial derivatives (including foreign exchange forwards, non-delivery forwards, interest swaps, currency swaps, cross currency swaps, stock index futures and foreign exchange option) are the amount of cash to be paid or to be received by the Bank, assuming that the contract will be terminated on the balance sheet date. The Bank adopts mark-to-model prices which are usually adopted among the banking industry, such as Discounted-Cash-Flow model and Black-Scholes model. The Bank adopts the price data from Reuters and Bloomberg to calculate the fair value of the holding position. The aforesaid price data is based upon the middle price and used consistently by the Bank. Furthermore, the fair value of the embedded financial derivatives are calculated based upon the quote from the counterparty, and separately calculated in accordance with the contracts.

(AI) Financial Risk Information

(a) General description

The goal of the financial risk management of the Bank is to effectively diversify, transfer and avoid risks by taking customer service, financial business operating target, overall risk tolerance and external limitation of laws into consideration and provide benefit to customers, shareholders and employees.

Ⅵ

The Bank's Financial Risk Management policy is to establish a risk management mechanism in terms of risk identification, risk measurement, risk monitoring, and risk control and to construct the overall risk management system. It is to facilitate the business model with appropriate risk management and to control the rationality between risks and rewards under the premise of legal capital ration in order to achieve operating targets and increase the value of the Bank for the shareholders. The scope covers the management of credit risk, market risk, operation risk, banking book interest rate risk , capital liquidity risk, and capital adequacy.

(b) Risk management organization structure

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Board of directors
President
Risk Management Committee
General manager
Assets and liabilities Management Committee
Vice president
Credit Examination Committee
Overdue Loans Clearing Committee
Risk management center
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(1) Risk Management Committee
The chairperson of the Risk Management Committee is appointed by the president, and the vice chairperson and other members are appointed by the chairperson. The duties are as follows:
and industrial changes which related to risk management occur.
B. Approval of the measurement and analyzing methods of various risk exposure.
C. Examination of the risk management policy of the Bank and relavent limitations and management indices.
D. Monitoring the risk exposure and approval of the response project when the risk exceeds the limitations of the management indices.
E. Ratio management of proprietary capital to risk assets.

Risk Management Department is the assistant unit of the Risk Management Committee. The responsibility of the Risk Management Department is to regularly report the important resolution and various risk exposure to the board of (executive) directors and conduct the identification, analysis and measurement of various risk exposure. The establishment of the Risk Management Committee is to manage and monitor the risk of the Bank in pursuit of steady growth of the Bank’s earnings and value.

(2) Assets and Liabilities Management Committee

The chairperson of the Assets and Liabilities Management Committee is the general manager, and the members are formed by the vice assistant general manager and the department heads of deposit, loan, financial transaction, capital deployment and risk management units. The responsibility of the Assets and Liabilities Management Committee is to monitor and manage the banking book

Taiwan Business Bank Annual Report 2014

interest rate risk and capital liquidity risk and convenes meetings regularly, to approve the analyzing and measurement methods of the capital liquidity risk and banking book interest rate risk exposure, to examine the capital liquidity risk and banking book interest rate risk management policy as well as the relavent limitations and management indices, to receive interest rate risk and capital liquidity risk exposure reports and adjust the assets and liabilities interest rate duration structure and capital maturity structure.

(3) Credit Examination Committee

The convener of the Credit Examination Committee is the assistant general manager supervising Risk Management Center. The Committee in principle convenes weekly to examine the modification and establishment of the regulations (including main points, measures and procedures) for significant loans, foreign exchange and guarantee cases.

(4) Overdue Loans Clearing Committee

The convener of the Overdue Loans Clearing Committee is the supervising vice president and the executive secretary is the manager of the Creditor’s Right Management Department. The convener holds meetings based on the necessacity to clear the non-performing loans and non-accrual loans and bad debts in order to improve the quality of the credit assets of the Bank and its subsidiaries.

deteriating financial status of trade counterparties, pessimistic external economic situation or other factors. The primary source of the credit risk of the Bank is the loan business, such as loans of various terms, guarantees and letters of credit, loan commitments, etc., in addition, other sources of credit risk include call loans from banks, securities investments, derivative financial instrument transactions, etc.

(2) Credit risk management policy

In order to control the credit risk to a tolerable scope, the Bank continuously conduct below operations:

A. Fully understand the credit status and ratings of loan customers and trade counterparties as well as the purposes and payments of loans.
B. Prudently evaluates the credit risk status of loan customers and trade counterparties and consider the adequacy of collaterals and guarantees to assess risk and profit.
C. Establish credit rating mechanism for loan customers or apply the ratings from outside credit rating institutions as the reference for undertaking credit cases or interest rate determination.
D. Modify relavent regulations to control the credit risk to a tolerable extent for the Bank.

The credit risk management procedure and measurement methods of the Bank's major business are as follows:

A. Credit Business (Including loan commitments and guarantees)

The categorization and credit quality rating of credit assets are as follows:

Ⅵ

a. Categorization of credit assets

classified as the first category, others are classified, based on the assurance status and the time overdued, as second category (need attention), third category (possible to recover), fourth category (difficult to retrieve) and the fifth category (unable to retrieve). In order to manage creditor's rights, the Bank established "Regulations Governing the Procedures to Evaluate Assets and Deal with Non-performing/Non-accrual Loans", "Regulations Governing the Reconciliation of Non-performing/Non-accrual Loans" and its operating procedure "Operating procedure Governing the Collection of Non-performing/Non-accrual Loans" and "Code of Conduct to Deal With Non-Performing Loans" to serve as the guidelines for dealing with non-performing credit and overdue loans collection.

b. Categorization of credit quality

Based on historical default data, the Bank established internal credit rating model and completed internal rating system to serve as a reference to credit risk control.

In order to develop an appropriate credit rating model for the Bank to evaluate the credit risk for corporate banking customers and private banking customers, it applied statistical methods, professional expert judgements and relavent customer information to fulfill the requirements. The Bank examined whether the internal credit rating model is in conformity with the actual scenario based on practical default data quarterly and adjusted all parameters to optimize the estimated results.

B. Due from other banks and call loans to banks

The Bank evaluates the credit status of counterparties before transaction and takes the rating information from domestic and foreign credit rating institutions into consideration to determine various credit risk facilities for the counterparties.

The Bank manages credit risk of debt instruments through credit rating data of external institutions, credit quality of bonds, geographic situations and counterparties' risk so as to identify credit risk.

quality and are controlled based on the trade amount (including loans at call). Counterparties which do not have credit rating or which are of low quality shall be examined individually. For counterparties which are general customers, the Bank controls the credit risk exposure based on the derivative instrument risk facilities and conditions approved by general credit procedures.

(3) Credit risk hedging or diminishing.

A. Collaterals

The Bank adopts a series of policies and procedures to mitigate credit risk and enhance credit risk tolerance. The method applied most is to request customers to provide collaterals. The Bank established collateral accreditation code of conduct in term of collateral management and total loan amount to regulate the scope of collaterals and the accreditation method and regularly

Taiwan Business Bank Annual Report 2014

inspects the collaterals. When the collaterals devaluate or the concern of devaluation occurs, the Bank shall increase collaterals or retrieve part of the loans to ensure the creditor's right is intact.

B. Limit of credit risk and the control of credit risk concentration
a. In order to avoid the situation that the credit risk of single customer being too high, the credit limit of an individual, a related party or a related enterprise shall be in conformity with "Authorization method for subsection 3 of Atricle 33 of the Banking Act of the Republic of China" and the credit limit authorization steps are regulated in the Key Points of Credit Engagement Authorization and the Key Points of Credit Engagement Authorization for Overseas Branches of the Bank.
b. To enhance the risk concentration management, the Bank established regulations in terms of countries, financial institutions, industries and group enterprises. The relavent limits are reviewed and approved annually and the usage of the credit is monitored on a daily basis. In addition, the results are reported regularly.
C. General agreement of net amount settlement

The transactions of the Bank are mostly settled with gross amount. Part of the transactions agreed on net amount settlement. When a default occurs, the Bank terminates all the transactions with the counterparty and settles by net amount to further lower credit risk.

(4) Maximum credit risk exposure of the Bank.

the book value when not considering collaterals or other credit enhancement instruments. The maximum credit exposure off the consolidated balance sheet (when not considering collaterals or other credit enhancement instruments and not revokable) is as follows:

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Maximum credit risk exposure
Off balance sheet items
December 31, 2014 December 31, 2013
Loan commitment signed and irrevokable $ 39,694,378 2,602,110
Irrevokable credit card commitment of the customers 23,457,407 23,836,887
Signed but not used L/C credit amount 12,391,611 10,054,495
Various guarantee proceeds 9,073,990 9,000,830
Total $ 84,617,386 45,494,322
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The Management of the Bank evalueated the credit risk exposure and believed that the Bank is able to continuously control and minimize the off-balance-sheet credit risk exposure due to its strict appraisal process and regular subsequent examination.

(5) Credit risk concentration of the Bank

The Bank and its subsidiaries do not conduct significant transaction with single customer or single trade counterparty. The total amount of discounts and loans, overdue loans in terms of individual customer or individual trade counterparty is not significant. The information of credit risk concentration of the Bank’s discounts and loans and overdue loans are divided by industries, geographic areas and collaterals and listed as follows:

Ⅵ

A. Industry

Distribution of discounts and loans, overdue loans based on industries.

(In NT thousand)

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December 31, 2014 December 31, 2013
Industry
Amount % Amount %
Private business $ 519,917,395 51.35% 493,809,358 50.97%
Public business 22,129,302 2.19% 14,520,607 1.50%
Government institution 172,109,414 17.00% 165,932,856 17.13%
Non profit organization 3,701,726 0.37% 3,962,679 0.41%
Individual 254,629,361 25.15% 249,766,234 25.78%
Foreign financial institution 2,884,025 0.28% 4,957,757 0.51%
Foreign non-financial institution 37,063,467 3.66% 35,797,502 3.70%
Total $ 1,012,434,690 100.00% 968,746,993 100.00%
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B. Geographic area

Distribution of discounts and loans, overdue loans based on geographic area.

(In NT thousand)

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December 31, 2014 December 31, 2013
Area
Amount % Amount %
Domestic $ 972,601,713 96.07% 928,742,281 95.87%
Foreign 39,832,977 3.93% 40,004,712 4.13%
Total $ 1,012,434,690 100.00% 968,746,993 100.00%
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C. Collateral

Distribution of discounts and loans, overdue loans based on collateral.

(In NT thousand)

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December 31, 2014 December 31, 2013
Collateral
Amount % Amount %
Non-secured $ 351,363,384 34.70% 333,810,922 34.46%
Stock 10,299,450 1.02% 11,635,953 1.20%
Bond 4,643,420 0.46% 3,928,423 0.41%
Real estate 503,600,251 49.74% 482,031,623 49.76%
Chattel 14,688,914 1.45% 21,023,946 2.17%
Notes receivable 1,212,094 0.12% 1,169,884 0.12%
Guarantee 121,726,381 12.02% 112,420,927 11.60%
Other 4,900,796 0.49% 2,725,315 0.28%
Total $ 1,012,434,690 100.00% 968,746,993 100.00%
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Note: Secured credit are categorized in its respective item per the type of the collaterals. Non-secured credit (no collateral provided) is classified in fiduciary credit. If the credit amount is higher than the accreditation value, the credit amount within the accreditation is classified in the respective item, the credit amount exceeds the accreditation value is classified in fiduciary credit. The accreditation value is the value calculated per the accreditation regulations of the Bank, not the discounted value of the signed contract.

Taiwan Business Bank Annual Report 2014

loans to banks, financial assets at fair value through profit or loss, bills and bonds purchased under resell agreement, guarantee deposits paid and operation guarantee deposits and settlement funds are considered of minimum credit risk due to the good credit ratings of the trade counterparties.

as follows:

A. Credit quality analysis of discounts and loans as well as receivables

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Not overdue and not impairment amount Loss provided (D)
December 31, Overdue but Impaired Total With Without Net Amount
2014 Excellent Good Midium Acceptable standardUnder No rating Subtotal (A) not impaired (B) amount (C) (A)+(B)+(C) evidence of objective evidence of objective (A)+(B)+(C)-(D)
impairment impairment
Receivable
-Credit card $ 493,722 233,923 277,321 155,817 12,920 246,921 1,420,624 9,290 - 1,429,914 - 743 1,429,171
-Other 382,271 1,599,749 243,831 10,977 2,364 2,667,323 4,906,515 12,695 184,409 5,103,619 77,163 38,229 4,988,227
Discounts and 199,265,163 314,697,907 221,552,757 42,970,688 5,784,283 208,733,359 993,004,157 2,681,036 16,749,497 1,012,434,690 4,316,306 6,617,355 1,001,501,029
loans
Other financial 94 305 348 - - - 747 475 333,205 334,427 273,317 12 61,098
assets
Total $ 200,141,250 316,531,884 222,074,257 43,137,482 5,799,567 211,647,603 999,332,043 2,703,496 17,267,111 1,019,302,650 4,666,786 6,656,339 1,007,979,525
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December 31, 2013	Not overdue and not impairment amount	Not overdue and not impairment amount	Not overdue and not impairment amount	Not overdue and not impairment amount	Not overdue and not impairment amount	Not overdue and not impairment amount	Not overdue and not impairment amount	Overdue but not impaired (B)	Impaired amount (C)	Total (A)+(B)+(C)	Loss provided (D)	Loss provided (D)	Net Amount (A)+(B)+ (C)-(D)
	Excellent	Good	Midium	Acceptable	Under standard	No rating	Subtotal (A)				With objective evidence of impairment	Without objective evidence of impairment
Receivable -Credit card -Other Discounts and loans Other financial assets Total	$ 473,973 174,420 108,793,276 164 $ 109,441,833	208,246 1,313,219 347,695,457 43 349,216,965	279,972 361,469 243,543,650 1,581 244,186,672	195,345 51,768 34,835,863 - 35,082,976	17,163 - 4,545,772 - 4,562,935	281,351 2,158,577 201,850,045 - 204,289,973	1,456,050 4,059,453 941,264,063 1,788 946,781,354	8,940 86,641 3,596,935 462 3,692,978	- 139,441 23,885,995 376,894 24,402,330	1,464,990 4,285,535 968,746,993 379,144 974,876,662	- 73,602 5,124,124 268,283 5,466,009	1,163 58,561 5,337,997 11 5,397,732	1,463,827 4,153,372 958,284,872 110,850 964,012,921

The abovementioned "Excellent" refers to the position which belongs to level 1 to level 4 of the Bank's internal credit rating system, "Good" refers to the position belongs to level 5 to level 9, "Medium" refers to the position belongs to level 10 to level 17, "Acceptable" refers to the position belongs to level 18 to level 23, "under standard" refers to the position belongs to level 24 to level 26 and "No rating" refers to the position which possesses no credit rating in the Bank's internal rating system.

Ⅵ

B. Credit quality analysis based on intermal credit rating criteria of the not overdue and not impaired discounts and loans and expressed by customer types

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December 31, 2014 Excellent Good Midium Acceptable Under standard No rating Total
Private banking
Secured $ 81,739,872 69,296,413 69,057,498 5,472,372 2,850,363 2,109,038 230,525,556
Non-secured 1,270,197 4,491,422 11,194,693 2,116,959 116,326 1,737,775 20,927,372
Corporate banking
Government and public institution - 19,750,098 - 2,379,204 - 172,088,720 194,218,022
Financial institution 316,700 2,567,325 31,658 - - - 2,915,683
Margin loans receivable - - - - - 2,221,662 2,221,662
Large Enterprise- credit and guarantee - 133,544 42,789 - - - 176,333
fund
Large Enterprise-secured 40,342,076 11,752,148 1,236,654 1,120,471 63,241 - 54,514,590
Large Enterprise-nonsecured 13,501,801 43,579,860 6,931,805 406,724 340,801 3,569,752 68,330,743
Medium and small enterprises-credit and 8,246,900 29,427,389 48,891,682 4,192,775 343,682 63,142 91,165,570
guarantee fund
Medium and small enterprises-secured 44,206,738 98,888,749 68,036,479 19,300,369 1,364,718 9,421,067 241,218,120
Medium and small enterprises-nonsecured 9,640,879 34,810,959 16,129,499 7,981,814 705,152 17,522,203 86,790,506
Total $ 199,265,163 314,697,907 221,552,757 42,970,688 5,784,283 208,733,359 993,004,157
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December 31, 2013 Excellent Good Midium Acceptable Under standard No rating Total
Private banking
Secured $ 64,415,861 80,139,739 71,603,398 5,692,039 2,251,649 2,054,120 226,156,806
Non-secured 869,856 3,851,946 12,495,524 696,703 197,526 671,463 18,783,018
Corporate banking
Government and public institution - - 8,500,020 6,020,587 - 165,906,335 180,426,942
Financial institution 2,054,820 2,706,904 50,617 - 148,875 - 4,961,216
Margin loans receivable - - - - - 1,793,827 1,793,827
Large Enterprise- credit and guarantee - 123,544 90,530 - - - 214,074
fund
Large Enterprise-secured 1,180,523 52,784,765 2,672,209 1,351,789 216,998 - 58,206,284
Large Enterprise-nonsecured 4,975,745 47,690,333 10,233,392 1,643,240 886,695 2,556,193 67,985,598
Medium and small enterprises-credit and 3,766,287 27,886,013 47,070,864 3,841,116 151,902 198,480 82,914,662
guarantee fund
Medium and small enterprises-secured 24,938,906 105,548,044 70,141,567 11,201,538 399,016 12,727,144 224,956,215
Medium and small enterprises- nonsecured 6,591,278 26,964,169 20,685,529 4,388,851 293,111 15,942,483 74,865,421
Total $ 108,793,276 347,695,457 243,543,650 34,835,863 4,545,772 201,850,045 941,264,063
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C. Credit quality analysis of security investments

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Not overdue and impaired position Overdue but Net amount
Impairment Total Loss
December 31, 2014 not impaired (A)+(B)+
Investment Subinvestment High risk No rating Subtotal (A) position (B) position (C) (A)+(B)+(C) provided (D) (C)-(D)
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	Investment	Subinvestment	High risk	No rating	Subtotal (A)	Subtotal (A)	Subtotal (A)	Subtotal (A)	Subtotal (A)	Subtotal (A)
Financial assets at fair value through proft or loss-net -Overseas bonds Available-for-sale fnancial assets-net -Overseas bonds -'NT bonds Hold-to-maturity fnancial assets-net -Overseas bonds -'NT bonds	$ 948,331 4,535,245 9,207,585 10,743,505 12,098,066	- - - - -	- - - - -	943,914 535,812 - - -	1,892,245 5,071,057 9,207,585 10,743,505 12,098,066	- - - - -	- - - - -	1,892,245 5,071,057 9,207,585 10,743,505 12,098,066	- - - - -	1,892,245 5,071,057 9,207,585 10,743,505 12,098,066

Taiwan Business Bank Annual Report 2014

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Not overdue and impaired position Overdue but Net amount
Impairment Total Loss
December 31, 2013 not impaired (A)+(B)+
position (C) (A)+(B)+(C) provided (D)
Investment Subinvestment High risk No rating Subtotal (A) position (B) (C)-(D)
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December 31, 2013	Not overdue and impaired position	Not overdue and impaired position	Not overdue and impaired position	Not overdue and impaired position	Not overdue and impaired position	Overdue but not impaired position (B)	Impairment position (C)	Total (A)+(B)+(C)	Loss provided (D)	Net amount (A)+(B)+ (C)-(D)
	Investment	Subinvestment	High risk	No rating	Subtotal (A)
Financial assets at fair value through proft or loss-net -Overseas bonds Available-for-sale fnancial assets-net -Overseas bonds -'NT bonds Hold-to-maturity fnancial assets-net -Overseas bonds -'NT bonds	$ 2,179,340 1,712,577 10,238,738 7,663,219 8,970,952	- - - - -	- - - - -	300,260 287,208 - - -	2,479,600 1,999,785 10,238,738 7,663,219 8,970,952	- - - - -	- - - - -	2,479,600 1,999,785 10,238,738 7,663,219 8,970,952	- - - - -	2,479,600 1,999,785 10,238,738 7,663,219 8,970,952

For the investment ratings of above tables, investment grade refers to AAA to BBB-, Subinvestment grade refers to BB+ ~B-, high risk refers to CCC+ and below (including no rating). No rating refers to the bonds not graded by credit rating institution.

Operation process delay of loan borrowers and other administrative factors may cause financial assets to be overdue but not impaired. According to the internal risk management regulations of the Bank and its subsidiaries, financial assets overdue within 90 days are not considered impaired unless there are other evidence indicates otherwise.

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December 31, 2014
within 1 month 1~3 months over 3 months Total
Account receivables
-Credit card $ 6,479 2,811 - 9,290
-Other 12,695 - - 12,695
Discounts and loans
Private banking
-Secured 1,432,098 436,830 - 1,868,928
-Nonsecured 107,956 9,845 - 117,801
Corporatre banking
-Large enterprise nonsecured 22,046 - - 22,046
-Medium and small enterprises- credit and guarantee 207,663 40,216 - 247,879
fund
-Medium and small enterprises- secured 173,679 25,036 - 198,715
-Medium and small enterprises-nonsecured 225,655 12 - 225,667
Other financial assets - Exchange bills negotiated 475 - - 475
Total $ 2,188,746 514,750 - 2,703,496
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Ⅵ

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December 31, 2013
within 1 month 1~3 months over 3 months Total
Account receivables
-Credit card $ 5,924 3,016 - 8,940
-Other 86,641 - - 86,641
Discounts and loans
Private banking
-Secured 2,022,633 533,043 - 2,555,676
-Nonsecured 139,830 11,706 - 151,536
Corporatre banking
-Large enterprise nonsecured 16,753 - - 16,753
-Medium and small enterprises- credit and guarantee 209,443 36,380 - 245,823
fund
-Medium and small enterprises- secured 240,289 202,632 - 442,921
-Medium and small enterprises-nonsecured 184,226 - - 184,226
Other financial assets - Exchange bills negotiated 402 60 - 462
Total $ 2,906,141 786,837 - 3,692,978
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A. Discounts and loans

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December 31, 2014
Item
Discounts and loans Allowance for bad debts
With objective evidence of impairment
Individual assessment $ 12,256,533 2,659,096
Collective assessment
Medium and small enterprises-credit and guarantee fund 1,900,300 709,184
Medium and small enterprises-secured 514,158 188,227
Medium and small enterprises-nonsecured 172,069 130,697
Private banking-secured 1,712,920 494,585
Private banking-nonsecured 191,798 133,573
Preliminary negotiation projects 1,719 944
Subtotal 16,749,497 4,316,306
Without objective evidence of impairment
Collective assessment
Government and public institution 194,218,021 89,160
Financial institution 2,915,683 1,339
Margin loans receivables 2,221,662 1,019
Large Enterprise- credit and guarantee fund 176,333 6,126
Large enterprise secured 54,514,590 1,532,853
Large enterprise-nonsecured 68,352,788 1,234,735
Medium and small enterprises-credit guarantee fund 91,413,449 1,171,881
Medium and small enterprises-secured 241,416,835 734,212
Medium and small enterprises-nonsecured 87,016,175 1,244,456
Private banking-secured 232,394,484 529,510
Private banking-nonsecured 21,045,173 72,064
Subtotal 995,685,193 6,617,355
Total $ 1,012,434,690 10,933,661
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Taiwan Business Bank Annual Report 2014

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December 31, 2013
Item
Discounts and loans Allowance for bad debts
With objective evidence of impairment
Individual assessment $ 18,738,249 4,085,781
Collective assessment
Medium and small enterprises-credit and guarantee fund 1,833,189 545,249
Medium and small enterprises-secured 674,250 94,432
Medium and small enterprises-nonsecured 199,743 81,984
Private banking-secured 2,224,993 195,347
Private banking-nonsecured 214,304 120,736
Preliminary negotiation projects 1,267 595
Subtotal 23,885,995 5,124,124
Without objective evidence of impairment
Collective assessment
Government and public institution 180,426,942 80,822
Financial institution 4,961,216 2,222
Margin loans receivables 1,793,827 803
Large Enterprise- credit and guarantee fund 214,074 96
Large enterprise secured 58,206,284 932,685
Large enterprise-nonsecured 68,002,351 900,898
Medium and small enterprises-credit guarantee fund 83,160,486 1,224,876
Medium and small enterprises-secured 225,399,136 595,289
Medium and small enterprises-nonsecured 75,049,646 1,072,863
Private banking-secured 228,712,187 459,577
Private banking-nonsecured 18,934,849 67,866
Subtotal 944,860,998 5,337,997
Total $ 968,746,993 10,462,121
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B. Receivables

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December 31, 2014
Item
Receivables Allowance for bad debts
With objective evidence of impairment
Individual assessment $ 161,145 67,318
Collective assessment 23,264 9,845
Subtotal 184,409 77,163
Without objective evidence of impairment
Collective assessment
Credit card proceeds receiable 1,429,914 743
Accounts receivable 125,124 -
Installment accounts receivable and rents receibable 532,905 -
Other receivables 323,248 9,481
Acceptances receivable 1,608,642 16,544
Interest receivable 2,329,291 12,204
Subtotal 6,349,124 38,972
Total $ 6,533,533 116,135
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Ⅵ

Item	December 31, 2013	December 31, 2013	December 31, 2013
	Receivables	Allowance for bad debts
With objective evidence of impairment Individual assessment Collective assessment Subtotal Without objective evidence of impairment Collective assessment Credit card proceeds receiable Installment accounts receivable and rents receibable Other receivables Acceptances receivable Interest receivable Subtotal Total			24,396 49,206 73,602 1,163 - 38,849 11,424 8,288 59,724 133,326
	$ 100,205
	39,236
	139,441


	1,474,882
	379,462
	309,229
	1,550,304
	1,897,207
	5,611,084
	$ 5,750,525

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December 31, 2014
Item
Other financial assets Allowance for bad debts
With objective evidence of impairment
Individual assessment $ 225,868 212,631
Collective assessment
Guarantee, acceptance and other advances 26,195 24,650
Credit card 81,142 36,036
Subtotal 333,205 273,317
Without objective evidence of impairment
Collective assessment
Bills negotiated 1,222 12
Total $ 334,427 273,329
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December 31, 2013
Item
Other financial assets Allowance for bad debts
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	Decembe	Decembe	Decembe	Decembe
	Other fnancial assets
With objective evidence of impairment Individual assessment Collective assessment Guarantee, acceptance and other advances Credit card Subtotal Without objective evidence of impairment Collective assessment Bills negotiated Total		$ 269,989 8,317 98,588 376,894 2,250 $ 379,144		222,322 4,949 41,012 268,283 11 268,294

Taiwan Business Bank Annual Report 2014

(9) Collateral management policy

A. Collaterals are recognized under the account of other assets per the rules of "Regulations Governing the Preparation of Financial Reports by Public Banks".
B. Details are as follows:

Other assets		December 31, 2014		December 31, 2013
Collaterals (stocks)		$ 2,509		3,150

Collaterals refer to the collaterals provided by clients as guarantee which are undertaken through public auction when the debtor is not able to fulfill its obligation. The collaterals assumed are recognized using the prices undertaken per the rules of "Regulations Governing the Preparation of Financial Reports by Public Banks" and measured by the book value or the fair value deducted by cost of sale, whichever is lower, at the end of the period. Collaterals will be sold when they are available to be sold and the proceeds received will be used to reduce the book amount of collaterals.

(10) Disclosure required under "Regulations Governing the Preparation of Financial Reports by Public Held Banks "

A. Loan quality:

Unit: In Thousands of New Taiwan Dollars, %

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Month/Year December 31, 2014
Non-performing Non-performing Allowance for
Items loans Total loans loan ratio credit losses Coverage ratio
Secured 2,533,788 387,172,844 0.65% 5,422,697 214.02%
Corporate
finance Unsecured 1,545,815 377,967,170 0.41% 3,796,420 245.59%
Residence mortgages(Note 4) 301,550 129,986,870 0.23% 1,240,850 411.49%
Cash cards 21 244 8.61% 21 100.00%
Consumer
finance Small sum credit loans(Note 5) 2,119 340,900 0.62% 2,119 100.00%
Others Secured 204,301 96,456,088 0.21% 411,503 201.42%
(Note 6) Unsecured 29,959 20,510,574 0.15% 60,051 200.44%
total loan business 4,617,553 1,012,434,690 0.46% 10,933,661 236.78%
Allowance Ratio of
Total
Overdue loans Overdue ratio for doubtful allowance to
receivables
accounts overdue loans
Credit cards business 3,614 1,511,057 0.24% 36,779 1,017.68%
Account receivable factoring-without recourse - - -% - -%
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Ⅵ

Unit: In Thousands of New Taiwan Dollars, %

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Month/Year December 31, 2013
Non-performing Total loans Non-performing Allowance for Coverage
Items loans loan ratio credit losses ratio
Secured 5,224,837 372,569,121 1.40% 6,316,401 120.89%
Corporate
finance Unsecured 1,428,432 353,090,999 0.40% 3,266,949 228.71%
Residence mortgages (Note 4) 484,786 134,137,327 0.36% 560,608 115.64%
Cash cards 67 423 15.84% 67 100.00%
Consumer
finance Small sum credit loans (Note 5) 1,334 199,198 0.67% 1,334 100.00%
Others Secured 186,412 89,313,011 0.21% 239,648 128.56%
(Note 6) Unsecured 62,360 19,436,914 0.32% 77,114 123.66%
total loan business 7,388,228 968,746,993 0.76% 10,462,121 141.61%
Allowance Ratio of
Overdue Total
Overdue ratio for doubtful allowance to
loans receivables
accounts overdue loans
Credit cards business 3,605 1,563,577 0.23% 42,176 1,169.93%
Account receivable factoring‑without recourse - - -% - -%
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Note 1 Non‑performing loans represent the amount of overdue loans as reported in accordance with the "Regulations on the Procedures for Banking Institutions to Evaluate Assets and Deal with Past Due/Non‑performing Loans". The credit card overdue loans represent the amount of overdue loans as reported in accordance with Jin‑Kuan‑Yin‑(4)‑Zi No. 0944000378, dated July 6, 2005.
Note 2 Non‑performing loan ratio = Non‑performing loans÷ total loans; Credit card delinquency ratio = Overdue receivables÷ bal‑ ance of receivables
Note 3 Coverage ratio for loans = allowance for credit losses ÷ non‑performing loans; Coverage ratio for credit card business = al‑ lowance for credit losses ÷ overdue receivables.
Note 4 For residential mortgage loans, a borrower provides his/her (or spouse’s or minor child’s) house as collateral in full and pledges it to the financial institution for the purpose of obtaining funds to purchase property and to construct or repair a house.
Note 5 Microcredit loans are defined by Jin‑Kuan‑Yin‑(4)‑Zi No. 09440010950, dated December 19, 2005, and do not include cred‑ it cards or cash cards.
Note 6 Others in consumer finance are secured and unsecured consumer loans other than residential mortgage loans, cash card loans, and microcredit loans, and do not include credit cards.
Note 7 In accordance with Jin‑Kuan‑Yin‑(5)‑Zi No. 0944000494, dated July 19, 2005, the amounts of without‑recourse factoring will be classified as overdue receivables within three months from the date that suppliers or insurance companies resolve not to compensate the loss.

B. Overdue loans and receivables exempted from reporting

(In NTD thousands)

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December 31, 2014 December 31, 2013
Loans may be Receivables may Loans may be Receivables may
exempted from be exempted from exempted from be exempted from
reporting as a reporting as overdue reporting as a reporting as overdue
non-performing loan receivables non-performing loan receivables
Pursuant to a contract 7,115 15,184 10,594 21,396
under a debt negotiation
plan
Pursuant to a contract 94,360 62,491 96,729 71,047
under a debt liquidation
plan and a debt relief
plan
Total 101,475 77,675 107,323 92,443
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Note A: In accordance with Jin‑Kuan‑Yin‑(1)‑Zi No. 09510001270, dated April 25, 2006, a bank is required to make supplemental disclosure of credit information which was approved under the debt coordination mechanism of unsecured consumer debts by the Bankers Association of the R.O.C.

Note B: In accordance with Jin‑Kuan‑Yin‑(1)‑Zi No. 09700318940, dated September 15, 2008, a bank is required to make supple‑ mental disclosure of credit information once debtors apply for pre‑negotiation, relief and liquidation under the “Consumer Debt Clearance Act."

Taiwan Business Bank Annual Report 2014

C. Concentration of credit extensions

Unit: In Thousands of New Taiwan dollars, %

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December 31, 2014
Credit amount to
Ranking Group enterprise Credit amount
equity ratio (%)
1 A company. (Railway transportation) 35,441,632 56.49%
2 B group. (Petroleum and chemical material manufacturing) 9,972,008 15.89%
3 C group. (Steel rolling and extruding) 6,558,121 10.45%
4 D group. (Computer manufacturing) 6,053,918 9.65%
5 E company. (Real estate development) 5,803,072 9.25%
6 F group. (Real estate development) 5,528,172 8.81%
7 G group. (Petroleum and chemical material manufacturing) 4,436,466 7.07%
8 H group. (Investment and consulting) 3,957,030 6.31%
9 I group. (Liquid crystal panel and components manufacturing) 3,831,758 6.11%
10 J group. (Liquid crystal panel and components manufacturing) 3,138,799 5.00%
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Unit: In Thousands of New Taiwan dollars, %

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December 31, 2013
Credit amount to
Ranking Group enterprise Credit amount
equity ratio (%)
1 A company. (Railway transportation) 35,699,216 62.35%
2 B group. (Petroleum and chemical material manufacturing) 8,596,313 15.01%
3 C group. (Steel rolling and extruding) 6,674,272 11.66%
4 I group. (Liquid crystal panel and components manufacturing) 5,251,240 9.17%
5 E company. (Real estate development) 5,865,072 10.24%
6 D group. (Computer manufacturing) 4,977,674 8.69%
7 H group. (Investment and consulting) 4,586,890 8.01%
8 G group. (Petroleum and chemical material manufacturing) 4,522,972 7.90%
9 J group. (Liquid crystal panel and components manufacturing) 4,129,254 7.21%
10 K group. (Steel smelting) 3,726,359 6.51%
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Note 1 The top ten enterprise groups other than government or stated‑owned enterprises are ranked according to their total outstanding credit amount. If the borrowers belong to an enterprise group, the aggregate credit balance of the enterprise should be calculated and disclosed as a code number for each such borrower together with an indication of the borrowers’ line of business. In addition, if the borrowers are enterprise groups, the enterprise group’s industry sector with the maximum exposure to credit risk in its main industry sector should be disclosed, along with the “class” of the industry, in compliance with the Standard Industrial Classification System of the R.O.C. posted by the Directorate‑General of Budget, Accounting and Statistics, Executive Yuan, R.O.C.

Note 2 Enterprise group is as defined in Article 6 of the “Supplementary Provisions to the Taiwan Stock Exchange Corporation Rules for Review of Securities Listings”.
Note 3 Consists of loans (foreign currency imports financing, foreign currency export financing, notes discounted, customer over‑ drafts, short‑term unsecured loans, short‑term secured loans, receivables from securities lending, medium‑term unsecured loans, medium‑term secured loans, long‑term unsecured loans loan‑term secured loans, non‑performing loans), foreign currency long positions, accounts receivable‑factoring discount, bankers’ acceptance receivable, guarantees receivable.
Note 4 In the calculation of Credit amount to equity ratio, the domestic bank should be calculated in the net value of head office. The Foreign bank should be calculated in the net value of Taiwan branch.

Ⅵ

(d) Liquidity risk

finance to fulfill the financial obligation which is going to mature with sufficient fund, such as early rescind of time deposits, the channels and terms to call loan from other bank are deteriorated due to the influence of specific markets and the default of loan customers worsen and it is harder for the Bank to receive payments and liquidate financial instruments. The abovementioned situations may diminish the source of cash for the Bank to undertake loan business, trades and investment activities. Under some extreme circumstances, the lack of liquidity may increase the potential possibility of reduction of the overall position of consolidated financial statement, sale of assets and inability to fulfill loan obligation. Liquidity risk is an inherent risk of bank operations and is influenced by specific or overall events in various markets. Those events include but not limited to : Credit event, merger or buyout, systematic strike and natural disaster.

(2) The management policy, process and measurement of liquidity risk

A. Policy

a. In accordance with the target and limit for liquidity risk management approved by the board of directors and monitor all liquidity risk positions.
b. Established "Directions Governing the Capital Liquidity Risk Management of Taiwan Business Bank" and "Remarks Governing the Capital Liquidity Risk Management of Taiwan Business Bank" to serve as guidance to effectively control capital liquidity risk.
c. Overseas branches shall regulate the code of conduct for liquidity risk management based on business characteristics and the regulations of local authorities. After being approved by the general manager, the Risk Management Department will be in charge of monitoring liquidity risk.

B. Process

a. Finance Department is in charge of daily capital deployment to ensure that the capital is sufficient to cope with various demands for capital.
b. Risk Management Department is in charge of the identification, measurement, supervision and control of capital liquidity risk to establish a firm operation process and structure.
c. Risk Management Department reports the result of capital liquidity risk measurement to the Assets and Liabilities Management Committee on a monthly basis and reports the results of capital liquidity risk and pressure test to Risk Mangement Committee and the board of directors quarterly.

C. Measurement

based on the remaining days to maturity and calculate the gap of capital of each time zone in order to measure the capital deficiency of each time zone.
b. Lona-deposit ratio: To calculate the deposits the Bank received which are used to conduct loan business. In other words, the percentage of the total loan amount accounts for the total deposit amount.

Taiwan Business Bank Annual Report 2014

  - c. Capital concentration and stability: In order to prevent the Bank from over-relying on single trade counterparty, product or market, the Bank observes several aspects such as the changes in large time deposit customers, the percentage of demand deposits and the continuity of deposits.

  - d. Pressure test: Except for monitoring the capital demand under normal circumstances, the Bank conducts pressure test regularly in order to evaluate the capital liquidity under abnormal circumstances and ensure that the Bank is equipped with sufficient capital.

(3) Financial assets possessed for managing liquidity risk and maturity analysis for non-derivative financial liability
A. Financial assets possessed for managing liquidity risk

The Bank possesses cash and other high liquidity interest yielding assets to cope with payment obligations and potential emergent capital demands in the market. The assets possessed for managing liquidity risk include cash and cash equivalent, due from the Central Bank and call loans to banks, financial assets at fair value through profit or loss, discounts and loans, available-for-sale financial assets, held-to-maturity financial assets, debts investment without active market.

possessed by the Bank based on the remaining days from the consolidated financial statement date to the contract maturity date. The amount disclosed is based on the cash flows of the contracts and thus part of the amount disclosed may not correspond to the amount disclosed in

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December 31, 2014
0-30 days 31-90 days 91 days-1 year 1-5 years Over 5 years Total
Major matured cash outflow $ 739,355,610 155,649,864 321,772,228 43,727,203 35,380,274 34,928,743
Deposits from the Central 388,548 - - - - 388,548
Bank and banks
Overdrafts on banks 1,274,988 - - - - 1,274,988
Call loans from banks 25,837,595 11,811,378 2,237,850 - - 39,886,823
Bills and bond sold under 1,666,432 2,081,162 147,714 - - 3,895,308
repurchase agreement
Interest payable 244,970 464,872 979,948 49,141 - 1,738,931
Deposits transferred from 1,229,890 19,672,559 18,142,264 - - 39,044,713
Chunghwa Post Co., Ltd.
Demand deposits 591,084,342 - - - - 591,084,342
Time deposits 117,187,139 121,619,143 293,930,362 27,900,802 1,504 560,638,950
Remittance 433,706 - - - - 433,706
Financial debentures - - 6,200,000 8,600,000 27,000,000 41,800,000
Appropriated loan fund 8,000 750 134,090 7,177,260 8,378,770 15,698,870
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Ⅵ

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December 31, 2013
0-30 days 31-90 days 91 days-1 year 1-5 years Over 5 years Total
Major matured cash outflow $ 698,623,857 138,154,643 329,133,771 56,906,299 23,214,945 1,246,033,515
Deposits from the Central 409,956 - - - - 409,956
Bank and banks
Overdrafts on banks 1,217,031 - - - - 1,217,031
Call loans from banks 23,034,668 4,859,522 297,475 - - 28,191,665
Bills and bond sold under 2,420,469 1,305,817 472,956 - - 4,199,242
repurchase agreement
Interest payable 458,532 474,155 876,688 47,549 - 1,856,924
Deposits transferred from 1,319,651 19,738,374 28,203,076 - - 49,261,101
Chunghwa Post Co., Ltd.
Demand deposits 564,513,138 - - - - 564,513,138
Time deposits 104,839,346 110,676,775 290,627,086 24,356,000 2,612 530,501,819
Remittance 405,316 - - - - 405,316
Financial debentures - 1,100,000 8,550,000 26,800,000 15,000,000 51,450,000
Appropriated loan fund 5,750 - 106,490 5,702,750 8,212,333 14,027,323
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The derivative instruments of the Bank's possession which are settled by net amount include foreign derivative instruments, such as non-delivery forward contracts, foreign exchange options settled by net amount. After evaluation the Bank concluded that the maturity date is the basic element to comprehend all the derivative financial instruments listed in the consolidated financial statement. The amount disclosed is based on the cash flows of the contracts and thus part of the amount disclosed may not correspond to the amount disclosed in the consolidated financial statement.

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December 31, 2014
0-30 days 31-90 days 91-180 days 181 days to 1 year Over1 year Total
Derivative financial
liabilities at fair value
through profit or loss
Foreign exchange
derivative instrument $ 362 724 - - - 1,086
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The derivative instruments of the Bank's possession settled by gross amount include the following :

amount, foreign exchange forward contracts and currency swap contracts.

are settled by gross amount based on the remaining days from the consolidated financial statement date to the contract maturity date. The amount disclosed is based on the cash flow of the contracts and thus part of the amount disclosed may not correspond to the amount disclosed in the consolidated financial statement. The maturity analysis for derivative financial liabilities settled by gross amount is as follows:

Taiwan Business Bank Annual Report 2014

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December 31, 2014 0-30 days 31-90 days 91-180 days 181 days to 1 year Over 1 year Total
Derivative financial
instruments at fair value
through profit or loss
Foreign exchange
derivative instrument
Cash outflow $ 20,903,693 17,985,172 2,002,706 971,141 - 41,862,712
Cash inflow 20,720,398 17,841,479 1,986,866 970,159 - 41,518,902
Interest rate derivative
instrument
Cash outflow 3,560 7,791 11,372 16,544 5,248 44,515
Cash inflow 1,312 3,301 4,611 9,820 4,802 23,846
Total cash outflow 20,907,253 17,992,963 2,014,078 987,685 5,248 41,907,227
Total cash inflow 20,721,710 17,844,780 1,991,477 979,979 4,802 41,542,748
Net cash flow $ 185,543 148,183 22,601 7,706 446 364,479
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December 31, 2013 0-30 days 31-90 days 91-180 days 181 days to 1 year Over 1 year Total
Derivative financial
instruments at fair value
through profit or loss
Foreign exchange
derivative instrument
Cash outflow $ 29,348,773 15,447,508 2,003,167 803,635 - 47,603,083
Cash inflow 30,440,923 15,448,564 1,970,244 824,528 - 48,684,259
Interest rate derivative
instrument
Cash outflow 3,638 17,948 21,628 33,082 21,792 98,088
Cash inflow 1,172 18,043 20,017 30,367 20,109 89,708
Total cash outflow 29,352,411 15,465,456 2,024,795 836,717 21,792 47,701,171
Total cash inflow 30,442,095 15,466,607 1,990,261 854,895 20,109 48,773,967
Net cash flow $ (1,089,684) (1,151) 34,534 (18,178) 1,683 (1,072,796)
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(5) Maturity analysis of off balance sheet items

The table below shows the maturity analysis of the off-balance-sheet items of the Bank based on the remaining days from the consolidated financial statement date to the contract maturity date. For the financial guarantee contracts issued, the maximum amount of the guarantee is listed in the earliest time zone that the guarantee may be executed. The amount disclosed is based on the cash flows of the contracts and thus part of the amount disclosed may not correspond to the amount disclosed in

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December 31, 2014 0-30 days 31-90 days 91-180 days 181 days to 1 year Over 1 year Total
Issued and irrevokable loan $ 494,902 426,677 661,155 25,818,962 12,292,682 39,694,378
commitment
Irrevokable credit card loan 1,247 206,411 403,385 685,050 22,161,314 23,457,407
commitment
Issued but not yet executed 4,561,517 6,233,718 1,280,768 278,900 36,708 12,391,611
letter of credit
Miscellaneous guarantee 9,073,990 - - - - 9,073,990
Total $ 14,131,656 6,866,806 2,345,308 26,782,912 34,490,704 84,617,386
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Ⅵ

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December 31, 2013 0-30 days 31-90 days 91-180 days 181 days to 1 year Over 1 year Total
Issued and irrevokable loan $ - - 893,400 34,145 1,674,565 2,602,110
commitment
Irrevokable credit card loan 1,005 941,574 1,904,320 3,050,133 17,939,855 23,836,887
commitment
Issued but not yet executed 2,882,954 5,996,412 523,519 622,405 29,205 10,054,495
letter of credit
Miscellaneous guarantee 9,000,830 - - - - 9,000,830
Total $ 11,884,789 6,937,986 3,321,239 3,706,683 19,643,625 45,494,322
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(6) Maturity analysis of lease contract commitments

Operating lease commitment refers to, when the Bank is the lessor or lessee and under the irrevocable operating lease conditions, the minimum total future rent payment. Below tables show the maturity analysis of the Bank’s operating lease contract commitments:

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December 31, 2014 Below 1 year 1-5 years Over 5 years Total
Operating lease expense (lessee) $ 80,264 132,336 - 212,600
Operating lease income (lessor) 1,404 339 - 1,743
December 31, 2013 Below 1 year 1-5 years Over 5 years Total
Operating lease expense (lessee) $ 63,634 133,231 15,437 212,302
Operating lease income (lessor) 434 182 - 616
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The capital expenditure commitment of the Bank refers to the contract signed to obtain buildings and equipments. The maturity analysis of the capital expenditure commitment of the Bank is as follows:

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December 31, 2014 Below 1 year 1-5 years Over 5 years Total
Machinery and equipments $ 292,321 68,081 - 360,402
Lease property 9,599 36,368 7,707 53,674
Total $ 301,920 104,449 7,707 414,076
December 31, 2013 Below 1 year 1-5 years Over 5 years Total
Machinery and equipments $ 278,292 - - 278,292
Lease property 10,494 35,758 17,464 63,716
Total $ 288,786 35,758 17,464 342,008
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(7) Disclosures required by “Regulations Governing the Preparation of Financial Reports by Public Banks”

A. Maturity analysis in New Taiwan dollars

In NTD thousands, %

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December 31, 2014
Amount during the maturity period from the balance sheet date to due date
Total
0-10days 11-30days 31-90days 91-180days 181days-1year Over 1 year
Major maturity $ 1,202,044,702 106,107,982 153,420,772 103,373,559 173,515,267 157,381,492 508,245,630
capital inflow
Major maturity 1,571,454,900 61,084,104 82,111,881 166,806,571 183,012,377 294,223,739 784,216,228
capital outflow
Gap (369,410,198) 45,023,878 71,308,891 (63,433,012) (9,497,110) (136,842,247) (275,970,598)
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domestic branches, including commitment of credit agreement and estimates to outflow $369,998,301.

Taiwan Business Bank Annual Report 2014

In NTD thousands, %

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December 31, 2013
Amount during the maturity period from the balance sheet date to due date
Total
0-10days 11-30days 31-90days 91-180days 181days-1year Over 1 year
Major maturity $ 1,216,383,434 112,668,003 176,627,289 97,182,075 161,973,521 169,580,116 498,352,430
capital inflow
Major maturity 1,635,501,222 47,735,953 108,766,710 179,575,123 226,930,704 335,438,022 737,054,710
capital outflow
Gap (419,117,788) 64,932,050 67,860,579 (82,393,048) (64,957,183) (165,857,906) (238,702,280)
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domestic branches, including commitment of credit agreement and estimates to outflow $424,955,300.

B. Maturity analysis in U.S. dollars

US dollars in thousands, %

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December 31, 2014
Amount during the maturity period from the balance sheet date to due date
Total
0-30days 31-90days 91-180days 181days-1year Over 1 year
Major maturity $ 6,342,931 1,873,581 1,404,221 910,311 611,131 1,543,687
capital inflow
Major maturity 7,271,176 2,082,382 1,668,590 669,561 531,163 2,319,480
capital outflow
Gap (928,245) (208,801) (264,369) 240,750 79,968 (775,793)
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US dollars in thousands, %

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December 31, 2013
Amount during the maturity period from the balance sheet date to due date
Total
0-30days 31-90days 91-180days 181days-1year Over 1 year
M a j o r m a t u r i t y $ 6,091,724 2,179,267 1,346,856 733,738 462,210 1,369,653
capital inflow
M a j o r m a t u r i t y 7,661,973 2,444,640 1,387,194 686,965 675,799 2,467,375
capital outflow
Gap (1,570,249) (265,373) (40,338) 46,773 (213,589) (1,097,722)
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(e) Market risk

Market risk refers to the possible loss of the Bank’s business in or off the balance sheet results from the disadvantageous fluctuation in market price in terms of interest rates, stock prices, foreign exchange rates and commodity prices.

(2) Policies and procedures of market risk management

A. Strategy

a. To carry out market risk management, achieve operation target and maintain healthy capital adequacy by following "Directions Governing the Market Risk Management of Taiwan Business Bank" and other relavent regulations.
b. Under the risk tolerance approved by the board of directors, the Bank applies various risk control mechanism to effectively deploy and manage capital in order to maintain the market risk exposure within the tolerable extent and achieve earning target.

Ⅵ

B. Policies and procedures

In order to establish the market risk management mechanism and ensure that the market risk is within the tolerable extent, the Bank set up directions governing the market risk management, remarks governing the limit of market risk and financial product valuation procedures as the primary management guidance. Other than what is stated above, the Bank also establish limit control mechanism in terms of trade positions, stop-limit, suspensions and lines of alert based on the operation notices and procedures of different financial products (including fix income products, equity securities, foreign exchange transaction and derivative financial products).

(3) Process for market risk management

In accordance with the rules of "Directions Governing the Market Risk Management of Taiwan Business Bank", the Bank shall conduct appropriate market risk evaluation and document the process for later review before financial products are promoted. The content of evaluation includes risk factors identification, evaluation methods, cost-benefit analysis, market liquidity, risk strategy, adequacy of risk management mechanism and the influence on the Bank for undertaking market risk.

B. Risk measurement

a. Annually based on the business development of transaction units and submit to the board of directors for approval. For the units which the positions and limits remain unchanged after evaluation, they can put the positions and limits into practice after receiving the approval from the general manager.
through different information systems. For the market data and parameters of the models applied for evaluation, they shall be inspected regularly to determine the rationality.

C. Risk monitoring

to review and serve as the guidance for daily risk management operation.
stop-limit. Prvided that the valuation loss amount is over the limit, a stop-limit, suspension and subsequent risk control will be executed.

D. Risk report

Risk management units report current market risk management status of the Bank to directors (executive directors) and high rank management to facilitate the directors and management to control the risk exposure status and adjust management procedures properly.

(4) Scope and method of market risk management

A. Foreign exchange risk management

 - Foreign exchange risk refers to the potential profit or loss of the foreign currency financial instruments which results from the transition among fluctuating currencies.

Taiwan Business Bank Annual Report 2014

b. Applicable scope

and involve in foreign currencies.

c. Purpose for foreign exchange risk management

To avoid loss of earnings or deterioration of financial status due to intensive fluctuation of foreign exchange and to increase capital deployment efficiency and business operation integrity.

d. Procedures of foreign exchange risk management
1) In order to control foreign exchange transaction risk, the Bank established trade position authorization standard for financial transaction operations, trade units and traders in current regulations. In addition, for non-commercial business foreign exchange operation, all trade units submit the required amounts of position annually based on operation status. Risk management units will evaluated the requirement and submit to the board of directors' (executive directors) for approval. The demand will be executed after the board of directors approved. For the units which the positions remain unchanged after evaluation, they can put the positions into practice after receiving the approval from the general manager.
2) The trade units conduct various foreign financial product business, they shall fully understand the content of commodities, the risk tolerance and trade purpose. Trade units shall establish financial products trading strategies based on market status in the meeting every morning and submit the risk-benefit evaluation in the meeting minutes for the department heads to review. The trading shall follow the relavent authorization rules of the Bank and the stop-limit of all trade positions shall be executed reliably.
e. Process of foreign exchange risk management
- A) Risk Management unit established risk factor chart based on different financial transactions to effectively identify risk factors and market risk resources. In addition, the financial transactions which the Bank conducts deal with simple type financial products. For complex financial products, the Bank conducts back-to-back hedge covering to effectively avoid market risk.
- B) Positions of the trading book shall be evaluated daily where the positions of the banking book shall be evaluated monthly. When there are public quotes for financial instruments, the quotes shall be the prior evaluation prices. If the financial instruments are evaluated by models, then they shall be evaluated by mathematic models prudently and the assumptions and parameters of the models shall be reviewed regularly.
2) Monitoring and report
- A) When the evaluation loss of non-commercial foreign exchange transactions is over the limit, the trade units shall execute a stop-limit per the regulations. If the loss amount reaches the suspension warning line or suspension limit of the financial transaction, risk management units shall report to the general manager. Provided that the loss amount reaches the annual suspension line, risk mamagement units shall report to the board of directors (executive directors).
- B) Reports of operation results shall be prepared and submitted to the department heads for approval on a daily basis.

Ⅵ

B. Equity security risk management

The market risks of the equity securities possessed by the Bank include the individual risk results from the market price fluctuation of individual equity security and the general market risk results from overall market price fluctuation.

b. Applicable scope

Financial instruments similar to equity security in all trading books.

c. Purpose of equity security risk management

To avoid loss of earnings or deterioration of financial status due to intensive fluctuation of equity securites and to increase capital deployment efficiency and business operation integrity.

d. Procedures of equity security risk management
1) All trade units submit the required amounts of position annually base on operation status. Risk management units will evaluate the requirement and submit to the board of directors' (executive directors) for approval. The demand will be executed after the board of directors approved. For the units which the positions remain unchanged after evaluation, they can put the positions into practice after receiving the approval from the general manager.
2) The trade units shall predict the possible trend of domestic stock market based on the information of foreign and domestic security markets so as to set up the operation strategies and directions. The traders shall pay close attention to the market trend when the market opens so as to conduct security transactions and the operations as well as the meeting minutes shall be submitted to the department heads to review.
e. Process of equity security risk management
- A) The risk management units apply Value at Risk models to measure the market risk of equity security investment. Furthermore, base on the trade units operation demand and the risk limit established by the Bank's risk tolerance, the risk management units effectively control the variation of risk factors under an acceptable extent.
- B) Trading book position shall be evaluated daily. When there is a public quote in the market, the quote shall be adopted as the prior evaluation price (If the transaction is in secondary market and the liquidity is high, the closing price can be adopted as the evaluation price) ; If the financial instruments are evaluated by models, then they shall be evaluated by mathematic models prudently and the assumptions and parameters of the models shall be reviewed regularly.
2) Monitoring and report
- A) When the evaluation loss of equity security investment is over the limit, the trade units shall execute a stop-limit per regulations. If the loss amount reaches the suspension warning line or suspension limit of the financial transaction, risk management units shall report to the general manager. Provided that the loss amount reaches the annual suspension line, risk mamagement units shall report to the board of directors (executive directors).
- B) Transaction reports shall be prepared and submitted to the department heads for approval on a daily basis.

Taiwan Business Bank Annual Report 2014

C. Interest rate risk management

Interest rate risk refers to the price decline of the Bank's financial products which contain interest risk factors due to the disadvantageous changes in interest rate.

b. Applicable scope

Financial instruments which contain interest rate factors in all trading books.

c. Purpose of interest rate risk management

To avoid loss of earnings or deterioration of financial status due to intensive fluctuation of interest rate and to increase capital deployment efficiency and business operation integrity.

d. Procedures of interest rate risk management
1) In order to control intersest rate risk, the Bank established trade position authorization standard for financial transaction operations, trade units and trade counterparties in current regulations. In addition, for the positions held for trading, all trade units submit the required amounts of position annually based on operation status. Risk management units will evaluated the requirement and submit to the board of directors' (executive directors) for approval. The demand will be executed after the board of directors approved. For the units which the positions remain unchanged after evaluation, they can put the positions into practice after receiving the approval from the general manager.
2) The trade units shall consider safety, liquidity and profitability and gather market information to assess the potential risk and benefit. In additional, the trade units shall choose investment target prudently through analyzing the issuers' credit, financial status, country risks and interest rate trends.
e. Process of interest rate risk management
- A) The risk management units establish risk factor charts base on different financial transaction to effectively identify risk factors and market risk resources. In addition, the financial transactions which the Bank conducts deal with simple type financial products. For complex financial products, the Bank conducts back-to-back hedge covering to effectively avoid market risk.
- B). Position of the trading book shall be evaluated daily. When there are public quotes for financial instruments, the quotes shall be the prior evaluation prices. If the financial instruments are evaluated by models, then they shall be evaluated by mathematic models prudently and the assumptions and parameters of the models shall be reviewed regularly.
2) Monitoring and report
- A) The risk management units apply DV01 to measure to what extent the trading book bond positions are influenced by the interest rate risk and set up interest rate sensitivity limit base on the requirements of the trade units and the risk tolerance of the Bank annually.
- B) The trade units shall prepare the income assessment tables of trade positions and traders for the department heads to review. In addition, When the evaluation loss of the position is over the limit, the trade units shall execute a stop-limit per the regulations.

Ⅵ

If the loss amount reaches the suspension warning line or suspension limit of the financial transaction, risk management units shall report to the general manager. Provided that the loss amount reaches the annual suspension line, risk mamagement units shall report to the board of directors (executive directors).

D. Concentration management

  - over concentrated and enhance credit risk management, the Bank established financial institution credit risk limit based on the world ranking of  tier 1 capital and credit ratings from The Banker. The trade units shall also pay attention to the changes of the credit status of individual financial institution as well as the changes of the national credit rating to conduct the transaction prudently.

  - Bank set up limits for the corporate bonds and commercial papers purchased without the guarantee from financial institutions.

  - c. For equity security investments, the Bank set up limits for single institution and single related party.

(5) Interest rate risk management of the banking book
- a. The interest rate risk of the banking book refers to the negative effect towards the the future net interest income or economic value of equity results from the fluctuation of interest rate. Net Interest Income (hereafter NII) is the toal amount of interest revenue deducted by the total amount of interest expense; Economic Value of Equity (hereafter EVE) is the total discounted future cash inflow from assets deducted by the total discounted future cash outflow from liabilities.
- b. The management purpose of the interest rate risk management of the banking book is to control the negative effect from the interest rate risk fluctuation towards NII or EVE within the approved limit extent.
B. The process for the interest rate risk management of the banking book

curve risk, basis risk and option characteristic risk and measures the possible influence on the earnings and economic value results from interest rate fluctuation.

b. Monitoring and report

The Bank established limits of the ratio between interest-rate-sensitivity assets and interest-rate-sensitivity liabilities, the effect to NII in 1 year when the market interest rate parallel changes 1 BP and the effect to EVE when the market interest rate parallel changes 200 BP to control the banking book interest rate risk. The results of interest rate risk measurement are reported to the Assets and Liabilities Management Committee monthly and to the board of directors (executive directors) quarterly. When the measurement result is over the limit, relavent units shall be convened to establish responding plan and the plan shall be submitted to the Assets and Liabilities Management Committee for discussion. After the plan is approved by the general manager, it shall be executed by the relavent business units and report to the the board of directors (executive directors).

Taiwan Business Bank Annual Report 2014

(6) Value at Risk
A. Description of Value at Risk

Value at Risk (VaR) is a statistical amount used to evaluate the maximum possible loss of portfolio results from the changes of market risk factors within a certain period of time and a fixed

B. Value at Risk models and assumptions

market risk for the equity security position of the trading book. Based on the historical information of the last 1 year and applys Histocal Simulation Method (with the confidence interval being 99% and the duration of possession being 1 day), the Bank calculates and monitors the trend of Value at Risk.

C. The limit of Value at Risk model

Value at Risk is a tool to measure market risk under normal circumstance. The limits of the model are listed below:

  - liquidity risk.

  - b. Value at Risk measures the possible loss of the position on hand at the end of the transaction day, but it can not reflect the distribution of the part which actual loss exceeds Value at Risk

  - c. Value at Risk model is based on historical data to evaluate the amount, and therefore it may not be able to predict the future changes of risk factors, especially for those exceptions result from significant market fluctuation.

(7) Foreign exchange risk disclosure and sensitivity analysis
A. Foreign exchange risk exposure

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December 31, 2014
Currency Foreign currency amount NT$ amount
USD $ 114,665 3,631,441
AUD 15,292 397,974
HKD 31,602 128,999
JPY 271,978 72,237
EUR 1,654 63,745
December 31, 2013
Currency Foreign currency amount NT$ amount
USD $ 110,685 3,296,199
AUD 2,267 60,268
HKD 21,866 83,965
EUR 994 40,873
CNY 49,952 25,414
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Note 1 Main foreign currencies are the top five foreign currencies ranked in NTD value. Note 2 Net foreign currency is the absolute value of the net value of each foreign currency.

Ⅵ

b. Assets and liabilities of foreign currency

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December 31, 2014
Monetary Financial assets Monetary Financial liabilities
Forreign Forreign
Currency
currency currency
Spot rate NTD amount Spot rate NTD amount
amount (in amount (in
thousand) thousand)
USD $ 5,525,472 31.6700 174,991,698 5,363,091 31.6700 169,849,092
CNY 8,727,109 5.0990 44,499,529 8,729,303 5.0990 44,510,716
HKD 10,894,525 4.0820 44,471,451 10,885,821 4.0820 44,435,921
AUD 1,263,697 26.0250 32,887,714 1,233,854 26.0250 32,111,050
ZAR 7,370,250 2.7400 20,194,485 7,372,364 2.7400 20,200,277
EUR 244,217 38.5400 9,412,123 236,537 38.5400 9,116,136
JPY 27,983,237 0.2656 7,432,348 27,979,330 0.2656 7,431,310
CAD 38,990 27.3200 1,065,207 39,220 27.3200 1,071,490
NZD 35,182 24.8500 874,273 35,145 24.8500 873,353
GBP 14,229 49.3400 702,059 14,073 49.3400 694,362
SGD 3,114 24.0000 74,736 3,302 24.0000 79,248
Other (Note) - - 122,246 - - 128,274
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December 31, 2013
Monetary Financial assets Monetary Financial liabilities
Forreign Forreign
Currency
currency currency
Spot rate NTD amount Spot rate NTD amount
amount (in amount (in
thousand) thousand)
USD $ 5,492,938 29.7800 163,579,694 5,325,502 29.7800 158,593,450
CNY 4,278,186 4.9130 21,018,728 4,277,750 4.9130 21,016,586
HKD 6,977,261 3.8400 26,792,682 6,966,240 3.8400 26,750,362
AUD 1,372,042 26.5850 36,475,737 1,356,350 26.5850 36,058,565
ZAR 5,379,424 2.8600 15,385,153 5,380,848 2.8600 15,389,225
EUR 253,891 41.1200 10,439,998 245,988 41.1200 10,115,027
JPY 11,543,839 0.2840 3,278,450 11,553,664 0.2840 3,281,241
CAD 23,529 27.9800 658,341 23,638 27.9800 661,391
NZD 42,815 24.5000 1,048,968 42,670 24.5000 1,045,415
GBP 17,516 49.1400 860,736 17,496 49.1400 859,753
SGD 4,594 23.5200 108,051 4,710 23.5200 110,779
Other (Note) - - 88,696 - - 100,746
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Note ： Consolidated disclosure is applied for other currencies not over NT$100,000.

Taiwan Business Bank Annual Report 2014

B. Foreign exchange risk sensitivity analysis (Change by 1%)

Foreign exchange risk sensitivity analysis is the analysis that given other coditions remain the same, the influence on profit or loss and equity when each respective currency depreciate or appreciate by 1%

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December 31, 2014
Currency Depreciate by 1% Appreciate by 1%
Income Equity Income Equity
USD $ 26,507 (42,133) (26,507) 42,133
AUD 9,204 (13,190) (9,204) 13,190
HKD 3,221 (2,821) (3,221) 2,821
CAD 70 - (70) -
GBP (76) - 76 -
SGD 45 - (45) -
ZAR 54 - (54) -
SEK (4) - 4 -
CHF 42 - (42) -
JPY (10) - 10 -
THB 22 - (22) -
EUR 144 - (144) -
NZD (9) - 9 -
CNY (329) - 329 -
Total $ 38,881 (58,144) (38,881) 58,144
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December 31, 2013
Currency Depreciate by 1% Appreciate by 1%
Income Equity Income Equity
USD $ 21,226 (37,535) (21,226) 37,535
AUD 5,344 (9,541) (5,344) 9,541
CAD 19 - (19) -
HKD 2,887 (2,194) (2,887) 2,194
GBP (11) - 11 -
SGD 27 - (27) -
ZAR 40 - (40) -
SEK 36 - (36) -
CHF 23 - (23) -
JPY 45 - (45) -
THB 61 - (61) -
EUR 4 - (4) -
NZD (46) - 46 -
CNY (506) - 506 -
Total $ 29,149 (49,270) (29,149) 49,270
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Ⅵ

(8) Interest rate risk disclosure and sensitivity analysis

A. Interest rate sensitivity analysis

The assumption of interest rate sensitivity analysis is, under the circumstance that other conditions remain the same, the yield of the market increase or decrease by 1 basis point (1 bp).

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December 31, 2014
Currency Interst rate increases by 1 bp Interst rate decreases by 1 bp
Income Equity Income Equity
trading book
TWD $ (58) (3,638) 58 3,638
banking book
TWD - (5,824) - 5,824
USD (25) (95) 25 95
AUD - (75) - 75
HKD - (379) - 379
CNY - (176) - 176
Total $ (83) (10,187) 83 10,187
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December 31, 2013
Currency Interst rate increases by 1 bp Interst rate decreases by 1 bp
Income Equity Income Equity
trading book
TWD $ (9) (4,106) 9 4,106
banking book
TWD - (3,320) - 3,320
USD (28) (77) 28 77
AUD - (39) - 39
HKD (5) (1) 5 1
CNY - (119) - 119
Total $ (42) (7,662) 42 7,662
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B. Sensitivity analysis of expected net revenue/Sensitivity of equity in terms of interest rate

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December 31, 2014
Effect on NII in 1 year Effect on EVE in 1 year
TWD USD TWD USD
Scenario
Interst rate increases by 100 bp 3,079,541 (9,879) 1,834,336 (3,178)
Interst rate decreases by 100 bp (5,353,320) (94) (1,820,770) 1,652
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	December 31, 2013	December 31, 2013	December 31, 2013	December 31, 2013
	Effect on NII in 1 year		Effect on EVE in 1 year
	TWD	USD	TWD	USD
Scenario
Interst rate increases by 100 bp	2,861,728	(9,266)	2,482,283	(3,880)
Interst rate decreases by 100 bp	(4,980,631)	(29)	(2,506,060)	2,087

100

Taiwan Business Bank Annual Report 2014

(9) Equity security risk disclosure and sensitivity analysis

A. Equity security sensitivity analysis (Changes by 1%)

The assumption of equity security sensitivity analysis is, under the circumstance that other conditions remain the same, the price of equity security increased or decreased by 1%.

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December 31, 2014
Change
Currency Income Equity
Equity security price increases by 1 % TWD - 15,031
Equity security price decreases by 1 % TWD - (15,031)
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Change		December 31, 2013	December 31, 2013
	Currency	Income	Equity
Equity security price increases by 1 % Equity security price decreases by 1 %	TWD TWD	- -	5,750 (5,750)

B. Value at Risk of equity security

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From January 1, 2014 to December 31, 2014
Value at Risk
Average Average Average
Equity security risk 23,815 47,242 11,679
From January 1, 2013 to December 31, 2013
Value at Risk
Average Average Average
Equity security risk 20,864 27,994 11,528
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(10) Disclosures required by “Regulations Governing the Preparation of Financial Reports by Public Banks”

A. analysis of interest rate-sensitive assets and liabilities (New Taiwan dollars)

In NTD thousand, %

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December 31, 2014
Item 1~90 days 91~180 days 181days~1year over 1 year total
Interest rate-sensitive assets $ 1,077,922,594 6,450,645 15,830,328 35,730,574 1,135,934,141
Interest rate-sensitive liabilities 897,131,135 66,144,274 79,635,462 25,369,017 1,068,279,888
Interest rate sensitivity gap 180,791,459 (59,693,629) (63,805,134) 10,361,557 67,654,253
Net amount 62,737,917
Ratio of interest rate-sensitive assets to debt (%) 106.33
Ratio of interest rate-sensitive gap to net worth (%) 107.84
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Ⅵ

In NTD thousand, %

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December 31, 2013
Item 1~90 days 91~180 days 181days~1year over 1 year total
Interest rate-sensitive assets $ 1,070,152,461 5,517,310 12,898,323 29,123,224 1,117,691,318
Interest rate-sensitive liabilities 872,672,546 96,325,484 60,275,767 28,234,077 1,057,507,874
Interest rate sensitivity gap 197,479,915 (90,808,174) (47,377,444) 889,147 60,183,444
Net amount 57,253,568
Ratio of interest rate-sensitive assets to debt (%) 105.69
Ratio of interest rate-sensitive gap to net worth (%) 105.12
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Note 1 Listed amounts are denominated in N.T. dollars of the head office and domestic branches, offshore banking unit, overseas branches. (i.e., excluding foreign currency amounts).

Note 2 Interest rate‑sensitive assets and liabilities refer to revenue or cost of interest–yielding assets and interest–bearing liabili‑ ties, which are affected by interest rate fluctuations.

Note 3 Interest rate‑sensitivity gap = Interest rate‑sensitive assets ‑ Interest‑rate‑sensitive liabilities.

Note 4 Ratio of interest rate‑sensitive assets to liabilities=Interest rate‑sensitive assets÷ Interest rate‑sensitive liabilities (New Tai‑ wan dollars interest‑rate‑sensitive assets and New Taiwan dollars interest‑rate‑sensitive liabilities).

B. Analysis of the interest-sensitive assets and liabilities (U.S. dollars)

US dollars in thousand, %

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December 31, 2014
Item 1~90 days 91~180 days 181days~1year over 1 year total
Interest rate-sensitive assets $ 2,993,041 546,025 64,999 49,817 3,653,882
Interest rate-sensitive liabilities 3,641,988 230,611 165,855 - 4,038,454
Interest rate sensitivity gap (648,947) 315,414 (100,856) 49,817 (384,572)
Net amount 1,980,989
Ratio of interest rate-sensitive assets to debt (%) 90.48
Ratio of interest rate-sensitive gap to net worth (%) (19.41)
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US dollars in thousand, %

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December 31, 2013
Item 1~90 days 91~180 days 181days~1year over 1 year total
Interest rate-sensitive assets $ 2,787,114 468,353 24,221 99,143 3,378,831
Interest rate-sensitive liabilities 3,509,512 160,932 137,788 - 3,808,232
Interest rate sensitivity gap (722,398) 307,421 (113,567) 99,143 (429,401)
Net amount 1,922,551
Ratio of interest rate-sensitive assets to debt (%) 88.72
Ratio of interest rate-sensitive gap to net worth (%) (22.33)
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Note 1 Listed amounts are in U.S. dollars (i.e., excluding contingent assets and contingent liabilities) of the head office and domes‑ tic branches, offshore banking unit, overseas branches.

Note 2 Interest rate‑sensitive assets and interest rate‑sensitive liabilities refer to the interest yielding assets and interest paying lia‑ bilities which the revenue and cost are affected by interest rate fluctuation.

Note 3 Interest rate sensitivity gap=interest rate‑sensitive assets‑interest rate‑sensitive liabilities.

Note 4 Ratio of interest rate‑sensitive assets to liabilities=Interest rate‑sensitive assets÷ Interest rate‑sensitive liabilities (U.S. dol‑ lars interest‑rate‑sensitive assets and U.S. dollars interest-rate-sensitive liabilities).

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Taiwan Business Bank Annual Report 2014

(AK) Capital Management

(a) The Bank takes business development and risk control into consideration and calculates capital adequacy per “Regulations Governing the Capital Adequacy Ratio and Capital Category of Banks” and “Calculation Methods and Forms of Proprietary Capital and Risk Capital of Banks”. The ratio between proprietary capital and risk capital shall remain above the regulated minimum ratio.
(b) In oder to maintain adequate capital and reach a balance between risk control and business development, the Bank established “Directions Governing Capital Adequacy” as the guidance for controlling capital adequacy. The scope of the directions include, except for the least capital requirements for credit risk, market risk and operation risk, significant risk such as banking book interest rate risk, liquidity risk and concentration risk. In addition, in order to link business strategies, capital and risk management, the Bank sets up capital management plan annually for the president’s approval and reports to Risk Management Committee and the board of directors quarterly about relavent risks and capital control status.
(c) The Bank identifies, measures, monitors and reports various risks based on the directions, notices and relavent rules of competent authority regarding credit risk, market risk, operation risk, legal and compliance risk, interest rate risk of the banking book, liquidity risk and concentration risk so as to be familiar with current business environment and monitors and adjusts capital adequacy effectively.
(d) To cope with the implementation of new Basel Accord, the Bank set up complete risk management system, risk management operation tracking procedures to provide the management with appropriate risk management information for making decisions. Therefore, the Bank is able to maintain adequate capital within the tolerable extent and to ensure the provision of proprietary capital of the Bank corresponds with the overall operating risk characteristics of the Bank.
(e) The proprietary capital is categorized as tier 1 capital and tier 2 capital

(1) Tier 1 capital

A. Common stock equity: The item includes common stock deducted by treasury stock, goodwill and other intangible assets, deferred tax assets based on future profit status of the Bank, unrealized gain on available-for-sale financial assets, operating reserve and deficiency of allowance for bad debts, real estate retained earning increment arising from applying the fair value or the revaluation reserve as the deemed cost when first adopting IFRSs, and 25% of the investment on financial related business which is classified in banking book.
debentures deducted by the investment on financial related business which is classified in banking book.

(2) Tier 2 capital

debenture, real estate retained earning increment arising from applying the fair value or the revaluation reserve as the deemed cost when first adopting IFRSs, 45% of unrealized gain on available-for-sale financial assets, and 50% of the investment on financial related business which is classified in banking book.

Ⅵ

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Item December 31, 2014 December 31, 2013
Common stock equity 60,731,181 55,567,008
Other tier 1 capital 2,532,896 3,209,313
Eligible capital
Tier 2 captial 18,043,384 21,602,216
Eligible Capital 81,307,461 80,378,537
Standardized approach 726,103,364 674,231,863
Credit risk Internal ratings-based approach - -
Securitisation - -
Basic indicator approach 32,959,913 30,731,800
- -
Risk- weighted Operational Standardized approach/selective
assets risk standardized approach
Advanced measurement approach - -
Standardized approach 12,022,600 9,169,125
Market risk
Internal model approach - -
Total risk-weighted assets 771,085,877 714,132,788
Capital adequacy ratio 10.54% 11.26%
Common stock equity/ Risk-weighted assets ratio 7.88% 7.78%
Tier 1 capital / Risk-weighted assets ratio 8.20% 8.23%
Leverage ratio 3.41% 3.19%
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The formulas of the table are listed as follows:

A. The eligible capital, risk‑weighted assets and exposure are calculated per "Regulations Governing the Capital Adequacy and Capital Category of Banks" and "The Calculation and Forms of Eligible Capital and Risk Assets of Banks".
report, the Bank shall disclose the capital adequacy of the previous period ended December 31 except the capital adequacy of this period and last period.
C. Note 1. Eligible Capital = Common stock equity ＋ Other Tier 1 Capital ＋ Tier 2 Capital
Note 2. Total risk‑weighted assets = Credit risk weighted asset ＋ (operational risk charge ＋ market risk charge) × 12.5
Note 3. Capital adequacy ratio= Eligible Capital ÷ Risk weighted asset.
Note 4. Common stock equity / Risk‑weighted assets ratio= Common stock equity / total risk weighted assets
Note 5. Tier 1 capital / Risk‑weighted assets ratio = (Common stock equity ＋ other tier 1 capital)/ Risk‑weighted assets
Note 6. Leverage ratio = Average net Tier 1 capital for the last three months / Average value of risk exposure for the last three months.

7. RELATED PARTY TRANSACTIONS

(A) Names of related parties and relationship with the bank

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Name of related party Relationship with the Bank and its subsidiaries
Bank of Taiwan Corporate director of the Bank
Ministry of Finance, R.O.C Corporate director of the Bank
Land Bank of Taiwan Corporate director of the Bank
Other Major shareholders, directors(includes independent directors), president,
executive vice president, managers and their second tier of kinship.
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(B) Significant related party transactions

(a) Due from other Banks

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December 31, 2014
Amount %
Bank of Taiwan $ 98,946 0.21
Land Bank of Taiwan 310 -
Total $ 99,256 0.21
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104

Taiwan Business Bank Annual Report 2014

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December 31, 2013
Amount %
Bank of Taiwan $ 159,498 0.85
Land Bank of Taiwan 18 -
Total $ 159,516 0.85
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Interest rates are the same as those with regular clients.

(b) Deposits from other banks

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December 31, 2014
Amount %
Land Bank of Taiwan $ 471 0.26
December 31, 2013
Amount %
Land Bank of Taiwan $ 865 0.58
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Interest rates are the same as those with regular clients.

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Maximum Balance on Annual
Interest income
balance December 31, 2014 interest rate
Bank of Taiwan $ 5,576,020 - 1,051 0.39%~1.35%
Land Bank of Taiwan 3,167,000 475,050 2,992 0.2%~1.4%
Total $ 8,743,020 475,050 4,043
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		Maximum balance	Balance on December 31, 2013	Balance on December 31, 2013		Interest income	Annual interest rate
Bank of Taiwan Land Bank of Taiwan Total		$ 679,805 2,779,920 $ 3,459,725		- - -		1,532 4,520 6,052	0.39%~2.90% 0.15%~3.00%

Interest rates are the same as those with regular clients.

(d) Call loans from banks

	Maximum balance	Balance on December 31, 2014	Balance on December 31, 2014	Interest expense	Interest expense	Annual interest rate
Bank of Taiwan Land Bank of Taiwan Total	$ 11,212,070 7,366,670 $ 18,578,740		791,750 2,308,120 3,099,870		12,131 14,399 26,530	0.21%~1.6% 0.18%~1.7%

	Maximum balance	Balance on December 31, 2013		Interest expense		Annual interest rate
Bank of Taiwan Land Bank of Taiwan Total	$ 10,896,440 8,486,630 $ 19,383,070		893,400 446,700 1,340,100		7,830 3,369 11,199	0.21%~0.90% 0.10%~2.78%

Ⅵ

Interest rates are the same as those with regular clients.

(e) Deposits

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December 31, 2014
Amount %
Bank of Taiwan $ 3,262 -
Others 2,640,222 0.23
Total $ 2,643,484 0.23
December 31, 2013
Amount %
Bank of Taiwan $ 3,257 -
Others 1,369,394 0.13
Total $ 1,372,651 0.13
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Interest rates are the same as those with regular clients.

(f) Credit

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December 31, 2014
Number of Performing situations Transaction terms
clients or Maximum Ending are the same as
Category name of balance balance Performing Non-performing Collaterals those with regular
related party loan Loans clients
Employee consumer 116 293,387 256,784 256,784 - none/real none
loans estate
Self-use residence 104 364,638 330,982 330,982 - real estate none
collateral loans
Others Hung ○ ○ 2,127 2,127 2,127 - real estate none
Lu ○ ○ 394 1 1 - real estate none
Lin ○ ○ 1,967 1,357 1,357 - real estate none
Cho○ ○ 500 500 500 - real estate none
Hsiao○ ○ 343 343 343 - real estate none
December 31, 2013
Number of Performing situations Transaction terms
clients or Maximum Ending are the same as
Category name of balance balance Performing Non-performing Collaterals those with regular
related party loan Loans clients
Employee consumer 117 311,657 264,147 264,147 - none/real none
loans estate
Self-use residence 98 359,093 308,633 308,633 - real estate none
collateral loans
Others Sun ○ 2,500 - - - real estate none
Lin ○ ○ 2,500 - - - real estate none
----- End of picture text -----

(g) Guarantees of credit: None.
(h) Rental revenue: None.
(j) Sales of Non–Performing Loans Transactions: None.

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(C) Major management salary information

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

For the year ended December 31,
2014 2013
Salary and other short-term employee benefit $ 98,469 72,075
Retirement Benefit 1,202 1,121
Total $ 99,671 73,196
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8. PLEDGED ASSETS : Please refer to note 6(H) for more details.

9. COMMITMENTS AND CONTINGENCIES

(A) Significant commitments and contingencies were as follows:

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December 31, 2014 December 31, 2013
Marketable securities held for custody $ 4,469,561 4,638,603
Bills collected for others 63,775,749 65,603,899
Bills lent for others 20,118,912 24,899,190
Guarantees and letters of credit 21,465,601 19,055,325
Collaterals received 426 886
Trust liabilities 126,849,691 118,080,583
Travelers' check in custody for sale 150,009 155,040
Items held for custody 6,730,929 9,433,036
Registered government bonds for sale 9,110,200 9,015,000
Registered short-term bills for sale 5,407,300 7,883,200
Guarantee notes payable 30,508,000 35,699,220
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(B) As of December 31, 2014 and 2013, major constructions in progress and purchases amounted to $397,034 and $197,312 respectively, of which $316,965 and $126,726 respec‑ tively, remained unpaid.
(C) The Bank’s trust department plans, manages, and operates trust services in accordance with the Banking Law and Trust Law. Special purpose funds are used to invest in market‑ able securities and the Bank also manages trust funds. The trust information as of De‑ cember 31, 2014 and 2013 is as follows:

Trust Balance Sheet

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

Trust Assets December 31, 2014 December 31, 2013
Cash in Bank $ 3,465,392 3,407,100
Common stock 255,620 265,799
Funds 55,692,251 52,272,070
Receivables 67 63
Prepayment 4 17
Real estate 7,138,995 5,124,459
Securities custody 60,297,362 57,011,075
Total trust assets $ 126,849,691 118,080,583
----- End of picture text -----

Ⅵ

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

Trust Liabilities December 31, 2014 December 31, 2013
Payables $168 198
Securities held for custody 60,297,361 57,011,075
Trust capital 66,529,150 61,052,985
Reserves and accumulated loss ( 1,756,434 ) ( 647,986 )
Net income 1,779,446 664,311
Total trust liabilities $ 126,849,691 118,080,583
----- End of picture text -----

Trust Property Accounts

Investment in	December 31, 2014	December 31, 2013
Cash in bank Common stock Funds Receivables Prepayment Real estate Land Buildings Construction in progress Securities in custody Total	$ 3,465,392	3,407,100 265,799 52,272,070 63 17 5,092,714 31,745 - 57,011,075 118,080,583
	255,620
	55,692,251
	67
	4

	7,096,192
	32,323
	10,480
	60,297,362
	$ 126,849,691

Note: As of December 31 2014 and 2013, the amounts above included OBU transaction on "foreign currency designated trust funds investment in foreign negotiable securities business" amounting to $832,748 and $680,633, respectively.

Trust Income Statement

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

For the year ended December 31,
Investment in
2014 2013
Trust Revenue
Interest income $ 13,823 12,793
Realized cpaital gain-fund - 3,825
Realized capital gain-stock 1,392 372
Cash dividend income of common stock 1,340,443 974,353
Gains on property transaction 1,434,320 1,384,882
Other revenue 236 1,407
Sub-total 2,790,214 2,377,632
Trust Expense
Administrative expenses 69,705 69,095
Custody expenses 540 636
Postage and phone/fax expense - 2
Duties - 83,145
Realized capital loss-fund 2,696 502
Realized capital loss-stock - 26
Losses on property transaction 936,612 1,551,923
Other expense 189 7,029
Sub-total 1,009,742 1,712,358
Net income before tax 1,780,472 665,274
Income tax expense ( 1,026 ) ( 963 )
Net income after tax $ 1,779,446 664,311
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(D) (a) In 1996, the Bank’s World Trade Center Branch was sued for handling a letter of credit export collection from Chin Seen Industrial Co., which allegedly used a forged export document and failed to ship the goods to the importer, the International Comagnie de Commercialization et d’Invertissement (I.C.C.I.) of the Republic of Zaire, suffered a loss thereon. In November 1998, I.C.C.I. initiated a case with the Court of Commerce of Brussels in Belgium, requested the L/C opening bank (Banque Bruxelles Lambert, or BBL) and the Bank to jointly pay compensation of US$7,830 thousand plus interest, losses, and expenses for the L/C. On August 31, 2005, the Court of Commerce of Brussels rendered its judgment which the Bank has to make compensation of US$7,674 thousand plus interest to I.C.C.I. The Bank has engaged a local attorney in Belgium to formally file an appeal. In Feburary 2011, Court of Appeal in Brussels had made an intermediate adjudication which I.C.C.I and the Bank are both responsible for the offense. Furthermore, on November 16, 2011, the judgment of the court indicated that the Bank should be responsible for 90% of the negligence proportion. In terms of the judgment of the court of the second instance The Bank has filed an appeal on November 3, 2011. On Feburary 6, 2013, the court overruled the Bank’s appeal and the Bank lost the case. As of December 31, 2014, the Bank has accrued the compensation of NT$ 135,815 thousands and EUR 8,000,000. The relavent provision please refer to Note 6(S).
(b) In December, 2007, Jin-ye Industry Corporation (JIC) was a checking account client of the Bank’s Tai Ping Branch. The JIC’s accountant falsified the seal to write checks and steal the deposit from the company. JIC filed a lawsuit with Taichung District Court according to the claim right of consumption deposit which required the Bank to return the deposit of $61,751thousand plus the interest. Taiwan High Court Taichung branch ruled that the Bank lost the case in November 2011 and should return $61,751 thousand and the interest with annual rate of 5% from April 1, 2008 to the settlement date. The Bank filed an appeal. On January 16, 2013 Taiwan Supreme Court overruled the appeal and the Bank lost the case. The Bank settled with the counterparty with $62,677 on May 15, 2014 and paid the proceeds to the counterparty on May 29, 2014. The case is closed. The estimated liability reserve was written off and the relevant decreased amount please refer to Note 6 (S).
(c) In July 2008,Hua Nan Bank, which purchased secured and unsecured non-performing loans receivable of Wei Lei Food Corporation (WLF), argued that the Bank should allocate the payment that it received from Ge Riu Wei Assets Management Corporation (GWAM) which resulted from the auction of the real estate mortgaged to the Bank by Wei Lei Food Corporation on 1996. For this reason, Kang-Cheng Corp. filed a lawsuit to Shihlin District Court to oblige the Bank to pay Kang-Cheng Corp. $15,594 thousand plus the interest. The Bank lost the first trial and appealed. Taiwan High Court ruled that the Bank lost the lawsuit in December, 2010 and should pay Hua Nan Bank $10,250 thousand plus the interest with annual rate of 5% from July 18, 2008 to the settlement date. The Bank has filed an appeal. Taiwan Supreme Court ruled that the original verdict was abandoned and the case was sent back to remand in September, 2011. Taiwan High Court ruled that the Bank lost the lawsuit on October 23, 2013 and should pay Hua Nan Bank $249 thousand plus the interest with annual rate of 5% from July 18, 2008 to the settlement date. The counterparty has filed an appeal now and it is under the trial of Taiwan supreme Court.

10. LOSSES DUE TO MAJOR DISASTERS: None.

11. SUBSEQUENT EVENTS: None.

Ⅵ

12. OTHER

(A) Employee benefits, depreciation, depletion and amortization expenses were as follows:

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For the year ended December 31,
Nature 2014 2013
Operating expense Operating expense
Employee benefit expenses
Salary expense $ 5,578,887 5,587,989
Labor and health insurance expenses 391,191 389,939
Pension expenses 320,282 333,925
Other employee benefit 743,793 994,033
Total employee benefit 7,034,153 7,305,886
Depreciation expenses 324,023 363,327
Amortization expenses 84,064 75,876
Total $ 7,442,240 7,745,089
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The employee numbers for the year 2014 and 2013 amounted to 4,839 and 4,797 people, respectively.

(B) Profitability

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Unit : %
Item December 31, 2014 December 31, 2013
Before income tax 0.40 0.29
The ratio of return on assets
After income tax 0.39 0.28
Before income tax 9.14 6.96
The ratio of return on equity
After income tax 8.86 6.51
Net income ratio 27.98 20.37
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Note 1 The ratio of return on assets = Income before (after) income tax expense÷ average assets Note 2 The ratio of return on equity = Income before (after) income tax expense ÷ average equity

Note 3 Net income ratio = Gain or loss after income tax expense ÷ Net revenue

Note 4 Income before (after) income tax expense refers to income accumulated from January of the current year to the current pe‑ riod.

13. OTHER DISCLOSURES

(A) Information on significant transactions:

(a) Cumulative purchase or sale of the same investee’s capital stock up to $300,000 or 10% of paid‑in capi‑

tal ：

Unit: In NTD thousands; thousand share

Name of Company	Category and name of security	Account name	Name of counter-party	Relationship with the Company	Beginning balance	Beginning balance	Purchases	Purchases	Sales	Sales	Sales	Sales	Ending balances (Note)	Ending balances (Note)
					Shares/ Units	Amount	Shares/ Units	Amount	Shares/ Units	Amount	Cost	Disposal gain or loss	Shares/ Units	Amount
Taiwan Business Bank International Leasing Co., Ltd.	Private placement	Investment under equity method	Not applicable	Subsidiary company	40,000	400,000	110,000	1,100,000	-	-	-	-	150,000	1,500,000

Note: Original investment.

(b) Acquisition of real estate amounting to over $300,000 or 10% of paid-in capital: None.

(d) Discount of commissions and handling fees with related parties amounting to over $5,000: None.

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Taiwan Business Bank Annual Report 2014

(e) Receivables from related parties amounting to over $300,000 or 10% of paid‑in capital: None.
(f) Sale of non-performing loans information:
(1) Sale of non-performing loans:

Unit: In NTD thousands(US dollars in thousands)

==> picture [456 x 96] intentionally omitted <==

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

Gains and On disposal
Trade date Counterparty Debt component Book value Sale price Relationship
losses additional term
2014.01.29 JP MORGAN Syndicated loan 203,076 207,786 4,710 None None
CHASE BANK
NATIONAL (USD6,699) (USD6,854) (USD155)
ASSOCIATION
2014.03.17 MACQUARIE Syndicated loan 100,364 117,801 17,437 None None
BANK LIMITED
(USD3,290) (USD3,862) (USD572)
----- End of picture text -----

(g) Types of securitization goods and related information approved by financial assets securitization rules or real estate securitization rules: None.

==> picture [456 x 444] intentionally omitted <==

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

Transaction in For the year ended December 31, 2014
Percentage
No Trader Counterparty Relationship accounted for
Account Amount Terms consolidated net
revenue or total
assets
0 TAIWAN BUSINESS Taiwan Business 1 Account 73,920 No difference with 0.01%
BANK, LTD. Bank Insurance Receivables non-related parties
Agency Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Deposits and 85,247 No difference with 0.01%
BANK, LTD. Bank Insurance remittances non-related parties
Agency Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Service 960,597 No difference with 5.06%
BANK, LTD. Bank Insurance revenue non-related parties
Agency Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Other 838 No difference with -%
BANK, LTD. Bank Insurance non-related parties
Agency Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Account 3,665 No difference with -%
BANK, LTD. Bank Property Receivables non-related parties
Insurance Agency
Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Deposits and 6,484 No difference with -%
BANK, LTD. Bank Property remittances non-related parties
Insurance Agency
Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Service 44,064 No difference with 0.23%
BANK, LTD. Bank Property revenue non-related parties
Insurance Agency
Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Other 419 No difference with -%
BANK, LTD. Bank Property non-related parties
Insurance Agency
Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Deposits and 118,495 No difference with 0.01%
BANK, LTD. Bank International remittances non-related parties
Leasing Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Other 691 No difference with -%
BANK, LTD. Bank International non-related parties
Leasing Co., Ltd.
----- End of picture text -----

Ⅵ

==> picture [456 x 443] intentionally omitted <==

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

Transaction in For the year ended December 31, 2013
Percentage
No Trader Counterparty Relationship accounted for
Account Amount Terms consolidated net
revenue or total
assets
0 TAIWAN BUSINESS Taiwan Business 1 Account 112,371 No difference with 0.01%
BANK, LTD. Bank Insurance Receivables non-related parties
Agency Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Deposits and 127,645 No difference with 0.72%
BANK, LTD. Bank Insurance remittances non-related parties
Agency Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Service 873,865 No difference with 4.93%
BANK, LTD. Bank Insurance revenue non-related parties
Agency Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Other 690 No difference with -%
BANK, LTD. Bank Insurance non-related parties
Agency Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Account 3,342 No difference with -%
BANK, LTD. Bank Property Receivables non-related parties
Insurance Agency
Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Deposits and 8,619 No difference with 0.05%
BANK, LTD. Bank Property remittances non-related parties
Insurance Agency
Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Service 41,632 No difference with 0.23%
BANK, LTD. Bank Property revenue non-related parties
Insurance Agency
Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Other 345 No difference with -%
BANK, LTD. Bank Property non-related parties
Insurance Agency
Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Deposits and 5,935 No difference with 0.03%
BANK, LTD. Bank International remittances non-related parties
Leasing Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Other 519 No difference with -%
BANK, LTD. Bank International non-related parties
Leasing Co., Ltd.
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Note: The meaning of the number is as follows.

Zero stands for the parent company
2 .Subsidiaries are coded from No 1 per respective companies.

statements users: None.

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Taiwan Business Bank Annual Report 2014

(B) Information of investee company:

(a) Names, locations, and related information of investees on which the company exercises significant

(In NTD thousand; thousand share)

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The cross holding of the Bank and its related
Investment parties
Main gain or loss
Name of investee Address business Shareholding Book Value recognized Number Total Note
company ratio Number of
scope by the
Company of shares profoma Number of Shareholding
shares shares ratio
Taiwan Business 2F, No.158, Agent of 100.00% 65,434 55,433 500 - 500 100.00% Already
Bank Insurance Songjiang Rd personal written-off
Agency Co., Ltd. Taipei City 104, insurance when
Taiwan (R.O.C.) preparing the
consolidated
financial
statements
Taiwan Business 2F, No.158, Agent of 100.00% 6,244 1,867 300 - 300 100.00% 〝
Bank Property Songjiang Rd property
Insurance Taipei City 104, insurance
Agency Co., Ltd. Taiwan (R.O.C.)
Taiwan 5F., No.151, Sec. Leasing 100.00% 1,505,883 (17,808) 150,000 - 150,000 100.00% 〝
Business Bank 4, Nanjing E. business
International Rd., Songshan
Leasing Co., Dist., Taipei City
Ltd. 10580, Taiwan
(R.O.C.)
Taiwan Room 925B, Leasing 100.00% 865,415 (1,389) - - - 100.00% 〝
Business Bank 9th floor, No.55, business
International Xili road, China (CNY170 million)
Financing (Shanghai) Pilot
Leasing Co., Free Trade Zone
Ltd.
----- End of picture text -----

(b) Loans to others: None
(c) Endorsements and guarantee for others: None
(d) Acquisition of securities:

(Unit: In NTD thousands)

Company acquired				At the end of the period	At the end of the period	At the end of the period	At the end of the period	Note
	Type and name of the security	Relationship with the security issuer	Account	Number of shares	Book value	Share proportion (Note 2)	Market price (Note 1)
Taiwan Business Bank International Financing leasing Co., Ltd.	Not public	The investee under the equity method of the subsidiary Taiwan Business Bank International Leasing Co., Ltd.	Investment under equity method	-	865,415 (CNY170 million)	100.00%	865,415	The transaction has been written off when preparing the consolidated fnancial statements.

Note 1: Listed companies apply the market price to calculate the net amount of the shares possessed. Not listed companies and companies that are not in the over‑the‑counter market apply the share proportion to calculate the net amount of the shares possessed. The net amount of preferred stock is calculated based on the settlement .
Note 2: The share proportion of the preferred stock is calculated based on the shares the Company possessed divided by the shares issued.
(e) Accumulative purchases or sales of the same investee companies amounting to over $300,000 or 10% of

paid-in capital: None.

Ⅵ

(Unit: In NTD thousands)

Company	type and				Beginning of the period	Beginning of the period	Purchase	Purchase	Sale	Sale	Sale	Sale	End of the period	End of the period
	name of the security	Account	Trade counter-party	Relation-ship	Shares	Amount	Shares	Amount	Shares	Amount	Book value	Disposition gains or losses	Shares	Amount
Taiwan Business Bank International Financing leasing Co., Ltd.	Not public	Investment under equity method	Not applicable	Subsidiary	-	-	-	838,305 (CNY170 million)	-	-	-	-	-	838,305 (CNY170 million)

(f) Acquisition of real estate amounting to over $300,000 or 10% of paid-in capital: None.
(g) Disposition of real estate amounting to over $300,000 or 10% of paid-in capital: None.
(h) Discount of commissions and handling fees with related parties amounting to over $5,000: None.
(i) Receivables from related parties amounting to over $300,000 or 10% of paid-in capital: None.
(k) Sale of non-performing loans information: None.
real estate securitization rules: None.
statements users: None.
(C) Information on investment in mainland China ：
(a) Name and major business item of the investee in China ：

(In NTD thousand)

==> picture [454 x 194] intentionally omitted <==

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

Accumulated Investment transferred Accumulated
amount out or recovered amount The current Shares directly Investment
investee Name of business Major Paid-in Investment transferred transferred from profit or or indirectly or loss Profit Ending book value of profit
company item capital method beginning of the from Taiwan, Transferred out Recovered end of the Taiwan, loss of the investee possessed by the Bank recognized investment transferred in
period period
Taiwan Banking 2,371,237 (e) 2,371,237 - - 2,371,327 - Shanghai - 2,631,794 None
Business business branch of the
(CNY500 (CNY500 (CNY500
Bank , Ltd. Bank, not
Shanghai million)) million)) million) an investee
branch (Operating company
capital)
Taiwan Leasing 838,305 ( d ) - 838,305 - 838,305 (1,389) 100% (1,389) 865,415 "
Business business (CNY170
Bank million) (CNY170 (CNY170
International million) million)
Financing
leasing Co.,
Ltd.
----- End of picture text -----

Investment method is divided into 5 categories and are listed as follows:

(a) Invest in a Chinese Company through remittance from the third party.
(b) Establish a company in the third party and use the company to invest in a Chinese Company.
(c) Reinvest in the existing company in the third party and use the company to invest in a Chinese company.
(d) Directly invest in a Chinese company.
(e) Other: establish a foreign branch.

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Taiwan Business Bank Annual Report 2014

(b) Limit of investment in China ：

(In NTD thousand)

Name of Company	Accumulated amount transferred from Taiwan, end of the period	Investment amount approved by Ministry of Finance	Limit of investment regulated by Investment Audit Committee of Ministry of Finance.
Taiwan Business Bank Co., Ltd. (Note)	3,209,542 (CNY 670 million)	3,209,542 (CNY 670 million)	37,642,750

Note: The investment amount in China of the subsidiary Taiwan Business Bank International Leasing Co, Ltd is included.

14. SEGMENT INFORMATION

(A) General information

The chief operating decision maker is the general manager of the Bank who is in charge of all major projects approval, budget review and performance measurement. In order to express operating activities legitimately, the reportable segments of the Bank are Bank segment and others (including securities department and trust department). The major operating activities of securities department are securities brokerage, financing transaction and future auxiliary transaction. It is to provide customer a platform for securities investment. The trust department mainly provides customers relevant financial services, including securities review and approval, custodian bank service, new type trust business and specific trust funds investing in domestic or foreign securities. The profit or loss of the operating segments of the Bank is measured by net income before tax. The reported amount is consistent with the data which was provided to the chief operating decision maker in order to use it as the base of resource allocation and performance measurement.

(B) Segment information

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

Other-securities Inter-department
December 31, 2014 Bank Department Total segment
and trust adjustment
Net interest income $ 14,548,907 241,350 - 14,790,257
Other net non-interest income 3,597,528 647,980 (41,440) 4,204,068
Net revenue 18,146,435 889,330 (41,440) 18,994,325
-
Bad debt expenses (2,488,352) (50,235) (2,538,587)
Operating expense (10,489,846) (482,121) 1,945 (10,970,022)
Net income before tax $ 5,168,237 356,974 (39,495) 5,485,716
Total assets $ 1,377,074,733 17,172,016 (1,856,182) 1,392,390,567
Total liabilities $ 1,316,842,415 13,088,854 (278,619) 1,329,652,650
----- End of picture text -----

December 31, 2013		Bank Department		Other-securities and trust		Inter-department adjustment		Total segment
Net interest income Other net non-interest income Net revenue Bad debt expenses Operating expense Net income before tax Total assets Total liabilities		$ 13,424,144 3,555,693 16,979,837 (2,994,335) (10,402,754) $ 3,582,748 $ 1,310,041,521 $ 1,255,240,083		170,358 608,573 778,931 (5,804) (465,151) 307,976 17,049,020 14,132,336		- (35,527) (35,527) - 1,553 (33,974) (722,465) (257,911)		13,594,502 4,128,739 17,723,241 (3,000,139) (10,866,352) 3,856,750 1,326,368,076 1,269,114,508

Ⅵ

(C) Geographic information ：

The Bank and its subsidiaries, based on the geographic location of foreign operating segments, to disclose the information as below:

Net income before tax ：

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

For the year ended December 31,
Area
2014 2013
Taiwan $ 5,007,309 3,503,638
USA 293,740 177,151
Hong Kong 37,109 19,065
Australia 58,443 137,794
China 89,115 19,102
Total $ 5,485,716 3,856,750
----- End of picture text -----

Non-current assets ：

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

Area December 31, 2014 December 31, 2013
Taiwan $ 18,834,327 16,164,713
USA 1,067 21,721
Hong Kong 24,257 10,362
Australia 16,659 20,357
China 17,730 12,462
Total $ 18,894,040 16,229,615
----- End of picture text -----

(D) Significant client information ：

No single customer represents 10% or more of the Bank and its subsidiaries's operating revenue. Therefore, no disclosure of major customer information is required.

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Taiwan Business Bank Annual Report 2014

Corporate Social VII Responsibility

==> picture [49 x 38] intentionally omitted <==

==> picture [459 x 488] intentionally omitted <==

Ⅶ

1. Corporate Social Responsibility

The fulfillment of CSR has always been one of the Bank's four major operating principles. Besides pursuing business development, the upgrading of employee value-added, and an emphasis on shareholders' interest in its own business operations, the Bank uses concrete action to fulfill its CSR by showing care for disadvantaged groups, carrying through with the principle of care for society, and participating actively in public-benefit activities.

(1) Fulfillment of Responsibilities as an SME Bank

A. Active guidance of SMEs and deep‑rooting of the core SME business

The TBB jointly organized, with the Taipei Exchange, a Cultural/Creative Youth Dream-Building Plan Seminar in response to the government's promotion of the cultural/creative industry and to help young people with start-ups; participated in the "2014 Taiwan Innovation Match-Making Show" organized by the Taiwan External Trade Development Council (TAITRA) in order to support the "Financial Sector Support for Innovation Industries Project" by providing financial consultation for innovation industries; and cooperated with the Ministry of Culture's organizing of a Cultural/Creative Industry Advertising and Promotion Seminar to help enterprises obtain bank financing.

B. Assistance for startups, increasing employment, winning awards

The TBB tops the nation in the extension of "Young Entrepreneur Loan", and "Micro-Business Startup Phoenix" loans.

C. Loan policy

food safety, labor safety, environmental protection are included among the key points in loan assessment.

(2) Customer Care

A. A diverse range of innovative financial products to satisfy the capital needs throughout all stages of the human life cycle

(A) The “childbearing consumer loan” program was carried out in order to encourage childbearing by providing capital needed for bearing children, thereby lightening the burden on families and satisfying the funding needs of more people.
(B) "Youth Overseas Living Experience Loan” was extended and “Youth Overseas Grand Tour Loan" was offered to help young people take overseas study tours, free individual travel (FIT) tours, and working holiday tours in order to expand their global view, cultivate their career abilities, and carry out career planning.
(C) The graded management of small-business customers was implemented and three innovative preferential loan programs—”Small but Beautiful,” “Small but Rich,” and “Little Giant”—were introduced and approved by the Credit Guarantee Fund and listed for “preferential conditions, highspeed” underwriting approval in order to satisfy corporate needs for quick loans and show the Bank’s strong support for domestic micro-businesses.
(D) The Bank strongly supports cultural/creative industries and actively handles financing for them, helping creative industries with the potential for development by providing the most professional financing services so as to attract more creative people into the industry, stimulate production capacity, and bring new economic value to Taiwan.

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Taiwan Business Bank Annual Report 2014

B. Protection of customer rights

(A) The Bank has established "Consumer Protection Policy” and “Consumer Protection Operating Procedure” to protect the rights of consumers by clearly stipulating measures that should be adopted pursuant to the consumer protection policy and designating a unit to be responsible for monitoring the effectiveness of the consumer protection mechanism. The Auditing Dept. is responsible for checking the status of implementation to assure the protection of consumers.
(B) Details of loan charges and annual percentage rates on total loan charges are disclosed in contracts, and standards for the collection of fees are displayed on the TBB website and in business lobbies so that customers can easily understand the actual cost of loans.
services, settlement procedures for trust-business disputes, and information on fund channel reimbursement are disclosed on the TBB website.

C. In response to the Kaohsiung gas explosion, food safety scares, and other major social incidents, the Bank established personal loan relief measures to help rehabilitate victims of the Kaohsiung gas explosion and assist victims of the food safety incidents get through their financial difficulties.

(3) Environmental Protection

The Bank vigorously implements the energy conservation and carbon reduction policy to promote sustainable environmental development.

equipment and save electricity costs.

(4) Social‑benefit Activities and Community Participation

and calls on its domestic branches to exhibit the spirit of "sending warmth in the winter chill," cultivate the community through visits, and donate to disadvantaged groups within their areas.

(5) Support for Academic and Sports Activities

The Bank and the Taiwan Cooperative Bank jointly organized the 11th Annual Meeting and Conference of APEC Financial Institutions Dealing with SMEs, which focused on the strengthening of professional know-how about SME financing and reinforced cooperation and cross-cultural interchange among APEC members while promoting the beauty of Taipei.

(6) Employee Care

A. Employees are company’s assets, and the TBB has never spared any effort to take care of its employees. In addition to establishing work rules and human resources management regulations in accordance with the Labor Standards Act and other relevant labor regulations, the Bank also complies with laws in providing labor insurance, national health insurance, and allocations for retirement funds. Employee health exams are carried out on a regular basis and group medical care and accident insurance are offered on preferential terms in order to protect the living of employees so that they can fully express their professional skills at work.
B. To strengthen employees’ competitiveness and upgrade their professional know‑how, the Bank holds training classes focused on different businesses in accordance with its annual manpower training plans, and provides a rich diversity of courses on its digital learning website along with irregular video lectures and professional speeches

Ⅶ

by prominent speakers.

C. The Bank has a complete salaries/rewards system and promotion channels as well as diversified training and welfare measures designed to recruit and retain outstanding personnel to struggle in concert with the Bank.
D. The Bank places utmost attention on employee rights and regularly calls labor‑ management meetings where the two sides can fully communicate and negotiate on employee rights and welfare issues, and sign group agreements, thereby maintaining harmonious labor‑management relations.

(7) Continuity of Operations and Creation of Shareholders’ interest

The Bank is engaged in a long-term effort to upgrade corporate governance, in which it spares no effort, and demonstrates its capacity to act through full-marketing in the pursuit of outstanding operating performance, and works continuously to enhance asset value and competitiveness with the aim of reinforcing the TBB's operating structure and creating maximum value for all our shareholders.

2. Implementation of Social Responsibility

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1. Corporate Governance Implementation (1)Does the Bank declare itscorporate social responsibility policy and examine the results of the implementation? (2) Does the Bank Provide educational training on corporate social responsibility on a regular basis?	1.The TBB Articles of Incorporation clearly stipulate: "In line with government policy, Taiwan Business Bank takes as its objectives the provision of credit to the public and to small and medium enterprises, the provision of assistance to small and medium enterprises in improving their production equipment and fnancial structures, and the strengthening of their business management." 2. To carry through with corporate social responsibility and promote balanced and sustainable economic, social, and environmental development, the Bank has formulated "Corporate Social Responsibility Best Practice Principles" and produced corporate social responsibility report disclosing the Bank's status of CRS implementation, and published it on the TBB website. 1. The Bank provides information on education andtraining to its directors in a timely manner and conforms to the provisions of the "Directions for the Continuing Education for Directors and Supervisors of TWSE Listed and GTSM Listed Companies" so as to upgrade the professional competence of directors, and posts notices of their participation in training activities on the company's Market Observation Post System. 2. The Bank's education and training courses include social responsibility in their curricula, and employees are also sent to participate in external training classes in corporate social responsibility.	No divergence. No divergence.

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(3) Does the Bank establish exclusively (or concurrently) dedicated frst‑line managers authorized by the board to be in charge of proposing the corporate social responsibility policies and reporting to the board? (4) Does the Bank declare a reasonable salary remuneration policy, and integrate the employee performance appraisal system with its corporate social responsibility policy, as well as establish an effective reward and disciplinary system?	The Bank has established "Corporate Social Responsibility Best Practice Principles" and its Board of Directors Secretariat, Operating Management Center, Human Resources Department, and General Affairs Department carry out corporate social responsibility. Each of the Bank's units strives to execute corporate social responsibility within the scope of its authority, and reports on implementation in accordance with the Bank's division of responsibilities. The Bank has instituted "Guidelines for the Payment of Employee Salaries" and "Guidelines for the Issuance of Employee New Year and Performance Bonuses," and standards for salary increases are based on year‑end evaluations. Further, the Bank's guidelines for employee rewards and punishments, and instructions for general evaluations, provide punishment, up to dismissal, for violation of business ethics and for bribery and corruption; there is also provision of rewards for the prevention or reporting of improper behavior and fraud, to encourage employees to implement business ethics and corporate social responsibility.	No divergence. No divergence.
2. Sustainable Environment Development (1)Does the Bank endeavor to utilize allresources more effciently and use renewable materials which have low impact on the environment? (2) Does the Bank establish properenvironmental management systems based on the characteristics of their industries?	1. Carbon powder ink cartridges are collected for recycling. 2. Double‑sided printing 3. Recycling companies are commissioned to dispose of unusable computer equipment. 4. The Bank has signed the "Letter of Intent for Green Procurement by Private Enterprises and Groups" as promoted by the Environmental Protection Administration, providing for the priority adoption of green construction materials and other goods that bear energy‑saving or environmental protection labels. 5. Bisphenol A‑free paper rolls are used in ATMs, environmentally friendly cars and motor scooters are procured or leased, and copying machines and other offce machines that are environmentally friendly and can serve as energy‑saving models are leased. Environmental cleaning and maintenance is carried out in accordance with the Bank's "Cleaning and Maintenance Instructions for Business Units."	No divergence. No divergence.

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(3) Does the Bank monitor the impactof climate change on its operations and conduct greenhouse gas inspections, as well as establish strategies for energy conservation and carbon reduction?	1. The Bank's greenhouse gas emissions and volume reduction information is posted on the market observation post system. 2. Bank‑wide water conservation measures have been implemented; use of water and electricity by the different units is monitored regularly, and is included in business performance evaluation. 3. The improvement of energy‑saving measures is evaluated the effciency of equipment is enhanced, and the conservation of water and electricity is upgrader. 4. The Taipei City Government Statute for Autonomy in Energy Conservation and Carbon Reduction is observed, and air conditioners in offces and business premises are set no lower than 26 degrees Celsius.	No divergence.
3. Preserving Public Welfare (1) Does the Bank formulate appropriate management policies and procedures according to relevant regulations and the international Bill of Human Rights? (2) Has the Bank set up an employee hotline or grievance mechanism to handle complaints with appropriate solutions? (3)Does the Bankprovide a healthy and safe working environment and organize training on health and safety for its employees on a regular basis	The Bank's personnel regulations are written to conform to the relevant labor laws and regulations. The employment policy has no discrimination on gender, race, age, marital and family status, and has equality of opportunity on remuneration, employment, training and promotion which protect the legitimate rights and interest of employees. Employees may submit written complaints to their superiors at any time. The Bank also provides telephone and Internet channels for complaints, which the head offce assigns designated personnel to handle. 1. To prevent occupational accidents and protect the safety and health of workers, the Bank has set up a specifc worker‑safety unit to oversee bank‑wide occupational safety and health matters and work to prevent occupational accidents. The Bank has also trained 481 personnel in charge of occupational safety and health, along with 417 emergency‑ care personnel, with the aim of achieving a happy workplace and a safe, healthy environment with zero accidents.	No divergence. No divergence. No divergence.

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(4) Does the Bank setup a communication channel with employees on a regular basis, as well as resaonably inform employees of any signifcant changes in operations that may have an impact on them? (5) Does the Bank provide its employees with career development and training sessions? (6) Does the Bank establish any consumer protection mechanisms and appealing procedures regarding research development, purchasing, producing, operating and service?	2. To reinforce employee health management, the prevention of occupational disease, and the promotion of health, the Bank contracts a specialist doctor and employs a full‑time nurse to provide health services. Safety and health education is offered on a regular basis, and an inquiry area is provided on the E‑service Employee Portal for employees to use. In addition, courses related to occupational safety and health are offered on the TBB E‑learning Network for the choice of employees. 3. The Bank holds three hours of labor safety education for all of its employees every three years, and provides health checkups for new employees. In‑service employees are given regular health checks every one or two years in accordance with the Occupational Safety and Health Act, indicating the Bank's concern for the health of its employees and reminding them of the importance of health. Matters that affect the rights or welfare of employees are submitted to labor‑management meetings for discussion on a regular basis, or to prior labor‑ management negotiations. There is also a channel for employees to express their opinions, and their legal rights are fully respected and protected. Changes in operations or regulations that may have a major infuence on employees are reported by letter to all units, which are asked to publicize them during business meetings, and bank‑wide videoconferences are also used for notifcation purposes. The Bank has formulated an annual personnel training program, with courses in general banking education, basic business courses, advanced courses, seminars, executive training, and lectures provided in accordance with the specifc jobs and seniorities of personnel. Personnel are also selected for professional courses by external agencies, and outside professional lecturers are hired to offer course in order to train TBB personnel in advanced professional skills, in an integration of training and hiring designed to advance the career development of banking staff. Please refer to VII Corporate Social Responsibility (2) customer care B. Protection of Customer rights.	No divergence. No divergence. No divergence.

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(7) Does the Bank advertise and label its goods and services according to relevant regulations and international standards? (8) Does the Bank evaluate the records of suppliers' impact on the environment and society before taking on business partnerships? (9) Do the contracts between the Bank and its major suppliers include termination clauses which come into force once the suppliers breach the corporate social responsibility policy and cause appreciable impact on the environment and society?	In addition to following to its own regulations, in the marketing and labeling of products and services the Bank also adheres to the laws and regulations of the competent authorities, and to relevant legal orders and international practices. Environmental commitments are included in the Bank's construction contracts in order to strengthen the responsibilities borne by contracted companies. Environmental commitments are included in the Bank's construction contracts in order to strengthen the responsibilities borne by contracted companies.	No divergence. No divergence. No divergence.
4. EnhancingInformation Disclosure Does the Bank disclose relevant and reliable information regarding its corporate social responsibility on its website and the Market Observation Post System (MOPS)?	1. The Bank discloses its "Corporate Social Responsibility Best Practice Principles" on its website. 2. The Bank discloses its "Corporate Social Responsibility Report" on its website and the Market Observation Post System. 3. The Bank's greenhouse gas emissions and volume reduction information is posted on the Market Observation Post System.	No divergence.

If the Company compiles its own CSR rules in accordance with the "Corporate Social Responsibility Best Practice Principles for TWSE/GTSM‑listed Companies," please describe its operation and divergences by the established rules:
The Bank has set up "Corporate Social Responsibility Best Practice Principles" in accordance with the "Corporate Social Responsibility Best Practice Principles for TWSE/GTSM‑listed Companies" in order to carry through with CSR. There is no divergence from the Best Practice Principles.
For other information to aid understanding of the Bank's CSR operations, please refer to VII Corporate Social responsibility
If the Company's products or CSR report has passed the verification standards of a related verification institution, please explain: None.

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3. Implementation of honest operation, and measures adopted

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Item	Status of Operation	Divergence from Corporate Responsibility Rules for Listed Companies, and Reasons for Divergence

1. Establishment of ethical corporate management policies and programs
(1) Does the Bank declare its ethical corporate management policies and procedures in its guidelines and external documents, as well as the commitment from its board to implement the policies?	1. The Bank's establishment, in accordance with the relevant laws and regulations, of auditing, internal controls, and other internal regulations that specify rules which employees must observe. 2. The Bank's work rules clearly specify that employees may not use their positions to perpetrate fraud for personal gain or for the illicit interest of themselves or others, and may not receive gifts of any kind or obtain other improper beneft.	No divergence.
(2) Does the Bank establish policies to prevent unethical conduct with clear statements regarding relevant procedures, guidelines of conduct, punishment for violation, rules of appeal, and the commitment to implement the policies?	1. Clear provisions for punishment, up to dismissal, for corporate ethics violations, bribery, and corruption are written into the Bank's guidelines for employee rewards and punishments and instructions for normal evaluation, and rewards are offered for the prevention or reporting of improper behavior or fraud, This prevents employees from dishonest behavior. 2. "Guidelines for the Construction, Procurement, Customization, and Selling of Property" have been established to serve as a basis for the Bank's procurement operations, and are thoroughly carried out.	No divergence.
(3) Does the Bank establish appropriate precautions against high‑potential unethical conducts or listed activities stated in Article 2, Paragrath 7 of the Ethical Corporate Management Best‑ Practice Principles for TWSE/ TPEx Listed Companies?	According to the provisions of the "Guidelines for the Construction, Procurement, Customization, and Selling of Property," Article 21, which states that "Persons handling the construction, procurement, customization, and sale of property may not engage in the work of inspection and acceptance of a related case, persons involved in inspection may not supervise the inspection of a related case, and persons involved in the sale of property may not handle the work of inspection transfer of a related case." And Article 27, "Personnel of all levels who handles or supervises construction or the procurement, customization, or sale of property are strictly prohibited from accepting invitations to banquets or presentations of gifts from related companies, in order to assure rectitude and fairness, and persons handling procurement should be rotated on a regular basis." The Bank does in fact demand that such personnel observe these rules, and if there is any misconduct to report it to the personnel unit for reporting to the Personnel Evaluation Committee for review and investigation.	No divergence.

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2. Fulfll operations integrity policy
(1) Does the Bank evaluate business partners' ethical records and include ethics‑ related clauses in business contracts?	Contract provisions clearly state that all hardware and software equipment must be legally authorized, and that if personnel sent by a company that wins the bidding for a procurement contract engage in any illegal behavior, divulging of secrets, or negligence that results in loss for the Bank, then that company may be banned from participation in the bidding and be held jointly liable for payment of compensation for the loss. It is also stipulated in bidding instructions that if a bidding company has a record of unethical behavior, it may be banned from participation in bidding.	No divergence.
(2) Does the Bank establish an exclusively (or concurrently) dedicated unit supervised by the Board to be in charge of corporate integrity?	Related units of the Bank promote ethical management within the scope of their responsibility, and internal auditing reports are submitted to the Board of Directors on a regular basis.	No divergence.
(3) Does the Bank establish policies to prevent conficts of interest and provide appropriate communication channels, and implement it?	Provisions for recusal for confict of interest are included in the Bank's Rules and Procedures for Board of Directors Meetings, making discussions more fair and objective. Rules are also established for donations to materially interested parties in order to avoid harming the Bank's interests.	No divergence.
(4) Has the Bank established effective systems for both accounting and internal control to facilitate ethical corporate management, and are they audited by either internal auditors or CPAs on a regular basis?	1. Beginning in 2013 the Bank accounting system is compiled with the International Financial Reporting Standards, as approved by the Financial Supervisory Commission. 2. The Bank does establish internal control system to manage risk in line with Implementation Rules of Internal Audit and Internal Control System of Financial Holding Companies and Banking Industries. The Bank carries out auditing by an independent auditing department so as to assure the design and implementation of the system sustained effectiveness.	No divergence.

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Item	Status of Operation	Divergence from Corporate Responsibility Rules for Listed Companies, and Reasons for Divergence

	3. The TBB Board of Directors Audit Department carries out auditing in accordance with the "Implementation Rules of Internal Audit and Internal Control System of Financial Holding Companies and Banking Industries" and the TBB "Internal Auditing Operating Rules," and submits reports on auditing operations to the Board of Directors and Audit Committee at least once every three months. At least one general audit and one special audit is carried out for domestic branches, Treasury Department, asset custody unit and IT Department. each year, along with one special audit for other management units. At least one general audit is carried out each year for each regional operation division, operation center, and overseas business unit. One special business audit is carried out each half‑year for the fnance, risk management, and legal compliance of subsidiaries. Full‑time auditors are appointed to carry out internal securities business auditing, and the Board of Directors Auditing Department supervises at least one audit each half‑year.
(5) Does the Bank regularly hold internal and external educational trainings on operational integrity?	The Bank's education and training courses encompass the discussions of regulatory compliance, including education in laws and regulations, the legal liabilities of employees, and ethical management, and employees are sent to take outside training courses in ethical management and corporate social responsibility.	No divergence.
3. Operation of the integrity channel
(1) Does the Bank establish both a reward/punishment system and an integrity hotline? Can the accused be reached by an appropriate person for follow‑ up?	Bank employees may make suggestions or report offenses to the heads of their units. They may report, giving their names along with evidence, to the head offce for action; the head offce will assign appropriate designated personnel to handle the matter.	No divergence.
(2) Does the Bank establish standard operating procedures for confdential reporting on investigating accusation cases?	The Bank's designated personnel for handling reports of offenses investigate reports in accordance with the relevant business regulations, and protects job‑related secrets in conformity with the provisions of the Bank's work rules and the Personal Information Protection Act.	No divergence.
(3) Does the Bank provide proper whistleblower protection?	The Bank keeps the identity of whistle‑blowers strictly confdential, and the names of whistle‑blowers, and other personal information that might identify them, are suitably masked in relevant written investigative reports.	No divergence.

Ⅶ

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4. Strengthening information disclosure Does the Bank disclose its ethical corporate management policies and the results of its implementation on the company's website and the Market Observation Post System?	1. The Bank has posted its "Ethical Corporate Management Best Practice Principles" on its website and the Market Observation Post System. 2. Monthly operating conditions and quarterly Chinese‑language CPA audited and approved fnancial statements and important fnancial business information are posted on the Bank's website and the Market Observation Post System, and quarterly English‑language CPA audited and approved fnancial statements are disclosed on the Bank's website. 3. Information on the Bank's risk management is disclosed on the "Capital Adequacy and Risk Management" area of the Bank's website in accordance with the Regulations Governing the Capital Adequacy and Capital Category of Banks. 4. The TBB Board of Directors Auditing Department discloses on the Market Observation Post System, in accordance with the "Criteria for Establishment of Internal Control Systems by Public Companies," the "Statement of Internal Control" approved by the Board of Directors 5. When the Bank acquires or takes over real estate from a materially interested party, or acquires or takes over non‑real‑estate assets from a materially interested party, and the amount of the transaction reaches at least 20% of the Bank's paid‑in capital, 10% of its total assets, or NT$300 million and the assets acquired or taken over consist of machinery or equipment used by a jointly operated business, or its object is not a materially interested party and the amount of the transaction reaches at least NT$500 million and the assets consist of real estate acquired via commissioned development on self‑owned land, commissioned development on leased land, joint development and division of buildings, or joint development and divided sale, and projected investment in the transaction reaches at least NT$500 million, the matter is disclosed on the Market Observation Post System.	No divergence.

If the Bank establishes its own ethical management rules in accordance with the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM‑Listed Companies," please describe differences in their operation and established rules:
(1) In accordance with the Ethical Corporate Management Best Practice Principles for TWSE/GTSM‑listed Companies" and other relevant rules, the Bank has set up "Ethical Corporate Management Best Practice Principles" with the aim of realizing an ethical management policy and preventing unethical behavior. There is no deviation from the rules.
(2) In accordance with our accounting and internal control system, The TBB Board of Directors Auditing Department conducts annual review to each business unit. Scope of review includes all business and internal management. The Auditing Department has submitted reports to the Board and Auditing committee quarterly.

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Divergence from Corporate Item Status of Operation Responsibility Rules for Listed Companies, and Reasons for Divergence

Other important information that will facilitate an understanding of the Bank's ethical management operations (such as the Bank's publicizing of its ethical management determination and policies to companies with which it does business, and its inviting of them to participate in education and training, and review and amendment of the ethical management rules established by the Bank).
The Bank provides its directors with information on corporate governance learning channels so as to improve their competence.

4. Information Disclosure

(1) Internal significant information disclosure procedures

The Banks has set up "Information Disclosure Procedures" as the SOP of internal significant information disclosures. Regarding insider trading prevention, please refer to our "Stockholders' Equity Management Policy".

(2) For information on corporate governance rules and related regulations, please visit the Market Observsation Post System website (http:// mops.twse.com) and click on "corpo‑ rate governance."
(3) For a further understanding of the Bank's governance operations, please visit the Bank's website (http://www.tbb.com.tw) and click on "About TBB" and then "Investor Relations."

VIII

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Directory of Head VIII Office and Branch Units

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TBB'S OFFICES ADDRESS TEL NO. SWIFT ADDRESS
Head Office 30 Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171
Banking Department 30 Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171 MBBTTWTP010
Trust Department 15F, 30 Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171
Securities Department
4F, 30 Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171
(Banking Broker)
International Banking
3F, 30 Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171 MBBTTWTP
Department
46, Sec. 2, Minquan E. Rd., Zhongshan Dist.,
Chi Lin Branch (02)25417171 MBBTTWTP001
Taipei, Taiwan, R.O.C.
634-10, Jingping Rd., Zhonghe Dist, New
Chung Ho Branch (02)22427171 MBBTTWTP002
Taipei City, Taiwan, R.O.C.
419, Mingcheng 2nd Rd., Zuoying Dist.,
Po Ai Branch (07)5567171
Kaohsiung City, Taiwan, R.O.C.
985 Chunri Rd., Taoyuan Dist., Taoyuan City,
North Taoyuan Branch (03)3567171 MBBTTWTP004
Taiwan, R.O.C.
381 Zhongzheng Rd., Luzhu Dist., Taoyuan
Nan Ken Branch (03)3227171 MBBTTWTP005
City, Taiwan, R.O.C.
839/847 Sec. 4, Taiwan Blvd., Xitun Dist.,
Si Tuen Branch (04)23587171 MBBTTWTP006
Taichung City , Taiwan R.O.C.
301 Zhongming S. Rd., West Dist., Taichung
Chung Min Branch (04)23057171 MBBTTWTP007
City, Taiwan, R.O.C.
116, Minquan Rd., Jincheng Township, Kinmen
Kinmen Branch (082) 316871 MBBTTWTP009
County, Taiwan, R.O.C.
161 Daya Rd., Daya Dist., Taichung City,
Ta Ya Branch (04)25687171 MBBTTWTP011
Taiwan, R.O.C
183 Fengnan Rd., Nanzi Dist., Kaohsiung City,
Jen Ta Branch (07)3537171 MBBTTWTP012
Taiwan, R.O.C.
357, Sec. 4, Ren'ai Rd., Da'an Dist., Taipei
Jen Ai Branch (02)27217171 MBBTTWTP020
City, Taiwan, R.O.C.
147, Sec. 4, Nanjing E. Rd., Songshan Dist.,
Sung Shan Branch (02)27167171 MBBTTWTP021
Taipei City, Taiwan, R.O.C.
Chien Cheng Branch 76 Nanjing W. Rd., Datong Dist., Taipei City,
(02)25507171 MBBTTWTP022
(Banking Broker) Taiwan, R.O.C.
601 Zhongzheng Rd., Shilin Dist., Taipei City,
Shih Lin Branch (02)28117171 MBBTTWTP023
Taiwan, R.O.C
168 Zhulin Rd., Yonghe Dist., New Taipei City,
Yung Ho Branch (02)29277171
Taiwan, R.O.C.
192, Sec. 2, Zhongxing Rd., Xindian Dist.,
Hsin Tien Branch (02)29117171 MBBTTWTP025
New Taipei City, Taiwan, R.O.C.
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TBB'S OFFICES ADDRESS TEL NO. SWIFT ADDRESS
16, Sec. 1, Zhonghua Rd., Xinzhuang Dist.,
Hsin Chuang Branch (02)29907171 MBBTTWTP026
New Taipei City, Taiwan, R.O.C.
25, Touqian Rd., Xinzhuang Dist., New Taipei
Hwa Cheng Branch (02)29977171 MBBTTWTP027
City, Taiwan, R.O.C.
158 Songjiang Rd., Zhongshan Dist., Taipei
Sung Kiang Branch (02)25377171 MBBTTWTP040
City, Taiwan, R.O.C.
Taipei Branch 72, Sec. 1, Chongqing S. Rd., Zhongzheng
(02)23717171 MBBTTWTP050
(Banking Broker) Dist., Taipei City, Taiwan, R.O.C.
146 Guangzhou St., Wanhua Dist., Taipei City,
Wan Hua Branch (02)23387171 MBBTTWTP060
Taiwan, R.O.C.
93, Sec. 2, Roosevelt Rd., Da'an Dist., Taipei
South Taipei Branch (02)23697171 MBBTTWTP061
City, Taiwan, R.O.C.
390, Sec. 1, Fuxing S. Rd., Da'an Dist., Taipei
Fu Hsin Branch (02)27057171 MBBTTWTP070
City, Taiwan, R.O.C.
17 Changchun Rd., Zhongshan Dist., Taipei
Chung Shan Branch (02)25517171 MBBTTWTP080
City, Taiwan, R.O.C.
4, Sec. 3, Minquan E. Rd., Zhongshan Dist.,
Chien Kuo Branch (02)25097171 MBBTTWTP081
Taipei CIty, Taiwan, R.O.C.
15, Alley 360, Sec. 1, Naihu Rd., Naihu Dist.,
Nai Hu Branch (02)27997171 MBBTTWTP082
Taipei City, Taiwan, R.O.C.
Nan King East Road
311, Sec. 3, Nanjing E. Rd., Songshan Dist.,
Branch (02)27127171 MBBTTWTP090
Taipei City, Taiwan, R.O.C.
(Banking Broker)
267, Sec. 3, Chung Hsiao E. Rd., Taipei City,
Chung Hsiao Branch (02)27727171 MBBTTWTP100
Taiwan, R.O.C.
135, Sec. 4, Bade Rd., Songshan Dist., Taipei
East Taipei Branch (02)87877171 MBBTTWTP101
City, Taiwan, R.O.C.
World Trade Center 547 Guangfu S. Rd., Xinyi Dist., Taipei City,
(02)23457171 MBBTTWTP102
Branch Taiwan, R.O.C.
552, Sec. 5, Chung Hsiao E. Rd., Taipei City,
Yung Trin Branch (02)23467171 MBBTTWTP103
Taiwan, R.O.C.
19-2 Sanchong Rd., Nangang Dist., Taipei City,
Nan Kang Branch (02)26553771 MBBTTWTP105
Taiwan, R.O.C.
161, Sec. 1, Keelung Rd., Xinyi Dist., Taipei
Sung Nan Branch (02)27647171 MBBTTWTP110
City, Taiwan, R.O.C.
152, Sec. 6, Minquan E. Rd., Naihu Dist.,
Dong Hu Branch (02)87929771 MBBTTWTP111
Taipei City, Taiwan, R.O.C.
92, Sec. 2, Dunhua S. Rd. Da'an Dist., Taipei
Ta An Branch (02)27007171 MBBTTWTP120
City, Taiwan, R.O.C.
356 Zhonghe Rd., Zhonghe Dist., New Taipei
Shuang Ho Branch (02)22327171 MBBTTWTP121
City, Taiwan, R.O.C.
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TBB'S OFFICES ADDRESS TEL NO. SWIFT ADDRESS
403, Sec. 2, Zhongshan Rd., Zhonghe Dist.,
Jim Ho Branch (02)22287171 MBBTTWTP122
New Taipei City, Taiwan, R.O.C.
95 Wugong Rd., Wu Ku Industrial Zone,
Wu Ku Branch Xinzhuang Dist., New Taipei City, Taiwan, (02)22987171 MBBTTWTP130
R.O.C.
1F-2, 188 Zhongshan Rd., Linkou Dist., New
Lin Kou Branch (02)26037171 MBBTTWTP131
Taipei City, R.O.C.
2-1 Mingde St., Banqiao Dist., New Taipei City,
Pan Chiao Branch (02)29687171 MBBTTWTP140
Taiwan, R.O.C.
217, Sec. 1, Zhongshan Rd., Shulin Dist., New
Shu Lin Branch (02)26757171 MBBTTWTP141
Taipei City, Taiwan, R.O.C.
126, Sec. 2, Zhongyang Rd., Tucheng Dist.,
Tu Cheng Branch (02)22737171 MBBTTWTP142
New Taipei City, Taiwan, R.O.C.
933 Zhongzheng Rd., Xinzhuang Dist., New
Hwei Long Branch (02)82097171 MBBTTWTP143
Taipei City, Taiwan, R.O.C.
75, Sec. 1, Xintai 5th Rd., Xizhi Dist., New
Xi Zhi Branch (02)26987171 MBBTTWTP144
Taipei City, R.O.C.
9 Ai 3rd Rd., Ren'ai Dist., Keelung City, Taiwan,
Kee Lung Branch (02)24237171
R.O.C.
Pu Chya Branch 62-1, Sec. 2, Zhongshan Rd., Banqiao Dist.,
(02)29547171 MBBTTWTP151
(Banking Broker) New Taipei City, Taiwan, R.O.C.
North San Chung 137, Sec. 4, Sanhe Rd., Sanchong Dist., New
(02)22867171 MBBTTWTP152
Branch Taipei City, Taiwan, R.O.C.
South San Chung 232, Sec. 1, Ziqiang Rd., Sanchong Dist., New
(02)29827171 MBBTTWTP153
Branch Taipei City, Taiwan, R.O.C.
42 Yongle St., Luzhou Dist., New Taipei City,
Lu Chow Branch (02)28477171 MBBTTWTP154
Taiwan, R.O.C.
305 Sec. 2,Zhongshan Rd., Yilan City, Yilan
I Lan Branch (03)9367171
County, Taiwan, R.O.C.
15 Zhongzheng N. Rd., Luodong Township,
Lo Tung Branch (03)9567171
Yilan County, Taiwan, R.O.C.
96-1,Sec. 1, Zhongshan Rd., Su' ao Township,
Su Aw Branch (03)9965051
Yilan County, Taiwan, R.O.C.
146 Dacheng Rd., Yangmei Dist., Taoyuan
Yang Mei Branch (03)4786111 MBBTTWTP290
City, Taiwan, R.O.C.
76, Sec. 1, Zhongcheng Rd., Hukou Township,
Hu Kou Branch (03)5997171 MBBTTWTP291
Hsinchu County, Taiwan, R.O.C.
Taoyuan Branch 99 Zhonghua Rd. Taoyuan Dist., Taoyuan City,
(03)3317171 MBBTTWTP300
(Banking Broker) Taiwan, R.O.C.
80 Zhongshan S. Rd., Dayuan Township,
Ta Yuan Branch (03)3857171 MBBTTWTP301
Taoyuan County, Taiwan, R.O.C.
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TBB'S OFFICES ADDRESS TEL NO. SWIFT ADDRESS
80 Fuxing Rd., Daxi Dist., Taoyuan County,
Ta Shi Branch (03)3887171 MBBTTWTP302
Taiwan, R.O.C.
157 Zhongshan Rd., Zhongli Dist., Taoyuan
Chung Li Branch (03)4277171 MBBTTWTP310
City, Taiwan, R.O.C.
153 Zhongxiao Rd., Zhongli Dist., Taoyuan
Nei Li Branch (03)4557171 MBBTTWTP311
City, Taiwan, R.O.C.
282 Minzu Rd., Zhongli Dist., Taoyuan City,
Hsin Ming Branch (03)4027171 MBBTTWTP312
Taiwan, R.O.C.
1223, Sec. 2, Wanshou Rd., Guishan Dist.,
East Taoyuan Branch (03)3297171 MBBTTWTP313
Taoyuan City, Taiwan, R.O.C.
257 Zhongshan Rd., Xinwu Dist., Taoyuan
Hsin Wu Branch (03)4777171
CIty, Taiwan, R.O.C.
Hsin Chu Branch 154 Dongmen St., Hsinchu City, Taiwan, R.O.C. (03)5277171 MBBTTWTP320
Chu Pei Branch 128 Xianzheng 9th Rd., Zhubei City, Hsinchu
(03)5517171 MBBTTWTP321
(Banking Broker) County, Taiwan, R.O.C.
Hsinchu Science
489, Sec. 1, Guangfu Rd., Hsinchu City,
Based Industrial Park (03)5637171 MBBTTWTP322
Taiwan, R.O.C.
Branch
789, Sec. 1, Jieshou Rd., Bade Dist., Taoyuan
Pa Te Branch (03)3767171 MBBTTWTP330
County, Taiwan, R.O.C.
64 Longyuan Rd., Longtan Dist., Taoyuan
Luong Tan Branch (03)4807171 MBBTTWTP332
County, Taiwan, R.O.C.
6 Donglin Rd., Zhudong Township, Hsinchu
Chu Tung Branch (03)5947171 MBBTTWTP340
County, Taiwan, R.O.C.
29 Bo'ai St., Zhunan Township, Miaoli County
Chu Nan Branch (037)467171 MBBTTWTP350
Taiwan, R.O.C.
90 Xinyi Rd., Toufen Township, Miaoli County,
Tou Fen Branch (037)687171 MBBTTWTP351
Taiwan, R.O.C.
606 Zhongzheng Rd., Miaoli City, Taiwan,
Maio Li Branch (037)327171 MBBTTWTP360
R.O.C.
Feng Yuan Branch 1 Sanfeng Rd., Fengyuan Dist., Taichung City,
(04)25267171 MBBTTWTP460
(Banking Broker) Taiwan, R.O.C.
51 Wenming Rd., Houli Dist., Taichung City,
Houli Branch (04)25587171
Taiwan, R.O.C.
Tai Ping Branch 27 Zhongxing E. Rd., Taiping Dist., Taichung
(04)22707171 MBBTTWTP470
(Banking Broker) City, Taiwan, R.O.C.
14 Zhenzheng Rd., Dajia Dist., Taichung City,
Ta Chia Branch (04)26867171 MBBTTWTP480
Taiwan, R.O.C.
1023 Sec. 7, Taiwan Blvd., Shalu Dist.,
Sha Lu Branch (04)26657171 MBBTTWTP482
Taichung City , Taiwan R.O.C.
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TBB'S OFFICES ADDRESS TEL NO. SWIFT ADDRESS
616 Zhonghua Rd., Wuri Dist., Taichung City,
Wu Jih Branch (04)23387171 MBBTTWTP483
Taiwan, R.O.C.
Taichung Branch 400 Sec. 1, Taiwan Blvd., Central Dist.,
(04)22297171 MBBTTWTP490
(Banking Broker) Taichung City, Taiwan R.O.C.
84 Minquan Rd., Central Dist., Taichung City,
Min Chen Branch (04)22267171 MBBTTWTP491
Taiwan, R.O.C.
136 Taizhong Rd., South Dist., Taichung City,
Hsing Chung Branch (04)22877171 MBBTTWTP500
Taiwan, R.O.C.
53 Jinhua N. Rd., Beitun Dist., Taichung City,
Pei Tuen Branch (04)22307171 MBBTTWTP501
Taiwan, R.O.C.
139 Fuxing Rd., Nantou City, Nantou County,
Nan Tou Branch (049)2237171
Taiwan, R.O.C.
604 Zhongzheng Rd., Caotun Township,
Tsao Tuen Branch (049)2357171 MBBTTWTP511
Nantou County, Taiwan, R.O.C.
434 Zhongzheng Rd., Puli Township, Nantou
Pu Li Branch (049)2997171
County, Taiwan, R.O.C.
135, Sec. 2, Zhongshan Rd., Tanzi Dist.,
Tan Tze Branch (04)25317171 MBBTTWTP521
Taichung City, Taiwan, R.O.C.
919, Sec. 3, Jishan Rd., Zhushan Township,
Chu Shan Branch (049)2637171
Nantou County, Taiwan, R.O.C.
61 Guangfu Rd., Changhua City, Changhua
Chang Hwa Branch (04)7257171 MBBTTWTP540
County, Taiwan, R.O.C.
8 He'an St., Hemei Township, Changhua
Ho Mei Branch (04)7558131 MBBTTWTP541
County, Taiwan, R.O.C.
16 Minquan St., Yuanlin Township, Changhua
Yuan Lin Branch (04)8377171 MBBTTWTP550
County, Taiwan, R.O.C.
62 Gongqian St., Beidou Township, Changhua
Pei Tou Branch (04)8877171 MBBTTWTP560
County, Taiwan, R.O.C.
2 Zhongzheng Rd., Erlin Township, Changhua
Erh Lin Branch (04)8957171
County, Taiwan, R.O.C.
109 Datong Rd., Douliu City, Yunlin County,
Tou Liu Branch (05)5347171 MBBTTWTP660
Taiwan, R.O.C.
65 Wenhua Rd., Beigang Township, Yunlin
Pei Kang Branch (05)7827171
County, Taiwan, R.O.C.
45 Heping Rd., Huwei Township, Yunlin
Hu Wei Branch (05)6337171
County, Taiwan, R.O.C.
Chia Yi Branch
132 Guanghua Rd., Chiayi City, Taiwan, R.O.C. (05)2287171 MBBTTWTP680
(Banking Broker)
Ming Hsiung Branch 83, Sec. 3, Jianguo Rd., Minxiong Township,
(05)2207171
(Banking Broker) Chiayi County, Taiwan, R.O.C.
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TBB'S OFFICES ADDRESS TEL NO. SWIFT ADDRESS
216 Zhongshan Rd., Xinying Dist., Tainan City,
Hsin Ying Branch (06)6357171 MBBTTWTP690
Taiwan, R.O.C.
12 Zhonghua Rd., Yongkang Dist., Tainan City,
Kai Yuan Branch (06)3117171 MBBTTWTP691
Taiwan, R.O.C.
79 Zhongzheng S. Rd., Yongkang Dist., Tainan
Yun Kang Branch (06)2517171 MBBTTWTP700
City, Taiwan, R.O.C.
87 Zhongshan Rd., Xuejia Dist., Tainan City,
Shiue Chia Branch (06)7837171
Taiwan, R.O.C.
352 Zhongshan Rd., Shanhua Dist., Tainan
Shan Hwa Branch (06)5816111 MBBTTWTP702
City, Taiwan, R.O.C.
1532, Sec. 2, Yongda Rd., Yongkang Dist.,
Yung Ta Branch (06)2337171 MBBTTWTP703
Tainan City, Taiwan, R.O.C.
Tainan Branch 185 Zhongzheng Rd., Tainan City, Taiwan,
(06)2247171 MBBTTWTP710
(Banking Broker) R.O.C.
339 Zhongshan Rd., Rende Dist., Tainan City,
Jen Te Branch (06)2797171 MBBTTWTP711
Taiwan, R.O.C.
25 Gongyuan Rd., West Central Dist., Tainan
Cheng Kung Branch (06)2217171 MBBTTWTP720
City, Taiwan, R.O.C.
75, Sec. 2, Zhonghua E. Rd., East Dist., Tainan
East Tainan Branch (06)2687171 MBBTTWTP721
City, R.O.C.
67, Sec. 1, Zhonghua W. Rd., East Dist.,
An Ping Branch (06)2657171 MBBTTWTP730
Tainan City, R.O.C
247 Zhongshan Rd., Hualien City, Hualien
Hua Lien Branch (03)8357171 MBBTTWTP760
County, Taiwan, R.O.C.
335, Sec. 1, Zhonghua Rd., Taitung City,
Taitung Branch (089)327171
Taitung County, Taiwan, R.O.C.
East Kaohsiung 249 Zhongzheng 1st Rd., Lingya Dist.,
(07)7167171 MBBTTWTP820
Branch Kaohsiung City, Taiwan, R.O.C.
Kang Shan Branch 412 Gangshan Rd., Gangshan Dist.,
(07)6227171 MBBTTWTP830
(Banking Broker) Kaohsiung City, Taiwan, R.O.C.
North Feng Shan 28, Sec. 3, Jianguo Rd., Fengshan Dist.,
(07)7767171 MBBTTWTP840
Branch Kaohsiung City, Taiwan, R.O.C.
31 Qingnian 1st Rd., Lingya Dist., Kaohsiung
Ling Ya Branch (07)5377171 MBBTTWTP841
City, Taiwan, R.O.C.
79 Wufu 3rd Rd., Qianjin Dist., Kaohsiung City,
Kaohsiung Branch (07)2717171 MBBTTWTP850
Taiwan, R.O.C.
North Kaohsiung
90, Fuxing 1st Rd., Xinxing Dist., Kaohsiung
Branch (07)2387171 MBBTTWTP851
City, Taiwan, R.O.C.
(Banking Broker)
116 Dachang 2nd Rd., Sanmin Dist.,
Ta Chang Branch (07)3827171
Kaohsiung City, Taiwan, R.O.C.
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TBB'S OFFICES ADDRESS TEL NO. SWIFT ADDRESS
378-3 Minquan 2nd Rd., Qianzhen Dist.,
Chien Chen Branch (07)5355171
Kaohsiung City, Taiwan, R.O.C.
Jeou Ru Branch 255 Jiuru 2nd Rd., Sanmin Dist., Kaohsiung
(07)3137171 MBBTTWTP860
(Banking Broker) City, Taiwan, R.O.C.
San Ming Branch 153 Zhongshan 1st Rd., Xinxing Dist.,
(07)2867171 MBBTTWTP870
(Banking Broker) Kaohsiung City, Taiwan, R.O.C.
157 Zhongshan Rd., Fengshan Dist.,
Feng Shan Branch (07)7107171
Kaohsiung City, Taiwan, R.O.C.
1 Huazhong Rd., Ta Fa Industrial Zone, Daliao
Ta Fa Branch (07)7887171 MBBTTWTP881
Dist., Kaohsiung City, Taiwan, R.O.C.
Ping Tung Branch 7 Hankou St., Pingtung City, Pingtung County,
(08)7327171
(Banking Broker) Taiwan, R.O.C.
718 Hongping Rd., Xiaogang Dist., Kaohsiung
Xiao Gang Branch (07)8016171 MBBTTWTP891
City, Taiwan, R.O.C.
100 Xinsheng Rd., Chaozhou Township,
Chiao Chou Branch (08)7807171
Pingtung County, Taiwan, R.O.C.
Offshore Banking
3F, 30 Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171 MBBTTWTP893
Branch
633, West 5TH St. Suite 2280 LA CA 90071
Los Angeles Branch 1-213-8921260 MBBTUS6L
U.S.A.
Suite 2705-9,27/F, Tower The Gateway,
Hong Kong Branch 852-29710111 MBBTHKHH
Harbour City, Kowloon,H.k,
Suite 3, Level 24, 363 George Street Sydney,
Sydney Branch 61-2-92623356 MBBTAU2S
N.S.W.2000 Australia
38F,Longemont Yes Tower,399 Kaixuan Road,
Shanghai Branch 86-21-62627171 MBBTCNSH
Shanghai 200051 China
Suite 903,Level 9,239 George Street,
Brisbane Branch 61-7-33173000 MBBTAU2SBRI
Brisbane, QLD. 4000 Australia
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Taiwan Business Bank, Ltd.

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Chairman

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AI assistant

TBB — Annual Report 2014

52201_rns_2015-07-09_73c780ee-58ed-41a2-aa8f-f6f8b36060e1.pdf

中華民國一○三年年報

NOTICE TO READERS

Taiwan Business Bank Head Office

Spokesperson

Deputy Spokesperson

Deputy Spokesperson

Stock Registration Agent

Rating Agency

The CPA-auditor of the Financial Report

Contents

18 V Business Plans for 2015

1. Establishment and History

Organizational III Framework

1. Organization Chart

2. Directors information

4. Operations of Major TBB Units

(1) Corporate Banking Group

(2) Personal Banking Group

(3) Treasury Group

(6) Administration Management Center

(7) Compliance and Legal Affair Center

Business IV Performance in 2014

1. The Domestic and Overseas Financial Environment

2. Restructure of TBB's Organization

3. Results of Operating Plans and Strategies

B. Foreign Exchange and Trade Financing

C. Wealth Management

4 . Budget Implementation

5 . Revenues, Expenditures, and Profitability

6. Research and Development

1. Operating Directions and Policies

(2) Internal Procedure

(4) Financial Structure

2. Business Targets

3. Future Development Strategies

4. The Impact of Intensifying Competition, Government Regulation, and the Overall Operating Environment

Foreign Account Tax Compliance Act (FATCA)

5. Results of Latest Credit Rating

Financial Statements VI

1. STATEMENT OF COMPLIANCE

2. Independent Accountants' Audit Report

The Board of Directors

Taiwan Business Bank, Ltd.

KPMG

Notice to Readers

3. Financial Statement in FY2014 and notes to Financial Statement

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED DECEMBER 31, 2014 AND 2013

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY CHANGE

TAIWAN BUSINESS BANK, LTD.AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

TAIWAN BUSINESS BANK, LTD.AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. COMPANY HISTORY

2. FINANCIAL STATEMENTS AUTHORISATION DATE AND AUTHORISATION PROCESS

3. NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED

(A) The effect of 2013 version of the International Financial Reporting Standards not yet en‑ dorsed by the FSC:

1. IFRS 13-Fair value measurement

(B) The effect of International Financial Reporting Standards issued by the IASB but not yet endorsed by the FSC:

4. SIGNIFICANT ACCOUNTING POLICIES

(A) Statement of compliance

(B) Basis of preparation

(c) Functional and presentation currency

(C) Basis of consolidation

(a) Subsidiary

(D) Foreign currency

(b) Foreign operations

(E) Cash and cash equivalent

(F) Financial Instruments

(f) Loans and advances

(1) Payment of principal or interest is very likely not to be redeemed as per contracts.

(g) Allowance for bad debts and reserve for guarantee

(G) Impairment loss on non‑financial assets

(H) Property, Plant and Equipment

(I) Leasehold

(J) Deferred assets

TBB Annual Report 2014