TBB - Annual Report 2015 | FinancialReports.eu

Stock Code ： 2834

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

TBB’s Annual Report is available at ： https://www.tbb.com.tw

中華民國一○四年年報[2015]

==> picture [272 x 34] intentionally omitted <==

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 2016

Taiwan Business Bank Head Office

Address: No. 30, Ta Cheng St., Taipei, Taiwan, R.O.C. Tel: 886-2-2559-7171 Web Site: https://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: Jun-Shen Tseng 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: https://www.capital.com.tw

Rating Agency

Name: Taiwan Ratings Co. 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, R.O.C. Tel: 886-2- 8101-6666 Web Site: http://www.kpmg.com.tw

Flotation at Overseas Stock Exchange and Information Inquiry: None

==> picture [199 x 32] intentionally omitted <==

We can be the best !

Contents
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 2015 14 1. The Domestic and Overseas Financial Environment 14 2. Changes in the Bank's Organization
15 3. Implementation of Business Plans and Operating Strategies
17 4. Budget Implementation
17
17 6. Research and Development

18 V. Business Plans for 2016

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

==> picture [78 x 842] intentionally omitted <==

VI. Financial Statements

23 1. Statement of Compliance
24 2. Independent Accountants' Audit Report

120 VII. Corporate Social Responsibility

129 VIII. Directory of Head Office and Branch Units

==> picture [544 x 392] intentionally omitted <==

I

Message from the Management

Taiwan Business Bank Annual Report 2015

Global economic growth in 2015 was disappointing due to such factors as uncertainty over interest rates rise in the United States, the fall in international raw materials prices, and slowing growth in emerging economies. In Taiwan, exports of manufactured products slowed and economic performance weakened in response to international economic conditions. Thanks to the support of all our shareholders and clients, however, and the dedicated efforts of our entire staff, the Taiwan Business Bank posted growth in both profitability and business development during the year.

Looking ahead to 2016 we see that despite such worries in the international economy as slowing growth in mainland China, falling international raw materials prices, and turbulence in global financial markets, major international forecasting institutions expect that moderate growth in the U.S. economy and quantitative easing monetary policies in Europe and Japan will lead to a slight improvement in global economic performance compared with 2015. According to the latest forecasts by major domestic and international institutions, Taiwan's economy is also expected to improve in the new year. The government's continuous efforts in recent years to deregulate the financial market, loosen restrictive measures, expand the scope of financial businesses, assist the financial industry with international development, and promote the orderly development of cross-strait financial businesses have enlarged the space for advancement of the banking business. The TBB will continue the profit growth momentum of the past year and focus on key businesses with development potential as our entire staff exerts its utmost concerted efforts with the aim of upgrading overall operating performance, achieving profit growth targets, and realizing four major operating principles--pursuit of business performance, enhancement of added values of employees, emphasis on shareholders' equity, and fulfillment of corporate social responsibility--as we progress vigorously toward the ranks of outstanding banks and create an even better business performance.

==> picture [268 x 456] intentionally omitted <==

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

Chairman
Robert Rueen-Fong Chu
----- End of picture text -----

==> picture [245 x 443] intentionally omitted <==

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

President
Tzeng-Show Lin
----- End of picture text -----

II

Taiwan Business Bank Annual Report 2015

==> picture [85 x 125] intentionally omitted <==

==> picture [86 x 125] intentionally omitted <==

==> picture [85 x 125] intentionally omitted <==

==> picture [452 x 26] intentionally omitted <==

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

Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Chief Auditor
(Chief Compliance Officer)
Chang-Yi Chen Chih-Chien Chang Tsan-Huang Chou Gordon Y. Wang Mei-Yeh Wu Chiu-Yen Chen
----- End of picture text -----

Chang-Yi Chen Chih-Chien Chang Tsan-Huang Chou Gordon Y. Wang

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.

At the time of the TBB's reorganization in 1976, it had a capitalization of NT$500 million, 50 branches, and 58 sub-branches. To build up the Bank's operating capital and strengthen its operating structure, repeated capital increases have brought total capitalization to NT$56,846.62 million today. The Bank's structural framework has also been readjusted constantly in response to changes in the financial environment and in business needs; an 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 and an Offshore Banking Unit; it also operates six overseas branches, in Hong Kong, Los Angeles, Sydney, Brisbane, Shanghai, and Wuhan, along with the Yangon Representative Office. Regional Operation Centers were set up to handle business development and supervision, centralized business managemenet, operational services, and other business support functions in order to enhance business promotion capability and reinforce asset quality control. In addition, Domestic Processing Centers were established to upgrade operating performance through the centralized handling of domestic remittances, bills collection and withdrawal.

2. Bank M&A, reinvestment in related enterprises, and reorganization in 2015 and to the end of February 2016

The Bank carried out no M&A or reorganization during this period. Reinvestment was made in 100% ownership in four enterprises—the Taiwan Business Bank Life Insurance Agency Co., Ltd., Taiwan Business Bank Property Insurance Agency Co., Ltd., TBB International Leasing Co., Ltd. and TBB (Cambodia) Microfinance Instituion PLC-and the TBB International Leasing Co., Ltd. reinvested in 100% ownership in a firm, the Taiwan Business Bank International Leasing Co., Ltd.

4. Major exchanges or transfers of shares by directors, supervisors, and others required to report shareholding 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

Taiwan Business Bank Annual Report 2015

III Organizational Framework

10 11 11 12

1. Organization Chart 2. Directors Information 3. List of Major Shareholders 4. Operations of Major TBB Units

==> picture [510 x 786] intentionally omitted <==

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

1. Organization Chart
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.
Development Div. Domestic Branches
Chief Compliance 營運管理中心 Management CenterOperating Technology Dept.Information Loan Supervision Div.
Offcer Appraisal Div.
SharehoMeetinglders' DirectorsBoard of Chairman of the Board President Digital Banking Dept. 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.
Taiwan Business Bank Annual Report 2015
----- End of picture text -----

III

2. Directors Information

==> picture [456 x 580] intentionally omitted <==

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

Dec.31 2015
Title Name
Acting Chairman of the Board Robert Rueen-Fong Chu
Managing Director Tzeng-Show Lin
Managing Director Shiu Yen Lin
Managing Director Hong-Chi Chang
Independent Managing Director Chih Yu Cheng
Director Wen-Chieh Wang
Director Hung-Sheng Yu
Director Lillian L. Lin
Director Wan Fu Lin
Director Chung-Min Huang
Director Cheng-Lung Lu
Director Jong-Jyr Kau
Director Che Nan Wang
Director Chau-Chen Yang
Director Yaw-Huei Huang
3. List of Major Shareholders
Dec.31 2015
Name Shares %
Bank of Taiwan 979,134,407 17.22%
Hua Nan Commercial Bank Trustee Account- exchangeable
682,944,839 12.01%
stock of Mega Financial Holding Company
Chen Hai Lin 163,599,408 2.88%
Kin Ming Investment Co., Ltd. 150,005,951 2.64%
Land Bank of Taiwan 137,997,877 2.43%
Ministry of Finance 125,410,308 2.21%
Vanguard Emerging Markets Stock Index Fund, A Series Of
71,700,872 1.26%
Vanguard International Equity Index Funds
Chun Jin Shi 58,968,906 1.037%
CitiBank Taiwan was commissioned and management investor
57,280,398 1.008%
account of Dimension emerging market estimate fund
BES Engineering Corporation 56,620,716 0.996%
----- End of picture text -----

Note: The holding shares accords with the book records of last ex-dividend date. Hua Nan Commercial Bank Trustee Account-exchangeable/ 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.

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., Digital Banking Dept. and Information Technology Dept. operate under the Center.

(6) Administration Management Center

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

(7) Compliance and Legal Department

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

Taiwan Business Bank Annual Report 2015

IV

Business Performance in 2015

14 14 15 17 17 17

1. The Domestic and Overseas Financial Environment

2. Changes in the Bank's Organization

3. Implementation of Business Plans and Operating Strategies

4. Budget Implementation

6. Research and Development

1. The Domestic and Overseas Financial Environment

Because of worries about the heating up of geopolitical economic risks, the Greek bailouts, and the timetable of interest rate increases in the U.S., along with the falling prices of crude oil and bulk commodities, the slowdown of growth in mainland China and other emerging economies, and the turmoil in global financial markets, global economic growth in 2015 did not meet the optimistic expectations current at the beginning of the year and the pace of recovery lagged. According to data released by Global Insight in February 2016, global economic growth rate in 2015 amounted to 2.6%, down by 0.4% from the January 2015 forecast and lower than the 2.7% growth rate achieved the year before. This shows that although the global economy was continuing to recover, the strength of the recovery was weak.

Due to weakening global economic growth and the fall in prices of crude oil and other commodities in the first quarter of 2015, the growth in Taiwan's commodity exports (in US dollar terms) turned negative; however, when exports were calculated in NT dollars with price factors excluded and exports of services added, the growth in exports of goods and services remained positive. In addition, private consumption grew at a steady pace because of a continued improvement in employment and incomes, driving Taiwan's annualized economic growth rate for the quarter to 4.04%.In the second quarter, the domestic private consumption continued to grow moderately, but the global recovery was disappointing and the weakening of Taiwan's goods exports intensified, depressing growth for the quarter to 0.57%. In the third quarter, despite an increased growth in private investment because of an expansion of advanced manufacturing processes by domestic semiconductor companies, plus increased investment in railroads and other mass transportation facilities, weakness in the global economic recovery and a continued drop in prices of crude oil and other materials, along with the crowding out effect of the increasing autonomy of supply chains in mainland China, the weakening of Taiwan's exports expanded continuously; this, plus the impact of a large drop in domestic stock prices, caused consumer confidence to decline and the economic growth rate to drop further, to -0.80%. In the fourth quarter, investment in advanced processes by the domestic semiconductor industry and by railroads and other mass transportation facilities continued to grow and private consumption steadily heated up; but because of continued weakness in global economic growth and in external demand, the decline in Taiwan's goods exports continued and economic growth rate for the quarter was -0.52%. According to figures compiled by the Directorate General of Budget, Accounting and Statistics, Taiwan's economic growth rate in 2015 was 0.75%. With the disappointing global economic performance in 2015, domestic growth was slow and the expectation was that inflation would be moderate. To stimulate growth, the Central Bank lowered the policy interest rate by 0.125% in September and again in December, for a total reduction of 0.25%. In the area of exchange rates, in the first half of 2016 the New Taiwan Dollar appreciated slightly against the US Dollar; but in the second half of the year the Chinese yuan underwent a large drop in value, leading to a trend of depreciation in Asian currencies. In addition, under the influence of the continued decline in Taiwan's exports and the overselling of Taiwan stocks by foreign investors and the remittance of the proceeds off the island, plus the interest rate reductions by the Central Bank, at the end of 2015 the NT Dollar was trading at 33.066 to the US Dollar, representing a depreciation of 4.08%. The average exchange rate for the year was NT$31.898 to the US Dollar, a drop of 4.80% for the year.

2. Changes in the Bank's Organization

(1) In response to the development of Bank 3.0 and global mobile payments, the Bank's original Digital Banking Section was expanded into the Digital Banking Department in charge of e-banking R&D, planning, marketing, integration, guidance, management and evaluation.
(2) To secure the loyalty of investors and highlight the Bank's reasonable share value, the staff of the Investor Relations (IR) team has been enlarged, the frequency of small seminars has been increased through proactive invitations, and IR websites in Chinese and English versions have been established to strengthen the disclosure of operating information and enhance the overall effectiveness of IR operations.

Taiwan Business Bank Annual Report 2015

3. Implementation of Business Plans and Operating Strategies

(1) Profitability

The Bank experienced stable growth in profitability and various areas of business in 2015, with a net profit after-tax of NT$5.113 billion (net profit before-tax was NT$6.196 billion), and carried out a capital increase via earnings. Pre-distribution (2014) annual dividends per share were NT$0.73.

(2) Corporate Governance
A. The Bank ranked in the top 5% in the First Annual Corporate Governance Evaluation held by the Taiwan Stock Exchange, indicating substantial achievements in the establishment of a corporate governance system.
B. The Bank was awarded the highest rating of A++ in the Securities & Futures Institute's 12th Information Disclosure Evaluation for Publicly Listed Companies, making the TBB the only government bank in Taiwan to win this highest ranking for seven years in a row.
(3) Core Business
A. Corporate Banking:
- a. The Bank won Outstanding Awards from the Financial Supervisory Commission for the Program to Encourage Lending by Domestic Banks to Small and Medium Enterprises (Division A) and the Program to Encourage Lending by Domestic Banks to Creative Enterprises (Division A).
- b. In recognition of the Bank's outstanding performance in helping small and medium enterprises with financial services, it was presented four top Outstanding Bank for Small and Medium Enterprise Credit Guarantee Financing awards: the Credit Guarantee Partner Award, Direct Guarantee Performance Award, Assistance for Regional Development Award, and Young Entrepreneur Support Award.
- c. 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.
- d. In the aggressive promotion of policy project loans, the Bank took first place nationally with the extension of 12 project loans.
B Foreign Exchange and Trade Financing
- a. Strengthening the absorption of foreign-currency deposits and expanding the scale of deposits, and the accumulated average balance of foreign-currency deposits in 2015 grew 12.75% over 2014.
- b. Foreign-currency loans were vigorously expanded to strengthen interest-spread income, and the average amount of foreign-currency loans in 2015 expanded by 7.20% over 2014.
C Wealth Management
- a. To meet market demand, the Bank introduced two discretionary investment-oriented insurance products, for which combined sales exceeded NT$10 billion.
- b. To promote the fund custodian business, the Bank raised the Yuanta Emerging Indonesian Opportunity Bond Fund with outstanding sales results.
- c. With vigorous promotion of a special program aimed at the marketing of designated financial service products, fee income from the wealth management business rose 35.21% in 2015.
(4) Products Innovation
A. Internet cashier services offer convenient online payment services for small sellers (in microbusinesses such as specialty agricultural products and homestay accommodation).
B. In response to the advent of the aging society, the Bank introduced a program of elderly care trust combined with mortgage life insurance.
C. A special loan program was introduced to provide borrowers with insurance against death and disability along with the funds they need.

D. A credit loan program was introduced to serve the government employees and teachers of the entire country by satisfying their needs for consumption and investment capital.
E. In response to the development of mobile payments, the Bank inaugurated the mobile credit card to provide customers with a diversified range of products and services.
F. The iPass co-branded card, combining the functions of a credit card with iPass small payments, was issued.
(5) Expansion of Scope of Channel Services
A. The Bank has actively engaged in international deployment, with the Yangon Representative Office opening for business on Dec. 7, 2015 and the Wuhan Branch opening on Dec. 29 that year. In addition, permission from the U.S. Federal Reserve for the establishment of the New York Branch was received on Dec. 31, 2015, and an application for the establishment of a Tokyo Branch was approved by the Financial Supervisory Commission on Jan. 4, 2016.
B. The 100%-invested TBB (Cambodia) Microfinance Institution Plc opened for business in Cambodia on Aug. 10, 2015, marking the first operating base to be established by the TBB in the Southeast Asian market. It will take advantage of the opportunities of rapid economic growth in the region.
C. To continue developing and assisting small and medium business clients in industrial zones, the Bank reinforced development of its core industrial zone SME business with the opening of the Ta Fa Branch on Dec. 28, 2015 to provide customers with even more outstanding services.
(6) Information Operations
A. In coordination with the 12 online services included in the Financial Supervisory Commission's Digital Finance Environment 3.0 plan, the TBB has completed development and has put online 11 of the e-services. The exception is the joint marketing of businesses within the financial holding company scope.
B. The Bank achieved outstanding success in the promotion of e-banking, and this achievement was recognized by two awards, the Best Development Award for Electronic Payment Business and the Outstanding Innovative Award for Electronic Payment Business, presented by the Financial Information Service Co.
C. The Bank inaugurated the TBB My Dream fans club on Facebook, with all kinds of financial products presented on the fans' page in line with advertisements for marketing activities, thereby enhancing the Bank's exposure.
(7) Corporate Social Responsibility
A. To conform to international standards, the Bank's CSR report for 2014 was compiled in accordance with GRI G4 international criteria. The Bank responds to the hopes and needs of stakeholders by publishing its CSR report annually and by carrying through with the Corporate Social Responsibility Best Practice Principles, actively implementing CSR and fulfilling its values of sustainable operations.
B. To carry through with the principle of care for society and fulfill its CSR, the Bank contributes to 40 disadvantaged groups and subsidizes breakfasts for elementary school students in remote areas, in this way helping disadvantaged groups and participating actively in social welfare.
C. The Bank has been awarded for excellence in green procurement for four consecutive years by the Environmental Protection Administration of the Executive Yuan and the Department of Environmental Protection of the Taipei City Government.
D. The Bank won an energy-conservation enterprise award from the Bureau of Energy, Ministry of Economic Affairs and an outstanding award from the Taiwan Power Company in the small and medium enterprise electricity-conservation competition.
E. The Bank's headquarters building acquired ISO50001 energy management system certification in response to the promotion of energy conservation by the Taipei City Government.
F. The Bank is committed to publicizing campus and community financial know-how, promoting correct financial management concepts, and propagating anti-financial fraud education with the aim of laying down

Taiwan Business Bank Annual Report 2015

a solid foundation for financial education. In recognition of this effort, the Bank was awarded by the Banking Bureau of the Financial Supervisory Commission for its promotion of campus and community financial knowhow activities.

4. Budget Implementation

(1) Average deposits was NT$1,198.627 billion, an increase of 5.33% over 2014.
(2) The annual average amount of loans outstanding by the Bank was NT$1,012.708 billion, an increase of 6.11% from the year before.
(3) The amount of foreign exchange transactions undertaken during the year totaled US$65.106 billion, a growth of 4.67% from the previous year.
(4) Fee income from life insurance and property insurance was NT$1.619 billion, up 61.09% from the year before.
(5) The budget achievement rates for the above items were between 90.73% and 132.31%.

(1) Revenues and Expenditures

Net income in 2015 amounted to NT$20.162 billion, bad debt expenses and guarantee liability provisions were NT$2.409 billion, operating expenses were NT$11.556 billion, and net income before tax from continuing operations was NT$6.196 billion (a growth of 12.95% from 2014); net profit after-tax was NT$5.113 billion, giving a return on assets (after tax) of 0.36%, return on equity (after tax) of 7.84%, profit margin (after tax) of 25.36%, and after-tax earnings per share of NT$0.90.

(2) Profitability

The various items of pre-provision, pre-tax net income (including recovered bad debts) totaled NT$9.499 billion, an increase of NT$349 million over 2014. To strengthen loan risk appetite, the Bank allocated NT$3.303 billion in reserves against bad debts, giving a coverage ratio of 231.22%; it also wrote off bad debts in the amount of NT$3.095 billion, giving a non-performing loan ratio of 0.48%. Before-tax profit in 2015 amounted to NT$6.196 billion, an increase of NT$710 million compared with 2014; this was due primarily to a growth in loans and

deposits, an increase in net interest earnings, and expansion of the wealth management business and increase in net fee income.

6. Research and Development

(1) Establishment of an Exclusive Unit for Industry Research
A. A total of 162 industry analysis reports were written and published in the Bank's E-Library in 2015 for colleagues to peruse.
B. Elite professionals from industry, government, and academe are invited to speak on an irregular basis to help the Bank's employees understand the latest trends in industrial development.
(2) Encouragement of Innovation and Professionalism in Line with Business Development Needs
A. Employees are encouraged to take the initiative in carrying out innovation and suggesting new financial products and methods of business improvement that will enhance the Bank's business competitiveness. A total of 66 employee suggestions were accepted in 2015.
B. Business lectures are held on a scheduled basis and a rich variety of digital learning courses are offered to encourage employees to engage in further on-the-job studies and absorb new knowledge that will strengthen their competitiveness and enhance their professional know-how.

V

Business Plans for 2016

19 20 20 20 21

1. Operating Directions and Policies

2. Business Targets

3. Future Development Strategies

4. The Impact of External Competition Environment, Regulatory Environment, and Overall Operating Environment

5. Results of Latest Credit Rating

Taiwan Business Bank Annual Report 2015

1. Operating Directions and Policies

In response to the shift in the development of financial markets toward Asia, aging populations, mobile functions, and internationalized renminbi (RMB), and to coordinate with the Financial Supervisory Commission's encouragement of financial institutions to deploy in Asia and establish Asia-Pacific wealth-management centers, promote financial infrastructure construction, the digitization of the financial environment, and other key financial development strategies, the Bank has formulated six major strategies and promoted "deep-rooting plans" for financial infrastructure construction in order to reinforce its customer service foundation. The Bank will also strengthen policy finance, lending, and guidance, will deepen cultivation of the specialized field of small and medium enterprise businesses, and will strive to develop in the direction of niche banking.

(1) Augmentation of Equity Capital and Expansion of Business Capabilities
A. Reinforcement of investor relations and highlighting of the Bank's reasonable share value.
B. Augmentation of capital and enhancement of business expansion capability.
(2) Addition of Overseas Units and Integration of Channel Services
A. Expansion of deployment in overseas markets and heightening of the proportion of overseas branch profits.
B. Adaptation to local conditions and maintenance of close customer relations.
(3) Optimization of Human Resources and Strengthening of Manpower Training
A. Strengthened training of international personnel and development of sufficient seed personnel for overseas branches.
B. Optimization of human resources, provision of assistance in career transition, and establishment of a corporate culture of shared learning and know-how.
(4) Reinforcement of Technological Investment and Development of Digital Finance
A. Reinforcement of investment in IT installations and enhancement of information system performance.
B. Accelerated use of big data collection and analysis, and reinforcement of CRM for targeted marketing.
C. Real/virtual integration and synchronous advancement, and optimization of the customer experience.
(5) Optimization of Internal Processes and Strengthening of Risk Management
A. Reinforcement of operational and customer management processes.
B. Strengthening of strategic alliances and introduction of innovative capacity.
C. Implementation of risk management mechanisms to enhance asset quality.
(6) Reinforcement of Corporate Governance and Fulfillment of Corporate Social Responsibility
A. Reinforcement of corporate governance, and enhancement of information disclosure and transparency.
B. Realization of consumer protection and the Equator Principles, care for disadvantaged groups, emphasis on energy conservation and carbon reduction, and fulfillment of social responsibility.

2. Business Targets

To give equal weight to the protection of shareholder interests, improvement of the capital structure, and upgrading of asset quality, the Bank, in consideration to economic growth forecasts of 2016 by the Directorate General of Budget, Accounting and Statistics and the reduction of interest rates by the Central Bank on Sept. 24, 2015, as well as the application of IFRS 9's "Financial Instruments" in 2018, is required to increase provisions of various kinds.

(1) Annual average deposit balance, NT$1,222.335 billion.
(2) Annual average loans outstanding, NT$1,061.199 billion.
(3) Total foreign exchange transactions, US$72.00 billion.

3. Future Development Strategies

(1) Focus on key businesses that have development advantage, manifestation of the spirit of full-staff marketing in the form of action, and overall upgrading of operating performance.
(2) Deep cultivation of the core small and medium enterprise business as a specialized SME financing and service bank and a self-professed role as rear support for Taiwan's million SMEs, maintaining the Bank's leadership position through its professional advantage in SME financing and services.
(3) Reinforcement of integrated business marketing, with expansion of business relations with core clients through cross-marketing, and upgrading of profitability to create enterprise value and shareholder equity.
(4) Deep cultivation of core customers and focus on core products, expansion of the scale of key businesses, and upgrading of business competitiveness and market share.
(5) Creation of a superior digital financial environment through innovation of digital financial products, expansion of digital marketing channels, and development of the digital banking business.
(6) Deep cultivation of the Asia-Pacific region, global deployment, and enhancement of the ratio of profit from overseas markets
(7) Adjustment of asset structure and quality, and enhancement of rate of return on risk-weighted assets; upgrading of the ratio of fee income, and improvement of the revenue structure.
(8) Augmentation of equity capital, upgrading of risk appetite, strengthening of risk control, maintenance of asset quality, reduction of the non-performing loan ratio, and advancement toward the ranks of outstanding banks.

4. The Impact of External Competition Environment, Regulatory Environment, and Overall Operating Environment

(1) To boost the international competitiveness of Taiwan's banking industry, the Financial Supervisory Commission has opened up cooperation between payment institutions of the island's financial institutions and those of mainland China in handling the payments business, and has formulated the Act Governing Electronic Payment Institutions, in response to the impending entry of non-financial institutions in payment services and banking transition faced by banks due to the impact of the passage of the Act and the development of Bank 3.0.

Taiwan Business Bank Annual Report 2015

(2) In view of the international trend toward anti-money laundering and countering terrorism financing, plus the assessment by the Asia/Pacific Group on Money Laundering Group in the fourth quarter of 2018, the competent authorities are strengthening oversight of anti-money laundering and anti-terrorist financing activities and are asking financial institutions to complete the planning and establishment of management measures and risk assessment, and to formulate anti-money laundering and terrorist financing risk prevention plans, in accordance with the established timetable.

5. Results of Latest Credit Rating

==> picture [456 x 62] intentionally omitted <==

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

Ratings
Date of Rating Rating Company Outlook
Long-term Credit Short-term Credit
JAN. 15, 2016 Taiwan Ratings twA+ twA-1 Positive
----- End of picture text -----

been raised from "stable" to "positive."

VI

Financial Statements

23 24

1. Statement of Compliance

2. Independent Accountants' Audit Report

Taiwan Business Bank Annual Report 2015

Ⅵ

1. Statement of Compliance

For the year ended December 31, 2015 (from January 1, 2015 to December 31, 2015), 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 10 which is accepted by the Financial Supervisory Commission. 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: Robert Rueen-Fong Chu

Date: March 23, 2016

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, 2015 and 2014, and the related consolidated statements of comprehensive income as well as changes in consolidated equity and cash flows for the year ended December 31, 2015 and 2014. 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 audit.

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 perform the 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, 2015 and 2014, 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 2015 and 2014 of Taiwan Business Bank Ltd. and expressed an unqualified opinion.

KPMG

Taipei, Taiwan, R.O.C.

March 23, 2016

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.

Taiwan Business Bank Annual Report 2015

Ⅵ

TAIWAN BUSINESS BANK, LTD.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2015 AND 2014

(Expressed In Thousands of New Taiwan Dollars)

==> picture [456 x 523] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Assets
Amount ％ Amount ％
Cash and cash equivalents(Notes 6(A) and 7) $ 41,061,810 3 64,242,245 5
Due from the Central Bank and call loans to banks (Notes 6(B) and 7) 118,884,771 8 61,844,444 5
Financial assets at fair value through profit or loss (Note 6(C)) 2,082,611 - 2,610,707 -
Securities purchased under resell agreements (Note 6(D)) 26,784,515 2 5,527,837 -
Receivables － net (Note 6(E)) 24,697,758 2 21,821,960 2
Current Income tax assets 293,454 - 235,755 -
Discounts and loans － net (Notes 6(F) and 7) 1,007,398,302 68 1,001,234,570 72
Available-for-sale financial assets － net (Notes 6(G) and (N)) 25,668,785 2 16,043,539 1
Held-to-maturity financial assets － net (Notes 6(H)) 206,277,479 14 194,541,571 14
Other financial assets － net (Note 6(I)) 2,086,966 - 3,268,115 -
Premises and equipment － net (Note 6(J)) 14,105,378 1 14,101,430 1
Intangible assets-net 131,292 - 150,029 -
Deferred income tax assets-net (Note 6(V)) 1,437,671 - 2,125,784 -
Other assets － net (Note 6(K)) 4,980,803 - 4,642,581 -
Total assets $ 1,475,891,595 100 1,392,390,567 100
----- End of picture text -----

==> picture [456 x 523] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Liabilities and equity
Amount % Amount %
Liabilities
Deposits from the Central Bank and other banks (Note 6(L) and 7) $ 77,857,537 5 80,595,072 6
Financial liabilities at fair value through profit or loss (Note 6(M)) 219,999 - 303,213 -
Securities sold under repurchase agreements (Note 6(N)) 4,163,147 - 3,895,308 -
Payables (Note 6(O)) 30,924,431 2 30,556,802 3
Deposits and remittances (Notes 6(P) and 7) 1,232,320,685 84 1,152,156,998 83
Financial debentures (Note 6(Q)) 45,600,000 3 41,800,000 3
Other financial liabilities (Note 6(R)) 12,197,117 1 15,739,260 1
Provision for liabilities (Note 6(S)) 3,321,737 - 3,018,791 -
Deferred income tax liabilities(Note 6(V)) 920,890 - 898,420 -
Other liabilities (Note 6(T)) 706,923 - 688,786 -
Total liabilities 1,408,232,466 95 1,329,652,650 96
Equity parent company
Common stock (Note 6(U)) 56,846,618 4 52,979,141 4
Retained earnings:
Legal reserve (Note 6(U)) 5,626,631 1 4,032,090 -
Special reserve (Note 6(U)) 185,128 - 281,365 -
Undistributed earnings (accumulated deficit)(Note 6(U)) 4,873,804 - 5,381,104 -
Other items in equity 126,948 - 64,217 -
Total equity 67,659,129 5 62,737,917 4
Total liability and equity $ 1,475,891,595 100 1,392,390,567 100
----- End of picture text -----

Taiwan Business Bank Annual Report 2015

Ⅵ

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED DECEMBER 31, 2015 AND 2014

(Expressed In Thousands of New Taiwan Dollars)

==> picture [456 x 38] intentionally omitted <==

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

For the year ended December 31,
2015 2014 Percent
Amount ％ Amount ％ Change%
----- End of picture text -----

	2015	2015	2015	2014	2014	2014	2014	2014
	Amount		％	Amount		％
Interest revenue (Note 6(Z) and 7) Less: Interest expenses (Note 6(Z) and 7) Net interest income Non-interest income Service fee and commission income (Note 6(AA) and 13) Gains (losses) on fnancial assets or liabilities at fair value through proft or loss - net (Note 6(AB)) Realized gains on available-for-sale fnancial assets - net (Note 6(AC)) Realized losses on held-to-maturity fnancial assets - net Foreign exchange gains Reversal of impairment loss on assets Other net non-interest income (Note 6(AD) and 7) Net proft or loss on fnancial assets measured at cost Securities brokerage income - net Net revenue Provisions for bad debt expenses and guarantee reserve (miscellaneous provision)(Note 6(AE)) Operating expenses： Employee beneft expenses (Note 6(AF) and 12) Depreciation and amortization expenses (Note 6(AG) and 12) Other general and administrative expenses (Note 6(AH)) Total operating expenses Income from continuing operations before income tax Income tax expenses (Note 6(V)) Net income Other comprehensive income： Items not to be reclassifed into proft or loss Remeasurements of defned beneft plans Income tax of items not to be reclassifed Total items not to be reclassifed into proft or loss Items that are or may be reclassifed subsequently to proft or loss Difference of foreign exchange in translating fnancial statements of foreign operating units Unrealized valuation (losses) gains on available-for-sale fnancial assets Income tax related to items that are or may be reclassifed to proft or loss Total items that are or may be reclassifed subsequently to proft or loss Other comprehensive income (net amount after tax) Total comprehensive income Earnings per share (in NT dollar)(Note 6 (X)) Basic earnings per share (in NT dollar) Diluted earnings per share (in NT dollar)		$ 25,853,374 128 (10,384,359 ) (51 ) 15,469,015 77 3,540,500 17 185,112 1 90,107 - ( 13 ) - 524,206 3 6,104 - 43,861 - 131,489 1 171,503 1 20,161,884 100 (2,409,189 ) (12 ) ( 7,157,141 ) ( 35 ) ( 380,054 ) ( 2 ) (4,019,336 ) (20 ) (11,556,531 ) (57 ) 6,196,164 31 (1,083,128 ) (5 ) 5,113,036 26 ( 306,693 ) ( 1 ) 52,138 - (254,555 ) (1 ) 151,731 1 ( 66,530 ) ( 1 ) (22,470 ) - 62,731 - (191,824 ) (1 ) $ 4,921,212 25 $ 0.90 $ 0.89			25,259,678 133 (10,469,421 ) (55) 14,790,257 78 2,779,820 15 326,010 2 53,078 - - - 846,166 4 641 - ( 121,326 ) ( 1 ) 117,346 1 202,333 1 18,994,325 100 (2,538,587 ) (13 ) ( 7,034,153 ) ( 37 ) ( 408,087 ) ( 2 ) (3,527,782 ) (19 ) (10,970,022 ) (58 ) 5,485,716 29 (170,579 ) (1 ) 5,315,137 28 10,550 - (1,793 ) - 8,757 - 244,690 1 ( 43,745 ) - (40,490 ) - 160,455 1 169,212 1 5,484,349 29 0.93 0.93		133 (55)	2 ( 1 ) 5 27 ( 43 ) 70 - ( 38 ) 852 136 12 ( 15 ) 6 ( 5 ) ( 2 ) ( 7 ) 14 5 13 535 ( 4 ) ( 3,007 ) 3,008 ( 3,007 ) ( 38 ) ( 52 ) 45 ( 61 ) ( 213 ) ( 10 )
					(







		$

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

FOR THE YEAR ENDED DECEMBER 31, 2015 AND 2014

(Expressed In Thousands of New Taiwan Dollars)

==> picture [456 x 125] intentionally omitted <==

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

Equity attributed to the parent company
Stock Retained earnings Other item in equity
Difference
of foreign
exchange in Unrealized
translating gains and
financial losses on
statements available
of foreign -for-sale
Common Legal Special Undistributed operating financial
stock reserve reserve earnings Total units assets Total
----- End of picture text -----

		Equity attributed to the parent company	Equity attributed to the parent company	Equity attributed to the parent company	Equity attributed to the parent company
	Stock	Retained earnings				Other item in equity
						Difference of foreign exchange in translating fnancial statements of foreign operating units	Unrealized gains and losses on available -for-sale fnancial assets
	Common stock	Legal reserve	Special reserve	Undistributed earnings	Total
Balance─January 1, 2014 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 appropriated Reversal of special reserve Common stock dividend Balance - December 31, 2014 Net Income for the year ended December 31, 2015 Other comprehensive income (losses) for the year ended December 31, 2015 Total comprehensive income for the year ended December 31, 2015 Earnings appropriation and distribution Legal reserve appropriated Reversal of special reserve Common stock dividend Balance─December 31, 2015	$ 50,941,482 - - - - - 2,037,659 52,979,141 - - - - - 3,867,477 $ 56,846,618	3,423,455 - - - 608,635 - - 4,032,090 - - - 1,594,541 - - 5,626,631	956,088 - - - - (674,723) - 281,365 - - - - (96,237) - 185,128	2,028,781 5,315,137 8,757 5,323,894 (608,635) 674,723 (2,037,659)	6,408,324 5,315,137 8,757 5,323,894 - - (2,037,659)	(111,235)	14,997 - (42,638)	57,253,568 5,315,137 169,212 5,484,349 - - - 62,737,917 5,113,036 (191,824)
						- 203,093 203,093 - - - 91,858 - 129,784 129,784 - - - 221,642
							(42,638)
							- - - (27,641) - (67,053)
				5,381,104 5,113,036 (254,555)	9,694,559 5,113,036 (254,555)
				4,858,481 (1,594,541) 96,237 (3,867,477)	4,858,481 - - (3,867,477)		(67,053)	4,921,212 - - - 67,659,129
							- - - (94,694)
				4,873,804	10,685,563

Taiwan Business Bank Annual Report 2015

Ⅵ

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

THE YEAR ENDED DECEMBER 31, 2015 AND 2014

(Expressed In Thousands of New Taiwan Dollars)

==> picture [456 x 516] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Cash flows from operating activities:
Net income before tax $ 6,196,164 5,485,716
Adjustments ：
Accounts that do not affect cash flow
Depreciation expenses 303,565 324,023
Amortization expenses 76,489 84,064
Provision of bad debt expenses 2,404,596 2,493,093
Net loss (gain) on financial assets and liabilities at fair value through 94,369 ( 147,424 )
profit or loss
Interest expenses 10,384,359 10,469,421
Interest revenues ( 25,853,374 ) ( 25,259,678 )
Net change of provision for guarantee reserve 4,593 45,494
Net change of other miscellaneous liability reserve ( 10,046 ) ( 76,428 )
Losses on disposal and retirement of premises and equipment 595 386
Losses on disposal of investments - 10,218
Other ( 126,000 ) 328,905
Total ( 12,720,854 ) ( 11,727,926 )
Change in assets and liabilities related to operating activities ：
Net change in assets related to operating activities ：
(Increase) decrease in due from the Central Bank and call loans to ( 57,040,327 ) 6,451,683
banks
Decrease in financial assets at fair value through profit or loss 308,411 553,535
(Increase) decrease in securities purchased under resale agreements ( 21,256,678 ) 15,342,188
Increase in receivables ( 2,858,038 ) ( 7,069,389 )
Increase in discounts and loans ( 8,471,950 ) ( 45,767,194 )
Decrease in other financial assets 22,124 54,785
Decrease (increase) in other assets 2,313,112 ( 2,618,677 )
Total ( 86,983,346 ) ( 33,053,069 )
----- End of picture text -----

==> picture [456 x 666] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Net change in liabilities related to operating activities ：
(Decrease) increase in deposits from the Central Bank and other ( 2,737,535 ) 1,515,319
banks
Increase (decrease) in financial liabilities at fair value through profit or 42,102 ( 19,893 )
loss
Increase (decrease) in bills and bonds sold under repurchase 267,839 ( 303,934 )
agreements
Increase in payables 428,957 10,922,593
Increase in deposits and remittances 80,163,687 56,736,725
(Decrease) increase in other financial liabilities ( 3,548,270 ) 1,580,485
Increase (decrease) in provision for employee benefits 74,698 ( 34,290 )
Total 74,691,478 70,397,005
Total Change in assets and liabilities related to operating activities ( 12,291,868 ) 37,343,936
Total adjustments ( 25,012,722 ) 25,616,010
Cash (used in) provided by operating activities ( 18,816,558 ) 31,101,726
Interest collected 25,743,075 24,886,771
Interest paid ( 10,445,687 ) ( 10,587,414 )
Income tax paid ( 326,191 ) ( 289,315 )
Net cash (used in) provided by operating activities ( 3,845,361 ) 45,111,768
：
Cash flows from investing activities
Purchase of available-for-sale financial assets ( 9,692,299 ) ( 3,040,859 )
Proceeds from repayments of debt investment without active market 1,500,000 -
Purchase of hold-to-maturity financial assets ( 11,735,908 ) ( 107,400 )
Purchase of capital deduction of financial assets carried at cost ( 328,104 ) ( 6,000 )
Proceeds from capital deduction of financial assets carried at cost - 3,122
Purchase of premises and equipment ( 315,739 ) ( 149,365 )
Proceeds from disposition of premises and equipments 10,000 265
Decrease (increase) in guarantee deposits paid 53,035 ( 71,018 )
Purchase of intangible assets ( 55,015 ) ( 30,487 )
Net cash used in investing activities ( 20,564,030 ) ( 3,401,742 )
：
Cash flows from financing activities
Decrease in due to the Central Bank and other banks - ( 13,000 )
Issuance of financial debentures 10,000,000 -
Redemption of financial debentures ( 6,200,000 ) ( 9,650,000 )
Increase in guarantee deposits received 33,854 51,996
Increase in lease payable 6,127 5,193
Decrease in other liabilities ( 2,568,532 ) ( 120,861 )
Net cash provided by (used in) financing activities 1,271,449 ( 9,726,672 )
Foreign exchange effect ( 42,493 ) 14,728
Net (decrease) increase in cash and cash equivalents ( 23,180,435 ) 31,998,082
Cash and cash equivalents, at the beginning of the period 64,242,245 32,244,163
Cash and cash equivalents, at the end of the period $ 41,061,810 64,242,245
----- End of picture text -----

Taiwan Business Bank Annual Report 2015

Ⅵ

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

December 31, 2015 and 2014

(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 as Taiwan Business Bank, Ltd. in order to finance and provide 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, 2015, 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, 6 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. The Bank was awarded as one of the top 5 percent of listed companies in "the first corporate governance evaluation" on April 30, 2015.

2. FINANCIAL STATEMENTS AUTHORISATION DATE AND AUTHORISATION PROCESS

3. NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED

(A) The effect of adopting the standards newly released and modified which are endorsed by the FSC:

Starting from 2015, the Group have fully adopted the 2013 version of International Financial Reporting Standards (excluding the application of IFRS 9 "Financial Instruments," as accepted by the Financial Supervisory Commission (the "FSC"), when compiling quarterly consolidated financial reports. The newly issued and revised accounting standards and interpretations are as follows:

==> picture [420 x 313] intentionally omitted <==

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

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 」
IFRS 10 「 Consolidated Financial Statements 」 January 1, 2013
(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
----- End of picture text -----

Except for the following listed items, the adoption of the 2013 version of IFRSs by the Group would have no significant impact on the consolidated financial reports:

1.IFRS 13 Fair value measurement

The standard redefines fair value that provides a single IFRS framework for measuring fair value and requires disclosures about fair value measurement. The Group has disclosed at fair value as prescribed in the standard, which have been carried forward except for comparative information which is not required. However the standards have been carried forward since 2015, the new measurement prescription has no significant impact on asset and liability items of the Group.

2. IAS 1 Presentation of Financial Statements

The amendments change the presentation of other comprehensive income. That section is required to present line items which are classified by their nature, and grouped between those items that will or will not be reclassified to profit and loss in subsequent periods. The other comprehensive items shown pre-tax amounts, and the related tax also need to be presented separately with the above two categories. The Group has changed the presentation of other comprehensive income section accordance with the guidelines, and be consistent from period to period.

(B) The standards and interpretations newly issued and amended but not yet endorsed by the FSC:

A summary as below of the new standards and interpretations issued by the International Accounting Standards Board (the "IASB") that may have an impact on the consolidated financial statements not yet endorsed by the FSC:

Taiwan Business Bank Annual Report 2015

Ⅵ

==> picture [456 x 317] intentionally omitted <==

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

IASB released of
New Standards And Interpretations Not Yet Adopted
effective date
IFRS 9 「 Financial Instruments 」 January 1, 2018
Amendments to IFRS 10 and IAS 28 「 Sales or contributions of assets between an investor and Determination by
its associate/joint venture 」 council
Amendments to IFRS 10, IFRS 12 and IAS 28 「 Investment entities: Applying the consolidation January 1, 2016
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, 2018
IFRS 16 「 Leasing 」 January 1, 2019
Amendments to IAS 1 「 Disclosure initiative 」 January 1, 2016
Amendments to IAS 7 「 Disclosure initiative 」 January 1, 2017
Amendments to IAS 12 「 Recognition of deferred tax assets for unrealised losses 」 January 1, 2017
Amendments to IAS 16 and IAS 38 「 Acceptable methods of depreciation and amortisation 」 January 1, 2016
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 Assets 」 January 1, 2014
Amendment to IAS 39 「 Novation of Derivatives and Continuation of Hedge Accounting 」 January 1, 2014
Annual Improvements to IFRSs 2010–2012 and 2011–2013 Cycle July 1, 2014
Annual Improvements to IFRSs 2012–2014 Cycle January 1, 2016
IFRIC 21 「 Levies 」 January 1, 2014
----- End of picture text -----

The Group is evaluating the effect on financial status and operating result from adopting the above mentioned 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

The consolidated financial statements have been prepared on a historical cost basis except for the

derivative instruments);
of defined benefit obligation and the effect of the asset ceiling in note4.

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.

==> picture [405 x 163] intentionally omitted <==

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

Stockholder's equity
(Holding %)
Established Main business December 31, December 31,
location scope 2015 2014
Taiwan Business Bank Insurance Agent of personal
Taiwan 100 100
Agency Co., Ltd. insurance
Taiwan Business Bank Property Agent of property
Taiwan 100 100
Insurance Agency Co., Ltd. insurance
Taiwan Business Bank International
Taiwan Leasing business 100 100
Leasing Co., Ltd.
Taiwan Business Bank International
China Leasing business 100 100
Financing Leasing Co., Ltd.
TBB (Cambodia) Microfinance Kampuchea Financial 100 -
Institution Plc company
----- End of picture text -----

(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 amortised cost in the functional currency at the beginning of the year adjusted for the effective interest

Taiwan Business Bank Annual Report 2015

Ⅵ

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 economies, 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 Group, 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;
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.

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.

The Group shall derecognize a financial asset when the contractual rights to the cash flows from the financial asset expire or when the Group transfer substantially all the risks and rewards of ownership of the financial assets. A financial liability should be removed from the balance sheet when, and only when, it is extinguished, that is, when the obligation specified in the contract is either discharged or cancelled or expires. If the bonds or stocks are taken as collateral, shall not be derecognized because the Group have retained substantially all the risks and rewards of ownership.

(g) Financial assets offsetting

when, an entity has a legally enforceable right to set off the amounts; and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

(h) Loans and advances

Loans and advances are recorded as initial fair value (including direct transaction cost), and the subsequent measurement recognizes interest income via effective interest rate method (if there is not

Taiwan Business Bank Annual Report 2015

Ⅵ

much difference then it can adopt straight line method) and is booked as per amortized cost deducted by impairment 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.
(i) 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".

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 losses 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.
(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 impaired amount is the difference between the book value of the financial asset and the sum of estimated 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

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 ".

The Bank provides reserve for guarantee liabilities for off-balance-sheet non-credit assets taking into account 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:

Taiwan Business Bank Annual Report 2015

Ⅵ

(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 and 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.

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 present 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 durable 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

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.

(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.

plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognized past service costs and the fair value of any plan assets are deducted. The discount rate is the yield at the reporting date on government bonds that have maturity dates approximating the terms of the Bank's obligations and that are denominated in the same currency in which the benefits are expected to be paid.

the calculation results in a benefit to the Bank, the recognized asset is limited to the total of the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the Bank. An economic benefit is available to the Bank if it is realizable during the life of the plan, or on settlement of the plan liabilities.

past service by employees, is recognized immediately in profit or loss to the extent that the benefits vest immediately.

(1) Actuarial gains and losses ;

Taiwan Business Bank Annual Report 2015

Ⅵ

with a corresponding debit or credit to retained earnings in the period in which they occur.

curtailment or settlement occurs. The gain or loss on curtailment comprises any resulting change in the fair value of plan assets and change in the present value of defined benefit obligation.

(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 deposits 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.

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.

realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal 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 irrevokable 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) multiplied 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 relevant 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.

(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 segments 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:

Taiwan Business Bank Annual Report 2015

Ⅵ

(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 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

==> picture [456 x 90] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Petty cash and revolving fund $ 8,522,890 9,377,085
Foreign currencies on hand 1,017,077 1,006,821
Checks for clearing 3,844,857 7,654,077
Due from other banks 27,676,986 46,204,262
Total $ 41,061,810 64,242,245
----- End of picture text -----

(B) Due from the Central Bank and call loans to banks

==> picture [456 x 104] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Due from the Central Bank $ 65,326,427 42,756,826
Deposits transferred to the Central Bank 178,826 110,523
Call loans to banks 53,379,518 18,977,095
Trust fund indemnity reserve deposited 70,000 70,000
Securities served as trust fund indemnity reserve deposited ( 70,000 ) ( 70,000 )
Total $ 118,884,771 61,844,444
----- End of picture text -----

As of December 31, 2015 and 2014, in accordance with the Banking Law and the Central Bank Law, the required reserve deposited by the Bank with the Central Bank amounted to $65,064,860 and $42,602,403 , of which $32,419,372 and $30,304,020 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, 2015 and 2014, the required reserve with the Central Bank amounted to $261,567 and $154,423 respectively, and its use is unrestricted.

As of December 31, 2015 and 2014, 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, 2015 and 2014, the Bank deposited marketable securities of both $70,000 as trust fund reserves.

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

==> picture [456 x 217] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Financial assets held for trading:
Commercial paper $ 209,896 79,949
Common Stock 133,842 -
Beneficiary certificates 290,215 -
Foreign exchange forward contracts 61,679 59,331
Currency swap contracts 321,258 484,148
Interest swap contracts - 1,261
Foreign currency options-call 68,067 66,340
Structured product options-call 287 148
Stock index futures 27,324 27,285
Sub-total 1,112,568 718,462
Financial assets designated at fair value through profit or loss:
Overseas bonds 970,043 1,892,245
Total $ 2,082,611 2,610,707
----- End of picture text -----

As of December 31, 2015 and 2014, the nominal amounts of unsettled financial derivative instrument contracts were as follows:

==> picture [456 x 104] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Foreign exchange forward contracts $ 4,338,602 5,132,526
Currency swap contracts 63,859,563 52,982,358
Non-delivery forward contracts 328,325 -
Interest swap contracts 986,400 4,600,200
Option contracts-call 3,125,120 1,726,731
Option contracts-put 3,126,106 1,726,731
----- End of picture text -----

(D) Securities purchased under resell agreements

==> picture [456 x 104] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Securities under resell agreements $ 26,784,515 5,527,837
Face amount 26,811,300 5,534,000
Resell period 2016.1.4~2016.1.29 2015.1.5~2015.1.21
Range of resell interest rate 0.37%~0.42% 0.6%~0.75%
Resell price
Securities purchased under resell agreement $ 26,791,690 5,529,181
----- End of picture text -----

Taiwan Business Bank Annual Report 2015

Ⅵ

Please refer to Note 6(N) for information with regard to repurchase conditions for securities purchased under resell agreements shown above.

(E) Receivables–net

==> picture [456 x 231] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Interest receivable $ 2,408,377 2,329,291
Acceptances receivable 1,264,956 1,608,642
Accrued incomes 84,908 77,984
Accounts receivable 548,203 128,124
Spot exchange receivable-foreign currencies 17,789,230 14,456,636
Refinancing guaranty deposits - 3,026
Guaranteed proceeds receivable from refinancing - 3,340
Receivable from credit card 1,318,632 1,429,914
Receivable from security brokerage 113,278 122,211
Settlement fund 69,953 741,365
Installment receivables and leases 927,857 655,661
Other receivables 261,999 381,901
Sub-total 24,787,393 21,938,095
Less: Allowance for bad debts ( 89,635 ) ( 116,135 )
Net $ 24,697,758 21,821,960
----- End of picture text -----

The change in allowance for bad debts is as follows:

==> picture [456 x 104] intentionally omitted <==

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

For the year ended December 31,
Receivables
2015 2014
Beginning balance $ 116,135 133,326
Provision (reversal) 61,218 ( 17,495 )
Write off ( 87,826 ) -
Foreign exchange 108 304
Ending balance $ 89,635 116,135
----- End of picture text -----

(F) Discounts and loans–net

==> picture [456 x 260] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Import/export bills negotiated $ 215,381 448,466
Bills and notes discounted 1,232,112 1,476,099
Overdrafts 12,687 16,835
Secured overdrafts 764,276 877,478
Short-term loans 222,558,470 231,437,942
Short-term secured loans 156,523,049 146,168,111
Margin loans receivable 1,717,363 2,221,662
Medium-term loans 133,863,586 143,601,507
Medium-term secured loans 133,160,273 132,804,405
Long-term loans 15,750,630 16,957,020
Long-term secured loans 348,360,399 331,799,385
Account receivable financing 575,588 463,313
Overdue loans 4,241,327 4,162,467
Sub-total 1,018,975,141 1,012,434,690
Less: Adjustment of discount and premium ( 235,246 ) ( 266,459 )
Less: Allowance for bad debts ( 11,341,593 ) ( 10,933,661 )
Net $ 1,007,398,302 1,001,234,570
----- End of picture text -----

The change in allowance for bad debts is as follows:

==> picture [456 x 118] intentionally omitted <==

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

Loan 2015 2014
Beginning balance $ 10,933,661 10,462,121
Provision 2,418,854 2,545,394
Transfer out ( 62,605 ) ( 29,773 )
Write-off ( 2,793,281 ) ( 3,165,160 )
Foreign exchange ( 16,818 ) 35,416
Written-off recovered 861,782 1,085,663
Ending balance $ 11,341,593 10,933,661
----- End of picture text -----

(G) Available‑for‑sale financial assets–net

==> picture [456 x 89] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Government bonds $ 6,121,612 4,130,829
Corporate bonds 10,457,790 5,076,756
Overseas bonds 6,943,965 5,071,057
Listed and OTC stocks 2,145,418 1,764,897
Total $ 25,668,785 16,043,539
----- End of picture text -----

Please refer to Note 6(N) for the information with regard to repurchase conditions for available-for-sale

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

==> picture [456 x 120] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Certificates of deposit with the Central Bank $ 165,115,000 171,700,000
Government bonds 10,936,236 4,354,399
Corporate bonds 11,602,452 7,743,667
Overseas bonds 18,554,743 10,676,998
Negotiable certificates of deposit 69,048 66,507
Total $ 206,277,479 194,541,571
----- End of picture text -----

As of December 31, 2015 and 2014, 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 $701,100 and $707,800, respectively. As of December 31, 2015 and 2014, the three overseas branches have provided $69,048 and $66,507, 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 $8,200,000 and $12,000,000 as overdraft guarantee as of December 31, 2015, and 2014, respectively. The amount of the guarantee can be modified anytime and the remaining amount could be served as liquid reserves.

As of December 31, 2015 and 2014, 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 $825,000 and $800,000, 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.

Taiwan Business Bank Annual Report 2015

Ⅵ

(I) Other financial assets–net

==> picture [456 x 163] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Non-accrual loans transferred from non-loan financial assets $ 70,842 333,205
Less: Allowance for bad debts － non-accrual loans transferred ( 20,285 ) ( 273,317 )
from non-loan financial assets
Non-accrual loans transferred from non-loan financial assets － net 50,557 59,888
Exchange bills negotiated 1,303 1,222
Less: Allowance for bad debt － exchange bills negotiated ( 15 ) ( 12 )
Exchange bills negotiated － net 1,288 1,210
Financial assets carried at cost 2,035,121 1,707,017
Debts investment without active market - 1,500,000
Total $ 2,086,966 3,268,115
----- End of picture text -----

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

==> picture [439 x 285] intentionally omitted <==

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

December 31, 2015 December 31, 2014
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. Co., 29,000 4.84 29,000 4.84
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., Ltd. 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 9,245 4.12
Taiwan Depository and Clearing Corp. 4,639 0.08 4,639 0.08
Yand Guang Asset Management Corp. 460 0.77 460 0.77
Taiwan Trusted Service Manager Co., Ltd. 6,000 1.00 6,000 1.00
Taipei Financial Center Corp. 328,104 0.80 - -
Total $ 2,035,121 1,707,017
----- End of picture text -----

The investees of the Bank, Taiwan Integrated Shareholder's Service Company has been purchased and merged 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:

Investee	December 31, 2015	December 31, 2015	December 31, 2014	December 31, 2014
Taiwan High Speed Rail Corp. preferred Stock		$ -		1,500,000

==> picture [439 x 109] intentionally omitted <==

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

Other financial assets For the year ended December 31,
2015 2014
Beginning balance $ 273,329 268,294
Reversal ( 75,476 ) ( 34,806 )
Transfer in 62,605 29,773
Write-off ( 271,960 ) ( 29,773 )
Written-off recovered 31,802 39,841
Ending balance $ 20,300 273,329
----- End of picture text -----

(J) Premises and equipment–net

==> picture [454 x 27] intentionally omitted <==

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

Revaluation Accumulated Accumulated
December 31, 2015 Cost Total
appreciation depreciation impairment
----- End of picture text -----

Land	$	6,678,952	2,986,161	-	14,156	9,650,957
Buildings		7,439,580	31,184	3,520,394	21,411	3,928,959
Machinery		1,967,149	-	1,790,698	-	176,451
Transportation equipment		290,326	-	248,268	-	42,058
Miscellaneous equipment		586,357	-	522,051	-	64,306
Leasehold improvement		71,008	-	38,373	-	32,635
Construction in progress		101,726	-	-	-	101,726
Prepayment for equipment		58,325	-	-	-	58,325
Leased assets		70,577	-	20,616	-	49,961
Total	$	17,264,000	3,017,345	6,140,400	35,567	14,105,378

==> picture [456 x 27] intentionally omitted <==

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

Revaluation Accumulated Accumulated
December 31, 2014 Cost Total
appreciation depreciation impairment
----- End of picture text -----

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

Change of cost

	January 1, 2015	January 1, 2015		Increase		Decrease		Foreign Exchange		December 31, 2015
Land Buildings Machinery Transportation equipment Miscellaneous equipment Leasehold improvement Construction in progress Prepayment for equipment Leased assets Total		$ 9,665,113 7,451,540 1,908,648 293,201 577,301 79,605 11,105 36,622 55,222 $ 20,078,357		- 19,224 103,661 9,977 21,418 20,575 99,066 26,463 15,355 315,739		- - 47,164 14,108 15,044 28,398 8,445 4,760 - 117,919		- - 2,004 1,256 2,682 (774) - - - 5,168		9,665,113 7,470,764 1,967,149 290,326 586,357 71,008 101,726 58,325 70,577 20,281,345

48 Taiwan Business Bank Annual Report 2015

Ⅵ

==> picture [456 x 170] intentionally omitted <==

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

Foreign December 31,
January 1, 2014 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
----- End of picture text -----

Change of depreciation

==> picture [456 x 256] intentionally omitted <==

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

Foreign December 31,
January 1, 2015 Increase Decrease
Exchange 2015
Buildings $ 3,356,676 163,718 - - 3,520,394
Machinery 1,754,836 83,037 46,573 ( 602 ) 1,790,698
Transportation equipment 250,246 11,983 13,893 ( 68 ) 248,268
Miscellaneous equipment 519,885 17,093 14,987 60 522,051
Leasehold improvement 49,810 16,780 27,872 ( 345 ) 38,373
Leased assets 9,907 10,954 - ( 245 ) 20,616
Total $ 5,941,360 303,565 103,325 ( 1,200 ) 6,140,400
January 1, Foreign December 31,
Increase Decrease
2014 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
----- End of picture text -----

Accumulated impairment

==> picture [456 x 142] intentionally omitted <==

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

Foreign December 31,
January 1, 2015 Increase Decrease
Exchange 2015
Land $ 14,156 - - - 14,156
Buildings 21,411 - - - 21,411
Total $ 35,567 - - - 35,567
January 1, Foreign December
Increase Decrease
2014 Exchange 31, 2014
Land $ 14,156 - - - 14,156
Buildings 21,411 - - - 21,411
Total $ 35,567 - - - 35,567
----- End of picture text -----

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

As of December 31, 2015 and 2014, 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, 2015 and 2014, land which was illegally occupied amounted to $5,496 and $69,321, respectively. 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

==> picture [456 x 204] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Office supplies $ 27,936 28,820
Prepayments 4,164,850 3,659,021
Operating guaranty deposits and settlement fund 32,510 30,531
Guarantee deposits paid 209,359 262,394
Less: Accumulated impairment ( 22,606 ) ( 28,710 )
Guarantee deposits paid － net 186,753 233,684
Collateral assumed - 2,509
Less: Accumulated impairment - ( 2,509 )
Collateral assumed － net - -
Deferred assets 238 381
Temporary payments and suspense accounts 364,740 690,047
Proceeds of settlement and credit transaction 203,776 97
Total $ 4,980,803 4,642,581
----- End of picture text -----

(L) Deposits from the Central Bank and other banks

==> picture [456 x 119] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Deposits from the Central Bank $ 233,999 209,486
Call loans from the Central Bank 8,055,600 3,167,000
Deposits from banks 186,609 179,062
Call loans from banks 30,790,166 36,719,823
Overdrafts on banks 870,323 1,274,988
Deposits transferred from Chunghwa Post Co., Ltd. 37,720,840 39,044,713
Total $ 77,857,537 80,595,072
----- End of picture text -----

(M) Financial liabilities at fair value through profit or loss

==> picture [456 x 118] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Foreign exchange forward contracts $ 65,580 114,662
Currency swap contracts 84,950 110,554
Non-delivery forward contracts 472 -
Interest swap contracts - 11,509
Foreign currency option-put 68,710 66,340
Structured product option-put 287 148
Total $ 219,999 303,213
----- End of picture text -----

Please refer to 6(C) for the nominal amount of unsettled financial derivatives instrument contracts of December 31, 2015 and 2014.

Taiwan Business Bank Annual Report 2015

Ⅵ

(N) Securities sold under repurchase agreements

==> picture [456 x 89] intentionally omitted <==

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

December 31, 2015
Selling Price
Assets (Recognized in Designated Designated
Par value repurchase
securities sold under repurchase date
amount
repurchase agreements)
Available-for-sale financial Prior to June 30,
$ 3,924,900 4,163,147 4,165,361
assets 2016
----- End of picture text -----

Assets	December 31, 2014	December 31, 2014	December 31, 2014	December 31, 2014
	Par value	Selling Price (Recognized in securities sold under repurchase agreements)	Designated repurchase amount	Designated repurchase date
Available-for-sale fnancial assets	$ 3,695,500	3,895,308	3,898,081	Prior to June 18, 2015

(O) Payables

==> picture [456 x 210] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Interest payable $ 1,677,603 1,738,931
Accounts payable 5,257,427 7,654,291
Acceptances 1,293,501 1,721,714
Accrued expenses 2,290,385 2,296,894
Collection payable 1,015,038 739,057
Deposits received from securities borrowers 88,669 138,078
Guaranteed price deposits received from securities borrowers 98,577 152,437
Spot exchange payable － foreign currencies 17,790,115 14,455,510
Other payables 1,196,408 765,262
Trusted security payable 180,620 190,919
Settlement - 668,386
Others 36,088 35,323
Total $ 30,924,431 30,556,802
----- End of picture text -----

(P) Deposits and remittances

==> picture [456 x 107] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Savings deposits $ 576,072,578 563,162,499
Time deposits 315,174,807 298,713,140
Demand deposits 315,517,530 265,176,426
Checking account deposits 25,056,541 24,671,227
Remittances 499,229 433,706
Total $ 1,232,320,685 1,152,156,998
----- End of picture text -----

(Q) Financial debentures

==> picture [456 x 647] intentionally omitted <==

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

Terms of Transactions Bond Issued
Amount
Bonds Maturity
Issue date date Interest Rate & repayment Type December December
31, 2015 31, 2014
2008-2 04/30/2008 04/30/2015 (A) The debentures bear annual interest Unsecured $ - 5,200,000
rate, which is the index rate plus 1.02%. subordinated
The index rate is the average offer long-term financial
of 90-days CP which is indicated in debentures
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.Simple
interest rate is accrued four times a
year and paid annually. The principal
will be repaid in full at maturity.
2009-2 08/27/2009 08/27/2015 The debentures bear annual interest rate of 〞 - 1,000,000
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 will debentures
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.
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 accrued subordinated
and paid annually. The principal will be long-term financial
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.
----- End of picture text -----

Taiwan Business Bank Annual Report 2015

Ⅵ

==> picture [456 x 581] intentionally omitted <==

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

Terms of Transactions Bond Issued
Amount
Bonds Maturity
Issue date date Interest Rate & repayment Type December December
31, 2015 31, 2014
2010-1P B 09/23/2010 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.Simple
interest rate is accrued four times a
year and paid annually. The principal
will be repaid in full at maturity.
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.
2015-1P 06/18/2015 None The debenture bear an annual interest Perpetual 5,000,000 -
rate of 3.9%. Simple interest is accrued non-accumulated
and paid annually.The debentures is subordinated
redeemable per face value plus accrued financial
interest at interest payment date after debentures
five years from the issued date under the
consent of the competent authority.
2015-2A 08/31/2015 08/31/2023 The debenture bear an annual interest rate Unsecured $ 4,700,000 -
of 2.05%. Simple interest is accrued and subordinated
paid annually.The principal will be repaid in long-term financial
full at maturity. debentures
2015-2B 08/31/2015 08/31/2025 The debenture bear an annual interest rate 〞 300,000 -
of 2.10%. Simple interest is accrued and
paid annually.The principal will be repaid in
full at maturity.
$ 45,600,000 41,800,000
----- End of picture text -----

(R) Other financial liabilities

==> picture [456 x 62] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Appropriated loans funds $ 12,150,600 15,698,870
Lease payable 46,517 40,390
Total $ 12,197,117 15,739,260
----- End of picture text -----

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

==> picture [456 x 75] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Reserve for guarantee liabilities $ 97,708 93,009
Reserve for lawsuit 413,129 444,135
Other-Employee benefit 2,810,900 2,481,647
Total $ 3,321,737 3,018,791
----- End of picture text -----

Change of reserves

==> picture [456 x 192] intentionally omitted <==

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

January 1, Foreign December
2015 Increase Decrease Use Reversal exchange 31, 2015
Reserve for guarantee liabilities $ 93,009 23,270 - - 18,677 106 97,708
Reserve for lawsuit 444,135 - - - 10,046 ( 20,960 ) 413,129
Reserve for employee benefit 2,481,647 265,420 225,039 17,821 (306,693 ) - 2,810,900
obligation
Total $ 3,018,791 288,690 225,039 17,821 (277,970 ) ( 20,854 ) 3,321,737
January 1, Foreign December
2014 Increase Decrease Use Reversal 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 employee 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
----- End of picture text -----

above.

(T) Other liabilities

==> picture [456 x 104] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Advance interest receipts $ 3,857 5,255
Unearned revenue 86,554 105,320
Other advances receipts 62,078 57,484
Guarantee deposits received 549,102 515,248
Other 5,332 5,479
Total $ 706,923 688,786
----- End of picture text -----

(U) Equity

(a) Common stock

As of December 31, 2015 and 2014, the Bank's authorized capital were all $60,000,000 and the paid-in capital for common shares of the Bank were $56,846,618 and $52,979,141 and the face value of each share is NTD $10. The outstanding shares were 5,684,662 thousand shares and 5,297,914 thousand shares, respectively.

Taiwan Business Bank Annual Report 2015

Ⅵ

Pursuant to the resolution approved by the stockholders' meeting of the Bank on June 26, 2015, the Bank increased its capital from the retained earnings by $3,867,477 and issued 386,748 thousand shares. The capital increase has been approved by Financial Supervisory Commission and came into effect on August 4, 2015. The base date of the capital increase is set on August 31, 2015.The Bank has completed the registration of change in paid-in capital on September 14, 2015.

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 thousand 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.

(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.

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 appropriated 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).

In order to continuously expand scale and increase profitability, the Bank, based on the future capital budget plan, adopts residual dividend policy and primarily distributes stock dividend to ensure 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 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.

In compliance with the amendment of Company Act published on May 2015, Employee bonuses and directors remuneration are not recognized as Earnings distribution. The bank will amend the articles to comply to the Act before the deadline ruled by the competent authority.

Employee bonuses and directors 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 remuneration. The estimated employee bonuses are $305,347 and the directors remuneration are $38,168 for the year ended December 31, 2014. 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 $305,347 and $38,168 of the employee bonuses and directors remuneration which were determined by the shareholder's meeting on June 26, 2015 were the same as the estimated

The Bank resolved the earning distribution for the earnings of 2014 and 2013 in the shareholder's meeting on June 26, 2015 and June 20, 2014. The dividends distributed are as follows:

	2014	2014	2014	2014	2013	2013
	Distribution rate (NT dollar)	Amount			Distribution rate (NT dollar)	Amount
Dividends to common share holders Share					0.40	2,037,659
	$ 0.73	3,867,477
(d) Other equity items
	Unrealized gains and losses of avaliable-for-sale fnancial assets		Difference of foreign exchange in translating fnancial statements of foreign operating unit			Total
January 1, 2015 Available-for-sale fnancial assets -Valuation adjustment -Realized amount Currency translation difference -Current exchange difference December 31, 2015 January 1, 2014 Available-for-sale fnancial assets -Valuation adjustment -Realized amount Currency translation difference -Current exchange difference December 31, 2014	$ ( 27,641 ) ( 4,670 ) ( 62,383 ) $ ( 94,694 ) $ 14,997 ( 65,133 ) 22,495 - $ ( 27,641)			91,858 - - 129,784 221,642 ( 111,235 ) - - 203,093 91,858		64,217 ( 4,670 ) ( 62,383 ) 129,784 126,948 ( 96,238 ) ( 65,133 ) 22,495 203,093 64,217

56 Taiwan Business Bank Annual Report 2015

Ⅵ

(V) Income taxes

(a) The amount of income tax for the year 2015 and 2014 were as follows:

==> picture [456 x 131] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Current tax expense
Current period $ 184,557 239,498
Adjustment for prior periods 16,686 9,941
Basic tax 141,634 49,848
342,877 299,287
Deferred tax expense
Origination and reversal of temporary different 740,251 ( 128,708 )
Income tax expenses $ 1,083,128 170,579
----- End of picture text -----

(b) The amount of expense (income) tax recognised in other comprehensive income for the year 2015 and 2014 were as follows:

==> picture [456 x 130] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Items not to be reclassified into profit or loss:
Remeasurements of defined benefit plans $ 52,138 ( 1,793 )
Items that are or may be reclassified subsequently to profit or loss:
Foreign exchange difference in translating financial statements of $ ( 21,947 ) ( 41,597 )
foreign operations
Unrealized valuation gains on available-for-sale financial assets ( 523 ) 1,107
Total $ ( 22,470 ) ( 40,490 )
----- End of picture text -----

The reconciliation between the income tax expense (income) and net income before tax of the Bank for the year 2015 and 2014 is as follows:

==> picture [456 x 322] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Income tax computed on net income before tax $ 1,054,392 932,572
Permanent differences:
- Tax-exempt securities transaction loss 4,045 411
- Net income from offshore banking unit ( 200,734 ) ( 70,703 )
- Recognized loss (gain) from financialassets and liabilities 16,279 ( 23,784 )
measured at fair valuethrough profit or loss
- Cash Dividend ( 27,860 ) ( 28,405 )
- Reversal of impairment gain on assets ( 1,038 ) ( 109 )
- Non-deductible expense 39 36
Temporary differences:
-Difference between the actual allowance for bad debts and the 12,512 13,370
statutory allowance for bad debts amount regulated in the Tax Law
-Reversal of losses on lawsuit - ( 12,993 )
-Difference between the actual pension and the statutory pension 5,259 ( 12,425 )
amount regulated in the Tax Law
- Other ( 150 ) 264
Taxable income 862,744 798,234
Duduct: Loss carryforward ( 849,483 ) ( 783,709 )
Income tax payable 13,261 14,525
Decrease (increase) in deferred income tax assets 740,251 ( 128,708 )
Additional tax resulted from Alternative Minimum Tax 141,634 49,848
Overseas branch income tax expenses 158,026 224,953
Underestimate prior income tax expense 16,686 9,961
Other 13,270 -
Income tax expense $ 1,083,128 170,579
----- End of picture text -----

	For the year ended December 31, 2015	For the year ended December 31, 2015	For the year ended December 31, 2015	For the year ended December 31, 2015	For the year ended December 31, 2015	For the year ended December 31, 2015
	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 gains and losses 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	$ 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		12,512 - - 5,259 - - - - (150 ) 17,621 (757,872 ) ( 740,251)		- - - - - ( 21,947 ) ( 523 ) 52,138 - 29,668 - 29,668	358,236 46,627 75,446 403,851 ( 879,056 ) ( 40,761 ) ( 1,072 ) 113,611 114 76,996 439,785 516,781 1,437,671 920,890
	For the year ended				December 31, 2014
	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 gains and losses 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 2015

Ⅵ

As of December 31, 2015, 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:

Loss for the year		No loss carryforwards	Loss on not recognized as deferred income tax assets	Available for carryforward year
2006 2009		$ 1,021,326 1,565,648 $ 2,586,974	- -	2007∼2016 2010∼2019

(d) The Bank's income tax returns for years up to 2012 have been approved by the Tax Authority.

The income tax returns of the subsidiaries Taiwan Business Bank Insurance Agency Co., Ltd., and Taiwan Business Bank International Leasing Co., Ltd. have been approved until 2013 by the Tax authority. Taiwan Business Bank Property Insurance Agency Co., Ltd. have been approved until 2014 by the Tax authority.

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

==> picture [456 x 64] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Stockholders' imputation credit account $ 125,593 209,990
2015(expected) 2014(actual)
Stockholders' tax deductible ratio 2.29% 9.95%
----- End of picture text -----

As of December 31, 2014 and 2013 , 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

its subsidiaries were as follows:

==> picture [456 x 76] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Recognized on the balance sheet
Defined benefit plan $ 2,061,094 1,751,221
Employee deposit with favorable rate 749,806 730,426
Total $ 2,810,900 2,481,647
----- End of picture text -----

Composition of plan assets:

==> picture [456 x 61] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Present value of defined benefit obligation $ 7,237,239 6,864,745
Less: Fair value of defined benefit plan assets ( 5,176,145 ) ( 5,113,524 )
Net defined benefit liability $ 2,061,094 1,751,221
----- End of picture text -----

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 $5,176,145 and $5,113,514 on December 31, 2015 and 2014. 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.

2014 were as follows:

==> picture [456 x 133] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Defined benefit obligation on January 1 $ 6,864,745 6,808,683
Benefits paid by the plan 326,980 333,638
Remeasurements of the net defined benefit liability
Actuarial gain and loss on experience adjustment 56,576 19,677
Actuarial gain and loss on financial assumptions changed 297,296 -
Benefits paid by the plan ( 308,358 ) ( 297,253 )
Defined benefit obligation on December 31 $ 7,237,239 6,864,745
----- End of picture text -----

were as follows:

==> picture [456 x 134] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Fair value of plan assets on Junuary 1 $ 5,113,524 5,010,252
Interest income 89,164 89,123
Remeasurements of the net defined benefit liability 47,179 30,227
-plan assets revenue (excluded of current interest)
Contributions made 234,636 281,175
Benefits paid by the plan ( 308,358 ) ( 297,253 )
Fair value of plan assets on December 31 $ 5,176,145 5,113,524
----- End of picture text -----

==> picture [456 x 76] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Current service costs $ 209,480 215,317
Net interest on the net defined benefit liability 28,336 29,198
$ 237,816 244,515
----- End of picture text -----

Taiwan Business Bank Annual Report 2015

Ⅵ

Actuarial gains and losses recognised in other comprehensive income for the year ended December 31 2015 and 2014 were as follows ：

==> picture [456 x 76] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Amount on January 1 $ 361,602 372,152
Recognised during the period 306,693 ( 10,550 )
Amount on December 31 $ 668,295 361,602
----- End of picture text -----

(6) Actuarial assumptions

the reporting date as follow :

==> picture [456 x 44] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Discount rate of defined benefit plan 1.30% 1.75%
Future salary increase rate 1.50% 1.50%
----- End of picture text -----

The expected allocation payment made by the Bank to the defined benefit plans for the one year period after the reporting dates is $236,057 in 2015.

(7) Sensitivity analysis

When calculating the present value of defined pension obligations, the company must apply judgments and estimates to determine the actuarial assumptions on balance sheet date, including discount rates and expected rate of return on plan assets. Any changes in these assumptions could significantly impact the carrying amount of defined pension obligations.

The effects of changes in major actuarial assumptions adopted in defined benefit obligation on December 31, 2015 as follows :

	Defned beneft plan obligation	Defned beneft plan obligation
	Increase0.25%	Decrease0.25%
December 31, 2015 Discount rate(Change0.25%) Future salary increase rate(Change0.25%)	(2.32)% 2.33%	2.40% (2.25)%

The above sensitivity analysis is based on the effects of changes in assumptions single analysis under other assumptions remain unchanged .

In practice many changes in assumptions may be moving .

consistent method.

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 without additional legal or constructive obligations.

The Bank and its subsidiaries' pension costs under the defined contribution method were $83,170 and $75,767 for the nine months ended December 31, 2015 and 2014, respectively.

fair value of assets are as follows:

==> picture [456 x 72] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Present value of defined benefit obligation (Liabilities recognized in $ 749,806 730,426
separate financial statement)
- -
Less: Fair value of defined benefit plan assets
Net defined benefit liability $ 749,806 730,426
----- End of picture text -----

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".

2014 were as follows:

==> picture [456 x 120] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Defined benefit obligation on January 1 $ 730,426 726,263
Interest cost 27,604 27,439
Remeasurements of the net defined benefit liability 153,897 138,038
-current actuarial gains and losses
Benefits paid by the plan ( 162,121 ) ( 161,314 )
Defined benefit obligation on December 31 $ 749,806 730,426
----- End of picture text -----

were as follows:

==> picture [456 x 90] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Fair value of plan assets on January 1 $ - -
Contributions made 162,121 161,314
Benefits paid by the plan ( 162,121 ) ( 161,314 )
Fair value of plan assets on December 31 $ - -
----- End of picture text -----

		For the year ended	For the year ended	December 31,
		2015		2014
Net interest on the net defned beneft liability		$ 181,501		165,477

(4) Primary actuarial assumption

the reporting date as follow :

62 Taiwan Business Bank Annual Report 2015

Ⅵ

==> picture [456 x 72] intentionally omitted <==

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

December 31, 2015 December 31, 2014
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%
----- End of picture text -----

(X) Earnings per share

==> picture [456 x 140] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Net income $ 5,113,036 5,315,137
Weighted average number of common stock shares outstanding (in 5,684,662 5,684,662
thousands) (Note 1)
Basic earnings per shares (in dollars) $0.90 0.93
Dilutive potential common shares (in thousands) (Note 2) 40,890 33,226
Weighted average number of shares outstanding for diluted EPS (in 5,725,552 5,720,313
thousands) (Note 1)
Diluted earnings per shares (in dollars) $ 0.89 0.93
----- End of picture text -----

Note 1: The basic earnings per share of 2014 has applied retrospective adjustments. Note 2: The shares were calculated based on the stock price on the balance sheet date.

(Y) Employees and directors remuneration

According by the Bank's Articles of Incorporation has been approved by the Board but not been approved by shareholders' meeting yet. If there is an annual profit, distributable earnings shall be asided to employees remuneration from 1% to 6% and no more than 0.6% shall be asided to board of directors as remuneration. But when there are accumulated losses, the Bank shall first remain earning for the deficit.

The estimated employee and the directors remuneration are $334,482 and $39,259 for the periods ended December 31 2015, respectively. The esimates are based on pre-tax net profit for the period, before deducting employee and directors remuneration, multiplied by the elaboration of the Bank's Articles of Association of employee and the directors remuneration ratio, and recognized as operating cost. According to changes in accounting estimates, if there are differences between the actual distribution amount and estimates, and recognized the difference as gains and loss in 2016.

(Z) Net interest income

==> picture [456 x 198] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Interest revenue:
Loan $ 6,599,264 6,286,694
Secured loans 14,589,753 14,228,496
Bills negotiated 4,337 5,509
Bank overdraft 18,806 18,327
Discount 24,670 27,776
Time deposit from Central Bank 1,448,492 1,547,684
Due from the Central Bank 182,589 175,964
Call loans to banks 532,131 233,894
Bond 754,024 575,042
International credit card 69,110 75,030
Overdue loans 313,419 307,898
Bills 123,507 161,920
----- End of picture text -----

==> picture [456 x 199] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Due from other Banks 986,622 1,437,534
Other 206,650 177,910
Subtotal 25,853,374 25,259,678
Interest expense:
Deposits 9,026,917 8,913,450
Deposits from banks 101 178
Call loans from banks 334,052 469,449
Fund 22,370 27,912
Financial debentures 973,407 1,031,029
Bond sold under repurchase agreement 26,566 26,367
Other 946 1,036
Subtotal 10,384,359 10,469,421
Total $ 15,469,015 14,790,257
----- End of picture text -----

(AA) Net service charge income

==> picture [456 x 448] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Service charge income:
Remittance service fee $ 105,182 105,523
Import bills negotiated service fee 59,143 71,094
Export bills negotiated service fee 20,368 24,949
Letter of credit service fee 12,189 12,474
Certification service fee 1,071 1,120
Acceptance service fee 2,012 2,172
Trust service fee 495,304 545,281
Guarantee service fee 94,390 77,558
Agency service fee 84,143 37,770
Interbank service fee 67,196 68,590
Card service fee 133,656 134,789
Commission revenue of insurance premium 1,857,340 1,186,491
Custodian service fee 134,553 125,570
Foreign currency service fee 114,316 119,202
Commission of futures 7,791 5,094
Loan service fee 208,187 145,908
Miscellaneous fees 430,640 400,228
Subtotal 3,827,481 3,063,813
Service fee expense:
Foreign currency service fee 23,093 20,968
Interbank service fee 126,920 126,319
Trust service fee 5,410 8,768
Agency service fee 4,035 3,547
IC card service fee 63,851 57,621
Check clearing service fee 13,247 14,652
Remittance service fee 3,195 2,162
Custodian service fee 29,267 27,925
Call loans service fee 1,794 1,163
Miscellaneous fees 16,169 20,868
Subtotal 286,981 283,993
Total $ 3,540,500 2,779,820
----- End of picture text -----

Taiwan Business Bank Annual Report 2015

Ⅵ

(AB) Gains (losses) on financial assets and liabilities at fair value through profit or loss

==> picture [456 x 480] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Valuation profit and loss:
Government bonds $ - 821
Corporate bonds ( 9,338 ) ( 9,953 )
Financial debentures 1,603 35,913
-
Stock of listed company ( 7,208 )
-
Beneficiary certificates ( 4,557 )
Commercial paper 8 3
Option contracts 1,500 ( 1,847 )
Interest swap contracts 10,247 32,614
Foreign exchange forward contracts 51,133 ( 70,479 )
Currency swap contracts ( 137,285 ) 160,352
-
Non-delivery forward contracts ( 472 )
Subtotal ( 94,369 ) 147,424
Disposition profit and loss:
Government bond - 1
Financial debentures - ( 50,448 )
Stock of listed company ( 47,928 ) ( 4,488 )
Beneficiary certificates ( 80,772 ) ( 3,285 )
Commercial paper 8 -
Option contracts 12,505 18,299
Interest swap contracts ( 3,520 ) ( 39,313 )
Foreign exchange forward contracts ( 132,220 ) ( 212,611 )
Currency swap contracts 505,109 418,348
Non-delivery forward contracts ( 3,523 ) ( 1,524 )
Subtotal 249,659 124,979
Dividend revenue 4,671 8,944
Interest income 25,151 44,663
Total $ 185,112 326,010
----- End of picture text -----

(AC) Realized gains (losses) on available‑for‑sale financial assets

==> picture [456 x 131] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Gains on disposition of government bond $ 39,117 64
Gains on disposition of corporate bonds 18,759 12,535
Gains from disposition of financial debentures - 9,896
Gains from disposition of stock of listed company 4,507 -
Dividend revenue 27,724 30,583
Total $ 90,107 53,078
----- End of picture text -----

(AD) Other non‑interest income

==> picture [456 x 202] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Rental revenue of operating assets $ 7,507 8,204
Losses on disposal and retirement of premises and equipment ( 595 ) ( 386 )
Loss of account error ( 96 ) ( 151 )
Gold deposit book 6,331 6,009
Gains on sale of collateral assumed 3,337 -
Gains (losses) on sale of non-performing loans - 21,824
-
Miscellaneous income of dormant account recategorized as expense ( 206,140 )
Other operating expense ( 31,918 ) ( 22,870 )
Other miscellaneous income 59,295 72,184
Total $ 43,861 ( 121,326 )
----- End of picture text -----

(AE) Bad debt expenses and provision for guarantee reserve

==> picture [456 x 120] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Discounts, loans and overdue loans $ 2,418,854 2,545,394
Receivables and other financial assets ( 14,258 ) ( 52,301 )
Subtotal 2,404,596 2,493,093
Guarantee reserve 4,593 45,494
Total $ 2,409,189 2,538,587
----- End of picture text -----

(AF) Employee benefit expense

==> picture [456 x 120] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Salary expense $ 5,636,070 5,578,887
Labor and health insurance 401,788 391,191
Pension expense 320,986 320,282
Other employee benefit 798,297 743,793
Total $ 7,157,141 7,034,153
----- End of picture text -----

(AG) Depreciation and amortization

==> picture [456 x 120] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Property and equipment depreciation $ 303,565 324,023
Amortization
Computer software 76,312 83,812
Other deferred charges 177 252
Total $ 380,054 408,087
----- End of picture text -----

Taiwan Business Bank Annual Report 2015

Ⅵ

(AH) Other operation and management expense

==> picture [456 x 301] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Compensation loss $ 846 835
Water and electricity fee 106,953 110,208
Postage and telecommunication 152,462 152,674
Transportation fee 38,441 30,907
Printing and advertisement fee 170,902 156,723
Maintainance fee 39,157 34,862
Insurance fee 343,718 377,102
Professional service fee 177,537 163,814
Materials and supplies 107,877 96,617
Rental expenses 639,926 587,640
Duties and levies 1,485,430 1,097,537
Membership, donation and partaking 528,229 517,214
Storage, packing and processing 41,700 39,852
Cash transit 124,170 103,400
Other 61,988 58,397
Total $ 4,019,336 3,527,782
----- End of picture text -----

(AI) Financial Instruments

(a) Fair value information

(1) General description

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The financial instruments are record as fair value when original recognizing, usually refer to the transection price in many circumstances. Except some amortised cost financial instruments, the financial instruments are measured in fair value. A quoted market price in an active market provides the most reliable evidence of fair value. If financial instruments are without active market, the Group adopted the value technique, refer to Bloomberg, Reuters or the price at which the asset could be bought or sold in a current transaction between willing parties.

A. Level 1 inputs

market: A market in which transactions for the homogenous assets or liabilities take place with sufficient frequency and volume to provide pricing information. The stock of listed company and the beneficiary certificates the Group had are Level 1 inputs.

B. Level 2 inputs

Level 2 inputs are inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e. derived from

prices). The government bond, corporate bonds, financial debentures, convertible corporate bonds and derivative instruments, including financial debentures the bank issued are Level 2 inputs.

C. Level 3 inputs

Level 3 inputs are unobservable inputs for the asset or liability in market. Unobservable inputs like: Option pricing model using the historical volatility. Because the historical volatility cannot represent the future volatility expected value of whole market participants. The equity instruments with no active market which the Group invested are Level 3 inputs.

(3) Based on fair value measurement
A. The fair value hierarchy of information

value hierarchy of information were as follows:

==> picture [456 x 107] intentionally omitted <==

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

December 31, 2015
Quoted prices
in active Significant Significant
markets for quoted prices quoted prices
identical that are that are
financial observable unobservable
instruments inputs inputs
Assets and Liabilities Total Level 1 Level 2 Level 3
----- End of picture text -----

	Total	Quoted prices in active markets for identical fnancial instruments Level 1	Signifcant quoted prices that are observable inputs Level 2	Signifcant quoted prices that are observable inputs Level 2
Instruments measured at fair value on a recurring basis Non-derivative fnancial assets: Financial assets at fair value through proft or loss Financial assets held for trading Security Investment Other Financial assets measured at fair value on initial recognition Available-for-Sale Financial Assets Security Investment Bond Investment Derivative fnancial assets and liabilities Assets: Financial assets at fair value through proft or loss Liabilities: Financial liabilities at fair value through proft or loss	$ 133,842 500,111 970,043 2,145,418 23,523,367 $ 478,615 219,999	133,842 290,215 - 2,145,418 - 27,324 -	- 209,896 970,043 - 23,523,367 451,291 219,999	- - - - - - -

68 Taiwan Business Bank Annual Report 2015

Ⅵ

==> picture [456 x 99] intentionally omitted <==

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

December 31, 2014
Quoted prices
in active Significant Significant
markets for quoted prices quoted prices
identical that are that are
financial observable unobservable
instruments inputs inputs
Assets and Liabilities Total Level 1 Level 2 Level 3
----- End of picture text -----

	Total	Quoted prices in active markets for identical fnancial instruments Level 1	Signifcant quoted prices that are observable inputs Level 2	Signifcant quoted prices that are observable inputs Level 2
Instruments measured at fair value on a recurring basis Non-derivative fnancial 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 and liabilities 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	- - - - - -

its fair value.

If the financial instruments of quoted price, which are from the Stock Exchange, Brokers, Pricing service agencies or Government institutions, are timely and frequently, and reflects the actual price, then the financial instruments has a quoted price in an active market. If the above conditions are not fulfilled, the market is inactive.

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 considered the identical financial instrument with same characteristics and essential terms of transaction, Discounted-Cash-Flow model and other valuation techniques including the model using market information to be made of the calculation at the balance sheet date(eg Taipei Exchange reference yield curve, Reuters quoted the average commercial paper rate, the Taipei Financial industry call loan rate fixing TAIBOR).

Group adopted 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.

Fair value of financial derivatives 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.

C. Adjustment for fair value

a. The restraint of evaluation model and uncertain inputs

Group's all related factors. Therefore the estimated value of the evaluation model will be appropriately adjusted according to the extra parameters such as model risk or liquidity risk. Information and price parameters used in the evaluation process after careful assessment, and appropriately adjusted according to the current market situation.

b. Credit risk value adjustment

The Group's credit risk value adjustment of OTC transaction derivative instruments can be divided to Credit value adjustments (CVA) and debit value adjustments (DVA). To reflect the fair value of the Group's counterparty or the Group likely to default, and the Group may not be received or paid full market value of trading possibilities.

The Group would calculate credit valuation adjustment (CVA) by assessing probability of default (PD) and loss given default (LGD) of the counterparty before multiplying exposure at default (EAD) of the counterparty. On the contrary, debit valuation adjustment (DVA).

The Group assess the probability of default on the assumption of 60%, but at the risk of the nature and circumstances of available data, we may use other loss given default assumptions.

(4) Not based on fair value measurement

A. Fair value information

Group have. Except those items, others' fair value are reasonably approximate value, the Group does not disclosure their fair value.

==> picture [456 x 113] intentionally omitted <==

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

December 31, 2015
Book value Fair value
Held-to-maturity financial assets － net $ 206,277,479 206,473,302
December 31, 2014
Book value Fair value
Held-to-maturity financial assets － net $ 194,541,571 194,577,231
----- End of picture text -----

Taiwan Business Bank Annual Report 2015

Ⅵ

B. The fair value hierarchy of information

==> picture [457 x 186] intentionally omitted <==

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

December 31, 2015
Quoted prices in Significant quoted Significant quoted
active markets for prices that are prices that are
identical financial observable unobservable
Assets and Liabilities Total instrumentsLevel 1 inputsLevel 2 inputsLevel 3
Held-to -maturity financial $ 206,473,302 - 206,473,302 -
assets-net
December 31, 2014
Quoted prices in Significant quoted Significant quoted
active markets for prices that are prices that are
identical financial observable unobservable
Assets and Liabilities Total instrumentsLevel 1 inputsLevel 2 inputsLevel 3
Held-to -maturity financial $ 194,577,231 - 194,577,231 -
assets-net
----- End of picture text -----

C. Valuation techniques

were as follows:

a. Cash and cash equivalents, due from Central Bank and call loans to banks, securities purchased under resell agreements, receivables, non-accrual loans transferred from non-loan financial assets, guarantee deposits paid, temporary payments and suspense accounts, deposits from Central Bank and other banks, securities sold under repurchase agreements, payables, other financial liabilities and guarantee deposits received: since these instruments have short maturities, the book value is adopted as a reasonable basis in estimating the fair value.
b. Discounts and loans(including non-performing loans): the interest rate of bank loans, dependent on the benchmark interest rate which plus or minus the input value(ie motorized interest rate), said market rates, therefore, the book value of financial assets is equivalent to their fair value. Among the case of fixed interest rate, the estimated fair value of long-term loans using the discounted value of its expected cash flows, but this is minority, so the book value of financial assets is equivalent to their fair value.
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.
1) Central Government Securities(NTD): using the comment of "Bonds a fair price for each of times" from Taipei Exchange.
2) Corporate bonds and financial bonds(NTD): the present value or fair price of Taipei Exchange determined using the future cash flow of yield curve discounting evaluation.
d. Deposits and remittance: to determine the fair value, considered Banking industry characteristics, the market interest rates (ie market price) is the fair value. And deposits are mostly due within one year, the carrying amounts is the fair value of reasonable basis. The fixed interest rate of long-term deposits should be estimated by the discounted value of its expected cash flows at fair value, and its maturity date no longer than three years, so its estimated fair value of the carrying amount is considered reasonable.

e. Bank debentures payable: The bank debentures payable the bank issueed, whose stated rate was equal the effective rate, using discounted cash flow projections to estimate the fair value, equivalent to its book value.
using the price to evaluate the fair value. If there is not market value, using evaluation model to estimate the fair value.
g. Other financial assets–the financial assets using cost method: Because there is without active price and estimated fair value's variation material or the variation estimates cannot be reasonable assessment, the fair value cannot be reliably measured, the Group does not disclose their fair value.

(AJ) 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.

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

==> picture [317 x 143] intentionally omitted <==

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

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
----- End of picture text -----

(1) Risk Management Committee

The chairperson of the Risk Management Committee is appointed by the president. The chairpersons include general manager, deputy general manager of the non-regulatory compliance in head office and department directors of head office (excluding the director of audit department in the Board). This Committee is set up for the purpose of establishing a sound risk management system, strengthening risk management and the implementation of the Bank's risk management and monitoring. The meeting will be held once a month in principle. The meeting can be held by the chairman of the Committee when necessary. The duties are as follows:

Taiwan Business Bank Annual Report 2015

Ⅵ

and industrial risk management occur.
B. Risk management report of various risk exposure and agenda processing.
C. The processing of examination of the risk management relevant policy of the Bank and limitations, management indices and the response project when the risk exceeds the limitations.
D. Supervise the Bank's capital adequacy management.
E. Conduct or supervise other risk management related issues.

Risk Management Department is the assistant unit of the Risk Management Committee. The responsibility of the Risk Management Department is to execute preparing sittings agenda, convening sittings, agenda proccessing, taking meeting minutes and tracking resolution and regularly report the important resolution and various risk exposure to the board of (executive) directors.

(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 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 relevant 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 necessity 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.

(c) Credit risk

to deteriorating 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 relevant 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:

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 judgments and relevant 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.

Taiwan Business Bank Annual Report 2015

Ⅵ

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 terms of collateral management and total loan amount to regulate the scope of collaterals and the accreditation method and regularly 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 Article 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 relevant 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.

D. Enhancement of other credit

The assessment of credit business apply to credit 5P principles, credit risk is offset by dividing self-liquidating loan commitments as the main, and set the accounts to master the repayment of cash flow. Also in terms of the credit agreement stipulates the offset.(ie all kinds of deposits, except prohibition of low or the parties agreement, the Group can set off all the debts), thus to reduce the loan amount, shorter loan repayment period or are considered part or all of expiration of acceleration clauses. To strengthen the protection of creditor and reduce credit risk, using qualified and effective enhancement, such as the requirement of real property, personal property, demand deposits, time deposits, securities and the guarantee of financial institution or the credit guarantee mechanism approved by government.(ig R.O.C SMEG, Agricultural Credit Guarantee Fund, Overseas Credit Guarantee Fund)

(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 revocable) is as follows:

==> picture [456 x 105] intentionally omitted <==

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

Maximum credit risk exposure
Off balance sheet items
December 31, 2015 December 31, 2014
Loan commitment signed and irrevacable $ 100,771,521 39,694,378
Signed but not used L/C credit amount 8,030,146 12,391,611
Various guarantee proceeds 9,129,331 9,073,990
Total $ 117,930,998 61,159,979
----- End of picture text -----

The Management of the Bank evaluated 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:

A. Industry

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

(In NT thousands)

==> picture [456 x 173] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Industry
Amount % Amount %
Private business $ 544,785,919 53.46% 519,917,395 51.35%
Public business 29,127,243 2.86% 22,129,302 2.19%
Government institution 138,480,450 13.59% 172,109,414 17.00%
Non profit organization 3,679,363 0.36% 3,701,726 0.37%
Individual 265,399,186 26.05% 254,629,361 25.15%
Foreign financial institution 3,214,584 0.32% 2,884,025 0.28%
Foreign non-financial institution 34,288,396 3.36% 37,063,467 3.66%
Total $ 1,018,975,141 100.00% 1,012,434,690 100.00%
----- End of picture text -----

B. Geographic area

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

(In NT thousands)

==> picture [456 x 88] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Area
Amount % Amount %
Domestic $ 981,757,378 96.35% 972,601,713 96.07%
Foreign 37,217,763 3.65% 39,832,977 3.93%
Total $ 1,018,975,141 100.00% 1,012,434,690 100.00%
----- End of picture text -----

76 Taiwan Business Bank Annual Report 2015

Ⅵ

C. Collateral

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

(In NT thousands)

==> picture [456 x 190] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Collateral
Amount % Amount %
Unsecured $ 323,627,725 31.76% 351,363,384 34.70%
Stock 9,307,171 0.91% 10,299,450 1.02%
Bond 5,849,312 0.57% 4,643,420 0.46%
Real estate 546,080,256 53.59% 503,600,251 49.74%
Chattel 10,265,366 1.01% 14,688,914 1.45%
Notes receivable 1,380,450 0.14% 1,212,094 0.12%
Guarantee 116,442,766 11.43% 121,726,381 12.02%
Other 6,022,095 0.59% 4,900,796 0.49%
Total $ 1,018,975,141 100.00% 1,012,434,690 100.00%
----- End of picture text -----

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.

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.

are as follows:

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

December 31, 2015	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	Medium	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 fnancial assets Total	$ 403,996 333,578 172,504,775 412 $ 173,242,761	272,814 1,508,769 328,480,930 286 330,262,799	282,456 236,492 227,063,228 - 227,582,176	82,916 11,501 44,927,496 - 45,021,913	12,632 3,943 45,282,263 - 45,298,838	254,041 3,317,109 181,807,637 82 185,378,869	1,308,855 5,411,392 1,000,066,329 780 1,006,787,356	9,777 - 3,000,061 523 3,010,361	- 128,323 15,908,751 70,842 16,107,916	1,318,632 5,539,715 1,018,975,141 72,145 1,025,905,633	- 61,101 3,435,569 20,285 3,516,955	3,888 24,645 7,906,024 15 7,934,572	1,314,744 5,453,969 1,007,633,548 51,845 1,014,454,106

December 31, 2014	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	Medium	Acceptable	Under standard	No rating	Subtotal (A)				With objective evidence of impairment	Without objective evidence of impairment
Receivable -Credit -Other Discounts and loans Other financial assets Total	$ 493,722 382,271 199,265,163 94 $ 200,141,250	233,923 1,599,749 314,697,907 305 316,531,884	277,321 243,831 221,552,757 348 222,074,257	155,817 10,977 42,970,688 - 43,137,482	12,920 2,364 5,784,283 - 5,799,567	246,921 2,667,323 208,733,359 - 211,647,603	1,420,624 4,906,515 993,004,157 747 999,332,043	9,290 12,695 2,681,036 475 2,703,496	- 184,409 16,749,497 333,205 17,267,111	1,429,914 5,103,619 1,012,434,690 334,427 1,019,302,650	- 77,163 4,316,306 273,317 4,666,786	743 38,229 6,617,355 12 6,656,339	1,429,171 4,988,227 1,001,501,029 61,098 1,007,979,525

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.

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

==> picture [456 x 22] intentionally omitted <==

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

December 31, 2015 Excellent Good Medium Acceptable Under standard No rating Total
----- End of picture text -----

December 31, 2015	Excellent	Good	Medium	Acceptable	Under standard	No rating	Total
Private banking Secured Non-secured Corporate banking Government and public institution Financial institution Margin loans receivable Large Enterprise- credit and guarantee fund Large Enterprise-secured Large Enterprise-unsecured Medium and small enterprises-credit and guarantee fund Medium and small enterprises-secured Medium and small enterprises-unsecured Total	$ 77,364,965 1,536,573 - - - 5,089 6,977,631 17,666,315 7,244,085 45,835,415 15,874,702	67,967,149 4,562,469 27,000,007 2,721,189 - 150,245 9,457,158 37,054,388 30,699,103 114,527,619 34,341,603	70,469,211 9,169,406 - 828,850 - 5,293 1,507,565 8,404,114 44,447,272 78,223,109 14,008,408	16,430,699 1,250,647 - 164,302 - - 3,027,538 2,686,100 3,710,278 11,106,153 6,551,779	3,776,645 193,573 2,127,236 - - - 35,473,646 481,030 321,307 1,743,649 1,165,177	7,672,746 1,653,922 138,461,969 328,800 1,717,363 10,000 - 3,924,910 952,635 8,677,618 18,407,674	243,681,415 18,366,590 167,589,212 4,043,141 1,717,363 170,627 56,443,538 70,216,857 87,374,680 260,113,563 90,349,343
	$ 172,504,775	328,480,930	227,063,228	44,927,496	45,282,263	181,807,637	1,000,066,329

Taiwan Business Bank Annual Report 2015

Ⅵ

==> picture [456 x 16] intentionally omitted <==

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

December 31, 2014 Excellent Good Medium Acceptable Under standard No rating Total
----- End of picture text -----

Private banking Secured Non-secured Corporate banking Government and public institution Financial institution Margin loans receivable Large Enterprise- credit and guarantee fund Large Enterprise-secured Large Enterprise-unsecured Medium and small enterprises-credit and guarantee fund Medium and small enterprises-secured Medium and small enterprises-unsecured Total	$ 81,739,872 1,270,197 - 316,700 - - 40,342,076 13,501,801 8,246,900 44,206,738 9,640,879	69,296,413 4,491,422 19,750,098 2,567,325 - 133,544 11,752,148 43,579,860 29,427,389 98,888,749 34,810,959	69,057,498 11,194,693 - 31,658 - 42,789 1,236,654 6,931,805 48,891,682 68,036,479 16,129,499	5,472,372 2,116,959 2,379,204 - - - 1,120,471 406,724 4,192,775 19,300,369 7,981,814 42,970,688	2,850,363 116,326 - - - - 63,241 340,801 343,682 1,364,718 705,152	2,109,038 1,737,775 172,088,720 - 2,221,662 - - 3,569,752 63,142 9,421,067 17,522,203	230,525,556 20,927,372 194,218,022 2,915,683 2,221,662 176,333 54,514,590 68,330,743 91,165,570 241,218,120 86,790,506 993,004,157
	$ 199,265,163	314,697,907	221,552,757		5,784,283	208,733,359

C. Credit quality analysis of security investments

==> picture [456 x 176] intentionally omitted <==

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

Not overdue and impaired position Overdue but
not Net amount
Sub impaired Impairment Total Loss (A)+(B)+
December 31, 2015 Investment investment High risk No rating Subtotal (A) position (B) position (C) (A)+(B)+(C) provided (D) (C)-(D)
Financial assets at fair value
through profit or loss -
net
-Overseas bonds $328,621 - - 641,422 970,043 - - 970,043 - 970,043
Available-for-sale financial
assets-net
-Overseas bonds 6,423,359 - - 520,606 6,943,965 - - 6,943,965 - 6,943,965
-'NT bonds 16,579,402 - - - 16,579,402 - - 16,579,402 - 16,579,402
Hold-to-maturity financial
assets-net
-Overseas bonds 18,130,591 493,200 - - 18,623,791 - - 18,623,791 - 18,623,791
-'NT bonds 22,538,688 - - - 22,538,688 - - 22,538,688 - 22,538,688
----- End of picture text -----

December 31, 2014	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	Sub investment	High risk	No rating	Subtotal (A)
Financial assets at fair value through profit or loss - net -Overseas bonds Available-for-sale financial assets-net -Overseas bonds -'NT bonds Hold-to-maturity financial 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

For the investment ratings of above tables, investment grade refers to AAA to BBB-, Sub investment 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.

		December 31, 2015	December 31, 2015
	within 1month	1~3 months	over 3 months	Total
Account receivables -Credit card Discounts and loans Private banking -Secured -Unsecured Corporatre banking -Government and public institution -Large enterprise unsecured -Medium and small enterprises- credit and guarantee fund -Medium and small enterprises- secured -Medium and small enterprises-unsecured Other fnancial assets - Exchange bills negotiated Total	$ 6,219 1,559,118 123,500 - 33,713 272,496 305,710 69,021 523 $ 2,370,300	3,558 530,781 17,628 - - 73,554 1,362 13,178 - 640,061	- - - - - - - - - -	9,777 2,089,899 141,128 - 33,713 346,050 307,072 82,199 523 3,010,361
		December 31, 2014
	within 1month	1~3 months	over 3 months	Total
Account receivables -Credit card -Other Discounts and loans Private banking -Secured -Unsecured Corporatre banking -Large enterprise unsecured -Medium and small enterprises- credit and guarantee fund -Medium and small enterprises- secured -Medium and small enterprises-unsecured Other fnancial assets - Exchange bills negotiated Total	$ 6,479 12,695 1,432,098 107,956 22,046 207,663 173,679 225,655 475 $ 2,188,746	2,811 - 436,830 9,845 - 40,216 25,036 12 - 514,750	- - - - - - - - - -	9,290 12,695 1,868,928 117,801 22,046 247,879 198,715 225,667 475 2,703,496

80 Taiwan Business Bank Annual Report 2015

Ⅵ

A. Discounts and loans

==> picture [456 x 38] intentionally omitted <==

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

December 31, 2015
Item
Discounts and loans Allowance for bad debts
----- End of picture text -----

	Decembe	Decembe	Decembe	Decembe
	Discounts and loans
With objective evidence of impairment Individual assessment Collective assessment Large enterprise-secured Large enterprise-unsecured Medium and small enterprises-credit and guarantee fund Medium and small enterprises-secured Medium and small enterprises-unsecured Private banking-secured Private banking-unsecured Preliminary negotiation projects Subtotal Without objective evidence of impairment Collective assessment Government and public institution Financial institution Margin loans receivables Large Enterprise- credit and guarantee fund Large enterprise secured Large enterprise-unsecured Medium and small enterprises-credit guarantee fund Medium and small enterprises-secured Medium and small enterprises-unsecured Private banking-secured Private banking-unsecured Subtotal Total		$ 11,287,196 27,927 18,481 2,019,867 509,332 155,403 1,711,220 178,171 1,154 15,908,751 167,589,212 3,714,536 1,717,363 170,627 56,477,252 70,545,462 87,720,731 260,409,846 90,431,541 245,782,102 18,507,718 1,003,066,390 $ 1,018,975,141		1,838,436 12,173 15,226 739,118 158,753 110,941 432,784 127,481 657 3,435,569 138,271 3,065 1,417 8,540 969,564 1,551,049 1,821,217 972,283 1,619,055 710,058 111,505 7,906,024 11,341,593

==> picture [456 x 31] intentionally omitted <==

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

December 31, 2014
Item
Discounts and loans Allowance for bad debts
----- End of picture text -----

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

B. Receivables

Item		December 31, 2015	December 31, 2015	December 31, 2015
		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 receivable Accounts receivable Installment accounts receivable and rents receivable Other receivables Acceptances receivable Interest receivable Subtotal Total		$ 102,837 25,486 128,323 1,318,632 546,753 864,652 198,331 1,264,956 2,408,377 6,601,701 $ 6,730,024		51,252 9,849 61,101 3,888 - - 4,591 12,650 7,404 28,533 89,634

Taiwan Business Bank Annual Report 2015

Ⅵ

==> picture [456 x 31] intentionally omitted <==

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

December 31, 2014
Item
Receivables Allowance for bad debts
----- End of picture text -----

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

Item	December 31, 2015	December 31, 2015	December 31, 2015	December 31, 2015
	Other fnancial assets		Allowance for bad debts
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		$ 1,712 3,631 65,499 70,842 1,303 $ 72,145		1,510 7,837 10,938 20,285 15 20,300

Item	December 31, 2014	December 31, 2014	December 31, 2014	December 31, 2014
	Other fnancial assets		Allowance for bad debts
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		$ 225,868 26,195 81,142 333,205 1,222 $ 334,427		212,631 24,650 36,036 273,317 12 273,329

(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, 2015	December 31, 2015	December 31, 2014	December 31, 2014
Collaterals (stocks)		$ -		2,509

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, %

==> picture [456 x 293] intentionally omitted <==

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

Month/Year December 31, 2015
Non-performing Non-performing Allowance for
Items loans Total loans loan ratio credit losses Coverage ratio
Corporate Secured 3,295,371 401,332,844 0.82% 7,321,836 222.19%
finance
Unsecured 1,004,890 358,722,393 0.28% 2,322,989 231.17%
Residence mortgages(Note 4) 357,191 135,910,901 0.26% 1,195,030 334.56%
Cash cards 2 154 1.30% 2 100.00%
Consumer
Small sum credit loans(Note 5) 2,756 571,709 0.48% 2,756 100.00%
finance
Others Secured 185,001 104,802,110 0.18% 372,074 201.12%
(Note 6)
Unsecured 59,797 17,635,030 0.34% 126,906 212.23%
total loan business 4,905,008 1,018,975,141 0.48% 11,341,593 231.22%
Allowance Ratio of
Total for doubtful allowance to
Overdue loans receivables Overdue ratio accounts overdue loans
Credit cards business 951 1,384,131 0.07% 14,826 1,558.99%
Account receivable factoring-without recourse - - -% - -%
----- End of picture text -----

84 Taiwan Business Bank Annual Report 2015

Ⅵ

Unit ： In Thousands of New Taiwan Dollars, %

==> picture [456 x 224] intentionally omitted <==

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

Month/Year December 31, 2014
Non-performing Non-performing Allowance for
Items loans Total loans loan ratio credit losses Coverage ratio
Corporate Secured 2,533,788 387,172,844 0.65% 5,422,697 214.02%
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
Small sum credit loans(Note 5) 2,119 340,900 0.62% 2,119 100.00%
finance
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 for doubtful allowance to
Overdue loans receivables Overdue ratio accounts overdue loans
Credit cards business 3,614 1,511,057 0.24% 36,779 1,017.68%
Account receivable factoring-without recourse - - -% - -%
----- End of picture text -----

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÷ balance of receivables
Note 3 Coverage ratio for loans = allowance for credit losses ÷ non-performing loans; Coverage ratio for credit card business = allowance 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 credit 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)

==> picture [458 x 150] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Loans may be exempted Receivables may be Loans may be exempted Receivables may be
from reporting as a exempted from reporting from reporting as a exempted from reporting
non-performing loan as overdue receivables non-performing loan as overdue receivables
Pursuant to a contract 4,587 10,749 7,115 15,184
under a debt negotiation
plan
Pursuant to a contract 90,441 57,811 94,360 62,491
under a debt liquidation
plan and a debt relief
plan
Total 95,028 68,560 101,475 77,675
----- End of picture text -----

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 supplemental disclosure of credit information once debtors apply for pre-negotiation, relief and liquidation under the “Consumer Debt Clearance Act.”

C. Concentration of credit extensions

Unit ： In Thousands of New Taiwan dollars, %

==> picture [456 x 209] intentionally omitted <==

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

December 31, 2015
Credit amount to
Ranking Group enterprise Credit amount
equity ratio (%)
1 A company. (Railway transportation) 35,037,426 51.79%
2 B group. (Petroleum and chemical material manufacturing) 8,801,707 13.01%
3 C group. (Steel rolling and extruding) 7,345,220 10.86%
4 D company. (Real estate development) 6,145,072 9.08%
5 E company. (Computer manufacturing) 6,004,799 8.88%
6 F group. (Real estate development) 4,803,740 7.10%
7 G group. (Petroleum and chemical material manufacturing) 4,606,778 6.81%
8 H group. ( Liquid crystal panel and components manufacturing) 3,844,646 5.68%
9 I group. ( Steel smelting) 3,576,033 5.29%
10 J group. (Computer manufacturing) 3,487,934 5.16%
----- End of picture text -----

Unit ： In Thousands of New Taiwan dollars, %

==> picture [456 x 210] intentionally omitted <==

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

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 E group. (Computer manufacturing) 6,053,918 9.65%
5 D 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 K group. (Investment and consulting) 3,957,030 6.31%
9 I group. (Liquid crystal panel and components manufacturing) 3,831,758 6.11%
10 H group. (Liquid crystal panel and components manufacturing) 3,138,799 5.00%
----- End of picture text -----

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 overdrafts, 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.

Taiwan Business Bank Annual Report 2015

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 Management 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. Loan-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.

  - 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

==> picture [456 x 273] intentionally omitted <==

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

December 31, 2015
0-30 days 31-90 days 91 days-1 year 1-5 years Over 5 years Total
Major matured cash outflow $ 790,522,579 152,524,106 353,076,340 66,722,424 10,924,123 1,373,769,572
Deposits from the Central Bank 420,608 - - - - 420,608
and banks
Overdrafts on banks 870,323 - - - - 870,323
Call loans from banks 26,911,653 9,925,836 2,008,277 - - 38,845,766
Bills and bond sold under 3,283,045 240,944 639,158 - - 4,163,147
repurchase agreement
Interest payable 423,253 371,486 825,145 57,713 6 1,677,603
Deposits transferred from 843,570 18,931,583 17,945,687 - - 37,720,840
Chunghwa Post Co., Ltd.
Demand deposits 650,175,296 - - - - 650,175,296
Time deposits 107,088,602 123,052,097 317,869,993 33,632,791 2,677 581,646,160
Remittance 499,229 - - - - 499,229
Financial debentures - - 13,550,000 27,050,000 5,000,000 45,600,000
Appropriated loan fund 7,000 2,160 238,080 5,981,920 5,921,440 12,150,600
----- End of picture text -----

88 Taiwan Business Bank Annual Report 2015

Ⅵ

==> picture [456 x 274] intentionally omitted <==

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

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 1,295,885,179
Deposits from the Central Bank 388,548 - - - - 388,548
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
----- End of picture text -----

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.

==> picture [456 x 173] intentionally omitted <==

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

December 31, 2015
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 $ 475 - - - - 475
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
----- End of picture text -----

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:

==> picture [456 x 356] intentionally omitted <==

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

December 31, 2015 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 $ 22,660,960 12,542,840 2,515,524 842,038 - 38,561,362
Cash inflow 22,748,215 12,784,232 2,521,002 893,631 - 38,947,080
Total cash outflow 22,660,960 12,542,840 2,515,524 842,038 - 38,561,362
Total cash inflow 22,748,215 12,784,232 2,521,002 893,631 - 38,947,080
Net cash flow $ ( 87,255 ) ( 241,392 ) ( 5,478 ) ( 51,593 ) - ( 385,718 )
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
----- End of picture text -----

(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

90 Taiwan Business Bank Annual Report 2015

Ⅵ

==> picture [456 x 223] intentionally omitted <==

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

December 31, 2015 0-30 days 31-90 days 91-180 days 181 days to 1 year Over 1 year Total
Issued and irrevocable loan $ 6,390,851 15,955,553 1,577,133 30,860,170 45,987,814 100,771,521
commitment
Issued but not yet executed 2,731,882 4,245,628 758,790 265,792 28,054 8,030,146
letter of credit
Miscellaneous guarantee 9,129,331 - - - - 9,129,331
Total $ 18,252,064 20,201,181 2,335,923 31,125,962 46,015,868 117,930,998
December 31, 2014 0-30 days 31-90 days 91-180 days 181 days to 1 year Over 1 year Total
Issued and irrevocable loan $ 494,902 426,677 661,155 25,818,962 12,292,682 39,694,378
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 $ 14,130,409 6,660,395 1,941,923 26,097,862 12,329,390 61,159,979
----- End of picture text -----

(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:

==> picture [456 x 117] intentionally omitted <==

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

December 31, 2015 Below 1 year 1-5 years Over 5 years Total
Operating lease expense (lessee) $ 79,092 138,614 - 217,706
Operating lease income (lessor) 1,506 114 - 1,620
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
----- End of picture text -----

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:

==> picture [456 x 205] intentionally omitted <==

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

December 31, 2015 Below 1 year 1-5 years Over 5 years Total
Buildings and constructions $ 54,518 - - 54,518
Machinery and equipments 593,308 13,180 - 606,488
Communication and transportation 2,698 - - 2,698
equipments
Lease property 9,287 36,575 175 46,037
Miscellaneous equipments 4,399 - - 4,399
Total $ 664,210 49,755 175 714,140
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
----- End of picture text -----

(7) Disclosures required by "Regulations Governing the Preparation of Financial Reports by Public Banks"
A. Maturity analysis in New Taiwan dollars

In NTD thousands, %

==> picture [456 x 113] intentionally omitted <==

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

0.354
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 $ 1,272,950,880 129,497,755 177,607,743 111,154,135 153,934,463 157,183,362 543,573,422
capital inflow
Major maturity 1,635,584,929 43,476,796 81,759,354 159,703,330 185,925,242 316,623,714 848,096,493
capital outflow
Gap (362,634,049) 86,020,959 95,848,389 (48,549,195) (31,990,779) (159,440,352) (304,523,071)
----- End of picture text -----

Note: Listed amounts are denominated in New Taiwan dollars (i.e., excluding foreign – currency amounts) of the head office and domestic branches, including commitment of credit agreement and estimates to outflow $358,629,707.

In NTD thousands, %

==> picture [456 x 112] intentionally omitted <==

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

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)
----- End of picture text -----

B. Maturity analysis in U.S. dollars

US dollars in thousands, %

==> picture [456 x 113] intentionally omitted <==

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

December 31, 2015
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 $ 7,029,595 2,279,080 1,462,367 782,629 1,032,682 1,472,837
capital inflow
Major maturity 8,246,927 2,495,283 1,317,464 586,146 615,002 3,233,032
capital outflow
Gap (1,217,332) (216,203) 144,903 196,483 417,680 (1,760,195)
----- End of picture text -----

Note: Including commitment of credit agreement and estimates to outflow US$1,269,182.

US dollars in thousands, %

==> picture [456 x 112] intentionally omitted <==

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

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)
----- End of picture text -----

Note: Including commitment of credit agreement and estimates to outflow US$1,098,986.

Taiwan Business Bank Annual Report 2015

Ⅵ

(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 relevant 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.
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 established 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. Provided 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.

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 relevant 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.

94 Taiwan Business Bank Annual Report 2015

Ⅵ

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 management 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.

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 securities 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 management 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.

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 interest 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

96 Taiwan Business Bank Annual Report 2015

Ⅵ

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. 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 management 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 total 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, relevant 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 relevant business units and report to the board of directors (executive directors).

(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 applies 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

98 Taiwan Business Bank Annual Report 2015

Ⅵ

==> picture [456 x 118] intentionally omitted <==

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

December 31, 2015
Currency Foreign currency amount NT$ amount
USD $ 240,196 7,897,644
AUD 15,022 360,152
ZAR 76,029 161,181
EUR 2,576 92,530
GBP 717 34,954
----- End of picture text -----

==> picture [456 x 36] intentionally omitted <==

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

December 31, 2014
Currency Foreign currency amount NT$ amount
----- End of picture text -----

	r 31, 2014	r 31, 2014
	Foreign currency 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

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.

b. Assets and liabilities of foreign currency

	December 31, 2015	December 31, 2015	December 31, 2015	December 31, 2015	December 31, 2015	December 31, 2015
Currency	Monetary Financial assets			Monetary Financial liabilities
	Foreign currency amount (in thousands)	Spot rate	NTD amount	Foreign currency amount (in thousands)	Spot rate	NTD amount
USD	$ 6,273,977	32.8800	206,288,364	5,965,598	32.8800	196,148,862
HKD	7,830,359	4.2420	33,216,383	7,760,162	4.2420	32,918,607
AUD	1,369,945	23.9750	32,844,431	1,335,805	23.9750	32,025,925
CNY	5,948,664	4.9930	29,701,679	5,951,689	4.9930	29,716,783
ZAR	6,298,577	2.1200	13,352,983	6,300,039	2.1200	13,356,083
EUR	211,216	35.9200	7,586,879	206,446	35.9200	7,415,540
JPY	14,652,399	0.2730	4,000,105	14,874,789	0.2730	4,060,817
CAD	40,911	23.7200	970,409	41,256	23.7200	978,592
GBP	13,463	48.7500	656,321	13,546	48.7500	660,368
NZD	27,392	22.5000	616,320	27,508	22.5000	618,930
Other (Note)	-	-	180,082	-	-	204,752
	Non-monetary Financial assets			Non-monetary Financial liabilities
USD	1,561	32.8800	51,326	-	-	-
EUR	3,022	35.9200	108,550	-	-	-
JPY	159,979	0.2730	43,674	-	-	-
CNY	2,100	4.9930	10,485	-	-	-

==> picture [456 x 256] intentionally omitted <==

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

December 31, 2014
Monetary Financial assets Monetary Financial liabilities
Foreign Foreign
currency currency
amount (in amount (in
Currency thousands) Spot rate NTD amount thousands) Spot rate NTD amount
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
NZD 35,182 24.8500 874,273 35,145 24.8500 873,353
CAD 38,990 27.3200 1,065,207 39,220 27.3200 1,071,490
GBP 14,229 49.3400 702,059 14,073 49.3400 694,362
CHF - - 196,982 - - 207,522
----- End of picture text -----

Note: Consolidated disclosure is applied for other currencies not over NT$100,000.

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

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

==> picture [456 x 290] intentionally omitted <==

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

December 31, 2015
Depreciate by 1% Appreciate by 1%
Currency Income Equity Income Equity
USD $ 63,352 ( 61,796 ) ( 63,352 ) 61,796
AUD 8,436 ( 13,119 ) ( 8,436 ) 13,119
HKD 3,347 ( 5,134 ) ( 3,347 ) 5,134
CAD 85 - ( 85 ) -
GBP 83 - ( 83 ) -
SGD 39 - ( 39 ) -
ZAR 27 - ( 27 ) -
SEK (17) - 17 -
CHF 66 - ( 66 ) -
JPY 90 - ( 90 ) -
THB 159 - ( 159 ) -
EUR 111 - ( 111 ) -
NZD 26 - ( 26 ) -
CNY ( 25,335 ) - 25,335 -
Total $ 50,469 ( 80,049 ) ( 50,469 ) 80,049
----- End of picture text -----

100 Taiwan Business Bank Annual Report 2015

Ⅵ

==> picture [456 x 240] intentionally omitted <==

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

December 31, 2014
Depreciate by 1% Appreciate by 1%
Currency 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
----- End of picture text -----

(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).

==> picture [456 x 175] intentionally omitted <==

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

December 31, 2015
Interest rate increases by 1 bp Interest rate decreases by 1 bp
Currency Income Equity Income Equity
trading book
TWD $ ( 61 ) ( 5,557 ) 61 5,557
banking book
TWD - ( 12,155 ) - 12,155
USD ( 8 ) ( 2,423 ) 8 2,423
AUD - ( 82 ) - 82
ZAR - ( 196 ) - 196
HKD - ( 300 ) - 300
CNY - ( 701 ) - 701
Total $ ( 69 ) ( 21,414 ) 69 21,414
----- End of picture text -----

==> picture [456 x 42] intentionally omitted <==

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

December 31, 2014
Interest rate increases by 1 bp Interest rate decreases by 1 bp
Currency Income Equity Income Equity
----- End of picture text -----

	Decembe	Decembe	Decembe	Decembe	Decembe	Decembe	Decembe
	Interest rate increases by 1 bp
	Income		Equity		Income
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

101

B. Sensitivity analysis of expected net revenue/Sensitivity of equity in terms of interest rate

==> picture [456 x 97] intentionally omitted <==

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

December 31, 2015
Effect on NII in 1 year Effect on EVE in 1 year
TWD USD TWD USD
Scenario
Interest rate increases by 100 bp 2,995,305 ( 11,765 ) 2,538,545 ( 8,657 )
Interest rate decreases by 100 bp ( 5,625,249 ) ( 3,688 ) ( 2,260,172 ) 8,400
----- End of picture text -----

	December 31, 2014	December 31, 2014	December 31, 2014	December 31, 2014
	Effect on NII in 1 year		Effect on EVE in 1 year
	TWD	USD	TWD	USD
Scenario
Interest rate increases by 100 bp	3,079,541	( 9,879 )	1,834,336	( 3,178 )
Interest rate decreases by 100 bp	( 5,353,320 )	( 94 )	( 1,820,770 )	1,652

(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%.

==> picture [456 x 331] intentionally omitted <==

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

December 31, 2015
Change Currency Income Equity
Equity security price increases by 1 % TWD 2,100 15,083
USD 16 -
EUR 30 -
JPY 1,600 -
CNY 21 -
Equity security price decreases by 1 % TWD ( 2,100 ) ( 15,083 )
USD ( 16 ) -
EUR ( 30 ) -
JPY ( 1,600 ) -
CNY ( 21 ) -
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 )
Form January 1, 2015 to December 31, 2015
Value at Risk Average Maximum Minimum
Equity security risk 48,134 74,035 33,445
----- End of picture text -----

102 Taiwan Business Bank Annual Report 2015

Ⅵ

Value at Risk	Form January 1, 2014 to December 31, 2014	Form January 1, 2014 to December 31, 2014	Form January 1, 2014 to December 31, 2014
	Average	Maximum	Minimum
Equity security risk	23,815	47,242	11,679

(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 thousands, %

==> picture [456 x 128] intentionally omitted <==

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

December 31, 2015
Item 1~90 days 91~180 days 181days~1year over 1 year total
Interest rate-sensitive assets $ 1,101,376,273 5,738,484 11,848,870 56,178,825 1,175,142,452
Interest rate-sensitive liabilities 924,046,571 79,743,585 92,180,763 34,296,117 1,130,267,036
Interest rate sensitivity gap 177,329,702 ( 74,005,101 ) ( 80,331,893 ) 21,882,708 44,875,416
Net amount 67,659,129
Ratio of interest rate-sensitive assets to debt (%) 103.97
Ratio of interest rate-sensitive gap to net worth (%) 66.33
----- End of picture text -----

==> picture [456 x 139] intentionally omitted <==

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

In NTD thousands, %
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
----- End of picture text -----

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 liabilities, 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)

==> picture [456 x 138] intentionally omitted <==

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

US dollars in thousands, %
December 31, 2015
Item 1~90 days 91~180 days 181days~1year over 1 year total
Interest rate-sensitive assets $ 3,632,156 445,654 80,855 313,089 4,471,754
Interest rate-sensitive liabilities 4,128,277 466,743 184,353 - 4,779,373
Interest rate sensitivity gap ( 496,121 ) ( 21,089 ) ( 103,498 ) 313,089 ( 307,619 )
Net amount 2,057,759
Ratio of interest rate-sensitive assets to debt (%) 93.56
Ratio of interest rate-sensitive gap to net worth (%) ( 14.95 )
----- End of picture text -----

103

US dollars in thousands, %

==> picture [456 x 108] intentionally omitted <==

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

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 )
----- End of picture text -----

Note 1 Listed amounts are in U.S. dollars (i.e., excluding contingent assets and contingent liabilities) of the head office and domestic 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 liabilities 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. dollars interest‑rate‑sensitive assets and U.S. dollars interest‑rate‑sensitive liabilities).

The transactions, relating to transferred financial assets not qualifying for full derecognition, the Group conduct during daily operation mostly involve securities lending in accordance to repurchase agreements. Since the right to receive contractual cash flow has been transferred to others and the Group's obligation to repurchase the transferred assets for a fixed price at a future date is recognized under liability, for these transactions, the Group can not use, sell or pledge those transferred financial assets in availability period, the Group have interest rate risk and credit risk, the said transferred assets are not fully derecognized.

	December 31, 2015	December 31, 2015	December 31, 2015	December 31, 2015	December 31, 2015
Types of fnancial assets	Carrying amount of transferred fnancial assets	Carrying amount of associated fnancial liabilities	Fair value of transferred fnancial assets	Fair value of associated fnancial liabilities	Net fair value
Available-for-sale fnancial assets Repurchase agreement	$ 1,329,694	1,249,798	1,329,694	1,249,798	79,896

The Group have an exercisable master netting arrangement or similar agreement in place with counterparties. When both parties reach a consensus regarding net settlement, the aforesaid exercisable master netting arrangement or similar agreement can be net settled by offsetting financial assets and financial liabilities. If not, the transaction can be settled at total amount. In the event of default involving one of the parties, the other party can have the transaction net settled.

December 31, 2015	December 31, 2015	December 31, 2015	December 31, 2015	December 31, 2015	December 31, 2015	December 31, 2015
Financial assets that are offset, have an exercisable master netting arrangement or similar agreement
				Amounts not set off in the balance sheet(d)
	Gross amounts of recognized fnancial assets(a)	Gross amounts of fnancial liabilities offset in the balance sheet(b)	Net amount of fnancial assets presented in the balance sheet (c)=(a)-(b)	Financial instruments (Note)	Cash collateral pledged	Net amount (e)=(c)-(d)
Derivative fnancial instruments	$131,745	-	131,745	-	37,367	94,378

104

Taiwan Business Bank Annual Report 2015

Ⅵ

==> picture [456 x 135] intentionally omitted <==

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

December 31, 2015
Financial liabilities that are offset, have an exercisable master netting arrangement or similar agreement
Amounts not set off in the
balance sheet(d)
Net amount
Gross amounts of financial
Gross amounts of financial liabilities
of recognized assets offset presented in the Financial
financial in the balance balance sheet instruments Cash collateral Net amount
liabilities(a) sheet(b) (c)=(a)-(b) (Note) pledged (e)=(c)-(d)
Derivative financial
instruments $72,202 - 72,202 - - 72,202
----- End of picture text -----

Note: Master netting arrangements and non‑cash financial collaterals are included.

(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 order 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 relevant risks and capital control status.
(c) The Bank identifies, measures, monitors and reports various risks based on the directions, notices and relevant 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.

(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.

105

(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.

==> picture [456 x 273] intentionally omitted <==

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

Item December 31, 2015 December 31, 2014
Common stock equity 65,662,491 60,731,181
Other tier 1 capital 7,057,157 2,532,896
Eligible capital
Tier 2 captial 19,689,051 18,043,384
Eligible Capital 92,408,699 81,307,461
Credit Standardized approach 770,946,612 726,103,364
- -
risk Internal ratings-based approach
Securitization - -
Operational Basic indicator approach - 32,959,913
Risk- weighted risk Standardized approach/selective 32,741,848 -
assets standardized approach
- -
Advanced measurement approach
Market Standardized approach 18,682,350 12,022,600
- -
risk Internal model approach
Total risk-weighted assets 822,370,810 771,085,877
Capital adequacy ratio 11.24% 10.54%
Common stock equity/ Risk-weighted assets ratio 7.98% 7.88%
Tier 1 capital / Risk-weighted assets ratio 8.84% 8.20%
Leverage ratio 4.69% 3.41%
----- End of picture text -----

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".
B. The Bank shall shall fill out the capital adequacy of this period and last period for this period and last period, For the semi-annual 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 = Net Tier 1 capital / Total risk exposure.

and third quarter.

106

Taiwan Business Bank Annual Report 2015

Ⅵ

7. RELATED PARTY TRANSACTIONS

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

==> picture [456 x 84] intentionally omitted <==

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

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.
----- End of picture text -----

(B) Significant related party transactions

(a) Due from other Banks

==> picture [456 x 150] intentionally omitted <==

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

December 31, 2015
Amount %
Bank of Taiwan $ 171,246 0.62
Land Bank of Taiwan 1,589 0.01
Total $ 172,835 0.63
December 31, 2014
Amount %
Bank of Taiwan $ 98,946 0.21
Land Bank of Taiwan 310 -
Total $ 99,256 0.21
----- End of picture text -----

Interest rates are the same as those with regular clients.

(b) Deposits from other banks

==> picture [456 x 93] intentionally omitted <==

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

December 31, 2015
Amount %
Land Bank of Taiwan $ 507 0.27
December 31, 2014
Amount %
Land Bank of Taiwan $ 471 0.26
----- End of picture text -----

Interest rates are the same as those with regular clients.

	Maximum balance	December 31, 2015	Interest income	Annual interest rate
Bank of Taiwan Land Bank of Taiwan Total	$ 129,850 1,149,900 $ 1,279,750	- 328,800 328,800	7 1,171 1,178	2% 0.15%~4.3%

	Maximum balance	December 31, 2014	Interest income	Annual interest rate
Bank of Taiwan Land Bank of Taiwan Total	$ 5,576,020 3,167,000 $ 8,743,020	- 475,050 475,050	1,051 2,992 4,043	0.39%~1.35% 0.2%~1.4%

Interest rates are the same as those with regular clients.

107

(d) Call loans from banks

==> picture [456 x 79] intentionally omitted <==

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

Maximum December 31, Annual interest
balance 2015 Interest expense rate
Bank of Taiwan $ 6,491,130 1,350,520 9,672 0.14%~15%
Land Bank of Taiwan 11,300,729 2,506,730 15,738 0.03%~3.8%
Total $ 17,791,859 3,857,250 25,410
----- End of picture text -----

		Maximum balance		December 31, 2014		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%

Interest rates are the same as those with regular clients.

(e) Deposits

==> picture [456 x 166] intentionally omitted <==

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

December 31, 2015
Amount %
Bank of Taiwan $ 3,267 -
Others 1,397,770 0.11
Total $ 1,401,037 0.11
December 31, 2014
Amount %
Bank of Taiwan $ 3,262 -
Others 2,640,222 0.23
Total $ 2,643,484 0.23
----- End of picture text -----

Interest rates are the same as those with regular clients.

(f) Credit

==> picture [456 x 232] intentionally omitted <==

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

December 31, 2015
Number of Performing situations Transaction terms
clients or are the same as
name of related Maximum Ending Performing Non-performing those with regular
Category party balance balance loan Loans Collaterals clients
Employee consumer 123 310,774 291,995 291,995 - none none
loans
Self-use residence 113 383,793 365,071 365,071 - real estate none
collateral loans
Others Du ○ ○ 2,323 2,323 2,323 - real estate none
Chen ○ ○ 3,531 2,932 2,932 - real estate none
Chian ○ ○ 3,981 1,812 1,812 - real estate none
Hung ○ ○ 1,379 2,326 2,326 - real estate none
Hsiao ○ ○ 566 566 566 - real estate none
Lu ○ ○ 1,001 967 967 - real estate none
Cho ○ ○ 423 - - - real estate none
----- End of picture text -----

108

Taiwan Business Bank Annual Report 2015

Ⅵ

==> picture [456 x 200] intentionally omitted <==

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

December 31, 2014
Performing situations Transaction terms
Number of are the same as
clients or name Maximum Ending Performing Non-performing those with regular
Category of related party balance balance loan Loans Collaterals clients
Employee consumer 116 293,387 256,784 256,784 - none none
loans
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
----- End of picture text -----

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

(C) Major management salary information

==> picture [456 x 84] intentionally omitted <==

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

For the year ended December 31,
2015 2014
Salary and other short-term employee benefit $ 104,713 98,469
Retirement Benefit 1,529 1,202
Total $ 106,242 99,671
----- End of picture text -----

8. PLEDGED ASSETS : Please refer to note 6(H) for more details.

9. COMMITMENTS AND CONTINGENCIES

(A) Significant commitments and contingencies were as follows:

==> picture [456 x 196] intentionally omitted <==

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

December 31, 2015 December 31, 2014
Marketable securities held for custody $ 14,792,705 4,469,561
Bills collected for others 57,060,916 63,775,749
Bills lent for others 21,966,839 20,118,912
Guarantees and letters of credit 17,159,477 21,465,601
Collaterals received 426 426
Trust liabilities 127,155,475 126,849,691
Travelers' check in custody for sale 126,303 150,009
Items held for custody 4,253,437 6,730,929
Registered government bonds for sale 17,208,500 9,110,200
Registered short-term bills for sale 3,713,900 5,407,300
Guarantee notes payable 26,726,100 30,508,000
----- End of picture text -----

109

(B) As of December 31, 2015 and 2014, major constructions in progress and purchases
amounted to $672,851 and $397,034 respectively, of which $467,391 and $316,965 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, 2015 and 2014 is as follows:

Trust Balance Sheet

==> picture [456 x 195] intentionally omitted <==

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

Trust Assets December 31, 2015 December 31, 2014
Cash in Bank $ 2,260,436 3,465,392
Common stock 202,743 255,620
Funds 52,456,093 55,692,251
Receivables 90 67
Prepayment 2 4
Real estate 11,115,380 7,138,995
Securities custody 61,120,731 60,297,362
Total trust assets $ 127,155,475 126,849,691
----- End of picture text -----

==> picture [456 x 153] intentionally omitted <==

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

Trust Liabilities December 31, 2015 December 31, 2014
Payables $ 102 168
Securities held for custody 61,120,731 60,297,361
Trust capital 66,023,908 66,529,150
Reserves and accumulated loss ( 1,527,014 ) ( 1,756,434 )
Net income 1,537,748 1,779,446
Total trust liabilities $ 127,155,475 126,849,691
----- End of picture text -----

Trust Property Accounts

==> picture [456 x 153] intentionally omitted <==

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

Investment in December 31, 2015 December 31, 2014
Cash in bank $ 2,260,436 3,465,392
Common stock 202,743 255,620
Funds 52,456,093 55,692,251
Receivables 90 67
Prepayment 2 4
Real estate
----- End of picture text -----

110

Taiwan Business Bank Annual Report 2015

Ⅵ

==> picture [456 x 130] intentionally omitted <==

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

Investment in December 31, 2015 December 31, 2014
Land 10,493,581 7,096,192
Buildings 51,100 32,323
Construction in progress 570,699 10,480
Securities in custody 61,120,731 60,297,362
Total $ 127,155,475 126,849,691
----- End of picture text -----

Note: As of December 31, 2015 and 2014, the amounts above included OBU transaction on “foreign currency designated trust funds investment in foreign negotiable securities business” amounting to $873,807 and $832,748, respectively.

Trust Income Statement

==> picture [456 x 478] intentionally omitted <==

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

For the year ended December 31,
Investment in
2015 2014
Trust Revenue
Interest income $ 13,065 13,823
Realized capital gain-stock 1,440 1,392
Cash dividend income of common stock 1,540,375 1,340,443
Gains on property transaction 1,434,819 1,434,320
Other revenue 225 236
Sub-total 2,989,924 2,790,214
Trust Expense
Administrative expenses 55,972 69,705
Custody expenses 604 540
Postage and phone/fax expense 1 -
Realized capital loss-fund 933 2,696
Realized capital loss-stock 19 -
Losses on property transaction 1,393,000 936,612
Other expense 753 189
Sub-total 1,451,282 1,009,742
Net income before tax 1,538,642 1,780,472
Income tax expense ( 894 ) ( 1,026 )
Net income after tax $ 1,537,748 1,779,446
----- End of picture text -----

111

(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 thousands 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 thousands plus interest to I.C.C.I.. The Bank has engaged a local attorney in Belgium to formally file an appeal. In February 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 February 6, 2013, the court overruled the Bank's appeal and the Bank lost the case. As of December 31, 2015, the Bank has accrued the compensation of NT$135,815 thousands and EUR$8,000,000. Please refer to Note 6(S) for relevant provision.
(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 $61,751 thousands plus the interest. Taiwan High Court Taichung branch ruled that the Bank lost the case in November 2011 and should return $61,751 thousands 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 thousands 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 is referred 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 thousands 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 thousands 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 thousands plus the interest with annual rate of 5% from July 18, 2008 to the settlement date. The counterparty has filed an appeal and Taiwan Supreme Court overruled the appeal On February 11, 2015. The case is closed.

10. LOSSES DUE TO MAJOR DISASTERS: None.

11. SUBSEQUENT EVENTS: None.

112

Taiwan Business Bank Annual Report 2015

Ⅵ

12. OTHER

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

==> picture [456 x 176] intentionally omitted <==

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

For the year ended December 31,
Nature 2015 2014
Operating expense Operating expense
Employee benefit expenses
Salary expense $ 5,636,070 5,578,887
Labor and health insurance expenses 401,788 391,191
Pension expenses 320,986 320,282
Other employee benefit 798,297 743,793
Total employee benefit 7,157,141 7,034,153
Depreciation expenses 303,565 324,023
Amortization expenses 76,489 84,064
Total $ 7,537,195 7,442,240
----- End of picture text -----

The employee numbers amounted to 4,983 and 4,839 people for the year ended December 31, 2015 and 2014, respectively.

(B) Profitability

==> picture [457 x 97] intentionally omitted <==

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

Unit : %
Item December 31, 2015 December 31, 2014
Before income tax 0.43 0.40
The ratio of return on assets
After income tax 0.36 0.39
Before income tax 9.50 9.14
The ratio of return on equity
After income tax 7.84 8.86
Net income ratio 25.36 27.98
----- End of picture text -----

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 period.

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

capital ：

Name of Company	Category and	Account	Name of	Relationship	Beginning balance	Beginning balance	Purchases	Purchases	Sales	Sales	Sales	Sales	Ending balances (Note)	Ending balances (Note)
	name of security	name	counter-party	with the Company	Shares/ Units	Amount	Shares/ Units	Amount	Shares/ Units	Amount	Cost	Disposal gain or loss	Shares/ Units	Amount
TBB (Cambodia) Microfnance Institution Plc	Private placement	Investment under equity method	Not applicable	Subsidiary company	-	-	-	306,130 (USD10,000)	-	-	-	-	-	306,130 (USD10,000)

Note: Original investment

(b) Acquisition of real estate amounting to over $300,000 or 10% of paid-in capital: None.
(c) Disposition 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.
(e) Receivables from related parties amounting to over $300,000 or 10% of paid-in capital: None.

113

(f) Sale of non-performing loans information: None.
real estate securitization rules: None.

==> picture [456 x 572] intentionally omitted <==

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

Transaction in For the year ended December 31, 2015
Percentage
No Trader Counterparty Relationship accounted for
Account Amount Terms consolidated net
revenue or total
assets
0 TAIWAN BUSINESS Taiwan Business 1 Account 80,392 No difference with 0.01%
BANK, LTD. Bank Insurance Receivables non-related parties
Agency Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Deposits and 149,727 No difference with 0.01%
BANK, LTD. Bank Insurance remittances non-related parties
Agency Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Service 1,575,159 No difference with 7.81%
BANK, LTD. Bank Insurance revenue non-related parties
Agency Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Other 1,127 No difference with -%
BANK, LTD. Bank Insurance non-related parties
Agency Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Account 3,827 No difference with -%
BANK, LTD. Bank Property Receivables non-related parties
Insurance Agency
Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Deposits and 8,292 No difference with -%
BANK, LTD. Bank Property remittances non-related parties
Insurance Agency
Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Service 44,098 No difference with 0.22%
BANK, LTD. Bank Property revenue non-related parties
Insurance Agency
Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Other 211 No difference with -%
BANK, LTD. Bank Property non-related parties
Insurance Agency
Co., Ltd.
0 TAIWAN BUSINESS Taiwan Business 1 Deposits and 570,205 No difference with 0.04%
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 -----

114 Taiwan Business Bank Annual Report 2015

Ⅵ

==> picture [456 x 571] 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 -----

Note: The meaning of the number is as follows.

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

statements users: None.

115

(B) Information of investee company:

(a) Names, locations, and related information of investees on which the company exercises significant influence (excluding investment in mainland China) :

(In NTD thousands ； thousand shares)

==> picture [456 x 273] intentionally omitted <==

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

The cross holding of the Bank and its related
Investment parties
Name of Main gain or loss
investee Address business Shareholding ratio valueBook recognized Number Number of Total Note
company scope Company by the sharesof profoma shares Number of shares Shareholding ratio
Taiwan Business 2F, No.158, Agent of 100.00% 109,927 99,927 500 - 500 100.00% Already
Bank Insurance Songjiang Rd personal written-off
Agency Co., Ltd. Taipei City insurance when
preparing the
consolidated
financial
statements
Taiwan Business 2F, No.158, Agent of 100.00% 7,881 3,318 300 - 300 100.00% 〞
Bank Property Songjiang Rd property
Insurance Taipei City insurance
Agency Co., Ltd.
Taiwan 5F., No.151, Sec. Leasing 100.00% 1,437,174 (53,701) 150,000 - 150,000 100.00% 〞
Business Bank 4, Nanjing E. business
International Rd.,Taipei City
Leasing Co.,
Ltd.
TBB Kampuchea Financial 100.00% 325,537 (3,227) - - - 100.00% 〞
(Cambodia) company
Microfinance (USD 10,000)
Institution Plc
----- End of picture text -----

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

(In NTD thousands)

Company acquired	Type and			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
	name of the security	Relationship with the security issuer	Account	Number of shares	Carrying amount	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	-	858,299 (CNY170 million)	100.00%	858,299	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:

116

Taiwan Business Bank Annual Report 2015

Ⅵ

==> picture [456 x 142] intentionally omitted <==

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

Beginning of the
type and period Purchase Sale End of the period
name Trade
Company securityof the Account counter-party [Relation-ship] Shares Amount Shares Amount Shares Amount [Carrying ] amount Disposition gains or Shares Amount
losses
Taipei Financial Not public Financial Not applicable Not applicable - - 11,760 328,104 - - - - 11,760 328,104
Center Corp. assets
carried at
cost
Taiwan High 〞 Available- 〞〞 - - 44,500 445,000 - - - - 44,500 445,000
Speed Rail for-sale
Corporation financial
assets
----- End of picture text -----

(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 thousands)

Name of investee company	Major			Accumulated amount	Investment transferred out or recovered	Investment transferred out or recovered	Accumulated amount transferred from Taiwan, end of the period	The current proft or loss of the investee	Shares directly or indirectly possessed by the Bank	Proft or loss recognized	Ending book value of investment	Investment proft transferred in
	business item	Paid-in capital	Investment method	transferred from Taiwan, beginning of the period	Transferred out	Recovered
Taiwan Business Bank , Ltd. Shanghai branch	Banking business	3,910,537 (CNY800 million) (Operating capital)	(e)	2,371,237 (CNY500 million))	1,539,300 (CNY300 million)	-	3,910,537 (CNY800 million)	-	Shanghai branch of the Bank, not an investee company	-	4,356,448	None
Taiwan Business Bank , Ltd. Wuhan branch	Banking business	2,552,375 (CNY500 million) (Operating capital)	(e)	-	2,552,375 (CNY500 million)	-	2,552,375 (CNY500 million)	-	Wuhan branch of the Bank, not an investee company	-	2,585,546	"
Taiwan Business Bank International Financing leasing Co., Ltd.	Leasing business	838,305 (CNY170 million) (Operating capital)	(d)	838,305 (CNY170 million)	-	-	838,305 (CNY170 million)	10,967	100%	10,967	858,299	"

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.

117

(b) Limit of investment in China ：

(In NTD thousands)

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)	7,301,217 (CNY 1,470 million)	7,301,217 (CNY 1,470 million)	40,595,477

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

==> picture [456 x 30] intentionally omitted <==

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

For the year ended December Other-securities Inter-department
Bank Department Total segment
31, 2015 and trust adjustment
----- End of picture text -----

Net interest income Other net non-interest income Net revenue Bad debt expenses Operating expense Net income before tax Total assets Total liabilities		$ 15,178,778 3,984,645 19,163,423 ( 2,332,061 ) (11,052,134 ) $ 5,779,228 $ 1,454,594,712 $ 1,389,654,273		290,237 756,571 1,046,808 ( 77,128 ) (506,427 ) 463,253 23,593,212 18,994,003		- (48,347 ) ( 48,347 ) - 2,030 ( 46,317) ( 2,296,329) ( 415,810)		15,469,015 4,692,869 20,161,884 ( 2,409,189 ) (11,556,531 ) 6,196,164 1,475,891,595 1,408,232,466

For the year ended December 31, 2014	Bank Department	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		$ 14,548,907 3,597,528 18,146,435 ( 2,488,352 ) (10,489,846 ) $ 5,168,237 $ 1,377,074,733 $ 1,316,842,415		241,350 647,980 889,330 ( 50,235 ) (482,121 ) 356,974 17,172,016 13,088,854		- (41,440 ) ( 41,440 ) - 1,945 ( 39,495) ( 1,856,182) ( 278,619)		14,790,257 4,204,068 18,994,325 ( 2,538,587 ) (10,970,022 ) 5,485,716 1,392,390,567 1,329,652,650

118

Taiwan Business Bank Annual Report 2015

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:

==> picture [456 x 141] intentionally omitted <==

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

For the year ended December 31,
Area
2015 2014
Taiwan $ 5,470,517 5,007,309
USA 267,559 293,740
Hong Kong 227,902 37,109
Australia 153,363 58,443
China 76,823 89,115
Total $ 6,196,164 5,485,716
----- End of picture text -----

Non-current assets:

==> picture [456 x 123] intentionally omitted <==

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

Area December 31, 2015 December 31, 2014
Taiwan $ 19,165,869 18,834,327
USA 1,187 1,067
Hong Kong 20,125 24,257
Australia 13,230 16,659
China 17,062 17,730
Total $ 19,217,473 18,894,040
----- End of picture text -----

(D) Significant client information:

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

119

VII Corporate Social Responsibility

120

Taiwan Business Bank Annual Report 2015

Ⅶ

performance, the upgrading of employee value-added, and an emphasis on shareholders' interests in its 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) Active Guidance of SMEs and Deep‑rooting of the Core SME Business
A. Holding of activities in celebration of the Bank's 100[th] anniversary
- a. A "Love at 100 Happy Carnival Garden Party" was held under the theme of "A Century of Care, Heart to Heart," with a garden party, performances, charity donations, and live demos used to provide corporate consultation services, deepen customer friendship, and illustrate the Bank's care for SMEs, thereby burnishing its image as a specialized SME bank.
- b. A "Startup Forum" was held at the Regent Taipei, with "Takeoff of a Dream – Starting a Life" as the topic of discussion. Successful entrepreneurs were invited to share their own startup experiences, with government representatives, bankers, and new entrepreneurs engaging in a three-way dialogue to providing key innovative startup methods in response to the government's policy of strong support for young entrepreneurs.
- c. A "Love at 100 – Sharing of Care "SME seminar tour was organized on two major topics: easy loans for cultural/creative industries, and SME financing. Issues discussed included industry trends and prospects, bank financing assistance, and sharing of experiences by enterprise owners.
B. Support was provided for creative/cultural industries, with loans extended to help with the filming of the Taiwanese movies "Lion Dancing 2" and "Where the Wind Settles" and box‑office sponsorship provided by booking whole theaters and inviting clients to view the films.
C. A "Cultural Industries Consultation Interchange Meeting" was held to provide ideas on financing for cultural/ creative industries to serve as a reference for strategic directions and for implementation of current cultural policy.
D. A "Cultural/Creative ICE: Recycling of Old Houses in Old Towns" activity was held to help fulfill the government's policy of optimizing the startup environment and provide bank financing consultation and support services that can help with the development of startups.
E. In coordination with the Small and Medium Enterprise Credit Guarantee Fund, the Bank held an "SME Financing and Credit Guarantee Seminar," "Credit Guarantee Heritage Lecture," and "Corporate Operation and Social Care Forum" to introduce the bank financing business and provide SMEs with bank financing consultation services.
F. The Bank organized the 2015 "Care and Service for SMEs and Upgrading of Financial Competitiveness" seminar together with the Taiwan Small Business Integrated Assistance Center to carry through with the government's policy of vigorous assistance for SMEs and reinforce their financial management so that they can procure financing needed and strengthen their competitive advantage.
G. The "2015 Service Industry Innovation Research" seminar was held to introduce SME innovation development loans and related bank financial services.
H. The results of the Bank's assistance for SMEs was expounded through radio interviews and the broadcast of loan ads to industrial zones, cultural/creative industries, and small and micro‑businesses, publicizing successful cases of the Bank's assistance to help businesses weather difficult periods and to provide

121

innovative and creative enterprises and entrepreneurs with information about how best to procure bank financing.

(2) Assistance for Startups, Boosting Employment, and Receipt of Awards
The Bank achieved first place nationally in extending "Young Entrepreneur and Start‑up Capital Loans" and "Phoenix Micro Start‑up Loans."
(3) Loan Policy

In carrying out the "Equator Principles," the Bank places key emphasis in its loan evaluation on its loan customers' food safety and labor safety, environmental protection responsibility, and social responsibility.

(4) In accordance with the provisions of Article 13 of the Act for the Development of Small and Medium Enterprises, the Bank donated, with approval from its Board of Directors, to the Small and Medium Enterprise Credit Guarantee Fund.

2. Customer Care

(1) A diverse range of innovative financial products to satisfy the capital needs throughout all stages of the human life cycle
A. The Bank inaugurated childbirth consumer loans to encourage the bearing of children by providing capital needed for birth, thereby lightening the burden of family life and satisfying the financial needs of childbirth for more people.
B. "Youth Overseas Life Experience Loans" were inaugurated and "Youth Overseas Travel Loans" were provided to help young people realize their dreams of living overseas and expand their international vision, thereby providing early career and job cultivation and helping carry out career plans.
C. To take care of young people and disadvantaged groups, the Bank inaugurated the Ministry of Finance's "Young Couples' Preferential Home Loans (Second Program)" and the Ministry of the Interior's "Housing Subsidy and Home Improvement Loan" program.
D. To guide young entrepreneurs in starting businesses and increase job opportunities for young people, as well as promote the development of national economic construction, the Bank inaugurated "Young Entrepreneur and Start‑up Capital Loans."
E. The Bank introduced "Capital Preference Loans" to help SMEs procure operating capital, and "Industrial Zone Preferential Loans" designed specifically for enterprises in industrial zones.
F. To give strong support to cultural/creative industries, the Bank vigorously promoted cultural/creative financing to help creative enterprise with development potential and provide the most professional financing so as to encourage more creative people to join the field, promote economic production, and stimulate new values for the domestic economy.
G. "Phoenix Micro Start‑up Loans" were inaugurated to help female and middle aged/elderly entrepreneurs, and to stimulate employment.
H. The Bank handled retirement trust funds to help enterprises deal with employee resignations, severance, occupational accident compensation, death compensation, and other benefits; in addition, the Bank's pension fund is managed and used to boost the economic security of employees after they retire or resign.
I. To cope with the aging and low fertility of Taiwan's population, the Bank continuously introduces related trust products including nursing care trust, disabilities trust, and insurance trust, and has planned out a trust

122

Taiwan Business Bank Annual Report 2015

Ⅶ

model that encompasses both asset management and nursing care, adding greater assurance and peace of mind to customers' economic security.

J. Under the principles of care and sharing, the Bank provides customized financial and asset planning services that allow its customers to satisfy their need for wealth creation, preservation, and inheritance, thereby helping customers create a high quality of life with carefree economic stability for their golden years.
(2) Protection of customer rights
A. The Bank has set up a Product Review Committee to assure the suitability for financial consumers of its products and services, and has established a differentiated prior screening mechanism to assure customers' rights by screening different products and services in regard to their legality, marketability, profitability, fees collected, and other relevant matters.
B. To protect consumer rights, the Bank has established a "Consumer Protection Policy" and "Consumer Protection Operating Procedure," clearly stipulating measures for the implementation of the protection policy and designating a unit to monitor the effectiveness of the consumer protection mechanism. The Auditing Department is responsible for checking the status of implementation to assure that consumers are protected.
C. The Bank has established a "Consumer Dispute Resolution System" to strengthen emphasis on consumer dispute resolution, upgrade the effectiveness and quality of consumer dispute resolution, and protect the rights of consumers.
D. The Bank has established "Main Points for the Handling of Customer Complaints" and an "Operating Procedure for the Handling of Credit Card Disputes," and has set up a free customer service hotline. It has also posted relevant information in business units and on ATMs, with designated personnel to take complaints and resolve them promptly.
E. The Bank has formulated "Handling Procedures for Trust Business Disputes" to resolve questions or disputes about such matters as trust products or services provided by the Bank. In addition to written submission, clients can submit complaints by telephone or the "customer service mail box" on the Bank's website.
F. To comply with the provisions of the Personal Information Protection Act, protect the interests of consumers, and fulfill its responsibility to protect personal information, the Bank has introduced the international norms of the British Standards Institute's BS10012:2009 Personal Information Management System, and has acquired the relevant certification, in order to root deeply a consciousness of personal information protection and related regulations in the Bank's corporate culture so as to provide customers with a financial services environment of guaranteed safety.
G. To continue strengthening security of its information operations, the Bank carried out new adaptation in accordance with the criteria of the new version of ISO 27001 (2013 version) and passed the British Standards Institute's review and recertification in June of 2015.
H. The Bank established specifications and plans in accordance with the Bankers Association's "Regulations Governing Computer System Information Security Assessment by Financial Institutions," and commissioned a professional organization to carry out the Type 1 computer system information security assessment.
I. To follow through with consumer protection and comply with the regulations of the competent authority, business units handling medium- and long-term loans secured by housing or loans secured by other kinds of real estate and the real purpose of which is to procure housing have strengthened their oral explanation of "Special Items for Attention in Regard to Housing Loans" so that customers will clearly understand the interest rate risk connected with their loans.

123

J. The Wealth Management customer rights protection manual, standard contracts for different types of business, fees for financial services, settlement procedures for trust‑business disputes, and information on fund channel returns are disclosed on the TBB website.
(3) Wealth management lectures were held, with investment experts invited to give talks and provide analysis on fundamentals, industrial, and technical aspects so as to provide customers with reference information on investment strategy and risk control.
(4) A lecture on ETF stock and futures hedging was held together with Jih Sun Futures to provide customers with reference information on futures transaction strategies, risk control and hedging.
(5) To bring financial services even closer to the disabled, the Bank has been steadily building an obstacle‑free environment for financial transactions. Obstacle‑free ATMs accounted for 8.84% of the Bank's total at the end of December 2015; with the installation of 27 more obstacle‑free ATMs procured in 2015, the ratio of the Bank's obstacle‑free ATMs will reach 15.12%.
(6) To carry through with measures to provide a friendly financial service environment for the hearing‑impaired, teller counters at the Bank's branches offer assistance to such customers in credit card activation and loss reporting. The Online banking also provides online credit card activation and loss reporting services.
(7) To carry through with implementation of a conversion mechanism for long‑term users of revolving credit, the Bank took the initiative in inviting customers by phone to convert to credit-card installment payment as a means of achieving the target that the competent authority's target of a conversion ratio in excess of 25% by the end of 2015.
(8) In line with the inauguration by the Financial Supervisory Commission of the "Unsecured Consumer Loan Extension Program for Economically Disadvantaged Debtors with Loan‑repayment Difficulties" and "2006 Bankers Association Program of Consistent Debt Negotiation/Separate Negotiation of Breached Former Negotiation Agreements" negotiating mechanisms, the Bank set up a negotiation application window and provided a debt negotiation channel and re‑negotiation mechanism to help debtors in economic difficulty to lighten their debt load.

3. Environmental Protection

(1) Implementation of the energy‑conservation, carbon‑reduction policy to promote environmentally sustainable development
A. LED Energy Label lighting is used in office premises bank‑wide, with more than 28,000 lights installed, greatly reducing the electricity used for lighting at business premises. About 3.54 million kilowatt-hours are saved annually, reducing carbon dioxide emissions by 1,845 metric tons—equivalent to the planting of 168,000 trees a year, enough to develop 4.7 Da'an Forest Parks. In this way, the Bank contributes to energy conservation and carbon reduction, and to protection of the environment.
B. The Bank implemented its "Measures for Water and Electricity Conservation," with scheduled follow‑up on the status of water and electricity conservation by different units and inclusion of the results in business performance assessments. Various energy-conservation improvement programs were forcefully carried out in order to enhance the energy efficiency of equipment and save on electricity costs.
C. The Bank's headquarters carried out the renewal of a 500‑ton VSD chiller and installed an energy‑ management system as well as LED lighting for public areas. Third‑party verification showed that these improvements boosted the energy efficiency of equipment by more than 37.2%, saving about 273,000

124

Taiwan Business Bank Annual Report 2015

Ⅶ

kilowatt‑hours per year, reducing carbon dioxide emissions by 167 metric tons, and saving NT$1.55 million in electricity costs annually. The electricity contract capacity of the Bank's headquarters was cut from 1,150 kilowatts to 950 kilowatts over the past three years and has been further reduced to 750 kilowatts.

D. The main source of the Bank’s energy use is electrical power, which causes indirect greenhouse gas emission. According to statistics, the electricity used in office premises bank‑wide in 2015 was 22,050,149 kilowatt‑hours, resulting in approximately 11,488 metric tons of carbon dioxide emissions. In the past 3 years, the Bank has reduced carbon dioxide emissions by 365 metric tons.
E. Energy conservation and environmental protection were emphasized in the design of the new Ta Fa Branch premises, including air conditioning, illumination, elevation design, and landscaping. Green-building concepts were used throughout, and a solar power generation system was installed on the roof.
F. In coordination with the "Low‑energy‑use Residential and Commercial Energy‑conservation and Carbon‑ reduction Technology Integration and Demonstration/Application Plan" conducted by the Bureau of Energy, Ministry of Economic Affairs, the Bank provided information on electricity use for the establishment of a domestic energy database. The Bank also participated in the low-carbon management cloud alliance plan of the New Taipei City Government, installing smart electric meters and informatized electricity-use management systems in the Chongnan Building, Linkou generator room, and other energy-consuming structures.

(2) Superior performance record

A. The Bank participated in the "Voluntary Energy Conservation Plan for Financial Groups" conducted by the Bureau of Energy, Ministry of Economic Affairs, and reached the target of 10% energy saving within three years. As a result, it received an Energy‑saving Enterprise Award.
B. The Bank held a learning demonstration of successful energy conservation cases in its headquarters in coordination with the Bureau of Energy, Ministry of Economic Affairs.
C. The Bank received "Outstanding Green Procurement" citations from the Executive Yuan's Environmental Protection Administration and the Taipei City Government's Department of Environmental Protection for the fourth year in a row.
D. The Bank's headquarters office won an "Outstanding Electricity Conservation" award, and a prize of NT$200,000, in the Taiwan Power Company's SME electricity‑conservation contest.
E. In coordination with the industrial energy conservation program of the Department of Economic Development of Taipei City Government, the Bank's headquarters building acquired ISO 50001 energy management system certification.

(3) Special‑purpose financing

The Bank has worked hard to nourish low-energy-consumption and pollution-reducing environmentally sustainable enterprises. Besides taking the fulfillment of environmental responsibility into account when evaluating corporate loan applications, the Bank has continuously promoted such project loans as "Low-interest Loans to Private Enterprises for Pollution‑reduction Equipment," "Preferential Loans for the Procurement of Energy‑saving Equipment," "Preferential Loans for the Procurement of Renewal‑energy Equipment," and "Export Loans for Green Energy and Industrial Equipment" in order to nourish green enterprises by guiding domestic businesses in expanding the procurement and export of green energy and industrial equipment, and in improving production equipment and processes.

125

(1) The Bank participated actively in community public‑benefit activities to carry through with the principle of caring for society, and appealed to its domestic branches to manifest the spirit of "sending warmth in the cold winter" and develop community visits. The branches donated to 40 disadvantaged groups within their jurisdictions.
(2) The Bank initiated the collection of uniform invoices and old batteries. On the occasion of its 100[th] anniversary garden party it presented the uniform invoices to the Genesis Social Welfare Foundation and the proceeds from the sale of recycled batteries is given to the Children Are Us Foundation.
(3) The Bank, together with the National Taxation Bureau of Taipei Ministry of finance, organized the 2015 Uniform Invoice Race to expand publicity about asking for invoices when making purchases and donating them to disadvantaged groups, and to encourage healthy sports activities.
(4) For many years the Bank has sponsored the cost of healthy breakfasts for primary schools in Shuanglong, Nanfeng, Saijia, Duona, and other remote mountain areas.
(5) The Bank donated to the Nantou Senior Citizens' Home, the Kaohsiung Christian Mountain Children's Home (Liugui Children's Home), and Hsiangyuan Memorial Reform School.
(6) Sponsorship was provided for the "Food Bank" project of the Taiwan Futures Exchange to help disadvantaged families in remote areas that have encountered economic difficulties and emergency situations.
(7) The Bank participated in the "2015 Care for Society Through Financial Services" garden party organized by the Taiwan Financial Services Roundtable, responding to the call for charity and propagating financial know‑how.
(8) Sponsorship was provided for the anti‑tuberculosis commemorative stamp of the Taiwan Anti‑Tuberculosis Association.
(9) Sponsorship was provided for the "Yongle Borough Year‑end Giving Warmth in Winter" activity organized by the Yongle Borough Office.
(10) The Bank devoted efforts to financial know‑how publicity on campuses and in communities, using the imparting of correct money-management concepts and education in preventing financial fraud to lay down a deep foundation of financial education. For these efforts, the Bank received "going into the campus" and "community financial know‑how propagation" awards from the Banking Bureau of the Financial Supervisory Commission.
(11) Holding to the spirit of "when others are hungry I am hungry; when others are drowning I am drowning," the Bank made donations to those in extremis because of the Formosa Fun Coast dust explosion and established personal loan repayment mitigation measures to help victims of the disaster and their dependents weather their difficulties.
(12) The Bank provided a summer student work quota for economically disadvantaged youth so as to strengthen care for students from disadvantaged families by offering them work opportunities.
(13) Trust businesses were introduced in line with government policy and social issues: senior citizen care trust, disabled care trust, superficies property trust, and gift certificate advance payment trust.
(14) The Bank handled urban renewal trust to help with implementation of the government's urban‑renewal policy and promote the goals of urban renewal and cityscape beautification by establishing a foundation for two‑party mutual trust.
(15) To boost media exposure of charity groups such as the Children Are Us Foundation, Genesis Social Welfare Foundation, and Waker Welfare Action Association, the Bank enclosed fund-raising information with credit-card bills .

126

Taiwan Business Bank Annual Report 2015

Ⅶ

5. Support for Academic, Cultural, and Sports Activities

(1) To celebrate its 100[th] anniversary the Bank held a "Love at 100 – Sharing and Caring" concert, to which outstanding clients were invited to participate for an easy‑to‑understand dissection of financial market trends and an intimate experience of classical music.
(2) To elevate the quality of artistic and cultural life nation‑wide, the Bank provided sponsorship for the "Portrayals from a Brush Divine: A Special Exhibition on the Tricentennial of Giuseppe Castiglione's Arrival in China and Opening of the Southern Branch of the National Palace Museum" and "A History of the World in 100 Objects" in celebration of the 90[th] anniversary of the National Palace Museum.
(3) The Bank spared no effort to support creative/cultural industries, sponsoring an exhibition by master sculptor Kang Mu‑Xiang. Kang's work "Taiwan Ruyi – Infinite Life" is installed at the ZKM Center for Art and Media in Karlsruhe, Germany; the sculpture has become a new landmark for the city, and helps enhance Taiwan's people-to-people diplomacy.
(4) The Bank supported the documentary film One Journey, One Mission, directed by Lin Cheng‑sheng, by booking a room for its opening celebration and giving tickets to Hsing Wu University and the Juren Senior High School in Beigang, allowing students to experience the feeling of building a dream.
(5) The Bank purchased VIP tickets for a Jurassic dinosaur exhibition mounted by the Shi‑shang company, giving them to elementary school children in remote areas.
(6) The Bank joined vigorously in cultural activities to upgrade the level of culture in society, inviting wealth‑ management clients to participate in the VIP Night of the "Portrayals from a Brush Divine: A Special Exhibition on the Tricentennial of Giuseppe Castiglione's Arrival in China" and enjoy a richer and greater diversity of art.
(7) The Bank operated a "Ministry of Science and Technology Subsidy Program for Industry‑University Collaboration Projects for the Production and Broadcasting of Products of Popular Science" trust to stimulate cooperation between colleges, universities, and research institutions and domestic and overseas media operators in the production, broadcasting, and promotion of high-quality popular science products, and to expand the dissemination of popular science knowledge, thereby upgrading the scientific literacy of Taiwan's people.
(8) The Hsinchu County Government was sponsored in organizing the 2015 Taiwan International Festival of Hakka Culture.
(9) The Chinese Taipei Baseball Association was provided sponsorship in organizing the Third Hsu Sheng‑ming Cup National Little League Championship to memorialize Hsu's contributions to baseball and promote the popularity of baseball in Taiwan.
(10) Sponsorship was provided for the costs of promoting the business of the Longshan Elementary School in Kaohsiung City's Meinong District and of sports promotion, and of sports uniforms for Meinong Elementary School.
(11) The Bank sponsored the cost of training by the Chinese Taipei Volleyball Association, and the 24[th] Keelung City New Park Cup Basketball Championship.
(12) The Bank donated to help cover the costs of school anniversary celebrations and provide scholarships for the National Kaohsiung University of Applied Sciences.
(13) A donation was made to National Ilan University for scholarships and the endowment fund.

127

6. Employee Care

(1) Employees are a company's assets, and the Bank never spares any effort to take care of its employees. In addition to establishing work rules and human resources management rules in accordance with the Labor Standards Act and other relevant labor regulations, the Bank also complies with the law 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.
(2) To strengthen the competitiveness of employees and upgrade their professional knowledge, 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 video lectures and professional speeches by prominent speakers on an irregular basis.
(3) 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 who will work hard in concert with the Bank.
(4) The Bank places utmost emphasis 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.
(5) In compliance with the Sexual Harassment Prevention Act and laws governing gender equality in the workplace, the Bank has established regulations for sexual harassment measures, complaints, and punishments so that employees will have a work environment free of sexual harassment.
(6) The Bank provides its employees with a safe and healthy workplace, with central air conditioning systems, abundant lighting, and comfortable work space in office premises, along with emergency evacuation routes and exits. Elevators are maintained on a regular basis, firefighting equipment is available, and regular fire drills are held. Workplaces are disinfected and cleansed regularly, and access is controlled.
(7) To upgrade the safety of the Bank's work environment, whenever unexpected construction anomalies occur, the contractor is notified via a "Contractor Operating Environment and Hazard Factors Notice" so as to reduce occupational accidents. The Bank also organizes general worker safety and health training periodically to provide employees with proper concepts of safety and health.
(8) To provide employees with a safe and healthy work environment including necessary health and first‑aid equipment, reduce factors that are hazardous to worker safety and health, and prevent occupational accidents, the Bank has formulated "Work Rules for Occupational Safety and Health," and special personnel are designated to carry out safety and health inspections and assure that the related equipment is able to operate normally. This reduces accidents and guarantees the personal safety of Bank employees.
(9) To protect the safety and health of its employees, the Bank's Occupation Safety and Health Section is charged with handling occupational safety and health affairs, and temporary doctors and full-time nurses are hired to provide health consultation services for employees.

7. Continuity of Operations and Creation of Shareholder Value

The Bank is engaged in a long-term effort to upgrade corporate governance in which no effort is spared, and demonstrates its capacity to act through full-marketing in the pursuit of outstanding operating performance. The TBB works ceaselessly to upgrade asset quality and competitiveness with the aim of reinforcing its operating structure and creating the greatest values for all its shareholders.

128

Taiwan Business Bank Annual Report 2015

VIII

==> picture [27 x 20] intentionally omitted <==

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

VIII
----- End of picture text -----

Directory of Head Office and Branch Units

129

==> picture [456 x 654] intentionally omitted <==

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

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
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 Taipei
Chung Ho Branch (02)22427171 MBBTTWTP002
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 City,
Nan Ken Branch (03)3227171 MBBTTWTP005
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, Taiwan,
Ta Ya Branch (04)25687171 MBBTTWTP011
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 City,
Jen Ai Branch (02)27217171 MBBTTWTP020
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 MBBTTWTP024
Taiwan, R.O.C.
192, Sec. 2, Zhongxing Rd., Xindian Dist., New
Hsin Tien Branch (02)29117171 MBBTTWTP025
Taipei City, Taiwan, R.O.C.
----- End of picture text -----

130

Taiwan Business Bank Annual Report 2015

VIII

==> picture [456 x 659] intentionally omitted <==

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

TBB'S OFFICES ADDRESS TEL NO. SWIFT ADDRESS
16, Sec. 1, Zhonghua Rd., Xinzhuang Dist., New
Hsin Chuang Branch (02)29907171 MBBTTWTP026
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 City,
Sung Kiang Branch (02)25377171 MBBTTWTP040
Taiwan, R.O.C.
Taipei Branch 72, Sec. 1, Chongqing S. Rd., Zhongzheng Dist.,
(02)23717171 MBBTTWTP050
(Banking Broker) 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 City,
Chung Shan Branch (02)25517171 MBBTTWTP080
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.,
(02)27127171 MBBTTWTP090
Branch Taipei City, Taiwan, R.O.C.
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 City,
Sung Nan Branch (02)27647171 MBBTTWTP110
Taiwan, R.O.C.
152, Sec. 6, Minquan E. Rd., Naihu Dist., Taipei
Dong Hu Branch (02)87929771 MBBTTWTP111
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.
----- End of picture text -----

131

==> picture [456 x 642] intentionally omitted <==

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

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 (02)22987171 MBBTTWTP130
Xinzhuang Dist., New Taipei City, Taiwan, 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., New
Tu Cheng Branch (02)22737171 MBBTTWTP142
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 Taipei
Xi Zhi Branch (02)26987171 MBBTTWTP144
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 MBBTTWTP160
County, Taiwan, R.O.C.
15 Zhongzheng N. Rd., Luodong Township, Yilan
Lo Tung Branch (03)9567171
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 City,
Yang Mei Branch (03)4786111 MBBTTWTP290
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 Dist.,
Ta Yuan Branch (03)3857171 MBBTTWTP301
Taoyuan City, Taiwan, R.O.C.
----- End of picture text -----

132 Taiwan Business Bank Annual Report 2015

VIII

==> picture [456 x 657] intentionally omitted <==

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

TBB'S OFFICES ADDRESS TEL NO. SWIFT ADDRESS
80 Fuxing Rd., Daxi Dist., Taoyuan City,
Ta Shi Branch (03)3887171 MBBTTWTP302
Taiwan, R.O.C.
157 Zhongshan Rd., Zhongli Dist., Taoyuan City,
Chung Li Branch (03)4277171 MBBTTWTP310
Taiwan, R.O.C.
153 Zhongxiao Rd., Zhongli Dist., Taoyuan City,
Nei Li Branch (03)4557171 MBBTTWTP311
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 CIty,
Hsin Wu Branch (03)4777171
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
NO.198, Guanxin Rd., Hsinchu City 300, Taiwan,
Based Industrial Park (03)5637171 MBBTTWTP322
R.O.C.
Branch
789, Sec. 1, Jieshou Rd., Bade Dist., Taoyuan
Pa Te Branch (03)3767171 MBBTTWTP330
City, Taiwan, R.O.C.
64 Longyuan Rd., Longtan Dist., Taoyuan City,
Luong Tan Branch (03)4807171 MBBTTWTP332
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 City, Miaoli County, Taiwan,
Tou Fen Branch (037)687171 MBBTTWTP351
R.O.C.
Maio Li Branch 606 Zhongzheng Rd., Miaoli City, Taiwan, R.O.C. (037)327171 MBBTTWTP360
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., Taichung
Sha Lu Branch (04)26657171 MBBTTWTP482
City , Taiwan R.O.C.
----- End of picture text -----

133

==> picture [456 x 642] intentionally omitted <==

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

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., Taichung
(04)22297171 MBBTTWTP490
(Banking Broker) 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 MBBTTWTP510
Taiwan, R.O.C.
604 Zhongzheng Rd., Caotun Township, Nantou
Tsao Tuen Branch (049)2357171 MBBTTWTP511
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 MBBTTWTP530
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 County,
Ho Mei Branch (04)7558131 MBBTTWTP541
Taiwan, R.O.C.
16 Minquan St., Yuanlin City, Changhua County,
Yuan Lin Branch (04)8377171 MBBTTWTP550
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 MBBTTWTP561
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 County,
Hu Wei Branch (05)6337171
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 MBBTTWTP681
(Banking Broker) Chiayi County, Taiwan, R.O.C.
----- End of picture text -----

134 Taiwan Business Bank Annual Report 2015

VIII

==> picture [456 x 641] intentionally omitted <==

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

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 MBBTTWTP701
Taiwan, R.O.C.
352 Zhongshan Rd., Shanhua Dist., Tainan City,
Shan Hwa Branch (06)5816111 MBBTTWTP702
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., South Dist., Tainan
An Ping Branch (06)2657171 MBBTTWTP730
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
Taitung Branch (089)327171
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., Kaohsiung
(07)6227171 MBBTTWTP830
(Banking Broker) 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 City,
Branch (07)2387171 MBBTTWTP851
Taiwan, R.O.C.
(Banking Broker)
----- End of picture text -----

135

==> picture [456 x 599] intentionally omitted <==

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

TBB'S OFFICES ADDRESS TEL NO. SWIFT ADDRESS
116 Dachang 2nd Rd., Sanmin Dist., Kaohsiung
Ta Chang Branch (07)3827171
City, Taiwan, R.O.C.
378-3 Minquan 2nd Rd., Qianzhen Dist.,
Chien Chen Branch (07)5355171 MBBTTWTP853
Kaohsiung City, Taiwan, R.O.C.
Jeou Ru Branch 255 Jiuru 2nd Rd., Sanmin Dist., Kaohsiung City,
(07)3137171 MBBTTWTP860
(Banking Broker) Taiwan, R.O.C.
San Ming Branch 153 Zhongshan 1st Rd., Xinxing Dist., Kaohsiung
(07)2867171 MBBTTWTP870
(Banking Broker) City, Taiwan, R.O.C.
157 Zhongshan Rd., Fengshan Dist., Kaohsiung
Feng Shan Branch (07)7107171
City, Taiwan, R.O.C.
No.5-3, Guanghua Rd., Daliao Dist., Kaohsiung
Ta Fa Branch (07)7887171 MBBTTWTP881
City 831, 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, Harbour
Hong Kong Branch 852-29710111 MBBTHKHH
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,
Brisbane Branch 61-7-33173000 MBBTAU2SBRI
QLD. 4000 Australia
Floor 17, Building 2, No. 108, Zhongbei Road,
Wuhan Branch Wuchang District, Wuhan, Hubei Province 86-27-59817171 MBBTCNSHWUH
430077, China
422 Strand Road (Corner of Botahtaung Pagoda
Yangon Representative
Road), #04-08, Botahtaung Township, Yangon, 95-1-202101
Office
Myanmar
----- End of picture text -----

136

Taiwan Business Bank Annual Report 2015

Taiwan Business Bank, Ltd.

==> picture [184 x 244] intentionally omitted <==

==> picture [294 x 60] intentionally omitted <==

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

Chairman
----- End of picture text -----

==> picture [140 x 132] intentionally omitted <==

AI assistant

TBB — Annual Report 2015

52201_rns_2016-07-22_2d66286c-04ac-4bc3-b619-0db2b6247b23.pdf

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

18 V. Business Plans for 2016

VI. Financial Statements

I

Message from the Management

II

1. Establishment and History

III Organizational Framework

2. Directors Information

4. Operations of Major TBB Units

(1) Corporate Banking Group

(2) Personal Banking Group

(3) Treasury Group

(4) Risk Management Center

(5) Operating Management Center

(6) Administration Management Center

(7) Compliance and Legal Department

IV

Business Performance in 2015

1. The Domestic and Overseas Financial Environment

2. Changes in the Bank's Organization

3. Implementation of Business Plans and Operating Strategies

4. Budget Implementation

6. Research and Development

V

Business Plans for 2016

1. Operating Directions and Policies

2. Business Targets

3. Future Development Strategies

4. The Impact of External Competition Environment, Regulatory Environment, and Overall Operating Environment

5. Results of Latest Credit Rating

VI

Financial Statements

1. Statement of Compliance

2. Independent Accountants' Audit Report

The Board of Directors

Taiwan Business Bank, Ltd.

KPMG

Notice to Readers

TAIWAN BUSINESS BANK, LTD.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

FOR THE YEAR ENDED DECEMBER 31, 2015 AND 2014

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

THE YEAR ENDED DECEMBER 31, 2015 AND 2014

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 adopting the standards newly released and modified which are endorsed by the FSC:

1.IFRS 13 Fair value measurement

2. IAS 1 Presentation of Financial Statements

(B) The standards and interpretations newly issued and amended 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

(b) Elimination of inter-group transaction

(D) Foreign currency

(b) Foreign operations

(E) Cash and cash equivalent

(F) Financial Instruments

(d) Financial assets measured at cost

(e) Debt instrument with no active market

TBB Annual Report 2015