TBB — Interim / Quarterly Report 2018

Apr 18, 2019

Financial Review of 2018Q4

2019.4.18

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 2018Q4

Significant Profit Growth and Asset Quality Improvement

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TBB reported a net income before tax of NT$9,198 million for 2018 (+56.67% YoY); net service fee income NT$3,660 million for 2018 decreased by 0.84% YoY; interest income NT$17.20 billion increased by 11.49% YoY.

Loan balance in 2018 was NT$1,102 billion, grew 3.63% YoY; deposit balance in 2018 was NT$1,389 billion, grew 5.99% YoY; the FX volume was USD 69.69 billion, decreased by 1.63% YoY.

The net interest spread for 2018 was 1.33% (+4bp YoY), the net interest margin (NIM) in 2018 was 0.97% (-0 bp YoY).

As for asset quality, NPL ratio in 2018Q4 was 0.30%, decreased 3bp YoY; coverage ratio in 2018Q4 was 394.08%, increased by 66.51%.

2

Financial Performance

3

Assets and Liabilities

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----- Start of picture text ----- 1,584,094 1,619,0401,498,7291,475,8921,392,391 1,534,1871,508,2761,427,8591,408,2331,329,6532014 2015 2016 2017 2018 Assets Liabilities----- End of picture text -----

(in NT mn)

					(in NT mn)
	2014	2015	2016	2017	2018
Assets	1,392,391	1,475,892	1,498,729	1,584,094	1,619,040
Liabilities	1,329,653	1,408,233	1,427,859	1,508,276	1,534,187

4

Equity

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----- Start of picture text ----- 13.2790,00013.0012.3380,000 11.84 11.90 11.87 84,85312.0075,81870,00011.0070,87067,65960,000 62,738 10.0050,000 9.002014 2015 2016 2017 2018 Equity BVPS----- End of picture text -----

(in NT mn)

					(in NT mn)
	2014	2015	2016	2017	2018
Equity	62,738	67,659	70,870	75,818	84,853
Common Stock	52,979	56,847	59,689	61,480	63,939
BVPS	11.84	11.90	11.87	12.33	13.27

5

Income Growth

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----- Start of picture text ----- 1.449,000 1.49,1981.09 1.21.04 1.077,000 0.9516,3596,1965,000 5,486 5,871 0.80.63,0000.41,000 0.22014 2015 2016 2017 2018 Net Income before tax EPS before Tax (NTD)----- End of picture text -----

(in NT mn)

					(in NT mn)
	2014	2015	2016	2017	2018
Net Income before tax	5,486	6,196	6,359	5,871	9,198
Net income	5,315	5,113	5,196	5,040	7,641
EPS before Tax(NTD)	1.04	1.09	1.07	0.95	1.44
EPS(NTD)	1.00	0.90	0.87	0.82	1.19
ROE before tax	9.14%	9.50%	9.18%	8.00%	11.45%
ROA before tax	0.40%	0.43%	0.43%	0.38%	0.57%
Employeeproductivity	1.13	1.24	1.28	1.15	1.75

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(in NT mn)

Assets, Liabilities and Equity Breakdown

2018 Assets

2018 Liabilities

2018 Equity

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----- Start of picture text ----- Other assets, 52,911 , 4%Other liabilities,Premises and equipment, 65,876 , 5% Legal reserve,10,020 , 12%14,310 , 1%Financial liabilities,Financial assets, Loans, 18,505 , 1%344,174 , 21% 1,074,628 , Deposits and66% Financial remittances,Due from the Central 1,311,041 , 85%debentures, Common stock,Bank and call loans to47,450 , 3% 63,939 , 75%banks, 86,980 , 5%Deposits from theOther items inCash and cash equivalents, Central Bank and otherequity, 10,894 , 13%46,037 , 3% banks, 91,315 , 6%----- End of picture text -----

2017 Assets

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----- Start of picture text ----- Other assets, 29,253 , 3%Premises and equipment,14,227 , 1%Financial assets,276,420 , 17% Loans,1,111,560 ,Due from the Central Bank 70%and call loans to banks,101,342 , 6%Cash and cashequivalents, 51,292 , 3%----- End of picture text -----

2017 Equity

2017 Liabilities

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----- Start of picture text ----- Legal reserve,Other liabilities,8,570 , 11%42,763 , 3%Financial liabilities,14,959 , 1%Common stock,Financial debentures, 61,480 , 81%Deposits and41,000 , 3%remittances, Other items in equity,1,316,024 , 87%5,768 , 8%Deposits from theCentral Bank and otherbanks, 93,530 , 6%----- End of picture text -----

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Income Breakdown

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----- Start of picture text ----- (In NT mn)Net ServicePre-tax IncomeFee Income9,1983,66039.94% 201816%FinancialProvisions Instruments794 Net Revenues Net Income3.45% 23,027 Net interest 1,404100.00% income 6%17,198Operating 75% Otherexpenses Net Revenues breakdown Income13,035 76556.61%3%Pre-tax Income Net Service5,871 Fee Income28.14% 3,6912017 18%Provisions3,029 Financial14.52% Net Revenues InstrumentsNet Income20,863Net interest 1,288100.00%income 6%Operating15,425expenses74%Other Income11,96345957.34% Net Revenues breakdown 2%8----- End of picture text -----

Overseas Income

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----- Start of picture text ----- (in NT mn)2017 2018Overseas + OBU,2,133 , 36.33%Overseas + OBU,2,254 , 24.51%Domestic,Domestic,6,450 ,3,280 , 70.12%55.87% AffiliatedAffiliatedEnterprises,Enterprises,458 , 7.80%494 , 5.37%----- End of picture text -----

Note ： % indicates the percentage of the total net income before tax.

9

Operating Expense Ratio

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----- Start of picture text ----- 57.76%57.32% 57.34%57.09%56.60%----- End of picture text -----

20142015201620172018(in NT mn)	20142015201620172018(in NT mn)	20142015201620172018(in NT mn)	20142015201620172018(in NT mn)	20142015201620172018(in NT mn)	20142015201620172018(in NT mn)
	2014	2015	2016	2017	2018
Net Income	18,994	20,162	20,657	20,863	23,027
Oerating Expense	10,970	11,557	11,793	11,963	13,034
Percentage	57.76%	57.32%	57.09%	57.34%	56.60%

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Loan,Deposit, andFX volume

Loan,Deposit, andFX volume	Loan,Deposit, andFX volume	Loan,Deposit, andFX volume	Loan,Deposit, andFX volume	Loan,Deposit, andFX volume	Loan,Deposit, andFX volume
1,137,9971,198,6271,259,3051,310,3281,388,764954,3611,012,7081,010,8241,063,1791,101,75920142015201620172018DepositLoan(in NT mn)
	2014	2015	2016	2017	2018
Deposit	1,137,997	1,198,627	1,259,305	1,310,328	1,388,764
Loan	954,361	1,012,708	1,010,824	1,063,179	1,101,759
FX volume (in USD mn )	62,204	65,106	63,257	70,846	69,688

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Loan Breakdown

(in NT 100mn)

2018 by Currency

2018 NTD Loan by Business

2018 Foreign Currency Loan by Region

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----- Start of picture text ----- Foreign Currency Loan Government,1,232.16 1,190.32 , 12%11%Public Enterprises,Consumer, 171.92 , 2%2,780.18 ,28%Corporate,NTD Loan5,643.01 ,9,785.43 58%89%2017 by Currency 2017 NTD Loan by Business----- End of picture text -----

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----- Start of picture text ----- USA168.64 Taiwan14% 257.6221%Japan Australia9.66 249.211% 20%OBU352.64Hong Kong 29%116.729% China77.676%----- End of picture text -----

2017 Foreign Currency Loan by Region

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----- Start of picture text ----- USA134.90 Taiwan12% 255.08Japan 23%0.12 Australia0% 238.8222% OBUHong Kong 331.2577.70 30%7%China61.776%----- End of picture text -----

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----- Start of picture text ----- Government,Foreign Currency Loan1,474.32 , 15%1,099.6410%Consumer,2,658.60 , Public Enterprises,28% 257.71 , 3%NTD Loan Corporate,5,141.52 , 54%9,532.1590%----- End of picture text -----

12

Deposit Breakdown

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----- Start of picture text ----- (in NT 100mn)2018 by Currency 2018 by PeriodFCY Deposit2,201.7115.85%Time Deposits Demand Deposits6,827.96 7,059.68NTD Deposit 49.17% 50.83%11,685.9384.15%2017 by Currency 2017 by PeriodFCY Deposit1,986.2115.16%Time Deposits6,183.65NTD Deposit Demand Deposits47.19%11,117.07 6,919.6384.84% 52.81%2014 2015 2016 2017 2018Demand Deposits Ratio 48.80% 49.16% 55.08% 52.81% 50.83%----- End of picture text -----

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Loans to Small and Medium Enterprises

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----- Start of picture text ----- 5,500 60.00%4,990.405,0004,675.70 55.00%4,579.104,316.60 4,328.30 50.50%4,50048.58%50.00%4,000 46.12%45.42%44.46%45.00%3,5003,000 40.00%2014 2015 2016 2017 2018Loans to Small and Medium Enterprises Account for total loans(in NT 100mn)2014 2015 2016 2017 2018Loans to Small and Medium4,316.60 4,579.10 4,328.30 4,675.70 4,990.40EnterprisesAccount for total loans 46.12% 48.58% 44.46% 45.42% 50.50%----- End of picture text -----

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Loans to Overseas

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----- Start of picture text ----- 700 8.00%621.90600513.31500430.695.64%369.12400 346.274.83%300 4.26%3.63% 3.64%200100 3.00%2014 2015 2016 2017 2018Loans to Overseas Account for total loans(in NT 100mn)2014 2015 2016 2017 2018Loans to Overseas 346.27 369.12 430.69 513.31 621.90Account for total loans 3.63% 3.64% 4.26% 4.83% 5.64%----- End of picture text -----

15

Net Interest Spread and NIM

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----- Start of picture text ----- 2.281.991.901.531.50 1.35 1.32 1.29 1.331.371.041.06 0.97 0.97 0.97----- End of picture text -----

(unit：%)20142015201620172018Net Interest SpreadFCY SpreadNIM	(unit：%)20142015201620172018Net Interest SpreadFCY SpreadNIM	(unit：%)20142015201620172018Net Interest SpreadFCY SpreadNIM	(unit：%)20142015201620172018Net Interest SpreadFCY SpreadNIM	(unit：%)20142015201620172018Net Interest SpreadFCY SpreadNIM	(unit：%)20142015201620172018Net Interest SpreadFCY SpreadNIM
	2014	2015	2016	2017	2018
Net Interest Spread	1.37	1.35	1.32	1.29	1.33
NTD Spread	1.37	1.33	1.26	1.23	1.24
FCY Spread	1.5	1.53	1.9	1.99	2.28
NIM	1.06	1.04	0.97	0.97	0.97

16

Asset Quality

	Asset Quality	Asset Quality	Asset Quality	Asset Quality	Asset Quality	Asset Quality
0.20%0.25%0.30%0.35%0.40%0.45%0.50%	0.46%0.48%0.43%0.33%0.30%236.78%231.22%277.63%327.57%394.08%100.00%150.00%200.00%250.00%300.00%350.00%400.00%20142015201620172018NPL RatioCoverage Ratio(in NT mn)
		2014	2015	2016	2017	2018
NPL		4,618	4,905	4,520	3,712	3,308
NPL Ratio		0.46%	0.48%	0.43%	0.33%	0.30%
Allowance for bad debts		10,934	11,342	12,550	12,158	13,034
Coverage Ratio		236.78%	231.22%	277.63%	327.57%	394.08%
Bad Loans Write-offs		3,044	3,095	2,884	3,950	2,659

17

Capital Adequacy Ratio

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----- Start of picture text ----- 12.7013.00 12.2711.9112.00 11.2410.5411.0010.00 9.59 9.51 9.608.849.008.20 8.217.98 7.91 7.988.007.887.002014 2015 2016 2017 2018資本適足率 (BIS)(%) 第一類資本比率 (Tier1)(%) 普通股權益比率 (CET1)(%)2014 2015 2016 2017 2018BIS (%) 10.54 11.24 11.91 12.27 12.70Tier1 Ratio (%) 8.20 8.84 9.59 9.51 9.60CET1 (%) 7.88 7.98 7.91 7.98 8.21----- End of picture text -----

18

Domestic Branches

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Taiwan Business Bank has 125 domestic branches and 1 OBU.

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In 2018, the East Taipei Branch was relocated to the Sanxia Branch, and the Yang Mei Branch and the Wan Hua Branch were relocated.

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Strategy ：

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Focus on the development of core business: In line with TBB's mission to serve SMEs, TBB will relocate our branches and move some branches to industrial parks gathering SMEs.

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Strengthening the value of physical channels: To meet the needs of TBB’s medium- and long-term business development, TBB will examine the appropriateness of each branch’s location, and relocate or redecorate to enhance the value of them.

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Overseas Branches

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8 overseas branches:

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Asia ：

、 、 Hong Kong branch Shanghai branch 、 Wuhan branch Tokyo branch

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USA ：

、 LA branch New York branch

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Australia ： 、 Brisbane branch Sydney branch

Other overseas offices ： Yangon Representative Office, TBB International Leasing Co., Ltd. and TBB (Cambodia) Microfinance Institution Plc..

Strategy

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Improve foreign-currency loans and boost interest margin income Promotion of Compliance

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20

Award

2018 Asia Money	• Best Bank for SMEs.
Executive Yuan	• Merit Bank in 0206 Hualien earthquake financing Project
Financial SupervisoryCommission	• Merit award in SME Partner Award• Merit Bank award and Merit award in new industry laon project• Merit award in Southbound Policy lending program
Ministry of EconomicAffairs	• the Credit Guarantee Partner Award• Direct Guarantee Performance Award• Policy Promotion Award
Ministry of Finance	• Merit Bank in Promoting Output Insurance
Taiwan Institute forSustainable Energy	• Taiwan Corporate Sustainability Awards
Taiwan Academy ofBanking and Finance	• Outstanding awards- the “Best Corporate Banking”- the “Best Small and Medium Enterprise Banking”
	• 2018 Outstanding Bank
Other	- (Non financial holding company)Best Service Provider in new industry
	• BSI
	- Sustainable practice Awared

21

Employee Stock Ownership Trust

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The First state-owned Bank implemented in ESOT.

Consolidate ownership

Enhance employee benefits

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22

Credit Ratings

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Taiwan Ratings

Taiwan Ratings
Taiwan Ratings	Long term	Short term	Outlook
2017	twAA-	twA-1+	Stable
2018	twAA-	twA-1+	Stable
2019	twAA-	twA-1+	Stable

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S&P

S&P
S&P	Long term	Short term	Outlook
2017	BBB+	A-2	Stable
2018	BBB+	A-2	Stable
2019	BBB+	A-2	Stable

23

Dividend Policy

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	2015	2016	2017	2018	2019
Stock (NTD)	0.73	0.50	0.30	0.40	0.50
Cash (NTD)	-	0.10	0.102	0.268	0.30
Total	0.73	0.60	0.402	0.668	0.80

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