TBB — Audit Report / Information 2023

Nov 14, 2023

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Stock Code:2834

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2023 and 2022

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

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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Table of contents

Contents 1. Cover Page 2. Table of Contents 3. Representation Letter 4. Independent Auditors’ Report 5. Consolidated Balance Sheets 6. Consolidated Statements of Comprehensive Income 7. Consolidated Statements of Changes in Equity 8. Consolidated Statements of Cash Flows 9. Notes to the Consolidated Financial Statements (1) Company history (2) Approval date and procedures of the consolidated financial statements (3) New standards, amendments and interpretations adopted (4) Summary of material accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Commitments and contingencies (10) Losses from disasters (11) Subsequent Events (12) Others (13) Other disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investments in Mainland China (d) Information of major shareholders (14) Segment information

Page

1 2 3 4 5 6 7 8 9 9 9～10 10～24 24～25 25～120 121～123 123 124～127 127 127 128～134 135 136～140 140 140 141～143

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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, 2023 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: Liu Pei-Jean Date: February 21, 2024

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KPMG 台北市110615信義路5段7號68樓(台北101大樓) 電 話 Tel + 886 2 8101 6666 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, 傳 真 Fax + 886 2 8101 6667 Xinyi Road, Taipei City 110615, Taiwan (R.O.C.) 網 址 Web kpmg.com/tw

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, 2023 and 2022, 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, 2023 and 2022, 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 Regulation Governing the Preparation of Financial Reports by Securities firms.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, Jing-Kuan-Yin-Zi No.1082731571 and Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ 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 Norm of Professional Ethics for Certified Public Account of Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirement. 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. We have determined the matters described below to be the key audit matters to be communicated in our report.

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.

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

4-1

Description of key audit matter:

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:

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

Other Matter

Taiwan Business Bank, Ltd. has prepared its parent-company-only financial statements as of and for the years ended December 31, 2023 and 2022, 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.

4-2

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 auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the 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:

1. 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.

2. 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.

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

4. 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.

5. 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.

6. 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 Bank and subsidiaries audit. We remain solely responsible for our audit opinion.

4-3

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 Tsai, Pei-Ju.

KPMG

Taipei, Taiwan (Republic of China) February 21, 2024

Notes to Readers

The accompanying consolidated financial statements are intended only to present the consolidated 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 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 auditors’ report and consolidated financial statements, the Chinese version shall prevail.

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

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

Assets 11000 Cash and cash equivalents (Notes 6(a) and 7) 11500 Due from the Central Bank and call loans to banks (Notes 6(b) and 7) 12000 Financial assets at fair value through profit or loss (Note 6(c)) 12100 Financial assets at fair value through other comprehensive income (Notes 6(g) and (q)) 12200 Investment in debt instruments at amortized cost (Note 6(h)) 12500 Securities purchased under resell agreements (Note 6(d)) 13000 Receivables (Note 6(e)) 13200 Current tax assets 13500 Discounts and loans, net (Notes 6(f) and 7) 15000 Investments accounted for using equity method (Note 6(i)) 15500 Other financial assets (Note 6(j)) 18500 Property and equipment, net (Note 6(k)) 18600 Right-of-use assets, net (Note 6(l)) 19000 Intangible assets, net 19300 Deferred tax assets (Note 6(z)) 19500 Other assets, net (Note 6(m)) Total assets	December 31, 2023 Amount % $ 34,356,881 2 119,931,580 5 73,366,025 3 189,415,924 9 252,895,142 11 7,110,485 - 11,907,936 1 351,197 - 1,491,313,443 68 - - 8,227 - 14,046,879 1 1,284,449 - 921,536 - 2,015,839 - 10,888,988 - $ 2,209,814,531 100	December 31, 2022 Amount % 49,260,262 2 148,557,744 7 33,913,114 2 160,000,410 8 236,774,247 11 797,893 - 9,057,109 - 350,069 - 1,400,112,365 68 808 - 10,315 - 14,121,833 1 1,212,593 - 757,216 - 1,777,199 - 15,782,948 1 2,072,486,125 100 Liabilities and Equity Liabilities 21000 Deposits from the Central Bank and banks (Notes 6(n) and 7) 21500 Due to the Central Bank and banks (Note 6(o)) 22000 Financial liabilities at fair value through profit or loss (Notes 6(p) and (t)) 22500 Notes and bonds issued under repurchase agreement (Note 6(q)) 23000 Payables (Note 6(r)) 23200 Current tax liabilities 23500 Deposits and remittances (Notes 6(s) and 7) 24000 Bank notes payable (Note 6(t)) 25500 Other financial liabilities (Note 6(u)) 25600 Provisions (Note 6(v)) 26000 Lease liabilities (Note 6(w)) 29300 Deferred tax liabilities (Note 6(z)) 29500 Other liabilities (Note 6(x)) Total liabilities Equity attributable to owners of parent 31101 Common stock (Note 6(y)) 31500 Capital Surplus (Note 6(y)) Retained earnings: 32001 Legal reserve (Note 6(y)) 32003 Special reserve (Note 6(y)) 32005 Unappropriated retained earnings (Note 6(y)) 32500 Other equity interest (Note 6(y)) Total equity Total liabilities and equity	December 31, 2023	December 31, 2023		December 31, 2022
			Amount	%		Amount % 194,966,177 9 1,131,025 - 9,925,525 - 2,462,991 - 21,493,131 1 1,101,015 - 1,673,580,263 81 52,250,000 4 2,910,581 - 2,676,102 - 1,239,919 - 879,056 - 3,763,082 - 1,968,378,867 95 80,296,934 4 815,900 - 17,239,615 1 185,128 - 9,339,356 - (3,769,675) - 104,107,258 5 2,072,486,125 100
			$ 163,162,556 1,431,840 9,394,136 1,786,715 24,342,295 101,003 1,823,413,234 53,850,000 2,136,402 2,903,375 1,319,108 878,623 4,972,959 2,089,692,246 82,224,061 815,900 20,028,865 3,954,803 12,114,062 984,594 120,122,285 $ 2,209,814,531	7 - - - 1 - 83 3 - - - - - 94 4 - 1 - 1 - 6 100

See accompanying notes to consolidated financial statements.

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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, 2023 and 2022

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

41000 Interest income (Notes 6(ad) and 7) 51000 Less: Interest expenses (Notes 6(ad) and 7) Net interest revenue Net revenue other than interest 49100 Net service fee revenue (Notes 6(ae) and 13) 49200 Gain on financial assets or liabilities measured at fair value through profit or loss (Note 6(af)) 49310 Realized gain on financial assets at fair value through other comprehensive income (Note 6(ag)) 49450 Gain arising from derecognition of financial assets measured at amortized cost (Note 6(h)) 49600 Foreign exchange gain 49700 (Impairment loss on assets) reversal of impairment loss on assets (Note 6(ah)) 49750 Share of profit of associates and joint ventures accounted for using equity method (Notes 6(h) and 6(ai)) 49800 Net other revenue other than interest income (Note 6(aj)) 49831 Net securities brokering revenue Net revenue 58200 Bad debts expense, commitment and guarantee liability provision (Note 6(ak)) Operating expenses 58500 Employee benefits expenses (Note 6(al)) 59000 Depreciation and amortization expense (Note 6(am)) 59500 Other general and administrative expense (Note 6(an)) Total operating expense 61001 Income from continuing operation before tax 61003 Less: Income tax expenses (Note 6(z)) Net income 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 6(z)) 65204 Revaluation gains (losses) on investments in equity instruments measured at fair value through other comprehensive income 65220 Less: Income tax related to components of other comprehensive income that will not be reclassified to profit or loss (Note 6(z)) Components of other comprehensive income that 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 65308 Gains (losses) from investments in debt instruments measured at fair value through other comprehensive income 65320 Less: Income tax related to components of other comprehensive income that will be reclassified to profit or loss (Note 6(z)) Components of other comprehensive income that will be reclassified to profit or loss 65000 Other comprehensive income Total comprehensive income Earnings per share (in NT dollar) (Note 6(ab)) Basic earnings per share (in NT dollar) Diluted earnings per share (in NT dollar)	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,	Percent Change % % 117 47 (45) 133 72 (8) 14 17 5 336 5 (16) - (91) 3 (79) - 231 - 32 - (13) 1 18 100 12 (8) 77 (31) 2 (4) 3 (14) 23 (49) 8 43 3 7 (3) 36 4 2 (142) (8) 294 - (142) (6) 330 5 (103) (22) 131 1 96 (18) (138) (24) 191 12 422 1.23 1.23
	2023	% 154 (95) 59 14 21 4 - 1 - - - 1 100 (13) (28) (4) (15) (47) 40 6 34 (1) 14 - 13 - 6 - 6 19 53 1.29 1.28	2022 Amount 33,300,102 (13,072,129) 20,227,973 3,951,892 1,540,238 1,462,681 1,981 923,295 11,689 (1,192) 83,689 326,877 28,529,123 (2,386,062) (8,875,692) (1,229,876) (3,997,701) (14,103,269) 12,039,792 1,917,940 10,121,852 557,098 (2,347,122) 111,419 (1,901,443) 1,511,789 (6,238,235) 272,357 (4,998,803) (6,900,246) 3,221,606
	Amount $ 49,116,713 (30,411,203) 18,705,510 4,617,356 6,718,444 1,234,707 170 196,130 (15,335) (808) 72,693 384,677 31,913,544 (4,226,518) (9,079,004) (1,272,085) (4,908,130) (15,259,219) 12,427,807 1,860,132 10,567,675 (233,043) 4,553,627 (46,609) 4,367,193 (39,156) 1,931,940 9,656 1,883,128 6,250,321 $ 16,817,996 $ $

See accompanying notes to consolidated financial statements.

7

(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, 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

Balance at January 1, 2022 Net income for the year ended December 31, 2022 Other comprehensive income for the year ended December 31, 2022 Total comprehensive income for the year ended December 31, 2022 Appropriation and distribution of retained earnings: Legal reserve appropriated Cash dividends of ordinary share Stock dividends of ordinary share Disposal of investment in equity instruments designated at fair value through other comprehensive income Balance at December 31, 2022 Net income for the year ended December 31, 2023 Other comprehensive income for the year ended December 31, 2023 Total comprehensive income for the year ended December 31, 2023 Appropriation and distribution of retained earnings: Legal reserve appropriated Special reserve appropriated Cash dividends of ordinary share Stock dividends of ordinary share Disposal of investments in equity instruments designated at fair value through other comprehensive income Balance at December 31, 2023							Attributable to owners of parent	Attributable to owners of parent	Attributable to owners of parent				Other equity interest Unrealized gains Exchange differences on translation of foreign financial statements (losses) on financial assets measured at fair value through other comprehensive income	Other equity interest Unrealized gains Exchange differences on translation of foreign financial statements (losses) on financial assets measured at fair value through other comprehensive income	Other equity interest Unrealized gains Exchange differences on translation of foreign financial statements (losses) on financial assets measured at fair value through other comprehensive income	Total
	Share capital		Capital surplus				Retained earnings
	Common stock				Legal reserve		Special reserve		Unappropriated retained earnings		Total		Exchange differences on translation of foreign financial statements
	$ 77,431,952 - - - - - 2,864,982 - 80,296,934 - - - - - - 1,927,127 - $ 82,224,061		815,900 - -		15,693,140 - -		185,128 - -		5,227,632 10,121,852 445,679		21,105,900 10,121,852 445,679		(1,807,265) - 1,209,432 1,209,432 - - - - (597,833) - (31,325) (31,325) - - - - - (629,158)		4,113,485 - (8,555,357) (8,555,357) - - - 1,270,030 (3,171,842) - 6,468,080 6,468,080 - - - - (1,682,486) 1,613,752	101,659,972 10,121,852 (6,900,246) 3,221,606 - (774,320) - - 104,107,258 10,567,675 6,250,321 16,817,996 - - (802,969) - - 120,122,285
			-		-		-		10,567,531		10,567,531
			- - - -		1,546,475 - - -		- - - -
			815,900 - -		17,239,615 - -		185,128 - -
			-		-		-
			- - - - -		2,789,250 - - - -		- 3,769,675 - - -
			815,900		20,028,865		3,954,803

See accompanying notes to consolidated financial statements.

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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, 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities: Net income before tax Adjustments: Income and expences items: Depreciation expense Amortization expense Provision for bad debt expense Net (gains) losses on financial assets or liabilities at fair value through profit or loss Interest expenses Net gain arising from derecognition of financial assets measured at amortised cost Interest income Net change in provisions for guarantee liabilities Net change in other provisions Share of loss of associates and joint ventures accounted for using equity method Loss on disposal of property and equipment Impairment loss (reversal of impairment loss) on financial assets Other items Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Changes in operating assets: Decrease in due from the central bank and call loans to banks (Increase) decrease in financial assets at fair value through profit or loss (Increase) decrease in securities purchased under resell agreements Increase in receivables Increase in discounts and loans Decrease in other financial assets Decrease (increase) in other assets Total changes in operating assets Changes in operating liabilities: (Decrease) increase in deposits from the central bank and banks (Decrease) increase in financial liabilities at fair value through profit or loss (Decrease) increase in notes and bonds issued under repurchase agreement Decrease in payable Increase in deposits and remittances Decrease in other financial liabilities Decrease in provisions for employee benefits Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Interest paid Income taxes paid Net Cash flows from operating activities Cash flows from (used in) investing activities: Acquisition of financial assets at fair value through other comprehensive income Acquisition of financial assets at amortised cost Proceeds from repayments of financial assets at amortised cost Acquisition of investments accounted for using equity method Acquisition of property and equipment Proceeds from disposal of property and equipment Increase (decrease) in refundable deposits Acquisition of intangible assets Net cash flows (used in) from investing activities Cash flows from (used in) financing activities: Increase (decrease) in due to the central bank and banks Proceeds from issuing bank notes payable Repayments of bank notes payable (Decrease) increase in guarantee deposits received Payment of lease liabilities Increase (decrease) in other liabilities Cash dividends paid Net cash flows from (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period

For the years ended December 31, 2023 2022 $ 12,427,807 12,039,792 985,755 980,783 286,330 249,093 4,188,472 2,378,872 (1,936,453) 86,901 30,411,203 13,072,129 (170) (1,981) (49,116,713) (33,300,102) 47,333 (21,496) (6,677) 29,220 808 1,192 1,660 925 15,335 (11,689) 14 (3,817) (15,123,103) (16,539,970) 28,631,604 9,550,611 (37,360,746) 7,234,305 (6,312,592) 7,033,381 (1,514,546) (75,360) (95,379,615) (100,231,972) 13,018 25,244 4,620,986 (1,988,898) (107,301,891) (78,452,689) (31,803,621) 92,425,862 (687,101) 925,569 (676,276) 402,298 (447,852) (3,682,123) 149,832,971 4,923,441 (774,179) (1,454,713) (46,312) (196,272) 115,397,630 93,344,062 8,095,739 14,891,373 (7,027,364) (1,648,597) 5,400,443 10,391,195 47,746,448 31,992,358 (27,563,323) (11,090,974) (2,596,783) (648,645) 22,986,785 30,643,934 (22,939,444) (11,055,764) (219,827,853) (188,506,846) 203,701,380 230,783,092 - (2,000) (527,576) (318,336) 109 73 233,749 (2,227,141) (399,651) (288,288) (39,759,286) 28,384,790 300,815 (49,130,565) 9,000,000 - (7,400,000) - (1,984,985) 2,104,548 (442,420) (420,428) 3,194,862 (1,081,839) (802,969) (774,320) 1,865,303 (49,302,604) 3,817 90,110 (14,903,381) 9,816,230 49,260,262 39,444,032 $ 34,356,881 49,260,262

2023 $ 12,427,807 985,755 286,330 4,188,472 (1,936,453) 30,411,203 (170) (49,116,713) 47,333 (6,677) 808 1,660 15,335 14 (15,123,103) 28,631,604 (37,360,746) (6,312,592) (1,514,546) (95,379,615) 13,018 4,620,986 (107,301,891) (31,803,621) (687,101) (676,276) (447,852) 149,832,971 (774,179) (46,312) 115,397,630 8,095,739 (7,027,364) 5,400,443 47,746,448 (27,563,323) (2,596,783) 22,986,785 (22,939,444) (219,827,853) 203,701,380 - (527,576) 109 233,749 (399,651) (39,759,286) 300,815 9,000,000 (7,400,000) (1,984,985) (442,420) 3,194,862 (802,969) 1,865,303 3,817 (14,903,381) 49,260,262 $ 34,356,881

See accompanying notes to consolidated financial statements.

9

(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, 2023 and 2022

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

(1) Company history

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

• (a) As prescribed by the Banking Law, provides professional services tailored to the needs of small and medium-size businesses;

• (b) Trust and securities brokerage businesses as approved by the relevant authority;

• (c) International banking business; and

• (d) Other relevant businesses as authorized by the relevant authority in-charge.

As of December 31, 2023, 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, 2023 and 2022, the Bank and subsidiaries has 5,702 and 5,581 employees, respectively.

(2) Approval date and procedures of the consolidated financial statements:

These consolidated financial statements were authorized for issuance by the Board of Directors on February 21, 2024.

(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, 2023:

• ●Amendments to IAS 1 “Disclosure of Accounting Policies”

• ●Amendments to IAS 8 “Definition of Accounting Estimates”

(Continued)

10

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• ●Amendments to IAS 12 “ Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

The Bank and subsidiaries has initially adopted the (following) new amendment, which do not have a significant impact on its consolidated financial statements, from May 23, 2023 ：

• ●Amendments to IAS 12 “International Tax Reform—Pillar Two Model Rules”

• (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, 2024, would not have a significant impact on its consolidated financial statements:

• ●Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

• ●Amendments to IAS 1 “Non-current Liabilities with Covenants”

• ●Amendments to IAS 7 and IFRS 7 “Supplier Finance Arrangements”

• ●Amendments to IFRS 16 “Lease Liability in a Sale and Leaseback”

• (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 IFRS 17 “Initial Application of IFRS 17 and IFRS 9 – Comparative Information”

• ●Amendments to IAS 21 “Lack of Exchangeability”

(4) Summary of material accounting policies:

The material accounting policies presented in the consolidated financial statements are summarized below. Except for those specifically indicated, the following accounting policies were applied consistently throughout the periods presented in the consolidated financial statements.

• (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 Regulations"), 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).

(Continued)

11

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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(k).

(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

• (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.

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

(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.

(Continued)

12

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

List of subsidiaries in the consolidated financial statements:

TBB International Leasing Co., Ltd. Taiwan Business Bank International Leasing Co., Ltd. TBB (Cambodia) Microfinance Institution Plc TBB Venture Capital Co., Ltd. TBB Consulting Co., Ltd.	Established location Main business scope	Shareholding (Holding %)
		December 31, 2023 December 31, 2022 100 100 100 100 100 100 100 100 100 100
	Taiwan Leasing business China Leasing business Cambodia Financial company Taiwan Investing business Taiwan Consulting business

• (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.

(Continued)

13

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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.

(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.

(Continued)

14

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 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-byinvestment basis.

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

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

Dividend income is recognized in profit or loss on the date on which the Bank 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.

(Continued)

15

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• ‧ Non-performing loans are categorized as overdue loans in six months after the settlement period ends.

• 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.

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;

(Continued)

16

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• ‧ 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.

(Continued)

17

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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 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.

(Continued)

18

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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.

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) 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).

(Continued)

19

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

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.

• (h) 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.

Land is not depreciated.

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

1)	Buildings	35~50	years
2)	Equipment	3~8	years

The Bank and subsidiaries reviews and adjusts the residual value and the useful lives of assets at the end of each annual reporting date and adjusts it appropriately.

(Continued)

20

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) 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.

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

(Continued)

21

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Bank and subsidiaries 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 and subsidiaries 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 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.

(j) 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. The unwinding of the discount is recognized as financial cost.

(k) 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.

(Continued)

22

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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.

The Bank and subsidiaries 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 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.

(Continued)

23

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

(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.

(l) 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.

(Continued)

24

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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.

(m) 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.

(n) 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.

(o) 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.

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

In preparing these consolidated financial statements, management has made judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

(Continued)

25

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The management continues to monitor the accounting estimates and assumptions. The management recognizes any changes in accounting estimates during the period and the impact of those changes in accounting estimates in the next financial year.

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 reporting period is as follow. Those assumptions and estimation have been updated to reflect the impact of COVID19.

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.

(6) Explanation of significant accounts:

• (a) Cash and cash equivalents

Petty cash and revolving funds Foreign currencies on hand Checks for clearing Due from other banks Total	December 31, 2023 $ 10,710,469 974,397 10,126,589 12,545,426 $ 34,356,881	December 31, 2022
		14,042,641 988,995 11,029,785 23,198,841
		49,260,262

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

Due from the Central Bank Deposits transferred to Central Bank Call loans to banks Trust fund indemnity reserve deposited Securities serving as trust fund indemnity reserve deposited Total	December 31, 2023 $ 81,573,887 63,536 38,294,157 120,000 (120,000) $ 119,931,580	December 31, 2022
		85,208,065 39,664 63,310,015 110,000 (110,000)
		148,557,744

(Continued)

26

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

As of December 31, 2023 and 2022, in accordance with the Banking Law and the Central Bank Law, the required reserve deposited by the Bank with the Central Bank amounted to $81,101,782 and $84,763,295 of which $51,277,043 and $47,637,794 respectively, were restricted and such restriction may only be lifted when the required reserve is adjusted to a lower amount.

As of December 31, 2023 and 2022, the Bank’s subsidiaries and overseas branches, in compliance with the Central Bank’ s reserve requirement set by local authorities, deposited $135,310 and $134,809 and in reserve, of which $34,776 and $52,137 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, 2023 and 2022, the required reserve with the Central Bank amounted to $336,795 and $309,961 respectively, and its use was unrestricted.

As of December 31, 2023 and 2022, 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, 2023 and 2022, the Bank deposited marketable securities of $120,000 and $110,000 as trust fund reserves.

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

Financial assets at fair value through profit or loss, mandatorily measured at fair value : Derivative instruments not used for hedging: Foreign exchange forward contracts Currency swap contracts Foreign currency options-buy Stock index futures Interest rate swap Non-derivative financial assets Commercial paper Listed stocks Unlisted stocks Beneficiary certificates Financial debentures Total	December 31, 2023 $ 41,379 3,181,677 7,070 26,930 2,165 68,332,202 877,404 453,636 243,562 200,000 $ 73,366,025	December 31, 2022
		27,271 1,088,827 17,813 26,860 5,896 30,907,810 752,713 471,554 414,370 200,000
		33,913,114

(Continued)

27

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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)

Currency swaps contract Interest rate swaps contract Option contract - buy Option contract - sell Forward foreign exchange contract	December 31, 2023 December 31, 2022 $ 204,031,838 260,470,257 12,842,842 12,665,622 1,090,028 1,229,230 1,090,028 1,229,230 1,747,621 2,786,130

• (d) Securities purchased under resell agreements

Securities under resell agreements Face amount Resell period Range of resell interest rate Resell price (e) Receivables, net Interest receivable Acceptances receivable Accrued income Accounts receivable Spot exchange receivable-foreign currencies Refinancing guaranty deposits Guaranteed proceeds receivable from refinacing Credit cards accounts receivable Receivable price of securities purchased for customers Settlement price Installment receivables and leases Other receivables Sub-total Less: Allowance for bad debts Total	December 31, 2023 December 31, 2022 $ 7,110,485 797,893 7,118,900 800,000 2024.01.04~2024.01.22 2023.01.05 1.40%~1.43% 1.24% $ 7,114,988 798,576 December 31, 2023 December 31, 2022 $ 5,485,089 4,123,259 904,663 791,284 216,729 140,805 1,316,808 1,262,213 8,603 9,096 - 1,505 - 1,158 1,144,320 1,098,733 164,121 179,159 526,070 - 2,051,814 1,320,741 211,231 233,198 12,029,448 9,161,151 (121,512) (104,042) $ 11,907,936 9,057,109	December 31, 2022 797,893	December 31, 2022 797,893
			800,000
			2023.01.05
			1.24% 798,576
			December 31, 2022
			4,123,259 791,284 140,805 1,262,213 9,096 1,505 1,158 1,098,733 179,159 - 1,320,741 233,198
			9,161,151 (104,042)
			9,057,109

(Continued)

28

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The outstanding contract amount of financial assets that have been written off and still have recourse as of December 31, 2023 and 2022 were $84,525,458 and $85,659,528 respectively.

The change in allowance for bad debts was as follows:

Beginning balance Provision (reversal) Write-off Foreign exchange Ending balance (f) Discounts and loans, net	For the years ended December 31,	For the years ended December 31,
	2023 $ 104,042 25,689 (8,079) (140) $ 121,512	2022
		118,111 (17,353) - 3,284 104,042

Import/export bills negotiated Bills and notes discounted Overdrafts Secured overdrafts Short-term loans Short-term secured loans Margin loans receivable Medium-term loans Medium-term secured loans Long-term loans Long-term secured loans Overdue loans Sub-total Less: Adjustment of discount and premium Less: Allowance for bad debts Total	December 31, 2023 $ 82,287 647,785 13,632 2,774,230 170,048,490 237,069,295 3,154,190 194,551,099 319,627,017 35,722,447 546,388,355 1,131,493 1,511,210,320 (294,035) (19,602,842) $ 1,491,313,443	December 31, 2022 111,492 631,574 30,781 934,845 175,758,201 222,836,626 2,672,159 182,824,935 293,811,922 36,127,193 500,599,070 2,154,653 1,418,493,451 (302,470) (18,078,616) 1,400,112,365

(Continued)

29

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The change in allowance for bad debts was as follows:

Beginning balance Provision Transfer out Write-off Write-off recovered Foreign exchange Ending balance	For the years ended December 31,	For the years ended December 31,
	2023 $ 18,078,616 4,192,078 (12,890) (4,310,620) 1,647,874 7,784 $ 19,602,842	2022
		15,576,817 2,419,063 (16,605) (2,300,641) 2,337,772 62,210 18,078,616

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

Investment in debt instruments measured at fair value through other comprehensive income： Government bonds Corporate bonds Financial debentures Negotiable certificates of deposit Subtotal Investment in equity instruments measured at fair value through other comprehensive income： Listed stocks Unlisted stocks Real Estate Investment Trust Subtotal Total	December 31, 2023 $ 54,805,119 77,991,623 36,535,591 601,026 169,933,359 13,515,621 5,825,636 141,308 19,482,565 $ 189,415,924	December 31, 2022
		48,754,854 60,445,796 32,639,581 -
		141,840,231
		12,676,936 5,337,461 145,782 18,160,179 160,000,410

(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.

(Continued)

30

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (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 $1,234,455 and $1,457,705, respectively as dividend revenue for the years ended December 31, 2023 and 2022. In which, the disposal equity instruments were recognized $682,789 and $688,220 as dividend revenue for the years ended December 31, 2023 and 2022.

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 $12,631,825 and $11,601,994. And gains (losses) on disposal are $1,682,486 and $(1,270,030) for the years ended December 31, 2023 and 2022. 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 changes in the allowance for credit losses attribute to the FVOCI were as follows:

Beginning balance Provision Foreign exchange Ending balance Investment in debt instruments at amortized cost Certificates of deposit with the Central Bank Government bonds Corporate bonds Financial debentures Negotiable certificates of deposit Subtotal Less: Accumulated impairment Total	For the years ended December 31,	For the years ended December 31,
	2023 $ 90,852 9,564 (67) $ 100,349 December 31, 2023 $ 190,900,000 29,199,649 17,260,961 15,550,671 64,481 252,975,762 (80,620) $ 252,895,142	2022
		87,792 1,521 1,539
		90,852
		December 31, 2022 195,595,000 24,370,304 7,481,434 9,337,858 64,523 236,849,119 (74,872) 236,774,247

• (h) Investment in debt instruments at amortized cost

(Continued)

31

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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.

• (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:

Reserve for provisional seizure by the court, international card payment reserve, trust claim reserve and operating guaranty funds Overseas branches required reserve of overdraft guarantee Daylight overdraft guarantee Guarantee for borrowing US dollars Guarantee for borrowing JPY dollars Sponsorship of Treasury Affairs Total	December 31, 2023 $ 1,063,500 64,481 2,000,000 29,000,000 200,000 - $ 32,327,981	December 31, 2022
		854,500 64,523 2,000,000 29,000,000 200,000 20,000,000 52,119,023

• (iii) The changes in the allowance for credit losses attribute to investment in debt instruments at amortized cost were as follows:

Beginning balance Provision (reversal) Foreign exchange Ending balance	For the year ended December 31,	For the year ended December 31,
	2023 $ 74,872 5,771 (23) $ 80,620	2022
		87,478 (13,210 604
		74,872

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

Corporate bonds Corporate bonds Financial debentures Total	For the year ended December 31, 2023	For the year ended December 31, 2023
	The carrying amount at the date of derecognition Gain (Loss) on disposal $ 15,433 170 For the year ended December 31, 2022	Gain (Loss) on disposal
		170
	The carrying amount at the date of derecognition $ 81,364 305,979 $ 387,343	Gain (Loss) on disposal
		710 1,271
		1,981

(Continued)

32

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022, it is due to the advanced redemption of the issuer.

• (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. In addition, since Media Fund 1, which was planned to be raised, was not as well funded as expected and the accumulated losses of Media Talk Consultants Co., Ltd. had exceeded 70% of the paid-in capital at the end of 2022, it has ceased its operation with effect from May 1, 2023, after prudent assessment.

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

December 31, 2023 December 31, 2022 Carrying amount of individually insignificant associates’ equity $ - 808 For the years ended December 31, 2023 2022 Attributable to the Bank and subsidiaries: Net income $ (808) (1,192) Total comprehensive income $ (808) (1,192)	December 31, 2023 December 31, 2022 Carrying amount of individually insignificant associates’ equity $ - 808 For the years ended December 31, 2023 2022 Attributable to the Bank and subsidiaries: Net income $ (808) (1,192) Total comprehensive income $ (808) (1,192)	December 31, 2022
	2023 $ (808) $ (808)	2022 (1,192) (1,192)

(ii) Guarantee

As of December 31, 2023 and 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

Overdue receivable Less: Allowance for bad debts, overdue receivable Total	December 31, 2023 $ 19,717 (11,490) $ 8,227	December 31, 2022 58,786 (48,471) 10,315

(Continued)

33

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The change in allowance for bad debts was as follows:

Beginning balance Reversal Transfer in Write-off Written-off recovered Ending balance	For the years ended December 31, 2023 2022 $ 48,471 51,392 (23,820) (23,222) 12,890 16,605 (46,894) (16,567) 20,843 20,263 $ 11,490 48,471
	2023 $ 48,471 (23,820) 12,890 (46,894) 20,843 $ 11,490

(k) Property and equipment, net

December 31, 2023	Cost $ 6,746,952 8,143,689 2,809,955 264,916 671,418 203,138 61,737 220,805 $ 19,122,610 Cost $ 6,743,535 8,116,339 2,696,721 272,344 658,114 205,430 20,225 130,457 $ 18,843,165	Revaluation increment 2,984,621 31,184 - - - - - - 3,015,805 Revaluation increment 2,986,161 31,184 - - - - - - 3,017,345	Accumulated depreciation - 4,979,561 2,170,544 227,359 565,428 119,859 - - 8,062,751 Accumulated depreciation - 4,790,018 2,012,107 230,440 557,596 119,731 - - 7,709,892	Accumulated impairment 14,031 14,754 - - - - - - 28,785 Accumulated impairment 14,031 14,754 - - - - - - 28,785	Total 9,717,542 3,180,558 639,411 37,557 105,990 83,279 61,737 220,805
Land Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Construction in progress Prepayment for equipment Total December 31, 2022
					14,046,879
					Total 9,715,665 3,342,751 684,614 41,904 100,518 85,699 20,225 130,457
Land Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Construction in progress Prepayment for equipment Total
					14,121,833

(Continued)

34

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Change of cost

Land Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Construction in progress Prepayment for equipment Total Land Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Construction in progress Prepayment for equipment Total	January 1, 2023 $ 9,729,696 8,147,523 2,696,721 272,344 658,114 205,430 20,225 130,457 $ 21,860,510 January 1, 2022 $ 9,729,696 8,049,138 2,393,432 272,502 647,036 162,953 40,547 573,971 $ 21,869,275	Increase 3,417 27,350 239,056 7,778 34,846 32,672 43,192 284,156 672,467 Increase - 98,385 449,271 7,577 22,461 42,391 32,248 49,995 702,328	Decrease 1,540 - 124,976 15,612 21,117 33,327 1,680 193,848 392,100 Decrease - - 154,016 8,543 14,859 2,572 52,570 493,808 726,368	Foreign Exchange - - (846) 406 (425) (1,637) - 40 (2,462) Foreign Exchange - - 8,034 808 3,476 2,658 - 299 15,275	December 31, 2023
					9,731,573 8,174,873 2,809,955 264,916 671,418 203,138 61,737 220,805
					22,138,415
					December 31, 2022 9,729,696 8,147,523 2,696,721 272,344 658,114 205,430 20,225 130,457
					21,860,510

Change of depreciation

Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Total Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Total	January 1, 2023 $ 4,790,018 2,012,107 230,440 557,596 119,731 $ 7,709,892 January 1, 2022 $ 4,592,658 1,865,901 225,193 539,601 83,416 $ 7,306,769	Increase 189,543 282,068 12,483 29,563 34,407 548,064 Increase 197,360 293,226 13,183 30,261 37,309 571,339	Decrease - 123,399 15,579 20,959 33,326 193,263 Decrease - 153,250 8,480 14,690 2,572 178,992	Foreign Exchange - (232) 15 (772) (953) (1,942) Foreign Exchange - 6,230 544 2,424 1,578 10,776	December 31, 2023 4,979,561 2,170,544 227,359 565,428 119,859
					8,062,751
					December 31, 2022 4,790,018 2,012,107 230,440 557,596 119,731
					7,709,892

(Continued)

35

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Accumulated impairment

Land Buildings Total Land Buildings Total	January 1, 2023 $ 14,031 14,754 $ 28,785 January 1, 2022 $ 14,031 14,754 $ 28,785	Increase - - - Increase - - -	Decrease - - - Decrease - - -	Foreign Exchange - - - Foreign Exchange - - -	December 31, 2023 14,031 14,754
					28,785
					December 31, 2022 14,031 14,754
					28,785

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, 2023, the appreciation from revaluation of properties all amounted to $3,015,805. Reserve for land incremental tax all amounted to $878,623 (Recognized under deferred tax liabilities).

As of December 31, 2023 and 2022, 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:

December 31, 2023	Cost $ 2,026,012 26,178 80,397 11,484 $ 2,144,071 Cost $ 1,857,074 26,497 77,477 12,403 $ 1,973,451	Accumulated depreciation 791,158 26,174 37,072 5,218 859,622 Accumulated depreciation 706,516 26,408 22,728 5,206 760,858	Accumulated impairment - - - - - Accumulated impairment - - - - -	Total 1,234,854 4 43,325 6,266
Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total December 31, 2022
				1,284,449
				Total 1,150,558 89 54,749 7,197
Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total
				1,212,593

(Continued)

36

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Change of cost

Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total	January 1, 2023 $ 1,857,074 26,497 77,477 12,403 $ 1,973,451 January 1, 2022 $ 1,795,803 27,842 74,819 10,337 $ 1,908,801	Increase 496,517 - 13,359 3,098 512,974 Increase 604,750 - 54,940 2,996 662,686	Decrease 331,403 319 10,373 4,017 346,112 Decrease 563,446 1,345 52,442 930 618,163	Foreign Exchange 3,824 - (66) - 3,758 Foreign Exchange 19,967 - 160 - 20,127	December 31, 2023 2,026,012 26,178 80,397 11,484
					2,144,071
					December 31, 2022 1,857,074 26,497 77,477 12,403
					1,973,451

Change of depreciation

Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total	January 1, 2023 $ 706,516 26,408 22,728 5,206 $ 760,858 January 1, 2022 $ 683,580 27,272 45,301 3,353 $ 759,506	Increase 409,907 85 24,749 3,059 437,800 Increase 385,019 481 22,623 2,666 410,789	Decrease 331,037 319 10,382 3,047 344,785 Decrease 370,919 1,345 45,294 813 418,371	Foreign Exchange 5,772 - (23) - 5,749 Foreign Exchange 8,836 - 98 - 8,934	December 31, 2023 791,158 26,174 37,072 5,218
					859,622
					December 31, 2022 706,516 26,408 22,728 5,206
					760,858

(Continued)

37

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(m) Other assets, net

Office supplies Prepayments Operating guarantee deposits and settlement fund Guarantee deposits paid Deferred assets Temporary payments and suspense accounts Proceeds of settlement and margin trading Other assets Total (n) Deposits from the Central Bank and banks Deposits from the Central Bank Due from the Central Bank Deposits from banks Call loans from banks Overdrafts on banks Deposits transferred from Chunghwa Post Co., Ltd. Total	December 31, 2023 $ 29,180 8,238,377 33,631 2,407,797 328 - 3,244 176,431 $ 10,888,988 December 31, 2023 $ 324,763 14,738,400 1,251,484 24,934,745 1,003,829 120,909,335 $ 163,162,556	December 31, 2022
		29,019 8,168,184 31,753 2,641,545 128 4,675,748 60,139 176,432
		15,782,948
		December 31, 2022
		232,262 14,133,500 705,261 31,549,533 1,084,076 147,261,545
		194,966,177

(Continued)

38

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(o) Due to the Central Bank and banks

Agricultural Bank of Taiwan Hua Nan Commercial Bank, Ltd Mega International Commercial Bank First Commercial Bank Bank of Kaohsiung Co., Ltd (OBU) Chang Hwa Commercial Bank , Ltd Sunny Commercial Bank (OBU) Bank of Panshin Chang Hwa Commercial Bank , Ltd. (Kunshan) Total Unused credit lines Agricultural Bank of Taiwan First Commercial Bank Bank of Kaohsiung Co., Ltd. (OBU) Sunny Commercial Bank (OBU) KGI Commercial Bank Co., Ltd. (OBU) Bank of Panshin Total Unused credit lines			December 31, 2023
	Currency TWD TWD TWD TWD USD USD USD USD CNY	Interest Rate 1.75% 1.864% 1.70%~1.75% 1.825% 7.33% 7.35% 6.346%~6.646% 7.30% 4.10%	Maturity Date 2024.01.31 2024.03.20 2024.02.20~2024.03.27 2024.01.19 2026.06.10 2024.04.27 2024.07.05 2024.11.14 2024.02.28 December 31, 2022	Original Amount NTD Amount 350,000 $ 350,000 40,000 40,000 210,000 210,000 30,000 30,000 2,000 61,410 1,000 30,705 20,000 614,100 1,000 30,705 15,000 64,920 $ 1,431,840 $ 1,402,042
	Currency TWD TWD USD USD USD USD	Interest Rate 1.332% 1.450%~1.575% 5.50% 5.642%~5.887% 5.326%~6.261% 6.60%	Maturity Date 2023.10.13 2023.02.16~2023.04.25 2023.06.10 2023.08.04~2023.08.26 2023.01.10~2023.04.07 2023.05.10~2023.08.18	Original Amount NTD Amount 100,000 $ 100,000 140,000 140,000 10,000 307,250 9,000 276,525 7,000 215,075 3,000 92,175 $ 1,131,025 $ 1,447,949	NTD Amount

(Continued)

39

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

Financial liabilities designated at fair value through profit or loss： Financial debentures Financial liabilities held for trading： Derivative instruments not used for hedging Foreign exchange forward contracts Currency swap contracts Foreign currency option-sell Interest rate contract Total	December 31, 2023 $ 9,175,560 6,657 204,481 7,077 361 $ 9,394,136	December 31, 2022
		9,367,595 10,932 524,421 17,864 4,713 9,925,525

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, 2023 and 2022.

• (q) Notes and bonds issued under repurchase agreement

Assets	December 31, 2023	December 31, 2023	December 31, 2023	December 31, 2023
	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	$ 1,911,300	1,786,715	1,792,342	2024/1/3~2024/7/1
Assets	December 31, 2022
	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	2023/1/4~2024/7/1

(Continued)

40

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(r) Payables

Accrued interest Accounts payable Acceptances Accrued expenses Collection payable Deposits received from securities borrowers Guaranteed price deposits received from securities borrowers Spot exchange payable, foreign currencies Other payables Prices payable of securities sold for customers Settlement payable Other Total Deposits and remittances Savings deposits Time deposits Demand deposits Checking account deposits Remittances Total	December 31, 2023 $ 7,266,021 10,144,863 917,187 3,530,179 816,442 50,962 56,172 7,235 866,697 679,235 - 7,302 $ 24,342,295 December 31, 2023 $ 776,882,639 551,305,074 462,357,697 32,541,672 326,152 $ 1,823,413,234	December 31, 2022
		4,435,668 11,042,992 802,824 3,277,743 676,888 116,196 108,289 13,625 834,692 137,155 40,444 6,615
		21,493,131
		December 31, 2022
		737,659,280 436,771,576 465,429,114 33,292,182 428,111
		1,673,580,263

(s) Deposits and remittances

(Continued)

41

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(t) Bank notes payable

Bonds			Terms of Transactions		Bond Issued
	Issue date	Maturity date	Interest Rate & repayment	Type	Amou	nt
2015-2A 2015-2B 2016-2 2017-1A 2017-1B 2017-1C 2017-2 2018-2 2019-1A 2019-1B 2020-1 2020-2 2021-1 2023-1 2023-2	08/31/2015 08/31/2015 12/20/2016 03/28/2017 03/28/2017 03/28/2017 05/23/2017 08/20/2018 03/21/2019 03/21/2019 03/25/2020 08/13/2020 11/17/2021 06/20/2023 09/27/2023	08/31/2023 08/31/2025 12/20/2023 03/28/2024 03/28/2025 03/28/2027 05/23/2027 08/20/2028 03/21/2026 03/21/2029 03/25/2030 None None 06/20/2030 09/27/2025	The debentures bear an annual interest rate of 2.05%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 2.10%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.40%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.50%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.60%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.85%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.85%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.45%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.20%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.30%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 0.80%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.62%.Simple interest is accrued and paid annually. After calculating the early redeemable bond is in line with the capital adequacy ratio under the consent of the competent authority, the debentures are redeemable per face value plus accrued interest at the interest payment date after five years and a month from the issue date . The debentures bear an annual interest rate of 1.60%.Simple interest is accrued and paid annually. After calculating the early redeemable bond is in line with the capital adequacy ratio under the consent of the competent authority, the debentures are redeemable per face value plus accrued interest at the interest payment date after five years and a month from the issue date . The debentures bear an annual interest rate of 2.10%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.47%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity.	Unsecured subordinated long-term financial debentures 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 Perpetual non- accumulated subordinated financial debentures 〞 Unsecured subordinated long-term financial debentures Unsecured senior financial debentures	December 31, 2023 $ - 300,000 - 390,000 250,000 3,360,000 1,300,000 5,450,000 1,000,000 4,800,000 10,000,000 10,000,000 8,000,000 8,000,000 1,000,000 $ 53,850,000	December 31, 2022
						4,700,000 300,000 2,700,000 390,000 250,000 3,360,000 1,300,000 5,450,000 1,000,000 4,800,000 10,000,000 10,000,000 8,000,000 - -
						52,250,000

(Continued)

42

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

Bonds			Terms of Transactions		Bond Issued
	Issue date	Maturity date	Interest Rate & repayment	Type	Amou	nt
2017-3 2018-3	10/27/2017 09/27/2018	10/27/2047 09/27/2048	The zero-coupon debentures with call options can be executed on strike price after five years from the issued date. Without executing call options during the periods of debentures, the principal will be repaid in full at maturity. The zero-coupon debentures with call options can be executed on strike price after five years from the issued date. Without executing call options during the periods of debentures, the principal will be repaid in full at maturity.	Unsecured dollar- denominated senior financial debentures 〞 Valuation adjustment	December 31, 2023 $ 3,684,600 5,526,900 (35,940) $ 9,175,560	December 31, 2022
						3,687,000 5,530,500 150,095
						9,367,595

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

Fair value of corporate bonds Fair value increase not attributable to changes in market conditions that give rise to market risk Difference between the carrying value and the amount payable at the end of the contract term	December 31, 2023 December 31, 2022 $ 9,175,560 9,367,595 241,673 170,133 (35,940) 150,095

(u) Other financial liabilities

Other financial liabilities
Cumulative earnings on appropriated loans fund	December 31, 2023 $ 2,136,402	December 31, 2022
		2,910,581

(Continued)

43

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

Provision for guarantee liabilities Provision for loan commitments Indeterminate indemnity provisions Provision for employee benefits Total	December 31, 2023 $ 284,412 92,689 75,372 2,450,902 $ 2,903,375	December 31, 2022
		237,076 100,236 74,619 2,264,171
		2,676,102

Change of provision

Provision for guarantee liabilities Provision for loan commitments Indeterminate indemnity provisions Provision for employee benefits Total Provision for guarantee liabilities Provision for loan commitments Indeterminate indemnity provisions Provision for employee benefits Total	January 1, 2023 $ 237,076 100,236 74,619 2,264,171 $ 2,676,102 January 1, 2022 $ 258,065 71,423 73,181 3,017,541 $ 3,420,210	Increase 47,333 - 753 421,069 469,155 Increase - 27,782 1,438 172,726 201,946	Decrease - 7,430 - 183,994 191,424 Decrease 21,496 - - 875,196 896,692	Use - - - 50,344 50,344 Use - - - 50,900 50,900	Foreign exchange 3 (117) - - (114) Foreign exchange 507 1,031 - - 1,538	December 31, 2023
						284,412 92,689 75,372 2,450,902
						2,903,375
						December 31, 2022
						237,076 100,236 74,619 2,264,171
						2,676,102

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

(w) Lease liabilities

Lease liabilities as follows:

Less than one year More than one year	December 31, 2023 $ 395,763 $ 923,345	December 31, 2022
		387,320
		852,599

(Continued)

44

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities Expenses relating to short-term leases Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets	For the years ended December 31,	For the years ended December 31,
	2023 $ 17,527 $ 17,848 $ 17,745	2022
		16,920
		18,691
		16,259

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

Total cash outflow for leases	For the years ended December 31,	For the years ended December 31,
	2023 $ 478,013	2022
		455,378

• (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.

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.

(x) Other liabilities

Advance interest receipts Unearned revenue Other advance receipts Guarantee deposits received Temporary receipts and suspense accounts Others Total	December 31, 2023 $ 4,586 362,241 76,318 1,387,790 3,113,825 28,199 $ 4,972,959	December 31, 2022
		6,396 315,153 62,411 3,372,775 - 6,347 3,763,082

(Continued)

45

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(y) Equity

(i) Common stock

As of December 31, 2023 and 2022, the Bank’s authorized capital were all $100,000,000, and the paid-in capital for common shares of the Bank were $82,224,061 and $80,296,934, respectively, with a par value of $10 per share. The outstanding shares were 8,222,406 and 8,029,693 thousand shares, respectively.

Pursuant to the resolution approved by the regular stockholders’ meeting of the Bank on June 16, 2023, the Bank increased its capital from the retained earnings by $1,927,127 and issued 192,713 thousand shares. The capital increase has been approved by the Financial Supervisory Commission and came into effect on August 16, 2023. The base date of the capital increase was September 8, 2023. The Bank has completed the alternation of registered capital amount on September 27, 2023.

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 thousand shares. The capital increase has been approved by the Financial Supervisory Commission and came into effect on July 12, 2022. The base date of the capital increase was 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:

Additional paid-in capital	December 31, 2023 $ 815,900	December 31, 2022
		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.

(Continued)

46

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

In order to continuously expand scale and increase profitability, the Bank based on the future capital budget plan, adopts residual dividend policy and primarily distributes stock dividend to ensure the capital is sufficient. When there is surplus of capital, the remaining capital can be distributed by cash dividend. Cash dividend shall not be lower than 10% of the total dividend distributed. If the cash dividend distributed per share is lower than NTD$ 0.1, except for otherwise resolved by the shareholder’s meeting, it is not distributed. If there is any situation conforms to that is regulated in article 44 item 1 of the Banking Act of The Republic of China, the Bank is not allowed to distribute earnings by cash or purchase shares outstanding. The maximum cash earning distribution is not allowed to be over 15% of the total paid in capital unless the legal reserve reaches the total paid-in capital.

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

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

The Bank resolved the earning distribution for the earnings of 2022 and 2021 in the shareholders' meeting on June 16, 2023 and June 17, 2022, respectively. The dividends distributed were as follows:

distributed were as follows:
Dividends to common shareholders Stock dividends Cash dividends Total	2022 Distribution rate (NT dollar) Amount $ 0.24 1,927,127 0.10 802,969 $ 2,730,096	2021
		Distribution rate (NT dollar) 0.37 0.10	Amount
			2,864,982 774,320
			3,639,302

(Continued)

47

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iv) Other equity interest

January 1, 2023 Share of other comprehensive income of associates and joint ventures accounted for using equity method Investment in financial assets measured at fair value through other comprehensive income -Unrealized amount -Realized amount Foreign currency translation difference－Exchange difference Disposal of investments in equity instruments measured at fair value through other comprehensive income December 31, 2023 January 1, 2022 Share of other comprehensive income of associates and joint ventures accounted for using equity method Investment in financial assets measured at fair value through other comprehensive income -Unrealized amount -Realized amount Foreign currency translation difference－Exchange difference Disposal of investments in equity instruments measured at fair value through other comprehensive income December 31, 2022	Unrealized gains from financial assets measured at fair value through other comprehensive income $ (3,171,842) (175) 6,468,507 (252) - (1,682,486) $ 1,613,752 $ 4,113,485 (4,729) (8,545,652) (4,976) - 1,270,030 $ (3,171,842)	Exchange differences on translation of foreign financial statements (597,833) (14,754) - - (16,571) - (629,158) (1,807,265) 11,653 - - 1,197,779 - (597,833)	Total (3,769,675) (14,929) 6,468,507 (252) (16,571) (1,682,486) 984,594 2,306,220 6,924 (8,545,652) (4,976) 1,197,779 1,270,030 (3,769,675)

(Continued)

48

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(z) Income taxes

• (i) The income tax expenses were as follows:

Current tax expense Current period Adjustment for prior period Additional surtax on undistributed retained earnings The Income basic tax Deferred tax expense (income) Origination and reversal of temporary differences Change in unrecognized temporary differences Income tax expenses	For the years ended December 31, 2023 2022 $ 1,990,218 2,106,302 61,093 5,401 1,525 1,297 6,266 - 2,059,102 2,113,000 (200,778) (215,456) 1,808 20,396 $ 1,860,132 1,917,940
	2023 $ 1,990,218 61,093 1,525 6,266 2,059,102 (200,778) 1,808 $ 1,860,132

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

Items that will not be reclassified subsequently to profit or loss Remeasurements of defined benefit plans Items that may be reclassified subsequently to profit or loss Exchange differences on translation of foreign financial statements Losses on debt instruments at fair value through other comprehensive income	For the years ended December 31, 2023 2022 $ (46,609) 111,419 For the years ended December 31, 2023 2022 $ (7,831) 302,357 17,487 (30,000) $ 9,656 272,357
	2023 $ (7,831) 17,487 $ 9,656

(Continued)

49

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The reconciliation between the income tax expense (income) and net income before tax of the Bank and subsidiaries for 2023 and 2022 is as follows:

Bank and subsidiaries for 2023 and 2022 is as follows:
Income tax computed on net income before tax Tax-free income Overseas branch income tax expenses Current-year losses for which no deferred tax asset was recognized Underestimate prior income tax expense Surtax on unappropriated retained earnings Income basic tax Other Income tax expense	For the years ended December 31
	2023 $ 2,485,376 (809,023) 110,943 1,808 61,093 1,525 6,266 2,144 $ 1,860,132	2022
		2,406,771 (669,128) 152,074 20,396 5,401 1,297 - 1,129 1,917,940

(Continued)

50

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (iii) Deferred tax assets and liabilities

• 1) Changes in recognized deferred tax assets and liabilities of the Bank and subsidiaries were as follows:

For the year ended December Beginning balance Recognized in profit or loss Recognized in other comprehensive income Temporary difference Deferred tax assets resulted from allowance for bad debts exceeding the limit regulated in Tax Law $ 1,034,571 199,009 - Loss on assets impairment 19,372 3,067 - Reserve for employee benefit liabilities 332,159 (1,619) - Land value increment tax (879,056) 433 - Exchange differences from the translation of financial statements of foreign operations 149,457 - 7,831 Unrealized loss on valuation of financial assets measured at fair value through other comprehensive income 22,766 - (17,487) Actuarial gains and losses 200,055 - 46,609 Indeterminate indemnity provisions 14,923 151 - Other 265 (263) - Subtotal 894,512 200,778 36,953 Losses carried forward 3,631 1,396 - Net deferred tax assets (liabilities) $ 898,143 202,174 36,953 The information stated on the balance sheet is as follows: Deferred tax assets $ 1,777,199 Deferred tax liabilities $ 879,056		For the year ended December	For the year ended December	31, 2023	Ending balance 1,233,528 22,439 330,540 (878,623) 157,288 5,279 246,664 15,074 - 1,132,189 5,027 1,137,216 2,015,839 878,623
			Recognized in other comprehensive income - - - - 7,831 (17,487) 46,609 - - 36,953 - 36,953	Others (52) - - - - - - - (2) (54) - (54)

(Continued)

51

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For the year ended December Beginning balance Recognized in profit or loss Recognized in other comprehensive income Temporary difference Deferred tax assets resulted from allowance for bad debts exceeding the limit regulated in Tax Law $ 774,187 260,349 - Loss on assets impairment 21,710 (2,338) - Reserve for employee benefit liabilities 374,995 (42,836) - Land value increment tax (879,056) - - Exchange differences from the translation of financial statements of foreign operations 451,814 - (302,357) Unrealized loss on valuation of financial assets measured at fair value through other comprehensive income (7,234) - 30,000 Actuarial gains and losses 311,474 - (111,419) Indeterminate indemnity provisions 14,636 287 - Other 267 (6) - Subtotal 1,062,793 215,456 (383,776) Losses carried forward 2,553 1,078 - Net deferred tax assets (liabilities) $ 1,065,346 216,534 (383,776) The information stated on the balance sheet is as follows: Deferred tax assets $ 1,951,636 Deferred tax liabilities $ 886,290		For the year ended December	For the year ended December	31, 2022	Ending balance 1,034,571 19,372 332,159 (879,056) 149,457 22,766 200,055 14,923 265 894,512 3,631 898,143 1,777,199 879,056
			Recognized in other comprehensive income - - - - (302,357) 30,000 (111,419) - - (383,776) - (383,776)	Others 35 - - - - - - - 4 39 - 39

2) Deferred tax assets have not been recognized in respect of the following items:

Tax effect of deductible Temporary Differences The carryforward of unused tax losses	December 31, 2023 $ 153 45,968 $ 46,121	December 31, 2022
		153 44,160
		44,313

The R.O.C. Income Tax Act allows net losses, as assessed by the tax authorities, to offset taxable income over a period of ten years for local tax reporting purposes. Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the Bank and subsidiaries can utilize the benefits therefrom.

(Continued)

52

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

As of December 31, 2023, the information of the Bank and subsidiaries unused tax losses for which no deferred tax assets were recognized are as follows:

Year of loss	Unused tax loss Expiry date $ 20,885 2026 16,528 2027 15,957 2028 9,426 2029 6,927 2030 41,036 2031 80,990 2032 38,092 2033 $ 229,841
2016 2017 2018 2019 2020 2021 2022 2023

• (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, 2018, 2019 and 2021 have been assessed by the Tax Authority.

• (vi) The income tax returns of the subsidiaries TBB Venture Capital Co., Ltd., TBB Consulting Co., Ltd., and TBB International Leasing Co., Ltd. have been assessed until 2021 by the Tax Authority.

(aa) Provision for employee benefit

As of December 31, 2023 and 2022, the balance of provision for employee benefit of the Bank and subsidiaries was as follows:

Defined benefit plan Employee deposits with favorable rate	December 31, 2023 $ 1,328,440 1,122,462 $ 2,450,902	December 31, 2022
		1,211,918 1,052,253
		2,264,171

(i) Defined benefit plan

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

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities	December 31, 2023 $ 5,920,493 (4,592,053) $ 1,328,440	December 31, 2022 6,156,019 (4,944,101) 1,211,918 (Continued)

53

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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 $4,592,053 and $4,944,101 on December 31, 2023 and 2022. 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:

Defined benefit obligation on January 1 Current service and interest cost Remeasurements of the net defined benefit liability －Actuarial loss on experience adjustment －Actuarial loss (gains) on financial assumptions changed Benefits paid Defined benefit obligation at December 31	For the years ended December 31, 2023 2022 $ 6,156,019 6,870,061 243,796 191,252 77,431 443,097 177,409 (593,737) (734,162) (754,654) $ 5,920,493 6,156,019
	2023 $ 6,156,019 243,796 77,431 177,409 (734,162) $ 5,920,493

(Continued)

54

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 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:

Fair value of plan assets on Junuary 1 Interest income Remeasurements of the net defined benefit liability －plan assets revenue (excluded of current interest) Contributions made Benefits paid by the plan Fair value of plan assets on December 31	For the years ended December 31, 2023 2022 $ 4,944,101 4,903,846 82,833 19,453 21,797 406,458 277,484 368,998 (734,162) (754,654) $ 4,592,053 4,944,101
	2023 $ 4,944,101 82,833 21,797 277,484 (734,162) $ 4,592,053

• 4) Expenses recognized in profit or loss

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

Current service costs Net interest of the net liability of define benefit obligations	For the years ended December 31,	For the years ended December 31,
	2023 $ 142,443 18,520 $ 160,963	2022
		164,454 7,345
		171,799

• 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, 2023 and 2022 were as follows:

Amount on January 1 Recognized during the period Amount on December 31	For the years ended December 31, 2023 2022 $ 1,000,275 1,557,373 233,043 (557,098) $ 1,233,318 1,000,275
	2023 $ 1,000,275 233,043 $ 1,233,318

(Continued)

55

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

6) Actuarial assumptions

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

Discount rate Future salary increase rate	December 31, 2023 December 31, 2022 % 1.25 % 1.70 % 1.50 % 1.50

The expected allocation payment made by the Bank and subsidiaries to the defined benefit plans for the one-year after the reporting date is $242,000.

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, 2023 and 2022 were as follows :

December 31, 2023 Discount rate(Change 0.25%) Future salary increase rate(Change 0.25%) December 31, 2022 Discount rate(Change 0.25%) Future salary increase rate(Change 0.25%)	Influence of defined benefit plan obligation
	Increase 0.25% Decrease 0.25% % (1.67) % 1.71 % 1.63 % (1.60) % (1.70) % 1.74 % 1.67 % (1.64)

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 2023 and 2022.

(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.

(Continued)

56

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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 $184,606 and $170,382 for the years ended December 31, 2023 and 2022, respectively.

(iii) Employee deposit with favorable rate

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liability	December 31, 2023 $ 1,122,462 - $ 1,122,462	December 31, 2022
		1,052,253 -
		1,052,253

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, 2023 and 2022, were as follows:

Defined benefit obligation on January 1 Interest cost Remeasurements of the net defined benefit liability -current actuarial gains and losses Benefits paid by the plan Defined benefit obligation on December 31	For the years ended December 31, 2023 2022 $ 1,052,253 1,051,326 39,983 39,953 247,171 175,487 (216,945) (214,513) $ 1,122,462 1,052,253
	2023 $ 1,052,253 39,983 247,171 (216,945) $ 1,122,462

• 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:

Fair value of plan assets on January 1 Contributions made Benefits paid by the plan Fair value of plan assets on December 31	For the years ended December 31, 2023 2022 $ - - 216,945 214,513 (216,945) (214,513) $ - -
	2023 $ - 216,945 (216,945) $ -

(Continued)

57

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 3) Expenses recognized in profit or loss

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

Net interest on the net defined benefit liability	For the years ended December 31,	For the years ended December 31,
	2023 $ 287,154	2022
		215,440

• 4) Actuarial assumption

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

Discount rate of employee deposit with favorable rate Rate of return for capital deposited Annual diminishing rate of account balance Possibility that employee deposit with favorable rate be modified	December 31, 2023 December 31, 2022 % 4.00 % 4.00 % 2.00 % 2.00 % 1.00 % 1.00 % 50.00 % 50.00

• (ab) Earnings per share

Net income Weighted average number of common shares outstanding (in thousands) (Note 1) Basic earnings per share (in dollars) (Note 1) Dilutive potential common shares (in thousands) (Notes 1 and 2) Weighted average number of common shares outstanding for diluted earnings per share (in thousands) (Note 1) Diluted earnings per share (in dollars) (Note 1)	For the years ended December 31,	For the years ended December 31,
	2023 $ 10,567,675 8,222,406 $ 1.29 52,815 8,275,221 $ 1.28	2022
		10,121,852
		8,222,406
		1.23
		35,699
		8,258,105
		1.23

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

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.

(Continued)

58

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022, the estimated employee remuneration were $723,563 and $451,457, and the estimated directors' remuneration were $79,237 and $75,243, 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 2022 remuneration. The information is available at the Market Observation Post System website.

(ad) Net interest revenue

Interest income: Loans Secured loans Bills negotiated Bank overdrafts Discounts Time deposit from Central Bank Due from the Central Bank Call loans to banks Bonds International credit card Overdue loans Bills Due from Banks Others Subtotal Interest expense: Deposits Deposits from banks Call loans from banks Financial debentures Notes and bond issued under repurchase agreement Others Subtotal Total	For the years ended December 31,	For the years ended December 31,
	2023 $ 13,214,343 25,640,722 6,196 26,157 33,520 2,075,554 468,046 1,864,332 4,639,096 34,864 387,993 86,872 223,483 415,535 49,116,713 27,381,521 4,305 2,021,423 818,770 33,025 152,159 30,411,203 $ 18,705,510	2022
		8,053,024 19,220,653 4,181 14,266 17,116 1,218,788 201,563 1,260,539 2,603,937 35,527 211,415 28,950 111,158 318,985
		33,300,102
		11,295,463 1,489 890,231 759,937 9,358 115,651
		13,072,129
		20,227,973

(Continued)

59

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ae) Net service fee revenue

Service fee income: Remittance service fee Import bills negotiated service fee Export bills negotiated service fee Letter of credit service fee Certification service fee Acceptance service fee Trust service fee Guarantee service fee Agency service fee Interbank service fee Card service fee Commission revenue of insurance premium Custodian service fee Foreign currency service fee Commission of futures Loan service fee Miscellaneous fees Subtotal Service fee expense: Foreign currency service fee Interbank service fee Trust service fee Agency service fee IC card service fee Check clearing service fee Remittance service fee Custodian service fee Call loans service fee Futures option fee Miscellaneous fees Subtotal Total	For the years ended December 31,	For the years ended December 31,
	2023 $ 65,749 39,724 9,630 7,468 2,189 2,534 522,234 265,052 26,767 111,315 167,949 2,382,028 193,064 78,635 2,994 980,180 215,698 5,073,210 31,622 193,247 1,774 1,338 119,388 8,240 4,926 60,606 10,768 1 23,944 455,854 $ 4,617,356	2022
		64,477 45,635 12,653 8,887 1,482 1,677 595,144 242,678 34,481 108,774 113,297 1,535,440 197,542 85,707 2,939 852,045 429,965
		4,332,823
		29,427 178,644 857 1,567 66,106 8,877 5,404 58,378 9,029 43 22,599
		380,931
		3,951,892

(Continued)

60

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

Valuation gains (losses): Corporate bonds Financial debentures Listed stocks and emerging stocks Unlisted stocks Beneficiary certificates Private fund Commercial paper Derivative financial instruments Subtotal Disposal gains (losses): Corporate bonds Financial debentures Listed stocks and emerging stocks Unlisted stocks Beneficiary certificates Commercial paper Derivative financial instruments Subtotal Dividend revenue Interest income Total

For the years ended December 31, 2023 2022 $ - (5,636) (491,435) (546,927) 75,194 197,910 (44,299) 69,472 590 (6,437) (20,311) (39) (12,456) 10,790 2,429,170 193,966 1,936,453 (86,901) - 6,437 - (4,098) 133,908 (40,241) (16,498) (270) 5,272 (21,734) (1,225) (2,574) 3,760,431 1,463,644 3,881,888 1,401,164 36,492 16,654 863,611 209,321 $ 6,718,444 1,540,238

2023 $ - (491,435) 75,194 (44,299) 590 (20,311) (12,456) 2,429,170 1,936,453 - - 133,908 (16,498) 5,272 (1,225) 3,760,431 3,881,888 36,492 863,611 $ 6,718,444

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

Gain on disposal of government bonds Gain on disposal of corporate bonds Loss on disposal of financial debentures Dividend revenue Total	For the years ended December 31, 2023 2022 $ - 4,480 252 666 - (170) 1,234,455 1,457,705 $ 1,234,707 1,462,681
	2023 $ - 252 - 1,234,455 $ 1,234,707

(Continued)

61

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

Investment in debt instrument measured at fair value through other comprehensive income Investment in debt instrument measured at amortized cost Total	For the years ended December 31,	For the years ended December 31,
	2023 $ (9,564) (5,771) $ (15,335)	2022
		(1,521) 13,210 11,689

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

Investment income - Media Talk Consulting Co., Ltd.	For the years ended December 31,	For the years ended December 31,
	2023 $ (808)	2022 (1,192)

(aj) Net other revenue other than interest income

Rental revenue of operating assets Rental expense of operating assets Loss on disposal and retirement of property and equipment Loss of account error Gold deposit book Other operating expense Other miscellaneous income Total	For the years ended December 31,	For the years ended December 31,
	2023 $ 10,058 (1,860) (1,660) (137) 1,999 (40,895) 105,188 $ 72,693	2022
		9,360 (1,796) (925) (163) 2,536 (40,650) 115,327 83,689

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

Discounted and loans Call loans to banks Due from banks, debit Receivables and other financial assets Subtotal Provisions for guarantee liabilities Provisions for loan commitments Total	For the years ended December 31,	For the years ended December 31,
	2023 $ 4,192,078 (5,475) (1,857) 1,869 4,186,615 47,333 (7,430) $ 4,226,518	2022
		2,419,063 384 904 (40,575) 2,379,776 (21,496) 27,782 2,386,062

(Continued)

62

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(al) Employee benefits expenses

Salary expense Labor and health insurance Pension expense Directors' remuneration Other employee benefits Total	For the years ended December 31,	For the years ended December 31,
	2023 $ 7,375,772 561,143 344,914 95,832 701,343 $ 9,079,004	2022
		7,285,860 532,682 341,576 92,949 622,625
		8,875,692

(am) Depreciation and amortization expense

Depreciation Property and equipment Right-of-use assets Amortization Computer software Other deferred charges Total	For the years ended December 31,	For the years ended December 31,
	2023 $ 547,955 437,800 286,261 69 $ 1,272,085	2022
		569,994 410,789 249,046 47
		1,229,876

(Continued)

63

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(an) Other general and administrative expense

Compensation loss Utilities fee Postage and telecommunication fee Transportation fee Printing and advertisement fee Repair and maintenance fee Insurance fee Professional service fee Materials and supplies Rental expenses Duties and levies Membership, donation and partaking Storage, packing and processing fee Cash transit fee Others Total	For the years ended December 31,	For the years ended December 31,
	2023 $ 288 95,984 288,351 39,572 325,287 338,349 427,105 289,166 185,456 35,593 2,035,042 652,350 51,294 62,982 81,311 $ 4,908,130	2022
		42 90,142 249,164 32,015 215,431 261,268 378,827 264,061 126,728 34,950 1,566,727 591,647 45,955 65,098 75,646
		3,997,701

(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.

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 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.

(Continued)

64

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 2) The definition of fair value hierarchy

a) Level 1

The input of this level is quoted prices in active markets for identical financial instruments. The active market is a market in which transactions for the homogenous assets or liabilities take place with sufficient frequency and volume to provide pricing information. The stock of listed company and the beneficiary certificates, government bonds and the derivative financial instruments with public quote inactive market processed by the Bank 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

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.

(Continued)

65

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 3) Based on fair value measurement

• a) The fair value hierarchy of information

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

Assets and Liabilities Instruments measured at fair value on a recurring basis Non-derivative financial assets and liabilities:		December 31, 2023	December 31, 2023
	Total $ 1,331,040 200,000 68,575,764 19,341,257 169,332,333 742,334 9,175,560 $ 3,259,221 218,576	Level 1 877,404 - 66,444 13,515,621 101,272,236 141,308 - 26,930 -	Level 2 Level 3 - 453,636 200,000 - 68,332,202 177,118 - 5,825,636 68,060,097 - 601,026 - 9,175,560 - 3,232,291 - 218,576 -
Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss, mandatorily measure at fair value Security Investments Bond Investments Others Financial assets at fair value through other comprehensive income Security Investments Bond Investments Others Financial liabilities at fair value through profit or loss Financial liabilities designated at fair value through profit or loss Derivative financial assets and liabilities Assets: Financial assets at fair value through profit or loss Liabilities: Financial liabilities at fair value through profit or loss

(Continued)

66

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Assets and Liabilities Instruments measured at fair value on a recurring basis Non-derivative financial assets and liabilities: Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss, mandatorily measure at fair value Security Investments Bond Investments Others Financial assets at fair value through other comprehensive income Security Investments Bond Investments Other Financial liabilities at fair value through profit or loss Financial liabilities designated at fair value through profit or loss Derivative financial assets and liabilities Assets: Financial assets at fair value through profit or loss Liabilities: Financial liabilities at fair value through profit or loss		December 31, 2022	December 31, 2022
	Total $ 1,224,267 200,000 31,322,180 18,014,397 141,840,231 145,782 9,367,595 $ 1,166,667 557,930	Level 1 752,713 - 250,691 12,676,936 91,536,068 145,782 - 26,860 -	Level 2 Level 3 - 471,554 200,000 - 30,907,810 163,679 - 5,337,461 50,304,163 - - - 9,367,595 - 1,139,807 - 557,930 -

b) Valuation techniques used in estimating the fair values of financial instruments

If the financial instruments have quoted price in an active market, the quoted price is regarded as its fair value.

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

(Continued)

67

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Except for the above financial instruments of quoted price in an active market, there is no quoted price in an active market for the financial asset, its fair value is estimated on the basis of the result of a valuation technique that refers to quoted prices considered the identical financial instrument with same characteristics and essential terms of transaction, Discounted-Cash-Flow model and other valuation techniques including the model using market information to be made of the calculation at the balance sheet date (e.g. Taipei Exchange reference yield curve, Reuters quoted the average commercial paper rate, the Taipei Financial industry call loan rate fixing TAIBOR).

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

(Continued)

68

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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, 2023 and 2022.

• e) Changes in financial assets which were classified to Level 3 based on fair value measurement

Changes of financial assets categorized in Level 3 :

Name		Fo	Fo	r the year ended	December 31, 20	23
	Beginning balance	Valuation profit and loss		Incr	ease	Decr	ease Transfer out from Level 3 (Note) Ending balance 33,465 630,754 - 5,825,636
		Recognized in profit or loss	Recognized in other comprehensive income	Purchase or issue	Transfer into Level 3	Sale Disposition or Settlement
Financial assets at fair value through profit or loss Investments in equity instruments measured at fair value through other comprehensive income	$ 635,233 5,337,461	(64,610) -	- 488,175	137,285 -	- -	43,689 -

Name		Fo	Fo	r the year ended	December 31, 20	22
	Beginning balance	Valuation profit and loss		Incr	ease	Decr	ease Transfer out from Level 3 (Note) Ending balance 93,484 635,233 - 5,337,461
		Recognized in profit or loss	Recognized in other comprehensive income	Purchase or issue	Transfer into Level 3	Sale Disposition or Settlement
Financial assets at fair value through profit or loss Investments in equity instruments measured at fair value through other comprehensive income	$ 508,481 4,974,579	69,433 -	- 362,882	245,059 -	- -	94,256 -

Note: The invested stock is registered in the emerging market. Therefore, the measurement of fair value was transferred out from Level 3.

(Continued)

69

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• f) Profit and loss information of Level 3

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

Recognized on profit and loss (reported as unrealized gain (loss) from investments instruments measured at fair value through profit and loss) Recognized on other comprehensive income (reported as unrealized gain (loss) from investments instruments measured at fair value through other comprehensive income)	For the years ended December 31,
	2023 2022 $ (94,195) 69,686 488,175 362,882

• g) Quantified information of the fair value measurement of significant unobservable inputs (Level 3)

The Bank and subsidiaries financial instruments that use Level 3 inputs to measure fair value include financial 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 :

Financial asset at fair value through profit or loss Private fund Unlisted stocks Financial assets at fair value through other comprehensive income Unlisted stocks			December 31, 2023
	fair value $ 177,118 453,636 5,825,636	valuation methods assets approach market approach market approach assets approach income approach income approach	significant unobservable inputs liquidity discount liquidity discount liquidity discount sustainable growth rate cost of equity	range inter-relationship between significant unobservable inputs and fair value measurement 0.00%~10.00% The higher market liquidity discount, the lower fair value. 0.00%~43.31% The higher market liquidity discount, the lower fair value. 0.00%~28.98% The higher market liquidity discount, the lower fair value. 0.00%~1.54% The higher sustainable growth rate, the higher fair value. 10.71%~12.35% The higher rate of cost of equity, the lower fair value.

(Continued)

70

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Financial assets at fair value through profit or loss Private fund Unlisted stocks Financial assets at fair value through other comprehensive income Unlisted stocks			December 31, 2022
	fair value $ 163,679 471,554 5,337,461	valuation methods assets approach market approach market approach assets approach income approach income approach	significant unobservable inputs liquidity discount liquidity discount liquidity discount sustainable growth rate cost of equity	range inter-relationship between significant unobservable inputs and fair value measurement 0.00%~10.00% The higher market liquidity discount, the lower fair value. 0.00%~36.67% The higher market liquidity discount, the lower fair value. 8.62%~29.95% The higher market liquidity discount, the lower fair value. 0.00%~1.55% The higher sustainable growth rate, the higher fair value. 10.96%~12.68% 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.

Valuation techniques used by the Bank and subsidiaries 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 income if using alternative assumptions and inputs:

• 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 income is as follows:

December 31, 2023 Financial assets at fair value through profit or loss Unlisted stocks and private fund Financial assets at fair value through other comprehensive income Unlisted stocks	the effects to the net income and other comprehensive income Favorable changes (-5%) Unfavorable changes (5%) $ 38,364 (38,364) 339,693 (339,693)

(Continued)

71

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

			the effects to the net income and	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)
Inc	ome approach
Ad	opting the income approach to evaluate Level 3 financial instruments of
the	Bank and subsidiaries. The evaluation parameters			are divided into
sus	tainable growth rate and cost of equity capital. The effects of the two
eva	luation parameters on the other comprehensive profit and loss are as
foll	ows:
1.	sustainable growth rate
			the effects to other comprehensive
			income
			Favorable	Unfavorable
			changes (0.3%)	changes (-0.3%)
December 31, 2023
Financial assets at fair value through other
	comprehensive income
	Unlisted stocks	$	3,171	(2,977)
			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)

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

(Continued)

72

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2. cost of equity

December 31, 2023 Financial assets at fair value through other comprehensive income Unlisted stocks December 31, 2022 Financial assets at fair value through other comprehensive income Unlisted stocks	the effects to other comprehensive income Favorable changes (-3%) Unfavorable changes (3%) $ 66,075 (31,980) the effects to other comprehensive income Favorable changes (-3%) Unfavorable changes (3%) $ 61,250 (30,146)

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

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

Debt instruments measured at amortized cost Debt instruments measured at amortized cost	December	31, 2023
	Book value $ 252,895,142 December	Fair value
		253,352,513 31, 2022
	Book value $ 236,774,247	Fair value
		236,657,427

(Continued)

73

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• b) The fair value hierarchy of information

Assets and Liabilities		December 31, 2023	December 31, 2023
	Total $ 253,352,513	Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) 45,904,472 207,448,041 - December 31, 2022
Debt instruments measured at amortized cost Assets and Liabilities
	Total $ 236,657,427	Quoted prices in active markets for identical assets (Level 1) 31,336,817	Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) 205,320,610 -
Debt instruments measured at amortized cost

• c) Valuation techniques

Methods and assumptions used by the Bank and subsidiaries for fair value evaluation of financial instruments 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.

• 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.

(Continued)

74

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

  - iv) 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.

  - v) 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:

• a) Conduct Analysis and response project when significant domestic and foreign economic, financial and industrial risk management occur.

• b) Risk management report of various risk exposure and agenda processing.

• c) The processing of examination of the risk management relevant policy of the Bank and limitations, management indices and the response project when the risk exceeds the limitations.

(Continued)

75

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 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

The chairperson of the Assets and Liabilities Management Committee is the general manager, and the members are formed by the vice assistant general manager and the department heads of deposit, loan, financial transaction, capital deployment and risk management units. The responsibility of the Assets and Liabilities Management Committee is to monitor and manage the banking book interest rate risk and capital liquidity risk and convenes meetings regularly, to approve the analyzing and measurement methods of the capital liquidity risk and banking book interest rate risk exposure, to examine the capital liquidity risk and banking book interest rate risk management policy as well as the relevant limitations and management indices, to receive interest rate risk and capital liquidity risk exposure reports and adjust the assets and liabilities interest rate duration structure and capital maturity structure.

3) Credit Examination Committee

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

• 4) Overdue Loans Clearing Committee

The convener of the Overdue Loans Clearing Committee is the supervising vice president. The convener holds meetings as needed to discuss measures on reducing nonperforming 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.

(Continued)

76

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

(Continued)

77

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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.

• c) Debt instrument investments and derivative financial instruments

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

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

• 3) Determining the credit risk has increased significantly since initial recognition

At each reporting date, the Bank 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;

(Continued)

78

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

  - 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;

  - 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 investment-grade but the ratings are not significantly reduced are also considered to be low-risk areas.

(Continued)

79

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 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:

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

(Continued)

80

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 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

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

(Continued)

81

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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:

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

If the credit risk on a credit asset has not increased significantly since initial recognition or the credit asset has low credit risk at the reporting date, the Bank and subsidiaries 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 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.

(Continued)

82

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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 credit-impaired assets are based on the rules mentioned above. Additionally, in order to determine the EAD used to calculate expected credit loss of off-balance sheet items, the Bank 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 forwardlooking 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.

(Continued)

83

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

9) Credit risk hedging or diminishing.

• a) Collaterals

The Bank adopts a series of policies and procedures to mitigate credit risk and enhance credit risk tolerance. The method applied most is to request customers to provide collaterals. The Bank established collateral accreditation code of conduct in term of collateral management and total loan amount to regulate the scope of collaterals and the accreditation method and regularly inspects the collaterals. When the collaterals devaluate or the concern of devaluation occurs, the Bank shall increase collaterals or retrieve part of the loans to ensure the creditor’ s right is intact.

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

• 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

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

(Continued)

84

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 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, 2023 Impairment financial assets： Receivables Accounts receivables Accounts receivables factoring without recourse Interest receivable Discounts and loans Overdue receivable Total impairment financial assets December 31, 2022 Impairment financial assets： Receivables Acceptances receivables Interest receivable Discounts and loans Overdue receivable Total impairment financial assets	Carrying amount $ 143,938 1,525 53,837 19,125,961 19,717 $ 19,344,978 Carrying amount $ 75,222 42,578 20,309,083 58,786 $ 20,485,669	Allowance impairment 12,754 1,525 16,263 4,196,783 10,891 4,238,216 Allowance impairment 10,034 7,050 4,784,155 15,898 4,817,137	Exposure (measured at amortized cost) 131,184 - 37,574 14,929,178 8,826 15,106,762 Exposure (measured at amortized cost) 65,188 35,528 15,524,928 42,888 15,668,532	Value of collateral
				143,938 - - 22,784,264 -
				22,928,202
				Value of collateral
				73,243 - 22,707,890 -
				22,781,133

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 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:

(Continued)

85

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• a) By industry

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

Industry	**December 31, **	2023 % % 62.36 % 1.75 % 3.08 % 0.18 % 25.70 % 0.56 % 6.24 % 0.13 % 100.00	December 31	, 2022
	Amount $ 942,481,908 26,473,840 46,485,000 2,700,387 388,328,132 8,532,647 94,290,432 1,917,974 $ 1,511,210,320		Amount 894,970,270 6,415,252 70,682,095 2,919,516 346,079,715 6,899,993 87,153,772 3,372,838 1,418,493,451	% % 63.09 % 0.45 % 4.98 % 0.21 % 24.40 % 0.49 % 6.14 % 0.24 % 100.00
Private business Public business Government institution Nonprofit organization Individual Foreign financial institution Foreign non-financial institution Foreign individual Total

• b) By geographic area

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

Area	December 31,	2023 % % 93.07 % 6.93 % 100.00	December 31, 2022	December 31, 2022
	Amount $ 1,406,469,267 104,741,053 $ 1,511,210,320		Amount 1,321,066,848 97,426,603 1,418,493,451	% % 93.13 % 6.87 % 100.00
Domestic Foreign Total

• c) By collateral

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

Collateral	**December 31, **	2023 % % 17.40 % 0.63 % 1.56 % 62.76 % 0.90 % 0.14 % 16.02 % 0.59 % 100.00	December 31	, 2022
	Amount $ 262,896,301 9,567,174 23,544,824 948,449,425 13,604,217 2,088,810 242,173,546 8,886,023 $ 1,511,210,320		Amount 271,796,900 8,846,336 23,134,859 878,535,410 15,849,874 2,414,280 208,721,552 9,194,240 1,418,493,451	% % 19.16 % 0.63 % 1.63 % 61.93 % 1.12 % 0.17 % 14.71 % 0.65 % 100.00
Unsecured Stocks Bonds Real estate Chattel Notes receivable Guarantees Others Total

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.

(Continued)

86

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

12) Maximum credit risk exposure

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

Off balance sheet items	Maximum credit	risk exposure
	December 31, 2023 $ 110,877,663 17,826,561 7,577,343 27,513,283 $ 163,794,850	December 31, 2022
Issued and irrevocable loan commitments Irrevocable credit card loan commitments Letters of credit issued yet unused Various guarantee proceeds Total		64,987,007 18,839,955 8,129,149 22,056,496
		114,012,607

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.

(Continued)

87

TAIWAN BUSINESS BANK, LTD.

Notes to the Consolidated Financial Statements

b) The credit quality analyses of the financial assets

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

December 31, 2023	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
	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	$ 407,287	224,647	173,640	5	2,792	330,380	1,138,751	640	2,746	1,684	-	489	10	5,569	-	1,013	1,143,307
Acceptances receivable	359,835	362,994	27,562	-	-	154,272	904,663	-	-	-	-	-	-	-	-	9,047	895,616
Other receivables	546,518	2,815,932	514,312	78,310	28,164	4,303,516	8,286,752	429	3,250	3,736	999	4,446	79,690	92,550	199,300	111,452	8,467,150
Discounts and loans
Private banking	157,888,014	145,477,258	71,012,229	3,416,554	1,113,419	5,877,892	384,785,366	44,210	117,070	304,099	96,716	71,708	23,617	657,420	4,803,319	4,806,609	385,439,496
Corporate banking	294,413,340	396,339,294	261,840,972	40,056,612	17,587,923	91,149,940	1,101,388,081	268,637	1,293,493	771,072	448,641	1,429,722	1,041,927	5,253,492	14,322,642	14,796,233	1,106,167,982
Other financial assets
Overdue receivable	-	-	-	-	-	-	-	-	-	-	-	-	-	-	19,717	11,490	8,227
Total	$ 453,614,994	545,220,125	333,568,715	43,551,481	18,732,298	101,816,000	1,496,503,613	313,916	1,416,559	1,080,591	546,356	1,506,365	1,145,244	6,009,031	19,344,978	19,735,844	1,502,121,778
Guarantee and commitments	$ 30,766,391	12,299,252	7,865,230	358,346	248,200	111,821,971	163,359,390	12,255	282,643	261	7,876	-	227	303,262	132,198	377,101	163,417,749
December 31, 2022	12-month ECL							Lifetime ECL－not impaired							Lifetime ECL－ impaired
	Excellent	Good	Medium	Acceptable	Under standard	No rating	Subtotal	Excellent	Good	Medium	Acceptable	Under standard	No rating	Subtotal	High risk	Allowance impairment	Total
Receivable
Credit card	$ 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 receivable	375,279	232,317	119,969	25,670	-	38,049	791,284	-	-	-	-	-	-	-	-	7,913	783,371
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 commitments	$ 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

(Continued)

88

TAIWAN BUSINESS BANK, LTD.

Notes to the Consolidated Financial Statements

ii) Debt instruments

December 31, 2023	12-month ECL	12-month ECL	12-month ECL	12-month ECL	12-month ECL	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－ impaired
	Investment	Sub investment	High risk	No rating	Subtotal	Investment	Sub investment	High risk	No rating	Subtotal	High risk	Total	Accumulated impairment(Note)
Investment in debt instruments measured at fair value through other comprehensive income
Overseas bonds	$ 68,060,097	-	-	-	68,060,097	-	-	-	-	-	-	68,060,097	19,146
NT bonds	101,272,236	-	-	-	101,272,236	-	-	-	-	-	-	101,272,236	80,973
Negotiable certificates of deposit	601,026	-	-	-	601,026	-	-	-	-	-	-	601,026	230
Investment in debt instruments at amortized cost
Overseas bonds	22,193,166	-	-	-	22,193,166	-	-	-	-	-	-	22,193,166	3,899
NT bonds	39,818,115	-	-	-	39,818,115	-	-	-	-	-	-	39,818,115	20,322
Certificates of deposit with the Central Bank	190,900,000	-	-	-	190,900,000	-	-	-	-	-	-	190,900,000	56,375
Negotiable certificates of deposit	64,481	-	-	-	64,481	-	-	-	-	-	-	64,481	24
Total	$ 422,909,121	-	-	-	422,909,121	-	-	-	-	-	-	422,909,121	180,969
December 31, 2022	12-month ECL					Lifetime ECL－not impaired					Lifetime ECL－ impaired
	Investment	Sub investment	High risk	No rating	Subtotal	Investment	Sub investment	High risk	No rating	Subtotal	High risk	Total	Accumulated impairment(Note)
Investment in debt instruments measured at fair value through other comprehensive income
Overseas bonds	$ 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

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

(Continued)

89

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

December 31, 2023	Maximum credit risk exposure $ 200,000 68,332,202 877,404 453,636 243,562 3,259,221 Maximum credit risk exposure $ 200,000 30,907,810 752,713 471,554 414,370 1,166,667	Collateral Enhancement of other credit - - - - - - - - - - 694,552 727,563 Collateral Enhancement of other credit - - - - - - - - - - 2,527,996 727,720
Financial assets at fair value through profit or loss －Debt investments －Commercial paper －Listed stocks －Unlisted stocks －Beneficiary certificates －Derivative instrument December 31, 2022
Financial assets at fair value through profit or loss －Debit investments －Commercial paper －Listed stocks －Unlisted stocks －Beneficiary certificates －Derivative instrument

(Continued)

90

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

a) Receivables

Beginning balance Changes in financial instruments that have been identified at the beginning of the period： －Transferred to 12-months ECL －Transferred to lifetime ECL －Transferred to the credit- impaired financial assets －The financial assets that have been derecognized New financial assets originated or purchased Write-off Other changes Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-Performing and Non-Accrual Loans " Ending balance			For the year end	ed December 31,	2023	Total
	12-month ECL $ 29,630 234 (51) (116) (18,331) 30,697 - (2,959) - $ 39,104	Lifetime ECL－not impaired 10,712 (30) 65 (16) (139) 108 - (3,657) - 7,043	Lifetime ECL－ impaired 17,084 (204) (14) 132 (3,082) 9,806 (6,393) 13,213 - 30,542	Impaired (IFRS9) 57,426 - - - (21,552) 40,611 (6,393) 6,597 - 76,689	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 46,616 - - - - - - - (1,793) 44,823
						104,042 - - - (21,552) 40,611 (6,393) 6,597 (1,793)
						121,512

(Continued)

91

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Beginning balance Changes in financial instruments that have been identified at the beginning of the period： －Transferred to 12-months ECL －Transferred to lifetime ECL －Transferred to the credit- impaired financial assets －The financial assets that have been derecognized New financial assets originated or purchased Other changes Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-Performing and Non-Accrual Loans " Ending balance			For the year end	ed December 31,	2022	Total
	12-month ECL $ 31,774 108 (5) (28) (21,801) 17,877 1,705 - $ 29,630	Lifetime ECL－not impaired 6,068 (12) 16 (10) (108) 168 4,590 - 10,712	Lifetime ECL－ impaired 28,695 (96) (11) 38 (2,030) 5,617 (15,129) - 17,084	Impaired (IFRS9) 66,537 - - - (23,939) 23,662 (8,834) - 57,426	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 51,574 - - - - - - (4,958) 46,616
						118,111 - - - (23,939) 23,662 (8,834) (4,958)
						104,042

(Continued)

92

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

b) Discounts and loans

Beginning balance Changes in financial instruments that have been identified at the beginning of the period： －Transferred to 12-months ECL －Transferred to lifetime ECL －Transferred to the credit- impaired financial assets －The financial assets that have been derecognized New financial assets originated or purchased Write-off Other changes Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-Performing and Non-Accrual Loans " Ending balance			For the year end	ed December 31,	2023	Total
	12-month ECL $ 5,882,540 125,583 (27,462) (20,664) (2,603,606) 2,507,153 - (742,929) - $ 5,120,615	Lifetime ECL－not impaired 138,138 (12,008) 37,460 (6,485) (94,720) 10,314 - 245,297 - 317,996	Lifetime ECL－ impaired 4,784,155 (113,575) (9,998) 27,149 (764,241) 260,023 (4,003,890) 4,017,160 - 4,196,783	Impaired (IFRS9) 10,804,833 - - - (3,462,567) 2,777,490 (4,003,890) 3,519,528 - 9,635,394	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 7,273,783 - - - - - - - 2,693,665 9,967,448
						18,078,616 - - - (3,462,567) 2,777,490 (4,003,890) 3,519,528 2,693,665
						19,602,842

(Continued)

93

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

(Continued)

94

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• c) Other financial assets

Beginning balance Changes in financial instruments that have been identified at the beginning of the period： －The financial assets that have been derecognized New financial assets originated or purchased Write-off Other changes Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-Performing and Non-Accrual Loans " Ending balance Beginning balance Changes in financial instruments that have been identified at the beginning of the period： －The financial assets that have been derecognized New financial assets originated or purchased Write-off Other changes Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-Performing and Non-Accrual Loans " Ending balance			For the year end	ed December 31,	2023	Total
	12-month ECL $ - - - - - - $ -	Lifetime ECL－not impaired - - - - - - -	Lifetime ECL－ impaired 15,898 (13) 10,365 (46,954) 31,595 - 10,891 For the year end	Impaired (IFRS9) 15,898 (13) 10,365 (46,954) 31,595 - 10,891 ed December 31,	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 32,573 - - - - (31,974) 599 2022
						48,471 (13) 10,365 (46,954) 31,595 (31,974)
						11,490
						Total
		Lifetime ECL－not impaired - - - - - - -	Lifetime ECL－ impaired 25,545 (8) 7,633 (16,567) (705) - 15,898	Impaired (IFRS9) 25,545 (8) 7,633 (16,567) (705) - 15,898	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 25,847 - - - - 6,726 32,573
						51,392 (8) 7,633 (16,567) (705) 6,726
						48,471

(Continued)

95

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

d) Guarantee and commitments

Beginning balance Changes in financial instruments that have been identified at the beginning of the period： －Transferred to lifetime ECL －The financial assets that have been derecognized New financial assets originated or purchased Other changes Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-Performing and Non-Accrual Loans " Ending balance Beginning balance Changes in financial instruments that have been identified at the beginning of the period： －Transfer to 12-months ECL －Transfer to lifetime ECL －Transferred to the credit- impaired financial assets －The financial assets that have been derecognized New financial assets originated or purchased Other changes Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-Performing and Non-Accrual Loans " Ending balance			For the year end	ed December 31,	2023	Total
	12-month ECL $ 178,812 (19) (76,203) 84,692 (28,034) - $ 159,248	Lifetime ECL－not impaired 57 19 (46) 1,083 4 - 1,117	Lifetime ECL－ impaired 61,625 - (6,825) 555 (12,652) - 42,703 For the year end	Impaired (IFRS9) 240,494 - (83,074) 86,330 (40,682) - 203,068 ed December 31,	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 96,818 - - - - 77,215 174,033 2022
						337,312 - (83,074) 86,330 (40,682) 77,215
						377,101
						Total
		Lifetime ECL－not impaired 69 - 86 - (89) - (9) - 57	Lifetime ECL－ impaired 6,786 (1,459) - 458 (4,543) 6,517 53,866 - 61,625	Impaired (IFRS9) 156,209 - - - (79,324) 90,121 73,488 - 240,494	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 173,279 - - - - - - (76,461) 96,818
						329,488 - - - (79,324) 90,121 73,488 (76,461)
						337,312

(Continued)

96

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• e) Debts investments

Beginning balance Additions Derecognition Other changes Ending balance Beginning balance Additions Derecognition Other changes Ending balance	For	the year ended December 31, 2023 Lifetime ECL －not impaired Lifetime ECL －impaired Total - - 165,724 - - 88,647 - - (72,490) - - (912) - - 180,969 the year ended December 31, 2022 Lifetime ECL －not impaired Lifetime ECL －impaired Total - - 175,270 - - 68,255 - - (78,262) - - 461 - - 165,724	the year ended December 31, 2023 Lifetime ECL －not impaired Lifetime ECL －impaired Total - - 165,724 - - 88,647 - - (72,490) - - (912) - - 180,969 the year ended December 31, 2022 Lifetime ECL －not impaired Lifetime ECL －impaired Total - - 175,270 - - 68,255 - - (78,262) - - 461 - - 165,724
	12-month ECL $ 165,724 88,647 (72,490) (912) $ 180,969 For
	12-month ECL $ 175,270 68,255 (78,262) 461 $ 165,724	Lifetime ECL －not impaired - - - - -	Lifetime ECL －impaired - - - - -

• 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.

(Continued)

97

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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.

• 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.

(Continued)

98

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 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 overrelying on single trade counterparty, product or market, the Bank observes several aspects such as the changes in large time deposit customers, the percentage of demand deposits and the continuity of deposits.

  • 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 nonderivative 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.

(Continued)

99

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

b) Maturity analysis for non-derivative financial liabilities

The table below shows the cash outflows from the non-derivative financial liabilities which are possessed by the Bank 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 flows of the contracts.

Major matured cash outflow Deposits from the Central Bank and banks Overdrafts on banks Call loans from the Central Bank and banks Due to the Central Bank and banks Financial liabilities designated at fair value through profit or loss Notes and bonds issued under repurchase agreement Interest payable Deposits transferred from Chunghwa Post Co., Ltd. Demand deposits Time deposits Remittance Bank notes payable Cumulative earnings on appropriated loan fund Lease liabilities Major matured cash outflow Deposits from the Central Bank and banks Overdrafts on banks Call loans from the Central Bank and banks Due to the Central Bank and banks Financial liabilities designated at fair value through profit or loss Notes and bonds issued under repurchase agreement Interest payable Deposits transferred from Chunghwa Post Co., Ltd. Demand deposits Time deposits Remittance Bank notes payable Cumulative earnings on appropriated loan fund Lease liabilities			December 31, 2023	December 31, 2023
	0-30 days $ 1,142,694,512 1,576,247 1,003,829 26,383,499 40,000 - 456,419 1,045,607 19,380,000 965,636,314 126,790,196 326,152 - 500 55,749	31-90 days 244,628,605 - - 12,675,547 194,920 - 206,281 2,627,092 37,529,335 - 190,930,840 - 390,000 6,750 67,840	91 days-1 year 1-5 years 544,137,229 80,911,970 - - - - 614,099 - 1,135,510 61,410 - - 1,124,015 - 3,469,568 123,735 43,000,000 21,000,000 - - 494,448,612 45,278,241 - - - 12,660,000 73,250 1,043,330 272,175 745,254 December 31, 2022		Over 5 years Total 51,169,120 2,063,541,436 - 1,576,247 - 1,003,829 - 39,673,145 - 1,431,840 9,175,560 9,175,560 - 1,786,715 19 7,266,021 - 120,909,335 - 965,636,314 2,879 857,450,768 - 326,152 40,800,000 53,850,000 1,012,572 2,136,402 178,090 1,319,108
	0-30 days $ 1,097,763,808 937,523 1,084,076 27,012,375 92,175 - 458,662 317,254 9,820,000 954,030,572 103,528,154 428,111 - 2,250 52,656	31-90 days 221,732,162 - - 18,670,658 111,450 - 157,550 1,288,484 21,196,335 - 180,237,487 - - 3,750 66,448	91 days-1 year 480,666,633 - - - 927,400 - 1,292,066 2,711,772 75,185,210 - 392,763,469 - 7,400,000 118,500 268,216	1-5 years 92,838,661 - - - - - 554,713 118,148 41,060,000 - 42,587,346 - 6,600,000 1,198,580 719,874	Over 5 years Total 49,342,955 1,942,344,219 - 937,523 - 1,084,076 - 45,683,033 - 1,131,025 9,367,595 9,367,595 - 2,462,991 10 4,435,668 - 147,261,545 - 954,030,572 5,124 719,121,580 - 428,111 38,250,000 52,250,000 1,587,501 2,910,581 132,725 1,239,919

(Continued)

100

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 4) Derivative financial liabilities maturity analysis

• a) Derivative financial instruments settled by net amount

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-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, 2023 and 2022, maturity analysis for the derivative financial liabilities settled by net amount is as follows:

==> picture [436 x 165] intentionally omitted <==

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

December 31, 2023
181 days Over
0-30 days 31-90 days 91-180 days to 1 year 1 year Total
Derivative financial
liabilities at fair value
through profit or loss
－ Foreign exchange $ 5 - - - - 5
derivative instrument
December 31, 2022
181 days Over
0-30 days 31-90 days 91-180 days to 1 year 1 year Total
Derivative financial
liabilities at fair value
through profit or loss
－ Foreign exchange $ - 825 225 - - 1,050
derivative instrument
----- End of picture text -----

• b) Derivative financial instruments settled by gross amount

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.

(Continued)

101

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The maturity analysis for derivative financial liabilities settled by gross amount is as follows:

December 31, 2023 0-30 days 31-90 days Derivative financial instruments at fair value through profit or loss －Foreign exchange derivative instruments －Cash outflow $ 38,621,818 26,451,403 －Cash inflow 39,110,694 26,310,296 －Interest rate derivative instrument －Cash outflow - 1,174 －Cash inflow - 2,235 Total cash outflow 38,621,818 26,452,577 Total cash inflow 39,110,694 26,312,531 Net cash flow $ (488,876) 140,046 December 31, 2022 0-30 days 31-90 days Derivative financial instruments at fair value through profit or loss －Foreign exchange derivative instruments －Cash outflow $ 25,782,525 45,415,630 －Cash inflow 27,862,886 48,002,551 －Interest rate derivative instrument －Cash outflow - 1,168 －Cash inflow - 2,021 Total cash outflow 25,782,525 45,416,798 Total cash inflow 27,862,886 48,004,572 Net cash flow $ (2,080,361) (2,587,774) 5) Maturity analysis of off-balance sheet December 31, 2023 0-30 days 31-90 days Issued and irrevocable loan commitments $ 203,276 1,775,526 Irrevocable credit card loan commitments 3,026 296,607 Letters of credit issued yet unused 1,531,075 5,022,825 Other guarantees 4,172,359 1,661,888 Total $ 5,909,736 8,756,846	December 31, 2023 0-30 days 31-90 days Derivative financial instruments at fair value through profit or loss －Foreign exchange derivative instruments －Cash outflow $ 38,621,818 26,451,403 －Cash inflow 39,110,694 26,310,296 －Interest rate derivative instrument －Cash outflow - 1,174 －Cash inflow - 2,235 Total cash outflow 38,621,818 26,452,577 Total cash inflow 39,110,694 26,312,531 Net cash flow $ (488,876) 140,046 December 31, 2022 0-30 days 31-90 days Derivative financial instruments at fair value through profit or loss －Foreign exchange derivative instruments －Cash outflow $ 25,782,525 45,415,630 －Cash inflow 27,862,886 48,002,551 －Interest rate derivative instrument －Cash outflow - 1,168 －Cash inflow - 2,021 Total cash outflow 25,782,525 45,416,798 Total cash inflow 27,862,886 48,004,572 Net cash flow $ (2,080,361) (2,587,774) 5) Maturity analysis of off-balance sheet December 31, 2023 0-30 days 31-90 days Issued and irrevocable loan commitments $ 203,276 1,775,526 Irrevocable credit card loan commitments 3,026 296,607 Letters of credit issued yet unused 1,531,075 5,022,825 Other guarantees 4,172,359 1,661,888 Total $ 5,909,736 8,756,846	December 31, 2023 0-30 days 31-90 days Derivative financial instruments at fair value through profit or loss －Foreign exchange derivative instruments －Cash outflow $ 38,621,818 26,451,403 －Cash inflow 39,110,694 26,310,296 －Interest rate derivative instrument －Cash outflow - 1,174 －Cash inflow - 2,235 Total cash outflow 38,621,818 26,452,577 Total cash inflow 39,110,694 26,312,531 Net cash flow $ (488,876) 140,046 December 31, 2022 0-30 days 31-90 days Derivative financial instruments at fair value through profit or loss －Foreign exchange derivative instruments －Cash outflow $ 25,782,525 45,415,630 －Cash inflow 27,862,886 48,002,551 －Interest rate derivative instrument －Cash outflow - 1,168 －Cash inflow - 2,021 Total cash outflow 25,782,525 45,416,798 Total cash inflow 27,862,886 48,004,572 Net cash flow $ (2,080,361) (2,587,774) 5) Maturity analysis of off-balance sheet December 31, 2023 0-30 days 31-90 days Issued and irrevocable loan commitments $ 203,276 1,775,526 Irrevocable credit card loan commitments 3,026 296,607 Letters of credit issued yet unused 1,531,075 5,022,825 Other guarantees 4,172,359 1,661,888 Total $ 5,909,736 8,756,846	91-180 days 5,363,562 5,334,414 - - 5,363,562 5,334,414 29,148 91-180 days 11,979,083 12,577,650 587 724 11,979,670 12,578,374 (598,704) items 91-180 days	91-180 days 5,363,562 5,334,414 - - 5,363,562 5,334,414 29,148 91-180 days 11,979,083 12,577,650 587 724 11,979,670 12,578,374 (598,704) items 91-180 days		181 days to 1 year 7,057,958 7,024,302 - - 7,057,958 7,024,302 33,656 181 days to 1 year 3,463,765 3,500,326 2,955 3,742 3,466,720 3,504,068 (37,348) 181 days to 1 year		Over 1 year - - - - - - - Over 1 year - - 1,174 1,568 1,174 1,568 (394) Over 1 year 56,694,157 16,429,180 108,081 18,569,597 91,801,015	Total 77,494,741 77,779,706 1,174 2,235 77,495,915 77,781,941 (286,026) Total 86,641,003 91,943,413 5,884 8,055 86,646,887 91,951,468 (5,304,581) Total 110,877,663 17,826,561 7,577,343 27,513,283 163,794,850
		1,775,526 296,607 5,022,825 1,661,888 8,756,846		41,887,365 404,332 728,242 797,710 43,817,649		10,317,339 693,416 187,120 2,311,729 13,509,604

(Continued)

102

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

December 31, 2022 Issued and irrevocable loan commitments Irrevocable credit card loan commitments Letters of credit issued yet unused Other guarantees Total	0-30 days $ 1,997,541 1,117 2,016,789 2,667,240 $ 6,682,687		31-90 days		91-180 days		181 days to 1 year		Over 1 year 35,575,997 18,432,747 54,706 15,393,282 69,456,732	Total 64,987,007 18,839,955 8,129,149 22,056,496
			512,056 34,225 4,985,416 1,001,432 6,533,129		22,218,395 55,553 716,174 656,793 23,646,915		4,683,018 316,313 356,064 2,337,749 7,693,144
										114,012,607

• 6) Maturity analysis of lease contract commitments

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, 2023 Operating lease income (lessor) December 31, 2022 Operating lease income (lessor)	Below 1 year $ 1,938 Below 1 year $ 1,027	1-5 years 1,134 1-5 years 1,389	Over 5 years Total - 3,072 Over 5 years Total - 2,416

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:

December 31, 2023 Machinery and equipment Transportation equipment Miscellaneous equipment Total December 31, 2022 Machinery and equipment Transportation equipment Right-of-use assets Miscellaneous equipment Total	Below 1 year $ 1,399,429 3,182 10,019 $ 1,412,630 Below 1 year $ 1,496,409 2,098 620 1,024 $ 1,500,151	1-5 years - - - - 1-5 years - - 85 - 85	Over 5 years - - - - Over 5 years - - - - -	Total
				1,399,429 3,182 10,019
				1,412,630
				Total
				1,496,409 2,098 705 1,024
				1,500,236

(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.

(Continued)

103

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 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

• a) Risk identification

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

• b) Risk measurement

• 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.

(Continued)

104

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 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.

• 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.

(Continued)

105

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

1. 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.

2. v) Process of foreign exchange risk management

3. Identification and measurement

   • a. Risk Management department established risk factor chart based on different financial transactions to effectively identify risk factors and market risk resources. In addition, the financial transactions which the Bank 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.

   • b. Risk Management department uses Greeks to measure the influence level of exchange rate for held-for-trading spot exchange and exchange rate derivative and setup Greek's sensitivity allowance, according to the yearly demand of trade units, the state of utilization, and monitor the load of fluctuation of exchange rate in each acceptable range.

   • 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.

4. Monitoring and report

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

   • b. Reports of operation results shall be prepared and submitted to the department heads for approval on a daily basis.

(Continued)

106

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 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

• Identification and measurement

  • a. The risk management department apply Value at Risk models to measure the market risk of equity security investment. Furthermore, based on the trade units' operation demand and the risk limit established by the Bank’ s risk tolerance, the risk management units effectively control the variation of risk factors under an acceptable extent.

  • b. Trading book position shall be evaluated daily. When there is a public quote in the market, the quote shall be adopted as the prior evaluation price. If the transaction is in secondary market and the liquidity is high, the closing price can be adopted as the evaluation price. If the financial instruments are evaluated by models, then they shall be evaluated by mathematic models prudently and the assumptions and parameters of the models shall be reviewed regularly.

(Continued)

107

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

  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.

• The trade units shall consider safety, liquidity and profitability and gather market information to assess the potential risk and benefit. In additional, the trade units shall choose investment target prudently through analyzing the issuers’ credit, financial status, country risks and interest rate trends.

(Continued)

108

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• v) Process of interest rate risk management

  1. Identification and measurement

     • a. The risk management department establish risk factor charts base on different financial transaction to effectively identify risk factors and market risk resources. In addition, the financial transactions which the Bank conducts deal with simple type financial products. For complex financial products, the Bank conducts back-to-back hedge covering to effectively avoid market risk.

     • b. Position of the trading book shall be evaluated daily. When there are public quotes for financial instruments, the quotes shall be the prior evaluation prices. If the financial instruments are evaluated by models, then they shall be evaluated by mathematic models prudently and the assumptions and parameters of the models shall be reviewed regularly.

  2. Monitoring and report

     • a. The risk management department apply DV01 to measure to what extent the trading book bond positions are influenced by the interest rate risk and set up interest rate sensitivity limit base on the requirements of the trade units and the risk tolerance of the Bank annually.

     • b. The trade units shall prepare the income assessment tables of trade positions and traders for the department heads to review. In addition, when the evaluation loss of the position is over the limit, the trade units shall execute a stop-limit per the regulations. If the loss amount reaches the suspension warning line or suspension limit of the financial transaction, risk management department shall report to the general manager. Provided that the loss amount reaches the annual suspension line, risk management units shall report to the board of directors or executive directors.

• d) Concentration management

• 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.

(Continued)

109

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 5) Interest rate risk management of the banking book

• a) The definition and management purpose for the interest rate risk 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 interest-rate-sensitivity liabilities, the effect to NII in 1 year when the market interest rate parallel changes 1 BP and the effect to EVE when the market interest rate changes in the six interest rate stress scenarios set by the Bank Association of the Republic of China (IRRBB) 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.

(Continued)

110

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 6) Value at Risk

• a) Description of Value at Risk

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

• b) Value at Risk models and assumptions

In order to enhance the market risk control operation, the Bank established quantified indices of market risk for the equity security position of the trading book. Based on the historical information of the last 1 year and applies Historical Simulation Method (with the confidence interval being 99% and the duration of possession being 1 day), the Bank calculates and monitors the trend of Value at Risk.

• c) The limit of Value at Risk model

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

• 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.

(Continued)

111

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 7) Foreign exchange risk disclosure and sensitivity analysis

• a) Foreign exchange risk exposure

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

Significant net positions of foreign currencies (Market risk)	Significant net positions of foreign currencies (Market risk)
December 31, 2023
Currency USD JPY AUD HKD CNY	Foreign currency amount (in thousands) NT$ amount $ 344,888 10,589,786 1,886,734 409,610 15,988 335,748 35,216 138,364 25,221 109,156

Significant net positions of foreign currencies (Market risk)	Significant net positions of foreign currencies (Market risk)
December 31, 2022
Currency USD JPY AUD ZAR EUR	Foreign currency amount (in thousands) NT$ amount $ 504,348 15,496,092 2,069,083 480,234 14,865 308,895 46,223 83,617 809 26,503

Note 1: Main foreign currencies are the top five foreign currencies ranked in NTD value.

Note 2: Net foreign currency is the absolute value of the net positions of each foreign currency.

(Continued)

112

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

ii) Assets and liabilities of foreign currency

	December 31, 2023	December 31, 2023
Currency	Monetary financial assets Foreign currency amount (in thousands) Spot rate NTD amount $ 14,554,500 30.7050 446,895,922 5,814,107 21.0000 122,096,247 6,113,455 4.3280 26,459,034 120,712,008 0.2171 26,206,577 5,526,259 3.9290 21,712,672 349,698 34.0200 11,896,726 4,650,921 1.6570 7,706,576 43,494 39.1200 1,701,485 44,304 19.5000 863,928 12,965 23.2200 301,047 9,771 23.3100 227,762 3,907 36.4350 142,352 44,314 3.0800 136,487 141,541 0.9026 127,755		Monetary financial liabilities
	Foreign currency amount (in thousands) $ 14,554,500 5,814,107 6,113,455 120,712,008 5,526,259 349,698 4,650,921 43,494 44,304 12,965 9,771 3,907 44,314 141,541	Spot rate 30.7050 21.0000 4.3280 0.2171 3.9290 34.0200 1.6570 39.1200 19.5000 23.2200 23.3100 36.4350 3.0800 0.9026	Foreign currency amount (in thousands) 14,155,692 5,699,183 5,876,159 119,150,933 4,983,824 349,597 4,649,315 43,414 44,214 12,964 9,690 3,988 44,522 144,571	Spot rate NTD amount 30.7050 434,650,510 21.0000 119,682,843 4.3280 25,432,014 0.2171 25,867,668 3.9290 19,581,444 34.0200 11,893,290 1.6570 7,703,915 39.1200 1,698,356 19.5000 862,173 23.2200 301,024 23.3100 225,874 36.4350 145,303 3.0800 137,128 0.9026 130,490
USD AUD CNY JPY HKD EUR ZAR GBP NZD CAD SGD CHF SEK THB

	December 31, 2022	December 31, 2022
Currency	Monetary financial assets Foreign currency amount (in thousands) Spot rate NTD amount $ 15,838,292 30.7250 486,631,513 4,985,648 20.7800 103,601,765 11,948,387 4.4110 52,704,337 184,707,477 0.2321 42,870,605 5,771,939 3.9400 22,741,440 352,406 32.7600 11,544,821 4,251,194 1.8090 7,690,410 45,244 37.0700 1,677,195 34,139 19.4500 664,004 14,564 22.6800 330,312 7,992 22.8700 182,777 34,420 2.9400 101,195 - - 114,540 Non-monetary financial assets Foreign currency amount (in thousands) Spot rate NTD amount 974 30.7250 29,926		Monetary financial liabilities
			Foreign currency amount (in thousands) Spot rate NTD amount 15,291,888 30.7250 469,843,260 4,890,551 20.7800 101,625,650 11,749,698 4.4110 51,827,917 183,141,677 0.2321 42,507,183 5,348,671 3.9400 21,073,764 352,361 32.7600 11,543,346 4,249,572 1.8090 7,687,476 45,236 37.0700 1,676,899 34,124 19.4500 663,712 14,475 22.6800 328,293 7,969 22.8700 182,251 34,431 2.9400 101,227 - - 119,278 Non-monetary financial liabilities
USD AUD CNY JPY HKD EUR ZAR GBP NZD CAD SGD SEK Others (Note) Currency
	Foreign currency amount (in thousands) 974	Spot rate 30.7250	Foreign currency amount (in thousands) -	Spot rate NTD amount - -
USD

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

(Continued)

113

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• b) Foreign exchange risk sensitivity analysis (Change by 1%)

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

December 31, 2023

Currency USD AUD HKD JPY GBP SGD ZAR SEK CHF THB EUR NZD CNY Total	Depreciate	by 1% Equity (70,179) (28,263) (24,147) (3,323) - - - - - - - - - (125,912)	Appreciate by 1% Income Equity (9,271) 70,179 (4,159) 28,263 (3,038) 24,147 (22) 3,323 43 - 23 - 28 - (6) - (29) - (27) - 48 - 25 - 56,501 - 40,116 125,912	Appreciate by 1% Income Equity (9,271) 70,179 (4,159) 28,263 (3,038) 24,147 (22) 3,323 43 - 23 - 28 - (6) - (29) - (27) - 48 - 25 - 56,501 - 40,116 125,912
	Income $ 9,271 4,159 3,038 22 (43) (23) (28) 6 29 27 (48) (25) (56,501) $ (40,116)		Income (9,271) (4,159) (3,038) (22) 43 23 28 (6) (29) (27) 48 25 56,501 40,116
				125,912

Currency USD AUD HKD JPY GBP SGD ZAR CHF CAD THB EUR NZD CNY Total		December 31, 2022	December 31, 2022	December 31, 2022
	Depreciate	by 1% Equity (63,299) (23,440) (19,240) (3,450) - - - - - - - - - (109,429)	Appreciate by 1% Income Equity 44,000 63,299 (4,060) 23,440 (3,029) 19,240 161 3,450 15 - 9 - 31 - (51) - 5 - 4 - 37 - 10 - 55,663 - 92,795 109,429
	Income $ (44,000) 4,060 3,029 (161) (15) (9) (31) 51 (5) (4) (37) (10) (55,663) $ (92,795)			Equity 63,299 23,440 19,240 3,450 - - - - - - - - - 109,429

(Continued)

114

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 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).

Currency Trading book TWD Banking book TWD USD EUR AUD HKD CNY ZAR Total Currency Trading book TWD Banking book TWD USD AUD HKD CNY ZAR Total	December 31, 2023	December 31, 2023	December 31, 2023
	Interest rate increases by 1 bp Interest rate decreases by 1 bp Income Equity Income Equity $ (1,232) (2,126) 1,232 2,126 - (65,282) - 65,282 - (23,783) - 23,783 - (1,976) - 1,976 - (216) - 216 - (149) - 149 - (1,355) - 1,355 - (114) - 114 $ (1,232) (95,001) 1,232 95,001 December 31, 2022	Interest rate decreases by 1 bp
	Income $ (1,232) - - - - - - - $ (1,232)		Equity 2,126 65,282 23,783 1,976 216 149 1,355 114
			95,001
		Interest rate decreases by 1 bp
		Income 512 - - - - - - 512	Equity 2,661 46,200 3,993 364 70 1,335 161
			54,784

b) Sensitivity analysis of expected net revenue/Sensitivity of equity in terms of interest rate fluctuation

Scenario Interest rate increases by 100 bp Interest rate decreases by 100 bp		December 31, 2023 in 1 year Effect on EVE USD TWD USD (28,218) (5,962,708) (123,979) 27,020 14,273,803 106,693
	Effect on NII	in 1 year USD (28,218) 27,020
	TWD 4,722,522 (4,954,837)

(Continued)

115

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Scenario Interest rate increases by 100 bp Interest rate decreases by 100 bp		December 31, 2022 in 1 year Effect on EVE USD TWD USD (24,074) (5,148,928) (58,960) 22,469 13,788,825 27,772
	Effect on NII	in 1 year USD (24,074) 22,469
	TWD 3,962,492 (4,598,328)

• 9) Managing interest rate benchmark reform

A fundamental reform of major interest rate benchmarks is 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 converts loans and corporate debt securities related to Interest rate benchmarks indexed to US dollar LIBOR. As of December 31, 2023, US dollar London Inter-bank Offered Rate – have been automatically switched to other alternative rates in accordance with fallback clauses.

• 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%.

decreased by 1%.
Change Equity security price increases by 1 % Equity security price decreases by 1 % Change Equity security price increases by 1 % Equity security price decreases by 1 %	Currency TWD TWD Currency TWD USD TWD USD		December 31, 2023
			Income Equity 2,613 - (2,613) - December 31, 2022
			Income Equity 3,359 - 10 - (3,359) - (10) -

• b) Value at Risk of equity security

Value at Risk	From January 1, 2023 to December 31, 2023	From January 1, 2023 to December 31, 2023	From January 1, 2023 to December 31, 2023
	Average	Maximum	Minimum
Equity security risk	10,657	18,595	5,057
Value at Risk	From January 1, 2022 to December 31, 2022
	Average	Maximum	Minimum
Equity security risk	5,038	13,963	1,399

(Continued)

116

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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, 2023 and 2022, 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.

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

liabilities:
				December 31, 2023							Net amount (e)=(c)-(d) 367,368
	Financial assets un		d	er offsetting or general agreement of ne			t	amount settlement	o	r similar norm
Item	Gross amounts of recognized financial assets (a)			Gross amounts of financial liabilities offset in the balance sheet (b)		Net amount of financial assets presented in the balance sheet (c)=(a)-(b)		Amounts not balance	s s	et off in the heet (d) Cash collateral received 694,552
								Financial instruments (Note)
Derivative financial instruments	$ 1,789,483			- D	e	1,789,483 cember 31, 2023		727,563
											Net amount (e)=(c)-(d) (2,114,190)
F	i	nancial liabilities u	n	der offsetting or general agreement of n			e	t amount settlemen	t	or similar norm
Item		Gross amounts of recognized financial liabilities (a)		Gross amounts of financial assets offset in the balance sheet (b)		Net amount of financial liabilities presented in the balance sheet (c)=(a)-(b)		Amounts not balance	s s	et off in the heet (d) Cash collateral pledged 2,199,407
								Financial instrument (Note)
Derivative financial instruments	$ 85,217			- D	e	85,217 cember 31, 2022		-
											Net amount (e)=(c)-(d) (2,704,621)
		Financial assets un	d	er offsetting or general agreement of ne			t	amount settlement	o	r similar norm
Item		Gross amounts of recognized financial assets (a)		Gross amounts of financial liabilities offset in the balance sheet (b)		Net amount of financial assets presented in the balance sheet (c)=(a)-(b)		Amounts not balance	s s	et off in the heet (d) Cash collateral received 2,527,996
								Financial instruments (Note)
Derivative financial instruments	$ 551,095			-		551,095		727,720

(Continued)

117

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

			December 31, 2022	December 31, 2022	December 31, 2022					Net amount (e)=(c)-(d) (2,192,753)
F	inancial liabilities u	n	der offsetting or general agreement of n			e	t amount settlemen	t	or similar norm
Item	Gross amounts of recognized financial liabilities (a)		Gross amounts of financial assets offset in the balance sheet (b)		Net amount of financial liabilities presented in the balance sheet (c)=(a)-(b)		Amounts not balance	s s	et off in the heet (d) Cash collateral pledged 2,422,569
							Financial instruments (Note)
Derivative financial instruments	$ 229,816		-		229,816		-

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

(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.

• (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.

(Continued)

118

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 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.

Item			December 31, 2023	December 31, 2022
Eligible capital	Common stock equity		113,940,410	100,331,196
	Other tier 1 capital		18,000,000	18,000,000
	Tier 2 capital		48,568,883	40,103,704
	Eligible Capital		180,509,293	158,434,900
Risk- weighted assets	Credit risk	Standardized approach	1,240,930,971	1,188,123,617
		Internal ratings-based approach	-	-
		Securitization	-	-
	Operational risk	Basic indicator approach	-	-
		Standardized approach/selective standardized approach	50,031,661	43,118,270
		Advanced measurement approach	-	-
	Market risk	Standardized approach	41,435,513	38,716,513
		Internal model approach	-	-
	Total risk-weighted assets		1,332,398,145	1,269,958,400
Capital adequacy ratio			% 13.55	% 12.48
Common stock equity/ Risk-weighted assets ratio			% 8.55	% 7.90
Tier 1 capital / Risk-weighted assets ratio			% 9.90	% 9.32
Leverage ratio			% 5.71	% 5.47

The formulas of the table are listed as follows:

• a) The eligible capital, risk-weighted assets and exposure are calculated per “Regulations Governing the Capital Adequacy and Capital Category of Banks” and “The Calculation and Forms of Eligible Capital and Risk Assets of Banks”.

• b) The Bank shall fill out the capital adequacy of this period and last period. For the semi-annual report, the Bank shall disclose the capital adequacy of this period and last period and additionally disclose the capital adequacy of the previous period ended December 31.

(Continued)

119

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• c) Note 1. Eligible Capital = Common stock equity ＋ Other Tier 1 Capital ＋ Tier 2 Capital

  • Note 2. Total risk-weighted assets = Credit risk weighted asset ＋ (operational risk charge ＋ market risk charge) × 12.5

  • Note 3. Capital adequacy ratio= Eligible Capital ÷ Risk weighted asset.

  • Note 4. Common stock equity / Risk-weighted assets ratio= Common stock equity / total risk weighted assets

  • Note 5. Tier 1 capital / Risk-weighted assets ratio = (Common stock equity ＋ other tier 1 capital)/ Risk-weighted assets

  • Note 6. Leverage ratio = Net Tier 1 capital / Total risk exposure.

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

• (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, 2023 and 2022 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:

Financial liabilities at fair value through profit or loss Bank notes payable Lease liabilities Total liabilities from financing activities Financial liabilities at fair value through profit or loss Bank notes payable Lease liabilities Total liabilities from financing activities	January 1, 2023 $ 9,367,595 52,250,000 1,239,919 $ 62,857,514 January 1, 2022 $ 8,293,730 52,250,000 1,149,456 $ 61,693,186	Cash flows - 1,600,000 (442,420) 1,157,580 Cash flows - - (420,428) (420,428)	Non-cash changes Foreign exchange rate movement Fair value changes Other changes (6,000) (186,035) - - - - (7,587) - 529,196 (13,587) (186,035) 529,196 Non-cash changes Foreign exchange rate movement Fair value changes Other changes 921,000 152,865 - - - - 25,634 - 485,257 946,634 152,865 485,257	Non-cash changes Foreign exchange rate movement Fair value changes Other changes (6,000) (186,035) - - - - (7,587) - 529,196 (13,587) (186,035) 529,196 Non-cash changes Foreign exchange rate movement Fair value changes Other changes 921,000 152,865 - - - - 25,634 - 485,257 946,634 152,865 485,257	December 31, 2023 9,175,560 53,850,000 1,319,108
					64,344,668
					December 31, 2022 9,367,595 52,250,000 1,239,919
			Foreign exchange rate movement 921,000 - 25,634 946,634	Fair value changes 152,865 - - 152,865
					62,857,514

(Continued)

120

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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:

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

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

Private fund Asset securitization product Total	December 31, 2023 $ 177,118 521,724 $ 698,842	December 31, 2022
		163,679 560,023
		723,702

• (iii) The carrying amounts of interests held by the Bank and subsidiaries in these structured entities were as follows:

Assets held by the Bank and subsidiaries	December 31, 2023 $ 177,118 452,651 69,073 $ 698,842	December 31, 2022
Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Investments in debt instruments at amortized cost Total		163,679 475,485 84,538
		723,702

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, 2023 and 2022, the Bank and subsidiaries has not provided any financial support to its special purpose entities that is not included in consolidated financial reports.

(Continued)

121

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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 statements.

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

Note : Become a related party commencing from the first quarter of 2022.

• (b) Significant transactions with related parties

• (i) Due from banks

Bank of Taiwan Bank of Taiwan Interest rates are the same as those with regular clients.	December 31, 2023	December 31, 2023
	Amount % $ 138,751 1.11 December 31, 2022	%
		1.11
		%
		0.71

• (ii) Call loans to banks

For the year ended December 31, 2023 Bank of Taiwan	Maximun balance $ 1,597,725	December 31, 2023 -	Interest income Annual interest rate 5,172 1.242%~5.500%

(Continued)

122

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For the year ended December 31, 2022 Bank of Taiwan	Maximun balance $ 1,098,264	December 31, 2022 -	Interest income Annual interest rate 1,358 0.13%~3.81%

Interest rates are the same as those with regular clients.

• (iii) Call loans from banks

For the year ended December 31, 2023	Maximun balance $ 18,383,250 Maximun balance $ 9,434,791	December 31, 2023 4,688,775 December 31, 2022 1,786,360	Interest expense Annual interest rate 150,564 0.68%~5.87% Interest expense Annual interest rate 61,939 0.04%~5.18%
Bank of Taiwan For the years ended December 31, 2022
Bank of Taiwan

Interest rates are the same as those with regular clients.

(iv) Deposits

Others Others	December 31, 2023	December 31, 2023
	Amount % $ 2,564,182 0.14 December 31, 2022	%
		0.14
		%
		0.11

Interest rates are the same as those with regular clients.

(v) Credit

December 31, 2023	December 31, 2023	December 31, 2023	December 31, 2023	December 31, 2023	December 31, 2023	December 31, 2023	December 31, 2023
Category	Number of clients or name of relatedparty	Highest balance	Ending balance	Performing situations		Collaterals	Transaction terms are different to regular clients
				Performing loan	Non-performing Loans
Employee consumer loans	37	16,427	13,548	13,548	-	none	none
Self-use home mortgages loans	119	554,182	509,311	509,311	-	real estate	none
Others	Natural person	605,165	538,864	538,864	-	real estate	none
December 31, 2022
Category	Number of clients or name of relatedparty	Highest balance	Ending balance	Performing situations		Collaterals	Transaction terms are different to regular clients
				Performing loan	Non-performing Loans
Employee consumer loans	46	18,311	14,727	14,727	-	none	none
Self-use home mortgages loans	127	557,503	511,280	511,280	-	real estate	none
Others	Natural person	617,163	590,656	590,656	-	real estate	none

(Continued)

123

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(vi) Donation:

Small and Medium Enterprise Credit Guarantee Fund of Taiwan Taiwan Business Bank Guild Total (vii) Guarantees: None. (viii) Service fees: None.	For the years ended December 31,	For the years ended December 31,
	2023 $ 361,361 4,200 $ 365,561	2022
		318,530 2,500
		321,030

(ix) Rental revenue: None.

(x) Derivatives financial instrument transactions: None.

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

(xii) Other revenue:

TBB No. 1 Venture Capital Limited Partnership Media Talk Consultants Co., Ltd. Total (c) Major management salary information Salary and other short-term employee benefits Post-employment benefits Total	For the years ended December 31,	For the years ended December 31,
	2023 2022 $ 17,047 16,954 10 50 $ 17,057 17,004 For the years ended December 31,	2022
		16,954 50
		17,004
	2023 $ 149,718 2,486 $ 152,204	2022
		144,720 2,478
		147,198

(8) Pledged assets:

Please refer to notes 6(h) for more details.

(Continued)

124

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(9) Commitments and contingencies:

• (a) Significant commitments and contingencies were as follows:

Marketable securities held for custody Bills collected for others Bills lent for others Guarantees and letters of credit Trust liabilities Items held for custody Registered government bonds for sale Registered short-term bills for sale Guarantee notes payable	December 31, 2023 December 31, 2022 $ 8,088,397 8,659,768 40,194,861 43,238,126 42,003,008 49,785,210 35,090,626 30,185,645 226,004,817 218,150,077 700,074 901,998 71,059,800 66,327,700 3,376,274 4,290,113 32,263,500 54,054,530

• (b) Unrecognized contractual commitments:

As of December 31, 2023 and 2022, major constructions in progress and purchases amounted to $1,011,961 and $1,018,993 respectively, of which $750,278 and $911,848 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, 2023 and 2022 is as follows:

Trust Balance Sheet

December 31, 2023 and 2022

Trust Assets	December 31, 2023 $ 7,625,630 1,181,658 68,326,910 6,737,777 24,684,803 117,063,470 384,569 $ 226,004,817	December 31, 2022
Cash in Bank Stocks Funds Bonds Real estate Securities custody Other assets Total trust assets		6,303,284 928,987 73,259,462 2,935,786 21,657,475 112,621,601 443,482
		218,150,077

(Continued)

125

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Trust Liabilities	December 31, 2023 $ - 117,063,470 108,839,333 (934,887) 1,036,901 $ 226,004,817	December 31, 2022 9 112,621,601 105,439,231 (332,731) 421,967 218,150,077
Payables Securities held for custody Trust capital Accumulated loss Net income Total trust liabilities

Trust Property Accounts

December 31, 2023 and 2022

Investment in	December 31, 2023 $ 7,625,630 1,181,658 68,326,910 6,737,777 14,436,994 64,122 10,183,687 117,063,470 384,569 $ 226,004,817	December 31, 2022
Cash in bank Stocks Funds Bonds Real estate Land Buildings Construction in progress Securities in custody Other assets Total		6,303,284 928,987 73,259,462 2,935,786 14,422,800 29,556 7,205,119 112,621,601 443,482
		218,150,077

Note: As of December 31, 2023 and 2022, the amounts above included OBU transaction on “foreign currency designated trust funds investment in foreign negotiable securities business” amounting to $1,509,302 and $1,580,471, respectively.

(Continued)

126

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Trust Income Statement

For the years ended December 31, 2023 and 2022

Investment items Trust Revenue Interest income Realized capital gain-fund Realized gain-stocks Realized gain-bonds Dividend revenue Other revenues Sub-total Trust Expense Administrative expenses Postage and telecommunication expense Duties Realized loss-stocks Realized loss-bonds Loss on disposal of property Other expenses Sub-total Income before income tax Income tax expense Net income	For the years ended December 31, 2023 2022 $ 218,673 87,436 651,591 338,547 2,760 3,147 1,650 5,059 2,028,912 2,147,052 5,175 4,179 2,908,761 2,585,420 60,331 43,494 377 841 52 49 1,799,292 2,104,595 6,409 11,072 7 - 4,679 3,195 1,871,147 2,163,246 1,037,614 422,174 (713) (207) $ 1,036,901 421,967
	2023 $ 218,673 651,591 2,760 1,650 2,028,912 5,175 2,908,761 60,331 377 52 1,799,292 6,409 7 4,679 1,871,147 1,037,614 (713) $ 1,036,901

(Continued)

127

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (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.

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 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. On August 23, 2023, the Frankfurt District Court ruled that the bank won the case in the first instance. I.C.C.I. Company must pay the Bank EUR$1,046 plus interest since November 17, 2017. I.C.C.I. Company appealed on September 25, 2023. 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, judging 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. According to the statement of plaintiff and considering that I.C.C.I has already received about EUR$14,860, an addition of $75,372 has been provision for lawsuit in 2021. Please refer to Note 6(v) for more details. As of December 31, 2023, the Bank has accrued the compensation of $259,635 and EUR$9,660.

(10) Losses from disasters: None

(11) Subsequent Events: None

(Continued)

128

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(12) Others:

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

• (i) Loan quality:

Items	Month/Year	Month/Year	December 31, 2023	December 31, 2023	December 31, 2023	December 31, 2023	December 31, 2023
			Non-performing loans (Note1)	Total loans	Non-performing loan ratio (Note2)	Allowance for credit losses	Coverage ratio (Note3)
Corporate finance	Secured		1,202,821	767,968,106	0.16 %	9,876,798	821.14 %
	Unsecured		310,490	366,763,834	0.08 %	4,865,922	1,567.18 %
Consumer finance	Residence mortgages(Note 4)		129,519	210,232,982	0.06 %	2,699,274	2,084.08 %
	Cash cards		-	-	- %	-	- %
	Microcredit(Note 5)		2,140	282,475	0.76 %	4,443	207.62 %
	Others (Note 6)	Secured	1,059,242	152,813,332	0.69 %	1,981,063	187.03 %
		Unsecured	15,100	13,149,591	0.11 %	175,342	1,161.21 %
Total loan busin	ess		2,719,312	1,511,210,320	0.18 %	19,602,842	720.88 %
			Overdue receivables	Total receivables	Delinquency ratio	Allowance for credit losses	Coverage ratio
Credit cards bus	iness		599	1,163,037	0.05 %	11,684	1,950.58 %
Account receiva (Note 7)	ble factoring-without recourse		-	-	- %	-	- %
Items	Month/Year		December 31, 2022
			Non-performing loans (Note1)	Total loans	Non-performing loan ratio (Note2)	Allowance for credit losses	Coverage ratio (Note3)
Corporate finance	Secured		1,602,465	713,092,812	0.22 %	8,945,106	558.21 %
	Unsecured		691,641	372,391,080	0.19 %	4,952,203	716.01 %
Consumer finance	Residence mortgages(Note 4)		187,800	170,335,261	0.11 %	2,130,940	1,134.69 %
	Cash cards		-	-	- %	-	- %
	Microcredit(Note 5)		4,802	325,663	1.47 %	7,370	153.48 %
	Others (Note 6)	Secured	266,055	149,120,110	0.18 %	1,868,990	702.48 %
		Unsecured	14,614	13,228,525	0.11 %	174,007	1,190.69 %
Total loan busin	ess		2,767,377	1,418,493,451	0.20 %	18,078,616	653.28 %
			Overdue receivables	Total receivables	Delinquency ratio	Allowance for credit losses	Coverage ratio
Credit cards bus	iness		437	1,122,771	0.04 %	14,292	3,270.48 %
Account receiva (Note 7)	ble factoring-without recourse		-	-	- %	-	- %

• Note 1 Non-performing loans represent the amount of overdue loans as reported in accordance with the "Regulations on the Procedures for Banking Institutions to Evaluate Assets and Deal with Past Due/Non-performing Loans". The credit card overdue loans represent the amount of overdue loans as reported in accordance with Jin-Kuan-Yin-(4)-Zi No. 0944000378, dated July 6, 2005.

• Note 2 Non-performing loan ratio = Non-performing loans ÷ total loans; Credit card delinquency ratio = Overdue receivables÷ receivables

• Note 3 Coverage ratio for loans = allowance for credit losses ÷ non-performing loans; Coverage ratio for credit card business = allowance for credit losses ÷ overdue receivables.

(Continued)

129

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• Note 4 For residential mortgage loans, a borrower provides his/her (or spouse’ s or minor child’ s) house as collateral in full and pledges it to the financial institution for the purpose of obtaining funds to purchase property and to construct or repair a house.

• Note 5 Microcredit loans are defined by Jin-Kuan-Yin-(4)-Zi No. 09440010950, dated December 19, 2005, and do not include credit cards or cash cards.

• Note 6 Others in consumer finance are secured and unsecured consumer loans other than residential mortgage loans, cash card loans, and microcredit loans, and do not include credit cards.

• Note 7 In accordance with Jin-Kuan-Yin-(5)-Zi No. 0945000494, dated July 19, 2005, the amounts of without-recourse factoring will be classified as overdue receivables within three months from the date that suppliers or insurance companies resolve not to compensate the loss.

Overdue loans and receivables exempted from reporting

December Loans may be exempted from reporting as a non-performing loan Pursuant to a contract under a debt negotiation plan (Note1) $ 163 Pursuant to a contract under a debt liquidation plan and a debt relief plan (Note 2) 68,959 Total $ 69,122	December	31, 2023	December	31, 2022
	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
		802 17,317 18,119	258 54,109 54,367	1,112 22,489
				23,601

• 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.”

(Continued)

130

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Concentration of credit extensions

Concentration of credit extensions	Concentration of credit extensions	Concentration of credit extensions	Concentration of credit extensions
December 31, 2023
Ranking	Group enterprise	Credit amount	Credit amount to equity ratio (%)
1	A company. (Railway transportation)	20,228,474	% 16.84
2	B group. (Real estate for sale and rental with own or leased property)	15,766,100	% 13.13
3	C group. (Other holding)	9,549,460	% 7.95
4	D group. (Steel rolling and extruding)	9,457,303	% 7.87
5	E group. (Real estate development)	7,416,907	% 6.17
6	F group. (Liquid crystal panel and components manufacturing)	7,206,749	% 6.00
7	G group. (Real estate development)	6,840,074	% 5.69
8	H group. (Computers manufacturing)	6,548,180	% 5.45
9	I group. (Real estate development)	6,237,041	% 5.19
10	J group. (Financial leasing)	5,915,829	% 4.92

December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022
Ranking	Group enterprise	Credit amount	Credit amount to 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	E group. (Real estate development)	8,982,725	% 8.63
5	D group. (Steel rolling and extruding)	8,715,755	% 8.37
6	H group. (Computers manufacturing)	6,523,340	% 6.27
7	G group. (Real estate development)	6,261,408	% 6.01
8	I group. (Real estate development)	6,027,170	% 5.79
9	F group. (Liquid crystal panel and components manufacturing)	5,531,674	% 5.31
10	J group. (Financial Leasing)	4,565,169	% 4.39

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.

(Continued)

131

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 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.

• Note 4 In the calculation of Credit amount to equity ratio, the domestic bank should be calculated in the net value of head office. The Foreign bank should be calculated in the net value of Taiwan branch.

(iii) Interest rate-sensitivity information

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

Unit : %

December 31, 2023	December 31, 2023	December 31, 2023	December 31, 2023	December 31, 2023	December 31, 2023
Item	1~90 days	91~180 days	181days~1year	over 1 year	total
Interest rate-sensitive assets	$ 1,590,706,669	47,996,047	48,849,207	136,264,787	1,823,816,710
Interest rate-sensitive liabilities	1,362,402,193	64,646,757	115,568,023	61,026,639	1,603,643,612
Interest rate sensitivity gap	228,304,476	(16,650,710)	(66,718,816)	75,238,148	220,173,098
Net worth					120,122,285
Ratio of interest rate-sensitive assets to liabilities (%)					113.73
Ratio of interest rate-sensitive gap to net worth (%)					183.29

December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022	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

(Continued)

132

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 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, %

December 31, 2023	December 31, 2023	December 31, 2023	December 31, 2023	December 31, 2023	December 31, 2023
Item	1~90 days	91~180 days	181days~1year	over 1 year	total
Interest rate-sensitive assets	$ 4,386,578	262,261	144,390	1,893,156	6,686,385
Interest rate-sensitive liabilities	7,097,974	2,347,287	1,793,723	-	11,238,984
Interest rate sensitivity gap	(2,711,396)	(2,085,026)	(1,649,333)	1,893,156	(4,552,599)
Net worth					3,912,141
Ratio of interest rate-sensitive assets to liabilities (%)					59.49
Ratio of interest rate-sensitive gap to net worth (%)					(116.37)

December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022	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)

(Continued)

133

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 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

Unit: %

			Unit: %
Item		December 31, 2023	December 31, 2022
The ratio of return on assets	Before income tax	0.58	0.59
	After income tax	0.49	0.49
The ratio of return on equity	Before income tax	11.08	11.70
	After income tax	9.43	9.84
Net income ratio		33.11	35.48

• 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

		December 31, 2023	December 31, 2023	December 31, 2023	December 31, 2023	December 31, 2023	December 31, 2023
	Total	Amount during the maturity period from the balance sheet date to due date
		0-10days	11-30days	31-90days	91-180days	181days-1year	Over 1 year
Major maturity capital inflow	$ 1,932,748,774	226,530,278	153,738,309	186,842,109	198,232,876	170,531,204	996,873,998
Major maturity capital outflow	2,358,290,547	68,877,805	111,110,090	250,955,397	264,154,241	440,382,875	1,222,810,139
Gap	(425,541,773)	157,652,473	42,628,219	(64,113,288)	(65,921,365)	(269,851,671)	(225,936,141)

(Continued)

134

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Note: Listed amounts are denominated in New Taiwan dollars of the Bank and subsidiaries, including loan commitments of credit agreement and estimates to outflow $426,499,512.

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

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.

• 2) Maturity analysis in US dollars

Unit : In Thousands of US Dollars

		December 31, 2023	December 31, 2023	December 31, 2023	December 31, 2023	December 31, 2023
	Total	Amount during the maturity period from the balance sheet date to due date
		0-30days	31-90days	91-180days	181days-1year	Over 1 year
Major maturity capital inflow	$ 12,909,090	3,551,727	2,458,846	2,134,006	1,949,635	2,814,876
Major maturity capital outflow	13,501,007	3,271,391	3,017,309	2,770,293	2,525,849	1,916,165
Gap	(591,917)	280,336	(558,463)	(636,287)	(576,214)	898,711

Note: Listed amounts are denominated in US dollars of the Bank and subsidiaries, including loan commitments of credit agreement and estimates to outflow USD $525,282.

	$525,282.
		December 31, 2022
	Total	Amount during the maturity period from the balance sheet date to due date
		0-30days	31-90days	91-180days	181days-1year	Over 1 year
Major maturity capital inflow	$ 16,353,649	5,107,519	4,629,214	1,287,440	1,713,177	3,616,299
Major maturity capital outflow	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: 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.

(Continued)

135

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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:

No (Note 1)	Trader	Counterparty	Relationship (Note 2)	Transaction status for year ended December 31, 2023	Transaction status for year ended December 31, 2023	Transaction status for year ended December 31, 2023	Transaction status for year ended December 31, 2023
				Account	Amount	Terms	Percentage accounted for consolidated net revenue or total assets
0	Taiwan Business Bank, Ltd.	TBB International Leasing Co., Ltd.	1	Deposits and remittances	12,715	No difference with non- related parties	- %
1	TBB International Leasing Co., Ltd.	Taiwan Business Bank, Ltd.	2	Right-of-use assets	3,601	No difference with non- related parties	- %
1	TBB International Leasing Co., Ltd.	Taiwan Business Bank, Ltd.	2	Lease liabilities	3,622	No difference with non- related parties	- %
0	Taiwan Business Bank, Ltd.	TBB International Leasing Co., Ltd.	1	Net revenue other than interest	834	No difference with non- related parties	- %
0	Taiwan Business Bank, Ltd.	TBB Venture Capital Co., Ltd.	1	Deposits and remittances	109,066	No difference with non- related parties	- %
2	TBB Venture Capital Co., Ltd.	Taiwan Business Bank, Ltd.	2	Right-of-use assets	478	No difference with non- related parties	- %
2	TBB Venture Capital Co., Ltd.	Taiwan Business Bank, Ltd.	2	Lease liabilities	485	No difference with non- related parties	- %
0	Taiwan Business Bank, Ltd.	TBB Venture Capital Co., Ltd.	1	Net revenue other than interest	175	No difference with non- related parties	- %
0	Taiwan Business Bank, Ltd.	Taiwan Business Bank International Leasing Co., Ltd.	1	Deposits and remittances	39,210	No difference with non- related parties	- %
0	Taiwan Business Bank, Ltd.	TBB Consulting Co., Ltd.	1	Deposits and remittances	63,578	No difference with non- related parties	- %
0	Taiwan Business Bank, Ltd.	TBB Consulting Co., Ltd.	1	Net revenue other than interest	972	No difference with non- related parties	- %
3	TBB Consulting Co., Ltd.	Taiwan Business Bank, Ltd.	2	Right-to-use assets	2,669	No difference with non- related parties	- %
3	TBB Consulting Co., Ltd.	Taiwan Business Bank, Ltd.	2	Lease liabilities	2,703	No difference with non- related parties	- %
2	TBB Venture Capital Co., Ltd.	TBB Consulting Co., Ltd.	3	Business expenses	42,980	No difference with non- related parties	0.13 %
2	TBB Venture Capital Co., Ltd.	TBB Consulting Co., Ltd.	3	Accounts payable	14,277	No difference with non- related parties	- %

Note: 1. The meaning of the number is as follows.

(1) Zero stands for the parent company

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

1. 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.

(Continued)

136

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Information on investees:

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

(Unit : thousand shares)

Name of investee	Location	Main business scope	Shareholding ratio	Book value	Investment gain (loss)	The cross holding of the B	The cross holding of the B	ank and its related parties	ank and its related parties	Note
						Number of shares	Number of proforma shares	Total
								Number of shares	Shareholding ratio
TBB International Leasing Co., Ltd.	Taiwan	Leasing business	100.00 %	1,548,582	53,929	150,000	-	150,000	100.00 %	Already written-off when preparing the consolidated financial statements
TBB (Cambodia) Microfinance Institution Plc	Cambodia	SMEs and personal finance business	100.00 %	629,464	5,352	20	-	20	100.00 %	〞
TBB Venture Capital Co., Ltd.	Taiwan	Investing business	100.00 %	1,369,515	111,178	123,211	-	123,211	100.00 %	〞
TBB Consulting Co., Ltd.	Taiwan	Consulting business	100.00 %	71,984	17,172	5,000	-	5,000	100.00 %	〞
Media Talk Consulting Co., Ltd.	Taiwan	Investing cultural and creative business	20.00 %	-	(808)	200	-	200	20.00 %

(ii) Loans to others:

NO.	Creditor	Debtor	Interaction Account	Related party	Highest Amount	Ending balance	Actual drawdown amount	Range of interest rate	Nature of the loan	Dealing amount	The necessary reason for short-term loans	Allowance for bad debts	Guarantee	Guarantee	Limited amount for individual object	Total limited amount for loan
													Name	Value
1	TBB International Leasing Co., Ltd.	Hsin Chuan Construction Co., Ltd.	Financial receivables	No	154,430	62,801	100,000	2%-10%	2	-	To the lender for buying goods	628	None	-	387,140	1,548,561
1	TBB International Leasing Co., Ltd.	Xi Quan Restaurant Co., Ltd	Financial receivables	No	151,957	88,195	153,000	2%-10%	2	-	To the lender for buying goods	882	None	-	387,140	1,548,561
1	TBB International Leasing Co., Ltd.	Acon-Holding INC.	Financial receivables	No	60,000	7,584	30,000	2%-10%	2	-	To the lender for buying goods	76	None	-	387,140	1,548,561
1	TBB International Leasing Co., Ltd.	Maw Shing Top Co., Ltd.	Financial receivables	No	24,616	8,071	15,000	2%-10%	2	-	To the lender for buying goods	81	None	-	387,140	1,548,561
1	TBB International Leasing Co., Ltd.	Yu Ding Investment Co., Ltd	Financial receivables	No	96,989	50,000	50,000	2%-10%	2	-	To the lender for buying goods	500	None	-	387,140	1,548,561
1	TBB International Leasing Co., Ltd.	Chaishan Foods Co., Ltd.	Financial receivables	No	50,000	-	50,000	2%-10%	2	-	To the lender for buying goods	-	None	-	387,140	1,548,561
1	TBB International Leasing Co., Ltd.	Chao-Chi Property Management Consulting Co.,Ltd	Financial receivables	No	23,835	8,854	15,000	2%-10%	2	-	To the lender for buying goods	89	None	-	387,140	1,548,561
1	TBB International Leasing Co., Ltd.	Tai Chang Fiber Co., Ltd	Financial receivables	No	23,851	8,858	15,000	2%-10%	2	-	To the lender for buying goods	89	None	-	387,140	1,548,561
1	TBB International Leasing Co., Ltd.	Jiou Chang Motor Co., Ltd.	Financial receivables	No	9,188	-	10,000	2%-10%	2	-	To the lender for buying goods	-	None	-	387,140	1,548,561
1	TBB International Leasing Co., Ltd.	Liang-wei Tobacco & Liquor Co.,Ltd.	Financial receivables	No	9,188	-	10,000	2%-10%	2	-	To the lender for buying goods	-	None	-	387,140	1,548,561
1	TBB International Leasing Co., Ltd.	Jia Ho Food Co., Ltd.	Financial receivables	No	19,044	-	20,000	2%-10%	2	-	To the lender for buying goods	-	None	-	387,140	1,548,561
1	TBB International Leasing Co., Ltd.	Cheng Mao Enterprise Co., Ltd.	Financial receivables	No	8,000	6,036	8,000	2%-10%	2	-	To the lender for buying goods	60	None	-	387,140	1,548,561

(Continued)

137

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

NO.	Creditor	Debtor	Interaction Account	Related party	Highest Amount	Ending balance	Actual drawdown amount	Range of interest rate	Nature of the loan	Dealing amount	The necessary reason for short-term loans	Allowance for bad debts	Guarantee	Guarantee	Limited amount for individual object	Total limited amount for loan
													Name	Value
1	TBB International Leasing Co., Ltd.	Chao-Yang International Co., Ltd.	Financial receivables	No	30,115	15,111	20,000	2%-10%	2	-	To the lender for buying goods	151	None	-	387,140	1,548,561
1	TBB International Leasing Co., Ltd.	Sian Shang Frozen Food Co., Ltd.	Financial receivables	No	20,000	16,749	20,000	2%-10%	2	-	To the lender for buying goods	167	None	-	387,140	1,548,561
1	TBB International Leasing Co.,Ltd.	Qing Rui Construction Co., Ltd.	Financial receivables	No	15,000	14,213	15,000	2%-10%	2	-	To the lender for buying goods	142	None	-	387,140	1,548,561
1	TBB International Leasing Co.,Ltd.	Pei Xian Seafood Co., Ltd.	Financial receivables	No	20,000	18,378	20,000	2%-10%	2	-	To the lender for buying goods	184	None	-	387,140	1,548,561
1	TBB International Leasing Co.,Ltd.	Li Cheng Construction Co., Ltd.	Financial receivables	No	12,000	12,000	12,000	2%-10%	2	-	To the lender for buying goods	120	None	-	387,140	1,548,561
1	TBB International Leasing Co.,Ltd.	99 Bottles Co., Ltd.	Financial receivables	No	10,000	10,000	10,000	2%-10%	2	-	To the lender for buying goods	100	None	-	387,140	1,548,561
1	TBB International Leasing Co.,Ltd.	Pround Construction Co., Ltd.	Financial receivables	No	20,000	20,000	20,000	2%-10%	2	-	To the lender for buying goods	200	None	-	387,140	1,548,561
1	TBB International Leasing Co.,Ltd.	V-Optech Inc.	Financial receivables	No	10,000	10,000	10,000	2%-10%	2	-	To the lender for buying goods	100	None	-	387,140	1,548,561
1	TBB International Leasing Co.,Ltd.	Wen Ying International Logistics Co., Ltd.	Financial receivables	No	30,000	30,000	30,000	2%-10%	2	-	To the lender for buying goods	300	None	-	387,140	1,548,561

Note1: The meaning of the number is as follows.

(1) Zero stands for issuer.

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

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

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

(1) 1 stands for business relation.

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

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

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

(iii) Endorsements and guarantee for others: None

(iv) Acquisition of securities:

Company acquired	Type and name of the security	Relationship with the security issuer	Account	At the end of the period	At the end of the period	At the end of the period	At the end of the period	Note
				Number of shares	Carrying amount	Share proportion	Market price
TBB International Leasing Co., Ltd.	Taiwan Business International Leasing Co., Ltd.	Parent company	Investment under equity method	-	971,708	100.00 %	971,708	The transaction has been written off when preparing the consolidated financial statements.
TBB International Leasing Co., Ltd.	G12245、G12246	-	Financial assets at fair value through profit or loss	-	100,000	- %	100,000	Financial debentures
TBB Venture Capital Co., Ltd.	G12245	-	Financial assets at fair value through profit or loss	-	100,000	- %	100,000	〞
TBB Venture Capital Co., Ltd.	Energenesis Biomedical Co., Ltd.	-	Financial assets at fair value through profit or loss	220	13,288	0.29 %	13,288	Listed Stocks

(Continued)

138

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Company acquired	Type and name of the security	Relationship with the security issuer	Account	At the end of the period	At the end of the period	At the end of the period	At the end of the period	Note
				Number of shares	Carrying amount	Share proportion	Market price
TBB Venture Capital Co., Ltd.	Powerchip Semiconductor Manufacturing Corporation	-	Financial assets at fair value through profit or loss	250	7,363	0.01 %	7,363	Listed Stocks
TBB Venture Capital Co., Ltd.	Lungteh Shipbuilding Co., Ltd.	-	Financial assets at fair value through profit or loss	748	63,928	0.69 %	63,928	〞
TBB Venture Capital Co., Ltd.	Evergreen Aviation Technologies Corporation	-	Financial assets at fair value through profit or loss	13	1,411	- %	1,411	〞
TBB Venture Capital Co., Ltd.	Tigerair Taiwan Co., Ltd.	-	Financial assets at fair value through profit or loss	836	28,102	0.19 %	28,102	〞
TBB Venture Capital Co., Ltd.	Eir Genix, Inc.	-	Financial assets at fair value through profit or loss	845	84,923	0.28 %	84,923	OTC Stocks
TBB Venture Capital Co., Ltd.	Chenfull Precision Co., Ltd.	-	Financial assets at fair value through profit or loss	180	19,530	0.30 %	19,530	〞
TBB Venture Capital Co., Ltd.	Handa Pharmaceuticals, Inc.	-	Financial assets at fair value through profit or loss	1,470	269,663	1.04 %	269,663	Emerging Stocks
TBB Venture Capital Co., Ltd.	Locus Cell Co., Ltd.	-	Financial assets at fair value through profit or loss	1,341	42,242	0.67 %	42,242	〞
TBB Venture Capital Co., Ltd.	Starlux Airlines Co., Ltd.	-	Financial assets at fair value through profit or loss	4,763	111,457	0.23 %	111,457	〞
TBB Venture Capital Co., Ltd.	TFBS Bioscience, Inc.	-	Financial assets at fair value through profit or loss	260	12,298	0.75 %	12,298	〞
TBB Venture Capital Co., Ltd.	Iovtec Co., Ltd.	-	Financial assets at fair value through profit or loss	485	28,360	2.91 %	28,360	〞
TBB Venture Capital Co., Ltd.	Song Chuan Precision Co., Ltd.	-	Financial assets at fair value through profit or loss	665	66,496	0.92 %	66,496	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Techplasma Technology Co., Ltd.	-	Financial assets at fair value through profit or loss	944	47,184	2.84 %	47,184	〞
TBB Venture Capital Co., Ltd.	Hephas Energy Co., Ltd.	-	Financial assets at fair value through profit or loss	816	52,895	2.96 %	52,895	〞
TBB Venture Capital Co., Ltd.	Ren Chin Electric Conductor Co., Ltd.	-	Financial assets at fair value through profit or loss	250	5,035	2.61 %	5,035	〞
TBB Venture Capital Co., Ltd.	Manford Machinery Co.,Ltd.	-	Financial assets at fair value through profit or loss	1,195	25,704	2.99 %	25,704	〞
TBB Venture Capital Co., Ltd.	Yuh Shan Enviromental Engineering Co., Ltd.	-	Financial assets at fair value through profit or loss	562	28,656	1.94 %	28,656	〞
TBB Venture Capital Co., Ltd.	e-Formula Technologies,Inc.	-	Financial assets at fair value through profit or loss	600	11,280	2.76 %	11,280	〞
TBB Venture Capital Co., Ltd.	Ina Energy Corporation	-	Financial assets at fair value through profit or loss	2,000	35,620	0.99 %	35,620	〞
TBB Venture Capital Co., Ltd.	Amazing Cool Technology Corporation.	-	Financial assets at fair value through profit or loss	390	8,580	2.37 %	8,580	〞
TBB Venture Capital Co., Ltd.	Long-Shun Green Energy Technology Ltd.	-	Financial assets at fair value through profit or loss	1,045	30,315	2.99 %	30,315	〞
TBB Venture Capital Co., Ltd.	Gamamobi Taiwan Co.,Ltd.	-	Financial assets at fair value through profit or loss	200	-	1.00 %	-	〞
TBB Venture Capital Co., Ltd.	Toyo Automation Co.,Ltd.	-	Financial assets at fair value through profit or loss	263	19,609	0.95 %	19,609	〞
TBB Venture Capital Co., Ltd.	aetherAI Co., Ltd.	-	Financial assets at fair value through profit or loss	400	10,000	0.66 %	10,000	〞
TBB Venture Capital Co., Ltd.	Quants AI Inc.	-	Financial assets at fair value through profit or loss	1,600	9,840	8.89 %	9,840	〞

(Continued)

139

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Company acquired	Type and name of the security	Relationship with the security issuer	Account	At the end of the period	At the end of the period	At the end of the period	At the end of the period	Note
				Number of shares	Carrying amount	Share proportion	Market price
TBB Venture Capital Co., Ltd.	Honley Auto. Parts Co., Ltd.	-	Financial assets at fair value through profit or loss	3,000	16,950	2.95 %	16,950	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Cuumed Catheter Medical Co., Ltd.	-	Financial assets at fair value through profit or loss	600	18,120	1.53 %	18,120	〞
TBB Venture Capital Co., Ltd.	AnnJi Pharmaceutical Co. Ltd.	-	Financial assets at fair value through profit or loss	400	16,320	0.44 %	16,320	〞
TBB Venture Capital Co., Ltd.	GoodLinker Co., Ltd.	-	Financial assets at fair value through profit or loss	100	610	2.86 %	610	〞
TBB Venture Capital Co., Ltd.	Yiyi Pictures Co., Ltd.	-	Financial assets at fair value through profit or loss	9	1,291	2.94 %	1,291	〞
TBB Venture Capital Co., Ltd.	Asia Hydrogen Energy Corporation	-	Financial assets at fair value through profit or loss	490	19,587	3.34 %	19,587	〞
TBB Venture Capital Co., Ltd.	Longwalk social enterprise, Co., Ltd.	-	Financial assets at fair value through profit or loss	120	469	12.77 %	469	〞
TBB Venture Capital Co., Ltd.	Carpost Co., Ltd.	-	Financial assets at fair value through profit or loss	330	4,590	2.84 %	4,590	〞
TBB Venture Capital Co., Ltd.	Rising FinTech Corp.	-	Financial assets at fair value through profit or loss	38	35	2.08 %	35	〞
TBB Venture Capital Co., Ltd.	Maxima Biotech Inc.	-	Financial assets at fair value through profit or loss	225	4,950	0.96 %	4,950	〞
TBB Venture Capital Co., Ltd.	Unoscope Technology Inc.	-	Financial assets at fair value through profit or loss	90	1,080	0.96 %	1,080	〞
TBB Venture Capital Co., Ltd.	Eti Ca Battery Inc.	-	Financial assets at fair value through profit or loss	75	3,150	0.42 %	3,150	〞
TBB Venture Capital Co., Ltd.	Pinkoi Inc.		Financial assets at fair value through profit or loss	93	15,269	0.53 %	15,269	〞
TBB Venture Capital Co., Ltd.	Taiwania Buffalo III Biotechnology Venture Capital LLP.	-	Financial assets at fair value through profit or loss	-	52,560	4.57 %	52,560	Private Fund
TBB Venture Capital Co., Ltd.	Ju He Venture Capital LLP.	-	Financial assets at fair value through profit or loss	-	24,874	2.46 %	24,874	〞
TBB Venture Capital Co., Ltd.	TBB No.1 Venture Capital Limited Partnership	-	Financial assets at fair value through profit or loss	-	11,868	1.12 %	11,868	〞
TBB Venture Capital Co., Ltd.	Outstanding Capital Limited Partnership	-	Financial assets at fair value through profit or loss	-	8,429	4.86 %	8,429	〞
TBB Venture Capital Co., Ltd.	Jia Da International Development Co., Ltd.	-	Financial assets at fair value through other comprehensive income	2,919	29,632	8.52 %	29,632	Unlisted Stocks
TBB Consulting Co., Ltd.	Media Talk Consulting Co., Ltd.	Associates	Investment under equity method	200	-	20.00 %	-
TBB Consulting Co., Ltd.	TBB No.1 Venture Limited Partnership	-	Financial assets at fair value through profit or loss	-	1,187	0.11 %	1,187	Private Fund

(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.

(Continued)

140

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (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	Major business	Paid-in capital	Investment method (Note 1)	Accumulated amount transferred from Taiwan, beginning of the period	Investment transferred out or recovered	Investment transferred out or recovered	Accumulated amount transferred from Taiwan, end of the period	The current profit or loss of the investee (Note 2)	Shares directly or indirectly possessed by the Bank	Investment income for the period (Notes 2 and 4)	Ending carrying value of investment	Accumulated inward remittance of earnings as of the end of period
					Transferred out	Recovered
Taiwan Business Bank , Ltd. Shanghai branch	Banking business	3,910,537 (CNY800 million) (Operating capital)	(3)	3,910,537 (CNY800 million)	-	-	3,910,537 (CNY800 million)	-	Shanghai branch of the Bank, not an investee company	Note 4	4,327,509	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	4,185,181	"
Taiwan Business Bank International Leasing Co., Ltd.	Leasing business	838,305 (CNY170 million) (Operating capital)	(1)	838,305 (CNY170 million)	-	-	838,305 (CNY170 million)	36,322 2 (c)	100%	36,322 2 (c)	971,708	"

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. a. The audited financial reports that are issued by an international accounting firm which is connected to an accounting firm in Taiwan. b The audited financial reports that are issued by the Taiwan parent company’s designated accounting firm. c. Others

• (3) Please specify if information regarding current gains or losses of an investee is not retrievable.

==> picture [168 x 7] intentionally omitted <==

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

Note 3: The number is expressed in New Taiwan Dollars.
----- End of picture text -----

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 outflow of investment from Taiwan to Mainland China, as of the end of period	Investment amount authorized by Investment Commission, MOEA	Upper limit on investment authorized by Investment Commission, MOEA
Taiwan Business Bank, Ltd.(Note)	8,691,657 (CNY 1,770 million)	8,691,657 (CNY 1,770 million)	72,073,371

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

• (d) Information of major shareholders:

Information of major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
Bank of Taiwan	1,333,153,090	% 16.21
National Development Fund, Executive Yuan	482,381,505	% 5.87

(Continued)

141

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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

For the year ended December 31, 2023 Net interest revenue Net revenue other than interest Net revenue Bad debt expense, commitment and guarantee liability provision Operating expenses Income from continuing operation before tax Total assets Total liabilities	Banking Segment $ 18,411,507 10,013,659 28,425,166 (4,206,938) (14,518,521) $ 9,699,707 $ 2,194,855,300 $ 2,078,401,655	Securities, Trust, Insurance agent and Others 294,003 3,424,986 3,718,989 (19,580) (783,678) 2,915,731 18,824,489 11,536,304	Adjustment and Elimination - (230,611) (230,611) - 42,980 (187,631) (3,865,258) (245,713)	Total 18,705,510 13,208,034 31,913,544 (4,226,518) (15,259,219) 12,427,807 2,209,814,531 2,089,692,246

(Continued)

142

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

(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:

Area	For the years ended December 31,	For the years ended December 31,
	2023 $ 10,606,543 759,509 452,360 520,022 50,123 3,261 35,989 $ 12,427,807	2022 10,788,450 630,934 255,099 372,368 (80,112) 29,282 43,771 12,039,792
Taiwan USA Hong Kong Australia China Cambodia Japan Total

(Continued)

143

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Non-current assets:

Area	December 31, 2023 $ 26,685,665 125,038 104,512 44,639 100,786 60,647 20,565 $ 27,141,852	December 31, 2022
Taiwan USA Hong Kong Australia China Cambodia Japan Total		31,472,080 152,549 60,067 58,225 72,102 36,970 22,597
		31,874,590

(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.