TBB - Annual Report 2022 | FinancialReports.eu

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Stock Code ： 2834
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Taiwan Stock Exchange Market Observation Post System ： http://mops.twse.com.tw

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

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2022

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Notice to readers

If there is any discrepancy between the English version and Chinese version, the Chinese

version shall prevail.

Published in March 2023

Taiwan Business Bank Head Office

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

Spokesperson

Name: Shao-Huang Chen Title: Executive Vice President Tel: 886-2-2559-7108 / 886-2-2559-7171 ext: 1211 E-mail Address: [email protected]

Deputy Spokesperson (1)

Name: Tseng-Hsiang Yi Title: Executive Vice President Tel: 86-2-2559-5815 / 886-2-2559-7171 ext: 1311 E-mail Address: [email protected]

Deputy Spokesperson (2)

Name: Li-Yueh Hsu Title: S.V.P. & Chief Secretary Tel: 886-2-2550-5726 / 886-2-2559-7171 ext: 1511 E-mail Address: [email protected]

Stock Registration Agent

Name: Yuanta Securities Co., Ltd. Address: B1, No. 210, Sec. 3, Chengde Rd., Datong Dist., Taipei, Taiwan, R.O.C. Tel: 886-2-2586-5859

Web Site: https://www.yuanta.com.tw

Rating Agency

Name: Taiwan Ratings Co.

Address: 2F., No. 167, Dunhua N. Rd., Songshan Dist., Taipei City, Taiwan, R.O.C. TEL: 886-2-2175-6800

Web Site: http://www.taiwanratings.com

The CPA-auditor of the Financial Report

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

Flotation at Overseas Stock Exchange and Information Inquiry: None Please refer to Chapter X for the Directory of Head Office and Branch Units.

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深耕臺灣連結亞太布局全球 We can be the best !

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Contents
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04 I. Letter to Shareholders

05 1. Operation Results in 2022
11 2. Business Plan for 2023
14
Future Development Strategies
14 4. Influences from the External Competitive Environment, Legal Environment, and the Overall Economy
15 5. Results of Latest Credit Rating

II. Bank Profile 16 18 III. Corporate Governance Report

19 1. Organization
21 2. Directors and Management Team
39 3. Operations of Corporate Governance
60 4. CPA Professional Fees
60
Information on Changing CPAs
60 6. The Bank's chairman, president, or any manager in charge of finance or accounting matters who has, in the most recent year, held a position at the accounting firm of its CPA or at an affiliated enterprise
61 7. Changes in Shareholdings of Directors, Executive Officers, and Shareholders Conform to the Requirements under Article 11 of the Regulations Governing the Same Person or Same Concerned Party Holding the Issued Shares with Voting Rights over a Particular Ratio of a Bank
66 8. Information Disclosing the Relationship among Top Ten Shareholders in the Relationship of Related Parties or Spouses, Relatives within the Second Degree of Kinship
67 9. Shareholding in the Same Investee Company of a Business Directly or Indirectly Controlled and Managed by Directors, President, Executive Vice Presidents, and SVP & GM of Departments and Branches, and the Consolidated Shareholding Ratio

IV. Fund-Raising Status

69 1. Capital and Shares
72 2. Issuance Status of Financial Bonds
77 3. Preferred Stocks, Global Depository Receipts, and Employee Stock Warrants, New Restricted Employee Shares, Any Merger and Acquisition Activities, and Acceptance of Transfer of the Shares of Another Financial Institution
77 4. Status of Implementation of Capital Allocation Plans

V. Business Operation

79 1. Business Scope
91 2. Employees
94 3. Corporate Responsibilities and Moral Conduct
94 4. Number of Non-managerial Full-time Employees and Their Average and Median Salaries
94 5. Information Equipment
95 6. Cyber Security Management
97 7. Labor-Management Relations
98 8. Important Contracts
99 9. Relevant Information on Securitization Products

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100 VI. Financial Status

101 1 Condensed Consolidated Balance Sheets and Consolidated Statements of Comprehensive Income for the Past Five Years
105 2. Financial Analysis for the Past Five Years
111 3. Audit Committee's Audit Report on the 2022 Financial Statements
112 4. Representation Letter for 2022 Consolidated Financial Statements
113 5. Independent Auditors' Report for 2022 Consolidated Financial Statements
126 6. 2022 Consolidated Financial Statements and Accompanying Notes
218 7. Independent Auditors' Report for 2022 Individual Financial Statements
221 8. 2022 Individual Financial Statements and Accompanying Notes
321

322

VII. Review, Analysis, and Risks of Financial Conditions and Performance

323 1. Financial Position Analysis
324 2. Financial Performance Analysis
324 3. Analysis of Cash Flow
324 4. Impact of Major Capital Expenditure on Financial Operations in 2022
325 5. Long-term Equity Investment Policy for 2022, the Main Reasons for the Profit or Loss Generated thereby, the Plan for Improving Profitability, and Investment Plans for the Coming Year
325 6. Risk Management
337 7. Crisis Management and Response Mechanism
337

338

VIII. Special Notes

339 1. Information Regarding the Bank’s Subsidiaries
341 2. Progress of Private Placement of Securities and Financial Bonds
341 3. The Bank’s Subsidiaries’ Shareholding or Disposal of the Bank’s Shares
341 4. Additional Disclosure
341 5. Pursuant to Item 2, Paragraph 3, Article 36 of Security and Exchange Act, the Incidence Exerting Material Influence on Shareholders’ Rights or Security Prices

342 IX. Sustainable Development Report

343 1. Promotion of Sustainable Development and Responsibility Analysis
344 2. Material Issues
352 3. Climate-related Financial Disclosures
357 4. The Bank's achievements in promoting sustainable development in 2022

364 X. Directory of Head Office and Branch Units

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I

Letter to Shareholders

05 1. Operation Results in 2022
11 2. Business Plan for 2023

3. Future Development Strategies

Legal Environment, and the Overall Economy

5. Results of Latest Credit Rating

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As the Russia-Ukraine war dragged on in 2022, pandemic lockdowns in China sent shock waves through economic and trade activities as well as supply chains. Moreover, major economies started raising interest rates, leading to tightening financial conditions, and hence the growth of the global economy continued the downward trend. On the whole, central banks of major economies adopted different monetary policies based on respective economic and financial conditions in the first half of 2022. Most economies tightened monetary policies in order to curb high inflation. Moving into the second half of 2022, inflation remained high around the world, which dampened the post-COVID recovery of the travel and consumption sectors. In addition, tightening monetary policies deterred aggregate demand and the global economy continued to slow down while central banks of major economies turned to aggressive rate hikes to curb high inflation. The U.S. raised rates by a total of 4.25% in 2022, while the Bank of Japan (BoJ) passed a resolution to maintain a large scale quantitative easing monetary policy, and the People's Bank of China (PBoC) lowered rates to ease the downward pressure on its economy.

incentives offered by the Taiwanese government to encourage banks to provide financing for supporting industry growth, the Bank will continue to optimize asset quality, create diversified profit sources, and undertake lower riskweighted businesses to enhance the efficiency of capital utilization, which include strengthening the DBU replace OBU foreign currency loans, and actively engaging in the entire builder’s mortgage loans business. Moreover, the Bank will keep reviewing the value system and improving operating efficiency. We place equal emphasis on the cultivation of talents, digital technologies, and corporate governance, and strive to achieve comprehensive sustainability through the implementation of compliance, refined internal audit and control, and improved IT security resilience. Lastly, the Bank will enhance organizational resilience and pursue mutually beneficial sustainability. By continuing to assist customers in low carbon transformation and net-zero emissions, the Bank can grasp the risks and opportunities closely and develop sustainable products, operations, and loans while pursuing profit growth. The combination of digital technologies and sustainable development will increase the operational resilience and lay a more solid foundation for the Bank.

1. Operation Results in 2022

(1) The Domestic and International Financial Environments

In March 2022, given strong employment growth and persistently high inflation, the Federal Open Market Committee (FOMC) decided to raise the federal funds rate range by 0.25%, that is, between 0.25% and 0.50%. Since the U.S. started the rate hike cycle, it raised the rates by a total of 4.25% in 2022, and the benchmark rate up to a range of 4.25% to 4.50%. The ECB maintained the same policy interest rate in the first half year. However, it started offloading bond purchases and discontinued bond purchases in the third quarter, which has since followed with multiple increases in policy interest rate. Meanwhile, Japan held the short term policy interest rate steady at -0.10% to support domestic economic recovery, and in order to keep the long term rate target (10year government bond yield) at approximately 0%, it continued to carry out government bonds purchasing plan. In China, due to the strict lockdown measures, private consumption has been seriously impacted, leading to a weakened real estate market. To ease

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Chairman

Chien-Hao Lin

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the effects of the pandemic on the economy, the People's Bank of China has reduced various key rates (such as market rates quoted for loans of different terms) several times.

In Taiwan, the conflict between Russia and Ukraine that started in February 2022 pushed prices of raw materials up significantly in the global market and added to the pressure of imported inflation in the country. Moreover, as consumer prices kept rising, domestic demand started to shrug off the effects of the pandemic, the labor market continued to improve and some economies started the rate hike cycle, the central bank thus decided to raise the discount rate, the accommodations with collateral rate, and the accommodations without collateral rate by 0.25% respectively in March 2022. The central bank subsequently raised the aforementioned rates by 0.125% respectively in June, September, and December. In terms of exchange rates, the US dollar kept rising since the Fed started the rate hike cycle, and the New Taiwan dollar remained weak against the US dollar. The depreciation of NTD was most apparent in the third quarter (6.4%), and in the fourth quarter, it depreciated first before rising. The New Taiwan dollar fell from 27.632 at the beginning of 2022 to 30.708 at the end of the same year, with a total depreciation of NT$3.076, or 11.13%, in 2022.

(2) Changes in the Bank's Organization

None.

(3) Implementation of Business Plans and Operating Strategies

A. Profitability:

The Bank carried out a capital increase of NT$2.865 billion via transferred earnings and issued stock and cash dividends of NT$0.37 per share and NT$0.10 per share, respectively, for the previous year (2021). Net income after tax for 2022 amounted to NT$10.122 billion (net income before tax was NT$12.040 billion).

B. Core Businesses:
a. NTD deposit business

The Bank strove to increase the scale of NTD demand deposit to reduce the capital costs and increase earnings. In 2022, the cumulative average balance of the Bank’s NTD demand deposits was NT$802.478 billion, an increase of NT$63.208 billion from NT$739.270 billion in 2021, a growth rate of 8.55%.

b. Corporate Banking
1) The Bank was recognized as an "Outstanding Bank" under the "Program to Encourage Loan Projects by Domestic Banks to SMEs (Group A)" organized by the Financial Supervisory Commission (FSC).
2) The Bank was recognized as an "Grade-A Bank" under the "Program to Encourage Loan Projects by Domestic Banks to Key Innovative Industries (Group A)" organized by the FSC.
3) The Bank won the "Outstanding Performance Award" and "Inclusive Finance Award" under the "Outstanding Financial Institutions for SMEs Project Loans" from the Central Bank.
4) The Bank won seven awards from the MOEA for the SMEs Credit Guarantee Financing Business Outstanding Financial Institutions, namely the Youth Entrepreneurship, Start-up and Micro Businesses Support Award, the Policy Facilitation Award, the Economic Relief and Stimulus Award, the Excellent Award for Collections for Guarantee Cases, the Collaboration with Corporates Award, the Excellent Credit-Granting Bank for the Program of Increasing Start-up Business Relief Financing, and the Managing Bank for the Program of Increasing Start-up Business Relief Financing.
5) The Bank received the "Best SME Service Award" from the Excellence Magazine under the category of non-financial holding for the "2022 Excellent Bank."
6) In the extension of SME loans, the Bank ranked No. 1 in Taiwan in the total guarantee amount of loans transferred for guarantees to the Small and Medium Enterprise Credit Guarantee Fund.
c. Foreign Exchange Business
In 2022, the Bank focused on the active promotion of expansion measures for different foreign exchange businesses. In 2022, the Bank's accumulated average balance of foreign currency deposits was NT$338.063 billion, representing an increase of NT$77.398 billion or a growth of 29.69% as compared with the average balance of NT$260.665 billion in 2021. In 2022, the Bank's accumulated average balance of foreign currency loans was NT$153.957 billion, representing an increase of NT$20.173 billion or a growth of 15.08% as compared with the average balance of NT$133.784 billion in 2021. In 2022, the Bank’s accumulated transaction amount of foreign exchange business was US$77.459 billion,

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representing an increase of US$8.396 billion or a growth of 12.16% as compared with US$69.063 billion in 2021.

d. Wealth Management
In 2022, the Bank focused on strengthening its wealth management business by vigorously expanding fee income from the insurance, fund, and foreign bond businesses, with boosting revenue and generating profit as the priority goal, and actively promoted the wealth-management focused projects. Fee income from the wealth management business amounted to approximately NT$1.916 billion in 2022, representing an increase of NT$0.266 billion or a growth of 16.12% as compared with NT$1.650 billion in 2021.
C. Innovative Products:
a. Continue to develop innovative products to provide more convenient services
1) Type 2 digital deposit account service is made available through cardless application to existing deposit account holders of the Bank.
2) Types 1, 2 and 3 foreign currency digital deposit account services are made available through online application.
3) A Wi-Fi security checker is made available through the mobile banking app. Cross border lock and late night lock are added to online banking and mobile banking.
4) Mobile income tax filing and Taiwan Pay enabled payment are made available through mobile banking.
5) Interbank ATM cardless withdrawal function is made available through the mobile banking app.
6) The icash Pay e-Payment Account Linking service was launched.
7) Robotic process automation (RPA) was introduced into the e-Loan platform to facilitate the online application process.
8) The smart helper iMoney was introduced to provide frequently used banking services (such as inquiry, transfer, and voice navigation) to customers.
9) Exchange rates, term/savings deposit rates, and branch information on the CWMoney app and Consumer Info on the TDCC e-Passbook app are made available for viewing to customers.
b. Develop products according to the social trend and provide diversified services to customers
1) Auction, smart stock selection and other services were implemented as an upgrade to the e-Trade app in order to improve the quality of mobile securities trading service provided by the Bank and meet the wealth management needs of different customer groups.
2) The Bank developed the intraday odd lot trading service in alignment with Taiwan Stock Exchange’s new system and customers’ trading needs. Since July 2022, the minimum handling fee for electronic odd lot trading has been reduced to NT$1 to increase the willingness of investors on a small budget to invest.
3) In line with the government's pro-natalist policy, the Bank organized consumption loans of "Gold Pregnancy" and "Luck Pregnancy," hoping to increase the fertility rates of nationals. As of the end of December 2022, the cumulative number of loan disbursements was 1,712, which amounted to NT$669 million.

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President

Chih-Chien Chang

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D. Expansion of the Scope of Channel Services:
a. To provide better and more comprehensive financial services, the reallocation of the Pu Chya Branch was completed and re-opened for business on July 25, 2022.
b. To align with the "Blueprint for Developing Taiwan into a Bilingual Nation by 2030" promulgated by the government, the Bank aims to provide a bilingual-friendly environment for financial services. As of the end of 2022, 50 branches of the Bank had been upgraded to bilingual branches and we intend to increase 25 more bilingual branches in 2023. It is estimated that all branches shall become bilingual by the end of 2025.
E. Information Operations and Information Security:
a. Improvement to system and service functions
- 1) Simplified core billing systems: Real-time inquiries of borrowers' accounts and guarantors' information on peripheral systems are provided to shorten data query time and improve branch efficiency.
- 2) Tiered storage equipment management: Storage disks were categorized and organized according to system requirements and transaction natures in order to reduce the cost of business data storage.
- 3) Simplified robot-assisted AML operation: RPA was implemented to quickly identify highly similar alerts and simplify the operating process for branch employees.
- 4) Rebuilding the CRM system: For the purpose of increasing customer loyalty and contribution, customer data was integrated and made available to salespersons for reference.
- 5) Building open API gateway and management platform: Time to market is reduced for new businesses or services for external parties and access and traffic are controlled and monitored.
b. Reinforce the defense mechanism for the information system
- 1) Duly implemented the Bank’s cyber security maintenance program, the effectiveness of which has been confirmed by a third-party organization, and reported to the Board of Directors on the achievement of cyber security targets on a quarterly basis.

2) Supervised the compliance in the operations of overseas branches, including the cyber defense program in Hong Kong, PART 500 in New York, and CPS 234 in Australia. The Bank has met all the local authorities’ requirements in 2022.
3) White-hat hackers (red team) exercises were organized to identify hidden IS security risks by simulating real hacker attacks. System management units were also brought in to make improvement and strengthen IS defense capability and response to network attacks on the Bank.
4) Carried out a total of 6 email social engineering drills in 2022 to strengthen employees' awareness of information security, as well as conducted DDoS attack and defense drills, which not only achieved the expected protection results, but also verified the effectiveness of the information security defense mechanism.
5) 3-hour information security awareness courses and 1-hour IoT information security training courses are provided to all branch employees in order to raise awareness of information security and increase knowledge of IoT security. Role specific training is also provided to IS personnel to enhance IS security skills.
c. Continuous promotion of the digital banking business
1) Actively promoted the Taiwan Pay acquiring businesses, endeavored to increase the rate of adopting the QR Code common payment service by established merchants, and organized marketing discount events to facilitate the penetration rate of e-payment.
2) Promoted the rights and benefits of digital deposit accounts, allowing the public to enjoy convenient financial services including online deposits, withdrawals, transfers, and consumption.
3) For digital marketing development and social media operations, the Bank designed a series of marketing activities to boost its share of voice on social media with TBB’s digital brand mascot, Hokii Penguin.
4) The Bank is recognized by the following domestic awards:
- ① The 19th National Brand Yushan Award of 2022
  - (a) Five-Heart Mobile Banking - Most Understanding Bank in Your Pocket: Best Product Category.
  - (b) i-Money - Most Intuitive Voice Technology: Best Product Category.
  - (c) Hokii Digital Account - Enjoy Your e-Life: Best Popular Brand Award/National First Prize.
  - (d) Network Security Sentinel - Safeguarding Your Account: Best Product Category/National First Prize.

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  - ② The Customer Se rvice Excellence Award (CSEA) of 2022

     - (a) Best Internet Service Enterprise Award.

     - (b) Best Smart Application System Award.

  - ③ 2021 Awards for Financial Institutions Promoting ACH and Enhanced Financial Collection Service (eFCS):

     - (a) eFCS Payment Processing Promotion Award.

F. Implementation of Legal Compliance and Anti-Money Laundering Operations:
a. Implementation of legal compliance and anti-money laundering in line with the regulations of the
competent authority
1) Due to the practical operations and changes in relevant laws and regulations, the Bank continues to amend its procedures for anti-money laundering and combatting the financing of terrorism.
2) The Bank performed its compliance risk assessment (CRA) and comprehensive Institutional Risk Assessment (IRA) for 2021 and reported to the FSC after being approved by the Board.
b. Holding of regular compliance and anti-money laundering training, and irregular online video conferences for domestic business units
1) The Bank organized the online training program "2022 Seminar for Anti-money Laundering and Combating the Financing of Terrorism" from June to August of 2022, and promoted the trend of preventing money laundering and combating terrorism, as well as shared relevant cases, with video conferencing on December 9, 2022.
2) A "Compliance Officer Seminar" was held in each of the first and second halves of 2022.
c. Strengthening of the monitoring mechanism for compliance follow-up cases
According to the "Legal Compliance Follow-up Cases Control System," the letters regarding relevant laws and regulations from external parties and changes in laws and regulations that the Bank shall comply are all included in the "Legal Compliance Follow-up Cases" for control. The Bank compiles the subsequent implementation of "Legal Compliance Follow-up Cases" replied by relevant departments on a monthly basis and reports to the Chief Compliance Officer, to ensure that all operations and business activities comply with relevant laws and regulations..
d. Reinforcing the control mechanism of the second line of defense
1) To reinforce the strength of audits, the Chief Compliance Officer (also the AML/CFT Dedicated Officer) led managers of business management departments and dedicated units to conduct on-site visits and random tests for legal compliance and anti-money laundering on selected domestic branches with a higher number of deficiencies found during the internal and external audit in 2022.
2) Meetings are held for "major deficiencies and outstanding improvement from previous inspections". Any vulnerability identified will be corrected immediately through the feedback mechanism. Implementation of improvement measures will be verified to effectively reduce deficiencies.
e. Engaged CPAs to carry out the project audits for anti-money laundering and combatting the financing of terrorism for 2021 in accordance with the "Implementation Rules of Internal Audit and Internal Control System of Financial Holding Companies and Banking Industries."
G. Enhance Risk Control and Improve Assets Quality:
a. The Bank completed the analysis of risks and opportunities for Climate-Related Financial Disclosure (TCFD) in 2022, and has disclosed TCFD information in the Bank’s Sustainability Report.
b. An internal credit rating system, Credit Card Review, was implemented to strengthen the Bank’s capability in credit risk management.
c. Plans are made for Basel III capital requirements.
d. For the purpose of complying with the competent authority's requirements and simplifying the stress scenario setting process for market risk, the Bank has established a clear process for constructing stress scenarios for market risk and added indicators for measuring interest rate risk in response to retirement of LIBOR.
e. Performance evaluation criteria such as "return on risk-weighted assets", "eligible collaterals", and "average credit risk weights and credit risk-weighted assets" were used to guide the business units to modify lending structures and reduce risk-weighted assets in order to improve the Bank's financial structure.

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f. As the FSC amended the qualitative and quantitative indicators for IRRBB, the Bank implemented the module related to "IRRBB quantitative indicator calculation" in its ALM system to improve its risk control capabilities.
H. ESG Sustainable Development:
a. Strengthen corporate governance and pursue sustainable development
- 1) The Bank has long strived to enhance its corporate governance and ranked in the "Top 6%-20% of the Listed Companies Group" in the 2021 Corporate Governance Evaluation held by the Taiwan Stock Exchange.
- 2) We actively increased our communication channels for domestic and overseas investors, and an online investor conference was respectively held on March 24, 2022; May 30, 2022; and September 8, 2022. In addition, each investor has immediate access to information on the Market Observation Post System (MOPS), and can also obtain the same information simultaneously on the Bank’s official website.
- 3) The 2021 Sustainability Report has been verified by an external third party based on the AA1000 Assurance Standard TYPE1 to comply with the Core Options of the GRI Standards, and obtained the Certification of Moderate Level of Assurance. In addition, the Report has passed two stages of verification by the British Standards Institution (BSI) for 7 consecutive years, and an Independent Assurance Opinion Statement was issued to the Bank by BSI.
- 4) The "Climate-Related Financial Disclosure (TCFD) Report" was released for the first time in 2022, which was verified by the British Standards Institution (BSI) and awarded the highest level of certification - "Level-5: Excellence".
- 5) The Bank has officially signed to join the Equator Principles Association and became one of the global Equator Principles member banks.

6) The Bank received the Gold Award in the financial and insurance group of corporate sustainability report division under the 15th TCSA Taiwan Corporate Sustainability Awards of 2022 organized by the Taiwan Institute for Sustainable Energy.
7) The Bank won the Social Empowerment Award of the Asia Responsible Enterprise Awards (AREA). This helped increase the Bank's visibility and our ESG corporate image.
b. Continual implementation of senior caring policy, donations to vulnerable groups, and active participation in public benefit affairs
1) The Bank continued the sponsorship of the Senior Learning Centers to improve the quality of life and care for the disadvantaged elderly in the community. As of the end of 2022, we have set up 20 Senior Learning Centers across Taiwan, and the cumulative sponsorship has amounted to NT$20.24 million. The cumulative number of beneficiaries is more than 280,000 per year.
2) The Bank continued to promote the elder care trust and won the Outstanding Award of "Trust Industry Promoting Trust 2.0 Project Evaluation Phase 1 - Elder Care Trust Award", as well as received the two Excellence Awards, namely Urban Renewal Trust Innovation Award and Best Innovative Trust Award, from the 2nd Trust Award of 2022 hosted by the Commercial Times.
c. Combining environmental sustainability with the core business to promote green financial products
1) Preferential financing terms are provided to encourage individual customers to purchase renewable energy powered equipment, green building label properties, and energy saving label appliances, so as to reduce carbon emissions and energy consumption. A total of NT$39.76 million of loans were approved in 2022.
2) By injecting funds into environmental protection and green energy related industries and SMEs, and providing upgrade & transformation counseling, sustainable financing and other one-stop services, the Bank guides corporate customers to implement ESG sustainability. A total of 899 green energy loans were approved in 2022.
3) As part of its support for urban renewal and sustainable lifestyle, TBB provides the public with onestop services, including case-by-case advice, guidance, project financing and trust management. A total of NT$68.699 billion of urban renewal loans were approved in 2022.
4) The Bank launched one ESG concept fund in 2022.

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d. Fulfilling responsibility for environmental protection and continued energy conservation and carbon emission reduction efforts
1) The Environmental Protection Administration of the Executive Yuan and the Department of Environment Protection of the Taipei City Government cited the Bank 11 years in a row for outstanding performance in green procurement.
2) The head office building was awarded the certificate for ISO50001 & ISO14001 Energy Management System.
3) The Bank won the "2022 Taipei City Zero Carbon Benchmarking Award" under the Industrial and Commercial Industry Group B Model Award.
4) The Bank had formulated its "Environmental Sustainability Management Handbook" and "Measures for Water and Electricity Conservation" with scheduled follow-up on the status of water and electricity conservation by different units. Various energy conservation improvement programs were vigorously implemented in order to enhance the energy efficiency of equipment and save on electricity costs.

(4) Budget Implementation

A. The annual average balance of deposits was NT$1,739.721 billion, for an achievement rate of 100.79%.
B. The annual average balance of outstanding loans was NT$1,349.760 billion, for an achievement rate of 101.73%.
C. The foreign exchange transactions amounted to US$77.459 billion, for an achievement rate of 110.66%.
D. The securities brokerage business amounted to NT$493.215 billion, for an achievement rate of 41.14%.

A. Net income for 2022 amounted to NT$28.529 billion; bad debt expense, commitment, and provision for guarantee liabilities totaled NT$2.386 billion; operating expenses were NT$14.103 billion; before-tax net income from continuing operations was NT$12.040 billion; net profit after tax was NT$10.122 billion; return on assets ratio (after-tax) amounted to 0.49%; return on equity ratio (after-tax) amounted to 9.84%; net profit margin (after-tax) was 35.48%, and earnings per share (after-tax) was NT$1.26.
B. Net income before taxes (excluding provisions) in 2022 amounted to NT$14.426 billion, an increase of NT$3.436 billion over 2021. NT$2.386 billion was allocated as an allowance for bad debts in order to strengthen risk appetite. Before-tax net profit for 2022 amounted to NT$12.040 billion, an increase of NT$6.238 billion over 2021, primarily due to the increase in deposits, the net interest income, the net service fee revenue and the net revenue of financial products.
C. The non-performing loan (NPL) ratio at the end of 2022 stood at 0.20%, a decrease of 0.08% compared with the end of 2021. The bad-debt coverage ratio was 653.28%, an increase of 230.59% over the end of 2021.

(6) Research and Development

A. Establishment of an Exclusive Unit for Industry Research
a. A total of 120 industry analysis reports were written and published in the Bank's E-Library in 2022 for colleagues to peruse.
b. Elite professionals from industry, government, and academia are invited to speak on an occasional basis to help the Bank's employees understand the latest trends in industrial development.
B. Encouragement of Innovation and Professionalism in Line with Business Development Needs
Business lectures are held on a scheduled basis and a wide variety of digital learning courses are offered to encourage employees to engage in further on-the-job studies and absorb new knowledge that will strengthen their competitiveness and enhance their professional know-how.

2. Business Plan for 2023

(1) Operating Directions

A. Optimize asset quality and diversify profits
a. Strengthen credit quality and loan delay management and improve collection performance to reduce new nonperforming loans.
b. Develop insights into global developments, respond quickly through risk management, and make dynamic asset allocation to enhance capital efficiency.

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c. Increase the percentage of demand deposits and attract cash flows of customers to boost fee income and adjust the revenue structure.
d. Develop closer relationships with core customers and expand the customer base, increase customer added value through the all-in-one approach, and create diversified revenue sources.
B. Inspect value system and improve operating efficiency
a. Pay equal attention to development of talent, technology, and governance while improving response ability and securing a strong driver of strategic development.
b. Follow a customer centric approach, take advantage of digital technologies, and value innovative financial services to enhance operating capabilities.
c. Raise risk management awareness, ensure compliance and refine internal control, and improve IT security to lay a solid foundation for the Bank.
C. Build up organizational resilience and pursue mutually beneficial sustainability
a. Understand environmental and social changes, extend influence as a bank, and continue to help customers with low carbon transformation and net-zero emissions.
b. Grasp the risks and opportunities closely, build up digital trust, enhance operating resilience, and pursue mutually beneficial sustainability for business.

(2) Operating Policies

In the face of uncertain challenges such as supply chain reorganization, geopolitical risks, succession of personnel and ever-changing international financial situation, the Bank always adheres to its core value of "SME Specialized Bank" and utilize the four aspects on its strategy map with a bottom-up approach. In line with the aspects of learning & growth, internal procedures, customers, and finance, the Bank will establish a strategy structure with specified directions and centralized resources, and review the internal and external value chains to incorporate sustainable thinking into daily operations and procedures, continuing to optimize through digital and green transformation to provide customers with premium services. The Bank will work to realize our business vision, become the bank of choice for SMEs by providing complete financial services to SMEs, business owners, major shareholders, and all employees, and become a high-quality bank with allaround financial services, thereby achieving the goal of sustainable development.

A. Learning & Growth
a. Optimize human capital: Transformation of human capital is key to the transformation of the Bank and sustainable operations. Professional training is provided for all employees on an ongoing basis and recruitment takes place across different fields through various channels. There is an emphasis on career development for employees as well as an effort to develop promising potential. There is also an emphasis on employee benefits and fair and reasonable pay. A safe and comfortable work environment is created to cultivate and retain talent.
b. Augmented IT performance: Strong IT capabilities are essential to supporting and protecting the rights of the Bank and its customers. Overall performance is augmented through optimization of IT and digital equipment. Cyber security defense and monitoring capabilities are also strengthened. There is a constant effort to find a balance between digital transformation and cyber security and to implement resilient infrastructures.
c. Building organizational capital: Learning is the cornerstone of sustainable development. A corporate culture of learning and sharing encourages employees to engage in internal innovation and reach their full potential. A comprehensive accountability mechanism is put in place to encourage a culture of accountability and teamwork. All employees work together toward sustainable development.

B. Internal Procedures

a. Deepened business management: Set goals and follow through with execution in response to significant changes in the internal/external environment. Construct a flexible management framework, develop knowledge management and improve response, and continue to formulate best practice processes for better operating performance and value. Respond to emerging risks and climate change risk, strengthen risk management capabilities, and develop a risk management framework for better sustainable operations.

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b. Precise CRM: Respond to customer needs, take advantage of digital technology to integrate data, expand the customer base with precision, know the right approach to customer communication, continue to observe and act with speed, validate ideas for optimizing products and services, improve service efficiency, and increase customer loyalty and product stickiness.
c. Develop innovative management: Apply innovative thinking to analyze value chain activities, strengthen core advantages through cross industry alliances, utilize digital capabilities, and refine product and service models. Pursue energy efficiency and green transition, place emphasis on digital trust, create a new financial environment defined by sustainability, extend influence as a financial intermediary, and increase the value of products and services to the environment and society.
d. Implement ESG governance: Adhere to compliance and build on trust and integrity, follow sustainable governance, and enforce supervisory practices in business and management activities. Pay attention to AML/CFT, whistleblower protection and consumer rights. Follow sound governance practice for more stable and transparent operation. Optimize internal/external value chain in terms of sustainability, and increase the Bank's value and competitiveness in the long run.

C. Customers

a. Optimize products and services: Monitor customer needs in different areas, develop new business models, focus on customer experience, increase customer satisfaction, and conduct precision marketing on target audience. Combine core products to increase penetration and provide one-stop integrated service solutions. Develop innovative and competitive sustainable products, increase added value for SME customers, and resolve environmental and social issues to increase shared value from products and services.
b. O2O integrated channels: Extend the reach of virtual channel services, gradually expand and complete the product line, build customer trust in O2O integration, and provide one-stop quality financial services. Combine customer views from all channels, fully present each aspect of customers and various service channels, analyze interactive customer experience and value, and increase value of each channel.
c. Focus on the role as a specialized bank: Clearly define the Bank as a SME specialized bank, reinforce the core business service for SMEs, utilize product and marketing capabilities, and shape a brand image as a professional bank while expanding the customer base. Work with stakeholders to support sustainability and extend influence as a member of the community to help customers practice environmental conservation and transformation.

D. Finance

a. Optimize asset quality and diversify profits: Control asset quality, strengthen risk management and improve asset allocation to expand the scale of operations; widen the deposit-loan interest rate spread and improve the efficiency of capital utilization; increase the added value of customers with All-inone approach to create diverse sources of income; increase the proportion of revenue and profit from overseas branches to strengthen profitability.
b. Enhance core capital and develop sustainable values: Comply with the monitoring requirements of the competent authority regarding authorized capital; ensure a healthy capital structure and the goal of optimized resource allocation; strengthen the risk appetite to expand the growth of operating income; bring goodness to society while pursuing profitable growth to maximize shareholders' value.

(3) Business Targets

To give equal weight to the protection of shareholder interests, improve the capital structure, and enhance asset quality, the Bank has set the following targets in consideration of the Directorate General of Budget, Accounting and Statistics for 2023.

A. Annual average deposit balance: NT$1,810.630 billion.
B. Annual average balance of loans outstanding: NT$1,420.287 billion.
C. Total foreign exchange transactions: US$80.864 billion.

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3. Future Development Strategies

(1) Reform the corporate culture, recognize changes and advance with the times, cultivate a culture of accountability, and enhance the execution ability.
(2) Strengthen the core SMEs business, provide one-stop services based on customers’ needs, attach importance of passing on experiences to gain customers’ trust, and become SMEs’ bank of choice in Taiwan.
(3) Diversify profit sources, increase profit momentum from multiple aspects to enhance capital, conduct cash capital increase in a timely manner, strengthen the capital structure, and develop future development potential.
(4) Develop digital finance in alignment with trends, promote digital transformation, continue to reinforce digital financial services and upgrade information systems, optimize internal processes, and support the development of various business services.
(5) Shape a corporate culture with compliance as the top priority, strengthen risk control to improve asset quality, and reinforce the three lines of defense for internal control.
(6) Continue to inspect the manpower structure, cultivate critical talents, optimize the human resource structure, accelerate successor training, and shape a corporate culture of "learning and sharing" through education and training to increase employees’ loyalty.
(7) Adhere to the ESG concept, strengthen corporate governance, care for employees, take environmental sustainability into account, assist customers in low-carbon transformation, protect customers’ rights and interests, and realize public welfare, to achieve sustainable development.

and the Overall Economy

(1) External Competitive Environment

A. As COVID-19 is now considered as a flu worldwide, disease control measures are being lifted gradually. However, as the global economy continues to struggle, the Bank works with the government's relief loans, "Three Major Programs for Investing in Taiwan" and "6 Core Strategic Industries Promotion Program” to satisfying the funding needs of enterprises affected by the pandemic in a timely fashion. The Bank also helps domestic businesses complete upgrade or transformation and increase resistance to environmental effects. Furthermore, the Bank supports Taiwanese businesses to return to Taiwan to invest, and join businesses in driving economic growth in Taiwan during the post-pandemic era of co-existing with viruses.
B. The Russia-Ukraine war has cast a shadow on global economic growth. Russia is a major supplier of oil and natural gas while Ukraine is a major supplier of wheat and corn. Shortage of these goods knocked supply and demand out of balance. Rising prices accelerated inflation and affected economies worldwide, which had lasting effects on overall spending and economic activities. Investors turned more conservative and cautious in their investment strategies in the financial markets. The Bank will closely watch risk changes in the financial markets and bring in diversified products as appropriate in response to market trends. The Bank will also disclose investment risks before sale in order to safeguard the rights of its customers.

(2) Regulatory Environment

A. For the purpose of promoting fair and reasonable treatment of customers and prevention of financial exploitation of elderly customers to help banks better protect elderly customers in their consumer rights, the Bankers Association established the Self Regulatory Guidelines for Fair Treatment of Elderly Customers, which was filed with the FSC under the Letter Jin-Guan-Yin-He No.1110133182 dated March 23, 2022. The self regulatory guidelines provide rules on collection of personal information, performance of KYC, assessment of suitability of product to be sold, and background questions when conducting business with elderly customers. Related control and response measures were put in place by the Bank.
B. In order to pursue the goal of providing secure, convenient and uninterrupted financial services, the Bank followed through the Financial Cybersecurity Action Plan launched by the FSC in 2020, and fulfilled the key performance targets, such as appointment of Chief Information Security Officer, introduction of international cybersecurity standards, organization of cyber attack defensing exercises, and establishment of financial cybersecurity incident response system, in 2022. The Bank will continue to implement and strengthen cybersecurity protection in accordance with the Financial Cybersecurity Action Plan 2.0 released on December 27, 2022.

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(3) Overall Operating Environment

Inflation is expected to remain high worldwide in 2023. Slowing growth in major economies combined with geopolitical tension and a constant string of COVID variants can threaten the stability of international financial markets and increase investment and lending risks for banks around the world. Fortunately, the rate hike cycle started by the Fed in March 2022 may improve the operating environment of the banking sector. Moreover, delayed reaction to rate hike policies of the U.S. and Taiwan in 2022 also helps the banking industry further increase interest spreads and profits in 2023. Meanwhile, as countries lift more COVID related border control measures, banks can pick up pace in overseas market expansion again; therefore, the volume of overseas lending is expected to show a clear jump in 2023. Regarding the domestic lending market, the government continues to offer multiple policies in 2023 to encourage banks to provide financing to support industrial development. In addition, new construction of hi-tech factories such as IC, semiconductors, optoelectronics, and batteries continues, giving support for the growth in the domestic lending market in 2023.

5. Results of Latest Credit Rating

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Ratings
Date of Rating Rating Institution Outlook
Long-term Credit Short-term Credit
2023.1.16 Taiwan Ratings twAA- twA-1+ Stable
2023.1.16 Standard & Poor's BBB+ A-2 Stable
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On January 25, 2022, Taiwan Business Bank won the National Brand Yushan Award, and Chairman Chien-Hao Lin (second from the left in the third row) received the Award on behalf of the Bank from President Ing-Wen Tsai.

II

Bank Profile

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1. Establishment and History

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

Following the restoration of Taiwan to China on October 25, 1945, these two savings institutions, along with two others, were taken over by the Taiwan Provincial Government. On September 1, 1946, the four were combined and reorganized into "Taiwan Mutual Financial Co." On May 31, 1947, this new financial institution absorbed Tokiwa Real Estate Co., bringing its capitalization to $10 million Old Taiwan Dollars. Its name was changed to "Taiwan Provincial Loans and Savings Co." on June 1, 1947, as the original name was under the Japanese system, and again to "Taiwan Mutual Loans and Savings Co." in January 1948 as the scope of business was similar to the nature of saving institutions.

The government moved to promote Taiwan's economic development and boost the growth of small and medium enterprises (SMEs) in 1975 by revising the Banking Act and writing in an additional provision for a specialized SME bank. In line with the government policy, Taiwan Mutual Loans and Savings Co. was reorganized into "Medium Business Bank of Taiwan" (later to be known as Taiwan Business Bank, or TBB) on July 1, 1976, whereupon it became a specialized bank charged with the provision of financial assistance and guidance to SMEs. It has been cultivating the SME financial services field now for more than 46 years. Later, to cope with the liberalized and internationalized financial environment, and to conform to the government's vision of promoting Taiwan to become Asia-Pacific Regional Operations Center, TBB was transformed into a private bank on January 22, 1998, and officially entered into a whole new era.

At the time of TBB's reorganization in 1976, it had a capitalization of NT$500 million, 50 branches, and 58 subbranches. To build up the Bank's operating capital and strengthen its operating structure, repeated capital increases have brought total capitalization to NT$80,296.94 million today. The Bank's structural framework has also been readjusted constantly in response to changes in the financial environment and in business needs. The Auditing Department and Secretarial Department were set up under the Board of Directors in the headquarters. Apart from the Compliance Department, TBB's management units include 20 departments under three major business groups, one development center, and two management centers. The Bank has 125 domestic branches (including the Banking Department) and the Offshore Banking Branch (OBU), and also operates 8 overseas branches, including Hong Kong Branch, Los Angeles Branch & New York Branch in the U.S., Sydney Branch & Brisbane Branch in Australia, Shanghai Branch, Wuhan Branch, and Tokyo Branch, along with the Yangon Representative Office in Myanmar. Regional Operation Centers were set up to handle business development and supervision, centralized business management, operational services, and other business support functions in order to enhance business promotion capability and reinforce asset quality control. In addition, Domestic Processing Centers were established to upgrade operating performance through the centralized handling of domestic outward remittances, bills for collection and bills withdrawal. Meanwhile, the Bank has established the Customer Service Center dedicated to handling customer consultation services for the entire bank.

2. Bank M&A, investment in related enterprises, and reorganization in 2022 and to the end of February 2023

There are 5 enterprises reinvested by the Bank in 100% ownership—TBB International Leasing Co., Ltd, TBB (Cambodia) Microfinance Institution PLC, TBB Venture Capital Co., Ltd., TBB Consulting Co., Ltd., and Taiwan Business Bank International Leasing Co., Ltd. reinvested in 100% ownership by TBB International Leasing Co., Ltd.

4. Major exchanges or transfers of shares by directors and others required to report shareholding under Paragraph 3, Article 25 of the Banking Act in 2022 and to the end of February 2023: None.

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5. Major changes in operating rights, operating methods or business content, and other major events of sufficient importance to affect shareholders' rights in 2022 and to the end of February 2023: None.

III Corporate Governance Report

1. Organization

2. Directors and Management Team

3. Operations of Corporate Governance

4. CPA Professional Fees

5. Information on Changing CPAs

6. The Bank's chairman, president, or any manager in charge of finance or accounting matters who has, in the most recent year, held a position at the accounting firm of its CPA or at an affiliated enterprise

Shareholders Conform to the Requirements under Article 11 of the Regulations Governing the Same Person or Same Concerned Party Holding the Issued Shares with Voting Rights over a Particular Ratio of a Bank

8. Information Disclosing the Relationship among Top Ten Shareholders in the Relationship of Related Parties or Spouses, Relatives within the Second Degree of Kinship

9. Shareholding in the Same Investee Company of a Business Directly or Indirectly Controlled and Managed by Directors, President, Executive Vice Presidents, and SVP & GM of Departments and Branches, and the Consolidated Shareholding Ratio

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1. Organization
(1) Organization Chart
Compliance Affairs Compliance Dept.人人人人人
人人人人人Human III
Resources Dept.
Administration AdministrationManagement人人人
Management Center Dept.
人人人
Accounting Dept.
Information Security人人人人人
Dept.
Personal Information
Audit Committee Protection Management Committee Risk Management人人人人人Dept.
Remuneration
Committee Management Center 人人人人人人 Risk Loan Supervision人人人人人Dept.
Sustainable Development
Committee Credit Checking &
Industrial/Economic 人人人
Digital Transformation Committee Research Dept.
Overdue Loan &人人人人人Control Dept.
Risk Management
Committee
Development Dept.Business Processing Center 人人人人人 Domestic 19
Chief Compliance Development Center 人人人人人人 Operating Digital Banking Dept. Customer Service Center Do Banking Dept.mestic Branches
Officer
SharehoMeetinglders' DirectorsBoard of Chairman of the Board President Technology Dept.Information
Executive Vice Regional Operation
President Dept.
人人人人人人人人人人
Treasury Group Treasury Dept.
ALM CommitteeBusiness Corporate Bankin人人人Dept. g
ManagementCommittee 人人人人人人人Banking Group Corporate Banking BranchOffshore
International
AML and CFT Banking Dept.
Committee Overseas Branches
Personal
Banking Dept. 人人人人人
Credit Card Dept.人人人人
NPL ManaLoan Supervision Committeegement Committee 人人人Banking GroupPe 人人人人 rsonal Wealth Mana 人人人人人 Dept.gement
Trust Asset Evaluation Committee
Personnel Evaluation Committee Insurance Agent 人人人人人人Dept.
IT Planning & Development
Committee
Cyber Security Management Securities Dept.人人人 Secu r ities Branches
Committee
Trust Dept.人人人
Secretarial Dept.人人人人人人
Chief Auditor人人人人人人人人人Auditing Dept.
February 28, 2023
REPORT CORPORATE GOVERNANCE
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(2) Operations of Major TBB Departments

A. Corporate Banking Group
This unit handles financial services for corporate customers, including business planning, promotion, and improvement in respect to loan products, forex products, and corporate financial planning products. It understands customers' needs and proactively carries out marketing, and is responsible for development and service in regard to the Group's products and customers as well as for improvement of the Bank's asset quality, operating income, and profit. The Corporate Banking Dept. and International Banking Dept. operate under the Corporate Banking Group.
B. Personal Banking Group
This unit handles planning, promotion, and improvement of the Bank's personal loan products, financial planning for customers, and marketing services for financial planning products. It carries out proactive marketing based on an understanding of customers' needs, is responsible for development and service in regard to the Group's products and customers, and maintains improvement of the Bank's asset quality, operating income, and profit. The Personal Banking Dept., Credit Card Dept., Wealth Management Dept., Insurance Agent Dept., Securities Dept, and Trust Dept. operate under the Personal Banking Group.
C. Treasury Group
The Treasury Group handles planning, promotion, and improvement of the Bank's financial businesses, and is responsible for development and service in regard to the Group's products and customers as well as for maintaining improvement of the Bank's asset quality, operating income, and profit. The Treasury Dept. operates under the Treasury Group.
D. Risk Management Center

The Risk Management Center handles risk control, maintenance of the quality of the Bank's loan assets, and investigation and review of loan cases and products, economic and financial research and industry investigation, collection of overdue loans and information security matters. The Loan Supervision Dept., Credit Checking & Industrial/Economic Research Dept., Overdue Loan & Control Dept., Risk Management Dept. and Information Security Dept. operate under the Risk Management Center.
E. Operating Development Center
The Operating Development Center is charged with bank-wide management and planning for performance analysis, operational management, information operations and digital banking business, provision of full and necessary support for business development, and simplification of the planning process, so as to achieve operational centralization and upgrade operational efficiency. The Center also handles planning and implementation of bank-wide operating strategy formulation and public relations. The Business Development Dept., Digital Banking Dept., and Information Technology Dept. operate under the Center.

F. Administration Management Center

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

G. Compliance Affairs

Compliance Dept. handles the planning, management, and implementation of legal compliance systems and AML & CFT related matters. Compliance Dept. operate under the Compliance Affairs.

III

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2. Directors and Management Team

(1) Board of Directors

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Chairman Managing Director Managing Director Managing Directorr Managing Director
(President) (Independent Director)
Chien-Hao Lin Chih-Chien Chang Xin-Wu Lin Chun-Hsien Yeh Hsin-Tzu Hu
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Director Director Director Director Director Director
(Independent Director) (Independent Director) (Independent Director)
Jin-Long Liu Yung-Cheng Chuang Chiou-Mien Lin Hung-Sheng Yu Tzu-Hao Tsai Wen-Hsiang Ma
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A. Board of Directors

A. Board of Directors	A. Board of Directors	A. Board of Directors	A. Board of Directors	A. Board of Directors	A. Board of Directors	A. Board of Directors	A. Board of Directors	A. Board of Directors	A. Board of Directors	A. Board of Directors	A. Board of Directors	A. Board of Directors	A. Board of Directors	A. Board of Directors	A. Board of Directors	A. Board of Directors	A. Board of Directors	A. Board of Directors	A. Board of Directors
December 31, 2022
Title	Nationality	Name	Gender / Age	Date Elected	Tenure (16th)	Initial Inauguration Date	Shareholding On Inauguration		Current Shareholding		Shareholding By Self, Spouse & Minor Children		Shareholding Under Other’s Title		Major Experience & Education	Concurrent Positions at the Bank and Other	Being the Spouse or Relative within the Second Degree of Kinship of Other Managers, Directors, or Supervisors
							Shares	%	Shares	%	Shares	%	Shares	%		Companies	Title	Name	Relationship
Chairman	R.O.C.	Chien-Hao Lin (Ministry of Finance Representative) (Note 1)	Male / 61~70 years old	Jul. 20, 2021	Jul. 20, 2021 to Jul. 19, 2024	Apr. 27, 2021	155,514,786	2.08	166,751,972	2.08	0	0	0	0	Education: B.S., Laws, National Taiwan University Experience: Director and President, First Financial Holding; EVP and Head of Strategy Planning Dept., First Financial Holding; Chief Auditor, First Financial Holding; GM of HK Branch and Shih-Mao Branch, First Bank; SVP and Head of Business Planning & Admin. Division, First Bank	Supervisor, Taiwan Asset Management Corporation	None	None	None
Managing Director & President	R.O.C.	Chih-Chien Chang (Ministry of Finance Representative)	Male / 61~70 years old	Jul. 20, 2021	Jul. 20, 2021 to Jul. 19, 2024	Mar. 4, 2020	155,514,786	2.08	166,751,972	2.08	239,250	0	0	0	Education: MBA, National Taiwan University of Science and Technology Experience: Acting Chairman, Taiwan Business Bank; Acting President, Taiwan Business Bank; Executive Vice President, Taiwan Business Bank; SVP & GM, Loan Supervision Dept., Taiwan Business Bank; SVP & GM, Credit Investigation Dept., Taiwan Business Bank; SVP & GM, Wu Ku Branch, Sung Nan Branch, Taiwan Business Bank; Chairman, Taiwan Business Bank Insurance Agency Co., Ltd.; Chairman, Taiwan Business Bank Property Insurance Agency Co., Ltd.; Director, Sunsino Development Associate Inc.	President, Taiwan Business Bank; Director, Taiwan Small & Medium Enterprise Counseling Foundation; Director, Small & Medium Enterprise Credit Guarantee Fund of Taiwan	None	None	None
Managing Director	R.O.C.	Hsin-Tzu Hu (Bank of Taiwan Representative)	Female / 61~70 years old	Feb. 9, 2022	Jul. 20, 2021 to Jul. 19, 2024	Feb. 9, 2022	1,214,173,562	16.21	1,301,907,315	16.21	0	0	0	0	Education: Master, Tamkang University Department of Management Sciences Experience: Director, Taiwan Fire & Marine Insurance Co.Ltd.; Manager, Bank of Taiwan Wanhua Branch; Manager, Bank of Taiwan Renai Branch; Manager, Bank of Taiwan Zhonghe Branch; Manager, Bank of Taiwan Guanqian Branch	Manager, Department of Planning, Bank of Taiwan; Director, China Tea Associates Co., Ltd.	None	None	None

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22
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Being the Spouse or
Shareholding On Shareholding By Shareholding Under Concurrent Relative within the Second
Title Nationality Name Gender / Date Elected Tenure (16th) Inauguration Initial Inauguration Current Shareholding Self, Spouse & Minor Children Other’s Title Major Experience & Education at the Bank and Positions Degree of Kinship of Other Managers, Directors, or
Age Date Other Supervisors
Companies
Shares % Shares % Shares % Shares % Title Name Relationship
Education: Associate Dean,
Ph.D., Department of Economics, National Taiwan University Taiwan Institute of
Experience: Economic Research;
15th Managing Director (Independent) , Taiwan Business Bank, Researcher,
Male Ltd;.Director (Independent), Land Bank of Taiwan Commissioner; Research Division
Managing Director (Independent R.O.C. Xin-Wu Lin 51~60 / Jul. 20, 2021 Jul. 20, 2021to Jun. 29,2018 0 0 0 0 0 0 0 0 the 6th term of the Taiwan Fair Trade Commission; Chief Antitrust Compliance Officer, AU Optronics Corporation; Full-time Ⅲ Economic Research; , Taiwan Institute of None None None
Director) Jul. 19, 2024 Researcher & Director, Research Division Ⅲ , Taiwan Institute of Independent
years old
Economic Research; Full-time Associate Researcher & Director, Director, FitTech Co.,
Research Division Ⅲ , Taiwan Institute of Economic Research Ltd.; Independent
Director, Daxin
Materials Corp. als
Corp.
Education:
Ph.D. in Economics, University of Rochester
Experience:
Chun-Hsien Deputy Dean, Chung-Hua Institution for Economic Research;
Managing Director R.O.C. Executive Yuan Yeh (National Development Fund, years old51~60 Male/ Jul. 20, 2021 Jul. 20, 2021Jul. 19, 2024to Jul. 20, 2021 439,330,543 5.87 471,075,689 5.87 0 0 0 0 Adjunct Professor, Department of Economics, NTU; Jointly Appointed Professor, Department of Economics, NCU; Jointly Appointed Professor, Graduate Institute of Industrial Economics, NCU; Adjunct Research Fellow, Institute of Economics, Dean, Chung-Hua Institution for Economic Research None None None
Representative) Academia Sinica Visiting Assistant; Professor, Department
of Economics, SMU, Singapore; Associate Professor, School
of Economics, NCU; Assistant Research Fellow, Institute of
Economics, Academia Sinica
Education:
Director R.O.C. Tung-Fu Lin of Finance (Ministry 51~60 Male/ Nov. 1, 2022 Jul. 20, 2021to Nov. 1, 2022 155,514,786 2.08 166,751,972 2.08 0 0 0 0 Master, Department of Public Finance, National Chengchi UniversityExperience: Manager, National Treasury Administration, None None None
Jul. 19, 2024 Manager, National Treasury Administration, Ministry of Finance;
Representative) years old Ministry of Finance
Deputy Manager & Manager, National Treasury Administration,
Ministry of Finance
Education:
PhD in Economics, Texas A&M University
Experience:
Professor, Department of Financial Operations, National
Kaohsiung University of Science and Technology; Director,
Department of Financial Operations, Kaohsiung University
of Science and Technology; Professor, Department of Risk
Management & Insurance, National Kaohsiung University
Director R.O.C. Ho-Chyuan Chen (Bank of Taiwan Representative) 51~60 Male/ Jul. 19, 2022 Jul. 20, 2021Jul. 19, 2024to Jul. 19, 2022 1,214,173,562 16.21 1,301,907,315 16.21 0 0 0 0 of Science and Technology; Acting Director, Department of Financial Management, Kaohsiung University of Science and Technology; Professor, Department of Economics, National Professor, Department Of Economics, CCU None None None
years old Chung Cheng University; Director, Department of Economics,
National Chung Cheng University; Director, Department of
Economics, National Chung Cheng University; Director, Business
Administration Industry-University Bridging Center, School
of Management, National Chung Cheng University; Director,
Center for Economic Strategies and Policy Evidence, School of
Management, National Chung Cheng University; Director, Hua
Nan Financial Holdings Co., Ltd.; Quarterly Editorial Committee,
Fair Trade Commission
Education:
M.S., Executive Master of Business Administration, Ling Tung
University
Director R.O.C. Hung-Sheng Yu (Ministry of Finance 51~60 Male/ Jul. 20, 2021 Jul. 20, 2021Jul. 19, 2024to (Note 2)Jul. 1,2013 155,514,786 2.08 166,751,972 2.08 27,917 0 0 0 Experience:13th & 15th Director, Taiwan Business Bank; 1th to 8th Member & Director & Managing Director, TBB Industry Union; Supervisor, Taiwan Federation of Financial Unions; 3th Member, Labor Chairman, TBB Industry Union None None None
Representative) years old
Dispute Arbitration Committee, Ministry of Labor; Member, Basic
Salary Review Committee, Ministry of Labor; Managing Director,
Taiwan Confederation of Trade Unions; Supervisor, Taiwan
Federation of Labor
Education: Associate Professor,
Department of
Tzu-Hao Tsai Male Jul. 20, 2021 Ph.D., Department of Finance, National Taiwan UniversityExperience: Quantitative Finance,
Director R.O.C. (Bank of Taiwan Representative) under 50/ Jul. 20, 2021 Jul. 19, 2024to Jan. 20,2020 1,214,173,562 16.21 1,301,907,315 16.21 0 0 0 0 15th Director, Taiwan Business Bank, Ltd; Independent Director, Jetbest Corporation;15th Director, Taiwan Business Bank; National Tsing Hua University None None None
Independent
Professor, Assistant Professor, Department of Quantitative
Director, Jetbest
Finance, National Tsing Hua University
Corporation
Education:
Bachelor, Department of Social Work, Shih Chien University
Experience:
8th Member & Director & Managing Director, TBB Industry 8th Member &
Wen-Hsiang Male Jul. 20, 2021 Union; 28th Member, Taiwan Federation Labor Union; 8th Director & Managing
Director R.O.C. Industry Union Ma (TBB under 50/ Jul. 19, 2022 Jul. 19, 2024to Jul. 19, 2022 4,026,193 0.05 4,519,356 0.05 292 0 0 0 Member & Director, TBB Industry Union; Member of the 40th Employee Welfare Committee, TBB; Member of the Personnel Director, TBB Industry Union; Bank None None None
Representative) Review Committee, TBB; Labor representative of the 6th labor- Clerk,TBB
management conference, TBB; 7th Member Representative &
Director, Taiwan Confederation of Trade Unions; Bank Clerk,
TBB
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III

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Note 1: If the position of Chairman and the President or an equivalent position (chief manager) are taken by the same person, or are spouses or are the first degree of kinship, describe the relevant information of reason, rationale, necessity, and response measures: No such matters. Note 2: Previous term of Director Hung-Sheng Yu: July 1, 2013 to July 30, 2014 (TBB Industry Union Representative)

B. Major Shareholders of Legal Person Shareholders

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December 31, 2022
Legal Person Shareholder Major Shareholders of Legal Person Shareholders
Ministry of Finance Government Agency
National Development Fund , Executive Yuan Government Agency
Bank of Taiwan Co., Ltd. Taiwan Financial Holding Co., Ltd. (100%)
TBB Industry Union Juridical Association
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C. Major Shareholders of Major Legal Person Shareholders of the Bank

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December 31, 2022	December 31, 2022
Legal Person	Major Shareholders of the Legal Person
Taiwan Financial Holdings Co., Ltd.	Ministry of Finance (100%)

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D. Professional Knowledge and Independence of Directors

December 31, 2022

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Qualifications Number of Other Public
Qualification and Experience Independence Companies Serving as an
Name Independent Director
Has five years or more of working experience as 1. Does not have a spouse or relative within the second degree of kinship who is
a bank manager or above and has professional also a TBB’s director.
qualifications in banking, business, legal affairs, 2. Is not an employee at TBB or any of its subsidiaries.
Chien-Hao Lin finance, accounting, etc. 3. Has not worked at TBB’s external audit institution or as a partner of the audit 0
institution.
4. Has not served as a member of the senior management of TBB's consulting firm.
Has five years or more of working experience as 1. Does not have a spouse or relative within the second degree of kinship who is
a bank manager or above and has professional also a TBB’s director.
Chih-Chien Chang qualifications in banking, business, finance, 2. Has not worked at TBB’s external audit institution or as a partner of the audit 0
accounting, etc. institution.
3. Has not served as a member of the senior management of TBB's consulting firm.
Has five years or more of working experience 1. Does not have a spouse or relative within the second degree of kinship who is
as a bank manager and has well-rounded also a TBB’s director.
Hsin-Tzu Hu professional qualifications in banking, business, 2. Is not an employee at TBB or any of its subsidiaries. 0
finance, etc. 3. Has not worked at TBB’s external audit institution or as a partner of the audit
institution.
4. Has not served as a member of the senior management of TBB's consulting firm.
Has served at the Taiwan Institute of Economic 1. Dose not or the spouse or relative within the second degree of kinship thereof
Research as Deputy Dean, Dean & Researcher, does not hold TBB’s shares by themselves or by nominee arrangement.
and is experienced in economic and industrial 2. Does not have a spouse or relative within the second degree of kinship with
research; has served as an independent other directors.
director of a bank for more than five years, 3. Has not or the spouse or relative within the second degree of kinship thereof has
and an independent director of other publicly not served as a director, supervisor, or employee at TBB or its affiliates.
Xin-Wu Lin listed companies; a member of TBB's Audit 4. Has not served at a company with specific relations with TBB (under Article 3, 2
Committee, Remuneration Committee, paragraph 1, subparagraph 5 to 8 of the Regulations Governing the Appointment
Sustainable Development Committee and Digital of Independent Directors of Public Companies and Matters to Be Followed) as a
Transformation Committee, with professional director, supervisor, or employee.
qualifications in business, economics, finance, 5. Has not obtained remuneration for providing business, legal, financial,
24 accounting, etc.; and is not in any circumstances accounting, or other services to TBB or its affiliates in the last two years.
under Article 30 of the Company Act. 6. Has not served as a senior manager of the Bank or any of its subsidiaries.
Has served as a university professor in 1. Does not have a spouse or relative within the second degree of kinship who is
economics and the Dean of the Chung- also a TBB’s director.
Chun-Hsien Yeh Hua Institution for Economic Research; 2. Is not an employee at TBB or any of its subsidiaries. 0
has professional qualifications in business, 3. Has not worked at TBB’s external audit institution or as a partner of the audit
economics, finance, etc. institution.
4. Has not served as a member of the senior management of TBB's consulting firm.
Has served as the Manager, National Treasury 1. Does not have a spouse or relative within the second degree of kinship who is
Administration, Ministry of Finance, with also a TBB’s director.
Tung-Fu Lin managerial work experience at state-owned 2. Is not an employee at TBB or any of its subsidiaries. 0
enterprises and public banks, and professional 3. Has not worked at TBB’s external audit institution or as a partner of the audit
qualifications in business, economics, finance, institution.
etc. 4. Has not served as a member of the senior management of TBB's consulting firm.
Has five years or more of working experience 1. Does not have a spouse or relative within the second degree of kinship who is
at a bank and has professional qualifications in also a TBB’s director.
Hung-Sheng Yu business, finance, banking, human resources, 2. Has not worked at TBB’s external audit institution or as a partner of the audit 0
etc. institution.
3. Has not served as a member of the senior management of TBB's consulting firm.
Served as the Professor of Department of 1. Does not have a spouse or relative within the second degree of kinship who is
Economics, National Chung Cheng University also a TBB’s director.
Ho-Chyuan Chen and has served concurrently as the Director 2. Is not an employee at TBB or any of its subsidiaries. 0
of Hua Nan Financial Holdings Co., Ltd., with 3. Has not worked at TBB’s external audit institution or as a partner of the audit
professional qualifications in banking, finance, institution.
law, etc. 4. Has not served as a member of the senior management of TBB's consulting firm.
Has served as an associate professor at the 1. Does not have a spouse or relative within the second degree of kinship who is
Department of Quantitative Finance, National also a TBB’s director.
Tzu-Hao Tsai Tsing Hua University, and concurrently as a 2. Is not an employee at TBB or any of its subsidiaries. 1
bank director for more than three years, with 3. Has not worked at TBB’s external audit institution or as a partner of the audit
professional qualifications in business, finance, institution.
banking, etc. 4. Has not served as a member of the senior management of TBB's consulting firm.
Has five years or more of working experience 1. Does not have a spouse or relative within the second degree of kinship who is
at a bank and has professional qualifications in also a TBB’s director.
Wen-Hsiang Ma business, finance, banking, etc. 2. Has not worked at TBB’s external audit institution or as a partner of the audit 0
institution.
3. Has not served as a member of the senior management of TBB's consulting firm.
Taiwan Business Bank Annual Report 2022
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Qualifcations Name	Qualifcation and Experience	Independence	Number of Other Public Companies Serving as an Independent Director
Che-Nan Wang	Has served as a bank director for more than nine years and has professional qualifications in business, finance, banking, and human resources.	1. Does not have a spouse or relative within the second degree of kinship who is also a TBB’s director. 2. Is not an employee at TBB or any of its subsidiaries. 3. Has not worked at TBB’s external audit institution or as a partner of the audit institution. 4. Has not served as a member of the senior management of TBB's consulting frm.	0
Jin-Long Liu	Has served as a professor at the Graduate Institute of Industrial Economics, National Central University for years; an independent director of a bank for more than four years; a member of TBB's Audit Committee, Remuneration Committee, Sustainable Development Committee and Digital Transformation Committee, with professional qualifcations in business, economics, fnance, banking, etc.; and is not in any circumstances under Article 30 of the Company Act.	1. Dose not or the spouse or relative within the second degree of kinship thereof does not hold TBB’s shares by themselves or by nominee arrangement. 2. Does not have a spouse or relative within the second degree of kinship with other directors. 3. Has not or the spouse or relative within the second degree of kinship thereof has not served as a director, supervisor, or employee at TBB or its affliates. 4. Has not served at a company with specifc relations with TBB (under Article 3, paragraph 1, subparagraph 5 to 8 of the Regulations Governing the Appointment of Independent Directors of Public Companies and Matters to Be Followed) as a director, supervisor, or employee. 5. Has not obtained remuneration for providing business, legal, financial, accounting, or other services to TBB or its affliates in the last two years.	0
Yung-Cheng Chuang	H a s s e r v e d a s t h e d e p u t y d e a n o f School of Law, Soochow University; is specialized in financial regulations, such as the Securities and Exchange Act, Financial Law, and the Company Act; is familiar with compliance by publicly listed companies, financial consumer protection, securities and futures trading and operation, insurance laws and business in the fnancial feld; is a member of TBB's Audit Committee, Remuneration Committee and Sustainable Development Committee, with professional qualifications in banking, securities, insurance, law, etc. and not in any circumstances under Article 30 of the Company Act.	1. Dose not or the spouse or relative within the second degree of kinship thereof does not hold TBB’s shares by themselves or by nominee arrangement. 2. Does not have a spouse or relative within the second degree of kinship with other directors. 3. Has not or the spouse or relative within the second degree of kinship thereof has not served as a director, supervisor, or employee at TBB or its affliates. 4. Has not served at a company with specifc relations with TBB (under Article 3, paragraph 1, subparagraph 5 to 8 of the Regulations Governing the Appointment of Independent Directors of Public Companies and Matters to Be Followed) as a director, supervisor, or employee. 5. Has not obtained remuneration for providing business, legal, financial, accounting, or other services to TBB or its affliates in the last two years.	1
Shao-Yuan Chang	Is currently an independent director of TBB; has served as a director of publicly listed companies, the deputy mayor of Tainan City Government, the head of the Finance and Local Tax Bureau of Tainan City Government, the director of the Finance Department of Tainan City Government, and the deputy head of the Finance Department of Tainan City Government; a member of TBB's Audit Committee and Remuneration Committee; with the experience of providing consulting service to grass-roots financial institutions and credit cooperatives during his tenure in Tainan City and the professional qualifcations in accounting, finance, human resources and administration, and taxation; not in any circumstances under Article 30 of the Company Act.	1. Dose not or the spouse or relative within the second degree of kinship thereof does not hold TBB’s shares by themselves or by nominee arrangement. 2. Does not have a spouse or relative within the second degree of kinship with other directors. 3. Has not or the spouse or relative within the second degree of kinship thereof has not served as a director, supervisor, or employee at TBB or its affliates. 4. Has not served at a company with specifc relations with TBB (under Article 3, paragraph 1, subparagraph 5 to 8 of the Regulations Governing the Appointment of Independent Directors of Public Companies and Matters to Be Followed) as a director, supervisor, or employee. 5. Has not obtained remuneration for providing business, legal, financial, accounting, or other services to TBB or its affliates in the last two years.	0
Chiou-Mien Lin	Has served as an associate professor at the Department of Real Estate & Built Environment, National Taipei University; concurrently as a supervisor of the Chinese Institute of Land Appraisal and the Land Reform Association for a long time; a member of the Urban Renewal, Land Price and Standard Land Price Committee of the city or county government; has engaged in land appraisal and urban renewal for a long time; a member of TBB’s Audit Committee and Remuneration Committee with professional qualifcations in real estate appraisal, law, etc.; not in any circumstances under Article 30 of the Company Act.	1. Dose not or the spouse or relative within the second degree of kinship thereof does not hold TBB’s shares by themselves or by nominee arrangement. 2. Does not have a spouse or relative within the second degree of kinship with other directors. 3. Has not or the spouse or relative within the second degree of kinship thereof has not served as a director, supervisor, or employee at TBB or its affliates. 4. Has not served at a company with specifc relations with TBB (under Article 3, paragraph 1, subparagraph 5 to 8 of the Regulations Governing the Appointment of Independent Directors of Public Companies and Matters to Be Followed) as a director, supervisor, or employee. 5. Has not obtained remuneration for providing business, legal, financial, accounting, or other services to TBB or its affliates in the last two years.	0

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E. Board diversity and independence:

a. Board diversity

To strengthen corporate governance and enhance the sound development of the composition and structure of the Board of Directors, the Bank has proposed a board diversity policy, so that board members’ diverse capabilities in different fields can be complemented. The Bank’s Corporate Governance Best Practice Principles stipulate that directors who serve as managers at the Bank concurrently are not advised to account for more than one-third of the total directors. The Bank’s board diversity policy shall cover the two criteria below in terms of operations, business model and development needs:
1) Basic qualification and value: Gender, age, nationality, and culture.
2) Professional knowledge and skills: Professional background (such as law, accounting, industry, finance, marketing, or technology), professional skills, and industry experience.

The board members shall generally possess the knowledge, skills, and qualities necessary to perform their duties, so as to achieve the Bank's ideal goals of corporate governance and enable the Board as a whole to possess the capabilities including operational judgment, accounting, financial analysis, business management, risk management, crisis management, industry knowledge, international market perspective, leadership, and decision-making.

b. Independence of the Board: The Bank values the independence of the Board, and specially set out in the regulations that the number of directors served concurrently by the Bank's managers shall not exceed one-third of the total number of directors; independent directors shall not serve concurrently as directors (including independent directors) or supervisors of four or more than four listed and OTC companies; the consecutive term of office of independent directors shall not exceed three terms, and the Chairman shall not be the same person as the President. The current Board of Directors include one director with managerial status and five independent directors, who all meet the independence criteria set by the competent authority. Also, the Bank's directors concurrently serve as directors or independent directors in no more than two other companies. The Chairman and the President are not the same person and are not spouses or relatives within the first degree of kinship. Additionally, the Bank’s directors do not have any spouse or relative within the second degree of kinship who is also a director of TBB, which is in compliance with regulations. The independence of the Board is deemed to be achieved.
c. Implementation of Board diversity
The Board of Directors of the Bank consists of 15 directors, of which 3 work as employees concurrently, accounting for 20%; 5 are independent directors, accounting for 33.3%; and 1 is a director with managerial status, accounting for 6.6%. In addition, in order to place emphasis on gender equality in the composition of Board members, the goal will be to increase the number of female directors to 33% (currently 13 directors are males, accounting for 86.7%; while 2 are females, accounting for 13.3%). The members generally possess expertise and experience in banking, finance, risk management, and asset management. The relevant implementation status is as follows:

December 31, 2022

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Core Item
Basic Composition Industry Experience Professional Skills
Tenure of
Concurrent
Name of Nationality Gender Role as Bank (Note 1) Age Independent Director Bank Securities Insurance ManagementAsset Accounting Finance ManagementRisk ResourcesHuman Legal
Director Employee (Note 2)
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Core Item Name of Director	Basic Composition	Basic Composition	Basic Composition	Basic Composition	Basic Composition	Industry Experience	Industry Experience	Industry Experience	Industry Experience	Professional Skills	Professional Skills	Professional Skills	Professional Skills	Professional Skills
	Nationality	Gender	Concurrent Role as Bank Employee	Age (Note 1)	Tenure of Independent Director (Note 2)	Bank	Securities	Insurance	Asset Management	Accounting	Finance	Risk Management	Human Resources	Legal

Chien-Hao Lin	R.O.C	Male		■		v	v	v	v	v	v	v	v	v
Chih-Chien Chang	R.O.C	Male	v	■		v	v	v	v	v	v	v	v
Hsin-Tzu Hu	R.O.C	Female		■		v	v	v	v	v	v	v
Chun-Hsien Yeh	R.O.C	Male		●		v		v	v	v	v	v
Xin-Wu Lin	R.O.C	Male		●	◆	v	v	v	v	v	v	v	v
Tung-Fu Lin	R.O.C	Male		●		v			v		v	v
Hung- Sheng Yu	R.O.C	Male	v	●		v	v	v	v	v	v	v	v
Ho-Chyuan Chen	R.O.C	Male		●		v		v	v	v	v	v		v
Tzu-Hao Tsai	R.O.C	Male		○		v	v	v	v	v	v	v
Wen-Hsiang Ma	R.O.C	Male	v	○		v	v	v		v	v	v
Che-Nan Wang	R.O.C	Male		★		v	v		v		v	v	v
Jin-Long Liu	R.O.C	Male		■	◆	v	v	v	v	v	v	v
Yung-Cheng Chuang	R.O.C	Male		●	◇	v	v	v				v	v	v
Shao-Yuan Chang	R.O.C	Male		★	◇	v	v	v	v	v	v	v	v
Chiou-Mien Lin	R.O.C	Female		●	◇	v	v		v		v	v		v

Note 1 ：○ Under 50 ● 51 to 60 ■ 61 to 70 ★ Over 71 Note 2 ：◇ Less than 3 years ◆ 3 to 9 years △ More than 9 years

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(2) Information of President, Executive Vice President, SVP & GM and Managers of Departments and Branches

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EVP & Chief Auditor

Executive Vice President

Sung-Shui Chiu Shao-Huang Chen Chiu-Yen Chen

Jia-Ruey Luan Tsung-Chu Hsieh

Tseng-Hsiang Yi

III

December 31, 2022

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The Spouse or Relative
Shareholding Shareholding
Shareholding by Spouse & Under Others’ within the Second Degree
Title Nationality Name Gender ElectedDate Minor Children Title Major Experience (Education) Concurrent Positionsat Other Companies of Kinship of General Managers
Relation-
Shares (%) Shares (%) Shares (%) Title Name ship
SVP&GM, Law,
Human Resources R.O.C Ching-Yun Kuo Female 20191001 250,230 0 29,643 0 0 0 National Taiwan None None
Dept. University
SVP&GM, Electronic Engineering, Supervisor, Financial
Information R.O.C Mei-Huei Chen Female 20220309 11,735 0 0 0 0 0 National Taipei University Information Service None
Technology Dept. of Technology Co., Ltd.
Supervisor, TBB
International Leasing
Co., Ltd.; Supervisor,
SVP&GM, Taiwan Business
Loan&Control Overdue R.O.C Chiang-Shu Lin Male 20201030 140,021 0 0 0 0 0 Testile Department, Vanung University Bank International None
Leasing Co., Ltd.;
Dept.
Director, Taiwan
Financial Asset
Service Corporation
Department of Medical
SVP&GM,
Personal Banking R.O.C Wen-Fang Lin Male 20221231 109,266 0 0 0 0 0 Administration, None None
Yuanpei Junior College of
Dept. Medical Technology
Director, CDIB &
Partners Investment
Master of Statistics, Holding Corp.;
SVP&GM, R.O.C Jyun-You Shih Male 20210820 5,361 0 0 0 0 0 National Chung Hsing Director, TBB None
Treasury Dept.
University Venture Capital Co.,
Ltd.; Director, TBB
Consulting Co., Ltd.
SVP&GM, EMBA,
Digital Banking R.O.C Yu-Cheng Tsai Male 20200330 23,589 0 0 0 0 0 National Chengchi None None
Dept. University
Master of Accounting and
SVP&GM, R.O.C Min-Chung Hsieh Male 20201030 115,126 0 0 0 0 0 Information Technology, None None
Compliance Dept. National Chung Cheng
University
Master of Information
SVP&GM, Management,
Information R.O.C Yi-Chin Chai Male 20180723 109,926 0 0 0 0 0 National Taiwan None None
Security Dept. University of Science and
Technology
SVP&GM,
Wealth Master of Management
R.O.C Ying-Che Fang Male 20210820 223,886 0 0 0 0 0 Sciences, None None
Management
Dept. TamKang University
Credit Card DeSVP&GM, pt. R.O.C Wen-Shu Lin Female 20180208 127,911 0 0 0 0 0 Business Administration, Soochow University None None
Acting SVP&GM, Master of Science in
Risk Management R.O.C Ming-Ju Yang Male 20220731 0 0 0 0 0 0 Finance,Ming Chuan None None
Dept. University
Accounting, Supervisor, TBB
SVP&GM, R.O.C Yu-Chuan Chou Female 20180208 143,567 0 941 0 0 0 National Chung Hsing Venture Capital Co., None
Accounting Dept. University Ltd.
Director, Chaofu Real
SVP&GM, R.O.C Le-Yi Jiang Female 20210820 21,449 0 0 0 0 0 MBA, Estate Management None
Trust Dept. Drexel University, USA
Co., Ltd.
Ph.D.,Department of
SVP&GM, R.O.C Ting-Huei Liao Male 20210820 280,630 0 266,033 0 0 0 Banking and Finance, None None
Securities Dept. Tamkang University
Director, TBB
International Leasing
SVP&GM,
International R.O.C Shenn-Bao Jean Male 20211212 130,990 0 0 0 0 0 Economics, Soochow University Co., Ltd.; Director, Taiwan Business None
Banking Dept. Bank International
Leasing Co., Ltd.
SVP&GM,
Insurance Agent R.O.C Wen-Ling Wang Female 20200102 23,220 0 0 0 0 0 Cooperative Economics, None
Dept. Feng Chia University
SVP&GM, Business Management
North 1 Regional R.O.C Li-Chuan Huang Female 20221231 126,818 0 73,766 0 0 0 Institute, None None
Operation Center Chung Hua University
SVP&GM, Accounting,
North 2 Regional R.O.C Yueh-Chin Wang Female 20221231 138,725 0 7,125 0 0 0 Hsing Wu College of None None
Operation Center Commerce
SVP&GM,
North 3 Regional R.O.C Li-Huei Chen Male 20210831 36,882 0 0 0 0 0 MBA, None None
Operation Center Tamkang University
Department of Applied
SVP&GM,
Central Regional R.O.C Ming-Yi Lin Male 20201030 396,637 0 284,669 0 0 0 Business, None None
Taichung University of
Operation Center Science and Technology
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The Spouse or Relative
Shareholding Shareholding
Shareholding by Spouse & Under Others’ within the Second Degree
Title Nationality Name Gender ElectedDate Minor Children Title Major Experience (Education) Concurrent Positionsat Other Companies of Kinship of General Managers
Relation-
Shares (%) Shares (%) Shares (%) Title Name ship
SVP&GM,
South 1 Regional R.O.C Chih-Cheng Chen Male 20220121 136,168 0 0 0 0 0 Business, None None
Operation Center National Open University
SVP&GM, Department of Business
South 2 Regional R.O.C Wen-Hsiu Huang Male 20180208 172,913 0 0 0 0 0 Administration, None None
Operation Center Tunghai University
VP&GM, Master of Banking and
Domestic R.O.C Shu-Cing Wu Female 20210122 64,248 0 0 0 0 0 Finance, None None
Processing Center TamKang University
AVP&GM,
Customer Service R.O.C Ching-Yi Lin Female 20190213 118,688 0 0 0 0 0 Economics, None None
Center Fu Jen Catholic University
Department of Industrial
VP&GM, R.O.C Tung-Sheng Ni Male 20220901 685 0 0 0 0 0 Management,National None None
Chung Ho Branch Taiwan University of
Science and Technology
Po Ai BranchVP&GM, R.O.C Po-Jung Huang Male 20220331 105,081 0 0 0 0 0 Master of Science,Chung Hua University None None
Department of Applied
VP&GM,
North Taoyuan R.O.C Mu-Hsiang Wu Male 20210831 124,957 0 0 0 0 0 Business, None None
Branch National Taipei College of
Business
Department of
Nan Ken BranchVP&GM, R.O.C Yu-Chiao Wei Female 20180208 117,235 0 9,395 0 0 0 Economics, National Chung Hsing None None
University
EMBA,
Si Tuen BranchVP&GM, R.O.C Yuan-Hsueh Hsiao Male 20180208 126,881 0 0 0 0 0 Taichung Health and None None
Management Collage
ChunVP&GM, g Min Branch R.O.C Tung-Han Lu Male 20210820 75,058 0 0 0 0 0 Accounting,Tamkang University None None
Master of Business &
Kinmen BranchVP&GM, R.O.C Shui-Chiang Fang Male 20190213 108,280 0 0 0 0 0 Management, National University of None None
Tainan
SVP&GM,
Banking R.O.C Hsih-Hui Chen Female 20200511 133,197 0 0 0 0 0 Law, None None
Department Fu Jen Catholic University
Accounting,
Ta Ya BranchVP&GM, R.O.C Li-Ching Lai Female 20201030 107,933 0 0 0 0 0 National Chung Hsing None VP&GM An Hsieh [Cheng-] [Spouse]
University
Department of
Accounting,
Jen Ta BranchVP&GM, R.O.C Zuo-Ling Zeng Female 20210820 103,705 0 309,094 0 0 0 Open College with None None
National Chang Kung
University
Jen Ai BranchVP&GM, R.O.C Ching-Yang Lee Female 20210217 129,026 0 0 0 0 0 MBA, CMSU None None
Bank & Insurance
VP&GM, R.O.C Hsiu-Hsin Hou Male 20220901 127,321 0 0 0 0 0 Section, None None
Sung Shan Branch Hsing Wu Business
College
VP&GM, Business Management,
Chien Cheng R.O.C Shu-Ling Yuan Female 20220121 13,051 0 120,872 0 0 0 National Taipei College of None None
Branch Business
Master of Science in
Shih Lin BranchVP&GM, R.O.C Yun-Hui Chang Male 20210122 57,275 0 0 0 0 0 Engineering, Tatung Institute of None None
Technology
Department of Finance,
VP&GM, R.O.C Jiann-Yea Shyu Male 20201030 107,384 0 0 0 0 0 National Taipei College of None None
Yung Ho Branch Business
Hsin Tien BranchVP&GM, R.O.C Sung-Nan Chiao Male 20221231 97,980 0 1,051 0 0 0 Accounting, Soochow University None None
VP&GM,
Hsin Chuang R.O.C Ching-Hsiu Liu Female 20220121 47,827 0 0 0 0 0 MBA, None None
Branch National Taipei University
MBA,
VP&GM,
Hwa Cheng R.O.C Yun-Shiang Tsai Male 20210820 115,401 0 0 0 0 0 National Taichung None None
Branch University of Science and
Technology
VP&GM,
Sung Kiang R.O.C Chao-Lieh Chen Male 20170718 6,316 0 0 0 0 0 EMBA, None None
Branch Tamkang University
Master of Service Industry
VP&GM, R.O.C Chun-Ying Shen Female 20220121 60,065 0 0 0 0 0 Management, Chihlee None None
Taipei Branch University of Technology
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The Spouse or Relative
Shareholding Shareholding
Shareholding by Spouse & Under Others’ within the Second Degree
Title Nationality Name Gender ElectedDate Minor Children Title Major Experience (Education) Concurrent Positionsat Other Companies of Kinship of General Managers
Relation-
Shares (%) Shares (%) Shares (%) Title Name ship
International Trade,
Wan Hua BranchVP&GM, R.O.C Li-Jhu Huang Female 20210820 94,325 0 0 0 0 0 Chinese Culture None None
University
VP&GM,
South Taipei R.O.C Bi-Shuang Lin Female 20210122 107,527 0 0 0 0 0 International Trade, None None
Branch Tunghai University
Department of
Accounting, Open
Fu Hsin BranchVP&GM, R.O.C Ssu-Jung Lai Female 20220121 67,381 0 0 0 0 0 College Affiliated with None None
National Taipei University
of Business
VP&GM, Master of Banking and
Chung Shang R.O.C Pei-Ling Lin Female 20220901 13,352 0 0 0 0 0 Finance, None None
Branch TamKang University
Chien Kuo BranchVP&GM, R.O.C Mei-Chih Hou Female 20210122 143,711 0 0 0 0 0 Banking, Feng Chia University None None
Department of
Nai Hu BranchVP&GM, R.O.C Ching-Yao Chen Female 20220121 48,475 0 0 0 0 0 Statistics,Tunghai None None
University
VP&GM,
Nan King East R.O.C Fuh-Yuh Yeh Male 20190716 126,848 0 1,138 0 0 0 Business, None None
Road Branch National Open University
Department of
VP&GM,
Chung Hsiao R.O.C Yen-Ling Chen Female 20170718 127,355 0 0 0 0 0 International Trade, None None
Branch Takming Junior College of
Commerce
Department of
VP&GM, International
World Trade R.O.C Hui-Mei Chen Female 20220311 1,098 0 0 0 0 0 None None
Center Branch Business,National Taipei
College of Business
YungVP&GM, Trin Branch R.O.C Chin-Shan Sung Male 20220311 9,213 0 0 0 0 0 EMBA,National Taiwan Normal University None None
Master of Economics,
VP&GM, R.O.C Chin-Tsan Wu Male 20200717 52,421 0 0 0 0 0 National Dong Hwa None None
Nan Kang Branch University
SungVP&GM, Nan Branch R.O.C Wen-Ching Huang Female 20210820 234,303 0 0 0 0 0 Law, Fu Jen Catholic University None None
Master of Finance,
VP&GM, R.O.C Mei-Kuei Li Female 20200316 43,402 0 0 0 0 0 National Taiwan None None
Dong Hu Branch University of Science and
Technology
Master of Banking and
Ta An BranchVP&GM, R.O.C Shu-Ping Ciou Female 20210820 13,239 0 8,657 0 0 0 Finance, None None
TamKang University
Department of Industrial
VP&GM, R.O.C Chien-Fa Wang Male 20221231 111,540 0 0 0 0 0 Engineering, None None
Shuang Ho Branch St. John's and St. Mary's
Institute of Technology
Jim Ho BranchVP&GM, R.O.C Pin-Hsiung Chen Male 20201030 30,151 0 4,783 0 0 0 Business Administration, Soochow University None None
MBA,
Wu Ku BranchVP&GM, R.O.C Jui-Yuan Huang Male 20210820 108,023 0 0 0 0 0 National Taiwan Normal None None
University
Master of Marketing and
Lin Kuo BranchVP&GM, R.O.C Shuan-Hua Liu Female 20210820 158,812 0 0 0 0 0 Logistics management, Hsing Wu University of None None
Science and Technology
VP&GM, Department of Business
East Linkou R.O.C Ying-Hui Lai Female 20220121 0 0 0 0 0 0 Administration,Overseas None None
Branch Chinese University
MBA,
Pan Chiao BranchVP&GM, R.O.C Yu-Hsia Feng Female 20210315 0 0 0 0 0 0 Chung Yuan Christian None None
University
Master of Banking and
Shu Lin BranchVP&GM, R.O.C Ming-Chien Chien Male 20221231 32,715 0 492 0 0 0 Finance, None None
TamKang University
Tu ChenVP&GM, g Branch R.O.C Nien-Tzu Chen Female 20180208 134,506 0 0 0 0 0 Accounting, Fu Jen Catholic University None None
Department of Industrial
VP&GM, R.O.C Chun-Ta Lin Male 20220506 114,740 0 0 0 0 0 Management, None None
Hwei Long Branch Lunghwa University of
Science and Technology
Department of
Hsi Chih BranchVP&GM, R.O.C Fang-Chuan Chiu Male 20221231 127,376 0 0 0 0 0 Transportation and Logistics, None None
Feng Chia University
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III

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The Spouse or Relative
Shareholding Shareholding
Shareholding by Spouse & Under Others’ within the Second Degree
Title Nationality Name Gender ElectedDate Minor Children Title Major Experience (Education) Concurrent Positionsat Other Companies of Kinship of General Managers
Relation-
Shares (%) Shares (%) Shares (%) Title Name ship
Department of
Sanxia BranchVP&GM, R.O.C Jui-Yu Li Female 20200825 112,069 0 7,009 0 0 0 International Business, None None
Ming Chuan College
KeelunVP&GM, g Branch R.O.C Ming-Yi Chiu Male 20220506 90,446 0 1,787 0 0 0 MBA, Fu Jen Catholic University None None
International Trade,
VP&GM, R.O.C Shu-Ting Chen Female 20190213 111,865 0 988 0 0 0 Hsing Wu Business None None
Pu Chya Branch College
VP&GM, International Trade and
North San Chung R.O.C Chin-Chih Li Female 20220121 55,160 0 54,518 0 0 0 Finance, None None
Branch Fu Jen Catholic University
VP&GM, Department of Business
South San Chung R.O.C Han-Mei Nung Female 20220121 50,424 0 0 0 0 0 Management, None None
Branch Ming Chuan College
Lu Chow BranchVP&GM, R.O.C Mei Hung Female 20220121 2 0 0 0 0 0 MBA, Tamkang University None None
I Lan BranchVP&GM, R.O.C Tsung-Jen Hsieh Male 20220121 11,666 0 0 0 0 0 MBA, Tamkang University None None
Business,
Lo Tung BranchVP&GM, R.O.C Ming-Fa Chien Male 20190823 108,257 0 0 0 0 0 National Lo-Tung Commercial Vocational None None
High School
Master of Finance and
Su Aw BranchVP&GM, R.O.C Cheng-Hsiung Tsai Male 20210820 21,876 0 3,111 0 0 0 Business Administration, None None
Fu Jen Catholic University
MBA,
VP&GM, R.O.C Yueh-Mei Chang Female 20190823 136,427 0 0 0 0 0 National Dong Hwa None None
Yang Mei Branch University
Master of Technology
Hu Kou BranchVP&GM, R.O.C Ju-Hsiang Tien Male 20220801 5,361 0 0 0 0 0 Management, None None
Chung Hua University
International Trade,
VP&GM, R.O.C Shu-Fen Li Female 20190823 107,764 0 0 0 0 0 Hsing Wu Business None None
Taoyuan Branch College
MBA,
Ta Yuan BranchVP&GM, R.O.C Chin-Fu Chiang Male 20221231 208,105 0 7,024 0 0 0 National Taiwan University of Science and None None
Technology
VP&GM, R.O.C Chia-Yi Wu Female 20220801 0 0 0 0 0 0 Master of Science, None None
Ta Shi Branch Yuan Ze University
ChunVP&GM, g Li Branch R.O.C Chi-Fen Yen Female 20221231 138,997 0 0 0 0 0 Business Administration, Fu Jen Catholic University None None
Nei Li BranchVP&GM, R.O.C Hsu-Hsiang Huang Male 20210831 113,958 0 0 0 0 0 Economics, Feng Chia University None None
Department of
VP&GM, R.O.C Chun-Hung Chang Male 20221214 0 0 0 0 0 0 Business Management None None
Hsin Ming Branch Technologies, Yuan Ze
university
Master of International
VP&GM,
East Taoyuan R.O.C Shu-E Chen Female 20200316 116,138 0 0 0 0 0 Business, None None
Branch Chung Yuan Christian
University
Hsin Wu BranchVP&GM, R.O.C Chun-Chu Hsiao Female 20210831 23,335 0 0 0 0 0 Business Administration, Fu Jen Catholic University None None
Graduate Institute of
Hsin Chu BranchVP&GM, R.O.C Nai-Chia Chi Male 20190823 209,368 0 0 0 0 0 Industrial Economics, National Central None None
University
Master of Technology
Chu Pei BranchVP&GM, R.O.C Kuan-Yi Huang Male 20191031 63,386 0 0 0 0 0 Management, None None
Chung Hua University
VP&GM,
Hsinchu Science EMBA,
Based Industrial R.O.C Su-Fen Chen Female 20190823 127,118 0 289 0 0 0 National Yang Ming Chiao None None
Park Branch Tung University
EMBA,
Pa Te BranchVP&GM, R.O.C Chiu-Yu Lin Female 20220801 50,652 0 75,975 0 0 0 National Taipei University None None
of Technology
Department of Industrial
VP&GM, R.O.C Hsin-Te Li Male 20220121 130 0 0 0 0 0 Management, Asia None None
Luong Tan Branch Eastern University of
Science and Technology
Chu TunVP&GM, g Branch R.O.C Yu-Jung Tseng Male 20210820 17,326 0 0 0 0 0 Banking Managemen, Chungyu College None None
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The Spouse or Relative
Shareholding Shareholding
Shareholding by Spouse & Under Others’ within the Second Degree
Title Nationality Name Gender ElectedDate Minor Children Title Major Experience (Education) Concurrent Positionsat Other Companies of Kinship of General Managers
Relation-
Shares (%) Shares (%) Shares (%) Title Name ship
Department of Chemical
Chu Nan BranchVP&GM, R.O.C Hsin-Lu Chiang Male 20220331 417 0 253 0 0 0 Engineering, Chinese Culture None None
University
Department of Business
Tou Fen BranchVP&GM, R.O.C Sheng-Wang Chang Male 20191031 125,027 0 7,009 0 0 0 Management, Chin Min Institute of Technology None None
Department of Accounting
Maio Li BranchVP&GM, R.O.C Fang-Mei Lai Female 20220331 7,280 0 0 0 0 0 and Statistics, Chihlee None None
University of Technology
Business Administration,
VP&GM, R.O.C Li-Chung Lin Male 20180723 134,915 0 0 0 0 0 National Taichung College None None
Feng Yuan Branch of Business
Tai PinVP&GM, g Branch R.O.C Yih-Shiou Wang Male 20200717 162,393 0 0 0 0 0 EMBA, Feng Chia University None None
International Trade,
Ta Chia BranchVP&GM, R.O.C Man-Chung Yeh Male 20181029 21,471 0 794 0 0 0 National Taichung College None None
of Business
Sha Lu BranchVP&GM, R.O.C Jung-Yu Huang Male 20201030 128,038 0 0 0 0 0 Accounting, Feng Chia University None None
Wu Jih BranchVP&GM, R.O.C Cheng-An Hsieh Male 20210122 138,766 0 0 0 0 0 Master of Insurance, Feng Chia University None VP&GM [Li-Ching ] Lai Spouse
Department of Applied
VP&GM, R.O.C Fu-Ching Chou Male 20220331 122,984 0 0 0 0 0 Business, None None
Taichung Branch Taichung University of
Science and Technology
EMBA,
Min Chen BranchVP&GM, R.O.C Chien-Ta Wu Male 20220121 110,117 0 0 0 0 0 National Chi Nan None None
University
VP&GM, Doctor of
Hsing Chung R.O.C Meng-Fang Wu Female 20220121 77,142 0 126,975 0 0 0 Philosophy,Feng Chia None None
Branch University
International Trade,
Pei Tuen BranchVP&GM, R.O.C Pi-Chu Chang Female 20210831 206,666 0 0 0 0 0 National Taichung College None None
of Business
EMBA,
Nan Tou BranchVP&GM, R.O.C Yen-Ju Chen Female 20210820 184,563 0 215,523 0 0 0 National Chi Nan None None
University
International Trade,
Tsao Tuen BranchVP&GM, R.O.C Yueh-Man Sung Female 20210820 153,563 0 0 0 0 0 National Taichung College None None
of Business
Pu Li BranchVP&GM, R.O.C Tsai-Chuan Wu Male 20210122 204,108 0 0 0 0 0 International Trade, Feng Chia University None None
Master of Applied
Tan Tze BranchVP&GM, R.O.C His-Her Pai Male 20210122 203,688 0 91 0 0 0 Economics, National Chung Hsing None None
University
Department of Industrial
Chu Shan BranchVP&GM, R.O.C Chih-Shan Hung Male 20210831 14,416 0 0 0 0 0 Management, Lunghwa University of None None
Science and Technology
Applied Business,
VP&GM,
Chang Hwa R.O.C Chih-Cheng Cho Male 20201030 113,645 0 0 0 0 0 National Taichung None None
Branch University of Science and
Technology
Department of Industrial
Ho Mei BranchVP&GM, R.O.C Ming-Tang Chen Male 20190213 132,011 0 0 0 0 0 Management, Lunghwa University of None None
Science and Technology
Master of Finance,
Yuan Lin BranchVP&GM, R.O.C Liang-Pin Chen Male 20210820 22,347 0 869 0 0 0 National Yunlin University of Science and None None
Technology
Master of Applied
Pei Tou BranchVP&GM, R.O.C Fu-Yuan Yao Male 20220121 11,820 0 0 0 0 0 Economics, National Chung Hsing None None
University
Department of Business
Erh Lin BranchVP&GM, R.O.C Yu-Cheng Chiao Male 20220331 79,863 0 40,998 0 0 0 Administration, National Chung Hsing None None
University
Master of Science in
Tou Liu BranchVP&GM, R.O.C Ming-Chin Ke Female 20220901 16,040 0 5,226 0 0 0 Finance,National Chung Cheng None None
University
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III

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The Spouse or Relative
Shareholding Shareholding
Shareholding by Spouse & Under Others’ within the Second Degree
Title Nationality Name Gender ElectedDate Minor Children Title Major Experience (Education) Concurrent Positionsat Other Companies of Kinship of General Managers
Relation-
Shares (%) Shares (%) Shares (%) Title Name ship
Business Management,
VP&GM, R.O.C Po-Hung Wang Male 20220101 123,569 0 0 0 0 0 National Cheng Kung None None
Pei Kang Branch University
Hu Wei BranchVP&GM, R.O.C Ruey-shyang Guo Male 20210820 130,145 0 0 0 0 0 MBA, Baruch Collge , CUNY None None
Chia Yi BranchVP&GM, R.O.C Chia-Cheng Liu Male 20220901 121,873 0 0 0 0 0 EMBA, National Chiayi University None None
VP&GM,
Ming Hsiung R.O.C I-Man Chen Female 20181029 129,519 0 86 0 0 0 Business, None None
Branch Providence College
Department of Banking
Chia Hsin BranchVP&GM, R.O.C Li-Feng Huang Female 20200825 110,061 0 0 0 0 0 and Finance, None None
Aletheia University
Hsin YinVP&GM, g Branch R.O.C Chung-Hsien Huang Male 20210122 24,361 0 0 0 0 0 Business Administration, Tamkang University None None
Kai Yuan BranchVP&GM, R.O.C Chun-Jen Huang Male 20210122 109,537 0 0 0 0 0 Public Finance,Feng Chia University None None
MBA,
VP&GM, R.O.C Mei-Chen Chen Female 20220506 149,609 0 11,868 0 0 0 National Cheng Kung None None
Yun Kang Branch University
Department of Business
Shiue Chia BranchVP&GM, R.O.C Hui-Pai Kuo Female 20200316 68,461 0 0 0 0 0 Management, Nan Jeon Universtiy of None None
Science And Technology
Business Management,
Shan Hwa BranchVP&GM, R.O.C Hsiu-Chen Chiu Female 20200203 113,872 0 0 0 0 0 National Cheng Kung None None
University
Master of Business &
VP&GM, R.O.C Chien-Lai Su Male 20181224 867 0 0 0 0 0 Management, None None
Yung Ta Branch National University of
Tainan
EMBA,
Tainan BranchVP&GM, R.O.C Hsiu-Chu Lin Female 20220121 130,119 0 0 0 0 0 National Chung Cheng None None
University
Cooperative Economics,
Jen Te BranchVP&GM, R.O.C Guo-Shiang Huang Male 20200203 53,876 0 95,758 0 0 0 National Chung Hsing University None None
VP&GM,
Cheng Kung R.O.C Shun-Ho Chen Male 20200825 100,973 0 0 0 0 0 Business Administration, None None
Branch Feng Chia University
Department of Applied
VP&GM,
East Tainan R.O.C Su-Chih Wang Female 20200825 265,376 0 0 0 0 0 Business, None None
Branch Taichung University of
Science and Technology
An PinVP&GM, g Branch R.O.C Ling-Ling Chen Female 20220506 241 0 0 0 0 0 Economics, Feng Chia University None None
Department of French ,
Hua Lien BranchVP&GM, R.O.C Shu-Hui Chen Female 20200825 108,513 0 0 0 0 0 Chinese Culture None None
University
Department of Applied
VP&GM, R.O.C Kuo-Tai Shih Male 20210820 1,219 0 0 0 0 0 Business, None None
Tai Tung Branch National Taipei College of
Business
Master of Human
VP&GM,
East Kaohsiung R.O.C Hui-E Wu Female 20220121 129,943 0 0 0 0 0 Resource Management, National Sun Yat-sen None None
Branch
University
MBA,
VP&GM, R.O.C Kuang-Tsai Wang Male 20201030 49,217 0 0 0 0 0 National Sun Yat-sen None None
Kang Shan Branch University
VP&GM,
North Feng Shan R.O.C Fu-Lai Chang Male 20200511 112,860 0 0 0 0 0 Business, None None
Branch National Open University
Master of Business
Administration in
VP&GM, R.O.C Yi-Ching Wang Female 20210820 113,610 0 0 0 0 0 International Business, None None
Ling Ya Branch National Kaohsiung
Unversity of Applied
Sciences
Accounting,
VP&GM, R.O.C Chin-Chuan Su Male 20211031 346,863 0 0 0 0 0 National Chung Hsing None None
Kaohsiung Branch University
VP&GM,
North Kaohsiung R.O.C Chiu-Yuan Hung Female 20210820 2,356 0 5,361 0 0 0 Banking, None None
Branch Tamkang University
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The Spouse or Relative
Shareholding Shareholding
Shareholding by Spouse & Under Others’ within the Second Degree
Title Nationality Name Gender ElectedDate Minor Children Title Major Experience (Education) Concurrent Positionsat Other Companies of Kinship of General Managers
Relation-
Shares (%) Shares (%) Shares (%) Title Name ship
Ta ChanVP&GM, g Branch R.O.C Li-Jung Lin Female 20180208 140,239 0 0 0 0 0 Business, National Open University None None
VP&GM, MBA,
Chien Chen R.O.C Tao-Cheng Shen Male 20220121 5,185 0 0 0 0 0 National Sun Yat-sen None None
Branch University
Master of Finance and
Information,
Jeou Ru BranchVP&GM, R.O.C Yao-Chin Yang Male 20190823 113,709 0 0 0 0 0 National Kaohsiung None None
Unversity of Applied
Sciences
Master of Human
San Ming BranchVP&GM, R.O.C Shu-Fang Kuo Female 20211217 0 0 0 0 0 0 Resource Management, National Sun Yat-sen None None
University
Master of Finance,
VP&GM, R.O.C Leh-Chin Kuo Female 20220121 107,258 0 0 0 0 0 Kaohsiung First None None
Feng Shan Branch University of Science And
Technology
International Trade,
Ta Fa BranchVP&GM, R.O.C Chien-Chung Lin Male 20200316 59,886 0 67,947 0 0 0 Chinese Culture None None
University
Department of Business
Management,
VP&GM, R.O.C Meng-Hsun Sung Male 20220121 112,289 0 0112,289 0 0 0 National Pingtung None None
Ping Tung Branch
University of Science &
Technology
Business Management,
VP&GM, R.O.C Hsueh-Mei Yang Female 20191223 107,329 0 1,309 0 0 0 Chinese Culture None None
Xiao Gang Branch University
VP&GM,
Chiao Chou R.O.C Cheng-Chuan Lin Male 20200825 228 0 0 0 0 0 Banking Management, None None
Branch Tamsui Exford College
VP&GM,
Offshore Banking R.O.C Wen-Ling Chang Female 20210217 53,920 0 0 0 0 0 MBA, None None
Unit Drexel University, USA
Master of Finance,
VP&GM,
Los Angeles R.O.C An-Yun Lin Female 20211209 252,369 0 54,885 0 0 0 Kaohsiung First None None
Branch University of Science And
Technology
Master of Economics,
VP&GM, R.O.C Hsiao-Ming Chen Male 20211116 126,278 0 61,976 0 0 0 National Taiwan None None
Hong Kong Branch University
Department of Business
Sydney BranchVP&GM, R.O.C Chen-Chung Fan Male 20220124 127,300 0 0 0 0 0 Management, National Sun Yat-sen None None
University
EMBA,
VP&GM, R.O.C Chao-Ming Huang Male 20190128 122,915 0 0 0 0 0 National Chiao Tung None None
Shanghai Branch University
Master of International
Brisbane BranchVP&GM, R.O.C Sue-Jen Chen Female 20180413 116,522 0 115,474 0 0 0 Business, None None
Soochow University
MBA,
New York BranchVP&GM, R.O.C Feng-Chang Wu Male 20200928 0 0 0 0 0 0 Northern Illinois None None
University, USA
Cooperative Economics,
Wuhan BranchVP&GM, R.O.C Chu-Ying Ting Female 20211215 32,662 0 0 0 0 0 National Chung Hsing None None
University
MBA,
VP&GM, R.O.C Cheng-Hung Male 20180815 123,619 0 0 0 0 0 University of Wisconsin, None None
Tokyo Branch Chang USA
AVP&Chief
Department of Labor
Representative,
Yangon R.O.C Hsi-Pin Tseng Male 20211022 101,595 0 0 0 0 0 Relations, Chinese Culture None None
Representative
Office University
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Note: The position of President or an equivalent position (chief manager) is held by the Chairman at the same time, or held by spouses or relatives within the first degree of kinship: No such matters.

(3) The Chairman or the President who retired from TBB or its affiliates serves as a consultant at TBB: None.

III

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(4) Remuneration to Directors, President, Executive Vice President, and Remuneration Distribution to Employees for 2022

A. Remuneration to directors and independent directors and range of remuneration

Unit: NT$ 1,000

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Director's Remuneration Total and Ratio of Relevant Remuneration Received by Directors Who are Also Employees Total and Ratio of
Total Remuneration Total Remuneration
Pension and Director’s Business Execution (A+B+C+D) to Net Salary, Bonus Pension and (A+B+C+D+E+F+G)
Compensation (A) Separation Pay (B) Remuneration (C) Expenses (D) Income Disbursement (E)and Special Separation Pay (F) Employee's Remuneration (G) to Net Income from an Investee Compensation
Other Than the
Title Name
All All All All All All All All Companies All Company’s
TBB within the Finance Subsidiaries or
TBB Companies within the TBB Companies within the TBB Companies within the TBB Companies within the TBB Companies within the TBB Companies within the TBB Companies within the Statements TBB Companies within the Parent Company
Finance Finance Finance Finance Finance Finance Finance Finance
Amount Amount Amount Amount
Statements Statements Statements Statements Statements Statements Statements Statements
in Cash in Stock in Cash in Stock
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Title	Name	Director's Remuneration	Director's Remuneration	Director's Remuneration	Director's Remuneration	Director's Remuneration	Director's Remuneration	Director's Remuneration	Director's Remuneration	Total and Ratio of Total Remuneration (A+B+C+D) to Net Income	Total and Ratio of Total Remuneration (A+B+C+D) to Net Income	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Total and Ratio of Total Remuneration (A+B+C+D+E+F+G) to Net Income	Total and Ratio of Total Remuneration (A+B+C+D+E+F+G) to Net Income	Compensation from an Investee Other Than the Company’s Subsidiaries or Parent Company
		Compensation (A)		Pension and Separation Pay (B)		Director’s Remuneration (C)		Business Execution Expenses (D)				Salary, Bonus and Special Disbursement (E)		Pension and Separation Pay (F)		Employee's Remuneration (G)
		TBB	All Companies within the Finance Statements	TBB	All Companies within the Finance Statements	TBB	All Companies within the Finance Statements	TBB	All Companies within the Finance Statements	TBB	All Companies within the Finance Statements	TBB	All Companies within the Finance Statements	TBB	All Companies within the Finance Statements	TBB		All Companies within the Finance Statements		TBB	All Companies within the Finance Statements
																Amount in Cash	Amount in Stock	Amount in Cash	Amount in Stock

Representative of the Ministry of Finance
Chairman of the Board	Chien-Hao Lin
President	Chih-Chien Chang
Director	Tung-Fu Lin
Director	Hung-Sheng Yu
Former Director	Shiu-Yen Lin
Bank of Taiwan Representative
Managing Director	Hsin-Tzu Hu
Director	Tzu-Hao Tsai
Director	Ho-Chyuan Chen
Former Director	Shih-Yuan Tai
Former Director	Wen-Chieh Wang
National Development Fund, Executive Yuan Representative
Managing Director	Chun-Hsien Yeh
Director	Che-Nan Wang
TBB Industry Union Representative
Director	Wen-Hsiang Ma
Former Director	Ming-Huei Chen
Subtotal		9,016	9,016	605	605	75,243	75,243	1,508	1,508	86,372/ 0.85%	86,372/ 0.85%	9,687	9,687	412	412	248		248		96,719/ 0.95%	96,719/ 0.95%	169
Independent Managing Director	Xin-Wu Lin
Independent Director	Jin-Long Liu
Independent Director	Chiou-Mien Lin
Independent Director	Yung-Cheng Chuang
Independent Director	Shao-Yuan Chang
Subtotal		3,543	3,543	0	0	0	0	1,275	1,275	4,818/ 0.05%	4,818/ 0.05%	0	0	0	0	0		0		4,818/ 0.05%	4,818/ 0.05%	0

Note:

The Bank’s independent directors only receive monthly compensation and do not receive directors’ remuneration additionally. The compensation has not exceeded the upper limit specified in the Ministry of Finance’s official letter, referenced Tai-Cai-Ku No. 09903518290 dated September 10, 2010 and has been submitted to the Bank’s shareholders’ meeting on June 24, 2011 for approval.
Except as disclosed in the above table, the remuneration received by the Bank’s directors in the most recent year for providing services (such as serving as a non-employee consultant at parent company, all companies in the financial report, or investees): None
Chairman Chien-Hao Lin and President Chih-Chien Chang, each has a driver, and the drivers’ total remuneration amounted to NT$2,268,000.

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The amounts disclosed in columns (B) and (F) are the provisions pension and separation pay expensed.
Hung-Sheng Yu, Wen-Hsiang Ma, and Ming-Hui Chen are TBB’s employees.

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Name of Director
Total of Remuneration (A+B+C+D) Total of Remuneration (A+B+C+D+E+F+G)
Range of Remuneration Paid to Directors of TBB
TBB All companies in the financial report H TBB All companies in the financial report I
Shiu-Yen Lin; Shiu-Yen Lin; Shiu-Yen Lin; Shiu-Yen Lin;
Hung-Sheng Yu; Hung-Sheng Yu; Tung-Fu Lin; Tung-Fu Lin;
Tung-Fu Lin; Tung-Fu Lin; Hsin-Tzu Hu; Hsin-Tzu Hu;
Hsin-Tzu Hu; Hsin-Tzu Hu; Tzu-Hao Tsai; Tzu-Hao Tsai;
Tzu-Hao Tsai; Tzu-Hao Tsai; Ho-Chyuan Chen; Ho-Chyuan Chen;
Ho-Chyuan Chen; Ho-Chyuan Chen; Shih-Yuan Tai; Shih-Yuan Tai;
Shih-Yuan Tai; Shih-Yuan Tai; Wen-Chieh Wang; Wen-Chieh Wang;
Below NT$1,000,000 Wen-Chieh Wang; Wen-Chieh Wang; Chun-Hsien Yeh; Chun-Hsien Yeh;
Chun-Hsien Yeh; Chun-Hsien Yeh; Che-Nan Wang; Che-Nan Wang;
Che-Nan Wang; Che-Nan Wang; Wen-Hsiang Ma; Wen-Hsiang Ma;
Wen-Hsiang Ma; Wen-Hsiang Ma; Chiou-Mien Lin; Chiou-Mien Lin;
Ming-Huei Chen; Ming-Huei Chen; Yung-Cheng Chuang; Yung-Cheng Chuang;
Chiou-Mien Lin; Chiou-Mien Lin; Shao-Yuan Chang Shao-Yuan Chang
Yung-Cheng Chuang; Yung-Cheng Chuang;
Shao-Yuan Chang Shao-Yuan Chang
Xin-Wu Lin; Xin-Wu Lin;
Xin-Wu Lin; Xin-Wu Lin;
NT$1,000,000 (inclusive) ~ NT$2,000,000 (exclusive) Jin-Long Liu; Jin-Long Liu;
Jin-Long Liu Jin-Long Liu
Ming-Huei Chen Ming-Huei Chen
NT$2,000,000 (inclusive) ~ NT$3,500,000 (exclusive) Hung-Sheng Yu Hung-Sheng Yu
NT$3,500,000 (inclusive) ~ NT$5,000,000 (exclusive)
NT$5,000,000 (inclusive) ~ NT$10,000,000 (exclusive) Chien-Hao Lin Chien-Hao Lin Chien-Hao Lin; Chien-Hao Lin;
Chih-Chien Chang Chih-Chien Chang
NT$10,000,000 (inclusive) ~ NT$15,000,000 (exclusive)
NT$15,000,000 (inclusive) ~ NT$30,000,000 (exclusive)
NT$30,000,000 (inclusive) ~ NT$50,000,000 (exclusive)
NT$50,000,000 (inclusive) ~ NT$100,000,000 (exclusive)
NT$100,000,000 and above
Total 18 people 18 people 19 people 19 people
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B. Remuneration to President and Executive Vice Presidents and range of remuneration

2022

Unit: NT$ 1,000

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Ratio of Total
Pension and Bonus and Special Remuneration
Salary (A) Employee's Compensation (D)
Separation Pay (B) Disbursement (C) (A+B+C+D) to Net Compensation
Income (%) from an Investee
Other Than the
Title Name All All All TBB All Companies within All Company’s
Companies Companies Companies the Finance Statements Companies Subsidiaries or
TBB within the TBB within the TBB within the TBB within the Parent Company
Finance Finance Finance Amount in Amount in Amount in Amount in Finance
Statements Statements Statements Cash Stock Cash Stock Statements
President Chih-Chien Chang Yes
Executive Vice
Chiu-Yen Chen None
President
Executive Vice
President Jia-Ruey Luan Yes
Executive Vice
President Sung-Shui Chiu Yes
EVP and
SVP&GM,
Adminstration Shao-Huang Chen Yes
Management
Dept.
EVP and
SVP&GM,
Tseng-Hsiang Yi None
Corporate
Banking Dept.
Former
Executive Vice Yu-Min Chang None
President
Former
Executive Vice Chang-Yu Lin None
President
EVP & Chief
Auditor and
Tsung-Chu Hsieh None
SVP&GM,
Auditing Dept.
31,825
31,825/
Total 16,280 16,280 1,375 1,375 13,019 13,019 1,151 1,151 / 225
0.31%
0.31%
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Note: Each of them was assigned a driver during the tenure in 2022, and the drivers’ remuneration totaled NT$6,845,000.

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Name of the President or the Executive Vice President
Range of Remuneration Paid to the President and Executive Vice Presidents of TBB
TBB Parent company and all investees
Below NT$1,000,000 Yu-Min Chang Yu-Min Chang
NT$1,000,000 (inclusive) ~ NT$2,000,000 (exclusive)
NT$2,000,000 (inclusive) ~ NT$3,500,000 (exclusive) Tseng-Hsiang Yi; Chang-Yu Lin; Tseng-Hsiang Yi; Chang-Yu Lin;
Tsung-Chu Hsieh Tsung-Chu Hsieh
NT$3,500,000 (inclusive) ~ NT$5,000,000 (exclusive) Chiu-Yen Chen; Jia-Ruey Luan; Chiu-Yen Chen; Jia-Ruey Luan;
Sung-Shui Chiu; Shao-Huang Chen Sung-Shui Chiu; Shao-Huang Chen
NT$5,000,000 (inclusive) ~ NT$10,000,000 (exclusive) Chih-Chien Chang Chih-Chien Chang
NT$10,000,000 (inclusive) ~ NT$15,000,000 (exclusive)
NT$15,000,000 (inclusive) ~ NT$30,000,000 (exclusive)
NT$30,000,000 (inclusive) ~ NT$50,000,000 (exclusive)
NT$50,000,000 (inclusive) ~ NT$100,000,000 (exclusive)
NT$100,000,000 and above
Total 9 people 9 people
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III

C. Name of Management Receiving the Distribution of Employee's Compensation and the Distribution

Unit: NT$ 1,000; %

2022

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

Ratio of Total
Amount
Title Name in Amount Total Compensation
in Cash to Net Income
Stock
(%)
Executive Vice
Chiu-Yen Chen
President
Executive Vice
President Jia-Ruey Luan
Executive Vice
President Sung-Shui Chiu
EVP and SVP&GM,
Adminstration Shao-Huang Chen
Management Dept.
EVP and SVP&GM,
Corporate Banking Tseng-Hsiang Yi
Dept.
Former Executive
Vice President Yu-Min Chang
Former Executive
Vice President Chang-Yu Lin
EVP & Chief Auditor
and SVP&GM, Tsung-Chu Hsieh
Auditing Dept.
SVP&GM, Treasury
Dept. Jyun-You Shih
SVP&GM, Yu-Chuan Chou
Accounting Dept.
Li-Yueh Hsu; Chu-Jou Chen; Kuo-Liang Tseng; Hsiou-Chen Kang; Ching-Yun Kuo; Mei-Huei
Chen; Chiang-Shu Lin; Wen-Fang Lin; Yu-Cheng Tsai; Min-Chung Hsieh; Yi-Chin Chai; Ying-
Che Fang; Wen-Shu Lin; Ming-Ju Yang; Le-Yi Jiang; Ting-Huei Liao; Shenn-Bao Jean; Wen-
Ling Wang; Li-Chuan Huang; Yueh-Chin Wang; Li-Huei Chen; Ming-Yi Lin; Chih-Cheng Chen;
Wen-Hsiu Huang; Shu-Cing Wu; Ching-Yi Lin; Tung-Sheng Ni; Po-Jung Huang; Mu-Hsiang
Wu; Yu-Chiao Wei; Yuan-Hsueh Hsiao; Tung-Han Lu; Shui-Chiang Fang; Hsih-Hui Chen; Li-
Ching Lai; Zuo-Ling Zeng; Ching-Yang Lee; Hsiu-Hsin Hou; Shu-Ling Yuan; Yun-Hui Chang;
Jiann-Yea Shyu; Sung-Nan Chiao; Ching-Hsiu Liu; Yun-Shiang Tsai; Chao-Lieh Chen; Chun-
Ying Shen; Li-Jhu Huang; Bi-Shuang Lin; Ssu-Jung Lai; Pei-Ling Lin; Mei-Chih Hou; Ching-
Yao Chen; Fuh-Yuh Yeh; Yen-Ling Chen; Hui-Mei Chen; Chin-Shan Sung; Chin-Tsan Wu;
Wen-Ching Huang; Mei-Kuei Li; Shu-Ping Ciou; Chien-Fa Wang; Pin-Hsiung Chen; Jui-Yuan
Huang; Shuan-Hua Liu; Ying-Hui Lai; Yu-Hsia Feng; Ming-Chien Chien; Nien-Tzu Chen;
Chun-Ta Lin; Fang-Chuan Chiu; Jui-Yu Li; Ming-Yi Chiu; Shu-Ting Chen; Chin-Chih Li; Han-
SVP, VP, GM for Mei Nung; Mei Hung; Tsung-Jen Hsieh; Ming-Fa Chien; Cheng-Hsiung Tsai; Yueh-Mei Chang;
Departments and Ju-Hsiang Tien; Shu-Fen Li; Chin-Fu Chiang; Chia-Yi Wu; Chi-Fen Yen; Hsu-Hsiang Huang;
Branches Chun-Hung Chang; Shu-E Chen; Chun-Chu Hsiao; Nai-Chia Chi; Kuan-Yi Huang; Su-Fen
Chen; Chiu-Yu Lin; Hsin-Te Li; Yu-Jung Tseng; Hsin-Lu Chiang; Sheng-Wang Chang; Fang-
Mei Lai; Li-Chung Lin; Yih-Shiou Wang; Man-Chung Yeh; Jung-Yu Huang; Cheng-An Hsieh;
Fu-Ching Chou; Chien-Ta Wu; Meng-Fang Wu; Pi-Chu Chang; Yen-Ju Chen; Yueh-Man Sung;
Tsai-Chuan Wu; His-Her Pai; Chih-Shan Hung; Chih-Cheng Cho; Ming-Tang Chen; Liang-
Pin Chen; Fu-Yuan Yao; Yu-Cheng Chiao; Ming-Chin Ke; Po-Hung Wang; Ruey-shyang Guo;
Chia-Cheng Liu; I-Man Chen; Li-Feng Huang; Chung-Hsien Huang; Chun-Jen Huang; Mei-
Chen Chen; Hui-Pai Kuo; Hsiu-Chen Chiu; Chien-Lai Su; Hsiu-Chu Lin; Guo-Shiang Huang;
Shun-Ho Chen; Su-Chih Wang; Ling-Ling Chen; Shu-Hui Chen; Kuo-Tai Shih; Hui-E Wu;
Kuang-Tsai Wang; Fu-Lai Chang; Yi-Ching Wang; Chin-Chuan Su; Chiu-Yuan Hung; Li-Jung
Lin; Tao-Cheng Shen; Yao-Chin Yang; Shu-Fang Kuo; Leh-Chin Kuo; Chien-Chung Lin; Meng-
Hsun Sung; Hsueh-Mei Yang; Cheng-Chuan Lin; Wen-Ling Chang; An-Yun Lin; Hsiao-Ming
Chen; Chen-Chung Fan; Chao-Ming Huang; Sue-Jen Chen; Feng-Chang Wu; Chu-Ying Ting;
Cheng-Hung Chang; Hsi-Pin Tseng; a total of 161 persons.
Total 0 28,787 28,787 0.28%
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Note:

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According to the requirements under Article 41 of the Article of Association of the Bank, shall there be profits of the year and except for retaining the compensation amount for losses from previous years, the Bank shall allocate 1% to 6% as employee's compensation.
The remuneration of the Bank's employee is calculated and distributed in accordance with the Bank's "Directions for Payment of Employee's Compensation" after evaluating the Bank's pre-tax net profit achievement rate, operating performance financial indicators, and individual assessment results.

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(5) Analysis of total remuneration, as a percentage of net income stated in the parent company-only financial reports or individual financial reports, as paid by the Bank and all other companies included in the consolidated financial report during the past 2 fiscal years to Directors, the President, and the Executive Vice Presidents; the remuneration policies, standards, and package of remuneration payment
A. Analysis of total remuneration (including salary, bonus, pension, and employee's compensation), as a percentage of net income stated in the parent company-only financial reports or individual financial reports, as paid by the Bank and all other companies included in the consolidated financial report during the past 2 fiscal years to Directors, the President, and the Executive Vice Presidents:

Unit: NT$ 1,000; %

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2022 2021
TBB All Companies within the TBB All Companies within the
Item Finance Statements Finance Statements
Amount As Percentage Amount As Percentage Amount As Percentage Amount As Percentage
of Net Income of Net Income of Net Income of Net Income
Directors 101,536 1.00% 101,536 1% 62,591 1.23% 62,591 1.23%
President and
Executive Vice 31,825 0.31% 31,825 0.31% 31,979 0.63% 31,979 0.63%
Presidents
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B. The policy, standards, and package of remuneration payment are analyzed as follows: a Directors
According to the requirements under Article 41 of the Article of Association of the Bank, shall there be profits of the year and except for retaining the compensation amount for losses from previous years, shall allocate no more than 0.6% as the remuneration of Directors.

Furthermore, according to the requirements under Article 21 of the Article of Association of the Bank, the Board was authorized by the Shareholders' Meeting to determine the remuneration of Directors, and such amount shall be determined according to the general remuneration offered within the industry.

The remuneration paid to the directors is based on the standards in the industry, the respective performance of Directors, the performance of corporate operations, and the results of the performance assessment by the Board. The remuneration for Independent Directors shall be subject to the monthly payment plan for remuneration passed at the Shareholders' Meeting in 2011. Except for the monthly fixed remunerations payment, such Directors shall not receive the Director remuneration specified in the Article of Association.

Directors' remuneration distributed in 2021 was NT$37,107 thousand, and the Directors' remuneration proposed to be distributed in 2022 shall be NT$75,243 thousand.

b President, Executive Vice Presidents, and Chief Auditor
Regarding the remuneration paid to the President, Vice Presidents, and Chief Auditor, except for giving considerations to the standard in the industry, personal performance and corporate business performance are also taken into account. Moreover, such remuneration shall be based on relevant requirements of "Directions for Salary Payment to Employees," "Directions for Payment of New Year, Festival, and Performance Bonuses," "Directions for Payment of Employee's Compensation," and "Remuneration Committee Organizational Procedures."

(6) Procedure for determining remuneration to directors, the President, and the Executive Vice Presidents by the Bank and all other companies included in the consolidated financial report during the past 2 fiscal years; and linkage thereof to operating performance and future risks

A. Directors
Regarding the bonus of Directors of the Bank, the Article of Association has provided that, shall there be profits of the year and except for retaining the compensation amount for losses from previous years, the Bank shall allocate no more than 0.6% as the remuneration of Directors. The Shareholders' Meeting authorized the Board to determine the payment for such remuneration according to the standards in the industry, the respective performance of Directors, the performance of corporate operations, and the results of the performance assessment by the Board. Relevant performance assessment was proposed at the meeting of the Remuneration Committee for discussion and was submitted to and approved by the Board

III

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meeting. Regarding the remuneration for Independent Directors, the Board shall determine a reasonable remuneration different from that of the general Directors according to the relevant standards within the industry. Except for the monthly fixed remunerations payment, such directors shall not receive the Director remuneration specified in the Article of Association. For losses incurred to the Bank resulting from dubious acts of the Directors, the Audit Committee shall exert control and supervision on the existing and potential risks, and impose necessary punishment according to the relevant laws and regulations.

B. President, Executive Vice Presidents, Chief Auditor, and members of management

The approval procedures for the remuneration of President, Executive Vice Presidents, Chief Auditor, and members of management shall be based on relevant requirements of "Directions for Salary Payment to Employees," "Directions for Payment of New Year, Festival, and Performance Bonuses" "Directions for Payment of Employee's Compensation," and "Remuneration Committee Organizational Procedures." Such remuneration shall be implemented and paid after an assessment of performance based on the "Directions for Employee Audit," "Directions for Performance Audit," and "Directions for Administrative Incentives for Performance Audit" of the Bank, with consideration to the general standard within the industry. Furthermore, the remuneration and relevant performance assessment of the Bank's managers shall be proposed at the meeting of the Remuneration Committee for discussion annually, and the results thereof shall be submitted to the Board for approvals. Among which, the bonus part shall be linked to and subject to the before tax net profit achieving rate, business performance financial indications, and personal audit results of the Bank. For losses incurred to the Bank resulting from dubious acts of President, Executive Vice Presidents, Chief Auditor, and members of management, the Board shall not only approve the dismissal of them and cease the payment of remuneration, but also impose necessary punishment according to the relevant laws and regulations.

3. Operations of Corporate Governance

(1) Operations of Board of Directors

A total of 9 meetings were held by the Board in the most recent year (2022). The attendance of the members of the Board are as follows:

December 31, 2022

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Number of Number of
Title Name required Number of actual delegated Actual attendance Name of the legal entity Remarks
attendance (A) attendance (B) attendance rate (%) (B/A) represented
Chairman Chien-Hao Lin 9 9 0 100 Ministry of Finance
Managing Director Chih-Chien Chang 9 9 0 100 Ministry of Finance
Managing Director Shih-Yuan Tai 1 1 0 100 Bank of Taiwan Resigned on Feb. 9, 2022
Managing Director Hsin-Tzu Hu 8 8 0 100 Bank of Taiwan Appointed on Feb. 9, 2022
Managing Director Xin-Wu Lin 9 9 0 100
(Independent Director)
Managing Director Chun-Hsien Yeh 9 9 0 100 National Development
Fund, Executive Yuan
Director Shiu-Yen Lin 7 7 0 100 Ministry of Finance Resigned on Nov. 1, 2022
Director Tung-Fu Lin 2 2 0 100 Ministry of Finance Appointed on Nov. 1, 2022
Director Wen-Chieh Wang 3 3 0 100 Bank of Taiwan Resigned on June
17, 2022
Director Ho-Chyuan Chen 5 5 0 100 Bank of Taiwan Appointed on July
19, 2022
Director Hung-Sheng Yu 9 9 0 100 Ministry of Finance
Director Tzu-Hao Tsai 9 9 0 100 Bank of Taiwan
Director Che-Nan Wang 9 9 0 100
Director Ming-Huei Chen 4 4 0 100 TBB Industry Union Resigned on July 19, 2022
Director Wen-Hsiang Ma 5 5 0 100 TBB Industry Union Appointed on July
19, 2022
Independent Director Jin-Long Liu 9 9 0 100
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Number of Number of
Title Name required Number of actual delegated Actual attendance Name of the legal entity Remarks
attendance (A) attendance (B) attendance rate (%) (B/A) represented
Independent Director Yung-Cheng Chuang 9 9 0 100
Independent Director Shao-Yuan Chang 9 9 0 100
Independent Director Chiou-Mien Lin 9 9 0 100
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Other items that shall be recorded:

When any of the following situations occurred to the operations of the Board, state the date and term of the Board meeting, the content of proposals, opinions of all Independent Directors, and the Bank's actions in response to the opinions of the Independent Directors:
(1) Matters included in Article 14-3 of the Securities and Exchange Act: Not applicable. The Bank has already established an Audit Committee.
(2) Other resolutions of the Board, which the Independent Director(s) voiced objection or reservation that are documented or issued through a written statement in addition to the above: None.
When Directors abstain themselves for being a stakeholder in certain proposals, the name of the Directors, the content of the proposal, reasons for abstentions and the results of voting counts should be stated.
(1) At the 5th Board meeting of the 16th Board on March 9, 2022, for the proposal to lift the non-competition restriction of the Bank's directors on the 2022 Shareholders’ Meeting, except for Managing Director Hsin-Tzu Hu and Independent Director Yung-Cheng Chuang who recused themselves from the discussion and voting, all the attending directors agreed to pass the proposal as proposed.
(2) At the 6th Board meeting of the 16th Board on May 4, 2022, for the proposal to submit the case of canceling the rent subsidy for the Chairman and President of the Bank, except for Chairman Chien-Hao Lin, and Managing Director and the President Chih-Chien Chang, who recused themselves from the discussion and voting, all the attending directors agreed to pass the proposal as proposed.
(3) The proposal for the Bank's 2021 director's remuneration distribution at the 7th Board meeting of the 16th Board on July 13, 2022
A. In the review of the remuneration to directors representing the Ministry of Finance, except for Chairman Chien-Hao Lin, Managing Director and the President ChihChien Chang, Director Shiu-Yen Lin, and Director Hung-Sheng Yu who recused themselves from the discussion and voting, all the attending directors agreed to pass the proposal as proposed.
B. In the review of the remuneration to directors representing the Bank of Taiwan, except for Managing Director Hsin-Tzu Hu and Director Tzu-Hao Tsai who recused themselves from the discussion and voting, all the attending directors agreed to pass the proposal as proposed.
C. In the review of the remuneration to directors representing the National Development Fund, Executive Yuan, except for Managing Director Chun-Hsien Yeh representing the National Development Fund, Executive Yuan who recused himself from the discussion and voting, all the attending directors agreed to pass the proposal as proposed.
D. In the review of the remuneration to directors representing the TBB Inductry Union and Land Bank of Taiwan and to individual directors, except for Director Hung-Sheng Yu (Chairman of the TBB Industry Union) and union representative - Director Ming-Hui Chen, and Individual Director Che-Nan Wang, who recused themselves from the discussion and voting, all the attending directors agreed to pass the proposal as proposed.

(4) At the 11th Board meeting of the 16th Board on November 2, 2022, for the report of the Bank’s 2023 annual budget draft and audit business operating expense budget draft, except for Managing Director Chih-Chien Chang, Independent Director Jin-Long Liu, Independent Director Chiou-Mien Lin, Director Hung-Sheng Yu (Chairman of the TBB Industry Union) and union representative - Director Wen-Hsiang Ma, who recused themselves from the discussion and voting, all the attending directors agreed to pass the proposal as proposed.
(5) At the 12th Board meeting of the 16th Board on December 14, 2022, for the report of the group agreement between the Bank and TBB Industry Union that has expired and is planned to be renewed, except for Director Hung-Sheng Yu and Director Wen-Hsiang Ma, who recused themselves from the discussion and voting, all the attending directors agreed to pass the proposal as proposed.
Information on the evaluation cycle and period, evaluation scope, method, and evaluation content for the Board's evaluation:

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Evaluation Cycle Evaluation Period Evaluation Scope Evaluation Method Evaluation Content
Once every year January 1, 2022 to Board of Directors Self-evaluation ● The evaluation items of the Board performance include the five aspects
December 31, 2022 and its members. of the Board below:
Functional of Directors 1. Involvement in the Bank's operations.
Committees and its and Functional 2. Improvement to the decision-making quality of the Board of Directors.
members Committees 3. Composition and structure of the Board of Directors.
4. Election and continuing education of directors.
5. Internal control.
● The evaluation items of the directors ’ performance include the six aspects
below:
1. Understanding of the Bank's goals and tasks.
2. Awareness of directors' responsibilities.
3. Involvement in the Bank's operations.
4. Internal relationship management and communication.
5. Directors ’ professionalism and continuing education.
6. Internal control.
● The evaluation items of the functional committees ’ performance include
the five aspects below:
1. Involvement in the Bank's operations.
2. Awareness of functional committee ’ s responsibilities.
3. Improvement to functional committee ’ s decision-making quality.
4. Composition of functional committee and selection of members.
5. Internal control.
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The Bank conducted the internal performance evaluation of the Board of Directors, individual directors and functional committees (including the Audit Committee, Remuneration Committee, Sustainable Development Committee and Digital Transformation Committees) in 2022, and the evaluation result was listed as "excellent". The report has been made on the 14th Board meeting of the 16th Board on February 22, 2023. In addition, the 2022 evaluation result of the performance of the Board of Directors has been disclosed on the Bank's website. (https://ir.tbb.com.tw/corp/board-of-directors/diversity-of-directors-members)

Measures undertaken during the current year and the latest year in order to strengthen the functions of the Board of Directors (the establishment of the Audit Committee and improvement of information transparency, etc.), and the assessment of the implementation:
(1) Directors’ continuing education on corporate governance and the hours of training are in compliance with the requirements of the Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies. The total training hours are 128 hours, and the average training hours are about 8.5 hours. The trainings regarding the information security, anti-money laundering/combating financing of terrorism and fair treatment of consumers were also conducted for directors.
(2) The Bank’s rules of procedure for Board meetings clearly stipulate that at least one independent director shall attend a Board meeting in person; for matters that should be resolved by the Board of Directors, all independent directors shall attend such Board meetings. If an independent director is unable to attend in person, he/she shall appoint another independent director to attend the meeting on his/her behalf. A total of 9 Board meetings were convened in 2022, and all independent directors attended every meeting in person

III

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(2) Audit Committee activities

A total of 14 meetings were held by the Audit Committee in the most recent year (2022). The attendance of Independent Directors was as follows:

December 31, 2022

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Number of Number of Number of Actual
Title Name required actual delegated attendance rate Remarks
attendance (A) attendance (B) attendance (%) (B/A)
Committee Chair Jin-Long Liu 14 14 0 100
Member Xin-Wu Lin 14 14 0
Member Yung-Cheng 14 14 0 100
Chuang
Shao-Yuan
Member 14 14 0 100
Chang
Member Chiou-Mien Lin 14 14 0 100
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Other items that shall be recorded:

If any of the following circumstances occurs during the operation of the Audit Committee, the dates, sessions, agenda, all independent directors’ objections, reservations or major suggestions, the results of the committee’s resolutions, and the Company’s handling of such opinions shall be specified:
(1) All conditions stated in Article 14-5 of the Securities and Exchange Act.

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Board Date/ Resolution results of the Audit Committee and the Bank's response regarding
Session Agenda the Audit Committee's opinions
The 4th Board Amendments to the Bank's Regulations for Internal Control Resolution results of the Audit Committee: Ratification approved and submitted to
meeting of the System for Securities Firms (including the internal control the Board.
16th Board on system, internal audit implementation rules, audit statement, The Bank's response to the opinions of the Auditing Committee: Ratification
January19, 2022 and audit working papers) (the 4th meeting of the 4th Audit approved by all directors in attendance with consent.
Committe on January 12, 2022)
The 5th Board Report on the 2021 individual financial reports and Resolution results of the Audit Committee: Passed, and submitted to the Board for
meeting of the 16th consolidated financial reports of the Bank and its consideration.
Board on March 9, subsidiaries (the 5th meeting of the 4th Audit Committee on The Bank's response to the opinions of the Auditing Committee: Resolution passed
2022 March 2, 2022) by all directors in attendance with consent.
The 5th Board The plan to carry out a capital increase via transferred Resolution results of the Audit Committee:
meeting of the 16th earnings for the issuance of new shares in response to the 1. Passed, and submitted to the Board for consideration.
Board on March 9, earnings distribution of stock dividends for 2021 (the 5th 2. Please provide further explanation of the distribution method, proportion and
2022 meeting of the 4th Audit Committee on March 2, 2022) main considerations regarding the Bank's shareholder dividends.
The Bank’s response to the opinions of the Auditing Committee: Resolution passed
by all directors in attendance with consent.
The 5th Board Amendments to the Bank's Procedures for Acquisition or Resolution results of the Audit Committee:
meeting of the 16th Disposal of Assets of the Bank (the 5th meeting of the 4th 1. Passed, and submitted to the Board for consideration.
Board on March 9, Audit Committee on March 2, 2022) 2. The Administration Management Dept. shall review whether the internal
2022 regulations of the Bank involved in Article 5 of this Procedure need to be revised.
The Bank’s response to the opinions of the Auditing Committee: Resolution passed
by all directors in attendance with consent.
The 6th Board Amendments to the Bank's Regulations for Internal Control Resolution results of the Audit Committee: Ratification approved and submitted to
meeting of the 16th System for Securities Firms (including the internal control the Board.
Board on May 4, system, internal audit implementation rules, audit statement, The Bank's response to the opinions of the Auditing Committee: Ratification
2022 and audit working papers) (the 6th meeting of the 4th Audit approved by all directors in attendance with consent.
Committe on April 27, 2022)
The 6th Board Report of the 2022 Q1 consolidated financial reports of the Resolution results of the Audit Committee: Passed, and submitted to the Board for
meeting of the 16th Bank and its subsidiaries (the 6th meeting of the 4th Audit consideration.
Board on May 4, Committee on April 27, 2022) The Bank's response to the opinions of the Auditing Committee: Resolution passed
2022 by all directors in attendance with consent.
The 6th Board Conducting the change of Chief Auditor as explained (the Resolution results of the Audit Committee:
meeting of the 16th 5th extraordinary meeting of the 4th Audit Committee on 1. Agree to the resignation of the original Chief Auditor and agree to appoint a new
Board on May 4, May 4, 2022) Chief Auditor.
2022 2. The Chief Auditor shall hand over duties completely, including matters instructed
by the Audit Committee
The Bank’s response to the opinions of the Auditing Committee: Resolution passed
by all directors in attendance with consent.
The 7th Board Amendments to the Bank's Regulations for Internal Control Resolution results of the Audit Committee: Ratification approved and submitted to
meeting of the 16th System for Futures Trading Assistance (including the the Board.
Board on July 13, internal control system, internal audit implementation rules, The Bank's response to the opinions of the Auditing Committee: Ratification
2022 audit statement, and audit working papers) (the 7th meeting approved by all directors in attendance with consent.
of the 4th Audit Committee on July 6, 2022)
The 7th Board Amendments to the Bank's Regulations for Internal Control Resolution results of the Audit Committee: Passed, and submitted to the Board for
meeting of the 16th System for Securities Firms (including the internal control consideration.
Board on July 13, system, internal audit implementation rules, audit statement, The Bank's response to the opinions of the Auditing Committee: Resolution passed
2022 and audit working papers) (the 7th meeting of the 4th Audit by all directors in attendance with consent.
Committe on July 6, 2022)
The 8th Board Amendments to the Bank's Regulations for Internal Control Resolution results of the Audit Committee:
meeting of the 16th System for Futures Trading Assistance (including the 1. The 1st and 2nd cases of ratification were relisted as discussion proposals
Board on August internal control system, internal audit implementation rules, instead, and the contents were discussed and agreed to be approved as
17, 2022 audit statement, and audit working papers) (the 8th meeting proposed, and submitted to the Board for ratification.
of the 4th Audit Committee on August 10, 2022) 2. Matters that should be deliberated by the Audit Committee shall not be handled
as ratification cases hereafter.
3. The compliance units did have deficiencies in the handling of this case, which
should be suject to disciplinary action.
The Bank's response to the opinions of the Auditing Committee: Ratification
approved by all directors in attendance with consent.
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Board Date/ Resolution results of the Audit Committee and the Bank's response regarding
Session Agenda the Audit Committee's opinions
The 8th Board Amendments to the Bank's Regulations for Internal Control Resolution results of the Audit Committee:
meeting of the 16th System for Securities Firms (including the internal control 1. The 1st and 2nd cases of ratification were relisted as discussion proposals
Board on August system, internal audit implementation rules, audit statement, instead, and the contents were discussed and agreed to be approved as
17, 2022 and audit working papers) (the 8th meeting of the 4th Audit proposed, and submitted to the Board for ratification.
Committe on August 10, 2022) 2. Matters that should be deliberated by the Audit Committee shall not be handled
as ratification cases hereafter.
3. The compliance units did have deficiencies in the handling of this case, which
should be suject to disciplinary action.
The Bank's response to the opinions of the Auditing Committee: Ratification
approved by all directors in attendance with consent.
The 8th Board Report on 2022 Q2 individual financial reports and Resolution results of the Audit Committee: Passed, and submitted to the Board for
meeting of the 16th consolidated financial reports of the Bank and its consideration.
Board on August subsidiaries (the 8th meeting of the 4th Audit Committee on The Bank's response to the opinions of the Auditing Committee: Resolution passed
17, 2022 August 10, 2022) by all directors in attendance with consent.
The 8th Board The proposal for a loan case with Mega Bills Finance Co., Resolution results of the Audit Committee:Passed, and submitted to the Board for
meeting of the 16th Ltd. submitted (the 8th meeting of the 4th Audit Committee consideration.
Board on August on August 10, 2022) The Bank's response to the opinions of the Auditing Committee: Except for Director
17, 2022 Shiu-Yen Lin who recused herself from the discussion and voting, all the other
attending directors agreed to pass the resolution as proposed.
The 9th Board Amendments to the Bank's Regulations for Internal Control Resolution results of the Audit Committee:
meeting of the System for Securities Firms (including the internal control Passed, and submitted to the Board for consideration.
16th Board on system, internal audit implementation rules, sudit statement, The Bank’s response to the opinions of the Auditing Committee: Resolution passed
September 21, and audit working papers) (the 9th meeting of the 4th Audit by all directors in attendance with consent.
2022 Committe on September 14, 2022)
The 10th Board Amendments to the Bank's Regulations for Internal Control Resolution results of the Audit Committee: Passed, and submitted to the Board for
meeting of the 16th System for Securities Firms (including the internal control consideration.
Board on October system, internal audit implementation rules, audit statement, The Bank's response to the opinions of the Auditing Committee: Resolution passed
19, 2022 and audit working papers) (the 10th meeting of the 4th Audit by all directors in attendance with consent.
Committe on October 12, 2022)
The 10th Board Amendments to the Bank's Regulations for Internal Control Resolution results of the Audit Committee:
meeting of the 16th System for Futures Trading Assistance (including the internal 1. Please supplement the relevant provisions of the contract signed between the
Board on October control system, internal audit implementation rules, audit Bank and Yuanta Futures Exchange, and make appropriate amendments.
19, 2022 statement, and audit working papers) (the 10th meeting of 2. Passed, and submitted to the Board
the 4th Audit Committee on October 12, 2022) The Bank’s response to the opinions of the Auditing Committee: Resolution passed
by all directors in attendance with consent.
The 11th Board Report on the 2022 Q3 consolidated financial report of the Resolution results of the Audit Committee: Passed, and submitted to the Board for
meeting of the 16th Bank and its subsidiaries (the 11th meeting of the 4th Audit consideration.
Board on November Committee on November 1, 2021) The Bank's response to the opinions of the Auditing Committee: Resolution passed
2, 2022 by all directors in attendance with consent.
The 11th Board Amendments to the Bank's Regulations for Internal Control Resolution results of the Audit Committee: Passed, and submitted to the Board for
meeting of the 16th System for Securities Firms (including the internal control consideration.
Board on November system, internal audit implementation rules, audit statement, The Bank's response to the opinions of the Auditing Committee: Resolution passed
2, 2022 and audit working papers) (the 11th meeting of the 4th Audit by all directors in attendance with consent.
Committe on November 1, 2022)
The 12th Board Proposal to appoint Feng-Hui Li and Pei-Ru Tsai, CPAs Resolution results of the Audit Committee: Passed, and submitted to the Board for
meeting of the 16th at KPMG in Taiwan to perform audit of the next year’s consideration.
Board on December annual financial report (2023), tax audit, ad-hoc audit of due The Bank's response to the opinions of the Auditing Committee: Resolution passed
14, 2022 diligence, and other business audits (the 12th meeting of the by all directors in attendance with consent.
4th Audit Committee on December 7, 2022)
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(2) Except for the items in the preceding issues, other resolutions approved by two-thirds of all the Directors but yet to be approved by the Audit Committee: None.
When Independent Directors abstain themselves for being a stakeholder in certain proposals, the name of the Independent Directors, the content of the proposal, reasons for abstentions and the results of voting counts should be stated: None.
Communication between Independent Directors and head of internal audit and CPAs (including material issues, audit methods and results relating to the Bank's finances and business).

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Date Communication target Communication content Communication result
2022/3/2 CPA 2021 Independent Auditors' Report Suggestions from independent directors:
1. Understand the actual audit process performed by auditors.
2. Discrepancies between findings of internal control audits and
findings of auditors.
3. Repeat with audits of previous years.
Response:
Action will be taken as suggested by the independent directors.
2022/8/10 CPA 1. Audit of unqualified opinion for 2022 Q2. Suggestions from independent directors:
2. Computer audit. Effects of COVID-19 and the Russia-Ukraine war were included.
3. Information security risk. Assistance should be provided to help the business units understand
the differences.
Response:
Action will be taken as suggested by the independent directors.
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Date Communication target Communication content Communication result
2022/11/1 Internal Audit Managers 1. Implementation status of internal audit and Suggestions from independent directors:
and Auditors deficiencies identified. 1. The risk-based internal audit system will come into effect in January
2. Penalties and key points supervised by the 2024. Plans are made for tasks to be completed every month up to
competent authority. launch and the tasks will be followed up and completed.
3. Implementation of a risk-based internal audit 2. Performance evaluation should be linked to audit evaluation.
system and preparation progress. 3. The audit process can be assisted by IT or software tools.
Response:
1. Plans have been made according to the suggestions from the
independent directors and progress reports are made regularly to
the Board of Directors.
2. Audit evaluation score currently accounts for 15% of the total
performance evaluation score. If audit report evaluation fails to
reach a certain standard, eligibility for administrative awards will be
canceled. Audit reports on the business units are provided to the
Human Resources Department as a reference for managers during
performance evaluation.
3. The audit process is aided by laptops and an audit management
system is utilized to facilitate the audit report and procedures. The
Auditing Department will continue to adjust and improve system
features.
2022/12/5 CPA 1. Key audit matters. Suggestions from independent directors:
2. Audit quality indicators. 1. Financial product impairment valuation or fair value valuation
3. Independence issues. have an impact on subsequent dividend distribution and should be
4. Updates on important regulations. included or have suggestions made.
2. For unaudited financial statements, please actively provide
assistance to ensure the process is completed smoothly and meet
the requirements.
Response:
Request has been made for the CPAs to provide opinions and
assistance on financial product impairment valuation or fair value
valuation with an impact on subsequent dividend distribution and
unaudited financial statements.
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Key annual emphasis in working for the Audit Committee: The Audit Committee aims to assist the Board in using the appropriate expressions of the Bank's financial statements; appointing (dismissing) the CPA and assuring its independence and performance; and overseeing effective implementation of internal controls, compliance with laws, regulations, and rules; as well as implementing controls for existing or potential risks.
(1) Supervise the appropriate expressions in the Bank's financial statements: Review of quarterly financial statements (2022 Q1 reviewed in the 6th meeting of the 4th Audit Committee on April 6, 2022, 2022 Q2 reviewed in the 8th meeting of the 4th Audit Committee on August 10, 2022, and 2022 Q3 reviewed in the 11th meeting of the 4th Audit Committee on November 1, 2022) and 2021 annual financial statement, business report and earning distribution table (reviewed in the 5th meeting of the 4th Audit Committee on March 2, 2022), and issue the review report to the shareholders' meeting according to the requirements under Article 219 of the Company Act approved by Paragraph 3, Article 14-4 of the Securities and Exchange Act.
(2) Appointment (dismissal) of the CPA and assuring its independence and performance: Evaluate the appointment (dismissal) of the CPA and undertaking the annual assessment of the independence and performance of the CPA (considered and passed at the 12th meeting of the 4th Audit Committee on December 7, 2022); and report to the Shareholders' Meeting for review (considered and passed at the 12th Board meeting of the 16th Board on December 14, 2022).
(3) Effective implementation of internal controls: The Bank has established the organization, structure, and authorization, and has prepared the internal audit workbook and the working paper. These items shall contain evaluations of the requirements and the business process under the internal control system to determine whether the current system and procedures have proper internal controls in place; whether the departments comply with relevant requirements and duly execute the internal controls; and the rationale of the effects of executing such internal controls, and proposals of improvement recommendations at any time. The internal audit shall carry out the audit activity according to the rules, and shall submit reports to the Board and the Audit Committee on a regular basis.
(4) Comply with relevant laws, regulations, and rules as well as control over existing and potential risks: The Chief Compliance Officer reports on the implementation of the Bank's legal compliance system as follows: 2021 Q4 compliance update on the Bank’s legal compliance system was reported in the 4th meeting of the 4th Audit Committee on January 12, 2022; 2022 Q1 compliance update in the 6th meeting of the 4th Audit Committee on April 27, 2022; 2022 Q2 compliance update in the 8th meeting of the 4th Audit Committee on August 10, 2022; and 2022 Q3 compliance update in the 11th meeting of the 4th Audit Committee on November 1, 2022.

(3) Sustainable Development Committee Activities

A. The responsibilities of the Sustainable Development Committee:
a. Approval of mid- and long-term strategies and annual goals for sustainable development.
b. Approval of the implementation plans for sustainable development.
c. Follow up on the mid- and long-term strategies, annual goals and implementation plans for sustainable development and review the effectiveness of implementation.
d. Approval of the standards for making the sustainability report.

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e. Approval of other matters related to sustainable development.
B. Matters resolved or passed by the Sustainable Development Committee after discussion are transferred to relevant units or team members of the Bank.
C. The Sustainable Development Committee reports to the Board on the annual implementation results of sustainable development every year.

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D. The Sustainable Development Committee is comprised of the Chairman, President, and three Independent Directors, with the Chairman being the Committee Chair. A total of 3 meetings were held in 2022 and the attendance of members was as follows:

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December 31, 2022
Number of Number Number of Actual
Title Name required of actual delegated attendance Note
attendance (A) attendance (B) attendance rate (%) (B/A)
Chairman of the Board Chien-Hao Lin 3 3 0 100
Managing Director and President Chih-Chien Chang 3 3 0 100
Managing Director Xin-Wu Lin 3 3 0 100
(Independent Director)
Independent Director Jin-Long Liu 3 3 0 100
Independent Director Yung-Cheng Chuang 3 3 0 100
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E. The discussion proposals and resolution results of the Sustainable Development Committee in 2022:

Date	Agenda	Resolutions	Notes
February 18, 2022	Presented updates on the Bank’s implementation of ethical corporate management and communication with stakeholders in 2021.	Duly noted.	Submitted to the 5th Board meeting of the 16th Board on March 9, 2022 for review.
	Presented the implementation resules of the Bank on material issues related to sustainability in 2021.	Duly noted.
May 31, 2022	Presented the draft version of the Bank’s Sustainability Report.	Duly noted.
	Presented the Bank’s sustainability strategies - using All-in-One to increase added value for customers.	Duly noted.
	The draft mid- and long-term sustainability strategies.	Approved unanimously without amendment.
November 28, 2022	Presented the progress report on the mid- and long-term sustainability strategies for January - September 2022.	Duly noted.	Submitted to the 12th Board meeting of the 16th Board on December 14, 2022 for review.
	Amendments to the “Ethical Corporate Management Best Practice Principles for Taiwan Business Bank”.	Approved unanimously without amendment.	Submitted to and approved by the 12th Board meeting of the 16th Board on December 14, 2022.
	Amended the charter of the Sustainable Development Committee.	Approved unanimously without amendment.	Submitted to and approved by the 12th Board meeting of the 16th Board on December 14, 2022.

Note: Chairman Chien-Hao Lin has long been dedicated to the research of SME development, as well as the role and social responsibility of an SME specialized bank, and all members of the committee have relevant expertise in the field of sustainable development.

(4) Digital Transformation Committee activities

The Digital Transformation Committee is comprised of the Chairman, President, two Independent Directors and two external members, with the Chairman being the convener. A total of 2 meetings were held by the Digital Transformation Committee in the most recent year (2022). The attendance of members was as follows:

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December 31, 2022
Number of Number Number of Actual
Title Name required of actual delegated attendance Note
attendance (A) attendance (B) attendance rate (%) (B/A)
Chairman of the Board Chien-Hao Lin 2 2 0 100
Managing Director and President Chih-Chien Chang 2 2 0 100
Managing Director Xin-Wu Lin 2 2 0 100
(Independent Director)
Independent Director Jin-Long Liu 2 2 0 100
Member Chia-Chung Chen 2 2 0 100
Member Wen-Nan Tsan 2 2 0 100
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(5) Items disclosed in accordance with the Corporate Governance Best Practice Principles for Banking Industry: Please refer to the Bank's website

About TBB > Investor Relations (https://ir.tbb.com.tw/).

III

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(6) Implementation of Corporate Governance, and Gaps with the "Corporate Governance Best Practice Principles for the Banking Industry" and the cause of the said gaps

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State of Implementation Gaps with the "Corporate
Governance Best Practice
Assessed items Principles for the Banking
Yes No Summary Industry," and the cause of
the said gaps
1. Structure of the bank's shareholders and
equities
(1) Does the bank stipulate and implement  The Bank has established customer complaints procedures and the customer complaint and stock affairs contact No gap
a set of internal procedures to handle window, which will look into the circumstances upon receiving recommendations, doubts, or disputes, and pass
shareholders' suggestions, queries, the task to relevant departments for handling. The Bank also has a spokesperson to address the problem to
disputes, and litigations? external parties.
(2) Does the bank keep track of the major  The Bank refers to the declaration of changes in the Register of Shareholders when closing the stock transfer No gap
shareholders with ultimate control over the and the monthly report for internal parties to keep track and understand the shareholding changes of substantial
bank and the ultimate controllers of the Shareholders and analyze the final controllers of substantial Shareholders.
major shareholders?
(3) Does the bank set up a firewall and  The Directions and procedures for the management of investee companies of the Bank provide relevant No gap
risk control mechanism to reduce the requirements for the supervisors of its related companies, benefitting in effective control over its performance
risks involved with the bank's related and business overview.
companies? In respect of the firewall mechanism, personnel, accounting, assets, and finance departments all have distinct
operations.
Loans to related companies are all subject to the relevant laws and regulations under Article 32 and Article 33 of
the Banking Act.
2. Board composition and its responsibilities
(1) Does the Board formulate a diversity policy  To strengthen the structure of the Board of Directors, no more than one third of the directors may be served No gap
and specific management goals? concurrently by the Bank's managers. In addition, to meet the demands of the Bank's operation, business model,
and development, the Board diversity policy should include the two standards below:
(1) Basic qualification and value: Gender, age, nationality, and culture.
(2) Professional knowledge and skills: Professional background (such as law, accounting, industry, finance,
marketing, or technology), professional skills, and industry experience.
The board members shall generally possess the knowledge, skills, and qualities necessary to perform their
duties, so as to achieve the Bank's ideal goals of corporate governance and enable the Board as a whole to
possess the capabilities including operational judgment, accounting, financial analysis, business management,
risk management, crisis management, industry knowledge, international market perspective, leadership, and
decision-making.
(2) Apart from the Remuneration Committee  1. The Bank has established the Audit Committee, Remuneration Committee, Sustainable Development No gap
and Audit Committee, does the bank Committee and Digital Transformation Committee under the Board.
assembled other functional committees at 2. There is no nomination committee; however, the Article of Association of the Bank provide that the election of
its own discretion? Directors shall adopt the nomination system. Any re-election of Directors shall be subject to nomination by a
shareholder with over 1% shareholding of the Bank or by the Board and subject to the approval of the Board
before being proposed at the Shareholders' Meeting for election.
(3) Does the bank have a set of performance  According to Articles 2 and 3 of the Bank's Regulations for Board Performance Assessment, the Board of the No gap
assessment regulations and assessment Bank shall conduct the annual performance assessment at the end of every year. The assessment results shall
methods for the Board in place, carry out be reported by the Secretarial Dept. to the Board before the end of the first quarter (reported to the 14th Board
regular performance assessment, submit meeting of the 16th Board on February 22, 2023). The scope of assessment shall include the performance of
the results of the performance assessment the Board, individual directors, and the functional committees. Regarding the assessment method, the directors
to the Board and utilizes such results as a (members) and executive departments (departments responsible for such affairs) shall perform self-assessment
reference for determining the remuneration and evaluation, and an external party shall be engaged for the performance assessment every three years
and compensation of individual Directors (Taiwan Corporate Governance Association was engaged to conduct the performance evaluation for 2020, and
and their nomination for re-election? the Association had issued their evaluation report). The remuneration of the Bank's Directors is determined
with reference to the standard in the industry, individual performance, operating efficiency of the Bank, and the
results of the Board performance assessment. Fixed compensation is paid to Independent Directors monthly;
Independent Directors do not receive the Director's remuneration stated in the Article of Association of the Bank.
(4) Does the bank regularly evaluate the  Regular assessment on the independence and competency of the appointed CPA is carried out annually and No gap
independence of CPAs? submitted to the Board meeting for approval before granting the appointment The assessment had been carried
out according to the requirements under Article 46 of the Bank’s "Corporate Governance Practices Best Practice
Principles" and Article 68 of "Statement on Auditing Standards No.46," with reference to the independence of
CPA and Audit Quality Indicators (AQIS) in the CPA Auditing Plan. The assessing items are as follow:
1. The CPA appointed by the Bank does not provide account-keeping, financial system design introduction,
appraisal (assessment) business, management function, actuary services, internal audit outsourcing, human
resources services, investment consultancy, and legal services.
2. The CPA appointed by the Bank does not undertake contingency cases on professional charges (i.e.,
proceedings), active or confidential tax avoidance plan and personal taxation case for the chief of finance
(above).
3. The 2 appointed CPAs have not been appointed for over 7 years, which complies with the requirements
under Article 38 of "Corporate Governance Practices Best Practice Principles for the Banking Industry" and
Article 68 of "Statement on Auditing Standards No.46."
4. The Bank has disclosed 5 major aspects of the framework and evaluated 13 AQI indicators based on the
AQIS template issued by the competent authority.
The evaluation results of the latest year have been discussed and approved at the 12th meeting of the 4th Audit
Committee on December 7, 2022, and submitted to and approved at the 12th meeting of the 16th Board on
December 14, 2022 for the assessment on the independence and competency of CPAs.
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Assessed items	State of Implementation	State of Implementation	State of Implementation	Gaps with the "Corporate Governance Best Practice Principles for the Banking Industry," and the cause of the said gaps
	Yes	No	Summary
3. Does the bank has proper number of eligible corporate governance personnel in place and appoint a manager for corporate governance to be in charge of affairs relating to corporate governance (including but not limited to, the provision of necessary data for directors and supervisors to execute their duties, assisting directors and supervisors in legal compliance, administering matters relating to the Board meetings and Shareholders' Meetings in accordance with the law, and producing minute books for the Board and shareholders' meetings)?			Relevant departments of the headquarters, such as the Secretarial Dept., shall be the department fully (jointly) responsible for corporate governance. Passed at the 13th meeting of the 15th Board on March 11, 2020, S.V.P. & Chief Secretary to the Board of Directors Li-Yueh Hsu was designated as the Corporate Governance Manager to protect the Shareholders' interests and strengthen the function of the Board. Ms. Hsu has held the post of director in relation to affairs of legal affairs, fnance, stock affairs, or corporate governance for over three years. Her primary duties are handling matters concerning the compliance of Board meetings and Shareholders' Meetings according to the law, preparing the meeting minutes for Board meeting and Shareholders' Meeting, providing assistance for Directors and Supervisors when assuming offce and continuing education, providing required information for Directors and Supervisors in executing businesses, providing assistance to Directors and Supervisors regarding their compliance with laws and other matters stipulated in the Bank's articles of association or contracts. Affairs carried out in relation to the corporate governance in 2022 are as follow: 1. There were changes in directors on February 9, June 15, July 19 and October 27, 2022. The Secretarial Dept. has disclosed material information and reported to the Board meeting according to the requirements. Moreover, the Administration Management Dept. has applied for the alteration registration to the Ministry of Economic Affairs, and both tasks were successfully completed. 2. Provide Directors with the continuing education information regarding corporate governance and track the continuing education conditions. The continuing education hour for each Director has complied with the requirements under "Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies," in 2022, with new Directors and existing Directors receiving corporate government courses for 12 hours and 6 hours, respectively. 3. Providing logistics of Board meetings for 9 times, succeeded in delivering the notice of meetings and the agenda to Directors 7 days prior to the date of the meeting and dispatched the meeting minutes within 20 days from the ending of the Board meeting. 4. The Bank held the 2022 Annual Shareholders' Meeting on June 17, 2022 and uploaded the meeting notice and the meeting agenda handbook to the MOPS 30 days before the meeting, while announcing the minutes of the shareholders' meeting within 20 days after the meeting, all of which were duly completed. 5. Assist in organizing compliance and information security promotion courses on the "Friendly Service Principles" and "Implementing Ethical Corporate Management Principles" for anti-money laundering and fair customer treatment for directors. 6. Amended the Bank’s Articles of Incorporation (approved by MOEA in Letter Jing-Shou-Shang No. 11101115230 dated July 18, 2022) and amended the Bank’s Corporate Governance Best Practice Principles and the Ethical Corporate Management Best Practice Principles.	No gap
4. Does the bank establish a channel to communicate with stakeholders (including but not limited to Shareholders, employees, and customers)? Does the bank set up a section for stakeholders on its website and duly respond to the material CSR issues concerned by stakeholders?			1. Stakeholders may contact the Bank through methods of presenting themselves at branches, letters, phone calls, fax, and e-mail. A reporting mailbox and a direct line are also in place for reporting matters of breach of trust. 2. The Investor Relations on the Bank’s website has sections including About TBB, News and Events, Financial Information, Corporate Governance, Stakeholder, SDGs, FAQs, and IR Contacts, to provide better services to investors. 3. At Investor Relations > Stakeholder on the Bank's website, Material Issues, Summary Table of Concerned Issues and Communication Channels, Stakeholder Contact Info and Feedbackare are in place to respond to the issues concerned by stakeholders and safeguard their interests. 4. Report the content and frequency of communications with stakeholders, as wells as issues concerned by stakeholders, to the Board at least once per year.	No gap
5. Information disclosure (1) Does the bank set up a website for the disclosure of relevant information on fnancial status and corporate governance?			1. The Investor Relations section on the Bank's website disclosed sections including About TBB, News and Events, Financial Information, Corporate Governance, Stakeholder, Sustainable Development, FAQs, and IR Contacts, to provide better services to investors. 2. The Investor Relations > Corporate Governance section on the Bank's website has sections including Board of Directors, Committees, Organization Chart, Functions and Duties of Departments, Internal Audit, Regulation Documents, Operations, Information Security, Corporate Integrity and Report staff's inappropriate behaviors or illegal conducts.	No gap
(2) Does the bank take any other methods to disclose its information (e.g. English website, a special group engaged on gathering and compiling the bank's information, the information announced through the bank's spokesman, and regular investor conference process disclosed on the bank's website)?			1. To realize the open information, the Bank has established the "Procedures for the Operations for Disclosing Information Externally." According to the requirements, the disclosure to be reported such as information on fnance and business shall be carried out by designated personnel of the relevant department in accordance with the duties. Furthermore, information such as About TBB, News and Events, Financial Information, Corporate Governance, Stakeholder, CSR, FAQs, and IR Contacts, is provided in the Investor Relations on the Bank's Chinese and English websites to offer relevant information to domestic and overseas investors. 2. The mechanism of spokesperson is responsible for providing descriptions and announcing the news to external parties, so as to ensure investors may receive accurate news.	No gap
(3) Does the bank publish its annual fnancial reports and make flings at the end of the accounting year within time according to relevant requirements under the Banking Act and the Securities and Exchange Act, and publish fnancial reports of the frst, second, and third quarters and the operating status each month and make flings in advance according to the time prescribed?			The Bank publishes its annual fnancial reports and make flings at the end of the accounting year within time according to relevant requirements under the Banking Act and the Securities and Exchange Act, and publish fnancial reports of the frst, second, and third quarters and the operating status each month and make flings according to the time prescribed.	No gap

III

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State of Implementation Gaps with the "Corporate
Governance Best Practice
Assessed items Principles for the Banking
Yes No Summary Industry," and the cause of
the said gaps
6. Does the bank have other relevant information  1. To clarify the rights and obligations of employees and the employer, the Bank established the "Working No gap
for better understanding the bank's corporate Rules" according to the Labor Standards Act and relevant laws and regulations, with reference to the nature
governance operation (such as employee of the banking industry, to regulate employees' rights. the Bank also established the "Directions for Measures
rights, caring for employees, investors of Prevention, Complaint, and Punishment of Sexual Harassment at the Workplace of Taiwan Business
relationship, stakeholder rights, on-the- Bank" as regulations according to the Act of Gender Equality in Employment.
job education of Directors and Supervisors, 2. Caring for Employees:
implementation of risk management policies (1) Employees are assets of enterprises. the Bank has spared no efforts in caring for its employees. Except
and risk assessment standards, implementation for establishing working rules and personnel management rules according to relevant labor laws such
of customer policies, liability insurance policies as the Labor Standards Act, the Bank complied with the laws and regulations and insured for the Labor
purchased by the bank for Directors and Insurance, National Health Insurance, and provision of retirement pension for its employees. It also
Supervisors, and donations to political parties, organizes health inspections for employees regularly, provides discounted group medical insurance
interested parties, or charity organizations)? and casualty insurance to protect the lives of our employees, allowing employees to exert their talents
at work worry-free. Also, to strengthen the competitiveness of our employees and improve their
professional know-how, the Bank organizes training courses for different businesses according to the
annual employee training plan, provide a diversified program on the digital learning website, and holds
nonscheduled celebrity seminars and professional lectures via video. the Bank has a comprehensive
system of remuneration and rewards as well as the promotion channel, diversified training and welfare
measures that attract and retain talents, joining hands for the prosperity of the Bank.
(2) The Bank places the utmost emphasis on employee rights and regularly calls labor-management
meetings where the two sides can fully communicate and negotiate on employee rights and welfare
issues, and sign the Collective Agreement, thereby maintaining harmonious labor-management relations.
3. The Bank subscribed for "Directors, Supervisors, and Officers' Liability Insurance" for Directors and officers
of the Bank and reported the insured circumstances to the Board.
4. The Bank established the "Directions for Processing of Donations of Taiwan Business Bank" to regulate the
charitable group donation projects where the stakeholder(s) acts as the representative or the manager.
5. The Bank considers that proper handling of customer complaints may improve the service quality and
realize the control for operating risks. the Bank established the "Customer Complaint Center" to respond
to customer complaints, and established the "Directions for the Processing of Customer Complaints" of the
Bank for compliance.
6. The Bank established the handling procedures and regulations in response to "scams against financial
institutions by scoundrels," "report and contact for major contingencies," and "report and contact for
disastrous emergencies" to actively care for and effectively remind our customers to avoid the losses
resulting from scams.
7. To improve our attention attaches to the handling of customers' disputes, increase the efficiency and quality
for handling consumption disputes, and protect the rights of consumers, the Bank established the "Consumer
Disputes Handling System," and the Auditing Dept. shall review the execution.
8. To protect customer rights and benefits and optimize the business operation, the Bank established
the "Consumer Protection Policy of Taiwan Business Bank" and "Procedures for Consumer Protection
Procedures of Taiwan Business Bank," and designated a responsible department to inspect the effectiveness
of the consumer protection system. The Auditing Dept. shall be responsible for examine the execution and
realize the protection for consumers.
9. To treat Shareholders in a fair manner, the Bank established the "Procedures for the Operations for
Disclosing Information Externally," "Directions for Equity Management," and "Ethical Corporate Management
Best Practice Principles," which clearly stated that the internal personnel is prohibited from trading securities
of the Bank before the announcement of relevant information.
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With respect to the results of the annual corporate governance evaluation most recently issued by the Corporate Governance Center of Taiwan Stock Exchange, please describe the improvements and provide priority and measures to enhance those matters that have not yet been improved.
The Bank will continue to engage legal shareholders in discussions on the gender composition of the Board. Additionally, preparation of the financial statements will be made more efficient in order to publish annual financial reports within two months after the end of a fiscal year and enhance information transparency and timeliness.
Continual education of Corporate Governance Manager in 2022

Corporate Governance Manager: Li-Yueh Hsu, S.V.P. & Chief Secretary to the Board of Directors

Date of appointment: March 11, 2020

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Serial Time for Continual Education No. of Hours for Continual
Number Institution for Continual Education Program Title From To Education
1 Securities and Futures Institute Global Risk Consciousness - Opportunities and challenges in 2022/01/07 2022/01/07 3
the coming decade
2 Taiwan Corporate Governance Association Annual shareholders’ meeting and equity management 2022/03/11 2022/03/11 3
3 Taiwan Insurance Institute ESG sustainable development trends and implementation of 2022/09/19 2022/09/19 3
responsible investment
4 Taiwan Corporate Governance Association Corporate governance of the next level - Building an ethical 2022/11/08 2022/11/08 3
corporation
How to better communicate with external stakeholders and
5 Taiwan Insurance Institute 2022/12/09 2022/12/09 3
respond to challenges of IFRS 17
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December 31, 2022

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(7) Remuneration Committee activities

A. Members of the Remuneration Committee

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Qualifications Number of Other
Public Companies
Serving as a
Title Professional Qualifications and Experience Independence Criteria member of the
Remuneration
Name Committee
Has served as the head of the Taiwan Institute of Economic 1. Dose not or the spouse or relative within the second degree of kinship thereof
Research for more than five years; an independent director does not hold TBB’s shares by themselves or by nominee arrangement.
of a bank for more than four years, and an independent 2. Does not have a spouse or relative within the second degree of kinship with
director of other publicly listed companies; a member of TBB's other directors.
Audit Committee, Remuneration Committee, Sustainable 3. Has not or the spouse or relative within the second degree of kinship thereof
Managing
Development Committee and Digital Transformation has not served as a director, supervisor, or employee at TBB or its affiliates.
Independent
Director Xin-Wu Lin Committee, with professional qualifications in banking, 4. Has not served at a company with specific relations with TBB (under Article 2
accounting, financing, risk management, human resources, 3, paragraph 1, subparagraphs 5 to 8 of the Regulations Governing the
(Convenor)
etc.; and is not in any circumstances under Article 30 of the Appointment of Independent Directors of Public Companies and Matters to
Company Act. Be Followed) as a director, supervisor, or employee.
5. Has not obtained remuneration for providing business, legal, financial,
accounting, or other services to TBB or its affiliates in the last two years.
6. Has not served as a senior manager of the Bank or any of its subsidiaries.
Has served as a professor at the Graduate Institute of 1. Dose not or the spouse or relative within the second degree of kinship thereof
Industrial Economics, National Central University; an does not hold TBB’s shares by themselves or by nominee arrangement.
independent director of a bank for more than four years; 2. Does not have a spouse or relative within the second degree of kinship with
a member of TBB's Audit Committee, Remuneration other directors.
Committee, Sustainable Development Committee and Digital 3. Has not or the spouse or relative within the second degree of kinship thereof
Independent Jin-Long Liu Transformation Committee, with professional qualifications in has not served as a director, supervisor, or employee at TBB or its affiliates. 0
Director banking, accounting, financing, risk management, economics, 4. Has not served at a company with specific relations with TBB (under Article
etc.; and is not in any circumstances under Article 30 of the 3, paragraph 1, subparagraphs 5 to 8 of the Regulations Governing the
Company Act. Appointment of Independent Directors of Public Companies and Matters to
Be Followed) as a director, supervisor, or employee.
5. Has not obtained remuneration for providing business, legal, financial,
accounting, or other services to TBB or its affiliates in the last two years.
1. Dose not or the spouse or relative within the second degree of kinship thereof
Has served as an associate professor at the Department of
does not hold TBB’s shares by themselves or by nominee arrangement.
Real Estate & Built Environment, National Taipei University;
2. Does not have a spouse or relative within the second degree of kinship with
concurrently as a supervisor of the Chinese Institute of Land
other directors.
Appraisal and the Land Reform Association for a long time;
3. Has not or the spouse or relative within the second degree of kinship thereof
a member of the Urban Renewal, Land Price and Standard
Independent Chiou-Mien Lin Land Price Committee of the city or county government; has has not served as a director, supervisor, or employee at TBB or its affiliates. 0
Director 4. Has not served at a company with specific relations with TBB (under Article
engaged in land appraisal and urban renewal for a long time;
3, paragraph 1, subparagraphs 5 to 8 of the Regulations Governing the
a member of TBB’s Audit Committee and Remuneration
Committee, with professional qualifications in real estate Appointment of Independent Directors of Public Companies and Matters to
Be Followed) as a director, supervisor, or employee.
appraisal, law, etc.; not in any circumstances under Article 30 5. Has not obtained remuneration for providing business, legal, financial,
of the Company Act. accounting, or other services to TBB or its affiliates in the last two years.
1. Dose not or the spouse or relative within the second degree of kinship thereof
Has served as the deputy dean of
does not hold TBB’s shares by themselves or by nominee arrangement.
School of Law, Soochow University; is specialized in
financial regulations, such as the Securities and Exchange 2. Does not have a spouse or relative within the second degree of kinship with other directors.
Act, Financial Law, and the Company Act; is familiar with
compliance by publicly listed companies, financial consumer 3. Has not or the spouse or relative within the second degree of kinship thereof
Independent Yung-Cheng protection, securities and futures trading and operation, has not served as a director, supervisor, or employee at TBB or its affiliates. 0
Director Chuang 4. Has not served at a company with specific relations with TBB (under Article
insurance laws and business in the financial field; is a member
3, paragraph 1, subparagraphs 5 to 8 of the Regulations Governing the
of TBB's Audit Committee and Remuneration Committee, with
professional qualifications in banking, securities, insurance, Appointment of Independent Directors of Public Companies and Matters to
Be Followed) as a director, supervisor, or employee.
law, etc. and not in any circumstances under Article 30 of the 5. Has not obtained remuneration for providing business, legal, financial,
Company Act. accounting, or other services to TBB or its affiliates in the last two years.
Is currently an independent director of TBB; has served as 1. Dose not or the spouse or relative within the second degree of kinship thereof
a director of publicly listed companies, the deputy mayor does not hold TBB’s shares by themselves or by nominee arrangement.
of Tainan City Government, the head of the Finance and 2. Does not have a spouse or relative within the second degree of kinship with
Local Tax Bureau of Tainan City Government, the director other directors.
of the Finance Department of Tainan City Government, 3. Has not or the spouse or relative within the second degree of kinship thereof
and the deputy head of the Finance Department of Tainan has not served as a director, supervisor, or employee at TBB or its affiliates.
Independent
Director Shao-Yuan Chang City Government; a member of TBB's Audit Committee and 4. Has not served at a company with specific relations with TBB (under Article 0
Remuneration Committee; with the experience of providing 3, paragraph 1, subparagraphs 5 to 8 of the Regulations Governing the
consulting service to grass-roots financial institutions and Appointment of Independent Directors of Public Companies and Matters to
credit cooperatives during his tenure in Tainan City and the Be Followed) as a director, supervisor, or employee.
professional qualifications in banking, accounting, financing, 5. Has not obtained remuneration for providing business, legal, financial,
risk management, human resources, and taxation; not in any accounting, or other services to TBB or its affiliates in the last two years.
circumstances under Article 30 of the Company Act.
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III

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B. Operation of Remuneration Committee:

a. The Bank has a Remuneration Committee composed of 5 members.
b. The term of office of the incumbent members: From July 20, 2021 to July 19, 2024. The Remuneration Committee held 4 meetings (A) in the most recent year. The members’ eligibility and attendance are as follows:

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Title Name Total number of Number of actual Number of delegated Actual attendance rate (%) Remarks
meetings (A) attendance (B) attendance (B/A) (Note)
Committee Chair Xin-Wu Lin 4 4 0 100
Member Jin-Long Liu 4 4 0 100
Member Chiou-Mien Lin 4 4 0 100
Member Yung-Cheng Chuang 4 4 0 100
Member Shao-Yuan Chang 4 4 0 100
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Other items that shall be recorded:

If the Board of Directors does not adopt or amend the recommendations made by the Remuneration Committee, the date, and session of the Board of Directors' meeting, resolutions, voting results, and handling of opinions of the Remuneration Committee by the Bank shall be disclosed (if the remuneration approved by the Board of Directors is better than that of the Remuneration Committee, the discrepancies and related reasons should be stated): None.
For the decisions made by the Remuneration Committee, if there are members who vetoed or withheld from the decision and there are documented records, the date, session, agenda, all members' opinions, and ways in handling these opinions should be elaborated: none.
Discussion of the proposal and handling of opinions for 2022

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Date of
Remuneration
The resolution results of the Remuneration Committee and the Bank’s response
Committee Meeting/ Agenda
Date and Session of regarding the Remuneration Committee’s opinions
Board Meeting
5th Board meeting Percentage and amount of 2021 distribution of Resolution results of the Remuneration Committee: Passed, and submitted to the Board for
of the 16th Board on employee and director remuneration. consideration.
February 25, 2022/
March 9, 2022 TBB’s response regarding the Remuneration Committee’s opinions: Resolution passed by all
Directors in attendance as proposed.
Submitted the report on regular assessment of Resolution results of the Remuneration Committee: Passed, and submitted to the Board for
director and manager remuneration. consideration.
TBB’s response regarding the Remuneration Committee’s opinions: Resolution passed by all
Directors in attendance as proposed.
Distribution of personal bonuses for managers Resolution results of the Remuneration Committee: Passed, and submitted to the Board for
of domestic business units and Regional consideration.
Operation Centers regarding the 2021 targets
and performance evaluation measures. TBB’s response regarding the Remuneration Committee’s opinions: Resolution passed by all
Directors in attendance as proposed.
To support the government's policy to raise Resolution results of the Remuneration Committee: Passed, and submitted to the Board for
wages and to boost employee morale, the Bank consideration.
plans to raise average pay increase for bank
employees to 4% and allocate the budget. The TBB’s response regarding the Remuneration Committee’s opinions: Resolution passed by all
increase will apply retroactively on January 1, Directors in attendance as proposed.
2022.
To support the government's policy to raise Resolution results of the Remuneration Committee: Passed, and submitted to the Board for
wages and to boost employee morale, the consideration.
Bank plans to raise average pay increase
for securities personnel to 4% and amend TBB’s response regarding the Remuneration Committee’s opinions: Resolution passed by all
Article 6 of the Guidelines for Recruitment and Directors in attendance as proposed.
Management of Securities Dealer Employees
and the Pay Grade Tables 1 to 3. The changes
will apply retroactively on January 1, 2022.
6th Board meeting of Submitted the proposal to cancel housing Resolution results of the Remuneration Committee: Passed, and submitted to the Board for
16th Board on April allowances for the Chairman and the President consideration.
27, 2022/May 4, 2022 of the Bank.
TBB’s response regarding the Remuneration Committee’s opinions: Except for the Chairman
and the President who recused themselves from the discussion and voting, the proposal was
passed unanimously by the other directors.
7th Board meeting of Resolution for the distribution of Director’s Resolution results of the Remuneration Committee: Passed, and submitted to the Board for
16th Board on July 6, remuneration of consideration.
2022/July 13, 2022 the Bank for 2021.
TBB’s response regarding the Remuneration Committee’s opinions: The directors recused
themselves where they are a stakeholder. The proposals were passed unanimously by the other
directors.
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(8) Implementation of Sustainable Development, and Gaps with the "Sustainable Development Best Practice Principles for TWSE/GTSM Listed Companies" and the cause of the said gaps

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State of Implementation Gaps with the
"Sustainable Development
Assessed items Best Practice Principles
Yes No Summary for TWSE/GTSM Listed
Companies," and the
cause of the said gaps
1. Does the Bank establish a  1. The Bank established a functional committee, the Sustainable Development Committee (previsouly the CSR Committee), in 2018 to No gap
governance structure to promote be responsible for promoting sustainable development of the Bank. Chaired by the Chairman of the bank, the Committee currently
sustainable development and set consists of 5 members with the President as an ex-officio member and the other three being independent directors of the Bank. The
up a dedicated (concurrent) unit to Committee is responsible for reviewing mid- and long-term sustainability strategies and annual targets, reviewing sustainability action
promote sustainable development, plans, monitoring and reviewing results of mid- and long-term sustainability strategies, annual targets, and action plans, reviewing the
and does the Board of Directors standards for preparation of sustainability reports, and reviewing other sustainability related matters.
delegate the senior management to 2. The Sustainable Development Committee convened 3 times in 2022. Please refer to "(3) Sustainable Development Committee
handle the matter and supervise the Activities" under "3. Operations of Corporate Governance" of this Chapter (page 39) for the composition, responsibilities, operation,
implementation? and agendas of the Sustainable Development Committee.
3. There are currently 6 subordinated units under the Sustainable Development Committee which include Corporate Governance,
Customer Rights, Sustainable Finance, Sustainable Environment, Social Benefit, and Employee Care. The subordinated units
are formed by various units at the head office and responsible for performing sustainability related tasks. Team meetings are held
regularly, and implementation results of mid- and long-term sustainability strategies and stakeholder communication are reported to
the Sustainable Development Committee as well as the Board of Directors.
4. The Board of Directors oversees implementation of sustainable development at the Bank. Starting with the banking business, the
Board furthers a healthy and sustainable approach to top-down business management on an ongoing basis in order to achieve annual
sustainability targets. Stakeholder communication, mid- and long-term sustainability strategies and their results above were reviewed
by the Board of Directors on March 9, 2022, September 21, and December 14, 2022.
2. Does the bank stipulate and  1. Risk assessment covers business activities and services of TBB and its subsidiaries. The scope of disclosure includes sustainability No gap
implement a set of internal performance from January 2022 to December 2022. Please refer to page 345 of the annual report for the scope of impact on the value
procedures to handle Shareholders' chain.
suggestions, queries, disputes, and 2. The Bank follows the principles of the GRI Standards and gathers information on relevant issues through stakeholder surveys. The
litigations? process identifies material environmental, social, and governance issues followed by the Bank's stakeholders or relevant to the Bank's
business. In addition, risk management policies are implemented with respect to risk assessment on material GRI issues. Please refer
to page 344-351 of the annual report (Material Issues).
3. Environmental aspects
(1) Does the bank establish  1. To save energy on a sustained basis, the Bank complied with the ISO50001 Energy Management and published the energy policy on No gap
proper environmental our official website, and built the management system and regulations for energy usage. The head office building was awarded the
management systems based certificate for ISO50001 Energy Management System, which was verified by SGS Taiwan Limited (SGS).
on the characteristics of its 2. The head office building has been certified by the ISO14001 environmental management system, which was verified by SGS Taiwan
industries? Limited (SGS).
3. To move towards the terget of net zero, the Bank has been certified by the ISO14064-1 greenhouse gas emission inventory system,
which was verified by SGS Taiwan Limited (SGS), and covers the head office building, Linkou IT center and all domestic branches.
(2) Does the bank endeavor to  1. TBB supports green office by signing the "Green Procurement Commitment for Private Enterprises and Organizations," giving priority No gap
utilize all resources more to products with environmental labels and implementing green living in the workplace through procurement source management. With
efficiently and use renewable the procurement amount in 2020 as the basis and an increase rate of 2 % in the annual procurement amount, the green procurement
materials which have a low amount in 2020 was NT$98.22 million (base year), and that amount has reached NT$115.28 million in 2022, an increase rate of
impact on the environment? 17.36%. The Bank has been recognized as the "Outstanding Green Procurement Institution" by the Environmental Protection Agency
of the Executive Yuan and the Environmental Protection Bureau of Taipei City for 11 consecutive years.
2. The Bank actively responds to the use of renewable energy. It has inventoried the entire self-owned building and established solar-
powered branches. In addition to blocking sunlight from the roof of the building to reduce the temperature, the generated electricity
is prioritized for use by the branches. Currently, TBB has 5 solar-powered branches, including Ta Fa, Ta Yuan, Ming Hsiung, Tainan,
and Hsing Chung branches, with a total installed capacity of 108.025 kW self-generated for self-use, and the estimated annual power
generation is 134,000 kWh. In the future, the Bank will continue to implement more solar-powered branches to self-generate power for
self-use, in order to enhance the use of renewable energy.
3. The implementation of solar-powered branches is as follows:
Solar-powered Installed capacity Estimated power
branch Established year (KW) generation (kWh) Usage
Ta Fa 2017 28.8 36,000 Wholesale
Ta Yuan 2019 16.8 21,000 Wholesale
Ming Hsiung 2020 15.25 19,000 Self-generated for self-use
Tainan 2021 49.725 62,000 Self-generated for self-use
Hsing Chung 2022 43.05 53,000 Self-generated for self-use
(3) Does the bank evaluate  The Bank signed the TCFD in November 2021 and became a TCFD supporter. The assessment of climate change-related risks and No gap
potential current and future opportunities was conducted in accordance with the Task Force on Climate-related Financial Discourses and the FSC’s Guidelines on
risks and opportunities Climate-related Financial Disclosures by Domestic Banks. Please refer to page 352-357 of the annual report for details.
regarding climate change
on the corporate and adopt
corresponding measures for
aspects related to climate?
(4) Does the bank prepare  1. The Bank started to conduct ISO14064-1 greenhouse gas inspections since 2018, and obtained third-party inspections. The head No gap
statistics for the greenhouse office building was inspected at the beginning. In order to grasp the carbon emission situation of the entire bank, the scope of the
gas emissions, water usage, inspections has been expanded to all domestic branches, overseas branches and subsidiaries since 2022. The carbon reduction
and total weight of wastes target was set with 2020 as the base year and with a mid-term goal of a 5% cumulative reduction in carbon emissions for the entire
for the past two years and Bank in 2026 compared to the base year. The inspection scope and carbon emissions in the past two years are as follows:
establish policies for energy- Year 2021 2022
saving and carbon reduction,
greenhouse gas reduction, water usage reduction, or Inspection scope Head office building, Linkou server rooms, 125 domestic branches All domestic branches, overseas branches and subsidiaries
other waste management? Emissions/% Greenhouse gas emissions % of total Greenhouse gas emissions % of total
(metric tons CO2e) emissions (metric tons CO2e) emissions
Scope 1 1062.2625 8.39 1160.1975 7.830%
Scope 2 9234.7307 72.98 11,052.4654 74.590%
Scope 3
(Transport Greenhouse Gas 10.3532 0.08 34.4548 0.233%
Emissions)
Scope 3
(Greenhouse gas emissions from 2346.2075 18.54 2,570.5962 17.348%
products used by the organization)
Note 1
Note 1: Inspection of water was included in greenhouse gas emissions of products used by the organization.
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State of Implementation Gaps with the "Sustainable Development
Assessed items Best Practice Principles Yes No Summary for TWSE/GTSM Listed Companies," and the cause of the said gaps
1. Intensity of electricity consumption in the past two years: Year Electricity consumption Persons Intensity of electricity (kWh) consumption (kWh/person)
2021 18,395,878 5,273 3,489 2022 21,730,346 5,640 3,853
1. The Bank's water usage in operations is mainly from domestic water, and priority is given to purchasing products with water efficiency label, such as two-stage flush toilets, sensor faucets, and sensor urinals. The Bank responds to green office through source procurement management and promotes water-saving tips to raises employees' awareness of the value of water resources, building a water-saving habit to jointly support water conservation actions. The Bank's total water usage in 2021 (base year) and 2022 were 115,560 degrees and 168,150 degrees, respectively. The mid-term goal is to achieve a 3% cumulative water-saving target for the entire Bank in 2026 compared to the base year. The statistics of water usage in the past two years are as follows: Year 2021 2022
Item Total water usage (degree) 115,560 168,150 Coverage % 96.6% 100%
1. The Bank's head office building implemented waste sorting in 2022, with approximately 83.3 metric tons of waste and 19.1 metric tons of recyclables generated. To further implement waste management, waste sorting has been extended to include all units of the Bank in waste sorting statistics since 2023, with classification based on general waste, kitchen waste, paper, plastic, waste iron/aluminum, glass, batteries, and fluorescent tubes. In addition, to avoid using disposable tableware, employees are encouraged to bring their own eco-friendly cups and utensils when purchasing drinks and food. Personal trash bins beside individual desks in the head office were removed, and reusable dishes are provided in the employee cafeteria. The entire staff is working together to reduce waste, and the statistics of waste of the head office building in the past two years are as follows: (Unit: Metric tons)
Year 2021 2022
Item Total waste recycled/reused 2.322 19.147 Total waste 103.8 83.3 Landfill 6.85 5.50
Waste incineration and energy reused 96.95 77.80
1. For detailed information, please visit the Bank’s official website at: https://www.tbb.com.tw/zh-tw/about/sustainability/environment/ energy-conservation
1. Social aspects (1) Does the bank develop its  1. The Bank has disclosed the "Human Rights Policy of Taiwan Business Bank" and specific management plans on its official website. No gap policies and procedures in The Policy applies to employees in all business locations to ensure that the Bank's employees are treated equally regardless accordance with laws and the of gender, race, age, marital and family status, and that equal remuneration, employment conditions, training, and promotion International Bill of Human opportunities are implemented, so as to protect the legitimate rights and interests of employees. In accordance with the characteristics Rights? of the financial industry and operational development strategies, the Bank emphasizes human rights issues, such as "protecting workplace human rights," "providing a safe working environment," "supporting freedom of association and collective bargaining right," and "protecting personal information and cyber security," and implements measures to protect the basic human rights of all employees, customers, and stakeholders to fulfill its corporate social responsibility.
1. The Bank examines its own operations, value chains, new business activities (such as mergers and joint ventures), and other related activities every year through methods such as paying attention to major social issues, data monitoring, and surveys, in order to identify and evaluate groups facing risks and potential human rights risks. The Bank then develops human rights issue control plans based on these potential risks, and continuously monitors and improves the results of plan implementation. The Bank also discloses its specific management plans for the annual human rights management policy in the Bank's Sustainability Report and under the section of Sustainability/Society on its official website.
(2) Does the bank establish and  1. The Bank provides various employee welfare measures, including education, training, leave, retirement system, and others. Please No gap implement fair employees' refer to page 97 of this annual report for details. welfare measures (including 2. The Bank observes workplace diversity and equality and provides female and male employees with equal remuneration conditions remuneration, vacation, and and promotion opportunities. For sustainability and inclusion oriented economic growth, the Bank also consistently has more than 40% other benefits) and reflect of the management positions occupied by female employees. On average, 55.20% of employees, 46.30% of managers and 41.40% of the operating performance senior managers were females in 2022. or results on employees' 3. To attract and retain outstanding financial talents and to share the operational results with employees, the Bank stipulates in its remuneration? Articles of Association that if there is a profit in the current year, except for reserving an amount to offset the accumulated losses from previous years, 1% to 6% of the remaining profit shall be allocated as the remuneration for employees. In 2022, the employee remuneration amount was NT$ 451,457 thousand. In addition, the Bank has established the "Directions for Salary Payment to Employees," "Directions for Payment of New Year, Festival, and Performance Bonuses," and "Directions for Payment of Remuneration to Employees" as part of its remuneration policy. By integrating the performance of individuals, units, and the entire Bank, and after making an evaluation based on the Bank's "Directions for Employee Audit", "Directions for Performance Audit," and "Directions for Administrative Incentives for Performance Audit," the Bank provides a reasonable and competitive remuneration system, which includes bonuses linked to the Bank's financial performance indicators, such as pre-tax net profit achievement rate, return on assets, return on equity, NPL ratio, and coverage ratio, as well as individual performance evaluation results. In addition, the Bank uses the employee year-end performance evaluation results as a criteria for salary increase. In addition to the above directions, the remuneration policy for managers also refers to the general standard within the industry, and the Bank proposes the remuneration arrangements for managers and related performance evaluation every year at the Remuneration Committee meetings, and reports to the Board of Directors for review.
(3) Does the bank provide  1. The Bank has established its occupational safety and health policy, regulations, codes, and management manuals in accordance with No gap safe and healthy work the relevant provisions of the Occupational Safety and Health Act. The Bank promotes the implementation of occupational safety and environments for its health management systems, complies with relevant laws and requirements on occupational safety, and provides employees with employees, and organize a safe and healthy working environment. All units shall work together to prevent and eliminate hazards, and reduce risks related to training on safety and health occupational safety and health. The Bank is committed to continuous improvement to ensure sustainable operations and has made for its employees on a regular this an important business audit item. basis?

III

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State of Implementation Gaps with the
"Sustainable Development
Assessed items Best Practice Principles
Yes No Summary for TWSE/GTSM Listed
Companies," and the
cause of the said gaps
2. The Bank has implemented the "ISO 45001 Occupational Safety and Health Management System" at the head office building
since April 8, 2022. Occupational safety and health managers of various departments at the head office building were provided
with 4 months of educational training, with relevant contents solicited for opinions from departmental representatives at the head
office building. The Bank has also established the occupational safety and health management manual and policy. During the
implementation period, in addition to identifying occupational safety and health regulations and complying with relevant audits,
consultants were engaged to conduct on-site inspections at the head office building and relevant departments were requested to
make improvements based on the inspection results. The Bank also considered organizational background environment, internal
and external issues, conducted hazard identification and risk assessment, established target plans, provided internal audit training,
and performed management review, etc. On July 29 and August 11, 2022, the Bank passed the external audit of the 1st and 2nd
stage system verification by BSI, the British Standards Institution, and had relevant departments complete the improvement matters
recommended in the audit report, with the occupational safety and health policy committed and signed by the Bank's President. On
August 23, 2022, the Bank has received the "ISO 45001 Occupational Safety and Health Management System" certificate, which
covers all units of the Bank, and the verification target includes all employees and contractors at the head office building.
3. The Bank provides regular health inspections every 1 to 2 years and 1 hour occupational safety training for employees on active duties
every 3 years, respectively. the Bank also engaged visiting service doctors, recruited regular nursing personnel, and established a
health service and stress-free activity center and breastfeeding room to care for the employees' health and address the importance of
health. In the current year, there were 28 cases of occupational accidents with a total of 28 employees involved, accounting for 0.52%
of the total number of employees. The importance of safety has been re-iterated to avoid the recurrence of accidents.
(4) Does the bank implement  1. The Bank established the annual employee training plan according to different job functions and experiences of employees and No gap
an effective training program provides comprehensive programs including general knowledge courses for new employees, business fundamentals courses,
that helps employees develop advanced courses, workshops, trainings for managers and various seminars. The Bank also assigns relevant personnel to participate
skills over the course of their in professional training programs organized by external institutions or engage external professional lecturers to provide lessons,
career? cultivating the professional skills and knowledge of our employees, exerting the effect of training-application integration, so as to
improve the career development potentials for our employees.
2. In 2022, a total of 405 courses were offered (including 29 business fundamentals courses, 349 (advanced) business workshops, 7
courses for managers, and 20 seminars/explanatory sessions, with a total of 38,674 trainees. On average, each employee received
training approximately 7.1 times per year. The effectiveness of various business fundamentals course training was tracked, with an
average training effectiveness rate of 98.20% in 2022.
(5) Regarding customers' health  1. The Bank has followed relevant regulations and international guidelines regarding customer health and safety, customer privacy, No gap
and safety, customer privacy, marketing, and labeling of products and services, and also established the following internal regulations:
marketing, and labeling of 2. To maintain the safety of consumers' personal data, the Bank has established the "Personal Data Management Policy," "Precautions
products and services, does for Personal Data and Equipment Security Management," "Personal Data File Security Maintenance Plan and Handling of Personal
the bank comply with relevant Data after Termination of Businesses," "Operating Procedures for Personal Data Security Incident Response, Notification and
regulations and international Prevention," "Operating Procedures for Personal Data Collection, Processing, Utilization and Management," and "Measurement
standards and establish Indicators for Personal Data Management System," in accordance with the "Non-Governmental Organization Personal Data File
relevant policies and complaint Security Maintenance Measures Designated by the Financial Supervisory Commission" and relevant personal data protection laws
procedures to protect and regulations, so as to implement appropriate management mechanisms for personal data protection.
customers' rights? 3. For the financial products or services provided by the Bank, the Bank has established the "Treat Client Fairly Policies," "Treat
Client Fairly Strategies," "Consumer Protection Policy" and "Consumer Protection Operating Procedures" in accordance with the
"Implementation Rules of Internal Audit and Internal Control System of Financial Holding Companies and Banking Industries,"
"Principle for Financial Service Industries to Treat Clients Fairly," "Financial Consumer Protection Act," and other relevant laws and
regulations, so as to ensure that the design, advertising, sales, contract fulfillment, service consulting, and customer complaint
handling processes take into account our customers, such as whether the features of the products or services are suitable for
customers and whether the sales process is designed to meet customer needs, to achieve the goal of fair and reasonable treatment of
customers.
4. To enhance the efficiency and quality of consumer dispute resolution, the Bank has established the "Consumer Disputes Handling
System" and "Directions for the Processing of Customer Complaints" to regulate the handling procedures and timeliness for consumer
disputes or complaints, in order to implement operational risk control and protect the rights and interests of consumers.
(6) Does the bank establish  1. The Bank has disclosed the supplier management regulations on its official website and required in the supplier contract that suppliers No gap
policies for supplier shall fulfill their social and environmental responsibilities, while requesting them to sign the "Human Rights and Environmental
management, requiring Sustainability Commitment Letter" and " Corporate Social Responsibility Self-Assessment Form" to urge them to take on the
suppliers to comply with necessary responsibilities. The "Corporate Social Responsibility Self-Assessment Form" evaluates suppliers based on four major
relevant regulations regarding aspects: economy, environment, society, and legal compliance. The Bank assesses and grades the performance of suppliers based
aspects of environment on their responses to the form. Further details can be found on the Supplier Management website: https://tbb.tw/4whyqw.
protection, occupational 2. The Bank has additionally released the implementation plan of the supplier management regulations. During the procurement,
safety and hygiene, or investment soliciting, or transaction period, we regularly check whether suppliers have violated relevant laws and regulations
labor rights and monitor the on the websites of the Environmental Protection Administration, Executive Yuan, and the Ministry of Labor, while strengthening
implementations? communication, evaluation and guidance, and rewards, to motivate suppliers to duly take actions in ESG related issues. Further
evaluation is conducted to determine whether suppliers have violated environmental and social issues and have been identified as
having a negative impact. Different supplier counseling and education are provided based on the impact type. Further details can be
found on the Supplier Management website: https://tbb.tw/4whyqw.
3. It is stipulated in the contracts that if a supplier violates environmental protection and labor-related laws and regulations, the Bank
may refuse its participation in a bid. If a supplier has a material impact on the environment and society, the Bank may terminate the
contract after it determines that the violation is true.
5. Does the bank refer to report  1. The Bank's 2021 Sustainability Report was prepared in accordance with "Taiwan Stock Exchange Corporation Rules Governing No gap
preparation standards or guidelines the Preparation and Filing of Sustainability Reports by TWSE Listed Companies", GRI Sustainability Reporting Standards and
commonly used internationally to Sustainability Accounting Standards Board (SASB) Standards.
prepare reports that disclose non- 2. The Report obtained the Independent Assurance Opinion Statement from British Standards Institution based on the AA1000
financial information of the bank, Assurance Standard V3 pursuant to the GRI Sustainability Reporting Standards, and obtained the Independent Assurance Report
such as CSR reports? Has the from Ernst & Young Accounting Firm in accordance with the Statement of Assurance Engagements Standards No. 1, "Assurance
abovementioned report received the Engagements Other than Audits or Reviews of Historical Financial Information" published by Accounting Research and Development
confirmation or assurance opinion Foundation.
of any third-party certification 3. The Bank is in the process of preparing the 2022 Sustainability Report.
department?
6. Regarding banks that established its "Sustainable Development Best Practice Principles" based on the " Sustainable Development Best Practice Principles for TWSE/GTSM Listed Companies," please specify the gaps between
its operations and the provisions in the Principles: The Bank established its " Sustainable Development Best Practice Principles " according to " Sustainable Development Best Practice Principles for TWSE/GTSM Listed
Companies" to promote the performance of Sustainable Development, and no such gap exists.
7. Other important information contributes to understanding the operations of Sustainable Development: Please refer to IX. Sustainable Development Report (page 342).
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III

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(9) Implementation of Ethical Corporate Management, and Gaps with the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies," and the cause of the said gaps

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State of Implementation Gaps with the " Ethical
Corporate Management
Assessed items Best Practice Principles
Yes No Summary for TWSE/GTSM Listed
Companies," and the
cause of the said gaps
1. Establishment of Corporate Conduct and
Ethics Policy and Implementation Measures
(1) Has the bank established the integrity  1. The Banks has established the Ethical Corporate Management Best Practice Principles for Taiwan Business Bank, which was No gap
management policies that were passed by the Board, and the last revision date is December 14, 2022. The content of the principles clearly states the Bank's
approved by the Board and stated policy of ethical corporate management, and is disclosed on the Bank's website and the Market Observation Post System
in its Memorandum and external (MOPS).
correspondence about the policies and 2. The Ethical Corporate Management Best Practice Principles for Taiwan Business Bank clearly stipulates that business
practices it has to maintain business activities shall be conducted in the principle of fairness, honesty, integrity, and transparency and that the Bank’s personnel
integrity? Are the Board and the shall not directly or indirectly offer, accept, promise, or demand any illegitimate benefits in the performance of duties, while
management committed to fulfilling this specifying the ethical management policy, including respect for intellectual property rights, prohibition of insider trading, and
commitment? whistleblowing of unethical conduct. The principles apply to the Bank’s subsidiaries and other institutions or juridical persons
with substantive control over the Bank.
3. On September 21, 2022, all directors and senior management were given "Anti-money laundering, combating terrorism,
treating clients fairly and ethical corporate management trainings (including BSA/AML and OFAC regulations at the U.S.)", with
an attendance rate of 100%, to convey the importance of ethical corporate management to the Bank.
4. The Bank’s directors and senior management have all signed the Statement of Compliance with the Ethical Management
Policy, with a signing rate of 100%.
(2) Does the bank has an evaluation system  1. On December 14, 2022, the Board passed the amendments to the Ethical Corporate Management Best Practice Principles for No gap
for the risk of dishonest conduct to regularly Taiwan Business Bank, which has incorporated the conduct under Article 7, Paragraph 2 of the Ethical Corporate Management
analyze and evaluate operating activities Best Practice Principles for TWSE/GTSM Listed Companies.
with a higher probability of dishonest 2. An inventory of potential risks of unethical conduct within the Bank's scope of business was taken in 2022. Preventive
conduct within its scope of operations, so measures were installed against offering or taking of bribes, making illegal political donations, inadequate sponsorship or
as to establish the program for preventing charity donations, providing or receiving improper gifts, treatments, or other unjustified benefits, and infringing on trade secret,
dishonest conduct, and such program trademark, patent, or intellectual property rights.
includes prevention measures listed in 3. The result of the inventory above was provided to the Risk Management Department, the Compliance Department, and the
Paragraph 2, Article 7 of the "Ethical Auditing Department for reference. The result was also implemented in the risk and control self assessment (RCSA) and the
Corporate Management Best Practice compliance risk assessment (CRA) and used to draft audit plans in order to prevent unethical conduct.
Principles for TWSE/GTSM- Listed
Companies"?
(3) Does the bank have any measures  1. On December 23, 2022, the Bank has completed an inspection on possible risks of unethical behavior within the Bank's No gap
against dishonest conduct? Are these business scope and examine the control points of the internal operating procedures. Regulations were also established for the
measures supported by proper procedures, division of job responsibilities.
behavioral guidelines, disciplinary actions, 2. For any unethical conduct by an employee that is found true after investigation, the case shall be submitted to the Personnel
and complaint systems? Does the bank Evaluation Committee according to the punishment provisions of the Working Rules. The involving party for the punishment
implement such measures and regularly may reply in writing, or attend the meeting for inquiries where the Personnel Evaluation Committee has any doubt.
review and amend the abovementioned
measures?
2. Implementation of business integrity
(1) Does the bank evaluate the integrity  When the Bank is signing a contract with others, it is required to fully understand the other party's integrity. The contract shall No gap
of all counterparties with which it has include terms of complying with the ethical corporate management of the Bank and shall stipulate that when the counterparty in
business relationships? Are there any the transaction engages in unethical behaviors, the Bank may terminate or cancel the terms of the contract at any time. When the
integrity clauses in the agreements it Bank enters a loan contract with the customer, the contract shall state that, if a customer has records of bad check or bad credit,
signs with business partners? or the financial reports and data provided, or any statement, description, waiver, consent, or commitment made by a customer are
found to be fraudulent or false and violating integrity, the Bank may call back the loan, reduce the credit amount, shorten the term
for borrowings, or deem the terms as expired. Furthermore, when processing purchase or tender, where the assigned personnel
from the awarded supplier of the purchasing project engages in any illegal conduct, leakage of confidential information, or fault
that results in losses of the Bank, the supplier shall be jointly responsible for compensating the losses. In addition, the Bank may
reject such suppliers to participate in the tender in reference to the Government e-Procurement system regarding suppliers on the
blacklist, so as to implement the ethical corporate management policy of the Bank.
(2) Does the bank have a unit that  The Bank's Sustainable Development Committee is the dedicated unit for ethical operations, which has 6 subordinated units No gap
specializes in business integrity? Does dedicated to Corporate Governance, Sustainable Finance, Customer Rights, Sustainable Environment, Social Benefit, and
this unit report to the Board regularly Employee Care, and is responsible for the promotion of corporate governance matters, such as ethical corporate management,
(at least once a year) regarding the anti-corruption, anti-bribery and compliance. The Sustainable Development Committee would report to the Board on a regular basis
business integrity policy, measures to (once a year) regarding the implementation of ethical operations during the previous year before the first quarter of each year.
prevent dishonesty, and the supervision Furthermore, the Secretarial Dept. is responsible for the amendment, interpretation, and consultation services for the Bank's Ethical
and execution? Corporate Management Best Practice Principles, as well as the report of content for archiving, and other relevant tasks.
(3) Does the bank have any policy that  1. The Bank’s Ethical Corporate Management Best Practice Principles, Corporate Governance Best Practice Principles, Rules of No gap
prevents conflict of interest, and Procedure for Board Meetings, and Audit Committee Charter all stipulate that when directors, managers, or other stakeholders
channels that facilitate the reporting of who attend a board meeting in a voting or non-voting capacity or juridical persons they represent have their personal interests
conflicting interests? involved in any motions on the agenda, they shall explain the important content of their personal interests at the Board
meeting. If it may be detrimental to the Bank’s interests, they may state their opinions and answer questions, shall recuse
themselves from discussion and voting, and shall not exercise the voting rights on behalf of other directors. Directors shall
maintain discipline among one another and not inappropriately support one another.
2. In addition, the Bank’s Directions for Loans to Stakeholders, Procedures of Loans to Stakeholders, Code of Conduct for
Financial Advisors, Anomaly Report System, Procedures for Acquisition or Disposal of Assets, Directions for Construction
Work, Purchase, Customization and Selling of Properties, Directions for Acquisition and Disposal of Premises and Real Estate,
Directions for Leasing Real Estate, Internal Control System for Securities Firms, etc. also contain relevant rules for prevention
of conflicts of interest and appropriate channels for declaration and implementation.
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State of Implementation Gaps with the " Ethical
Corporate Management
Assessed items Best Practice Principles
Yes No Summary for TWSE/GTSM Listed
Companies," and the
cause of the said gaps
(4) Has the bank implemented effective  1. The Bank adopted the accounting system established according to the International Financial Reporting Standards (IFRS) No gap
accounting and internal control systems recognized by the FSC for its operations, and regularly checks the appropriateness of the accounting system.
for maintaining business integrity? 2. According to the Bank’s Enforcement Guidelines for Internal Control Systems and Procedures for Internal Control Systems,
Does the internal audit department the departments at the head office should implement adequate policies and operating procedures for all business activities,
establish relevant audit plans according conduct regular audits, and require relevant personnel to implement effective execution in everyday operations and regular
to the results of risk assessment of review and revision.
dishonest conduct, so as to examine 3. Unethical conduct has been added to audit items of self assessments of all units to strengthen the internal control system
the compliance with measures for and management mechanisms. The Auditing Department audited all units in 2022 and did not find any violation of the Bank's
preventing dishonest conduct? Or does ethical management practice or acceptance of unlawful gain.
the Bank engage CPAs for audits? 4. The Board of Directors approved the amendment of the Bank’s Ethical Corporate Management Best Practice Principles. The
Auditing Department devised audit plans based on the results of unethical conduct risk assessment. These plans cover audit
subjects, scope, items, and frequency and provide a basis for inspecting compliance with the preventive programs. Audit
results are required to be reported to the senior management and the Sustainable Development Committee, and audit reports
are to be prepared and submitted to the Board of Directors.
(5) Does the Bank organize internal or  1. The relevant business departments shall promote the internal and external requirements through ethical corporate No gap
external training on a regular basis to management training programs of the Bank, including contents in relation to ethical operations such as laws and regulations
maintain business integrity? promotion, legal responsibilities of employees of the Bank, so as to reinforce the cognition and practices of employees
regarding requirements under "Treat Client Fairly Policies" and "Treat Client Fairly Strategies", as well as ethical operations.
2. The Bank arranged a business fundamental session to new employees and offered a course on Legal Regulations that
Financial Practitioners Should Follow, mainly covering various laws and regulations and integrity education and training. A
total of 11 sessions have been held in 2022, with 596 new employees trained. Meanwhile, 5,233 people browsed through
and learned Treat Client Fairly related knowledge on the internal e-learning website. The work rules and ethical corporate
management best practice principles were added to the online assessment tests for the second half of 2022. The pass rate of
the test was 99% or higher. The purpose was to reinforce awareness and practice of ethical conduct and ethical management
among employees.
3. The Bank routinely send employees to participate in external education and training. A total of 76 employees were sent in
2022.
3. Implementation of a misconduct reporting
system
(1) Does the Bank provide incentives  1. To establish an ethical and transparent corporate culture and promoting healthy operations, the Bank established its No gap
and means for employees to report "Directions for Handling Reported Cases" based on the "Implementation Rules of Internal Audit and Internal Control System of
malpractices? Does the Bank assign Financial Holding Companies and Banking Industries," "Regulations Governing the Establishment of Internal Control Systems
dedicated personnel to investigate the by Service Enterprises in Securities and Futures Markets," and "Ethical Corporate Management Best Practice Principles for
reported malpractices? TWSE/GTSM Listed Companies." It also announced the whistle-blowing channels on its website and the integrated portal of its
internal employee system, set up the whistle-blowing mailbox and direct line for internal and external parties; the Compliance
Dept. would assign officers to handle the reported matters.
2. The Bank has integrated the whistleblowing channels announced on the portal on the official website and the internal staff
system, and set up a whistleblowing mailbox and a hotline to handle whistleblowing by people inside and outside the Bank.
3. Rewards were distributed according to the Bank’s work rules.
(2) Does the Bank implement any standard  The "Directions for Handling Reported Cases" of the Bank has stated the responsible department, SOP for investigation, and No gap
procedures for handling reported execution of related confidentiality system regarding any reported cases.
cases or follow-up and confidentiality
measures after the investigation?
(3) Does the Bank take measures to  Article 12 under the "Directions for Handling Reported Cases" of the Bank has provided that the Bank shall keep confidential No gap
protect whistleblowers from facing regarding the information about the whistleblower, including the name, age, residence, and identity. Except for otherwise provided
repercussions for making reports? by the laws, no third party is allowed to browse or transcribe the information, and the Bank may not carry out dismissal, discharge,
demotion, pay-cut regarding the whistleblower, or form damages to the rights that the whistleblower is entitled to according to laws
and regulations, contracts, or practices, or other adverse actions. However, where the whistleblower reported untrue facts or set
unjustified benefits as targets shall be excluded.
4. Enhanced information disclosure  The "Ethical Corporate Management Best Practice Principles" of the Bank is disclosed on the Market Observation Post System and No gap
Does the Bank disclose its integrity its corporate website. the Bank will facilitate the disclosure of its yearly ethical operations on its website (Home > Investor Relations
principles and progress on its website and > Corporate Governance > Corporate Integrity).
MOPS?
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Regarding banks that established its "Ethical Corporate Management Best Practice Principles" based on the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies," please specify the gaps between its operations and the provisions in the Principles: The Bank's "Ethical Corporate Management Best Practice Principles" was modified with reference to the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies," and no such gap exists.
Other important information contributes to understanding the ethical operations of the Bank (such as the Bank examining and revising its "Ethical Corporate Management Best Practice Principles"): The Bank inspected the risk of unethical behaviors within its scope of business during the year and submitted the inspection results to the Auditing Dept., Risk Management Dept., and Compliance Dept. to introduce the risk of unethical behaviors into the riskoriented internal audit system, the RCSA system, and CRA, realizing the prevention for unethical behaviors.

(10) Procedures for Handling Material Inside Information:

The Bank reports its information according to the "Taiwan Stock Exchange Corporation Procedures for Verification and Disclosure of Material Information of Companies with Listed Securities," "Taiwan Stock Exchange Corporation Rules Governing Information Filing by Companies with TWSE Listed Securities and Offshore Fund Institutions with Listed Offshore Exchange Traded Funds," and "Taiwan Business Bank Procedures for External Information Disclosures."

(11) Inquiry for Corporate Governance Principles and relevant rules: Please refer to the Bank's website at Investor Relations > Corporate Governance > Regulation Documents (https://ir.tbb.com.tw/corp/regulations-info).
(12) Other important information contributes to understanding the operations of corporate governance: Please refer to the Bank's website at Investor Relations (https://ir.tbb.com. tw/).

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(13) Implementation of the Internal Control System
A. Internal control system statement
III
55
REPORT CORPORATE GOVERNANCE
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Taiwan Business Bank

Matters of Internal Control to be Enhanced and Improvement Plan

(Base Date: December 31, 2022)

Matters to be Enhanced	Improvement Measures	Estimated Time for the Completion of the Improvement
The Financial Supervisory Commission ("FSC") fned the Bank NT$240,000 and imposed corrective action requirements for the fnding in the full-scope examination of the Bank in 2020 that the internal personnel placed securities trading orders and handled securities brokerage operations on behalf of others, and the bank has not formulated relevant norms for user authority management.	I. The “Same Securities Order-Placing IP or Phone Voice Verifcation Procedure” was established and a checklist was made to prevent internal personnel from placing orders on behalf of others. II. The “User Authority Management Guidelines for the Securities Brokerage System” was established and relevant inspections will be conducted annually.	Completed according to the improvement measures.
The Bank was fned NT$1 million by the FSC for investing in stocks which was issued by the Bank’s interested party.	I. Strengthened the verifcation of interested parties check by the Investment Section traders before daily transactions, transaction orders can only be placed after a supervisor confrms not interested parties. II. For adding a stock to an equity portfolio, it is required to confrm not interested party and be approved by the investment team meeting. Besides, the self-inspection item of “whether the verifcation of interested parties has been conducted” was included in the monthly project self-inspection of Treasury Department. III. The current month's equity portfolio is checked regularly by the system each month. If the result shows a stock involving a interested party, the establishment of new positions will be ceased immediately. A report will be subsequently made to the General Manager of the Treasury Department and a proposal to remove the stock will be submitted to the next securities investment team meeting. IV. Relevant rules were added to the “Guidelines for Investments in Securities” and the revision was made to the business handbooks and stock trading standard operating procedure to prevent similar cases from re-occurring.	Completed according to the improvement measures.
An employee of the Banking Department embezzled the processing fee from the managing bank of the Bank's Relief Project Loan Program. The competent authority was notifed of a material contingency. (All embezzled funds have been returned.)	I. Improved account management: i. All new project loans which provide interest subsidies or commission fees will be processed in a single project account management approach. ii. Assigned dedicated personnel to verify the correctness of account balance regularly. II. Transfer process management: i. Funds will be processed by ACH transfer to reduce the risk of human operations. ii. Notifcations for the transfer operation instructions will be sent by offcial documents before (or on) the transfer date. The transfer vouchers will be issued by the Business Management Department instead. iii. After each transfer operation is completed, the outgoing/ incoming payment records of the account will be checked to ensure the normality and the account balance will be confrmed before the case can be signed off.	Completed according to the improvement measures.

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B. Where CPAs are commissioned to audit the Bank’s internal control systems, the audit report prepared by the
CPAs should be disclosed
III
57
REPORT CORPORATE GOVERNANCE
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years and up to the end of February 2023
A. Any indictment of a responsible person or employee by a prosecutor for an offense related to the occupation:
- ○○ Liu (hereinafter referred to as "Liu"), a retired employee of the Bank, conducted the credit check on the company, New ○ and its affiliates (hereinafter referred to as "New ○ Group") for Branch ○○ at which she was employed. The prosecutor considered Liu might have aided New ○ Group in loan fraud on the grounds that Liu received fruit baskets and condolence money from New ○ Group during 2015 to 2019, and changed Liu from witness to suspect on August 3, 2020. Liu was released on bail for NT$300,000. Several media reported on December 30, 2022 that the prosecutor prosecuted Liu with violation of the Banking Act for suspected acceptance of fruit baskets and large condolence money in return for illegal loans to New ○ Group.
B. Any fine imposed by the Financial Supervisory Commission for violation of law or regulations:
- a. According to Letter of Jin-Guan-Zheng-Quan-Fa-Zi No. 1090351676 on Jan. 21, 2021: The FSC conducted a project inspection on the securities business concurrently operated by the Bank from Feb. 13 to Feb. 19, 2020. The deficiencies found were verified to be violating the requirements under Paragraph 2 in Article 2 of the "Regulations Governing Securities Firms." Therefore, a fine of NT$240,000 was imposed according to Subparagraph 4, Paragraph 1 in Article 178-1 of the Securities Exchange Act. Furthermore, Letter Jin-Guan-Zheng-Quan-Zi No. 10903516761 ordered the Bank to rectify according to the requirements under Article 65 of the Securities Exchange Act. To prevent the recurrence of defects, the Bank have amended relevant internal regulations and established a systematic inspection and control mechanism, while strengthening educational training and self-audit operations.

b. According to Letter of Jin-Guan-Bao-So-Zi No. 11004952917 on Dec. 30, 2021: The Bank has never engaged in insurance solicitation and only agrees that insurance companies may re-market and explain to the customers who we have previously solicited and been underwritten by any insurance companies and that the Bank will charge commissions or business service fees linked to the actual premiums paid by such customers for purchasing insurance products from the insurance companies. This has been confirmed to be in violation of Article 49, paragraph 12 of the Regulations Governing Insurance Agents, formulated as authorized by Article 163, paragraph 4 of the Insurance Act. The FSC requested the Bank to make corrections within one month and was fined NT$1.5 million in accordance with Article 167-2 of the Insurance Act. The Bank has already terminated related collaboration cases and had no such business collaboration model anymore. Based on the examination of the commissions paid by the insurance companies currently collaborating with the Bank, commissions were all generated from insurance solicitation conducted by the Bank’s salespersons and there were no such deficiencies identified. All insurance brokerage activities conducted by the Bank comply with the Insurance Brokerage Solicitation and Procedures for Taiwan Business Bank and adhere strictly to the Regulations Governing Insurance Agents and related rules. Going forward, the Bank will review contracts and other rules with greater caution when entering into agreements with insurance partners.
c. According to Letter of Jin-Guan-Bao-Zong-Zi No. 11104902891 and Letter of Jin-Guan-Bao-ZongZi No. 11104902892 on Jan. 21, 2022: The insurance company, with which the Bank works, in charge of the change of the home fire insurance policy upon the expiration of the policy, failed to explain to customers and obtain their consent in advance, and the Bank failed to set a deadline for the transfer of such applications from the responsible branches to the Insurance Agent Department during the relevant insurance operations. This has been confirmed to be in violation of Article 6, paragraph 1; Article 7, paragraph 1, subparagraph 1; Article 4 and Article 8 of Regulations Governing the Implementation of Internal Control and Audit System and Business Solicitation System of Insurance Agent Companies and Insurance Broker Companies, formulated as authorized by Article 165 paragraph 3 of the Insurance Act. The Bank was fined NT$600,000 in accordance with Article 167-3 of the Insurance Act. The Bank has reiterated the relevant regulations on the renewal operations of home fire insurance, and strengthened the educations and trainings to avoid operational deficiencies. The Bank has also set a deadline for the transfer of insurance applications from the responsible branches to the Insurance Agent Department to prevent from compromising customer’s rights.
d. According to Letter of Jin-Guan-Zheng-Quan-Fa-Zi No. 1100373282 on Feb. 16, 2022: the FSC has conducted general business inspection on the Bank from May 20 to June 19, 2020, among which the deficiency in the concurrent securities business was found to be in violation of Article 2, paragraph 2 of the Regulations Governing Securities Firms. The Bank was fined NT$240,000 in accordance with

III

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Article 178-1, paragraph 1, subparagraph 4 of the Securities and Exchange Act, and was corrected in accordance with Article 65 of the Securities and Exchange Act as per the Letter of Jin-Guan-ZhengQuan-Zi No. 11003732821. In order to improve and prevent deficiencies, the Bank has added internal regulations, established the system control, and reinforced the educational training and self-inspection operations.

  - e. According to Letter of Jin-Guan-Yin-Guo-Zi No. 11102742202 on Jan. 11, 2023: The Bank invested in the stock issued by a company where the Bank's director serves as an independent director on the Board, violating Article 74-1 of the Banking Act and Article 5 of the Directions Governing Limitations on Types and Amounts of the Securities. A penalty of NT$1 million was issued according to Subparagraph 4, Article 130 of the Banking Act. The Bank has amended internal operating guidelines and rules, established review procedures, and strengthened educational and self-audit trainings.

C. Disclose any security incident arising from employee infidelity or material contingencies or failure to faithfully abide by security maintenance work. If actual losses, whether singly or in aggregate, exceed NT$50 million in any given year: None.
D. Other matters that must be disclosed pursuant to Financial Supervisory Commission designation: None.
(15) Material resolutions of a Shareholders' Meeting or a Board meeting during 2022 and up to the end of February 2023
Resolutions at the Annual Shareholders' Meeting of 2022 (June 17, 2022) and resolution execution process

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Reason for the resolution Execution of resolutions
Resolution to ratify the annual final The Shareholders' Meeting has ratified the annual final statement and statements for
statement and statements for 2021. 2021.
Resolution to ratify the annual earnings The Shareholders' Meeting has ratified the earnings distribution from the final
distribution from the final accounts of accounts of 2021 and the execution of such distribution (cash dividend of NT$0.1 per
2021. share and stock dividend of NT$0.37 per share), and the distribution was made to
shareholders on September 7, 2022.
Resolution to carry out a capital Reported to the Financial Supervisory Commission upon receiving the approval
increase via transferred earnings and from the Shareholders' Meeting, and was publicly announced and became effective
issuance of new stocks in accordance on July 12, 2022. Also, the alteration registration was completed according to the
with the earnings distribution of approval from the Ministry of Economic Affairs through Letter Jing-shou-shang-zi No.
dividends for 2021. 11101156810 on August 26, 2022. Stock certificates were transferred to shareholders
on September 7, 2022, and the listing for trading of our new shares completed
smoothly.
Amendments to the Article of Amendments to the Bank’s Article of Association were approved in the Shareholders'
Association of the Bank Meeting and reported to the Ministry of Economic Affairs for the approval of change
through Letter Jing-shou-shang-zi No. 11101115230 on July 18, 2022.
Amendments to the Rules for Election Approved by the Shareholders' Meeting, and disclosed on the MOPS and the Bank's
of Directors of the Bank website.
Amendments to the Procedures for
Issued on June 21, 2022 through Letter Xing-cai-zi No. 1116004348 after approved by
Acquisition or Disposal of Assets of the
Bank the Shareholders' Meeting.
Lifting the non-competition ban on the
Directors of the Board Approved by the Shareholders' Meeting and disclosed on the MOPS.
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Material resolutions of Board meetings for 2022 and up to the end of February 2023: Please refer to the Bank’s website (https://www.tbb.com.tw) at Investor Relations > Corporate Governance > Board of Directors.
(16) For 2022 and up to the end of February 2023, disclose any dissenting opinion of any director regarding any material resolution passed by the Board, where there is a record or written statement of such opinion: None.
(17) For 2022 and up to the end of February 2023, the resignations and dismissals of relevant personnel to the financial report

(17) For 2022 and up to the end of February 2023, the resignations and dismissals of relevant personnel to the fnancial report	(17) For 2022 and up to the end of February 2023, the resignations and dismissals of relevant personnel to the fnancial report	(17) For 2022 and up to the end of February 2023, the resignations and dismissals of relevant personnel to the fnancial report	(17) For 2022 and up to the end of February 2023, the resignations and dismissals of relevant personnel to the fnancial report	(17) For 2022 and up to the end of February 2023, the resignations and dismissals of relevant personnel to the fnancial report
February 28, 2023
Title	Name	Date of arrival	Date of dismissal	Reason for resignation or dismissal
Chief Auditor	Jia-Ruey Luan	Nov. 12, 2021	Jul. 8, 2022	Reassigned as Executive Vice President
SVP&GM, Treasury Dept.	Jyun-You Shih	Aug. 20, 2021	Jan. 13, 2023	Reassigned
SVP&GM, Accounting Dept.	Yu-Chuan Chou	Feb. 8, 2018	Jan. 31, 2023	Retired at retirement age

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Note: Relevant personnel of the Bank refers to chairman, president, financial manager, accounting manager, internal audit manager, and corporate governance manager.

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4. CPA Professional Fees

(1) CPA professional charges grading table

Unit: NT$ 1,000

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Name of the Non-
accounting Name of the CPA Audit Period [Accounting ] charge accounting Total Note
firm charge
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Name of the accounting frm	Name of the CPA	Audit Period	Accounting charge	Non- accounting charge	Total	Note

KPMG	Feng-Hui Li	2022.01.01- 2022.12.31	10,584	5,082	15,666	Non-audit fees include: Tax compliance audit, bad debt account audit, Maintenance of FATCA Act & CRS Compliance, electronic payment security operation and review report, information security execution assessment, assessment of the contract for providing IT services by the head offce to overseas branches, overseas branches’ deposit insurance, audit of work and business registration.
	Tan-Tan Chung	2022.01.01- 2022.12.31

previous year: None.
(3) Where the audit fee has decreased by more than 10% compared with the prior year: None.

5. Information on Changing CPAs

(1) Former CPA

(1)	Former CPA
(2)	Date of Change	February 17, 2022
	Reason of Change and Explanation	Internal structural adjustment of KPMG
	Whether the appointment is terminated by the appointor or CPA or the CPA does not accept the appointment	Parties Involved Condition		CPA			Appointor
		Terminate the Appointment by Initiative		None			None
		Cease to Accept (Continue) the Appointment		None			None
	Opinion and reason for issuing an audit report during the most recent 2 years containing an opinion other than an unqualifed opinion		None
	Whether the CPA has any opinion discrepancy	Yes			Accounting principles or practices
					Disclosure in fnancial reports
					Scope or process of audit
					Other
		No	
			Explanation: None
	Other Disclosures (disclosures required under item A(d), Subparagraph 6, Article 10 of the Regulations)		None
	Successor CPA
Name of the AccountingFirm						KPMG
Name of the CPA						Feng-Hui Li, Tan-Tan Chung
Date of Appointment						February17, 2022
Consultations and the consultation results may be issued by the CPA regarding the accounting treatment of or application of accounting principles to a specifc transaction, or the type of audit opinion that might be rendered on the fnancial report before the appointment						None
Written opinions from the successor CPA regarding the matters on which the frm disagreed with the former CPA						None

(3) A letter of response from the former CPA regarding Item A and Item B (c), Subparagraph 6, Article 10 of the Regulations: None.

III

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Conform to the Requirements under Article 11 of the Regulations Governing the Same Person or Same Concerned Party Holding the Issued Shares with Voting Rights over a Particular Ratio of a Bank

(1) Changes in Shareholding

Unit: Shares

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2022 As of Feb 28, 2023
Title Name Changes Changes
Changes in Changes in
in pledged in pledged
shareholding shareholding
shareholding shareholding
Chairman Chien-Hao Lin 0 0 0 0
Managing Director & President Chih-Chien Chang 8,536 0 0 0
Managing Director Hsin-Tzu Hu 0 0 0 0
Managing Director Xin-Wu Lin 0 0 0 0
Managing Director Chun-Hsien Yeh 0 0 0 0
Director Tung-Fu Lin 0 0 0 0
Director Hung- Sheng Yu 0 0 0 0
Director Ho-Chyuan Chen 996 0 0 0
Director Tzu-Hao Tsai 0 0 0 0
Director Wen-Hsiang Ma 10 0 0 0
Director Che-Nan Wang 505,013 0 0 0
Independent Director Jin-Long Liu 0 0 0 0
Independent Director Yung-Cheng Chuang 0 0 0 0
Independent Director Shao-Yuan Chang 0 0 0 0
Independent Director Chiou-Mien Lin 0 0 0 0
Manager Chih-Chien Chang 8,536 0 0 0
Manager Sung-Shui Chiu 5,960 0 0 0
Manager Shao-Huang Chen 15,755 0 0 0
Manager Chiu-Yen Chen 8,809 0 0 0
Manager Tseng-Hsiang Yi 4,702 0 0 0
Manager Jia-Ruey Luan 8,165 0 0 0
Manager Tsung-Chu Hsieh 4,939 0 0 0
Manager Li-Yueh Hsu 3,825 0 0 0
Manager Chu-Jou Chen 9,290 0 0 0
Manager Kuo-Liang Tseng 4,531 0 0 0
Manager Hsiou-Chen Kang 4,518 0 0 0
Manager Ching-Yun Kuo 8,928 0 0 0
Manager Mei-Huei Chen 418 0 0 0
Manager Chiang-Shu Lin 4,995 0 0 0
Manager Wen-Fang Lin 3,898 0 0 0
Manager Jyun-You Shih 191 0 0 0
Manager Yu-Cheng Tsai 841 0 0 0
Manager Min-Chung Hsieh 4,107 0 0 0
Manager Yi-Chin Chai 3,922 0 0 0
Manager Ying-Che Fang 7,988 0 0 0
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2022 As of Feb 28, 2023
Title Name Changes Changes
Changes in Changes in
in pledged in pledged
shareholding shareholding
shareholding shareholding
Manager Wen-Shu Lin 4,563 0 0 0
Acting manager Ming-Ju Yang 0 0 0 0
Manager Yu-Chuan Chou 5,122 0 0 0
Manager Le-Yi Jiang 765 0 0 0
Manager Ting-Huei Liao 10,012 0 0 0
Manager Shenn-Bao Jean 4,673 0 0 0
Manager Wen-Ling Wang 828 0 0 0
Manager Li-Chuan Huang 4,524 0 0 0
Manager Yueh-Chin Wang 4,949 0 0 0
Manager Li-Huei Chen 1,315 0 0 0
Manager Ming-Yi Lin 14,151 0 0 0
Manager Chih-Cheng Chen 4,858 0 0 0
Manager Wen-Hsiu Huang 6,169 0 0 0
Manager Shu-Cing Wu 2,292 0 0 0
Manager Ching-Yi Lin 4,234 0 0 0
Manager Tung-Sheng Ni 0 0 0 0
Manager Po-Jung Huang 3,749 0 0 0
Manager Mu-Hsiang Wu 4,458 0 0 0
Manager Yu-Chiao Wei 4,182 0 0 0
Manager Yuan-Hsueh Hsiao 4,527 0 0 0
Manager Tung-Han Lu 2,678 0 0 0
Manager Shui-Chiang Fang 3,863 0 0 0
Manager Hsih-Hui Chen 4,752 0 0 0
Manager Li-Ching Lai 3,851 0 0 0
Manager Zuo-Ling Zeng 3,700 0 0 0
Manager Ching-Yang Lee 4,603 0 0 0
Manager Hsiu-Hsin Hou 4,542 0 0 0
Manager Shu-Ling Yuan (111,645) 0 0 0
Manager Yun-Hui Chang 2,043 0 0 0
Manager Jiann-Yea Shyu 3,831 0 0 0
Manager Sung-Nan Chiao 3,495 0 0 0
Manager Ching-Hsiu Liu 1,706 0 0 0
Manager Yun-Shiang Tsai 4,117 0 0 0
Manager Chao-Lieh Chen 225 0 0 0
Manager Chun-Ying Shen 2,143 0 0 0
Manager Li-Jhu Huang 3,365 0 0 0
Manager Bi-Shuang Lin 3,836 0 0 0
Manager Ssu-Jung Lai 2,404 0 0 0
Manager Pei-Ling Lin 0 0 0 0
Manager Mei-Chih Hou 5,127 0 0 0
Manager Ching-Yao Chen 1,729 0 0 0
Manager Fuh-Yuh Yeh 4,525 0 0 0
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2022 As of Feb 28, 2023
Title Name Changes Changes
Changes in Changes in
in pledged in pledged
shareholding shareholding
shareholding shareholding
Manager Yen-Ling Chen 4,544 0 0 0
Manager Hui-Mei Chen 39 0 0 0
Manager Chin-Shan Sung 9,007 0 0 0
Manager Chin-Tsan Wu (51,130) 0 0 0
Manager Wen-Ching Huang 8,359 0 0 0
Manager Mei-Kuei Li 1,548 0 0 0
Manager Shu-Ping Ciou 472 0 0 0
Manager Chien-Fa Wang 3,979 0 0 0
Manager Pin-Hsiung Chen 1,075 0 0 0
Manager Jui-Yuan Huang 3,854 0 0 0
Manager Shuan-Hua Liu 5,666 0 0 0
Manager Ying-Hui Lai 0 0 0 0
Manager Yu-Hsia Feng 0 0 0 0
Manager Ming-Chien Chien 0 0 0 0
Manager Nien-Tzu Chen 4,799 0 0 0
Manager Chun-Ta Lin 4,093 0 0 0
Manager Fang-Chuan Chiu 4,544 0 0 0
Manager Jui-Yu Li 3,998 0 0 0
Manager Ming-Yi Chiu 3,227 0 0 0
Manager Shu-Ting Chen 3,991 0 0 0
Manager Chin-Chih Li 1,968 0 0 0
Manager Han-Mei Nung 50,015 0 0 0
Manager Mei Hung 0 0 0 0
Manager Tsung-Jen Hsieh 416 0 0 0
Manager Ming-Fa Chien 3,862 0 0 0
Manager Cheng-Hsiung Tsai 780 0 0 0
Manager Yueh-Mei Chang 4,867 0 0 0
Manager Ju-Hsiang Tien 191 0 0 0
Manager Shu-Fen Li 3,845 0 0 0
Manager Chin-Fu Chiang 7,425 0 0 0
Manager Chia-Yi Wu 0 0 0 0
Manager Chi-Fen Yen 4,959 0 0 0
Manager Hsu-Hsiang Huang 4,066 0 0 0
Manager Chun-Hung Chang 0 0 0 0
Manager Shu-E Chen 4,143 0 0 0
Manager Chun-Chu Hsiao 832 0 0 0
Manager Nai-Chia Chi 7,470 0 0 0
Manager Kuan-Yi Huang 2,261 0 0 0
Manager Su-Fen Chen 4,535 0 0 0
Manager Chiu-Yu Lin 1,807 0 0 0
Manager Hsin-Te Li 4 0 0 0
Manager Yu-Jung Tseng 618 0 0 0
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2022 As of Feb 28, 2023
Title Name Changes Changes
Changes in Changes in
in pledged in pledged
shareholding shareholding
shareholding shareholding
Manager Hsin-Lu Chiang 14 0 0 0
Manager Sheng-Wang Chang 4,460 0 0 0
Manager Fang-Mei Lai 259 0 0 0
Manager Li-Chung Lin 4,813 0 0 0
Manager Yih-Shiou Wang 5,794 0 0 0
Manager Man-Chung Yeh (794) 0 0 0
Manager Jung-Yu Huang 4,568 0 0 0
Manager Cheng-An Hsieh 4,951 0 0 0
Manager Fu-Ching Chou 4,388 0 0 0
Manager Chien-Ta Wu 3,928 0 0 0
Manager Meng-Fang Wu 2,752 0 0 0
Manager Pi-Chu Chang 7,373 0 0 0
Manager Yen-Ju Chen 6,585 0 0 0
Manager Yueh-Man Sung 5,479 0 0 0
Manager Tsai-Chuan Wu 7,282 0 0 0
Manager His-Her Pai 7,267 0 0 0
Manager Chih-Shan Hung 514 0 0 0
Manager Chih-Cheng Cho 4,054 0 0 0
Manager Ming-Tang Chen 4,710 0 0 0
Manager Liang-Pin Chen 797 0 0 0
Manager Fu-Yuan Yao 421 0 0 0
Manager Yu-Cheng Chiao 2,849 0 0 0
Manager Ming-Chin Ke 0 0 0 0
Manager Po-Hung Wang 4,408 0 0 0
Manager Ruey-Shyang Guo 4,643 0 0 0
Manager Chia-Cheng Liu 4,348 0 0 0
Manager I-Man Chen 4,621 0 0 0
Manager Li-Feng Huang 3,926 0 0 0
Manager Chung-Hsien Huang 869 0 0 0
Manager Chun-Jen Huang 3,908 0 0 0
Manager Mei-Chen Chen 5,338 0 0 0
Manager Hui-Pai Kuo 2,442 0 0 0
Manager Hsiu-Chen Chiu 4,062 0 0 0
Manager Chien-Lai Su 30 0 0 0
Manager Hsiu-Chu Lin 4,642 0 0 0
Manager Guo-Shiang Huang 1,922 0 0 0
Manager Shun-Ho Chen (23,399) 0 0 0
Manager Su-Chih Wang 9,468 0 0 0
Manager Ling-Ling Chen 8 0 0 0
Manager Shu-Hui Chen 3,871 0 0 0
Manager Kuo-Tai Shih 43 0 0 0
Manager Hui-E Wu 4,636 0 0 0
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2022 As of Feb 28, 2023
Title Name Changes Changes
Changes in Changes in
in pledged in pledged
shareholding shareholding
shareholding shareholding
Manager Kuang-Tsai Wang (73,244) 0 0 0
Manager Fu-Lai Chang 4,026 0 0 0
Manager Yi-Ching Wang 4,053 0 0 0
Manager Chin-Chuan Su 12,376 0 0 0
Manager Chiu-Yuan Hung 84 0 0 0
Manager Li-Jung Lin 5,003 0 0 0
Manager Tao-Cheng Shen 5,185 0 0 0
Manager Yao-Chin Yang 4,057 0 0 0
Manager Shu-Fang Kuo 0 0 0 0
Manager Leh-Chin Kuo 3,826 0 0 0
Manager Chien-Chung Lin 2,136 0 0 0
Manager Meng-Hsun Sung 4,006 0 0 0
Manager Hsueh-Mei Yang 3,829 0 0 0
Manager Cheng-Chuan Lin 8 0 0 0
Manager Wen-Ling Chang 1,923 0 0 0
Manager An-Yun Lin 9,004 0 0 0
Manager Hsiao-Ming Chen 4,505 0 0 0
Manager Chen-Chung Fan 4,542 0 0 0
Manager Chao-Ming Huang 4,385 0 0 0
Manager Sue-Jen Chen 4,157 0 0 0
Manager Feng-Chang Wu 0 0 0 0
Manager Chu-Ying Ting 1,165 0 0 0
Manager (Note 2) Cheng-Hung Chang 4,410 0 - -
Manager Hsi-Pin Tseng 45,090 0 0 0
Manager (Note 2) Jhong-Lin Yang - - 0
Manager (Note 2) Siang-Lan Jian - - 0 0
Manager (Note 2) Rong-Ciang Huang - - 0 0
Legal Person Shareholder
Represented by a Director Ministry of Finance 5,949,684 0 0 0
(Note 1)
Legal Person Shareholder
Bank of Taiwan Co.,
Represented by a Director Ltd. 46,451,852 0 0 0
(Note 1)
Legal Person Shareholder National
Represented by a Director Development Fund, 16,807,908 0 0 0
(Note 1) Executive Yuan
Legal Person Shareholder 259,332 0 0 0
Represented by a Director [TBB Industry Union]
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Note 1: A major shareholder holding 1% of the Bank’s shares or above.

Note 2: Managers appointed based on the resolution of the Board and transferred to the new post on January 2023. ("-" means that the information is not required to be disclosed)

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(2) Information of shareholding transfer: The counterparties of the above shareholding transfer are not related parties, therefore, this item is not applicable.

(3) Information for shareholding pledge: None.

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8. Information Disclosing the Relationship among Top Ten Shareholders in the Relationship of Related Parties or Spouses, Relatives within the Second Degree of Kinship

Feb. 28, 2023

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Names and Relationship
among Top Ten Shareholders
Shareholding by Shareholding
Name Shareholding Spouse & Minor Children under others’ names in the Relationship of Related Parties or Spouses, Relatives Remarks
within the Second Degree of
Kinship
Shares % Shares % Shares % Name Relationship
Taiwan Financial
Bank of Taiwan Holding Co.,
(Representative: 1,301,907,315 16.21% 0 0 0 0 [Ministry of ] Finance Ltd., a wholly-owned subsidiary
Chu-Cheng Lu)
of the Ministry of
Finance
National
Development Fund, 471,075,689 5.87% 0 0 0 0 None None
Executive Yuan,
R.O.C
Land Bank of
Land Bank of Taiwan Taiwan, a wholly-
(Representative: 183,489,051 2.29% 0 0 0 0 [Ministry of ] Finance owned subsidiary
Jyuan-Jyuan Sie) of the Ministry of
Finance
Bank of
Taiwan Financial
Taiwan
Holding Co.,
(subsidiary
of Taiwan Ltd., a wholly-
Financial owned subsidiary
of the Ministry of
Ministry of Finance Holding Finance
(Representative: 166,751,972 2.08% 0 0 0 0 Co., Ltd.)
Tsui-Yun Chuang)
Land Bank of
Land Bank Taiwan, a wholly-
of Taiwan owned subsidiary
of the Ministry of
Finance
Taiwan Business
Bank Trust Account
for Employee Stock 78,026,393 0.97% 0 0 0 0 None None
Ownership of Taiwan
Business Bank
Vanguard Emerging
Markets Stock
Index Fund A
74,968,270 0.93% 0 0 0 0 None None
Series Of Vanguard
International Equity
Index Funds
JPMorgan Chase
Bank N.A. Taipei
Branch in custody
for Vanguard Total 70,065,692 0.87% 0 0 0 0 None None
International Stock
Index Fund a series
of Vanguard Star
Funds
Morgan Stanley & 69,731,620 0.87% 0 0 0 0 None None
Co. International Plc
BES Engineering
Corporation 68,964,727 0.86% 0 0 0 0 None None
(Representative:
Chih-Ming Chou)
Norges Bank -
internal - NBIM PF 63,987,604 0.80% 0 0 0 0 None None
EQ INTERNAL CFD
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Note: Shares of shareholding represent the number of shares recorded on the last ex-dividend basis date.

III

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Consolidated Shareholding Ratio

December 31, 2022

Unit: Share; %

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Investments of A Business
Directly or Indirectly
Controlled and Managed
Name of the Investee Investments of TBB by Directors, President, Consolidated Investments
Company (Note) Executive Vice Presidents,
and SVP & GM of
Departments and Branches
Shares % Shares % Shares %
Taipei Forex Inc. 700,000 3.5318% 1,400,000 7.0636% 2,100,000 10.5954%
Financial Information Service
6,460,857 1.2377% 15,143,965 2.9011% 21,604,822 4.1388%
Co., Ltd.
Taiwan Stock Exchange 9,736,561 0.9496% 102,640,419 10.0101% 112,376,980 10.9597%
Corporation
Taiwan Futures Exchange 4,786,449 1.0000% 23,214,305 4.8500% 28,000,754 5.8500%
Corporation
Taiwan Asset Management 60,000,000 5.6754% 60,000,000 5.6754% 120,000,000 11.3508%
Corporation
Taiwan Financial Asset Service
5,000,000 2.9412% 10,000,000 5.8823% 15,000,000 8.8235%
Corporation
Sunny Asset Management 46,062 0.7678% 15,531 0.2589% 61,593 1.0267%
Corporation
Financial eSolution Co., Ltd. 905,475 4.1158% 1,268,688 5.7668% 2,174,163 9.8826%
Taiwan Depository & Cleansing 484,550 0.0830% 484,550 0.0830%
Corporation
Taiwan Mobile Payment Co., 600,000 1.0000% 1,200,000 2.0000% 1,800,000 3.0000%
Ltd.
Taiwan Power Company 1,451,523 0.0044% 865,191,972 2.6218% 866,643,495 2.6262%
Taiwan Sugar Corporation 16,831,537 0.2986% 20,074,211 0.3561% 36,905,748 0.6547%
Taiwan Incubator SME
3,417,440 4.8438% 3,417,440 4.8438%
Development Corporation
Sunsino Development 1,480,402 3.1166% 1,480,402 3.1166%
Associate Inc.
CDIB & Partners Investment
54,000,000 4.9505% 54,000,000 4.9505%
Holding Corp.
Taipei Financial Center 11,760,000 0.8000% 11,760,000 0.8000%
Corporation
Taiwan Urban Regeneration & 2,500,000 5.0000% 2,500,000 5.0000% 5,000,000 10.0000%
Financial Services Co., Ltd.
Chaofu Real Estate
150,000 3.0000% 150,000 3.0000%
Management Co., Ltd.
Taiwan High Speed Rail 44,500,000 0.7906% 120,055,365 2.1329% 164,555,365 2.9235%
Corporation
TBB International Leasing Co., 150,000,000 100.000% 150,000,000 100.0000%
Ltd.
TBB (Cambodia) Microfinance 20,000 100.000% 20,000 100.0000%
Institution Plc
TBB Venture Capital Co., Ltd. 105,000,000 100.000% 105,000,000 100.0000%
TBB Consulting Co., Ltd. 5,000,000 100.000% 5,000,000 100.000%
Taiwania Capital Buffalo II 1.6946% 33.89% 35.5846%
Bioventures, LP
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Note: Long-term investment of the Bank.

IV

Fund-Raising Status

69 1. Capital and Shares 72

2. Issuance Status of Financial Bonds

3. Preferred Stocks, Global Depository Receipts, and Employee Stock Warrants, New Restricted Employee Shares, Any Merger and Acquisition Activities, and Acceptance of Transfer of the Shares of Another Financial Institution

4. Status of Implementation of Capital Allocation Plans

Ⅳ

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1. Capital and Shares

(1) Sources of Capital

Unit: Share; NT$

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Authorized Capital Paid-in Capital Remarks
Year/ Issue
Month Price Number of Number of Sources of
Amount Amount Others
shares shares Capital
Letter of Jing-
Shou-Shang-Zi
Capital No. 11101156810
2022.8 10.00 10,000,000,000 100,000,000,000 8,029,693,521 80,296,935,210 Increased by issued by MOEA
Earnings of approved the
2,864,982,260 change in
registration on
August 26, 2022.
Unit: Shares
Authorized Capital
Category of Shares Remarks
Outstanding Shares Un-issued Shares Total
Common Share 8,029,693,521 1,970,306,479 10,000,000,000
Listed Shares
Total 8,029,693,521 1,970,306,479 10,000,000,000
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(2) Structure of Shareholders

Feb. 28, 2023

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Structure of
Shareholders Other Foreign
Government Financial Personal Institutions
institutions institutions Corporate Shareholders and Personal Total
Shareholders
Shareholders
Quantity
Number of Shareholders 8 10 591 334,721 542 335,872
Number of Shares Held
699,783,419 1,535,216,575 429,236,925 4,468,196,762 897,259,840 8,029,693,521
(share)
Shareholding Ratio (%) 8.71 19.12 5.35 55.65 11.17 100.00
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Note: Structure of Shareholders was based on the number of shares recorded on the last closing date of the Bank.

(3) Distribution of Shareholding

Par value NT$10

Feb. 28, 2023

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Classification of Shareholding Number of Shareholders Number of Shares Held Shareholding Ratio (%)
1 to 999 77,421 19,528,741 0.24
1,000 to 5,000 139,904 338,437,258 4.21
5,001 to 10,000 44,191 343,099,159 4.27
10,001 to 15,000 21,715 273,252,028 3.40
15,001 to 20,000 12,194 224,863,632 2.80
20,001 to 30,000 13,594 346,779,185 4.32
30,001 to 40,000 6,931 249,180,903 3.10
40,001 to 50,000 4,390 206,855,199 2.58
50,001 to 100,000 8,465 615,725,013 7.67
100,001 to 200,000 4,287 598,441,602 7.45
200,001 to 400,000 1,715 487,179,865 6.07
400,001 to 600,000 431 215,118,291 2.68
600,001 to 800,000 186 135,015,936 1.68
800,001 to 1,000,000 111 104,351,067 1.30
1,000,001 to 99,999,999,999 337 3,871,865,642 48.23
Total 335,872 8,029,693,521 100.00
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Note: Distribution of Shareholding was based on the number of shares recorded on the last closing date of the Bank.

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(4) Major Shareholders

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Feb. 28, 2023
Number of Shares Shareholding Ratio
Name of Major Shareholders Held (%)
Bank of Taiwan 1,301,907,315 16.21%
National Development Fund, Executive Yuan 471,075,689 5.87%
Land Bank of Taiwan 183,489,051 2.29%
Ministry of Finance 166,751,972 2.08%
Taiwan Business Bank Trust Account for Employee Stock Ownership of Taiwan 78,026,393 0.97%
Business Bank
Vanguard Emerging Markets Stock Index Fund A Series of Vanguard International 74,968,270 0.93%
Equity Index Funds
JPMorgan Chase Bank N.A. Taipei Branch in custody for Vanguard Total 70,065,692 0.87%
International Stock Index Fund a series of Vanguard Star Funds
Morgan Stanley & Co. International Plc 69,731,620 0.87%
BES Engineering Corporation 68,964,727 0.86%
Norges Bank - internal - NBIM PF EQ INTERNAL CFD 63,987,604 0.80%
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Note: Number of Shares held by shareholders was based on the number of shares recorded on the last closing date of the Bank.

(5) Market Price Per Share, Net Value, Surplus, Capital Bonus, and Related Information for the Past Two Years (based on the consolidated financial information)

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Year
Item 2021 2022 2023 (as of Feb. 28)
Max. 10.03 14.45 14.60
Market Price per Min. 9.10 9.80 12.85
Share (NT$)
Average 9.62 12.12 13.63
Before Distribution 13.13 12.97 -
Net Value per
Share (NT$) After Distribution - - -
Weighted Average Number of Shares 7,743,195 8,029,693 8,029,693
(before adjustment) thousand shares thousand shares thousand shares
Weighted Average Number of Shares(after adjustment) thousand shares8,029,693 - -
Earnings per Share
Earnings per Share 0.66 1.26 -
(before adjustment) (NT$)
Earnings per Share 0.64 - -
(after adjustment) (NT$)
To be determined
Cash Dividends 0.10 at the -
Shareholders'
Meeting
To be determined -
Dividends per
at the
Share (NT$) Stock Stock Dividends from Surplus 0.37 Shareholders'
Dividends Meeting
Capital Surplus Distribution - - -
Accumulated Undistributed Dividend - - -
Price/Earnings (P/E) Ratio (Note 1) 14.58 9.62 -
Return on
Investment Price/Dividend Ratio (Note 2) 96.2 - -
Analysis Cash Dividend Yield (Note 3) 1.04 - -
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Note 1: P/E ratio = average closing price per share of the year/earnings per share.

Note 2: Price/dividend ratio = average closing price per share of the year/cash dividends per share. Note 3: Cash dividend yield = cash dividends per share/average closing price per share of the year.

Ⅳ

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(6) Dividend Policy and Distributions

A. Dividend policy prescribed in the Article of Association of the Bank: Please refer to "Earnings Distribution and Dividend Policy" in the "Notes to the Financial Statements" of VI. Financial Status. (page 100)
B. Dividend distribution to be proposed in the upcoming Shareholders' Meeting: A cash dividend of NT$0.10 per share and a stock dividend of NT$0.24 per share are proposed to be distributed from the capital surplus of the Bank in 2022.

(7) Impacts of the Stock Dividends to be Proposed in the Upcoming Shareholders' Meeting to Operating Performance and Earnings Per Share

According to the requirements under the "Regulations Governing the Publication of Financial Forecasts of Public Companies" and "Taiwan Stock Exchange Corporation Standards for Determining Whether a TWSE Listed Company Shall Publish Complete Financial Forecasts," as the Bank has not published a complete financial forecast in 2023, the item of disclosure is not applicable.

(8) Employees and Directors' Remuneration

A. Percentage or scope of employees and Directors' remuneration set out in the Article of Association of the Bank: Please refer to "Employees and Directors' Remuneration" in the "Notes to the Financial Statements" of VI. Financial Status. (page 100)
B. If the amounts of estimated employees and Directors' remuneration differ from the actual distribution amounts, such differences are deemed as changes in estimates, which shall be recorded in profit or loss for 2023.
C. Status of remuneration distribution as approved by the Board
a. The Bank has proposed a total of NT$451,457 thousand of employees' remuneration and NT$75,243 thousand of Directors' remuneration to be distributed for 2022.
b. The amount of any employees' remuneration distributed in stocks as a percentage of the sum of the current after-tax net income and total employees' remuneration in the individual financial report: The Bank has not distributed any employees' remuneration in stocks during 2022.
D. Actual distribution of employees and Directors' remuneration for the previous year: The Bank distributed employees and Directors' remuneration for the previous year amounted to NT$371,068 thousand and NT$37,107 thousand, respectively, equivalent to the estimates set out in the financial statements of 2021.

(9) Share Redemption by the Bank in 2022 and as of the End of February 2023: None.

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2. Issuance Status of Financial Bonds

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Tranche 104-2 (A) long-term Tranche 104-2 (B) long-term Tranche 105-2 long-term
Category of Financial Bonds subordinated bonds subordinated bonds subordinated bonds
Approval Date and Approval April 8, 2015 April 8, 2015 June 24, 2016
Document Number of the Letter of Jin-Guan-Yin-Guo-Zi Letter of Jin-Guan-Yin-Guo-Zi Letter of Jin-Guan-Yin-Guo-Zi
Central Competent Authority No. 10400065480 No. 10400065480 No. 10500148070
Date of Issuance August 31, 2015 August 31, 2015 December 20, 2016
Nominal Value NT$10 million NT$10 million NT$10 million
Place of Issuance and Trading Taiwan Taiwan Taiwan
Currency NTD NTD NTD
Issue Price Issued in full Issued in full Issued in full
Total Amount NT$4.7 billion NT$0.3 billion NT$2.7 billion
Coupon Rates Annual rate fixed at 2.05% Annual rate fixed at 2.10% Annual rate fixed at 1.40%
8-year term 7-year term
Term Maturity Date: August 31, 10-year term Maturity date: December 20,
2023 Maturity date: August 31, 2025 2023
Superior to shareholders’ Superior to shareholders’ Superior to shareholders’
rights in asset securitization rights in asset securitization rights in asset securitization
Priority of Distribution and subordinate to all and subordinate to all and subordinate to all
depositors and other ordinary depositors and other ordinary depositors and other ordinary
creditors of the Bank. creditors of the Bank. creditors of the Bank.
Guarantor None None None
Trustee None None None
Underwriting Agency None None None
Lawyer None None None
Certified Public Accountant KPMG KPMG KPMG
Feng-Hui Lee, CPA Feng-Hui Lee, CPA Tan-Tan Chung, CPA
Verification Financial None None None
Institution
Lump sum payment at Lump sum payment at Lump sum payment at
Payment Method
maturity (bullet loan) maturity (bullet loan) maturity (bullet loan)
Outstanding Balances NT$4.7 billion NT$0.3 billion NT$2.7 billion
Paid-in Capital of the
NT$52.979 billion NT$52.979 billion NT$56.846 billion
Preceding Year
Net Worth of Paid-in Capital
After Final Report for the NT$62.738 billion NT$62.738 billion NT$67.659 billion
Preceding Year
Payment Status Normal Normal Normal
Redemption or Early None None None
Settlement Term
Conversion and Exchange None None None
Terms
Restrictive terms Subordinate bonds Subordinate bonds Subordinate bonds
Net Value of Paid-in Capital
After Final Report for the 72.68 72.68 71.02
Preceding Year
Application of Funds Medium-to-long-term loans Medium-to-long-term loans Medium-to-long-term loans
Eligible Equity Capital Tier II Capital Tier II Capital Tier II Capital
Credit Rating Agencies,
Evaluation Date and Rating
Score
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Tranche 106-1 (A) long-term Tranche 106-1 (B) long-term Tranche 106-1 (C) long-term
Category of Financial Bonds subordinated bonds subordinated bonds subordinated bonds
Approval Date and Approval June 24, 2016 June 24, 2016 June 24, 2016
Document Number of the Letter of Jin-Guan-Yin-Guo-Zi Letter of Jin-Guan-Yin-Guo-Zi Letter of Jin-Guan-Yin-Guo-Zi
Central Competent Authority No. 10500148070 No. 10500148070 No. 10500148070
Date of Issuance March 28, 2017 March 28, 2017 March 28, 2017
Nominal Value NT$10 million NT$10 million NT$10 million
Place of Issuance and Trading Taiwan Taiwan Taiwan
Currency NTD NTD NTD
Issue Price Issued in full Issued in full Issued in full
Total Amount NT$0.39 billion NT$0.25 billion NT$3.36 billion
Coupon Rates Annual rate fixed at 1.50% Annual rate fixed at 1.60% Annual rate fixed at 1.850%
Term 7-year term 8-year term 10-year term
Maturity Date: March 28, 2024 Maturity Date: March 28, 2025 Maturity Date: March 28, 2027
Superior to shareholders’ Superior to shareholders’ Superior to shareholders’
rights in asset securitization rights in asset securitization rights in asset securitization
Priority of Distribution and subordinate to all and subordinate to all and subordinate to all
depositors and other ordinary depositors and other ordinary depositors and other ordinary
creditors of the Bank. creditors of the Bank. creditors of the Bank.
Guarantor None None None
Trustee None None None
Underwriting Agency None None None
Lawyer None None None
Certified Public Accountant KPMG KPMG KPMG
Tan-Tan Chung, CPA Tan-Tan Chung, CPA Tan-Tan Chung, CPA
Verification Financial None None None
Institution
Lump sum payment at Lump sum payment at Lump sum payment at
Payment Method
maturity (bullet loan) maturity (bullet loan) maturity (bullet loan)
Outstanding Balances NT$0.39 billion NT$0.25 billion NT$3.36 billion
Paid-in Capital of the
NT$59.689 billion NT$59.689 billion NT$59.689 billion
Preceding Year
Net Worth of Paid-in Capital
After Final Report for the NT$70.87 billion NT$70.87 billion NT$70.87 billion
Preceding Year
Payment Status Normal Normal Normal
Redemption or Early
Settlement Term None None None
Conversion and Exchange None None None
Terms
Restrictive terms Subordinate bonds Subordinate bonds Subordinate bonds
Net Value of Paid-in Capital
After Final Report for the 64.48 64.48 64.48
Preceding Year
Application of Funds Medium-to-long-term loans Medium-to-long-term loans Medium-to-long-term loans
Eligible Equity Capital Tier II Capital Tier II Capital Tier II Capital
Credit Rating Agencies,
Evaluation Date and Rating
Score
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Tranche 106-2 long-term Tranche 106-3 unsecured Tranche 107-2 long-term
Category of Financial Bonds subordinated bonds US dollar bonds subordinated bonds
Approval Date and Approval June 24, 2016 April 28, 2017 June 6, 2018
Document Number of the Letter of Jin-Guan-Yin-Guo-Zi Letter of Jin-Guan-Yin-Guo-Zi Letter of Jin-Guan-Yin-Guo-Zi
Central Competent Authority No. 10500148070 No. 10600090390 No. 10702114820
Date of Issuance May 23, 2017 October 27, 2017 August 20, 2018
Nominal Value NT$10 million US$1 million NT$10 million
Place of Issuance and Trading Taiwan Taiwan Taiwan
Currency NTD USD NTD
Issue Price Issued in full Issued in full Issued in full
Total Amount NT$1.3 billion US$0.12 billion NT$5.45 billion
Issued as zero-coupon bond,
Coupon Rates Annual rate fixed at 1.850% with an internal rate of return Annual rate fixed at 1.450%
of 4.10%
30-year term 10-year term
Term 10-year term Maturity Date: October 27, Maturity Date: August 20,
Maturity Date: May 23, 2027 2047 2028
Superior to shareholders’ Superior to shareholders’
rights in asset securitization The distribution priority is rights in asset securitization
Priority of Distribution and subordinate to all equivalent to other unsecured and subordinate to all
depositors and other ordinary creditors of the Bank. depositors and other ordinary
creditors of the Bank. creditors of the Bank.
Guarantor None None None
Trustee None None None
Underwriting Agency None None None
Lawyer None None None
Certified Public Accountant KPMG KPMG KPMG
Tan-Tan Chung, CPA Tan-Tan Chung, CPA Tan-Tan Chung, CPA
Verification Financial None None None
Institution
Except for the redemption
via the “issuer’s right,” the
Lump sum payment at Lump sum payment at
Payment Method bond is subject to lump sum
maturity (bullet loan) maturity (bullet loan)
repayment at maturity (bullet
loan).
Outstanding Balances NT$1.3 billion US$0.12 billion NT$5.45 billion
Paid-in Capital of the
NT$59.689 billion NT$59.689 billion NT$61.48 billion
Preceding Year
Net Worth of Paid-in Capital
After Final Report for the NT$70.87 billion NT$70.87 billion NT$75.818 billion
Preceding Year
Payment Status Normal Normal Normal
Issuer’s redemption right: 5
years after the bond is issued,
the Bank may redeem the
Redemption or Early None bond in full, on each effective None
Settlement Term day of redemption and at the
par value prices per share as
set out in the bond redemption
table.
Conversion and Exchange None None None
Terms
Restrictive terms Subordinate bonds Subordinate bonds
Net Value of Paid-in Capital
After Final Report for the 66.32 62.96 67.37
Preceding Year
Application of Funds Medium-to-long-term loans Medium-to-long-term loans Medium-to-long-term loans
Eligible Equity Capital Tier II Capital No Tier II Capital
Credit Rating Agencies,
Evaluation Date and Rating
Score
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Tranche 107-3 unsecured Tranche 108-1 (A) long-term Tranche 108-1 (B) long-term
Category of Financial Bonds US dollar bonds subordinated bonds subordinated bonds
Approval Date and Approval April 28, 2017 June 6, 2018 June 6, 2018
Document Number of the Letter of Jin-Guan-Yin-Guo-Zi Letter of Jin-Guan-Yin-Guo-Zi Letter of Jin-Guan-Yin-Guo-Zi
Central Competent Authority No. 10600090390 No. 10702114820 No. 10702114820
Date of Issuance September 27, 2018 March 21, 2019 March 21, 2019
Nominal Value US$1 million NT$10 million NT$10 million
Place of Issuance and Trading Taiwan Taiwan Taiwan
Currency USD NTD NTD
Issue Price Issued in full Issued in full Issued in full
Total Amount US$0.18 billion NT$1 billion NT$4.8 billion
Issued as zero-coupon bond,
Coupon Rates with an internal rate of return Annual rate fixed at 1.20% Annual rate fixed at 1.30%
of 4.70%
30-year term
Term Maturity Date: September 27, 7-year term 10-year term
2048 Maturity Date: March 21, 2026 Maturity Date: March 21, 2029
Superior to shareholders’ Superior to shareholders’
The distribution priority is rights in asset securitization rights in asset securitization
Priority of Distribution equivalent to other unsecured and subordinate to all and subordinate to all
creditors of the Bank. depositors and other ordinary depositors and other ordinary
creditors of the Bank. creditors of the Bank.
Guarantor None None None
Trustee None None None
Underwriting Agency None None None
Lawyer None None None
Certified Public Accountant KPMG KPMG KPMG
Tan-Tan Chung, CPA Tan-Tan Chung, CPA Tan-Tan Chung, CPA
Verification Financial None None None
Institution
Except for the redemption
via the “issuer’s right,” the
Lump sum payment at Lump sum payment at
Payment Method bond is subject to lump sum
maturity (bullet loan) maturity (bullet loan)
repayment at maturity (bullet
loan).
Outstanding Balances US$0.18 billion NT$1 billion NT$4.8 billion
Paid-in Capital of the
NT$61.48 billion NT$63.938 billion NT$63.938 billion
Preceding Year
Net Worth of Paid-in Capital
After Final Report for the NT$75.818 billion NT$84.853 billion NT$84.853 billion
Preceding Year
Payment Status Normal Normal Normal
Issuer’s redemption right: 5
years after the bond is issued,
the Bank may redeem the
Redemption or Early bond in full, on each effective None None
Settlement Term day of redemption and at the
par value prices per share as
set out in the bond redemption
table.
Conversion and Exchange None None None
Terms
Restrictive terms Subordinate bonds Subordinate bonds
Net Value of Paid-in Capital
After Final Report for the 74.66 73.36 73.36
Preceding Year
Application of Funds Medium-to-long-term loans Medium-to-long-term loans Medium-to-long-term loans
Eligible Equity Capital No Tier II Capital Tier II Capital
Credit Rating Agencies,
Evaluation Date and Rating
Score
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Tranche 109-2 non- Tranche 110-1 non-
Tranche 109-1 long-term
Category of Financial Bonds subordinated bonds cumulative perpetual cumulative perpetual
subordinated bonds subordinated bonds
Approval Date and Approval July 11, 2019 July 2, 2020 August 13, 2021
Document Number of the Letter of Jin-Guan-Yin-Guo-Zi Letter of Jin-Guan-Yin-Guo-Zi Letter of Jin-Guan-Yin-Guo-Zi
Central Competent Authority No. 10802116910 No. 1090216191 No. 1100220115
Date of Issuance March 25, 2020 August 13, 2020 November 17, 2021
Nominal Value NT$10 million NT$10 million NT$10 million
Place of Issuance and Trading Taiwan Taiwan Taiwan
Currency NTD NTD NTD
Issue Price Issued in full Issued in full Issued in full
Total Amount NT$10 billion NT$10 billion NT$8 billion
Coupon Rates Annual rate fixed at 0.80% Annual rate fixed at 1.62% Annual rate fixed at 1.60%
Term 10-year term No maturity date No maturity date
Maturity Date: March 25, 2030
Superior to shareholders’ Subordinate to the holders of Subordinate to the holders of
rights in asset securitization the Bank’s tier II subordinated the Bank’s tier II subordinated
Priority of Distribution and subordinate to all
bonds and other ordinary bonds and other ordinary
depositors and other ordinary creditors creditors
creditors of the Bank.
Guarantor None None None
Trustee None None None
Underwriting Agency None None None
Lawyer None None None
Certified Public Accountant KPMG KPMG KPMG
Tan-Tan Chung, CPA Tan-Tan Chung, CPA Tan-Tan Chung, CPA
Verification Financial None None None
Institution
5 years and 1 month 5 years and 1 month
(including) after the bond is (including) after the bond is
issued, the Bank may redeem issued, the Bank may redeem
Lump sum payment at
Payment Method the bond, upon the approval the bond, upon the approval
maturity (bullet loan)
of the competent authority, in of the competent authority, in
full at its face value with the full at its face value with the
accrued interest paid. accrued interest paid.
Outstanding Balances NT$10 billion NT$10 billion NT$8 billion
Paid-in Capital of the
NT$71.319 billion NT$71.319 billion NT$74.886 billion
Preceding Year
Net Worth of Paid-in Capital
After Final Report for the NT$95.517 billion NT$95.517 billion NT$97.910 billion
Preceding Year
Payment Status Normal Normal Normal
5 years and 1 month 5 years and 1 month
(including) after the bond is (including) after the bond is
issued, the Bank may redeem issued, the Bank may redeem
Redemption or Early Settlement Term None the bond, upon the approval the bond, upon the approval
of the competent authority, in of the competent authority, in
full at its face value with the full at its face value with the
accrued interest paid. accrued interest paid.
Conversion and Exchange None None None
Terms
Restrictive terms
Subordinate bonds Subordinate bonds Subordinate bonds
Net Value of Paid-in Capital
After Final Report for the 79.19 80.67 70.08
Preceding Year
Application of Funds Medium-to-long-term loans Medium-to-long-term loans Medium-to-long-term loans
Eligible Equity Capital Tier II Capital Tier I Capital Tier I Capital
Credit Rating Agencies,
Evaluation Date and Rating
Score
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Ⅳ

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4. Status of Implementation of Capital Allocation Plans

(1) Plan Details

None.

(2) Status of Implementation

Analysis of the changes of major financial ratios, capital adequacy ratios, and after-tax earnings per share of the Bank:

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Unit: NT$1,000; %
Year
2022 2021 Increase/Decrease
Item
Financial Ratios
After-tax Return on Assets (ROA) 0.49% 0.27% 0.22%
After-tax Return on Shareholders' Equity (ROE) 9.84% 5.09% 4.75%
Capital Adequacy Ratio 12.48% 13.39% -0.91%
Net Profit After Tax 10,121,852 5,100,112 5,021,740
Earnings Per Share After Tax 1.26 0.64 0.62
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Notes:

Earnings per share is calculated according to the weighted average number of shares of the current fiscal year. The effects of retrospective adjustments apply to basic earnings per share for 2021.
Net profit after tax for 2022 totaled NT$10.122 billion, increased by NT$5.022 billion from 2021, primarily due to the growth of deposit and loan volume, and the increase in net income from interests, service fees and financial products.

On July 21, 2022, Taiwan Business Bank won the Asia Responsible Enterprise Awards (AREA) for the third time. The Bank's President, Chih-Chien Chang (center), and Executive Vice President, Jia-Ruey Luan (second from the left), shared the honor with the management team and entire staff.

V

Business Operation

79 1. Business Scope
91 2. Employees

3. Corporate Responsibilities and Moral Conduct

94 4. Number of Non-managerial Full-time Employees and Their Average and Median Salaries

5. Information Equipment

6. Cyber Security Management

7. Labor-Management Relations

8. Important Contracts

9. Relevant Information on Securitization Products

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1. Business Scope

(1) Principal Activities for Various Business Areas

A. Corporate Banking
a. Corporate financing loan
Engage in various corporate loans, project loans, syndication, bills discounting, domestic credit issuing, domestic and overseas guarantee provision, as well as accounts receivable financing and factoring.

b. Foreign exchange

Engage in foreign currency in cash, foreign currency deposits, import and export foreign exchange, general outward and inward remittance, loans in foreign currency, and foreign currency guarantee.

B. Personal Banking
a. Personal loans
Engage in personal mortgage and consumer financing business.
b. Credit card
Engage in credit card businesses.
c. Wealth management

Engage in the promotion of wealth management products.

d. Insurance agency

Engage in life insurance and property insurance agent businesses.

e. Trust service
1) Monetary trust: Fiduciary investments in domestic and overseas marketable securities, advance trust, real estate transaction trust, civil servant estate trust, government projects subsidy trust, caring trust, insurance trust, third-party payment trust, equity transaction values trust, foreign exchange trust, charitable trust, employee stock ownership trust, and other monetary trust business.
2) Custodian business: Entrusted for keeping domestic securities investment trust fund, entrusted for keeping investment policy-linked investment targets, and entrusted for keeping operation deposits and custody business for foreign investors.
3) Others: Real estate trust, superficies trust, marketable securities trust, marketable securities subscription business, and trust business concurrently engaging in securities investment consulting business.

f. Securities

Engage in marketable securities transactions, margin trading and short selling, as well as futures introducing broker services.

C. Finance Logistics

Engage in the capital movement for New Taiwan Dollars and foreign currencies, foreign exchange transactions, marketable securities transactions, long-term equity investments, financial products marketing, and derivatives business.

D. Deposits

Engage in check deposits, passbook deposits, certificate deposits, tax collection, national treasury agent, collections, and remittance.

E. Digital Banking

Engage in digital banking businesses such as general online banking, corporate online banking and online banking APP, global e-banking, mobile banking APP, telephone banking, e-ATM, national payment, parking fee collection, virtual accounts, digital deposit account, the Bank’s official website, smart customer services, online loan service, Open API, big data, Account link, social media (Facebook, Line), Taiwan Pay, deposit account acquisition with QR Code, ACH (eACH, eDDA) and blockchain confirmation.

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(2) Business Overview for the Past Two Years

A. Corporate Banking

a. Corporate financing loan

Unit: NT$ million

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Year 2022 2021 Increase
Item Amount Percentage % Amount Percentage % (Decrease) %
SMEs loan balances 713,010 65.74 684,684 67.35 4.14
Large enterprises loan 142,832 13.17 121,813 11.98 17.26
balances
Government and
public enterprise loan 77,097 7.11 70,921 6.98 8.71
balances
Corporate banking 932,939 86.02 877,418 86.31 6.33
NTD loan balances
Foreign currency loan 151,672 13.98 139,248 13.69 8.92
balances
Total 1,084,611 100.00 1,016,666 100.00 6.68
b. Foreign exchange Unit: NT$ million
Year 2022 2021 Increase
Item Amount Percentage % Amount Percentage % (Decrease) %
Balances of foreign
currency demand 111,841 30.63 125,241 40.25 -10.70
deposit
Balances of foreign 253,346 69.37 185,939 59.75 36.25
currency time deposit
Total 365,187 100.00 311,180 100.00 17.36
Unit: US$ million
Year Increase
2022 2021
Item (Decrease) %
Volume of foreign exchange business 77,459 69,063 12.16
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b. Foreign exchange

Note: The volume of foreign exchange business is the sum of business volumes of DBU and OBU.

B. Personal Banking

Unit: NT$ million

a. Personal loans

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Year 2022 2021 Increase
Item Amount Percentage % Amount Percentage % (Decrease) %
Consumer loan
4,522 1.37 6,005 2.02 -24.70
balance
Mortgage balance 227,292 69.10 193,127 65.19 17.69
Other personal loan 97,130 29.53 97,133 32.79 0.00
balance
Total 328,944 100.00 296,265 100.00 11.03
b. Wealth management and insurance agent businesses Unit: NT$ million
Year 2022 2021 Increase
Item Amount Percentage % Amount Percentage % (Decrease) %
Trust fund service fee
532.50 25.71 1,024.09 55.95 -48.00
income
Life insurance service
1494.24 72.16 760.14 41.53 96.57
fee income
Property insurance 41.20 1.99 43.20 2.36 -4.63
service fee income
Gold passbook income 2.86 0.14 2.94 0.16 -2.72
Total 2070.80 100.00 1,830.37 100.00 13.14
Unit: NT$ million
Year Increase
2022 2021
Item (Decrease) %
Fiduciary investments in domestic and overseas 76,884 73,955 3.96
marketable securities balance
Custodian bank balance (Note) 116,056 118,299 -1.90
Other trusts balance 28,644 24,239 18.17
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b. Wealth management and insurance agent businesses

c. Trusts

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Unit: NT$ million/card

d. Credit card

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Year Increase
2022 2021
Item (Decrease) %
Card transaction volume 9,833 9,418 4.41
Number of issued cards 195,551 204,682 -4.46
Note: Visa Debit and Easy Debit cards are not included in the number of issued cards.
e. Securities Unit: NT$ million/lot
Year Increase
2022 2021
Item (Decrease) %
Securities broker transacted amount 493,215 794,729 -37.94
Average securities financing balance 2,806 2,900 -3.24
Lot amount for futures (lot) 133,639 152,676 -12.47
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e. Securities

C. Finance Logistics

a. Foreign currency and foreign capital transaction

Unit: US$ million

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Year 2022 2021 Increase
(Decrease) %
Item Amount Percentage % Amount Percentage % Percentage %
Forwards 452 0.37 464 0.45 -2.60
SWAP 25,074 20.53 22,798 22.14 9.98
Non-deliverable forwards - 0.00 0 0.00 0.00
Options 176 0.14 204 0.20 -13.50
Inter-bank borrowings and 96,427 78.95 79,485 77.21 21.32
inter-bank loans
Total 122,130 100.00 102,951 100.00 18.63
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Note: The foreign exchange transaction volume is the sum of the transaction volume of the Bank’s head office and overseas branches.

b. Stock fund investment

Unit: NT$ million

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At the end of 2022 At the end of 2021 Increase
Year
Item (Decrease) %
Amount Percentage % Amount Percentage % Percentage %
Stocks 12,444 98.96 14,573 90.37 -14.61
Funds 131 1.04 1,553 9.63 -91.56
Total 12,575 100.00 16,126 100.00 -22.02
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Note: Stated at the initial acquisition costs.

Unit: NT$ million

c. Bonds and notes

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At the end of 2022 At the end of 2021 Increase
Year
Item (Decrease) %
Amount Percentage % Amount Percentage % Percentage %
Short-term notes 226,493 54.40 268,411 59.24 -15.62
Certificates of deposit 195,595 231,395
acquisition
Commercial paper
30,898 37,016
acquisition
Acceptances acquisition - 0
Bonds 189,844 45.60 184,681 40.76 2.80
Government bonds 75,540 71,149
Corporate bonds 69,567 65,267
Financial debentures 44,248 47,691
Beneficiary securities and 489 574
asset-backed securities
Total 416,337 100.00 453,092 100.00 -8.11
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Note: Stated at the initial acquisition costs.

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d. Long-term Equity Investments

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Investment Amount Shareholding
Investment Target
(NT$1,000) Ratio (%)
Taipei Forex Inc. 7,000 3.5318
Financial Information Service Co., Ltd. 59,008 1.2377
Taiwan Stock Exchange Corporation 198,012 0.9496
Taiwan Futures Exchange Corporation 20,000 1.0000
Taiwan Asset Management Corporation 600,000 5.6754
Taiwan Financial Asset Service Corporation 50,000 2.9412
Sunny Asset Management Corporation 461 0.7678
Financial eSolution Co., Ltd. 19,285 4.1158
Taiwan Depository & Cleansing Corporation 4,639 0.0830
Taiwan Mobile Payment Co., Ltd. 6,000 1.0000
Taiwan Power Company 11,427 0.0044
Taiwan Sugar Corporation 58,294 0.2986
Taiwan Incubator SME Development Corporation 29,000 4.8438
Sunsino Development Associate Inc. 17,440 3.1166
CDIB & Partners Investment Holding Corp. 500,000 4.9505
Taipei Financial Center Corporation 328,104 0.8000
Taiwan Urban Regeneration & Financial Services Co., Ltd. 25,000 5.0000
Chaofu Real Estate Management Co., Ltd. 8,598 3.0000
Taiwan High Speed Rail Corporation 445,000 0.7906
Taiwania Capital Buffalo II Bioventures, LP 85,000 1.6946
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Note: Long-term investment of the Bank.

Unit: NT$ million

D. NTD Deposits

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Year At the end of 2022 At the end of 2021
Increase
Item Amount Percentage % Amount Percentage % (Decrease) %
Demand Deposits 842,271 57.86 829,772 58.24 1.51
Time Deposits 613,313 42.14 594,921 41.76 3.09
Total 1,455,584 100.00 1,424,693 100.00 2.17
E. Digital Banking Unit: Customer/Transaction
Year
Item At the end of 2022 At the end of 2021 Increase (Decrease) %
Number of online banking 1,678,782 customers 1,650,103 customers 1.73
customers
Number of mobile banking 1,025,392 customers 918,915 customers 11.58
customers
Number of digital banking 16,983,953 transactions 15,084,884 transactions 12.58
transactions
Number of digital deposit accounts 76,529 customers 30,053 customers 154.64
Number of Taiwan Pay customers 62,111 customers 45,165 customers 37.52
Number of Taiwan Pay transactions 1,883,700 transactions 1,199,681 transactions 57.01
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E. Digital Banking

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(3) Operating Plan for 2023

A. Corporate Banking
a. Corporate financing loan
- 1) Promote the government’s “Three Major Programs for Investing in Taiwan” and “6 Core Strategic Industries Promotion Program”, etc. to assist enterprises in obtaining required funding and increase the investment in Taiwan, creating more domestic employment opportunities.
- 2) Continue to promote the government’s initiative for actively assisting in micro-scale enterprises and start-ups (of which the capital is below NT$ 30 million) to obtain the capital required for operations; participate in project loans inaugurated by county/city governments; support youth entrepreneurs as well as small and medium enterprise (SME) corporate financing; invigorate the local economy and fulfill its corporate social responsibilities.
- 3) Strengthen the Bank’s DBU replace OBU and the parent-subsidiary shared credit model, actively increase transactions with such OBU customers, provide customized financing plans, such as foreign currency working capital, foreign letters of credit, and export bill negotiations, with complete foreign exchange financial services.
- 4) Focus on core clients in business clusters and industrial zones and strive to expand our upstream and downstream client base to scale up our loan business and market share in industrial zones.
- 5) Continue to provide loan projects related to urban renewal and green finance, while promoting building reconstruction to integrate electricity generation on-farm, energy storage, and other building designs, in response to the government’s policy of urban renewal, reconstruction of old and dangerous buildings, and green energy sustainability, to achieve the goal of sustainable development of the environment
- 6) Focus on long-term SME customers or SMEs supported by the Bank and actively organize and manage the syndicated loans and credits to expand the number of loans and commissions from corporates.
- 7) With consideration of credit risks and revenue, adjust loan structure, enhance the credit guarantee funds transferring to reduce the risk-adjusted assets, and increase the loans for SMEs.
- 8) Focus on the major business of SMEs, enhance educational training and enhance professional competencies to effectively control risks and improve overall service quality.
b. Foreign exchange
- 1) Strengthen the expansion of foreign exchange businesses
  - ① Provide various foreign exchange services to closely meet the needs of our customers.
  - ② Optimize the digitalization services of various foreign exchange products.
  - ③ Enhance training to improve foreign exchange service quality.
  - ④ Strengthen the implementation of various operation procedures to minimize operating risks.
- 2) Facing uncertainty factors such as interest rate hikes, and changes in political and economic situations in various countries, our overseas branches will continue to focus on the implementation of credit risk control to respond to the local political and economic circumstances, changes in industries at any time, and steadily promote their business with considerations given to different risks in accordance with factors such as the nature of regions, policies implemented by the headquarters, regulations, and supervisory strength.
B. Personal Banking
a. Personal loans
- 1) Enhance the operating efficiencies of personal banking and focus on the growth of revenue.
- 2) Continue to strengthen the expansion of house mortgage life insurance business to increase the service fee income of the Bank.
- 3) Strengthen online service functions for personal banking and provide diverse selling channels.
- 4) Actively cooperate with various government policies to fulfill the Bank’s corporate social
  - responsibilities.

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b. Wealth management

1) Promote high-end asset and wealth management business: Integrate personal finance, wealth management, and trust resources to launch timely and well-rounded marketing campaigns and work with certified public accountants (CPAs) and attorneys when necessary to promote family wealth management and wealth inheritance, so as to rapidly enhance the Bank's ability to serve VIP customers.
2) Establish a digital transaction process: Continuously optimize the digital financial transaction process to meet the digital mobility trend and scale up our wealth management operation.
3) Provide comprehensive services to VIP customers: Strengthen the Bank’s wealth management service team, enhance the training programs for wealth management personnel, such as asset management, research and analysis, tax planning, and cash management, and employ experienced senior investment planning professionals in the banking industry.
c. Insurance agent
1) Digital services – Implement mobile insurance application, online insurance application, and new internet banking "Policy Inquiry" function: Launch innovative Fintech services to respond to the trend of digitalization and paperless environment; as such, customers no longer need to apply for insurance policies over the counter. Strengthen digital finance services and simplify the insuring process to improves customer satisfaction, which in turn expanding our digital customer base.
2) Continue to select premium insurance products as an agency: Keep abreast of market changes, provide insurance products based on the needs of different customer bases, and enrich the diversity of products to enhance the competitive advantage.

3) Adopt inter-departmental integrated marketing: Integrate marketing across departments in an all-inone manner for our core group of customers, including SMEs, business owners, and their employees. Expand the property insurance business related to employees, factories, construction projects, houses, etc. For the individual customer group, the main focus is placed on the injury insurance of accident protection, with the protection extended to their family members, so as to boost the trust of customers with our professional image.

d. Trusts

1) Develop closer relationships with investment trust companies as IPO fund custodian and provide fund custody products that are marketable and risk-diversified to generate long term fixed income in order to satisfy customers' investment needs and increase the scale of funds under custody.
2) Extend the range of assets under custody (e.g. private placement, ETFs) and continue to work with investment trust companies and investment consulting companies to expand the size and range of fund custody products and increase the scale of assets under custody.
3) Continue to introduce marketable overseas bonds with high credit rated issuers in order to meet the demands of high net worth customers and make the Bank more competitive in the market.
4) Explore new financial products and introduce specific money trusts for investment in overseas stocks, ETFs, and preferred stocks to create an all-round wealth management platform to satisfy customers’ investment needs.
5) Follow the Trust 2.0 policy and make plans for diversified trust products and services in order to provide trust products and services corresponding to social requirements and fulfill corporate social responsibility.
6) Continue to launch programs, which promote elder care trust and trust for people with disabilities, and help the elderly or people with dementia protect their assets and care for their later years, in response to the trend of an aging society, declining birth rates, and a growing need to protect assets of people with dementia.
7) Provide real estate and fund trust services along with financing for urban renewal and old building reconstruction, and organize seminars related to urban renewal and old building reconstruction trust in order to improve the local amenities and living environment.
8) Implement Phase 2 of Trust 2.0 and step up presale property transaction trust services to ensure property payments are used for the intended purpose and development projects are completed as scheduled, and help consumers keep property transactions secure.

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9) Continue to promote the employee stock ownership trust, implement investment transaction functions for employee benefit and stock ownership trusts, and integrate with the securities investment consulting business to strengthen the competitiveness of the Bank.

e. Credit card

1) Continue to promote the Sustainable Life Card with "green food, carbon reduction and green transportation" as the theme to develop the Bank's image as an ESG business. Offer card discounts through certain channels and entice ESG conscious consumers to apply for the card.
2) Advertise art and culture as well as entertainment via the Enjoy Life and Fun Signature Card and continue to refine and optimize channel specific offers in order to become the first choice of credit card in the art and culture community.
3) Continue to hold marketing campaigns for the Beigang Chaotian Gong Affinity Card and the Charity Affinity Signature Business Card to attract specific customer groups and develop closer ties with these customers to encourage loyalty.
4) The Bank cooperates with the government-funded platform to introduce Taiwan Pay scanned transactions, and will continue to hold marketing events, and encourage cardholders' usage by utilizing credit card statements and the website of the Bank to achieve the goal of mobile payment under the government's policy and increase the usage rate of mobile payment.
5) Optimize various operating processes based on customers’ experience to improve customers’ satisfaction.

f. Securities

1) Expand the institutional customer base and provide customer oriented securities services.
2) Vigorously cooperate with branches to jointly visit the target customer groups, implement and execute on annual key operations, and develop securities business to fully exerting the integral marketing function of the entire bank and improve the overall contribution of customers.
3) Plan to establish an Online Securities Account Opening System to provide securities account opening services without the need to visit branch counters, so as to save customers’ valuable time and improve their satisfaction.
4) Plan to implement a regular stock investment plan that allows customers to purchase individual stocks and ETFs on a regular basis in a fixed amount to meet the need for small-budget investments and attract young customers to invest in the stock market in order to increase participation in inclusive finance.
5) Continue to optimize the e-Gold App as the Bank is the first securities dealer in the market to offer screen customization in a friendly, intuitive and simple design that increases customer stickiness to the platform.

C. Finance Logistics

a. Enhance capital management and operating efficiency to maintain liquidity and improve capital utilization
income.
b. Actively carry out foreign exchange operations to increase exchange gains.
c. Closely monitor domestic and overseas governmental and economic conditions to get hold of the overall market investment trend. Select premium stocks in different industries in due course to balance the investment allocation and increase our investment income.
d. Improve the planning and management for our long-term equity investment business to increase the income of the Bank.
e. Cautiously select premium investment targets with stable growth and financial health to expand our investment portfolio, boosting foreign currency securities income.
f. Implement KYC system and assessment for product adequacy; closely monitor customers' credit limits and carry out risk control.
D. Deposits
a. Enhance performance management and evaluation, and utilize incentive measures and activities to reinforce the expansion of key customer groups, so as to drive deposit growth momentum of our branches and increase the size of demand deposits.

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b. Enhance various deposit agency services and continue to optimize system services in order to provide better customer service, strengthen the Bank’s competitiveness, and assist the branches in expanding business.
c. Continue to improve the payroll to demand deposit service and introduce special offers for payroll customers in order to increase the size of demand deposits while extending retail banking, wealth management and related services through cross selling and synergy to create more profit sources.

E. Digital Banking

a. Continue to optimize digital channels and value user experiences to satisfy the needs of customers and enterprises.
b. Introduce digitalized procedures, promote mobile payment and digital membership to expand sales momentum.
c. Utilize data to drive growth, develop digital marketing, and create a convenient financial ecosystem.
d. Develop innovative FinTech, promote digital transformation, and establish AI in financing.
e. Change thinking patterns, enhance digital knowledge and image, and optimize human capital.
f. Develop and manage three major customer groups (enterprise + generation, young YZ generations, orange/silver generation) to enhance the value of active customers.

F. Risks Management

a. Complete the Task Force on Climate-Related Financial Disclosure (TCFD) for the Bank and release the 2022 TCFD Report.
b. Start the implementation of Basel III system requirements in 2022 in response to the FSC's adoption of BIS Basel III in 2024; and schedule to gradually complete risk-weighted asset calculation and logic modification for credit, market, and operational risks by the end of 2023 and the end of 2024 in order to comply with the FSC’s BIS modification requirements.

c. Continue to enhance the linking function among the top three managing tools for operating risks, allowing management tools to support and link to one another, perform cross-over analysis and verification, to improve the Bank's capacity for active and advance control on operating risks.
G. Legal compliance and anti-money laundering
a. Comply with regulations imposed by domestic and foreign competent authorities and continue to optimize the AML system of the Bank.
b. Strengthen the supervision for the first line of defense as well as field visits and sampling tests for the branches.
c. Adopt diversified channels to continue organizing educational trainings
d. Convene video conference from time to time to communicate with branches regarding relevant regulations and matters of attention, so as to achieve the effectiveness and immediacy of control.

(4) Market Analysis

A. Geographic Scope of Operations
Apart from being a SME specialized bank, the Bank also provides diversified services in personal financing, wealth management, and the professional financing field. Our branches spread across the nation, including 125 branches in Taiwan and 1 Offshore Banking Unit. There are also 8 overseas branches in Los Angeles, New York, Sydney, Brisbane, Shanghai, Wuhan, Hong Kong, and Tokyo, as well as one representative office in Yangon, Myanmar.

B. Market supply, demand and growth in the future

As the forecast of the International Monetary Fund (IMF), the growth rate of the world trade volume will fall to 2.4% in 2023. Despite the slowing global demand, Taiwan can expect to maintain export momentum supported by the world leading semiconductor production and increased manufacturing capacity. In addition, international travel is expected to boost consumption. According to the figures released by the DirectorateGeneral of Budget, Accounting and Statistics on February 22, 2023, Taiwan's economic growth rate in 2022 was 2.45% and that in 2023 is expected to drop to 2.12%. According to ITRI's IEK-CQM, it is estimated that the output value of the manufacturing industry in Taiwan will reach NT$26.32 trillion in 2023, with an output value growth of 3.24%.

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As countries lift more COVID related border control measures, banks can once again pick up pace in overseas market expansion and shake off the effects of travel restrictions on business promotion over the last two years. Moreover, experiences accumulated in the New Southbound market and more extensive participation in the market by the banking sector as a whole both point to a significant increase in the volume of overseas lending in 2023. Regarding the domestic lending market, the government continues to encourage domestic banks to extend the "6 Core Strategic Industries Promotion Program”, which can create new market opportunities for banks. In addition, the construction of new hi-tech factories, such as IC, semiconductors, optoelectronics, and battery factories continues, giving support for growth in the domestic lending market in 2023. As for wealth management business, the Russia-Ukraine war has caused rising global inflation, supply chain issues, energy conflict and other negative impacts that may continue into 2023. Financial market volatility from rate hikes also create more investment risks worldwide. How to encourage investors to invest will be the direction for wealth management teams in 2023.

Meanwhile, the increasing use of online banking and impact of pandemic have driven the banking sector to take a more active approach to digital finance. Banks are working through cross-industry collaboration to create a financial ecosystem, establishing integrated platforms and optimizing their services, all of which will help banks as a whole improve the quality of digital financial services. In addition, as consumers have become more zero contact conscious as a result of the pandemic, the digital banking business is expected to move in the direction of fast expansion and security in 2023. Such development will not only benefit the banking sector in all lines of business, but will also effectively reduce operating costs in the long term.

C. Positive and negative factors affecting competitive niches and long-term development, as well as response

strategies

Facing the fast-changing global financing and economic state, the Bank may encounter the following circumstances:
a. Favorable factors
1) With a solid local business foundation, the Bank has a large number of loyal customers with longterm relationship, and established a good network relationship with external counseling institutions to jointly promote the sustainable operation of SMEs.
2) Leverage on the competitive advantage of "Financing, Guidance, Investment," the Bank has been focusing on the SMEs loan business in the long run, assuming an essential part in the market of SME loans with the benefit of scale profit.
3) The monetary policies of the central banks in major countries are expected to turn from tightening to neutral, leading to a significant decrease in market risks.
4) We have long promoted our trust business and work together with professional teams inside and outside the Bank to provide fast, easy, and convenient one-stop integrated planning services, from customer counseling, financing to trust.
b. Unfavorable Factors
1) The Fed's rate hikes and the continuing Russia-Ukraine war are putting pressure on the supply/ demand of raw materials and inflation. A slowing domestic economy is causing businesses and consumers to become more conservative in terms of the investment momentum.
2) Fierce competition among domestic financial institutions which provide products and services of high homogeneity.
3) As the digitalization of our systems is pending improvement, and the types of business provided are limited, the transaction process and customer services cannot be optimized.

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c. Countermeasures

1) Leverage on the channel advantages and integrate marketing resources, increase in-depth relationship with target customers and core product promotions to improve the operating performance.
2) Strengthen our specialized field of SMEs with considerations equally given to financing and counseling and create a leading financial brand as a SME specialized bank.
3) Carefully select large enterprises with stable financial structures at home and abroad as investment targets and adopt conservative and stable strategies to obtain stable returns.
4) Consider factors of risks and returns to make effective adjustments on asset allocation for the increase of overall income.
5) In response to the implementation of the government’s policies and to fulfill its corporate social responsibility, the Bank has organized diverse products and services to develop comprehensive financial businesses that cater to different aspects of lives for the public.
6) Continue to optimize digital finance services and enhance the backend system to improve customer experiences. Expand and strengthen the customer service team for VIPs, focus on target customer groups, carry out business opportunity and customer analysis, and integrate the internal resources from different departments based on customers' demands to provide comprehensive wealth management services for customers.

(5) Financial Product Research and Business Development Summary

A. Primary Financial Products and Size of Newly Added Business Department, and Profit or Loss for the Past Two Years
a. Major financial products of the Bank for the past two years
- 1) Providing the "Micro-to-small Enterprises + Startups Loan," and the loan balance was NT$60.479 billion as of the end of February 2023.
- 2) Providing the "Preferential Loans for Youth Entrepreneurship and Start-up," and the loan balance was NT$11.497 billion as of the end of February 2023.

3) Providing the "Preferential Loans for 6 Core Strategic Industries," and the loan balance was NT$55.698 billion as of the end of February 2023.
4) Providing the "Industrial Zone Preferential Loans," and the loan balance was NT$39.081 billion as of the end of February 2023.
5) In response to the aging society, the Bank offers diverse products for seniors and provides secured house mortgages of "Reverse Mortgage Loan for Joyful Retirement" and "Joyful Retirement Part II," and a total of 248 customers received the loans with the loan balances amounted to NT$ 974 million as of the end of February 2023.
6) To prevent losing customers for the existing Considerate Loan and improve business relationship with premium customers, the Bank provides the "Heart of Gold" civil and teaching personnel credit loan in the hope of expanding its consumption loan business, and the loan balances were NT$2.239 billion at the end of February 2023.
7) In response to government policies for satisfying capital demands for giving birth, pregnancy, and raising children under 5-year-old, the Bank launched the "Childbirth Consumer Loans (originally Golden Pregnancy), and a total of 1,716 families received the assistance with the approved loan amounted to NT$671 million as of the end of February 2023.
8) The Bank carries out the Ministry of Finance's "Preferential Housing Loan Program for Successful Family Foundation of Youth (Case 2)," and a total of 31,425 customers received the loans with the loan amounted to NT$132.220 billion at the end of February 2023.
9) To satisfy the demands of borrowers regarding the flexible deployment of funds, the Bank continues to provide the "Convenient Revolving Overdraft Credit Loan," a product with mid-term guarantee limits, and the utilized balances were NT$14.457 billion at the end of February 2023.
10) To strengthen the competitiveness of mortgages and guide customers to implement an eco-friendly, energy-saving, and carbon-reduction livingstyles, so as to realize the ESG spirit, the Bank launched the Happiness Loan mortgage program. As of the end of February 2023, the cumulative amount of loans disbursed reached NT$34.979 billion.
11) To strengthen business relationship with owners of SMEs and high-income groups, the Bank launched the house mortgage project of "True Excellent Loan," and the loan balance was NT$15.309 billion at the end of February 2023.

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  - 12) To help first-time homebuyers and other residential property buyers purchase a home and make the Bank more competitive in the mortgage market, the "Happiness Advantage" house mortgage program and related short-term measures have been promoted and disbursed a total loan amount of NT$23.169 billion as of the end of 2022.

  - 13) To support the government's Quintuple Stimulus Voucher, the Bank provided an in-branch voucher cashing service between October 15, 2021 and June 30, 2022. As of June 30, 2022, the Bank has helped consumers cash a total of 3.52 million vouchers for a total amount of NT$1.767 billion.

b. Newly added business departments of the Bank for the past two years: None.
B. R&D expenses and results, and the future R&D plan
a. R&D expenses for the past two years

cashing service between October 15, 2021 and June 30, 2022. As of June 30, 2022, the Bank has helped consumers cash a total of 3.52 million vouchers for a total amount of NT$1.767 billion. Newly added business departments of the Bank for the past two years: None. D expenses and results, and the future R&D plan R&D expenses for the past two years	cashing service between October 15, 2021 and June 30, 2022. As of June 30, 2022, the Bank has helped consumers cash a total of 3.52 million vouchers for a total amount of NT$1.767 billion. Newly added business departments of the Bank for the past two years: None. D expenses and results, and the future R&D plan R&D expenses for the past two years	cashing service between October 15, 2021 and June 30, 2022. As of June 30, 2022, the Bank has helped consumers cash a total of 3.52 million vouchers for a total amount of NT$1.767 billion. Newly added business departments of the Bank for the past two years: None. D expenses and results, and the future R&D plan R&D expenses for the past two years
Unit: NT$ thousand
Year	2022	2021
Amount	40,599	27,903

b. R&D results for the past two years
1) Provide industrial information on a regular basis
- ① To improve the professional knowledge and expertise of industries for our employees, industrial analysis reports were written by the Bank on a regular basis. 51 weekly reports on domestic and overseas economic and financial situation, 96 industrial dynamics reports, 12 domestic and overseas economic situation and industry overview reports, 8 monthly reports on industry trends, and 4 quarterly reports on prospects of domestic industries were completed during 2022.
- ② 50 weekly reports on domestic and overseas economic and financial situation, 96 industrial dynamics reports, 12 domestic and overseas economic situation and industry overview reports, 8 monthly reports on industry trends, and 4 quarterly reports on prospects of domestic industries are expected to be completed during 2023.
2) Analysis, reports, and research on particular and major industries
- ① To help the business units understand and pay attention to the global initiative Net Zero by 2050, the Bank gathered the competent authority's methods and plans and prepared a project report titled "Trends in GHG Disclosure Regulations for Taiwanese Businesses". The goal is to guide the business units to disclose correctly customer carbon footprint verification data.
- ② The Bank compiled a report, "Trends in Exchange Rate Spread between Offshore CNH/Onshore CNY", to help the business units and related departments understand the internationalization of the Chinese Renminbi and latest trends. To provide a reference for observing the change of the Chinese Renminbi, the report describes the factors for greater volatility in the transaction prices of CNH as compared to that of CNY, as well as the background and causes of significant price difference.
- ③ Moving in the direction of the government's economic and trade policies, the Bank prepared project reports, including "Trends in Taiwan's Display Panel Industry" and "Electricity Trading Platform - Opportunities in Frequency Control Ancillary Services and Energy Saving Market", to help all employees of the Bank understand industrial and economic trends.
3) The first financial innovation competition for bank employees and the fintech innovation challenge on campus were organized to cultivate talent in innovative financial services, as well as enhancing academia-industry collaboration. The Bank also encourages employees to pursue continuing education and be passionate about their work. Creative ideas taking shape in the competition will help businesses accelarate the implementation of their digital transition.
c. Future research and development (R&D) plans and the R&D expenses expected to be invested
1) R&D budget for 2023 is NT$77,855 thousand.
2) The Bank continues to invest in research and analysis of domestic/foreign financial markets and key industries in order to respond to future business development trends and domestic/foreign economic changes. Reports or data are provided in a timely manner to relevant business departments and branches to provide a basis for business expansion and risk management.

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d. Disclosure of our intellectual property management plan

1) Intellectual property management plan: The Bank is committed to innovating financial technology. In addition to integrating various departments’ resources and encouraging employees to actively innovate, we have formulated an intellectual property rights plan in alignment with our operational goals to attach great importance to customers’ financial service experience and their satisfaction, so as to further improve the values and profitability of our banking products, protecting trade secrets and research and development achievements and enhancing our momentum of accumulates intellectual property rights, thereby strengthening the Bank’s competitiveness.
① Patent management: The Bank develops a patent layout in alignment with various technology research and development initiatives. In addition to reward patent proposers and include their proposals in employee performance evaluation to motivate more patent proposals, the Bank also hires external patent law firms to assist in reviewing and developing a plan for intellectual property rights application and actively implement the plan accordingly. Relevant patents are mainly used for big data analysis, financial certificates, and automated services. In the process of research and development, we also appoint an external patent firm to conduct patent search for developing a patent layout and reducing our risk of infringement.
② Management of trade secrets: To strengthen the management of trade secrets, the Bank's work rules and clerk employment agreement stipulate as follows:
- (a) The Bank's trade secrets and customers ’ data shall be kept confidential and shall not be disclosed to the public.
- (b) Unpublished information, trade secrets and customers’ data informed or obtained due to work shall be kept confidential and shall not be used illegally regardless of the performance of duties, changes, or after resignation. If the violation causes the Bank to suffer losses, the employee shall be willing to be dismissed and liable for damages.
- (c) During the tenure, due to job or business, individual or joint research and development achievements or creation of works or works derived from work or business, works edited, or other intellectual property rights (including patent rights) all have the Bank as the author or patentee, and the employee shall promise that all creations in which they engaged during their tenure are their own creations and that they never plagiarize or copy others ’ works and may not use pirated software by themselves or through others, or copy software to the Bank's computers without consent. If another person ’ copyright or other intellectual property rights are violated as a result, the employee shall be willing to be liable for all damages and any expenses incurred to the Bank as indicted or warned by a third party.
③ Trademark management
- (a) Regularly check the extension period of trademark registration every year and extend trademark registration by a trademark office appointed or by the Bank.
- (b) Continue to optimize the Bank's CIS trademark to enhance our corporate image in alignment with our business marketing and advertising needs.
2) Implementation: The Bank has been promoting the intellectual property management plan since 2020 and regularly reports the intellectual property management plan to the Board of Directors in the fourth quarter of each year. The main implementation situation is as follows:
① 2022: Formulated an intellectual property rights plan in alignment with the Bank's operational goals.
② As of the end of December 2022, all our intellectual property achievements are as follows:
- (a) Invention patents: 11 applications have been approved.
- (b) Utility model patents: 23 applications have been approved.
- (c) Trademarks: The Bank ’ s 19 registered trademarks include the Bank's corporate identity, HiBank design drawing, BOBE, Daily Combo Card and drawing, as well as Governmental Banks Credit Card Alliance and drawing.

(6) Short- and Long-Term Business Development Plans

A. Short-term business development plan: Please refer to the "(3) Operating Plan for 2023" (page 83 ) in this chapter.
B. Long-term business development plan: Please refer to "3. Future Development Strategies" (page 14 ) in "I. Letter to Shareholders."

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2. Employees

(1) Employees Information

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2023
Year 2021 2022 (As of
February 28)
Number of employees 5,321 5,424 5,395
Average age 43.88 43.26 43.22
Average year of service 16.37 15.56 15.49
Ph.D. 0.19 0.15 0.15
Master's degree 18.12 18.71 18.74
Distribution
of Academic
Qualifications Bachelor’s degree 75.94 76.38 76.5
(%) High school 5.49 4.55 4.41
Below high school 0.26 0.20 0.20
Licenses for trusts 4,649 4,780 4,732
Financial planner 1,715 1,708 1,698
Senior Qualification Examination for Professional
and Technical Personnel (Lawyers and Chartered 13 9 9
Public Accountant)
Qualification Examination for Senior Securities 1,743 1,755 1,744
Specialist
Qualification Examination for Securities 87 91 92
Investment Analyst
Qualification Examination for Futures Specialist 2,118 2,123 2,118
Grade above S2 for FLPT® 1,395 1,534 1,531
Internal auditor 11 11 11
Basic Proficiency Test on Bank Internal Controls 3,936 4,072 4,047
Financial Risk Manager (FRM) 16 15 15
Certified Financial Planner (CFP) 19 21 21
Qualification Examination for Property and 15 16 16
Insurance Broker
Qualification Examination for Property Insurance 13 14 14
Agent
Qualification Examination for Personal Insurance 9 10 10
Broker
Qualification Examination for Personal Insurance 10 11 11
Agent
Qualification Examination for Investment- 4,271 4,321 4,317
orientated Insurance Product Representative
Property Insurance Representative 3,924 4,040 4,032
Personal Insurance Representative 4,728 4,822 4,803
Test for the Sales of Non-investment-oriented Life
Insurance with Payment in Foreign Currency by 3,192 3,254 3,244
Personal Insurance Representative
Name and number of professional licenses hold by employees
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(2) Studies and Training for Employees

A. The Bank executed different training according to the “Enforcement Guidelines for Training for Employees of Taiwan Business Bank, Ltd.” and the Bank’s employee training program for 2022; however, due to the pandemic and in response to the central pandemic-prevention policies and measures, partial programs were postponed or adopted the form of digital learning, Webex or video connection. Training sessions held during 2022 recorded a total of 405 sessions (including 29 sessions of business foundation, 349 advanced sessions of business seminars, 7 sessions for managers, 20 sessions of lectures/orientations); the total number of people trained was 38,674, the average employee training frequency was approximately 7.1 times per person/year, and the annual employee training expense was NT$29,209 thousand in total.
B. A series of digital marketing courses are provided to give bank employees an in-depth knowledge of fintech and innovation in response to Bank 4.0 and in preparation for future transition. The Bank has hired Taiwan Academy of Banking and Finance (Fin & Tech) to provide a training course, “Future of Banking & Digital Innovations and Technologies”, tailored specifically for the Bank’s needs. The course is workshop based and encourages employees to exercise creativity and develop potential. Interdepartmental collaboration is adopted to bring creativity into the workplace.
C. Management training courses are provided for managers on all levels to make the Bank more competitive and its managers better trained in their professional knowledge and roles. The Bank also held the Learning Diversity Book Club, which focuses on issues arising from the management of employees in the front-line business units and helps improve the expertise of the management team and reduce operational risks.
D. To encourage employees to absorb new knowledge and improve their professional competencies, business departments at the head office will assign relevant personnel to participate in training courses organized by external professional training institutions, so as to meet the requirements on professional competencies for the business development of the Bank.

(3) Employee Code of Conduct and Ethics

The Bank attaches great importance to the employee code of conduct and ethics. All of our employees are provided with the working rules for them to clearly understand their own rights and code of conduct to be observed, including loyalty and dedication, legal compliance and faithfulness, honesty and integrity, professional commitment, confidentiality, and courtesy. Our employees also adhere to a high standard of morals and ethics.

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(4) Protective Measures for the Safety of the Work Environment and Personal Safety of the Employees

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Item Description
Access control A. Rigorous access control monitor system is available during daytime and nighttime.
B. The Bank has signed a contract with the security company to protect the safety of the branches
during night time and weekends.
C. Connect with the police and public security unit as a precaution.
Equipment A. According to the requirements under Regulations for Inspecting and Reporting Buildings Public
inspection and Security, the Bank shall engage professional companies to carry out the security inspection every
maintenance two to four years.
B. The Bank commissioned professional organizations to inspect the fire safety facilities every year
as required by the Fire Services Act.
C. According to the Code of Practice for Occupational Health and Safety of the Bank, the
maintenance and inspection for motorcycles, air conditioners, vehicles, coin counters, kitchen,
hole puncher, and bill counter are carried out per day; the maintenance and inspection for
air conditioners, first-aid kit, fire service equipment, and elevators are carried out per month;
the maintenance and inspection for vehicles are carried out per season; the maintenance
and inspection for high/low voltage electrical equipment are carried out per six months; the
maintenance and inspection for motorcycles, fire service equipment, and elevators are carried
out per year; and the maintenance and inspection for motorcycles are carried out per three years.
Disaster A. The Bank has disaster prevention, rescue notes, and occupational accident reporting procedures
prevention in place, including "Disaster Emergency Response Countermeasures Manual," "Management
and response Guidelines for Major Contingencies," "Procedure Guidelines for Security and Grouping of
measures Branches," "Code of Practice for Occupational Health and Safety," "Regulations Governing
Occupational Health and Safety," "Workplace Self-Inspection Plan," and "Procedure Guidelines
for Equipment Maintenance." Such procedures specify the responsibilities and mission for
personnel at each level before and after material events of natural disasters and material
emergencies of robberies. Anti-robbery drills are performed twice a year at our branches.
B. The head office engages the fire protection competent authority to organize the fire protection
and disaster prevention lectures in accordance with the fire protection plan.
C. To safeguard the security and health of our employees, the Occupational Safety Section
subordinates to the Human Resources Department is in place for the promotion of safety and
health affairs.
Physical Health A. Health check and health management: Regular health check is provided for employees, and
medical workers present at the branches will offer health guidelines and recommendations to
employees who receive abnormal results of the health check.
B. Hygiene of the working environment: Smoking is prohibited at all business premises. The Bank
also carries out regular office cleaning and sterilization and sets the 17th of each month as the
cleaning day.
C. In order to help voluntary health management of our employees, the Bank organizes health
seminars, CPR training, and provides health-related programs on the digital learning website
of the Bank for our fellow colleagues to learn new knowledge from the internet and enrich their
concepts of health.
D. To provide employees a healthy working environment, the Bank established a health service and
stress relief activity center, nursing rooms, and emergency facilities (such as AED and first -aid
kit), and improved the workplace facilities in due course to improve the safety of the environment
and minimize the occurrence of workplace accident.
Mental Health A. Provide physical and mental relaxation for employees: To help care for the living quality of our
employees and relieve their stress from workplace and family, the Bank provides programs of
pressure release, family care, emotion control, and encouragement on its digital learning platform
for our fellow colleagues to access, adjusting mental health in due course.
B. Prevention of sexual harassment at the workplace: Establish report regulations and punitive
terms, as well as provide the “Gender Equality” course on the E-learning website to strengthen
employees' correct perception and awareness.
Advice on Setting up the "Advice on hazardous analysis during operations environment of contractors" and
hazardous "Q&A" in the exclusive zone for the employees of the Bank according to the government regulations.
factors during
operations of
contractors
Insurance and A. The Bank provides labor insurance (including occupational injury and disease) and health
Medical Care insurance to its employees according to the law, and negotiates with insurance companies to
Consolation provide casualty insurance, accident medical insurance, and cancer insurance to the Bank's
employees and their families at a rate of concession.
B. The Bank offers work-related casualty insurance for all our employees with coverage of NT$3
million. For work-related disability or work-related deaths, the insurance claim will be used to
support the employee or its successors.
C. Provide disease subsidies to our clerks, their spouses, and descendants.
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3. Corporate Responsibilities and Moral Conduct: Please refer to IX. Sustainable Development Report (page 342).

4. Number of Non-managerial Full-time Employees and Their Average and Median

Salaries

Items	2022	2021	Growth Rate
Number of non-managerial full-time employees (Persons)	5,065	5,040	0.50%
Average salary of non-managerial full-time employees (NT$1,000)	1,283	1,195	7.36%
Median salary of non-managerial full-time employees (NT$1,000)	1,143	1,069	6.92%

5. Information Equipment

(1) Primary hardware: Central accounting mainframe, foreign exchange mainframe, fund mainframe, automatic tape library of the mainframe, virtual tape library of the mainframe, hard drive of the mainframe, laser printer of the mainframe, hard drive of the open system, tape library of the open system, virtual tape library of the open system, server of the open system, and network equipment.

(2) Primary information system: Deposits system, loans system, remittance system, foreign exchange system, credit card system, general ledger system, e-banking information system, teller terminal system, seal/ signature verification system of the Bank, ATM system, ATM monitoring system, the central operating system for collection bill and outward remittance, statement management and inquiry system, CRM system, digital branches system, AML system, fund system, wealth management system, and overseas branches system.

(3) Information operating project

A. Transform the information architecture to provide a double-speed development system architecture.
B. Data-driven decision-making to build a customer data pool that can be accessed in real time.
C. Streamline processes to improve operational efficiency.
D. Develop and integrate business information application systems to fully support the development of various services.
E. Strengthen the information security protection mechanism to provide transaction security management and protection.

(4) Emergency backup and security protection measures for information operations

A. Central mainframe backup
The operating center of the Bank is located at Linkou, and a remote backup center is established in Taipei. Established the SYSPLEX system with local HA in April 2020. The core system structure is the SYSPLEX system with local HA and remote mainframe backup. The data storage adopts local dual-disk backup and remote disk backup to prevent the disruption of operations and data damages due to the malfunction of a single mainframe or disk unit, so as to ensure data security, system availability and uninterrupted operations, and effectively shorten connection response time. In addition, to enhance the familiarity of our employees toward the operating procedures and the completeness of the verification document, remote backup rehearsals are carried out twice a year.
B. Branches backup
Our branches are equipped with backup networks. Also, when accidents occur and the connection system is down, customers may present at the nearby branch with relevant documents for handling.
C. Computer virus and hacker invasion precaution for computer equipment of the Bank
a. Spam filtering and malicious email blocking system is in place; meanwhile, external email accounts are prohibited, and letters have been dispatched to all departments regarding internal control operations.
b. Build the Internet firewalls and the server zone firewalls, adopt dual firewall mechanism and Intrusion Prevention System (IPS), monitor the access to DMZ zone (i.e., Internet banking, the entry portal, and

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online financing system, etc.), server zone (i.e., application servers, and database servers, etc.) and all external website connections made by our employees, to reinforce the cyber security protection.

c. Establish the firewall that can partition into serval network segments and control the network connections between network segments, cross-network segment access of IoT equipment, and the connection to the internet, in order to avoid information equipment being implanted with malicious ware and resulting in effects on the Bank's operations due to the spreading and infection of viruses.
d. Establish the web application firewall (WAF) to strengthen protection against web application program vulnerabilities and block application-layer web page attacks (such as SQL Injection).
e. Establish the anti-virus software (Symantec) to protect the operating security of PCs, work stations, and servers using the Windows platform at all departments of the Bank, to prevent the interruption of normal business operations or leakage of important information due to the infection of computer viruses (including malicious ware).
f. Facing the Distributed Denial-of-Service attack (DDoS), in addition to adopting the internet service provider (ISP) approach to stop DDoS traffic, DDoS defense system (Arbor) is also installed to block application-layer attacks.
g. Establish an SIP system to manage private intranet connections and dual Ethernet devices.
h. Inspect EOS/EOL systems (including operating systems, databases, and applications) every quarter to better prevent system vulnerabilities.
i. Conduct regular emergency response drills for the information and communication systems to reinforce the operating procedures of system administrators’ responding to cyber security incidents.
j. Establish a personal data endpoint protection system (DLP) to manage the file transfer of portable storage devices (USB) and prevent personal data leakage.

6. Cyber Security Management

(1) Risk management structure

A. The Bank has completed the operations related to cyber security and adopted the principle of three lines of defense and division of labor to ensure the effective operations of the overall cyber security management and control mechanism. The first line is the bank-wide information and communication system management and user units, which are responsible for design and implementation; the second line is the Information Security Department, which is responsible for planning and monitoring information security management; the third line is the Auditing Department, which is responsible for performing independent audits.
B. The Bank assigned the Executive Vice President supervising the Information Security Department as the Chief Information Security Officer, with responsibilities for coordinating the promotion of the Bank's cyber security policies and resource allocation.
C. In addition to monthly cyber security updates to the Risk Management Committee, quarterly cyber security updates are submitted to the Cyber Security Management Committee for review before being presented to the Audit Committee and Board of Directors to keep the Board informed of information security operations in the Bank.
D. To ensure operating procedures have been calibrated to the optimal condition, the Bank sends representatives to provide onsite assistance from time to time to help relevant units implement a fully developed information security operation as soon as possible.
E. The Bank has the Cyber Security Management Committee in place for effective execution of cyber security management related matters. The Committee is convened by the Chief Information Security Officer who oversees the execution and coordination of cyber security management related matters, and the Bank's independent directors with cyber security background are invited to attend and provide guidance. Furthermore, cyber security experts are invited to discussions of major information security issues to provide expert opinions and be consulted when major information proposals are presented to the Board of Directors.
F. The Cyber Security Management Committee convenes at least once a quarter, and the Committee had convened 6 meetings in 2022.

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(2) Cyber Security Management Policy

A. The Bank has formulated the Cyber Security Management Policy to ensure the security of our various information and communication systems and information assets, strengthen our overall cyber security structure, and reduce operational risks. The five key points of the Policy are listed as follows: objective, scope, compliance, cyber security management systems installed, and reporting to the Board of Directors on an annual basis.
B. Our overall cyber security objective is to ensure the confidentiality, integrity, and availability of the information and communication systems and information assets, and reduce operational risks. In addition, all of our employees, outsourced vendors, and guests shall abide by our cyber security policy.
C. The Bank re-examines this Policy every year regularly or at each major change in order to ensure compliance with the latest development trends in cyber security regulations, technologies, organizations, and operations.
D. A third party is engaged every year to conduct onsite audits at relevant departments to assess the effectiveness of the information security system as a whole.
E. Execution of the information security protection mechanism, reporting of cyber security incidents, and feedback from internal/external stakeholders from the previous year are summarized and reported to the Board of Directors. In addition, an overall cyber security update is presented to the Board of Directors in the first quarter of every year.

A. Computer systems are assessed for information security every year to ensure the security protection mechanisms in the IT systems provided by the Bank are effective. These assessments cover information architecture check, network activity check, vulnerability scan, penetration test, APP test, security settings check, and compliance check. They are used to identify potential information security threats and vulnerabilities and facilitate implementation of technical and administrative controls.

B. The Bank is now a member of F-ISAC, F-SOC, F-CERT, and TWCERT/CC. These memberships give the Bank more channels for receiving and sending information security updates and perform risk assessment based on these updates. Handling of information security data is monitored by information security personnel.
C. The Bank has implemented a cyber security maintenance program and cyber security incident response mechanism to keep information and communication systems working continuously. In addition, incident drills are conducted on a regular basis.
D. All cyber security incidents will be reported and handled according to the applicable regulations.
E. Collaborative white hat exercises are conducted to train the Bank in responding to cyber security incidents. In addition to testing the Bank's ability to monitor and prevent cyber security incidents during hacker attacks, these exercises provide a basis for improving the Bank's ability to respond to cyber attacks.
F. A 3-hour information security awareness course is provided to all employees every year to reinforce information security awareness. All information security personnel complete 15 hours or more professional courses or training in information security to improve the expertise of information security personnel.
G. For effective residual risk management, plans have been put in place to purchase information security insurance to transfer the risk. The Bank is currently evaluating suitable information security insurance products.
H. The investment in information security (including hardware/software and licensing fees) in 2022 accounted for 1.87% of the total IT budget.
I. To ensure the confidentiality, integrity, and availability of customer data and related operational information, the Bank obtained ISO 27001 information security management system certification in November 2010 and has been renewing the certificate every year. The current certificate is valid from November 7, 2022 to November 6, 2025. With the implementation of the ISO 27001 information security management system, it strengthens the Bank’s information security protection and business continuity capabilities, ensures the safety of our internal assets and increases customer trust and protection.

(4) Material cyber security incidents

In 2022 and as of February 28, 2023, the Bank has not suffered any loss from material cyber security incidents.

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7. Labor-Management Relations

(1) Welfare measures of the Bank

A. Employees may use their off-hours to participate in language studies and apply for subsidies according to the Bank's requirements.
B. The cafeteria at the head office provides delicious lunch at a decent price for employees.
C. Except for securities staff who do not enjoy preferential deposit interest rates, all other employees may enjoy preferential rates for both deposits and loans.
D. The Bank’s employees who voluntarily retire at the age of 60 or above are given bonuses in three important Chinese holidays each year.
E. The Bank provides insurance for all employees with coverage of NT$3 million regarding accident insurance related to work; employees may apply for claims from insurance companies concerning work-related injury or illness or work-related death.
F. The Bank has established the "Employee Welfare Committee" which deducts 0.5% of the employees' salaries as benefits each month. 0.15% of the operating revenue is allocated to the Employee Welfare Committee to process employee welfare matters, including scholarships for employees' children, medical assistance for employees and their spouses and children, childbirth subsidies, regular one-year term group life insurance, and employee bonuses for the three important Chinese holidays each year.
G. Except for the fertility subsidies distributed to employees from the Bank's Employee Welfare Committee, the Bank also provided additional fertility subsidies to employees starting from 2020.
H. Inaugurated the Employee Stock Ownership Trust to create a win-win situation for the Bank and its employees.

(2) Retirement system

The Bank shall set aside the pension (contribution rate of 6%) per month to deposit in the employees' individual pension accounts for employees eligible for the new labor pension plan. the Bank shall set aside employees' retirement allowance (contribution rate of 7.26% at the end of 2022) per month to deposit in financial institutions designated by the government for employees eligible for the old labor pension plan. As of the end of 2022, balances in the employees' retirement allowance account were over NT$4.9 billion. the Bank has established the Labor Retirement Allowance Supervision Committee to supervise the utilization and contribution of retirement reserve funds.

Regarding the procedures and conditions for retirement application, the Bank complies with the "Direction for Employees' Retirement, Consolation Payment, and Discharge with Severance Payment of the Bank" and the "Group Contract" signed between the Bank and the Bank Industry Union for employees' retirement.

(3) Labor-management Agreements and Protective Measures for Employee Rights and

Interests

A. The Bank convenes labor-management conferences regularly according to "Regulations for Implementing Labor-Management Meeting" to negotiate employee rights and interests, and implements according to the resolutions at the conferences; the execution process remains well.
B. The Bank conducted its first employee satisfaction survey in 2020. Based on the results of the questionnaire survey, the Bank will continue to develop improvement measures to enhance employees' interests.
C. On May 16, 2011, the Bank completed the signing of the first "Group Contract", which includes terms related to salary, insurance, employment, transfer, termination, holiday, leave, retirement, working hours, and labor safety and health. Under the solid mutual trust between labor and management, the first renewal of the Contract was completed on September 2, 2014, followed by the second renewal on December 4, 2018, and the third renewal on December 15, 2022, promoting win-win harmony between labor and management and setting a good example for the mutually beneficial labor-management relations in the industry. In the future, labor and management relations will continue to move forward with mutual trust, assistance, existence, and prosperity, working together to keep the brand of Taiwan Business Bank glowing and shining.
(4) Losses arising from labor disputes in the most recent year and up to the end of February 2023: None.

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(5) Current or future potential losses arising from labor disputes: None.

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8. Important Contracts

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

Restrictive
Nature of contract Parties Starting date of the contract Major contents terms
Outsourcing contract SYSTEX Corporation 2020.7.1-2022.6.30 Credit card-related operations Confidentiality
(automatically renewed for - Operations of form printing, clause
one year at expiration up to filling and sealing, and
twice; currently renewed until posting.
2023.6.30)
Outsourcing contract Taiwan Security Co., 2022.7.1-2023.6.30 Cash transit operation - None
Ltd. and LeeBao (automatically extended for Temporary and pay-per-use (2
Security Co., Ltd. one year at expiration and all firms)
subsequent years)
Outsourcing contract Taiwan Security Co., 2022.7.1-2023.6.30 Cash transit operation - None
Ltd. and LeeBao (automatically extended for Charter by month (2 firms)
Security Co., Ltd. one year at expiration and all
subsequent years)
Outsourcing contract SYSTEX Corporation 2020.1.1-2023.12.31 Printing and mailing of None
comprehensive statements
and trust reports and sending
of e-statements.
Outsourcing contract SYSTEX Corporation 2020.7.1-2022.6.30 Outsource printing and None
(automatically extended for six mailing of balance reports
months up to twice if neither and time deposit termination
party gives termination notice statements.
by expiration)
Outsourcing contract Yuen Foong Paper 2022.10.1-2023.9.30 Logistics for data processing - None
Co., Ltd. (automatically extended for Notice for NTD time deposits
one year at expiration and all automatic renewal upon
subsequent years) expiry.
Outsourcing contract Hong Li Assets 2007.11.7~ Outsourcing of debt collection Confidentiality
Management (no expiration date and can for credit cards and consumer clause
Consultancy Co., Ltd.; be terminated by the Bank at finance.
Hong Kong Gold anytime)
Partners (Asia) Asset
Management Co., Ltd.
Taiwan Branch
Outsourcing contract United Credit Services 2021.3.18 Confidentiality
Ltd. (no expiration date and can clause
be terminated by the Bank at
anytime)
Outsourcing contract Financial Information 2008.12.1-2010.12.31 Credit card-related operations Confidentiality
Service Co., Ltd. (automatically renewed for - international card purchase clause
one year at expiration and all authorization operation,
subsequent years; currently card opening/suspending/
renewed until 2023.12.31) lost reporting operation, cash
advance, and emergency
services.
Outsourcing contract Chung Hwa Express Established on the date Marketable securities, notes, None
Corp. of signing by the signing and receipts transit operations
department for a term of one
year. Automatically extended
for one year at expiration and
all subsequent years.
Outsourcing contract An Feng Enterprise Established on the date ATM replenishing operations None
Co., Ltd. and Lian An of signing by the signing (2 firms)
Service Co., Ltd. department for a term of one
year. Automatically extended
for one year at expiration and
all subsequent years.
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Restrictive
Nature of contract Parties Starting date of the contract Major contents terms
Outsourcing contract Shin Kong Security Established on the date ATM video monitoring None
Co., Ltd., Taiwan of signing by the signing operations
Secom Co., Ltd., and department for a term of one (3 firms).
China Steel Security year. Automatically extended
Co., Ltd. for one year at expiration and
all subsequent years.
Outsourcing contract CROWN RECORDS 2021.2.1-2023.1.31 Document storage and None
MANAGEMENT destruction of contract
Outsourcing contract Taiwan FamilyMart. 2012.10.1-2013.12.31 Credit card operations - Confidentiality
Co., Ltd. (automatically renewed for Collecting the credit card bill clause
one year at expiration and all payment from the cardholders.
subsequent years; currently
renewed until 2023.12.31)
Outsourcing contract Yuen Foong Paper 2022.7.24-2023.7.23 Matters of printing cash None
Co., Ltd. (automatically renewed for dividends check, data
one year at expiration and all processing and folding for
subsequent years) postage.
Outsourcing contract Taiwan Mobile 2014.12.25-2016.12.24 Participate in the Payment Confidentiality
Payment Co., Ltd. (automatically renewed for Service Provider TSM, clause
two years if neither party and entrust Taiwan Mobile
disagrees; currently renewed Payment Co., Ltd. to handle
until 2024.12.24) mobile payment tools (such as
credit cards, debit cards, etc.)
card production operations,
card life cycle management
and other data processing
services.
Outsourcing contract SYSTEX Corporation 2022.3.1-2023.2.28 Printing, filling and sealing, None
and posting of e-bank transfer
transaction statements.
Outsourcing contract SYSTEX Corporation 2019.11.1-2022.10.31 Printing, sealing, and posting None
(automatically extended for of the balance statements for
one year up to twice if neither check deposits.
party gives termination notice
by expiration)
Outsourcing contract Trade-Van. Com 2019.8.1-2021.12.31 Issue unified invoices and Confidentiality
(automatically extended for receipts for franchised stores clause
one year at expiration and all and provide online inquiry and
subsequent years; currently statement download services
renewed until 2023.12.31) to franchised stores.
Outsourcing contract GUARDFORCE 2022.11.1-2023.10.31 Shipping Exchange Bill None
LIMITED Business for Hong Kong
Branch
Outsourcing contract Yuen Foong Paper 2021.7.1-2023.6.30 Sending notices of None
Co., Ltd. (automatically extended for undelivered SMS for transfers
one year at expiration and all from physical ATM and mobile
subsequent years) APP
Outsourcing contract SYSTEX Corporation 2021.6.15-2023.6.14 Printing and mailing of None
insurance-purchasing
notifications for residential fire
insurance agents
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9. Relevant Information on Securitization Products: None.

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VI

Financial Status

101 1. Condensed Consolidated Balance Sheets and Consolidated Statements of Comprehensive Income for the Past Five Years

105

111

112

113

116

218

221 321

2. Financial Analysis for the Past Five Years

3. Audit Committee's Audit Report on the 2022 Financial Statements

4. Representation Letter for 2022 Consolidated Financial Statements

5. Independent Auditors' Report for 2022 Consolidated Financial Statements

6. 2022 Consolidated Financial Statements and Accompanying Notes

7. Independent Auditors' Report for 2022 Individual Financial Statements

8. 2022 Individual Financial Statements and Accompanying Notes

the Related Impacts

Ⅵ

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1. Condensed Consolidated Balance Sheets and Consolidated Statements of Comprehensive Income for the Past Five Years

(1) Condensed Consolidated Balance Sheets and Consolidated Statements of Comprehensive Income

Condensed Consolidated Balance Sheets

Unit: NT$ 1,000

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Year Financial information for the past five years (Note 1)
Item 2022 2021 2020 2019 2018
Cash and cash equivalents, due from the Central Bank
197,818,006 197,554,450 145,013,105 156,827,077 133,016,947
and call loans to banks
Financial assets at fair value through profit or loss 33,913,114 40,670,401 15,597,556 26,972,786 7,134,604
Financial assets at fair value through other
160,000,410 157,533,062 117,355,850 102,597,144 73,164,201
comprehensive income
Investment in debt instruments at amortized costs 236,774,247 279,035,906 228,003,332 263,056,842 261,470,496
Securities purchased under resell agreements 797,893 7,831,274 6,132,162 13,399,113 2,386,518
Receivables － net 9,057,109 7,616,634 43,448,157 27,736,905 45,652,981
Current income tax assets 350,069 349,884 306,417 810 64,880
Discounts and loans － net 1,400,112,365 1,302,388,363 1,209,716,083 1,132,462,936 1,074,627,748
Investments measured by equity method - net 808 0 0 0 0
Other financial assets － net 10,315 28,942 13,781 19,928 17,971
Property and equipment － net 14,121,833 14,533,721 14,514,906 14,498,237 14,309,738
Right-of-use assets - net 1,212,593 1,149,295 1,073,757 1,051,559 0
Intangible assets － net 757,216 554,337 375,008 352,376 286,054
Deferred income tax assets 1,777,199 1,951,636 1,843,835 1,624,651 1,646,991
Other assets - net 15,782,948 10,055,167 8,241,104 5,552,450 5,261,326
Total assets 2,072,486,125 2,021,253,072 1,791,635,053 1,746,152,814 1,619,040,455
Deposits from the Central Bank and other banks 194,966,177 102,540,315 118,201,039 104,793,612 91,314,543
Due to the Central Bank and other banks 1,131,025 50,261,590 29,040,100 752,145 591,988
Financial liabilities at fair value through profit or loss 9,925,525 8,436,037 8,639,002 9,393,336 9,339,273
Securities sold under agreements 2,462,991 2,060,693 2,055,991 868,581 1,657,706
Payable 21,493,131 22,761,436 47,787,075 31,057,684 58,674,131
Current income tax liabilities 1,101,015 64,584 3,053 258,956 1,017,575
Deposits and remittances 1,673,580,263 1,668,656,822 1,418,572,000 1,435,049,547 1,311,041,103
Bank notes payable 52,250,000 52,250,000 53,250,000 53,250,000 47,450,000
Other financial liabilities 2,910,581 4,365,294 5,492,366 6,835,084 7,507,715
Provisions for liabilities 2,676,102 3,420,210 3,393,417 3,158,003 3,565,727
Lease liabilities 1,239,919 1,149,456 1,062,021 1,041,183 0
Deferred income tax liabilities 879,056 886,290 901,581 888,436 880,738
Other Liabilities 3,763,082 2,740,373 4,578,659 3,289,481 1,146,937
Total liabilities Pre-distribution 1,968,378,867 1,919,593,100 1,692,976,304 1,650,636,048 1,534,187,436
(Note 2) Post-distribution Note 3 1,919,593,100 1,692,976,304 1,650,636,048 1,534,187,436
Equity attributable to owners of the parent company 104,107,258 101,659,972 98,658,749 95,516,766 84,853,019
Stock capital Pre-distribution 80,296,934 77,431,952 74,885,834 71,319,842 63,938,802
(Note 2) Post-distribution Note 3 80,296,934 77,431,952 74,885,834 67,135,742
Capital surplus 815,900 815,900 815,900 815,900 0
Retained earnings Pre-distribution 26,764,099 21,105,900 19,245,962 19,702,723 18,007,553
(Note 2) Post-distribution Note 3 17,466,598 15,950,986 14,710,334 12,892,449
Other equity (3,769,675) 2,306,220 3,711,053 3,678,301 2,906,664
Total equity Pre-distribution 104,107,258 101,659,972 98,658,749 95,516,766 84,853,019
(Note 2) Post-distribution Note 3 100,885,652 97,909,891 94,090,369 82,934,855
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Note 2: Regarding the above information on pre-distribution and post-distribution, the pre-distribution amount was based on the amount certified by the CPA, while the post-distribution amount was based on the appropriation and distribution of surplus passed on the resolution of the Shareholders' Meeting in the following year.

Note 3: Distribution of earnings for 2022 is subject to the resolution at the Shareholders' Meeting.

102

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Condensed Individual Balance Sheets

Unit: NT$ 1,000

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Year Financial information for the past five years (Note 1)
Item 2022 2021 2020 (Restated) 2019 2018
Cash and cash equivalents, due from the Central
197,437,001 197,299,056 144,398,236 156,550,730 132,686,605
Bank and call loans to banks
Financial assets at fair value through profit or loss 32,536,757 39,658,224 15,003,571 26,626,885 6,934,604
Financial assets at fair value through other
159,970,603 157,498,525 117,352,923 102,597,144 73,164,201
comprehensive income
Investment in debt instruments at amortized costs 236,774,247 279,035,906 228,003,332 263,056,842 261,470,496
Securities purchased under resell agreements 797,893 7,831,274 6,047,187 13,399,113 2,386,518
Receivables － net 6,469,268 5,609,809 41,709,998 25,662,450 43,698,543
Current income tax assets 348,724 347,649 302,967 0 64,842
Discounts and loans － net 1,400,112,365 1,302,388,363 1,209,716,083 1,132,462,936 1,074,627,748
Investments measured by equity method - net 3,497,456 3,117,027 2,568,843 2,216,377 2,684,501
Other financial assets － net 10,315 28,942 13,781 19,928 17,971
Property and equipment － net 14,118,286 14,529,762 14,512,022 14,493,529 14,298,525
Right-of-use assets - net 1,189,528 1,145,071 1,066,732 1,037,377 0
Intangible assets － net 756,703 553,784 374,263 351,476 284,944
Deferred income tax assets 1,752,566 1,923,597 1,815,778 1,591,851 1,623,371
Other assets - net 15,763,696 10,011,973 8,209,863 5,514,283 5,222,172
Total assets 2,071,535,408 2,020,978,962 1,791,095,579 1,745,580,921 1,619,165,041
Deposits from the Central Bank and other banks 194,966,177 102,540,315 118,201,039 104,793,612 91,314,543
Due to the Central Bank and other banks 0 49,713,800 28,450,000 0 0
Financial liabilities at fair value through profit or
9,925,525 8,436,037 8,639,002 9,393,336 9,339,273
loss
Securities sold under agreements 2,462,991 2,060,693 2,055,991 868,581 1,657,706
Payable 21,441,496 22,727,994 47,767,380 31,039,875 58,620,227
Current income tax liabilities 1,086,481 59,567 0 257,687 952,293
Deposits and remittances 1,673,936,069 1,669,039,989 1,418,703,482 1,435,332,094 1,311,937,545
Bank notes payable 52,250,000 52,250,000 53,250,000 53,250,000 47,450,000
Other financial liabilities 2,910,581 4,365,294 5,492,366 6,835,084 7,507,715
Provisions for liabilities 2,676,102 3,420,210 3,393,417 3,158,003 3,565,727
Lease liabilities 1,216,510 1,145,072 1,054,665 1,026,667 0
Deferred income tax liabilities 879,056 886,290 901,581 888,436 880,738
Other Liabilities 3,677,162 2,673,729 4,527,907 3,220,780 1,086,255
Total liabilities Pre-distribution 1,967,428,150 1,919,318,990 1,692,436,830 1,650,064,155 1,534,312,022
(Note 2) Post-distribution Note 3 1,919,318,990 1,692,436,830 1,650,064,155 1,534,312,022
Stock capital Pre-distribution 80,296,934 77,431,952 74,885,834 71,319,842 63,938,802
(Note 2) Post-distribution Note 3 80,296,934 77,431,952 74,885,834 67,135,742
Capital surplus 815,900 815,900 815,900 815,900 0
Retained earnings Pre-distribution 26,764,099 21,105,900 19,245,962 19,702,723 18,007,553
(Note 2) Post-distribution Note 3 17,466,598 15,950,986 14,710,334 12,892,449
Other equity (3,769,675) 2,306,220 3,711,053 3,678,301 2,906,664
Total equity Pre-distribution 104,107,258 101,659,972 98,658,749 95,516,766 84,853,019
(Note 2) Post-distribution Note 3 100,885,652 97,909,891 94,090,369 82,934,855
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Note 3: Distribution of earnings for 2022 is subject to the resolution at the Shareholders' Meeting.

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Condensed Consolidated Statements of Comprehensive Income

Unit: NT$ 1,000

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Year Financial information for the past five years (Note 1)
Item 2022 2021 2020 2019 2018
Interest income 33,300,102 24,170,747 25,026,784 29,444,970 28,287,358
Less: Interest expenses (13,072,129 ) (6,364,971 ) (8,834,567 ) (12,413,857 ) (11,089,482 )
Net interest income 20,227,973 17,805,776 16,192,217 17,031,113 17,197,876
Non-interest net income 8,301,150 6,300,248 5,677,225 6,178,829 5,829,071
Net Income 28,529,123 24,106,024 21,869,442 23,209,942 23,026,947
Allowances for doubtful accounts,
(2,386,062 ) (5,187,503 ) (4,054,740 ) (2,417,677 ) (794,134 )
commitments and guarantees
Operating expenses (14,103,269 ) (13,116,475 ) (12,429,441 ) (12,726,585 ) (13,034,396 )
Net income before tax from
12,039,792 5,802,046 5,385,261 8,065,680 9,198,417
continuing operation
Less: Income tax (expenses) gains (1,917,940 ) (701,934 ) (683,486 ) (1,331,427 ) (1,557,875 )
Net income from continuing
10,121,852 5,100,112 4,701,775 6,734,253 7,640,542
operation for the period
Net income (net loss) for the period 10,121,852 5,100,112 4,701,775 6,734,253 7,640,542
Other comprehensive income (6,900,246 ) (1,350,031 ) (133,395 ) 847,658 583,288
Other comprehensive income for the
(6,900,246 ) (1,350,031 ) (133,395 ) 847,658 583,288
period (net of tax)
Total comprehensive income for the
3,221,606 3,750,081 4,568,380 7,581,911 8,223,830
period
Net income attributable to owners of
10,121,852 5,100,112 4,701,775 6,734,253 7,640,542
the parent company for the period
Total comprehensive income
attributable to owners of the parent 3,221,606 3,750,081 4,568,380 7,581,911 8,223,830
company for the period
Earnings per share (Note 2) 1.26 0.64 0.61 0.94 1.14
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Note 2: Earnings per share is calculated based on the weighted average number of shares of the current year and on the basis of NT$. The effects of stock dividends have been included in the retrospective adjustments.

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Condensed Individual Statements of Comprehensive Income

Unit: NT$ 1,000

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Year Financial information for the past five years (Note 1)
Item 2022 2021 2020 (Restated) 2019 2018
Interest income 33,136,301 24,037,857 24,884,487 29,270,949 28,156,855
Less: Interest expenses (13,046,962 ) (6,357,367 ) (8,822,210 ) (12,384,142 ) (11,082,469 )
Net interest income 20,089,339 17,680,490 16,062,277 16,886,807 17,074,386
Non-interest net income 8,290,136 6,278,747 5,711,669 6,130,438 5,572,596
Net Income 28,379,475 23,959,237 21,773,946 23,017,245 22,646,982
Allowances for doubtful accounts,
(2,401,068 ) (5,171,832 ) (4,072,168 ) (2,349,480 ) (745,770 )
commitments and guarantees
Operating expenses (13,964,622 ) (13,011,107 ) (12,328,268 ) (12,611,218 ) (12,814,383 )
Net income before tax from
12,013,785 5,776,298 5,373,510 8,056,547 9,086,829
continuing operation
Less: Income tax (expenses) gains (1,891,933 ) (676,186 ) (671,735 ) (1,322,294 ) (1,446,287 )
Net income from continuing
10,121,852 5,100,112 4,701,775 6,734,253 7,640,542
operation for the period
Net income (net loss) for the period 10,121,852 5,100,112 4,701,775 6,734,253 7,640,542
Other comprehensive income (6,900,246 ) (1,350,031 ) (133,395 ) 847,658 583,288
Other comprehensive income for the
period (6,900,246 ) (1,350,031 ) (133,395 ) 847,658 583,288
(net of tax)
Total comprehensive income for the
3,221,606 3,750,081 4,568,380 7,581,911 8,223,830
period
Earnings per share (Note 2) 1.26 0.64 0.61 0.94 1.14
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(2) Name of CPA and its Audit Opinions

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Year Audit Opinions from CPA CPA
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Year	Audit Opinions from CPA	CPA

2018	Unqualifed opinion	Tan-Tan Chung, Feng-Hui Lee
2019	Unqualifed opinion	Tan-Tan Chung, Chun-Kuang Chen
2020	Unqualifed opinion	Tan-Tan Chung, Chun-Kuang Chen
2021	Unqualifed opinion	Tan-Tan Chung, Chun-Kuang Chen
2022	Unqualifed opinion	Feng-Hui Lee, Tan-Tan Chung,

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2. Financial Analysis for the Past Five Years

Consolidated Financial Analysis

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Year Financial information for the past 5 years (Note 1)
Analysis item 2022 2021 2020 2019 2018
Loan-to-deposit ratio (%) (Note 2) 77.80 75.84 81.97 76.03 79.41
NPL ratio (%) (Note 2) 0.20 0.28 0.50 0.32 0.30
Interest expense to average deposits
0.65 0.33 0.50 0.71 0.67
balances ratio (%)
Operation Interest income to average credit loan
2.02 1.62 1.74 2.06 2.00
performance balances ratio (%)
Total assets turnover rate (Number of
1.39 1.26 1.24 1.38 1.44
times)
Average revenue of employee (NT$1,000) 5,112 4,397 4,042 4,309 4,385
Average profit of employee (NT$1,000) 1,814 930 869 1,250 1,455
Return on Tier 1 capital (%) 10.38 5.17 5.09 8.35 10.22
Return on asset (%) 0.49 0.27 0.27 0.40 0.48
Profitability Return on equity (%) 9.84 5.09 4.84 7.47 9.51
Net profit margin (%) 35.48 21.16 21.50 29.01 33.18
Earnings per share (NT$) 1.26 0.64 0.61 0.94 1.14
Debts to total assets ratio (%) 94.98 94.97 94.49 94.53 94.76
Financial
structure Real estate and equipment to equity ratio 13.56 14.30 14.71 15.18 16.86
(%)
Asset growth ratio (%) 2.53 12.82 2.60 7.85 2.21
Growth rate
Profit growth ratio (%) 107.51 7.74 (33.23 ) (12.31 ) 56.67
Cash flow ratio (%) 13.32 43.99 Note 3 3.86 31.91
Cash flow Cash flow adequacy ratio (%) 1,352.80 1,080.68 707.51 1,507.14 3,177.03
Cash flow adequacy ratio (%) 107.96 Note 3 Note 3 Note 3 Note 3
Liquidity reserve ratio (%) 23.09 22.00 18.21 23.81 20.94
Total credit loan balances for stakeholders (NT$1,000) 11,820,604 11,177,905 10,214,528 9,542,062 9,598,016
Ratio of total credit loan balances for stakeholders to total
0.82 0.83 0.83 0.83 0.88
credit loan balances (%)
Market share of assets (%) 2.97 3.11 2.91 3.06 2.96
Operating Market share of net value (%) 2.32 2.27 2.28 2.28 2.20
scale
(Note 4) Market share of deposits (%) 3.32 3.44 3.17 3.51 3.38
Market share of loans (%) 3.65 3.69 3.66 3.61 3.57
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interests, service fees and financial products in 2022.

Note1. The above financial information for the most recent 5 years has been calculated according to the balances in the consolidated financial report certified by the CPA.

Represent the key performance indicators with the industry particularity of the Bank.

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Operation performance
- (1) Loan-to-deposit ratio = total loans/total deposits
- (2) NPL ratio = total not performing loans/total loans
- (3) Interest expense to annual average deposits balances ratio = total interest expenditures related to deposits/annual average deposits balances
- (4) Interest income to annual average credit loan balances ratio = total interest income related to credit loan balances/annual average credit loan balances
- (5) Total assets turnover rate = net gain/total average assets
- (6) Average gain for employee = net gain/total number of employees
- (5) Earnings per Share = (income attributable to owners of the parent company – dividends on preferred stock)/weighted average number of shares issued.
Financial structure
- (1) Debt-asset ratio = total liabilities/total assets
- (2) Real estate and equipment to equity ratio = net real estate and equipment/net equity

106

Growth rate
(1) Asset growth ratio = (total assets of the current year - total assets of the previous year)/total assets of the previous year
(2) Profit growth ratio = (before-tax profit or loss of the current year - before-tax profit or loss of the previous year)/before-tax profit or loss of the previous year
paper payables + financial at fair value through profit or loss + notes issued under repurchase agreement and bond indebtedness + amount payable with maturity within one year)
expenditures + cash dividend) for the past five years.
(3) Cash flow adequacy ratio = net cash flow from operating activities/net cash flow from investment activities
Liquidity reserve ratio = current assets prescribed by the central bank/liabilities required liquid reserves

7. Operating scale

and loans business
and loans business
(3) Market share of deposits = total deposits/total net value of all financial institutions available for deposits and loans business
loans business

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Individual Financial Analysis

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Year Financial analysis for the past five years (Note 1)
(Restated)
Analysis item 2022 2021 2020 2019 2018
Loan-to-deposit ratio (%) (Note 2) 77.78 75.82 81.96 76.01 79.36
NPL ratio (%) (Note 2) 0.20 0.28 0.50 0.32 0.30
Interest expense to annual average
0.65 0.33 0.50 0.71 0.67
deposits balances ratio (%)
Operation Interest income to average credit loan
2.02 1.62 1.74 2.06 2.00
performance balances ratio (%)
Total assets turnover rate (Number of
1.39 1.26 1.23 1.37 1.41
times)
Average revenue of employee (NT$1,000) 5,132 4,408 4,055 4,305 4,365
Average profit of employee (NT$1,000) 1,830 938 876 1,259 1,473
Return on Tier 1 capital (%) 10.36 5.15 5.08 8.34 10.10
Return on asset (%) 0.49 0.27 0.27 0.40 0.48
Profitability Return on equity (%) 9.84 5.09 4.84 7.47 9.51
Net profit margin (%) 35.67 21.29 21.59 29.26 33.74
Earnings per share (NT$) 1.26 0.64 0.61 0.94 1.14
Debts to total assets ratio (%) 94.97 94.97 94.49 94.53 94.76
Financial
structure Real estate and equipment to equity ratio
13.56 14.29 14.71 15.17 16.85
(%)
Asset growth ratio (%) 2.50 12.83 2.61 7.81 2.18
Growth rate
Profit growth ratio (%) 107.98 7.50 (33.30 ) (11.34 ) 56.99
Cash flow ratio (%) 13.60 45.14 Note 3 4.08 32.50
Cash flow Cash flow adequacy ratio (%) 1,389.79 1,117.86 740.83 1,525.21 3,275.58
Cash flow adequacy ratio (%) 109.57 Note 3 Note 3 Note 3 Note 3
Liquidity reserve ratio (%) 23.09 22.00 18.21 23.81 20.94
Total credit loan balances for stakeholders (NT$1,000) 11,820,604 11,177,905 10,214,528 9,542,062 9,598,016
Ratio of total credit loan balances for stakeholders to total
0.82 0.83 0.83 0.83 0.88
credit loan balances (%)
Market share of assets (%) 2.97 3.11 2.91 3.06 2.96
Market share of net value (%) 2.32 2.27 2.28 2.28 2.20
Operating scale
Market share of deposits (%) 3.32 3.44 3.17 3.51 3.38
Market share of loans (%) 3.65 3.69 3.66 3.61 3.57
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interests, service fees and financial products in 2022.

consolidated financial report certified by the CPA.

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Represent the key performance indicators with the industry particularity of the Bank.

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Operation performance
- (1) Loan-to-deposit ratio = total loans/total deposits
- (2) NPL ratio = total not performing loans/total loans
- (3) Interest expense to annual average deposits balances ratio = total interest expenditures related to deposits/annual average deposits balances
- (4) Interest income to annual average credit loan balances ratio = total interest income related to credit loan balances/annual average credit loan balances
- (5) Total assets turnover rate = net gain/total average assets
- (6) Average gain for employee = net gain/total number of employees
- (5) Earnings per Share = (income attributable to owners of the parent company – dividends on preferred stock)/weighted average number of shares issued.
Financial structure
- (1) Debt-asset ratio = total liabilities / total assets.
- (2) Real estate and equipment to equity ratio = net real estate and equipment/net equity

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Growth rate
(1) Asset growth ratio = (total assets of the current year - total assets of the previous year)/total assets of the previous year
(2) Profit growth ratio = (before-tax profit or loss of the current year - before-tax profit or loss of the previous year)/before-tax profit or loss of the previous year
(1) Cash flow ratio = net cash flow from operating activities / (interbank loans and overdrafts + commercial paper payables + financial at fair value through profit or loss + notes issued under repurchase agreement and bond indebtedness + amount payable with maturity within one year)
expenditures + cash dividend) for the past five years.
(3) Cash flow adequacy ratio = net cash flow from operating activities/net cash flow from investment activities
Liquidity reserve ratio = current assets prescribed by the central bank/liabilities required liquid reserves

7. Operating scale

and loans business
and loans business
(3) Market share of deposits = total deposits/total net value of all financial institutions available for deposits and loans business
loans business

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(2) Capital Adequacy

Consolidated Capital Adequacy

Unit: NT$1,000

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Year Capital adequacy ratio for the past 5 years (Note 3)
Capital
(Note 1)
adequacy
ratio as of
DDMMYY
2022 2021 2020 2019 2018 of current
year
(Note 5)
Analysis item
Common stock equity 100,331,196 96,157,516 93,119,841 88,212,592 78,947,036
Other Tier 1 capital that is not
18,000,000 17,487,758 17,504,060 12,708,443 13,386,998
common stock equity
Tier 2 capital 40,103,704 41,159,410 40,329,291 32,082,995 29,797,442
Eligible capital 158,434,900 154,804,684 150,953,192 133,004,030 122,131,476
Standardized approach 1,188,123,617 1,066,163,181 1,058,435,685 992,799,980 912,764,211
Credit risk Internal ratings-based
approach
Asset securitization
Basic indicator
approach
Standardized approach/
Operational alternative standardized 43,118,270 38,884,436 38,142,417 38,286,712 36,971,711
risk
approach
Advanced
measurement approach
Standardized approach 38,716,513 50,859,425 28,041,588 19,565,088 11,844,063
Market risk Internal models
approach
Total risk-weighted assets 1,269,958,400 1,155,907,042 1,124,619,690 1,050,651,780 961,579,985
Capital adequacy ratio (Note 2) 12.48% 13.39% 13.42% 12.66% 12.70%
Tier 1 capital / Risk-weighted assets ratio 9.32% 9.83% 9.84% 9.61% 9.60%
Common stock equity / Risk-weighted 7.90% 8.32% 8.28% 8.40% 8.21%
assets ratio
Leverage ratio 5.47% 5.41% 5.90% 5.53% 5.40%
Please explain the reasons for the change in the capital adequacy ratio in the last two years. (Note 4)
Eligible capital
Risk-weighted assets
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Represent the key performance indicators with the industry particularity of the Bank.
The regulatory capital, weighted risk-adjusted assets and total amount of exposure listed in the table was calculated according to the “ Regulations Governing the Capital Adequacy and Capital Category of Banks ” , and the “ Explanation and table of calculation method for banks' regulatory capital and risk assets. ”
Changes for the latest two periods (2022 and 2021) have not reached 20%; analysis of the reason is exempted.
the annual report.
Calculation formula of capital adequacy ratio is as follow:
Eligible capital = common stock equity + other tier 1 capital + tier 2 capital that is non-common stock equity.
Total risk-weighted assets = credit-risk-weighted assets + capital charge of (operating risk + market risk) × 12.5
Capital adequacy ratio = Eligible capital / total risk-weighted assets.

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Tier 1 capital / Risk-weighted assets ratio = (common stock equity + other tier 1 capital under noncommon stock equity) / total risk-weighted assets.
Common stock equity / Risk-weighted assets ratio = common stock equity / total risk-weighted assets.
Leverage ratio = net tier 1 capital / total risk exposure.

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Individual Capital Adequacy

Unit: NT$1,000

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Capital
Capital adequacy ratio for the past 5 years (Note 3)
adequacy
Year ratio as of
(Note 1) DDMMYY
Analysis item 2022 2021 2020 2019 2018 of current
year
(Note 5)
Common stock equity 100,331,709 96,157,516 93,119,841 88,212,592 78,947,036
Other Tier 1 capital that is not
18,000,000 17,487,758 17,504,060 12,708,443 13,386,998
common stock equity
Tier 2 capital 40,066,956 41,159,410 40,329,291 32,082,995 29,797,442
Eligible capital 158,398,665 154,804,684 150,953,192 133,004,030 122,131,476
Standardized approach 1,190,251,924 1,066,163,181 1,058,435,685 992,799,980 912,764,211
Credit risk Internal ratings-based
approach
Asset securitization
Basic indicator
approach
Standardized approach/
Operational alternative standardized 42,908,871 38,884,436 38,142,417 38,286,712 36,971,711
risk
approach
Advanced
measurement approach
Standardized approach 38,716,513 50,859,425 28,041,588 19,565,088 11,844,063
Market risk
Internal models
approach
Total risk-weighted assets 1,271,877,308 1,155,907,042 1,124,619,690 1,050,651,780 961,579,985
Capital adequacy ratio (Note 2) 12.45% 13.39% 13.42% 12.66% 12.70%
Tier 1 capital / Risk-weighted assets ratio 9.30% 9.83% 9.84% 9.61% 9.60%
Common stock equity / Risk-weighted 7.89% 8.32% 8.28% 8.40% 8.21%
assets ratio
Leverage ratio 5.48% 5.41% 5.90% 5.53% 5.40%
Please explain the reasons for the change in the capital adequacy ratio in the last two years. (Note 4)
Eligible capital
Risk-weighted assets
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Note1~5: The notes and calculation formula of this table are the same as those in the previous table “ Consolidated Capital ” Adequacy .

(3) Improvement measures when the eligible capital to risk-weighted assets ratio calculated according to Article 44 of the Banking Act is lower than the required ratio: No such matter.

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3. Audit Committee's Audit Report on the 2022 Financial Statements

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4. Representation Letter for 2022 Consolidated Financial Statements

Representation Letter

The entities that are required to be included in the combined financial statements of TAIWAN BUSINESS BANK, LTD. as of and for the year ended December 31, 2022 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards No. 10 by the Financial Supervisory Commission, “Consolidated Financial Statements” endorsed by the Financial Supervisory Commission of the Republic of China. In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, TAIWAN BUSINESS BANK, LTD. and Subsidiaries do not prepare a separate set of combined financial statements.

Company name: TAIWAN BUSINESS BANK, LTD. Chairman: Chien-Hao Lin Date: February 22, 2023

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5. Independent Auditors' Report for 2022 Consolidated Financial Statements

Independent Auditors' Report

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

Opinion

We have audited the consolidated financial statements of Taiwan Business Bank, Ltd. and subsidiaries (“the Bank and subsidiaries”), which comprise the consolidated balance sheets as of December 31, 2022 and 2021, the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Bank and subsidiaries as of December 31, 2022 and 2021, and its consolidated financial performance and its consolidated 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 International Financial Reporting Standards (“IFRSs”), International Accounting Standards (“IASs”), Interpretations developed by the International Financial Reporting Interpretations Committee (“IFRIC”) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

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.1082731571 and the auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Bank and subsidiaries 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 consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

1. The assessment of loans impairment

Please refer to Note 4(f) “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.The management of the Bank and subsidiaries 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 and its subsidairies need 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 and its subsidairies 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:

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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

114

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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. The impaired amounts recognized by the management were in compliance with the related regulations issued by authority. Meanwile, we assessed whether allowance for the loans meets the requirements.

2. The valuation of financial instruments

Please refer to Note 4(f) “Financial Instruments” for the related accounting policy regarding the valuation of financial instruments, Note 5(c) for accounting assumptions and estimation and Note 6(ao) for details on the information about fair value and fair value hierarchy.

Financial instruments that are held by the Bank and subsidiaries, some of them are valued through models. The valuation methods and important parameters require significant professional judgment. Therefore, the valuation of financial instruments has been identified as a key audit matter in our audit.

How the matter was addressed in our audit:

Our principal audit procedures included: tested internal control procedures applied by management for fair value measurement of financial instruments. For financial assets with quoted prices in an active market, selected samples to test the appropriateness of quoted prices. For financial assets without quoted prices in an active market and measured the fair value by valuation techniques, selected samples to test valuation models and check the reasonableness of the valuation methodology and the underlying parameters in order to assess whether the valuation techniques were properly adopted in accordance with IFRS13 “Fair Value Measurement”. Assessed the presentation and disclosures of financial instruments were in accordance with IFRSs.

Other Matter

Taiwan Business Bank, Ltd. has prepared its parent-company-only financial statements as of and for the years ended December 31, 2022 and 2021, on which we have issued an unmodified opinion.

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Public Held Banks, and with the IFRSs, IASs, IFRC, SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Bank and subsidiaries' 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 and subsidiaries 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 and subsidiaries' financial reporting process.

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's 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 Standards on Auditing of 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 consolidated financial statements.

As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated 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.

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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 and subsidiaries' 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 and subsidiaries' 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 consolidated 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 and subsidiaries to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated 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 entities or business activities within the Bank and subsidiaries to express an opinion on the consolidated 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.

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 consolidated 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 audit resulting in this independent auditors' report are LEE, FENG HUI and CHUNG, TAN TAN.

KPMG

Taipei, Taiwan (Republic of China)

February 22, 2023

Notes to Readers

The accompanying consolidated financial statements are intended only to present the consolidated 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 consolidated financial statements are those generally accepted and applied in the Republic of China.

The independent auditors' report and the accompanying consolidated 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 consolidated financial statements, the Chinese version shall prevail.

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6. 2022 Consolidated Financial Statements and Accompanying Notes

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese)

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

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December 31, 2022 December 31, 2021
Assets
Amount ％ Amount ％
11000 Cash and cash equivalents (Notes 6(a) and 7) $ 49,260,262 2 39,444,032 2
11500 Due from the Central Bank and call loans to banks (Notes 148,557,744 7 158,110,418 8
6(b) and 7)
12000 Financial assets at fair value through profit or loss (Note 33,913,114 2 40,670,401 2
6(c))
12100 Financial assets at fair value through other comprehensive 160,000,410 8 157,533,062 8
income (Notes 6(g) and (q))
12200 Investment in debt instruments at amortized cost (Note 236,774,247 11 279,035,906 14
6(h))
12500 Securities purchased under resell agreements (Note 6(d)) 797,893 - 7,831,274 -
13000 Receivables (Note 6(e)) 9,057,109 - 7,616,634 -
13200 Current tax assets 350,069 - 349,884 -
13500 Discounts and loans, net (Notes 6(f) and 7) 1,400,112,365 68 1,302,388,363 64
15000 Investments accounted for using equity method (Note 6(i)) 808 - - -
15500 Other financial assets (Note 6(j)) 10,315 - 28,942 -
18500 Property and equipment, net (Note 6(k)) 14,121,833 1 14,533,721 1
18600 Right-of-use assets, net (Note 6(l)) 1,212,593 - 1,149,295 -
19000 Intangible assets, net 757,216 - 554,337 -
19300 Deferred tax assets (Note 6(z)) 1,777,199 - 1,951,636 -
19500 Other assets, net (Note 6(m)) 15,782,948 1 10,055,167 1
Total assets $ 2,072,486,125 100 2,021,253,072 100
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December 31, 2022 December 31, 2021
Liabilities and equity
Amount % Amount %
Liabilities
21000 Deposits from the Central Bank and banks (Notes 6(n) $ 194,966,177 9 102,540,315 5
and 7)
21500 Due to the Central Bank and banks (Note 6(o)) 1,131,025 - 50,261,590 3
22000 Financial liabilities at fair value through profit or loss 9,925,525 - 8,436,037 -
(Notes 6(p) and (t))
22500 Notes and bonds issued under repurchase agreement 2,462,991 - 2,060,693 -
(Note 6(q))
23000 Payables (Note 6(r)) 21,493,131 1 22,761,436 1
23200 Current tax liabilities 1,101,015 - 64,584 -
23500 Deposits and remittances (Notes 6(s) and 7) 1,673,580,263 81 1,668,656,822 83
24000 Bank notes payable (Note 6(t)) 52,250,000 4 52,250,000 3
25500 Other financial liabilities (Note 6(u)) 2,910,581 - 4,365,294 -
25600 Provisions (Note 6(v)) 2,676,102 - 3,420,210 -
26000 Lease liabilities (Note 6(w)) 1,239,919 - 1,149,456 -
29300 Deferred tax liabilities (Note 6(z)) 879,056 - 886,290 -
29500 Other liabilities (Note 6(x)) 3,763,082 - 2,740,373 -
Total liabilities 1,968,378,867 95 1,919,593,100 95
Equity attributable to owners of parent
31101 Common stock (Note 6(y)) 80,296,934 4 77,431,952 4
31500 Capital Surplus (Note 6(y)) 815,900 - 815,900 -
Retained earnings:
32001 Legal reserve (Note 6(y)) 17,239,615 1 15,693,140 1
32003 Special reserve (Note 6(y)) 185,128 - 185,128 -
32005 Unappropriated retained earnings (Note 6(y)) 9,339,356 - 5,227,632 -
32500 Other equity interest (Note 6(y)) (3,769,675 ) - 2,306,220 -
Total equity 104,107,258 5 101,659,972 5
Total liabilities and equity $ 2,072,486,125 100 2,021,253,072 100
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(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2022 and 2021 (Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Common Share)

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For the year ended December 31,
2022 2021 Percent
Amount ％ Amount ％ Change%
41000 Interest income (Notes 6(ad) and 7) $ 33,300,102 117 24,170,747 100 38
51000 Less: Interest expenses (Notes 6(ad) and 7) (13,072,129 ) (45 ) (6,364,971 ) (26 ) 105
Net interest revenue 20,227,973 72 17,805,776 74 14
Net revenue other than interest
49100 Net service fee revenue (Notes 6(ae) and 13) 3,951,892 14 3,334,199 14 19
49200 Gain on financial assets or liabilities measured at fair value through 1,540,238 5 667,649 3 131
profit or loss (Note 6(af))
49310 Realized gain on financial assets at fair value through other 1,462,681 5 1,187,914 5 23
comprehensive income (Note 6(ag))
49450 Gain arising from derecognition of financial assets measured at 1,981 - 103,741 - (98 )
amortized cost (Note 6(h))
49600 Foreign exchange gain 923,295 3 309,479 1 198
49700 (Impairment loss on assets) reversal of impairment loss on assets 11,689 - (33,260 ) - (135 )
(Note 6(ah))
49750 Share of profit of associates and joint ventures accounted for using (1,192 ) - - - -
equity method (Notes 6(h) and 6(ai))
49800 Net other revenue other than interest income (Note 6(aj)) 83,689 - 168,887 1 (50 )
49831 Net securities brokering revenue 326,877 1 561,639 2 (42 )
Net revenue 28,529,123 100 24,106,024 100 18
58200 Bad debts expense, commitment and guarantee liability provision (Note (2,386,062 ) (8 ) (5,187,503 ) (22 ) (54 )
6(ak))
Operating expenses
58500 Employee benefits expenses (Note 6(al)) (8,875,692 ) (31 ) (8,421,635 ) (35 ) 5
59000 Depreciation and amortization expense (Note 6(am)) (1,229,876 ) (4 ) (1,041,031 ) (4 ) 18
59500 Other general and administrative expense (Note 6(an)) (3,997,701 ) (14 ) (3,653,809 ) (15 ) 9
Total operating expense (14,103,269 ) (49 ) (13,116,475 ) (54 ) 8
61001 Income from continuing operation before tax 12,039,792 43 5,802,046 24 108
61003 Less: Income tax expenses (Note 6(z)) 1,917,940 7 701,934 3 173
Net income 10,121,852 36 5,100,112 21 98
65000 Other comprehensive income:
65200 Components of other comprehensive income that will not be
reclassified to profit or loss
65201 Remeasurements of defined benefit plans 557,098 2 24,512 - 2,173
65204 Revaluation (losses) gains on investments in equity instruments (2,347,122 ) (8 ) 992,095 4 (337 )
measured at fair value through other comprehensive income
65220 Less: Income tax related to components of other comprehensive 111,419 - 4,902 - 2,173
income that will not be reclassified to profit or loss (Note 6(z))
Components of other comprehensive income that will not be (1,901,443 ) (6 ) 1,011,705 4 (288 )
reclassified to profit or loss
65300 Components of other comprehensive income that will be reclassified
to profit or loss
65301 Exchange difference on translation 1,511,789 5 (413,117 ) (2 ) 466
65308 Losses from investments in debt instruments measured at fair (6,238,235 ) (22 ) (2,046,533 ) (8 ) (205 )
value through other comprehensive income
65320 Less: Income tax related to components of other comprehensive 272,357 1 (97,914 ) - (378 )
income that will be reclassified to profit or loss (Note 6(z))
Components of other comprehensive income that will be (4,998,803 ) (18 ) (2,361,736 ) (10 ) 112
reclassified to profit or loss
65000 Other comprehensive income (6,900,246 ) (24 ) (1,350,031 ) (6 ) (411 )
Total comprehensive income $ 3,221,606 12 3,750,081 15 (14 )
Earnings per share (in NT dollar) (Note 6(ab))
Basic earnings per share (in NT dollar) $ 1.26 0.64
Diluted earnings per share (in NT dollar) $ 1.26 0.63
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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the years ended December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

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Attributable to owners of parent
Other equity interest
Unrealized gains
(losses) on
financial assets
Share capital Retained earnings Exchange measured at fair
differences on value
translation of through other
Unappropriated foreign financial comprehensive
Common stock Capital surplus Legal reserve Special reserve retained earnings Total statements income Total
Balance at January 1, 2021 $ 74,885,834 815,900 14,332,452 185,128 4,728,382 19,245,962 (1,476,771 ) 5,187,824 98,658,749
Net income for the year ended
December 31, 2021 - - - - 5,100,112 5,100,112 - - 5,100,112
Other comprehensive income for
the year ended December 31,
2021 - - - - 19,610 19,610 (330,494 ) (1,039,147 ) (1,350,031 )
Total comprehensive income for the
year ended December 31, 2021 - - - - 5,119,722 5,119,722 (330,494 ) (1,039,147 ) 3,750,081
Appropriation and distribution of
retained earnings:
Legal reserve appropriated - - 1,360,688 - (1,360,688 ) - - - -
- - - - - -
Cash dividends of ordinary share (748,858 ) (748,858 ) (748,858 )
Stock dividends of ordinary share 2,546,118 - - - (2,546,118 ) (2,546,118 ) - - -
Disposal of investment in equity
instruments designated at fair value
through other comprehensive income - - - - 35,192 35,192 - (35,192 ) -
Balance at December 31, 2021 77,431,952 815,900 15,693,140 185,128 5,227,632 21,105,900 (1,807,265 ) 4,113,485 101,659,972
Net income for the year ended
December 31, 2022 - - - - 10,121,852 10,121,852 - - 10,121,852
Other comprehensive income for
the year ended December 31,
2022 - - - - 445,679 445,679 1,209,432 (8,555,357 ) (6,900,246 )
Total comprehensive income for the
year ended December 31, 2022 - - - - 10,567,531 10,567,531 1,209,432 (8,555,357 ) 3,221,606
Appropriation and distribution of
retained earnings:
Legal reserve appropriated - - 1,546,475 - (1,546,475 ) - - - -
- - - - - -
Cash dividends of ordinary share (774,320 ) (774,320 ) (774,320 )
Stock dividends of ordinary share 2,864,982 - - - (2,864,982 ) (2,864,982 ) - - -
Disposal of investments in equity
instruments designated at fair value
through other comprehensive income - - - - (1,270,030 ) (1,270,030 ) - 1,270,030 -
Balance at December 31, 2022 $ 80,296,934 815,900 17,239,615 185,128 9,339,356 26,764,099 (597,833 ) (3,171,842 ) 104,107,258
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(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

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For the years ended December 31,
2022 2021
Cash flows from (used in) operating activities:
Net income before tax $ 12,039,792 5,802,046
Adjustments:
Adjustments to reconcile profit (loss):
Depreciation expense 980,783 869,996
Amortization expense 249,093 171,035
Provision for bad debt expense 2,378,872 5,127,339
Net loss on financial assets or liabilities at fair value through profit or loss 86,901 306,370
Interest expenses 13,072,129 6,364,971
Net gain arising from derecognition of financial assets measured at amortised (1,981 ) (103,741 )
cost
Interest income (33,300,102 ) (24,170,747 )
Net change in provisions for guarantee liabilities (21,496 ) 39,802
Net change in other provisions 29,220 92,077
Share of loss of associates and joint ventures accounted for using equity 1,192 -
method
Loss on disposal of property and equipment 925 1,193
Impairment loss on financial assets (reversal of impairment loss) (11,689 ) 33,260
Other items (3,817 ) (1,369 )
Total adjustments to reconcile profit (loss) (16,539,970 ) (11,269,814 )
Changes in operating assets and liabilities:
Changes in operating assets:
Decrease (increase) in due from the central bank and call loans to banks 9,550,611 (43,911,562 )
Decrease (increase) in financial assets at fair value through profit or loss 7,234,305 (25,674,071 )
Decrease (increase) in securities purchased under resell agreements 7,033,381 (1,699,112 )
(Increase) decrease in receivables (75,360 ) 36,085,939
Increase in discounts and loans (100,231,972 ) (99,035,256 )
Decrease (Increase) in other financial assets 25,244 (5,770 )
Increase in other assets (1,988,898 ) (3,586,664 )
Total changes in operating assets (78,452,689 ) (137,826,496 )
Changes in operating liabilities:
Increase (decrease) in deposits from the central bank and banks 92,425,862 (15,660,724 )
Increase in financial liabilities at fair value through profit or loss 925,569 91,891
Increase in notes and bonds issued under repurchase agreement 402,298 4,702
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For the years ended December 31,
2022 2021
Decrease in payable $ (3,682,123 ) (25,389,001 )
Increase in deposits and remittances 4,923,441 250,084,822
Decrease in other financial liabilities (1,454,713 ) (1,127,072 )
Decrease in provisions for employee benefits (196,272 ) (80,182 )
Total changes in operating liabilities 93,344,062 207,924,436
Total changes in operating assets and liabilities 14,891,373 70,097,940
Total adjustments (1,648,597 ) 58,828,126
Cash inflow generated from operations 10,391,195 64,630,172
Interest received 31,992,358 23,921,904
Interest paid (11,090,974 ) (6,248,636 )
Income taxes paid (648,645 ) (449,051 )
Net Cash flows from operating activities 30,643,934 81,854,389
Cash flows (used in) from investing activities:
Acquisition of financial assets at fair value through other comprehensive income (11,055,764 ) (41,252,988 )
Acquisition of financial assets at amortised cost (188,506,846 ) (130,873,423 )
Proceeds from repayments of financial assets at amortised cost 230,783,092 79,933,076
-
Acquisition of investments accounted for using equity method (2,000 )
Acquisition of property and equipment (318,336 ) (534,917 )
Proceeds from disposal of property and equipment 73 132
Increase in refundable deposits - 1,359,450
-
Decrease in refundable deposits (2,227,141 )
Acquisition of intangible assets (288,288 ) (309,411 )
Net cash flows from (used in) investing activities 28,384,790 (91,678,081 )
Cash flows (used in) from financing activities:
(Decrease) increase in due to the central bank and banks (49,130,565 ) 21,221,490
Proceeds from issuing bank notes payable - 8,000,000
-
Repayments of bank notes payable (9,000,000 )
Increase in guarantee deposits received 2,104,548 -
-
Decrease in guarantee deposits received (332,463 )
Payment of lease liabilities (420,428 ) (418,641 )
Decrease in other liabilities (1,081,839 ) (1,505,823 )
Cash dividends paid (774,320 ) (748,858 )
Net cash flows (used in) from financing activities (49,302,604 ) 17,215,705
Effect of exchange rate changes on cash and cash equivalents 90,110 1,234,582
Net increase in cash and cash equivalents 9,816,230 8,626,595
Cash and cash equivalents at beginning of period 39,444,032 30,817,437
Cash and cash equivalents at end of period $ 49,260,262 39,444,032
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(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2022 and 2021

(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 mediumsize 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, 2022, 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, 2022 and 2021, the Bank and subsidiaries has 5,581 and 5,483 employees, respectively.

These consolidated financial statements were authorized for issuance by the Board of Directors on February 22, 2023.

(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. which have already been adopted.

The Bank and subsidiaries has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2022:

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”

(b) The impact of IFRS issued by the FSC but not yet effective

The Bank and subsidiaries assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2023, would not have a significant impact on its consolidated financial statements:

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Amendments to IAS 1 “Disclosure of Accounting Policies”
Amendments to IAS 8 “Definition of Accounting Estimates”
Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

(c) The impact of IFRS issued by IASB but not yet endorsed by the FSC

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

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”
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 IFRS 17 “Initial Application of IFRS 17 and IFRS 9 – Comparative Information “
IFRS16 “Requirements for Sale and Leaseback Transactions”
Amendments to IAS 1 “Non-current Liabilities with Covenants”

(a) Statement of compliance

These consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Public Held Banks (hereinafter referred to as “the Regulation”) and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations endorsed and issued into effect by the Financial Supervisory Commission (hereinafter referred to IFRS endorsed by the FSC).

(b) Basis of preparation

(i) Basis of measurement

The consolidated 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).
(ii) Consolidation of financial statement

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

(iii) Functional and presentation currency

The functional currency of each entities is determined based on the primary economic environment in which the entities operate. The consolidated 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.

(c) Basis of consolidation

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(i) Subsidiary

A subsidiary is an enterprise controlled by the Bank. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

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

(ii) Elimination of intra-group transaction

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

List of subsidiaries in the consolidated financial statements:

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Shareholding (Holding %)
Established Main business December 31, December 31,
location scope 2022 2021
TBB International Leasing Co., Ltd. Taiwan Leasing business 100 100
Taiwan Business Bank International China Leasing business 100 100
Leasing Co., Ltd.
TBB (Cambodia) Microfinance Cambodia Financial company 100 100
Institution Plc
TBB Venture Capital Co., Ltd. Taiwan Investing business 100 100
TBB Consulting Co., Ltd. Taiwan Consulting business 100 100
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(d) Foreign currencies

(i) Foreign currency transactions

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.

(ii) 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 and subsidiaries 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 and subsidiaries 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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(e) 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.

(f) 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 and subsidiaries 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.

(i) Financial assets

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

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 and subsidiaries may irrevocably elect to present subsequent changes in the investment's fair value in other comprehensive income. This election is made on an investment-by-investment 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.

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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

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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 and subsidiaries' 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 and subsidiaries 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.

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.

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5) Impairment of financial assets

The Bank and subsidiaries recognizes 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 and subsidiaries 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 and subsidiaries is exposed to credit risk.

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 and subsidiaries' 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 and subsidiaries expects to receive. ECLs are discounted at the effective interest rate of the financial asset.

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At each reporting date, the Bank and subsidiaries 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 credit-impaired 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.

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 and subsidiaries, 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.

(ii) 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.
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.

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(iii) Reclassification of financial instruments

The Bank and subsidiaries 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 and subsidiaries must not reclassify any financial assets and liabilities of equity instruments.

If the Bank and subsidiaries 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.

(iv) Derecognition of financial assets and liabilities

The Bank and subsidiaries 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 and subsidiaries 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 and subsidiaries 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 and subsidiaries derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Bank and subsidiaries 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.

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On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

(v) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Bank and subsidiaries 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.

(vi) Interest rate benchmark reform

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 and subsidiaries 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 change to the basis for determining the contractual cash flows required by interest rate benchmark reform, the Bank and subsidiaries 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 and subsidiaries will applied the policies on accounting for modifications to the additional changes.

(g) Investment in associates

Associates are those entities in which the Bank and subsidiaries has significant influence, but not control or joint control, over their financial and operating policies.

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Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition less any accumulated impairment losses.

The consolidated financial statements include the Bank and subsidiaries' share of the profit or loss and other comprehensive income of those associates, after adjustments to align their accounting policies with those of the Bank and subsidiaries, from the date on which significant influence commences until the date on which significant influence ceases. The Bank and subsidiaries recognizes any changes of its proportionate share in the investee within capital surplus, when an associate's equity changes due to reasons other than profit and loss or comprehensive income, which did not result in changes in actual proportionate share.

Gains and losses resulting from transactions between the Bank and subsidiaries and an associate are recognized only to the extent of unrelated Bank and subsidiaries' interests in the associate.

When the Bank and subsidiaries' share of losses of an associate equals or exceeds its interests in an associate, it discontinues recognizing its share of further losses. After the recognized interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Bank and subsidiaries has incurred legal or constructive obligations or made payments on behalf of the associate.

(h) Impairment loss on non-financial assets

The Bank and subsidiaries 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 pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

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.

(i) Property, plant and equipment

(i) 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.

(ii) 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 and subsidiaries.

(iii) Depreciation

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.

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Land is not depreciated.

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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

The Bank and subsidiaries 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 and subsidiaries evaluates the impairment loss of assets.

(j) Leases

At inception of a contract, the Bank and subsidiaries 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.

(i) As a leasee

The Bank and subsidiaries 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.

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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 and subsidiaries incremental borrowing rate. Generally, the Bank and subsidiaries 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.

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 and subsidiaries estimates 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-ofuse 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 and subsidiaries accounts for the

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remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognizes in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Bank and subsidiaries 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 and subsidiaries recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(ii) As a leasor

When the Bank and subsidiaries 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 and subsidiaries 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 and subsidiaries considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

(k) 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.

(l) Collaterals

The difference between the amount of claims and the Bank and subsidiaries 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.

(m) Provisions

A provision is recognized if, as a result of a past event, the Bank and subsidiaries 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.

(n) Employee benefits

(i) Short term employee benefit

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

(ii) Retirement benefit

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

Defined contribution plan refers to the plan that the Bank and subsidiaries annually provides certain amount of money to funds to fulfill the obligation. The Bank and subsidiaries 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 and subsidiaries does not hold legal or constructive obligation to pay additional provision. The Bank and subsidiaries recognizes the pension fund provided as current pension cost on accrual basis.

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reporting date on government bonds that have maturity dates approximating the terms of the Bank and subsidiaries' 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 and subsidiaries, 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 and subsidiaries. An economic benefit is available to the Bank and subsidiaries 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.

The pension cost in the consolidated interim financial statements was calculated and disclosed on a yearto-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.

(iii) Deposits with favorable rate

The Bank and subsidiaries 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.

(iv) Termination benefits

Termination benefits are recognized as an obligation when the Bank and subsidiaries 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 and subsidiaries 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.

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(o) Income taxes

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.

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 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.

(p) Revenue recognition

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

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.

(q) Earnings per share (EPS)

The Bank and subsidiaries 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.

(r) Operating segments

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

(s) Segment information

An operating segment is a component of the Bank and subsidiaries that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Bank and subsidiaries). Operating results of the operating segment are regularly reviewed by the Bank and subsidiaries' chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Each operating segment consists of standalone financial information.

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(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

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 and Russia-Ukraine war:

(a) Impairment losses on loans

The impairment of loans of the Bank and subsidiaries were 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 and subsidiaries 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 and subsidiaries 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 and subsidiaries determines the appropriate discount rate at the end of each year and apply it to calculate the present value of the future cash outflows which are to be paid to the retirement benefit obligation. To determine the appropriate discount rate, the Bank and subsidiaries should consider the interest rate of highquality 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.

(c) Fair value of financial instruments

Financial instruments without active market or quoted market prices are measured using the valuation models or counterparty prices. When using the valuation model, all the inputs data are using the observable factors as much as possible and the inputs cannot be adjusted manually. In principle, the models used the factors can be long-term stably accessed in the market. In order to avoid the data source changed causing the gap of the financial report between the difference financial years, the models need to be adjusted and verified repeatedly to ensure the output can be measured the value of financial instruments properly.

(a) Cash and cash equivalents

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December 31, 2022 December 31, 2021
Petty cash and revolving funds $ 14,042,641 10,892,311
Foreign currencies on hand 988,995 813,650
Checks for clearing 11,029,785 12,197,958
Due from other banks 23,198,841 15,540,113
Total $ 49,260,262 39,444,032
----- End of picture text -----

Ⅵ

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

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

December 31, 2022 December 31, 2021
Due from the Central Bank $ 85,208,065 72,157,970
Deposits transferred to Central Bank 39,664 52,275
Call loans to banks 63,310,015 85,900,173
Trust fund indemnity reserve deposited 110,000 90,000
Securities serving as trust fund indemnity reserve deposited (110,000 ) (90,000 )
Total $ 148,557,744 158,110,418
----- End of picture text -----

As of December 31, 2022 and 2021, in accordance with the Banking Law and the Central Bank Law, the required reserve deposited by the Bank with the Central Bank amounted to $84,763,295 and $71,836,985of which $47,637,794 and $44,525,965 respectively, were restricted and such restriction may only be lifted when the required reserve is adjusted to a lower amount. The Bank and subsidiaries 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, 2022 and 2021 are guaranteed by the deposit reserve of the Central Bank as required, $0 and $39,000,000 respectively, please refer to 6(o) for the information of due to the Central Bank and banks.

As of December 31, 2022 and 2021, the Bank's subsidiaries and overseas branches, in compliance with the Central Bank's reserve requirement set by local authorities, deposited $134,809 and $154,177 and in reserve, of which $52,137 and $64,758 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, 2022 and 2021, the required reserve with the Central Bank amounted to $309,961 and $166,808 respectively, and its use was unrestricted.

As of December 31, 2022 and 2021, deposits transferred to the Central Bank collected from the armed forces,

prisons, and other treasury deposits were restricted.

Effective January 20, 2001, in accordance with the requirement of the Central Bank of China, the Bank complies with Clause 34 of the Trust Law to treat the discretionary trust of investments in overseas marketable securities as a default loss reserve. As of December 31, 2022 and 2021, the Bank deposited marketable securities of $110,000 and $90,000 as trust fund reserves.

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

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December 31, 2022 December 31, 2021
Financial assets at fair value through profit or loss, mandatorily
measured at fair value :
Derivative instruments not used for hedging:
Foreign exchange forward contracts $ 27,271 18,120
Currency swap contracts 1,088,827 495,831
Foreign currency options-buy 17,813 3,714
Stock index futures 26,860 28,745
Interest rate swap 5,896 6,226
Non-derivative financial assets
Commercial paper 30,907,810 37,015,444
Listed stocks 752,713 474,025
Unlisted stocks 471,554 376,313
Beneficiary certificates 414,370 1,695,843
Convertible corporate bonds - 79,230
Financial debentures 200,000 476,910
Total $ 33,913,114 40,670,401
----- End of picture text -----

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Derivative financial instruments are used for hedging foreign exchange risk and interest rate risk arising from operating, financing and investing activities. The Bank and subsidiaries 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)

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December 31, 2022 December 31, 2021
Currency swaps contract $ 260,470,257 153,249,108
Interest rate swaps contract 12,665,622 11,916,735
Option contract - buy 1,229,230 682,393
Option contract - sell 1,229,230 682,393
Forward foreign exchange contract 2,786,130 3,835,462
----- End of picture text -----

(d) Securities purchased under resell agreements

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December 31, 2022 December 31, 2021
Securities under resell agreements $ 797,893 7,831,274
Face amount 800,000 7,834,600
Resell period 2023.01.05 2022.01.03~2022.01.19
Range of resell interest rate 1.24% 0.33%~0.34%
Resell price $ 798,576 7,832,994
----- End of picture text -----

(e) Receivables, net

136

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December 31, 2022 December 31, 2021
Interest receivable $ 4,123,259 2,772,213
Acceptances receivable 791,284 1,033,229
Accrued income 140,805 138,537
Accounts receivable 1,262,213 893,518
Spot exchange receivable-foreign currencies 9,096 9,546
Refinacing guaranty deposits 1,505 33
Guaranteed proceeds receivable from refinacing 1,158 36
Credit cards accounts receivable 1,098,733 1,033,355
Receivable price of securities purchased for customers 179,159 177,964
Settlement price - 141,261
Installment receivables and leases 1,320,741 1,147,550
Other receivables 233,198 387,503
Sub-total 9,161,151 7,734,745
Less: Allowance for bad debts (104,042 ) (118,111 )
Total $ 9,057,109 7,616,634
----- End of picture text -----

The outstanding contract amount of financial assets that have been written off and still have recourse as of December 31, 2022 and 2021 were $85,659,528 and $85,356,830 respectively.

The change in allowance for bad debts was as follows:

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

For the years ended December 31,
2022 2021
Beginning balance $ 118,111 138,564
Reversal (17,353 ) 1,252
Write-off - (21,046 )
Foreign exchange 3,284 (659 )
Ending balance $ 104,042 118,111
----- End of picture text -----

Ⅵ

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(f) Discounts and loans, net

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December 31, 2022 December 31, 2021
Import/export bills negotiated $ 111,492 185,267
Bills and notes discounted 631,574 753,253
Overdrafts 30,781 35,359
Secured overdrafts 934,845 3,082,281
Short-term loans 175,758,201 158,526,680
Short-term secured loans 222,836,626 224,893,139
Margin loans receivable 2,672,159 3,245,824
Medium-term loans 182,824,935 158,957,105
Medium-term secured loans 293,811,922 283,220,193
Long-term loans 36,127,193 30,248,716
Long-term secured loans 500,599,070 453,214,205
Overdue loans 2,154,653 1,862,326
Sub-total 1,418,493,451 1,318,224,348
Less: Adjustment of discount and premium (302,470 ) (259,168 )
Less: Allowance for bad debts (18,078,616 ) (15,576,817 )
Total $ 1,400,112,365 1,302,388,363
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The change in allowance for bad debts was as follows:

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For the years ended December 31,
2022 2021
Beginning balance $ 15,576,817 14,326,157
Provision 2,419,063 5,153,489
Transfer out (16,605 ) (15,073 )
Write-off (2,300,641 ) (5,081,394 )
Write-off recovered 2,337,772 1,218,393
Foreign exchange 62,210 (24,755 )
Ending balance $ 18,078,616 15,576,817
----- End of picture text -----

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

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December 31, 2022 December 31, 2021
Investment in debt instruments measured at fair value through
other comprehensive income:
Government bonds $ 48,754,854 46,011,743
Corporate bonds 60,445,796 57,107,224
Financial debentures 32,639,581 32,875,263
Subtotal 141,840,231 135,994,230
Investment in equity instruments measured at fair value through
other comprehensive income:
Listed stocks 12,676,936 16,414,356
Unlisted stocks 5,337,461 4,974,579
Real Estate Investment Trust 145,782 149,897
Subtotal 18,160,179 21,538,832
Total $ 160,000,410 157,533,062
----- End of picture text -----

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138

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

The Bank and subsidiaries 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.

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

The Bank and subsidiaries 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 and subsidiaries designated the investments shown above as equity instrument as at fair value through other comprehensive income; therefore, the Bank and subsidiaries recognized $1,457,705 and $885,010, respectively as dividend revenue for the years ended December 31, 2022 and 2021. In which, the disposal equity instruments were recognized $688,220 and $44,127 as dividend revenue for the years ended December 31, 2022 and 2021.

The Bank and subsidiaries 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 $11,601,994 and $801,669. And (losses) gains on disposal are $(1,270,030) and $35,192 for the years ended December 31, 2022 and 2021. Therefore, accumulated gains on disposal were transferred from other equity to retained earnings.

(iii) Please refer to Note 6(ap) for the credit risk (including the impairment in debt instruments) and market risk information.
(iv) The Bank and subsidiaries assessed the impairment of financial assets measured at fair value through other comprehensive income as of December 31, 2022 and 2021. The changes in allowance for credit losses attribute to the financial assets were as follows:

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For the years ended December 31,
2022 2021
Beginning balance $ 87,792 66,454
Provision 1,521 21,599
Foreign exchange 1,539 (261 )
Ending balance $ 90,852 87,792
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(h) Investment in debt instruments at amortized cost

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December 31, 2022 December 31, 2021
Certificates of deposit with the Central Bank $ 195,595,000 231,395,000
Government bonds 24,370,304 24,673,670
Corporate bonds 7,481,434 8,689,856
Financial debentures 9,337,858 14,306,782
Negotiable certificates of deposit 64,523 58,076
Subtotal 236,849,119 279,123,384
Less:Accumulated impairment (74,872 ) (87,478 )
Total $ 236,774,247 279,035,906
----- End of picture text -----

The Bank and subsidiaries 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.

Ⅵ

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

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December 31, 2022 December 31, 2021
Reserve for provisional seizure by the court, international card $ 854,500 901,900
payment reserve, trust claim reserve and operating guaranty
funds
Central Bank Financing Guarantee - 11,300,000
Overseas branches required reserve of overdraft guarantee 64,523 58,076
Daylight overdraft guarantee (Certificates of deposit with the 2,000,000 2,000,000
Central Bank)
Guarantee for borrowing US dollars 29,000,000 23,000,000
Guarantee for borrowing JPY dollars 200,000 200,000
Sponsorship of Treasury Affairs 20,000,000 16,200,000
Total $ 52,119,023 53,659,976
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(iii) The Bank and subsidiaries assessed the impairment of investment in debt instruments at amortized cost as of December 31, 2022 and 2021. The changes in allowance for credit losses attribute to these financial assets were as follows:

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

For the years ended December 31,
2022 2021
Beginning balance $ 87,478 75,964
(Reversal) provision (13,210 ) 11,661
Foreign exchange 604 (147 )
Ending balance $ 74,872 87,478
----- End of picture text -----

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

	For the years ended December 31, 2022	For the years ended December 31, 2022
	The carrying amount at the date of derecognition	Gain (Loss) on disposal
Corporate bonds Financial debentures Total	$ 81,364 305,979 $ 387,343	710 1,271 1,981
	For the years ended December 31, 2021
	The carrying amount at the date of derecognition	Gain (Loss) on disposal
Government bonds Corporate bonds Financial debentures Total	$ 791,559 248,776 549,111 $ 1,589,446	78,951 2,048 22,742 103,741

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For the year ended 2022 and 2021, 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.

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(i) Investments accounted for using equity method

(i) Associates

The Bank and subsidiaries had significant influence on Media Talk Consultants Co., Ltd. by investing 2 million dollars on December 22, 2021 and holding 20% equity on it. The establishment registration was completed on January 19, 2022.

The Bank and subsidiaries' financial information for investments accounted for using the equity method are individually insignificant was as follows:

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December 31, 2022
Carrying amount of individually insignificant associates' equity $ 808
For the years ended December 31,
2022 2021
Attributable to the Bank and subsidiaries:
Net income $ (1,192 ) -
Total comprehensive income $ (1,192 ) -
----- End of picture text -----

(ii) Guarantee

As of December 31, 2022, the Bank and subsidiaries did not provide any investments accounted for using the equity method as collateral for its loans.

(j) Other financial assets, net

140

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December 31, 2022 December 31, 2021
Overdue receivable $ 58,786 80,334
Less: Allowance for bad debts, overdue receivable (48,471 ) (51,392 )
Total $ 10,315 28,942
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The change in allowance for bad debts was as follows:

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

For the years ended December 31,
2022 2021
Beginning balance $ 51,392 55,051
Reversal (23,222 ) (24,464 )
Transfer in 16,605 15,073
Write-off (16,567 ) (15,308 )
Written-off recovered 20,263 21,040
Ending balance $ 48,471 51,392
----- End of picture text -----

(k) Property and equipment, net

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Ⅵ

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

Revaluation Accumulated Accumulated
December 31, 2021 Cost increment depreciation impairment Total
Land $ 6,743,535 2,986,161 - 14,031 9,715,665
Buildings 8,017,954 31,184 4,592,658 14,754 3,441,726
Machinery and equipment 2,393,432 - 1,865,901 - 527,531
Transportation equipment 272,502 - 225,193 - 47,309
Miscellaneous equipment 647,036 - 539,601 - 107,435
Leasehold improvements 162,953 - 83,416 - 79,537
Construction in progress 40,547 - - - 40,547
Prepayment for equipment 573,971 - - - 573,971
Total $ 18,851,930 3,017,345 7,306,769 28,785 14,533,721
----- End of picture text -----

Change of cost

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

Foreign December 31,
January 1, 2022 Increase Decrease Exchange 2022
Land $ 9,729,696 - - - 9,729,696
Buildings 8,049,138 98,385 - - 8,147,523
Machinery and equipment 2,393,432 449,271 154,016 8,034 2,696,721
Transportation equipment 272,502 7,577 8,543 808 272,344
Miscellaneous equipment 647,036 22,461 14,859 3,476 658,114
Leasehold improvements 162,953 42,391 2,572 2,658 205,430
Construction in progress 40,547 32,248 52,570 - 20,225
Prepayment for equipment 573,971 49,995 493,808 299 130,457
Total $ 21,869,275 702,328 726,368 15,275 21,860,510
Foreign December 31,
January 1, 2021 Increase Decrease Exchange 2021
Land $ 9,729,696 - - - 9,729,696
Buildings 7,961,424 87,714 - - 8,049,138
Machinery and equipment 2,273,606 229,566 106,275 (3,465 ) 2,393,432
Transportation equipment 275,438 18,695 21,548 (83 ) 272,502
Miscellaneous equipment 608,684 63,600 24,177 (1,071 ) 647,036
Leasehold improvements 168,234 19,223 20,641 (3,863 ) 162,953
Construction in progress 12,246 62,045 33,744 - 40,547
Prepayment for equipment 514,215 158,678 98,853 (69 ) 573,971
Total $ 21,543,543 639,521 305,238 (8,551 ) 21,869,275
----- End of picture text -----

Change of depreciation

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

Foreign December 31,
January 1, 2022 Increase Decrease Exchange 2022
Buildings $ 4,592,658 197,360 - - 4,790,018
Machinery and equipment 1,865,901 293,226 153,250 6,230 2,012,107
Transportation equipment 225,193 13,183 8,480 544 230,440
Miscellaneous equipment 539,601 30,261 14,690 2,424 557,596
Leasehold improvements 83,416 37,309 2,572 1,578 119,731
Total $ 7,306,769 571,339 178,992 10,776 7,709,892
Foreign December 31,
January 1, 2021 Increase Decrease Exchange 2021
Buildings $ 4,404,411 188,247 - - 4,592,658
Machinery and equipment 1,771,978 201,131 105,626 (1,582 ) 1,865,901
Transportation equipment 232,974 13,865 21,394 (252 ) 225,193
Miscellaneous equipment 521,029 44,089 23,996 (1,521 ) 539,601
Leasehold improvements 69,460 32,181 20,300 2,075 83,416
Total $ 6,999,852 479,513 171,316 (1,280 ) 7,306,769
----- End of picture text -----

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Accumulated impairment

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

January 1, 2022 Increase Decrease Foreign Exchange December 31, 2022
Land $ 14,031 - - - 14,031
Buildings 14,754 - - - 14,754
Total $ 28,785 - - - 28,785
January 1, 2021 Increase Decrease Foreign Exchange December 31, 2021
Land $ 14,031 - - - 14,031
Buildings 14,754 - - - 14,754
Total $ 28,785 - - - 28,785
----- End of picture text -----

When the Bank and subsidiaries 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, 2022 and 2021, 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, 2022 and 2021, 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.

(l) Right-of-use assets

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

142

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Accumulated Accumulated
December 31, 2022 Cost depreciation impairment Total
Buildings $ 1,857,074 706,516 - 1,150,558
Machinery and equipment 26,497 26,408 - 89
Transportation equipment 77,477 22,728 - 54,749
Miscellaneous equipment 12,403 5,206 - 7,197
Total $ 1,973,451 760,858 - 1,212,593
Accumulated Accumulated
December 31, 2021 Cost depreciation impairment Total
Buildings $ 1,795,803 683,580 - 1,112,223
Machinery and equipment 27,842 27,272 - 570
Transportation equipment 74,819 45,301 - 29,518
Miscellaneous equipment 10,337 3,353 - 6,984
Total $ 1,908,801 759,506 - 1,149,295
Change of cost
January 1, 2022 Increase Decrease Foreign Exchange December 31, 2022
Buildings $ 1,795,803 604,750 563,446 19,967 1,857,074
Machinery and equipment 27,842 - 1,345 - 26,497
Transportation equipment 74,819 54,940 52,442 160 77,477
Miscellaneous equipment 10,337 2,996 930 - 12,403
Total $ 1,908,801 662,686 618,163 20,127 1,973,451
January 1, 2021 Increase Decrease Foreign Exchange December 31, 2021
Buildings $ 1,538,073 538,564 274,552 (6,282 ) 1,795,803
Machinery and equipment 43,406 3 15,567 - 27,842
Transportation equipment 67,794 19,818 12,776 (17 ) 74,819
Miscellaneous equipment 7,603 4,960 2,226 - 10,337
Total $ 1,656,876 563,345 305,121 (6,299 ) 1,908,801
----- End of picture text -----

Ⅵ

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Change of depreciation

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

January 1, 2022 Increase Decrease Foreign Exchange December 31, 2022
Buildings $ 683,580 385,019 370,919 8,836 706,516
Machinery and equipment 27,272 481 1,345 - 26,408
Transportation equipment 45,301 22,623 45,294 98 22,728
Miscellaneous equipment 3,353 2,666 813 - 5,206
Total $ 759,506 410,789 418,371 8,934 760,858
January 1, 2021 Increase Decrease Foreign Exchange December 31, 2021
Buildings $ 503,033 380,246 198,924 (775 ) 683,580
Machinery and equipment 40,895 1,944 15,567 - 27,272
Transportation equipment 36,156 21,183 12,032 (6 ) 45,301
Miscellaneous equipment 3,035 2,416 2,098 - 3,353
Total $ 583,119 405,789 228,621 (781 ) 759,506
----- End of picture text -----

(m) Other assets, net

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

December 31, 2022 December 31, 2021
Office supplies $ 29,019 28,953
Prepayments 8,168,184 8,167,284
Operating guarantee deposits and settlement fund 31,753 31,450
Guarantee deposits paid 2,641,545 414,405
Deferred assets 128 175
Temporary payments and suspense accounts 4,675,748 -
Proceeds of settlement and margin trading 60,139 1,307,041
Other assets 176,432 105,859
Total $ 15,782,948 10,055,167
----- End of picture text -----

(n) Deposits from the Central Bank and banks

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

December 31, 2022 December 31, 2021
Deposits from the Central Bank $ 232,262 249,565
Due from the Central Bank 14,133,500 9,955,800
Deposits from banks 705,261 244,033
Call loans from banks 31,549,533 24,292,901
Overdrafts on banks 1,084,076 536,471
Deposits transferred from Chunghwa Post Co., Ltd. 147,261,545 67,261,545
Total $ 194,966,177 102,540,315
----- End of picture text -----

(o) Due to the Central Bank and banks

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

December 31, 2022
Currency Interest Rate Maturity Date Original Amount NTD Amount
Agricultural Bank of Taiwan TWD 1.332% 2023.10.13 100,000 $ 100,000
First Commercial Bank TWD 1.45%~1.575% 2023.2.16~2023.4.25 140,000 140,000
Bank of Kaohsiung Co., Ltd. (OBU) USD 5.50% 2023.6.10 10,000 307,250
Sunny Commercial Bank (OBU) USD 5.642%~5.887% 2023.8.4~2023.8.26 9,000 276,525
KGI Commercial Bank Co., Ltd. (OBU) USD 5.326%~6.261% 2023.1.10~2023.4.7 7,000 215,075
Bank of Panshin USD 6.60% 2023.5.10-2023.8.18 3,000 92,175
Total $ 1,131,025
Unused credit lines $ 1,447,949
----- End of picture text -----

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

December 31, 2021
Currency Interest Rate Maturity Date Original Amount NTD Amount
Central Bank TWD 0.10% 2022.6.30 49,713,800 $ 49,713,800
Agricultural Bank of Taiwan TWD 0.827% 2021.10.19 50,000 50,000
Sunny Commercial Bank (OBU) USD 1.68% 2022.8.27 6,000 165,930
Bank of Kaohsiung Co., Ltd. (OBU) USD 1.62% 2023.6.10 12,000 331,860
Total $ 50,261,590
Unused credit lines $ 1,598,755
----- End of picture text -----

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

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

December 31, 2022 December 31, 2021
：
Financial liabilities designated at fair value through profit or loss
Financial debentures $ 9,367,595 8,293,730
Financial liabilities held for trading ：
Derivative instruments not used for hedging
Foreign exchange forward contracts 10,932 4,404
Currency swap contracts 524,421 126,198
Foreign currency option-sell 17,864 3,714
Interest rate contract 4,713 7,991
Total $ 9,925,525 8,436,037
----- End of picture text -----

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, 2022 and 2021.

(q) Notes and bonds issued under repurchase agreement

144

	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022
Assets	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	$ 2,616,634	2,462,991	2,472,765	Prior to July1, 2024

	December 31, 2021
Assets	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 July1, 2024

(r) Payables

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

December 31, 2022 December 31, 2021
Accrued interest $ 4,435,668 2,471,433
Accounts payable 11,042,992 12,819,963
Acceptances 802,824 1,039,557
Accrued expenses 3,277,743 2,835,553
Collection payable 676,888 783,316
Deposits received from securities borrowers 116,196 115,541
Guaranteed price deposits received from securities borrowers 108,289 149,272
Spot exchange payable, foreign currencies 13,625 9,204
Other payables 834,692 2,209,483
Prices payable of securities sold for customers 137,155 309,498
Settlement payable 40,444 -
Other 6,615 18,616
Total $ 21,493,131 22,761,436
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(s) Deposits and remittances

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December 31, 2022 December 31, 2021
Savings deposits $ 737,659,280 707,880,781
Time deposits 436,771,576 451,747,040
Demand deposits 465,429,114 475,333,055
Checking account deposits 33,292,182 33,266,719
Remittances 428,111 429,227
Total $ 1,673,580,263 1,668,656,822
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(t) Bank notes payable

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Terms of Transactions Bond Issued
Maturity
Bonds Issue date date Interest Rate & repayment Type Amount
December December
31, 2022 31, 2021
2015-2A 08/31/2015 08/31/2023 The debentures bear an annual interest rate of 2.05%. Unsecured $ 4,700,000 4,700,000
Simple interest is accrued and paid annually. The principal subordinated
will be repaid in full at maturity. long-term
financial
debentures
2015-2B 08/31/2015 08/31/2025 The debentures bear an annual interest rate of 2.10%. 〞 300,000 300,000
Simple interest is accrued and paid annually. The principal
will be repaid in full at maturity.
2016-2 12/20/2016 12/20/2023 The debentures bear an annual interest rate of 1.40%. 〞 2,700,000 2,700,000
Simple interest is accrued and paid annually. The principal
will be repaid in full at maturity.
2017-1A 03/28/2017 03/28/2024 The debentures bear an annual interest rate of 1.50%. 〞 390,000 390,000
Simple interest is accrued and paid annually. The principal
will be repaid in full at maturity.
2017-1B 03/28/2017 03/28/2025 The debentures bear an annual interest rate of 1.60%. 〞 250,000 250,000
Simple interest is accrued and paid annually. The principal
will be repaid in full at maturity.
2017-1C 03/28/2017 03/28/2027 The debentures bear an annual interest rate of 1.85%. 〞 3,360,000 3,360,000
Simple interest is accrued and paid annually. The principal
will be repaid in full at maturity.
2017-2 05/23/2017 05/23/2027 The debentures bear an annual interest rate of 1.85%. 〞 1,300,000 1,300,000
Simple interest is accrued and paid annually. The principal
will be repaid in full at maturity.
2018-2 08/20/2018 08/20/2028 The debentures bear an annual interest rate of 1.45%. 〞 5,450,000 5,450,000
Simple interest is accrued and paid annually. The principal
will be repaid in full at maturity.
2019-1A 03/21/2019 03/21/2026 The debentures bear an annual interest rate of 1.20%. 〞 1,000,000 1,000,000
Simple interest is accrued and paid annually. The principal
will be repaid in full at maturity.
2019-1B 03/21/2019 03/21/2029 The debentures bear an annual interest rate of 1.30%. 〞 4,800,000 4,800,000
Simple interest is accrued and paid annually. The principal
will be repaid in full at maturity.
2020-1 03/25/2020 03/25/2030 The debentures bear an annual interest rate of 0.80%. 〞 10,000,000 10,000,000
Simple interest is accrued and paid annually. The principal
will be repaid in full at maturity.
2020-2 08/13/2020 None The debentures bear an annual interest rate of 1.62%. Perpetual 10,000,000 10,000,000
Simple interest is accrued and paid annually. After non-
calculating the early redeemable bond is in line with the accumulated
capital adequacy ratio under the consent of the competent subordinated
authority, the debentures are redeemable per face value financial
plus accrued interest at the interest payment date after debentures
five years and a month from the issue date .
2021-1 11/17/2021 None The debentures bear an annual interest rate of 1.60%. 〞 8,000,000 8,000,000
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 .
$ 52,250,000 52,250,000
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The Bank issued $120,000 and $180,000 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:

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Terms of Transactions Bond Issued
Maturity
Bonds Issue date date Interest Rate & repayment Type Amount
December December
31, 2022 31, 2021
2017-3 10/27/2017 10/27/2047 The zero-coupon debentures with call options can be Unsecured $ 3,687,000 3,318,600
executed on strike price after five years from the issued dollar-
date. Without executing call options during the periods of denominated
debentures, the principal will be repaid in full at maturity. senior financial
debentures
2018-3 09/27/2018 09/27/2048 The zero-coupon debentures with call options can be 〞 5,530,500 4,977,900
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.
Valuation 150,095 (2,770 )
adjustment
$ 9,367,595 8,293,730
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The increase (decrease) in fair value of the financial liabilities that are attributable to changes in credit risk are as follows:

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December 31, 2022 December 31, 2021
Fair value of corporate bonds $ 9,367,595 8,293,730
Fair value increase (decrease) not attributable to changes in 170,133 90,645
market conditions that give rise to market risk
Difference between the carrying value and the amount payable at 150,095 (2,770 )
the end of the contract term
(u) Other financial liabilities
December 31, 2022 December 31, 2021
Cumulative earnings on appropriated loans fund $ 2,910,581 4,365,294
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(u) Other financial liabilities

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.

(v) Provisions

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December 31, 2022 December 31, 2021
Provision for guarantee liabilities $ 237,076 258,065
Provision for loan commitments 100,236 71,423
Indeterminate indemnity provisions 74,619 73,181
Provision for employee benefits 2,264,171 3,017,541
Total $ 2,676,102 3,420,210
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Change of provision

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January 1, Foreign December
2022 Increase Decrease Use exchange 31, 2022
Provision for guarantee liabilities $ 258,065 - 21,496 - 507 237,076
Provision for loan commitments 71,423 27,782 - - 1,031 100,236
Indeterminate indemnity provisions 73,181 1,438 - - - 74,619
Provision for employee benefits 3,017,541 172,726 875,196 50,900 - 2,264,171
Total $ 3,420,210 201,946 896,692 50,900 1,538 2,676,102
January 1, Foreign December
2021 Increase Decrease Use exchange 31, 2021
Provision for guarantee liabilities $ 218,351 39,802 - - (88 ) 258,065
Provision for loan commitments 52,831 18,896 - - (304 ) 71,423
Indeterminate indemnity provisions - 73,181 - - - 73,181
Provision for employee benefits 3,122,235 277,974 327,408 55,260 - 3,017,541
Total $ 3,393,417 409,853 327,408 55,260 (392 ) 3,420,210
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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:

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December 31, 2022 December 31, 2021
Less than one year $ 387,320 334,838
More than one year $ 852,599 814,618
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The amounts recognized in profit or loss were as follows:

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For the years ended December 31,
2022 2021
Interest on lease liabilities $ 16,920 17,864
Expenses relating to short-term leases $ 18,691 14,471
Expenses relating to leases of low-value assets, excluding short- $ 16,259 16,631
term leases of low-value assets
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The amounts recognized in the statement of cash flows were as follows:

		For the years ended December 31,	For the years ended December 31,	For the years ended December 31,
		2022		2021
Total cash outfow for leases		$ 455,378		449,743

(i) Real estate leases

The Bank and subsidiaries 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 and subsidiaries 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.

(ii) Other leases

The Bank and subsidiaries leased machinery and transportation equipment with lease terms of one to four years. In some cases, the Bank and subsidiaries 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.

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

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(x) Other liabilities

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December 31, 2022 December 31, 2021
Advance interest receipts $ 6,396 2,019
Unearned revenue 315,153 267,493
Other advance receipts 62,411 59,965
Guarantee deposits received 3,372,775 1,268,228
Temporary receipts and suspense accounts - 1,136,408
Others 6,347 6,260
Total $ 3,763,082 2,740,373
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(y) Equity

(i) Common stock

As of December 31, 2022 and 2021, the Bank's authorized capital were $100,000,000 and $80,000,000, and the paid-in capital for common shares of the Bank were $80,296,934 and $77,431,952, the face value of each share is $10. The outstanding shares were 8,029,693 and $7,743,195 shares, respectively.

Pursuant to the resolution approved by the regular stockholders' meeting of the Bank on June 17, 2022, the Bank increased its capital from the retained earnings by $2,864,982 and issued 286,498 shares. The capital increase has been approved by Financial Supervisory Commission and came into effect on July 12, 2022.The record date of the capital increase is set on August 8, 2022.The Bank has completed the alteration of the registered capital amount on August 26, 2022.

148

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 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.

(ii) Capital surplus

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

		December 31, 2022		December 31, 2021
Additional paid-in capital		$ 815,900		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.

(iii) 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% 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.

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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 2021 and 2020 in the shareholders'meeting on June 17, 2022 and July 20, 2021, respectively. The dividends distributed were as follows:

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For the years ended December 31,
2021 2020
Distribution rate Distribution rate
(NT dollar) Amount (NT dollar) Amount
Dividends to common shareholders
Stock dividends $ 0.37 2,864,982 0.34 2,546,118
Cash dividends 0.10 774,320 0.10 748,858
Total $ 3,639,302 3,294,976
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(iv) Other equity interest

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Unrealized gains
from financial assets Exchange
measured at fair differences on
value through other translation of foreign
comprehensive income financial statements Total
January 1, 2022 $ 4,113,485 (1,807,265 ) 2,306,220
Share of other comprehensive income of associates and joint (4,729 ) 11,653 6,924
ventures accounted for using equity method
Investment in debt instruments measured at fair value through
other comprehensive income
-Unrealized amount (8,545,652 ) - (8,545,652 )
-Realized amount (4,976 ) - (4,976 )
Foreign currency translation difference － Exchange difference - 1,197,779 1,197,779
Disposal of investments in equity instruments measured at fair 1,270,030 - 1,270,030
value through other comprehensive income
December 31, 2022 $ (3,171,842 ) (597,833 ) (3,769,675 )
January 1, 2021 $ 5,187,824 (1,476,771 ) 3,711,053
Share of other comprehensive income of associates and joint 4,546 2,674 7,220
ventures accounted for using equity method
Investment in debt instruments measured at fair value through
other comprehensive income
-Unrealized amount (740,789 ) - (740,789 )
-Realized amount (302,904 ) - (302,904 )
－ -
Foreign currency translation difference Exchange difference (333,168 ) (333,168 )
Disposal of investments in equity instruments measured at fair (35,192 ) - (35,192 )
value through other comprehensive income
December 31, 2021 $ 4,113,485 (1,807,265 ) 2,306,220
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150

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(z) Income taxes

(i) The income tax expenses were as follows:

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For the years ended December 31,
2022 2021
Current tax expense
Current period $ 2,129,073 726,360
Adjustment for prior period 5,401 5,646
2,134,474 732,006
Deferred tax expense (income)
Origination and reversal of temporary differences (216,534 ) (30,072 )
Income tax expenses $ 1,917,940 701,934
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(ii) The income tax expenses (income) recognized under other comprehensive income were as follows:

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For the years ended December 31,
2022 2021
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit plans $ 111,419 4,902
For the years ended December 31,
2022 2021
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign financial $ 302,357 (82,623 )
statements
Losses on debt instruments at fair value through other (30,000 ) (15,291 )
comprehensive income
$ 272,357 (97,914 )
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The reconciliation between the income tax expense (income) and net income before tax of the Bank and subsidiaries for 2022 and 2021 is as follows:

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For the years ended December 31,
2022 2021
Income tax computed on net income before tax $ 2,406,771 1,175,280
Tax-free income (669,128 ) (562,252 )
Overseas branch income tax expenses 152,074 48,932
Current-year losses for which no deferred tax asset was 20,396 (6,378 )
recognized
-
Change in unrecognized temporary differences (223 )
Underestimate (Overestimate) prior income tax expense 5,401 5,646
Surtax on unappropriated retained earnings 1,297 865
Income basic tax - 1,416
Other 1,129 38,648
Income tax expense $ 1,917,940 701,934
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(iii) Changes in deferred tax assets and liabilities of the Bank and subsidiaries are as follows:

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For the year ended December 31, 2021
Recognized
in other
Beginning Recognized in comprehensive
balance profit or loss income Others Ending balance
Temporary difference
Deferred tax assets resulted from $ 704,768 69,411 - 8 774,187
allowance for bad debts exceeding
the limit regulated in Tax Law
Loss on assets impairment 57,058 (35,348 ) - - 21,710
Reserve for employee benefit 393,422 (18,427 ) - - 374,995
liabilities
Land value increment tax (879,056 ) - - - (879,056 )
Exchange differences from the 369,191 - 82,623 - 451,814
translation of financial statements
of foreign operations
Unrealized loss on valuation of (22,525 ) - 15,291 - (7,234 )
financial assets measured
at fair value through other
comprehensive income
Actuarial gains and losses 316,376 - (4,902 ) - 311,474
Indeterminate indemnity provisions - 14,636 - - 14,636
Other 225 42 - - 267
Subtotal 939,459 30,314 93,012 8 1,062,793
Losses carried forward 2,795 (242 ) - - 2,553
Net deferred tax assets (liabilities) $ 942,254 30,072 93,012 8 1,065,346
The information stated on the balance sheet is as follows:
Deferred tax assets $ 1,843,835 1,951,636
Deferred tax liabilities $ 901,581 886,290
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152

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(iv) Uncertainty over income tax treatments

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

(v) The Bank's income tax returns through 2017 and 2019 have been assessed by the Tax Authority.
(vi) The income tax returns of the subsidiaries TBB Venture Capital Co., Ltd., and TBB International Leasing Co., Ltd. have been assessed until 2020 by the Tax Authority.

(aa) Provision for employee benefit

As of December 31, 2022 and 2021, the balance of provision for employee benefit of the Bank and subsidiaries was as follows:

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December 31, 2022 December 31, 2021
Defined benefit plan $ 1,211,918 1,966,215
Employee deposits with favorable rate 1,052,253 1,051,326
$ 2,264,171 3,017,541
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(i) Defined benefit plan

Reconciliation of defined benefit obligation and plan assets at fair value of the Bank and subsidiaries as follows:

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December 31, 2022 December 31, 2021
Present value of defined benefit obligation $ 6,156,019 6,870,061
Fair value of plan assets (4,944,101 ) (4,903,846 )
Net defined benefit liabilities $ 1,211,918 1,966,215
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The Bank and subsidiaries 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

Acording 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 and subsidiaries amounted to $4,944,101 and $4,903,846 on December 31, 2022 and 2021. 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 and subsidiaries were as follows:

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For the years ended December 31,
2022 2021
Defined benefit obligation on January 1 $ 6,870,061 7,217,819
Current service and interest cost 191,252 197,748
Remeasurements of the net defined benefit liability
－ Actuarial loss on experience adjustment 443,097 (21,266 )
－ Actuarial loss on demographic assumptions changed - 126,343
－ Actuarial loss on financial assumptions changed (593,737 ) (53,470 )
Benefits paid (754,654 ) (597,113 )
Defined benefit obligation at December 31 $ 6,156,019 6,870,061
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3) Movements of defined benefit plan assets

The movements in the fair value of defined benefit plan assets of the Bank and subsidiaries were as follows:

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For the years ended December 31,
2022 2021
Fair value of plan assets on Junuary 1 $ 4,903,846 5,027,251
Interest income 19,453 14,921
Remeasurements of the net defined benefit liability
－ plan assets revenue (excluded of current interest) 406,458 76,119
Contributions made 368,998 382,668
Benefits paid (754,654 ) (597,113 )
Fair value of plan assets on December 31 $ 4,944,101 4,903,846
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4) Expenses recognized in profit or loss

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

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For the years ended December 31,
2022 2021
Current service costs $ 164,454 176,661
Net interest of the net liability of define benefit obligations 7,345 6,166
$ 171,799 182,827
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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, 2022 and 2021 were as follows:

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For the years ended December 31,
2022 2021
Amount on January 1 $ 1,557,373 1,581,885
Recognized during the period (557,098 ) (24,512 )
Amount on December 31 $ 1,000,275 1,557,373
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6) Actuarial assumptions

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

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December 31, 2022 December 31, 2021
Discount rate 1.70% 0.40%
Future salary increase rate 1.50% 1.50%
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The expected allocation payment made by the Bank and subsidiaries to the defined benefit plans for the one-year after the reporting date is $245,000.

The weighted average lifetime of the defined benefit plans is 7 years.

7) Sensitivity analysis

The effects of changes in major actuarial assumptions adopted in defined benefit obligation on December 31, 2022 and 2021 were as follows :

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Influence of defined benefit plan obligation
Increase 0.25% Decrease 0.25%
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	Infuence of defned beneftplan obligation	Infuence of defned beneftplan obligation
	Increase 0.25%	Decrease 0.25%
December 31, 2022 Discount rate(Change 0.25%) Future salary increase rate(Change 0.25%) December 31, 2021 Discount rate(Change 0.25%) Future salaryincrease rate(Change 0.25%)	(1.70)% 1.67 % (1.90)% 1.87 %	1.74 % (1.64)% 1.96 % (1.82)%

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154

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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 2022 and 2021.

(ii) Defined contribution plan

The Bank and subsidiaries 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 and subsidiaries 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.

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 $170,382 and $157,330 for the years ended December 31, 2022 and 2021, respectively.

(iii) Employee deposit with favorable rate

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December 31, 2022 December 31, 2021
Present value of defined benefit obligation $ 1,052,253 1,051,326
- -
Fair value of plan assets
Net defined benefit liability $ 1,052,253 1,051,326
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The Bank and subsidiaries 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 and subsidiaries for the years ended December 31, 2022 and 2021, were as follows:

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For the years ended December 31,
2022 2021
Defined benefit obligation on January 1 $ 1,051,326 931,667
Interest cost 39,953 35,363
Remeasurements of the net defined benefit liability
-current actuarial gains and losses 175,487 290,695
Benefits paid by the plan (214,513 ) (206,399 )
Defined benefit obligation on December 31 $ 1,052,253 1,051,326
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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 and subsidiaries were as follows:

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For the years ended December 31,
2022 2021
Fair value of plan assets on January 1 $ - -
Contributions made 214,513 206,399
Benefits paid by the plan (214,513 ) (206,399 )
Fair value of plan assets on December 31 $ - -
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3) Expenses recognized in profit or loss

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

		For the years ended December 31,	For the years ended December 31,	For the years ended December 31,
		2022		2021
Net interest on the net defned beneft liability		$ 215,440		326,058

4) Actuarial assumption

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

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December 31, 2022 December 31, 2021
Discount rate of employee deposit with favorable rate 4.00% 4.00%
Rate of return for capital deposited 2.00% 2.00%
Annual diminishing rate of account balance 1.00% 1.00%
Possibility that employee deposit with favorable rate be 50.00% 50.00%
modified
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(ab) Earnings per share

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

For the years ended December 31,
2022 2021
Net income $ 10,121,852 5,100,112
Weighted average number of common stock shares outstanding (in 8,029,693 8,029,693
thousands) (Note 1)
Basic earnings per shares (in dollars) $ 1.26 0.64
Dilutive potential common shares (in thousands) (Note 1,2) 34,862 38,869
Weighted average number of shares outstanding for diluted EPS (in 8,064,555 8,068,562
thousands)
Diluted earnings per shares (in dollars) $ 1.26 0.63
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Note 1: The earnings per share for the ysar ended December 31, 2021 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, 2022 and 2021, the estimated employee remuneration were $451,457 and $371,068, and the estimated directors' remuneration were $75,243 and $37,107, 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 distribution for 2021 remuneration. The information is available at the Market Observation Post System website.

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(ad) Net interest revenue

156

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For the years ended December 31,
2022 2021
Interest income:
Loans $ 8,053,024 4,963,356
Secured loans 19,220,653 15,150,729
Bills negotiated 4,181 2,025
Bank overdrafts 14,266 12,544
Discounts 17,116 9,007
Time deposit from Central Bank 1,218,788 612,953
Due from the Central Bank 201,563 90,494
Call loans to banks 1,260,539 565,684
Bonds 2,603,937 2,084,103
International credit card 35,527 38,908
Overdue loans 211,415 189,008
Bills 28,950 26,134
Due from Banks 111,158 179,706
Others 318,985 246,096
Subtotal 33,300,102 24,170,747
Interest expense:
Deposits 11,295,463 5,277,005
Deposits from banks 1,489 13,220
Call loans from banks 890,231 102,288
Financial debentures 759,937 895,377
Notes and bond issued under repurchase agreement 9,358 4,327
Others 115,651 72,754
Subtotal 13,072,129 6,364,971
Total $ 20,227,973 17,805,776
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(ae) Net service fee revenue

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For the years ended December 31,
2022 2021
Commission of futures $ 2,939 3,867
Loan service fee 852,045 729,484
Miscellaneous fees 429,965 142,322
Subtotal 4,332,823 3,684,094
Service fee expense:
Foreign currency service fee 29,427 25,008
Interbank service fee 178,644 154,805
Trust service fee 857 813
Agency service fee 1,567 1,508
IC card service fee 66,106 62,665
Check clearing service fee 8,877 9,275
Remittance service fee 5,404 5,180
Custodian service fee 58,378 60,407
Call loans service fee 9,029 10,164
Futures option fee 43 10
Miscellaneous fees 22,599 20,060
Subtotal 380,931 349,895
Total $ 3,951,892 3,334,199
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(af) Gain on financial assets or liabilities measured at fair value through profit or loss

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For the years ended December 31,
2022 2021
Valuation gains (losses):
Corporate bonds $ (5,636 ) 4,685
Financial debentures (546,927 ) (381,752 )
Listed stocks and emerging stocks 197,910 117,147
Unlisted stocks 69,472 (29,807 )
Beneficiary certificates (6,437 ) (11,477 )
Private fund (39 ) 4,120
Commercial paper 10,790 3,173
Derivative financial instruments 193,966 (12,459 )
Subtotal (86,901 ) (306,370 )
Disposal gains (losses):
Corporate bonds 6,437 29,074
Financial debentures (4,098 ) (1,349 )
Listed stocks and emerging stocks (40,241 ) (11,282 )
Unlisted stocks (270 ) 4,678
Beneficiary certificates (21,734 ) 22,711
Commercial paper (2,574 ) (7,398 )
Derivative financial instruments 1,463,644 843,655
Subtotal 1,401,164 880,089
Dividend revenue 16,654 7,226
Interest income 209,321 86,704
Total $ 1,540,238 667,649
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158

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

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For the years ended December 31,
2022 2021
Gain on disposal of government bonds $ 4,480 247,087
Gain on disposal of corporate bonds 666 25,167
Gain (loss) on disposal of financial debentures (170 ) 30,650
Dividend revenue 1,457,705 885,010
Total $ 1,462,681 1,187,914
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(ah) (Impairment losses on assets) reversal of impairment loss on assets

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For the years ended December 31,
2022 2021
Investment in debt instrument measured at fair value through $ (1,521 ) (21,599 )
other comprehensive income
Investment in debt instrument measured at amortized cost 13,210 (11,661 )
Total $ 11,689 (33,260 )
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(ai) Share of profit of associates and joint ventures accounted for using equity method

		For the years ended December 31,	For the years ended December 31,	For the years ended December 31,
		2022		2021
Investment income - Media Talk Consulting Co., Ltd.		$ (1,192)		-

(aj) Net other revenue other than interest income

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For the years ended December 31,
2022 2021
Rental revenue of operating assets $ 9,360 7,557
Rental expense of operating assets (1,796 ) (1,605 )
Loss on disposal and retirement of property and equipment (925 ) (1,193 )
Loss of account error (163 ) (350 )
Gold deposit book 2,536 2,630
Other operating expense (40,650 ) (122,396 )
Other miscellaneous income 115,327 284,244
Total $ 83,689 168,887
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(ak) Bad debts expenses, commitment and guarantee liability provision

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For the years ended December 31,
2022 2021
Discounted and loans $ 2,419,063 5,153,489
Call loans to banks 384 (2,938 )
Due from banks, debit 904 1,466
Receivables and other financial assets (40,575 ) (23,212 )
Subtotal 2,379,776 5,128,805
Provisions for guarantee liabilities (21,496 ) 39,802
Provisions for loan commitments 27,782 18,896
Total $ 2,386,062 5,187,503
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(al) Employee benefits expenses

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For the years ended December 31,
2022 2021
Salary expense $ 7,285,860 6,775,909
Labor and health insurance 532,682 515,332
Pension expense 341,576 339,402
Directors' remuneration 92,949 51,411
Other employee benefits 622,625 739,581
Total $ 8,875,692 8,421,635
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(am) Depreciation and amortization expense

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For the years ended December 31,
2022 2021
Depreciation
Property and equipment $ 569,994 464,207
Right-of-use assets 410,789 405,789
Amortization
Computer software 249,046 171,002
Other deferred charges 47 33
Total $ 1,229,876 1,041,031
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(an) Other general and administrative expense

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For the years ended December 31,
2022 2021
Compensation loss $ 42 59
Utilities fee 90,142 90,737
Postage and telecommunication fee 249,164 244,180
Transportation fee 32,015 22,700
Printing and advertisement fee 215,431 201,971
Repair and maintenance fee 261,268 249,470
Insurance fee 378,827 331,254
Professional service fee 264,061 249,997
Materials and supplies 126,728 170,033
Rental expenses 34,950 31,102
Duties and levies 1,566,727 1,239,589
Membership, donation and partaking 591,647 642,598
Storage, packing and processing fee 45,955 49,429
Cash transit fee 65,098 63,742
Others 75,646 66,948
Total $ 3,997,701 3,653,809
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(ao) Financial Instruments

(i) 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.

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the most reliable evidence of fair value. If financial instruments are without active market, the Bank and subsidiaries 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.

2) The definition of fair value hierarchy

a) Level 1

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 and subsidiaries 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 and subsidiaries issued are belong to Level 2.

c) Level 3

160

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 and subsidiaries invested are Level 3.

3) Based on fair value measurement

a) The fair value hierarchy of information

of information were as follows:

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Ⅵ

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December 31, 2021
Assets and Liabilities Total Level 1 Level 2 Level 3
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 $ 850,338 474,025 - 376,313
Bond Investments 556,140 276,910 279,230 -
Others 38,711,287 1,563,675 37,015,444 132,168
Financial assets at fair value through other comprehensive
income
Security Investments 21,388,935 16,414,356 - 4,974,579
Bond Investments 135,994,230 86,780,365 49,213,865 -
Others 149,897 149,897 - -
Financial liabilities at fair value through profit or loss
Financial liabilities designated at fair value through profit or 8,293,730 - 8,293,730 -
loss
Derivative financial assets and liabilities
Assets:
Financial assets at fair value through profit or loss 552,636 28,745 523,891 -
Liabilities:
Financial liabilities at fair value through profit or loss 142,307 - 142,307 -
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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.

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).

subsidiaries adopted that refers to quoted prices provided by financial institutions. Ask (bid) is used to evaluate the selling (buying) position by the Bank and subsidiaries 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 and subsidiaries, assuming that the contract will be terminated on the balance sheet date. The Bank and subsidiaries 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 and subsidiaries 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

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with the contracts.

c) Adjustment for fair value
i) 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.

ii) Credit risk value adjustment

The Bank and subsidiaries' 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 and subsidiaries may not be received or paid full market value of trading possibilities.

The Bank and subsidiaries 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 and subsidiaries assesses 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.

d) Transfers between Level 1 and Level 2

There were no transfers between Level 1 and 2 for the years ended December 31, 2022 and 2021.

162

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For the year ended December 31, 2022
Valuation profit and loss Increase Decrease
Recognized in
Recognized other Sale Transfer out
Beginning in profit comprehensive Purchase or Transfer into Disposition or from Level 3 Ending
Name balance or loss income issue Level 3 Settlement (Note) balance
Financial assets at fair value $ 508,481 69,433 - 245,059 - 94,256 93,484 635,233
through profit or loss
Investments in equity instruments 4,974,579 - 362,882 - - - - 5,337,461
measured at fair value through
other comprehensive income
For the year ended December 31, 2021
Valuation profit and loss Increase Decrease
Recognized in
Recognized other Sale Transfer out
Beginning in profit comprehensive Purchase or Transfer into Disposition or from Level 3 Ending
Name balance or loss income issue Level 3 Settlement (Note) balance
Financial assets at fair value $ 415,118 (23,356) - 198,478 - 25,330 56,429 508,481
through profit or loss
Investments in equity instruments 4,478,071 - 469,444 27,064 - - - 4,974,579
measured at fair value through
other comprehensive income
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Note: The invested stock is registered in the energing market. Therefore, the measurement of fair value was transferred out from Level 3.

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f)

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

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For the years ended December 31,
2022 2021
Recognized on profit and loss (reported as unrealized gain (loss) from investments $ 69,686 $ (23,356 )
instruments measured at fair value through profit and loss)
Recognized on other comprehensive income (reported as unrealized gain (loss) 362,882 469,444
from investments instruments measured at fair value through other comprehensive
income)
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assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. Without active market quotation, the Bank and subsidiaries takes professional financial information vendors and widely used by market participants for evaluation or counterparty quotation as reference. The unobservable inputs are as follows :

	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022
	fair value	valuation methods	signifcant unobservable inputs	range	inter-relationship between signifcant unobservable inputs and fair value measurement
Financial asset at fair value through proft or loss Private fund Unlisted stocks Financial assets at fair value through other comprehensive income Unlisted stocks	$ 163,679 471,554 5,337,461	assets approach market approach market approach assets approach income approach income approach	liquidity discount liquidity discount liquidity discount sustainable growth rate cost of equity	0.00%~10.00% 0.00%~36.67% 8.62%~29.95% 0.00%~1.55% 10.69%~12.68%	The higher market liquidity discount, the lower fair value. The higher market liquidity discount, the lower fair value. 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.

	December 31, 2021
	fair value	valuation methods	signifcant unobservable inputs	range	inter-relationship between signifcant unobservable inputs and fair value measurement
Financial assets at fair value through proft or loss Private fund Unlisted stocks Financial assets at fair value through other comprehensive income Unlisted stocks	$ 132,168 376,313 4,974,579	assets approach market approach market approach assets approach income approach income approach	liquidity discount liquidity discount liquidity discount sustainable growth rate cost of equity	0.00%~10.00% 0.00%~34.69% 8.71%~34.60% 0.00%~1.48% 10.60%~12.50%	The higher market liquidity discount, the lower fair value. The higher market liquidity discount, the lower fair value. 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.

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

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:

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164

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i) Assets approach/ Market approach

The evaluation methods of Level 3 financial instruments of the Bank and subsidiaries 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:

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the effects to the net income and other
comprehensive income
Favorable Unfavorable
changes (-5%) changes (5%)
December 31, 2022
Financial assets at fair value through profit or loss
Unlisted stocks and private fund $ 36,225 (36,225 )
Financial assets at fair value through other comprehensive income
Unlisted stocks 309,605 (309,605 )
the effects to the net income and other
comprehensive income
Favorable Unfavorable
changes (-5%) changes (5%)
December 31, 2021
Financial assets at fair value through profit or loss
Unlisted stocks and private fund $ 30,624 (30,624 )
Financial assets at fair value through other comprehensive income
Unlisted stocks 292,784 (292,784 )
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ii) Income approach

Adopting the income approach to evaluate Level 3 financial instruments of the Bank and subsidiaries. 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:

1. sustainable growth rate

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cost of equity

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the effects to other comprehensive income
Favorable Unfavorable
changes (-3%) changes (3%)
December 31, 2022
Financial assets at fair value through other comprehensive
income
Unlisted stocks $ 61,250 (30,146)
the effects to other comprehensive income
Favorable Unfavorable
changes (-3%) changes (3%)
December 31, 2021
Financial assets at fair value through other comprehensive
income
Unlisted stocks $ 64,070 (30,848)
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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.

4) Not based on fair value measurement

a) Fair value information

subsidiaries. Except those items, others' fair value is reasonably approximate value, the Bank and subsidiaries does not disclosure their fair value.

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December 31, 2022
Book value Fair value
Debt instruments measured at amortized cost $ 236,774,247 236,657,427
December 31, 2021
Book value Fair value
Debt instruments measured at amortized cost $ 279,035,906 279,993,077
b) The fair value hierarchy of information
December 31, 2022
Quoted price
in active markets Significant Significant
for identical other observable unobservable
Assets and Liabilities Total assets (Level 1) inputs (Level 2) inputs (Level 3)
Debt instruments measured at amortized cost $ 236,657,427 31,336,817 205,320,610 -
December 31, 2021
Quoted price
in active markets Significant Significant
for identical other observable unobservable
Assets and Liabilities Total assets (Level 1) inputs (Level 2) inputs (Level 3)
Debt instruments measured at amortized cost $ 279,993,077 33,068,000 246,925,077 -
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b) The fair value hierarchy of information

c) Valuation techniques

were as follows:

i) 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.
ii) 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.
iii) 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.

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Central Government Securities (NTD): using the comment of “ Bonds a fair price for each of times ” from Taipei Exchange.
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.

166

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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 and subsidiaries, 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

(i) General description

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

The Bank's Financial Risk Management policy is to establish a risk management mechanism in terms of risk identification, risk measurement, risk monitoring, and risk control and to construct the overall risk management system. It is to facilitate the business model with appropriate risk management and to control the rationality between risks and rewards under the premise of legal capital 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.

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

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 and subsidiaries' 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.

2) Assets and Liabilities Management Committee

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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.

(iii) 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.

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:

i) 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 Non-performing/Non-accrual Loans” and its operating procedure “Operating procedure Governing the Collection of Non-performing/Non-accrual Loans” and “Code of

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Conduct to Deal With Non-Performing Loans” to serve as the guidelines for dealing with nonperforming credit and overdue loans collection.

ii) Categorization of credit quality

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

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

b) Due from other banks and call loans to banks

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

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

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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 and subsidiaries 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 and subsidiaries considers 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

i) The borrowers failed to pay the principal and interest overdue for more than 30 days, less than 90 days;
ii) When the Bank and subsidiaries 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;
iii) 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 and subsidiaries is except;
iv) The bank knows (if it has received the notice from court) that the collaterals are compulsory executed by other banks;
v) Borrowers were notified the refund by the Bank and did not conduct refund notice;
vi) The letter of credit insurance fund notice due to the related company's overdue debt in other bank, the creditor to stop the delivery;
vii) Because the borrowers have been involved in litigation and unfavorable judgments, their ability of credit performance is affected;

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

b) Debt instrument investments
- i) The latest credit rating on the report date was non-investment grade and fell more than two levels than the original rating, or;
- ii) 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 and subsidiaries 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 investmentgrade 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
- i) Significant financial difficulty of the issuer or the borrower;
- ii) A breach of contract, such as a default or past due event ;
- iii) 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;
- iv) It is becoming probable that the borrower will enter bankruptcy or other financial reorganization;
- v) The disappearance of an active market for that financial asset because of financial difficulties;
- vi) The purchase or origination of a financial asset at a considerable amount of discount that reflects the incurred credit losses;
b) Debt instrument investments
- i) Significant financial difficulty of the issuer;
- ii) The disappearance of an active market for that financial asset because of financial difficulties;
- iii) The purchase or origination of a financial asset at a considerable amount of discount that reflects the incurred credit losses.
- iv) 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:

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a) The borrowers fail to recover all or part of the debt due to dissolution, escape, settlement, bankruptcy or other reasons.

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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.
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 and subsidiaries, 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 and subsidiaries 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

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.

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

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Government and public institution
Financial institution (including banks, ticket companies, securities finance
companies)
The guarantee of the credit guarantee mechanism
Corporate banking Large Enterprise Secured
Non-secured
The guarantee of the credit guarantee mechanism
Medium and small
Secured
enterprises
Non-secured
Mortgage
Microcredit
Private banking
Other-Secured
Other-Non-secured
The guarantee of the credit guarantee mechanism
Entrepreneurship Secured
Non-secured
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credit asset has low credit risk at the reporting date, the Bank and subsidiaries shall measure the

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instrument has increased significantly or credit-impaired since initial recognition, the Bank and subsidiaries shall measure the allowance for impairment using the lifetime expected credit losses.

In order to measure expected credit losses, the Bank and subsidiaries 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.

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 and subsidiaries 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 creditimpaired 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 and subsidiaries 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 and subsidiaries 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 and subsidiaries identified 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 and subsidiaries 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 forward-looking information while evaluating the credit ratings, which the Bank and subsidiaries considered to be appropriate after its assessment, the credit ratings will be included in the Bank and subsidiaries' assessment of related expected credit losses.

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.

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b) Limit of credit risk and the control of credit risk concentration

i) 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

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“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.

ii) To enhance the risk concentration management, the Bank established regulations in terms of countries, financial institutions, industries and group enterprises. The relevant limits are reviewed and approved annually and the usage of the credit is monitored on a daily basis. In addition, the results are reported regularly.
c) General agreement of net amount settlement

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

d) Enhancement of other credit

The assessment of credit business applies to credit 5P principles, credit risk is offset by dividing selfliquidating 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)

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

December 31, 2022	Carrying amount	Allowance impairment	Exposure (measured at amortized cost)	Value of collateral
Impairment fnancial assets： Receivables Accounts receivables Interest receivable Discounts and loans Overdue receivable Total impairment fnancial assets		10,034 7,050 4,784,155 15,898 4,817,137	65,188 35,528 15,524,928 42,888 15,668,532	73,243 - 22,707,890 - 22,781,133

	$ 75,222
	42,578
	20,309,083
	58,786
	$ 20,485,669
December 31, 2021	Carrying amount	Allowance impairment	Exposure (measured at amortized cost)	Value of collateral
Impairment fnancial assets： Receivables Acceptances receivables Interest receivable Discounts and loans Overdue receivable Total impairment fnancial assets		23,735 4,960 3,635,336 25,545 3,689,576	35,175 38,060 16,720,813 54,789 16,848,837	56,910 - 21,352,293 - 21,409,203

	$ 58,910
	43,020
	20,356,149
	80,334
	$ 20,538,413

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

11) Credit risk concentration

The Bank and subsidiaries 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

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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.

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December 31, 2022 December 31, 2021
Industry Amount % Amount %
Private business $ 894,970,270 63.09% 852,346,402 64.66%
Public business 6,415,252 0.45% 4,330,080 0.33%
Government institution 70,682,095 4.98% 66,591,431 5.05%
Nonprofit organization 2,919,516 0.21% 2,934,798 0.22%
Individual 346,079,715 24.40% 314,527,333 23.86%
Foreign financial institution 6,899,993 0.49% 3,634,002 0.28%
Foreign non-financial institution 87,153,772 6.14% 70,945,795 5.38%
Foreign individual 3,372,838 0.24% 2,914,507 0.22%
Total $ 1,418,493,451 100.00% 1,318,224,348 100.00%
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b) By geographic area

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

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December 31, 2022 December 31, 2021
Area Amount % Amount %
Domestic $ 1,321,066,848 93.13% 1,240,730,044 94.12%
Foreign 97,426,603 6.87% 77,494,304 5.88%
Total $ 1,418,493,451 100.00% 1,318,224,348 100.00%
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c) By collateral

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

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December 31, 2022 December 31, 2021
Collateral Amount % Amount %
Unsecured $ 271,796,900 19.16% 234,949,230 17.82%
Stocks 8,846,336 0.63% 9,101,690 0.69%
Bonds 23,134,859 1.63% 26,102,842 1.98%
Real estate 878,535,410 61.93% 802,113,094 60.85%
Chattel 15,849,874 1.12% 16,117,256 1.22%
Notes receivable 2,414,280 0.17% 2,949,127 0.22%
Guarantees 208,721,552 14.71% 216,270,546 16.41%
Others 9,194,240 0.65% 10,620,563 0.81%
Total $ 1,418,493,451 100.00% 1,318,224,348 100.00%
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Note: Secured credit are categorized in its respective item per the type of the collaterals. Non-secured credit (no collateral provided) is classified in 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 and subsidiaries, not the discounted value of the signed contract.

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12) Maximum credit risk exposure

book value when not considering collaterals or other credit enhancement instruments. The maximum

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credit exposure off the consolidated balance sheet (when not considering collaterals or other credit enhancement instruments and not revocable) was as follows:

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Maximum credit risk exposure
Off balance sheet items December 31, 2022 December 31, 2021
Issued and irrevocable loan commitments $ 64,987,007 36,415,736
Irrevocable credit card loan commitments 18,839,955 19,380,151
Letters of credit issued yet unused 8,129,149 11,058,128
Various guarantee proceeds 22,056,496 24,336,413
Total $ 114,012,607 91,190,428
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The Management of the Bank and subsidiaries 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.

i) Credit quality analysis of discounts and loans, receivables, guarantee and commitments

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Lifetime ECL–
12-month ECL Lifetime ECL–not impaired impaired
Under Under Allowance
December 31, 2022 Excellent Good Medium Acceptable standard No rating Subtotal Excellent Good Medium Acceptable standard No rating Subtotal High risk impairment Total
Receivable
Credit card $ 426,421 227,850 196,313 79 4,913 238,053 1,093,629 1,688 1,452 1,618 - 326 20 5,104 - 569 1,098,164
Acceptances 375,279 232,317 119,969 25,670 - 38,049 791,284 - - - - - - - - 7,913 783,371
receivable
Other receivables 401,011 1,898,488 493,641 35,741 24,719 3,526,312 6,379,912 408 945 1,952 897 2,387 149,816 156,405 117,800 95,560 6,558,557
Discounts and loans
Private banking 130,698,330 132,157,479 70,280,524 3,199,945 1,062,127 6,962,188 344,360,593 56,031 137,190 252,638 22,912 111,432 36,101 616,304 4,475,656 4,181,307 345,271,246
Corporate banking 245,799,786 365,067,368 272,870,989 26,218,577 15,363,104 125,044,694 1,050,364,518 288,453 355,127 556,056 930,623 562,350 150,344 2,842,953 15,833,427 13,897,309 1,055,143,589
Other financial assets
Overdue receivable - - - - - - - - - - - - - - 58,786 48,471 10,315
Total $ 377,700,827 499,583,502 343,961,436 29,480,012 16,454,863 135,809,296 1,402,989,936 346,580 494,714 812,264 954,432 676,495 336,281 3,620,766 20,485,669 18,231,129 1,408,865,242
Guarantee and $ 26,669,887 15,125,762 5,916,207 174,424 45,746 65,833,294 113,765,320 43,098 11,091 421 - 98 - 54,708 192,579 337,312 113,675,295
commitments
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	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–not impaired	Lifetime ECL– impaired
December 31, 2021	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 Acceptances receivable Other receivables Discounts and loans Private banking Corporate banking Other fnancial assets Overdue receivable Total Guarantee and commitments	$ 368,690 276,046 215,499 113,609,203 186,110,603 - $ 300,580,041 $ 23,693,996	246,002 549,061 1,502,291 116,551,170 315,339,281 - 434,187,805 20,955,504	192,898 113,769 324,870 66,928,175 306,477,476 - 374,037,188 8,177,179	325 832 33,189 4,268,868 32,953,038 - 37,256,252 830,226	4,924 29,835 23,858 1,700,024 18,573,454 - 20,332,095 55,958	216,176 63,686 2,562,986 9,170,592 122,106,000 - 134,119,440 37,392,210	1,029,015 1,033,229 4,662,693 312,228,032 981,559,852 - 1,300,512,821 91,105,073	129 - 82 21,412 80,570 - 102,193 13,401	1,550 - 431 53,655 388,410 - 444,046 17,786	1,993 - 1,292 207,948 413,816 - 625,049 7,248	13 - 1,847 21,550 1,601,886 - 1,625,296 -	655 - 1,065 81,566 782,756 - 866,042 788	- - 197,420 10,059 416,687 - 624,166 -	4,340 - 202,137 396,190 3,684,125 - 4,286,792 39,223	- - 101,930 4,817,619 15,538,530 80,334 20,538,413 46,132	1,693 10,332 106,086 3,662,551 11,914,266 51,392 15,746,320 329,488	1,031,662 1,022,897 4,860,674 313,779,290 988,868,241 28,942 1,309,591,706 90,860,940

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ii) Debt instruments

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Lifetime ECL–
12-month ECL Lifetime ECL–not impaired impaired
Accumulated
Sub Sub impairment
December 31, 2022 Investment investment High risk No rating Subtotal Investment investment High risk No rating Subtotal High risk Total (Note)
Investment in debt instruments measured at fair
value through other comprehensive income
Overseas bonds $ 50,304,163 - - - 50,304,163 - - - - - - 50,304,163 15,793
NT bonds 91,536,068 - - - 91,536,068 - - - - - - 91,536,068 75,059
Investment in debt instruments at amortized cost
Overseas bonds 10,420,185 - - - 10,420,185 - - - - - - 10,420,185 3,247
NT bonds 30,769,411 - - - 30,769,411 - - - - - - 30,769,411 13,846
Certificates of deposit with the Central Bank 195,595,000 - - - 195,595,000 - - - - - - 195,595,000 57,763
Negotiable certificates of deposit 64,523 - - - 64,523 - - - - - - 64,523 16
Total $ 378,689,350 - - - 378,689,350 - - - - - - 378,689,350 165,724
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		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	Lifetime ECL– impaired
December 31, 2021		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 NT bonds Investment in debt instruments at amortized cost Overseas bonds NT bonds Certifcates of deposit with the Central Bank Negotiable certifcates of deposit Total		$ 49,213,865 86,780,365 15,296,961 32,373,347 231,395,000 58,076 $ 415,117,614	- - - - - - -	- - - - - - -	- - - - - - -	49,213,865 86,780,365 15,296,961 32,373,347 231,395,000 58,076 415,117,614	- - - - - - -		- - - - - - -	- - - - - - -	- - - - - - -	- - - - - - -	- - - - - - -		49,213,865 86,780,365 15,296,961 32,373,347 231,395,000 58,076 415,117,614	15,600 72,192 5,916 13,214 68,334 14 175,270
iii)	Note: The cumulative impairment of the bond which measured at fair value through other comprehensive proft or loss is recognized as other equity. The Maximum credit risk exposure for fnancial instruments are not subject to impairment regulations are as follows:
	December 31, 2022							Maximum credit risk exposure			Collateral			Enhancement of other credit
	Financial assets at fair value through proft or loss －Debt investments －Commercial paper －Listed stocks －Unlisted stocks －Benefciary certifcates －Derivative instrument							$ 200,000 30,907,810 752,713 471,554 414,370 1,166,667			- - - - - 2,527,996			- - - - - 727,720
	December 31, 2021							Maximum credit risk exposure			Collateral			Enhancement of other credit
	Financial assets at fair value through proft or loss －Debit investments －Commercial paper －Listed stocks －Unlisted stocks －Benefciary certifcates －Derivative instrument							$ 556,140 37,015,444 474,025 376,313 1,695,843 552,636			- - - - - 489,795			- - - - - 699,723

loss is recognized as other equity.

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

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13) Changes in the expected credit losses of the Bank and subsidiaries

a) Receivables

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For the year ended December 31, 2022
Impairment difference of
"Regulations Governing the
Procedures for Banking
Lifetime Institutions to Evaluate Assets
12-month ECL － not Lifetime ECL － Impaired and Deal with Non-Performing
ECL impaired impaired (IFRS9) and Non-Accrual Loans " Total
Beginning balance $ 31,774 6,068 28,695 66,537 51,574 118,111
Changes in financial instruments that have been
：
identified at the beginning of the period
－ Transferred to 12-months ECL 108 (12 ) (96 ) - - -
－ Transferred to lifetime ECL (5 ) 16 (11 ) - - -
－ Transferred to the credit-impaired financial (28 ) (10 ) 38 - - -
assets
－ -
The financial assets that have been (21,801 ) (108 ) (2,030 ) (23,939 ) (23,939 )
derecognized
New financial assets originated or purchased 17,877 168 5,617 23,662 - 23,662
Other changes 1,705 4,590 (15,129 ) (8,834 ) - (8,834 )
- - - -
Impairment difference of "Regulations (4,958 ) (4,958 )
Governing the Procedures for Banking
Institutions to Evaluate Assets and Deal with
Non-Performing and Non-Accrual Loans "
Ending balance $ 29,630 10,712 17,084 57,426 46,616 104,042
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For the year ended December 31, 2021
Impairment difference of
"Regulations Governing the
Procedures for Banking
Lifetime Institutions to Evaluate Assets
12-month ECL － not Lifetime ECL － Impaired and Deal with Non-Performing
ECL impaired impaired (IFRS9) and Non-Accrual Loans " Total
Beginning balance $ 38,014 3,567 32,573 74,154 64,410 138,564
Changes in financial instruments that have been
：
identified at the beginning of the period
－ Transferred to 12-months ECL 1,123 (954 ) (169 ) - - -
－ Transferred to lifetime ECL (6 ) 13 (7 ) - - -
－ Transferred to the credit-impaired financial (86 ) (61 ) 147 - - -
assets
－ The financial assets that have been (19,220 ) (129 ) (3,350 ) (22,699 ) - (22,699 )
derecognized
New financial assets originated or purchased 23,057 25 3,113 26,195 - 26,195
- - -
Write-off (2,296 ) (2,296 ) (2,296 )
Other changes (11,108 ) 3,607 (1,316 ) (8,817 ) - (8,817 )
- - - -
Impairment difference of "Regulations (12,836 ) (12,836 )
Governing the Procedures for Banking
Institutions to Evaluate Assets and Deal with
Non-Performing and Non-Accrual Loans "
Ending balance $ 31,774 6,068 28,695 66,537 51,574 118,111
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b) Discounts and loans

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For the year ended December 31, 2022
Impairment difference of
"Regulations Governing the
Procedures for Banking
Lifetime Institutions to Evaluate Assets
12-month ECL － not Lifetime ECL － Impaired and Deal with Non-Performing
ECL impaired impaired (IFRS9) and Non-Accrual Loans " Total
Beginning balance $ 4,166,467 129,977 3,635,336 7,931,780 7,645,037 15,576,817
Changes in financial instruments that have
：
been identified at the beginning of the period
－ Transferred to 12-months ECL 154,551 (29,664 ) (124,887 ) - - -
－ Transferred to lifetime ECL (8,551 ) 21,718 (13,167 ) - - -
－ Transferred to the credit-impaired financial (25,545 ) (3,572 ) 29,117 - - -
assets
－ -
The financial assets that have been (2,079,596 ) (85,034 ) (730,979 ) (2,895,609 ) (2,895,609 )
derecognized
New financial assets originated or purchased 2,921,806 12,984 388,582 3,323,372 - 3,323,372
Write-off - - (2,223,252 ) (2,223,252 ) - (2,223,252 )
Other changes 753,408 91,729 3,823,405 4,668,542 - 4,668,542
- - - -
Impairment difference of "Regulations (371,254 ) (371,254 )
Governing the Procedures for Banking
Institutions to Evaluate Assets and Deal with
Non-Performing and Non-Accrual Loans "
Ending balance $ 5,882,540 138,138 4,784,155 10,804,833 7,273,783 18,078,616
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----- Start of picture text -----

For the year ended December 31, 2021
Impairment difference of
"Regulations Governing the
Procedures for Banking
Lifetime Institutions to Evaluate Assets
12-month ECL － not Lifetime ECL － Impaired and Deal with Non-Performing
ECL impaired impaired (IFRS9) and Non-Accrual Loans " Total
Beginning balance $ 3,133,215 951,010 5,219,221 9,303,446 5,022,711 14,326,157
Changes in financial instruments that have
：
been identified at the beginning of the period
－ Transferred to 12-months ECL 1,089,009 (770,235 ) (318,774 ) - - -
－ Transferred to lifetime ECL (5,445 ) 9,047 (3,602 ) - - -
－ Transferred to the credit-impaired financial (16,929 ) (9,790 ) 26,719 - - -
assets
－ -
The financial assets that have been (1,587,449 ) (71,342 ) (1,105,361 ) (2,764,152 ) (2,764,152 )
derecognized
New financial assets originated or purchased 1,861,459 4,752 292,035 2,158,246 - 2,158,246
Write-off - - (4,606,000 ) (4,606,000 ) - (4,606,000 )
Other changes (307,393 ) 16,535 4,131,098 3,840,240 - 3,840,240
Impairment difference of "Regulations - - - - 2,622,326 2,622,326
Governing the Procedures for Banking
Institutions to Evaluate Assets and Deal with
Non-Performing and Non-Accrual Loans "
Ending balance $ 4,166,467 129,977 3,635,336 7,931,780 7,645,037 15,576,817
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178

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For the year ended December 31, 2022
Impairment difference of
"Regulations Governing
the Procedures for
Banking
Institutions to Evaluate
Lifetime Lifetime Assets and Deal with
ECL － not ECL － Impaired Non-Performing and
12-month ECL impaired impaired (IFRS9) Non-Accrual Loans " Total
Beginning balance $ - - 25,545 25,545 25,847 51,392
Changes in financial instruments that
have been identified at the beginning
of the period ：
－ - - -
The financial assets that have been (8 ) (8 ) (8 )
derecognized
New financial assets originated or - - 7,633 7,633 - 7,633
purchased
Write-off - - (16,567 ) (16,567 ) - (16,567 )
- - -
Other changes (705 ) (705 ) (705 )
Impairment difference of "Regulations - - - - 6,726 6,726
Governing the Procedures for Banking
Institutions to Evaluate Assets and
Deal with Non-Performing and Non-
Accrual Loans "
Ending balance $ - - 15,898 15,898 32,573 48,471
For the year ended December 31, 2021
Impairment difference of
"Regulations Governing
the Procedures for
Banking
Institutions to Evaluate
Lifetime Lifetime Assets and Deal with
ECL － not ECL － Impaired Non-Performing and
12-month ECL impaired impaired (IFRS9) Non-Accrual Loans " Total
Beginning balance $ - - 23,121 23,121 31,930 55,051
Changes in financial instruments that
have been identified at the beginning
of the period ：
－ - - -
The financial assets that have been (83 ) (83 ) (83 )
derecognized
New financial assets originated or - - 17,074 17,074 - 17,074
purchased
Write-off - - (15,308 ) (15,308 ) - (15,308 )
Other changes - - 741 741 - 741
- - - -
Impairment difference of "Regulations (6,083 ) (6,083 )
Governing the Procedures for Banking
Institutions to Evaluate Assets and
Deal with Non-Performing and Non-
Accrual Loans "
Ending balance $ - - 25,545 25,545 25,847 51,392
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d) Guarantee and commitments

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For the year ended December 31, 2021
Impairment difference of
"Regulations Governing
the Procedures for
Banking
Institutions to Evaluate
Lifetime Assets and Deal with
12-month ECL － not Lifetime ECL － Impaired Non-Performing and
ECL impaired impaired (IFRS9) Non-Accrual Loans " Total
Beginning balance $ 106,670 880 6,699 114,249 156,933 271,182
Changes in financial instruments that
have been identified at the beginning
of the period ：
－ The financial assets that have been (51,707 ) (179 ) (5,520 ) (57,406 ) - (57,406 )
derecognized
New financial assets originated or 73,511 10 4,439 77,960 - 77,960
purchased
Other changes 20,880 (642) 1,168 21,406 - 21,406
Impairment difference of "Regulations - - - - 16,346 16,346
Governing the Procedures for Banking
Institutions to Evaluate Assets and
Deal with Non-Performing and Non-
Accrual Loans "
Ending balance $ 149,354 69 6,786 156,209 173,279 329,488
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180

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e) Debts investments

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For the year ended December 31, 2022
Lifetime ECL Lifetime ECL
12-month ECL － not impaired － impaired Total
Beginning balance $ 175,270 - - 175,270
Additions 68,255 - - 68,255
- -
Derecognition (78,262 ) (78,262 )
Other changes 461 - - 461
Ending balance $ 165,724 - - 165,724
For the year ended December 31, 2021
Lifetime ECL Lifetime ECL
12-month ECL － not impaired － impaired Total
Beginning balance $ 142,418 - - 142,418
Additions 97,018 - - 97,018
- -
Derecognition (61,254 ) (61,254 )
Other changes (2,912 ) - - (2,912 )
Ending balance $ 175,270 - - 175,270
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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.

(iv) 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 consolidated financial statement, sale of assets and inability to fulfill loan obligation. Liquidity risk is an inherent risk of bank operations and is influenced by specific or overall events in various markets. Those events include but not limited to: Credit event, merger or buyout, systematic strike and natural disaster.

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

a) Policy

i) In accordance with the target and limit for liquidity risk management approved by the board of directors and monitor all liquidity risk positions.
ii) 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.
iii) 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

i) Finance Department is in charge of daily capital deployment to ensure that the capital is sufficient to cope with various demands for capital.
ii) 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.
iii) 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

  - i) 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.

  - ii) 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.

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

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

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

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

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182

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

December 31, 2022
0-30 days 31-90 days 91days-1 year 1-5 years Over 5 years Total
Major matured cash outflow $ 1,097,763,808 221,732,162 480,666,633 92,838,661 49,342,955 1,942,344,219
Deposits from the Central Bank 937,523 - - - - 937,523
and banks
Overdrafts on banks 1,084,076 - - - - 1,084,076
Call loans from the Central Bank 27,012,375 18,670,658 - - - 45,683,033
and banks
Due to the Central Bank and 92,175 111,450 927,400 - - 1,131,025
banks
Financial liabilities designated at - - - - 9,367,595 9,367,595
fair value through profit or loss
Notes and bonds issued under 458,662 157,550 1,292,066 554,713 - 2,462,991
repurchase agreement
Interest payable 317,254 1,288,484 2,711,772 118,148 10 4,435,668
Deposits transferred from 9,820,000 21,196,335 75,185,210 41,060,000 - 147,261,545
Chunghwa Post Co., Ltd.
Demand deposits 954,030,572 - - - - 954,030,572
Time deposits 103,528,154 180,237,487 392,763,469 42,587,346 5,124 719,121,580
Remittance 428,111 - - - - 428,111
Bank notes payable - - 7,400,000 6,600,000 38,250,000 52,250,000
Cumulative earnings on 2,250 3,750 118,500 1,198,580 1,587,501 2,910,581
appropriated loan fund
Lease liabilities 52,656 66,448 268,216 719,874 132,725 1,239,919
December 31, 2021
0-30 days 31-90 days 91days-1 year 1-5 years Over 5 years Total
Major matured cash outflow $ 1,095,137,710 184,665,112 500,748,031 75,656,773 35,841,707 1,892,049,333
Deposits from the Central Bank 493,598 - - - - 493,598
and banks
Overdrafts on banks 536,471 - - - - 536,471
Call loans from the Central Bank 25,155,291 9,093,410 - - - 34,248,701
and banks
Due to the Central Bank and - - 49,929,730 331,860 - 50,261,590
banks
Financial liabilities designated at - - - - 8,293,730 8,293,730
fair value through profit or loss
Notes and bonds issued under 44,197 144,716 604,836 1,266,944 - 2,060,693
repurchase agreement
Interest payable 459,999 812,851 1,127,339 71,242 2 2,471,433
Deposits transferred from 10,500,000 21,359,335 35,402,210 - - 67,261,545
Chunghwa Post Co., Ltd.
Demand deposits 954,804,776 - - - - 954,804,776
Time deposits 102,670,190 153,191,825 413,340,264 44,219,865 675 713,422,819
Remittance 429,227 - - - - 429,227
Bank notes payable - - - 27,340,000 24,910,000 52,250,000
Cumulative earnings on 1,750 2,250 111,750 1,779,330 2,470,214 4,365,294
appropriated loan fund
Lease liabilities 42,211 60,725 231,902 647,532 167,086 1,149,456
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4) Derivative financial liabilities maturity analysis

The derivative instruments of the Bank and subsidiaries whose possession are settled by net amount include foreign derivative instruments, such as non-delivery forward contracts and net-

Ⅵ

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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 consolidated financial statement. The amount disclosed is based on the cash flows of the contracts and thus part of the amount disclosed may not correspond to the amount disclosed in the consolidated financial statement. As of December 31, 2021, the Bank and subsidiaries had no derivative financial instruments settled by net amount. As of December 31, 2022, maturity analysis for the derivative financial liabilities settled by net amount is as follows:

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

December 31, 2022
0-30 days 31-90 days 91-180 days 181 days to 1 year Over 1 year Total
Derivative financial liabilities at fair
value through profit or loss
－ Foreign exchange derivative $ - 825 225 - - 1,050
instrument
----- End of picture text -----

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

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

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

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

December 31, 2022 0-30 days 31-90 days 91-180 days 181 days to 1 year Over 1 year Total
Derivative financial instruments at fair
value through profit or loss
－ Foreign exchange derivative
instruments
Cash outflow $ 25,782,525 45,415,630 11,979,083 3,463,765 - 86,641,003
Cash inflow 27,862,886 48,002,551 12,577,650 3,500,326 - 91,943,413
－ Interest rate derivative instrument
Cash outflow - 1,168 587 2,955 1,174 5,884
Cash inflow - 2,021 724 3,742 1,568 8,055
Total cash outflow 25,782,525 45,416,798 11,979,670 3,466,720 1,174 86,646,887
Total cash inflow 27,862,886 48,004,572 12,578,374 3,504,068 1,568 91,951,468
Net cash flow $ (2,080,361 ) (2,587,774 ) (598,704 ) (37,348 ) (394 ) (5,304,581 )
December 31, 2021 0-30 days 31-90 days 91-180 days 181 days to 1 year Over 1 year Total
Derivative financial instruments at fair
value through profit or loss
－ Foreign exchange derivative
instruments
Cash outflow $ 4,498,580 6,093,790 6,071,884 2,768,967 - 19,433,221
Cash inflow 4,447,438 6,113,200 6,105,833 2,777,705 - 19,444,176
－ Interest rate derivative instrument
Cash outflow - 1,028 1,093 2,556 8,791 13,468
Cash inflow - 7,834 1,167 2,412 7,171 18,584
Total cash outflow 4,498,580 6,094,818 6,072,977 2,771,523 8,791 19,446,689
Total cash inflow 4,447,438 6,121,034 6,107,000 2,780,117 7,171 19,462,760
Net cash flow $ 51,142 (26,216 ) (34,023 ) (8,594 ) 1,620 (16,071 )
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5) Maturity analysis of off-balance sheet items

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

December 31, 2022 0-30 days 31-90 days 91-180 days 181 days to 1 year Over 1 year Total
Issued and irrevocable loan $ 1,997,541 512,056 22,218,395 4,683,018 35,575,997 64,987,007
commitments
Irrevocable credit card loan 1,117 34,225 55,553 316,313 18,432,747 18,839,955
commitments
Letters of credit issued yet unused 2,016,789 4,985,416 716,174 356,064 54,706 8,129,149
Other guarantees 2,667,240 1,001,432 656,793 2,337,749 15,393,282 22,056,496
Total $ 6,682,687 6,533,129 23,646,915 7,693,144 69,456,732 114,012,607
December 31, 2021 0-30 days 31-90 days 91-180 days 181 days to 1 year Over 1 year Total
Issued and irrevocable loan $ 84,608 730,576 1,012,632 4,268,229 30,319,691 36,415,736
commitments
Irrevocable credit card loan 2,747 31,254 70,784 215,130 19,060,236 19,380,151
commitments
Letters of credit issued yet unused 3,905,350 6,074,175 650,292 420,639 7,672 11,058,128
Other guarantees 3,419,240 3,485,929 2,138,876 2,597,286 12,695,082 24,336,413
Total $ 7,411,945 10,321,934 3,872,584 7,501,284 62,082,681 91,190,428
----- End of picture text -----

6) Maturity analysis of lease contract commitments

184

The Bank and subsidiaries only has operating lease contract, operating lease commitment refers to, when the Bank and subsidiaries 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 and subsidiaries operating lease contract commitments:

December 31, 2022	Below 1 year	1-5 years	Over 5 years	Total
Operating lease income (lessor)	$ 1,027	1,389	-	2,416

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

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

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

December 31, 2022 Below 1 year 1-5 years Over 5 years Total
Machinery and equipment $ 1,496,409 - - 1,496,409
Transportation equipment 2,098 - - 2,098
Right-of-use assets 620 85 - 705
Miscellaneous equipment 1,024 - - 1,024
Total $ 1,500,151 85 - 1,500,236
December 31, 2021 Below 1 year 1-5 years Over 5 years Total
Machinery and equipment $ 1,208,486 - - 1,208,486
Transportation equipment 1,313 - - 1,313
Right-of-use assets 405 238 - 643
Miscellaneous equipment 1,914 - - 1,914
Total $ 1,212,118 238 - 1,212,356
----- End of picture text -----

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(v) 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.

2) Policies and procedures of market risk management

a) Strategy

i) 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.
ii) 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

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

i) 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.
ii) 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

i) Valuation reports of various financial instruments are prepared regularly for executives to review and serve as the guidance for daily risk management operation.
ii) 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.

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186

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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
- i) 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.

ii) Applicable scope

All the financial instruments which apply to trading book position and banking book position and involve in foreign currencies.

iii) 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.

iv) Procedures of foreign exchange risk management

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.
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.
v) Process of foreign exchange risk management
- transactions to effectively identify risk factors and market risk resources. In addition, the financial transactions which the Bank and subsidiaries conducts deal with simple type financial products. For complex financial products, the Bank and subsidiaries conducts back-to-back hedge covering to effectively avoid market risk.
- 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.
- 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,

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by models, then they shall be evaluated by mathematic models prudently and the assumptions and parameters of the models shall be reviewed regularly.

  2. Monitoring and report

     - a. When the evaluation loss of non-commercial foreign exchange transactions is over the limit, the trade units shall execute a stop-limit per the regulations. If the loss amount reaches the suspension warning line or suspension limit of the financial transaction, risk management units shall report to the general manager. Provided that the loss amount reaches the annual suspension line, risk management 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
i) 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.

ii) Applicable scope

Financial instruments similar to equity security in all trading books.

iii) 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.

iv) Procedures of equity security risk management

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.
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.
v) Process of equity security risk management
- 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.

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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.
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

i) 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.

ii) Applicable scope

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

iii) 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.

iv) Procedures of interest rate risk management

188

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.
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.

v) Process of interest rate risk management

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.
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

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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

  - i) 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.

  - ii) 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
- i) 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.
- ii) 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

i) 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.

ii) Monitoring and report

The Bank established limits of the ratio between interest-rate-sensitivity assets and interestrate-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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190

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6) Value at Risk

a) Description of Value at Risk

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

b) Value at Risk models and assumptions

market risk for the equity security position of the trading book. Based on the historical information of the last 1 year and applies 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:

i) Value at Risk cannot reflect the losses result from other type of risks, such as credit risk and liquidity risk.
ii) 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.
iii) Value at Risk model is based on historical data to evaluate the amount, and therefore it may not be able to predict the future changes of risk factors, especially for those exceptions result from significant market fluctuation.
7) Foreign exchange risk disclosure and sensitivity analysis

a) Foreign exchange risk exposure

i) Significant net positions of foreign currencies (Market risk)

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Significant net positions of foreign currencies (Market risk)
December 31, 2022
Foreign currency
Currency amount (in thousands) NT$ amount
USD $ 504,348 15,496,092
JPY 2,069,083 480,234
AUD 14,865 308,895
ZAR 46,223 83,617
EUR 809 26,503
Significant net positions of foreign currencies (Market risk)
December 31, 2021
Foreign currency
Currency amount (in thousands) NT$ amount
USD $ 448,924 12,414,993
JPY 2,103,814 505,967
AUD 13,590 273,023
EUR 2,113 66,306
CNY 11,566 50,208
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Note 2: Net foreign currency is the absolute value of the net positions of each foreign currency.

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ii) Assets and liabilities of foreign currency

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

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December 31, 2021
Monetary financial assets Monetary financial liabilities
Foreign Foreign
currency currency
amount amount
Currency (in thousands) Spot rate NTD amount (in thousands) Spot rate NTD amount
USD $ 13,483,921 27.6550 372,897,835 12,888,760 27.6550 356,438,658
AUD 4,679,690 20.0900 94,014,972 4,588,043 20.0900 92,173,784
CNY 5,436,508 4.3410 23,599,881 5,215,483 4.3410 22,640,412
JPY 83,411,891 0.2405 20,060,560 82,096,035 0.2405 19,744,096
HKD 5,362,994 3.5460 19,017,177 4,989,090 3.5460 17,691,313
EUR 436,915 31.3800 13,710,393 436,993 31.3800 13,712,840
ZAR 3,151,732 1.7340 5,465,103 3,150,118 1.7340 5,462,305
GBP 104,307 37.3600 3,896,910 104,411 37.3600 3,900,795
NZD 53,010 18.9400 1,004,009 52,980 18.9400 1,003,441
CAD 18,796 21.6600 407,121 18,927 21.6600 409,959
SGD 10,842 20.4800 222,044 10,869 20.4800 222,597
CHF 3,833 30.2150 115,814 3,913 30.2150 118,231
Others (Note) - - 84,086 - - 83,329
Non-monetary financial assets Non-monetary financial liabilities
USD 1,083 27.6550 29,950 - - -
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Note: Consolidated disclosure is applied for other currencies not over $100,000.

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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

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December 31, 2021
Depreciate by 1% Appreciate by 1%
Currency Income Equity Income Equity
USD $ (54,235 ) (55,511 ) 54,235 55,511
AUD 4,053 (22,395 ) (4,053 ) 22,395
HKD 2,797 (15,842 ) (2,797 ) 15,842
JPY (5 ) (3,173 ) 5 3,173
GBP 19 - (19 ) -
SGD 6 - (6 ) -
ZAR (30 ) - 30 -
SEK (4 ) - 4 -
CHF 24 - (24 ) -
CAD 35 - (35 ) -
THB (4 ) - 4 -
EUR 16 - (16 ) -
NZD (13 ) - 13 -
CNY (51,012 ) - 51,012 -
Total $ (98,353 ) (96,921 ) 98,353 96,921
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8) Interest rate risk disclosure and sensitivity analysis

a) Interest rate sensitivity analysis

The assumption of interest rate sensitivity analysis is, under the circumstance that other conditions remain

the same, the yield of the market increase or decrease by 1 basis point (1 bp).

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December 31, 2022
Interest rate increases by 1 bp Interest rate decreases by 1 bp
Currency Income Equity Income Equity
Trading book
TWD $ (512 ) (2,661 ) 512 2,661
Banking book
TWD - (46,200 ) - 46,200
USD - (3,993 ) - 3,993
AUD - (364 ) - 364
HKD - (70 ) - 70
CNY - (1,335 ) - 1,335
ZAR - (161 ) - 161
Total $ (512 ) (54,784 ) 512 54,784
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December 31, 2021
Interest rate increases by 1 bp Interest rate decreases by 1 bp
Currency Income Equity Income Equity
Trading book
TWD $ (230 ) (3,462 ) 230 3,462
Banking book
TWD - (54,536 ) - 54,536
USD - (13,638 ) - 13,638
AUD - (606 ) - 606
HKD - (77 ) - 77
CNY - (1,956 ) - 1,956
ZAR - (204 ) - 204
Total $ (230 ) (74,479 ) 230 74,479
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December 31, 2022
Effect on NII in 1 year Effect on EVE
Scenario TWD USD TWD USD
Interest rate increases by 100 bp 3,962,492 (24,074 ) (5,148,928 ) (58,960 )
Interest rate decreases by 100 bp (4,598,328 ) 22,469 13,788,825 27,772
December 31, 2021
Effect on NII in 1 year Effect on EVE
Scenario TWD USD TWD USD
Interest rate increases by 100 bp 4,272,836 (34,660 ) (4,696,572 ) (45,509 )
Interest rate decreases by 100 bp (5,293,553 ) 3,502 8,616,664 63,806
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9) Managing interest rate benchmark reform

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 (referred to as IBOR reform'). The Bank and subsidiaries has exposures to IBORs on its financial instruments that will be replaced or reformed as part of these market-wide initiatives. The Bank and subsidiaries considers 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 anunreformed contract').

The Bank and subsidiaries' maining IBOR exposures at the reporting date are loans and corporate debt securities indexed to US dollar LIBOR. In March, 2021, the Financial Conduct Authority (FCA) announced that US dollar setting will either cease to be provided or no longer be representative after June 30, 2023. The Bank and subsidiaries had finished the process of implementing appropriate fallback clauses for all US dollar LIBOR-indexed exposures by the end of 2021.

The following tables show the total amounts of unreformed contracts and those with appropriate fallback language on December 31, 2022 and 2021. The amounts of financial assets and liabilities are shown at their carrying amounts, and derivatives are shown at their notional amounts.

194

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USD LIBOR EUR LIBOR GBP LIBOR JPY LIBOR CHF LIBOR
Total amount Amount with Total amount Amount with Total amount Amount with Total amount Amount with Total amount Amount with
of unreformed appropriate of unreformed appropriate of unreformed appropriate of unreformed appropriate of unreformed appropriate
contracts fallback clause contracts fallback clause contracts fallback clause contracts fallback clause contracts fallback clause
December 31, 2022
Financial assets
Discounts and loans $ 55,072,000 23,939,000 - - - - - - - -
Bond Investments 17,391,000 1,259,000 - - - - - - - -
Financial liabilities
Due to the Central Bank and 891,000 - - - - - - - - -
banks
Derivatives
Interest rate swaps 5,531,000 5,531,000 - - - - - - - -
December 31, 2021
Financial assets
Discounts and loans 70,757,000 22,182,000 402,000 293,000 - - 1,830,000 1,242,000 - -
Bond Investments 22,804,048 691,000 - - - - - - - -
Receivable 14,000 14,000 - - - - - - - -
Financial liabilities
Due to the Central Bank and 1,161,000 - - - - - - - - -
banks
Derivatives
Interest rate swaps 9,402,700 9,402,700 - - - - - - - -
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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%.

		December 31, 2022	December 31, 2022
Change	Currency	Income	Equity
Equity security price increases by 1 % Equity security price decreases by 1 %	TWD USD TWD USD	3,359 10 (3,359 ) (10 )	- - - -

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

b) Value at Risk of equity security

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From January 1, 2022 to December 31, 2022
Value at Risk Average Maximum Minimum
Equity security risk 5,038 13,963 1,399
From January 1, 2021 to December 31, 2021
Value at Risk Average Maximum Minimum
Equity security risk 6,959 14,786 3,827
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(vi) Transferred financial assets that are not fully derecognized

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

As of December 31, 2022 and 2021, there were not any financial assets of the Bank that are not fully derecognized.

(vii) Offsetting financial assets and financial liabilities

The Bank and subsidiaries 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.

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

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December 31, 2022
Financial assets under offsetting or general agreement of net amount settlement or similar norm
Gross amounts of Net amount of Amounts not set off in the
Gross amounts financial liabilities financial assets balance sheet (d)
of recognized offset in the presented in the Financial
financial assets balance sheet balance sheet instruments Cash collateral Net amount
Item (a) (b) (c)=(a)-(b) (Note) received (e)=(c)-(d)
Derivative financial $ 551,095 - 551,095 727,720 2,527,996 (2,704,621)
instruments
December 31, 2022
Financial liabilities under offsetting or general agreement of net amount settlement or similar norm
Gross amounts of Net amount of Amounts not set off in the
Gross amounts financial assets financial liabilities balance sheet (d)
of recognized offset in the presented in the Financial
financial liabilities balance sheet balance sheet instruments Cash collateral Net amount
Item (a) (b) (c)=(a)-(b) (Note) pledged (e)=(c)-(d)
Derivative financial $ 229,816 - 229,816 - 2,422,569 (2,192,753)
instruments
December 31, 2021
Financial assets under offsetting or general agreement of net amount settlement or similar norm
Gross amounts of Net amount of Amounts not set off in the
Gross amounts financial liabilities financial assets balance sheet (d)
of recognized offset in the presented in the Financial
financial assets balance sheet balance sheet instruments Cash collateral Net amount
Item (a) (b) (c)=(a)-(b) (Note) received (e)=(c)-(d)
Derivative financial $ 230,137 - 230,137 699,723 489,795 (959,381)
instruments
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December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021
Financial liabilities under offsetting orgeneral agreement of net amount settlement or similar norm
Item	Gross amounts of recognized fnancial liabilities (a)	Gross amounts of fnancial assets offset in the balance sheet (b)	Net amount of fnancial liabilities presented in the balance sheet (c)=(a)-(b)	Amounts not set off in the balance sheet(d)		Net amount (e)=(c)-(d)
				Financial instruments (Note)	Cash collateral pledged
Derivative fnancial instruments	$ 63,547	-	63,547	-	215,832	(152,285)

(aq) Capital Management

(i) 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.
(ii) 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.
(iii) 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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(iv) 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.

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Item December 31, 2022 December 31, 2021
Common stock equity 100,331,196 96,157,516
Other tier 1 capital 18,000,000 17,487,758
Eligible capital
Tier 2 capital 40,103,704 41,159,410
Eligible Capital 158,434,900 154,804,684
Standardized approach 1,188,123,617 1,066,163,181
Credit risk Internal ratings-based approach - -
Securitization - -
Basic indicator approach - -
Risk-weighted Operational Standardized approach/selective 43,118,270 38,884,436
assets risk standardized approach
Advanced measurement approach - -
Standardized approach 38,716,513 50,859,425
Market risk
Internal model approach - -
Total risk-weighted assets 1,269,958,400 1,155,907,042
Capital adequacy ratio 12.48% 13.39%
Common stock equity/ Risk-weighted assets ratio 7.90% 8.32%
Tier 1 capital / Risk-weighted assets ratio 9.32% 9.83%
Leverage ratio 5.47% 5.41%
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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 .
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.

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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.

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

The Bank and subsidiaries' investing and financing activities which did not affect the current cash flow for the nine months ended December 31, 2022 and 2021 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:

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Non-cash changes
Foreign
exchange rate Fair value Other December 31,
January 1, 2022 cash flows movement changes changes 2022
Financial liabilities at fair value $ 8,293,730 - 921,000 152,865 - 9,367,595
through profit or loss
Bank notes payable 52,250,000 - - - - 52,250,000
Lease liabilities 1,149,456 (420,428 ) 25,634 - 485,257 1,239,919
Total liabilities from financing $ 61,693,186 (420,428 ) 946,634 152,865 485,257 62,857,514
activities
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Non-cash changes
Foreign
exchange rate Fair value Other December 31,
January 1, 2021 cash flows movement changes changes 2021
Financial liabilities at fair value $ 8,411,0200 - (133,500 ) 16,210 - 8,293,730
through profit or loss
Bank notes payable 53,250,000 (1,000,000 ) - - - 52,250,000
Lease liabilities 1,062,021 (418,641 ) 256 - 505,820 1,149,456
Total liabilities from financing $ 62,723,041 (1,418,641 ) (133,244 ) 16,210 505,820 61,693,186
activities
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(as) Structured entities that not included in consolidated financial reports

(i) The table below presents the types of structured entities that the Bank and subsidiaries does not include in consolidated financial reports but in which they hold an interest:

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Types of structured entities Nature and purpose Interests held by the Bank and subsidiaries
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Types of structured entities	Nature and purpose	Interests held by the Bank and subsidiaries

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

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

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December 31, 2022 December 31, 2021
Private fund $ 163,679 132,168
Asset securitization product 560,023 728,147
Total $ 723,702 860,315
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(iii) The carrying amounts of interests held by the Bank and subsidiaries in these structured entities were as follows:

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Assets held by the Bank and subsidiaries December 31, 2022 December 31, 2021
Financial assets at fair value through profit or loss $ 163,679 132,168
Financial assets at fair value through other comprehensive 475,485 578,850
income
Investments in debt instruments at amortized cost 84,538 149,297
Total $ 723,702 860,315
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The maximum amount of risk exposure to the Bank and subsidiaries endures to a loss incurred from special purpose entities that is not included in consolidated financial reports is the carrying amount of interests held by the Bank and subsidiaries.

(iv) As of December 31, 2022 and 2021, the Bank and subsidiaries has not provided any financial support to its special purpose entities that is not included in consolidated financial reports.

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(7) Related-party transactions

(a) Names and relationship with related parties

The followings are entities that have had transactions with related party during the periods covered in the consolidated financial statementsconsolidated financial statements.

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Name of related party Relationship with the Bank and subsidiaries
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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, Executive Yuan (Note 1)	Corporate director of the Bank
Land Bank of Taiwan (Note 2)	Corporate director of the Bank
Taiwan Business Bank Guild	Corporate director of the Bank
Small and Medium Enterprise Credit Guarantee Fund of Taiwan	Substantive related parties
TBB No. 1 Venture Capital Limited Partnership (Note 3)	Substantive related parties
Media Talk Consulting Co., Ltd. (Notes 3)	Associates
Others	Management and other related parties of the Bank

Note 1: Become a related party commencing from the third quarter of 2021. Note 2: No longer a related party commencing from the third quarter of 2021. Note 3: Become a related party commencing from the first quarter of 2022.

(b) Significant transactions with related parties

(i) Due from banks

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December 31, 2022
Amount %
Bank of Taiwan $ 164,936 0.71
December 31, 2021
Amount %
Bank of Taiwan $ 157,131 1.01
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Interest rates are the same as those with regular clients.

(ii) Call loans to banks

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For the year ended Highest December 31, Interest Annual
December 31, 2022 balance 2022 income interest rate
Bank of Taiwan $ 1,098,264 - 1,358 0.13%~3.81%
For the year ended Highest December 31, Interest Annual
December 31, 2021 balance 2021 income interest rate
Bank of Taiwan $ 3,038,983 - 1,064 0.14%~3.80%
Land Bank of Taiwan 1,507,961 - 1,069 0.09%~3.30%
Total $ 4,546,944 - 2,133
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Interest rates are the same as those with regular clients.

(iii) Call loans from banks

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For the year ended Highest December 31, Annual
December 31, 2022 balance 2022 Interest Expense interest rate
Bank of Taiwan $ 9,434,791 1,786,360 61,939 0.04%~5.18%
For the year ended Highest December 31, Annual
December 31, 2021 balance 2021 Interest Expense interest rate
Bank of Taiwan $ 8,768,558 3,374,798 18,925 0.01%~2.80%
Land Bank of Taiwan 1,384,796 - 135 0.09%~2.35%
Total $ 10,153,354 3,374,798 19,060
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Interest rates are the same as those with regular clients.

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(iv) Deposits

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December 31, 2022
Amount %
Others $ 1,851,872 0.11
December 31, 2021
Amount %
Others $ 2,435,868 0.15
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Interest rates are the same as those with regular clients.

(v) Credit

200

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December 31, 2022
Performing situations
Number of Transaction terms
clients or name Highest Ending Performing Non-performing are different to regular
Category of related party balance balance loan Loans Collaterals clients
Employee 46 18,311 14,727 14,727 - none none
consumer loans
Self-use home 127 557,503 511,280 511,280 - real estate none
mortgages loans
Others Natural person 617,163 590,656 590,656 - real estate none
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December 31, 2021
Performing situations
Number of Transaction terms
clients or name Highest Ending Performing Non-performing are different to regular
Category of related party balance balance loan Loans Collaterals clients
Employee 40 17,353 13,480 13,480 - none none
consumer loans
Self-use home 130 517,303 490,456 490,456 - real estate none
mortgages loans
Others Natural person 499,016 463,274 463,274 - real estate none
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(vi) Donation:

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For the years ended December 31,
2022 2021
Small and Medium Enterprise Credit Guarantee Fund of $ 318,530 377,867
Taiwan
Taiwan Business Bank Guild 2,500 2,500
Total $ 321,030 380,367
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(vii) Guarantees: None.

(viii) Service fees: None.

(ix) Rental revenue: None.

(x) Derivatives financial instrument transactions: None.

(xi) Sales of Non–Performing Loans Transactions: None.

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(xii) Other revenue:

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For the years ended December 31,
2022 2021
TBB No. 1 Venture Capital Limited Partnership $ 16,954 -
Media Talk Consultants Co., Ltd. 50 -
Total $ 17,004 -
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(c) Major management salary information

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For the years ended December 31,
2022 2021
Salary and other short-term employee benefits $ 144,720 100,081
Post-employment benefits 2,478 2,669
Total $ 147,198 102,750
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(8) Pledged assets: Please refer to notes 6(h) for more details.

(9) Commitments and contingencies:

(a) Significant commitments and contingencies were as follows:

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December 31, 2022 December 31, 2021
Marketable securities held for custody $ 8,659,768 9,417,776
Bills collected for others 43,238,126 48,911,218
Bills lent for others 49,785,210 40,504,652
Guarantees and letters of credit 30,185,645 35,394,541
Trust liabilities 218,150,077 212,285,576
Items held for custody 901,998 1,163,471
Registered government bonds for sale 66,327,700 65,741,100
Registered short-term bills for sale 4,290,113 3,080,457
Guarantee notes payable 54,054,530 53,651,900
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(b) Unrecognized contractual commitments:

As of December 31, 2022 and 2021, major constructions in progress and purchases amounted to $1,018,993 and $583,601 respectively, of which $911,848 and $408,698 respectively, remained unpaid.

(c) The Bank's trust department plans, manages, and operates trust services in accordance with the Banking Law and Trust Law. Special purpose funds are used to invest in marketable securities and the Bank also manages trust funds. The trust information as of December 31, 2022 and 2021 is as follows:

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202

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Trust Balance Sheet

December 31, 2022 and 2021

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Trust Liabilities December 31, 2022 December 31, 2021
Payables $ 9 9
Securities held for custody 112,621,601 114,091,688
Trust capital 105,439,231 98,115,347
Accumulated loss (332,731 ) (2,478,944 )
Net income 421,967 2,557,476
Total trust liabilities $ 218,150,077 212,285,576
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Trust Property Accounts

December 31, 2022 and 2021

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Investment in December 31, 2022 December 31, 2021
Cash in bank $ 6,303,284 6,885,022
Stocks 928,987 845,570
Funds 73,259,462 71,899,727
Bonds 2,935,786 1,356,856
Real estate
Land 14,422,800 13,642,172
Buildings 29,556 34,674
Construction in progress 7,205,119 3,026,836
Securities in custody 112,621,601 114,091,688
Other assets 443,482 503,031
Total $ 218,150,077 212,285,576
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Note: As of December 31, 2022 and 2021, the amounts above included OBU transaction on “ foreign currency designated trust funds investment in foreign negotiable securities business ” amounting to $1,580,471 and $1,254,366, respectively.

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Trust Income Statement

For the years ended December 31, 2022 and 2021

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For the years ended December 31,
Investment items 2022 2021
Trust Revenue
Interest income $ 87,436 69,014
Realized capital gain-fund 338,547 1,700,677
Realized gain-stocks 3,147 1,112
Realized gain-bonds 5,059 24,585
Dividend revenue 2,147,052 1,981,168
Other revenues 4,179 5,007
Sub-total 2,585,420 3,781,563
Trust Expense
Administrative expenses 43,494 63,735
Postage and telecommunication expense 841 1,546
Duties 49 19
Realized loss-stocks 2,104,595 1,151,680
Realized loss-bonds 11,072 5,033
Loss on disposal of property - 441
Capital fee 3,195 1,592
Sub-total 2,163,246 1,224,046
Income before income tax 422,174 2,557,517
Income tax expense (207 ) (41 )
Net income $ 421,967 2,557,476
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(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 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 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 to the court to rescind the order for attachment.

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204

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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 Federal Supreme Court of Justice 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 Federal Supreme Court of Justice and filed a defense against I.C.C.I. of objections. The case is currently being tried by the Regional Court of Frankfurt. The Federal Supreme Court of Justice has denied 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 in compensation and held the Bank as jointly liable, and by I.C.C.I, which demanded the Bank to pay USD$20,060 less its reimbursed amount to make a security deposit of EUR$14,000. 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$20,060 for I.C.C.I. Also, I.C.C.I must compensate Star Marine for USD$1,130 as well as make a security deposit of EUR$14,000 in the domestic bank in Congo. I.C.C.I has been paid around EUR$14,860. According to the statement of plaintiff and considering that I.C.C.I has already received about EUR $14,860, an addition of $73,181 has been provision for lawsuit in 2021. Please refer to Note 6(v) for more details. As of December 31, 2022, the Bank has accrued the compensation of $259,635 and EUR$9,660.

(10) Losses from disasters:None

(11) Subsequent Events:None

(12) Others:

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

(i) Loan quality:

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Month/Year December 31, 2022
Non-performing Non-performing Allowance for
Items loans Total loans loan ratio credit losses Coverage ratio
Secured 1,602,465 713,092,812 0.22% 8,945,106 558.21%
Corporate
finance Unsecured 691,641 372,391,080 0.19% 4,952,203 716.01%
Residence 187,800 170,335,261 0.11% 2,130,940 1,134.69%
mortgages(Note 4)
Cash cards - - -% - -%
Consumer
finance Microcredit(Note 5) 4,802 325,663 1.47% 7,370 153.48%
Others Secured 266,055 149,120,110 0.18% 1,868,990 702.48%
(Note 6)
Unsecured 14,614 13,228,525 0.11% 174,007 1,190.69%
Total loan business 2,767,377 1,418,493,451 0.20% 18,078,616 653.28%
Overdue Total Delinquency Allowance for
receivables receivables ratio credit losses Coverage ratio
Credit cards business 437 1,122,771 0.04% 14,292 3,270.48%
Account receivable factoring-without - - -% - -%
recourse (Note 7)
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Month/Year December 31, 2021
Non-performing Non-performing Allowance for
Items loans Total loans loan ratio credit losses Coverage ratio
Corporate Secured 1,324,552 686,386,566 0.19% 7,855,442 593.06%
finance Unsecured 1,800,964 330,974,304 0.54% 4,246,313 235.78%
Residence 228,806 141,504,543 0.16% 1,625,312 710.35%
mortgages(Note 4)
Cash cards - 2 -% - -%
Consumer
finance Microcredit(Note 5) 6,085 417,829 1.46% 8,809 144.77%
Others Secured 307,198 147,964,837 0.21% 1,702,136 554.08%
(Note 6) Unsecured 17,548 10,976,267 0.16% 138,805 791.00%
Total loan business 3,685,153 1,318,224,348 0.28% 15,576,817 422.69%
Overdue Total Delinquency Allowance for
receivables receivables ratio credit losses Coverage ratio
Credit cards business 720 1,062,097 0.07% 18,375 2,552.08%
Account receivable factoring-without - - -% - -%
recourse (Note 7)
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Note 1 Non-performing loans represent the amount of overdue loans as reported in accordance with the “ Regulations on the Procedures for Banking Institutions to Evaluate Assets and Deal with Past Due/Non-performing Loans ” . The credit card overdue loans represent the amount of overdue loans as reported in accordance with Jin-Kuan-Yin-(4)-Zi No. 0944000378, dated July 6, 2005.
Note 2 Non-performing loan ratio = Non-performing loans ÷ total loans; Credit card delinquency ratio = Overdue receivables ÷ receivables
Note 3 Coverage ratio for loans = allowance for credit losses ÷ non-performing loans; Coverage ratio for credit card business = allowance for credit losses ÷ overdue receivables.
Note 4 For residential mortgage loans, a borrower provides his/her (or spouse's or minor child's) house as collateral in full and pledges it to the financial institution for the purpose of obtaining funds to purchase property and to construct or repair a house.
cards or cash cards.
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, 2022	December 31, 2022	December 31, 2022		December 31, 2021	December 31, 2021	December 31, 2021
		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	Receivables may be exempted from reporting as overdue receivables
Pursuant to a contract under a debt negotiation plan (Note1) Pursuant to a contract under a debt liquidation plan and a debt relief plan (Note 2) Total		$ 258 54,109 $ 54,367		1,112 22,489 23,601		372 51,418 51,790		1,486 26,536 28,022

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.

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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. ”

206

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(ii) Concentration of credit extensions

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December 31, 2022
Credit amount to
Ranking Group enterprise Credit amount
equity ratio (%)
1 A company. (Railway transportation) 21,202,474 20.37%
2 B group. (Real estate for sale and rental with own or leased property) 16,381,315 15.74%
3 C group. (Other holding) 9,788,164 9.40%
4 D group. (Real estate development) 8,982,725 8.63%
5 E group. (Steel rolling and extruding) 8,715,755 8.37%
6 F group. (Computers manufacturing) 6,523,340 6.27%
7 G group. (Real estate development) 6,261,408 6.01%
8 H group. (Real estate development) 6,027,170 5.79%
9 I group. (Liquid crystal panel and components manufacturing) 5,531,674 5.31%
10 J group. (Financial Leasing) 4,565,169 4.39%
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December 31, 2021
Credit amount to
Ranking Group enterprise Credit amount
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 E group. (Steel rolling and extruding) 9,135,146 8.99%
4 D group. (Real estate development) 9,024,525 8.88%
5 C group. (Other holding) 8,571,432 8.43%
6 H group. (Real estate development) 6,383,825 6.28%
7 F group. (Computers manufacturing) 5,977,657 5.88%
8 G group. (Real estate development) 5,893,403 5.80%
9 K group. (Air transportation) 4,393,761 4.32%
10 J group. (Financial Leasing) 4,201,781 4.13%
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Note 1 The top ten enterprise groups other than government or stated-owned enterprises are ranked according to their total outstanding credit amount. If the borrowers belong to an enterprise group, the aggregate credit balance of the enterprise should be calculated and disclosed as a code number for each such borrower together with an indication of the borrowers' line of business. In addition, if the borrowers are enterprise groups, the enterprise group's industry sector with the maximum exposure to credit risk in its main industry sector should be disclosed, along with the “ class ” of the industry, in compliance with the Standard Industrial Classification System of the R.O.C. posted by the Directorate-General of Budget, Accounting and Statistics, Executive Yuan, R.O.C.
Note 2 Enterprise group is as defined in Article 6 of the “ Supplementary Provisions to the Taiwan Stock Exchange Corporation ”
Rules for Review of Securities Listings .
Note 3 Consists of loans (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.
The Foreign bank should be calculated in the net value of Taiwan branch.

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(iii) Interest rate-sensitivity information

1) Analysis of interest rate-sensitive assets and liabilities (New Taiwan dollars)

Unit : %

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December 31, 2022
Item 1~90 days 91~180 days 181days~1year over 1 year total
Interest rate-sensitive assets $ 1,464,207,488 24,207,477 42,324,132 136,449,514 1,667,188,611
Interest rate-sensitive liabilities 1,333,797,410 31,475,346 65,933,051 49,486,811 1,480,692,618
Interest rate sensitivity gap 130,410,078 (7,267,869 ) (23,608,919 ) 86,962,703 186,495,993
Net worth 104,107,258
Ratio of interest rate-sensitive assets to liabilities (%) 112.60
Ratio of interest rate-sensitive gap to net worth (%) 179.14
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-sensitive gap to net worth (%) 116.64
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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-rate-sensitive liabilities.

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

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

Unit : In Thousands of US Dollars, %

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December 31, 2022
Item 1~90 days 91~180 days 181days~1year over 1 year total
Interest rate-sensitive assets $ 5,161,097 219,595 116,768 993,718 6,491,178
Interest rate-sensitive liabilities 7,302,641 1,388,445 2,402,052 1,139 11,094,277
Interest rate sensitivity gap (2,141,544 ) (1,168,850 ) (2,285,284 ) 992,579 (4,603,099 )
Net worth 3,388,357
Ratio of interest rate-sensitive assets to liabilities (%) 58.51
Ratio of interest rate-sensitive gap to net worth (%) (135.85 )
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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-sensitive gap to net worth (%) (63.19 )
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Note 1 Listed amount refers to the Bank's amount of US dollars and does not include contingent assets or liabilities.

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

Note 4 Ratio of interest rate-sensitive assets to liabilities=Interest rate-sensitive assets ÷ Interest rate-sensitive liabilities (US dollars interest-rate-sensitive assets and US dollars interest-rate-sensitive liabilities).

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(iv) Profitability

Unit: %

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Item December 31, 2022 December 31, 2021
Before income tax 0.59 0.30
The ratio of return on assets
After income tax 0.49 0.27
Before income tax 11.70 5.79
The ratio of return on equity
After income tax 9.84 5.09
Net income ratio 35.48 21.16
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Note 1 The ratio of return on assets = Income before (after) income tax expense ÷ average assets. Note 2 The ratio of return on equity = Income before (after) income tax expense ÷ average equity. Note 3 Net income ratio = 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.

(v) Maturity analysis for assets and liabilities

1) Maturity analysis in New Taiwan dollars

208

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December 31, 2022
Amount during the maturity period from the balance sheet date to due date
Total 0-10days 11-30days 31-90days 91-180days 181days-1year Over 1 year
Major maturity $ 1,798,278,148 171,214,261 167,605,412 186,953,929 204,957,223 152,184,634 915,362,689
capital inflow
Major maturity 2,201,577,109 79,002,934 115,025,374 262,893,103 184,927,959 384,673,313 1,175,054,426
capital outflow
Gap (403,298,961 ) 92,211,327 52,580,038 (75,939,174 ) 20,029,264 (232,488,679 ) (259,691,737 )
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Note: Listed amounts are denominated in New Taiwan dollars of the Bank and subsidiaries, including loan commitments of credit agreement and estimates to outflow $390,839,630.

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December 31, 2021
Amount during the maturity period from the balance sheet date to due date
Total 0-10days 11-30days 31-90days 91-180days 181days-1year Over 1 year
Major maturity $ 1,750,694,486 161,102,012 173,091,966 160,017,985 191,111,216 183,481,924 881,889,383
capital inflow
Major maturity 2,080,919,419 58,109,342 96,378,346 197,106,878 230,402,505 383,878,329 1,115,044,019
capital outflow
Gap (330,224,933 ) 102,992,670 76,713,620 (37,088,893 ) (39,291,289 ) (200,396,405 ) (233,154,636 )
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Note: Listed amounts are denominated in New Taiwan dollars of the Bank and subsidiaries, including loan commitments of credit agreement and estimates to outflow $321,721,283.

2) Maturity analysis in US dollars

Unit : In Thousands of US Dollars

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December 31, 2022
Amount during the maturity period from the balance sheet date to due date
Total 0-30days 31-90days 91-180days 181days-1year Over 1 year
Major maturity $ 16,353,649 5,107,519 4,629,214 1,287,440 1,713,177 3,616,299
capital inflow
Major maturity 17,155,496 3,645,117 4,045,473 2,484,679 3,910,394 3,069,833
capital outflow
Gap (801,847 ) 1,462,402 583,741 (1,197,239 ) (2,197,217 ) 546,466
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Note: Listed amounts are denominated in US dollars of the Bank and subsidiaries, including loan commitments of credit agreement and estimates to outflow USD $912,002.

Ⅵ

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December 31, 2021
Amount during the maturity period from the balance sheet date to due date
Total 0-30days 31-90days 91-180days 181days-1year Over 1 year
Major maturity $ 13,916,218 2,980,694 3,107,058 1,979,387 2,382,222 3,466,857
capital inflow
Major maturity 14,541,102 2,963,483 2,492,268 1,795,298 2,996,995 4,293,058
capital outflow
Gap (624,884 ) 17,211 614,790 184,089 (614,773) (826,201 )
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Note: Listed amounts are denominated in US dollars of the Bank and subsidiaries, including loan commitments of credit agreement and estimates to outflow USD $824,028.

(13) Other disclosures:

(a) Information on significant transactions:

(i) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 10% of the capital stock: None.
(ii) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 10% of the capital stock: None.
(iii) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 10% of the capital stock: None.
(iv) Service charge discounts on transactions with related parties in an aggregate amount of NT$5 million or more: None.
(v) Receivables from related parties with amounts exceeding the lower of NT$300 million or 10% of the capital stock: None.
(vi) Information on NPL disposal transaction: None.
(vii) Types of securitization instruments approved to be issued pursuant to financial assets securitization rules or real estate securitization rules and other relevant information: None.
(viii) Business relationships and significant intercompany transactions:

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Transaction status for the year ended Dcecember 31, 2022
Percentage
accounted for
consolidated net
No Relationship revenue or total
(Note1) Trader Counterparty (Note 2) Account Amount Terms assets
0 Taiwan Business TBB International 1 Deposits and 19,594 No difference with -%
Bank, Ltd. Leasing Co., Ltd. remittances non-related parties
1 TBB International Taiwan Business 2 Right-of-use 226 No difference with -%
Leasing Co., Ltd. Bank, Ltd. assets non-related parties
1 TBB International Taiwan Business 2 Lease 230 No difference with -%
Leasing Co., Ltd. Bank, Ltd. liabilities non-related parties
0 Taiwan Business TBB International 1 Net revenue 691 No difference with -%
Bank, Ltd. Leasing Co., Ltd. other than non-related parties
interest
0 Taiwan Business TBB Venture 1 Deposits and 102,534 No difference with 0.01%
Bank, Ltd. Capital Co., Ltd. remittances non-related parties
2 TBB Venture Taiwan Business 2 Right-of-use 640 No difference with -%
Capital Co., Ltd. Bank, Ltd. assets non-related parties
2 TBB Venture Taiwan Business 2 Lease 645 No difference with -%
Capital Co., Ltd. Bank, Ltd. liabilities non-related parties
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Transaction status for the year ended Dcecember 31, 2022
Percentage
accounted for
consolidated net
No Relationship revenue or total
(Note1) Trader Counterparty (Note 2) Account Amount Terms assets
0 Taiwan Business TBB Venture 1 Net revenue 172 No difference with -%
Bank, Ltd. Capital Co., Ltd. other than non-related parties
interest
0 Taiwan Business Taiwan Business 1 Deposits and 177,399 No difference with 0.01%
Bank, Ltd. Bank International remittances non-related parties
Leasing Co., Ltd.
0 Taiwan Business TBB Consulting 1 Deposits and 56,279 No difference with -%
Bank, Ltd. Co., Ltd. remittances non-related parties
0 Taiwan Business TBB Consulting 1 Net revenue 716 No difference with -%
Bank, Ltd. Co., Ltd. other than non-related parties
interest
3 TBB Consulting Taiwan Business 2 Right-to-use 3,557 No difference with -%
Co., Ltd. Bank, Ltd. assets non-related parties
3 TBB Consulting Taiwan Business 2 Lease 3,577 No difference with -%
Co., Ltd. Bank, Ltd. liabilities non-related parties
2 TBB Venture TBB Consulting 3 Net revenue 86,993 No difference with -%
Capital Co., Ltd. Co., Ltd. other than non-related parties
non-interest
2 TBB Venture TBB Consulting 3 Accounts 64,737 No difference with -%
Capital Co., Ltd. Co., Ltd. payable non-related parties
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Note: 1. The meaning of the number is as follows.

210

(1) Zero stands for the parent company

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

There are three kinds of relationships with counterparty

(1) Parent company to subsidiary

(2) Subsidiary to parent company

(3) Between subsidiaries

(ix) Other significant transactions that may have substantial influence upon the decisions made by financial report users: None.

(b) Information on investees:

(i) The following is the information on investees (excluding information on investees in Mainland China):

(Unit : thousand shares)

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The cross holding of the Bank and its related parties
Number of Total Note
Main business Shareholding Book Investment Number of proforma Number of Shareholding
Name ofinvestee Location scope ratio value gain (loss) shares shares shares ratio
TBB International Taiwan Leasing 100.00% 1,516,406 41,673 150,000 - 150,000 100.00% Already written-
Leasing Co., Ltd. business off when preparing
the consolidated
financial statements
TBB (Cambodia) Cambodia SMEs and 100.00% 624,591 26,911 20 - 20 100.00% 〞
Microfinance personal
Institution Plc finance
business
TBB Venture Taiwan Investing 100.00% 1,258,512 202,343 105,000 - 105,000 100.00% 〞
Capital Co., Ltd. business
TBB Consulting Taiwan Consulting 100.00% 97,947 49,356 5,000 - 5,000 100.00% 〞
Co., Ltd. business
Media Talk Taiwan Investing 20.00% 808 (1,192) 200 - 200 20.00%
Consulting Co., cultural and
Ltd. creative
business
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Ⅵ

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(ii) Loans to others:

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The
Limited
Actual Range of Nature necessary Allowance Guarantee amount for [Total limited]
reason for
NO. Creditor Debtor Interaction Related Highest Ending drawdown interest rate of the Dealing short-term forbad debts Name Value individual amountfor
Account party Amount balance amount loan amount loans object loan
1 TBB International Chao-Yang Financial No 28,442 11,781 20,000 2%~10% 2 - To the lender 120 None - 379,101 1,516,403
Leasing Co., Ltd. International Co., Ltd. receivables for buying
goods
1 TBB International Hsin Chuan Construc- Financial No 146,155 62,745 100,000 2%~10% 2 - To the lender 634 None - 379,101 1,516,403
Leasing Co., Ltd. tion Co., Ltd. receivables for buying
goods
1 TBB International Sian Shang Frozen Financial No 28,442 10,115 20,000 2%~10% 2 - To the lender 103 None - 379,101 1,516,403
Leasing Co., Ltd. Food Co., Ltd receivables for buying
goods
1 TBB International Xi Quan Restaurant Financial No 104,957 53,000 106,000 2%~10% 2 - To the lender 550 None - 379,101 1,516,403
Leasing Co., Ltd. Co., Ltd receivables for buying
goods
1 TBB International Acon-Holding INC. Financial No 37,570 7,570 30,000 2%~10% 2 - To the lender 76 None - 379,101 1,516,403
Leasing Co., Ltd. receivables for buying
goods
1 TBB International Pei Xian Seafood Co., Financial No 28,442 11,781 20,000 2%~10% 2 - To the lender 120 None - 379,101 1,516,403
Leasing Co., Ltd. Ltd receivables for buying
goods
1 TBB International Maw Shing Top Co., Financial No 26,481 10,971 15,000 2%~10% 2 - To the lender 112 None - 379,101 1,516,403
Leasing Co., Ltd. Ltd. receivables for buying
goods
1 TBB International Yu Ding Investment Financial No 77,555 50,000 50,000 2%~10% 2 - To the lender 518 None - 379,101 1,516,403
Leasing Co., Ltd. Co., Ltd receivables for buying
goods
1 TBB International Chaishan Foods Co., Financial No 50,000 - 50,000 2%-10% 2 - To the lender - None - 379,101 1,463,068
Leasing Co., Ltd. Ltd. receivables for buying
goods
1 TBB International Yu Shan Financial No 15,000 - 15,000 2%-10% 2 - To the lender - None - 379,101 1,463,068
Leasing Co., Ltd. Environmental receivables for buying
Engineering Co., Ltd. goods
1 TBB International Chao-Chi Property Financial No 15,000 10,078 15,000 2%~10% 2 - To the lender 103 None - 379,101 1,516,403
Leasing Co., Ltd. Management receivables for buying
Consulting Co.,Ltd goods
1 TBB International Tai Chang Fiber Co., Financial No 15,000 10,092 15,000 2%~10% 2 - To the lender 103 None - 379,101 1,516,403
Leasing Co., Ltd. Ltd receivables for buying
goods
1 TBB International Risingsun Wide Food Financial No 30,000 28,082 30,000 2%~10% 2 - To the lender 288 None - 379,101 1,516,403
Leasing Co., Ltd. Corp. receivables for buying
goods
1 TBB International Yu Cheng Precision Financial No 12,000 9,045 12,000 2%~10% 2 - To the lender 92 None - 379,101 1,516,403
Leasing Co., Ltd. Industry Co.,Ltd. receivables for buying
goods
1 TBB International Jiou Chang Motor Co., Financial No 10,000 10,000 10,000 2%~10% 2 - To the lender 103 None - 379,101 1,516,403
Leasing Co.,Ltd. Ltd. receivables for buying
goods
1 TBB International Liang-wei Tobacco & Financial No 10,000 10,000 10,000 2%~10% 2 - To the lender 103 None - 379,101 1,516,403
Leasing Co.,Ltd. Liquor Co., Ltd. receivables for buying
goods
1 TBB International Jia Ho Food Co., Ltd. Financial No 20,000 20,000 20,000 2%~10% 2 - To the lender 206 None - 379,101 1,516,403
Leasing Co.,Ltd. receivables for buying
goods
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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

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(iii) Endorsements and guarantee for others: None

212

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(iv) Acquisition of securities:

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Relationship At the end of the period
with the
Company Type and name security Number of Carrying Share
acquired of the security issuer Account shares amount proportion Market price Note
TBB International Taiwan Buisness Parent Investment - 953,828 100.00% 953,828 The transaction
Leasing Co., Ltd. International company under equity has been
Leasing Co., Ltd. method written off when
preparing the
consolidated
financial
statements.
TBB International G12245 、 - Financial assets - 100,000 -% 100,000 Financial
Leasing Co., Ltd. G12246 at fair value debentures
through profit or
loss
TBB Venture G12245 - Financial assets - 100,000 -% 100,000 Financial
Capital Co., Ltd. at fair value debentures
through profit or
loss
TBB Venture Powerchip - Financial assets 250 8,013 0.01% 8,013 Listed Stocks
Capital Co., Ltd. Semiconductor at fair value
Manufacturing through profit or
Corporation loss
TBB Venture Eir Genix, Inc. - Financial assets 845 104,780 0.28% 104,780 OTC Stocks
Capital Co., Ltd. at fair value
through profit or
loss
TBB Venture Chenfull - Financial assets 380 27,930 0.64% 27,930 OTC Stocks
Capital Co., Ltd. Precision at fair value
Co.,Ltd. through profit or
loss
TBB Venture Lungteh - Financial assets 1,702 113,163 1.74% 113,163 Emerging Stocks
Capital Co., Ltd. Shipbuilding Co., at fair value
Ltd. through profit or
loss
TBB Venture Ping Ho - Financial assets 150 8,730 0.51% 8,730 Emerging Stocks
Capital Co., Ltd. Environmental at fair value
Technology Co., through profit or
Ltd. loss
TBB Venture Handa - Financial assets 1,141 139,737 0.88% 139,737 Emerging Stocks
Capital Co., Ltd. Pharmaceuticals, at fair value
Inc. through profit or
loss
TBB Venture Tigerair Taiwan - Financial assets 1,973 61,360 0.49% 61,360 Emerging Stocks
Capital Co., Ltd. Co.,Ltd. at fair value
through profit or
loss
TBB Venture Energenesis - Financial assets 340 14,399 0.51% 14,399 Emerging Stocks
Capital Co., Ltd. Biomedical Co., at fair value
Ltd. through profit or
loss
TBB Venture Evergreen - Financial assets 468 37,580 0.13% 37,580 Emerging Stocks
Capital Co., Ltd. Aviation at fair value
Technologies through profit or
Corporation loss
TBB Venture Locus Cell Co., - Financial assets 1,362 48,760 0.68% 48,760 Emerging Stocks
Capital Co., Ltd. Ltd. at fair value
through profit or
loss
TBB Venture Starlux Airlines - Financial assets 3,860 73,147 0.21% 73,147 Emerging Stocks
Capital Co., Ltd. Co., Ltd. at fair value
through profit or
loss
TBB Venture Pinkoi Inc. - Financial assets 93 30,156 0.53% 30,156 Unlisted Stocks
Capital Co., Ltd. at fair value
through profit or
loss
TBB Venture Song Chuan - Financial assets 415 24,898 0.74% 24,898 Unlisted Stocks
Capital Co., Ltd. Precision Co., at fair value
Ltd. through profit or
loss
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Relationship At the end of the period
with the
Company Type and name security Number of Carrying Share
acquired of the security issuer Account shares amount proportion Market price Note
TBB Venture Techplasma - Financial assets 821 54,267 2.87% 54,267 Unlisted Stocks
Capital Co., Ltd. Technology Co., at fair value
Ltd. through profit or
loss
TBB Venture Hephas Energy - Financial assets 680 88,349 2.96% 88,349 Unlisted Stocks
Capital Co., Ltd. Co., Ltd. at fair value
through profit or
loss
TBB Venture Ren Chin Electric - Financial assets 250 3,835 2.61% 3,835 Unlisted Stocks
Capital Co., Ltd. Conductor Co., at fair value
Ltd. through profit or
loss
TBB Venture Manford - Financial assets 1,195 20,315 2.99% 20,315 Unlisted Stocks
Capital Co., Ltd. Machinery at fair value
Co.,Ltd. through profit or
loss
TBB Venture Yuh Shan - Financial assets 500 22,005 1.96% 22,005 Unlisted Stocks
Capital Co., Ltd. Enviromental at fair value
Engineering Co., through profit or
Ltd. loss
TBB Venture Huang Chieh - Financial assets 286 2,940 0.48% 2,940 Unlisted Stocks
Capital Co., Ltd. MetalHoldings at fair value
Co., Ltd. through profit or
loss
TBB Venture Iovtec Co., Ltd. - Financial assets 424 21,857 2.93% 21,857 Unlisted Stocks
Capital Co., Ltd. at fair value
through profit or
loss
TBB Venture e-Formula - Financial assets 600 8,952 2.76% 8,952 Unlisted Stocks
Capital Co., Ltd. Technologies, at fair value
Inc. through profit or
loss
TBB Venture Han-win - Financial assets 453 6,272 2.20% 6,272 Unlisted Stocks
Capital Co., Ltd. Technology at fair value
Co.,Ltd through profit or
loss
TBB Venture Ina Energy - Financial assets 2,000 25,800 1.00% 25,800 Unlisted Stocks
Capital Co., Ltd. Corporation at fair value
through profit or
loss
TBB Venture Amazing Cool - Financial assets 390 3,916 2.86% 3,916 Unlisted Stocks
Capital Co., Ltd. Technology at fair value
Corporation. through profit or
loss
TBB Venture Long-Shun - Financial assets 720 28,800 2.40% 28,800 Unlisted Stocks
Capital Co., Ltd. Green Energy at fair value
Technology Ltd. through profit or
loss
TBB Venture Gamamobi - Financial assets 200 1,690 1.00% 1,690 Unlisted Stocks
Capital Co., Ltd. Taiwan Co.,Ltd. at fair value
through other
comprehensive
income
TBB Venture Toyo Automation - Financial assets 250 26,250 0.95% 26,250 Unlisted Stocks
Capital Co., Ltd. Co.,Ltd. at fair value
through profit or
loss
TBB Venture aetherAI Co., - Financial assets 400 10,000 0.72% 10,000 Unlisted stocks
Capital Co., Ltd. Ltd. at fair value
through profit or
loss
TBB Venture GoodLinker Co., - Financial assets 100 3,000 2.86% 3,000 Unlisted stocks
Capital Co., Ltd. Ltd. at fair value
through profit or
loss
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214

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Relationship At the end of the period
with the
Company Type and name security Number of Carrying Share
acquired of the security issuer Account shares amount proportion Market price Note
TBB Venture Yiyi Pictures Co - Financial assets 9 2,992 1.10% 2,992 Unlisted Stocks
Capital Co., Ltd. Ltd. at fair value
through profit or
loss
TBB Venture Inbound Asia - Financial assets 83 3,000 0.41% 3,000 Unlisted stocks
Capital Co., Ltd. Co., Ltd. at fair value
through profit or
loss
TBB Venture TFBS - Financial assets 250 13,500 0.75% 13,500 Unlisted Stocks
Capital Co., Ltd. Bioscience, Inc. at fair value
through other
comprehensive
income
TBB Venture Asia Hydrogen - Financial assets 132 5,000 1.98% 5,000 Unlisted Stocks
Capital Co., Ltd. Energy at fair value
Corporation through profit or
loss
TBB Venture kuang shih AI - Financial assets 1,600 20,800 8.89% 20,800 Unlisted Stocks
Capital Co., Ltd. Co., Ltd. at fair value
through profit or
loss
TBB Venture Longwalk social - Financial assets 120 3,000 12.77% 3,000 Unlisted Stocks
Capital Co., Ltd. enterprise, Co., at fair value
Ltd. through profit or
loss
TBB Venture Carpost Co., Ltd. - Financial assets 330 3,960 2.92% 3,960 Unlisted Stocks
Capital Co., Ltd. at fair value
through profit or
loss
TBB Venture Honley Auto. - Financial assets 3,000 36,000 1.78% 36,000 Unlisted Stocks
Capital Co., Ltd. Parts Co., Ltd. at fair value
through profit or
loss
TBB Venture Taiwan Buffalo - Financial assets - 35,119 4.57% 35,119 Private fund
Capital Co., Ltd. III Biotechnology at fair value
VentureCapital through profit or
LLP. loss
TBB Venture Ju He Venture - Financial assets - 19,071 2.46% 19,071 Private fund
Capital Co., Ltd. CapitalLLP. at fair value
through profit or
loss
TBB Venture TBB No. - Financial assets - 11,831 1.12% 11,831 Private fund
Capital Co., Ltd. 1 Venture at fair value
Capital Limited through profit or
Partnership loss
TBB Venture Jia Da - Financial assets 2,919 29,807 8.52% 29,807 Unlisted Stocks
Capital Co., Ltd. International at fair value
Development through other
Co., Ltd. comprehensive
income
TBB Consulting Media Talk Associates Investment under - 808 20.00% 808
Co., Ltd. Consulting Co., equity method
Ltd.
TBB Consulting TBB No. - Financial assets - 1,183 0.11% 1,183 Private fund
Co., Ltd. 1 Venture at fair value
Capital Limited through profit or
Partnership loss
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(v) Accumulative purchases or sales of the same investee companies amounting to over $300,000 or 10% of paid-in capital: None.

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

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

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

Ⅵ

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(ix) Receivables from related parties amounting to over $300,000 or 10% of paid-in capital: None.
(x) Transactions of financial derivatives: None.
(xi) Sale of non-performing loans information: None.
(xii) Types of securitization instruments and related information approved by financial assets securitization rules or real estate securitization rules: None.
(xiii) 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:

(i) The names of investees in Mainland China, the main businesses and products, and other information:

Name of investee company in Mainland China				Accumulated	Investment transferred out or recovered	Investment transferred out or recovered	Accumulated amount transferred from Taiwan,end of the period	The current proft or loss of the investee (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
	Major business	Paid-in capital	Investment method (Note 1)	amount transferred from Taiwan, beginning of the period	Transferred out	Recovered
Taiwan Business Bank , Ltd. Shanghai branch	Banking business	3,910,537 (CNY800 million) (Operating capital)	(3)	3,910,537 (CNY800 million)	-	-	3,910,537 (CNY800 million)	-	Shanghai branch of the Bank, not an investee company	Note 4	4,325,735	None
Taiwan Business Bank , Ltd. Wuhan branch	Banking business	3,942,815 (CNY800 million) (Operating capital)	(3)	3,942,815 (CNY800 million)	-	-	3,942,815 (CNY800 million)	-	Wuhan branch of the Bank, not an investee company	Note 4	4,130,790	“
Taiwan Business Bank International Leasing Co., Ltd.	Leasing business	838,305 (CNY170 million) (Operating capital)	(1)	838,305 (CNY170 million)	-	-	838,305 (CNY170 million)	34,290 2(c)	100%	34,290 2(c)	953,828	“

Note 1: Investment method is divided into three categories and are listed as follows:

(1) Directly invest in Mainland China.
(2) Investment in Mainland China companies through a third region.
(3) Others: establishment of oversea branches
Note 2: The column of “ Investment gains (losses) ” :
(1) If the company is still in the preparation process, and does not have any investment gain or loss, please specify.
(2) The bases for recognition of investment income or loss have three methods, please specify.
- an accounting firm in Taiwan.
- c. Others
(3) 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.

(ii) Limitation on investment in Mainland China:

Name of Company	Accumulated outfow 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)	62,464,355

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

216

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(d) Information of major shareholders:

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Shareholding
Shares Percentage
Shareholder’s Name
Bank of Taiwan 1,301,907,315 16.21%
National Development Fund, Executive Yuan 471,075,689 5.87%
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(14) Segment information:

(a) General information

The chief operating decision maker is the general manager of the Bank and subsidiaries who is in charge of all major projects' approval, budget review and performance measurement. In order to express operating activities legitimately, the reportable segments of the Bank are Bank segment, Securities segment, Trust segment, Insurance agency segment and Others. Securities segment, Trust segment, Insurance agency segment and Other segments don't meet the quantitative thresholds, therefore regarded as the same reporting segment. The main operations of the banking segment are engaged in the deposits, remittance and loans in New Taiwanese Dollars or foreign currencies, as well as securities investments. The major operating activities of securities segment are securities brokerage, financing, ancillary business of futures trading and providing clients a platform for securities investment. The trust segment mainly provides customers relevant financial services, including securities under writing, custodian bank service, new type trust business and specific trust funds investing in domestic or foreign securities. Insurance agency segment primarily provides life and property insurance products to clients. Other segments include all the business of subsidiaries, which main operations are leasing, financing, consulting, and venture capital. The profit or loss of the operating segments of the Bank and subsidiaries is measured by income from continuing operation before tax. The reported amount is consistent with the financial statements which were provided to the chief operating decision maker in order to use it as the base of resource allocation and performance measurement.

(b) Segment information

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Securities, Trust,
For the year ended Insurance agent and Adjustment and
December 31, 2022 Banking Segment Others Elimination Total
Net interest revenue $ 19,919,668 308,305 - 20,227,973
Net revenue other than interest 5,935,920 2,772,506 (407,276 ) 8,301,150
Net revenue 25,855,588 3,080,811 (407,276 ) 28,529,123
Bad debt expense, commitment (2,406,886 ) 20,824 - (2,386,062 )
and guarantee liability provision
Operating expenses (13,414,504 ) (775,758 ) 86,993 (14,103,269 )
Income from continuing $ 10,034,198 2,325,877 (320,283 ) 12,039,792
operation before tax
Total assets $ 2,058,452,888 17,970,922 (3,937,685 ) 2,072,486,125
Total liabilities $ 1,957,766,486 11,052,610 (440,229 ) 1,968,378,867
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Ⅵ

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Securities, Trust,
For the year ended Insurance agent and Adjustment and
December 31, 2021 Banking Segment Others Elimination Total
Net interest revenue $ 17,499,571 306,177 28 17,805,776
Net revenue other than interest 4,960,238 1,440,785 (100,775 ) 6,300,248
Net revenue 22,459,809 1,746,962 (100,747 ) 24,106,024
-
Bad debt expense, commitment (5,160,985 ) (26,518 ) (5,187,503 )
and guarantee liability provision
Operating expenses (12,479,903 ) (637,647 ) 1,075 (13,116,475 )
Income from continuing $ 4,818,921 1,082,797 (99,672 ) 5,802,046
operation before tax
Total assets $ 2,005,406,016 19,351,477 (3,504,421 ) 2,021,253,072
Total liabilities $ 1,906,967,800 13,012,694 (387,394 ) 1,919,593,100
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(c) Geographic information:

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

Net income before tax:

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For the years ended December 31
Area 2022 2021
Taiwan $ 10,788,450 4,918,965
USA 630,934 255,588
Hong Kong 255,099 (38,884 )
Australia 372,368 437,156
China (80,112 ) 231,546
Cambodia 29,282 8,935
Japan 43,771 (11,260 )
Total $ 12,039,792 5,802,046
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Non-current assets:

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Area December 31, 2022 December 31, 2021
Taiwan $ 31,472,080 25,970,907
USA 152,549 41,374
Hong Kong 60,067 69,524
Australia 58,225 66,936
China 72,102 85,587
Cambodia 36,970 32,011
Japan 22,597 26,181
Total $ 31,874,590 26,292,520
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(d) Significant client information:

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

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7. Independent Auditors' Report for 2022 Individual Financial Statements

Independent Auditors' Report

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

Opinion

sheets as of December 31, 2022 and 2021, 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.

Bank as of December 31, 2022 and 2021, and its consolidated financial performance and its consolidated 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 International Financial Reporting Standards (" IFRSs" ), International Accounting Standards (" IASs" ), Interpretations developed by the International Financial Reporting Interpretations Committee ("IFRIC") or the former Standing Interpretations Committee ("SIC") endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

of Financial Statements by Certified Public Accountants, Jin-Kuan-Yin-Zi No.1082731571 and the auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Bank and subsidiaries 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

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.

1. 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.

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:

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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.

2. Fair value assessment of financial investments

Please refer to Note 4 (e) "Financial Instruments" for related accounting policy, Note 5 (c) for accounting estimates, and Note 6 (ao) "Financial Instruments" for details of loans impairment, respectively.

Description of key audit matter:

The evaluation of several financial instruments of the Bank is measured using the valuation models, which involved the exercise of significant professional judgments and estimations. Therefore, the assessment on the financial instruments has been identified as a key audit matter in our audit.

How the matter was addressed in our audit:

Our principal audit procedures included: inspected the internal control procedures for fair value measurement performed by management, selected samples to evaluate whether the quoted prices in active markets for financial assets are appropriate, inspected the reasonableness of valuation techniques and to test the key parameters of financial assets without active market prices, wherein valuation models are used to ensure that the applied valuation techniques are in accordance with IFRS 13 "Fair Value Measurement" and verified whether the presentation and disclosure of financial instruments are in accordance with the International Financial Reporting Standards

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.

Auditors' Responsibilities for the Audit of the Financial Statements

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 auditor's 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 Standards on Auditing of 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 the Standards on Auditing of the Republic of China, we exercise professional judgment and 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.

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Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

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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 this financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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 audit resulting in this independent auditors' report are LEE, FENG HUI and CHUNG, TAN TAN.

KPMG

Taipei, Taiwan (Republic of China)

February 22, 2023

Notes to Readers

The accompanying financial statements are intended only to present the statement of financial position, financial performance and its 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 auditors’ report and financial statements, the Chinese version shall prevail.

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8. 2022 Individual Financial Statements and Accompanying Notes

(English Translation of Financial Statements and Report Originally Issued in Chinese)

TAIWAN BUSINESS BANK LTD.

Balance Sheets

December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

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December 31, 2022 December 31, 2021
Assets Amount ％ Amount ％
11000 Cash and cash equivalents (Notes 6(a) and 7) $ 48,879,847 2 39,189,153 2
11500 Due from the central bank and call loans to banks 148,557,154 7 158,109,903 8
(Notes 6(b) and 7)
12000 Financial assets at fair value through profit or 32,536,757 2 39,658,224 2
loss (Note 6(c))
12100 Financial assets at fair value through other 159,970,603 8 157,498,525 8
comprehensive income (Notes 6(g) and (q))
12200 Investment in debt instruments at amortized cost 236,774,247 11 279,035,906 14
(Note 6(h))
12500 Securities purchased under resell agreements 797,893 - 7,831,274 -
(Note 6(d))
13000 Receivables (Note 6(e)) 6,469,268 - 5,609,809 -
13200 Current tax assets 348,724 - 347,649 -
13500 Discounts and loans, net (Notes 6(f) and 7) 1,400,112,365 68 1,302,388,363 65
15000 Investments measured by equity method (Note 3,497,456 - 3,117,027 -
6(i))
15500 Other financial assets (Note 6(j)) 10,315 - 28,942 -
18500 Property and equipment, net (Note 6(k)) 14,118,286 1 14,529,762 1
18600 Right-of-use assets, net (Note 6(l)) 1,189,528 - 1,145,071 -
19000 Intangible assets, net 756,703 - 553,784 -
19300 Deferred tax assets (Note 6(z)) 1,752,566 - 1,923,597 -
19500 Other assets, net (Note 6(m)) 15,763,696 1 10,011,973 -
Total assets $ 2,071,535,408 100 2,020,978,962 100
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December 31, 2022 December 31, 2021
Liabilities and Equity Amount % Amount %
Liabilities
21000 Deposits from the Central Bank and banks $ 194,966,177 9 102,540,315 5
(Notes 6(n) and 7)
21500 Due to the Central Bank and banks (Note 6(o)) - - 49,713,800 3
22000 Financial liabilities at fair value through profit or 9,925,525 - 8,436,037 -
loss (Notes 6(p) and (t))
22500 Notes and bonds issued under repurchase 2,462,991 1 2,060,693 -
agreement (Note 6(q))
23000 Payables (Note 6(r)) 21,441,496 1 22,727,994 1
23200 Current tax liabilities 1,086,481 - 59,567 -
23500 Deposits and remittances (Notes 6(s) and 7) 1,673,936,069 81 1,669,039,989 83
24000 Bank notes payable (Note 6(t)) 52,250,000 3 52,250,000 3
25500 Other financial liabilities (Note 6(u)) 2,910,581 - 4,365,294 -
25600 Provisions (Note 6(v)) 2,676,102 - 3,420,210 -
26000 Lease liabilities (Note 6(w)) 1,216,510 - 1,145,072 -
29300 Deferred tax liabilities (Note 6(z)) 879,056 - 886,290 -
29500 Other liabilities (Note 6(x)) 3,677,162 - 2,673,729 -
Total liabilities 1,967,428,150 95 1,919,318,990 95
Equity:
31101 Common stock (Note 6(y)) 80,296,934 4 77,431,952 4
31500 Capital surplus (Note 6(y)) 815,900 - 815,900 -
Retained earnings:
32001 Legal reserve (Note 6(y)) 17,239,615 1 15,693,140 1
32003 Special reserve (Note 6(y)) 185,128 - 185,128 -
32005 Unappropriated retained earnings (Note 9,339,356 - 5,227,632 -
6(y))
32500 Other equity interest (Note 6(y)) (3,769,675 ) - 2,306,220 -
Total equity 104,107,258 5 101,659,972 5
Total liabilities and equity $ 2,071,535,408 100 2,020,978,962 100
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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, 2022 and 2021

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

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For the year ended December 31,
Percent
2022 2021 Change
%
Amount ％ Amount ％
41000 Interest income (Notes 6(ad) and 7) $ 33,136,301 117 24,037,857 100 38
51000 Less:Interest expenses (Notes 6(ad) and 7) (13,046,962 ) (46 ) (6,357,367 ) (26 ) 105
Net interest revenue 20,089,339 71 17,680,490 74 14
Net revenue other than interest
49100 Net service fee revenue (losses) (Notes 6(ae) and 13) 3,934,425 14 3,317,550 14 19
49200 Gain on financial assets or liabilities measured at fair 1,244,071 4 562,196 2 121
value through profit or loss (Note 6(af))
49310 Realized gain on financial assets at fair value through 1,462,569 5 1,187,700 5 23
other comprehensive income (Note 6(ag))
49450 Gain arising from derecognition of financial assets 1,981 - 103,741 1 (98 )
measured at amortized cost (Note 6(h))
49600 Foreign exchange gain 925,170 3 310,634 1 198
49700 (Impairment loss on assets) reversal of impairment loss 11,689 - (33,260 ) - (135 )
on assets (Note 6(ah))
49750 Share of profit of associates and joint ventures accounted 320,283 1 99,659 - 221
for using equity method (Notes 6(h) and 6(ai))
49800 Net other revenue other than interest income (loss) (Note 63,071 - 168,888 1 (63 )
6(aj))
49831 Net securities brokering revenue 326,877 2 561,639 2 (42 )
Net revenue 28,379,475 100 23,959,237 100 18
58200 Bad debts expense, commitment and guarantee liability (2,401,068 ) (8 ) (5,171,832 ) (22 ) (54 )
provision (Note 6(ak))
Operating expenses
58500 Employee benefits expenses (Note 6(al)) (8,783,271 ) (31 ) (8,350,140 ) (35 ) 5
59000 Depreciation and amortization expenses (Note 6(am)) (1,220,945 ) (4 ) (1,032,950 ) (4 ) 18
59500 Other general and administrative expenses (Note 6(an)) (3,960,406 ) (14 ) (3,628,017 ) (15 ) 9
Total operating expense (13,964,622 ) (49 ) (13,011,107 ) (54 ) 7
61001 Income from continuing operation before tax 12,013,785 43 5,776,298 24 108
61003 Less: Income tax expenses (Note 6(z)) 1,891,933 7 676,186 3 180
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For the year ended December 31,
Percent
2022 2021 Change
%
Amount ％ Amount ％
Net income $ 10,121,852 36 5,100,112 21 98
65000 Other comprehensive income:
65200 Components of other comprehensive income that will
not be reclassified to profit or loss
65201 Remeasurements of defined benefit plans (Note 557,098 2 24,512 - 2,173
6(aa))
65204 Revaluation (losses) gains on investments in equity (2,342,393 ) (8 ) 987,549 4 (337 )
instruments measured at fair value through other
comprehensive income
65207 Share of other comprehensive income of associates (4,729 ) - 4,546 - (204 )
and joint ventures accounted for using equity
method, components of other comprehensive
income that will not be reclassified to profit or loss
65220 Less: Income tax related to components of other 111,419 - 4,902 - 2,173
comprehensive income that will not be reclassified
to profit or loss (Note 6(z))
Components of other comprehensive income that (1,901,443 ) (6 ) 1,011,705 4 (288 )
will not be reclassified to profit or loss
65300 Components of other comprehensive income that will be
reclassified to profit or loss
65301 Exchange difference on translation 1,497,223 5 (416,460 ) (2 ) 460
65308 Losses from investments in debt instruments (6,238,235 ) (22 ) (2,046,533 ) (9 ) (205 )
measured at fair value through other
comprehensive income
65307 Share of other comprehensive income of associates 11,653 - 2,674 - 336
and joint ventures accounted for using equity
method, components of other comprehensive
income that will not be reclassified to profit or loss
65320 Less: Income tax related to components of other 269,444 1 (98,583 ) - (373 )
comprehensive income that will be reclassified to
profit or loss (Note 6(z))
Components of other comprehensive income that (4,998,803 ) (18 ) (2,361,736 ) (11 ) 112
will be reclassified to profit or loss
65000 Other comprehensive income (6,900,246 ) (24 ) (1,350,031 ) (7 ) (411 )
Total comprehensive income $ 3,221,606 12 3,750,081 14 (14 )
Earnings per share (in NT dollar) (Note 6(ab))
Basic earnings per share (in NT dollar) $ 1.26 0.64
Diluted earnings per share (in NT dollar) $ 1.26 0.63
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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, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

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Share Capital Retained earnings Other equity interest
Unrealized
gains (losses)
from financial
Exchange assets
differences on measured at fair
translation value
Unappropriated of foreign through other
retained financial comprehensive
Common stock Capital surplus Legal reserve Special reserve earnings Total statements income Total
Balance at January 1, 2021 $ 74,885,834 815,900 14,332,452 185,128 4,728,382 19,245,962 (1,476,771 ) 5,187,824 98,658,749
Net income for the year ended - - - - 5,100,112 5,100,112 - - 5,100,112
December 31, 2021
Other comprehensive income for - - - - 19,610 19,610 (330,494 ) (1,039,147 ) (1,350,031 )
the year ended December 31,
2021
Total comprehensive income for the - - - - 5,119,722 5,119,722 (330,494 ) (1,039,147 ) 3,750,081
year ended December 31, 2021
Appropriation and distribution of
retained earnings:
Legal reserve appropriated - - 1,360,688 - (1,360,688 ) - - - -
- - - - - -
Cash dividends of ordinary share (748,858 ) (748,858 ) (748,858 )
Stock dividends of ordinary share 2,546,118 - - - (2,546,118 ) (2,546,118 ) - - -
Disposal of investment in equity - - - - 35,192 35,192 - (35,192 ) -
instruments designated at fair
value through other comprehensive
income
Balance at December 31, 2021 77,431,952 815,900 15,693,140 185,128 5,227,632 21,105,900 (1,807,265 ) 4,113,485 101,659,972
Net income for the year ended - - - - 10,121,852 10,121,852 - - 10,121,852
December 31, 2022
Other comprehensive income for - - - - 445,679 445,679 1,209,432 (8,555,357 ) (6,900,246 )
the year ended December 31,
2022
Total comprehensive income for the - - - - 10,567,531 10,567,531 1,209,432 (8,555,357 ) 3,221,606
year ended December 31, 2022
Appropriation and distribution of
retained earnings:
Legal reserve appropriated - - 1,546,475 - (1,546,475 ) - - - -
- - - - - -
Cash dividends of ordinary share (774,320 ) (774,320 ) (774,320 )
Stock dividends of ordinary share 2,864,982 - - - (2,864,982 ) (2,864,982 ) - - -
Disposal of investments in equity - - - - (1,270,030 ) (1,270,030 ) - 1,270,030 -
instruments designated at fair
value through other comprehensive
income
Balance at December 31, 2022 $ 80,296,934 815,900 17,239,615 185,128 9,339,356 26,764,099 (597,833 ) (3,171,842 ) 104,107,258
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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, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

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For the years ended December 31,
2022 2021
Cash flows from operating activities:
Net income before tax $ 12,013,785 5,776,298
Adjustments:
Income and expenses items:
Depreciation expense 972,173 862,209
Amortization expense 248,772 170,741
Provision for bad debt expense 2,394,782 5,113,134
Net loss on financial assets or liabilities at fair value through profit or 370,320 388,853
loss
Interest expenses 13,046,962 6,357,367
Net gain arising from derecognition of financial assets measured at (1,981 ) (103,741 )
amortised cost
Interest income (33,136,301 ) (24,037,857 )
Dividend income 7,161 -
Net change in provisions for guarantee liabilities (21,496 ) 39,802
Net change in other provisions 29,220 92,077
Share of profit of subsidiaries, associates and joint ventures accounted (320,283 ) (99,659 )
for using equity method
Loss on disposal of property and equipment 944 852
Impairment loss on financial assets (reversal of impairment loss) (11,689 ) 33,260
Other items (3,817 ) (1,369 )
Total adjustments to reconcile profit (loss) (16,425,233 ) (11,184,331 )
Changes in operating assets and liabilities:
Changes in operating assets:
Decrease (increase) in due from the central bank and call loans to 9,550,686 (44,028,431 )
banks
Decrease (increase) in financial assets at fair value through profit or 7,315,066 (25,338,360 )
loss
Decrease (increase) in securities purchased under resell agreements 7,033,381 (1,784,087 )
Decrease in receivables 479,288 36,367,071
Increase in discounts and loans (100,231,972 ) (97,792,108 )
Decrease (income) in other financial assets 25,244 (5,770 )
Increase in other assets (2,091,463 ) (3,568,328 )
Total changes in operating assets (77,919,770 ) (136,150,013 )
Changes in operating liabilities:
Increase (decrease) in deposits from the central bank and banks 92,425,862 (15,660,724 )
Increase in financial liabilities at fair value through profit or loss 925,569 91,891
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For the years ended December 31,
2022 2021
Increase in notes and bonds issued under repurchase agreement $ 402,298 4,702
Decrease in payable (3,679,471 ) (25,322,034 )
Increase in deposits and remittances 4,896,080 250,336,507
Decrease in other financial liabilities (1,454,713 ) (1,127,072 )
Decrease in provisions for employee benefits (196,272 ) (80,182 )
Total changes in operating liabilities 93,319,353 208,243,088
Total changes in operating assets and liabilities 15,399,583 72,093,075
Total adjustments (1,025,650 ) 60,908,744
Cash inflow generated from operations 10,988,135 66,685,042
Interest received 31,841,928 23,790,232
Interest paid (11,071,317 ) (6,241,095 )
Income taxes paid (649,535 ) (506,777 )
Net Cash flows from operating activities 31,109,211 83,727,402
Cash flows from investing activities:
Acquisition of financial assets at fair value through other comprehensive (11,055,765 ) (41,225,923 )
income
Acquisition of financial assets at amortised cost (188,506,846 ) (130,873,423 )
Proceeds from repayments of financial assets at amortised cost 230,783,092 79,933,076
Acquisition of property and equipment (317,194 ) (532,051 )
Proceeds from disposal of property and equipment 54 132
-
Increase in refundable deposits (2,223,467 )
Decrease in refundable deposits - 1,358,420
Acquisition of intangible assets (288,032 ) (309,304 )
Net cash flows (used in) from investing activities 28,391,842 (91,649,073 )
Cash flows from financing activities:
Increase in due to the central bank and banks - 21,263,800
Decrease in due to the central bank and banks (49,713,800 ) -
Proceeds from issuing bank notes payable - 8,000,000
-
Repayments of bank notes payable (9,000,000 )
Increase in guarantee deposits received 2,081,139 -
-
Decrease in guarantee deposits received (347,219 )
Payment of lease liabilities (413,133 ) (411,827 )
Increase in other liabilities (1,077,706 ) (1,506,959 )
Cash dividends paid (774,320 ) (748,858 )
Acquisition of ownership interests in subsidiaries - (450,000 )
Net cash flows (used in) from financing activities (49,897,820 ) 16,798,937
Effect of exchange rate changes on cash and cash equivalents 87,461 (8,065 )
Net increase in cash and cash equivalents 9,690,694 8,869,201
Cash and cash equivalents at beginning of period 39,189,153 30,319,952
Cash and cash equivalents at end of period $ 48,879,847 39,189,153
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(English Translation of Financial Statements Originally Issued in Chinese)

TAIWAN BUSINESS BANK LTD. Notes to the Financial Statements

For the years ended December 31, 2022 and 2021

(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 mediumsize 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.

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, 2022 and 2021, the Bank has 5,530 and 5,436 employees, respectively.

These financial statements were authorized for issuance by the board of directors on February 22, 2023.

(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 Bank has initially adopted the following new amendments, which do not have a significant impact on its financial statements, from January 1, 2022:

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"

(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, 2023, would not have a significant impact on its financial statements:

Amendments to IAS 1 "Disclosure of Accounting Policies"

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Amendments to IAS 8 "Definition of Accounting Estimates"
Amendments to IAS 12 "Deferred Tax related to Assets and Liabilities arising from a Single Transaction"

(c) The impact of IFRS issued by IASB but not yet endorsed by the FSC

The Bank does not expect the following 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”
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 1 “Non-current Liabilities with Covenants”
Amendments to IFRS 17 “Initial Application of IFRS 17 and IFRS 9 – Comparative Information “
IFRS16 “Requirements for Sale and Leaseback Transactions”

(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 (hereinafter referred to as the Regulation) and the Regulations Goverming the Preparation of Financial Report by Securities Firms (hereinafter referred to as the Regulation).

(b) Basis of preparation

(i) 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).
(ii) 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.

(iii) Functional and presentation currency

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.

(c) Foreign currencies

(i) Foreign currency transactions

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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.

(ii) Foreign operations

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.

(d) Cash and cash equivalents

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(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.

(i) 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.

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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.

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-by-investment basis.

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.

4) Discount and loans, net

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 recognizes 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.

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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:

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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.

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

When determining whether the credit risk of financial asset has increased significantly since initial recognition and when estimating ECL, the Bank 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 expects to receive. ECLs are discounted at the effective interest rate of the financial asset.

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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 credit-impaired 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.

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.

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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.

(ii) 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.

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.

(iii) Reclassification of financial instruments

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.

(iv) 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.

(v) Offsetting of financial assets and liabilities

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Financial assets and financial liabilities 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.

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(vi) Interest rate benchmark reform

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 change 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.

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

(g) Property, plant and equipment

(i) 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.

(ii) 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.

(iii) Depreciation

Land is not depreciated.

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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

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 thefinancial 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) Leases

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.

(i) As a leasee

The Bank recognizes a right-of-use asset and a lease liability at the lease commencement date. The rightof-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 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.

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 estimates 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

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－ there is a change of its assessment on whether it will exercise an extension or termination option; or
－ there are any lease modifications

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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-of-use asset to reflect the partial or full termination of the lease, and recognizes 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 short-term 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.

(ii) As a leasor

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.

(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.

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(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 benefits

(i) Short term employee benefit

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

(ii) 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 provides 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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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.

(iii) 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.

(iv) 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.

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(n) Income taxes

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.

(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 receives cash, the revenue is recognized.

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(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

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

estimation uncertainty:

(a) Impairment losses on loans

The impairment of loans of the Bank were 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

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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 assumptions applied to determine net pension cost (revenue) include the discount rate. The Bank determines 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.

(c) Fair value of financial instruments

(a) Cash and cash equivalents

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December 31, 2022 December 31, 2021
Petty cash and revolving funds $ 14,042,490 10,892,224
Foreign currencies on hand 988,995 813,650
Checks for clearing 11,029,785 12,197,958
Due from other banks 22,818,577 15,285,321
Total $ 48,879,847 39,189,153
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(b) Due from the Central Bank and call loans to banks

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December 31, 2022 December 31, 2021
Due from the Central Bank $ 85,207,475 72,157,455
Deposits transferred to Central Bank 39,664 52,275
Call loans to banks 63,310,015 85,900,173
Trust fund indemnity reserve deposited 110,000 90,000
Securities serving as trust fund indemnity reserve deposited (110,000 ) (90,000 )
Total $ 148,557,154 158,109,903
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As of December 31, 2022 and 2021, in accordance with the Banking Law and the Central Bank Law, the required reserve deposited by the Bank with the Central Bank amounted to $84,763,295 and $71,836,985 of which $47,637,794 and $44,525,965 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, 2022 and 2021 are guaranteed by the deposit reserve of the Central Bank as required, $0 and $39,000,000 respectively, please refer to 6(o) for the information of due to the Central Bank and banks.

As of December 31, 2022 and 2021, the Bank's overseas branches, in compliance with the Central Bank's reserve requirement set by local authorities, deposited $134,219 and $153,662 and in reserve, of which $52,137 and $64,758 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, 2022 and 2021, the required reserve with the Central Bank amounted to $309,961 and $166,808 respectively, and its use was unrestricted.

As of December 31, 2022 and 2021, deposits transferred to the Central Bank collected from the armed forces, prisons, and other treasury deposits were restricted.

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

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December 31, 2022 December 31, 2021
Financial assets designated at fair value through profit or loss:
Derivative instruments not used for hedging:
Foreign exchange forward contracts $ 27,271 18,120
Currency swap contracts 1,088,827 495,831
Foreign currency options-buy 17,813 3,714
Stock index futures 26,860 28,745
Interest rate swap 5,896 6,226
Non-derivative financial assets
Commercial paper 30,907,810 37,015,444
Listed stocks 115,114 68,106
Beneficiary certificates 347,166 1,665,898
Convertible corporate bonds - 79,230
Financial debentures - 276,910
Total $ 32,536,757 39,658,224
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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)

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(d) Securities purchased under resell agreements

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December 31, 2022 December 31, 2021
Securities under resell agreements $ 797,893 7,831,274
Face amount 800,000 7,834,600
Resell period 112.01.05 111.01.03~111.01.19
Range of resell interest rate 1.24% 0.33%~0.34%
Resell price 798,576 7,832,994
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(e) Receivables, net

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December 31, 2022 December 31, 2021
Interest receivable $ 4,091,548 2,753,874
Acceptances recievables 791,284 1,033,229
Accrued income 140,805 138,537
Accounts receivable 376 9,094
Spot exchange receivable-foreign currencies 9,096 9,546
Refinacing guaranty deposits 1,505 33
Guaranteed proceeds receivable from refinacing 1,158 36
Credit cards accounts receivable 1,098,733 1,033,355
Receivable price of securities purchased for customers 179,159 177,964
Settlement price - 141,261
Other receivables 225,605 383,953
Sub-total 6,539,269 5,680,882
Less: Allowance for bad debts (70,001 ) (71,073 )
Total $ 6,469,268 5,609,809
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The outstanding contract amount of financial assets that have been written off and still have recourse as of December 31, 2022 and 2021 were $85,446,014 and $85,326,562, respectively.

The change in allowance for bad debts was as follows:

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For the years ended December 31,
2022 2021
Beginning balance $ 71,073 84,162
Reversal (1,443 ) (12,953 )
Foreign exchange 371 (136 )
Ending balance $ 70,001 71,073
----- End of picture text -----

(f) Discounts and loans, net

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The change in allowance for bad debts was as follows:

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

242

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December 31, 2022 December 31, 2021
Investment in debt instruments measured at fair value through
other comprehensive income:
Government bonds $ 48,754,854 46,011,743
Corporate bonds 60,445,796 57,107,224
Financial debentures 32,639,581 32,875,263
Sub-total 141,840,231 135,994,230
Investment in equity instruments measured at fair value through
other comprehensive income:
Listed stocks 12,676,936 16,414,356
Unlisted stocks 5,307,654 4,940,042
Real Estate Investment Trust 145,782 149,897
Sub-total 18,130,372 21,504,295
Total $ 159,970,603 157,498,525
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(i) 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.

(ii) 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 $1,457,593 and $884,796, respectively as dividend revenue for the years ended December 31, 2022 and 2021. In which, the disposal equity instruments were recognized $688,220 and $44,127 as dividend revenue for the years ended December 31, 2022 and 2021.

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 $11,601,994 and $801,669. And (losses) gains on disposal are $(1,270,030) and $35,192 for the years ended December 31, 2022 and 2021. Therefore, accumulated gains on disposal were transferred from other equity to retained earnings.

(iii) Please refer to Note 6(ap) for the credit risk (including the impairment in debt instruments) and market risk information.

Ⅵ

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(iv) The Bank assessed the impairment of financial assets measured at fair value through other comprehensive income as of December 31, 2022 and 2021. The changes in allowance for credit losses attribute to the financial assets were as follows:

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(h) Investment in debt instruments at amortized cost

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December 31, 2022 December 31, 2021
Certificates of deposit with the Central Bank $ 195,595,000 231,395,000
Government bonds 24,370,304 24,673,670
Corporate bonds 7,481,434 8,689,856
Financial debentures 9,337,858 14,306,782
Negotiable certificates of deposit 64,523 58,076
Sub-total 236,849,119 279,123,384
Less:Accumulated impairment (74,872 ) (87,478 )
Total $ 236,774,247 279,035,906
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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.

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

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December 31, 2022 December 31, 2021
Reserve for provisional seizure by the court, international $ 854,500 901,900
card payment reserve, trust claim reserve and operating
guaranty funds
Central Bank financing guarantee - 11,300,000
Overseas branches required reserve of overdraft guarantee 64,523 58,076
Daylight overdraft guarantee 2,000,000 2,000,000
Guarantee for borrowing US dollars 29,000,000 23,000,000
Guarantee for borrowing JPY dollars 200,000 200,000
Sponsorship of Treasury Affairs 20,000,000 16,200,000
Total $ 52,119,023 53,659,976
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(iii) The Bank assessed the impairment of investment in debt instruments at amortized cost as of December 31, 2022 and 2021. The changes in allowance for credit losses attribute to these financial assets were as follows:

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

	For the year ended December 31, 2022	For the year ended December 31, 2022	For the year ended December 31, 2022
	The carrying amount at the date of derecognition	Gain (Loss) on disposal
Corporate bonds Financial debentures Total	$ 81,364 305,979 $ 387,343		710 1,271 1,981

	For the year ended December 31, 2021
	The carrying amount at the date of derecognition	Gain (Loss) on disposal
Government bonds Corporate bonds Financial debentures Total	$ 791,559 248,776 549,111 $ 1,589,446		78,951 2,048 22,742 103,741

For the years ended December 31, 2022 and 2021, 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) Investments accounted for using equity method, net

244

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December 31, 2022 December 31, 2021
Subsidiary Amount % Amount %
Investment measured by equity method
TBB International Leasing Co., Ltd. $ 1,516,406 100.00 1,463,080 100.00
－ initial investment $400,000 thousand
TBB (Cambodia) Microfinance Institution Plc. 624,591 100.00 537,297 100.00
－ initial investment USD $10,000 thousand
TBB Venture Capital Co., Ltd. 1,258,512 100.00 1,068,059 100.00
－ initial investment $300,000 thousand
TBB Consulting Co., Ltd. 97,947 100.00 48,591 100.00
－ initial investment $50,000 thousand
Total $ 3,497,456 3,117,027
----- End of picture text -----

The Bank's share of profit of associates and joint ventures accounted for using equity method for the years ended December 31, 2022 and 2021 are $320,283 and $99,659 respectively.

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 Bank has prepared consolidated financial statements for the years ended December 31, 2022 and 2021.

(j) Other financial assets, net

	December 31, 2022	December 31, 2021
Overdue receivable Less: Allowance for bad debts, overdue receivable Total	$ 58,786	80,334 (51,392 ) 28,942
	(48,471 )
	$ 10,315

Ⅵ

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The change in allowance for bad debts was as follows:

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(k) Property and equipment, net

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Revaluation Accumulated Accumulated
December 31, 2022 Cost increment depreciation impairment Total
Land $ 6,743,535 2,986,161 - 14,031 9,715,665
Buildings 8,116,339 31,184 4,790,018 14,754 3,342,751
Machinery and equipment 2,692,413 - 2,008,693 - 683,720
Transportation equipment 272,058 - 230,153 - 41,905
Miscellaneous equipment 653,883 - 554,159 - 99,724
Leasehold improvements 194,023 - 110,184 - 83,839
Construction in progress 20,225 - - - 20,225
Prepayment for equipment 130,457 - - - 130,457
Total $ 18,822,933 3,017,345 7,693,207 28,785 14,118,286
Revaluation Accumulated Accumulated
December 31, 2021 Cost in-crement depreciation impairment Total
Land $ 6,743,535 2,986,161 - 14,031 9,715,665
Buildings 8,017,954 31,184 4,592,658 14,754 3,441,726
Machinery and equipment 2,389,844 - 1,862,830 - 527,014
Transportation equipment 272,245 - 224,946 - 47,299
Miscellaneous equipment 643,410 - 536,589 - 106,821
Leasehold improvements 152,399 - 75,680 - 76,719
Construction in progress 40,547 - - - 40,547
Prepayment for equipment 573,971 - - - 573,971
Total $ 18,833,905 3,017,345 7,292,703 28,785 14,529,762
Change of cost
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January 1, Foreign December 31,
2022 Increase Decrease Exchange 2022
Land $ 9,729,696 - - - 9,729,696
Buildings 8,049,138 98,385 - - 8,147,523
Machinery and equipment 2,389,844 448,629 153,867 7,807 2,692,413
Transportation equipment 272,245 7,577 8,543 779 272,058
Miscellaneous equipment 643,410 22,072 14,859 3,260 653,883
Leasehold improvements 152,399 42,280 2,572 1,916 194,023
Construction in progress 40,547 32,248 52,570 - 20,225
Prepayment for equipment 573,971 49,995 493,808 299 130,457
Total $ 21,851,250 701,186 726,219 14,061 21,840,278
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January 1, Foreign December 31,
2021 Increase Decrease Exchange 2021
Land $ 9,729,696 - - - 9,729,696
Buildings 7,961,424 87,714 - - 8,049,138
Machinery and equipment 2,270,278 229,260 106,258 (3,436 ) 2,389,844
Transportation equipment 275,177 18,695 21,548 (79 ) 272,245
Miscellaneous equipment 605,359 63,178 24,177 (950 ) 643,410
Leasehold improvements 158,863 17,086 19,788 (3,762 ) 152,399
Construction in progress 12,246 62,045 33,744 - 40,547
Prepayment for equipment 514,215 158,678 98,853 (69 ) 573,971
Total $ 21,527,258 636,656 304,368 (8,296 ) 21,851,250
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Change of depreciation

246

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Foreign December 31,
January 1, 2022 Increase Decrease Exchange 2022
Buildings $ 4,592,658 197,360 - - 4,790,018
Machinery and equipment 1,862,830 292,951 153,101 6,013 2,008,693
Transportation equipment 224,946 13,171 8,480 516 230,153
Miscellaneous equipment 536,589 30,036 14,690 2,224 554,159
Leasehold improvements 75,680 36,185 2,572 891 110,184
Total $ 7,292,703 569,703 178,843 9,644 7,693,207
Foreign December 31,
January 1, 2021 Increase Decrease Exchange 2021
Buildings $ 4,404,411 188,247 - - 4,592,658
Machinery and equipment 1,769,070 200,922 105,609 (1,553 ) 1,862,830
Transportation equipment 232,756 13,833 21,394 (249 ) 224,946
Miscellaneous equipment 518,100 43,890 23,996 (1,405 ) 536,589
Leasehold improvements 62,114 31,195 19,788 2,159 75,680
Total $ 6,986,451 478,087 170,787 (1,048 ) 7,292,703
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Accumulated impairment

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

Foreign December 31,
January 1, 2022 Increase Decrease Exchange 2022
Land $ 14,031 - - - 14,031
Buildings 14,754 - - - 14,754
Total $ 28,785 - - - 28,785
Foreign December 31,
January 1, 2021 Increase Decrease Exchange 2021
Land $ 14,031 - - - 14,031
Buildings 14,754 - - - 14,754
Total $ 28,785 - - - 28,785
----- End of picture text -----

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.

Ⅵ

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(l) Right-of-use assets

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:

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Accumulated Accumulated
December 31, 2022 Cost depreciation impairment Total
Buildings $ 1,832,547 701,020 - 1,131,527
Machinery and equipment 26,497 26,408 - 89
Transportation equipment 72,592 21,877 - 50,715
Miscellaneous equipment 12,403 5,206 - 7,197
Total $ 1,944,039 754,511 - 1,189,528
Accumulated Accumulated
December 31, 2021 Cost depreciation impairment Total
Buildings $ 1,780,314 671,607 - 1,108,707
Machinery and equipment 27,842 27,272 - 570
Transportation equipment 71,244 42,434 - 28,810
Miscellaneous equipment 10,337 3,353 - 6,984
Total $ 1,889,737 744,666 - 1,145,071
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Change of cost

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

January 1, Foreign December 31,
2022 Increase Decrease Exchange 2022
Buildings $ 1,780,314 584,148 550,273 18,358 1,832,547
Machinery and equipment 27,842 - 1,345 - 26,497
Transportation equipment 71,244 50,368 49,099 79 72,592
Miscellaneous equipment 10,337 2,996 930 - 12,403
Total $ 1,889,737 637,512 601,647 18,437 1,944,039
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----- Start of picture text -----

January 1, Foreign December 31,
2021 Increase Decrease Exchange 2021
Buildings $ 1,522,533 535,271 271,377 (6,113 ) 1,780,314
Machinery and equipment 43,406 3 15,567 - 27,842
Transportation equipment 64,316 19,503 12,566 (9 ) 71,244
Miscellaneous equipment 7,603 4,960 2,226 - 10,337
Total $ 1,637,858 559,737 301,736 (6,122 ) 1,889,737
----- End of picture text -----

Change of depreciation

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

January 1, Foreign December 31,
2022 Increase Decrease Exchange 2022
Buildings $ 671,607 379,296 357,745 7,862 701,020
Machinery and equipment 27,272 481 1,345 - 26,408
Transportation equipment 42,434 21,372 41,952 23 21,877
Miscellaneous equipment 3,353 2,666 813 - 5,206
Total $ 744,666 403,815 401,855 7,885 754,511
----- End of picture text -----

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January 1, Foreign December 31,
2021 Increase Decrease Exchange 2021
Buildings $ 493,055 374,946 195,749 (645 ) 671,607
Machinery and equip-ment 40,895 1,944 15,567 - 27,272
Transportation equip-ment 34,141 20,122 11,829 - 42,434
Miscellaneous equip-ment 3,035 2,416 2,098 - 3,353
Total $ 571,126 399,428 225,243 (645 ) 744,666
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(m) Other assets, net

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

December 31, 2022 December 31, 2021
Office supplies $ 29,019 28,953
Prepayments 8,167,434 8,154,098
Operating guarantee deposits and settlement fund 31,753 31,450
Guarantee deposits paid 2,607,864 384,397
Deferred assets 128 175
Temporary payments and suspense accounts 4,690,927 -
Proceeds of settlement and margin trading 60,139 1,307,041
Other assets 176,432 105,859
Total $ 15,763,696 10,011,973
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(n) Deposits from the Central Bank and banks

248

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(o) Due to the Central Bank and banks

	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021
	Currency	Interest Rate	Maturity Date	Original Amount		NTD Amount
Central Bank Unused credit lines	TWD	0.1%	2022.6.30	49,713,800		$ 49,713,800 $ 586,200

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

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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, 2022 and 2021.

Ⅵ

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(q) Notes and bonds issued under repurchase agreement

	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022
Assets	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	$ 2,616,634	2,462,991	2,472,765	Prior to July 1, 2024
	December 31, 2021
Assets	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

(r) Payables

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

December 31, 2022 December 31, 2021
Accrued interest $ 4,428,933 2,469,585
Accounts payable 11,042,559 12,819,538
Acceptances 802,824 1,039,557
Accrued expenses 3,237,203 2,814,117
Collection payable 673,102 775,553
Deposits received from securities borrowers 116,196 115,541
Guaranteed price deposits received from securities borrowers 108,289 149,272
Spot exchange payable, foreign currencies 13,625 9,204
Other payables 834,692 2,209,159
Prices payable of securities sold for customers 137,155 309,498
Settlement payable 40,444 -
Others 6,474 16,970
Total $ 21,441,496 22,727,994
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(s) Deposits and remittances

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

December 31, 2022 December 31, 2021
Savings deposits $ 737,659,280 707,880,781
Time deposits 437,048,016 451,921,417
Demand deposits 465,508,480 475,541,845
Checking account deposits 33,292,182 33,266,719
Remittances 428,111 429,227
Total $ 1,673,936,069 1,669,039,989
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250

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(t) Bank notes payable

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Terms of Transactions Bond Issued
Amount
Maturity December 31, December 31,
Bonds Issue date date Interest Rate & repayment Type 2022 2021
2015-2A 08/31/2015 08/31/2023 The debentures bear an annual interest rate of 2.05%. Simple Unsecured $ 4,700,000 4,700,000
interest is accrued and paid annually. The principal will be repaid subordinated long-
in full at maturity. term financial
debentures
2015-2B 08/31/2015 08/31/2025 The debentures bear an annual interest rate of 2.10%. Simple 〞 300,000 300,000
interest is accrued and paid annually. The principal will be repaid
in full at maturity.
2016-2 12/20/2016 12/20/2023 The debentures bear an annual interest rate of 1.40%. Simple 〞 2,700,000 2,700,000
interest is accrued and paid annually. The principal will be repaid
in full at maturity.
2017-1A 03/28/2017 03/28/2024 The debentures bear an annual interest rate of 1.50%. Simple 〞 390,000 390,000
interest is accrued and paid annually. The principal will be repaid
in full at maturity.
2017-1B 03/28/2017 03/28/2025 The debentures bear an annual interest rate of 1.60%. Simple 〞 250,000 250,000
interest is accrued and paid annually. The principal will be repaid
in full at maturity.
2017-1C 03/28/2017 03/28/2027 The debentures bear an annual interest rate of 1.85%. Simple 〞 3,360,000 3,360,000
interest is accrued and paid annually. The principal will be repaid
in full at maturity.
2017-2 05/23/2017 05/03/2027 The debentures bear an annual interest rate of 1.85%. Simple 〞 1,300,000 1,300,000
interest is accrued and paid annually. The principal will be repaid
in full at maturity.
2018-2 08/20/2018 08/20/2028 The debentures bear an annual interest rate of 1.45%. Simple 〞 5,450,000 5,450,000
interest is accrued and paid annually. The principal will be repaid
in full at maturity.
2019-1A 03/21/2019 03/21/2026 The debentures bear an annual interest rate of 1.20%. Simple 〞 1,000,000 1,000,000
interest is accrued and paid annually. The principal will be repaid
in full at maturity.
2019-1B 03/21/2019 03/21/2029 The debentures bear an annual interest rate of 1.30%. Simple 〞 4,800,000 4,800,000
interest is accrued and paid annually. The principal will be repaid
in full at maturity.
2020-1 03/25/2020 03/25/2030 The debentures bear an annual interest rate of 0.8%. Simple 〞 10,000,000 10,000,000
interest is accrued and paid annually. The principal will be repaid
in full at maturity.
2020-2 08/13/2020 None The debentures bear an annual interest rate of 1.62%.Simple Perpetual non- 10,000,000 10,000,000
interest is accrued and paid annually. After calculating the early accumulated
redeemable bond is in line with the capital adequacy ratio under subordinated
the consent of the competent authority, the debentures are financial
redeemable per face value plus accrued interest at the interest debentures
payment date after five years and a month from the issue date .
2021-1 11/17/2021 None The debentures bear an annual interest rate of 1.60%.Simple 〞 8,000,000 8,000,000
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 .
$ 52,250,000 52,250,000
----- End of picture text -----

Ⅵ

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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:

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

Terms of Transactions Bond Issued
Amount
Maturity December 31, December 31,
Bonds Issue date date Interest Rate & repayment Type 2022 2021
2017-3 10/27/2017 10/27/2047 The zero-coupon debentures with call options can be executed Unsecured dollar- $ 3,687,000 3,318,600
on strike price after five years from the issued date. Without denominated senior
executing call options during the periods of debentures, the financial debentures
principal will be repaid in full at maturity.
2018-3 09/27/2018 09/27/2048 The zero-coupon debentures with call options can be executed 〞 5,530,500 4,977,900
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.
Valuation 150,095 (2,770 )
adjustment
$ 9,367,595 8,293,730
----- End of picture text -----

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

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(u) Other financial liabilities

		December 31, 2022		December 31, 2021
Cumulative earnings on appropriated loans fund		$ 2,910,581		4,365,294

(v) Provisions

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

For the years ended December 31,
2022 2021
Provision for guarantee liabilities $ 237,076 258,065
Provision for loan commitments 100,236 71,423
Indeterminate indemnity provisions 74,619 73,181
Provision for employee benefits 2,264,171 3,017,541
Total $ 2,676,102 3,420,210
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Change of provision

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

January 1, Foreign December
2022 Increase Decrease Use exchange 31, 2022
Provision for guarantee liabilities $ 258,065 - 21,496 - 507 237,076
Provision for loan commitments 71,423 27,782 - - 1,031 100,236
Indeterminate indemnity 73,181 1,438 - - - 74,619
provisions
Provision for employee benefits 3,017,541 172,726 875,196 50,900 - 2,264,171
Total $ 3,420,210 201,946 896,692 50,900 1,538 2,676,102
January 1, Foreign December
2021 Increase Decrease Use exchange 31, 2021
Provision for guarantee liabilities $ 218,351 39,802 - - (88 ) 258,065
Provision for loan commitments 52,831 18,896 - - (304 ) 71,423
Indeterminate indemnity - 73,181 - - - 73,181
provisions
Provision for employee benefits 3,122,235 277,974 327,408 55,260 - 3,017,541
Total $ 3,393,417 409,853 327,408 55,260 (392 ) 3,420,210
----- End of picture text -----

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:

252

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

December 31, 2022 December 31, 2021
Less than one year $ 381,387 331,216
More than one year $ 835,123 813,856
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The amounts recognized in profit or loss were as follows:

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

For the years ended December 31,
2022 2021
Interest on lease liabilities $ 16,297 17,577
Expenses relating to short-term leases $ 11,521 8,253
Expenses relating to leases of low-value assets, excluding short- $ 16,106 16,468
term leases of low-value assets
----- End of picture text -----

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

		For the years ended December 31,	For the years ended December 31,	For the years ended December 31,
		2022		2021
Total cash outfow for leases		$ 440,760		436,548

(i) 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.

(ii) 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.

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(x) Other liabilities

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December 31, 2022 December 31, 2021
Advance interest receipts $ 6,396 2,019
Unearned revenue 306,036 259,251
Other advance receipts 56,554 59,435
Guarantee deposits received 3,304,956 1,223,817
Temporary receipts and suspense accounts - 1,126,269
Others 3,220 2,938
Total $ 3,677,162 2,673,729
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(y) Equity

(i) Common stock

Pursuant to the resolution approved by the regular stockholders' meeting of the Bank on June 17, 2022, the Bank increased its capital from the retained earnings by $2,864,982 and issued 286,498 shares. The capital increase has been approved by Financial Supervisory Commission and came into effect on July 12, 2022. The record date of the capital increase is set on August 8, 2022. The Bank has completed the alteration of the registered capital amount on August 26, 2022.

(ii) Capital surplus

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

		December 31, 2022		December 31, 2021
Additional paid-in capital		$ 815,900		815,900

(iii) Earnings distribution and dividend policy

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.

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254

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The Bank resolved the earning distribution for the earnings of 2021 and 2020 in the shareholders'meeting on June 17, 2022 and July 20, 2021, respectively. The dividends distributed were as follows:

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2021 2020
Distribution rate Distribution rate
(NT dollar) Amount (NT dollar) Amount
Dividends to common shareholders
Stock dividends $ 0.37 2,864,982 0.34 2,546,118
Cash dividends 0.10 774,320 0.10 748,858
Total $ 3,639,302 3,294,976
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(iv) Other equity interest

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Unrealized gains
from financial assets Exchange
measured at fair differences on
value through other translation of foreign
comprehensive income financial statements Total
January 1, 2022 $ 4,113,485 (1,807,265 ) 2,306,220
Share of other comprehensive income of subsidiaries (4,729 ) 11,653 6,924
associates and joint ventures accounted for using equity
method
Investment in debt instruments measured at fair value
through other comprehensive income
-Unrealized amount (8,545,652 ) - (8,545,652 )
-Realized amount (4,976 ) - (4,976 )
Foreign currency translation difference － Exchange - 1,197,779 1,197,779
difference
Disposal of investments in equity instruments measured at 1,270,030 - 1,270,030
fair value through other comprehensive income
December 31, 2022 $ (3,171,842 ) (597,833 ) (3,769,675 )
Unrealized gains
from financial assets Exchange
measured at fair differences on
value through other translation of foreign
comprehensive income financial statements Total
January 1, 2021 $ 5,187,824 (1,476,771 ) 3,711,053
Share of other comprehensive income of subsidiaries 4,546 2,674 7,220
associates and joint ventures accounted for using equity
method
Investment in debt instruments measured at fair value
through other comprehensive income
-Unrealized amount (740,789 ) - (740,789 )
-Realized amount (302,904 ) - (302,904 )
－ -
Foreign currency translation difference Exchange (333,168 ) (333,168 )
difference
Disposal of investments in equity instruments measured at (35,192 ) - (35,192 )
fair value through other comprehensive income
December 31, 2021 $ 4,113,485 (1,807,265 ) 2,306,220
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(z) Income taxes

(i) The income tax expenses were as follows:

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For the years ended December 31,
2022 2021
Current tax expense
Current period $ 2,095,680 707,610
Adjustment for prior period 13,319 (1,995 )
2,108,999 705,615
Deferred tax expense (income)
Origination and reversal of temporary differences (217,066 ) (29,429 )
Income tax expenses $ 1,891,933 676,186
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(ii) The income tax expenses (income) recognized under other comprehensive income were as follows:

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For the years ended December 31,
2022 2021
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit plans $ 111,419 4,902
For the years ended December 31,
2022 2021
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign financial $ 299,444 (83,292 )
statements
Unrealized gains (losses) on valuation of financial assets (30,000 ) (15,291 )
measured at fair value through other comprehensive
income
$ 269,444 (98,583 )
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The reconciliation between the income tax expense (income) and net income before tax of the Bank for 2022 and 2021 is as follows:

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For the years ended December 31,
2022 2021
Income tax computed on net income before tax $ 2,402,757 1,155,260
Tax-free income (676,685 ) (564,059 )
Overseas branch income tax expenses 152,074 48,932
Overestimate prior income tax expense 13,319 (1,995 )
Other 468 38,048
Income tax expense $ 1,891,933 676,186
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(iii) Changes in deferred tax assets and liabilities of the Bank are as follows:

256

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For the year ended December 31, 2022
Recognized
in other
Beginning Recognized in comprehensive
balance profit or loss income Others Ending balance
Temporary difference
Deferred tax assets resulted from allowance for bad $ 770,707 261,944 - - 1,032,651
debts exceeding the limit regulated in Tax Law
Loss on assets impairment 21,710 (2,338 ) - - 19,372
Reserve for employee benefit liabilities 374,495 (42,827 ) - - 331,668
Land value increment tax (879,056 ) - - - (879,056 )
Exchange differences from the translation of 430,575 - (299,444 ) - 131,131
financial statements of foreign operations
Unrealized loss on valuation of financial (7,234 ) - 30,000 - 22,766
assets measured at fair value through other
comprehensive income
Actuarial gains and losses 311,474 - (111,419 ) - 200,055
Indeterminate indemnity provisions 14,636 287 - - 14,923
Net deferred tax assets (liabilities) $ 1,037,307 217,066 (380,863) - 873,510
The information stated on the balance sheet is as
follows:
Deferred tax assets $ 1,923,597 1,752,566
Deferred tax liabilities $ 886,290 879,056
For the year ended December 31, 2021
Recognized
in other
Beginning Recognized in comprehensive
balance profit or loss income Others Ending balance
Temporary difference
Deferred tax assets resulted from allowance for bad $ 702,104 68,603 - - 770,707
debts exceeding the limit regulated in Tax Law
Loss on assets impairment 57,058 (35,348 ) - - 21,710
Reserve for employee benefit liabilities 392,957 (18,462 ) - - 374,495
Land value increment tax (879,056 ) - - - (879,056 )
Exchange differences from the translation of 347,283 - 83,292 - 430,575
financial statements of foreign operations
Unrealized loss on valuation of financial (22,525 ) - 15,291 - (7,234 )
assets measured at fair value through other
comprehensive income
Actuarial gains and losses 316,376 - (4,902 ) - 311,474
Indeterminate indemnity provisions - 14,636 - - 14,636
Net deferred tax assets (liabilities) $ 914,197 29,429 93,681 - 1,037,307
The information stated on the balance sheet is as
follows:
Deferred tax assets $ 1,815,778 1,923,597
Deferred tax liabilities $ 901,581 886,290
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(iv) 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.

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(v) 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, 2022 and 2021, the balance of provision for employee benefit of the Bank was as follows:

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(i) Defined benefit plan

As of December 31, 2022 and 2021, the balance of provision for employee benefit of the Bank were as follows:

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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 $4,944,101 and $4,903,846 on December 31, 2022 and 2021. 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:

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258

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3) Movements of defined benefit plan assets

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

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For the years ended December 31,
2022 2021
Fair value of plan assets on Junuary 1 $ 4,903,846 5,027,251
Interest income 19,453 14,921
Remeasurements of the net defined benefit liability
－ plan assets revenue (excluded of current interest) 406,458 76,119
Contributions made 368,998 382,668
Benefits paid by the plan (754,654 ) (597,113 )
Fair value of plan assets on December 31 $ 4,944,101 4,903,846
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4) Expenses recognized in profit or loss

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

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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, 2022 and 2021 were as follows:

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6) Actuarial assumptions

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

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

December 31, 2022 December 31, 2021
Discount rate 1.70% 0.40%
Future salary increase rate 1.50% 1.50%
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The expected allocation payment made by the Bank to the defined benefit plans for the one-year after the reporting date is $245,000.

The weighted average lifetime of the defined benefit plans is 7 years.

7) Sensitivity analysis

The effects of changes in major actuarial assumptions adopted in defined benefit obligation on December 31, 2022 and 2021 were as follows :

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Influence of defined benefit plan obligation
Increase 0.25% Decrease 0.25%
December 31, 2022
Discount rate(Change 0.25%) (1.70)% 1.74%
Future salary increase rate(Change 0.25%) 1.67% (1.64)%
December 31, 2021
Discount rate(Change 0.25%) (1.90)% 1.96%
Future salary increase rate(Change 0.25%) 1.87% (1.82)%
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There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2022 and 2021.

(ii) 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.

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 $168,570 and $155,388 for the years ended December 31, 2022 and 2021, respectively.

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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, 2022 and 2021, were as follows:

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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:

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3) Expenses recognized in profit or loss

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

		For the years ended December 31,	For the years ended December 31,	For the years ended December 31,
		2022		2021
Net interest on the net defned beneft liability		$ 215,440		326,058

260

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4) Actuarial assumption

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

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(ab) Earnings per share

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

For the years ended December 31,
2022 2021
Net income $ 10,121,852 5,100,112
Weighted average number of common stock shares outstanding (in 8,029,693 8,029,693
thousands) (Note 1)
Basic earnings per shares (in dollars) $ 1.26 0.64
Dilutive potential common shares (in thousands) (Note 1,2) 34,862 38,869
Weighted average number of shares outstanding for diluted EPS (in 8,064,555 8,068,562
thousands) (Note 1)
Diluted earnings per shares (in dollars) $ 1.26 0.63
----- End of picture text -----

Note 1: The earnings per share for the year ended December 31, 2022 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

There is no difference with actual distributions of 2021 remuneration. The information is available at the Market Observation Post System website.

(ad) Net interest revenue

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Ⅵ

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

For the years ended December 31,
2022 2021
Bills $ 28,950 26,131
Due from Banks 99,990 172,981
Others 166,352 119,933
Subtotal 33,136,301 24,037,857
Interest expense:
Deposits 11,299,382 5,278,716
Deposits from banks 1,489 13,220
Call loans from banks 890,231 102,288
Financial debentures 759,937 895,377
Notes and bond issued under repurchase agreement 9,358 4,327
Others 86,565 63,439
Subtotal 13,046,962 6,357,367
Total $ 20,089,339 17,680,490
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(ae) Net service fee revenue

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For the years ended December 31,
2022 2021
Service fee income:
Remittance service fee $ 64,477 64,862
Import bills negotiated service fee 45,635 46,243
Export bills negotiated service fee 12,653 13,648
Letter of credit service fee 8,887 8,005
Certification service fee 1,482 1,431
Acceptance service fee 1,677 1,680
Trust service fee 595,144 1,084,528
Guarantee service fee 242,678 236,828
Agency service fee 34,481 35,662
Interbank service fee 108,774 93,684
Card service fee 113,297 118,074
Commission revenue of insurance premium 1,535,440 803,334
Custodian service fee 197,542 207,389
Foreign currency service fee 85,707 93,053
Commission of futures 2,939 3,867
Loan service fee 852,045 729,484
Miscellaneous fees 412,480 125,642
Subtotal 4,315,338 3,667,414
Service fee expense:
Foreign currency service fee 29,427 25,008
Interbank service fee 178,644 154,805
Trust service fee 857 813
Agency service fee 1,567 1,508
IC card service fee 66,106 62,665
Check clearing service fee 8,877 9,275
Remittance service fee 5,386 5,180
Custodian service fee 58,378 60,407
Call loans service fee 9,029 10,164
Futures option fee 43 10
Miscellaneous fees 22,599 20,029
Subtotal 380,913 349,864
Total $ 3,934,425 3,317,550
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262

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(af) (Loss) gain on financial assets or liabilities measured at fair value through profit or loss

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

For the years ended December 31,
2022 2021
Valuation gains (losses):
Corporate bonds $ (5,636 ) 4,685
Financial debentures (546,927 ) (381,752 )
Listed stocks (14,528 ) 4,052
Beneficiary certificates (6,437 ) (11,477 )
Private fund (1,548 ) 4,925
Commercial paper 10,790 3,173
Derivative financial instruments 193,966 (12,459 )
Subtotal (370,320 ) (388,853 )
Disposal gains (losses):
Corporate bonds 6,437 29,074
Financial debentures (4,098 ) (1,349 )
Listed stocks (39,776 ) (18,905 )
Beneficiary certificates (21,734 ) 22,711
Commercial paper (2,574 ) (7,398 )
Derivative financial instruments 1,463,644 843,655
Subtotal 1,401,899 867,788
Dividend revenue 11,314 4,397
Interest income 201,178 78,864
Total $ 1,244,071 562,196
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(ag) Realized gain on financial assets at fair value through other comprehensive income

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

For the years ended December 31,
2022 2021
Gain on disposal of government bonds $ 4,480 247,087
Gain on disposal of corporate bonds 666 25,167
Gain (loss) on disposal of financial debentures (170 ) 30,650
Dividend revenue 1,457,593 884,796
Total $ 1,462,569 1,187,700
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(ah) (Impairment losses on assets) reversal of impairment loss on assets

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

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

For the years ended December 31,
2022 2021
Investment income- TBB International Leasing Co., Ltd. $ 41,673 28,811
Investment income- TBB (Cambodia) Microfinance Institution Plc 26,911 (6,173 )
Investment income- TBB Venture Capital Co., Ltd. 202,343 78,430
Investment income- TBB Consulting Co., Ltd. 49,356 (1,409 )
Total $ 320,283 99,659
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(aj) Net other revenue other than interest income

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

For the years ended December 31,
2022 2021
Rental revenue of operating assets $ 10,939 8,659
Rental expense of operating assets (1,796 ) (1,605 )
Loss on disposal and retirement of property and equipment (944 ) (852 )
Loss of account error (163 ) (350 )
Gold deposit book 2,536 2,630
Other operating expense (40,597 ) (122,396 )
Other miscellaneous income 93,096 282,802
Total $ 63,071 168,888
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(ak) Bad debts expenses, commitment and guarantee liability provision

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

For the years ended December 31,
2022 2021
Discounted and loans $ 2,419,063 5,153,489
Call loans to banks 384 (2,938 )
Receivables and other financial assets (24,665 ) (37,417 )
Subtotal 2,394,782 5,113,134
Provisions for guarantee liabilities (21,496 ) 39,802
Provisions for loan commitments 27,782 18,896
Total $ 2,401,068 5,171,832
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(al) Employee benefits expenses

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

For the years ended December 31,
2022 2021
Salary expense $ 7,203,433 6,710,384
Labor and health insurance 528,718 512,569
Pension expense 339,764 337,460
Directors' remuneration 89,213 50,302
Other employee benefits 622,143 739,425
Total $ 8,783,271 8,350,140
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(am) Depreciation and amortization expense

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

For the years ended December 31,
2022 2021
Depreciation
Property and equipment $ 568,358 462,781
Right-of-use assets 403,815 399,428
Amortization
Computer software 248,725 170,708
Other deferred charges 47 33
Total $ 1,220,945 1,032,950
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(an) Other general and administrative expense

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

For the years ended December 31,
2022 2021
Compensation loss $ 42 59
Utilities fee 89,402 90,119
Postage and telecommunication fee 248,342 243,412
Transportation fee 30,855 22,242
Printing and advertisement fee 210,184 200,224
Repair and maintenance fee 261,133 249,335
Insurance fee 378,827 331,254
Professional service fee 260,568 243,637
Materials and supplies 119,396 168,332
Rental expenses 27,627 24,721
Duties and levies 1,559,256 1,234,932
Membership, donation and partaking 590,970 641,967
Storage, packing and processing fee 45,955 49,429
Cash transit fee 65,098 63,742
Others 72,751 64,612
Total $ 3,960,406 3,628,017
----- End of picture text -----

(ao) Financial Instruments

(i) Fair value information

264

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.

2) The definition of fair value hierarchy

a) Level 1

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

c) Level 3

Ⅵ

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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 the fact that their fair market value cannot be directly calculated. The equity instruments with no active market which the Bank invested are Level 3.

3) Based on fair value measurement
a) The fair value hierarchy of information

value hierarchy of information were as follows:

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December 31, 2022
Assets and Liabilities Total Level 1 Level 2 Level 3
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 $ 115,114 115,114 - -
Others 31,254,976 250,691 30,907,810 96,475
Financial assets at fair value through other comprehensive
income
Security Investments 17,984,590 12,676,936 - 5,307,654
Bond Investments 141,840,231 91,536,068 50,304,163 -
Others 145,782 145,782 - -
Financial liabilities at fair value through profit or loss
Financial liabilities designated at fair value through profit 9,367,595 - 9,367,595 -
or loss
Derivative financial assets and liabilities
Assets:
Financial assets at fair value through profit or loss 1,166,667 26,860 1,139,807
Liabilities:
Financial liabilities at fair value through profit or loss 557,930 - 557,930
December 31, 2021
Assets and Liabilities Total Level 1 Level 2 Level 3
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 $ 68,106 68,106 - -
Bonds Investments 356,140 276,910 79,230 -
Others 38,681,342 1,563,675 37,015,444 102,223
Financial assets at fair value through other comprehensive
income
Security Investments 21,354,398 16,414,356 - 4,940,042
Bonds Investment 135,994,230 86,780,365 49,213,865 -
Othesr 149,897 149,897 - -
Financial liabilities at fair value through profit or loss
Financial liabilities designated at fair value through profit 8,293,730 - 8,293,730 -
or loss
Derivative financial assets and liabilities
Assets:
Financial assets at fair value through profit or loss 552,636 28,745 523,891 -
Liabilities:
Financial liabilities at fair value through profit or loss 142,307 - 142,307 -
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266

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its fair value.

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).

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.

assuming that the contract will be terminated on the balance sheet date. The Bank adopts markto-model prices which are usually adopted among the banking industry, such as DiscountedCash-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
i) 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 are after careful assessment, and are appropriately adjusted according to the current market situation.

ii) 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 assesses 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.

d) Transfers between Level 1 and Level 2

There were no transfers between Level 1 and 2 for the years ended December 31, 2022 and 2021.

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		For the year ended December 31, 2022	For the year ended December 31, 2022	For the year ended December 31, 2022	For the year ended December 31, 2022	For the year ended December 31, 2022	For the year ended December 31, 2022	For the year ended December 31, 2022
		Valuation proft and loss		Increase		Decrease
Name	Beginning balance	Recognized in proft or loss	Recognized in other comprehensive income	Purchase or issue	Transfer into Level 3	Sale Disposition or Settlement	Transfer out from Level 3	Ending balance
Financial assets at fair value through proft or loss Investments in equity instruments measured at fair value through other comprehensive income	$ 102,223 4,940,042	(1,548) -	- 367,612	- -	- -	4,200 -	- -	96,475 5,307,654
		For the year ended December 31, 2021
		Valuation proft and loss		Increase		Decrease
Name	Beginning balance	Recognized in proft or loss	Recognized in other comprehensive income	Purchase or issue	Transfer into Level 3	Sale Disposition or Settlement	Transfer out from Level 3	Ending balance
Financial assets at fair value through proft 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 -	- -	102,223 4,940,042

f)

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

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For the years ended December 31,
2022 2021
Recognized on profit and loss (reported as unrealized gain (loss) from $ (935 ) 4,925
investments instruments measured at fair value through profit and loss)
Recognized on other comprehensive income (reported as unrealized gain 367,612 464,898
(loss) from investments instruments measured at fair value through other
comprehensive income)
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December 31, 2022
inter-relationship between
significant unobservable
significant inputs and fair value
fair value valuation methods unobservable inputs range measurement
Financial asset at fair value through profit
or loss
Private fund $ 96,475 assets approach liquidity discount 10.00% The higher market liquidity
discount, the lower fair value.
Financial assets at fair value through
other comprehensive income
Unlisted stocks 5,307,654 market approach liquidity discount 8.62%~26.57%. The higher market liquidity
assets approach discount, the lower fair value.
income approach sustainable growth rate 0.00%~1.55% The higher sustainable growth
rate, the higher fair value.
income approach cost of equity 10.96%~12.68% The higher rate of cost of
equity, the lower fair value.
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December 31, 2021
inter-relationship between
significant unobservable
significant inputs and fair value
fair value valuation methods unobservable inputs range measurement
Financial assets at fair value through
profit or loss
Private fund $ 102,223 assets approach liquidity discount 10.00% The higher market liquidity
discount, the lower fair value.
Financial assets at fair value through
other comprehensive income
Unlisted stocks 4,940,042 market approach liquidity discount 8.71%~34.60% The higher market liquidity
assets approach discount, the lower fair value.
income approach sustainable growth rate 0.00%~1.48% The higher sustainable growth
rate, the higher fair value.
income approach cost of equity 10.60%~12.50% The higher rate of cost of
equity, the lower fair value.
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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:

i) 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:

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the effects to the net income and other
comprehensive income
Favorable Unfavorable
changes (-5%) changes (5%)
December 31, 2022
Financial assets at fair value through profit or
loss
Private fund $ 5,360 (5,360 )
Financial assets at fair value through other
comprehensive income
Unlisted stocks 307,477 (307,477 )
the effects to the net income and other
comprehensive income
Favorable Unfavorable
changes (-5%) changes (5%)
December 31, 2021
Financial assets at fair value through profit or
loss
Private fund $ 5,679 (5,679 )
Financial assets at fair value through other
comprehensive income
Unlisted stocks 290,299 (290,299 )
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ii) 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

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effects of the two evaluation parameters on the other comprehensive profit and loss are as follows:

sustainable growth rate

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the effects to other comprehensive income
Favorable Unfavorable
changes (0.3%) changes (-0.3%)
December 31, 2022
Financial assets at fair value through other
comprehensive income
Unlisted stocks $ 2,975 (2,781)
the effects to other comprehensive income
Favorable Unfavorable
changes (0.3%) changes (-0.3%)
December 31, 2021
Financial assets at fair value through other
comprehensive income
Unlisted stocks $ 3,084 (2,895)
2. cost of equity
the effects to other comprehensive income
Favorable Unfavorable
changes (-3%) changes (3%)
December 31, 2022
Financial assets at fair value through other
comprehensive income
Unlisted stocks $ 61,250 (30,146)
the effects to other comprehensive income
Favorable Unfavorable
changes (-3%) changes (3%)
December 31, 2021
Financial assets at fair value through other
comprehensive income
Unlisted stocks $ 64,070 (30,848)
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2. cost of equity

4) Not based on fair value measurement

a) Fair value information

Bank. Except those items, others' fair value is reasonably approximate value, the Bank does not disclosure their fair value.

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b) The fair value hierarchy of information
December 31, 2022
Quoted prices in
active markets Significant other Significant
for identical observable unobservable
Assets and Liabilities Total assets (Level 1) inputs (Level 2) inputs (Level 3)
Debt instruments measured at amortized cost $ 236,657,427 31,336,817 205,320,610 -
December 31, 2021
Quoted prices in
active markets Significant other Significant
for identical observable unobservable
Assets and Liabilities Total assets (Level 1) inputs (Level 2) inputs (Level 3)
Debt instruments measured at amortized cost $ 279,993,077 33,068,000 246,925,077 -
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c) Valuation techniques

as follows:

i) 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.

270

ii) 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.
iii) 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 longterm 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

(i) General description

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(ii) Risk management organization structure

1) Risk Management Committee

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.

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

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4) Overdue Loans Clearing Committee

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5) Cyber Security Management Committee

(iii) Credit risk

1) Source and definition of credit risk

2) Credit risk management policy

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

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

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

a) Credit Business (Including loan commitments and guarantees)

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

i) 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 Non-performing/Non-accrual Loans" and its operating procedure "Operating procedure Governing the Collection of Non-performing/Non-accrual Loans" and "Code of Conduct to Deal With Non-Performing Loans" to serve as the guidelines for dealing with nonperforming credit and overdue loans collection.

ii) 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.

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b) Due from other banks and call loans to banks

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 considers 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

i) The borrowers failed to pay the principal and interest overdue for more than 30 days, less than 90 days;
ii) When the Bank conducts 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;
iii) 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 is except;
iv) The bank knows (if it has received the notice from court) that the collaterals are compulsory executed by other banks;
v) Borrowers were notified the refund by the Bank and did not conduct refund notice;
vi) The letter of credit insurance fund notice due to the related company's overdue debt in other bank, the creditor to stop the delivery;
vii) Because the borrowers have been involved in litigation and unfavorable judgments, their ability of credit performance is affected;
viii) The customer is classified as an early warning account by the Bank or has bad credit that aware by others.

b) Debt instrument investments

i) The latest credit rating on the report date was non-investment grade and fell more than two levels than the original rating, or;
ii) 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

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274

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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) Credit assets

i) Significant financial difficulty of the issuer or the borrower;

ii) A breach of contract, such as a default or past due event ;

iii) 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;

iv) It is becoming probable that the borrower will enter bankruptcy or other financial reorganization;

  - v) The disappearance of an active market for that financial asset because of financial difficulties;

  - vi) The purchase or origination of a financial asset at a considerable amount of discount that reflects the incurred credit losses;

b) Debt instrument investments
- i) Significant financial difficulty of the issuer;
- ii) The disappearance of an active market for that financial asset because of financial difficulties;
- iii) The purchase or origination of a financial asset at a considerable amount of discount that reflects the incurred credit losses.
- iv) 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 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.
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

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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

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:

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

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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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

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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 identified 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 forward-looking 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.

276

9) Credit risk hedging or diminishing.
a) Collaterals

b) Limit of credit risk and the control of credit risk concentration
i) 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.
ii) 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

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

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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 has been credit derogated and the collateral for mitigating potential losses are as follows:

December 31, 2022	Carrying amount	Allowance impairment	Exposure (measured at amortized cost)	Value of collateral
Impairment fnancial assets： Receivables Interest receivable	$ 42,578	7,050	35,528	-
Discounts and loans	20,309,083	4,784,155	15,524,928	22,707,890
Overdue receivable	58,786	15,898	42,888	-
Total impairment fnancial assets	$ 20,410,447	4,807,103	15,603,344	22,707,890

December 31, 2021	Carrying amount	Allowance impairment	Exposure (measured at amortized cost)	Value of collateral
Impairment fnancial assets： Receivables Accounts receivables	$ 2,000	681	1,319	-
Interest receivable	43,020	4,960	38,060	-
Discounts and loans	20,356,149	3,635,336	16,720,813	21,352,293
Overdue receivable	80,334	25,545	54,789	-
Total impairment fnancial assets	$ 20,481,503	3,666,522	16,814,981	21,352,293

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

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.

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278

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b) By geographic area

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

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c) By collateral

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

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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:

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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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i) Credit quality analysis of discounts and loans, receivables, guarantee and commitments

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Lifetime ECL-
12-month ECL Lifetime ECL-not impaired impaired
Under Under Allowance
December 31, 2022 Excellent Good Medium Acceptable standard No rating Subtotal Excellent Good Medium Acceptable standard No rating Subtotal High risk impairment Total
Receivable
Credit card $ 426,421 227,850 196,313 79 4,913 238,053 1,093,629 1,688 1,452 1,618 - 326 20 5,104 - 569 1,098,164
Acceptances 375,279 232,317 119,969 25,670 - 38,049 791,284 - - - - - - - - 7,913 783,371
receivable
Other receivables 401,011 579,726 493,641 35,741 24,719 2,459,168 3,994,006 408 945 1,952 897 2,387 600 7,189 42,578 61,519 3,982,254
Discounts and loans
Private banking 130,698,330 132,157,479 70,280,524 3,199,945 1,062,127 6,962,188 344,360,593 56,031 137,190 252,638 22,912 111,432 36,101 616,304 4,475,656 4,181,307 345,271,246
Corporate banking 245,799,786 365,067,368 272,870,989 26,218,577 15,363,104 125,044,694 1,050,364,518 288,453 355,127 556,056 930,623 562,350 150,344 2,842,953 15,833,427 13,897,309 1,055,143,589
Other financial assets
Overdue receivable - - - - - - - - - - - - - - 58,786 48,471 10,315
Total $ 377,700,827 498,264,740 343,961,436 29,480,012 16,454,863 134,742,152 1,400,604,030 346,580 494,714 812,264 954,432 676,495 187,065 3,471,550 20,410,447 18,197,088 1,406,288,939
Guarantee and $ 26,669,887 15,125,762 5,916,207 174,424 45,746 65,833,294 113,765,320 43,098 11,091 421 - 98 - 54,708 192,579 337,312 113,675,295
commitments
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	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-not impaired	Lifetime ECL- impaired
December 31, 2021	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 Acceptances receivable Other receivables Discounts and loans Private banking Corporate banking Other fnancial assets Overdue receivable Total Guarantee and commitments	$ 368,690 276,046 215,499 113,609,203 186,110,603 - $ 300,580,041 $ 23,693,996	246,002 549,061 354,743 116,551,170 315,339,281 - 433,040,257 20,955,504	192,898 113,769 324,870 66,928,175 306,477,476 - 374,037,188 8,177,179	325 832 33,189 4,268,868 32,953,038 - 37,256,252 830,226	4,924 29,835 23,858 1,700,024 18,573,454 - 20,332,095 55,958	216,176 63,686 1,915,055 9,170,592 122,106,000 - 133,471,509 37,392,210	1,029,015 1,033,229 2,867,214 312,228,032 981,559,852 - 1,298,717,342 91,105,073	129 - 82 21,412 80,570 - 102,193 13,401	1,550 - 431 53,655 388,410 - 444,046 17,786	1,993 - 1,292 207,948 413,816 - 625,049 7,248	13 - 1,847 21,550 1,601,886 - 1,625,296 -	655 - 1,065 81,566 782,756 - 866,042 788	- - 628 10,059 416,687 - 427,374 -	4,340 - 5,345 396,190 3,684,125 - 4,090,000 39,223	- - 45,020 4,817,619 15,538,530 80,334 20,481,503 46,132	1,693 10,332 59,048 3,662,551 11,914,266 51,392 15,699,282 329,488	1,031,662 1,022,897 2,858,531 313,779,290 988,868,241 28,942 1,307,589,563 90,860,940

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280

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ii) Debt instruments

December 31, 2022	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		Accumulated impairment (Note)
	Investment	Sub investment	High risk	No rating	Subtotal	Investment	Sub investment	High risk	No rating	Subtotal	High risk	Total
Investment in debt instruments measured at fair value through other comprehensive income Overseas bonds NT bonds Investment in debt instruments at amortized cost Overseas bonds NT bonds Certifcates of deposit with the Central Bank Negotiable certifcates of deposit Total	$ 50,304,163 91,536,068 10,420,185 30,769,411 195,595,000 64,523 $ 378,689,350	- - - - - - -	- - - - - - -	- - - - - - -	50,304,163 91,536,068 10,420,185 30,769,411 195,595,000 64,523 378,689,350	- - - - - - -	- - - - - - -	- - - - - - -	- - - - - - -	- - - - - - -	- - - - - - -	50,304,163 91,536,068 10,420,185 30,769,411 195,595,000 64,523 378,689,350	15,793 75,059 3,247 13,846 57,763 16 165,724

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

as other equity.

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

December 31, 2022	Maximum credit risk exposure	Collateral	Enhancement of other credit
Financial assets at fair value through proft or loss －Commercial paper －Listed stocks －Benefciary certifcates －Derivative instrument	$ 30,907,810 115,114 347,166 1,166,667	- - - 2,527,996	- - - 727,720
December 31, 2021	Maximum credit risk exposure	Collateral	Enhancement of other credit
Financial assets at fair value through proft or loss －Debit investments －Commercial paper －Listed stocks －Benefciary certifcates －Derivative instrument	$356,140 37,015,444 68,106 1,665,898 552,636	- - - - 489,795	- - - - 699,723

Ⅵ

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13) Changes in the expected credit losses of the Bank

a) Receivables

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

For the year ended December 31, 2022
mpairment difference of
"Regulations Governing the
Procedures for Banking
Institutions to Evaluate
Assets and Deal with Non-
Lifetime ECL － Lifetime ECL － Performing and Non-Accrual
12-month ECL not impaired impaired Impaired (IFRS9) Loans " Total
Beginning balance $ 13,694 164 5,641 19,499 51,574 71,073
Changes in financial instruments that have
been identified at the beginning of the
period ：
－ Transferred to 12-months ECL 108 (12 ) (96 ) - - -
－ Transferred to lifetime ECL (5 ) 16 (11 ) - - -
－ Transferred to the credit-impaired
financial assets (28 ) (10 ) 38 - - -
－
The financial assets that have been
derecognized (8,542 ) (108 ) (2,030 ) (10,680 ) - (10,680 )
New financial assets originated or purchased 6,323 168 3,637 10,128 - 10,128
Other changes 632 3,935 (129 ) 4,438 - 4,438
Impairment difference of "Regulations
Governing the Procedures for Banking
Institutions to Evaluate Assets and Deal with
Non-Performing and Non-Accrual Loans " - - - - (4,958 ) (4,958 )
Ending balance $ 12,182 4,153 7,050 23,385 46,616 70,001
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For the year ended December 31, 2021
Impairment difference of
"Regulations Governing
the Procedures for
Banking Institutions to
Evaluate Assets and Deal
Lifetime ECL － Lifetime ECL － with Non-Performing and
12-month ECL not impaired impaired Impaired (IFRS9) Non-Accrual Loans " Total
Beginning balance $ 13,208 1,240 5,304 19,752 64,410 84,162
Changes in financial instruments that have
been identified at the beginning of the
period ：
－ Transferred to 12-months ECL 1,123 (954 ) (169 ) - - -
－ Transferred to lifetime ECL (6 ) 13 (7 ) - - -
－ Transferred to the credit-impaired
financial assets (15 ) (61 ) 76 - - -
－
The financial assets that have been
derecognized (8,016 ) (129 ) (2,658 ) (10,803 ) - (10,803 )
New financial assets originated or purchased 8,192 25 3,113 11,330 - 11,330
Other changes (792 ) 30 (18 ) (780 ) - (780 )
Impairment difference of "Regulations
Governing the Procedures for Banking
Institutions to Evaluate Assets and Deal with
Non-Performing and Non-Accrual Loans " - - - - (12,836 ) (12,836 )
Ending balance $ 13,694 164 5,641 19,499 51,574 71,073
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b) Discounts and loans

282

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For the year ended December 31, 2022
Impairment difference of
"Regulations Governing
the Procedures for
Banking
Institutions to Evaluate
Assets and Deal with
Lifetime ECL － Lifetime ECL － Non-Performing and
12-month ECL not impaired impaired Impaired (IFRS9) Non-Accrual Loans " Total
Beginning balance $ 4,166,467 129,977 3,635,336 7,931,780 7,645,037 15,576,817
Changes in financial instruments that
have been identified at the beginning
of the period ：
－ Transferred to 12-months ECL 154,551 (29,664 ) (124,887 ) - - -
－ Transferred to lifetime ECL (8,551 ) 21,718 (13,167 ) - - -
－ Transferred to the credit-impaired
financial assets (25,545 ) (3,572 ) 29,117 - - -
－
The financial assets that have been
derecognized (2,079,596 ) (85,034 ) (730,979 ) (2,895,609 ) - (2,895,609 )
New financial assets originated or
purchased 2,921,806 12,984 388,582 3,323,372 - 3,323,372
Write-off - - (2,223,252 ) (2,223,252 ) - (2,223,252 )
Other changes 753,408 91,729 3,823,405 4,668,542 - 4,668,542
Impairment difference of "Regula-
tions Governing the Procedures
for Banking Institutions to Evaluate
Assets and Deal with Non-Performing
and Non-Accrual Loans " - - - - (371,254 ) (371,254 )
Ending balance $ 5,882,540 138,138 4,784,155 10,804,833 7,273,783 18,078,616
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For the year ended December 31, 2021
Impairment difference of
"Regulations Governing
the Procedures for
Banking
Institutions to Evaluate
Assets and Deal with
Lifetime ECL － Lifetime ECL － Non-Performing and
12-month ECL not impaired impaired Impaired (IFRS9) Non-Accrual Loans " Total
Beginning balance $ 3,133,215 951,010 5,219,221 9,303,446 5,022,711 14,326,157
Changes in financial instruments that
have been identified at the beginning
of the period ：
－ Transferred to 12-months ECL 1,089,009 (770,235 ) (318,774 ) - - -
－ Transferred to lifetime ECL (5,445 ) 9,047 (3,602 ) - - -
－ Transferred to the credit-impaired
financial assets (16,929 ) (9,790 ) 26,719 - - -
－
The financial assets that have been
derecognized (1,587,449 ) (71,342 ) (1,105,361 ) (2,764,152 ) - (2,764,152 )
New financial assets originated or
purchased 1,861,459 4,752 292,035 2,158,246 - 2,158,246
Write-off - - (4,606,000 ) (4,606,000 ) - (4,606,000 )
Other changes (307,393 ) 16,535 4,131,098 3,840,240 - 3,840,240
Impairment difference of "Regula-
tions Governing the Procedures
for Banking Institutions to Evaluate
Assets and Deal with Non-Performing
and Non-Accrual Loans " - - - - 2,622,326 2,622,326
Ending balance $ 4,166,467 129,977 3,635,336 7,931,780 7,645,037 15,576,817
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For the year ended December 31, 2022
Impairment difference
of "Regulations
Governing the
Procedures for
Banking
Institutions to Evaluate
Lifetime Lifetime Assets and Deal with
12-month ECL － not ECL － Impaired Non-Performing and
ECL impaired impaired (IFRS9) Non-Accrual Loans " Total
Beginning balance $ - - 25,545 25,545 25,847 51,392
Changes in financial instruments
that have been identified at the
beginning of the period ：
－
The financial assets that have
- - -
been derecognized (8 ) (8 ) (8 )
New financial assets originated or
purchased - - 7,633 7,633 - 7,633
Write-off - - (16,567 ) (16,567 ) - (16,567 )
- - -
Other changes (705 ) (705 ) (705 )
Impairment difference of
"Regulations Governing the
Procedures for Banking Institutions
to Evaluate Assets and Deal with
Non-Performing and Non-Accrual
Loans " - - - - 6,726 6,726
Ending balance $ - - 15,898 15,898 32,573 48,471
For the year ended December 31, 2021
Impairment difference
of "Regulations
Governing the
Procedures for
Banking
Institutions to Evaluate
Lifetime Lifetime Assets and Deal with
12-month ECL － not ECL － Impaired Non-Performing and
ECL impaired impaired (IFRS9) Non-Accrual Loans " Total
Beginning balance $ - - 23,121 23,121 31,930 55,051
Changes in financial instruments
that have been identified at the
beginning of the period ：
－
The financial assets that have
- - -
been derecognized (83 ) (83 ) (83 )
New financial assets originated or
purchased - - 17,074 17,074 - 17,074
Write-off - - (15,308 ) (15,308 ) - (15,308 )
Other changes - - 741 741 - 741
Impairment difference of
"Regulations Governing the
Procedures for Banking Institutions
to Evaluate Assets and Deal with
Non-Performing and Non-Accrual
Loans " - - - - (6,083 ) (6,083 )
Ending balance $ - - 25,545 25,545 25,847 51,392
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d) Guarantee and commitments

284

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For the year ended December 31, 2021
Impairment difference of
"Regulations Governing
the Procedures for
Banking
Institutions to Evaluate
Assets and Deal with
Lifetime ECL － Lifetime ECL － Non-Performing and
12-month ECL not impaired impaired Impaired (IFRS9) Non-Accrual Loans " Total
Beginning balance $ 106,670 880 6,699 114,249 156,933 271,182
Changes in financial instruments that
have been identified at the beginning
of the period ：
－
The financial assets that have
been derecognized (51,707 ) (179 ) (5,520 ) (57,406 ) - (57,406 )
New financial assets originated or
purchased 73,511 10 4,439 77,960 - 77,960
Other changes 20,880 (642 ) 1,168 21,406 - 21,406
Impairment difference of "Regulations
Governing the Procedures for
Banking Institutions to Evaluate
Assets and Deal with Non-Performing
and Non-Accrual Loans " - - - - 16,346 16,346
Ending balance $ 149,354 69 6,786 156,209 173,279 329,488
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e) Debts investments

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For the year ended December 31, 2022
Lifetime ECL － Lifetime ECL －
12-month ECL not impaired impaired Total
Beginning balance $ 175,270 - - 175,270
Additions 68,255 - - 68,255
- -
Derecognition (78,262 ) (78,262 )
Other changes 461 - - 461
Ending balance $ 165,724 - - 165,724
For the year ended December 31, 2021
Lifetime ECL － Lifetime ECL －
12-month ECL not impaired impaired Total
Beginning balance $ 142,418 - - 142,418
Additions 97,018 - - 97,018
Derecognition (61,254 ) - - (61,254 )
Other changes (2,912 ) - - (2,912 )
Ending balance $ 175,270 - - 175,270
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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.

(iv) Liquidity risk

1) The origin and definition of liquidity risk

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

a) Policy

i) In accordance with the target and limit for liquidity risk management approved by the board of directors and monitor all liquidity risk positions.
ii) 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.
iii) 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
i) Finance Department is in charge of daily capital deployment to ensure that the capital is sufficient to cope with various demands for capital.
ii) 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.

iii) 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

286

  - i) 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.

  - ii) 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.

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

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

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

The Bank possesses cash and other high liquidity interest yielding assets to cope with payment obligations and potential emergent capital demands in the market. The assets possessed for managing liquidity risk include cash and cash equivalent, due from the Central Bank and call loans to banks, financial assets at fair value through profit or loss, discounts and loans, financial assets measured at fair value through other comprehensive income and investment in debt instruments at amortized cost.

Ⅵ

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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 consolidated financial statement date to the contract maturity date. The amount disclosed is based on the cash flows of the contracts.

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December 31, 2022
0-30 days 31-90 days 91days-1 year 1-5 years Over 5 years Total
Major matured cash outflow $ 1,098,020,121 221,619,539 479,735,057 92,821,185 49,342,954 1,941,538,856
Deposits from the Central Bank and 937,523 - - - - 937,523
banks
Overdrafts on banks 1,084,076 - - - - 1,084,076
Call loans from the Central Bank 27,012,375 18,670,658 - - - 45,683,033
and banks
Financial liabilities designated at - - - - 9,367,595 9,367,595
fair value through profit or loss
Notes and bonds issued under 458,662 157,550 1,292,066 554,713 - 2,462,991
repurchase agreement
Interest payable 310,520 1,288,484 2,711,772 118,148 9 4,428,933
Deposits transferred from 9,820,000 21,196,335 75,185,210 41,060,000 - 147,261,545
Chunghwa Post Co., Ltd.
Demand deposits 954,109,937 - - - - 954,109,937
Time deposits 103,804,595 180,237,487 392,763,469 42,587,346 5,124 719,398,021
Remittance 428,111 - - - - 428,111
Bank notes payable - - 7,400,000 6,600,000 38,250,000 52,250,000
Cumulative earnings on 2,250 3,750 118,500 1,198,580 1,587,501 2,910,581
appropriated loan fund
Lease liabilities 52,072 65,275 264,040 702,398 132,725 1,216,510
December 31, 2021
0-30 days 31-90 days 91days-1 year 1-5 years Over 5 years Total
Major matured cash outflow $ 1,095,518,499 184,664,045 500,530,076 75,324,151 35,841,707 1,891,878,478
Deposits from the Central Bank and 493,598 - - - - 493,598
banks
Overdrafts on banks 536,471 - - - - 536,471
Call loans from the Central Bank 25,155,291 9,093,410 - - 34,248,701
and banks
Due to the Central Bank and banks - - 49,713,800 - - 49,713,800
Financial liabilities designated at - - - - 8,293,730 8,293,730
fair value through profit or loss
Notes and bonds issued under 44,197 144,716 604,836 1,266,944 - 2,060,693
repurchase agreement
Interest payable 458,151 812,851 1,127,339 71,242 2 2,469,585
Deposits transferred from 10,500,000 21,359,335 35,402,210 - - 67,261,545
Chunghwa Post Co., Ltd.
Demand deposits 955,013,566 - - - - 955,013,566
Time deposits 102,844,567 153,191,825 413,340,264 44,219,865 675 713,597,196
Remittance 429,227 - - - - 429,227
Bank notes payable - - - 27,340,000 24,910,000 52,250,000
Cumulative earnings on 1,750 2,250 111,750 1,779,330 2,470,214 4,365,294
appropriated loan fund
Lease liabilities 41,681 59,658 229,877 646,770 167,086 1,145,072
----- End of picture text -----

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288

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4) Derivative financial liabilities maturity analysis

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 consolidated financial statement. The amount disclosed is based on the cash flows of the contracts and thus part of the amount disclosed may not correspond to the amount disclosed in the financial statement. As of December 31, 2021, the Bank had no derivative financial instruments settled by net amount. As of December 31, 2022, maturity analysis for the derivative financial liabilities settled by net amount is as follows:

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

December 31, 2022 0-30 days 31-90 days 91-180 days 181 days to 1 year Over 1 year Total
Derivative financial liabilities at fair
value through profit or loss
－ Foreign exchange derivative $ - 825 225 - - 1,050
instrument
----- End of picture text -----

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

i) Foreign exchange derivative financial instrument: Foreign exchange options settled by gross amount, foreign exchange forward contracts and currency swap contracts.

ii) 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:

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December 31, 2022 0-30 days 31-90 days 91-180 days 181 days to 1 year Over 1 year Total
Derivative financial instruments at fair
value through profit or loss
－ Foreign exchange derivative
instruments
Cash outflow $ 25,782,525 45,415,630 11,979,083 3,463,765 - 86,641,003
Cash inflow 27,862,886 48,002,551 12,577,650 3,500,326 - 91,943,413
－ Interest rate derivative
instrument
Cash outflow - 1,168 587 2,955 1,174 5,884
Cash inflow - 2,021 724 3,742 1,568 8,055
Total cash outflow 25,782,525 45,416,798 11,979,670 3,466,720 1,174 86,646,887
Total cash inflow 27,862,886 48,004,572 12,578,374 3,504,068 1,568 91,951,468
Net cash flow $ (2,080,361 ) (2,587,774 ) (598,704 ) (37,348 ) (394 ) (5,304,581 )
December 31, 2021 0-30 days 31-90 days 91-180 days 181 days to 1 year Over 1 year Total
Derivative financial instruments at fair
value through profit or loss
－ Foreign exchange derivative
instruments
Cash outflow $ 4,498,580 6,093,790 6,071,884 2,768,967 - 19,433,221
Cash inflow 4,447,438 6,113,200 6,105,833 2,777,705 - 19,444,176
－ Interest rate derivative
instrument
Cash outflow - 1,028 1,093 2,556 8,791 13,468
Cash inflow - 7,834 1,167 2,412 7,171 18,584
Total cash outflow 4,498,580 6,094,818 6,072,977 2,771,523 8,791 19,446,689
Total cash inflow 4,447,438 6,121,034 6,107,000 2,780,117 7,171 19,462,760
Net cash flow $ 51,142 (26,216 ) (34,023 ) (8,594 ) 1,620 (16,071 )
----- End of picture text -----

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5) Maturity analysis of off-balance sheet items

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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, 2022	Below 1 year	1-5 years	Over 5 years	Total
Operating lease income (lessor)	$ 1,027	1,389	-	2,416
December 31, 2021	Below 1 year	1-5 years	Over 5 years	Total
Operating lease income (lessor)	$ 3,325	2,414	-	5,739

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:

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(v) Market risk

1) Definition of market risk

2) Policies and procedures of market risk management

a) Strategy

i) 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.
ii) 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

290

3) Process for market risk management

In accordance with the rules of "Directions Governing the Market Risk Management of Taiwan Business Bank", the Bank shall conduct appropriate market risk evaluation and document the process for later review before financial 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

i) 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.
ii) 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

i) Valuation reports of various financial instruments are prepared regularly for executives to review and serve as the guidance for daily risk management operation.
ii) 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.

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d) Risk report

4) Scope and method of market risk management
a) Foreign exchange risk management
- i) 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.

ii) Applicable scope

All the financial instruments which apply to trading book position and banking book position and involve in foreign currencies.

iii) 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.

iv) Procedures of foreign exchange risk management

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.
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.

v) Process of foreign exchange risk management

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.
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 stop-limit per the regulations. If the loss amount reaches the suspension warning line or suspension limit of the financial transaction, risk management units shall report to the general manager. Provided that the loss amount reaches the annual suspension line, risk management 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
i) Definition of equity security risk

ii) Applicable scope

Financial instruments similar to equity security in all trading books.

292

iii) 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.

iv) Procedures of equity security risk management

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.
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.

v) Process of equity security risk management

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.

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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.
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

i) 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.

ii) Applicable scope

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

iii) 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.

iv) Procedures of interest rate risk management

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.
to assess the potential risk and benefit. In addition, the trade units shall choose investment target prudently through analyzing the issuers' credit, financial status, country risks and interest rate trends.

v) Process of interest rate risk management

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.
Monitoring and report

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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

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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
- i) 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.
- ii) 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

294

i) 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.
ii) 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
i) Identification and measurement

ii) Monitoring and report

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6) Value at Risk

a) Description of Value at Risk

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

b) Value at Risk models and assumptions

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:

i) Value at Risk cannot reflect the losses result from other type of risks, such as credit risk and liquidity risk.
ii) 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.
iii) Value at Risk model is based on historical data to evaluate the amount, and therefore it may not be able to predict the future changes of risk factors, especially for those exceptions result from significant market fluctuation.
7) Foreign exchange risk disclosure and sensitivity analysis

a) Foreign exchange risk exposure

i) Significant net positions of foreign currencies (Market risk)

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Significant net positions of foreign currencies (Market risk)
December 31, 2022
Foreign currency
amount
Currency (in thousands) NT$ amount
USD $ 504,348 15,496,092
JPY 2,069,083 480,234
AUD 14,865 308,895
ZAR 46,223 83,617
EUR 809 26,503
Significant net positions of foreign currencies (Market risk)
December 31, 2021
Foreign currency
amount
Currency (in thousands) NT$ amount
USD $ 448,924 12,414,993
JPY 2,103,814 505,967
AUD 13,590 273,023
EUR 2,113 66,306
CNY 11,566 50,208
----- End of picture text -----

Note 2: Net foreign currency is the absolute value of the net positions of each foreign currency.

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ii) Assets and liabilities of foreign currency

296

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December 31, 2022
Monetary financial assets Monetary financial liabilities
Foreign Foreign
currency currency
amount amount
Currency (in thousands) Spot rate NTD amount (in thousands) Spot rate NTD amount
USD $ 15,787,493 30.7250 485,070,722 15,262,164 30.7250 468,929,989
AUD 4,985,648 20.7800 103,601,765 4,890,551 20.7800 101,625,650
CNY 11,721,834 4.4110 51,705,010 11,740,765 4.4110 51,788,514
JPY 184,707,477 0.2321 42,870,605 183,141,677 0.2321 42,507,183
HKD 5,771,939 3.9400 22,741,440 5,348,671 3.9400 21,073,764
EUR 352,406 32.7600 11,544,821 352,361 32.7600 11,543,346
ZAR 4,251,194 1.8090 7,690,410 4,249,572 1.8090 7,687,476
GBP 45,244 37.0700 1,677,195 45,236 37.0700 1,676,899
NZD 34,139 19.4500 664,004 34,124 19.4500 663,712
CAD 14,564 22.6800 330,312 14,475 22.6800 328,293
SGD 7,992 22.8700 182,777 7,969 22.8700 182,251
SEK 34,420 2.9400 101,195 34,431 2.9400 101,227
Others (Note) - - 114,540 - - 119,278
Non-monetary financial assets Non-monetary financial liabilities
USD 974 30.7250 29,926 - - -
Note: Consolidated disclosure is applied for other currencies not over $100,000.
December 31, 2021
Monetary financial assets Monetary financial liabilities
Foreign Foreign
currency currency
amount amount
Currency (in thousands) Spot rate NTD amount (in thousands) Spot rate NTD amount
USD $ 13,445,369 27.6550 371,831,680 12,870,218 27.6550 355,925,879
AUD 4,679,690 20.0900 94,014,972 4,588,043 20.0900 92,173,784
CNY 5,206,159 4.3410 22,599,936 5,206,836 4.3410 22,602,875
JPY 83,411,891 0.2405 20,060,560 82,096,035 0.2405 19,744,096
HKD 5,362,994 3.5460 19,017,177 4,989,090 3.5460 17,691,313
EUR 436,915 31.3800 13,710,393 436,993 31.3800 13,712,840
ZAR 3,151,732 1.7340 5,465,103 3,150,118 1.7340 5,462,305
GBP 104,307 37.3600 3,896,910 104,411 37.3600 3,900,795
NZD 53,010 18.9400 1,004,009 52,980 18.9400 1,003,441
CAD 18,796 21.6600 407,121 18,927 21.6600 409,959
SGD 10,842 20.4800 222,044 10,869 20.4800 222,597
CHF 3,833 30.2150 115,814 3,913 30.2150 118,231
Others (Note) - - 84,086 - - 83,329
Non-monetary financial assets Non-monetary financial liabilities
USD 1,083 27.6550 29,950 - - -
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Note: Consolidated disclosure is applied for other currencies not over $100,000.

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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%.

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December 31, 2022
Depreciate by 1% Appreciate by 1%
Currency Income Equity Income Equity
USD $ (44,000 ) (63,299 ) 44,000 63,299
AUD 4,060 (23,440 ) (4,060 ) 23,440
HKD 3,029 (19,240 ) (3,029 ) 19,240
JPY (161 ) (3,450 ) 161 3,450
GBP (15 ) - 15 -
SGD (9 ) - 9 -
ZAR (31 ) - 31 -
CHF 51 - (51 ) -
CAD (5 ) - 5 -
THB (4 ) - 4 -
EUR (37 ) - 37 -
NZD (10 ) - 10 -
CNY (55,663 ) - 55,663 -
Total $ (92,795 ) (109,429 ) 92,795 109,429
December 31, 2021
Depreciate by 1% Appreciate by 1%
Currency Income Equity Income Equity
USD $ (54,235 ) (55,511 ) 54,235 55,511
AUD 4,053 (22,395 ) (4,053 ) 22,395
HKD 2,797 (15,842 ) (2,797 ) 15,842
JPY (5 ) (3,173 ) 5 3,173
GBP 19 - (19 ) -
SGD 6 - (6 ) -
ZAR (30 ) - 30 -
SEK (4 ) - 4 -
CHF 24 - (24 ) -
CAD 35 - (35 ) -
THB (4 ) - 4 -
EUR 16 - (16 ) -
NZD (13 ) - 13 -
CNY (51,012 ) - 51,012 -
Total $ (98,353 ) (96,921 ) 98,353 96,921
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8) Interest rate risk disclosure and sensitivity analysis

a) Interest rate sensitivity analysis

The assumption of interest rate sensitivity analysis is, under the circumstance that other conditions remain the

same, the yield of the market increase or decrease by 1 basis point (1 bp).

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December 31, 2022
Interest rate increases by 1 bp Interest rate decreases by 1 bp
Currency Income Equity Income Equity
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Currency	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022
	Interest rate increases by 1 bp				Interest rate decreases by 1 bp
	Income		Equity		Income		Equity
Trading book TWD Banking book TWD USD AUD HKD CNY ZAR Total		$ (512 ) - - - - - - $ (512)		(2,661 ) (46,200 ) (3,993 ) (364 ) (70 ) (1,335 ) (161 ) (54,784)		512 - - - - - - 512		2,661 46,200 3,993 364 70 1,335 161 54,784

298

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December 31, 2021
Interest rate increases by 1 bp Interest rate decreases by 1 bp
Currency Income Equity Income Equity
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Currency	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021
	Interest rate increases by 1 bp				Interest rate decreases by 1 bp
	Income		Equity		Income		Equity
Trading book TWD Banking book TWD USD AUD HKD CNY ZAR Total		$ (230 ) - - - - - - $ (230 )		(3,462 ) (54,536 ) (13,638 ) (606 ) (77 ) (1,956 ) (204 ) (74,479)		230 - - - - - - 230		3,462 54,536 13,638 606 77 1,956 204 74,479

	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022
	Effect on NII in 1 year		Effect on EVE
Scenario	TWD	USD	TWD	USD
Interest rate increases by 100 bp Interest rate decreases by 100 bp	3,962,492 (4,598,328 )	(24,074 ) 22,469	(5,148,928 ) 13,788,825	(58,960 ) 27,772

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	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2021
	Effect on NII in 1 year		Effect on EVE
Scenario	TWD	USD	TWD	USD
Interest rate increases by 100 bp Interest rate decreases by 100 bp	4,272,836 (5,293,553 )	(34,660 ) 3,502	(4,696,572 ) 8,616,664	(45,509 ) 63,806

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 (referred to as IBOR reform'). The Bank has exposures to IBORs on its financial instruments that will be replaced or reformed as part of these market-wide initiatives. The Bank considers 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 anunreformed contract').

The Bank's maining IBOR exposures at the reporting date are loans and corporate debt securities indexed to US dollar LIBOR. In March, 2021, the Financial Conduct Authority (FCA) announced that US dollar setting will either cease to be provided or no longer be representative after June 30 2023. The Bank had finished the process of implementing appropriate fallback clauses for all US dollar LIBOR-indexed exposures by the end of 2021.

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USD LIBOR EUR LIBOR GBP LIBOR JPY LIBOR CHF LIBOR
Total Amount with Total Amount with Total Amount with Total Amount with Total Amount with
amount of appropriate amount of appropriate amount of appropriate amount of appropriate amount of appropriate
unreformed fallback unreformed fallback unreformed fallback unreformed fallback unreformed fallback
contracts clause contracts clause contracts clause contracts clause contracts clause
----- End of picture text -----

	USD LIBOR	USD LIBOR	EUR LIBOR	EUR LIBOR	GBP LIBOR	GBP LIBOR	JPY LIBOR	JPY LIBOR	CHF LIBOR	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	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
December 31, 2022 Financial assets Discounts and loans Bond Investments Derivatives Interest rate swaps December 31, 2021 Financial assets Discounts and loans Bond Investments Derivatives Interest rate swaps	$ 55,072,000 17,391,000 5,531,000 70,757,000 22,804,048 9,402,700	23,939,000 1,259,000 5,531,000 22,182,000 691,000 9,402,700	- - - 402,000 - -	- - - 293,000 - -	- - - - - -	- - - - - -	- - - 1,830,000 - -	- - - 1,242,000 - -	- - - - - -	- - - - - -

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300

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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%.

		December 31, 2022	December 31, 2022
Change	Currency	Income	Equity
Equity security price increases by 1 % Equity security price decreases by 1 %	TWD USD TWD USD	3,359 10 (3,359 ) (10 )	- - - -

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

b) Value at Risk of equity security

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From January 1, 2022 to December 31,2022
Value at Risk Average Maximum Minimum
Equity security risk 5,038 13,963 1,399
From January 1, 2021 to December 31, 2021
Value at Risk Average Maximum Minimum
Equity security risk 6,959 14,786 3,827
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(vi) Transferred financial assets that are not fully derecognized

The transactions, relating to transferred financial assets not qualifying for full derecognition, the Bank conducts 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 has interest rate risk and credit risk, the said transferred assets are not fully derecognized.

As of December 31, 2022 and 2021, there were not any financial assets of the Bank that are not fully derecognized.

(vii) 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.

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

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December 31, 2022
Financial assets under offsetting or general agreement of net amount settlement or similar norm
Gross amounts of Net amount of Amounts not set off in the
Gross amounts financial liabilities financial assets balance sheet(d)
of recognized offset in the presented in the Financial
financial assets balance sheet balance sheet instruments Cash collateral Net amount
Item (a) (b) (c)=(a)-(b) (Note) received (e)=(c)-(d)
Derivative financial $ 551,095 - 551,095 727,720 2,527,996 (2,704,621)
instruments
December 31, 2022
Financial liabilities under offsetting or general agreement of net amount settlement or similar norm
Gross amounts of Gross amounts of Net amount of Amounts not set off in the
recognized financial assets financial liabilities balance sheet(d)
financial offset in the presented in the Financial
liabilities balance sheet balance sheet instruments Cash collateral Net amount
Item (a) (b) (c)=(a)-(b) (Note) pledged (e)=(c)-(d)
Derivative financial $ 229,816 - 229,816 - 2,422,569 (2,192,753)
instruments
December 31, 2021
Financial assets under offsetting or general agreement of net amount settlement or similar norm
Gross amounts of Net amount of Amounts not set off in the
Gross amounts financial liabilities financial assets balance sheet(d)
of recognized offset in the presented in the Financial
financial assets balance sheet balance sheet instruments Cash collateral Net amount
Item (a) (b) (c)=(a)-(b) (Note) received (e)=(c)-(d)
Derivative financial $ 230,137 - 230,137 699,723 489,795 (959,381)
instruments
December 31, 2021
Financial liabilities under offsetting or general agreement of net amount settlement or similar norm
Gross amounts of Gross amounts of Net amount of Amounts not set off in the
recognized financial assets financial liabilities balance sheet(d)
financial offset in the presented in the Financial
liabilities balance sheet balance sheet instruments Cash collateral Net amount
Item (a) (b) (c)=(a)-(b) (Note) pledged (e)=(c)-(d)
Derivative financial $ 63,547 - 63,547 - 215,832 (152,285)
instruments
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(aq) Capital Management

(i) 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.
(ii) 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.
(iii) 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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(iv) 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.

302

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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

	Item	Item	December 31, 2022	December 31, 2021
Eligible capital	Common stock equity		100,331,709	96,157,516
	Other tier 1 capital		18,000,000	17,487,758
	Tier 2 capital		40,066,956	41,159,410
	Eligible Capital		158,398,665	154,804,684
Risk- weighted assets		Standardized approach	1,190,251,924	1,066,163,181
	Credit risk	Internal ratings-based approach	-	-
		Securitization	-	-
		Basic indicator approach	-	-
	Operational risk	Standardized approach/selective standardized approach	42,908,871	38,884,436
		Advanced measurement approach	-	-
		Standardized approach	38,716,513	50,859,425
	Market risk	Internal model approach	-	-
	Total risk-weighted assets		1,271,877,308	1,155,907,042
Capital adequacyratio			12.45%	13.39%
Common stock equity/ Risk-weighted assets ratio			7.89%	8.32%
Tier 1 capital / Risk-weighted assets ratio			9.30%	9.83%
Leverage ratio			5.48%	5.41%

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".
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)/ Riskweighted assets

Note 6. Leverage ratio = Net Tier 1 capital / Total risk exposure.

quarter.

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(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 nine months ended December 31, 2022 and 2021 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:

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Non-cash changes
Foreign
January 1, exchange rate Fair value December 31,
2022 Cash flows movement changes Other changes 2022
Financial liabilities at fair value $ 8,293,730 - 921,000 152,865 - 9,367,595
through profit or loss
Bank notes payable 52,250,000 - - - - 52,250,000
Lease liabilities 1,145,072 (413,133 ) 25,111 - 459,460 1,216,510
Total liabilities from financing $ 61,688,802 (413,133 ) 946,111 152,865 459,460 62,834,105
activities
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Non-cash changes
Foreign
January 1, exchange rate Fair value December 31,
2021 Cash flows movement changes Other changes 2021
Financial liabilities at fair value $ 8,411,020 - (133,500 ) 16,210 - 8,293,730
through profit or loss
Bank notes payable 53,250,000 (1,000,000 ) - - - 52,250,000
Lease liabilities 1,054,665 (411,827 ) 302 - 501,932 1,145,072
Total liabilities from financing $ 62,715,685 (1,411,827 ) (133,198 ) 16,210 501,932 61,688,802
activities
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(as) Structured entities that not included in consolidated financial reports

(i) 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:

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Types of structured entities Nature and purpose Interests held by the Bank
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Types of structured entities	Nature and purpose	Interests held by the Bank

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

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

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December 31, 2022 December 31, 2021
Private fund $ 96,475 102,223
Asset securitization product 560,023 728,147
Total $ 656,498 830,370
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(iii) The carrying amounts of interests held by the Bank in these structured entities were as follows:

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Assets held by the Bank December 31, 2022 December 31, 2021
Financial assets at fair value through profit or loss $ 96,475 102,223
Financial assets at fair value through other comprehensive 475,485 578,850
income
Investments in debt instruments at amortized cost 84,538 149,297
Total $ 656,498 830,370
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304

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

(iv) As of December 31, 2022 and 2021, the Bank has not provided any financial support to its special purpose entities that is not included in consolidated financial reports.

(7) Related-party transactions

(a) Names and relationship with related parties

The followings are entities that have had transactions with related party during the periods covered in the financial statementsconsolidated financial statements.

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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, Executive Yuan (Note 1) Corporate director of the Bank
Land Bank of Taiwan (Note 2) 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 Institution Plc. Investee company of the Bank
TBB Venture Capital Co., Ltd. Investee company of the Bank
TBB Consulting Co., Ltd. Investee company of the Bank
Taiwan Business Bank International Leasing Co., Ltd. Investee companies measured by using the equity method
Small and Medium Enterprise Credit Guarantee Fund of
Substantive related parties
Taiwan
TBB No. 1 Venture Capital Limited Partnership (Note 3) Substantive related parties
Media Talk Consulting Co., Ltd. (Notes 3) Associates
Others Management and other related parties of the Bank
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(b) Significant transactions with related parties

(i) Due from banks

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December 31, 2022
Amount %
Bank of Taiwan $ 164,936 0.72
December 31, 2021
Amount %
Bank of Taiwan $ 157,131 1.03
Interest rates are the same as those with regular clients.
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(ii) Call loans to banks

For the year ended December 31, 2022	Maximun balance	December 31, 2022	Interest Income	Annual interest rate
Bank of Taiwan	$ 1,098,264	-	1,358	0.13%~3.81%
For the years ended December 31, 2021	Maximun balance	December 31, 2021	Interest Income	Annual interest rate
Bank of Taiwan Land Bank of Taiwan Total	$ 3,038,983 1,507,961 $ 4,546,944	- - -	1,064 1,069 2,133	0.14%~3.80% 0.09%~3.30%

Interest rates are the same as those with regular clients.

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(iii) Call loans from banks

For the year ended December 31, 2022	Maximum balance	December 31, 2022	Interest Income	Annual interest rate
Bank of Taiwan	$ 9,434,791	1,786,360	61,939	0.04%~5.18%
For the year ended December 31, 2021	Maximum balance	December 31, 2021	Interest Income	Annual interest rate
Bank of Taiwan Land Bank of Taiwan Total	$ 8,768,558 1,384,796 $ 10,153,354	3,374,798 - 3,374,798	18,925 135 19,060	0.01%~2.80% 0.09%~2.35%

Interest rates are the same as those with regular clients.

(iv) Deposits

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December 31, 2022
Amount %
TBB International Leasing Co., Ltd. $ 19,594 -
Taiwan Business Bank International Leasing Co., Ltd. 177,399 0.01
TBB Venture Capital Co., Ltd. 102,534 0.01
TBB Consulting Co., Ltd. 56,279 -
Others 1,851,872 0.11
Total $ 2,207,678 0.13
December 31, 2021
Amount %
TBB International Leasing Co., Ltd. $ 43,794 -
Taiwan Business Bank International Leasing Co., Ltd. 175,563 0.01
TBB Venture Capital Co., Ltd. 120,727 0.01
TBB Consulting Co., Ltd. 43,083 -
Others 2,435,868 0.15
Total $ 2,819,035 0.17
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Interest rates are the same as those with regular clients.

(v) Credit

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December 31, 2022
Number of Performing situations
clients or Transaction terms
name of related Highest Ending Performing Non-performing are different to
Category party balance balance loan Loans Collaterals regular clients
Employee consumer 46 18,311 14,727 14,727 - none none
loans
Self-use home 127 557,503 511,280 511,280 - real estate none
mortgages loans
Others Natural person 617,163 590,656 590,656 - real estate none
December 31, 2021
Number of Performing situations
clients or Transaction terms
name of related Highest Ending Performing Non-performing are different to
Category party balance balance loan Loans Collaterals regular clients
Employee consumer 40 17,353 13,480 13,480 - none none
loans
Self-use home 130 517,303 490,456 490,456 - real estate none
mortgages loans
Others Natural person 499,016 463,274 463,274 - real estate none
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306

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(vi) Donation::

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(vii) Guarantees: None.

(viii) Service fees: None.

(ix) Rental revenue:

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For the years ended December 31,
2022 2021
TBB International Leasing Co., Ltd. $ 691 691
TBB Venture Capital Co., Ltd. 172 324
TBB Consulting Co., Ltd. 716 87
Total $ 1,579 1,102
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(x) Derivatives financial instrument transactions: None.

(xi) Sales of Non–Performing Loans Transactions: None.

(c) Major management salary information

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For the years ended December 31,
2022 2021
Salary and other short-term employee benefits $ 124,242 85,181
Post-employment benefits 2,150 2,362
Total $ 126,392 87,543
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(8) Pledged assets: Please refer to notes 6(h) for more details.

(9) Commitments and contingencies:

(a) Significant commitments and contingencies were as follows:

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(b) Unrecognized contractual commitments:

As of December 31, 2022 and 2021, major constructions in progress and purchases amounted to $1,018,993 and $583,601 respectively, of which $911,848 and $408,698 respectively, remained unpaid.

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(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, 2022 and 2021 is as follows:

Trust Balance Sheet

December 31, 2022 and 2021

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Trust Assets December 31, 2022 December 31, 2021
Cash in Bank $ 6,303,284 6,885,022
Stocks 928,987 845,570
Funds 73,259,462 71,899,727
Bonds 2,935,786 1,356,856
Real estate 21,657,475 16,703,682
Securities custody 112,621,601 114,091,688
Other assets 443,482 503,031
Total trust assets $ 218,150,077 212,285,576
Trust Liabilities December 31, 2022 December 31, 2021
Payables $ 9 9
Securities held for custody 112,621,601 114,091,688
Trust capital 105,439,231 98,115,347
Accumulated loss (332,731 ) (2,478,944 )
Net income 421,967 2,557,476
Total trust liabilities $ 218,150,077 212,285,576
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Trust Property Accounts

December 31, 2022 and 2021

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Note: As of December 31, 2022 and 2021, the amounts above included OBU transaction on "foreign currency designated trust funds investment in foreign negotiable securities business" amounting to $1,580,471 and $1,254,366, respectively.

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Trust Income Statement

For the years ended December 31, 2022 and 2021

308

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For the years ended December 31,
Investment items 2022 2021
Trust Revenue
Interest income $ 87,436 69,014
Realized capital gain-fund 338,547 1,700,677
Realized gain-stocks 3,147 1,112
Realized gain-bonds 5,059 24,585
Dividend revenue 2,147,052 1,981,168
Other revenues 4,179 5,007
Sub-total 2,585,420 3,781,563
Trust Expense
Administrative expenses 43,494 63,735
Postage and telecommunication expense 841 1,546
Duties 49 19
Realized loss-stocks 2,104,595 1,151,680
Realized loss-bonds 11,072 5,033
Capital fee - 441
Other expenses 3,195 1,592
Sub-total 2,163,246 1,224,046
Income before income tax 422,174 2,557,517
Income tax expense (207 ) (41 )
Net income $ 421,967 2,557,476
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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 Federal Court of Justice 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 of Justice and filed a defense against I.C.C.I. of objections. The case is currently being tried by the Regional Court of Frankfurt. The Federal Court of Justice has denied 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 in compensation and held the Bank as jointly liable, and by I.C.C.I, which demanded the Bank to pay USD$20,060 less its reimbursed amount to make a security deposit of EUR$14,000. 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$20,060 for I.C.C.I. Also, I.C.C.I must compensate Star Marine for USD$1,130 as well as make a security deposit of EUR$14,000 in the domestic bank in Congo. I.C.C.I has been paid around EUR$14,860. According to the statement of plantiff and considering that I.C.C.I has already received about EUR $14,860, 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, 2022, the Bank has accrued the compensation of $259,635 and EUR$9,660.

(10) Loss from major disasters:None

(11) Subsequent Events:None

(12) Others:

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

(i) Loan quality:

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Month/Year December 31, 2022
Non-performing Non-performing Allowance for
Total loans Coverage ratio
Items loans loan ratio credit losses
Secured 1,602,465 713,092,812 0.22% 8,945,106 558.21%
Corporate
finance Unsecured 691,641 372,391,080 0.19% 4,952,203 716.01%
Residence mortgages(Note 4) 187,800 170,335,261 0.11% 2,130,940 1,134.69%
Cash cards - - -% - -%
Consumer
finance Microcredit(Note 5) 4,802 325,663 1.47% 7,370 153.48%
Others Secured 266,055 149,120,110 0.18% 1,868,990 702.48%
(Note 6)
Unsecured 14,614 13,228,525 0.11% 174,007 1,190.69%
Total loan business 2,767,377 1,418,493,451 0.20% 18,078,616 653.28%
Overdue Allowance for
Total receivables Delinquency ratio Coverage ratio
receivables credit losses
Credit cards business 437 1,122,771 0.04% 14,292 3,270.48%
Account receivable factoring-without recourse - - -% - -%
(Note 7)
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Month/Year December 31, 2021
Non-performing Non-performing Allowance for
Total loans Coverage ratio
Items loans loan ratio credit losses
Corporate Secured 1,324,552 686,386,566 0.19% 7,855,442 593.06%
finance Unsecured 1,800,964 330,974,304 0.54% 4,246,313 235.78%
Residence mortgages(Note 4) 228,806 141,504,543 0.16% 1,625,312 710.35%
Cash cards - 2 -% - -%
Consumer
finance Microcredit(Note 5) 6,085 417,829 1.46% 8,809 144.77%
Others Secured 307,198 147,964,837 0.21% 1,702,136 554.08%
(Note 6)
Unsecured 17,548 10,976,267 0.16% 138,805 791.00%
Total loan business 3,685,153 1,318,224,348 0.28% 15,576,817 422.69%
Overdue Allowance for
Total receivables Delinquency ratio Coverage ratio
receivables credit losses
Credit cards business 720 1,062,097 0.07% 18,375 2,552.08%
Account receivable factoring-without recourse - - -% - -%
(Note 7)
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Note 1 Non-performing loans represent the amount of overdue loans as reported in accordance with the "Regulations on the Procedures for Banking Institutions to Evaluate Assets and Deal with Past Due/Non-performing Loans". The credit card overdue loans represent the amount of overdue loans as reported in accordance with Jin-Kuan-Yin-(4)-Zi No. 0944000378, dated July 6, 2005.
Note 2 Non-performing loan ratio = Non-performing loans ÷ total loans; Credit card delinquency ratio = Overdue receivables ÷ receivables

310

Note 3 Coverage ratio for loans = allowance for credit losses ÷ non-performing loans; Coverage ratio for credit card business = allowance for credit losses ÷ overdue receivables.
Note 4 For residential mortgage loans, a borrower provides his/her (or spouse's or minor child's) house as collateral in full and pledges it to the financial institution for the purpose of obtaining funds to purchase property and to construct or repair a house.
cards or cash cards.
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, 2022	December	31, 2021
	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	Receivables may be exempted from reporting as overdue receivables
Pursuant to a contract under a debt negotiation plan (Note1) Pursuant to a contract under a debt liquidation plan and a debt relief plan (Note 2) Total	$ 258 54,109 $ 54,367	1,112 22,489 23,601	372 51,418 51,790	1,486 26,536 28,022

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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(ii) Concentration of credit extensions

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December 31, 2022
Credit amount to equity
Ranking Group enterprise Credit amount ratio (%)
1 A company. (Railway transportation) 21,202,474 20.37%
2 B group. (Real estate for sale and rental with own or leased 16,381,315 15.74%
property)
3 C group. (Other holding) 9,788,164 9.40%
4 D group. (Real estate development) 8,982,725 8.63%
5 E group. (Steel rolling and extruding) 8,715,755 8.37%
6 F group. (Computers manufacturing) 6,523,340 6.27%
7 G group. (Real estate development) 6,261,408 6.01%
8 H group. (Real estate development) 6,027,170 5.79%
9 I group. (Liquid crystal panel and components manufacturing) 5,531,674 5.31%
10 J group. (Financial leasing) 4,565,169 4.39%
December 31, 2021
Credit amount to equity
Ranking Group enterprise Credit amount ratio (%)
1 A company. (Railway transportation) 23,637,474 23.26%
2 B group. (Real estate for sale and rental with own or leased 11,438,878 11.25%
property)
3 E group. (Steel rolling and extruding) 9,135,146 8.99%
4 D group. (Real estate development) 9,024,525 8.88%
5 C group. (Other holding) 8,571,432 8.43%
6 H group. (Real estate development) 6,383,825 6.28%
7 F group. (Computers manufacturing) 5,977,657 5.88%
8 G group. (Real estate development) 5,893,403 5.80%
9 K group. (Air transportation) 4,393,761 4.32%
10 J group. (Financial leasing) 4,201,781 4.13%
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Note 1 The top ten enterprise groups other than government or stated-owned enterprises are ranked according to their total outstanding credit amount. If the borrowers belong to an enterprise group, the aggregate credit balance of the enterprise should be calculated and disclosed as a code number for each such borrower together with an indication of the borrowers' line of business. In addition, if the borrowers are enterprise groups, the enterprise group's industry sector with the maximum exposure to credit risk in its main industry sector should be disclosed, along with the "class" of the industry, in compliance with the Standard Industrial Classification System of the R.O.C. posted by the Directorate-General of Budget, Accounting and Statistics, Executive Yuan, R.O.C. Note 2 Enterprise group is as defined in Article 6 of the "Supplementary Provisions to the Taiwan Stock Exchange Corporation Rules for Review of Securities Listings".

Note 3 Consists of loans (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.

The Foreign bank should be calculated in the net value of Taiwan branch.

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Unit : %

312

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(iii) Interest rate-sensitivity information

1) Analysis of interest rate-sensitive assets and liabilities (New Taiwan dollars)

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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-sensitive gap to net worth (%) 116.64
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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-rate-sensitive liabilities.

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

Unit : In Thousands of US Dollars, %

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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 rate-sensitive 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).

(iv) Profitability

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Unit: %

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Item December 31, 2022 December 31, 2021
Before income tax 0.59 0.30
The ratio of return on assets
After income tax 0.49 0.27
Before income tax 11.68 5.77
The ratio of return on equity
After income tax 9.84 5.09
Net income ratio 35.67 21.29
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Note 4 Income before (after) income tax expense refers to income accumulated from January of the current year to the current period end.

(v) Maturity analysis for assets and liabilities

1) Maturity analysis in New Taiwan dollars

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Note: Listed amounts are denominated in New Taiwan dollars of the Bank, including loan commitments of credit agreement and estimates to outflow $390,839,630.

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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.

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314

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2) Maturity analysis in US dollars

Unit : In Thousands of US Dollars

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Note: Listed amounts are denominated in US dollars of the Bank, including loan commitments of credit agreement and estimates to outflow USD $912,002.

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

(13) Other disclosures:

(a) Information on significant transactions:

(i) Cumulative purchase or sale of the same investee's capital stock up to $300,000 or 10% of paid-in capital: None.
(ii) Acquisition of real estate amounting to over $300,000 or 10% of paid-in capital: None.

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

(iv) Discount of commissions fees with related parties amounting to over $5,000: None.
(v) Receivables from related parties amounting to over $300,000 or 10% of paid-in capital: None.
(vi) Sale of non-performing loans information: None.
(vii) Types of securitization instruments and related information approved by financial assets securitization rules or real estate securitization rules: None.

(viii) Other significant transactions that might have influence over the decision-making process of the financial statements users: None.

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(b) Information on investees:

(i) The following is the information on investees (excluding information on investees in Mainland China):

(Unit : thousand shares)

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The cross holding of the Bank and its related parties
Number of Total Note
Name of Main business Shareholding Book Investment Number of proforma Number of Shareholding
Location
investee scope ratio value gain (loss) shares shares shares ratio
TBB Taiwan Leasing 100.00% 1,516,406 41,673 150,000 - 150,000 100.00%
International business
Leasing Co.,
Ltd.
TBB Cambodia SMEs and 100.00% 624,591 26,911 20 - 20 100.00%
(Cambodia) personal
Microfinance finance
Institution Plc business
TBB Venture Taiwan Investing 100.00% 1,258,512 202,343 105,000 - 105,000 100.00%
Capital Co., Ltd. business
TBB Consulting Taiwan Consulting 100.00% 97,947 49,356 5,000 - 5,000 100.00%
Co., Ltd. business
Media Talk Taiwan Investing 20.00% 808 (1,192) 200 - 200 20.00%
Consulting Co., cultural and
Ltd. creative
business
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(ii) Loans to others:

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The
necessary Limited Total
Actual Range of Nature reason for Allowance Guarantee amount for limited
Interaction Related Highest Ending drawdown of the Dealing short-term for individual amount
NO. Creditor Debtor Account party Amount balance amount interest rate loan amount loans bad debts Name Value object for loan
1 TBB International Chao-Yang Financial No 28,442 11,781 20,000 2%-10% 2 - To the lender 120 None - 379,101 1,516,403
Leasing Co., Ltd. International Co., Ltd. receivables for buying
goods
1 TBB International Hsin Chuan Financial No 146,155 62,745 100,000 2%-10% 2 - To the lender 634 None - 379,101 1,516,403
Leasing Co., Ltd. Construction Co., Ltd. receivables for buying
goods
1 TBB International Sian Shang Frozen Financial No 28,442 10,115 20,000 2%-10% 2 - To the lender 103 None - 379,101 1,516,403
Leasing Co., Ltd. Food Co., Ltd. receivables for buying
goods
1 TBB International Xi Quan Restaurant Financial No 104,957 53,000 106,000 2%-10% 2 - To the lender 550 None - 379,101 1,516,403
Leasing Co., Ltd. Co., Ltd receivables for buying
goods
1 TBB International Acon-Holding INC. Financial No 37,570 7,570 30,000 2%-10% 2 - To the lender 76 None - 379,101 1,516,403
Leasing Co., Ltd. receivables for buying
goods
1 TBB International Pei Xian Seafood Co., Financial No 28,442 11,781 20,000 2%-10% 2 - To the lender 120 None - 379,101 1,516,403
Leasing Co., Ltd. Ltd. receivables for buying
goods
1 TBB International Maw Shing Top Co., Financial No 26,481 10,971 15,000 2%-10% 2 - To the lender 112 None - 379,101 1,516,403
Leasing Co., Ltd. Ltd. receivables for buying
goods
1 TBB International Yu Ding Investment Financial No 77,555 50,000 50,000 2%-10% 2 - To the lender 518 None - 379,101 1,516,403
Leasing Co., Ltd. Co., Ltd. receivables for buying
goods
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316

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The
necessary Limited Total
Actual Range of Nature reason for Allowance Guarantee amount for limited
Interaction Related Highest Ending drawdown of the Dealing short-term for individual amount
NO. Creditor Debtor Account party Amount balance amount interest rate loan amount loans bad debts Name Value object for loan
1 TBB International Chaishan Foods Co., Financial No 50,000 - 50,000 2%-10% 2 - To the lender - None - 379,101 1,516,403
Leasing Co., Ltd. Ltd. receivables for buying
goods
1 TBB International Yu Shan Financial No 15,000 - 15,000 2%-10% 2 - To the lender - None - 379,101 1,516,403
Leasing Co., Ltd. Environmental receivables for buying
Engineering Co., Ltd. goods
1 TBB International Chao-Chi Property Financial No 15,000 10,078 15,000 2%-10% 2 - To the lender 103 None - 379,101 1,516,403
Leasing Co., Ltd. Management receivables for buying
Consulting Co.,Ltd. goods
1 TBB International Tai Chang Fiber Co., Financial No 15,000 10,092 15,000 2%-10% 2 - To the lender 103 None - 379,101 1,516,403
Leasing Co., Ltd. Ltd receivables for buying
goods
1 TBB International Risingsun Wide Food Financial No 30,000 28,082 30,000 2%-10% 2 - To the lender 288 None - 379,101 1,516,403
Leasing Co., Ltd. Corp. receivables for buying
goods
1 TBB International Yu Cheng Precision Financial No 12,000 9,045 12,000 2%-10% 2 - To the lender 92 None - 379,101 1,516,403
Leasing Co., Ltd. Industry Co.,Ltd. receivables for buying
goods
1 TBB International Jiou Chang Motor Co., Financial No 10,000 10,000 10,000 2%-10% 2 - To the lender 103 None - 379,101 1,516,403
Leasing Co.,Ltd. Ltd. receivables for buying
goods
1 TBB International Liang-wei Tobacco & Financial No 10,000 10,000 10,000 2%-10% 2 - To the lender 103 None - 379,101 1,516,403
Leasing Co.,Ltd. Liquor Co., Ltd. receivables for buying
goods
1 TBB International Jia Ho Food Co., Ltd. Financial No 20,000 20,000 20,000 2%-10% 2 - To the lender 206 None - 379,101 1,516,403
Leasing Co.,Ltd. receivables for buying
goods
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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

Note5: Total limited amount for loan: 100% net worth of the latest TBB International Leasing Co.,Ltd.'s audited

Ⅵ

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(iii) Endorsements and guarantee for others: None

(iv) Acquisition of securities:

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At the end of the period
Relationship Share
Type and name of with the Number of Carrying proportion Market price
Company acquired the security security issuer Account shares amount (Note 2) (Note 1) Note
TBB International Taiwan Buisness Parent company Investment under - 953,828 100.00% 953,828
Leasing Co., Ltd. International Leasing equity method
Co., Ltd.
TBB International G12245 、 G12246 - Financial assets at - 100,000 -% 100,000 Financial
Leasing Co., Ltd. fair value through debentures
profit or loss
TBB Venture Capital G12245 - Financial assets at - 100,000 -% 100,000 Financial
Co., Ltd. fair value through debentures
profit or loss
TBB Venture Capital Powerchip - Financial assets at 250 8,013 0.01% 8,013 Listed Stocks
Co., Ltd. Semiconductor fair value through
Manufacturing profit or loss
Corporation
TBB Venture Capital Eir Genix, Inc. - Financial assets at 845 104,780 0.28% 104,780 OTC Stocks
Co., Ltd. fair value through
profit or loss
TBB Venture Capital Chenfull Precision - Financial assets at 380 27,930 0.64% 27,930 OTC Stocks
Co., Ltd. Co.,Ltd. fair value through
profit or loss
TBB Venture Capital Lungteh - Financial assets at 1,702 113,163 1.74% 113,163 Emerging Stocks
Co., Ltd. Shipbuilding Co., fair value through
Ltd. profit or loss
TBB Venture Capital Ping Ho - Financial assets at 150 8,730 0.51% 8,730 Emerging Stocks
Co., Ltd. Environmental fair value through
Technology Co., Ltd. profit or loss
TBB Venture Capital Handa - Financial assets at 1,141 139,737 0.88% 139,737 Emerging Stocks
Co., Ltd. Pharmaceuticals, fair value through
Inc. profit or loss
TBB Venture Capital Tigerair Taiwan - Financial assets at 1,973 61,360 0.49% 61,360 Emerging Stocks
Co., Ltd. Co.,Ltd. fair value through
profit or loss
TBB Venture Capital Energenesis - Financial assets at 340 14,399 0.51% 14,399 Emerging Stocks
Co., Ltd. Biomedical Co., Ltd. fair value through
profit or loss
TBB Venture Capital Evergreen Aviation - Financial assets at 468 37,580 0.13% 37,580 Emerging Stocks
Co., Ltd. Technologies fair value through
Corporation profit or loss
TBB Venture Capital Locus Cell Co., Ltd. - Financial assets at 1,362 48,760 0.68% 48,760 Emerging Stocks
Co., Ltd. fair value through
profit or loss
TBB Venture Capital Starlux Airlines Co., - Financial assets at 3,860 73,147 0.21% 73,147 Emerging Stocks
Co., Ltd. Ltd. fair value through
profit or loss
TBB Venture Capital Pinkoi Inc. - Financial assets at 93 30,156 0.53% 30,156 Unlisted Stocks
Co., Ltd. fair value through
profit or loss
TBB Venture Capital Song Chuan - Financial assets at 415 24,898 0.74% 24,898 Unlisted Stocks
Co., Ltd. Precision Co., Ltd. fair value through
profit or loss
TBB Venture Capital Techplasma - Financial assets at 821 54,267 2.87% 54,267 Unlisted Stocks
Co., Ltd. Technology Co., Ltd. fair value through
profit or loss
TBB Venture Capital Hephas Energy Co., - Financial assets at 680 88,349 2.96% 88,349 Unlisted Stocks
Co., Ltd. Ltd. fair value through
profit or loss
TBB Venture Capital Ren Chin Electric - Financial assets at 250 3,835 2.61% 3,835 Unlisted Stocks
Co., Ltd. Conductor Co., Ltd. fair value through
profit or loss
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318

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At the end of the period
Relationship Share
Type and name of with the Number of Carrying proportion Market price
Company acquired the security security issuer Account shares amount (Note 2) (Note 1) Note
TBB Venture Capital Manford Machinery - Financial assets at 1,195 20,315 2.99% 20,315 Unlisted Stocks
Co., Ltd. Co., Ltd. fair value through
profit or loss
TBB Venture Capital Yuh Shan - Financial assets at 500 22,005 1.96% 22,005 Unlisted Stocks
Co., Ltd. Enviromental fair value through
Engineering Co., profit or loss
Ltd.
TBB Venture Capital Huang Chieh Metal - Financial assets at 286 2,940 0.48% 2,940 Unlisted Stocks
Co., Ltd. Holdings Co., Ltd. fair value through
profit or loss
TBB Venture Capital Iovtec Co., Ltd. - Financial assets at 424 21,857 2.93% 21,857 Unlisted Stocks
Co., Ltd. fair value through
profit or loss
TBB Venture Capital e-Formula - Financial assets at 600 8,952 2.76% 8,952 Unlisted Stocks
Co., Ltd. Technologies, Inc. fair value through
profit or loss
TBB Venture Capital Han-win Technology - Financial assets at 453 6,272 2.20% 6,272 Unlisted Stocks
Co., Ltd. Co., Ltd fair value through
profit or loss
TBB Venture Capital Ina Energy - Financial assets at 2,000 25,800 1.00% 25,800 Unlisted Stocks
Co., Ltd. Corporation fair value through
profit or loss
TBB Venture Capital Amazing Cool - Financial assets at 390 3,916 2.86% 3,916 Unlisted Stocks
Co., Ltd. Technology fair value through
Corporation. profit or loss
TBB Venture Capital Long-Shun Green - Financial assets at 720 28,800 2.40% 28,800 Unlisted Stocks
Co., Ltd. EnergyTechnology fair value through
Ltd. profit or loss
TBB Venture Capital Gamamobi Taiwan - Financial assets 200 1,690 1.00% 1,690 Unlisted Stocks
Co., Ltd. Co., Ltd at fair value
through other
comprehensive
income
TBB Venture Capital Toyo Automation - Financial assets at 250 26,250 0.95% 26,250 Unlisted Stocks
Co., Ltd. Co., Ltd. fair value through
profit or loss
TBB Venture Capital aetherAI Co., Ltd. - Financial assets at 400 10,000 0.72% 10,000 Unlisted stocks
Co., Ltd. fair value through
profit or loss
TBB Venture Capital GoodLinker Co., Ltd. - Financial assets at 100 3,000 2.86% 3,000 Unlisted Stocks
Co., Ltd. fair value through
profit or loss
TBB Venture Capital Yiyi Pictures Co Ltd. - Financial assets at 9 2,992 1.10% 2,992 Unlisted Stocks
Co., Ltd. fair value through
profit or loss
TBB Venture Capital Inbound Asia Co., - Financial assets at 83 3,000 0.41% 3,000 Unlisted Stocks
Co., Ltd. Ltd. fair value through
profit or loss
TBB Venture Capital TFBS Bioscience, - Financial assets 250 13,500 0.75% 13,500 Unlisted Stocks
Co., Ltd. Inc. at fair value
through other
comprehensive
income
TBB Venture Capital Asia Hydrogen - Financial assets at 132 5,000 1.98% 5,000 Unlisted Stocks
Co., Ltd. Energy Corporation fair value through
profit or loss
TBB Venture Capital kuang shih AI Co., - Financial assets at 1,600 20,800 8.89% 20,800 Unlisted Stocks
Co., Ltd. Ltd. fair value through
profit or loss
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At the end of the period
Relationship Share
Type and name of with the Number of Carrying proportion Market price
Company acquired the security security issuer Account shares amount (Note 2) (Note 1) Note
TBB Venture Capital Longwalk social - Financial assets at 120 3,000 12.77% 3,000 Unlisted Stocks
Co., Ltd. enterprise, Co., Ltd. fair value through
profit or loss
TBB Venture Capital Carpost Co., Ltd. - Financial assets at 330 3,960 2.92% 3,960 Unlisted Stocks
Co., Ltd. fair value through
profit or loss
TBB Venture Capital Honley Auto. Parts - Financial assets at 3,000 36,000 1.78% 36,000 Unlisted Stocks
Co., Ltd. Co., Ltd. fair value through
profit or loss
TBB Venture Capital Taiwania Buffalo - Financial assets at - 35,119 4.57% 35,119 Private fund
Co., Ltd. III Biotechnology fair value through
VentureCapital LLP. profit or loss
TBB Venture Capital Ju He Venture - Financial assets at - 19,071 2.46% 19,071 Private fund
Co., Ltd. Capital LLP. fair value through
profit or loss
TBB Venture Capital TBB No. 1 Venture - Financial assets at - 11,831 1.12% 11,831 Private fund
Co., Ltd. Capital Limited fair value through
Partnership profit or loss
TBB Venture Capital Jia Da International - Financial assets 2,919 29,807 8.52% 29,807 Unlisted Stocks
Co., Ltd. Development Co., at fair value
Ltd. through other
comprehensive
income
TBB Consulting Co., Media Talk Associates Investment under - 808 20.00% 808
Ltd. Consulting Co., Ltd. equity method
TBB Consulting Co., TBB No. 1 Venture - Financial assets at - 1,183 0.11% 1,183 Private fund
Ltd. Capital Limited fair value through
Partnership profit or loss
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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.
(v) Accumulative purchases or sales of the same investee companies amounting to over $300,000 or 10% of paid-in capital: None.
(vi) Acquisition of real estate amounting to over $300,000 or 10% of paid-in capital: None.
(vii) Disposition of real estate amounting to over $300,000 or 10% of paid-in capital: None.
(viii) Discount of commissions and handling fees with related parties amounting to over $5,000: None.
(ix) Receivables from related parties amounting to over $300,000 or 10% of paid-in capital: None.
(x) Transactions of financial derivatives: None.
(xi) Sale of non-performing loans information: None.
(xii) Types of securitization instruments and related information approved by financial assets securitization rules or real estate securitization rules: None.
(xiii) Other significant transactions that might have substantial influence over the decision making of the financial statement users: None.

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(c) Information on investments in Mainland China:

(i) Name and major business item of the investee in China:

Name of investee company in Mainland China			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 proft 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
	Major business	Paid-in capital			Transferred out	Recovered
Taiwan Business Bank , Ltd. Shanghai branch	Banking business	3,910,537 (CNY800 million) (Operating capital)	(3)	3,910,537 (CNY800 million)	-	-	3,910,537 (CNY800 million)	-	Shanghai branch of the Bank, not an investee company	Note 4	4,325,735	None
Taiwan Business Bank , Ltd. Wuhan branch	Banking business	3,942,815 (CNY800 million) (Operating capital)	(3)	3,942,815 (CNY800 million)	-	-	3,942,815 (CNY800 million)	-	Wuhan branch of the Bank, not an investee company	Note 4	4,130,790	“
Taiwan Business Bank International Leasing Co., Ltd.	Leasing business	838,305 (CNY170 million) (Operating capital)	(1)	838,305 (CNY170 million)	-	-	838,305 (CNY170 million)	34,290 2(c)	100%	34,290 2(c)	953,828	“

Note 1: Investment method is divided into three categories and are listed as follows:

(1) Directly invest in Mainland China.
(2) Investment in Mainland China companies through a third region.
(3) Others: establishment of oversea branches

Note 2: The column of "Investment gains (losses)":

(1) If the company is still in the preparation process, and does not have any investment gain or loss, please specify.

320

(2) The bases for recognition of investment income or loss have three methods, please specify.
an accounting firm in Taiwan.

c. Others

(3) 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.

(ii) Limitation on investment in Mainland China:

Name of Company	Accumulated outfow 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)	62,464,355

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

(d) Information of major shareholders:

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Shareholding
Shares Percentage
Shareholder's Name
Bank of Taiwan 1,301,907,315 16.21%
National Development Fund, Executive Yuan 471,075,689 5.87%
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(14) Segment information: None

Ⅵ

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Taiwan Business Bank, Ltd.

Chairman: Chien-Hao Lin

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President: Chih-Chien Chang

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SVP&GM, Accounting Dept.: Li-Ching Lai

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9. Financial Difficulties Confronted by TBB or Its Associates and the Related Impacts: None.

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VII

323 324 324 324

325

325 337 337

Review, Analysis, and Risks of Financial Conditions and Performance

1. Financial Position Analysis

2. Financial Performance Analysis

3. Analysis of Cash Flow

4. Impact of Major Capital Expenditure on Financial Operations in 2022

5. Long-term Equity Investment Policy for 2022, the Main Reasons for the Profit or Loss Generated thereby, the Plan for Improving Profitability, and Investment Plans for the Coming Year

6. Risk Management

7. Crisis Management and Response Mechanism

Ⅶ

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1. Financial Position Analysis

Consolidated Comparative Analysis of Financial Position

Unit: NT$1,000; %

Year Item			Difference	Difference
	2022	2021	Amount	%
Cash and cash equivalents, due from the Central Bank and call loans to banks	197,818,006	197,554,450	263,556	0.13
Financial assets at fair value through proft or loss	33,913,114	40,670,401	(6,757,287 )	(16.61 )
Financial assets at fair value through other comprehensive income	160,000,410	157,533,062	2,467,348	1.57
Investments in debt instruments at amortized costs	236,774,247	279,035,906	(42,261,659 )	(15.15 )
Securities purchased under agreements to resell	797,893	7,831,274	(7,033,381 )	(89.81 )
Receivables - net	9,057,109	7,616,634	1,440,475	18.91
Current income tax assets	350,069	349,884	185	0.05
Discounts and loans - net	1,400,112,365	1,302,388,363	97,724,002	7.50
Investments measured by equity method - net	808	-	808	-
Other fnancial assets - net	10,315	28,942	(18,627 )	(64.36 )
Premises and equipment - net	14,121,833	14,533,721	(411,888 )	(2.83 )
Right-of-use asset - net	1,212,593	1,149,295	63,298	5.51
Intangible assets - net	757,216	554,337	202,879	36.60
Deferred income tax assets	1,777,199	1,951,636	(174,437 )	(8.94 )
Other assets - net	15,782,948	10,055,167	5,727,781	56.96
Total assets	2,072,486,125	2,021,253,072	51,233,053	2.53
Deposits from the Central Bank and other banks	194,966,177	102,540,315	92,425,862	90.14
Due to the Central Bank and other banks	1,131,025	50,261,590	(49,130,565 )	(97.75 )
Financial liabilities at fair value through proft or loss	9,925,525	8,436,037	1,489,488	17.66
Securities sold under agreements	2,462,991	2,060,693	402,298	19.52
Payable	21,493,131	22,761,436	(1,268,305 )	(5.57 )
Current income tax liabilities	1,101,015	64,584	1,036,431	1,604.78
Deposits and remittances	1,673,580,263	1,668,656,822	4,923,441	0.30
Financial debentures	52,250,000	52,250,000	0	0.00
Other fnancial liabilities	2,910,581	4,365,294	(1,454,713 )	(33.32 )
Provisions for liabilities	2,676,102	3,420,210	(744,108 )	(21.76 )
Lease liabilities	1,239,919	1,149,456	90,463	7.87
Deferred income tax liabilities	879,056	886,290	(7,234 )	(0.82 )
Other Liabilities	3,763,082	2,740,373	1,022,709	37.32
Total liabilities	1,968,378,867	1,919,593,100	48,785,767	2.54
Equity attributable to owners of parent company	104,107,258	101,659,972	2,447,286	2.41
Common stock	80,296,934	77,431,952	2,864,982	3.70
Capital Surplus	815,900	815,900	0	0.00
Retained earnings	26,764,099	21,105,900	5,658,199	26.81
Other items in equity	(3,769,675)	2,306,220	(6,075,895 )	(263.46 )
Total equity	104,107,258	101,659,972	2,447,286	2.41

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324

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2. Financial Performance Analysis

Consolidated Operational Performance Analysis

Unit: NT$1,000; %

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Year 2022 2021 Amount increased Ratio of changes
Item (decreased) (%)
Net interest income 20,227,973 17,805,776 2,422,197 13.60
Non-interest net income 8,301,150 6,300,248 2,000,902 31.76
Bad debts expense, commitment
(2,386,062 ) (5,187,503 ) (2,801,441 ) (54.00 )
and guarantee liability provision
Operating expenses (14,103,269 ) (13,116,475 ) 986,794 7.52
Net income before tax from
12,039,792 5,802,046 6,237,746 107.51
continuing operation
Income tax (expense) gain (1,917,940 ) (701,934 ) 1,216,006 173.24
Net income after tax from continuing 10,121,852 5,100,112 5,021,740 98.46
operation
Net profit for the period 10,121,852 5,100,112 5,021,740 98.46
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Analysis on increase/decrease in ratio:

In 2022, net profit for the period increased by NT$5.022 billion, primarily due to the growth of deposit and loan volume, and the increase in net income from interests, service fees and financial products.

3. Analysis of Cash Flow

(1) Liquidity analysis for the past two years

Year Item	2022	2021	Increase (Decrease)
Cash fow ratio	13.32%	43.99%	-30.67%
Cash fow adequacy ratio	1,352.80%	1,080.68%	272.12%
Cash fow satisfaction ratio	107.96%	-	-

Analysis on increase/decrease in ratio:

The decrease in cash flow ratio is primarily due to the decrease in net cash inflow from operating activities in 2022 compared to 2021.

No analysis is presented for cash flow satisfaction ratio as negative net cash flow from investing activities was recorder in 2021.

(2) Analysis of cash liquidity for the coming year

Unit: NT$1,000

Opening cash balance ①	Expected net			Remedial measures for cash inadequacy	Remedial measures for cash inadequacy
	cash flow from operating activities throughout the year ②	Expected net cash flow throughout the year ③	Expected sum of cash surplus (inadequacy) ①+②+③	Investment planning	Financial planning
48,879,847	(9,442,231)	1,157,953	40,595,569	-	-

4. Impact of Major Capital Expenditure on Financial Operations in 2022

(1) The use of major capital expenditures and source of funds

Unit: NT$1,000

Planning items	Actual or	Actual or	Total	Use of actual or expected capital	Use of actual or expected capital	Use of actual or expected capital	Use of actual or expected capital	Use of actual or expected capital
	expected source of capital	expected date of completion	capital required	2019	2020	2021	2022	2023
Purchase of machinery and equipment - computer equipment	Own funds	2023/12/31	1,393,633	201,818	200,751	142,694	344,738	503,632
Purchase of premise of the Bank's headquarter	Own funds	2023/12/31	5,575	120	5,455	0	0	0
Maintenance and renovation work for the premise of the headquarter	Own funds	2023/12/31	489,836	37,573	81,397	61,732	65,824	243,310

Ⅶ

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Improve the corporate image of the Bank, enhance service quality, stabilize the operating locations, and expand our service network.

5. Long-term Equity Investment Policy for 2022, the Main Reasons for the Profit or Loss Generated thereby, the Plan for Improving Profitability, and Investment Plans for the Coming Year

During 2022, the primary profiting sources for the long-term equity investment business are the cash dividends income and the operating performance returns from the investment companies. In the future, shall there be appropriate investment targets or investments made according to factors of government policies, the Bank will carry out relevant procedures after due assessment.

6. Risk Management

(1) Structure of the Bank's risk management organization and the policy

A. Structure of the risk management organization
a. Risk Management Committee
The Chairman shall assign the chairman of the Risk Management Committee, and the committee member includes the President, Executive Vice President who is not the legal compliance officer of the Bank's headquarters, and the General Managers of departments under the Bank's headquarter (excluding the S.V.P. & GM of Auditing Department). The Committee is established to provide a sound risk management system, strengthen the efficacy of risk management, and execute the risk management and monitoring for the Bank. In principle, a meeting shall be convened per month, and the chairman of the committee may convene an extraordinary meeting when necessary. Its duties are as follow:
1) Analyze significant local and foreign economic, financial, and industrial risks, and review responding plans.
2) Risk exposures in the risk management report and review on resolutions.
3) The review shall be based on the rules and regulations, limitation, management indicator, and responding solutions for exceeding the limitation in relation to risk management approved by the Board (Managing Directors).
4) Supervise the capital adequacy management of the Bank.
5) Review or supervise relevant matters that shall be reported to the Risk Management Committee according to the requirements from the local and foreign competent authority.
6) Review or supervise other matters related to risk management.

Risk Management Department is a staff unit of the Committee, responsible for meeting agenda preparation, convening notice, meeting process, meeting minutes, and resolutions tracking and management, and it shall report the material resolutions from the Risk Management Committee and risk exposures to the Board (Managing Directors) regularly.

b. ALM Committee
The ALM Committee of the Bank is chaired by the President, and the committee member includes Executive Vice President, General Managers from departments in charge of deposits, loans, financial trading, funding allocation, and risk management. The Committee is responsible for the monitoring and management of interest rate risk in the banking book (IRRBB) and funding liquidity risks. It convenes regular meetings to evaluate the analysis and measurement method for funding liquidity risks and IRRBB, review the management policy for funding liquidity risks and IRRBB, relevant limitation, and management indicators, listen to exposure reports for interest risks and funding liquidity risks and adjust the debt-asset ratio period structure and the funding maturity structure of the Bank.
c. Loan Supervision Committee

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The Loan Supervision Committee of the Bank is convened by the Executive Vice President. In principle, the Committee is convened once a week to review credit loan projects of large denomination loans, foreign currency, and guarantee.

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d. NPL Management Committee

The NPL Management Committee of the Bank is convened by the Executive Vice President. The convenor may call upon members of the Committee for meeting according to business requirements at any time to discuss measures to prevent unfavorable credit loans and methods to handle overdue cases.

e. Cyber Security Management Committee

Cyber Security Management Committee is convened by the Chief Information Security Officer, and the Committee manages the overall execution and coordination regarding matters related to cybersecurity management of the Bank. The convenor may call upon members of the Committee for meeting according to business requirements at any time to review matters related to cybersecurity management.

B. Risk management policy

To effectively control the Bank's risks, the Bank established its "Risk Management Policy," "Standards for Credit Risk Management," "Standards for Market Risk Management," "Standards for Operational Risk," "Guidelines for Bank Interest Rate Management," "Guidelines for Capital Liquidity Risk Management." The regulations and their relevant risk tolerance were approved by the Board (Managing Directors). Content of the Risk Management Policy is as follows: Establish a risk management system for risk identification, measurement, supervision, control, information report, and countermeasures, construct an integrated risk management system, adopt an operating model with appropriate focus on risk management, and control the reasonableness of risk and compensation with the precondition of statutory adequacy ratio, so as to achieve the operating objectives and improve shareholders' interests. It covers credit risk, market risk, operating risk, IRRBB, and capital liquidity risk management, and funding adequacy management.

(2) Information on the Nature and Amount of All Types of Risk

A. Credit Risk Management Strategies, Goals, Policies and Procedures

Credit Risk Management System

326

2022

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Item Description
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Item

Description

1. Credit Risk
Management
Strategies, Goals,
Policies and
Procedures

I. Credit risk strategies
(I) Establish a proper credit risk control environment, including credit verification procedures, credit
management, measurement, and supervision procedures, as well as credit risk control.
(II) Credit risks regarding counterparties (including counterparties, borrower, and debtor), such as default risk
and delivery risk, are included in the scope of control.
(III) Develop advanced credit risk measuring methods to measure credit risk, and gradually introduce such
methods into our business procedures.
II. Credit risk management goals
Within the scope of acceptable credit risk to the Bank, maintain adequate capital to achieve a reasonable state
between risk and returns.
III. Credit risk management policies
(I) Fully understand the credit status of borrowers or counterparties and the usage of borrowings and
repayment sources of the borrowers.
(II) Prudently assess the credit risk condition of borrowers or counterparties and attach attention to the
adequacy of the collateral and the guarantee to measure risks and interests.
(III) Establish a credit rating system regarding the credit status of the borrowers or consider the ratings of the
customers from external credit rating institutions as the reference for accepting credit loan cases and
setting interest rate.
IV. Credit risk management procedures
(I) Establish comprehensive credit approval procedures, including mechanisms such as credit investigation,
credit loans, post-loan management, and claims management, to manage credit risks in an appropriate
manner.
(II) Regularly carry out control for the concentration of corporate risk regarding nations, fnancial industries,
industries, or conglomerates.
(III) Regularly report to the senior management and the Risk Management Committee regarding the credit
risk limitation utilization. Shall there be abnormal losses, establish the responding countermeasures
immediately and report to the senior management to minimize the potential losses.

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Item Description
2. Credit risk I. Board: The Board is the highest decision-making level for credit risk management, which supervises the
management effective operation for credit risk management. Credit risk management policies and standards are regularly
organization and reviewed by the Board meeting to ensure the efficacy of risk management and the optimized allocation of
framework resources.
II. Risk Management Committee: Responsible for the review of relevant information and issues about credit risk.
III. Loan Supervision Department: Responsible for credit loan management and credit loan review.
IV. Credit Checking & Industrial/Economic Research Department: Responsible for the credit investigation business
and its management and planning, industrial analysis.
V. Overdue Loan & Control Department: Responsible for matters in relation to post-loan management, non-
performing loans, non-accrual loans, and bad debt claims.
VI. Risk Management Department: Responsible for the measurement, evaluation, monitoring, management,
disclosure, and reporting of credit risks.
3. Scope and features I. Credit risk reporting
of the credit risk Convene meetings of the Risk Management Committee every month, report to the senior management
reporting and regarding the alert for counterparties, and the concentration control for the industry, group, country, and
measurement financial industry, and discuss the relevant information concerning the credit risk exposures of the Bank.
system II. Credit risk measurement system
(I) The Bank currently adopts the credit risk standard method to calculate the accrued capital; the risk
management system generates the statement for reporting to the competent authorities automatically by
month, and report to the senior management and the Risk Management Committee.
(II) The Bank has established multiple limitation control mechanisms (including, country, financial industry,
industry, group, counterparties of derivative) and monitored the above risk limitation on a daily basis. In
the case of exceeding the alert value or above 90% of the limitation, the Bank will establish the relevant
countermeasures.
(III) The Bank has established an internal credit rating system and verified the rating results regularly. Currently,
the rating results are included as part of the review regulations, and the Bank is planning to expand the
applicable scope for such business gradually.
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Credit Risk I. Credit Risk Hedging or Mitigation Policies: Avoidance or (I) Reduce the credit risk for the Bank through credit deduction methods of transferring credit trust fund Mitigation Policies, guarantee, collecting collateral and request for guarantors. and Monitoring (II) Establish the management limitation for credit risk concentration, such as limitation for the country, financial the Continued industry, industry, group, individual corporate, to prevent over-centralized risks. Effectiveness of II. Monitoring the Continued Effectiveness of Risk Hedging and Mitigation Tools: Risk Avoidance and (I) Through post-loan management and review mechanism, understand the usage of collateral and carry out Mitigation Tools the interim management inspection for the credit trust fund guarantee, so as to continue monitoring the credit risk undertaken by the Bank.
(II) Regularly monitor the credit risk concentration limitation, exposure distribution, and asset quality changes of the Bank to correspond to the changes of the financial states, review the credit risk control measures in due time, and regularly report to the senio
Approach adopted The standardized measurement method for statutory capital provision

Exposure After Risk Mitigation and Accrued Capital via Credit Risk Standardized Approach

December 31, 2022 (Unit: NT$1,000)

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Types of Exposure Exposure After Risk Mitigation Accrued Capital
Sovereign States 347,417,081 43,204
Non-central Government Public Sectors 86,338,885 1,650,424
Banks (including multilateral development banks) 147,747,040 4,129,329
Corporations (including securities and insurance companies) 351,206,679 22,106,833
Retail Claims 174,715,745 4,776,400
Real Estate 906,304,182 57,054,919
Equity Investments 20,223,534 1,886,556
Equity Investments for Fund and Venture Capital Business 1,521,633 141,817
Other Assets 62,510,992 3,116,187
Total 2,097,985,771 94,905,669
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B. Securitization Risk Management System, Exposure and Accrued Capital

328

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Securitization Risk Management System
2022
Item Explanation
1. Securitization Management Strategies and I. Securitization Management Strategies
Procedures Currently, the Bank does not engage in business related to
founding banks, and it may only invest in securitized products
with certain ratings approved by Taiwan Rating, S&P, Moody's,
and FITCH according to the requirements under the "Directions
for New Taiwan Dollar Capital Utilization Management of TBB"
and "Directions for Investments in Foreign Currency Marketable
Securities Management of TBB" approved by the Board of the
Bank.
II. Securitization Management Procedures
(I) Before investing in marketable securitized securities, such
investment shall be passed by the review team and shall be
approved by the report within the authorized limits of each
level.
(II) Subsequent evaluation, limitation monitoring, and stop-loss
mechanism shall be controlled according to the relevant
regulations.
2. Securitization Management Organization and I. Board: Approve the authorized limitation for all levels.
Framework II. Trading department: Engage in investment for securitized
products within the prescribed limitation according to the relevant
regulations of the Bank.
III. Risk Management Department: Perform the control according to
evaluation, limitation monitoring, and stop-loss mechanism of the
investment position according to the abovementioned regulations.
IV. Operating department: Carry out subsequent operations of
settlement.
3. Scope and Features of Securitization Risk Reporting The Risk Management Department shall be responsible for the
and Measurement Systems calculation of the limitation of investment position and accrued capital
and shall report to the President by month.
4. Securitization Risk Hedging or Mitigation Policies,
and Monitoring the Continued Effectiveness of Risk Invest in securitized products with certain ratings approved by Taiwan
Avoidance and Mitigation Tools Rating, S&P, Moody's, and FITCH.
5. Approaches adopted for statutory capital provision Perform according to the Standard Law of Securitized Seal according
to the third part of "Calculation Method Description and Forms
regarding the Equity Capital and Risk Assets of the Bank."
6. Overall requirements for qualitative disclosure,
including:
(1) Purpose of securitization activities and types of
risk that the Bank undertakes and retains in re-
securitization activities
(2) Other Risks Inherent in Securitized Assets (e.g.,
Liquidity Risk)
(3) Roles Played by the Bank in Processes of
Currently, the Bank does not engage in the founding bank business.
Securitization and Degrees of the Bank's
Participation in Each Process
(4) Monitoring Procedures for Changes in Credit
and Market Risks Involved in Securitization Risk
Exposure
(5) Credit Risk Mitigation Management Policies
Used by the Bank to Mitigate Risks Retained by
Securitization and Re-securitization
7. Policies for Securitization
Currently, the Bank does not engage in the founding bank business.
8. The Names of External Credit Assessment Institutions
(ECAI) Used in Securitization in Banking Books
Currently, the Bank does not engage in the founding bank business.
and the Usage of Each Type of Securitization Risk
Exposure
9. Significant Changes in Quantitative Information since
the Last Reporting (e.g., Asset Movements between None
Banking Books and Trading Books)
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Securitization Risk Exposure and Accrued Capital

December 31, 2022 (Unit: NT$1,000)

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Exposure Level Traditional Style Portfolio Style Total
Exposure Exposure
Asset Type Existing or Existing or Pre-
Purchased Providing Providing Purchased securitization
Book Securitized Liquidity Credit Accrued Securitized Accrued Accrued Accrued
Role Category Product Facility Enhancement Subtotal Capital Product Capital Exposure Capital Capital
of TBB (1) (2) (3) (4) (5)=(1)+(3) (6)=(2)+(4)
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Exposure Level Book Category Role of TBB	Exposure Level Book Category Role of TBB	Asset Type	Traditional Style	Traditional Style	Traditional Style	Traditional Style	Traditional Style	Portfolio Style	Portfolio Style	Total	Total	Total
			Exposure				Accrued Capital (2)	Exposure	Accrued Capital (4)	Exposure (5)=(1)+(3)	Accrued Capital (6)=(2)+(4)	Pre- securitization Accrued Capital
			Existing or Purchased Securitized Product	Providing Liquidity Facility	Providing Credit Enhancement	Subtotal (1)		Existing or Purchased Securitized Product (3)

Non- founding Bank	Banking Book	Real Estate Mortgage Securities	414,240			414,240	6,628			414,240	6,628

	Trading Book

	Subtotal		414,240			414,240	6,628			414,240	6,628
Founding Banking	Banking Book

	Trading Book

	Subtotal
Total			414,240			414,240	6,628			414,240	6,628

Information on Securitized Product

Table of Securitized Products Held by the Bank

Unit: NT$1,000

December 31, 2022

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Total Fair
Item Accounting Category Original Cost Value Profit/Loss Accumulated Impairment Carrying Amount
Collateralized Investments in debt instruments
mortgage obligations measured at amortized costs - 441,281.78 -1,791.37 0.00 84,537.59
(CMO) corporate bond
Investments in debt instruments
Collateralized
mortgage obligations measured at fair value through other 429,425.21 -1,847.54 0.00 26,986.08
comprehensive income - corporate
(CMO) bond
Investments in debt instruments
Collateralized
mortgage obligations measured at fair value through other 454,375.94 -10,353.39 0.00 91,502.89
comprehensive income - corporate
(CMO) bond
Investments in debt instruments
Collateralized
mortgage obligations measured at fair value through other 303,361.37 -63,015.96 0.00 286,430.50
comprehensive income - corporate
(CMO) bond
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330

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(1) Disclosure of investments in securitized products with an original value over NT$300 million (excluding those held by the Bank in the capacity as the founding institution with a view to strengthened credit):

Unit: NT$1,000

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Method of
securities Name of Accounting Category Currency [Issuer and ] Location PurchaseDate of Maturity Date Coupon Rate(%) RatingsCredit Interest Payment and Principal Original Cost Value Profit/Total Fair Loss Accumulated Impairment Carrying Amount Attachment Point Content of Asset Pool
Repayment
Announce the
Investments in California: 14.19%;
interests for the
debt instruments Texas: 12.95%;
US3137F4VQ28 measured at USD US 2018/10/19 2046/9/15 3.50 AAA next period and the 441,281.78 -1,791.37 0 84,537.59 Florida: 9.12%;
amortized costs - amount of principal Washington: 4.33%;
corporate bond repayment by month Others: 59.41%
Investments in
Announce the
debt instruments California: 50.87%;
interests for the
measured at fair New York: 25.31%;
US3136B3KS88 value through other USD US 2018/11/13 2048/11/25 4.00 AAA next period and the 429,425.21 -1,847.54 0 26,986.08 Virginia: 7.98%;
amount of principal
comprehensive Washington: 6.26%;
income - corporate repayment by month Others: 9.58%
bond
Investments in
Announce the
debt instruments
interests for the New York: 96.54%;
measured at fair
US3136B4CG16 value through other USD US 2019/3/29 2049/4/25 3.00 AAA next period and the 454,375.94 -10,353.39 0 91,502.89 Washington: 2.02%;
amount of principal Washington, D.C.:
comprehensive repayment by 1.44%
income - corporate month
bond
Investments in
Announce the
debt instruments
interests for the California: 67.91%;
measured at fair
US3137H44Y35 value through other USD US 2021/10/22 2051/10/25 1.50 AAA next period and the 303,361.37 -63,015.96 0 286,430.50 Washington: 11.15%;
amount of principal Virginia: 4.06%;
comprehensive repayment by Others: 16.88%
income - corporate month
bond
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(2) The Bank does not serve as the Founding Bank.
(3) The Bank does not serve as the Buyer Institution for Discredited or Liquidated Securitized Commodities.
The Bank does not serve as the Guaranteeing Institution for Securitized Products or provide Liquidity Facilities.
- C. Operational risk management system and accrued capital

Operational Risk Management System

2022

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Item Description
1. Operational I. The operational risk management strategies of the Bank aim to establish an appropriate operational management
Risk environment. Through the implementation of operating risk management structure approved by the Board and the
Management rigorous execution of such structure by the senior managers, the Bank ensures that all relevant operational risks have
Strategies and been monitored by using appropriate evaluation procedures.
Procedures II. To optimize the function of operational risk management, the Bank grasps the scope of operational risk through
managing procedures of risk identification, risk evaluation, risk measurement, risk monitoring, and communication.
The Bank also adopts appropriate measures to ensure a duly management for the relevant operational risk, efficiently
allocate limited resources to the operational risk management tasks.
2. Operational I. Board of Directors:
Risk Approve the risk management policies for the Risk Management Committee to execute the relevant management and
Management monitoring matters.
Organization II. Risk Management Committee
and Responsible for the review of information and issues related to the operational risk of the Bank.
Framework III. Risk Management Department
(I) Execute the risk management policies approved by the Board.
(II) Establish the operational risk management system and risk management tools.
(III) Monitor, analyze, and report to the Bank regarding the information on operational risks.
IV. Authority Department of Business
(I) Identify and analyze the potential operational risks of each business activity.
(II) Establish the standard operation procedures (SOP) as the basis for business execution
(III) Set up business regulations and operational procedures that cover operational risk points and relevant control
measures.
(IV) Manage and report the operational risks of each business activity.
V. Auditing Department
Conduct regular audit regarding the risk management operations for the departments of the Bank.
VI. All departments of the Bank
(I) Daily operations shall comply with the operational management requirements.
(II) Report the operational risk management information in accordance with regulations.
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Item Description
3. Scope and I. The Bank conducts its operational risk measurement primarily through three operational risk management tools:
Features of (I) Loss data collection (LDC) for operational risk-
Operational A. The LDC for operational risk of the Bank covers operational risk incidents arising from all business activities.
Risk Departments file such incidents through the "Operational Risk Management (ORM) System" and provide
Reporting and details regarding the registering items of the operational risk incidents.
Measurement B. Improve the cognition to risk for all employees of the Bank through the implementation of ORM System and
Systems relevant training and assist the incident occurring department in performing proper improvement plan and
tracking the management execution.
(II) Key risk indicators (KRI) for operational risk -
A. Adopt the view of the Bank's risk management, consider the data availability, indicator management efficacy,
and risk significance among the operational risk items concerned by the businesses to establish the Bank's
key risk indicators with effective management benefits.
B. Each risk indicator has an alert value that is based on the historical statistics or experiences of the Bank, which
is used as the basis for determining whether active management is required for the indicator. The authorities
of the Bank carry out risk control through monitoring the exposures of the indicators, so as to prevent the
occurrence of potential operating risk incidents for each department.
(III) Risk and control self-assessment (RCSA) for operational risk -
A. Regarding the RCSA system of the Bank, the authority department of business at the Bank's headquarter
prepares a self-assessment questionnaire in respect of risk and control of its business procedures and the
business execution departments and supervision departments shall conduct the self-assessment concerning
execution and management according to the risk and control assessment scale, and self-assess the risk
results to provide a responding plan, allowing the Bank to analyze the exposures of potential operational risk.
B. When carrying out the self-assessment, departments of the Bank may assess the residual risk hierarchy
of operational risk items concerning the effect of the residual risk and the probability of the residual risk.
Departments shall also assess the effectiveness of the control with respect to the execution of control and
relevance.
C. The Bank compiles and analyzes the risk control self-assessment results of the departments and prepares the
risk control self-assessment chart. Regarding items with higher risks, the authority department shall propose
the action plan to respond accordingly.
II. The content of the Bank's operational risk management report includes the disclosure regarding the Bank's operational
risk information and exposure monitoring status. The report is prepared and reported by the Risk Management
Department on a regular basis with a scope covering operational risk incidents, operational risk indicators, trend
analysis, and department improvement and tracking opinion, as well as the measurement and analysis regarding the
operational risk incident occurring frequency and severity based on the risk matrix formed with the top eight business
types and the top seven incident types, as the reference of improvement for relevant operating procedures.
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Operational I. The Bank has stipulation such as guidelines, procedures, and regulations to control and mitigate the operational Risk Hedging risk of the Bank. In addition, business departments adopt reasonable responding measures according to the loss or Risk probability and the amount arising from the operational risk, respectively, i.e., directly avoid processing, transfer Mitigation partial or entire risk by way of transfer or charges, or process after an evaluation on profit and risk. Policies, and II. Operational risk hedging or risk mitigation of the Bank is primarily processed through insurance or outsourcing, so Monitoring as to transfer and mitigate the losses of operational risks arising from human, system, or operation negligence, or the Continued external incidents. Effectiveness III. To minimize human factors, natural disasters, and other significant emergencies affecting the reputation or

of Risk endangering the normal operation of the Bank and the financial order, the Bank has established operational

Hedging and processing procedures and relevant regulations for departments to comply with, so as to instantly minimize the

Mitigation damages and resume the normal operation in a short time.

Tools IV. Unscheduled reports regarding crisis management of the Bank are submitted to the Risk Management Committee and senior managers to monitor the operational risks exposures and response capabilities of the Bank.

Approaches Adopted for Statutory The standardized measurement method Accrued Capital

Operational Risk Accrued Capital

December 31, 2022

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(Unit: NT$1,000)
Year Gross profit Accrued Capital
2020 20,602,141
2021 23,643,598
2022 28,334,773
Total 72,580,512 3,432,710
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D. The Market Risk Management System and Accrued Capital

The Market Risk Management System

332

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2022
Item Content
1. Market Risk I. Management Strategies
Management (I) Implement market risk management according to "TBB Market Risk Management Standards" and other relevant
Strategies and regulations to achieve the operating goals and maintain the healthy capital adequacy ratio.
Procedures (II) Subject to the risk tolerance approved by the Board (Managing Directors), the Bank adopts various risk control
mechanisms to effectively utilize and manage its capital, ensuring that the market risk exposures are within the bearable
scope and the Bank may still achieve its goal for earning.
II. Management Procedures
(I) Risk Identification
According to the requirements under the "TBB Market Risk Management Standards," a proper market risk evaluation
shall be performed before promoting a financial product; documentation of such evaluation shall be preserved for further
reference. Content for the evaluation includes identification of risk factors, cost-benefit analysis, market liquidity, risk
countermeasure, the adequacy of the risk management system and the effect of exposure to market risk by the Bank.
(II) Risk measurement
A. The risk management department shall draw up the market risk positions, sensitivity, value-at-risk and suspension
limit, and report to the Directors (Managing Directors) for approvals of execution.
B. The risk measurement (or valuation) for the financial products of the Bank are carried out on the different information
system, and the market data and model parameters used in the valuation were sampled regularly to check their
reasonability.
(III) Risk monitoring
A. Regularly prepare the valuation report of financial products and submit it to the supervisors of the departments for
approval, and used as the basis for the execution of daily risk management.
B. There are requirements concerning limitation and stop-loss in place for all financial transactions; risk control
mechanisms of stop-loss, suspension, and post-management will be carried out according to the requirements when
the losses amount from the valuation exceeds the limitation.
(IV) Risk Reporting
The risk management department regularly reports the current conditions of market risk management to the Directors
(Managing Directors) and senior management, allowing them to grasp the risk exposures and adjust the management
measures in due time.
2. Market Risk I. Board of Directors:
Management The highest market risk management and supervision unit, responsible for approving the market risk management policies and
Organization and all risk limitations.
Framework II. Risk Management Committee
Responsible for the review of issues and responding plans related to the market risk of the Bank.
III. Risk Management Department
(I) Establish market risk management operating procedures and relevant regulations.
(II) Plan and execute a market risk management business.
(III) Establish market risk management-related systems.
(IV) Report the market risk management execution of the Bank to senior management and Directors (Managing Directors) on a
regular basis.
3. Scope and Features of I. Scope and features of the measurement system
Market Risk Reporting (I) Evaluate and monitor market risk exposure on a daily basis, including the losses of the Bank caused by adverse changes
and Measurement in market price resulting from interest rates, equity, exchange rate and commodities on and off the balance sheet.
Systems (II) Adopt the historical simulation method to calculate the value at risk (VaR) on the financial trading management system on
a daily basis and observe its changing trends to report at the Risk Management Committee meeting per month.
(III) The VaR measurement scope includes all positions of foreign exchange risk and commodity risks, as well as the trading
book positions of interest rate and equity securities risk. There are VaR limitation control mechanisms in place for interest
rate, equity, foreign exchange, and overall position.
II. Connotations of Market Risk Report
(I) Regularly report to the Directors (Managing Directors) and Risk Management Committee regarding the amount of asset
portfolio exposures, providing references to senior management for decision-making.
(II) The market risk report of the Bank includes the valuation on the exchange rate, interest rate, equity securities positions,
and profit or loss, so as to monitor the profit or loss for the market risk positions.
(III) The risk management department reports the equity securities, government bonds, foreign exchange trading positions,
and profit or loss valuation on a daily basis, so as to grasp the daily routine market risk control at any time.
4. Market Risk Hedging The financial transactions of the Bank mostly involve simple financial products. Regarding complex financial products from the
or Mitigation Policies, customer end, the Bank, in principle, will carry out back-to-back hedging and covering to avoid market risks effectively. In addition,
and Monitoring when engaging in hedging transactions with different contractual terms, the financial trading department shall specify matters of
the Continued hedged items, hedging relationship, nature of the hedged risks, and the mitigation effects of the valuation risks. Risk management
Effectiveness of Risk departments shall regularly carry out measurements regarding the effects of executing risk mitigation.
Hedging and Mitigation
Tools
5. Approach Adopted
for Statutory Capital The standardized measurement method
Provision
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Market Risk Accrued Capital

December 31, 2022

Market Risk Accrued Capital December 31, 2022	Market Risk Accrued Capital December 31, 2022
(Unit: NT$1,000)
Category of Risk	Accrued Capital
Interest Rate Risk	1,420,586
Equity Risk	58,528
Foreign Exchange Risk	1,618,207
Commodity Risk	0
Total	3,097,321

E. Liquidity risks include the maturity analysis regarding assets and liabilities as well as management methods for assets liquidity and the cash flow gap liquidity

Liquidity Risk Management System

2022

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Item Description
1. Liquidity Risk Management I. Liquidity risk management strategies
Strategies and Procedures (I) Monitor the liquidity risk positions according to the liquidity risk management policies and limitations approved by
the Board of Directors.
(II) Established the "TBB Directions for funding Liquidity Risk Management" and "TBB Management Guidelines for
funding Liquidity Risk Management" for the compliance of the Bank, so as to effectively control the funding liquidity
risks.
(III) Overseas branches shall establish regulations related to liquidity risk management according to the business
nature and the requirements of the competent local authority; such regulations shall be executed after being
approved by the President, and the Risk Management Department shall be responsible for the monitoring.
II. Liquidity risk management procedures
(I) Discuss and formulate directions, management guidelines for liquidity risk management, and contingency plan for
funding liquidity risk and conduct a review on a yearly basis.
(II) Identify, measure, supervise, and control the funding liquidity risk and establish stable operating procedures and
structures.
(III) Report to the ALM committee regarding the measurement results for funding liquidity risk on a monthly basis and
report to the Board of Directors regarding funding liquidity risk and stress test results.
2. Liquidity Risk Management I. Board of Directors: The highest liquidity risk management and supervision unit, responsible for approving the directions
Organization and for liquidity risk management and all risk limitation, and shall review on a yearly basis, so as to ensure the effectiveness
Framework of the liquidity risk management.
II. ALM Committee: The Bank established an ALM Committee subordinated to the President, responsible for the
supervision for liquidity risk exposures and the approval of responding plan upon conditions exceeding management
indicators.
III. Treasury Department: Execute daily funding allocation operations to ensure sufficient funding is in place to satisfy all
funding requirements.
IV. Risk Management Department: Responsible for the identification, measurement, monitoring, disclosure, and reporting
of liquidity risk.
3. Scope and Features of The Bank uses the ALM system to calculate the liquidity gap on a monthly basis, allocates items of funding inflow and
Liquidity Risk Reporting and outflow to each time slot according to the remaining maturity date, calculates the funding gap, to measure the funding gap
Measurement Systems within each time slot. Also, it prepares the statement of term structures of the maturity date, to contain the liquidity gap
within the limitation, making sure that the Bank will have sufficient capacity to fulfill its obligation in due course.
4. Funding strategies of the I. The ratio of wholesale NT$ time deposits accounts shall be accounted for less than 1% of total time deposits of the
Bank: Policy of mismatching Bank in principle.
funding sources and funding II. The ratio of deposit balances per account for wholesale deposit accounts (sum of demand and time deposits) shall be
tenor, and centralized accounted for less than 2% of total NT$ deposits (excluding time deposits transferred from post offices) of the Bank in
or decentralized funding principle.
strategies III. Regarding depositors exceeding the above ratio, the Risk Management Department shall report to the ALM Committee
on a monthly basis.
IV. The ratio of total deposits balances (demand and time) of the top 10 customers of the Bank shall be accounted for less
than 30% of total NT$ deposits (excluding time deposits transferred from post offices) of the Bank in principle; however,
where the ratio is over 24%, the authority department shall propose countermeasure and report to the ALM Committee.
V. Prepare the "Wholesale Time Deposits Transaction List" and "Wholesale Deposits Transaction List"
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334

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Item Description
5. Liquidity risk hedging or I. The Bank has "Contingency Plan for Funding Liquidity Risk" in place to respond to liquidity crisis such as abnormal
mitigation policies, and withdrawal of deposits, huge loss of funding, or material shortage of liquidity, to minimize liquidity risk and maintain the
monitoring the continued normal operation of the Bank.
effectiveness of risk hedging II. Review the "TBB Directions for Funding Liquidity Risk Management", "TBB Management Guidelines for Funding
and mitigation tools Liquidity Risk Management", and "Contingency Plan for Funding Liquidity Risk" to effectively control the funding liquidity
risk.
III. Where the funding liquidity risk limitation is exceeded or other significant events have occurred that may lead to
a funding liquidity crisis, the Risk Management Department shall immediately call for a meeting with other related
departments to formulate countermeasures, submit to the ALM Committee for discussion and execute by the relevant
business authority after receiving the approvals from the President, and shall report to the Board of Directors (Managing
Directors).
6. Description of how to I. Conduct stress scenarios on the crisis that occurred to the individual banks, and the crisis occurred to the overall
conduct a stress test market on a quarterly basis.
II. Formulate the stress scenarios and the target value for risk management; submit to the President for approval and
conduct the stress test on a yearly basis.
7. Summary for liquidity When significant events occurred to the Bank that may incur funding liquidity crisis, and convene the ALM Committee
contingency plans meeting and establish a contingency workforce that is in charge of the following:
I. Allocate sufficient cash for support.
II. Deal with abnormal wholesale deposits and funding withdrawals.
III. Issue statement to clarify the truth.
IV. Maintain the operating orders.
V. Provide information related to crisis management, funding changes, and available balances of the Bank from time
to time according to the requirements of external processing institutions to allow such institutions to grasp the actual
circumstances of the Bank in a short time and provide assistance to the Bank in due course.
VI. Avoid conditions of over-utilization regarding deposits in the interbank accounts and proactively contact the correspondent
bank to maintain the current limitations.
VII. By the end of such events, in order to repay the borrowings and strengthened the confidence of the depositors, the
Bank's headquarter and branches shall assign material officers to visit designated key accounts at the site, so as to strive
for the early return of deposits. Meanwhile, to completely eliminate the suspicions casts by different sectors, the Bank
shall publish declarations to explain the event and show its appreciation to the assistance of relevant departments.
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Structural Analysis of the Maturity of New Taiwan Dollars

December 31, 2022

(Unit: NT$1,000)

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Amount for the Remaining Period Prior to the Maturity Date
Total
0-10 days 11-30 days 31-90 days 91-180 days 181 days-1 year Over one year
Primary inflow 1,798,278,148 171,214,261 167,605,412 186,953,929 204,957,223 152,184,634 915,362,689
upon maturity
Primary outflow 2,201,577,109 79,002,934 115,025,374 262,893,103 184,927,959 384,673,313 1,175,054,426
upon maturity
Gap -403,298,961 92,211,327 52,580,038 -75,939,174 20,029,264 -232,488,679 -259,691,737
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Note: The table includes the NT$ amount of the Bank, including an estimated outflow of loan commitments $390,839,630 thousand.

Structural Analysis of the Maturity of US Dollars

December 31, 2022

(Unit: US$1,000)

		Amount for the Remaining Period Prior to the Maturity Date	Amount for the Remaining Period Prior to the Maturity Date	Amount for the Remaining Period Prior to the Maturity Date	Amount for the Remaining Period Prior to the Maturity Date	Amount for the Remaining Period Prior to the Maturity Date
	Total	0-30 days	31-90 days	91-180 days	181 days-1 year	Over one year
Primary infow upon maturity	16,353,649	5,107,519	4,629,214	1,287,440	1,713,177	3,616,299
Primary outfow upon maturity	17,155,496	3,645,117	4,045,473	2,484,679	3,910,394	3,069,833
Gap	-801,847	1,462,402	583,741	-1,197,239	-2,197,217	546,466

Note: The table includes the US$ amount of the Bank, including an estimated outflow of loan commitments $912,002 thousand.

(3) Impact of changes of important domestic and international policies and laws on the Bank's finance and business, and response measures:

In response to the revision of the “Equalization of Land Rights Act”, which may affect the real estate market, the Bank had made announcements to the branches on the precuations related to real estate secured loan business in February 2023.

response measures

Due to the ever-changing development of digitalization and FinTech, banks within the same industry invested resources one after another to carry out their own digital development and digital transformation.

Ⅶ

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Big Data and FinTech are also widely used to improve customer experiences, and precise marketing and social media are adopted for business promotion. Furthermore, to become a part of customers' lives and provide omnipresent financial services, banks have adopted various approaches to construct their own digital ecosystems.

In response to the changes in the financial environment, the Bank actively promoted its digital transformation and developed digital marketing. It introduced FinTech services to establish the Bank's digitalized services with customers as cores, data as the basis, and customers' experiences as primary considerations. To rapidly develop its digital banking, the Bank intends to adopt a strategy with channels, customer-acquiring, marketing, and innovation, which is described as follows:
- A. Channel strategy
- Provide revisions and optimization for four major mediums used by customers, including online personal banking, online corporate banking, mobile banking APP, and its website. Attach attention to UIUX, emphasize simple and refreshing visual display as well as easy and convenient operations, and continue to update functions and services. Meanwhile, actively introduce a transaction security control system with convenience and security to provide a convenient and secured digital finance environment for customers.
- B. Customer-acquiring strategy
- Develop simple online application services and introduce automated and smart services to create the online application platform, including account opening, card application, loans and payment, and provision of exclusive products, allowing customers to enjoy fast, convenient, and preferential application services all day long. Promote the mobile payment business, continue developing Taiwan Pay, and proactively manages chains or online merchants to introduce Taiwan Pay. Develop customer group operations according to the grouping based on their categorizations.
- C. Marketing strategy
- Develop social media operations, including active expansion of FB fans, the number of friends on LINE's official account and functional services, to formulate a digital-friendly image of the Bank and attract different customer groups to establish business relationships with the Bank. Introduce Big Data analysis to analyze, segment, and label customers; track digital footprint of customers and analyze and predict customer behavior and preferences, so as to design and provide customized and personalized services.
- D. Innovation strategy
- Create the AI in financing that combines AI with customer services, voice processes, biological characteristics and KYC, to continue developing AI customer services, AI voice assistant, RPA, biometric recognition, and digital identity recognition and expand the diverse development of the Blockchain. Develop and deepen open API according to the open API development procedures in three stages promoted by the government to allow the Bank's services to enter customers' living scenarios, in the hope of providing premium and wide-ranged digital finance services and experiences.
Affected by the global COVID-19 pandemic, the hybrid working mode has become the norm, and social engineering attacks, such as counterfeiting and fraud, have also become fiercer. In addition, hackers also make better use of vulnerabilities and easily overlooked open source software to invade. Thus, the Bank actively conducts e-mail social engineering drills and cyber security promotion courses to enhance the vigilance and information security awareness of employees, and has achieved the target of reducing the e-mail opening rate to 0.3%. The Bank has established a “Vulnerabilities Management System” to track and manage various vulnerabilities (knowing yourself), increase information security intelligence collection channels (knowing the enemy), understand the corresponding vulnerabilities of the Bank's information assets, and identify a quid pro quo relationship with attacks through information security intelligence, which will help to predict and judge the threat of attacks, so as to know yourself and the enemy, and predict the enemy's moves beforehands.
(5) Impact of changes in the Bank's image on corporate risk management and response measures

Where the external parties recognize the Bank for its excellent business performances, the Bank will immediately grasp the timely opportunities of news and carry out relevant promotional activities, so as to improve the image of the Bank. Shall there be untrue rumors or negative media press that adversely affects the image of the Bank, the Bank will proactively verify the truth, provide instant verification or engage media to make a balance, protecting the reputation and image of the Bank.

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and the countermeasures: None.
(7) The expected benefits and possible risks to expand the branches and the countermeasures:

In 2022, the Bank had not expanded its branches but only carried out adjustments for its domestic branches.

(8) Risks derived from the concentration of operations, and countermeasures: None.
(9) The impact on the Company, and risk due to changes in managerial authority, and the countermeasures: None
(10) The effects of Directors or major shareholders holding more than 1% of shareholdings transferring or converting a large amount of equity in the Bank, as well as the risks, and countermeasures: The equity changes in Directors and corporate shareholders represented by Directors are reported according to the Securities and Exchange Act; furthermore, within 10 days from the closing day, communicate with shareholders holding more than 1% of shareholdings in the Bank according to Article 25 of the Banking Act to remind shareholders regarding notifying the Bank of the changes in their shareholding according to the requirements of the Banking Act, in order to stabilize the Bank's ownership.
(11) Litigious or non-litigious matters

336

The World Trade Center Branch of the Bank carried out the outward collection project under the letter of credits for its customer Chi Seng Industrial Co., Ltd. in 1996, and it is suspected that the importer L' International Compagnie de Commercialisation et D'Investissement in the Republic of Zaire (hereinafter, 'I.C.C.I. Company') incurred losses due to Chi Seng Industrial Co., Ltd. holding counterfeit notes and has not performed the exports. The I.C.C.I. Company filed a prosecution to the Brussels Commercial Court in November 1998 and requested the issuing bank of the certificate and the Bank to make a joint compensation amounting to US$7.83 million, plus interests, losses, and fees. On August 31, 2005, the Court pronounced the judgment that the Bank shall make compensation of US$7.674 million plus interests to the I.C.C.I. Company. The Bank engaged a local attorney to file an appeal, and the Court of Appeal of Brussels had made its interlocutory judgment in February 2011, considering that both the Bank and I.C.C.I. Company had faults and made its judgment regarding the proportion of fault on November 16, 2011, sentencing that the Bank shall be responsible for 90% of the proportion of fault. The Bank lodged an appeal regarding the interlocutory judgment of the second instance on November 3, 2011; however, the Court of Final Appeal rejected the appeal from the Bank on February 6, 2013. Therefore, losing the lawsuit was confirmed. However, the Bank failed to achieve a consensus regarding the currency rate and calculation of compensation with I.C.C.I. Company. In addition, in October 2016, I.C.C.I. Company filed an application to the Frankfurt Court to impound the deposits of the Bank at the correspondent bank. The Bank immediately provided security deposits of €13.2 million to the Court to release the order. In July 2017, I.C.C.I. Company applied for the enforcement regarding the abovementioned security deposits, and the Court transferred such security deposits to I.C.C.I. Company without any consultations. Therefore, the Bank filed an appeal of debtor disagreement. However, the Frankfurt Court rejected the lawsuit of the Bank in November 2018. After another appeal done by the Bank, the Frankfurt Supreme Court returned the lawsuit to the first trial for remand in November 2019. On March 16, 2020, I.C.C.I. Company submitted a declaration for the reasons of objection to German Federal Supreme Court of Justice for requesting the cancellation of "Verdict of Return for Remand by the Frankfurt Supreme Court." The Bank appointed a lawyer to act as the litigation representative at the German Federal Supreme Court of Justice and filed a defense against I.C.C.I. Company's objection to the statement, and the German Federal Supreme Court of Justice ruled to reject I.C.C.I. Company's counter appeal on May 20, 2021, and this case is now in trial by the Frankfurt District Court. Furthermore, the Bank received notices of appearance from the court in Congo in October and November 2019, respectively, for the reason that (1) A third-party Star Marine Company required I.C.C.I Company to make a compensation of US$1.13 million in total, and required the Bank to bear the joint and several liabilities for compensation; and (2) I.C.C.I required the Bank to make a compensation of US$20.06 million (less the amount it had been repaid) and required the Bank to provide a guarantee of €14 million. The Bank has appointed a local attorney to reply in court. The court in the Democratic Republic of Congo trialed the two cases together. The Bank received the translated version of the court's judgment in April 2021 that TBB shall pay I.C.C.I. Company about €20.06

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million, compensate Star Marine Company US$1.13 million jointly and severally with I.C.C.I. Company, and deposit €14 million in a bank in Congo. The Bank has appointed a local attorney in Congo to initiate relevant relief proceedings (appeal and objection proceedings). According to the plaintiff's statement, after deducting the I.C.C.I. Company's compensation of about €14.86 million, the Bank has set aside an additional reserve of NT$73,181 thousand for the outstanding compensation. As of December 31, 2022, the Bank recognized compensation for losses of NT$259,635 thousand and €9.66 million.

A. To strengthen the risk management for the loan business and avoid excessive centralized loans to industries, group corporations, and individual corporations, and incorporate climate change-related issues into the regulations, the Bank revised its “Risk Management Policy”, “Management Guidelines for Credit Risk Limitations Control” and “Credit Risk Management Guidelines”, respectively, to regulate its risk limits for loans, and thus diversify the risk.

Ⅶ

B. To control different types of risks from credit cards, the Bank has implemented various measures, including centralized credit review, regular semi-annual review, 24-hour risky transaction monitoring, control over abnormal transactions at contracted stores, SMS notification of transactions by credit cards, reminders of overdue payments by SMS, and centralized reminders of overdue payments by phone, to reduce the risk of loss.

7. Crisis Management and Response Mechanism

(1) The Bank has established the “Guideline for Material Contingencies Handling Mechanisms.” Shall there be bank runs for deposits, robberies, fraud, fire, flood, natural disaster, violence, or other significant matters, the department shall immediately notify the Business Development Department of the Bank with a call and describe the relevant circumstances according to the requirements under the Guideline to carry out the related reporting and contingency process. The Business Development Department shall notify the President immediately to adopt appropriate countermeasures, convene the contingency workforce meeting when necessary, and take the initiatives to assign staff for assistance in branches to take required measures. Report the relevant data to FSC, the Central Bank, Central Deposit Insurance Corporation, and the Ministry of Finance, and closely work with the responding measures of the competent authority. Where necessary, the spokesman of the Bank will take the initiative the release the press, directing the news report regarding the event toward the facts, instead of exaggerating, and affecting the reputation of the Bank.
(2) Respond to natural disaster factors according to the “TBB Management Guidelines for Branches Concerning Foreign Currency Transaction and Capital Operations during Natural Disasters.” When the Bank’s headquarter has called off work due to natural disasters while partial branches are still operating as usual, such guidelines provide a basis for branches that carry out foreign currency transactions and capital operations.
(3) Emergency backup and security protection measures for information equipment: Please refer to “Emergency backup and security protection measures for information operations” in “V. Business Operation” (page 78).
(4) Responding to the probability of significant funding outflow, the Bank has established the “Directions for Contingencies Response” and “Funding Liquidity Risk Management,” describing the contingency measures to be adopted when any liquidity crisis occurred.
(5) The Bank has established the “Occupational Safety and Health Code,” which sets out the relevant occupational safety and health standards, maintenance and inspection method for all equipment, and designates specialists to carry out safety and health inspection regularly to ensure related equipment to function normally, minimize accidents, and protect the personal safety of the employees. Upon disasters, a comprehensive security inspection shall be carried out according to the “Disaster Contingency Manual.” Regarding damaged branch premises or significant operating equipment, the Bank will adopt the necessary reinforcement or repair to ensure operational safety. For equipment that cannot be reinforced or repaired in a short time, a temporary substitute plan is also provided to help the restoration of all businesses.

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for hedging accounting.

338 VIII

Special Notes

339

1. Information Regarding the Bank’s Subsidiaries

341

2. Progress of Private Placement of Securities and Financial Bonds

341

3. The Bank’s Subsidiaries’ Shareholding or Disposal of the Bank’s Shares

341

4. Additional Disclosure

341

5. Pursuant to Item 2, Paragraph 3, Article 36 of Security and Exchange Act, the Incidence Exerting Material Influence on Shareholders’ Rights or Security Prices

VIII

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1. Information Regarding the Bank’s Subsidiaries

==> picture [456 x 467] intentionally omitted <==

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

Taiwan Business Bank, Ltd.
100% Ownership
TBB TBB TBB TBB
Consulting Co., Venture Capital International (Cambodia)
Ltd. Co., Ltd. Leasing Co., Microfinance
Ltd. Institution Plc.
100% Ownership
Taiwan Business Bank
International Leasing
Co., Ltd.
(2) Information of Affiliated Enterprises
Enterprise Name Established Date Address Paid-In Capital Major Business
5F, No. 151, Sec. 4, Nanjing E. Rd.,
TBB International Leasing 2013.04.03 Songshan Dist., Taipei City, Taiwan, NT$ 1.5 billion Financial lease
Co., Ltd.
R.O.C.
Taiwan Business Bank Room 368, 302 Part, No. 211,
International Leasing Co., 2014.06.16 North Fute Road, Free Trade Zone, CNY$ 170 million Financial lease
Ltd. Pudong District, Shanghai
TBB (Cambodia) 2E/2F, Street 315, Sangkat Boeung
Microfinance Institution 2015.08.10 Kok 1, Khan Toul Kork, Phnom Penh, US$ 20 million SME and personal
Plc Cambodia. finance business
TBB Venture Capital Co., 2018.09.07 11F, No. 30, Ta Cheng St., Taipei NT$ 1.05 billion Venture capital
Ltd. City, Taiwan, R.O.C. business
TBB Consulting Co., Ltd. 2021.08.30 11F, No. 30, Ta Cheng St., Taipei City, Taiwan, R.O.C. NT$ 50 million Consulting business
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340

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Enterprise Name	Title	Name	Shareholding	Shareholding
			Shares	%
TBB International Leasing Co., Ltd.	Chairman Director Director Supervisor President	Shao-Huang Chen Shenn-Bao Jean Kuo-Liang Tseng Chiang-Shu Lin Pao-Sheng Lin	150,000,000	100%
Taiwan Business Bank International Leasing Co., Ltd.	Chairman Director Director Supervisor President	Shao-Huang Chen Shenn-Bao Jean Mei-Chun Lin Chiang-Shu Lin Chi-An Liu	－	100%
TBB (Cambodia) Microfnance Institution Plc.	Director Director Director Independent Director President	Tseng-Hsiang Yi Sung-Shui Chiu Hung-Tien Chiang Jun-Shen Tseng Hung-Tien Chiang	20,000	100%
TBB Venture Capital Co., Ltd.	Chairman Director Director Director Director Supervisor Supervisor President	Chang-Yu Lin Jui-Yuan Wu Hsiou-Chen Kang Chun-Yu Shih Ching-Pu Chen Tun-Kung Cheng Yu-Chuan Chou Jui-Yuan Wu	105,000,000	100%
TBB Consulting Co., Ltd.	Chairman Director Director Director Director Supervisor Supervisor President	Chang-Yu Lin Jui-Yuan Wu Hsiou-Chen Kang Chun-Yu Shih Ching-Pu Chen Tun-Kung Cheng Yu-Chuan Chou Jui-Yuan Wu	5,000,000	100%

Unit: NT$ Thousand

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

Current
Enterprise Name Capital AssetTotal LiabilityTotal Net Value Operating Revenue Operating Profits Profit and Loss (After-tax)EPS
(After-tax)
TBB International
Leasing Co., Ltd. 1,500,000 1,757,732 241,329 1,516,403 82,438 45,320 41,681 0.28
(Consolidated)
TBB (Cambodia)
Microfinance Institution 614,730 1,580,976 956,385 624,591 89,503 -9,521 -6,939 -346.95
Plc
TBB Venture Capital
1,050,000 1,419,339 160,832 1,258,507 287,953 193,191 202,340 1.93
Co., Ltd.
TBB Consulting Co.,
50,000 131,313 33,386 97,927 102,938 60,905 49,339 9.87
Ltd.
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Note: The price per share of TBB (Cambodia) Microfinance Institution Plc is US$1,000. If it is converted to NT$10 per share according to the local practice, the earnings per share (after-tax) would be NT$-0.11.

VIII

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The financial statements of the companies with more than 50% of equity owned by the Bank have been incorporated into the consolidated statements. Please refer to the 2022 Consolidated Financial Statements and Accompanying Notes in VI Financial Status (page 126).

2. Progress of Private Placement of Securities and Financial Bonds in 2022 and to the end of February 2023: None.

3. The Bank’s Subsidiaries’ Shareholding or Disposal of the Bank’s Shares in 2022 and to the end of February 2023: None.

4. Additional Disclosure: None.

5. Pursuant to Item 2, Paragraph 3, Article 36 of Security and Exchange Act, the Incidence Exerting Material Influence on Shareholders’ Rights or Security Prices in 2021, 2022 and to the end of February 2023: None.

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342 IX

343

344 352 357

Sustainable Development Report

1. Promotion of Sustainable Development and Responsibility Analysis

2. Material Issues

3. Climate-related Financial Disclosures

4. The Bank’s achievements in promoting sustainable development in 2022

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1. Promotion of Sustainable Development and Responsibility Analysis

To reinforce the fulfillment of its corporate social responsibility (CSR) and exhibit the importance that the Bank attaches to CSR, the Bank established the CSR Initiative Committee in 2017 and promoted the CSR Initiative Committee to a functional committee, the CSR Committee, in 2018, which is responsible for the proposal and execution of CSR policies or systems, and reports to the Board annually regarding the results of the Bank’s CSR implementation. There are currently 5 members in the CSR Committee, with the Chairman and the President undertaking posts of committee chairman and the mandatory member, respectively, and the remaining 3 members are Independent Directors of the Bank.

In 2021, in response to the international financial development trends, and the Financial Supervisory Commission's (FSC’s) Corporate Governance 3.0 - Blueprint for Sustainable Development policy, the Bank renamed the CSR Committee as the Sustainable Development Committee. In addition, the Bank formulated its Sustainable Development Policy, and revised the name and partial provisions of the original CSR-related regulations.

In 2022, to ensure the implementation of the Bank's sustainable development related policies, the "Sustainable Finance" unit was established and the responsibilities of each task force unit were adjusted. There are currently 6 task force units under the Committee, which include Corporate Governance, Customer Rights, Sustainable Finance, Sustainable Environment, Social Benefit, and Employee Care. The Bank will take the core financing business as the starting point in carrying out sustainable development within its scope of business.

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Sustainable Development
Committee
Committee Chairman:
Chairman of the Board
Executive Secretary
GM of Business
Development Dept.
公司治理小組 GovernanceCorporate CustomerRights Sustainable Finance EnvironmentSustainable BenefitSocial Employee Care
Ethical corporate Customer rights Climate risk Environmentally Attention to social Human rights
management, protection, strategies, sustainable issues, protection,
Protection of Information security, Responsible development, Support for Staff remuneration and
Shareholders' rights Customer lending, Green disadvantaged welfare,
and interests, communication and Responsible procurement, groups, Career
Maintenance of complaints, investment, Supplier Social development and
stakeholder Customer Net zero and management, participation, educational
communication, relationship transition support, Enterprise energy Promotion of art, training,
Board structure and maintenance, Sustainable conservation and literature and Labor-ownership
operation, Inclusive finance, Products carbon reduction sports, Corporate relationship,
Iinformation Innovative services image Occupational
disclosure, safety and health
Rrisk control,
Legal compliance,
Organizational
strategies
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2. Material Issues

STEP 1 STEP 3 STEP 5 Identification of Degree of attention of Assess the significance stakeholders stakeholders of impact 8 key stakeholder Online and offline An impact assessment groups questionnaire surveys questionnaire was used were conducted to to assess the economic, find out the degree of environmental, and attention to 17 issues human rights impacts of paid by different business activities related stakeholders. to 13 major issues and their probabilities.

STEP 7 Confirm the results of effectiveness of relevant action goals by tracking the effectiveness of the actions taken

Report annually the achievement of performance indicators in the previous year to the Sustainable Development Committee, and track the effectiveness of actions through "Stakeholder communication methods and channels".

344

STEP 6

STEP 2 STEP 4 Collect sustainability issues Identify actual & potential The task force units under impacts and select material the Sustainable Development issues Committee gathered international The Sustainable Development sustainable development issues, Committee further analyzed the sustainability regulations, degree of external impacts of international sustainability the 17 sustainability issues. 13 ratings, domestic and foreign material issues of the year were peer case studies, and selected based on the results of stakeholder feedback, and Steps 3 and 4. compiled 17 sustainability issues.

Confirm the order of material issues

Results of the questionnaire and the external impact assessment were use to create a material issue matrix and describe the management guidelines and performance indicators for material issues.

(2) Material Issue Analysis Matrix

Material Issue Analysis Matrix

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

100
1 Ethical
corporate
90 management
2 Legal compliance
80 7 Talent retention and diverse benefits 3 Corporate governance
4 Information security
70 5 Customer service and privacy protection
6 Occupational safety and health
60 8 Responsible investment
9 Environmental protection
50 16 Operating performance 10 Climate change strategy and management
11 Sustainable Finance
40 12 Public welfare and charity
13 Inclusive finance
30 14 Labor-ownership relationship
20 17 Supplier Management
15 Risk control
10
0
0 10 20 30 40 50 60 70 80 90 100
Degree of external impact of sustainability issues
Degree of attention of Stakeholders
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(3) List of Material Issues and Explanation of Differences in 2022

==> picture [456 x 602] intentionally omitted <==

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

Scope of impact on value chain
Corresponding GRI
Explanation of
Priority Material Issue standards and topic specific standards Differences Employees Customers shareholder [Suppliers/] partners Governmentagency /Charity NGO Media ConsultantExternal
groups
GRI 3-3
1 Ethical corporate GRI 205-1 to 205-3 No change. ● ● 〇 ■ ● 〇〇
management GRI 206-1 (Note 1) (Note 2) (Note 3)
2 Legal compliance GRI 2-27GRI 3-3 No change. ● ■ ● ● 〇〇〇
GRI 3-3
3 Corporate GRI 205-1 to 205-3 No change. ● ■ ● ● 〇
governance GRI 206-1
Independent material
4 Information GRI 3-3 issue previously under ● ■ ● ■ ● 〇〇〇
security GRI 418-1 “Information Security
and Privacy”
Independent material
Customer
Service GRI 3-3 issue previously under
5 and Privacy GRI 417-1 and 417-2 “Information Security ● ● ● ● ● 〇
Protection and Privacy” and name
change
Occupational GRI 3-3
6 Safety and GRI 403 Material issues added. ●
Health
GRI 3-3
Talent retention GRI 401 Name change, formerly
7 and diverse GRI 402 “Diversified Training ●
benefits GRI 404-1 and 404-2 and Promotion”
GRI 405
Responsible GRI 3-3 Name change, formerly
8 investment Custom material issues “Management and ●
Investment Strategies”
GRI 3-3
Environmental GRI 302 Name change, formerly
9 “Energy Saving and ● ● ■
protection GRI 305-1 to 305-2 and
Carbon Reduction”
305-5
Climate change GRI 3-3
10 strategy and GRI 201-2 Material issues added. ● ● 〇〇 ■
management GRI 203-2
Independent material
GRI 3-3 issue previously under
11 Sustainable GRI 201-1 to 201-3 “Environmentally ● ● 〇
Finance GRI 203-2 and Socially Friendly
Services” and name
change
GRI 3-3
Public welfare
12 GRI 203-2 No change. ● 〇 ● 〇
and charity GRI 413-2
Independent material
issue previously under
13 Inclusive finance GRI 3-3GRI 203-2 “Environmentally and Socially Friendly ● ● 〇
Services” and name
change
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Note:

Actual impact.
Potential impact.
Direct correlation to this impact through business relationship.

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(4) Management guidelines for material issues and major achievements

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346

Priority	Material Issue	Responsible Unit	Key Risks and Opportunities	Policy	Commitment	Action	Evaluation and target	Evaluation and target	Evaluation and target	Evaluation and target	Evaluation and target
							Performance Indicator	2022 (short-term) goal	Achievement in 2022	2023 (short-term) goal	2024-2028 (mid to long- term) goal
1	Ethical	Corporate	◆Risk (negative impact):	◆Effectively assist	◆Monitor and	◆Follow the	KPI 1: Execution of	Audit plan	The 2022 audit plan was 100%	Audit plan	Audit plan execution rate
	corporate management	Governance Unit	Financial losses and reputational damage caused by acceptance of unlawful gains and inability to discover violation of the law in operations during audit. ◆Opportunity (positive impact): Reinforce workplace ethics as well as understanding and execution of ethical management, and use audit mechanisms for early discovery of violation of the law in operations in order to reduce unethical behaviors.	the Board and the management team in auditing and assessing effective operation of the internal control system. ◆Shape an ethical management culture to incorporate ethical management into employee competencies.	review areas of improvement listed by the inspection agencies, accountants, and internal audit units on an ongoing basis and report to the Board and the Audit Committee. ◆Establish honesty and integrity as core values.	competent authority’s rules to make audit plans and continuously conduct audits according to audit plans. ◆Conduct professional ethics, compliance training, and internal audits simultaneously.	audit plans.	execution rate 100%	executed.	execution rate 100%	100%
							KPI 2: Professional ethics and compliance training.	95% pass rate.	1. Online performance evaluation for the frst half of 2022 was completed between May 26, 2022 and June 21, 2022. A total of 4,801 people attended the exam and achieved a pass rate of 99.71%. 2. Online performance evaluation for the second half of 2022 was completed between October 19, 2022 and November 23, 2022. A total of 4,950 people attended the exam and achieved a pass rate of 99.76%.	95% pass rate.	97% pass rate.
							KPI 3: Incidents of acceptance of unlawful gain.	0 case.	No incident of acceptance of unlawful gain was reported in 2022.	0 case.	0 case.
							KPI 4: Reporting the execution status of ethical corporate management to the Board of Directors	At least once a year.	Reported to the Board the implementation status of ethical corporate management in the previous year.	At least once a year.	At least once a year.
2	Legal compliance	Corporate Governance Unit	◆Risk: Compliance failure causes losses as well as reputational damage if the competent authority takes disciplinary action. ◆Opportunity: Ensure effective compliance in order to increase customer trust in the company and facilitate potential sales.	Compliance is the responsibility of the Board, senior management, and all employees.	Familiarize every employee with laws and regulations and ethical guidelines relevant to their roles.	All units perform compliance self assessments.	KPI 1: Training completion rate of “Compliance Business Seminar” for compliance offcers at the Bank and securities subsidiaries	Training completion rate 100%	The 2022 H1 Compliance Business Seminar and the 2022 H2 Compliance Business Seminar took place on June 30 and November 17, respectively. The training completion rate was 100%.	Training completion rate 100%	Training completion rate 100%
							KPI 2: Training completion rate of “AML/CFT Seminar” for banking and securities subsidiaries	Training completion rate 100%	Training courses took place on June 13, October 18, and October 25. The training completion rate was 100%.	Training completion rate 100%	Training completion rate 100%
3	Corporate Governance	Corporate Governance Unit	◆Risk: A less than fully developed organizational structure or operation will affect competitiveness and innovation at a corporation. ◆Opportunity: Continue to enhance corporate governance, facilitate sustainable development and win stakeholders’ support in order to achieve mutual success.	Improve the corporate governance system to achieve sustainability.	Inspect corporate governance on an ongoing basis to create a mutually benefcial environment.	Protect the rights of shareholders and strengthen the role of the Board.	KPI 1: Board diversity.	Directors of either gender account for one ffth of the total number of directors.	There were 2 female directors in 2022, which was below the required one ffth.	Independent directors account for one third of the total number of directors.	Both directors and independent directors of either gender account for one half of the total number of directors.
							KPI 2: Board meeting attendance on average and for individual directors	90%/80%	The average Board meeting attendance was 100% in 2022. The lowest individual attendance was 100%.	92%/83%	96%/ 87%
4	Information security	Customer Rights Unit	◆Risk: Inadequate protection of the information and communication system and IT assets leads to failure of the company’s cyber security measures. ◆Opportunity: Add to the reference materials for future cyber security incident drills after taking response action or control measure in order to shorten the response time for information security incidents and reduce potential information security risk and make the company better equipped to handle information security and achieve information security resilience for sustainable development.	Compliance with the Cyber Security Management Policy	Ensure confdentiality, integrity, and availability of information and communication systems and IT assets and reduce operational risk.	Enforce the annual cyber security maintenance program.	Completion rate of damage control or recovery within 36 hours after becoming aware of the following cyber security incidents: 1. Core business information is leaked (in a mild/serious case) 2. Core business information or core information and communication systems are altered (in a mild/serious case) 3. Cyber security incidents classifed as Material Contingencies	100%	No core business information was leaked (in a mild/serious case) or core business information or core information and communication systems altered (in a mild/serious case) in 2022. Only one cyber security incident classifed as a material contingency was reported. Damage control or recovery was completed within 36 hours in this incident. The completion rate was 100%.	100%	100%

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Evaluation and target
Priority Material Issue [Responsible ] Unit Key Risks and Opportunities Policy Commitment Action Performance Indicator [2022 (short-term) ] Achievement in 2022 2023 (short-term) 2024-2028 (mid to long-
goal goal term) goal
5 Customer Customer ◆ Risk: ◆ Established the Follow the Financial Continue to provide Customer satisfaction Customer Customer satisfaction reached Customer Customer satisfaction
Service Rights Unit Failure to enforce the Bank’s “Treat Consumer employee training survey. satisfaction 89.3%. satisfaction reached 85%.
and Privacy Principle for Financial Client Fairly Protection Act, on fair customer reached 82%. reached 83%.
Protection Service Industries to Treat Policies” and the Treat Client treatment and
Clients Fairly and personal “Treat Client Fairly Principles, personal information
information protection Fairly Strategies”, the Personal Data protection in order to
that leads to damage to and personal Protection Act and protect customers’
customers’ rights and their information related regulations rights, and provide
trust in the Bank. protection to protect customers’ product information
◆ Opportunity: guidelines. rights. and channels for
Enforce the Principle for ◆ Enforce the making contact,
Financial Service Industries Principle for complaint, and
to Treat Clients Fairly Financial Service application on the
and personal information Industries to Treat Bank’s official website.
protection to increase Clients Fairly
customer satisfaction and to ensure the
stickiness. quality of products
and services;
and prohibit
unauthorized
disclosure
of customer
information to
external parties.
6 Occupational Employee ◆ Risk: Ensure employees’ Pay attention ◆ Continue the KPI 1: The protection ≧ 80% Completion rate 86% ≧ 80% ≧ 82%
Safety and Care Unit The absence of an safety and health and to employees’ “Maternal rate of the “Maternal (Reported 74 persons and
Health occupational safety and create an accident- safety and health Employee Health Health Protection Plan” completed maternal interview
health management system free workplace. management and Protection and nursing intervention for 64
may create a higher chance provide a friendly Plan”, “Human- persons)
of accident or health hazard workplace. Factor Hazard KPI 2: Completion rate ≧ 90% Completion rate 100% ≧ 90% ≧ 92%
to employees and cause less Prevention Plan,” of nurses following up (Physical examination reports
work efficiency and higher and “Abnormal on employees with provided by the contract hospital
personnel costs. Workload- major irregularities show major irregularities for 21
◆ Opportunity: Triggered in their physical persons, and health advice and
Establish the Occupational Diseases examination reports follow-up were completed for 21
Safety and Health Committee Prevention Plan”. persons)
to ensure effective ◆ Obtain the
occupational safety and ISO45001
health management in order occupational
to prevent occupational safety and health
accidents and protect standards and
workers’ safety and health. create a healthy
and safe work
environment.
7 Talent retention Employee ◆ Risk: Promote various Uphold employee ◆ Provide subsidies KPI 1: Encourage Employee Welfare Employee Welfare Committee: Employee Welfare Employee Welfare
and diverse Care Unit 1. A lack of effective employee employee benefits and safety in the or allowance for fertility by providing a Committee: NT$575,000 Committee: Committee:
benefits retention amid mass a reasonable and fair workplace and childbirth and childbirth subsidy NT$5,000 per child (115 persons) NT$5,000 per child NT$5,000 per child
retirement in recent years remuneration system strive to create a training. Employer: Employer: Employer: Employer:
may cause gaps in the in order to create an fair and friendly ◆ All holidays NT$5,000 for the NT$350,000 for the first child NT$5,000 for the NT$5,000 for the first
workforce. excellent workplace workplace with a and leaves are first child, and (70 persons) first child, and child, and
2. The absence of a wide and encourage reasonable and fair amended to reflect NT$10,000 for the NT$420,000 for the second child NT$10,000 for the NT$10,000 for the second
range of benefits and fair employee loyalty. remuneration policy. changes in the law. second child and and afterward second child and child and afterward
remuneration system may Some holidays afterward (42 persons) afterward
lead to loss of talent. and leaves exceed KPI 2: Reinstatement ≧ 78% 91.94% ≧ 78% ≧ 80%
◆ Opportunity: the statutory rate after parental leave
Talent is the core asset of a requirements. KPI 3: Retention rate ≧ 85% 86.67% ≧ 85% ≧ 85%
corporation. Retaining and ◆ Continue to after parental leave
developing professional provide Employee KPI 4: Percentage Participation Total participation: about 95.39% Participation Participation ≧ 95%
talent to prevent gaps in the workforce will benefit the Bank’s business as a whole. Stock Ownership Trust to foster loyalty. of participation in Employee Stock Ownership Trust ≧ 95% (the shareholding accounts for 1.001% of total outstanding shares) ≧ 95%
8 Responsible Sustainable ◆ Risk: Support enterprises Exercise due care Select investment KPI 1: Investing in Bond investment ESG bond investment was Bond investment 7% of total bond
investment Finance Unit Growing ESG awareness and committed to and uphold ethical targets with caution ESG bonds or related increases by 3% NT$2.63 billion in 2022, up by increases by 3% investment.
regulatory requirements lead environmental management. and continue industries or products. compared to the 7.3% compared to NT$2.45 compared to the
to higher operational costs. protection, social to monitor after previous year. billion in the previous year. previous year.
◆ Opportunity: responsibility, and transactions. Among these bonds, a total of 9
Increase the percentage of ESG corporate governance tranches have been approved by
investment to align to global and avoid investing in the Taipei Exchange for green
trends and reduce risk in controversial targets. bond qualification, with a total
asset allocation. investment of NT$2.3 billion.
KPI 2: 75% participation 80% participation Participation in electronic voting 85% participation 95% participation in
in electronic voting at in electronic voting at shareholders’ meetings in electronic voting electronic voting at
shareholders’ meetings at shareholders’ hosted by TWSE/TPEx listed at shareholders’ shareholders’ meetings
hosted by TWSE/TPEx meetings hosted companies in 2022 was 100%. meetings hosted hosted by TWSE/TPEx
listed companies by TWSE/TPEx by TWSE/TPEx listed companies
listed companies listed companies
Note: Investment details are as follows:
No. Bond Code ISIN Code Investment Amount
1 B618DA TW000B618DA0 NT$500 million
2 B50172 TW000B501725 NT$100 million
3 B98411 TW000B984111 NT$100 million
4 B98412 TW000B984129 NT$100 million
5 B618D2 TW000B618D21 NT$200 million
6 B948A3 TW000B948A33 NT$300 million
7 B50170 TW000B501709 NT$600 million
8 B98412 TW000B984129 NT$100 million
9 G10170 TW000G101703 NT$300 million
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348

Priority	Material Issue	Responsible Unit	Key Risks and Opportunities	Policy	Commitment	Action	Evaluation and target	Evaluation and target	Evaluation and target	Evaluation and target	Evaluation and target
							Performance Indicator	2022 (short-term) goal	Achievement in 2022	2023 (short-term) goal	2024-2028 (mid to long- term) goal
9	Environmental protection	Sustainable Environment	◆Risk: 1. Energy transition and	◆Carry out the Bank’s energy	◆Fulfll CSR and due care for the	◆Implement ISO energy and	KPI 1: Percentage of energy saving across all	Annual energy saving of 1%	To be disclosed after third party certifcation of GHG inventory in	Annual energy saving of 1%	A total of 10% (2020 as the base year
		Unit	carbon reduction missions add to the push for rising prices of water and electricity, and a risk of higher operational costs to the Bank. 2. Climate change poses a risk to the operation of the Bank. 3. Environmental and workplace safety issues involving suppliers have an impact on the environment and the Bank's reputation. ◆Opportunity: 1. Procure new equipment to replace old equipment that generates more greenhouse gas, implement an energy management system to achieve energy saving and carbon reduction, reduce operational costs, and mitigate climate change risk on the Bank's operation. 2. Purchases eco-friendly products and support vendors in developing technologies or acquiring environmental protection labels and certification to build a green sustainable society together.	policy, disclose GHG emissions, and save energy and reduce carbon emissions to build a green sustainable society. ◆Increase energy effciency and utilize environmentally friendly products. ◆Implement the Supplier Management Guidelines and detailed action plans to provide a basis of supplier evaluation for the Bank during procurement. Review and assistance are conducted regularly to require suppliers give active support to economic, social, environmental issues and other ESG causes.	environment. ◆Support green and environmentally friendly businesses and follow the government’s green procurement policies by avoiding engaging controversial suppliers directly and adding a supplier’s statement to procurement contracts in order to fulfll CSR.	environmental management systems, control water and electricity usage, replace old equipment, and reduce power consumption in the offces. ◆Install short-, mid-, and long- term monitoring mechanisms and manage direct and indirect GHG emissions (Scope 1 and Scope 2), and reduce GHG emissions year by year. ◆Give priority to procuring energy effcient products with environmental labels and green materials, expand the scope and quantity of green procurement, and raise the amount of green procurement year by year. ◆Conduct supplier evaluation and search through environmental and labor regulations and publicly available information and require explanation and improvement for any unethical conduct or violation of environmental, occupational safety and health, and worker rights regulations. The Bank may cancel or terminate a contract and terminate the supplier’s eligibility for bidding if improvement is not made after the Bank provided advice.	offces of the Bank	(2020 as the base year for energy saving)	May 2023	(2020 as the base year for power consumption)	for power consumption)
							KPI 2: Percentage of total GHG emissions	Annual carbon reduction of 1% (2020 as the base year for carbon emissions)	To be disclosed after third party certifcation of GHG inventory in May 2023	A total of 2% (2020 as the base year for carbon emissions)	A total of 10% (2020 as the base year for carbon emissions)
							KPI 3: Percentage of total green procurement	Annual procurement amount increases by 2% (2020 as the base year for procurement amount)	The amount of green procurement in 2022 increased by 17.36% compared to the base year 2020.	Annual procurement amount increases by 4% (2020 as the base year for procurement amount)	A total of 14% (2020 as the base year for power consumption)
							KPI 4: Number of cases with confrmed supplier violation but no improvement.	No violation and no cases with failure to improve.	No violation and no cases with failure to improve.	No violation and no cases with failure to improve.	No violation and no cases with failure to improve.
							KPI5: Percentage of suppliers who have signed the “Statement of Commitment to Human Rights and Environmental Sustainability”	95%	100%	100%	100%
10	Climate change strategy and management	Sustainable Finance Unit	◆Risk: Strong storms and tropical cyclones arising from extreme weather pose direct threat to the Bank’s operation and cause disruption to borrowers’ operations that lead to repayment diffculty and real estate collateral impairment. ◆Opportunity: Develop green loans that help borrowers respond to climate change transition and develop low carbon fnancial services.	Follow the competent authority’s Guidelines for Domestic Banks’ Climate Risk Financial Disclosure and identify climate change related risks and opportunities, implement response plans, and develop climate governance policy.	◆Perform climate change risk and opportunity analysis regularly to strengthen climate change governance of the Bank, assess fnancial impacts, and reduce risk while grasping business opportunities. ◆Continue to disclose information regarding carbon emissions and reduction of the Bank.	◆Sign and implement the Task Force on Climate- related Financial Disclosures (TCFD) framework. ◆Continue to fll out the CDP questionnaires for climate change. ◆Finish signing the Equator Principles and incorporate the Equator Principles into the lending process.	KPI 1: Fill out the CDP questionnaires for climate change	Completion rate 100%	The CDP questionnaire was completed at the end of July 2022. The completion rate was 100%.	Completion rate 100%	Completion rate 100%
							KPI 2: Perform TCFD analysis and publicly disclose key information	Completion rate 100%	Key TCFD information for 2021 was simultaneously disclosed in the 2021 Annual Report and the Sustainability Report. The 2021 TCFD report was disclosed on the Bank’s offcial website in August 2022. The completion rate was 100%.	Completion rate 100%	Completion rate 100%
							KPI 3: Organize third party certifcation of TCFD report	Completion rate 100%	The TCFD conformity certifcation was completed and rated Level 5: Excellence at the end of June 2022. The completion rate was 100%.	Completion rate 100%	Completion rate 100%

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Priority	Material Issue	Responsible Unit	Key Risks and Opportunities	Policy	Commitment	Action	Evaluation and target	Evaluation and target	Evaluation and target	Evaluation and target	Evaluation and target
							Performance Indicator	2022 (short-term) goal	Achievement in 2022	2023 (short-term) goal	2024-2028 (mid to long- term) goal
11	Sustainable	Sustainable	◆Risk:	◆Integrate ESG	◆Follow the ESG	◆Provide preferred	KPI 1: The accumulated	NT$10 million	NT$39.76 million in total loans	NT$20 million	NT$160 million in total
	Finance	Finance Unit	Increased pollution and energy consumption will affect quality of life and economic sustainability. The lack of response measures will expose the fnancial industry to operational risk. ◆Opportunity: 1. The Bank combines core businesses and utilizes characteristics of cash fow in the banking sector to fulfll its social responsibility in the fnancial supply chain and explore new proft sources in sustainability related opportunities. 2. Raise sustainability awareness among customers and take real ESG action to generate positive benefts for society.	issues into the development strategies and processes of fnancing, wealth management, and credit card businesses. Support the global trend of carbon reduction and follow the government’s policy while directing customers’ attention and action to ESG risks and opportunities. ◆Reject loan applications from controversial customers. When processing loan applications, search applicants on government websites for background data on environmental protection, workplace safety, food safety, and employee pension contribution rates and make these data part of the key factors for fnancing.	practice and offer green loan products as part of the commitment to the environment and society. ◆Support businesses implementing environmentally friendly and green developments and avoid working with businesses with environmental and social risks. ◆Encourage customers to support environmentally friendly spending through green diet and green transportation and pay attention to environmental sustainability. ◆Support environmentally friendly and green industries and avoid establishing loan business relationship with controversial enterprises.	fnancing terms to encourage customers to purchase renewable energy powered equipment, green label property, and energy effciency label appliances in order to reduce carbon emissions and energy consumption. ◆Inject funds into environmental conservation and green energy industries and SMEs, and provide upgrade & transformation guidance, ustainable fnance and other one- stop services to guide customers to implement ESG sustainability. ◆Provide fast information inquiries services regarding urban renewals and one-stop fnancial services, offering case inquiry, counseling, and project loans, as well as trust management for the pubilc. ◆Launch wealth management products with ESG concept. ◆Promote Sustainable Life Card, which advocates vegetarian diet and carbon reduction, green energy, and the sharing economy, and provide high cash back on green channels. ◆Increase e-Statement applications and the percentage of online credit card application. ◆Require borrowers who caused major environmental pollution, food safety or other hazard incidents submit improvement plans, and urge those who undercontribute to labor retirement reserve and cause damage to workers’ rights to make up the shortfall as soon as possible.	amount of green energy-related project loans for providing fnance and help individual customers improve and enhance equipment.	in total loans approved in the frst year.	approved.	in total loans approved.	loans approved.
							KPI 2: Total number of green loans to help corporate customers improve and enhance equipment.	Year-on-year growth of 10%	The total number of green energy-related project loans approved reached 899 cases, up by 13.08% compared to 795 cases in 2021.	Year-on-year growth of 10%	Year-on-year growth of 10%
							KPI 3: Total loans approved for urban renewal and old building reconstruction.	NT$50 billion in total loans approved.	NT$68.699 billion in total loans approved for urban renewal and old building reconstruction.	NT$60 billion in total loans approved.	NT$100 billion in total loans approved.
							KPI 4: Number of ESG funds launched.	5 ESG funds launched.	1 ESG fund launched.	Annual growth of number of funds: 3%. (Target for 2022 as the base)	Annual growth of number of funds: 18%. (Target for 2022 as the base)
							KPI 5: Number of credit cards made of environmentally friendly materials=	The percentage of total credit cards issued with environmentally friendly materials is 8%.	The percentage of total credit cards issued with environmentally friendly materials is 23%	The percentage of total cards issued has reached 13% (Number of cards issued in 2020 as the base)	The percentage of total cards issued has reached 23% (Number of cards issued in 2020 as the base)
							KPI 6: Number of improvements made by corporate borrowers.	Follow-up on improvement is noted in the conditions of approval for customers who had environmental protection or workplace safety issues.	Each loan case will be checked against the government websites for any environmental or workplace safety penalties and disclosure. There is no major improvement outstanding at the present.	Follow-up on improvement is noted in the conditions of approval for customers who had environmental protection or workplace safety issues.	Followup on improvement is noted in the conditions of approval for customers who had environmental protection or workplace safety issues.

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350

Priority	Material Issue	Responsible Unit	Key Risks and Opportunities	Policy	Commitment	Action	Evaluation and target	Evaluation and target	Evaluation and target	Evaluation and target	Evaluation and target
							Performance Indicator	2022 (short-term) goal	Achievement in 2022	2023 (short-term) goal	2024-2028 (mid to long- term) goal
12	Public welfare	Social Beneft	◆Risk:	Promote four public	Uphold the spirit of	◆Senior care:	KPI 1: Accumulated	NT$21 million	NT$21.23 million	NT$24.50 million	NT$41.08 million in
	and charity	Unit	The world and Taiwan remain in the shadow of the pandemic, which has sent shock waves through all kinds of economic activities and increased operational risk. It becomes more diffcult for minority groups to access resources and blocks certain charity efforts. Failure to fulfll corporate social responsibility will affect a company’s brand image. ◆Opportunity: Combine core competencies of a fnancial institution and maximize resource utilization while promoting sustainable fnance and charitable causes to extend ESG to all aspects of the business.	welfare strategies, “senior care”, “social care”, “arts and cultural education”, and “sports competition”, to increase recognition of the brand from employees and the public while fulflling the Bank’s responsibility in business development and social and environmental friendliness. New observation and collaboration will also be brought into the development of fnancial products and services.	giving back to the local community and social practice, connect positive forces and use a variety of platforms to gather and use resources for maximum benefts while resolving environmental and social issues.	In support of the government’s long term care policy, the Bank allocates 0.3% of total consumption amount of Silver Love Cards to charities that help seniors share meals and learn together. The fund will also help communities provide senior learning. The Bank continues to promote senior care in communities to help seniors retire locally. ◆Social Care: Follow the philosophy of giving back to the community to support minority groups and those with physical/ mental disabilities, take action in community care and social assistance, and care for the natural environment to bring love to all corners of the country. ◆Arts and cultural education: Support local artists and organizes a diverse range of exhibits in the arts and culture space at the Bank. Sponsor arts and cultural activities and promote arts and cultural exchange. Sponsor academic forums to facilitate communication among the industry, academia, and government and support education and cultural campaigns. ◆Sports Competition: Support grassroot sports and sponsor sports competition and games, help the agencies develop athletes and support sports in the local community so that Taiwan can adopt international standards, become more competitive in sports, and encourage more people to take on sports.	donations to charity funds				accumulated donations
							KPI 2: Number of recipients of senior care every year	270,000.	280,000.	280,000.	330,000 every year
							KPI 3: Accumulated number of recipients of social care	560,000.	570,000.	600,000.	Accumulated recipients reaching 800,000
							KPI 4: Number of arts and cultural education events as host or sponsor every year	8.	14.	9.	71 events hosted or sponsored since 2022.
							KPI 5: Number of sports competition hosted or sponsored every year	4.	8.	5.	43 events/persons hosted or sponsored since 2022

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Priority	Material Issue	Responsible Unit	Key Risks and Opportunities	Policy	Commitment	Action	Evaluation and target	Evaluation and target	Evaluation and target	Evaluation and target	Evaluation and target
							Performance Indicator	2022 (short-term) goal	Achievement in 2022	2023 (short-term) goal	2024-2028 (mid to long- term) goal
13	Inclusive	Customer	◆Risk:	Help business owners	Help business	Engage external	KPI 1: Organize or	5 or more.	24.	5 or more.	5 or more.
	fnance	Rights Unit	A lack of equal access to fnancial services for the fnancially disadvantaged ◆Opportunity: 1. Actively help business owners start their own businesses and work together on issues faced by SMEs. 2. Reach out and support each other as motivated by care. Continue with service innovation to ensure customers are fully protected and create more benefts for customers of all ages.	start their businesses and work together on sustainability issues faced by SMEs.	owners achieve sustainability and become a good business partner for customers.	institutions to organize a series of seminars and courses on “startup loans” and “how to build a relationship with banks” in order to provide the help needed in running businesses.	participate in seminars hosted by external parties.
				Promote small and micro startup loans as a solution to the fnancing diffculty faced by small and micro businesses.	Help small and micro businesses obtain funds needed to operate and grow in order to achieve economic stability.	Provide different fnancial services for different groups in society, thereby creating jobs and economic development.	KPI 2: Market ranking by number of small and micro business borrowers	First place.	First place.	First place.	First place.
				Promote mobile payment tools and provide customers with more friendly payment methods while improving customer experience with fnancial services.	Continue to expand the venues and increase the number of mobile payment users in order to raise the percentage of mobile payment.	In addition to expanding in certain shopping districts, the Bank encourages customers to use the mobile payment code provided by the Bank to pay taxes and receive bonus. The Bank tries to bring mobile payment into the everyday life and fulfll its role in fnancial inclusion.	KPI 3: Number of transactions by Taiwan Pay QR code.	845,000 new transactions.	1,619,494 new transactions.	900,000 new transactions.	1,150,000 new transactions.
				TWSE started offering the intraday odd lot trading system offcially in October 2020 and kept after- market odd lot trading in a move that facilitated diversity signifcantly in the securities market.	Help young and small-budget investors invest in TWSE listed companies and invigorated the odd lot market.	The Bank developed the intraday odd lot trading service in alignment with Taiwan Stock Exchange’s new system and customers’ trading needs, and offcially launched the service on March 30, 2021 to provide a more convenient way for investors on a small budget to trade odd lots.	KPI 4: Volume of odd lot transactions	Volume of odd lot transactions up by 10%.	Volume of odd lot transactions up by 23%.	The volume of odd lot transactions rose by 20% compared to 2021.	Volume of odd lot transactions up by 50%.
				Actively expand the elder care trust service.	Ensure safety of funds and protect customers’ lifestyle.	Actively expand the elder care trust service to satisfy customer needs for asset allocation, fnancial planning, and elder care trust funds. Work through cross sector alliances with long term care, elder care, medical and social beneft providers to provide solutions to elder care, medical care, and fund management issues. The trust fund mechanism is used to protect the elderly and provide complete care and achieve fnancial inclusion.	KPI 5: Number of trust benefciaries.	2,000 new elder care trust benefciaries in a single year.	7,091 new elder care trust benefciaries in a single year.	2,300 new elder care trust benefciaries in a single year.	3,300 new elder care trust benefciaries in a single year.
				Provide several friendly micro insurance products and services to be sold to minority customers or those with specifc roles by salespersons to extend the reach of micro insurance.	Keep designing and offering fnancial products and services that can protect the disadvantaged and the elderly in order to expand the customer base.	Promote small whole life insurance policies for more caring and friendly service for the elderly, and fully utilize characteristics of such products: The age bracket is wider and premium lower compared to other types of whole life policies. The intention is to enable consumers to care for the disadvantaged and the elderly by buying this type of policy.	KPI 6: (Number of) new micro accident insurance and small whole life insurance policies	150 new contracts.	422 new contracts.	180 persons.	288 persons.

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3. Climate-related Financial Disclosures

(1) TBB’s Milestones of Climate Governance Development

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2015 2016 2017 2018 2019 2020 2021 2022
◆ Completed the “Voluntary ◆ Completed the stipulation of ◆ Reduced the capacity in ◆ Issued NT$1 billion of green ◆ Introduced the ISO14001 ◆ Stipulated and implemented ◆ The head office building’s ◆ Launched the ESG Green
Energy Conservation Plan for the Bank’s “Energy Policy” the electricity consumption financial bonds environmental management the Bank’s “Supplier environmental management Energy Sustainable
Financial Group Enterprises” ◆ The energy management contract for business premises ◆ Implemented electricity system in the head office Management Measures” system passed ISO14001 Mortgage Loan
◆ Established the first solar system of the headquarters ◆ Launched the Green Energy consumption monitoring for building ◆ Replaced more than 100 air- certification ◆ Introduced ISO14064-
powered branch building passed ISO50001 Sustainable Project Loan energy-consuming premises ◆ Introduced ISO14064-1 conditioning units in business ◆ Handled the sustainable 1 direct, indirect, and
certification ◆ Achieved 1% energy direct and indirect emissions premises connection syndicated loan other indirect emissions
conservation in the head office inventories in the head ◆ The Chu Pei Branch was case inventories (procured
building and Chongqing South office building and passed awarded the Special Award ◆ Completed the second products and services,
Road building certification for Commercial Buildings of replacement of lighting in all and business trips) in
“2020 Hsinchu County Service office premises all business locations
Industry Energy Conservation ◆ Completed the stipulation of in Taiwan, and passed
Excellence Awards” by the Bank’s “Environmental certification
Hsinchu County Government Sustainability Management ◆ Replaced 4 elevators
Handbook” ◆ The TCFD framework was
◆ Signed up as a TCFD rated as Level-5 by BSI
Supporter ◆ Signed and successfully
◆ Improved the hed office introduced the Equator
building’s breakrooms and Principles
toilets, and installed energy- ◆ Received a rating of B for
saving and water-saving the first time participating
equipment in the international CDP
◆ Launched the Sustainable Climate Questionnaire
Life Credit Card, and issued ◆ Formulated the limit on
credit cards made with the investments and
environmentally friendly financing in industries
materials with high pollution/energy
◆ The Chongqing South Road consumption.
building received the Taipei
City Zero-Carbon Standard
Industrial and Commercial
Industry Group B Model
Award
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(2) TBB’s Task Force on Climate-related Financial Disclosures (TCFD)

After signing the TCFD statement and becoming a TCFD Supporter, the Bank regularly conducts the identification of climate change-related risks and opportunities every year in accordance with the TCFD framework, the FSC's Guidelines on Climate-related Financial Disclosures by Domestic Banks, and the Practical Manual of Climate-related Risk Management by Domestic Banks released by the Bankers Association Of The Republic Of China. The assessment results are presented in four dimensions: Governance, Strategy, Risk Management, and Indicator and Target:

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Information Disclosure Assessment Results
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Information Disclosure	Assessment Results

Governance	● Board of Directors Incorporate climate risk factors into the Bank’s risk appetite, strategy, and business plan, including identifcation of climate- related risks and opportunities and their impact on the Bank’s strategy and plan, and continue to effectively monitor the Bank’s management and disclosure of climate risks. ● Sustainable Development Committee Integrate specific implementation strategies for sustainable development of the entire bank, covering issues such as corporate governance, sustainable finance, climate governance, customer rights, social welfare, employee care, and environmental sustainability. ● Risk Management Committee Supervise and review the implementation and effectiveness of climate-related risk governance. ● Risk Management Department Regularly perform the analysis of climate-related fnancial disclosures and make the TCFD report.
Strategy	●Fully leverage the infuence as a banking institution in the mitigation of the impact of global climate change, to reduce the impact of climate change on the environment and strive to achieve sustainable development of the environment. ●Regularly identify climate change risks and opportunities under the TCFD framework and evaluate the potential impact on operations and finance, and then develop corresponding targets and measures for corporate operations, business development, and fnancial planning. ●Actively develop short-, mid- and long-term countermeasures in accordance with the identifed climate change risks and opportunities, and enhance the ability to adapt to climate-related risks in different climate scenarios.
Risk Management	●Risk Management Department collects issues of climate-related risks and opportunities with reference to the domestic and international climate scenarios and the TCFD framework and investigates on our relevant departments. After identifcation and prioritization, a risk and opportunity matrix is drawn based on the occurrence probability and the degree of impact, to identify the severity of each climate risk and opportunity incident and formulate countermeasures accordingly. ●Collect information on potential climate change transition and physical risks to analyze potential fnancial impacts in various climate scenarios. ●Hand over relevant issues to each business management department for management, and work on the planning and execution of business development strategies based on the climate risks and opportunities identifed, and the analysis results of climate transition and physical risks.

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Information Disclosure	Assessment Results	Assessment Results	Assessment Results	Assessment Results
Indicator and Target	●Indicator ◆ Continue to introduce international certifcation, and continuously monitor the information on TBB’s use of energy and water resources, waste disposal, and resource recycling, as well as regularly entrust third-party entities to conduct inspections. ◆ Continue to monitor the development of green fnancial services, and monitor the proportion of credit risk exposure of high polluting/energy consuming industries. ●Target ◆ Increase the proportion of green loans year by year. ◆ Set up a target proportion of credit risk exposure of high polluting/energy consuming industries ◆ Reduce greenhouse gas emissions year by year. ◆ Improve the effectiveness of reduction of electricity and water consumption year by year.
(3) The procedure for identifying issues of climate change-related risks and opportunities
STEP 1		STEP 2	STEP 3	STEP 4
The Bank works with external consultants to collect issues on climate-related risks and opportunities, and designs a questionnaire on climate-related risks and opportunities.		Invite various departments and subsidiaries of the Bank to conduct a questionnaire survey on climate-related risks and opportunities.	Analyze the questionnaire data, and prioritize the risk and opportunity issues by “Probability of occurrence” and “Degree of fnancial impact”.	Based on the result of prioritization, draw a climate change risk and opportunity issue matrix.

A. Climate Change Risk and Opportunity Matrix

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Climate Change Risk Matrix Climate Change Opportunity Matrix
5 5
4 4
13 6
15 14 11
5 10 3 財
3 務 3 1 2
7 2 效
16 2 2
8 12 9 益
程 6 2
2 度 2
4 1 2
1 1
1 2 3 4 5 1 2 3 4 5
Probability of occurrence 發生可能性 Probability of occurrence 發生可能性
Note:
Probability of occurrence: Prioritized from unlikely to occur (1) to almost certain to occur (5).
Degree of financial impact: Prioritized from low (1) to high (5) financial impacts.
Degree of financial impact Degree of financial benefit
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Time of occurrence:

Short term (Less than 1 year) Mid term (1 to 5 years) Long term (More than 5 years)

Risk and opportunity level: Measure the level of events based on the risk value (Probability of occurrence × Degree of financial impact or benefit).

Risk level	High	Medium	Low
Risk value	Above 15 (inclusive)	Between 7.5 (inclusive) and 15 (exclusive)	Below 7.5 (exclusive)

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354

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B. Priority of Climate Change Risk Issues

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Priority No. Risk issues Risk Category Time period Risk level
1 R13 Financing control tightened, leading to customer loss. Transition Mid Medium
2 R6 Long-term impact of climate change. Physical Long Medium
3 R15 Carbon emission control: resulting in a decrease in the Bank's return on investment. Transition Long Medium
4 R14 Carbon emission control: making it difficult for the Bank to Transition Mid Medium
recover its creditor's rights.
5 R11 Investment targets are facing low-carbon transition. Transition Long Medium
6 R5 Long-term climate change affects the value of real estate collateral. Physical Long Medium
7 R10 Financing targets are facing low-carbon transition. Transition Long Medium
8 R3 Assets of financing targets are damaged. Physical Mid Medium
9 R7 The Bank is unable to respond to the need for sustainable finance in a timely manner. Transition Mid Medium
10 R16 Environmental regulations and policies are becoming stricter. Transition Long Medium
11 R2 Assets of investment targets are damaged. Physical Mid Medium
Negative news about high pollution, such as environmental
12 R8 pollution, caused by the investment and financing targets of Transition Mid Medium
the Bank, indirectly affecting the Bank’s reputation.
13 R12 Digital financial transformation for paperless operation and Transition Mid Medium
energy conservation & carbon reduction.
The Bank's performance on sustainability is not satisfactory,
14 R9 affecting the willingness of customers to transact with the Transition Long Medium
Bank.
15 R4 Rising average temperatures or sea levels, affecting day-to- Physical Long Low
day operations.
16 R1 Business locations suspend due to natural disasters, causing Physical Mid Low
a decrease or interruption in production capacity.
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C. Priority of Climate Change Opportunity Issues

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Priority No. Opportunity issues Time period Risk level
1 O1 Develop climate-related project loans. Mid Medium
2 O3 In response to the trend of sustainable finance, promote diversified green financial products and develop new business opportunities. Mid Medium
3 O2 Increase investment in climate-related industries. Mid Medium
4 O4 Optimize digital financial services to reduce energy/resource consumption of Short Medium
operations and customers, which also helps in increasing customer base.
5 O6 Purchase new energy-saving equipment to improve energy efficiency. Mid Medium
6 O7 Increase the use of renewable energy. Mid Medium
7 O5 Hold internal and external energy conservation competitions; provide Short Medium
incentives or educational trainings.
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(5) Credit risk exposure analysis of high polluting/energy consuming industries

In order to effectively control climate-related risks, the Bank refers to the list of controlled enterprises in the "Mandatory Greenhouse Gas Reporting System" of the Environmental Protection Agency of the Executive Yuan and the scope of industries with high climate risks in the same industry to define the Bank's scope of high polluting/energy consuming industries. By the end of 2022, the balance of mid- and long-term loans granted to the Bank's high polluting/energy consuming industries was approximately NT$65.776 billion, accounting for about 10.80% of the total mid- and long-term loans, which was regarded as the Bank's carbon-related credit risk exposure. The Bank's lending trend and distribution of high polluting/energy consuming industries in the past three years are as follows:

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The trend of mid- and long-term loan balance of corporate loans
7,000.00 12.50%
12.11%
6,000.00
5,433.84 12.00%
5,000.00
4,983.40
4,000.00 4,494.48 11.50%
11.00%
3,000.00 11.00%
2,000.00 10.80%
619.20 615.77 10.50%
1,000.00 657.76
0.00 10.00%
2020 2021 2022
Mid- and long-term loan balance of high Mid- and long-term loan balance of non-high
Proportion of total loan balance
polluting/energy consuming industries polluting/energy consuming industries
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Plastic (Rubber) and non-metallic
mineral manufacturing industry 3%
Wood and bamboo paper products,
Mineral products printing and data storage media
manufacturing 3% reproduction industry 2%
Petrochemical Metal products
industry manufacturing
7% industry
26%
Electricity and
gas supply
industry Distribution of loans
9% to high polluting/energy
consuming industries
Transportation in 2022
and
warehousing
industry Basic metal
12% manufacturing industry
20%
Electronic component
manufacturing industry
17%
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This year, the Bank analyzed the transition and physical risk scenarios respectively, and quantified the financial impacts of climate change on the Bank, so as to assess the Bank's potential climate change risks.

A. Analysis of transition risk scenarios
Risk identification: According to the list of controlled enterprises in the "Mandatory Greenhouse Gas Reporting System" of the EPA, 26 of them are loan customers of the Bank.
Risk analysis: To keep abreast of the mid- and long-term climate-related risks accurately, the model of the Network for Green Financial System (NGFS) were applied to select the three scenarios of nationally determined contributions (NDC), delayed transition (Delayed Transition) and global net zero emissions (Net Zero). A trial calculation was made with the three time points of short- (2023), mid- (2027) and long-term (2050) to evaluate the carbon fees that our 26 customers might need to pay.

Scenario	Scenario of NGFS	Assumption of carbon price (NTD/metric ton)	Assumption of carbon price (NTD/metric ton)	Assumption of carbon price (NTD/metric ton)	Growth rate of carbon emissions (baseyear: 2021)	Growth rate of carbon emissions (baseyear: 2021)	Growth rate of carbon emissions (baseyear: 2021)
		2023	2027	2050	2023	2027	2050
A	NDC	300.00	300.00	300.00	0.40%	0.40%	-1.06%
B	Delayed Transition	-	-	11,937.71	-0.52%	-1.64%	-73.59%
C	Net Zero	1,160.61	2,333.52	17,301.28	-6.35%	-16.27%	-80.46%

Quantitative analysis results on financial impacts of transition risk
The potential financial impacts of the 26 customers on the Bank under different carbon fee scenarios are shown in the table below. For detailed countermeasures, please refer to the TCFD report expected to be released by the Bank in 2023.

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Scenario Scenario of NGFS 2023 2027 2050
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Scenario	Scenario of NGFS	2023	2027	2050

A	NDC	Mild	Mild	Moderate
B	Delayed Transition	No impact	No impact	Moderate
C	Net Zero	Moderate	Moderate	Moderate
Extremely signifcant Financial impact or beneft exceeds NT$1 billion. Signifcant Financial impact or beneft is between NT$500 million (inclusive) and NT$1 billion (exclusive). High Financial impact or beneft is between NT$100 million (inclusive) and NT$500 million (exclusive). Moderate Financial impact or beneft is between NT$1 million (inclusive) and NT$100 million (exclusive). Mild Financial impact or beneft is under NT$1 million (exclusive).

B. Analysis of physical risk scenarios

To monitor closely the impacts of physical risks on business locations and activities, the Bank evaluated the probability of flooding and simulated flood depth based on the Taiwan Disaster Risk Map published by the NCDR climate change disaster risk mitigation platform in 2021. To refine the scale of risk identification, disaster types, and the amount of loss caused by disasters, the Bank introduced the United Nations Environment Program Finance Initiative (UNEP FI) approved climate risk analytics databases this year. The physical risk analysis this year includes financial impact assessment regarding real estate collaterals and business locations of branches. The method and conclusion of the assessment are as follows.

Real estate collaterals: A physical risk analysis is performed on all domestic real estate collaterals.
Branch locations: A physical risk analysis is performed on all business locations and self-owned real estate in Taiwan.
Risk Analysis

■ ■ Land subsidence ■ Extreme heat ■ Forest fire ■ Extreme winds ■ River flooding

Scenarios and factors
Based on NCDR forecast, RCP 8.5 and RCP 2.6 of the Representative Connection Pathways (RCPs) are used in the assessment:
Analysis timing: Short-term (2023), mid-term (2027), and long-term (after 2050).

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Input parameters: Address of real estate, economic service life of building, material of building, coordinates, and year of construction.
Analysis method
The General Circulation Models (GCMs); IPCC CMIP5 and CMIP6 models are selected.
The result of the physical climate risk analysis shows that, the 2050 RCP 8.5 is the most severe scenario and the frequency of risk incidents and the amount of expected losses are higher in the long-term (2050) compared to the short- and mid-term (2023 and 2027). For details and countermeasures, please refer to the TCFD Report that the Bank plans to release in 2023.
and RCP2.6 scenarios and changes in the loan-to-value (LTV) ratio after impairment of real estate collaterals are shown in the table below.

Scenario	RCP8.5	RCP2.6
	5,519.25	4,864.19
Financial impact
(NTD mn)	Extremely signifcant	Extremely signifcant
	0.40%	0.35%
Change in LTV ratio (%)
	Mild impact	Mild impact
Change in LTV ratio = (Initial LTV ratio - LTV ratio after impairment) / Initial LTV ratio
Value after impairment = Initial appraised value		× (1 - 2050 real estate value impairment %)
Real estate value impairment (%): based on climate risk analytics databases recommended by UNEP
FI.

Although the assessment of overall financial impact on the Bank is extremely significant in both scenarios, the Bank has well-established collateral review, appraisal and pricing management, and other lending procedures in place for individual cases. Going forward, the Bank will continue to refine climate risk assessment in order to closely monitor impacts of physical climate risk on real estate collaterals at the Bank.

Branch locations: Business locations and self-owned real estate of the Bank under the 2050 RCP8.5 and RCP2.6 scenarios may have a financial impact on total assets. A physical risk assessment of the Bank as a whole or any single location indicates all potential physical risks of the Bank's business locations are mild.

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Scenario RCP8.5 RCP2.6
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Scenario	RCP8.5	RCP2.6

Financial impact (NTD mn)	42.86	37.83
	Moderate	Moderate
Potential physical risk	Mild	Mild

4. The Bank's achievements in promoting sustainable development in 2022, divided into categories of Environmental, Social and Corporate Governance (ESG), are described below:

(1) Environmental

A. Extension of Environmentally Friendly Enterprise Project Loans
a. In its advancement toward such sustainable environment goals as lowering energy consumption and reducing pollution, in addition to including the sustainable development and implementation of corporate environmental protection in its loan business, the Bank continuously promotes project loans under the "Preferential Loans for the Procurement of Renewal Energy Equipment," "Green Energy Sustainable Project Loans," "Machinery and Equipment Upgrading Loans," and the "Preferential Loans for 6 Core Strategic Industries." The Bank also cooperates with external counseling institutions and held several lectures on "green finance" related topics to provide guidance to enterprises in upgrading and transforming. Furthermore, through the credit granting model of "Sustainability Indices Linked", the Bank guides enterprises to pay attention to green development issues, in the hope of establishing a low-carbon economy, achieving the goal of sustainable social development, and generating a win-win for economic development and environmental protection.

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b. The Bank has developed the Innovative Urban Renewal 2.0 by combining urban renewal and green energy (generation of electricity on-farm and energy storage) and target the old factories in the industrial zones for renovation and reconstruction as their buildings can be designed to be more three-dimensional to increase the usable area and solar power generation and storage facilities can be installed on the rooftop of buildings to generate electricity on their own, which, at the same time, can solve the problems of land and power shortages in Taiwan.
B. Implementation of Carbon Reduction and Energy Conservation Policy to Stimulate Sustainable Environmental Development
a. The Sustainable Life Card advocates vegetarian diet and carbon reduction as well as green energy and the sharing economy. The card also offers 10% cash back on green channels. Green spending brings cardholders into environmental efforts by allowing cardholders to combine sustainability and spending. In addition, the Sustainable Life Card is made of environmentally friendly PETG material and does not emit poisonous gas during destruction, thereby reducing its environmental impact. Sustainability campaigns are offered from time to time to step up the Bank's ESG efforts and sustainability performance.
b. The Bank has established the "Environmental Sustainability Management Handbook" and "Measures for Water and Electricity Conservation" to monitor regularly water and power consumption by each unit. The Bank also actively implements energy saving and improvement programs to improve energy efficiency and reduce carbon emissions.
c. The Bank has five solar powered branches, which are Ta Fa, Ta Yuan, Ming Hsiung, Tainan, and Hsing Chung branches. The Ta Fa Branch and Ta Yuan Branch sold wholesale electricity to Taipower at the early stage, while the other three branches are self sufficient with a total installed capacity of 108.025 kW and expect to generate a total of 134,000 kWh of electricity every year. The Bank will continue to set up self sufficient solar powered branches in the future.

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d. Waste at the head office building is disposed by a professional vendor who also provides proof of disposal. Statistics show that waste at the head office building reached 83.3 tons with 19.1 tons in recyclable waste. The Bank will continue to raise awareness about reducing food waste and single use utensils and enforce waste sorting.
e. The head office building continues to promote ISO50001 and ISO14001 certification for energy and environmental management systems. Action plans will be implemented to improve and strengthen performance in energy efficiency and other environmental issues.
f. The Bank continues to promote ISO14064-1 GHG inventory certification, which covers the head office building, the Linkou server rooms, and all domestic branches.
g. The old ice water machine at the Zhongnan building was replaced by 120RT Class 1 energy efficient ice water machine and the ice water and cooling pumps were updated (IE3 energy efficient motors) and added with inverters.
h. Plans are made to digitize services. Mobile insurance and online insurance were implemented and a paperless process was introduced to save energy and reduce carbon emissions.
i. The Bank supported the government in encouraging reading and promoting paperless and energy saving and carbon reduction policies. The Bank also promoted an e-book city reading service inside the head office building.
C. Superior Performance Record in Implementing Environmental Protection
a. The Bank received the "2022 Taipei City Zero Carbon Benchmarking Award" under the Industrial and Commercial Industry Group B Model Award.
b. The Bank has been cited by the Environmental Protection Administration and the Taipei City Government's Department of Environmental Protection for "Outstanding Performance in Green Procurement" for 11 years in a row.

(2) Social

A. Promotion of Social Benefit and Participation in Community Development
a. To help with the media exposure of charity and public benefit groups, the Bank disclosed information on charitable donations on the Credit Card section of its official website, including donation programs for the Spinal Cord Injury Foundation, Taiwan Fund for Children and Families, World Vision International (Taiwan), Sunshine Social Welfare Foundation, Eden Social Welfare Foundation, Children Are Us Foundation, Genesis Social Welfare Foundation, and Waker Group.
b. The Bank participated in the community college seminars co-organized by the Trust Association and the New Taipei City Government as well as financial education campaigns on campus and in the community and trust campaigns for social welfare groups organized by the Banking Bureau. These activities served to make

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trust service more accepted by the public and enhance the Bank's brand image as a trust service provider. It is part of the Bank's commitment to implementing the competent authority's Trust 2.0 policy and fulfilling the Bank's corporate social responsibility.

c. The Bank continued the sponsorship of the Senior Learning Centers to improve the quality of life and care for the disadvantaged elderly in the community. Two new locations in Nuantong Village, Nuannuan District, Keelung City and Wanli Village, New Taipei City were added to the sponsorship in collaboration with community development associations in 2022. There are a total of 20 locations at present, and 284,944 people benefited from the sponsorship in the year. The Bank also partnered with University of Taipei in the USR program to provide physical exercise courses for seniors.
d. In support of the health status of school children in remote areas, the Bank continued to sponsor free breakfast at Nanfeng, Shuanglong, Duona, and Saijia elementary schools for the 2022 academic year.
e. The Bank worked with the valued customer, Cona's Chocolate, in organizing the Cona's Choco Adventure for Children that educated children in 8 remote elementary schools in Nantou on cocoa and handmade chocolate classes.
f. To help farmers alleviate the pressure of agricultural overproduction, the Bank purchased close to 12 tons of custard apples and 1,200 cases of pomelos to give away to all employees of the domestic branches, sponsored elementary school children, seniors at the Senior Learning Centers, and households in need at 3 food banks. The Bank received an appreciation certificate from the Council of Agriculture.
g. To offer humanitarian aid for Ukraine, the Bank donated NT$2.8 million to the Taiwan Foundation for Disaster Relief for this specific use.
h. The Bank sponsored the Sheng-An Yang charity tour hosted by NewArt. All ticket sales after necessary expenses were donated to the rebuilding of St. Camillus Hospital in Penghu.
i. As part of the commitment to humanitarian efforts and CSR, the Bank purchased 10 anti-tuberculosis 2022 charity stamps sold by the Taiwan Anti-tuberculosis Association in support of their fundraising effort.
j. The Bank was a sponsor of the Anue annual charity program and took action to help draw attention to difficulties faced by disadvantaged children and seniors in Taiwan.
k. The Bank organized the TBB Love Earth Green Go mountain cleaning campaign. Environmental education was made a part of the event to encourage employees join the charity effort and support the green lifestyle.
l. To extend social responsibility, build up capabilities in different areas, and recruit necessary talent, the Bank started working with colleges and universities in 2018 to promote academic-industry partnerships. These programs provide internships for junior and senior university students as well as first year graduate students. Students will be considered for full-time positions at the end of their internships based on an interview and internship evaluation. This is a way of bringing top talent into the Bank.
m. A total of 91 students participated in the academic-industry partnership program for the second half of the 2021 academic year. A total of 66 students were hired after their performance at their respective units and interviews were considered, leading to a retention rate of 73%. The Bank will continue with the partnership program for the second half of the 2022 academic year. The list of schools in the program is going to be expanded from 8 schools (8 departments) to 15 schools (20 departments), and the number of internships will increase from 91 to 146. The goal is to have the schools put forward outstanding students and help them in career development while the Bank recruits new employees, thereby creating a all-win situation.
n. The Bank provides summer internships for financially disadvantaged youth to help support financially disadvantaged households. The Bank provides part-time internships for active students and partnership programs with public and private colleges and universities. Courses are organized by both parties to educate top talent and a well constructed workplace experience for students. Job opportunities are offered to students with outstanding performance.
o. The Bank supports the government's Asian Silicon Valley project to accelerate growth and transformation of startup businesses. The Bank set up an office at the Kaohsiung Yawan Startup Terrace to provide financial services for the long term, and helped create an innovative startup ecosystem to support transformation of local businesses.
p. The Bank actively participated in events hosted by the Trust Association of the Republic of China and worked together to improve service quality and image of the financial sector through close ties and interaction.

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q. The Public Welfare Trust - Senior Carefree Social Welfare Fund, which was established with the Bank as the trustee, continued to donate to communities facing resource shortage. To fulfill CSR, the Bank also conducted Senior Learning Center events on trust education in Nuannuan District, Keelung City and Xinwu District, Taoyuan City.

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r. The Bank provided customized financing and dangerous building reconstruction programs and urban renewal trust services for landowners and individuals involved in reconstruction projects. These programs provide landowners and real estate developers with dangerous building reconstruction and urban renewal projects with coordination, building design, construction bidding, and progress management, financing planning, trust and renewal mechanisms and other professional services to help landowners who lack the expertise, experience, and resources to realize their dream of building renewal.
s. The Bank organized the 4th Dangerous Buildings, Urban Renewal, and Trust Expo at the Taipei Expo Dome. The Expo provided a venue for the public to obtain information on urban renewal and trust service. It was an opportunity for the public to get involved in old building renewal and for the Bank to strengthen its ties to the community, partners, and members of the public, thereby fulfilling its social responsibility and enhancing its image.
B. Support for Academic, Cultural, and Sports Activities
a. The Bank continued to hold Trust 2.0 seminars with schools in the academic-industry partnership program. The Bank also arranged for branch employees to give lectures at National Taipei University and Soochow University and trust courses at I-Shou University and National Taipei University of Business that introduced trust service in the everyday life to the students and advanced trust education to a younger generation.
b. In support of the 2030 bilingual policy to start English education at an early age, the Bank partnered with Studio Classroom to write English articles on trust service and publish English videos on Youtube to explain the purpose of trust through everyday examples. The materials help young audience learn English and understand the trust system and benefits at the same time.
c. The Bank handled the subsidy trust for domestic feature films subsidized by the Ministry of Culture. The contract was finalized and entered into on December 2, 2022.
d. The Bank sponsored the BBC Planet Earth II Live in Concert and the corporate inclusion initiative, and invited teachers and students to free screenings and drew attention to sustainability issues.

360

e. Continuing the art and culture exhibit, Dadaocheng in Images, the Bank organized 4 exhibits in 2022 and invited acrylic and ink painter Wen-Hui Chen and new mineral paint artist Yu-Jie Zhang, and Jia-Wei Ye who is an architecture artist and a member of the Bank's retiree association. In addition, calligraphy masters were invited to write CNY banners that were given away to customers in the branches for celebrating the festival.
f. In support of local art and culture, the Bank was a sponsor of the 2022 National Day Celebration in Taoyuan, 2022 National Day Fireworks in Chiayi, 2022 Taiwan Composer League, 2022 Tua-Tiu-Tiann International Festival of Arts, 2023 Taoyuan New Year Countdown Party, and the 2022 GACC National Day Building Projection Mapping and Interview with Masters videos.
g. The Bank supported academic exchange by sponsoring the ARDF 34th CPA Elite Debate, the 2022 ESG Summit on Environment, Social & Governance, the 2022 annual conference of the Taiwan Economic Association, the 2022 Wealth Magazine Impact Forum, and the 2023 Business Today Economic Outlook Forum.
h. The Bank assisted the Ministry of Finance in organizing the 2022 Unified Invoice Marathon and supported charity and minority groups through the marathon.
i. To encourage participation in sports, the Bank sponsored the 2022 TLPGA YTS & Suncity Heritage Tour, the 2022 CTFA TBB 5-a-side Football Tournament, the Keelung Community Basketball Association 31th New Park Basketball Tournament, the 2022 Chiayi City Government Sports Games, the Taichung Real Estate Development Association 16th Golf Tournament, and Australia Open, French Open, Wimbledon Championships and other sports on CSTV Sportcast.
j. The Bank allocates 0.3% of the Yilan Affinity Card consumption to donate to National Ilan University and Yilan County Government to facilitate school affairs development and local prosperity.
k. The Bank collaborated with Beigang Chaotian Gong in issuing the Beigang Chaotian Gong Affinity Card. The Bank provides the sponsorship and allocates 0.275% of general card consumption amount to Beigang Chaotian Gong every year for organizing the pilgrimage or other public welfare events.
C. Care for employees
Employees are assets of the Bank, and we spare no effort to take care of our employees. In addition to formulating work rules and various personnel management regulations in accordance with the Labor Standards Act and other relevant labor laws and regulations, we provide labor insurance, national health insurance and pension contributions as per laws and regulations. We regularly hold employee health checks, provide preferential group medical and accident insurance, and protect employees’ lives, so that they can leverage their capabilities at work without any concerns.
a. Enhancement of Employees' Professional Knowledge
To enhance our employees’ competitiveness and their professional knowledge, we provide education and training courses in different areas of business in accordance with our annual staff training plan and also

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offer holiday courses. Meanwhile, in response to the pandemic and e-learning trends, e-learning method was adopted instead. The courses focus on international financial trends, mortgage life insurance products, green industries and financing, metaverse, real estate development trends, electric self-driving car industry, financial digital transformation, and taxation and wealth management, etc., in the hope of enhancing the professional knowledge of the entire staff.

b. Creation of an excellent workplace
1) In compliance with the Act of Gender Equality in Employment, the Bank has established regulations for sexual harassment measures, complaints, and penalties so that employees will have a work environment free of sexual harassment.
2) The Bank provides its employees with a safe and healthy workplace, equipped with central air conditioning systems, abundant lighting, comfortable and appropriate working space, and emergency evacuation routes and exits. Elevators are maintained on a regular basis, firefighting equipment is available, and regular fire drills are held. Workplaces are disinfected and cleaned regularly, and door access safety controls are in place. Health service and stress-free activity center and first-class facilities (such as AED, first aid kit) are also in place.
c. Establishment of Smooth Channels for Promotion and Communication
1) The Bank has a comprehensive system of remuneration and rewards as well as the promotion channel, diversified training and welfare measures that attract and retain talents, joining hands for the prosperity of the Bank.
2) The Bank places the utmost emphasis on employee rights and regularly calls labor-management meetings where the two sides can fully communicate and negotiate on employee rights and welfare issues, and sign the Collective Agreement, thereby maintaining harmonious labor-management relations.

(3) Corporate Governance

A. Fulfillment of responsibility as a SME specialized bank
a. Deep cultivation of the core SME business
- 1) Support for diversity in the startup market, participation in events hosted by the government and supporting agencies, and information sessions on startup financing and business advice included the following:
  - ① The MOEA SMEA SME Incubator Development Plan hosted the National Incubator Meet at Chinese Culture University Kaohsiung Campus on February 9, 2022 and February 11, 2022. The Bank presented Preferential Loans for Youth Entrepreneurship and Start-up.
  - ② The ACFPT held the 2022 Taipei International Chain and Franchise Exhibition (Spring) at TWTC Hall 1 on March 11, 2022. The Bank arranged for a local branch to set up a stall and provide advice.
  - ③ Junior Chamber International Huwei held the Orientation and Youth Entrepreneurship Financing Information Session at Yunpin Restaurant on March 12, 2022. The Bank presented Preferential Loans for Youth Entrepreneurship and Start-up.
  - ④ The information session for the 17th Warring States Innovation and Entrepreneurship Competition in 2022 took place at the National Dong Hwa University Innovation Incubation Center on March 14, 2022. The Bank presented Preferential Loans for Youth Entrepreneurship and Start-up.
  - ⑤ The KPPT Regional Branch of the Workforce Development Agency of the Ministry of Labor organized the personnel policy information session for Micro Loans for Female Entrepreneurs on April 27, 2022. The Bank presented Onsite Assessment Key Points and Recommendations for Borrowers.
  - ⑥ The KPPT Regional Branch of the Workforce Development Agency of the Ministry of Labor organized the Course for Female Entrepreneurs on May 17, 2022. The Bank presented the Startup Financing course.
  - ⑦ The ACFPT held the 2022 Domestic Chain and Franchise Exhibition (Summer) at TWTC Hall 1 on June 10, 2022. The Bank arranged for a local branch to set up a stall and provide advice.
  - ⑧ The YCT Regional Branch of of the Workforce Development Agency of the Ministry of Labor organized the Advanced Course for Entrepreneurs on November 17, 2022. The Bank presented the Startup Financing and Incorporation course.
- 2) Active participation in financing information sessions hosted by the government and supporting agencies and industrial development and investment promotion committees included the following:
  - ① The Credit Guarantee Fund held "Postpandemic Outlook - Taipei " at Like Space on January 14, 2022 and invited the Bank to join the panel for the general session and a local branch to set up a stall and provide advice.

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② The Bureau of Economic Development of the Taoyuan City Government held the Taiwan Economic Outlook and Business Transition Information Session on April 14, 2022. The Bank sent representatives to provide online advice.

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③ National Kaohsiung University of Hospitality and Tourism held the "Academic-Industry Cooperation - Guest Lecturers from Industry" on May 10, 2022. The Bank presented the Financial Credit and Startup Loans course.
④ The Bureau of Economic Development of the Taoyuan City Government and Taiwan SMECF held the online Taiwan Economic Outlook and Business Transition Information Session on May 26, 2022 and June 23, 2022. The Bank sent representatives to provide online advice.
⑤ SMEA of MOEA held 6 SME financing matchmaking events in Taichung from July 1, 2022 to September 30, 2022 as part of the 2022 Project for Strengthening SME Solvency. The Bank spoke at the venue and arranged for a local branch to provide onsite financing matchmaking service.
3) Taiwan SMECF held the 2022 SME ESG Early Implementation Seminar at Chinese Culture University Daxia Branch on March 22, 2022. The Bank was invited to speak at the event and have a local branch set up a stall and provide advice.
4) The Taiwan Real Estate Management Association held an information on urban renewal and dangerous/ old building reconstruction on March 22, 2022. The Bank presented an introduction to urban renewal and old building financing and asked a local branch to set up a stall and provide advice.
5) The NKUST Department of Business Administration held the forum, ESG and Challenges and Opportunities for Taiwanese Businesses, on June 23, 2022. The Bank spoke to students at the forum on global ESG trends.
6) Wealth Magazine held the 4th Urban Renewal Expo and Seminar at the Taipei Expo Dome from September 17, 2022 to September 18, 2022. The Bank set up a stall and provide advice.
b. Loan policy
The Bank follows the spirit of the "Equator Principles" in its loan policy.

In its extension of loans, the Bank fulfills its corporate social responsibility by taking the customer's ethical corporate management, corporate governance, environmental protection, social responsibility, food safety, and labor safety into consideration in its loan evaluation and decision making, thereby exerting its influence on corporate social responsibility.

362

B. Implementation of consumer protection and reinforcement of customer care
a. Reinforcement of consumer protection
- 1) The Bank protects consumer rights through its "Consumer Protection Policy" and "Consumer Protection Operating Procedures," which clearly state the measures to be implemented and designate an exclusive unit to review the effectiveness of the consumer protection mechanism. The Auditing Dept. is responsible for checking on the status of implementation.
- 2) In line with the implementation of the Consumer Debt Clearance Act, the Bank has set up a single window for taking applications and providing consultation on preliminary negotiations, thereby helping to lighten the debt burden on debtors. To date, this facility has helped 5,648 people to start new lives, which in turn reducing social problems.
- 3) To protect consumers and comply with the competent authority’s regulations, in handling the mediumand long-term secured loan business with houses as collateral, or other real properties as collateral and its actual purpose is to purchase a home, branches have to emphasize the special reminders for mortgages, so as to allow customers to be aware of the risk of changes in loan interest rates.
b. Implementation of customer service and care
- 1) The Bank and Taiwan Small & Medium Enterprise Counseling Foundation (Taiwan SMECF) jointly planned the "Project Counseling Plan for Improving the Financial Competitiveness of SMEs", which provides counseling measures such as the diagnosis of SMEs' financing and accounting problems, financial knowledge training courses and financing practices, so as to strengthen the resource integration function, and provide a comprehensive financial counseling service.
- 2) To take care of young people and disadvantaged groups, the Bank carried out the Ministry of Finance's "Preferential Housing Loan Program for Successful Family Foundation of Youth" and the Construction and Planning Agency, Ministry of the Interior's "Housing Subsidy and Home Improvement Loans." By the end of December 2022, a total of 31,149 and 1,628 of these loans, respectively, had been extended, with the appropriation amount accumulated to NT$130.772 billion and NT$3.215 billion, respectively.
- 3) The Bank established negotiation service windows, provided debt negotiation channels, and renegotiation systems to help relieve the debt burden for borrowers in financial difficulties.
- 4) To reinforce the interaction between fellow colleagues of all branches and the existing customers of the wealth management business and improve the communication between both parties, the Bank held a total of 119 customer briefing sessions to establish a regular fixed investment concept and provide

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quarterly market outlook, so as to develop profound relationships with customers and improve the reputation of the Bank.

  - 5) To accord with the governmental policy and fulfill its corporate social responsibilities, the Bank donated the amount equal to the insurance premium to "Chiayi Fu An Sovereign Charity" for it to purchase the "Micro Group Accident Insurance" product from South China Insurance.

  - 6) The Bank provided various counseling services (such as counseling high-quality enterprises to participate in the National Award of Outstanding SMEs, the Rising Star Award, the Business Startup Award, or the Taiwan SMEs Innovation Award), helped business owners participate in the management and financial diagnosis project courses organized by counseling institutions, and assisted SMEs in making good use of various government resources and obtaining the necessary funds for operations. We satisfied customers’ needs by actively providing thoughtful services to strengthen SMEs’ foundation.

c. Creating financial products that conform to social trends and customer needs
- 1) In response to Taiwan's aging population and low birth rate, the Bank constantly introduces trust products, including nursing care trust, disability trust, and insurance trust, and has planned out trust services that combine asset management and nursing care. This adds assurance and peace of mind for customers and fulfills the Bank's corporate social responsibility while offering a full range of financial services.
- 2) In response to the government’s policy in encouraging financial institutions to actively participate in urban renewal and hazardous and old buildings reconstruction, the Bank continues to promote its urban renewal and hazardous and old buildings reconstruction trusts, where the Bank would combine financing products with the land and capital trust business to offer the complete financial services for facilitating the development of reconstruction, so as to revitalize urban and community functions and achieve the purposes of city appearance beautification and improvements in living environments.
- 3) In coordination with the "Loans for Youth Overseas Experience" program of the Youth Development Administration, Ministry of Education, the Bank provides young adults aged up to 35 with loans for overseas study, self-guided travel, and working holidays, helping them to realize their dreams of living overseas. As of the end of December 2022, the Bank had provided NT$562 million in these loans to 4,732 persons.
- 4) To help increase birth rates, the Bank continues to extend childbirth consumer loans, lightening the burden on family finances by providing the capital needed to pay for bearing children. As of the end of December 2022, 1,712 of these loans for a total of NT$669 million had been extended.
- 5) To help seniors to invigorate their assets and stabilize their livings, the Bank continues to promote the "Joyful Retirement" project. By the end of December 2022, a total of 248 of these loans had been extended, with the contract amount and the appropriation amount accumulated to NT$1.852 billion and NT$966 million, respectively.
- 6) To cooperate with the government’s building of properties with the set surface rights on state-owned nonpublic use land, the Bank formulated the regulations on the surface rights mortgage project to strengthen the development of state-owned non-public use land.
- 7) A total of 3,716 cases of "Preferential Loans for Youth Entrepreneurship and Start-up" and "MicroEntrepreneurship Phoenix Loans" were extended in 2022, which can create 14,864 job opportunities.
C. Upgrading of information transparency, and reinforcement of communication with shareholders and investors
The Bank engages in a long-term effort to upgrade its corporate governance, pursue even better operating performance, and constantly enhance asset quality and competitiveness so as to reinforce its operating structure and create greater value for its shareholders. In addition, the Bank works vigorously to reinforce channels of communication with its domestic and overseas shareholders and investors. The concrete methods used to do this are as follows:
a. Holding of the Annual Shareholders' Meeting each year (June 17, 2022).
b. The Bank held the quarterly online investor’s conference on March 24, May 30, September 8, and November 23 in 2022, giving investors a complete picture of the Bank's operations.
c. The Bank has setup a point of contact and an email for immediate response to queries raised by shareholders and investors.
d. Monthly revenue and financial status information is published on the Bank's official website, and the Bank's material Information and corporate social responsibility implementation are presented in both Chinese and English versions, which helps domestic and overseas investors to understand the Bank's operations.

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364 X Directory of Head Office and Branch Units

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TBB’S OFFICES ADDRESS TEL NO. SWIFT CODE
Head Office No. 30, Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171
Banking Department No. 30, Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171 MBBTTWTP010
Trust Department 15F, No. 30, Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171
Securities Department
(Banking Broker) 4F, No. 30, Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171
International Banking Department 3F, No. 30, Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171 MBBTTWTP
Chung Ho Branch No. 634-10, Jingping Rd., Zhonghe Dist, New Taipei City, Taiwan, R.O.C. (02)22427171 MBBTTWTP002
Po Ai Branch No. 419, Mingcheng 2nd Rd., Zuoying Dist., Kaohsiung City, (07)5567171
Taiwan, R.O.C.
North Taoyuan Branch No. 985, Chunri Rd., Taoyuan Dist., Taoyuan City, Taiwan, R.O.C. (03)3567171 MBBTTWTP004
Nan Ken Branch No. 381, Zhongzheng Rd., Luzhu Dist., Taoyuan City, Taiwan, R.O.C. (03)3227171 MBBTTWTP005
Si Tuen Branch No. 839, Sec. 4, Taiwan Blvd., Xitun Dist., Taichung City , Taiwan, R.O.C. (04)23587171 MBBTTWTP006
Chung Min Branch No. 301, Zhongming S. Rd., West Dist., Taichung City, Taiwan, R.O.C. (04)23057171 MBBTTWTP007
Kinmen Branch No. 116, Minquan Rd., Jincheng Township, Kinmen County, (082)316871 MBBTTWTP009
Taiwan, R.O.C.
Ta Ya Branch No. 161, Daya Rd., Daya Dist., Taichung City, Taiwan, R.O.C (04)25687171 MBBTTWTP011
Jen Ta Branch No. 183, Fengnan Rd., Nanzi Dist., Kaohsiung City, Taiwan, R.O.C. (07)3537171 MBBTTWTP012
Jen Ai Branch No. 357, Sec. 4, Ren’ai Rd., Da’an Dist., Taipei City, Taiwan, R.O.C. (02)27217171 MBBTTWTP020
Sung Shan Branch No. 147, Sec. 4, Nanjing E. Rd., Songshan Dist., Taipei City, (02)27167171 MBBTTWTP021
Taiwan, R.O.C.
Chien Cheng Branch(Banking Broker) No. 76, Nanjing W. Rd., Datong Dist., Taipei City, Taiwan, R.O.C. (02)25507171 MBBTTWTP022
Shih Lin Branch No. 601, Zhongzheng Rd., Shilin Dist., Taipei City, Taiwan, R.O.C (02)28117171 MBBTTWTP023
Yung Ho Branch No. 168, Zhulin Rd., Yonghe Dist., New Taipei City, Taiwan, R.O.C. (02)29277171 MBBTTWTP024
Hsin Tien Branch No. 192, Sec. 2, Zhongxing Rd., Xindian Dist., New Taipei City, (02)29117171 MBBTTWTP025
Taiwan, R.O.C.
Hsin Chuang Branch No. 16, Sec. 1, Zhonghua Rd., Xinzhuang Dist., New Taipei City, (02)29907171 MBBTTWTP026
Taiwan, R.O.C.
Hwa Cheng Branch No. 25, Touqian Rd., Xinzhuang Dist., New Taipei City, Taiwan, R.O.C. (02)29977171 MBBTTWTP027
Sung Kiang Branch No. 158, Songjiang Rd., Zhongshan Dist., Taipei City, Taiwan, R.O.C. (02)25377171 MBBTTWTP040
Taipei Branch No. 72, Sec. 1, Chongqing S. Rd., Zhongzheng Dist., Taipei City, (02)23717171 MBBTTWTP050
Taiwan, R.O.C.
Wan Hua Branch No. 103, Kangding Rd., Wanhua Dist., Taipei City, Taiwan, R.O.C. (02)23757171 MBBTTWTP060
South Taipei Branch No. 93, Sec. 2, Roosevelt Rd., Da’an Dist., Taipei City, Taiwan, R.O.C. (02)23697171 MBBTTWTP061
Fu Hsin Branch No. 390, Sec. 1, Fuxing S. Rd., Da’an Dist., Taipei City, Taiwan, R.O.C. (02)27057171 MBBTTWTP070
Chung Shan Branch No. 17, Changchun Rd., Zhongshan Dist., Taipei City, Taiwan, R.O.C. (02)25517171 MBBTTWTP080
Chien Kuo Branch No. 4, Sec. 3, Minquan E. Rd., Zhongshan Dist., Taipei CIty, (02)25097171 MBBTTWTP081
Taiwan, R.O.C.
Nai Hu Branch No. 15, Alley 360, Sec. 1, Naihu Rd., Naihu Dist., Taipei City, (02)27997171 MBBTTWTP082
Taiwan, R.O.C.
Nan King East Road Branch No. 311, Sec. 3, Nanjing E. Rd., Songshan Dist., Taipei City, (02)27127171 MBBTTWTP090
Taiwan, R.O.C.
Chung Hsiao Branch No. 267, Sec. 3, Chung Hsiao E. Rd., Taipei City, Taiwan, R.O.C. (02)27727171 MBBTTWTP100
World Trade Center Branch No. 547, Guangfu S. Rd., Xinyi Dist., Taipei City, Taiwan, R.O.C. (02)23457171 MBBTTWTP102
Yung Trin Branch No. 552, Sec. 5, Chung Hsiao E. Rd., Taipei City, Taiwan, R.O.C. (02)23467171 MBBTTWTP103
Nan Kang Branch No. 19-2, Sanchong Rd., Nangang Dist., Taipei City, Taiwan, R.O.C. (02)26553771 MBBTTWTP105
Sung Nan Branch No. 161, Sec. 1, Keelung Rd., Xinyi Dist., Taipei City, Taiwan, R.O.C. (02)27647171 MBBTTWTP110
Dong Hu Branch No. 152, Sec. 6, Minquan E. Rd., Naihu Dist., Taipei City, Taiwan, R.O.C. (02)87929771 MBBTTWTP111
Ta An Branch No. 92, Sec. 2, Dunhua S. Rd. Da’an Dist., Taipei City, Taiwan, R.O.C. (02)27007171 MBBTTWTP120
Shuang Ho Branch No. 356, Zhonghe Rd., Zhonghe Dist., New Taipei City, Taiwan, R.O.C. (02)22327171 MBBTTWTP121
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TBB’S OFFICES ADDRESS TEL NO. SWIFT CODE
Jim Ho Branch No. 11, Qiaohe Rd., Zhonghe Dist., New Taipei City, Taiwan, R.O.C. (02)22287171 MBBTTWTP122
Wu Ku Branch No. 95, Wugong Rd., Wu Ku Industrial Zone, Xinzhuang Dist., New Taipei City, Taiwan, R.O.C. (02)22987171 MBBTTWTP130
Lin Kou Branch No. 188, Zhongshan Rd., Linkou Dist., New Taipei City, R.O.C. (02)26037171 MBBTTWTP131
East Lin Kou Branch No. 38-11, Wenhua 2nd Rd., Guishan Dist., Taoyuan City, Taiwan, R.O.C. (03)3287171 MBBTTWTP132
Pan Chiao Branch No. 2-1, Mingde St., Banqiao Dist., New Taipei City, Taiwan, R.O.C. (02)29687171 MBBTTWTP140
Shu Lin Branch No. 217, Sec. 1, Zhongshan Rd., Shulin Dist., New Taipei City, (02)26757171 MBBTTWTP141
Taiwan, R.O.C.
Tu Cheng Branch No. 126, Sec. 2, Zhongyang Rd., Tucheng Dist., New Taipei City, (02)22737171 MBBTTWTP142
Taiwan, R.O.C.
Hwei Long Branch No. 933, Zhongzheng Rd., Xinzhuang Dist., New Taipei City, (02)82097171 MBBTTWTP143
Taiwan, R.O.C.
Xi Zhi Branch No. 75, Sec. 1, Xintai 5th Rd., Xizhi Dist., New Taipei City, Taiwan, R.O.C. (02)26987171 MBBTTWTP144
San Xia Branch No. 31, Daxue Rd., Sanxia Dist., New Taipei City, R.O.C. (02)26739871 MBBTTWTP148
Kee Lung Branch No. 9, Ai 3rd Rd., Ren’ai Dist., Keelung City, Taiwan, R.O.C. (02)24237171
Pu Chya Branch(Banking Broker) No. 51, Sec. 1, Wenhua Rd., Banqiao Dist., New Taipei City,Taiwan, R.O.C. (02)29547171 MBBTTWTP151
North San Chung Branch No. 137, Sec. 4, Sanhe Rd., Sanchong Dist., New Taipei City, (02)22867171 MBBTTWTP152
Taiwan, R.O.C.
South San Chung Branch No. 232, Sec. 1, Ziqiang Rd., Sanchong Dist., New Taipei City, (02)29827171 MBBTTWTP153
Taiwan, R.O.C.
Lu Chow Branch No. 42, Yongle St., Luzhou Dist., New Taipei City, Taiwan, R.O.C. (02)28477171 MBBTTWTP154
I Lan Branch No. 305, Sec. 2, Zhongshan Rd., Yilan City, Yilan County, Taiwan, R.O.C. (03)9367171 MBBTTWTP160
No. 15, Zhongzheng N. Rd., Luodong Township, Yilan County,
Lo Tung Branch (03)9567171
Taiwan, R.O.C.
Su Aw Branch No. 96-1, Sec. 1, Zhongshan Rd., Su’ao Township, Yilan County, (03)9965051
Taiwan, R.O.C.
Yang Mei Branch No. 10, Guangfu N. Rd., Yangmei Dist., Taoyuan City, Taiwan, R.O.C. (03)4786111 MBBTTWTP290
Hu Kou Branch No. 76, Sec. 1, Zhongcheng Rd., Hukou Township, Hsinchu County, Taiwan, R.O.C. (03)5997171 MBBTTWTP291
Taoyuan Branch(Banking Broker) No. 99, Zhonghua Rd., Taoyuan Dist., Taoyuan City, Taiwan, R.O.C. (03)3317171 MBBTTWTP300
Ta Yuan Branch No. 80, Zhongshan S. Rd., Dayuan Dist., Taoyuan City, Taiwan, R.O.C. (03)3857171 MBBTTWTP301
Ta Shi Branch No. 80, Fuxing Rd., Daxi Dist., Taoyuan City, Taiwan, R.O.C. (03)3887171 MBBTTWTP302
Chung Li Branch No. 157, Zhongshan Rd., Zhongli Dist., Taoyuan City, Taiwan, R.O.C. (03)4277171 MBBTTWTP310
Nei Li Branch No. 153, Zhongxiao Rd., Zhongli Dist., Taoyuan City, Taiwan, R.O.C. (03)4557171 MBBTTWTP311
Hsin Ming Branch No. 282, Minzu Rd., Zhongli Dist., Taoyuan City, Taiwan, R.O.C. (03)4027171 MBBTTWTP312
East Taoyuan Branch No. 1223, Sec. 2, Wanshou Rd., Guishan Dist., Taoyuan City, (03)3297171 MBBTTWTP313
Taiwan, R.O.C.
Hsin Wu Branch No. 257, Zhongshan Rd., Xinwu Dist., Taoyuan CIty, Taiwan, R.O.C. (03)4777171
Hsin Chu Branch No. 100, Dongmen St., East Dist., Hsinchu City, Taiwan, R.O.C. (03)5277171 MBBTTWTP320
Chu Pei Branch (Banking Broker) No. 128, Xianzheng 9th Rd., Zhubei City, Hsinchu County, Taiwan, R.O.C. (03)5517171 MBBTTWTP321
Hsinchu Science Based
Industrial Park Branch No. 198, Guanxin Rd., East Dist., Hsinchu City, Taiwan, R.O.C. (03)5637171 MBBTTWTP322
Pa Te Branch No. 789, Sec. 1, Jieshou Rd., Bade Dist., Taoyuan City, Taiwan, R.O.C. (03)3767171 MBBTTWTP330
Luong Tan Branch No. 64, Longyuan Rd., Longtan Dist., Taoyuan City, Taiwan, R.O.C. (03)4807171 MBBTTWTP332
Chu Tung Branch No. 6, Donglin Rd., Zhudong Township, Hsinchu County, Taiwan, R.O.C. (03)5947171 MBBTTWTP340
Chu Nan Branch No. 29, Bo’ai St., Zhunan Township, Miaoli County Taiwan, R.O.C. (037)467171 MBBTTWTP350
Tou Fen Branch No. 90, Xinyi Rd., Toufen City, Miaoli County, Taiwan, R.O.C. (037)687171 MBBTTWTP351
Maio Li Branch No. 606, Zhongzheng Rd., Miaoli City, Taiwan, R.O.C. (037)327171 MBBTTWTP360
Feng Yuan Branch No. 1, Yuanfeng Rd., Fengyuan Dist., Taichung City, Taiwan, R.O.C. (04)25267171 MBBTTWTP460
(Banking Broker)
Tai Ping Branch(Banking Broker) No. 27, Zhongxing E. Rd., Taiping Dist., Taichung City, Taiwan, R.O.C. (04)22707171 MBBTTWTP470
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TBB’S OFFICES ADDRESS TEL NO. SWIFT CODE
Ta Chia Branch No. 14, Zhenzheng Rd., Dajia Dist., Taichung City, Taiwan, R.O.C. (04)26867171 MBBTTWTP480
Sha Lu Branch No. 1023, Sec. 7, Taiwan Blvd., Shalu Dist., Taichung City , Taiwan, R.O.C. (04)26657171 MBBTTWTP482
Wu Jih Branch No. 616, Zhonghua Rd., Wuri Dist., Taichung City, Taiwan, R.O.C. (04)23387171 MBBTTWTP483
Taichung Branch(Banking Broker) No. 400, Sec. 1, Taiwan Blvd., Central Dist., Taichung City, Taiwan, R.O.C. (04)22297171 MBBTTWTP490
Min Chen Branch No. 84, Minquan Rd., Central Dist., Taichung City, Taiwan, R.O.C. (04)22267171 MBBTTWTP491
Hsing Chung Branch No. 136, Taizhong Rd., South Dist., Taichung City, Taiwan, R.O.C. (04)22877171 MBBTTWTP500
Pei Tuen Branch No. 53, Jinhua N. Rd., Beitun Dist., Taichung City, Taiwan, R.O.C. (04)22307171 MBBTTWTP501
Nan Tou Branch No. 139, Fuxing Rd., Nantou City, Nantou County, Taiwan, R.O.C. (049)2237171 MBBTTWTP510
Tsao Tuen Branch No. 604, Zhongzheng Rd., Caotun Township, Nantou County, (049)2357171 MBBTTWTP511
Taiwan, R.O.C.
Pu Li Branch No. 434, Zhongzheng Rd., Puli Township, Nantou County, Taiwan, R.O.C. (049)2997171
Tan Tze Branch No. 135, Sec. 2, Zhongshan Rd., Tanzi Dist., Taichung City, (04)25317171 MBBTTWTP521
Taiwan, R.O.C.
Chu Shan Branch No. 919, Sec. 3, Jishan Rd., Zhushan Township, Nantou County, (049)2637171 MBBTTWTP530
Taiwan, R.O.C.
Chang Hwa Branch No. 61, Guangfu Rd., Changhua City, Changhua County, Taiwan, R.O.C. (04)7257171 MBBTTWTP540
Ho Mei Branch No. 8, He’an St., Hemei Township, Changhua County, Taiwan, R.O.C. (04)7558131 MBBTTWTP541
Yuan Lin Branch No. 16, Minquan St., Yuanlin City, Changhua County, Taiwan, R.O.C. (04)8377171 MBBTTWTP550
Pei Tou Branch No. 62, Gongqian St., Beidou Township, Changhua County, (04)8877171 MBBTTWTP560
Taiwan, R.O.C.
Erh Lin Branch No. 2, Zhongzheng Rd., Erlin Township, Changhua County, Taiwan, R.O.C. (04)8957171 MBBTTWTP561
Tou Liu Branch No. 109, Datong Rd., Douliu City, Yunlin County, Taiwan, R.O.C. (05)5347171 MBBTTWTP660
Pei Kang Branch No. 65, Wenhua Rd., Beigang Township, Yunlin County, Taiwan, R.O.C. (05)7827171 MBBTTWTP670
Hu Wei Branch No. 45, Heping Rd., Huwei Township, Yunlin County, Taiwan, R.O.C. (05)6337171
Chia Yi Branch
(Banking Broker) No. 132, Guanghua Rd., Chiayi City, Taiwan, R.O.C. (05)2287171 MBBTTWTP680
Ming Hsiung Branch(Banking Broker) No. 83, Sec. 3, Jianguo Rd., Minxiong Township, Chiayi County, Taiwan, R.O.C. (05)2207171 MBBTTWTP681
Chia Hsin Branch No. 766, Hsinming Rd., West Dist., Chiayi City, Taiwan, R.O.C. (05)2867171 MBBTTWTP686
Hsin Ying Branch No. 216, Zhongshan Rd., Xinying Dist., Tainan City, Taiwan, R.O.C. (06)6357171 MBBTTWTP690
Kai Yuan Branch No. 12, Zhonghua Rd., Yongkang Dist., Tainan City, Taiwan, R.O.C. (06)3117171 MBBTTWTP691
Yun Kang Branch No. 79, Zhongzheng S. Rd., Yongkang Dist., Tainan City, Taiwan, R.O.C. (06)2517171 MBBTTWTP700
Shiue Chia Branch No. 87, Zhongshan Rd., Xuejia Dist., Tainan City, Taiwan, R.O.C. (06)7837171 MBBTTWTP701
Shan Hwa Branch No. 352, Zhongshan Rd., Shanhua Dist., Tainan City, Taiwan, R.O.C. (06)5816111 MBBTTWTP702
Yung Ta Branch No. 1532, Sec. 2, Yongda Rd., Yongkang Dist., Tainan City, Taiwan, R.O.C. (06)2337171 MBBTTWTP703
Tainan Branch(Banking Broker) No. 185, Zhongzheng Rd., West Central Dist., Tainan City, Taiwan, R.O.C. (06)2247171 MBBTTWTP710
Jen Te Branch No. 339, Zhongshan Rd., Rende Dist., Tainan City, Taiwan, R.O.C. (06)2797171 MBBTTWTP711
Cheng Kung Branch No. 25, Gongyuan Rd., West Central Dist., Tainan City, Taiwan, R.O.C. (06)2217171 MBBTTWTP720
East Tainan Branch No. 75, Sec. 2, Zhonghua E. Rd., East Dist., Tainan City, R.O.C. (06)2687171 MBBTTWTP721
An Ping Branch No. 67, Sec. 1, Zhonghua W. Rd., South Dist., Tainan City, R.O.C (06)2657171 MBBTTWTP730
Hua Lien Branch No. 247, Zhongshan Rd., Hualien City, Hualien County, Taiwan, R.O.C. (03)8357171 MBBTTWTP760
No. 335, Sec. 1, Zhonghua Rd., Taitung City, Taitung County,
Tai Tung Branch (089)327171
Taiwan, R.O.C.
East Kaohsiung Branch No. 249, Zhongzheng 1st Rd., Lingya Dist., Kaohsiung City, (07)7167171 MBBTTWTP820
Taiwan, R.O.C.
Kang Shan Branch(Banking Broker) No. 412, Gangshan Rd., Gangshan Dist., Kaohsiung City, Taiwan, R.O.C. (07)6227171 MBBTTWTP830
North Feng Shan Branch No. 28, Sec. 3, Jianguo Rd., Fengshan Dist., Kaohsiung City, (07)7767171 MBBTTWTP840
Taiwan, R.O.C.
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368

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TBB’S OFFICES ADDRESS TEL NO. SWIFT CODE
Ling Ya Branch No. 31, Qingnian 1st Rd., Lingya Dist., Kaohsiung City, Taiwan, R.O.C. (07)5377171 MBBTTWTP841
Kaohsiung Branch No. 79, Wufu 3rd Rd., Qianjin Dist., Kaohsiung City, Taiwan, R.O.C. (07)2717171 MBBTTWTP850
North Kaohsiung Branch(Banking Broker) No. 90, Fuxing 1st Rd., Xinxing Dist., Kaohsiung City, Taiwan, R.O.C. (07)2387171 MBBTTWTP851
No. 116, Dachang 2nd Rd., Sanmin Dist., Kaohsiung City, Taiwan,
Ta Chang Branch R.O.C. (07)3827171
Chien Chen Branch No. 378-3, Minquan 2nd Rd., Qianzhen Dist., Kaohsiung City, (07)5355171 MBBTTWTP853
Taiwan, R.O.C.
Jeou Ru Branch(Banking Broker) No. 255, Jiuru 2nd Rd., Sanmin Dist., Kaohsiung City, Taiwan, R.O.C. (07)3137171 MBBTTWTP860
San Ming Branch(Banking Broker) No. 153, Zhongshan 1st Rd., Xinxing Dist., Kaohsiung City, Taiwan, R.O.C. (07)2867171 MBBTTWTP870
No. 157, Zhongshan Rd., Fengshan Dist., Kaohsiung City, Taiwan,
Feng Shan Branch R.O.C. (07)7107171
Ta Fa Branch No. 5-3, Guanghua Rd., Daliao Dist., Kaohsiung City, Taiwan, R.O.C. (07)7887171 MBBTTWTP881
Ping Tung Branch
(Banking Broker) No. 7, Hankou St., Pingtung City, Pingtung County, Taiwan, R.O.C. (08)7327171
Xiao Gang Branch No. 718, Hongping Rd., Xiaogang Dist., Kaohsiung City, Taiwan, R.O.C. (07)8016171 MBBTTWTP891
Chiao Chou Branch No. 100, Xinsheng Rd., Chaozhou Township, Pingtung County, (08)7807171
Taiwan, R.O.C.
Offshore Banking Unit 3F, No. 30, Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171 MBBTTWTP893
Los Angeles Branch 633, West 5th St. Suite 2280, Los Angeles, CA 90071, U.S.A. 1-213-8921260 MBBTUS6L
Hong Kong Branch Suite 2705-9, 27F, Tower 6, The Gateway, No. 9 Canton Road, Tsimshasui, Kowloon, Hong Kong 852-29710111 MBBTHKHH
Sydney Branch Suite 601, Level 6, 60 Carrington Street, Sydney NSW 2000, Australia 61-2-92623356 MBBTAU2S
Brisbane Branch Suite 903, Level 9, 239 George Street, Brisbane, QLD 4000, 61-7-33173000 MBBTAU2SBRI
Australia
Shanghai Branch Room 3806, 38F, Longemont Yes Tower, 399 Kaixuan Road, Changning District, Shanghai 200051, China 86-21-62627171 MBBTCNSH
Wuhan Branch 17F, Building 2, 108 Zhongbei Road, Wuchang District, Wuhan, 86-27-59817171 MBBTCNSHWUH
Hubei Province 430077, China
New York Branch 32 Old Slip, 5F, New York, NY 10005, U.S.A. 1-646-213-3258 MBBTUS33
Tokyo Branch 707, 7F, Tekko Building, 1-8-2 Marunouchi, Chiyoda-Ku, Tokyo 81-3-5220-3918 MBBTJPJT
100-0005, Japan
Yangon Representative Office [422 Strand Road (Corner of Botahtaung Pagoda Road), #04-08, ] Botahtaung Township, Yangon, Republic of the Union of Myanmar 95-1-202101
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Taiwan Business Bank, Ltd.

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Chairman

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www.tbb.com.tw

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AI assistant

TBB — Annual Report 2022

52201_rns_2023-06-28_51f89db4-6b18-4219-9bd2-cc294f2a4fba.pdf

Taiwan Business Bank Head Office

Spokesperson

Deputy Spokesperson (1)

Deputy Spokesperson (2)

Stock Registration Agent

Rating Agency

The CPA-auditor of the Financial Report

04

I. Letter to Shareholders

IV. Fund-Raising Status

V. Business Operation

100

VI. Financial Status

VII. Review, Analysis, and Risks of Financial Conditions and Performance

VIII. Special Notes

364 X. Directory of Head Office and Branch Units

I

Letter to Shareholders

1. Operation Results in 2022

(1) The Domestic and International Financial Environments

(2) Changes in the Bank's Organization

(3) Implementation of Business Plans and Operating Strategies

(4) Budget Implementation

(6) Research and Development

2. Business Plan for 2023

(1) Operating Directions

(2) Operating Policies

B. Internal Procedures

C. Customers

D. Finance

(3) Business Targets

3. Future Development Strategies

and the Overall Economy

(1) External Competitive Environment

(2) Regulatory Environment

(3) Overall Operating Environment

5. Results of Latest Credit Rating

II

Bank Profile

1. Establishment and History

III Corporate Governance Report

1. Organization

5. Information on Changing CPAs

(2) Operations of Major TBB Departments

F. Administration Management Center

G. Compliance Affairs

2. Directors and Management Team

(1) Board of Directors

D. Professional Knowledge and Independence of Directors

E. Board diversity and independence:

a. Board diversity

(2) Information of President, Executive Vice President, SVP & GM and Managers of Departments and Branches

Sung-Shui Chiu Shao-Huang Chen Chiu-Yen Chen

Jia-Ruey Luan Tsung-Chu Hsieh

III

(4) Remuneration to Directors, President, Executive Vice President, and Remuneration Distribution to Employees for 2022

III

C. Name of Management Receiving the Distribution of Employee's Compensation and the Distribution

2022

(6) Procedure for determining remuneration to directors, the President, and the Executive Vice Presidents by the Bank and all other companies included in the consolidated financial report during the past 2 fiscal years; and linkage thereof to operating performance and future risks

3. Operations of Corporate Governance

(1) Operations of Board of Directors

(2) Audit Committee activities

(3) Sustainable Development Committee Activities

(4) Digital Transformation Committee activities

(6) Implementation of Corporate Governance, and Gaps with the "Corporate Governance Best Practice Principles for the Banking Industry" and the cause of the said gaps

(7) Remuneration Committee activities

B. Operation of Remuneration Committee:

(8) Implementation of Sustainable Development, and Gaps with the "Sustainable Development Best Practice Principles for TWSE/GTSM Listed Companies" and the cause of the said gaps

III

(9) Implementation of Ethical Corporate Management, and Gaps with the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies," and the cause of the said gaps

(10) Procedures for Handling Material Inside Information:

Taiwan Business Bank

Matters of Internal Control to be Enhanced and Improvement Plan

4. CPA Professional Fees

(1) CPA professional charges grading table

5. Information on Changing CPAs

TBB Annual Report 2022