Stock code：2834

TAIWAN BUSINESS BANK, LTD.

Financial Statements

with Independent Auditors’ Report For the Years Ended December 31, 2021 and 2020

ADDRESS: NO. 30, Ta-Cheng Street, Taipei, Taiwan, R.O.C. TELEPHONE : 02-2559-7171

The independent auditors’report and the accompanying financial statements are the English translation of 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 independent auditors’ report and financial statements, the Chinese version shall prevail.

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	Contents	Page
Cover Page		1
Table of Contents		2
Independent Auditors' Report		3
Balance Sheets		4
Statements of Comprehensive Income		5
Statements of Changes in Equity		6
Statements of Cash Flows		7
Notes to the Financial Statements
1.	Company history	8
2.	Approval date and procedures of the consolidated financial statements	8
3.	New standards, amendments and interpretations adopted	9～12
4.	Summary of significant accounting policies	12～29
5.	Significant accounting assumptions and judgments, and major sources of	29～30
	estimation uncertainty
6.	Explanation of significant accounts	31～122
7.	Related-party transactions	123～126
8.	Pledged assets	126
9.	Commitments and contingencies	126～129
10.	Losses from disasters	129
11.	Subsequent events	129
12.	Others	130～136
13.	Other disclosures
	(A) Information on significant transactions	136～137
	(B) Information of investees	137～140
	(C) Information on investments in Mainland China	140～141
	(D) Information of major shareholders	140～141
14.	Segment information	141
Statement of significant accounts		142～163
Segment information of Security Division		164～192

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KPMG

台北市110615信義路5段7號68樓(台北101大樓) 電話 Tel + 886 2 8101 6666 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, 傳真 Fax + 886 2 8101 6667 Xinyi Road, Taipei City 110615, Taiwan (R.O.C.) 網址 Web home.kpmg/tw

Independent Auditors’ Report

To the Board of Directors of Taiwan Business Bank, Ltd. :

Opinion

We have audited the financial statements of Taiwan Business Bank, Ltd. "the Bank" which comprise the balance sheets as of December 31, 2021 and 2020, the statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Bank as of December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Public Held Banks, and with the Regulation Governing the Preparation of Financial Reports by Securities Firms.

Basis for Opinion

We conducted our audits of the current period in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, Jin-Kuan-Yin-Zi No.10802731571 and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Bank in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China ("the Code"), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The assessment of loans impairment

Please refer to Note (4) (E) "Financial Instruments" for related accounting policy, Note 5 (A) for accounting assumptions and estimates, and Note 6 (F) "Discount and loans, net" and Note 6 (AP) "Financial Risk Information" for details of loans impairment, respectively.

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KPMG, a Taiwan partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

The management of the Bank assess the impairment of loans by determining if there is any observable evidence indicating impairment, and dividing them into collective assessment and individual assessment based on the materiality levels to measure by different impairment method. For the individual assessment with objective evidence of impairment, the measurement is based on expected future cash flow. For the collective assessment with objective evidence of impairment, the Bank needs to calculate the recovery rate of each group to measure the impairment amount. For the collectively assessed loans without objective evidence of impairment, the impairment is calculated by establishing an impairment model using the pass loss experience on assets with similiar credit risk characteristic to form basic estimation. Besides the methods mentioned above, the management of the Bank should inspect weather the amount of impairment is in compliance with the minimum level made by the authority. Both the evaluation of impairment evidences and its methods, as well as the uses of assumptions, such as the expected recovery rates and default rates, which are applied to determine the future cash flow, involved significant judgements and estimations. Therefore, the assessment on the impairment of loans has been identified as a key audit matter in our audit.

How the matter was addressed in our audit

Our principal audit procedures included: understanding the methodology and related control procedure about how the management asseses and measures the impairment amount of loans. For individual assessment, we used sampling test to evaluate the use of the original effective interest rate, the appropriateness of the estimation of future recoverable amounts and value of collateral. For collective assessment, we assessed the impairment model adopted by the management and reviewed the appropriated of the calculation of the impairment parameters and verified the completeness of the loans portfolio via sampling. Meanwhile, we assessed the impaired amounts recognized by the management were in compliance with the related regulations issued by authonity.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Public Held Banks, and the Regulations Governing the Preparation of Financial Reports by Securities Firms, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Bank’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (including the Audit Committee) are responsible for overseeing the Bank’s financial reporting process.

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Auditors’ Responsibilities for the Audit of the Financial Statement s

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank ’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Bank to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audits resulting in this independent auditors’ report are CHUNG, TAN TAN and CHEN, CHUN KUANG.

KPMG

Taipei, Taiwan (Republic of China) March 9, 2022

Notes to Readers

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

The independent auditors’ report and the accompanying financial statements are the English translation of 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 independent auditors’ report and financial statements, the Chinese version shall prevail.

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(English Translation of Financial Statements Originally Issued in Chinese.) TAIWAN BUSINESS BANK, LTD.

Balance Sheets

December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Assets 11000 Cash and cash equivalents (Notes 6(A) and 7) 11500 Due from the Central Bank and call loans to banks (Notes 6(B) and 7) 12000 Financial assets at fair value through profit or loss (Note 6(C)) 12100 Financial assets at fair value through other comprehensive income (Notes 6(G) and (Q)) 12200 Investment in debt instruments at amortized cost (Note 6(H)) 12500 Securities purchased under resell agreements (Note 6(D)) 13000 Receivables (Note 6(E)) 13200 Current tax assets 13500 Discounts and loans, net (Notes 6(F) and 7) 15000 Investment measured by equity method, net (Note 6(I)) 15500 Other financial assets (Note 6(J)) 18500 Property and equipment, net (Note 6(K)) 18600 Right-of-use assets, net (Note 6(L)) 19000 Intangible assets, net 19300 Deferred tax assets (Note 6(Z)) 19500 Other assets, net (Note 6(M)) Total assets	December 31, 2021 Amount ％ $ 39,189,153 2 158,109,903 8 39,658,224 2 157,498,525 8 279,035,906 14 7,831,274 - 5,609,809 - 347,649 - 1,302,388,363 65 3,117,027 - 28,942 - 14,529,762 1 1,145,071 - 553,784 - 1,923,597 - 10,011,973 - $ 2,020,978,962 100	December 31, 2020 Amount ％ 30,319,952 2 114,078,284 6 15,003,571 1 117,352,923 7 228,003,332 13 6,047,187 - 41,709,998 2 302,967 - 1,209,716,083 68 2,568,843 - 13,781 - 14,512,022 1 1,066,732 - 374,263 - 1,815,778 - 8,209,863 - 1,791,095,579 100 Liabilities and equity Liabilities 21000 Deposits from the Central Bank and banks (Notes 6(N) and 7) 21500 Due to the Central Bank and banks (Note 6(O)) 22000 Financial liabilities at fair value through profit or loss (Notes 6(P) and (T)) 22500 Notes and bonds issued under repurchase agreement (Note 6(Q)) 23000 Payables (Note 6(R)) 23200 Current tax liabilities 23500 Deposits and remittances (Notes 6(S) and 7) 24000 Bank notes payable (Note 6(T)) 25500 Other financial liabilities (Note 6(U)) 25600 Provisions (Note 6(V)) 26000 Lease liabilities (Note 6(W)) 29300 Deferred tax liabilities (Note 6(Z)) 29500 Other liabilities (Note 6(X)) Total liabilities Equity 31101 Common stock (Note 6(Y)) 31500 Capital Surplus(Note 6(Y)) Retained earnings: 32001 Legal reserve (Note 6(Y)) 32003 Special reserve (Note 6(Y)) 32005 Unappropriated retained earnings (Note 6(Y)) 32500 Other equity interest (Note 6(Y)) Total equity Total liabilities and equity	December 31, 2021		December 31, 2020
			Amount % $ 102,540,315 5 49,713,800 3 8,436,037 - 2,060,693 - 22,727,994 1 59,567 - 1,669,039,989 83 52,250,000 3 4,365,294 - 3,420,210 - 1,145,072 - 886,290 - 2,673,729 - 1,919,318,990 95 77,431,952 4 815,900 - 15,693,140 1 185,128 - 5,227,632 - 2,306,220 - 101,659,972 5 $ 2,020,978,962 100		Amount % 118,201,039 7 28,450,000 2 8,639,002 1 2,055,991 - 47,767,380 3 - - 1,418,703,482 79 53,250,000 3 5,492,366 - 3,393,417 - 1,054,665 - 901,581 - 4,527,907 - 1,692,436,830 95 74,885,834 4 815,900 - 14,332,452 1 185,128 - 4,728,382 - 3,711,053 - 98,658,749 5 1,791,095,579 100

See accompanying notes to financial statements.

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(English Translation of Financial Statements Originally Issued in Chinese.) TAIWAN BUSINESS BANK, LTD.

Statements of Comprehensive Income

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings Per Common Share)

For the ye	ar ende	d December 31, 2020 Amount ％ 24,884,487 114 (8,822,210) (40) 16,062,277 74 2,814,547 13 860,028 4 1,098,686 5 210,105 1 103,667 - (1,148) - 83,839 - 183,425 1 358,520 2 21,773,946 100 (4,072,168) (19) (7,861,658) (36) (983,655) (4) (3,482,955) (16) (12,328,268) (56) 5,373,510 25 671,735 3 4,701,775 22 (205,996) (1) (312,557) (1) - - (41,199) - (477,354) (2) (773,747) (4) 971,009 4 5,093 - (141,604) (1) 343,959 1 (133,395) (1) 4,568,380 21 0.61
2021	％ 100 (26)
Amount $ 24,037,857 (6,357,367)
17,680,490 3,317,550 562,196 1,187,700 103,741 310,634 (33,260) 99,659 168,888 561,639	74 14 2 5 1 1 - - 1 2
23,959,237	100
(5,171,832)	(22)
(8,350,140) (1,032,950) (3,628,017)	(35) (4) (15)
(13,011,107)	(54)
5,776,298 676,186	24 3
5,100,112	21
24,512 987,549 4,546	- 4 -
4,902	-
1,011,705	4
(416,460) (2,046,533) 2,674 (98,583)	(2) (9) - -
(2,361,736)	(11)
(1,350,031)	(7)
$ 3,750,081	14
$	0.66
$	0.66	0.61

See accompanying notes to financial statements.

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(English Translation of Financial Statements Originally Issued in Chinese.) TAIWAN BUSINESS BANK, LTD.

Statements of Changes in Equity

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

	Retained	earnings		Other equity interest Exchange differences on Unrealized gains (losses) from financial assets measured at fair value translation of foreign financial statements through other comprehensive income (862,866) 4,541,167 - - (613,905) 645,307 (613,905) 645,307 - - - - - - - - - 1,350 (1,476,771) 5,187,824 - - (330,494) (1,039,147) (330,494) (1,039,147) - - - - - - - (35,192) (1,807,265) 4,113,485	Total
				Exchange differences on translation of foreign financial statements (862,866) - (613,905) (613,905) - - - - - (1,476,771) - (330,494) (330,494) - - - - (1,807,265)
Legal reserve 12,312,175 - - - 2,020,277 - - - - 14,332,452 - - - 1,360,688 - - - 15,693,140	Special reserve 223,331 - - - - (38,203) - - - 185,128 - - - - - - - 185,128	Unappropriated retained earnings 7,167,217 4,701,775 (164,797) 4,536,978 (2,020,277) 38,203 (1,426,397) (3,565,992) (1,350) 4,728,382 5,100,112 19,610 5,119,722 (1,360,688) (748,858) (2,546,118) 35,192 5,227,632	Total
			19,702,723 4,701,775 (164,797) 4,536,978 - - (1,426,397) (3,565,992) (1,350) 19,245,962 5,100,112 19,610 5,119,722 - (748,858) (2,546,118) 35,192 21,105,900		95,516,766 4,701,775 (133,395)
					4,568,380
					- - (1,426,397) - -
					98,658,749 5,100,112 (1,350,031)
					3,750,081
					- (748,858) - -
					101,659,972

See accompanying notes to financial statements.

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(English Translation of Financial Statements Originally Issued in Chinese.) TAIWAN BUSINESS BANK, LTD.

Statements of Cash Flows

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities: Net income before tax Adjustments： Income and expenses items: Depreciation expenses Amortization expenses Provision for bad debt expenses Net losses on financial assets or liabilities at fair value through profit or loss Interest expenses Net gain arising from derecognition of financial assets measured at amortized cost Interest income Net change in provisions for guarantee liabilities Net change in other provisions Share of profit of associates and joint rentures accounted for using equity method Loss on disposal of property and equipment Property and equipment transferred to expenses Impairment loss on financial assets Others Total adjustments to reconcile profit Changes in Operating Assets and Liabilities： Changes in Operating Assets： (Increase) decrease in due from the Central Bank and call loans to banks (Increase) decrease in financial assets at fair value through profit or loss (Increase) decrease in securities purchased under resell agreements Decrease (increase) in receivables Increase in discounts and loans (Increase) decrease in other financial assets Increase in other assets Total changes in operating assets Changes in Operating Liabilities： (Decrease) increase in deposits from the Central Bank and banks Increase (decrease) in financial liabilities at fair value through profit or loss Increase in notes and bonds issued under repurchase agreement (Decrease) increase in payable Increase (decrease) in deposits and remittances Decrease in other financial liabilities Decrease in provisions for employee benefits Total Changes in Operating Liabilities Total Changes in Operating Assets and Liabilities Total adjustments Cash inflow (outflow) generated from operations Interest received Interest paid Income tax paid Net cash flow generated from (used in) operating activities Cash flows from investing activities： Acquisition of financial assets at fair value through other comprehensive income Acquisition of financial assets at amortized cost Proceeds from disposal of financial assets at amortized cost Proceeds from repayments of financial assets at amortized cost Acquisition of property and equipment Proceeds from disposal of property and equipment Increase in refundable deposits Decrease in refundable deposits Acquisition of intangible assets Net cash flows (used in) generated from investing activities Cash flows from financing activities： Increase in due to the Central Bank and banks Proceeds from issuing bank notes payable Repayments of bank notes payable Increase in guarantee deposits received Decrease in guarantee deposits received Payments of lease liabilities (Decrease) increase in other liabilities Cash dividends paid Aequisition of ownership interest in subsidiaries Net cash flows generated from financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalent at beginning of period Cash and cash equivalent at end of period	For the years ended December 31, 2021 2020 $ 5,776,298 5,373,510 862,209 842,138 170,741 141,517 5,113,134 4,033,155 388,853 467,059 6,357,367 8,822,210 (103,741) (210,105) (24,037,857) (24,884,487) 39,802 17,634 92,077 21,379 (99,659) (83,839) 852 1,796 - 5,719 33,260 1,148 (1,369) - (11,184,331) (10,824,676) (44,028,431) 11,291,521 (25,338,360) 11,668,480 (1,784,087) 7,351,926 36,367,071 (16,991,419) (97,792,108) (81,221,944) (5,770) 14,881 (3,568,328) (2,870,507) (136,150,013) (70,757,062) (15,660,724) 13,407,427 91,891 (1,266,559) 4,702 1,187,410 (25,322,034) 16,784,639 250,336,507 (16,628,612) (1,127,072) (1,342,718) (80,182) (9,318) 208,243,088 12,132,269 72,093,075 (58,624,793) 60,908,744 (69,449,469) 66,685,042 (64,075,959) 23,790,232 25,772,520 (6,241,095) (9,073,731) (506,777) (1,065,981) 83,727,402 (48,443,151) (41,225,923) (14,111,482) (130,873,423) - - 35,278,062 79,933,076 - (532,051) (500,273) 132 137 - (558,449) 1,358,420 - (309,304) (139,678) (91,649,073) 19,968,317 21,263,800 28,450,000 8,000,000 20,000,000 (9,000,000) (20,000,000) - 325,119 (347,219) - (411,827) (405,013) (1,506,959) 981,843 (748,858) (1,426,397) (450,000) (300,000) 16,798,937 27,625,552 (8,065) (24,103) 8,869,201 (873,385) 30,319,952 31,193,337 $ 39,189,153 30,319,952	For the years ended December 31, 2021 2020 $ 5,776,298 5,373,510 862,209 842,138 170,741 141,517 5,113,134 4,033,155 388,853 467,059 6,357,367 8,822,210 (103,741) (210,105) (24,037,857) (24,884,487) 39,802 17,634 92,077 21,379 (99,659) (83,839) 852 1,796 - 5,719 33,260 1,148 (1,369) - (11,184,331) (10,824,676) (44,028,431) 11,291,521 (25,338,360) 11,668,480 (1,784,087) 7,351,926 36,367,071 (16,991,419) (97,792,108) (81,221,944) (5,770) 14,881 (3,568,328) (2,870,507) (136,150,013) (70,757,062) (15,660,724) 13,407,427 91,891 (1,266,559) 4,702 1,187,410 (25,322,034) 16,784,639 250,336,507 (16,628,612) (1,127,072) (1,342,718) (80,182) (9,318) 208,243,088 12,132,269 72,093,075 (58,624,793) 60,908,744 (69,449,469) 66,685,042 (64,075,959) 23,790,232 25,772,520 (6,241,095) (9,073,731) (506,777) (1,065,981) 83,727,402 (48,443,151) (41,225,923) (14,111,482) (130,873,423) - - 35,278,062 79,933,076 - (532,051) (500,273) 132 137 - (558,449) 1,358,420 - (309,304) (139,678) (91,649,073) 19,968,317 21,263,800 28,450,000 8,000,000 20,000,000 (9,000,000) (20,000,000) - 325,119 (347,219) - (411,827) (405,013) (1,506,959) 981,843 (748,858) (1,426,397) (450,000) (300,000) 16,798,937 27,625,552 (8,065) (24,103) 8,869,201 (873,385) 30,319,952 31,193,337 $ 39,189,153 30,319,952
	2021 $ 5,776,298 862,209 170,741 5,113,134 388,853 6,357,367 (103,741) (24,037,857) 39,802 92,077 (99,659) 852 - 33,260 (1,369) (11,184,331) (44,028,431) (25,338,360) (1,784,087) 36,367,071 (97,792,108) (5,770) (3,568,328) (136,150,013) (15,660,724) 91,891 4,702 (25,322,034) 250,336,507 (1,127,072) (80,182) 208,243,088 72,093,075 60,908,744 66,685,042 23,790,232 (6,241,095) (506,777) 83,727,402 (41,225,923) (130,873,423) - 79,933,076 (532,051) 132 - 1,358,420 (309,304) (91,649,073) 21,263,800 8,000,000 (9,000,000) - (347,219) (411,827) (1,506,959) (748,858) (450,000) 16,798,937 (8,065) 8,869,201 30,319,952 $ 39,189,153
		(10,824,676)
		11,291,521 11,668,480 7,351,926 (16,991,419) (81,221,944) 14,881 (2,870,507)
		(70,757,062)
		13,407,427 (1,266,559) 1,187,410 16,784,639 (16,628,612) (1,342,718) (9,318)
		12,132,269
		(58,624,793)
		(69,449,469)
		(64,075,959) 25,772,520 (9,073,731) (1,065,981)
		(48,443,151)
		(14,111,482) - 35,278,062 - (500,273) 137 (558,449) - (139,678)
		19,968,317
		28,450,000 20,000,000 (20,000,000) 325,119 - (405,013) 981,843 (1,426,397) (300,000)
		27,625,552
		(24,103) (873,385) 31,193,337
		30,319,952

See accompanying notes to financial statements.

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(English Translation of Financial Statements Originally Issued in Chinese.) TAIWAN BUSINESS BANK, LTD. Notes to the Financial Statements December 31, 2021 and 2020 (Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

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, 2021, the Bank not only sets up the business dept., international dept., securities dept. and trust dept. under head office but also has 124 domestic branches, 1 offshore banking unit, 8 overseas branches, 1 oversea representative office and 16 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.

As of December 31, 2021 and 2020, the Bank has 5,436 and 5,369 employees, respectively.

2. Approval date and procedures of the consolidated financial statements

These financial statements were authorized for issuance by the board of directors on March 9, 2022.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

3. New standards, amendments and interpretations adopted:

(a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. (“FSC”) which have already been adopted.

The details of impact on the Taiwan Business Bank, Ltd.’s adoption of the new amendments beginning January 1, 2021 are as follows:

(i) Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark －
Reform Phase 2” (the Phase 2 amendments)

The Bank applied the Phase 2 amendments retrospectively. However, in accordance with the exceptions permitted in the Phase 2 amendments, the Bank has elected not to restate comparatives for the prior periods to reflect the application of these amendments.

The Phase 2 amendments provide practical relief from certain requirements in IFRS Standards. These reliefs relate to modifications of financial instruments and lease contracts or hedging relationships triggered by a replucement of a benchmark interest rate in a contract with a new alternative benchmark rate.

If the basis for determining the contractual cash flows of a financial asset or financial liability measured at amortized cost changed as a result of interest rate benchmark reform, the Bank will update the effective interest rate of the financial asset or financial liability to reflect the change that is required by the reform. A change in the basis for determining the contractual cash flows is required by interest rate benchmark reform if the following conditions are met:

–the change is necessary as a direct consequence of the reform; and

– the new basis for determining the contractual cash flows is economically equivalent to the previous basis – i.e. the basis immediately before the change.

When changes were made to a financial asset or financial liability in addition to changes to the basis for determining the contractual cash flows required by interest rate benchmark reform, the Bank first updateds the effective interest rate of the financial asset or financial liability to reflect the change that is required by interest rate benchmark reform. Thereafter, the Bank will apply policies on accounting for modifications to the additional changes.

The amendments also provide an exception to use a revised discount rate that reflects the change in interest rate when remeasuring a lease liability because of a lease modification that is required by interest rate benchmark reform.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

Finally, the Phase 2 amendments provide a series of temporary exceptions from certain hedge accounting requirements when a change required by interest rate benchmark reform occurs to a hedged item and/or hedging instrument that permits the hedging relationship to be continued without interruption.

The details of the accounting policies are disclosed in Note 4(E) and Note 6(AP).

(ii) Other amendments

The following new amendments, effective January 1, 2021, do not have a significant impact on the Bank’s financial statements:

●Amendments to IFRS 4 “ Extension of the Temporary Exemption from Applying IFRS 9”
●Amendments to IFRS 16 “ Covid-19-Related Rent Concessions beyond June 30, 2021”
(b) The impact of IFRS issued by the FSC but not yet effective

The Bank assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2022, would not have a significant impact on its financial statements:

－
●Amendments to IAS 16 “Property, Plant and Equipment Proceeds before Intended Use”
－
●Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”
Annual Improvements to IFRS Standards 2018–2020
●Amendments to IFRS 3 “Reference to the Conceptual Framework”

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

The following new and amended standards, which may be relevant to the Bank, has been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

Standards or
Interpretations
Amendments to IAS 1
“Disclosure of Accounting
Policies”
Amendments to IAS 8
“Definition of Accounting
Estimates”

Content of amendment
Effective date per
IASB
The key amendments to IAS 1 include:
●requiring companies to disclose their
material accounting policies rather
than their significant accounting
policies;
●clarifying that accounting policies
related to immaterial transactions,
other events or conditions are
themselves immaterial and as such
need not be disclosed; and
●clarifying that not all accounting
policies that relate to material
transactions,
other
events
or
conditions are themselves material to
a company’s financial statements.
January 1, 2023
The amendments introduce a new
definition for accounting estimates:
clarifying that they are monetary
amounts in the financial statements that
are subject to measurement uncertainty.
The amendments also clarify the
relationship
between
accounting
policies and accounting estimates by
specifying that a company develops an
accounting estimate to achieve the
objective set out by an accounting
policy.
January 1, 2023

The Bank is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its financial position and financial performance. The results thereof will be disclosed when the Bank completes its evaluation.

The Bank does not expect the following other new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its financial statements:

●Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

●IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”
●Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”
●Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

4. Summary of significant accounting policies

(A) Statement of compliance

These financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Public Held Banks and the Regulations Goverming the Preparation of Financial Report by Securities Firms (hereinafter referred to as the Regulation).

(B) Basis of preparation

(a) Basis of measurement

The financial statements have been prepared on a historical cost basis except for the following material items in the statement of financial position:

(1) Financial instruments measured at fair value through profit or loss are measured at fair value (including derivative instruments);
(2) Financial instrument measured at fair value through other comprehensive income; and
(3) The net defined benefit liability (asset) is recognized as fair value of plan assets, less present value of defined benefit obligation and the effect of the asset ceiling in Note 4(M).
(b) Consolidation of financial statement

The financial statements include the headquarter and all the domestic branches and foreign branches. The internal transactions within the headquarter, the domestic branches and the foreign branches are offset when preparing the financial statement.

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

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TAIWAN BUSINESS BANK, LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(C) 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 end of each subsequent reporting period (hereinafter referred to as the reporting date) are retranslated to the functional currency at the exchange rate of Bank of Taiwan at 10 AM. 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 equity instruments measured at fair value through other comprehensive income which are recognized in other comprehensive income arising on the retranslation.

(b) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the presentation currency at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the presentation currency at the average exchange rate. Exchange differences are recognized in other comprehensive income.

When a foreign operation is disposed of such that control, significant influence, or joint control is lost, 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. When the Bank disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non controlling interests. When the the Bank disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, Exchange differences arising from such a monetary item that are considered to form part of the net investment in the foreign operation are recognized in other comprehensive income.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(D) Cash and cash equivalents

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.

(E) Financial Instruments

Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Bank becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(a) Financial assets

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

On initial recognition, a financial asset is classified as measured at: amortized cost; fair value through other comprehensive income (FVOCI) – debt investment; FVOCI – equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Bank changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the next reporting period following the change in the business model.

(1) Investment in debt instruments measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

These assets are subsequently measured at amortized cost, which is the amount at which the financial asset is measured at initial recognition, plus/minus, the cumulative amortization using the effective interest method, adjusted for any loss allowance. Interest income, foreign exchange gains and losses, as well as impairment, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(2) Financial assets at fair value through other comprehensive income (FVOCI)

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL.

‧ it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Bank may irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an investment-byinvestment basis.

Debt investments at FVOCI are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.

Equity investments at FVOCI are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in other comprehensive income and are never reclassified to profit or loss.

Dividend income is recognized in profit or loss on the date on which the Bank’s right to receive payment is established.

(3) Financial assets at fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL, including derivate financial assets. On initial recognition, the Bank may irrevocably designate a financial asset, which otherwise meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(4) Discount and loans, net

Discount and loans 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 much difference then it can adopt straight line method and is booked as per amortized cost deducted by impairment loss. Interest accrual on discount and loans are suspended if either of the following occurs:

‧ Payment of principal or interest is very likely not to be redeemed as per contracts.
‧ Non-performing loans are categorized as overdue loans in six months after the settlement period ends.
(5) Impairment of financial assets

The Bank recognize loss allowances for expected credit losses on financial assets measured at amortized cost, debt investments measured at FVOCI and loan commitments and financial guarantee contracts. Equity instrument investment does not need to recognize expected credit losses.

The Bank measures loss allowances at an amount equal to lifetime expected credit loss (ECL), except for the following which are measured as 12-month ECL:

‧ debt securities that are determined to have low credit risk at the reporting date; and
‧ other debt securities, receivables, loan commitments and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instruments is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Bank is exposed to credit risk.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

When determining whether the credit risk of financial asset has increased significantly since initial recognition and when estimating ECL, the Bank and subsidiaries considers reasonable and supportable information that is relevant and available (without undue cost or effort). This includes both quantitative and qualitative information and analysis, based on the Bank’ s historical experience, informed credit assessment and including forward-looking information.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls. The difference between the cash flows due to the Bank expect to receive. ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Bank assesses whether financial assets carried at amortized cost, debt securities at FVOCI, loan commitments and contracts of financial guarantee are credit-impaired. A financial asset is “credit-impaired” when one or move events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is creditimpaired includes the following observable data:

‧ significant financial difficulty of the borrower or issuer;
‧ a breach of contract such as a default or being past due;
‧ the restructuring of a loan or advance by the borrowers on terms that the borrowers would not consider otherwise;
‧ it is probable that the borrower will enter bankruptcy or other financial reorganization;
‧ the disappearance of an active market for a security because of financial difficulties; or
‧ to purchase or initiate financial assets at a substantial discount that reflects the credit losses that have occurred.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognized in other comprehensive income instead of reducing the carrying amount of the asset.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

In addition to estimate the allowance for bad debts and guarantee liability provisions as above, according to “ Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-Performing and Non-Accrual Loans ”, and considering the situation of their finance and the default of principal and interest payment, the credit assets are classified as below:

‧ 1% of the first class credit assets deducted by the amount of credit assets from the government.
‧ 2% of the second class credit assets.
‧ 10% of the third class credit assets.
‧ 50% of the fourth class credit assets.
‧ 100% of the fifth class credit assets.

The allowance for bad debts and guarantee liability provisions were 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.

Unrecoverable overdue loans and bad debts of the Bank, 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 reserve is reflected as a current loss.

(b) Financial liabilities

Financial liability measured at fair value through profit or loss, if one of the following conditions is met

(1) Financial liabilities held for trading

A financial liability is held for trading if it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term; on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking. A derivative, except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument, is classified as instrument held for trading as well.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(2) Financial liabilities designated at fair value through profit or loss

Financial liabilities falling under this category are measured at fair value at initial recognition. Attributable transaction costs are recognized in profit or loss as incurred. Subsequent changes are measured at fair value and recognized in profit or loss. While for financial liabilities designated at fair value through profit or loss, the changes in fair value generated from credit risk should be recognized under other comprehensive income, except for avoiding accounting mismatch that should be recognized in profit or loss.

The Bank only reclassified all affected financial assets in accordance with the regulations when changing the business model of managing financial assets. These changes are expected to be extremely infrequent. In addition, the Bank must not reclassify any financial assets and liabilities of equity instruments.

If the Bank reclassify financial assets in accordance with the aforesaid circumstances, the reclassification shall be postponed from the reclassification date, and any previously recognized gains, losses (including impairment losses or reversal of impairment loss) or interest shall not be restated.

(d) Derecognition of financial assets and liabilities

The Bank derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Bank neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Bank enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

The Bank derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Bank also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(e) Offsetting of financial assets and liabilities

Financial asset and financial liability are offset and the net amount presented in the statement of balance sheet when, and only when, the Bank currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(f) Interest rate benchmark reform (policy applicable from January 1, 2021)

When the basis for determining the contractual cash flows of a financial asset or financial liability measured at amortized cost changes as a result of interest rate benchmark reform, the Bank updates the effective interest rate of the financial asset or financial liability to reflect the change that is required by the reform.

A change in the basis for determining the contractual cash flows is required by interest rate benchmark reform if the following conditions are met:

the change is necessary as a direct consequence of the reform; and
the new basis for determining the contractual cash flows is economically equivalent to the previous basis - i.e. the basis immediately before the change.

When changes were made to a financial asset or financial liability in addition to changes to the basis for determining the contractual cash flows required by interest rate benchmark reform, the Bank first updates the effective interest rate of the financial asset or financial liability to reflect the changes that is required by interest rate benchmark reform. Thereafter, the Bank will applied the policies on accounting for modifications to the additional changes.

(F) Impairment loss on non-financial assets

The Bank reviews the carrying amounts of its non-financial assets (other than contract assets and deferred tax assets) to determine whether there is any indication of impairment on the balance sheet date. If any such indication exists, then the asset’ s recoverable amount is estimated.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units (CGUs).

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

(G) Property and Equipment

(a) Recognition and measurement

Items of property and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses.

If significant parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property and equipment is recognized in profit or loss.

(b) Subsequent expenditure

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Bank.

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property and equipment.

Land is not depreciated.

The estimated useful lives of property and equipment for current and comparative periods are as follows:

(1) Buildings 35-50 years
(2) Equipment 3-8 years

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

The Bank reviews and adjusts the residual value and the useful lives of assets at the end of each fiscal year. Whenever there is evidence indicating that the carrying amount is unable to be recovered due to environmental activities or changes, the Bank evaluates the impairment loss of assets.

(H) Investment in associates

The Bank uses the equity method to evaluate an investee that it controls in preparing the financial statements. Under the equity method, the profit or loss and other comprehensive income are the same as the allocated amount of those attributable to owners of parent in the financial statements, and owners' equity are the same as the equity attributable to owners of parent in the consolidated financial statements. Changes in the Bank's ownership interest in a subsidiary that do not result in a loss of control of a subsidiary are equity transactions with owners.

(I) Lease

(a) Identifying a lease

At inception of a contract, the Bank assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Bank assesses whether:

the contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and
the Bank has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
the Bank has the right to direct the use of the asset throughout the period of use only if either:
(1) the Bank has the right to direct how and for what purpose the asset is used throughout the period of use; or

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(2) the relevant decisions about how and for what purpose the asset is used are predetermined and:
- the Bank has the right to operate the asset throughout the period of use, without the supplier having the right to change those operating instructions; or
- the Bank designed the asset in a way that predetermines how and for what purpose it will be used throughout the period of use.
(b) As a lessee

The Bank recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Bank incremental borrowing rate. Generally, the Bank uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

fixed payments, including in substance fixed payments;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
amounts expected to be payable under a residual value guarantee; and
payments for purchase or termination options that are reasonably certain to be exercised.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

there is a change in future lease payments arising from the change in an index or rate; or
there is a change in the Bank estimate of the amount expected to be payable under a residual value guarantee; or
there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or
there is a change of its assessment on whether it will exercise an extension or termination option; or
there are any lease modifications

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Bank accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-ofuse asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Bank has elected not to recognize right-of-use assets and lease liabilities for shortterm leases that have a lease term of 12 months or less and leases of low-value assets. The Bank recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(c) As a lessor

When the Bank acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Bank makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Bank considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(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) Collaterals

The difference between the amount of claims and the Bank received when creditors cannot meet obligations and the collaterals are auctioned off is recognized as bad debts expense. The amount that net realized value lower than book value is recognized as impairment loss. The selling price deducts the original book value of collateral assumed is recognized as gain or loss on sale of collateral assumed.

(L) Provisions

A provision is recognized if, as a result of a past event, the Bank has a present legal or constructive obligation that can be estimated reliably, and it is probably that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. Amortization of the discount is recognized as interest expense.

(M) Employee benefit

(a) Short term employee benefit

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

(b) Retirement benefit

The pension provision of the Bank includes defined contribution plan and defined benefit plan. For the personnel of foreign offices, the Bank provides pension fund per the regulations of the local authorities.

Defined contribution plan refers to the plan that the Bank annually provide certain amount of money to funds to fulfill the obligation. the Bank provides pension based on compulsory obligation, contracts or voluntary will to public or private managed pension funds. If certain pension fund fails to pay the employees the benefit which they deserve for the service they provided, the Bank does not hold legal or constructive obligation to pay additional provision.the Bank recognizes the pension fund provided as current pension cost on accrual basis.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

The Bank’ s net obligation in respect of defined benefit pension plans is calculated separately for each 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 is performed annually by a qualified actuary using the projected unit credit method. When 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.

If the benefits of a plan are improved, the pension cost incurred from the portion of the increase benefit relating to past service by employees, is recognized immediately in profit or loss.

The remeasurements of defined benefit liability (asset) include:

(1) Actuarial gains and losses;
(2) Return on plan assets, excluding net interest on the net defined benefit liability (asset); and
(3) The effect of the asset ceiling, excluding net interest on the net defined benefit liability (asset).

The remeasurements of defined benefit liability (asset) are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur.

Gains or losses on the curtailment or settlement of a defined benefit plan are recognized when the curtailment or settlement occurs. The gain or loss on curtailment arises from any changes in the fair value of plan assets, any changes in the present value of the defined benefit obligation, and any related actuarial gains or losses and past service cost which had not previously been recognized.

～ 26 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

The pension cost in the interim financial statements was calculated and disclosed on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior fiscal year, for the reporting period, the rate will be adjusted by material market volatility, material curtailment, reimbursement and settlement or other material one-time events.

(c) Deposits with favorable rate

The Bank provides deposits with favorable rate to employees, which include current employee fix amount 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.

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

(d) Termination benefits

Termination benefits are recognized as an obligation when the Bank is demonstrably committed, without 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 recognizes liabilities when a formal irrevocable 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 taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes are recognized in profit or loss.

～ 27 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables are the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized.

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date, and reflect uncertainty related to income taxes, if any.

Deferred tax assets and liabilities are offset against each other only if the following criteria are met by the Bank:

(a) the Taiwan Business Bank, Ltd. has a legally enforceable right to set off current tax assets against current tax liabilities; and
(b) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
- (1) the same taxable entity; or
- (2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
(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 receive cash, the revenue is recognized.

～ 28 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

The revenue of handling fee is recognized when cash collected or when the process of the profit are mostly 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 than 1% of the principal, the recognition of the revenue should be deferred and be recognized as revenue during the loan period.

(P) Earnings per share (EPS)

The Bank discloses the basic and diluted earnings per share attributable to ordinary shareholders of the bank. Basic earnings per share is calculated as the profit attributable to ordinary shareholders of the bank divided by the weighted average number of ordinary shares outstanding. Diluted earnings per share is calculated as the profit attributable to ordinary shareholders of the Bank divided by the weighted average number of ordinary shares outstanding after adjustment for the effects of all potentially dilutive ordinary shares, such as stock that issued for employee bonuses.

(Q) Operating segments

Segment information is disclosed in the consolidated financial statements by the Bank and therefore not included in this parent-company-only financial statements.

5. Significant accounting assumptions and judgments, and major sources of estimation uncertainty

In preparing these financial statements, management has made 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 continues to monitor the accounting estimates and assumptions. The management recognizes any changes in accounting estimates during the period and the impact of those changes in accounting estimates in the following period.

～ 29 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year is as follows. Those assumptions and estimation have been updated to reflect the impact of COVID-19 pandemic:

(A) Impairment losses on loans

The impairment of loans of the Bank was evaluated by identifying the credit risk of those financial assets have significantly increased or not at the reporting date if the credit risk has not significant incurred, the 12-month expected credit loss should be adopted to evaluate, or the lifetime credit loss evaluation should be adopted.

To evaluate the expected credit losses for 12-month and lifetime, the Bank considers the unfavorable changes of payment status or the economic conditions of the countries or areas related to the default loans. When analyzing expected cash flows, the estimates by the management are based on the pass losses experience from assets with similar credit risk characteristics. In order to reduce losses from the difference between estimated and actual amount, the Bank has considered historical experience, current economic conditions and forward-looking information at the reporting date to determine the assumptions to be used in calculating the impairments and the select inputs.

(B) Retirement benefit

The present value of the retirement benefit obligation is the actuarial result based on several assumptions. 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 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 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.

～ 30 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

6. Explanation of significant accounts

(A) Cash and cash equivalents

Petty cash and revolving funds Foreign currencies on hand Checks for clearing Due from other banks Total	December 31, 2021 $ 10,892,224 813,650 12,197,958 15,285,321 $ 39,189,153	December 31, 2020
		9,974,006 953,700 3,212,602 16,179,644
		30,319,952

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

Due from the Central Bank Deposits transferred to Central Bank Call loans to banks Trust fund indemnity reserve deposited Securities serving as trust fund indemnity reserve deposited Total	December 31, 2021 $ 72,157,455 52,275 85,900,173 90,000 (90,000) $ 158,109,903	December 31, 2020 46,208,001 55,339 67,814,944 90,000 (90,000) 114,078,284

As of December 31, 2021 and 2020, in accordance with the Banking Law and the Central Bank Law, the required reserve deposited by the Bank with the Central Bank amounted to $71,836,985 and $45,813,518 of which $44,525,965 and $37,579,517 respectively, were restricted and such restriction may only be lifted when the required reserve is adjusted to a lower amount. The Bank cooperated with the Central Bank to undertake financing loans for small and medium enterprises that are affected by the severe and the special infectious pneumonia epidemic, As of December 31, 2021 and 2020 are guaranteed by the deposit reserve of the Central Bank as required, $39,000,000 and $30,000,000 respectively, please refer to 6(O) for the information of due to the Central Bank and banks.

As of December 31, 2021 and 2020, the Bank’s overseas branches, in compliance with the Central Bank’s reserve requirement set by local authorities, deposited $153,662 and $84,665 and in reserve, of which $64,758 and $56,642 were restricted.

Effective December 2000, in accordance with the amended “ Regulations Governing the Audit and Adjustment of Deposit and Other Liability Reserves of Financial Institutions”, the Bank provides the required additional reserve on foreign currency deposits. As of December 31, 2021 and 2020, the required reserve with the Central Bank amounted to $166,808 and $309,818 respectively, and its use was unrestricted.

As of December 31, 2021 and 2020, deposits transferred to the Central Bank collected from the armed forces, prisons, and other treasury deposits were restricted.

～ 31 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

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, 2021 and 2020, the Bank deposited marketable securities of $90,000 as trust fund reserves.

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

Financial assets designated at fair value through profit or loss： Corporate bonds Financial assets at fair value through profit or loss, mandatorily measured at fair value : Derivative instruments not used for hedging: Foreign exchange forward contracts Currency swap contracts Foreign currency options-call Stock index futures Interest Rate Swap Non-derivative financial assets Commercial paper Listed stocks Beneficiary certificates Convertible corporate bonds Financial debentures Total	December 31, 2021 $ - 18,120 495,831 3,714 28,745 6,226 37,015,444 68,106 1,665,898 79,230 276,910 $ 39,658,224	December 31, 2020
		84,377 55,129 527,767 6,592 72,747 28,623 12,414,244 188,304 267,054 51,700 1,307,034
		15,003,571

Derivative financial instruments are used for hedging foreign exchange risk and interest rate risk arising from operating, financing and investing activities. The Bank held derivative financial instruments which did not apply to hedge accounting are as follows ( reported as financial assets mandatorily measured at fair value through profit or loss and financial liabilities held for trading)

Currency swaps contract Interest rate swaps contract Option contract - buy Option contract - sell Forward foreign exchange contract	December 31, 2021 December 31, 2020 $ 153,249,108 156,328,006 11,916,735 13,920,619 682,393 886,607 682,393 886,607 3,835,462 2,817,826

(D) Securities purchased under resell agreements

Securities under resell agreements Face amount Resell period Range of resell interest rate Resell price	December 31, 2021 $ 7,831,274 7,834,600 2022.01.03~2022.01.19 0.33%~0.34% $ 7,832,994	December 31, 2020
		6,047,187
		6,050,000
		2021.01.04~2021.01.25
		0.23%~0.26%
		6,047,636

～ 32 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(E) Receivables, net

Interest receivable Acceptances receivable Accrued incomes Accounts receivable Spot exchange receivable-foreign currencies Refinancing guaranty deposits Guaranteed proceeds receivable from refinancing Credit cards accounts receivable Receivable price of securities purchased for customers Settlement price Other receivables Sub-total Less: Allowance for bad debts Total	December 31, 2021 $ 2,753,874 1,033,229 138,537 9,094 9,546 33 36 1,033,355 177,964 141,261 383,953 5,680,882 (71,073) $ 5,609,809	December 31, 2020 2,500,082 1,283,753 69,435 3,600 35,719,388 6,272 6,360 1,090,030 246,189 452,602 416,449 41,794,160 (84,162) 41,709,998

The outstanding contract amount of financial assets that have been written off and still have recourse as of December 31, 2021 and 2020 were $85,326,562 and $81,683,160 respectively.

The change in allowance for bad debts was as follows:

Beginning balance (Reversal) provision Foreign exchange Ending balance	For theyears ended December 31, 2021 2020 $ 84,162 61,768 (12,953) 22,568 (136) (174) $ 71,073 84,162
	2021 $ 84,162 (12,953) (136) $ 71,073

～ 33 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(F) Discounts and loans, net

Import/export bills negotiated Bills and notes discounted Overdrafts Secured overdrafts Short-term loans Short-term secured loans Margin loans receivable Medium-term loans Medium-term secured loans Long-term loans Long-term secured loans Overdue loans Sub-total Less: Adjustment of discount and premium Less: Allowance for bad debts Total	December 31, 2021 $ 185,267 753,253 35,359 3,082,281 158,526,680 224,893,139 3,245,824 158,957,105 283,220,193 30,248,716 453,214,205 1,862,326 1,318,224,348 (259,168) (15,576,817) $ 1,302,388,363	December 31, 2020 149,837 835,280 22,354 1,456,408 142,677,907 197,006,073 2,504,189 154,862,508 260,308,203 25,097,549 433,675,772 5,699,161 1,224,295,241 (253,001) (14,326,157) 1,209,716,083

The change in allowance for bad debts was as follows:

Beginning balance Provision Transfer out Write-off Write-off recovered Foreign exchange Ending balance	For the years ended December 31, 2021 2020 $ 14,326,157 13,341,368 5,153,489 4,046,672 (15,073) (16,268) (5,081,394) (4,008,562) 1,218,393 991,109 (24,755) (28,162) $ 15,576,817 14,326,157
	2021 $ 14,326,157 5,153,489 (15,073) (5,081,394) 1,218,393 (24,755) $ 15,576,817

(G) Financial asset at fair value through other comprehensive income

Investment in debt instruments measured at fair value through other comprehensive income： Government bonds Corporate bonds Financial debentures Subtotal Investment in equity instruments measured at fair value through other comprehensive income： Listed stocks Unlisted stocks Real Estate Investment Trust Subtotal Total	December 31, 2021 $ 46,011,743 57,107,224 32,875,263 135,994,230 16,414,356 4,940,042 149,897 21,504,295 $ 157,498,525	December 31, 2020
		34,724,023 46,029,075 23,339,038
		104,092,136
		8,736,348 4,475,144 49,295
		13,260,787
		117,352,923

～ 34 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

Investment in debt instruments measured at fair value through other comprehensive income

The Bank assessed that the above bond investments were held within a business model whose objective was achieved by both collecting contractual cash flows and selling financial assets. The bond investments have been classified as the financial asset measured at fair value through other comprehensive income. Some of the investment in debt instruments measured at fair value through other comprehensive income are used as resell condition. Please refer to Note 6 (Q) for more details.

Investment in equity instruments measured at fair value through other comprehensive income

The Bank designated the investments shown above as equity securities as at fair value through other comprehensive income because these equity securities represent those investments intending to hold for long-term for strategic purpose.

The Bank designated the investments shown above as equity instrument as at fair value through other comprehensive income, therefore, the Bank recognized $884,796 and $511,208, respectively as dividend revenue for the years ended December 31, 2021 and 2020. In which, the disposal equity instruments were recognized $44,127 and $117,041 as dividend revenue for the years ended December 31, 2021 and 2020.

The Bank sold the investments which were measured as at fair value through other comprehensive income due to assets allocation. The fair value of disposed investments are $801,669 and $2,601,237. And gains(losses) on disposal are $35,192 and $(1,350) for the years ended December 31, 2021 and 2020. Therefore, accumulated gains on disposal were transferred from other equity to retained earnings.

Please refer to Note 6(AP) for the credit risk (including the impairment in debt instruments) and market risk information.
The Bank assessed the impairment of financial assets measured at fair value through other comprehensive income as of December 31, 2021 and 2020. The changes in allowance for credit losses attribute to the financial assets were as follows:

Beginning balance Provision Foreign exchange Ending balance	For the years ended December 31,	For the years ended December 31,
	2021 $ 66,454 21,599 (261) $ 87,792	2020
		52,299 14,630 (475) 66,454

～ 35 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(H) Investment in debt instruments at amortized cost

Certificates of deposit with the Central Bank Government bonds Corporate bonds Financial debentures Negotiable certificates of deposit Subtotal Less:Accumulated impairment Total	December 31, 2021 $ 231,395,000 24,673,670 8,689,856 14,306,782 58,076 279,123,384 (87,478) $ 279,035,906	December 31, 2020 161,705,000 29,584,857 13,464,156 23,044,358 280,925 228,079,296 (75,964) 228,003,332

The Bank assessed that these financial assets were held to collect the contractual cash flows, which consisted solely of payments of principal and interest on principal amount outstanding. Therefore, these investments were classified as financial assets measured at amortized cost.

Please refer to Note 6(AP) for credit risk.
The pledged assets provided by the above investment in debt instruments at amortized cost were shown follows:

Reserve for provisional seizure by the court, international card payment reserve, trust claim reserve and operating guaranty funds Central Bank financial guarantee Overseas branches required reserve of overdraft guarantee Daylight overdraft guarantee (Certificates of deposit with the Central Bank) Guarantee for borrowing US dollars Guarantee for borrowing JPY dollars Sponsorship of Treasury Affairs Total	December 31, 2021 $ 901,900 11,300,000 58,076 2,000,000 23,000,000 200,000 16,200,000 $ 53,659,976	December 31, 2020
		812,600 - - 2,000,000 23,000,000 200,000 -
		26,012,600

The Bank assessed the impairment of investment in debt instruments at amortized cost as of December 31, 2021 and 2020. The changes in allowance for credit losses attribute to these financial assets were as follows:

these financial assets were as follows:
Beginning balance Procision (Reversal) Foreign exchanges Ending balance	For the years ended December 31,
	2021 $ 75,964 11,661 (147) $ 87,478	2020 90,411 (13,482) (965) 75,964

～ 36 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

Disposal gain (loss) on disposal investment in assets at amortized cost：

Govement bonds Corporate bonds Financial debentures Total Govement bonds Corporate bonds Financial debentures Total	For theyears ended December 31, 2021	For theyears ended December 31, 2021
	The carrying amount at the date of derecognition Gain (Loss) on disposal $ 791,559 78,951 248,776 2,048 549,111 22,742 $ 1,589,446 103,741 For theyears ended December 31, 2020	Gain (Loss) on disposal
		78,951 2,048 22,742
		103,741
	The carrying amount at the date of derecognition $ 300,522 992,550 1,356,497 $ 2,649,569	Gain (Loss) on disposal
		2,921 100,087 107,097
		210,105

In 2021 and 2020, the following reasons that caused the Bank dispose part of its financial assets measured at amortized cost for the mandatorily redemption of the bond issuers, and the purpose of fund management.

(I) Investment measured by equity method, net

Subsidiary	December 31, 2021 Amount % $ 1,463,080 100.00 537,297 100.00 1,068,059 100.00 48,591 - $ 3,117,027	December 31, 2020	December 31, 2020
	Amount $ 1,463,080 537,297 1,068,059 48,591 $ 3,117,027	Amount 1,431,596 552,164 585,083 - 2,568,843	%
Investment measured by equity method TBB International Leasing Co., Ltd. －initial investment $400,000 thousand TBB (Cambodia) Microfinance Institution Plc. －initial investment USD $10,000 thousand TBB Venture Capital Co., Ltd. －initial investment $300,000 thousand TBB Consulting Co., Ltd. －initial investment $50,000 thousand Total			100.00 100.00 100.00 -

The Bank's share of profit of associates and joint ventures accounted for using equity method for the years ended December 31, 2021 and 2020 are $99,659 and $83,839 respectively.

～ 37 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

On August 23, 2021, the Bank invested $50,000 and held 100% of the equity in TBB Consulting Co., Ltd. The establishment registration was completed on August 30, 2021.

On December 22, 2021, the subsidiary TBB Consulting Co., Ltd. invested $2,000 and expected to hold 20% of the equity in Manitok Management Consultants Co., Ltd. The establishment registration was completed on January 19, 2022.

The board of directors of the Bank agreed on participating in the capital increase by cash of NTD$400,000, on December 24, 2020 in subsidiary TBB Venture Capital Co., Ltd. The capital increase is fully acquired by the Bank, and the base date of the capital increase is set on January 7, 2021.

The board of directors of the Bank agreed on participating in the capital increase by cash of NTD$300,000, on December 26, 2019 in subsidiary TBB Venture Capital Co., Ltd. The capital increase is fully acquired by the Bank, and the base date of the capital increase is set on January 7, 2020.

Pursuant to the resolution approved by the board of directors of the Bank on December 19, 2018, the Bank will merge subsidiaries Taiwan Business Bank Insurance Agency Co., Ltd. and Taiwan Business Bank Property Insurance Agency Co., Ltd. at January 2, 2020. The merger will be approved by The Ministry of Economic Affairs, R.O.C. by February 25, 2020.

The Bank has prepared consolidated financial statements for the years ended December 31, 2021 and 2020.

(J) Other financial assets

Overdue receivable Less: Allowance for bad debts, overdue receivable Total	December 31, 2021 $ 80,334 (51,392) $ 28,942	December 31, 2020 68,832 (55,051) 13,781

The change in allowance for bad debts was as follows:

Beginning balance Reversal Transfer in Write-off Written-off recovered Ending balance	For the years ended December 31, 2021 2020 $ 55,051 85,901 (24,464) (25,002) 15,073 16,268 (15,308) (44,717) 21,040 22,601 $ 51,392 55,051
	2021 $ 55,051 (24,464) 15,073 (15,308) 21,040 $ 51,392

～ 38 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(K) Property and equipment, net

December 31, 2021	Cost $ 6,743,535 8,017,954 2,389,844 272,245 643,410 152,399 40,547 573,971 $ 18,833,905 Cost $ 6,743,535 7,930,240 2,270,278 275,177 605,359 158,863 12,246 514,215 $ 18,509,913	Revaluation increment 2,986,161 31,184 - - - - - - 3,017,345 Revaluation increment 2,986,161 31,184 - - - - - - 3,017,345	Accumulated depreciation - 4,592,658 1,862,830 224,946 536,589 75,680 - - 7,292,703 Accumulated depreciation - 4,404,411 1,769,070 232,756 518,100 62,114 - - 6,986,451	Accumulated impairment 14,031 14,754 - - - - - - 28,785 Accumulated impairment 14,031 14,754 - - - - - - 28,785	Total 9,715,665 3,441,726 527,014 47,299 106,821 76,719 40,547 573,971
Land Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Construction in progress Prepayment for equipment Total December 31, 2020
					14,529,762
					Total 9,715,665 3,542,259 501,208 42,421 87,259 96,749 12,246 514,215
Land Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Construction in progress Prepayment for equipment Total
					14,512,022

Change of cost

Land Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Construction in progress Prepayment for equipment Total Land Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Construction in progress Prepayment for real estate Prepayment for equipment Total	January 1, 2021 $ 9,729,696 7,961,424 2,270,278 275,177 605,359 158,863 12,246 514,215 $ 21,527,258 January 1, 2020 $ 9,724,121 7,893,705 2,332,789 279,687 578,667 141,903 16,346 120 405,727 $ 21,373,065	Increase - 87,714 229,260 18,695 63,178 17,086 62,045 158,678 636,656 Increase 5,575 67,719 193,084 16,522 55,918 53,123 26,074 5,455 161,827 585,297	Decrease - - 106,258 21,548 24,177 19,788 33,744 98,853 304,368 Decrease - - 251,674 20,997 27,425 34,030 30,174 5,575 52,952 422,827	Foreign Exchange - - (3,436) (79) (950) (3,762) - (69) (8,296) Foreign Exchange - - (3,921) (35) (1,801) (2,133) - - (387) (8,277)	December 31, 2021
					9,729,696 8,049,138 2,389,844 272,245 643,410 152,399 40,547 573,971
					21,851,250
					December 31, 2020 9,729,696 7,961,424 2,270,278 275,177 605,359 158,863 12,246 - 514,215
					21,527,258

～ 39 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

Change of depreciation

Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Total Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Total	January 1, 2021 $ 4,404,411 1,769,070 232,756 518,100 62,114 $ 6,986,451 January 1, 2020 $ 4,213,708 1,837,298 240,266 490,638 68,841 $ 6,850,751	Increase 188,247 200,922 13,833 43,890 31,195 478,087 Increase 190,703 184,631 13,484 55,629 27,062 471,509	Decrease - 105,609 21,394 23,996 19,788 170,787 Decrease - 250,170 20,822 27,172 32,655 330,819	Foreign Exchange - (1,553) (249) (1,405) 2,159 (1,048) Foreign Exchange - (2,689) (172) (995) (1,134) (4,990)	December 31, 2021 4,592,658 1,862,830 224,946 536,589 75,680
					7,292,703
					December 31, 2020 4,404,411 1,769,070 232,756 518,100 62,114
					6,986,451

Accumulated impairment

Land Buildings Total Land Buildings Total	January 1, 2021 $ 14,031 14,754 $ 28,785 January 1, 2020 $ 14,031 14,754 $ 28,785	Increase - - - Increase - - -	Decrease - - - Decrease - - -	Foreign Exchange - - - Foreign Exchange - - -	December 31, 2021 14,031 14,754
					28,785
					December 31, 2020 14,031 14,754
					28,785

When the Bank first adopted IFRSs, it elected to apply the revaluation amount calculated per the regulation of GAAP of R.O.C as the original cost on the transition date.

As of December 31, 2021 and 2020, 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).

As of December 31, 2021 and 2020, land which was occupied all amounted to $5,496. Except for a portion of the land that had been negotiated with the occupant to collect the rent; the Bank intends to participate in land auction, urban renewal or by other appropriate means in due course.

～ 40 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(L) Right-of-use assets, net

The Bank leases many assets including buildings, machinery and transportation equipment. Information about leases on costs, depreciation and impairment for which the Bank as a lessee is presented below:

December 31, 2021	December 31, 2021	Total
Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total December 31, 2020		1,108,707 570 28,810 6,984
		1,145,071
		Total
Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total Change of cost Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total	January 1, 2021 $ 1,522,533 43,406 64,316 7,603 $ 1,637,858 January 1, 2020 $ 1,282,927 74,915 56,885 5,729 $ 1,420,456	1,029,478 2,511 30,175 4,568
		1,066,732
		December 31, 2021
		1,780,314 27,842 71,244 10,337
		1,889,737
		December 31, 2020
		1,522,533 43,406 64,316 7,603
		1,637,858

～ 41 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

Change of depreciation

Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total	January 1, 2021 $ 493,055 40,895 34,141 3,035 $ 571,126 January 1, 2020 $ 296,132 64,743 20,699 1,505 $ 383,079	Increase 374,946 1,944 20,122 2,416 399,428 Increase 373,919 7,645 20,531 2,003 404,098	Decrease 195,749 15,567 11,829 2,098 225,243 Decrease 176,359 31,493 7,089 473 215,414	Foreign Exchange (645) - - - (645) Foreign Exchange (637) - - - (637)	December 31, 2021 671,607 27,272 42,434 3,353
					744,666
					December 31, 2020 493,055 40,895 34,141 3,035
					571,126

(M) Other assets, net

Office supplies Prepayments Operating guarantee deposits and settlement fund Guarantee deposits paid Defund assets Process satlement and margin trading Other assets Total	December 31, 2021 $ 28,953 8,154,098 31,450 384,397 175 1,307,041 105,859 $ 10,011,973	December 31, 2020
		29,165 6,229,349 28,319 1,742,817 166 180,047 -
		8,209,863

(N) Deposits from the Central Bank and banks

Deposits from the Central Bank Due from the Central Bank Deposits from banks Call loans from banks Overdrafts on banks Deposits transferred from Chunghwa Post Co., Ltd. Total	December 31, 2021 $ 249,565 9,955,800 244,033 24,292,901 536,471 67,261,545 $ 102,540,315	December 31, 2020
		281,121 11,802,000 619,499 36,445,088 777,971 68,275,360
		118,201,039

～ 42 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(O) Due to the Central Bank and banks

		December 31, 2021
Currency TWD	Interest Rate 0.1%	Maturity Date 2022.06.30 December 31, 2020	Original Amount NTD Amount 49,713,800 $ 49,713,800 $ 586,200

Currency TWD	Interest Rate 0.1%	Maturity Date 2021.12.31	Original Amount NTD Amount 28,450,000 $ 28,450,000 $ 1,550,000	NTD Amount

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

Financial liabilities designated at fair value through profit or loss： Financial debentures Financial liabilities held for trading： Derivative instruments not used for hedging Foreign exchange forward contracts Currency swap contracts Foreign currency option-put Interest rate contract Total	December 31, 2021 $ 8,293,730 4,404 126,198 3,714 7,991 $ 8,436,037	December 31, 2020
		8,411,020 3,768 181,994 6,599 35,621
		8,639,002

Please refer to 6(T) for the information of financial liabilities designated at fair value through profit and loss.

Please refer to 6(C) for the nominal amount of unsettled financial derivatives instrument contracts of December 31, 2021 and 2020.

～ 43 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(Q) Notes and bonds issued under repurchase agreement

Assets	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021
	Par value	Selling Price (Recognized in securities sold under repurchase agreements)	Designated repurchase amount	Designated repurchase date
Financial assets at fair value through other comprehensive income	$ 2,157,553	2,060,693	2,068,283	Prior to July 1, 2024

Assets	December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020
	Par value	Selling Price (Recognized in securities sold under repurchase agreements)	Designated repurchase amount	Designated repurchase date
Financial assets at fair value through other comprehensive income	$ 2,131,570	2,055,991	2,062,593	Prior to August 24, 2023

(R) Payables

Accrued interest Accounts payable Acceptances Accrued expenses Collection payable Deposits received from securities borrowers Guaranteed price deposits received from securities borrowers Spot exchange payable, foreign currencies Other payables Prices payable of securities sold for customers Others Total Deposits and remittances Savings deposits Time deposits Demand deposits Checking account deposits Remittances Total	December 31, 2021 $ 2,469,585 12,819,538 1,039,557 2,814,117 775,553 115,541 149,272 9,204 2,209,159 309,498 16,970 $ 22,727,994 December 31, 2021 $ 707,880,781 451,921,417 475,541,845 33,266,719 429,227 $ 1,669,039,989	December 31, 2020
		2,370,890 3,229,071 1,303,348 2,543,515 690,136 112,416 150,740 35,716,094 944,149 683,596 23,425
		47,767,380
		December 31, 2020
		679,271,179 337,910,931 375,352,496 25,741,910 426,966
		1,418,703,482

(S) Deposits and remittances

～ 44 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(T) Bank notes payable

Bonds			Terms of Transactions		Bond Issued
	Issue date	Maturity date	Interest Rate & repayment	Type	Amou	nt
2015-2A 2015-2B 2016-1P 2016-2 2017-1A 2017-1B 2017-1C 2017-2 2018-1 2018-2 2019-1A 2019-1B 2020-1 2020-2 2021-1	08/31/2015 08/31/2015 09/20/2016 12/20/2016 03/28/2017 03/28/2017 03/28/2017 05/23/2017 01/05/2018 08/20/2018 03/21/2019 03/21/2019 03/25/2020 08/13/2020 11/17/2021	08/31/2023 08/31/2025 None 12/20/2023 03/28/2024 03/28/2025 03/28/2027 05/23/2027 01/05/2021 08/20/2028 03/21/2026 03/21/2029 03/25/2030 None None	The debentures bear an annual interest rate of 2.05%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 2.10%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 3.2%. Simple interest is accrued and paid annually. The debentures are redeemable per face value plus accrued interest at interest payment date after five years and three months from the issued date under the consent of the competent authority The debentures bear an annual interest rate of 1.40%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.50%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.60%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.85%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.85%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 0.7%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.45%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.20%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.30%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 0.8%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.62%.Simple interest is accrued and paid annually. After calculating the early redeemable bond is in line with the capital adequacy ratio under the consent of the competent authority, the debentures are redeemable per face value plus accrued interest at the interest payment date after five years and a month from the issue date . The debentures bear an annual interest rate of 1.60%.Simple interest is accrued and paid annually. After calculating the early redeemable bond is in line with the capital adequacy ratio under the consent of the competent authority, the debentures are redeemable per face value plus accrued interest at the interest payment date after five years and a month from the issue date	Unsecured subordinated long-term financial debentures 〞 Perpetual non- accumulated subordinated financial debentures Unsecured subordinated long-term financial debentures 〞〞〞〞 Unsecured senior long- term financial debentures Unsecured subordinated long-term financial debentures 〞〞〞 Perpetual non- accumulated subordinated financial debentures 〞	December 31, 2021 $ 4,700,000 300,000 - 2,700,000 390,000 250,000 3,360,000 1,300,000 - 5,450,000 1,000,000 4,800,000 10,000,000 10,000,000 8,000,000 $ 52,250,000	December 31, 2020
						4,700,000 300,000 8,000,000 2,700,000 390,000 250,000 3,360,000 1,300,000 1,000,000 5,450,000 1,000,000 4,800,000 10,000,000 10,000,000 -
						53,250,000

～ 45 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

The Bank issued $120,000 thousand and $180,000 thousand dollar-denominated debentures with call option that can be executed on strike price after five years from the issued date. Without executing call options during the periods of debentures, the principal will be repaid in full at maturity. In order to avoid interest risk, the Bank buys interest rate swap contracts that are classified as financial assets at fair value through profit or loss. To eliminate the measurement or recognition inconsistency between IRSs and debentures, the Bank classified the debentures into financial liabilities at fair value through profit or loss. In addition, the Bank considers that the designated economic relationship is evaluated by the SLMM model method , if the amount of changes in the fair value of the corporate bonds attributable to changes in credit risk is listed in other comprehensive gains and losses , it will trigger or aggravate the accounting ratio of gains and losses. Therefore, the amount is reported in the profit and loss.The debentures are as follows:

Bonds			Terms of Transactions		Bond Issued
	Issue date	Maturity date	Interest Rate & repayment	Type	Amou	nt
2017-3 2018-3	10/27/2017 09/27/2018	10/27/2047 09/27/2048	The zero-coupon debentures with call options can be executed on strike price after five years from the issued date. Without executing call options during the periods of debentures, the principal will be repaid in full at maturity. The zero-coupon debentures with call options can be executed on strike price after five years from the issued date. Without executing call options during the periods of debentures, the principal will be repaid in full at maturity.	Unsecured dollar- denominated senior financial debentures 〞 Valuation adjustment	December 31, 2021 $ 3,318,600 4,977,900 (2,770) $ 8,293,730	December 31, 2020
						3,372,000 5,058,000 (18,980)
						8,411,020

The increase (decrease) in fair value of the financial liabilities that are attributable to changes in credit risk are as follows:

Fair value of corporate bonds Fair value increase (decrease) not attributable to changes in market conditions that give rise to market risk Difference between the carrying value and the amount payable at the end of the contract term	December 31, 2021 December 31, 2020 $ 8,293,730 8,411,020 90,645 55,154 (2,770) (18,980)

(U) Other financial liabilities

Cumulative earnings on appropriated loans funds	December 31, 2021 $ 4,365,294	December 31, 2020
		5,492,366

Cumulative earnings on appropriated loan fund is the project contract signed by National Development Fund, Executive Yuan, 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. These accounts are used for transferring accounts and paying the deposit interests for each project contract.

～ 46 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(V) Provisions

Provision for guarantee liabilities Provision for loan commitments Indeterminate indemnity provisions Provision for employee benefits Total	December 31, 2021 $ 258,065 71,423 73,181 3,017,541 $ 3,420,210	December 31, 2020
		218,351 52,831 - 3,122,235
		3,393,417

Change of provision

Provision for guarantee liabilities Provision for loan commitments Indeterminate indemnity provisions Provision for employee benefits Total Provision for guarantee liabilities Provision for loan commitments Provision for employee benefits Total	January 1, 2021 $ 218,351 52,831 - 3,122,235 $ 3,393,417 January 1, 2020 $ 200,948 31,498 2,925,557 $ 3,158,003	Increase 39,802 18,896 73,181 277,974 409,853 Increase 17,634 21,379 430,399 469,412	Decrease - - - 327,408 327,408 Decrease - - 181,318 181,318	Use - - - 55,260 55,260 Use - - 52,403 52,403	Foreign exchange (88) (304) - - (392) Foreign exchange (231) (46) - (277)	December 31, 2021
						258,065 71,423 73,181 3,017,541
						3,420,210
						December 31, 2020
						218,351 52,831 3,122,235
						3,393,417

Please refer to Note 6(AA) for the information with regard to provision for employee benefits shown above.

(W) Lease liabilities

Lease liabilities as follows:

Less than one year More than one year	December 31, 2021 $ 331,216 $ 813,856	December 31, 2020
		331,504
		723,161

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities Expenses relating to short-term leases Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets	For the year ended December 31,	For the year ended December 31,
	2021 $ 17,577 8,253 16,468	2020
		16,379
		3,125
		13,240

The amounts recognized in the statement of cash flows were as follows：

Total cash outflow for leases	For the year ended December 31,	For the year ended December 31,
	2021 $ 436,548	2020
		437,757

～ 47 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(a) Real estate leases

The Bank leased buildings for its office space. Some leases include an option to renew the lease for an additional period of the same duration after the end of the contract term.

Some leases provide for additional rent payments that are based on changes in local price indices. Some also require the Bank to make payments that relate to the property taxes levied on the lessor and insurance payments made by the lessor; these amounts are generally determined monthly.

(b) Other leases

The Bank leased machinery and transportation equipment with lease terms of one to four years. In some cases, the Bank has options to purchase the assets at the end of the contract term; in other cases, it guarantees the residual value of the leased assets at the end of the contract term.

The Bank has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets and short term.

(X) Other liabilities

Advance interest receipts Unearned revenue Other advance receipts Guarantee deposits received Temporary receipts and suspense accounts Others Total	December 31, 2021 $ 2,019 259,251 59,435 1,223,817 1,126,269 2,938 $ 2,673,729	December 31, 2020
		2,707 246,588 84,298 1,571,036 2,618,436 4,842
		4,527,907

(Y) Equity

(a) Common stock

As of December 31, 2021 and 2020, the Bank’s authorized capital were $80,000,000 and the paid-in capital for common shares of the Bank were $77,431,952 and $74,885,834, the face value of each share is NTD $10. The outstanding shares were 7,743,195 and 7,488,584 thousand shares, respectively.

Pursuant to the resolution approved by the regular stockholders’ meeting of the Bank on July 20, 2021, the Bank increased its capital from the retained earnings by $2,546,118 and issued 254,611 thousand shares. The capital increase has been approved by Financial Supervisory Commission and came into effect on August 24, 2021. The record date of the capital increase is set on September 14, 2021. The Bank has completed the alteration of the registered capital amount on October 6, 2021.

～ 48 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

Pursuant to the resolution approved by the regular stockholders’ meeting of the Bank on May 29, 2020, the Bank increased its capital from the retained earnings by $3,565,992 and issued 356,599 thousand shares. The capital increase has been approved by Financial Supervisory Commission and came into effect on July 6, 2020. The record date of the capital increase is set on July 28, 2020. The Bank has completed the alteration of the registered capital amount on August 26, 2020.

The remaining quota of this private placement (581,590 thousand shares) was no longer processed by a resolution of the interim board of directors on April 22, 2020. The situation regarding the handling of privately placed ordinary shares was reported to the regular shareholders' meeting on May 29, 2020.

(b) Capital surplus

Sources and statement of the Bank's capital surplus were as follows:

Additional paid-in capital	December 31, 2021 $ 815,900	December 31, 2020
		815,900

According to the R.O.C. Company Act, capital surplus can only be used to offset a deficit, and only the realized capital surplus can be used to increase the common stock or be distributed as cash dividends based on the shareholder's initial number of shares. The aforementioned realized capital surplus includes capital surplus resulting from premium on issuance of capital stock and earnings from donated assets received. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, capital increases by transferring capital surplus in excess of par value should not exceed 10% of the total common stock outstanding.

(c) Earnings distribution and dividend policy

Under the Bank’s Articles of Incorporation, earnings are used initially to pay for income taxes and restore cumulative losses, and 30% of the remaining earnings is set aside as legal reserve. Special reserve is appropriated from or reversed to earnings per other regulations. The accumulated retained earnings from prior periods are added back as part of the distributable dividends, 30 to 100 percent of the aggregated retained earnings are available to be distributed and will be resolved by the annual stockholders’ meeting according to the proposal submitted by the Board of Directors.

～ 49 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

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. 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 Company Act, 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.

The Bank resolved the earning distribution for the earnings of 2020 and 2019 in the shareholder’s meeting on July 20, 2021 and May 29, 2020 respectively. The dividends distributed were as follows:

Dividends to common shareholders Stock dividends Cash dividends Total	2020 Distribution rate (NT dollar) Amount $ 0.34 2,546,118 0.10 748,858 $ 3,294,976	2019	2019
		Distribution rate (NT dollar) 0.50 0.20	Amount
			3,565,992 1,426,397
			4,992,389

～ 50 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(d) Other equity interest

January 1, 2021 Share of other comprehensive income of subsidiaries assoiates and joint ventures accounted for using equity method Investment in debt instruments measured at fair value through other comprehensive income -Unrealized amount -Realized amount Foreign currency translation difference－Exchange difference Disposal of investment in equity instruments measured at fair value through other comprehensive income December 31, 2021 January 1, 2020 Share of other comprehensive income of subsidiaries assoiates and joint ventures accounted for using equity method Investment in debt instruments measured at fair value through other comprehensive income -Unrealized amount -Realized amount Foreign currency translation difference－Exchange difference Disposal of investments in equity instruments measured at fair value through other comprehensive income December 31, 2020	Unrealized gains from financial assets measured at fair value through other comprehensive income $ 5,187,824 4,546 (740,789) (302,904) - (35,192) $ 4,113,485 $ 4,541,167 - 1,232,785 (587,478) - 1,350 $ 5,187,824	Exchange differences on translation of foreign financial statements (1,476,771) 2,674 - - (333,168) - (1,807,265) (862,866) 5,093 (618,998) - (1,476,771)	Total 3,711,053 7,220 (740,789) (302,904) (333,168) (35,192) 2,306,220 3,678,301 5,093 1,232,785 (587,478) (618,998) 1,350 3,711,053

(Z) Income taxes
(a) The income tax expenses were as follows:

Current tax expense Current period Adjustment for prior period Deferred tax expense (income) Origination and reversal of temporary differences Income tax expenses	For the years ended December 31,	For the years ended December 31,
	2021 $ 707,610 (1,995) 705,615 (29,429) $ 676,186	2020 754,317 (54,603)
		699,714 (27,979)
		671,735

(b) The income tax expenses (income) recognized under other comprehensive income were as follows:

Items that will not be reclassified subsequently to profit or loss: Remeasurements of defined benefit plans	For the years ended December 31, 2021 2020 $ 4,902 (41,199)
	2021 $ 4,902

～ 51 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign financial statements Unrealized gains (losses) on valuation of financial assets measured at fair value through other comprehensive income	For the years ended December 31, 2021 2020 $ (83,292) (154,749) (15,291) 13,145 $ (98,583) (141,604)	For the years ended December 31, 2021 2020 $ (83,292) (154,749) (15,291) 13,145 $ (98,583) (141,604)
	2021 $ (83,292) (15,291) $ (98,583)
		(141,604)

The reconciliation between the income tax expense (income) and net income before tax of the Bank for 2021 and 2020 is as follows:

Income tax computed on net income before tax Tax-free income Overseas branch income tax expenses Change in unrecognized temporary differences Overestimate prior income tax expense Income basic tax Other Income tax expense	For the years ended December 31,	For the years ended December 31,
	2021 $ 1,155,260 (564,059) 48,932 - (1,995) - 38,048 $ 676,186	2020 1,074,702 (588,424) 150,365 (4,600) (54,603) 90,282 4,013 671,735

For the year ended December	31, 2021	Ending balance 770,707 21,710 374,495 (879,056) 430,575 (7,234) 311,474 14,636
Recognized in other comprehensive income - - - - 83,292 15,291 (4,902) - 93,681	Others - - - - - - - - -
		1,037,307
		1,923,597
		886,290

～ 52 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

For the year ended December	31, 2020	Ending balance 702,104 57,058 392,957 (879,056) 347,283 (22,525) 316,376 -
Recognized in other comprehensive income - - - - 154,749 (13,145) 41,199 - 182,803	Others - - - - - - - - -
		914,197
		1,815,778
		901,581

(d) Uncertainty over income tax treatments

For tax returns that have not yet been assessed, the Bank has assessed relevant factors, including relevant IFRIC interpretations and historical experience, and believe that sufficient income tax liabilities have been estimated.

(e) The Bank’s income tax returns through 2017 and 2019 have been assessed by the Tax Authority.

(AA) Provision for employee benefit

As of December 31, 2021 and 2020, the balance of provision for employee benefit of the Bank were as follows:

Defined benefit plan Employee deposits with favorable rate	December 31, 2021 $ 1,966,215 1,051,326 $ 3,017,541	December 31, 2020
		2,190,568 931,667
		3,122,235

～ 53 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(a) Defined benefit plan

As of December 31, 2021 and 2020, the balance of provision for employee benefit of the Bank and subsidiaries were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities	December 31, 2021 $ 6,870,061 (4,903,846) $ 1,966,215	December 31, 2020 7,217,819 (5,027,251) 2,190,568

The Bank makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for employees upon retirement. Plans (covered by the Labour Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average salary for the six months prior to retirement.

(1) Composition of plan assets

According to the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. 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 Bank of Taiwan labour pension reserve account balance for the Bank amounted to $4,903,846 and $5,027,251 on December 31, 2021 and 2020. 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 Bureau of Labour Fund, Ministry of Labor.

(2) Movements in the present value of the defined benefit obligations

The movements in the present value of the defined benefit obligations of the Bank were as follows:

Defined benefit obligation on January 1 Current service and interest cost Remeasurements of the net defined benefit liability －Actuarial loss on experience adjustment －Actuarial loss on demographic assumptions changed －Actuarial loss on financial assumptions changed Benefits paid Defined benefit obligation on December 31	For the years ended December 31,	For the years ended December 31,
	2021 $ 7,217,819 197,748 (21,266) 126,343 (53,470) (597,113) $ 6,870,061	2020 7,177,326 231,891 154,633 - 226,001 (572,032)
		7,217,819

～ 54 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(3) Movements of defined benefit plan assets

The movements in the present value of defined the benefit plan assets of the Bank were as follows:

Fair value of plan assets on Junuary 1 Interest income Remeasurements of the net defined benefit liability －plan assets revenue (excluded of current interest) Contributions made Benefits paid by the plan Fair value of plan assets on December 31	For the years ended December 31, 2021 2020 $ 5,027,251 5,155,259 14,921 35,665 76,119 174,638 382,668 233,721 (597,113) (572,032) $ 4,903,846 5,027,251

(4) Expenses recognized in profit or loss

The expenses recognized in profit or loss of the Bank were as follows :

Current service costs Net interest of the net liability of define benefit obligations	For the years ended December 31,	For the years ended December 31,
	2021 $ 176,661 6,166 $ 182,827	2020
		183,017 13,209
		196,226

(5) Remeasurements of the net defined benefit liability recognized in other comprehensive income

Remeasurements of the net defined benefit liability recognized in other comprehensive income for the years ended December 31, 2021 and 2020 were as follows：

Amount on January 1 Recognized during the period Amount on December 31	For the years ended December 31,	For the years ended December 31,
	2021 $ 1,581,885 (24,512) $ 1,557,373	2020
		1,375,889 205,996
		1,581,885

～ 55 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(6) Actuarial assumptions

The principal actuarial assumptions at the reporting date were as follow :

Discount rate Future salary increase rate	December 31, 2021 December 31, 2020 % 0.40 % 0.30 % 1.50 % 1.50

The expected allocation payment made by the Bank to the defined benefit plans for the one-year after the reporting date is $260,000.

The weighted average lifetime of the defined benefit plans is 8 years.

(7) Sensitivity analysis

The effects of changes in major actuarial assumptions adopted in defined benefit obligation on December 31, 2021 and 2020 were as follows :

December 31, 2021 Discount rate(Change 0.25%) Future salary increase rate(Change 0.25%) December 31, 2020 Discount rate(Change 0.25%) Future salary increase rate(Change 0.25%)	Influence of defined benefit plan obligation
	Increase 0.25% Decrease 0.25% % (1.90) % 1.96 % 1.87 % (1.82) % (1.98) % 2.04 % 1.94 % (1.89)

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown above. The method used in the sensitivity analysis is consistent with the calculation of pension liabilities in the balance sheets.

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2021 and 2020.

(b) Defined contribution plan

The Bank allocates 6% of each employee’s monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under these defined contribution plans, the Bank allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligation. Employees based abroad are contributed in accordance with the local government’ s regulations.

～ 56 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

The pension costs incurred from the contributions to the Bureau of the Labor Insurance, oversea branches, and local authorities responsible for the Bank’s subsidiaries amounted to $155,388 and $141,257 for the years ended December 31, 2021 and 2020, respectively.

Present value of defined benefit obligation Less: Fair value of defined benefit plan assets Net defined benefit liability	December 31, 2021 $ 1,051,326 - $ 1,051,326	December 31, 2020
		931,667 -
		931,667

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

(1) Movements in the present value of the defined benefit obligations

The movements in the present value of the defined benefit obligations of the Bank for the years ended December 31, 2021 and 2020, were as follows:

Defined benefit obligation on January 1 Interest cost Remeasurements of the net defined benefit liability -current actuarial gains and losses Benefits paid by the plan Defined benefit obligation on December 31	For the years ended December 31, 2021 2020 $ 931,667 903,490 35,363 34,226 290,695 193,072 (206,399) (199,121) $ 1,051,326 931,667	For the years ended December 31, 2021 2020 $ 931,667 903,490 35,363 34,226 290,695 193,072 (206,399) (199,121) $ 1,051,326 931,667
	2021 $ 931,667 35,363 290,695 (206,399) $ 1,051,326
		903,490 34,226 193,072 (199,121)
		931,667

(2) Movements in fair value of the defined benefit plan assets

The movements in the present value of the defined plan assets of the Bank were as follows:

Fair value of plan assets on January 1 Contributions made Benefits paid by the plan Fair value of plan assets on December 31	For the years ended December 31, 2021 2020 $ - - 206,399 199,121 (206,399) (199,121) $ - -	For the years ended December 31, 2021 2020 $ - - 206,399 199,121 (206,399) (199,121) $ - -
	2021 $ - 206,399 (206,399) $ -
		- 199,121 (199,121)
		-

(3) Expenses recognized in profit or loss

The expenses recognized in profit or loss of the Bank were as follows :

Net interest on the net defined benefit liability	For the years ended December 31, 2021 2020 $ 326,058 227,298	For the years ended December 31, 2021 2020 $ 326,058 227,298
	2021 $ 326,058
		227,298

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(4) Actuarial assumption

The material actuarial assumptions used to determine present value of a defined benefit obligation on the reporting date were as follow :

Discount rate of employee deposit with favorable rate Rate of return for capital deposited Annual diminishing rate of account balance Possibility that employee deposit with favorable rate be modified	December 31, 2021 December 31, 2020 % 4.00 % 4.00 % 2.00 % 2.00 % 1.00 % 1.00 % 50.00 % 50.00

(AB) Earnings per share

Net income Weighted average number of common stock shares outstanding (in thousands) (Note 1) Basic earnings per shares (in dollars) Dilutive potential common shares (in thousands) (Note 1,2) Weighted average number of shares outstanding for diluted EPS (in thousands) Diluted earnings per shares (in dollars)	For the years ended December 31,	For the years ended December 31,
	2021 $ 5,100,112 7,743,195 $ 0.66 37,482 7,780,677 $ 0.66	2020
		4,701,775
		7,743,195
		0.61
		23,103
		7,766,298
		0.61

Note 1: The earnings per share for the year ended December 31, 2020 has applied retrospective adjustments.

Note 2: The shares were calculated based on the stock price on the balance sheet date.

(AC) Employees and directors' remuneration

In accordance with the articles of incorporation the Bank should contribute 1% to 6% of the profit as employee compensation and less than 0.6% as directors' remuneration when there is profit for the year. However, if the Bank has accumulated deficits, the profit should be reserved to offset the deficit.

For the years ended December 31, 2021 and 2020, the estimated employee remuneration were $371,068 and $217,393, and the estimated directors' remuneration were $37,107 and $33,748, the estimates are based on pre-tax net profit for the period, before deducting employees and directors' remuneration, multiplied by the elaboration of the Bank's Articles of Association of employees and the directors remuneration ratio, and recognized as operating cost. If the board’s meeting decides to release stock dividends as employees' bonuses, the total number of employees bonus stocks to be issued shall be determined by the common stock closing price of the day before the meeting date.

There is no difference with actual distributions of 2020 remuneration. The information is available at the Market Observation Post System website.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(AD) Net interest revenue

Interest income: Loans Secured loans Bills negotiated Bank overdrafts Discounts Time deposit from Central Bank Due from the Central Bank Call loans to banks Bonds International credit card Overdue loans Bills Due from Banks Others Subtotal Interest expense: Deposits Deposits from banks Call loans from banks Financial debentures Notes and bond issued under repurchase agreement Others Subtotal Total	For theyears ended December 31,	For theyears ended December 31,
	2021 $ 4,963,356 15,150,729 2,025 12,544 9,007 612,953 90,494 565,684 2,084,103 38,908 189,009 26,131 172,981 119,933 24,037,857 5,278,716 13,220 102,288 895,377 4,327 63,439 6,357,367 $ 17,680,490	2020
		5,693,883 14,592,394 2,204 12,545 14,492 699,147 100,458 596,548 2,503,696 44,897 225,840 39,550 227,827 131,006
		24,884,487
		7,246,864 7,543 378,000 1,153,012 5,138 31,653
		8,822,210
		16,062,277

～ 59 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(AE) Net service fee revenue

Service fee income: Remittance service fee Import bills negotiated service fee Export bills negotiated service fee Letter of credit service fee Certification service fee Acceptance service fee Trust service fee Guarantee service fee Agency service fee Interbank service fee Card service fee Commission revenue of insurance premium Custodian service fee Foreign currency service fee Commission of futures Loan service fee Miscellaneous fees Subtotal Service fee expense: Foreign currency service fee Interbank service fee Trust service fee Agency service fee IC card service fee Check clearing service fee Remittance service fee Custodian service fee Call loans service fee Futures option fee Miscellaneous fees Subtotal Total	For theyears ended December 31,	For theyears ended December 31,
	2021 $ 64,862 46,243 13,648 8,005 1,431 1,680 1,084,528 236,828 35,662 93,684 118,074 803,334 207,389 93,053 3,867 729,484 125,642 3,667,414 25,008 154,805 813 1,508 62,665 9,275 5,180 60,407 10,164 10 20,029 349,864 $ 3,317,550	2020
		69,845 36,908 11,589 8,020 2,482 1,182 805,291 210,864 89,355 88,721 116,043 573,846 169,816 91,386 5,375 755,839 128,431
		3,164,993
		29,226 157,912 1,040 1,588 64,121 9,526 4,920 53,948 7,921 1,149 19,095
		350,446
		2,814,547

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(AF) Gain (loss) on financial assets or liabilities measured at fair value through profit or loss

Valuation gains (losses): Government bonds Corporate bonds Financial debentures Listed stocks Beneficiary certificates Private fund Commercial paper Derivative financial instruments Subtotal Disposal gains (losses): Government bonds Corporate bonds Financial debentures Listed stocks Beneficiary certificates Commercial paper Derivative financial instruments Subtotal Dividend revenue Interest income Total	For theyears ended December 31,	For theyears ended December 31,
	2021 $ - 4,685 (381,752) 4,052 (11,477) 4,925 3,173 (12,459) (388,853) - 29,074 (1,349) (18,905) 22,711 (7,398) 843,655 867,788 4,397 78,864 $ 562,196	2020
		(5,051 683 (419,086 (9,934 15,007 9,948 (1,435 (57,191
		(467,059
		29,832 23,553 (5,425 (23,015 16,896 (4,111 1,178,721
		1,216,451
		1,996 108,640
		860,028

(AG) Realized gain on financial assets at fair value through other comprehensive income

Gain on disposal of government bonds Gain on disposal of corporate bonds Gain on disposal of financial debentures Dividend revenue Total	For the years ended December 31,	For the years ended December 31,
	2021 $ 247,087 25,167 30,650 884,796 $ 1,187,700	2020
		530,996 4,239 52,243 511,208
		1,098,686

(AH) (Impairment losses on assets) reversal of impairment loss on assets

Investment in debt instrument measured at fair value through other comprehensive income Investment in debt instrument measured at amortized cost Total	For the years ended December 31,	For the years ended December 31,
	2021 $ (21,599) (11,661) $ (33,260)	2020
		(14,630 13,482
		(1,148

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(AI) Share of profit (loss) of associates and joint ventures accounted for using equity method

Investment income- TBB International Leasing Co., Ltd. Investment income- TBB (Cambodia) Microfinance Institution Plc Investment income- TBB Venture Capital Co., Ltd. Investment income- TBB Consulting Co., Ltd. Total	For the years ended December 31,	For the years ended December 31,
	2021 $ 28,811 (6,173) 78,430 (1,409) $ 99,659	2020
		61,463 33,725 (11,349) -
		83,839

(AJ) Net other revenue other than interest income

Rental revenue of operating assets Rental expense of operating assets Loss on disposal and retirement of property and equipment Loss of account error Gold deposit book Other operating expense Other miscellaneous income Total	For theyears ended December 31,	For theyears ended December 31,
	2021 $ 8,659 (1,605) (852) (350) 2,630 (122,396) 282,802 $ 168,888	2020
		10,546 (1,614) (1,796) (641) 4,638 (56,915) 229,207
		183,425

(AK) Bad debts expenses, commitment and guarantee liability provision

Discounted and loans Call loans to banks Receivables and other financial assets Subtotal Provisions for guarantee liabilities Provisions for loan commitments Total	For theyears ended December 31,	For theyears ended December 31,
	2021 $ 5,153,489 (2,938) (37,417) 5,113,134 39,802 18,896 $ 5,171,832	2020
		4,046,672 (11,083) (2,434)
		4,033,155 17,634 21,379
		4,072,168

(AL) Employee benefits expenses

Salary expense Labor and health insurance Pension expense Director's remuneration Other employee benefits Total	For theyears ended December 31,	For theyears ended December 31,
	2021 $ 6,710,384 512,569 337,460 50,302 739,425 $ 8,350,140	2020
		6,376,597 475,473 336,729 47,160 625,699
		7,861,658

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(AM)Depreciation and amortization expense

Depreciation Property and equipment Right-of-use assets Amortization Computer software Other deferred charges Total	For theyears ended December 31,	For theyears ended December 31,
	2021 $ 462,781 399,428 170,708 33 $ 1,032,950	2020
		438,040 404,098 141,512 5
		983,655

(AN) Other general and administrative expense

Compensation loss Utilities fee Postage and telecommunication fee Transportation fee Printing and advertisement fee Repair and maintenance fee Insurance fee Professional service fee Materials and supplies Rental expenses Duties and levies Membership, donation and partaking Storage, packing and processing fee Cash transit fee Others Total	For theyears ended December 31,	For theyears ended December 31,
	2021 $ 59 90,119 243,412 22,242 200,224 249,335 331,254 243,637 168,332 24,721 1,234,932 641,967 49,429 63,742 64,612 $ 3,628,017	2020
		164 90,248 238,948 29,924 162,403 254,852 333,024 241,145 104,073 16,365 1,187,559 614,525 54,788 83,484 71,453
		3,482,955

(AO) 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 transaction price in many circumstances. Except some amortized 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 Bank 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.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(2) The definition of fair value hierarchy

A. Level 1

The input of this level is quoted prices in active markets for identical financial instruments. The active market is 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, government bonds and the derivative financial instruments with public quote inactive market processed by the Bank belong to Level 1.

B. Level 2

The input of this level is 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 investments with lower trade volume such as government bonds, corporate bonds, financial debentures, convertible corporate bonds and derivative instruments, including financial debentures the Bank issued are belong to Level 2.

C. Level 3

The input is unobservable for the asset or liability in market or counterparty prices. 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 input parameter used to measure the fair value of this level is not based on data that can be obtained in the market but using a combination of complex market prices to estimate their values. The assets have been categorized as a Level 3, due to their fair market value cannot be directly calculated. The equity instruments with no active market which the Bank invested are Level 3.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

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

The financial instruments which are record as fair value measure on an ongoing basis, the fair value hierarchy of information were as follows:

Assets and Liabilities		December 31, 2021	December 31, 2021
	Total $ 68,106 356,140 38,681,342 21,354,398 135,994,230 149,897 8,293,730 $ 552,636 142,307	Level 1 68,106 276,910 1,563,675 16,414,356 86,780,365 149,897 - 28,745 -	Level 2 Level 3 - - 79,230 - 37,015,444 102,223 - 4,940,042 49,213,865 - - - 8,293,730 - 523,891 - 142,307 -
Instruments measured at fair value on a recurring basis
Non-derivative financial assets and liabilities:
Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss, mandatorily measure at fair value Security Investments Bond Investments Others Financial assets at fair value through other comprehensive income Security Investments Bond Investments Others Financial liabilities at fair value through profit or loss Financial liabilities designated at fair value through profit or loss Derivative financial assets and liabilities
Assets: Financial assets at fair value through profit or loss Liabilities: Financial liabilities at fair value through profit or loss

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

Assets and Liabilities		December 31, 2020	December 31, 2020
	Total t $ 188,304 1,358,734 12,681,298 84,377 13,211,492 104,092,136 49,295 8,411,020 $ 690,858 227,982	Level 1 188,304 1,307,034 162,556 - 8,736,348 67,247,661 49,295 - 72,747 -	Level 2 Level 3 - - 51,700 - 12,414,244 104,498 84,377 - - 4,475,144 36,844,475 - - - 8,411,020 - 618,111 - 227,982 -
Instruments measured at fair value on a recurring basis
Non-derivative financial assets and liabilities:
Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss, mandatorily measure a fair value Security Investments Bond Investments Others Financial assets designated at fair value through profit or loss Financial assets at fair value through other comprehensive income Security Investments Bond Investments Other Financial liabilities at fair value through profit or loss Financial liabilities designated at fair value through profit or loss Derivative financial assets and liabilities
Assets: Financial assets at fair value through profit or loss Liabilities: Financial liabilities at fair value through profit or loss

B. Valuation techniques used in estimating the fair values of financial instruments

If the financial instruments have quoted price in an active market, the quoted price is regarded as 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 have a quoted price in an active market. If the above conditions are not fulfilled, the market is inactive.

Except for the above financial instruments of quoted price in an active market, there is no quoted price in an active market for the financial asset, its fair value is estimated on the basis of the result of a valuation technique that refers to quoted prices 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 (e.g. Taipei Exchange reference yield curve, Reuters quoted the average commercial paper rate, the Taipei Financial industry call loan rate fixing TAIBOR).

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

The financial asset's fair value is estimated on the basis of the result of a valuation technique, the Bank 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 is 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 is 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

The estimates of output-based value using the evaluation model, which may not reflect the Bank'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 Bank’ 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 counterparty or the default, and the Bank may not be received or paid full market value of trading possibilities.

The Bank 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 Bank 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.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

D. Transfers between Level 1 and Level 2

There were no transfers between Level 1 and 2 for the year ended December 31, 2021 and 2020.

E. Changes in financial assets which were classified to Level 3 based on fair value measurement

Changes of financial assets categorized in Level 3 :

Name		Fo	Fo	r the year ended	December 31, 20	21
	Beginning balance	Valuation profit and loss		Incr	ease	Decr	ease Transfer out from Level 3 Ending balance - 102,223 - 4,940,042
		Recognized in profit or loss	Recognized in other comprehensive income	Purchase or issue	Transfer into Level 3	Sale Disposition or Settlement
Financial assets at fair value through profit or loss Investments in equity instruments measured at fair value through other comprehensive income	$ 104,498 4,475,144	4,925 -	- 464,898	- -	- -	7,200 -

Name		Fo	Fo	r the year ended	December 31, 20	20
	Beginning balance	Valuation profit and loss		Incr	ease	Decr	ease Transfer out from Level 3 Ending balance - 104,498 - 4,475,144
		Recognized in profit or loss	Recognized in other comprehensive income	Purchase or issue	Transfer into Level 3	Sale Disposition or Settlement
Financial assets at fair value through profit or loss Investments in equity instruments measured at fair value through other comprehensive income	$ 48,150 4,154,137	9,948 -	- 321,007	50,000 -	- -	3,600 -

F. Profit and loss information of Level 3

Current gain (loss) and other comprehensive income of holding assets are as follow:

Recognized on profit and loss (reported as unrealized gain (loss) from investments instruments measured at fair value through profit and loss) Recognized on other comprehensive income (reported as unrealized gain (loss) from investments instruments measured at fair value through other comprehensive income)	For the years ended December 31,
	2021 2020 $ 4,925 9,948 464,898 321,007

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

G. Quantified information of the fair value measurement of significant unobservable inputs (Level 3)

fair value Financial asset at fair value through profit or loss Private fund $ 102,223 Financial assets at fair value through other comprehensive income Unlisted stocks 4,940,042 fair value Financial assets at fair value through profit or loss Private fund $ 104,498 Financial assets at fair value through other comprehensive income Unlisted stocks 4,475,144			December 31, 2021
		valuation methods assets approach market approach assets approach income approach income approach	significant unobservable inputs liquidity discount liquidity discount sustainable growth rate cost of equity December 31, 2020	range inter-relationship between significant unobservable inputs and fair value measurement 10% The higher market liquidity discount, the lower fair value. 8.71%~34.6%. 0%~1.48% 10.6%~12.5% The higher market liquidity discount, the lower fair value. The higher sustainable growth rate, the higher fair value. The higher rate of cost of equity, the lower fair value.
	fair value $ 104,498 4,475,144	valuation methods assets approach market approach assets approach income approach income approach	significant unobservable inputs liquidity discount liquidity discount sustainable growth rate cost of equity	range inter-relationship between significant unobservable inputs and fair value measurement 10% The higher market liquidity discount, the lower fair value. 8.94%~34.79% The higher market liquidity discount, the lower fair value. 0%~1.45% 8.3%~11.51% The higher sustainable growth rate, the higher fair value. The higher rate of cost of equity, the lower fair value.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

H. Sensitivity analysis of reasonably possible alternative assumptions for fair value measurement in Level 3.

Valuation techniques used by the Bank for fair value measurements of financial instruments are appropriate. However, the use of different valuation models or inputs could lead to different outcomes of fair value measurements. The following are the impact on the other comprehensive profit and loss if using different assumptions:

a. Assets approach/ Market approach

The evaluation methods of Level 3 financial instruments of the Bank are mainly based on the market approach or the assets approach. If the liquidity discount changes by 5% upwards or downwards, the impact on the other comprehensive profit and loss is as follows:

December 31, 2021 Financial assets at fair value through profit or loss Private fund Financial assets at fair value through other comprehensive income Unlisted stocks December 31, 2020 Financial assets at fair value through profit or loss Private fund Financial assets at fair value through other comprehensive income Unlisted stocks	the effects to the net income and other comprehensive income Favorable changes (-5%) Unfavorable changes (5%) $ 5,679 (5,679) 290,299 (290,299) the effects to the net income and other comprehensive income Favorable changes (-5%) Unfavorable changes (5%) $ 5,805 (5,805) 247,738 (247,774)

b. Income approach

Adopting the income approach to evaluate Level 3 financial instruments of the Bank. The evaluation parameters are divided into sustainable growth rate and cost of equity capital. The effects of the two evaluation parameters on the other comprehensive profit and loss are as follows:

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

1) sustainable growth rate

December 31, 2021
Financial assets at fair value through other
comprehensive income
Unlisted stocks
December 31, 2020
Financial assets at fair value through other
comprehensive income
Unlisted stocks
2)
cost of equity
December 31, 2021
Financial assets at fair value through other
comprehensive income
Unlisted stocks
December 31, 2020
Financial assets at fair value through other
comprehensive income
Unlisted stocks

the effects to other comprehensive income
Favorable
changes (0.3%)
Unfavorable
changes (-0.3%)
$ 3,084
(2,895)
the effects to other comprehensive income
Favorable
changes (0.3%)
Unfavorable
changes (-0.3%)
$ 6,616
(6,074)
the effects to other comprehensive income
Favorable
changes (-3%)
Unfavorable
changes (3%)
$ 64,070
(30,848)
the effects to other comprehensive income
Favorable
changes (-3%)
Unfavorable
changes (3%)
$ 141,859
(53,302)

The favorable and unfavorable effects represent the changes in fair value, and fair value is based on a variety of unobservable inputs calculated using a valuation technique. The analysis above only reflects the effects of changes in a single input, and it does not include the interrelationships with another input.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(4) Not based on fair value measurement
A. Fair value information

The following chart presents the financial instruments not based on fair value measurement of the Bank. Except those items, others' fair value is reasonably approximate value, the Bank does not disclosure their fair value.

Debt instruments measured at amortized cost, net Debt instruments measured at amortized cost, net	December 31, 2021	December 31, 2021
	Book value Fair value $ 279,035,906 279,993,077 December 31, 2020	Fair value
	Book value $ 228,003,332	Fair value
		229,803,196

B. The fair value hierarchy of information

Assets and Liabilities		December 31, 2021	December 31, 2021
	Total $ 279,993,077	Quoted prices in active markets for identical assets (Level 1) 33,068,000 December	Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) 246,925,077 - 31, 2020
Debt instruments measured at amortized cost Assets and Liabilities
	Total $ 229,803,196	Quoted prices in active markets for identical assets (Level 1) 43,000,581	Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) 186,802,615 -
Debt instruments measured at amortized cost

C. Valuation techniques

Methods and assumptions used by the Bank for fair value evaluation of financial instruments were as follows:

a. Cash and cash equivalents, due from Central Bank and call loans to banks, securities purchased under resell agreements, receivables, overdue receivables, exchange bills negotiated guarantee deposits paid, temporary payments and suspense accounts, proceeds of settlement and credit transaction, deposits from Central Bank and other banks, securities sold under repurchase agreements, payables, other financial liabilities, guarantee deposits received and temporary receipts and suspense accounts: since these instruments have short maturities, the book value is adopted as a reasonable basis in estimating the fair value.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

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 (i.e. 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.
c. Investment in debt instruments at amortized cost: the quoted price is regarded as its fair value. If there is no quoted price in an active market for the financial asset, its fair value is estimated on the basis of the result of a valuation technique.
1) Central Government Securities (NTD): using the comment of “Bonds a fair price for each of times” from Taipei Exchange.
2) Corporate bonds and bank debentures (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 (i.e. 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, issued by the Bank, whose stated rate was equal the effective rate, using discounted cash flow projections to estimate the fair value, equivalent to its book value.

(AP) 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.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

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 ratio 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
(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 nonregulatory 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 it necessary. The duties are as follows:

A. Conduct Analysis and response project when significant domestic and foreign economic, financial 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 the issues that have to report to Risk Management Committee according to the regulations drawn by the competent authority at home and abroad.
F. 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 processing, taking meeting minutes and tracking resolution and regularly report the important resolution and various risk exposure to the board of (executive) directors.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(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. The convener holds meetings as needed to discuss measures on reducing non-performing loans and approaches to handle overdue loans.

(5) Cyber Security Management Committee

The Cyber Security Management Committee is convened by the supervising vice president who oversees the implementation and coordination of the Bank's cyber security policies. The committee holds meetings as needed to examine matters related to cyber security.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(c) Credit risk
(1) Source and definition of credit risk

Credit risk refers to the default risk resulted from the inability to fulfill the contract obligations due 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.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

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

The credit assets are classified into 5 categories. Except for normal credit assets which are classified as the first category, others are classified, based on the assurance status and the time overdue, 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 Nonperforming/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.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

C. Debt instrument investments and derivative financial instruments

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.

The financial institutions which the Bank conducts derivative instruments are mostly investment 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) Determining the credit risk has increased significantly since initial recognition

At each reporting date, the Bank shall assess the change in the risk of a default occurring over the expected life of the various credit assets and financial assets to determine whether the credit risk has increased significantly since initial recognition. To make that assessment, the Bank consider reasonable and supportable information (including forward-looking information) that is indicative of significant increases in credit risk since initial recognition. The main considerations include:

A. credit assets

a. The borrowers failed to pay the principal and interest overdue for more than 30 days, less than 90 days;
b. When the Bank conduct review or follow-up review of the relevant management procedures after loan, it knows that the financial report of the borrowers have been issued by the accountant and it has issued opinions of the significant doubt on the ability to continue as a going concern;
c. The deposits and assets of borrowers are compulsorily executed, besides, the deposits are compulsorily executed because of tax arrears. However, the borrowers that have enough deposit to bear the cost that assessed by the Bank are except;
d. The bank knows (if it has received the notice from court) that the collaterals are compulsory executed by other banks;
e. Borrowers were notified the refund by the Bank and did not conduct refund notice;

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

  - f. The letter of credit insurance fund notice due to the related company's overdue debt in other bank, the creditor to stop the delivery;

  - g. Because the borrowers have been involved in litigation and unfavorable judgments, their ability of credit performance is affected;

  - h. The customer is classified as an early warning account by the Bank or has bad credit that aware by others.

B. Debt instrument investments
- a. The latest credit rating on the report date was non-investment grade and fell more than two levels than the original rating, or;
- b. Investment target evaluation loss is up to 30% of investment cost.
(4) The credit risk has not increased significantly or judged as low credit risk on the report date

On each report date, the Bank assessed that there was no significant increase in the risk of default for any credit asset during the expected duration of existence or a low credit risk. The amount of expected credit losses was not taken as the change of credit risk, if the credit risk of the credit asset was low on the report date, it also assumes that the credit risk of the credit asset has not increased significantly since the initial recognition. The credit assets with low credit risk refer to the low default risk and the borrower’s ability to perform its contractual cash flow obligations in the near term. No significant increase in risk relates to the borrower. The absence of economic, operational, and adverse changes in financial conditions and other bad debt conditions did not affect their ability to fulfill their contractual cash flow obligations. Financial assets on investment-grade or not on investment-grade but the ratings are not significantly reduced are also considered to be low-risk areas.

(5) Definitions of default and credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired not only the borrower defaults the loan more than 90 days, it also includes observable data as follows:

A. Credit assets
a. Significant financial difficulty of the issuer or the borrower;
b. A breach of contract, such as a default or past due event ;

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

c. The lender(s) of the borrower, for economic or contractual reasons relating to the borrower’ s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;
d. It is becoming probable that the borrower will enter bankruptcy or other financial reorganization;
e. The disappearance of an active market for that financial asset because of financial difficulties;
f. The purchase or origination of a financial asset at a considerable amount of discount that reflects the incurred credit losses;
B. Debt instrument investments
a. Significant financial difficulty of the issuer;
b. The disappearance of an active market for that financial asset because of financial difficulties;
c. The purchase or origination of a financial asset at a considerable amount of discount that reflects the incurred credit losses.
d. Counterparty defaulting on agreement of other financial instruments (e.g. transactions settlement failure, a bank decide to execute early termination of transactions, or loans originated from derivatives settlement failure).

(6) Write-off policy

The integral part or the portion of the credit assets that needs to be written-off should first be approved during the board of directors’ meeting; particularly, the portion that is deemed uncollectible.

The following are indicators that the financial assets are uncollectible:

A. The borrowers fail to recover all or part of the debt due to dissolution, escape, settlement, bankruptcy or other reasons.
B. After the collateral and the assets of the principal and subordinate debtors have been priced low or deducted from the first-order mortgage, they cannot be repaid, the execution costs are close or may exceed the Bank’s reimbursable amount, and the implementation is not beneficial.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

C. The collateral and the property of the principal and subordinate debtors were auctioned off at no cost and were not bought by anyone, and there was no one have substantial benefits.
D. Overdue loan and non-accrual loan have exceeded the liquidation period for two years.

The Bank, whose written-off claims may still have ongoing recourse, continues to follow laws and regulations to pursue the proceedings.

(7) Modification of contractual cash flow of financial assets

The Bank may revise the contractual cash flow of the credit asset due to the borrower's financial difficulties in negotiating, increasing the recovery rate of the borrowers that have problems, or maintaining the customer relationship. The modification of the contractual terms of the credit asset may include extending the contract period, modifying the payment time of interest, and modifying agreement rate and so on. If the contractual cash flow modification of the credit asset is due to the financial difficulty of the borrower, it is deemed as an impairment of the financial asset. If the contractual cash flow modification is not due to the financial difficulties of the borrower, the existing or projected unfavorable changes in the operating, financial or economic conditions under the borrower's performance or the borrower's ability to make the borrower's ability to perform its debt obligations vary significantly. The cause of anomalies or other bad debts is supplemented by an assessment of whether the credit risk of financial assets has increased significantly.

(8) Measuring the expected credit losses

A. Adoption of methods and assumptions

After considering the attributes of financial assets and credit assets and the adequacy of default experience, internal historical data or the information from external credit rating agency is used to estimate the Probability of default (PD), Loss given default (LGD), Exposure at default (EAD) and other credit risk components.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

In order to assess the expected credit losses of credit assets, the Bank is divided into the following combinations depending on the credit risk characteristics such as the identity of borrowers, products, and type of collateral:

Corporate banking	Government and public institution	Government and public institution
	Financial institution (including banks, ticket companies, securities finance companies)
	Large Enterprise	The guarantee of the credit guarantee mechanism
		Secured
		Non-secured
	Medium and small enterprises	The guarantee of the credit guarantee mechanism
		Secured
		Non-secured
Private banking	Mortgage
	Microcredit
	Other-Secured
	Other-Non-secured
Entrepreneurship	The guarantee of the credit guarantee mechanism
	Secured
	Non-secured

If the credit risk on a credit asset has not increased significantly since initial recognition or the credit asset has low credit risk at the reporting date, the Bank shall measure the allowance for impairment using the 12-month expected credit losses; if the credit risk on a financial instrument has increased significantly or credit-impaired since initial recognition, the Bank shall measure the allowance for impairment using the lifetime expected credit losses.

In order to measure expected credit losses, the Bank considers the default probability (Probability of default, "PD") of borrowers, and loss given default rate ("LGD") multiplying the exposure at default (“EAD”), taking into account the time value of money as well evaluate 12-month and lifetime loss.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

Default probability is the default probability of the borrower (default and credit impairment of financial assets), and the loss given default rate is the rate of loss caused by default by the borrower. The default probability and default loss rate used in the impairment assessment of the credit business are based on internal historical information of each group, and adjusted based on current observable information and forward-looking general economic information.

The Bank measures the EAD based on the book value of loans at reporting date. When estimating the 12-month and lifetime expected credit losses of the loan commitments and financial guarantee contracts, the definition of the credit risk increasing significantly and the credit-impaired assets are based on the rules mentioned above. Additionally, in order to determine the EAD used to calculate expected credit loss of off-balance sheet items, the Bank adopts the credit conversion factor (CCF) of standardized approach in credit risk which is legislated in the regulation of Proprietary Capital and Risk Capital of Banks.

B. Consideration of forward-looking information

The Bank obtains forward-looking information which it takes into consideration when determining whether the credit risk of financial instruments has increased significantly since initial recognition and assessing the expected credit losses. The Bank identifieds the relevant macroeconomic factors for credit risk of each portfolio by analyzing the historically data. These macroeconomic factors include Taiwan GDP (not seasonally adjusted), Taiwan's actual industrial production index, Taiwan's annual growth rate of retail sales, Taiwan's real sales price index, unemployment rate (seasonally adjusted), Cathay National Real Estate Index (national), Taiwan's real consumer price index (Not seasonally adjusted) and Taiwan's annual growth in retail sales or other factors. The various economic factors and their impacts on Probability of Default (“PD”) are different depending on the type of financial instruments.

In order to determine the credit risk of investment in debt instruments at amortized cost and at fair value through other comprehensive income has increased significantly, the Bank uses the changes of external ratings published by international credit rating agencies as the quantitative indicators, while the assessment of expected credit losses are calculated by using the external ratings, as well as PD and Loss Given Default (“LGD”), published by Moody’s. Since the international credit rating agencies have already considered the forwardlooking information while evaluating the credit ratings, which the Bank considered to be appropriate after its assessment, the credit ratings will be included in the Bank’s assessment of related expected credit losses.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(9) Credit risk hedging or diminishing.
A. Collaterals

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

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

D. Enhancement of other credit

The assessment of credit business applies 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. (i.e. all kinds of deposits, except prohibition of low or the party's agreement, the Bank 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. (e.g. R.O.C SMEG, Agricultural Credit Guarantee Fund, Overseas Credit Guarantee Fund)

(10)Information on the financial assets of the Bank that have been credit derogated and the collateral for mitigating potential losses are as follows:

December 31, 2021 Impairment financial assets： Receivables Accounts receivables Interest receivable Discounts and loans Overdue receivable Total impairment financial assets December 31, 2020 Impairment financial assets： Receivables Interest receivable Discounts and loans Overdue receivable Total impairment financial assets	Carrying amount $ 2,000 43,020 20,356,149 80,334 $ 20,481,503 Carrying amount $ 26,687 25,375,566 68,832 $ 25,471,085	Allowance impairment 681 4,960 3,635,336 25,545 3,666,522 Allowance impairment 5,304 5,219,221 23,121 5,247,646	Exposure (measured at amortized cost) 1,319 38,060 16,720,813 54,789 16,814,981 Exposure (measured at amortized cost) 21,383 20,156,345 45,711 20,223,439	Value of collateral
				- - 21,352,293 -
				21,352,293
				Value of collateral
				- 26,211,067 -
				26,211,067

Note: The value of collateral is the real estate appraisal information and credit guarantee agency guarantee amount levied by the Bank’s credit assets.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(11)Credit risk concentration

The Bank does 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. By industry

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

Industry	December 31, 2	021 % % 64.66 % 0.33 % 5.05 % 0.22 % 23.86 % 0.28 % 5.38 % 0.22 % 100.00	December 31,	2020
	Amount $ 852,346,402 4,330,080 66,591,431 2,934,798 314,527,333 3,634,002 70,945,795 2,914,507 $ 1,318,224,348		Amount 777,673,749 10,940,025 53,863,302 2,868,681 305,732,834 3,721,990 67,672,995 1,821,665 1,224,295,241	% % 63.52 % 0.89 % 4.40 % 0.23 % 24.98 % 0.30 % 5.53 % 0.15 % 100.00
Private business Public business Government institution Nonprofit organization Individual Foreign financial institution Foreign non-financial institution Foreign individual Total

B. By geographic area

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

Area	December 31, 2	021 % % 94.12 % 5.88 % 100.00	December 31,	2020
	Amount $ 1,240,730,044 77,494,304 $ 1,318,224,348		Amount 1,151,078,591 73,216,650 1,224,295,241	% % 94.02 % 5.98 % 100.00
Domestic Foreign Total

C. By collateral

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

Collateral	December 31, 2	021 % % 17.82 % 0.69 % 1.98 % 60.85 % 1.22 % 0.22 % 16.41 % 0.81 % 100.00	December 31,	2020
	Amount $ 234,949,230 9,101,690 26,102,842 802,113,094 16,117,256 2,949,127 216,270,546 10,620,563 $ 1,318,224,348		Amount 225,320,364 9,175,475 19,544,832 754,931,145 18,785,101 3,724,442 183,962,821 8,851,061 1,224,295,241	% % 18.40 % 0.75 % 1.60 % 61.66 % 1.53 % 0.30 % 15.04 % 0.72 % 100.00
Unsecured Stocks Bonds Real estate Chattel Notes receivable Guarantees Others Total

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

Note: Secured credit are categorized in its respective item per the type of the collaterals. Non-secured credit (no collateral provided) is classified in unsecured. 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 unsecured. The accreditation value is the value calculated per the accreditation regulations of the Bank, not the discounted value of the signed contract.

(12)Maximum credit risk exposure

A. The maximum credit exposure of the assets in the financial statement is approximately the book value when not considering collaterals or other credit enhancement instruments. The maximum credit exposure off the balance sheet (when not considering collaterals or other credit enhancement instruments and not revocable) was as follows:

Off balance sheet items Issued and irrevocable loan commitments Irrevocable credit card loan commitments Letters of credit issued yet unused Various guarantee proceeds Total	Maximum credit risk exposure	Maximum credit risk exposure
	December 31, 2021 $ 36,415,736 19,380,151 11,058,128 24,336,413 $ 91,190,428	December 31, 2020 61,833,395 20,067,204 8,892,012 20,636,932
		111,429,543

The Management of the Bank evaluated the credit risk exposure and believed that it is able to continuously control and minimize the off-balance sheet credit risk exposure due to its strict appraisal process and regular subsequent examination.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

B. The credit quality analyses of the financial assets
a. Credit quality analysis of discounts and loans, receivables, guarantee and commitments

December 31, 2021	12-month ECL	12-month ECL	12-month ECL	12-month ECL	12-month ECL	12-month ECL	12-month ECL		Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－ impaired
	Excellent	Good	Medium	Acceptable	Under standard	No rating	Subtotal	Excellent	Good	Medium	Acceptable	Under standard	No rating	Subtotal	High risk	Allowance impairment	Total
Receivable
Credit card	$ 368,690	246,002	192,898	325	4,924	216,176	1,029,015	129	1,550	1,993	13	655	-	4,340	-	1,693	1,031,662
Acceptances receivable	276,046	549,061	113,769	832	29,835	63,686	1,033,229	-	-	-	-	-	-	-	-	10,332	1,022,897
Other receivables	215,499	354,743	324,870	33,189	23,858	1,915,055	2,867,214	82	431	1,292	1,847	1,065	628	5,345	45,020	59,048	2,858,531
Discounts and loans
Private banking	113,609,203	116,551,170	66,928,175	4,268,868	1,700,024	9,170,592	312,228,032	21,412	53,655	207,948	21,550	81,566	10,059	396,190	4,817,619	3,662,551	313,779,290
Corporate banking	186,110,603	315,339,281	306,477,476	32,953,038	18,573,454	122,106,000	981,559,852	80,570	388,410	413,816	1,601,886	782,756	416,687	3,684,125	15,538,530	11,914,266	988,868,241
Other financial assets
Overdue receivable	-	-	-	-	-	-	-	-	-	-	-	-	-	-	80,334	51,392	28,942
Total	$ 300,580,041	433,040,257	374,037,188	37,256,252	20,332,095	133,471,509	1,298,717,342	102,193	444,046	625,049	1,625,296	866,042	427,374	4,090,000	20,481,503	15,699,282	1,307,589,563
Guarantee and commitments	$ 23,693,996	20,955,504	8,177,179	830,226	55,958	37,392,210	91,105,073	13,401	17,786	7,248	-	788	-	39,223	46,132	329,488	90,860,940

December 31, 2020	12-month ECL								Lifetime ECL－not impaired						Lifetime ECL－ impaired
	Excellent	Good	Medium	Acceptable	Under standard	No rating	Subtotal	Excellent	Good	Medium	Acceptable	Under standard	No rating	Subtotal	High risk	Allowance impairment	Total
Receivable
Credit card	$ 465,192	151,235	203,982	21,460	1,927	240,049	1,083,845	1,568	717	3,049	215	138	498	6,185	-	2,045	1,087,985
Acceptances receivable	271,727	689,404	111,845	5,812	12,400	192,565	1,283,753	-	-	-	-	-	-	-	-	12,837	1,270,916
Other receivables	200,365	319,067	443,197	38,386	9,723	1,673,377	2,684,115	2,344	19,338	11,165	7,828	1,395	2,325	44,395	26,687	69,280	2,685,917
Discounts and loans
Private banking	114,964,176	108,069,036	66,948,050	4,917,753	990,763	5,026,892	300,916,670	5,485	172,716	157,123	31,627	148,272	693	515,916	6,121,914	3,467,633	304,086,867
Corporate banking	159,077,810	276,441,887	269,775,572	33,545,450	9,752,131	107,943,286	856,536,136	2,615,868	14,235,894	13,636,440	6,744,478	1,197,555	2,520,718	40,950,953	19,253,652	10,858,524	905,882,217
Other financial assets
Overdue receivable	-	-	-	-	-	-	-	-	-	-	-	-	-	-	68,832	55,051	13,781
Total	$ 274,979,270	385,670,629	337,482,646	38,528,861	10,766,944	115,076,169	1,162,504,519	2,625,265	14,428,665	13,807,777	6,784,148	1,347,360	2,524,234	41,517,449	25,471,085	14,465,370	1,215,027,683
Guarantee and commitments	$ 26,160,471	14,889,757	5,567,518	945,234	330,756	62,931,925	110,825,661	44,927	37,019	40,993	14	-	433,734	556,687	47,195	271,182	111,158,361

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b. Debt instruments

December 31, 2021	12-month ECL	12-month ECL	12-month ECL	12-month ECL	12-month ECL	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－ impaired
	Investment	Sub investment	High risk	No rating	Subtotal	Investment	Sub investment	High risk	No rating	Subtotal	High risk	Total	Accumulated impairment (Note)
Investment in debt instruments measured at fair value through other comprehensive income
Overseas bonds	$ 49,213,865	-	-	-	49,213,865	-	-	-	-	-	-	49,213,865	15,600
NT bonds	86,780,365	-	-	-	86,780,365	-	-	-	-	-	-	86,780,365	72,192
Investment in debt instruments at amortized cost
Overseas bonds	15,296,961	-	-	-	15,296,961	-	-	-	-	-	-	15,296,961	5,916
NT bonds	32,373,347	-	-	-	32,373,347	-	-	-	-	-	-	32,373,347	13,214
Certificates of deposit with the Central Bank	231,395,000	-	-	-	231,395,000	-	-	-	-	-	-	231,395,000	68,334
Negotiable certificates of deposit	58,076	-	-	-	58,076	-	-	-	-	-	-	58,076	14
Total	$ 415,117,614	-	-	-	415,117,614	-	-	-	-	-	-	415,117,614	175,270

December 31, 2020	12-month ECL					Lifetime ECL－not impaired					Lifetime ECL－ impaired
	Investment	Sub investment	High risk	No rating	Subtotal	Investment	Sub investment	High risk	No rating	Subtotal	High risk	Total	Accumulated impairment (Note)
Investment in debt instruments measured at fair value through other comprehensive income
Overseas bonds	$ 36,844,475	-	-	-	36,844,475	-	-	-	-	-	-	36,844,475	11,599
NT bonds	67,247,661	-	-	-	67,247,661	-	-	-	-	-	-	67,247,661	54,855
Investment in debt instruments at amortized cost
Overseas bonds	24,555,550	-	-	-	24,555,550	-	-	-	-	-	-	24,555,550	10,790
NT bonds	41,537,821	-	-	-	41,537,821	-	-	-	-	-	-	41,537,821	17,333
Certificates of deposit with the Central Bank	161,705,000	-	-	-	161,705,000	-	-	-	-	-	-	161,705,000	47,754
Negotiable certificates of deposit	280,925	-	-	-	280,925	-	-	-	-	-	-	280,925	87
Total	$ 332,171,432	-	-	-	332,171,432	-	-	-	-	-	-	332,171,432	142,418

Note：The cumulative impairment of the bond which measured at fair value through other comprehensive profit or loss is recognized as other equity.

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C. The Maximum credit risk exposure for financial instruments are not subject to impairment regulations are as follows:

December 31, 2021 Financial assets at fair value through profit or loss －Debt investments －Commercial paper －Listed stocks －Beneficiary certificates －Derivative instrument December 31, 2020 Financial assets at fair value through profit or loss －Debt investments －Commercial paper －Listed stocks －Beneficiary certificates －Derivative instruments	Maximum credit risk exposure $ 356,140 37,015,444 68,106 1,665,898 552,636 Maximum credit risk exposure $ 1,443,111 12,414,244 188,304 267,054 690,858	Collateral Enhancement of other credit - - - - - - - - 489,795 699,723 Collateral Enhancement of other credit - - - - - - - - 882,623 700,109

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(13) Changes in the expected credit losses of the Bank

A. Receivables

		For the year end	ed December 31,	2021	Total
12-month ECL $ 13,208 1,123 (6) (15) (8,016) 8,192 (792) - $ 13,694	Lifetime ECL－not impaired 1,240 (954) 13 (61) (129) 25 30 - 164	Lifetime ECL－ impaired 5,304 (169) (7) 76 (2,658) 3,113 (18) - 5,641	Impaired (IFRS9) 19,752 - - - (10,803) 11,330 (780) - 19,499	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 64,410 - - - - - - (12,836) 51,574
					84,162 - - - (10,803) 11,330 (780) (12,836)
					71,073

For the year ended December 31, 2020

Beginning balance Changes in financial instruments that have been identified at the beginning of the period：－Transferred to 12-months ECL －Transferred to lifetime ECL －Transferred to the credit- impaired financial assets －The financial assets that have been derecognized New financial assets originated or purchased Other changes Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-Performing and Non-Accrual Loans " Ending balance	12-month ECL $ 10,249 182 (97) (18) (5,662) 8,259 295 - $ 13,208	Lifetime ECL－not impaired 1,369 (76) 119 (115) (1,016) 124 835 - 1,240	Lifetime ECL－ impaired 10,387 (106) (22) 133 (8,291) 2,294 909 - 5,304	Impaired (IFRS9) 22,005 - - - (14,969) 10,677 2,039 - 19,752	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 39,763 - - - - - - 24,647 64,410	Total
						61,768 - - - (14,969) 10,677 2,039 24,647
						84,162

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B. Discounts and loans

		For the year end	ed December 31,	2021	Total
12-month ECL $ 3,133,215 1,089,009 (5,445) (16,929) (1,587,449) 1,861,459 - (307,393) - $ 4,166,467	Lifetime ECL－not impaired 951,010 (770,235) 9,047 (9,790) (71,342) 4,752 - 16,535 - 129,977	Lifetime ECL－ impaired 5,219,221 (318,774) (3,602) 26,719 (1,105,361) 292,035 (4,606,000) 4,131,098 - 3,635,336 For the year end	Impaired (IFRS9) 9,303,446 - - - (2,764,152) 2,158,246 (4,606,000) 3,840,240 - 7,931,780 ed December 31,	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 5,022,711 - - - - - - - 2,622,326 7,645,037 2020
					14,326,157 - - - (2,764,152) 2,158,246 (4,606,000) 3,840,240 2,622,326
					15,576,817
					Total
	Lifetime ECL－not impaired 197,473 (41,278) 68,751 (57,177) (22,230) 216,028 - 589,443 - 951,010	Lifetime ECL－ impaired 5,722,768 (85,585) (2,489) 72,322 (1,132,117) 450,914 (3,841,168) 4,034,576 - 5,219,221	Impaired (IFRS9) 8,117,307 - - - (2,280,846) 2,554,955 (3,841,168) 4,753,198 - 9,303,446	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 5,224,061 - - - - - - - (201,350) 5,022,711
					13,341,368 - - - (2,280,846) 2,554,955 (3,841,168) 4,753,198 (201,350)
					14,326,157

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C. Other financial assets

		For the year end	ed December 31,	2021	Total
12-month ECL $ - - - - - - $ -	Lifetime ECL－not impaired - - - - - - -	Lifetime ECL－ impaired 23,121 (83) 17,074 (15,308) 741 - 25,545 For the year end	Impaired (IFRS9) 23,121 (83) 17,074 (15,308) 741 - 25,545 ed December 31,	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 31,930 - - - - (6,083) 25,847 2020
					55,051 (83) 17,074 (15,308) 741 (6,083)
					51,392
					Total
	Lifetime ECL－not impaired - - - - - -	Lifetime ECL－ impaired 53,947 13,908 (44,249) (485) - 23,121	Impaired (IFRS9) 53,947 13,908 (44,249) (485) - 23,121	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 31,954 - - - (24) 31,930
					85,901 13,908 (44,249) (485) (24)
					55,051

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

D. Guarantee and commitments

		For the year end	ed December 31,	2021	Total
12-month ECL $ 106,670 (51,707) 73,511 20,880 - $ 149,354	Lifetime ECL－not impaired 880 (179) 10 (642) - 69	Lifetime ECL－ impaired 6,699 (5,520) 4,439 1,168 - 6,786 For the year end	Impaired (IFRS9) 114,249 (57,406) 77,960 21,406 - 156,209 ed December 31,	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 156,933 - - - 16,346 173,279 2020
					271,182 (57,406) 77,960 21,406 16,346
					329,488
					Total
	Lifetime ECL－not impaired 338 (25) 367 - (278) 378 100 - 880	Lifetime ECL－ impaired 17,220 - - 57 (14,118) 652 2,888 - 6,699	Impaired (IFRS9) 76,603 - - - (36,224) 53,215 20,655 - 114,249	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 155,843 - - - - - - 1,090 156,933
					232,446 - - - (36,224) 53,215 20,655 1,090
					271,182

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

E. Debts investments

For	the year ended December 31, 2021 Lifetime ECL －not impaired Lifetime ECL －impaired Total - - 142,418 - - 97,018 - - (61,254) - - (2,912) - - 175,270 the year ended December 31, 2020 Lifetime ECL －not impaired Lifetime ECL －impaired Total - - 142,710 - - 69,437 - - (69,680) - - (49) - - 142,418	the year ended December 31, 2021 Lifetime ECL －not impaired Lifetime ECL －impaired Total - - 142,418 - - 97,018 - - (61,254) - - (2,912) - - 175,270 the year ended December 31, 2020 Lifetime ECL －not impaired Lifetime ECL －impaired Total - - 142,710 - - 69,437 - - (69,680) - - (49) - - 142,418	the year ended December 31, 2021 Lifetime ECL －not impaired Lifetime ECL －impaired Total - - 142,418 - - 97,018 - - (61,254) - - (2,912) - - 175,270 the year ended December 31, 2020 Lifetime ECL －not impaired Lifetime ECL －impaired Total - - 142,710 - - 69,437 - - (69,680) - - (49) - - 142,418
12-month ECL $ 142,418 97,018 (61,254) (2,912) $ 175,270 For
	Lifetime ECL －not impaired - - - - -	Lifetime ECL －impaired - - - - -
			142,710 69,437 (69,680) (49) 142,418

(14)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 were as follows:

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.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(d) Liquidity risk
(1) The origin and definition of liquidity risk

Liquidity risk refers to the potential financial loss results from the inability to liquidate assets or obtain 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 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.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

  - 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 the board of directors quarterly.

C. Measurement
- a. Maturity gap: To place the inflows and outflows of capital into various time zones accordingly 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 overrelying 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 nonderivative 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, financial assets measured at fair value through other comprehensive income and investment in debt instruments at amortized cost.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

B. Maturity analysis for non-derivative financial liabilities

The table below shows the cash outflows from the non-derivative financial liabilities which are possessed by the Bank based on the remaining days from the financial statement date to the contract maturity date. The amount disclosed is based on the cash flows of the contracts.

Major matured cash outflow Deposits from the Central Bank and banks Overdrafts on banks Call loans from the Central Bank and banks Due to the Central Bank and banks Financial liabilities designated at fair value through profit or loss Notes and bonds issued under repurchase agreement Interest payable Deposits transferred from Chunghwa Post Co., Ltd. Demand deposits Time deposits Remittance Bank notes payable Cumulative earnings on appropriated loan fund Lease liabilities Major matured cash outflow Deposits from the Central Bank and banks Overdrafts on banks Call loans from the Central Bank and banks Due to the Central Bank and banks Financial liabilities designated at fair value through profit or loss Notes and bonds issued under repurchase agreement Interest payable Deposits transferred from Chunghwa Post Co., Ltd. Demand deposits Time deposits Remittance Bank notes payable Cumulative earnings on appropriated loan fund Lease liabilities			December 31, 2021	December 31, 2021
	0-30 days $ 1,095,518,499 493,598 536,471 25,155,291 - - 44,197 458,151 10,500,000 955,013,566 102,844,567 429,227 - 1,750 41,681	31-90 days 184,664,045 - - 9,093,410 - - 144,716 812,851 21,359,335 - 153,191,825 - - 2,250 59,658	91 days-1 year 1-5 years 500,530,076 75,324,151 - - - - - - 49,713,800 - - - 604,836 1,266,944 1,127,339 71,242 35,402,210 - - - 413,340,264 44,219,865 - - - 27,340,000 111,750 1,779,330 229,877 646,770 December 31, 2020		Over 5 years Total 35,841,707 1,891,878,478 - 493,598 - 536,471 - 34,248,701 - 49,713,800 8,293,730 8,293,730 - 2,060,693 2 2,469,585 - 67,261,545 - 955,013,566 675 713,597,196 - 429,227 24,910,000 52,250,000 2,470,214 4,365,294 167,086 1,145,072
	0-30 days $ 949,743,136 900,620 777,971 33,177,364 - - 488,948 548,704 10,800,000 813,463,426 88,113,265 426,966 1,000,000 250 45,622	31-90 days 166,775,347 - - 12,082,474 - - 185,344 891,394 20,120,150 - 133,435,966 - - 6,670 53,349	91 days-1 year 425,185,011 - - 2,987,250 28,450,000 - 594,313 872,656 37,355,210 - 346,582,629 - 8,000,000 110,420 232,533	1-5 years 58,671,314 - - - - - 787,386 58,128 - - 36,679,797 - 18,340,000 2,220,250 585,753	Over 5 years Total 37,614,645 1,637,989,453 - 900,620 - 777,971 - 48,247,088 - 28,450,000 8,411,020 8,411,020 - 2,055,991 8 2,370,890 - 68,275,360 - 813,463,426 1,433 604,813,090 - 426,966 25,910,000 53,250,000 3,154,776 5,492,366 137,408 1,054,665

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(4) Derivative financial liabilities maturity analysis
A. Derivative financial instruments settled by net amount

The derivative instruments of the Bank whose possession are settled by net amount include foreign derivative instruments, such as non-delivery forward contracts and net-delivery foreign exchange option. After evaluation the Bank concluded that the maturity date is the basic element to comprehend all the derivative financial instruments listed in the 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 financial statement. As of December 31, 2021 and 2020, the Bank had no derivative financial instruments settled by net amount.

B. Derivative financial instruments settled by gross amount

The derivative instruments of the Bank’s possession settled by gross amount include the following:

a. Foreign exchange derivative financial instrument: Foreign exchange options settled by gross amount, foreign exchange forward contracts and currency swap contracts.
b. Interest rate derivative financial instruments: interest rate swap contracts.

The table below shows the derivative financial instruments of the Bank whose possession are settled by gross amount based on the remaining days from the 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 financial statement. The maturity analysis for derivative financial liabilities settled by gross amount is as follows:

December 31, 2021 Derivative financial instruments at fair value through profit or loss Foreign exchange derivative instruments Cash outflow Cash inflow Interest rate derivative instrument Cash outflow Cash inflow Total cash outflow Total cash inflow Net cash flow	0-30 days $ 4,498,580 4,447,438 - - 4,498,580 4,447,438 $ 51,142	31-90 days 6,093,790 6,113,200 1,028 7,834 6,094,818 6,121,034 (26,216)	91-180 days 6,071,884 6,105,833 1,093 1,167 6,072,977 6,107,000 (34,023)	181 days to 1 year 2,768,967 2,777,705 2,556 2,412 2,771,523 2,780,117 (8,594)	Over 1 year - - 8,791 7,171 8,791 7,171 1,620	Total 19,433,221 19,444,176 13,468 18,584 19,446,689 19,462,760 (16,071)

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December 31, 2020 Derivative financial instruments at fair value through profit or loss Foreign exchange derivative instruments Cash outflow Cash inflow Interest rate derivative instrument Cash outflow Cash inflow Total cash outflow Total cash inflow Net cash flow	0-30 days $ 18,587,554 18,999,896 - 671 18,587,554 19,000,567 $ (413,013)	31-90 days 20,742,526 21,036,931 7,903 1,071 20,750,429 21,038,002 (287,573)	91-180 days 14,038,845 14,267,128 14,547 6,907 14,053,392 14,274,035 (220,643)	181 days to 1 year 8,411,846 8,406,666 9,222 6,513 8,421,068 8,413,179 7,889	Over 1 year - - 18,690 15,276 18,690 15,276 3,414	Total 61,780,771 62,710,621 50,362 30,438
						61,831,133
						62,741,059
						(909,926)

(5) Maturity analysis of off-balance sheet items

31-90 days	91-180 days	181 days to 1 year	Total 36,415,736 19,380,151 11,058,128 24,336,413
730,576 31,254 6,074,175 3,485,929 10,321,934 31-90 days	1,012,632 70,784 650,292 2,138,876 3,872,584 91-180 days	4,268,229 215,130 420,639 2,597,286 7,501,284 181 days to 1 year
			91,190,428
			Total 61,833,395 20,067,204 8,892,012 20,636,932
338,189 336 5,464,898 2,859,595 8,663,018	4,349,374 300,316 604,705 1,189,714 6,444,109	27,261,664 1,150,378 258,636 3,635,884 32,306,562
			111,429,543

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(6) Maturity analysis of lease contract commitments

The Bank only has operating lease contract, 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 operating lease contract commitments:

December 31, 2021 Operating lease income (lessor) December 31, 2020 Operating lease income (lessor)	Below 1 year $ 3,325 Below 1 year $ 660	1-5 years 2,414 1-5 years -	Over 5 years Total - 5,739 Over 5 years Total - 660

The capital expenditure commitment of the Bank refers to the contract signed to obtain buildings and equipment. The maturity analysis of the capital expenditure commitment of the Bank is as follows:

December 31, 2021 Machinery and equipment Transportation equipment Right-of-use assets Miscellaneous equipment Total December 31, 2020 Machinery and equipment Transportation equipment Right-of-use assets Miscellaneous equipment Total	Below 1 year $ 1,208,486 1,313 405 1,914 $ 1,212,118 Below 1 year $ 1,478,133 2,986 1,260 26,900 $ 1,509,279	1-5 years - - 238 - 238 1-5 years - - 805 - 805	Over 5 years - - - - - Over 5 years - - - - -	Total
				1,208,486 1,313 643 1,914
				1,212,356
				Total
				1,478,133 2,986 2,065 26,900
				1,510,084

(e) Market risk
(1) Definition of 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.

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(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 or board of executive 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 establish limit control mechanism in terms of trade positions, stop-limit, suspensions and lines of alert based on the operation notices and procedures of different financial instruments, including fix income instruments, equity securities, foreign exchange transaction and derivative financial instruments.

(3) Process for market risk management
A. Risk identification

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 instruments 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 or board of executive 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.

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b. The risk measurements (or evaluations) of the financial instruments of the Bank are conducted through different information systems. For the market data and parameters of the models applied for evaluation, they shall be random inspected regularly to determine the rationality.
C. Risk monitoring
a. Valuation reports of various financial instruments are prepared regularly for executives to review and serve as the guidance for daily risk management operation.
b. All financial transactions are equipped with different regulations in terms of limit of loss and 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 department report current market risk management status of the Bank to directors, executive directors and executives to facilitate them to control the risk exposure status and adjust management procedures properly.

(4) Scope and method of market risk management
A. Foreign exchange risk management
- a. Definition of 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

All the financial instruments which apply to trading book position and banking book position 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.

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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 department 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
1) Identification and measurement
- A) Risk Management department established risk factor chart based on different financial transactions to effectively identify risk factors and market risk resources. In addition, the financial transactions which the Bank conducts deal with simple type financial products. For complex financial products, the Bank conducts back-to-back hedge covering to effectively avoid market risk.
- B) Risk Management department uses Greeks to measure the influence level of exchange rate for held-for-trading spot exchange and exchange rate derivative and setup Greek's sensitivity allowance, according to the yearly demand of trade units, the state of utilization, and monitor the load of fluctuation of exchange rate in each acceptable range.

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     - C) 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 stoplimit 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 department shall report to the board of directors or 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
a. Definition of equity security risk

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.

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d. Procedures of equity security risk management
1) All trade units submit the required amounts of position annually base on operation status. Risk management department will evaluate the requirement and submit to the board of directors or executive directors. The demand will be executed after approved by the board of directors.
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
1) Identification and measurement
- A) The risk management department apply Value at Risk models to measure the market risk of equity security investment. Furthermore, based 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 department shall report to the board of directors or executive directors.

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  - B) Transaction reports shall be prepared and submitted to the department heads for approval on a daily basis. And the investment gains or losses shall report to the board of directors or executive directors regularly for future reference.

C. Interest rate risk management
a. Definition of interest rate risk

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 department will evaluate the requirement and submit to the board of directors or executive directors for approval. The demand will be executed after the board of directors approved.
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.

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e. Process of interest rate risk management
- 1) Identification and measurement
  - A) The risk management department establish risk factor charts base on different financial transaction to effectively identify risk factors and market risk resources. In addition, the financial transactions which the Bank conducts deal with simple type financial products. For complex financial products, the Bank conducts back-to-back hedge covering to effectively avoid market risk.
  - B) Position of the trading book shall be evaluated daily. When there are public quotes for financial instruments, the quotes shall be the prior evaluation prices. If the financial instruments are evaluated by models, then they shall be evaluated by mathematic models prudently and the assumptions and parameters of the models shall be reviewed regularly.
- 2) Monitoring and report
  - A) The risk management department 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 department 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 or executive directors.
D. Concentration management
a. The trade counterparties of the Bank are mostly financial institutions. To avoid the risk being over concentrated and enhance credit risk management, the Bank established financial institution credit risk limit based on the world ranking of Level 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.

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b. 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 definition and management purpose for the interest rate risk of the banking book
a. The interest rate risk of the banking book refers to the negative effect towards 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
a. Identification and measurement

When the Bank conducts interest rate related products, it identifies the reprising risk, yield 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 or 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 or executive directors.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(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 confidence interval.

B. Value at Risk models and assumptions

In order to enhance the market risk control operation, the Bank established quantified indices of market risk for the equity security position of the trading book. Based on the historical information of the last 1 year and applies Historical 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:

a. Value at Risk cannot reflect the losses result from other type of risks, such as credit risk and liquidity risk.
b. Value at Risk measures the possible loss of the position on hand at the end of the transaction day, but it cannot 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.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(7) Foreign exchange risk disclosure and sensitivity analysis
A. Foreign exchange risk exposure
- a. Significant net positions of foreign currencies (Market risk)

Significant net positions of foreign currencies (Market risk)	Significant net positions of foreign currencies (Market risk)
December 31, 2021
Currency USD JPY AUD EUR CNY Significant net positions of	Foreign currency amount (in thousands) NT$ amount $ 448,924 12,414,993 2,103,814 505,967 13,590 273,023 2,113 66,306 11,566 50,208 foreign currencies (Market risk)
December 31, 2020
Currency USD JPY CNY EUR AUD	Foreign currency amount (in thousands) NT$ amount $ 440,115 12,367,232 2,022,710 551,188 66,291 286,709 5,401 186,821 5,013 108,531

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 positions of each foreign currency.

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b. Assets and liabilities of foreign currency

	December 31, 2021
Currency	Monetary financial assets Foreign currency amount (in thousands) Spot rate NTD amount $ 13,445,369 27.6550 371,831,680 4,679,690 20.0900 94,014,972 5,206,159 4.3410 22,599,936 83,411,891 0.2405 20,060,560 5,362,994 3.5460 19,017,177 436,915 31.3800 13,710,393 3,151,732 1.7340 5,465,103 104,307 37.3600 3,896,910 53,010 18.9400 1,004,009 18,796 21.6600 407,121 10,842 20.4800 222,044 3,833 30.2150 115,814 - - 84,086 Non-monetary financial assets 1,083 27.6550 29,950	Monetary financial liabilities
		Foreign currency amount (in thousands) Spot rate NTD amount 12,870,218 27.6550 355,925,879 4,588,043 20.0900 92,173,784 5,206,836 4.3410 22,602,875 82,096,035 0.2405 19,744,096 4,989,090 3.5460 17,691,313 436,993 31.3800 13,712,840 3,150,118 1.7340 5,462,305 104,411 37.3600 3,900,795 52,980 18.9400 1,003,441 18,927 21.6600 409,959 10,869 20.4800 222,597 3,913 30.2150 118,231 - - 83,329 Non-monetary financial liabilities
USD AUD CNY JPY HKD EUR ZAR GBP NZD CAD SGD CHF Others (Note) USD
		- - -

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

	December 31, 2020
	Monetary financial assets	Monetary financial liabilities
Currency		Foreign currency amount (in thousands) Spot rate NTD amount 12,201,044 28.1000 342,849,336 4,634,864 21.6500 100,344,806 10,129,659 4.3250 43,810,775 84,061,617 0.2725 22,906,791 5,236,467 3.6240 18,976,956 363,008 34.5900 12,556,447 4,524,811 1.9210 8,692,162 62,734 20.3200 1,274,755 26,199 38.3500 1,004,732 17,894 22.0600 394,742 7,483 21.2700 159,163 33,662 3.4300 115,461 - - 93,168 Non-monetary financial liabilities
USD AUD CNY JPY HKD EUR ZAR NZD GBP CAD SGD SEK Others (Note) USD
		- - -

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

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

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%.

	December 31, 2021	December 31, 2021	December 31, 2021
Depreciate	by 1% Equity (55,511) (22,395) (15,842) (3,173) - - - - - - - - - - (96,921)	Appreciate by 1%
Income $ (54,235) 4,053 2,797 (5) 19 6 (30) (4) 24 35 (4) 16 (13) (51,012) $ (98,353)		Income 54,235 (4,053) (2,797) 5 (19) (6) 30 4 (24) (35) 4 (16) 13 51,012 98,353	Equity 55,511 22,395 15,842 3,173 - - - - - - - - - -
			96,921

	December 31, 2020	December 31, 2020	December 31, 2020
Depreciate	by 1% Equity (54,119) (20,838) (16,090) (3,839) - - - - - - - - - (94,886)	Appreciate by 1%
Income $ (94,813) 4,317 2,844 2 (32) 41 (33) (32) 41 59 24 (14) (50,706) $ (138,302)		Income 94,813 (4,317) (2,844) (2) 32 (41) 33 32 (41) (59) (24) 14 50,706 138,302	Equity 54,119 20,838 16,090 3,839 - - - - - - - - -
			94,886

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(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).

December 31, 2021	December 31, 2021	December 31, 2021
Interest rate increases by 1 bp Income Equity $ (230) (3,462) - (54,536) - (13,638) - (606) - (77) - (1,956) - (204) $ (230) (74,479)	Interest rate decreases by 1 bp
Income $ (230) - - - - - - $ (230)	Income 230 - - - - - - 230	Equity 3,462 54,536 13,638 606 77 1,956 204
		74,479

December 31, 2020	December 31, 2020	December 31, 2020
Interest rate increases by 1 bp Income Equity $ (131) (4,161) - (43,732) (2) (10,477) - (639) - (35) - (2,587) - (284) $ (133) (61,915)	Interest rate decreases by 1 bp
Income $ (131) - (2) - - - - $ (133)	Income 131 - 2 - - - - 133	Equity 4,161 43,732 10,477 639 35 2,587 284
		61,915

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

Scenario Interest rate increases by 100 bp Interest rate decreases by 100 bp Scenario Interest rate increases by 100 bp Interest rate decreases by 100 bp		December 31, 2021 in 1 year Effect on EVE USD TWD USD (34,660) (4,696,572) (45,509) 3,502 8,616,664 63,806 December 31, 2020 in 1 year Effect on EVE USD TWD USD (28,815) (823,603) (50,085) 4,141 3,263,342 40,109
	Effect on NII
	TWD 4,272,836 (5,293,553)
	Effect on NII	in 1 year USD (28,815) 4,141
	TWD 3,709,697 (4,860,513)

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(9) Managing interest rate benchmark reform and associated risks

A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates (IBORs) with alternative nearly risk-free rates. The Bank has exposured to IBORs on its financial instruments that will be reformed as part of these market-wide initiatives. On December 31, 2021, the main risks to which the Bank is exposed to US dollar LIBOR. ICE Benchmark Administration reports that US dollar LIBOR is in next day, a month, three months, six months, and 12 months period will be stopping report on June, 2023, and the one week, and two months period will be stopping report in the end of 2021. The Bank has finished the LIBOR conversion plan to face the impact of the exit of the aforesaid IBORs.

The working group monitors and manages the transition to alternative rates. It evaluates the extent to which contracts reference IBOR, whether such contracts will need to be amended as a result of IBOR reform, and how to manage communication about IBOR reform with counterparties. The working group also provides periodic reports to the management of interest rate risk and risks arising from IBOR reform.

The Bank hold interest rate swaps for risk management surposes, the interest rate swaps have floating legs that are indexed to SOFA. The Bank and subsidiaries' derivative instruments are governed by contracts based on the International Swaps and Derivatives Association (ISDA)'s master agreements.

The Bank monitor the progress of transition from IBORs to new benchmark rates by reviewing the total amounts of contracts that have yet to transition to an alternative benchmark rate and the amounts of such contracts that include an appropriate fallback clause. The Bank consider that a contract is not yet transitioned to an alternative benchmark rate when interest under the contract is indexed to a benchmark rate that is still subject to IBOR reform ,even if it includes a fallback clause that deals with the cessation of the existing IBOR (referred to as an `unreformed contract').

The following tables show the total amounts of unreformed contracts and those with appropriate fallback language on January 1 and December 31, 2021. The amounts of financial assets and liabilities are shown at their carrying amounts, and derivatives are shown at their notional amounts.

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December 31, 2021 Financial assets Discounts and loans Bond Investments Derivatives Interest rate swaps January 1, 2021 Financial assets Discounts and loans Bond Investments Derivatives Interest rate swaps	USD L	IBOR	EUR L	IBOR	GBP LI	BOR	JPY L	IBOR	CHF LIBOR
	Total amount of unreformed contracts	Amount with appropriate fallback clause	Total amount of unreformed contracts	Amount with appropriate fallback clause	Total amount of unreformed contracts - - - 7,000 - -	Amount with appropriate fallback clause	Total amount of unreformed contracts	Amount with appropriate fallback clause	Total amount of unreformed contracts Amount with appropriate fallback clause - - - - - - 10,000 - - - - -
	$ 70,757,000 22,804,048 9,402,700 76,178,000 28,370,000 11,802,000	22,182,000 691,000 9,402,700 5,849,000 - -	402,000 - - 906,000 - -	293,000 - - 102,000 - -		- - - - - -	1,830,000 - - 1,809,000 - -	1,242,000 - - 193,000 - -

(10) 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%.

Change Equity security price increases by 1 % Equity security price decreases by 1 % Change Equity security price increases by 1 % Equity security price decreases by 1 %	Currency TWD USD TWD USD Currency TWD USD TWD USD		December 31, 2021
			Income Equity 16,018 - 11 - (16,018) - (11) - December 31, 2020

			Income Equity 2,053 - 52 - (2,053) - (52) -

B. Value at Risk of equity security

Value at Risk	From January 1, 2021 to December 31,2021	From January 1, 2021 to December 31,2021	From January 1, 2021 to December 31,2021
	Average	Maximum	Minimum
Equity security risk	6,959	14,786	3,827

Value at Risk	From January 1, 2020 to December 31, 2020
	Average	Maximum	Minimum
Equity security risk	6,749	15,917	1,668

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(f) Transferred financial assets that are not fully derecognized

The transactions, relating to transferred financial assets not qualifying for full derecognition, the Bank 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 Bank’s obligation to repurchase the transferred assets for a fixed price at a future date is recognized under liability, for these transactions, the Bank cannot use, sell or pledge those transferred financial assets in availability period, the Bank have interest rate risk and credit risk, the said transferred assets are not fully derecognized.

As of December 31, 2021 and 2020, there were not any financial assets of the Bank that are not fully derecognized.

(g) Offsetting financial assets and financial liabilities

The Bank has 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.

The following tables present the aforementioned offsetting financial assets and financial liabilities:


Financial assets under
Item	Gross amounts of recognized financial assets (a)	Gross amounts of financial liabilities offset in the balance sheet (b)	Net amount of financial assets presented in the balance sheet (c)=(a)-(b)
				Financial instruments (Note)
Derivative financial instruments	$ 230,137			699,723
Financial liabilities under offsetting or general agreement of
Item	Gross amounts of recognized financial liabilities (a)	Gross amounts of financial assets offset in the balance sheet (b)	Net amount of financial liabilities presented in the balance sheet (c)=(a)-(b)
				Financial instruments (Note)
Derivative financial instruments	$ 63,547	-	63,547	-

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==> picture [443 x 198] intentionally omitted <==

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

December 31, 2020
Financial assets under offsetting or general agreement of net amount settlement or similar norm
Gross amounts
of financial Net amount of Amounts not set off in the
Gross amounts liabilities offset financial assets balance sheet (d)
of recognized in the balance presented in the Financial
financial assets sheet balance sheet instruments Cash collateral Net amount
Item (a) (b) (c)=(a)-(b) (Note) received (e)=(c)-(d)
Derivative financial $ 391,191 - 391,191 700,109 882,623 (1,191,541)
instruments
December 31, 2020
Financial liabilities under offsetting or general agreement of net amount settlement or similar norm
Gross amounts Net amount of
Gross amounts of financial financial Amounts not set off in the
of recognized assets offset in liabilities balance sheet (d)
financial the balance presented in the Financial
liabilities sheet balance sheet instruments Cash collateral Net amount
Item (a) (b) (c)=(a)-(b) (Note) pledged (e)=(c)-(d)
Derivative financial $ 101,929 - 101,929 - 1,531,091 (1,429,162)
instruments
----- End of picture text -----

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

(AQ) 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 includes, 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, interest rate risk of the banking book, and liquidity risk so as to be familiar with current business environment and monitors and adjusts capital adequacy effectively.

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(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 financial assets measured at fair value through other comprehensive income, 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 major investment on financial related business.
- B. Other Tier 1 capital: 25% of the perpetual non-accumulated subordinated financial debentures deducted by the major investment on financial related business.
(2) Tier 2 capital

The item includes perpetual accumulated subordinated financial debentures, long term subordinated 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 financial assets measured at fair value through other comprehensive income, and 50% of the major investment on financial related business.

related	business.	business.
Item			December 31, 2021	December 31, 2020
Eligible capital	Common stock equity		96,157,516	93,119,841
	Other tier 1 capital		17,487,758	17,504,060
	Tier 2 capital		41,159,410	40,329,291
	Eligible Capital		154,804,684	150,953,192
Risk- weighted assets	Credit risk	Standardized approach	1,066,163,181	1,058,435,685
		Internal ratings-based approach	-	-
		Securitization	-	-
	Operational risk	Basic indicator approach	-	-
		Standardized approach/selective standardized approach	38,884,436	38,142,417
		Advanced measurement approach	-	-
	Market risk	Standardized approach	50,859,425	28,041,588
		Internal model approach	-	-
	Total risk-weighted assets		1,155,907,042	1,124,619,690
Capital adequacy ratio			% 13.39	% 13.42
Common stock equity/ Risk-weighted assets ratio			% 8.32	% 8.28
Tier 1 capital / Risk-weighted assets ratio			% 9.83	% 9.84
Leverage ratio			% 5.41	% 5.90

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The formulas of the table are listed as follows:

A. The eligible capital, risk-weighted assets and exposure are calculated per “Regulations Governing the Capital Adequacy and Capital Category of Banks” and “The Calculation and Forms of Eligible Capital and Risk Assets of Banks”.
B. The Bank shall fill out the capital adequacy of this period and last period. For the semi-annual report, the Bank shall disclose the capital adequacy of this period and last period and additionally disclose the capital adequacy of the previous period ended December 31.
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.

D. Above table is not required to be disclosed when preparing the financial reports of the first quarter and third quarter.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(AR) Investing and financing activities not affecting current cash flow

The Bank's investing and financing activities which did not affect the current cash flow for the years ended December 31, 2021 and 2020 were carried out to acquire right-of-use assets under leases. Please refer to Note 6(L).

Reconciliation of liabilities arising from financing activities were as follows:

Non-cash changes Foreign exchange rate movement Fair value changes Other changes (133,500) 16,210 - - - - 302 - 501,932 (133,198) 16,210 501,932 Non-cash changes Foreign exchange rate movement Fair value changes Other changes (567,000) 28,838 - - - - (4,269) - 453,659 (571,269) 28,838 453,659	Non-cash changes Foreign exchange rate movement Fair value changes Other changes (133,500) 16,210 - - - - 302 - 501,932 (133,198) 16,210 501,932 Non-cash changes Foreign exchange rate movement Fair value changes Other changes (567,000) 28,838 - - - - (4,269) - 453,659 (571,269) 28,838 453,659	December 31, 2021 8,293,730 52,250,000 1,145,072
		61,688,802
		December 31, 2020 8,411,020 53,250,000 1,054,665
Foreign exchange rate movement (567,000) - (4,269) (571,269)	Fair value changes 28,838 - - 28,838
		62,715,685

(AS) Structured entities that not included in consolidated financial reports
(a) The table below presents the types of structured entities that the Bank does not include in financial reports but in which they hold an interest:

Types of structured

Types of structured
entities	Nature and purpose Interests held by the Bank Investing in funds that cannot be freely traded on the open market Investing in units or limited partnership interests issued by these funds. Investing in commercial real estate assets securitization products Investment in asset-backed securities issued by unconsolidated structured entities
Private fund Asset securitization product

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(b) The scales of structures entities not included in financial reports were as follow:

Private fund Asset securitization product Total	December 31, 2021 $ 102,223 728,147 $ 830,370	December 31, 2020
		104,498 819,768
		924,266

Assets held by the Bank	December 31, 2021 $ 102,223 578,850 149,297 $ 830,370	December 31, 2020
Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Investments in debt instruments at amortized cost Total		104,498 415,351 404,417
		924,266

The maximum amount of risk exposure to the Bank endures to a loss incurred from special purpose entities that are not included in financial reports is the carrying amount of interests held by the Bank.

(d) As of December 31, 2021 and 2020, the Bank has not provided any financial support to its special purpose entities that are not included in financial reports.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

7. RELATED-PARTY TRANSACTIONS

(A) Names of related parties and relationship

Name of related party Relationship with the Bank and subsidiaries Bank of Taiwan Corporate director of the Bank Ministry of Finance, R.O.C Corporate director of the Bank National Development Fund, Corporate director of the Bank Executive Yuan (Note1) Land Bank of Taiwan (Note2) Corporate director of the Bank Taiwan Business Bank Guild. Corporate director of the Bank TBB International Leasing Co., Ltd. Investee company of the Bank TBB (CAMBODIA) Microfinance Investee company of the Bank Institution Plc. TBB Venture Capital Co., Ltd. Investee company of the Bank TBB Consulting Co., Ltd. Investee company of the Bank Taiwan Business Bank International Investee companies measured by using the equity Leasing Co., Ltd. method Small and Medium Enterprise Substantive related parties Credit Guarantee Fund of Taiwan Others Management and other related parties of the Bank

Note1: Become a related party commencing from the third quarter of 2021.

Note2: No longer a related party commencing from the third quarter of 2021

(B) Significant related party transactions
(a) Due from banks

Bank of Taiwan Bank of Taiwan Land Bank of Taiwan Total	December 31, 2021	December 31, 2021
	Amount % $ 157,131 1.03 December 31, 2020	%
		1.03
		%
		0.87 0.08
		0.95

Interest rates are the same as those with regular clients.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(b) Deposits from banks

Land Bank of Taiwan	December 31, 2020	December 31, 2020
	Amount $ 1,999	%
		0.32

Interest rates are the same as those with regular clients.

For the year ended December 31, 2021 Bank of Taiwan Land Bank of Taiwan Total For the year ended December 31, 2020 Bank of Taiwan Land Bank of Taiwan Total	Maximum balance $ 3,038,983 1,507,961 $ 4,546,944 Maximum balance $ 2,847,979 8,391,529 $ 11,239,508		December 31, 2021 - - - December 31, 2020 - - -	Interest income Annual interest rate 1,064 0.14%~3.80% 1,069 0.09%~3.30% 2,133 Interest income Annual interest rate 3,854 0.14%~3.12% 3,839 0.05%~2.81% 7,693

Interest rates are the same as those with regular clients.

(d) Call loans from banks

For the year ended December 31, 2021 Bank of Taiwan Land Bank of Taiwan Total For the year ended December 31, 2020 Bank of Taiwan Land Bank of Taiwan Total	Maximum balance $ 8,768,558 1,384,796 $ 10,153,354 Maximum balance $ 7,977,147 4,512,609 $ 12,489,756		December 31, 2021 3,374,798 - 3,374,798 December 31, 2020 4,309,375 - 4,309,375	Interest Expense Annual interest rate 18,925 0.01%~2.80% 135 0.09%~2.35% 19,060 Interest Expense Annual interest rate 14,256 0.09%~3.35% 2,100 0.10%~6.00% 16,356

Interest rates are the same as those with regular clients.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(e) Deposits

TBB International Leasing Co., Ltd. Taiwan Business Bank International Leasing Co., Ltd. TBB Venture Capital Co., Ltd. TBB Consulting Co., Ltd. Others Total TBB International Leasing Co., Ltd. Taiwan Business Bank International Leasing Co., Ltd. TBB Venture Capital Co., Ltd. Others Total	December 31, 2021	December 31, 2021
	Amount % $ 43,794 - 175,563 0.01 120,727 0.01 43,083 - 2,435,868 0.15 $ 2,819,035 0.17 December 31, 2020	%
		- 0.01 0.01 - 0.15
		0.17
		%
		- 0.01 - 0.09
		0.10

Interest rates are the same as those with regular clients.

(f) Credit

Decembe	Decembe	Decembe	Decembe	r 31, 2021	r 31, 2021	r 31, 2021	r 31, 2021
Category	Number of clients or name of relatedparty	Highest balance	Ending balance	Performing situations		Collaterals	Transaction terms are different to regular clients
				Performing loan	Non-performing Loans
Employee consumer loans	40	17,353	13,480	13,480	-	none	none
Self-use home mortgages loans	130	517,303	490,456	490,456	-	real estate	none
Others	Natural person	499,016	463,274	463,274	-	real estate	none

Decembe	Decembe	Decembe	Decembe	r 31, 2020	r 31, 2020	r 31, 2020	r 31, 2020
Category	Number of clients or name of relatedparty	Highest balance	Ending balance	Performing situations		Collaterals	Transaction terms are different to regular clients
				Performing loan	Non-performing Loans
Employee consumer loans	32	15,037	12,405	12,405	-	none	none
Self-use home mortgages loans	101	443,328	409,569	409,569	-	real estate	none
Others	Naturral person	461,382	450,128	450,128	-	real estate	none

(g) Donation:

		For the years ended	December 31,
		2021	2020
Small and Medium Enterprise Credit Guarantee Fund of Taiwan		377,867	329,928
Taiwan Business Bank Guild		2,500	2,500
Total	$	380,367	332,428

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(h) Guarantees: None.
(i) Service fees: None.
(j) Rental revenue:

TBB International Leasing Co., Ltd. TBB Venture Capital Co., Ltd. TBB Consulting Co., Ltd. Total	For the years ended December 31,	For the years ended December 31,
	2021 $ 691 324 87 $ 1,102	2020
		691 354 -
		1,045

(k) Derivatives financial instrument transactions: None.
(l) Sales of Non–Performing Loans Transactions: None.
(C) Major management salary information

Salary and other short-term employee benefits Post-employment benefits Total	For theyears ended December 31,	For theyears ended December 31,
	2021 $ 85,181 2,362 $ 87,543	2020
		78,758 2,265 81,023

8. Pledged assets : Please refer to notes 6(H) for more details.

9. Commitments and contingencies

(A) Significant commitments and contingencies were as follows:

Marketable securities held for custody Bills collected for others Bills lent for others Guarantees and letters of credit Collaterals received Trust liabilities Items held for custody Registered government bonds for sale Registered short-term bills for sale Guarantee notes payable	December 31, 2021 December 31, 2020 $ 9,417,776 10,522,496 48,911,218 43,458,651 40,504,652 32,385,246 35,394,541 29,528,944 - 426 212,285,576 174,773,364 1,163,471 1,138,192 65,741,100 57,191,300 3,080,457 2,050,801 53,651,900 26,061,610

(B) Unrecognized contractual commitments:

As of December 31, 2021 and 2020, major constructions in progress and purchases amounted to $583,601 and $1,067,016 respectively, of which $408,698 and $528,273 respectively, remained unpaid.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(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 marketable securities and the Bank also manages trust funds. The trust information as of December 31, 2021 and 2020 is as follows:

Trust Balance Sheet

December 31, 2021 and 2020

Trust Assets	December 31, 2021 $ 6,885,022 845,570 71,899,727 1,356,856 16,703,682 114,091,688 503,031 $ 212,285,576 December 31, 2021 $ 9 114,091,688 98,115,347 (2,478,944) 2,557,476 $ 212,285,576	December 31, 2020
Cash in Bank Stocks Funds Bonds Real estate Securities custody Other assets Total trust assets Trust Liabilities		5,306,469 607,416 60,203,034 1,484,021 15,077,574 91,543,361 551,489
		174,773,364
		December 31, 2020
Payables Securities held for custody Trust capital Accumulated loss Net income Total trust liabilities		81 91,543,361 83,159,467 (2,069,258) 2,139,713
		174,773,364

Trust Property Accounts

December 31, 2021 and 2020

Investment in	December 31, 2021 $ 6,885,022 845,570 71,899,727 1,356,856 13,642,172 34,674 3,026,836 114,091,688 503,031 $ 212,285,576	December 31, 2020
Cash in bank Stocks Funds Bonds Real estate Land Buildings Construction in progress Securities in custody Other assets Total		5,306,469 607,416 60,203,034 1,484,021 12,813,550 26,976 2,237,048 91,543,361 551,489
		174,773,364

Note： As of December 31, 2021 and 2020, the amounts above included OBU transaction on “foreign currency designated trust funds investment in foreign negotiable securities business” amounting to $1,254,366 and $1,055,223, respectively.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

Trust Income Statement

For the years ended December 31, 2021 and 2020

Investment items
Trust Revenue
Interest income
Realized capital gain-fund
Realized gain-stocks
Realized gain-bonds
Dividend revenue
Other revenues
Sub-total
Trust Expense
Administrative expenses
Postage and telecommunication expense
Duties
Realized loss-fund
Realized loss-bonds
Loss on disposal of property
Capital fee
Other expenses
Sub-total
Income before income tax
Income tax expense
Net income

For the years ended December 31,
2021
2020
$ 69,014
69,057
1,700,677
1,539,602
1,112
3,525
24,585
38,519
1,981,168
1,981,361
5,007
15,493
3,781,563
3,647,557
63,735
63,520
1,546
1,048
19
61
1,151,680
-
5,033
4,021
-
1,433,447
441
422
1,592
5,305
1,224,046
1,507,824
2,557,517
2,139,733
(41)
(20)
$
2,557,476
2,139,713

2021
$ 69,014
1,700,677
1,112
24,585
1,981,168
5,007
3,781,563
63,735
1,546
19
1,151,680
5,033
-
441
1,592
1,224,046
2,557,517
(41)
$
2,557,476

(D) 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 USD$7,830 thousand plus interest, losses, and expenses for the L/C. On August 31, 2005, the Court of Commerce of Brussels rendered its judgment which the Bank has to make compensation of USD$7,674 thousand plus interest to I.C.C.I.. The Bank has engaged a local attorney in Belgium to formally file an appeal. In 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. However, the Bank and I.C.C.I couldn't reach an agreement on the exchange rate and the calculation of the compensation. In October 2016, I.C.C.I initiated a case with the Court of Frankfurt in Germany, applied for seizing the Bank account in Germany, and the Bank lodged guaranty money of EUR $13,200 thousand to the court to rescind the order for attachment.

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In July 2017, I.C.C.I applied for compulsory execution to the guaranty money, the court has transferred the guaranty money to I.C.C.I. The Bank then filed a lawsuit objecting to the debt through the attorney. The case was dismissed by the Court of Frankfurt in November 2018, and remanded back to trial court in November 2019 after the Bank's appeal was granted by the High Court of Frankfurt. I.C.C.I. has filed a statement of grounds for objection to the German Federal Court on March 16, 2019. And request to revoke the "Return of the Judgment of the Frankfurt High Court". The Bank has appointed a lawyer to act as an attorney in the German Federal Court and filed a defense against I.C.C.I. of objections. The case is currently being tried by the Frankfurt District Court. The German Federal Court hasdenied the I.C.C.I interlocutory appeal on May 20, 2021. In October and November 2019, the Bank received subpoenas from the court of the Democratic Republic of Congo by a third person Star Marine, who demanded I.C.C.I to pay USD$1,130 thousand in compensation and held the Bank as jointly liable, and by I.C.C.I, which demanded the Bank to pay USD$20,060 thousand less its reimbursed amount to make a security deposit of EUR$14,000 thousand. The Bank has engaged local attorneys to represent itself in court. The Court of Congo will merge the two cases for court. In April 2021, the translation of judgement from the Court of Congo, judgeing that the Bank should pay around EUR$20,600 thousand for I.C.C.I. Also, I.C.C.I must compensate Star Marine for USD$1,130 thousand as well as make a security deposit of EUR$14,000 thousand in the domestic bank in Congo. I.C.C.I has been paid around EUR$14,860 thousand. According to the statement of plantiff and considering that I.C.C.I has already received about EUR $14,860 thousand, an addition of $73,181 thousand has been provision for lawsuit in 2021. Please refer to Note 6(V) for more details. As of December 31, 2021, the Bank has accrued the compensation of $258,197 and EUR$9,960 thousand.

10. Losses from disasters: None.

11. Subsequent events:

On December 22, 2021, the subsidiary TBB Consulting Co., Ltd. invested 2 million dollars and expected to hold 20% of the equity in Manitok Management Consultants Co., Ltd. The establishment registration was completed on January 19, 2022.

On November 5, 2021, the subsidiary TBB Consulting Co., Ltd. was approved by the board resolution as the general partner of TBB No. 1 Venture Capital Limited Partnership, and invested 1 million dollars on November 19, 2021. The establishment registration was completed on January 3, 2022.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

12. Others

(A) Information on loan quality, concentration of credit extensions, interest rate-sensitivity, profitability and maturity analysis
(a) Loan quality:

Items	Month/Year	Month/Year	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021
			Non-performing loans	Total loans	Non-performing loan ratio	Allowance for credit losses	Coverage ratio
Corporate finance	Secured		1,324,552	686,386,566	0.19 %	7,855,442	593.06 %
	Unsecured		1,800,964	330,974,304	0.54 %	4,246,313	235.78 %
Consumer finance	Residence mortgages(Note 4)		228,806	141,504,543	0.16 %	1,625,312	710.35 %
	Cash cards		-	2	- %	-	- %
	Microcredit(Note 5)		6,085	417,829	1.46 %	8,809	144.77 %
	Others (Note 6)	Secured	307,198	147,964,837	0.21 %	1,702,136	554.08 %
		Unsecured	17,548	10,976,267	0.16 %	138,805	791.00 %
Total loan busin	ess		3,685,153	1,318,224,348	0.28 %	15,576,817	422.69 %
			Overdue receivables	Total receivables	Delinquency ratio	Allowance for credit losses	Coverage ratio
Credit cards bus	iness		720	1,062,097	0.07 %	18,375	2,552.08 %
Account receiva (Note 7)	ble factoring-without recourse		-	-	- %	-	- %

Items	Month/Year		December 31, 2020
			Non-performing loans	Total loans	Non-performing loan ratio	Allowance for credit losses	Coverage ratio
Corporate finance	Secured		4,333,608	619,478,813	0.70 %	7,001,414	161.56 %
	Unsecured		646,422	309,604,313	0.21 %	3,946,125	610.46 %
Consumer finance	Residence mortgages(Note 4)		409,214	139,113,318	0.29 %	1,557,182	380.53 %
	Cash cards		-	7	- %	-	- %
	Microcredit(Note 5)		14,757	495,713	2.98 %	16,518	111.93 %
	Others (Note 6)	Secured	667,825	145,483,951	0.46 %	1,645,541	246.40 %
		Unsecured	61,010	10,119,126	0.60 %	159,377	261.23 %
Total loan busin	ess		6,132,836	1,224,295,241	0.50 %	14,326,157	233.60 %
			Overdue receivables	Total receivables	Delinquency ratio	Allowance for credit losses	Coverage ratio
Credit cards bus	iness		1,143	1,123,919	0.10 %	22,154	1,938.23 %
Account receiva (Note 7)	ble factoring-without recourse		-	-	- %	-	- %

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÷ 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.

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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. 0945000494, 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.

Overdue loans and receivables exempted from reporting

December 31, 2021	December 31, 2021	December 31, 2020	December 31, 2020
Loans may be exempted from reporting as a non- performing loan	Receivables may be exempted from reporting as overdue receivables	Loans may be exempted from reporting as a non- performing loan 536 63,956 64,492	Receivables may be exempted from reporting as overdue receivables
	1,486 26,536 28,022		2,135 30,612
			32,747

Note 1: 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 2: In accordance with Jin-Kuan-Yin-(1)-Zi No. 09700318940, dated September 15, 2008 and Jin-Kuan-Yin-Fa-Zi No. 10500134790, dated September 20, 2016, a bank is required to make supplemental disclosure of credit information once debtors apply for pre-negotiation, pre-conciliation, relief and liquidation under the “Consumer Debt Clearance Act.”

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(b) Concentration of credit extensions

December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021
Ranking	Group enterprise	Credit amount	Credit amount to equity ratio (%)
1	A company. (Railway transportation)	23,637,474	% 23.26
2	B group. (Real estate for sale and rental with own or leased property)	11,438,878	% 11.25
3	C group. (Steel rolling and extruding)	9,135,146	% 8.99
4	D group. (Real estate development)	9,024,525	% 8.88
5	E group. (Other holding)	8,571,432	% 8.43
6	F group. (Real estate development)	6,383,825	% 6.28
7	G group. (Computers manufacturing)	5,977,657	% 5.88
8	H group. (Real estate development)	5,893,403	% 5.80
9	I group. (Air transportation)	4,393,761	% 4.32
10	J group. (Financial leasing)	4,201,781	% 4.13

December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020
Ranking	Group enterprise	Credit amount	Credit amount to equity ratio (%)
1	A company. (Railway transportation)	25,103,282	% 25.44
2	C group. (Steel rolling and extruding)	9,422,041	% 9.55
3	B group. (Real estate for sale and rental with own or leased property)	9,011,609	% 9.13
4	D group. (Real estate development)	8,203,992	% 8.32
5	G group. (Computer manufacturing)	7,704,593	% 7.81
6	E group. (Other holding)	7,339,697	% 7.44
7	F group. (Real estate development)	6,311,017	% 6.40
8	I group. (Air transportation)	5,723,286	% 5.80
9	H group. (Real estate development)	5,118,016	% 5.19
10	K group. (Liquid crystal panel and components manufacturing)	4,954,000	% 5.02

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”.

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Note 3 Consists of loans (import/export bills negotiated, bills and notes discounted, overdrafts, short-term loans, short-term secured loans, margin loans receivable, medium-term loans, medium-term secured loans, long-term loans, long-term secured loans, overdue loans), exchange bills negotiated, accounts receivable factoring without recourse, bankers’ acceptance receivable, guarantees proceeds.
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.
(c) Interest rate-sensitivity information
(1) Analysis of interest rate-sensitive assets and liabilities (New Taiwan dollars)

Unit : %	Unit : %	Unit : %	Unit : %	Unit : %	Unit : %
December 31, 2021
Item	1~90 days	91~180 days	181days~1year	over 1 year	total
Interest rate-sensitive assets	$ 1,390,843,739	26,502,324	66,351,438	138,336,920	1,622,034,421
Interest rate-sensitive liabilities	1,260,163,540	78,136,810	107,263,390	57,890,778	1,503,454,518
Interest rate sensitivity gap	130,680,199	(51,634,486)	(40,911,952)	80,446,142	118,579,903
Net worth					101,659,972
Ratio of interest rate-sensitive assets to liabilities(%)					107.89
Ratio of interest rate-sensitivegapto net worth(%)					116.64

December 31, 2020
Item	1~90 days	91~180 days	181days~1year	over 1 year	total
Interest rate-sensitive assets	$ 1,261,749,950	15,575,973	23,133,404	119,785,773	1,420,245,100
Interest rate-sensitive liabilities	1,093,425,439	56,606,354	112,485,169	51,050,064	1,313,567,026
Interest rate sensitivity gap	168,324,511	(41,030,381)	(89,351,765)	68,735,709	106,678,074
Net worth					98,658,749
Ratio of interest rate-sensitive assets to liabilities(%)					108.12
Ratio of interest rate-sensitivegapto net worth(%)					108.13

Note 1 Listed amount refers to the Bank's amount of N.T. dollars and does not include contingent assets or liabilities.
Note 2 Interest rate-sensitive assets and liabilities refer to revenues or costs 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-ratesensitive liabilities.
Note 4 Ratio of interest rate-sensitive assets to liabilities=Interest rate-sensitive assets ÷ Interest rate-sensitive liabilities (New Taiwan dollars interest-ratesensitive assets and New Taiwan dollars interest-rate-sensitive liabilities).

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TAIWAN BUSINESS BANK, LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(2) Analysis of the interest-sensitive assets and liabilities (US dollars)

Unit : In Thousands of US Dollars, %	Unit : In Thousands of US Dollars, %	Unit : In Thousands of US Dollars, %	Unit : In Thousands of US Dollars, %	Unit : In Thousands of US Dollars, %	Unit : In Thousands of US Dollars, %
December 31, 2021
Item	1~90 days	91~180 days	181days~1year	over 1 year	total
Interest rate-sensitive assets	$ 5,768,616	985,190	124,536	812,271	7,690,613
Interest rate-sensitive liabilities	6,805,950	1,222,606	1,984,997	-	10,013,553
Interest rate sensitivity gap	(1,037,334)	(237,416)	(1,860,461)	812,271	(2,322,940)
Net worth					3,676,007
Ratio of interest rate-sensitive assets to liabilities(%)					76.80
Ratio of interest rate-sensitivegapto net worth(%)					(63.19)

December 31, 2020
Item	1~90 days	91~180 days	181days~1year	over 1 year	total
Interest rate-sensitive assets	$ 5,310,244	469,273	77,166	536,289	6,392,972
Interest rate-sensitive liabilities	6,181,947	966,658	747,211	-	7,895,816
Interest rate sensitivity gap	(871,703)	(497,385)	(670,045)	536,289	(1,502,844)
Net worth					3,510,988
Ratio of interest rate-sensitive assets to liabilities(%)					80.97
Ratio of interest rate-sensitivegapto net worth(%)					(42.80)

Note 1 Listed amount refers to the Bank's amount of US dollars and does not include contingent assets or liabilities.
Note 2 Interest rate-sensitive assets and interest rate-sensitive liabilities refer to the interest yielding assets and interest-bearing liabilities which the revenue and cost are affected by interest rate fluctuation.
Note 3 Interest rate sensitivity gap = interest rate-sensitive assets-interest ratesensitive liabilities.
Note 4 Ratio of interest rate-sensitive assets to liabilities=Interest rate-sensitive assets÷ Interest rate-sensitive liabilities (US dollars interest-rate-sensitive assets and US dollars interest-rate-sensitive liabilities).

(d) Profitability

Unit: %	Unit: %	Unit: %	Unit: %
Item		December 31, 2021	December 31, 2020
The ratio of return on assets	Before income tax	0.30	0.30
	After income tax	0.27	0.27
The ratio of return on equity	Before income tax	5.77	5.53
	After income tax	5.09	4.84
Net income ratio		21.29	21.59

Note 1 The ratio of return on assets = Income before (after) income tax expense ÷ average assets.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

Note 2 The ratio of return on equity = Income before (after) income tax expense ÷ average equity.

Note 3 Net income ratio = Net income 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 end.

(e) Maturity analysis for assets and liabilities
(1) Maturity analysis in New Taiwan dollars

		December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021
	Total	Amount during the maturity period from the balance sheet date to due date
		0-10days	11-30days	31-90days	91-180days	181days-1year	Over 1 year
Major maturity capital inflow	$ 1,750,694,486	161,102,012	173,091,966	160,017,985	191,111,216	183,481,924	881,889,383
Major maturity capital outflow	2,080,919,419	58,109,342	96,378,346	197,106,878	230,402,505	383,878,329	1,115,044,019
Gap	(330,224,933)	102,992,670	76,713,620	(37,088,893)	(39,291,289)	(200,396,405)	(233,154,636)

Note: Listed amounts are denominated in New Taiwan dollars of the Bank, including loan commitments of credit agreement and estimates to outflow $321,721,283.

		December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020
	Total	Amount during the maturity period from the balance sheet date to due date
		0-10days	11-30days	31-90days	91-180days	181days-1year	Over 1 year
Major maturity capital inflow	$ 1,528,946,546	132,138,936	166,645,095	136,163,423	178,254,748	125,643,908	790,100,436
Major maturity capital outflow	1,894,385,819	52,672,688	103,498,741	201,839,259	212,757,375	336,728,244	986,889,512
Gap	(365,439,273)	79,466,248	63,146,354	(65,675,836)	(34,502,627)	(211,084,336)	(196,789,076)

Note: Listed amounts are denominated in New Taiwan dollars of the Bank, including loan commitments of credit agreement and estimates to outflow $357,529,991.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(2) Maturity analysis in US dollars

Unit : In Thousands of US Dollars

		Unit : In Thousands of US Dollars	Unit : In Thousands of US Dollars	Unit : In Thousands of US Dollars	Unit : In Thousands of US Dollars	Unit : In Thousands of US Dollars
		December 31, 2021
	Total	Amount during the maturity period from the balance sheet date to due date
		0-30days	31-90days	91-180days	181days-1year	Over 1 year
Major maturity capital inflow	$ 13,916,218	2,980,694	3,107,058	1,979,387	2,382,222	3,466,857
Major maturity capital outflow	14,541,102	2,963,483	2,492,268	1,795,298	2,996,995	4,293,058
Gap	(624,884)	17,211	614,790	184,089	(614,773)	(826,201)

Note: Listed amounts are denominated in US dollars of the Bank, including loan commitments of credit agreement and estimates to outflow US $824,028.

		December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020
	Total	Amount during the maturity period from the balance sheet date to due date
		0-30days	31-90days	91-180days	181days-1year	Over 1 year
Major maturity capital inflow	$ 13,175,860	4,313,385	2,837,011	1,570,635	1,179,663	3,275,166
Major maturity capital outflow	13,753,689	4,085,099	2,691,982	1,883,298	1,626,015	3,467,295
Gap	(577,829)	228,286	145,029	(312,663)	(446,352)	(192,129)

Note: Listed amounts are denominated in US dollars of the Bank, including loan commitments of credit agreement and estimates to outflow US $779,907.

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：

Unit：In thousands of US Dollars；shares.

Name of Company	Category and name of security	Account name	Name of counter- party	Relationship with the Company	Beginning balance	Beginning balance	Purchases (Note)	Purchases (Note)	Sales	Sales	Sales	Sales	Ending balances	Ending balances
					Shares/ Units	Amount	Shares/ Units	Amount	Shares/ Units	Amount	Cost	Disposal gain or loss	Shares/ Units	Amount
Taiwan Buisness Bank Co., Ltd.	TBB Centure Capital Co., Ltd.	Invesment under equity method	TBB Venture Capital Co., Ltd.	Subsidiary company	60,000	585,083	40,000	482,976	-	-	-	-	100,000	1,068,059

Note: The aquisition cost amounted to $400,000, share of profit (loss) accounted for using equity method and other comprehensive income are included.

(b) Acquisition of real estate amounting to over $300,000 or 10% of paid-in capital: None.
(c) Disposal of real estate amounting to over $300,000 or 10% of paid-in capital: None.
(d) Discount of commissions fees with related parties amounting to over $5,000: None.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(e) Receivables from related parties amounting to over $300,000 or 10% of paid-in capital: None.
(f) Sale of non-performing loans information: None.
(g) Types of securitization instruments and related information approved by financial assets securitization rules or real estate securitization rules: None.
(h) Other significant transactions that might have influence over the decision-making process of the financial statements users: None.

(B) Information of investees:

(a) The following is the information on investees (excluding investment in mainland China):

								(Unit : thousand shares)	(Unit : thousand shares)	(Unit : thousand shares)
Name of investee	Location	Main business scope	Shareholding ratio	Book value	Investment gain (loss)	The cross holding of the		Bank and its related parties		Note
						Number of shares	Number of proforma shares	Total
								Number of shares	Shareholding ratio
TBB International Leasing Co., Ltd.	Taiwan	Leasing business	100.00 %	1,463,080	28,811	150,000	-	150,000	100.00 %
TBB (Cambodia) Microfinance Institution Plc	Cambodia	SMEs and personal finance business	100.00 %	537,297	(6,173)	20	-	20	100.00 %
TBB Venture Capital Co., Ltd.	Taiwan	Investing business	100.00 %	1,068,059	78,430	100,000	-	100,000	100.00 %
TBB Consulting Co., Ltd.	Taiwan	Consulting business	100.00 %	48,591	(1,409)	5,000	-	5,000	100.00 %

(b) Loans to others:

NO.	Creditor	Debtor	Interaction Account	Related party	Highest Amount	Ending balance	Actual drawdown amount	Range of interest rate	Nature of the loan	Dealing amount	The necessary reason for short-term loans	Allowance for bad debts	Guarantee	Guarantee	Limited amount for individual object	Total limited amount for loan
													Name	Value
1	TBB International Leasing Co.,Ltd.	Chao Yang Internation al Co., Ltd	Financial receivables	No	32,690	10,115	20,000	2%-10%	2	-	To the lender for buying goods	202	None	-	365,767	1,463,068
1	TBB International Leasing Co.,Ltd.	Hsin Chuan Constructi on Co., Ltd.	Financial receivables	No	146,155	54,488	100,000	2%-10%	2	-	To the lender for buying goods	1,042	None	-	365,767	1,463,068
1	TBB International Leasing Co.,Ltd.	Sian Shang Frozen Food Co., Ltd.	Financial receivables	No	33,944	10,115	20,000	2%-10%	2	-	To the lender for buying goods	202	None	-	365,767	1,463,068
1	TBB International Leasing Co.,Ltd.	Hsin Dan Co., Ltd.	Financial receivables	No	65,351	33,000	33,000	2%-10%	2	-	To the lender for buying goods	657	None	-	365,767	1,463,068
1	TBB International Leasing Co.,Ltd.	Xi Quan Catering Co., Ltd.	Financial receivables	No	105,487	53,000	53,000	2%-10%	2	-	To the lender for buying goods	1,054	None	-	365,767	1,463,068
1	TBB International Leasing Co.,Ltd.	Advanced- Connectek Inc.	Financial receivables	No	30,000	10,083	30,000	2%-10%	2	-	To the lender for buying goods	189	None	-	365,767	1,463,068

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

NO.	Creditor	Debtor	Interaction Account	Related party	Highest Amount	Ending balance	Actual drawdown amount	Range of interest rate	Nature of the loan	Dealing amount	The necessary reason for short-term loans	Allowance for bad debts	Guarantee	Guarantee	Limited amount for individual object	Total limited amount for loan
													Name	Value
1	TBB International Leasing Co.,Ltd.	Pei Xian Seafood Co., Ltd.	Financial receivables	No	20,000	10,115	20,000	2%-10%	2	-	To the lender for buying goods	202	None	-	365,767	1,463,068
1	TBB International Leasing Co.,Ltd.	Yu Constructi on Co., Ltd.	Financial receivables	No	20,000	18,990	20,000	2%-10%	2	-	To the lender for buying goods	379	None	-	365,767	1,463,068
1	TBB International Leasing Co.,Ltd.	Maw Shing Top Co., Ltd.	Financial receivables	No	16,000	12,993	16,000	2%-10%	2	-	To the lender for buying goods	256	None	-	365,767	1,463,068
1	TBB International Leasing Co.,Ltd.	Yu Ding Investment Co., Ltd	Financial receivables	No	30,000	30,000	30,000	2%-10%	2	-	To the lender for buying goods	600	None	-	365,767	1,463,068

Note1：The meaning of the number is as follows.

(1)Zero stands for issuer.

(2)Investee companies are numbered in a sequence of Arabic numerals from 1 based on company category.

Note2：The amount of loans is still valid up to now.

Note3：The nature of the loan nature is as follows.

(1)1 stands for business relation.
(2)2 stands for the necessity for short-term loans.

Note4：Limited amount for individual object：25% net worth of the latest TBB International Leasing Co.,Ltd's audited financial statements. Note5：Total limited amount for loan： 100% net worth of the latest TBB International Leasing Co.,Ltd.'s audited financial statements.

(c) Endorsements and guarantee for others: None

(d) Acquisition of securities:

Company acquired	Type and name of the security	Relationship with the security issuer	Account	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
				Number of shares	Carrying amount	Share proportion (Note 2)	Market price (Note 1)
Taiwan Business Bank International Leasing Co., Ltd.	Taiwan Buisness International Leasing Co., Ltd.	Parent company	Investment under equity method	-	904,971	100.00 %	904,971
Taiwan Business Bank International Leasing Co., Ltd.	G12245、 G12246	-	Financial assets at fair value through profit or loss	-	100,000	- %	100,000	Financial bonds
Taiwan Business Bank Venture Capital Co., Ltd.	G12245	-	Financial assets at fair value through profit or loss	-	100,000	- %	100,000	”
Taiwan Business Bank Venture Capital Co., Ltd.	Powerchip Semiconductor Manufacturing Corporation	-	Financial assets at fair value through profit or loss	250	17,900	0.01 %	17,900	Listed stocks
Taiwan Business Bank Venture Capital Co., Ltd.	Eir Genix, Inc.	-	Financial assets at fair value through profit or loss	638	70,213	0.26 %	70,213	Over-the-counter stocks
Taiwan Business Bank Venture Capital Co., Ltd.	Mutual-Tek Industries Co., Ltd.	-	Financial assets at fair value through profit or loss	1,600	19,680	2.04 %	19,680	Emerging stocks
Taiwan Business Bank Venture Capital Co., Ltd.	Superalloy Industrial Co., Ltd.	-	Financial assets at fair value through profit or loss	94	6,495	0.05 %	6,495	”
Taiwan Business Bank Venture Capital Co., Ltd.	Taiwan Advance Bio- Pharmaceutical Inc.	-	Financial assets at fair value through profit or loss	1,260	23,436	1.40 %	23,436	”
Taiwan Business Bank Venture Capital Co., Ltd.	Lungteh Shipbuilding Co., Ltd.	-	Financial assets at fair value through profit or loss	2,097	65,955	2.62 %	65,955	”
Taiwan Business Bank Venture Capital Co., Ltd.	Ping Ho Environmental Technology Co.,Ltd.	-	Financial assets at fair value through profit or loss	125	8,563	0.41 %	8,563	”

～ 138 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

Company acquired	Type and name of the security	Relationship with the security issuer	Account	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
				Number of shares	Carrying amount	Share proportion (Note 2)	Market price (Note 1)
Taiwan Business Bank Venture Capital Co., Ltd.	Chenfull Precision Co., Ltd.	-	Financial assets at fair value through profit or loss	380	38,950	0.71 %	38,950	”
Taiwan Business Bank Venture Capital Co., Ltd.	Handa Pharmaceutical s, Inc.	-	Financial assets at fair value through profit or loss	1,030	71,997	0.84 %	71,997	”
Taiwan Business Bank Venture Capital Co., Ltd.	Tigerair Taiwan Co., Ltd.	-	Financial assets at fair value through profit or loss	1,200	37,980	0.30 %	37,980	”
Taiwan Business Bank Venture Capital Co., Ltd.	Energenesis Biomedical Co., Ltd.	-	Financial assets at fair value through profit or loss	1,000	44,750	1.52 %	44,750	”
Taiwan Business Bank Venture Capital Co., Ltd.	Song Chuan Precision Co., Ltd.	-	Financial assets at fair value through profit or loss	267	10,698	0.74 %	10,698	Unlisted stocks
Taiwan Business Bank Venture Capital Co., Ltd.	Techplasma Technology Co., Ltd.	-	Financial assets at fair value through profit or loss	821	46,966	2.87 %	46,966	”
Taiwan Business Bank Venture Capital Co., Ltd.	Hephas Energy Co., Ltd.	-	Financial assets at fair value through profit or loss	455	9,757	2.97 %	9,757	”
Taiwan Business Bank Venture Capital Co., Ltd.	Ren Chin Electric Conductor Co., Ltd.	-	Financial assets at fair value through profit or loss	250	4,898	0.26 %	4,898	”
Taiwan Business Bank Venture Capital Co., Ltd.	Manford Machinery Co., Ltd.	-	Financial assets at fair value through profit or loss	1,195	19,192	2.99 %	19,192	”
Taiwan Business Bank Venture Capital Co., Ltd.	Yuh Shan Enviromental Engineering Co., Ltd.	-	Financial assets at fair value through profit or loss	500	13,670	1.96 %	13,670	”
Taiwan Business Bank Venture Capital Co., Ltd.	Huang Chieh Metal Holdings Co., Ltd.	-	Financial assets at fair value through profit or loss	286	5,305	0.48 %	5,305	”
Taiwan Business Bank Venture Capital Co., Ltd.	Iovtec Co., Ltd.	-	Financial assets at fair value through profit or loss	370	14,892	2.93 %	14,892	”
Taiwan Business Bank Venture Capital Co., Ltd.	e-Formula Technologies, Inc.	-	Financial assets at fair value through profit or loss	600	15,378	2.76 %	15,378	”
Taiwan Business Bank Venture Capital Co., Ltd.	Han-win Technology Co., Ltd.	-	Financial assets at fair value through profit or loss	352	3,064	2.25 %	3,064	”
Taiwan Business Bank Venture Capital Co., Ltd.	Ina Energy Corporation	-	Financial assets at fair value through profit or loss	2,000	28,400	1.00 %	28,400	”
Taiwan Business Bank Venture Capital Co., Ltd.	Locus Cell Co., Ltd.	-	Financial assets at fair value through profit or loss	3,600	35,640	1.80 %	35,640	Unlisted stocks
Taiwan Business Bank Venture Capital Co., Ltd.	Evergreen Aviation Technologies Corporation	-	Financial assets at fair value through profit or loss	1,580	99,540	0.45 %	99,540	”
Taiwan Business Bank Venture Capital Co., Ltd.	Longshun Green Energy Technology Ltd.	-	Financial assets at fair value through profit or loss	720	18,000	2.55 %	18,000	”
Taiwan Business Bank Venture Capital Co., Ltd.	Amazing Cool Technology Corporation	-	Financial assets at fair value through profit or loss	390	7,800	2.86 %	7,800	”
Taiwan Business Bank Venture Capital Co., Ltd.	Taiwania Buffalo III Biotechnology Venture Capital LLP.	-	Financial assets at fair value through profit or loss	-	17,944	- %	17,944	”
Taiwan Business Bank Venture Capital Co., Ltd.	Ju He Venture Capital LLP.	-	Financial assets at fair value through profit or loss	-	12,000	- %	12,000	”
Taiwan Business Bank Venture Capital Co., Ltd.	Jia Da International Development Co., Ltd	-	Financial assets at fair value through other comprehensive income	2,919	34,536	8.52 %	34,536	”
Taiwan Business Bank Venture Capital Co., Ltd.	Pinkoi Inc.	-	Financial assets at fair value through profit or loss	93	43,114	0.50 %	43,114	”

Note 1: Listed companies apply the market price to calculate the net worth of the shares possessed. Unlisted companies apply the proportion of shares calculate the net worth of the shares possessed. The net worth of preferred stock is calculated based on the liquidation price plus dividends in arrears.

Note 2: The proportion of shares the preferred stock is calculated based on the shares the Bank possessed divided by the shares issued.

～ 139 ～

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(e) Accumulative purchases or sales of the same investee companies amounting to over $300,000 or 10% of paid-in capital: None.
(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.
(j) Transactions of financial derivatives: None.
(k) Sale of non-performing loans information: None.
(l) Types of securitization instruments and related information approved by financial assets securitization rules or real estate securitization rules: None.
(m) Other significant transactions that might have substantial influence over the decision making of the financial statement users: None.
(C) Information on investments in Mainland China:
(a) Name and major business item of the investee in China:

Name of investee company in Mainland China	Major business	Paid-in capital	Investment method (Note 1)	Accumulated amount transferred from Taiwan, beginning of the period	Investment transferred out or recovered	Investment transferred out or recovered	Accumulated amount transferred from Taiwan, end of the period	The current profit or loss of the investee (Note 2)	Shares directly or indirectly possessed by the Bank	Investment income for the period (Notes 2 and 4)	Ending carring value of investment	Accumulated inward remittance of earnings as of the end of period
					Transferred out	Recovered
Taiwan Business Bank , Ltd. Shanghai branch	Banking business	3,910,537 (CNY800 million) (Operating capital)	( c )	3,910,537 (CNY800 million)	-	-	3,910,537 (CNY800 million)	-	Shanghai branch of the Bank, not an investee company	Note 4	3,936,365	None
Taiwan Business Bank , Ltd. Wuhan branch	Banking business	3,942,815 (CNY800 million) (Operating capital)	( c )	3,942,815 (CNY800 million)	-	-	3,942,815 (CNY800 million)	-	Wuhan branch of the Bank, not an investee company	Note 4	3,804,068	"
Taiwan Business Bank International Leasing Co., Ltd.	Leasing business	838,305 (CNY170 million) (Operating capital)	( a )	838,305 (CNY170 million)	-	-	838,305 (CNY170 million)	22,891 2(c)	100%	22,891 2(c)	904,971	"
Note 1:Investment method is divided into three categories and are listed as follows: (a) Directly invest in Mainland China.

(b) Investment in Mainland China companies through a third region.
(c) Others: establishment of oversea branches

Note 2:The column of “Investment gains (losses)”:

If the company is still in the preparation process, and does not have any investment gain or loss, please specify.
The bases for recognition of investment income or loss have three methods, please specify.
a. The audited financial reports that are issued by an international accounting firm which is connected to an accounting firm in Taiwan.
b. The audited financial reports that are issued by the Taiwan parent company’s designated accounting firm.
c. Others
Please specify if information regarding current gains or losses of an investee is not retrievable.

Note 3:The number is expressed in New Taiwan Dollars.

Note 4:The operating result of Shanghai and Wuhan branch have been included in the Bank.

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TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(b) Limit of investment in China:

Name of Company	Accumulated outflow of investment from Taiwan to Mainland China, as of the end of period	Investment amount authorized by Investment Commission, MOEA	Upper limit on investment authorized by Investment Commission, MOEA
Taiwan Business Bank, Ltd.(Note)	8,691,657 (CNY 1,770 million)	8,691,657 (CNY 1,770 million)	60,995,983

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

(D) Information of major shareholders:

Shareholding Shareholder’s Name	Shares	Percentage
Bank of Taiwan	1,255,455,463	% 16.21
National Development Fund, Executive Yuan	454,267,781	% 5.87

14. SEGMENT INFORMATION: None.

～ 141 ～

TAIWAN BUSINESS BANK, LTD.

Statement of Cash and Cash Equivalents

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item	Summary	Amount
Cash on hand, revolving funds and foreign currencies Checks for clearing Due from other banks Total	NTD USD 8,715 , spot rate 27.6550 HKD 26,527 , spot rate 3.5460 JPY 938,183 , spot rate 0.2405 EUR 4,555 , spot rate 31.3800 CNY 25,336 , spot rate 4.3410 Subtotal NTD USD 319,099 , spot rate 27.6550 HKD 528,034 , spot rate 3.5460 AUD 114,457 , spot rate 20.0900 JPY 2,905,928 , spot rate 0.2405 CNY 173,276 , spot rate 4.3410 Others Subtotal	$ 10,892,224 241,025 94,065 225,633 142,942 109,985 11,705,874 12,197,958 189,753 8,824,679 1,872,407 2,299,445 698,876 752,191 647,970 15,285,321 $ 39,189,153

〜 142 〜

TAIWAN BUSINESS BANK, LTD.

Statement of Receivables

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item Interest receivable Less: allowance for bad debts Net Acceptances receivable Less: allowance for bad debts Net Accrued incomes Accounts receivable Less: allowance for bad debts Net Spot exchange receivable, foreign currencies Refinancing guaranty deposits Guaranteed proceeds receivable from refinancing Credit cards accounts receivable Less: allowance for bad debts Net Receivable price of securities purchased for customers Settlement price Other receivables Less: allowance for bad debts Net Total	Summary Advance payment-letter of credit Advance payment International debit cards payment Advance payment-digital finance Stimulus voucher Others Subtotal	Amount $ 2,753,874 (9,665) 2,744,209 1,033,229 (10,332) 1,022,897 138,537 9,094 (718) 8,376 9,546 33 36 1,033,355 (1,693) 1,031,662 177,964 141,261 99,460 53,123 10,204 158,863 42,793 19,510 383,953 (48,665) 335,288 $ 5,609,809

〜 143 〜

TAIWAN BUSINESS BANK, LTD.

Statement of Financial Assets at Fair Value

through Profit or Loss

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item Financial assets at fair value through profit or loss, mandatorily measured at fair value Total	Summary Forward contracts Currency swap contracts Foreign currency options-call Stock index futures Interest rate contract Commercial paper Listed stocks Beneficiary certificates Convertible corporate bonds Financial debentures	Amount $ 18,120 495,831 3,714 28,745 6,226 37,015,444 68,106 1,665,898 79,230 276,910 $ 39,658,224	Note
			Note Note Note Note Note Note Note Note Note Table 1

Note: None of the other items exceeds 5% of the account balance.

〜 144 〜

TAIWAN BUSINESS BANK, LTD.

Statement of Financial Assets at Fair Value through profit or loss-

Financial Debentures

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Financial instrument	Summary	Total par value	Coupon rate		Acquisition cost	Fair value	Fair value	Fair value	Changes in fair value due to credit risk	Table 1 Note
						Unit price		Total
Central American Bank for Economic Integration(CABEI)		$ 276,550	3M LIBOR+1.00%		280,361	100.13		276,910	-

〜 145 〜

TAIWAN BUSINESS BANK, LTD.

Statement of Financial Assets at Fair Value

through Other Comprehensive Income

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item Investment in debt instruments measured at fair value through other comprehensive income Government bonds Corporate bonds Financial debentures Subtotal Investment in equity instruments measured at fair value through other comprehensive income Listed stocks Unlisted stocks Real estate investment trust Subtotal	Summary	Amount Note $ 46,011,743 Table 1 57,107,224 Note 32,875,263 Note 135,994,230 16,414,356 Table 2 4,940,042 Table 3 149,897 Note 21,504,295 $ 157,498,525

Note: None of the other items exceeds 5% of the account balance.

〜 146 〜

TAIWAN BUSINESS BANK, LTD.

Statement of Financial Assets at Fair Value through Other

Comprehensive Income - Government Bonds

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Table 1

Number of shares (thousand)	Cost	Fair value Unit price Total Note 110.91 2,439,931 103.08 3,865,467 102.53 2,358,090 96.58 2,656,020 107.38 2,523,356 - 32,168,879 46,011,743
		Unit price 110.91 103.08 102.53 96.58 107.38 -
22,000 37,500 23,000 27,500 23,500 -	2,498,391 3,834,479 2,330,332 2,737,239 2,482,514 32,591,610
	46,474,565

Note：None of the other items exceeds 5% of the account balance.

〜 147 〜

TAIWAN BUSINESS BANK, LTD.

Statement of Financial Assets at Fair Value through Other

Comprehensive Income - Listed stocks

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Table 2

Item THSRC TCC ASUS QUANTA CHT CHB Others (Note) Total	Summary	Number of shares (thousand) 44,500 24,811 3,200 11,000 15,100 125,896 -	Acquisition cost $ 445,000 1,062,863 1,036,511 851,395 1,691,256 2,256,293 7,451,776 $ 14,795,094	Valuation Adjustment 872,200 128,046 166,689 190,305 67,894 (116,054) 310,182 1,619,262	Fair value Unit price Total Note 29.60 1,317,200 48.00 1,190,909 376.00 1,203,200 94.70 1,041,700 116.50 1,759,150 17.00 2,140,239 - 7,761,958 16,414,356
					Unit price 29.60 48.00 376.00 94.70 116.50 17.00 -

Note: None of the other items exceeds 5% of the account balance.

〜 148 〜

TAIWAN BUSINESS BANK, LTD.

Statement of Financial Assets at Fair Value through Other

Comprehensive Income - Unlisted stocks

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Table 3

Item Taiwan Sugar Corporation Taipei Financial Center Corporation Taiwan Stock Exchange Corporation Taiwan Futures Exchange Corporation Taiwan Asset Management Corporation CDIB & Partners Investment Holding Corporation Others (Note) Total	Summary	Number of shares (thousand) 16,832 11,760 7,981 4,199 60,000 54,000 -	Acquisition cost $ 58,294 328,104 198,012 20,000 600,000 500,000 223,125 $ 1,927,535	Valuation adjustment 1,687,473 (57,742) 904,614 360,691 111,000 (241,880) 248,351 3,012,507	Fair value Unit price Total Note 103.72 1,745,767 22.99 270,362 138.16 1,102,626 90.67 380,691 11.85 711,000 4.78 258,120 - 471,476 4,940,042
					Unit price 103.72 22.99 138.16 90.67 11.85 4.78 -

Note: None of the other items exceeds 5% of the account balance.

〜 149 〜

TAIWAN BUSINESS BANK, LTD.

Statement of Investment in Debt Instruments at Amortized Cost

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item Certificates of deposit with the Central Bank Government bonds Corporate bonds Financial debentures Negotiable certificates of deposit Total	Summary	Amortized balance $ 231,395,000 24,673,670 8,689,856 14,306,782 58,076 $ 279,123,384		Accumulated impairment (68,334) (7,287) (6,216) (5,627) (14) (87,478)		Carrying Amount Note 231,326,666 Note1 24,666,383 Table 1 8,683,640 Table 2 14,301,155 Note 3 58,062 Note 2 279,035,906

Note 1: In order to comply with the immediate tax settlements mechanism of Central Bank and the interbank funds transfer system, the Bank provided certificates of deposit with the Central Bank amounting to $2,000,000 as overdraft guarantee. The amount of the guarantee could be modified anytime and the remaining amount could be served as liquid reserves.

As of December 31, 2021, the Bank provided Central bank with certificates of deposit with par value of $23,000,000 and $200,000 respectively to serve as a guarantee for borrowing US and JPY dollars from Central bank. Guarantee of national treasury matters is $16,200,000 and guarantee of due to the Central Bank and banks is $11,300,000.

Note 2: Overseas branches' reserve of overdraft guarantee is $58,076.

Note 3: None of the other items exceeds 5% of the account balance.

〜 150 〜

TAIWAN BUSINESS BANK, LTD.

Statement of Investment in Debt Instruments at Amortized Cost -

Government Bonds

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Table 1

Financial instrument	Summary Annual interest payment 8/10, maturity date 2032/8/10 Annual interest payment 9/24, maturity date 2022/9/24 Annual interest payment 3/3, maturity date 2024/3/3 Annual interest payment 9/11, maturity date 2025/9/11 Annual interest payment 2/25, maturity date 2025/2/25 Annual interest payment 2/14, maturity date 2027.02.14	Number of units (thousand)	Total par value $ 3,370,000 800,000 1,850,000 2,200,000 1,500,000 6,050,000 7,985,000 $ 23,755,000	Coupon rate % 1.500 % 1.125 % 1.500 % 1.125 % 2.375 % 2.000 0.63%~4.25%	Accumulated Impairment (1,019) (236) (554) (657) (464) (1,881) (2,476) (7,287)	Unamortized (discount) price 79,629 (208) 24,343 23,786 70,872 318,906 401,342 918,670	Carrying amount Note 3,448,610 799,556 $270,400 have been pledged 1,873,789 $105,800 have been pledged 2,223,129 $390,300 have been pledged 1,570,408 6,367,025 8,383,866 $135,400 have been pledged 24,666,383
A01107 A01109 A03106 A04112 A94103 A96102 Others (Note) Total		33,700 8,000 18,500 22,000 15,000 60,500 79,850

Note：None of the other items exceeds 5% of the account balance.

〜 151 〜

TAIWAN BUSINESS BANK, LTD.

Statement of Investment in Debt Instruments at Amortized Cost -

Corporate Bonds

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Financial instrument	Summary	Number of units (thousand)	Total par value	Coupon rate	Accumulated impairment	Accumulated impairment	Unamortized (discount) price	Unamortized (discount) price		Table 2 Carrying amount Note 599,411 499,808 7,584,421 8,683,640
B801AD F12401 Others (Note) Total	Annual interest payment 7/12, maturity date 2023/7/12 Annual interest payment 5/18, maturity date 2022/5/18	6,000 5,000 -	$ 600,000 $ 500,000 7,566,448 $ 8,666,448	% 1.60 % 1.10 0.88%~3.5%		(509) (187) (5,520) (6,216)		(80) (5) 23,493 23,408

Note：None of the other items exceeds 5% of the account balance.

〜 152 〜

TAIWAN BUSINESS BANK, LTD.

Statement of Changes in Investments Measured by Equity Method

For the year ended December 31, 2021

(Expressed in Thousands of New Taiwan Dollars, Thousands Shares)

Company	Beginning balance Number of shares Amount 150,000 $ 1,431,596 20 552,164 60,000 585,083 - - $ 2,568,843	Incre	ase Amount 31,484 - 482,976 50,000 564,460	Decr	ease Amount - 14,867 - 1,409 16,276	Ending balance	Ending balance	Amount 1,463,080 537,297 1,068,059 48,591 3,117,027	Market value	or net worth Total	Guaranteed or pledged Note None The increase is the investment gains and the cumulative translation adjustment accounted for using equity method. 〞 The decrease is the investment losses and the cumulative translation adjustment accounted for using equity method. 〞 The increase is the issuance of shares, the investment gains and other comprehensive income accounted for using equity method. 〞 The increase is due to making new investment, the decrease is the investment losses accounted for using equity method.
	Number of shares	Number of shares - - 40,000 5,000		Number of shares - - - -		Number of shares 150,000 20 100,000 5,000	Shareholding ratio% 100.00 100.00 100.00 100.00		Unit Price 9.75 26,864.85 10.68 9.72
TBB International Leasing Co., Ltd. TBB (Cambodia) Microfinance Institution Plc TBB Venture Capital Co., Ltd. TBB Consulting Co., Ltd. Total	150,000 20 60,000 -									1,463,080 537,297 1,068,059 48,591 3,117,027

〜 153 〜

TAIWAN BUSINESS BANK, LTD.

Statement of Changes in Intangible Assets

For the year ended December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item	Beginning balance $ 374,263	Increase 352,603	Decrease 173,082	Ending balance Note 553,784
Computer software

Note 1： An increase of $352,603 includes purchasing of $309,304 and a transferred from prepayments for equipment amounted to $43,299.

Note 2： A decrease of $173,082 includes amortizations of $170,708 and exchange differences of $2,374.

〜 154 〜

TAIWAN BUSINESS BANK, LTD.

Statement of Other Assets

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item Office supplies Prepayments Operation guarantee deposits and settlement fund Guarantee deposits paid Less: allowance for bad debts Net Deferred assets Proceeds of settlement and margin trading Miscellaneous Assets Total	Amount $ 28,953 8,031,738 60,528 16,263 45,569 8,154,098 31,450 52,972 55,855 4,433 215,832 55,305 - 384,397 175 1,307,041 105,859 $ 10,011,973	Summary
		Prepayments for inter-bank clearing fund and network system Prepayments for other taxes Amortization of other expenses Others Subtotal House deposit Membership deposit for golf clubs Performance bonds Transactions of financial derivatives Other

〜 155 〜

TAIWAN BUSINESS BANK, LTD.

Statement of Deposits from the Central Bank and Banks

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item Deposits from the Central Bank Due from the Central Bank Deposits from banks Call loans from banks Overdrafts on banks Deposits transferred from Chunghwa Post Co., Ltd.	Summary USD 425,573, spot rate 27.6550 JPY 1,724,843, spot rate 0.2405 HKD 794,810, spot rate 3.5460 AUD 157,262, spot rate 20.0900 CNY 150,000, spot rate 4.3410 GBP 29,000, spot rate 37.3600 NTD Subtotal USD 15,487, spot rate 27.6550 EUR 3, spot rate 31.3800 JPY 332,599, spot rate 0.2405 CNY 6,672, spot rate 4.3410 ZAR 892, spot rate 1.7340 Subtotal Total	Amount
		$ 249,565 9,955,800 244,033 11,763,703 414,825 2,818,396 3,159,387 651,150 1,083,440 4,402,000 24,292,901 428,280 96 77,585 28,962 1,548 536,471 67,261,545 $ 102,540,315

〜 156 〜

TAIWAN BUSINESS BANK, LTD.

Statement of Payables

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item Accrued interest Accounts payable Acceptances Accrued expenses Collection payable Spot exchange payable, foreign currencies Deposits received from securities borrowers Guaranteed price deposits received from securities borrowers Other payable Prices payable of securities sold for customers Others Total	Amount $ 368,644 1,666,828 119,977 138,948 175,188 2,469,585 12,197,958 553,177 68,403 12,819,538 1,039,557 866,489 550,889 408,175 328,577 189,526 66,088 404,373 2,814,117 230,520 57,099 62,391 51,034 64,454 310,055 775,553 9,204 115,541 149,272 230,175 1,308,974 83,852 99,453 99,521 387,184 2,209,159 309,498 16,970 $ 22,727,994	Summary
		Non-drawing time savings deposits interest Bond interest Foreign currency time deposits interest Time deposits interest Others Subtotal Checks for clearing Undelivered bond payments Others Subtotal Performance bonus Overtime premium Employee and directors compensation Annual bonuses Business tax Other accrued expenses Others Subtotal Media transfer Government bond-tax Matured bond lodged at courts Receipts under custody-tax authority account Clearing House media exchange automatic transfer Others Subtotal Deposits from dishonored account Temporary credit Labor retirement fund Pending accounts Stop payment reserve fund Others Subtotal Dividends and other taxes payable

〜 157 〜

TAIWAN BUSINESS BANK, LTD.

Statement of Deposits and Remittances

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item Savings deposits Time deposits Demand deposits Checking account deposits Remittances Total	Amount $ 431,713,084 14,491,919 296,452 210 66,574,943 194,804,173 707,880,781 1,686,306 273,854,090 176,381,021 451,921,417 12,154,889 339,449,864 123,937,092 475,541,845 33,266,719 429,108 119 429,227 $ 1,669,039,989	Summary
		Savings account deposits Staff demand savings deposits Club savings deposits Annuity savings deposits Non-drawing time savings deposits Interest drawing savings deposits Subtotal Government treasury Time deposits Foreign currencies Subtotal Government treasury New Taiwan dollars Foreign currencies Subtotal Remittances outstanding Remittances under custody Subtotal

〜 158 〜

TAIWAN BUSINESS BANK, LTD.

Statement of Lease Liabilities

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item	Summary	Leasing Period 2015.10.01~2040.09.30 2015.01.26~2026.07.31 2018.09.02~2025.08.29 2017.05.10~2027.12.31	Discount Rate	Ending Note $ 1,108,357 570 29,091 7,054 $ 1,145,072
Buildings Machinery and equipment Transportation equipment Miscellaneous equipment			1.32%~1.68% 1.32%~1.68% 1.32%~1.68% 1.32%~1.68%

〜 159 〜

TAIWAN BUSINESS BANK, LTD.

Statement of Other Liabilities

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item Unearned revenue Advance interest receipts Other advance receipts Guarantee deposits received Deferred revenue Temporary receipts and suspense accounts Margin trading Total	Amount $ 139,144 120,107 259,251 2,019 41,165 18,270 59,435 166,514 229,260 205,898 442,539 120,229 59,377 1,223,817 2,901 1,126,269 37 $ 2,673,729	Summary
		Advance receipt for guarantee service fee revenue Others Subtotal Credit card prepayments Other Subtotal Rental deposit Letter of credit for domestic and international deposit Performance bond CSA Warranty bond Others Subtotal

〜 160 〜

TAIWAN BUSINESS BANK, LTD.

Statement of Foreign Exchange Gain

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item USD AUD CAD HKD GBP SGD ZAR SEK CHF JPY THB EUR NZD CNY	Amount $ 100,809 9,308 2,005 11,508 6,287 2,093 24,112 (1,589) 2,715 41,119 31,962 39,562 1,014 39,729 $ 310,634	Note
		.

〜 161 〜

TAIWAN BUSINESS BANK, LTD.

Statement of Employee Benefits Expenses

For the year ended December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item	Amount	Amount	Amount	Amount
	Employee benefit expenses	Net other revenue other than interest income	Other general and administrative expense	Total
Salary expense	$ 6,710,384	-	41,505	6,751,889
Labor and health insurance	512,569	-	-	512,569
Pension expense	337,460	-	-	337,460
Director's remuneration	50,302	-	854	51,156
Other employee benefits	739,425	-	1,996	741,421

Note:：

1.The employee numbers amounted to 5,436 and 5,369 people and the number of directors who are not employees amounted to 12 and 12 people as of December 31, 2021 and 2020, respectively.
2.Financial statements for the years ended December 31, 2021 and 2020 should disclose the following information:
(1) The average of employee benefits expenses for the years ended December 31, 2021 and 2020 are $1,538 and $1,464 respectively .
(2) The average of salary expense for the years ended December 31, 2021 and 2020 are $1,245 and $1,195 respectively.
(3) The average movement of employees' salary is 4.18%.
(4) The supervisor's remuneration is $ 0 in 2021, and the supervisor's remuneration is $ 0 in 2020 .
(5) Information on the Bank's remuneration policy:
A. Directors' remuneration is paid with reference to peer industry standards, personal performance, company operating performance, and performance evaluation results of the board of directors. The remuneration of independent directors is executed in accordance with the monthly remuneration proposal approbated by the shareholders meeting in 2011. Exclude the monthly fixed remuneration, the independent directors will not draw the remuneration according to the corporation by-laws.
B. The remuneration of managers and employees not only refers to the standards of the same industry, but also considers personal performance and the company's operating performance. Respectively in accordance with the relevant regulations of the Bank, such as the "Guidelines for Staff Salary Payment", "Guidelines for Issuance of Annual and Performance Bonus", "Guidelines for Staff Remuneration" and "Organizational Rules of the Salary and Compensation Committee".

〜 162 〜

TAIWAN BUSINESS BANK, LTD.

For the year ended December 31, 2021

Please refer to the notes below for information on statements of other significant accounts:

(1) Statement of securities purchased under resell agreements, Note 6(D)
(2) Statement of discounts and loans, Note 6(F)
(3) Statement of other financial assets, Note 6(J)
(4) Statement of changes in accumulated impairment of property and equipment, Note 6(K)
(5) Statement of changes in property and equipment, Note 6(K)
(6) Statement of changes in accumulated depreciation of property and equipment, Note 6(K)
(7) Statement of changes in right-of-use assets, Note 6(L)
(8) Statement of changes in accumulated depreciation of right-of-use assets, Note 6(L)
(9) Statement of deferred taxes assets, Note 6(Z)
(10) Statement of financial liabilities at fair value through profit or loss, Notes 6(P) and (T)
(11) Statement of notes and bonds issued under repurchase agreements, Note 6(Q)
(12) Statement of bank notes payable, Note 6(T)
(13) Statement of other financial liabilities, Note 6(U)
(14) Statement of provisions, Note 6(V)
(15) Statement of deferred tax liabilities, Note 6(Z)
(16) Statement of interest income, Note 6(AD)
(17) Statement of interest expenses, Note 6(AD)
(18) Statement of net service fee revenue, Note 6(AE)
(19) Statement of gains (losses) on financial assets or liabilities measured at fair value through profit or loss, Note 6(AF)
(20) Statement of realized gains (losses) on financial assets at fair value through other comprehensive income, Note 6(AG)
(21) Statement of gains arising from derecognition of financial assets measured at amortized cost, Note 6(H)
(22) Statement of (impairment loss on assets) reversal of impairment loss on assets, Note 6(AH)
(23)Statement of share of profit (loss) of associates and joint ventures accounted for using equity method, Note 6(AI)
(24) Statement of net revenue other than interest, Note 6(AJ)
(25) Statement of bad debts expenses, commitment and guarantee liability provision, Note 6(AK)
(26) Statement of depreciation and amortization expense, Note 6(AM)
(27) Statement of other general and administrative expenses, Note 6(AN)

〜 163 〜

TAIWAN BUSINESS BANK, LTD. SECURITIES DIVISION DISCLOSURE

For the Years Ended December 31, 2021 and 2020

〜 164 〜

	Contents	Page
Cover Page		164
Table of Contents		165
Balance Sheets of Securities Division		166
Statements of Comprehensive Income of Securities Division		167
Notes to the Securities Division Financial Statements
1.	Company history	168
2.	Approval date and procedures of the financial statements	168
3.	New standards, amendments and interpretations adopted	168
4.	Summary of significant accounting policies	168～169
5.	Significant accounting assumptions and judgments, and major sources of	169
	estimation uncertainty
6.	Explanation of significant accounts	170～180
7.	Related party transactions	180
8.	Pledged assets	180
9.	Significant commitments and contingencies	180
10.	Significant losses from disasters	180
11.	Significant subsequent events	180
12.	Others	180
13.	Supplementary disclosures
	(A) Information on significant transactions	180
	(B) Information of investees	180
	(C) Information on investments in Mainland China	180
14.	Segment information	181
Statement of significant accounts		182～192

〜 165 〜

TAIWAN BUSINESS BANK, LTD.

Balance Sheets of Securities Division

December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan dollars)

Assets Current Assets： 113200 Current financial assets at fair value through other comprehensive income (Notes 6(A) and (S)) 114030 Margin loans receivable (Note 6(B)) 114040 Refinancing margin 114050 Refinancing collateral receivable 114130 Accounts receivable (Note 6(C)) 119000 Other current assets Total current assets Non-current Assets： 123200 Non-current financial assets at fair value through other comprehensive income (Notes 6(A) and (S)) 123300 Non-current financial assets at amortized cost (Notes 6(D) and (S)) 125000 Property and equipment, net (Note 6(E)) 125800 Right-of-use assets, net (Note 6(F)) 127000 Intangible assets 129000 Other non-current assets Total non current assets Total assets	December 31, 2021 Amount ％ $ 853,799 7 3,213,062 26 33 - 36 - 395,870 3 1,315,560 11 5,778,360 47 6,268,870 51 299,866 2 20,715 - - - 13,991 - 32,449 - 6,635,891 53 $ 12,414,251 100	December 31, 2020 Amount ％ 216,098 2 2,482,515 - 6,272 - 6,360 - 765,787 7 189,407 1 3,666,439 32 7,176,579 64 322,385 3 16,573 - 74 - 12,907 - 29,176 1 7,557,694 68 11,224,133 100 Liabilities and equity Current Liabilities 214010 Liabilities for bonds with attached repurchase agreements (Note 6(G)) 214040 Securities financing refundable deposits (Note 6(B)) 214050 Deposits payable for securities financing (Note 6(B)) 214130 Accounts payable (Note 6(H)) 216000 Current lease liabilities (Note 6(I)) 219000 Other current liabilities Total current liabilities 229030 Guaranteed deposits received 229110 Inter-department accounts, credit Total non-current liabilities Total liabilities 301110 Assigned working capital 304020 Special reserve 304040 Unappropriated retained earnings 305290 Other equity interest-other Total equity Total liabilities and equity	December 31, 2021		December 31, 2020
			Amount % $ 793,749 6 115,541 1 149,272 1 309,799 2 - - 1,361,338 11 2,729,699 21 20 - 6,816,143 55 6,816,163 55 9,545,862 76 2,200,000 19 185,127 1 438,522 4 44,740 - 2,868,389 24 $ 12,414,251 100		Amount % 830,820 7 112,416 1 150,740 1 683,961 6 74 - 238,032 1 2,016,043 16 20 - 6,352,049 57 6,352,069 57 8,368,112 73 2,200,000 20 185,127 2 284,204 3 186,690 2 2,856,021 27 11,224,133 100

〜 166 〜

TAIWAN BUSINESS BANK, LTD.

Statements of Comprehensive Income of Securities Division

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan dollars)

Revenues： 401000 Brokerage handling fee revenue (Note 6(J)) 401110 Handling fees from securities financing 421200 Interest revenue (Note 6(K)) 421750 Realized gains on financial assets measured at fair value through other comprehensive income- bonds (Note 6(L)) 424100 Future commission revenue 425300 Impairment loss (impairment gain and reversal of impairment loss) 428000 Other operating income (Note 6(M)) Expenses： 501000 Brokerage handling fee expenses (Note 6(N)) 503000 Refinancing processing fee expenses 521200 Finance costs (Note 6(O)) 528000 Other operating expenditure (Note 6(P)) 530000 Operating expenses (Note 6(Q)) 602000 Other gains and losses (Note 6(R)) Net income 805000 Other comprehensive income： 805615 Unrealised gains from investments in debt instruments measured at fair value through other comprehensive income 805699 Add: Income tax related to components of other comprehensive income 805000 Other comprehensive income (net amount after tax) Total comprehensive income	For the years ende	d December 31,
	2021 Amount ％ $ 616,408 77 1,553 - 183,527 23 - - 3,867 - 74 - 217 - 805,646 100 42,262 5 119 - 2,608 - 869 - 329,678 41 (8,412) (1) 367,124 45 438,522 55 (141,950) (18) - - (141,950) (18) $ 296,572 37	2020
		Amount ％ 391,712 67 1,188 - 163,542 28 25,785 4 5,375 1 1,158 - 278 - 589,038 100 25,401 4 185 - 3,296 1 899 - 273,832 47 1,221 - 304,834 52 284,204 48 105,106 18 - - 105,106 18 389,310 66

〜 167 〜

TAIWAN BUSINESS BANK, LTD. Notes to the Securities Division Financial Statements

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan dollars, unless otherwise stated)

1. Company history

The securities division of Taiwan Business Bank, Ltd. was approved by the Securities Regulatory Commission, Ministry of Finance on May 8, 1976 to concurrently operate in proprietary securities and brokerage businesses and began its operation in the same year.

2. Approval date and procedures of the financial statements

The approval date and procedures of the financial statements of the securities division are consistent with those of the Bank. Please refer to the Bank’s financial statements.

3. New standards, amendments and interpretations adopted

The new standards, amendments, and interpretations adopted by the securities division are consistent with those of the Bank. Please refer to the Bank’s financial statements.

4. Summary of significant accounting policies

The financial statements for the securities division have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Firms.

Except for the following items, the significant accounting policies of the securities division are consistent with those of the Bank. Please refer to the Bank’s financial statements.

(A) Classification of current and non-current assets and liabilities

Current assets are held primarily for the purpose of trading and expected to be converted to cash within 12 months from the balance sheet date.

Current liabilities are obligations due on demand within 12 months from the balance sheet date.

Assets and liabilities that are not classified as current are classified as non-current assets and liabilities, respectively.

(B) Margin loans, short sales, relending, and securities refinancing

When conducting margin purchase operations in securities trading, the securities division recognizes financing funds from securities investors purchasing stocks as margin loans receivable. All stocks purchased by the margin financiers are used as collaterals, which are to be returned when repayment from the financiers is settled.

〜 168 〜

TAIWAN BUSINESS BANK, LTD. NOTES TO SECURITIES DIVISION FINANCIAL STATEMENTS (CONT'D)

When conducting short sale operations in securities trading, the securities division recognizes deposits from short sellers as deposits and charges short sale proceeds (deducting securities transaction tax, handling fee from brokered trading and handling fee from securities financing) as collateral, recognizing it as deposits payable for securities financing. Both deposits and short sale proceeds are to be returned when repayment from short sellers is settled.

When conducting margin purchase and short sale operations in securities trading, the securities division with insufficient fund shall recognize refinancing from securities finance company as refinancing borrowings and all shares purchased are to be used as collaterals. The securities division may borrow securities from securities finance company via refinancing borrowings, and deposits paid are recognized as refinancing margin. The short sale proceeds paid by short sellers as refinancing collateral to the security finance company are recognized as deposits payable for securities financing and refinancing collateral receivable respectively.

According to the former No.82416 of Taiwan Financial Certificate issued by the Securities and Futures Commission, Ministry of Finance, when the overall collateral maintenance ratio of the customer margin account falls below the required number, and the account fails to cover the deficiency within deadline, the finance receivable balance is recognized as overdue receivable. If the securities in customer margin account cannot be disposed of, the securities finance receivable balance is recognized as other receivables or overdue receivables, and assessed as well as recognized allowance for bad debts by its impairment amount in accordance with the IFRS 9.

(C) Assigned working capital

The working capital refers to the amount allocated to the securities division as the Bank concurrently operates in securities business.

5. Significant accounting assumptions and judgments, and major sources of estimation uncertainty

The securities division's significant accounting assumptions and judgments, and major sources of estimation uncertainty is consistent with those of the Bank. Please refer to the Bank's financial statements.

〜 169 〜

TAIWAN BUSINESS BANK, LTD. NOTES TO SECURITIES DIVISION FINANCIAL STATEMENTS (CONT'D)

6. Explanation of significant accounts

(A) Financial assets at fair value through other comprehensive income

Current: Government bonds Corporate bonds Valuation adjustment on securities held for operations- proprietary Total Non-current: Government bonds Corporate bonds Valuation adjustment on securities held for operations- proprietary Total	December 31, 2021 $ 50,037 800,445 3,317 $ 853,799 $ 5,408,132 821,842 38,896 $ 6,268,870	December 31, 2020
		54,987 160,373 738
		216,098
		5,364,441 1,628,780 183,358
		7,176,579

Investment in debt instruments measured at fair value through other comprehensive income

The securities division of the Bank assessed that the above bond investments were held within a business model whose objective was achieved by both collecting contractual cash flows and selling financial assets. The bond investments have been classified as the financial asset measured at fair value through other comprehensive income. Some of the investment in debt instruments measured at fair value through other comprehensive income are held for reverse repurchase agreement. Please refer to Note 6 (G).

Please refer to the financial statements for information on credit risk (including the impairment in debt instruments) and market risk.
The securities division of the Bank conducted an impairment assessment for the years ended December 31, 2021 and 2020. Financial assets measured at fair value through other comprehensive income and recognized as reversal of impairment loss were as follows:

Beginning balance Reversal Ending balance	For the years ended December 31, 2021 2020 $ 2,594 3,750 (67) (1,156) $ 2,527 2,594
	2021 $ 2,594 (67) $ 2,527

〜 170 〜

TAIWAN BUSINESS BANK, LTD. NOTES TO SECURITIES DIVISION FINANCIAL STATEMENTS (CONT'D)

(B) Margin loans receivable

The securities financing transactions as of December 31, 2021 and 2020 were as follows:

Margin loans receivable Less: allowance for bad debts Net The change in allowance for bad debts was as follows:	December 31, 2021 $ 3,245,824 (32,762) $ 3,213,062	December 31, 2020 2,504,189 (21,674) 2,482,515

Beginning balance Provision (reversal of provision) Ending balance	For the years ended December 31,	For the years ended December 31,
	2021 $ 21,674 11,088 $ 32,762	2020 22,302 (628) 21,674

The guaranteed deposits received from securities transaction of the securities division as of December 31, 2021 and 2020 are $115,541 and $112,416, respectively; the deposits payable for securities financing are $149,272 and $150,740, respectively.
Since the securities divison is doing securities lending/ borrowing, the collateral securities provided by clients and the securities information on short sales as of December 31, 2021 and 2020 were as follows:

December 31, 2021 Number of shares (Note) Par value 118,307 $ 1,183,066 2,450 $ 24,500	December	31, 2020
Number of shares (Note) 118,307 2,450	Number of shares (Note) 113,835 5,523	Par value
		1,138,346
		55,230

Note: the unit is in thousands.

Receivable price of securities purchased for customers Settlement price Interests receivable Less: allowance for bad debts Total	December 31, 2021 $ 177,964 141,261 76,659 (14) $ 395,870	December 31, 2020 246,189 452,602 67,011 (15) 765,787

〜 171 〜

TAIWAN BUSINESS BANK, LTD. NOTES TO SECURITIES DIVISION FINANCIAL STATEMENTS (CONT'D)

Change in allowance for bad debts:

Beginning balance Reversal Ending balance	For the years ended December 31, 2021 2020 $ 15 23 (1) (8) $ 14 15
	2021 $ 15 (1) $ 14

(D) Non-current financial assets at amortized cost

Non-current: Government bonds Less: accumulated impairment Total	December 31, 2021 $ 299,955 (89) $ 299,866	December 31, 2020 322,481 (96) 322,385

The securities division of the Bank assessed that these financial assets were held to maturity to collect the contractual cash flows, which consisted solely of payments of principal and interest on principal amount outstanding. Therefore, these investments were classified as financial assets measured at amortized cost.

Please refer to the independent auditor's audit report in the financial statements for credit risk information.
The pledged assets provided by the above investment in debt instruments at amortized cost were shown follows:

Operation guarantee deposits	December 31, 2021 $ 270,000	December 31, 2020 270,000

The securities division of the Bank assessed the impairment of investment in debt instruments at amortized cost for the years ended December 31, 2021 and 2020. The change in allowance for credit losses reversal of impairment loss attribute to those financial assets were as follows:

Beginning balance Provision Ending balance	For the years ended December 31, 2021 2020 $ 96 98 (7) (2) $ 89 96
	2021 $ 96 (7) $ 89

〜 172 〜

TAIWAN BUSINESS BANK, LTD. NOTES TO SECURITIES DIVISION FINANCIAL STATEMENTS (CONT'D)

(E) Property and equipment

The statement of changes in the securities division's property and equipment cost, depreciation and impairment loss were as follows:

The beginning and ending book values and accumulated depreciation of the property and equipment

December 31, 2021	Cost $ 91,366 Cost $ 82,227	Accumulated depreciation (70,651) Accumulated depreciation (65,654)	Total
Equipment December 31, 2020			20,715
			Total
Equipment			16,573

Statement of changes in property and equipment costs

Equipment Equipment	January 1, 2021 $ 82,227 January 1, 2020 $ 72,308	Increase 11,887 Increase 15,002	Decrease (2,748) Decrease (5,083)	December 31, 2021
				91,366
				December 31, 2020
				82,227

Statement of changes in accumulated depreciation of property and equipment

Equipment Equipment	January 1, 2021 $ 65,654 January 1, 2020 $ 66,301	Increase 7,738 Increase 4,422	Decrease (2,741) Decrease (5,069)	December 31, 2021
				70,651
				December 31, 2020
				65,654

Property and equipment are depreciated on a straight-line basis with an useful life between 3 to 8 years basis. Property and equipment are not pledged as collateral.

〜 173 〜

TAIWAN BUSINESS BANK, LTD.

NOTES TO SECURITIES DIVISION FINANCIAL STATEMENTS (CONT'D)

(F) Right-of-use assets

Information about leases on costs, depreciation and impairment for which the securities division of the Bank as a lessee is presented below:

December 31, 2021 Machinery and equipment December 31, 2020 Machinery and equipment Change of cost January 1, 2021 Machinery and equipment $ 1,046 January 1, 2020 Machinery and equipment $ 2,268	December 31, 2021 Machinery and equipment December 31, 2020 Machinery and equipment Change of cost January 1, 2021 Machinery and equipment $ 1,046 January 1, 2020 Machinery and equipment $ 2,268		Accumulated depreciation (24) Accumulated depreciation (972) Decrease (1,022) Decrease (1,229)	Accumulated impairment	Total - Total 74 December 31, 2021	Total -
		$		-
				Accumulated impairment		Total 74
Machinery and equipment Change of cost Machinery and equipment Machinery and equipment		$		-
			Decrease (1,022) Decrease (1,229)	Foreign Exchange - Foreign Exchange -
	$ 1,046 January 1, 2020				24
					December 31, 2020
	$ 2,268				1,046

Change of depreciation

Machinery and equipment Machinery and equipment	January 1, 2021 $ 972 January 1, 2020 $ 1,937	Increase 74 Increase 264	Decrease 1,022 Decrease 1,229	Foreign Exchange - Foreign Exchange -	December 31, 2021
					24
					December 31, 2020
					972

〜 174 〜

TAIWAN BUSINESS BANK, LTD. NOTES TO SECURITIES DIVISION FINANCIAL STATEMENTS (CONT'D)

(G) Liabilities for bonds with attached repurchase agreements

Assets	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021
	Par value	Selling Price (recognized in liabilities for bonds with attached repurchase agreements)	Designated repurchase amount	Designated repurchase date
Financial assets at fair value through other comprehensive income	717,100	793,749	794,238	Prior to May 6, 2022

Assets	December 31, 2020
	Par value	Selling Price (recognized in securities sold under repurchase agreements)	Designated repurchase amount	Designated repurchase date
Financial assets at fair value through other comprehensive income	750,300	830,820	831,472	Prior to May 6, 2021

(H) Accounts payable

	December	31, 2021	December 31, 2020
Prices payable of securities sold for customers	$	309,498	683,596
Interest payable		301	365
Total	$	309,799	683,961

(I) Lease liabilities

The securities division of the Bank leased some lamps which classified as lease liabilities since the lease transferred significantly all of the risk . The maturity analysis is as follows:

Current	December 31, 2021 $ -	December 31, 2020 74

The amounts recognized in the statement of cash flows was as follows：

Total cash outflow for leases	For the year ended December 31,	For the year ended December 31,
	2021 $ 74	2020
		272

〜 175 〜

TAIWAN BUSINESS BANK, LTD. NOTES TO SECURITIES DIVISION FINANCIAL STATEMENTS (CONT'D)

(J) Brokerage handling fee revenue

Settlement from brokered trading-TWSE Settlement from brokered trading-OTC Front-end load Total	For the years ended December 31,	For the years ended December 31,
	2021 $ 494,905 120,236 1,267 $ 616,408	2020
		295,992 94,710 1,010
		391,712

(K) Interest revenue

Financing and securities refinancing interest Bond interest Total	For the years ended December 31,	For the years ended December 31,
	2021 $ 117,744 65,783 $ 183,527	2020
		87,130 76,412
		163,542

(L) Realized gains on financial assets measured at fair value through other comprehensive income-bonds

Gains on disposal of bonds	For the years ended December 31,	For the years ended December 31,
	2021 $ -	2020
		25,785

(M) Other operating income

Clearing and settlement interest Miscellaneous income Total	For the years ended December 31,	For the years ended December 31,
	2021 $ 42 175 $ 217	2020
		104 174
		278

(N) Brokerage handling fee expense

Brokerage handling fee expense Proprietary handling fee expense Total	For the years ended December 31,	For the years ended December 31,
	2021 $ 42,224 38 $ 42,262	2020
		25,366 35
		25,401

〜 176 〜

TAIWAN BUSINESS BANK, LTD. NOTES TO SECURITIES DIVISION FINANCIAL STATEMENTS (CONT'D)

(O) Finance costs

Securities financing interest expense Securities sold under repurchase agreements interest expense Total (P) Other operating expenditure Processing fee expenses (Q) Operating expenses Salary expense Overtime premium Stationery printing Traveling expense Postage expenses Repairs and maintenance expense Employee benefits Utilities expense Insurance expense Miscellaneous purchases Labor service fees Meal expense Subscription and magazine Taxes Commissions expense Depreciations Amortizations Information technology expense Membership fee Loss on error trading Transportation expense Pension expense Depository service expense Micellaneous disbursements Rental expense Total	For the years ended December 31,	For the years ended December 31,
	2021 2020 $ 431 387 2,177 2,909 $ 2,608 3,296 For the years ended December 31,	2020
		387 2,909
		3,296
		2020
		899

〜 177 〜

TAIWAN BUSINESS BANK, LTD. NOTES TO SECURITIES DIVISION FINANCIAL STATEMENTS (CONT'D)

(R) Other gains and losses

Financial income Losses (Gains) reversal of bad debts Other income Financial expenses Assets retirement losses Other expences Total	For the years ended December 31,	For the years ended December 31,
	2021 $ (186,735) 10,846 (1,461) 168,691 7 240 $ (8,412)	2020 (180,990) (696) (4,235) 187,128 14 - 1,221

(S) Financial instrument disclosure
Fair value information

The fair value information of the securities division is consistent with that of the Bank. Please refer to the Bank's financial report.

Based on fair value measurement
(1) The fair value hierarchy of information

The financial instruments which are recorded as fair value measure on an ongoing basis, the fair value hierarchy of information were as follows:

Assets and Liabilities Total Instruments measured at fair value on a recurring basis Non-derivative financial assets: Current financial assets at fair value through other comprehensive income $ 853,799 Non-current financial assets at fair value through other comprehensive income 6,268,870 Assets and Liabilities Total Instruments measured at fair value on a recurring basis Non-derivative financial assets: Current financial assets at fair value through other comprehensive income $ 216,098 Non-current financial assets at fair value through other comprehensive income 7,176,579		December 31, 2021	December 31, 2021
	Total	Level 1 Level 2 Level 3 853,799 - - 6,268,870 - - December 31, 2020
	Total	Level 1 216,098 7,176,579	Level 2 Level 3 - - - -

〜 178 〜

TAIWAN BUSINESS BANK, LTD. NOTES TO SECURITIES DIVISION FINANCIAL STATEMENTS (CONT'D)

(2) Valuation techniques used in estimating the fair values of financial instrument

The valuation techniques used in estimating the fair values of financial instruments by the securities division is consistent with those of the Bank. Please refer to the Bank's financial report.

Not based on fair value measurement
(1) Fair value information

The following chart presents the financial instruments not based on fair value measurement of the Bank's securities division. Except those items, other's fair value are reasonably approximate value, the securities division does not disclose their fair value.

Investment in debt instruments at amortized cost - non current Investment in debt instruments at amortized cost - non current	December 31, 2021	December 31, 2021
	Book value Fair value $ 299,866 301,690 December 31, 2020	Fair value
	Book value $ 322,385	Fair value
		327,748

(2) The fair value hierarchy of information

Assets and Liabilities Investment in debt instruments at amortized cost - non current Assets and Liabilities Investment in debt instruments at amortized cost - non current		December 31, 2021	December 31, 2021
	Total 301,690	Level 1 Level 2 Level 3 301,690 - - December 31, 2020
	Total 327,748	Level 1 327,748	Level 2 Level 3 - -

(3) Valuation techniques

The valuation techniques used by the securities division for fair value evaluation of financial instruments are consistent with those of the Bank. Please refer to the Bank's financial report.

〜 179 〜

TAIWAN BUSINESS BANK, LTD. NOTES TO SECURITIES DIVISION FINANCIAL STATEMENTS (CONT'D)

(T) Financial risk information

In order to achieve the goals of risk management, the Bank develops risk control strategies corresponding to different types of risks. Please refer to the Bank's financial report for relevant financial risk information on credit risk, market risk, liquidity risk and cash flow risk resulted from changes in the interest rate.

7. Related party transactions: None.

8. Pledged assets: Please refer to note 6(D).

9. Significant commitments and contingencies: None.

10. Significant losses from disasters: None.

11. Significant subsequent events: None.

12. Others

(A) Employee benefits, depreciation, and amortization expense categorized by function：

Category Employee benefits expense Salary expense Labor and health insurance expense Pension expense Other employee benefits expense Subtotal Depreciation expense Amortization expense Total	For the years ended December 31, 2021 2020 Operating expenses Operating expenses $ 205,381 168,610 17,933 15,152 9,961 8,659 7,641 7,544 240,916 199,965 6,611 3,457 6,187 2,645 $ 253,714 206,067	For the years ended December 31, 2021 2020 Operating expenses Operating expenses $ 205,381 168,610 17,933 15,152 9,961 8,659 7,641 7,544 240,916 199,965 6,611 3,457 6,187 2,645 $ 253,714 206,067
		2020 Operating expenses
		168,610 15,152 8,659 7,544
		199,965 3,457 2,645
		206,067

As of December 31, 2021 and 2020, The securities division of the Bank has 198 and 211 employees, respectively.

13. Supplementary disclosures

(A) Information on significant transactions: None.
(B) Information of investees: None.
(C) Information on investments in Mainland China: None.

〜 180 〜

TAIWAN BUSINESS BANK, LTD. NOTES TO SECURITIES DIVISION FINANCIAL STATEMENTS (CONT'D)

14. Segment information

The securities divison of the Bank is dealing and brokerage business of military securities, which is a single industry and therefore not applicable.

〜 181 〜

TAIWAN BUSINESS BANK, LTD. SECURITIES DIVISION

Statement of Current Financial Assets at Fair Value through Other Comprehensive Income

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Number of units	Par value	Total amount	Total amount	Acquisition cost 50,037	Fair
					Unit price - 100.19 100.34 100.46 100.67
500 2,000 2,000 1,000 3,000	100 100 100 100 100	$ 50,000 50,000 200,000 200,000 100,000 300,000 800,000 $ 850,000
			50,000	50,037
			200,000 200,000 100,000 300,000	200,017 200,311 100,117 300,000
			800,000	800,445
				850,482

Note1：None of the other items exceeds 5% of the total account balance.

Note2：The accumulated impairment of debt instuments measured at fair value through other comprehensive income is recognized as other equity.

〜 182 〜

TAIWAN BUSINESS BANK, LTD. SECURITIES DIVISION

Statement of Margin Loans Receivable

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Name of Securities	Number of shares	Amount	Note
Others Less: allowance for bad Total	118,260,000 -	$ 3,245,824 (32,762) $ 3,213,062	Note

Note：None of the items exceeds 5% of the total amount.

Statement of Other Current Assets

Item	Summary	Amount	Note
Prepayments Amount held for settlement Other receivable Total	Other prepaid taxes Prepaid share	$ 8,488 1,307,041 31 $ 1,315,560

〜 183 〜

TAIWAN BUSINESS BANK, LTD. SECURITIES DIVISION

Statement of Non-current Financial Assets at Fair Value through Other

Comprehensive Income

For the year ended December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Financial Instrument Government bonds－ A07107 A04112 A05104 A05111 A95107 A09109 Others (Note1) Subtotal Corporate bonds－ B401D6 Other (Note1) Subtotal Total		Beginning balance Number of units Fair Value 3,500 $ 354,147 9,000 938,817 10,500 1,078,805 7,500 765,419 4,000 443,512 10,000 993,747 8,810 937,128 53,310 5,511,575 3,000 330,249 13,000 1,334,755 16,000 1,665,004 69,310 $ 7,176,579	Increase Number of units Amount - - - - - - - - - - - - 500 9,960 500 9,960 - - - - - - 500 9,960	Decrease Number of units Amount - (3,745) - (16,086) - (19,992) - (11,233) - (14,005) - (31,772) - - - (96,833) - (3,971) (8,000) (816,865) (8,000) (820,836) (8,000) (917,669)	Ending balance Number of units Fair Value 3,500 350,402 9,000 922,731 10,500 1,058,813 7,500 754,186 4,000 429,507 10,000 961,975 9,310 947,088 53,810 5,424,702 3,000 326,278 5,000 517,890 8,000 844,168 61,810 6,268,870	Accumulated impairment (Note 2) 103 267 310 221 124 294 278 1,597 265 313 578 2,175	Guaranteed or pledged Note
			Number of units - - - - - - 500 500 - - - 500	Number of units - - - - - - - - - (8,000) (8,000) (8,000)	Number of units 3,500 9,000 10,500 7,500 4,000 10,000 9,310 53,810 3,000 5,000 8,000 61,810

The financial assets at fair value through other comprehensive income shown above are hold for resale agreement.

Note1：None of the other items exceeds 5% of the total account balance.

Note2：The accumulated impairment of debt instuments measured at fair value through other comprehensive income is recognized as other equity.

〜 184 〜

TAIWAN BUSINESS BANK, LTD. SECURITIES DIVISION

Non-current Financial Assets at Amortised Cost

For the year ended December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item Debt instruments Corporate bonds－ A01109 A90201 Others (Note1) Total		Beginning Balance Number of units Amount 3,000 299,899 196 19,584 30 2,998 3,226 $ 322,481	Increase Number of units Amount - 56 - - - - - 56	Decrease Number of units Amount - - (196) (19,584) (30) (2,998) (226) (22,582)	Ending Balance Number of units Par value 3,000 299,955 - - - - 3,000 299,955	Accumulated impairment 89 - - 89	Grananteed or pledged Note Note 2
			Number of units - - - -	Number of units - (196) (30) (226)	Number of units 3,000 - - 3,000

Note1：None of the other items exceeds 5% of the account balance.

Note2：Par value of pledged asset is $270,000.

〜 185 〜

TAIWAN BUSINESS BANK, LTD. SECURITIES DIVISION

Statement of Other Non-current Assets

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item Operation guarantee deposits Securities for operation guarantee deposits Clearing and settlement fund Guarantee deposits paid Overdue receivables Less: allowance for bad debts Total	Summary	Amount Note $ 270,000 (270,000) 31,450 695 1,133 (829) $ 32,449

〜 186 〜

TAIWAN BUSINESS BANK, LTD. SECURITIES DIVISION

Statement of Liabilities for Bonds with Attached Repurchase

Agreements

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Financial instrument	Terms of Transactions	Terms of Transactions	Terms of Transactions	Amount	Amount		Turnover Note 793,749
	Issue date	Maturity date	Interest rate	Type	Par value
A05111	2021.07.30	2022.05.06	0.15%	Government bonds	$ 717,100

〜 187 〜

TAIWAN BUSINESS BANK, LTD. SECURITIES DIVISION

Statement of Securities Financing Refundable Deposits

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Securities	Number of shares	Amount	Note
Others	2,528,000 $	115,541	Note

Note：None of the securities balance exceeds 5% of the total amount.

Statement of Deposits Payable for Securities Financing

Securities	Number of shares	Amount	Note
Others	2,528,000 $	149,272	Note

Note：None of the securities balance exceeds 5% of the total amount.

〜 188 〜

TAIWAN BUSINESS BANK, LTD. SECURITIES DIVISION

Statement of Accounts Payable

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Client Name		Summary
Client Item
Advance receipts Receipts under custody Accrued expenses Margin trading Other payables Total	Labor and health insurance expense and pension Business tax, welfare fund and stamp tax Bonus for unused vacation, yearend and group bonus Handling fee expense, depository premiums, and securities investor protection service expense fee Underwriting processing fee, the payment of lottery stocks, and cash voucher repayment Others

〜 189 〜

TAIWAN BUSINESS BANK, LTD. SECURITIES DIVISION

Statement of Brokerage Handling Fee Revenue

For the year ended December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Handling fee revenues from brokered trading

Month	Brokered trading-TWSE		Brokered trading-OTC	Handling fees from securities financing	Handling fees from securities financing	Other handling fee revenues Note 162 8 115 75 80 12 73 114 114 108 180 226 1,267
January February March April May June July August September October November December	$ 43,452 24,519 40,700 52,319 58,010 52,453 61,727 37,876 27,458 27,482 38,137 30,772 $ 494,905		10,375 6,075 10,347 12,935 9,685 9,602 13,104 9,441 7,468 7,639 12,489 11,076 120,236		150 63 70 103 188 156 135 131 155 193 104 105 1,553

〜 190 〜

TAIWAN BUSINESS BANK, LTD. SECURITIES DIVISION

Statement of Employees benefits, Depreciation, Amorization and Other Operating Expenses

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Item	Amount 2021 2020 Note $ 205,381 168,610 17,933 15,152 9,961 8,659 7,641 7,544 6,611 3,457 6,187 2,645 75,964 67,765 $ 329,678 273,832
	2021 $ 205,381 17,933 9,961 7,641 6,611 6,187 75,964 $ 329,678
Employee benefit expenses Salary expense Labor and health insurance expenses Pension expenses Other employee benefit Depreciation expenses Amortization expenses Other operating expences Total

Notes:

As of December 31, 2021 and 2020, the securities division of the Bank has $ 198 and $ 211 employees, respectively, and the number of directors who are not employees amounted to 0 people and 0 people , respectively.
Financial statement for the years ended December 31, 2021 and 2020 shuld disclose the following information:
(1) The average of employee benefit expenses for the years ended December 31, 2021 and 2020 are $ 1,217 and $ 948 respectively.
(2) The average of salary expense for the years ended December 31, 2021 and 2020 are $ 1,037 and $ 799 respectively.
(3) The average movement of employees' salary is 30%.
(4) The supervisor's remuneration for this year and the previous year are both $ 0 .
(5) Please refer to the Bank’s financial report for the remuneration policies.

〜 191 〜

TAIWAN BUSINESS BANK, LTD. SECURITIES DIVISION

December 31, 2021

Please refer to the notes below for information on statements of other significant accounts:

(1)Statement of accounts receivable, Note 6(C).

(2)Statement of changes in cost and accumulated depreciation of property and equipment, Note 6(E).

(3)Statement of changes in cost and accumulated depreciation of right-of-use assets, Note 6(F).

(4)Statement of interest revenue, Note 6(K).

(5)Statement of finance cost, Note 6(O).

〜 192 〜

AI assistant

TBB — Annual Report 2021

52201_rns_2021-12-21_3eadd8ed-882e-429e-8406-82893f05ffd0.pdf

TAIWAN BUSINESS BANK, LTD.

Financial Statements

Table of Contents

KPMG

Independent Auditors’ Report

Opinion

Basis for Opinion

Key Audit Matters

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Auditors’ Responsibilities for the Audit of the Financial Statement s

KPMG

Notes to Readers

(English Translation of Financial Statements Originally Issued in Chinese.) TAIWAN BUSINESS BANK, LTD.

Balance Sheets

December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

(English Translation of Financial Statements Originally Issued in Chinese.) TAIWAN BUSINESS BANK, LTD.

Statements of Comprehensive Income

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings Per Common Share)

(English Translation of Financial Statements Originally Issued in Chinese.) TAIWAN BUSINESS BANK, LTD.

(English Translation of Financial Statements Originally Issued in Chinese.) TAIWAN BUSINESS BANK, LTD.

Statements of Cash Flows

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

1. Company history

2. Approval date and procedures of the consolidated financial statements

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

3. New standards, amendments and interpretations adopted:

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

4. Summary of significant accounting policies

(B) Basis of preparation

TAIWAN BUSINESS BANK, LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(C) Foreign currency

(a) Foreign currency transaction

(b) Foreign operations

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(D) Cash and cash equivalents

(E) Financial Instruments

(a) Financial assets

(1) Investment in debt instruments measured at amortized cost

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(b) Financial liabilities

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(G) Property and Equipment

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(H) Investment in associates

(I) Lease

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(c) As a lessor

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(J) Deferred assets

(K) Collaterals

(L) Provisions

(M) Employee benefit

(b) Retirement benefit

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(c) Deposits with favorable rate

(d) Termination benefits

(N) Income tax

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(P) Earnings per share (EPS)

(Q) Operating segments

5. Significant accounting assumptions and judgments, and major sources of estimation uncertainty

TAIWAN BUSINESS BANK, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)

(A) Impairment losses on loans

(B) Retirement benefit

TBB Annual Report 2021