TBB — Interim / Quarterly Report 2018

Nov 9, 2018

Financial Review of 2018Q3

2018.11.09

Disclaimer

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This presentation is provided by Taiwan Business Bank Co., Ltd. (‘TBB’).The information contained within is not reviewed or reviewed by any accountant or any independent third party. Users should read this material in conjunction with all other public financial and operational information filed to the competent authorities by TBB. While we endeavor to provide accurate, complete and consistent information herein, TBB makes no guarantee or warranties as to the accuracy or correctness of all the material contained. After this presentation is released to the public, we undertake no obligation to update any relevant data to reflect any change hereafter.

Users should also notice that this presentation may contain forward-looking statements. Statements that are not historical facts, including statements relating to the implementation of strategic initiatives, future business development and economic performance are forward-looking statements. By their nature, forward-looking statements involve uncertainties, risks, assumptions and other factors that could cause actual developments and results to differ materially from our statement in this presentation. These factors include, but not limited to, regulatory developments, competitive conditions, technological developments, general economic conditions and management changes.

The information, statements or opinions in this presentation do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to buy any securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments. TBB and its affiliates representatives, no matter for their negligence or any other reasons, should not be liable for any loss or damages arising from the use of or interpretation by others of information contained within this presentation or any matter related to this document.

1

Operations Review of 2018Q3

Significant Profit Growth and Asset Quality Improvement

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TBB reported a net income of NT$7,182 million for 2018Q3 (+33.57% YoY); net service fee income NT$2,906 million for 2018Q3 decreased by 0.31% YoY; interest income NT$12.92 billion increased by 12.85% YoY.

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Loan balance in 2018Q3 was NT$1,108 billion, grew 5.50% YoY; deposit balance in 2018Q3 was NT$1,401 billion, grew 7.56% YoY; the FX volume was USD 52.50 billion, grew 0.26% YoY.

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The net interest spread for 2018Q3 was 1.31% (+2bp YoY), the net interest margin (NIM) in 2018Q3 was 0.97% (-0bp YoY).

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As for asset quality, NPL ratio in 2018Q3 was 0.34%, decreased 3bp YoY; coverage ratio in 2018Q3 was 346.74%.

2

Financial Performance

3

Assets and Liabilities

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1,617,545
1,584,094
1,498,729
1,475,892
1,392,391 1,533,940
1,508,276
1,326,368
1,427,859
1,408,233
1,329,653
1,269,114
2013 2014 2015 2016 2017 3Q18
Assets Liabilities
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(in NT mn)

						(in NT mn)
	2013	2014	2015	2016	2017	3Q18
Assets	1,326,368	1,392,391	1,475,892	1,498,729	1,584,094	1,617,545
Liabilities	1,269,114	1,329,653	1,408,233	1,427,859	1,508,276	1,533,940

4

Assets and Liabilities

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1,613,750 1,617,545
1,599,875
1,584,094
1,542,212
1,533,623 1,533,940
1,508,276 1,518,711
1,466,629
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3Q17	4Q17		1Q18 Assets	1Q18 Assets			Liabilities	2Q18	3Q18
										(in NT mn)

					(in NT mn)
	3Q17	4Q17	1Q18	2Q18	3Q18
Assets	1,542,212	1,584,094	1,613,750	1,599,875	1,617,545
Liabilities	1,466,629	1,508,276	1,533,623	1,518,711	1,533,940

5

Equity

40,000 50,000 60,000 70,000 80,000 90,000	57,254 62,738 67,659 70,870 75,818 83,605 11.24 11.84 11.90 11.87 12.33 13.08
		2013		2014		2015		2016		2017		3Q18
Equity		57,254		62,738		67,659		70,870		75,818		83,605
Common Stock		50,941		52,979		56,847		59,689		61,480		63,939
BVPS		11.24		11.84		11.90		11.87		12.33		13.08

6

Income Growth

	Income Growth	Income Growth	Income Growth	Income Growth	Income Growth	Income Growth	Income Growth
(500) 500 1,500 2,500 3,500 4,500 5,500 6,500 7,500	(in NT mn) 3,857 5,486 6,196 6,359 5,871 7,182 0.76 1.04 1.09 1.07 0.95 1.12 0.00 0.20 0.40 0.60 0.80 1.00 1.20 2013 2014 2015 2016 2017 3Q18 Net Income before tax EPS before Tax (NTD)
		2013	2014	2015	2016	2017	3Q18
Net Income before tax		3,857	5,486	6,196	6,359	5,871	7,182
Net income		3,610	5,315	5,113	5,196	5,040	6,014
EPS before Tax(NTD)		0.76	1.04	1.09	1.07	0.95	1.12
EPS(NTD)		0.71	1.00	0.90	0.87	0.82	0.94
ROE before tax		6.96%	9.14%	9.50%	9.18%	8.00%	12.01%
ROA before tax		0.29%	0.40%	0.43%	0.43%	0.38%	0.60%
Employeeproductivity		0.80	1.13	1.24	1.28	1.15	1.39

7

Income Growth

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7,500 7,182
6,478
6,500
5,680
5,377
5,500
4,747 4,712
4,500 4,136
3,619
3,483
3,500 2,810 2,925
2,341
2,500 2,118
1,750
1,313
1,500 1,144
667 580
500
(500) Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep.
2018 Net Income before tax (accumulated) 2017 Net Income before tax (accumulated)
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(in NT mn)

	Jan.	Feb.	Mar.	Apr.	May	Jun.	Jul.	Aug.	Sep.
2018 Net Income before tax (accumulated)	667	1,313	2,118	2,810	3,619	4,747	5,680	6,478	7,182
2017 Net Income before tax (accumulated)	580	1,144	1,750	2,341	2,925	3,483	4,136	4,712	5,377

8

(in NT mn)

Assets, Liabilities and Equity Breakdown

2018/9 Assets

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Other assets, 38,923 , 2%
Premises and equipment,
14,171 , 1%
Financial assets,
Loans,
355,663 , 22%
1,075,661 ,
67%
Due from the Central
Bank and call loans to
banks, 85,210 , 5%
Cash and cash equivalents,
47,917 , 3%
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2018/9 Liabilities

2018/9 Equity

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Other liabilities,
57,873 , 4%
Financial liabilities,
19,181 , 1%
Financial
Deposits and
debentures,
remittances,
47,450 , 3%
1,325,974 , 87%
Deposits from the Central
Bank and other banks,
83,462 , 5%
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Legal reserve,
10,020 , 12%
Common stock,
63,939 , 76%
Other items in equity,
9,646 , 12%
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2017/9 Assets

2017/9 Liabilities

2017/9 Equity

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Other assets, 37,342 , 2% Other liabilities,
37,522 , 2% Legal reserve,
Premises and equipment, 8,570 , 11%
14,126 , 1% Financial liabilities,
11,175 , 1%
Common stock,
Financial assets,
61,480 , 82%
269,947 , 18%
Loans,
1,098,382 , Financial Deposits and
Due from the Central 71% debentures, remittances,
Bank and call loans to 41,000 , 3% 1,272,835 , 87% Other items in equity,
banks, 81,918 , 5% 5,533 , 7%
Cash and cash equivalents, Deposits from the Central
40,497 , 3% Bank and other banks,
104,097 , 7%
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9

Income Breakdown

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(In NT mn)
Pre-tax Income Net Service
41.117,182 % 2018/1-9 Fee Income2,906
17%
Provisions
Financial
674 Net Income
Instruments
3.85%
17,472 Net interest Net Income
100.00%
income 1,100
Operating 12,915 6%
expenses Net income breakdown 74% Other Income
9,616
551
55.04%
3%
Pre-tax Income
Net Service
5,378 Fee Income
34.08%
2017/1-9 2,897
18%
Provisions
Financial
1,466
Net Income Instruments
9.29% Net interest
15,781 income Net Income
100.00% 1,006
11,444
6%
Operating 72%
Other Income
expenses
8,937 Net income breakdown 434
56.63% 4%
10
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Overseas Income

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(in NT mn)
2017/1-9 2018/1-9
Overseas + OBU,
1,633 , 30.37% Overseas + OBU,
1,767 , 24.60%
Affiliated
Domestic,
Enterprises,
Domestic, 4,990 ,
370 , 6.88% Affiliated
3,374 , 69.48%
Enterprises,
62.75%
425 , 5.92%
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Note ： % indicates the percentage of the total net income before tax.

11

Operating Expense Ratio

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(in NT mn)	(in NT mn)	(in NT mn)	(in NT mn)	(in NT mn)	(in NT mn)	(in NT mn)
	2013	2014	2015	2016	2017	3Q18
Net Income	17,723	18,994	20,162	20,657	20,863	17,472
Oerating Expense	10,866	10,970	11,557	11,793	11,963	9,616
Percentage	61.31%	57.76%	57.32%	57.09%	57.34%	55.04%

12

Operating Expense Ratio

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(in NT mn)	(in NT mn)	(in NT mn)	(in NT mn)	(in NT mn)	(in NT mn)
	3Q17	4Q17	1Q18	2Q18	3Q18
Net Income	15,781	20,863	5,772	11,807	17,472
Oerating Expense	8,937	11,963	3,297	6,492	9,616
Percentage	56.63%	57.34%	57.12%	54.98%	55.04%

13

LoanandDeposit

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1,600,000
1,310,328 1,400,544
1,259,305
1,198,627
1,112,324 1,137,997
1,200,000
1,108,484
1,063,179
963,347 954,361 1,012,708 1,010,824 800,000
400,000
-
2013 2014 2015 2016 2017 3Q18
Deposit Loan
(in NT mn)
2013 2014 2015 2016 2017 3Q18
Deposit 1,112,324 1,137,997 1,198,627 1,259,305 1,310,328 1,400,544
Loan 963,347 954,361 1,012,708 1,010,824 1,063,179 1,108,484
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14

Loans to Small and Medium Enterprises

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5,000 4,851.71 60.00%
4,675.70
4,579.10
4,500 4,328.30 55.00%
4,316.60
4,000 3,916.00 48.58% 49.04% 50.00%
46.12%
45.42%
44.46%
3,500 43.56% 45.00%
3,000 40.00%
2013 2014 2015 2016 2017 3Q18
Loans to Small and Medium Enterprises Account for total loans
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(in NT 100mn)	(in NT 100mn)	(in NT 100mn)	(in NT 100mn)	(in NT 100mn)	(in NT 100mn)	(in NT 100mn)
	2013	2014	2015	2016	2017	3Q18
Loans to Small and Medium Enterprises	3,916.00	4,316.60	4,579.10	4,328.30	4,675.70	4,851.71
Account for total loans	43.56%	46.12%	48.58%	44.46%	45.42%	49.04%

15

Loan Breakdown

(in NT 100mn)

2018/1-9 by Currency 2018/1-9 NTD Loan by Business

2018/1-9 Foreign Currency Loan by Region

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Foreign Currency Loan Government
1,216.57 1,399.88
11% 14%
Consumer Public Enterprises
2,769.04 115.74
28% 1%
NTD Loan
Corporate
9,868.27
5,583.61
89%
57%
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USA
Taiwan
165.51
255.29
14%
21%
Australia
Japan
249.05
4.26
20% OBU
0%
348.76
Hong Kong 29%
114.58
9% China
79.12
7%
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2017/1-9 by Currency 2017/1-9 NTD Loan by Business

2017/1-9 Foreign Currency Loan by Region

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Foreign Currency Loan Government
1,069.58 1,468.38
10% 15%
Consumer
Public Enterprises
2,640.59
259.71
28%
3%
NTD Loan Corporate
9,436.89 5,068.21
90% 54%
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USA
126.81
Taiwan
12%
247.53
Australia 23%
233.94
Japan 22%
0.00
OBU
0%
329.33
31%
Hong Kong
73.15
China
7%
58.82
5%
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16

Deposit Breakdown

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(in NT 100mn)
2018/1-9 by Currency 2018/1-9 by Period
FCY Deposit
2,217.62
15.83%
Time Deposits Demand Deposits
6,869.78 7,135.66
NTD Deposit 49.05% 50.95%
11,787.82
84.17%
2017/1-9 by Currency 2017/1-9 by Period
FCY Deposit
1,954.08
15.01%
Time Deposits
6,102.84
NTD Deposit Demand Deposits
46.87%
11,787.82 6,917.78
84.99% 53.13%
2013 2014 2015 2016 2017 3Q18
Demand Deposits
47.82% 48.80% 49.16% 55.08% 52.81% 50.95%
Ratio
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17

Net Interest Spread and NIM

Net Interest Spread and NIM	Net Interest Spread and NIM	Net Interest Spread and NIM	Net Interest Spread and NIM	Net Interest Spread and NIM	Net Interest Spread and NIM	Net Interest Spread and NIM
1.34 1.37 1.35 1.32 1.29 1.31 1.02 1.06 1.04 0.97 0.97 0.97 2013 2014 2015 2016 2017 3Q18 Net Interest Spread NIM (unit：%)
	2013	2014	2015	2016	2017	3Q18
Net Interest Spread	1.34	1.37	1.35	1.32	1.29	1.31
NTD Spread	1.31	1.37	1.33	1.26	1.23	1.22
FCY Spread	1.63	1.50	1.53	1.90	1.99	2.28
NIM	1.02	1.06	1.04	0.97	0.97	0.97

18

Net Interest Spread and NIM

Net Interest Spread and NIM	Net Interest Spread and NIM	Net Interest Spread and NIM	Net Interest Spread and NIM	Net Interest Spread and NIM	Net Interest Spread and NIM
1.29 1.29 1.26 1.29 1.31 0.97 0.97 0.96 0.97 0.97
3Q17 4Q17 1Q18 2Q18 3Q18 Net Interest Spread NIM (unit：%) 3Q17 4Q17 1Q18 2Q18 3Q18 Net Interest Spread 1.29 1.29 1.26 1.29 1.31 NTD Spread 1.23 1.23 1.20 1.21 1.22 FCY Spread 2.01 1.99 2.06 2.25 2.28 NIM 0.97 0.97 0.96 0.97 0.97
	3Q17	4Q17	1Q18	2Q18	3Q18
Net Interest Spread	1.29	1.29	1.26	1.29	1.31
NTD Spread	1.23	1.23	1.20	1.21	1.22
FCY Spread	2.01	1.99	2.06	2.25	2.28
NIM	0.97	0.97	0.96	0.97	0.97

19

Asset Quality

0.80%	0.80%	0.76%	0.76%																																400.00%	400.00%
0.70%																										327.57%					346.74%				350.00%
0.60%																					277.63%														300.00%
0.50%					236.78%								231.22%																						250.00%
0.40%					0.46%									0.48%								0.43%													200.00%
		141.61%
0.30%																										0.33%					0.34%				150.00%
0.20%																																			100.00%
0.10%																																			50.00%
0.00%																																			0.00%
		2013			2014							NPL		2015 Ratio							2016 Coverage Ratio					2017					3Q18
																																		(in NT mn)
									2013								2014				2015					2016				2017				3Q18
	NPL								7,388								4,618					4,905				4,520					3,712			3,708
	NPL Ratio								0.76%								0.46%						0.48%			0.43%					0.33%			0.34%
	Allowance for bad debts								10,462								10,934					11,342				12,550					12,158			12,858
	Coverage Ratio								141.61%								236.78%				231.22%					277.63%				327.57%				346.74%
	Bad Loans Write-offs								2,023								3,044						3,095			2,884					3,950			2,075

20

Asset Quality

	Asset Quality	Asset Quality	Asset Quality	Asset Quality	Asset Quality	Asset Quality
0.20% 0.30% 0.40% 0.50% 0.60%	0.37% 0.33% 0.35% 0.33% 0.34% 293.39% 327.57% 344.62% 350.87% 346.74% 280.00% 330.00% 380.00% 3Q17 4Q17 1Q18 2Q18 3Q18 NPL Ratio Coverage Ratio (in NT mn)
		3Q17	4Q17	1Q18	2Q18	3Q18
NPL		4,113	3,712	3,964	3,661	3,708
NPL Ratio		0.37%	0.33%	0.35%	0.33%	0.34%
Allowance for bad debts		12,066	12,158	13,661	12,844	12,858
Coverage Ratio		293.39%	327.57%	344.62%	350.87%	346.74%
Bad Loans Write-offs		1,883	3,950	357	1,531	2,075

21

Capital Adequacy Ratio

7 8 9 10 11 12 13	12.62 1257 13.02	12.62 1257 13.02	12.62 1257 13.02	12.62 1257 13.02	12.62 1257 13.02	12.62 1257 13.02	12.62 1257 13.02	12.62 1257 13.02	12.62 1257 13.02	12.62 1257 13.02
	11.91 . 12.41 12.27 12.45 12.46
	9.59 9.67 956 947 951 9.59 9.61 9.69
	. . .
	7.91 8.04 7.99 7.93 7.98 8.13 8.17 8.27
	2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 4Q16 1Q17 Q17 3Q17 4Q17 1Q18 Q18 3Q18
		資本適足率(BIS)(%) 第一類資本比率(Tier1)(%) 普通股權益比率(CET1)(%)
			4Q16	1Q17	2Q17	3Q17	4Q17	1Q18	2Q18	3Q18
BIS(%)			11.91	12.62	12.57	12.41	12.27	12.45	12.46	13.02
Tier1 Ratio(%)			9.59	9.67	9.56	9.47	9.51	9.59	9.61	9.69
CET1(%)			7.91	8.04	7.99	7.93	7.98	8.13	8.17	8.27

22

23