TBB - Interim / Quarterly Report 2021

Stock code：2834

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Financial Statements

with Independent Auditors’ Review Report For the Nine Months Ended September 30, 2021 and 2020

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

The independent auditors’ review 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’ review report and consolidated financial statements, the Chinese version shall prevail.

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	Contents	Page
Cover Page		1
Table of Contents		2
Independent Auditors' Review Report		3
Consolidated Balance Sheets		4
Consolidated Statements of Comprehensive Income		5
Consolidated Statements of Changes in Equity		6
Consolidated Statements of Cash Flows		7
Notes to the Consolidated Financial Statements
1.	Company history	8
2.	Approval date and procedures of the consolidated financial statements	8
3.	New standards, amendments and interpretations adopted	9～11
4.	Summary of significant accounting policies	11～27
5.	Significant accounting assumptions and judgments, and major sources of	28
	estimation uncertainty
6.	Explanation of significant accounts	29～128
7.	Related-party transactions	128～132
8.	Pledged assets	132
9.	Commitments and contingencies	132～133
10.	Losses from disasters	133
11.	Subsequent events	133
12.	Others	134～142
13.	Other disclosures
	(A) Information on significant transactions	143～144
	(B) Information of investees	144～146
	(C) Information on investments in Mainland China	146
	(D) Information of major shareholders	146
14.	Segment information	147～149
Segment information of Security Division		150～151

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KPMG

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

Independent Auditors’ Review Report

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

Introduction

We have reviewed the accompanying consolidated balance sheets of Taiwan Business Bank, Ltd. and subsidiaries as of September 30, 2021 and 2020, and the related consolidated statements of comprehensive income for the three months and nine months ended September 30, 2021 and 2020, as well as changes in equity and cash flows for the nine months ended September 30, 2021 and 2020, and notes to the consolidated financial statements, including a summary of significant accounting policies. 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, the Regulations Governing the Preparation of Financial Reports by Securities Firms and International Accounting Standards (“ IASs” ) 34, “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

We conducted our reviews in accordance with Statement of Auditing Standards 65, “ Review of Financial Information Performed by the Independent Auditor of the Entity” . A review of the consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the generally accepted auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of Taiwan Business Bank, Ltd. and subsidiaries as of September 30, 2021 and 2020, and of its consolidated financial performance for the three months and nine months ended September 30, 2021 and 2020, and its consolidated cash flows for the nine months ended September 30, 2021 and 2020 in accordance with the Regulations Governing the Preparation of Financial Reports by Public Held Banks, the Regulations Governing the Preparation of Financial Reports by Securities Firms and IASs 34, “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

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

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

KPMG Taipei, Taiwan (Republic of China) October 29, 2021

Notes to Readers

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

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese.) Reviewed only, not audited in accordance with generally accepted auditing standards as of September 30, 2021 and 2020

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

September 30, 2021, December 31, and September 30, 2020

(Expressed in Thousands of New Taiwan Dollars)

Assets 11000 Cash and cash equivalents (Notes 6(A) and 7) 11500 Due from the Central Bank and call loans to banks (Notes 6(B) and 7) 12000 Financial assets at fair value through profit or loss (Note 6(C)) 12100 Financial assets at fair value through other comprehensive income (Notes 6(G) and (P)) 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) 15500 Other financial assets (Note 6(I)) 18500 Property and equipment, net (Note 6(J)) 18600 Right-of-use assets, net (Note 6(K)) 19000 Intangible assets, net 19300 Deferred tax assets (Note 6(Y)) 19500 Other assets, net (Note 6(L)) Total assets		September 30, 2021 Amount ％ $ 31,745,333 2 233,207,915 12 47,518,005 2 149,620,086 7 241,105,739 12 18,052,974 1 8,071,469 - 349,583 - 1,257,572,870 63 12,641 - 14,433,334 1 1,199,449 - 513,451 - 1,990,224 - 4,958,569 - $ 2,010,351,642 100	December 31, 2020 Amount ％ 30,817,437 2 114,195,668 6 15,597,556 1 117,355,850 7 228,003,332 13 6,132,162 - 43,448,157 2 306,417 - 1,209,716,083 68 13,781 - 14,514,906 1 1,073,757 - 375,008 - 1,843,835 - 8,241,104 - 1,791,635,053 100	September 30, 2020 Amount ％ 32,329,346 2 83,347,122 5 29,046,139 2 114,714,511 7 230,816,898 13 10,644,096 1 41,556,291 2 122,855 - 1,184,757,119 66 14,372 - 14,489,846 1 1,015,074 - 372,622 - 2,037,942 - 10,023,917 1 1,755,288,150 100 Liabilities and equity Liabilities 21000 Deposits from the Central Bank and banks (Notes 6(M) and 7) 21500 Due to the Central Bank and banks (Note 6(N)) 22000 Financial liabilities at fair value through profit or loss (Notes 6(O) and (S)) 22500 Notes and bonds issued under repurchase agreement (Note 6(P)) 23000 Payables (Note 6(Q)) 23200 Current tax liabilities 23500 Deposits and remittances (Notes 6(R) and 7) 24000 Bank notes payable (Note 6(S)) 25500 Other financial liabilities (Note 6(T)) 25600 Provisions (Note 6(U)) 26000 Lease liabilities (Note 6(V)) 29300 Deferred tax liabilities (Note 6(Y)) 29500 Other liabilities (Note 6(W)) Total liabilities Equity attributable to owners of parent 31101 Common stock (Note 6(X)) 31500 Capital Surplus(Note 6(X)) Retained earnings: 32001 Legal reserve (Note 6(X)) 32003 Special reserve (Note 6(X)) 32005 Unappropriated retained earnings (Note 6(X)) 32500 Other equity interest (Note 6(X)) Total equity Total liabilities and equity		September 30, 2021 Amount % $ 94,421,624 5 46,565,100 2 8,522,458 1 2,061,306 - 21,857,584 1 24,687 - 1,671,482,830 83 52,250,000 3 4,458,292 - 3,357,471 - 1,188,436 - 894,212 - 1,998,093 - 1,909,082,093 95 77,431,952 4 815,900 - 15,693,140 1 185,128 - 4,005,046 - 3,138,383 - 101,269,549 5 $ 2,010,351,642 100	December 31, 2020		September 30, 2020
							Amount % 118,201,039 7 29,040,100 2 8,639,002 - 2,055,991 - 47,787,075 3 3,053 - 1,418,572,000 79 53,250,000 3 5,492,366 - 3,393,417 - 1,062,021 - 901,581 - 4,578,659 - 1,692,976,304 94 74,885,834 4 815,900 - 14,332,452 1 185,128 - 4,728,382 1 3,711,053 - 98,658,749 6 1,791,635,053 100		Amount % 114,740,534 7 17,058,790 1 8,961,099 1 3,028,033 - 51,605,359 3 1,500 - 1,388,929,286 79 59,250,000 3 5,908,558 - 3,158,910 - 991,305 - 895,743 - 3,402,899 - 1,657,932,016 94 74,885,834 4 815,900 - 14,332,452 1 185,128 - 3,654,369 1 3,482,451 - 97,356,134 6 1,755,288,150 100

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese.) Reviewed only, not audited in accordance with generally accepted auditing standards.

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the three and nine months ended September 30, 2021 and 2020

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

41000 Interest income (Notes 6(AC) and 7) 51000 Less：Interest expenses (Notes 6(AC) and 7) Net interest revenue Net revenue other than interest 49100 Net service fee revenue (Notes 6(AD) and 13) 49200 Gain on financial assets or liabilities measured at fair value through profit or loss (Note 6(AE)) 49310 Realized gain on financial assets at fair value through other comprehensive income (Note 6(AF)) 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(AG)) 49800 Net other revenue other than interest income (Note 6(AH)) 49831 Net securities brokering revenue Net revenue 58200 Bad debts expense, commitment and guarantee liability provision (Note 6(AI)) Operating expense 58500 Employee benefits expenses (Notes 6(AJ)) 59000 Depreciation and amortization expense (Notes 6(AK)) 59500 Other general and administrative expense (Note 6(AL)) Total operating expense 61001 Income from continuing operation before tax 61003 Less: Income tax expenses (Note 6(Y)) Net income 65000 Other comprehensive income： 65200 Components of other comprehensive income that will not be reclassified to profit or loss 65204 Revaluation (losses) gains 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(Y)) 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 (Losses) gains 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(Y)) 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 (AA)) Basic earnings per share (in NT dollar) Diluted earnings per share (in NT dollar)	For the three months e	nded September 30,	For the nine months e	nded September 30, 2020 Amount ％ 19,122,309 117 (7,086,368) (44) 12,035,941 73 2,107,122 13 787,661 5 896,952 5 1,849 - 113,988 1 3,504 - 149,703 1 258,096 2 16,354,816 100 (3,226,772) (20) (6,046,302) (37) (746,121) (5) (2,506,385) (15) (9,298,808) (57) 3,829,236 23 366,271 2 3,462,965 21 (710,251) (4) - - (710,251) (4) (472,121) (3) 898,055 5 (87,117) (1) 513,051 3 (197,200) (1) 3,265,765 20 0.45
	2021 Amount ％ $ 6,079,723 93 (1,552,802) (24) 4,526,921 69 1,008,473 15 (4,451) - 755,142 12 23,299 - 63,318 1 (7,078) - 48,521 1 143,292 2 6,557,437 100 (1,705,016) (26) (2,128,773) (33) (261,783) (4) (909,391) (14) (3,299,947) (51) 1,552,474 23 154,147 2 1,398,327 21 (165,472) (2) - - (165,472) (2) (128,212) (2) (291,199) (4) (28,888) - (390,523) (6) (555,995) (8) $ 842,332 13 $ 0.18	2020 Amount ％ 5,915,176 103 (1,960,576) (34) 3,954,600 69 736,976 13 180,071 3 538,863 9 780 - 95,844 2 (5,843) - 109,270 2 105,642 2 5,716,203 100 (1,271,791) (22) (1,983,480) (35) (257,915) (5) (874,439) (15) (3,115,834) (55) 1,328,578 23 123,784 2 1,204,794 21 (331,540) (6) - - (331,540) (6) (147,379) (2) 180,255 3 (25,668) - 58,544 1 (272,996) (5) 931,798 16 0.16	2021 Amount ％ 17,988,615 99 (4,747,270) (26) 13,241,345 73 2,468,970 14 394,342 2 1,107,136 6 103,486 1 218,716 1 (17,110) - 113,689 1 445,146 2 18,075,720 100 (4,021,240) (22) (6,251,283) (35) (774,187) (4) (2,603,348) (14) (9,628,818) (53) 4,425,662 25 528,526 3 3,897,136 22 529,045 3 - - 529,045 3 (321,989) (2) (816,301) (4) (71,767) - (1,066,523) (6) (537,478) (3) 3,359,658 19 0.50
	$ 0.18	0.16	0.50	0.45

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese.) Reviewed only, not audited in accordance with generally accepted auditing standards.

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the nine months ended September 30, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

			Attributable to o	wners of parent		Other equity interest Exchange differences on Unrealized gains on financial assets measured at fair value translation of foreign financial statements through other comprehensive income (862,866) 4,541,167 - - (377,697) 180,497 (377,697) 180,497 - - - - - - - - - 1,350 (1,240,563) 4,723,014 (1,476,771) 5,187,824 - - (257,591) (279,887) (257,591) (279,887) - - - - - - - (35,192) (1,734,362) 4,872,745	Total 95,516,766 3,462,965 (197,200)
Share Capital Common stock $ 71,319,842 - - - - - - 3,565,992 - $ 74,885,834 $ 74,885,834 - - - - - 2,546,118 - $ 77,431,952	Capital Surplus 815,900 - - - - - - - - 815,900 815,900 - - - - - - - 815,900		Retained	earnings	Total 19,702,723 3,462,965 - 3,462,965 - - (1,426,397) (3,565,992) (1,350) 18,171,949 19,245,962 3,897,136 - 3,897,136 - (748,858) (2,546,118) 35,192 19,883,314
						Exchange differences on translation of foreign financial statements (862,866) - (377,697) (377,697) - - - - - (1,240,563) (1,476,771) - (257,591) (257,591) - - - - (1,734,362)
		Legal reserve 12,312,175 - - - 2,020,277 - - - - 14,332,452 14,332,452 - - - 1,360,688 - - - 15,693,140	Special reserve 223,331 - - - - (38,203) - - - 185,128 185,128 - - - - - - - 185,128	Unappropriated retained earnings 7,167,217 3,462,965 - 3,462,965 (2,020,277) 38,203 (1,426,397) (3,565,992) (1,350) 3,654,369 4,728,382 3,897,136 - 3,897,136 (1,360,688) (748,858) (2,546,118) 35,192 4,005,046

							3,265,765
							- - (1,426,397) - -
							97,356,134
							98,658,749 3,897,136 (537,478)
							3,359,658
							- (748,858) - -
							101,269,549

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese.) Reviewed only, not audited in accordance with generally accepted auditing standards.

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the nine months ended September 30, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities: Net income before tax Adjustments： Income and expenses items: Depreciation expenses Amortization expenses Provision for bad debt expenses Net losses on financial assets or liabilities at fair value through profit or loss Interest expenses Net gain arising from derecognition of financial assets measured at amortized cost Interest income Net change in provisions for guarantee liabilities Net change in other provisions Loss on disposal of property and equipment Property and equipment transferred to expenses Impairment loss on financial assets Reversal of impairment loss on financial asset Total adjustments to reconcile profit Changes in Operating Assets and Liabilities： Changes in Operating Assets： (Increase) decrease in due from the Central Bank and call loans to banks Increase in financial assets at fair value through profit or loss (Increase) decrease in securities purchased under resell agreements Decrease (increase) in receivables Increase in discounts and loans 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 Increase (decrease) in financial liabilities at fair value through profit or loss Increase in notes and bonds issued under repurchase agreement (Decrease) increase in payable Increase (decrease) in deposits and remittances Decrease in other financial liabilities Decrease in provisions for employee benefits Total Changes in Operating Liabilities Total Changes in Operating Assets and Liabilities Total adjustments Net cash flows generated from (used in) operations Interest received Interest paid Income tax paid Net cash flow generated from (used in) operating activities Cash flows from investing activities： Acquisition of financial assets at fair value through other comprehensive income Acquisition of financial assets at amortized cost Proceeds from repayments of financial assets at amortized cost Acquisition of property and equipment Proceeds from disposal of property and equipment Decrease in refundable deposits Acquisition of intangible assets Net cash flow (used in) generated from investing activities Cash flows from financing activities： Increase in due to the Central Bank and banks Proceeds from issuing bank notes payable Repayments of bank notes payable Increase in guarantee deposits received Decrease in guarantee deposits received Payments of lease liabilities Decrease in other liabilities Cash dividends paid Net cash flows generated from financing activities Effect of exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalents Cash and cash equivalent at beginning of period Cash and cash equivalent at end of period	For the nine months ended September 30, 2021 2020 $ 4,425,662 3,829,236 652,006 639,056 122,181 107,065 3,971,449 3,222,708 364,537 257,352 4,747,270 7,086,368 (103,486) (1,849) (17,988,615) (19,122,309) 41,112 (293) 81,860 4,357 584 1,636 - 5,061 17,110 - - (3,504) (8,093,992) (7,804,352) (119,021,659) 42,091,000 (32,414,623) (1,725,558) (11,920,812) 2,755,017 35,377,787 (14,647,681) (51,801,573) (55,464,875) 8,251 8,405 1,671,404 (5,346,385) (178,101,225) (32,330,077) (23,779,415) 9,946,922 13,094 (1,037,385) 5,315 2,159,452 (26,906,287) 20,400,747 252,910,830 (46,120,261) (1,034,074) (926,526) (158,627) (2,979) 201,050,836 (15,580,030) 22,949,611 (47,910,107) 14,855,619 (55,714,459) 19,281,281 (51,885,223) 17,982,991 19,907,106 (4,702,639) (7,294,758) (448,750) (709,374) 32,112,883 (39,982,249) (32,567,831) (11,938,394) (202,267,917) (148,234,850) 189,268,485 180,489,725 (301,271) (362,297) 46 27 1,297,779 406,986 (229,533) (98,886) (44,800,242) 20,262,311 17,525,000 16,306,645 - 20,000,000 (1,000,000) (14,000,000) - 561,859 (336,172) - (311,273) (321,564) (2,244,394) (448,606) - (1,426,397) 13,633,161 20,671,937 (17,906) (18,214) 927,896 933,785 30,817,437 31,395,561 $ 31,745,333 32,329,346	For the nine months ended September 30, 2021 2020 $ 4,425,662 3,829,236 652,006 639,056 122,181 107,065 3,971,449 3,222,708 364,537 257,352 4,747,270 7,086,368 (103,486) (1,849) (17,988,615) (19,122,309) 41,112 (293) 81,860 4,357 584 1,636 - 5,061 17,110 - - (3,504) (8,093,992) (7,804,352) (119,021,659) 42,091,000 (32,414,623) (1,725,558) (11,920,812) 2,755,017 35,377,787 (14,647,681) (51,801,573) (55,464,875) 8,251 8,405 1,671,404 (5,346,385) (178,101,225) (32,330,077) (23,779,415) 9,946,922 13,094 (1,037,385) 5,315 2,159,452 (26,906,287) 20,400,747 252,910,830 (46,120,261) (1,034,074) (926,526) (158,627) (2,979) 201,050,836 (15,580,030) 22,949,611 (47,910,107) 14,855,619 (55,714,459) 19,281,281 (51,885,223) 17,982,991 19,907,106 (4,702,639) (7,294,758) (448,750) (709,374) 32,112,883 (39,982,249) (32,567,831) (11,938,394) (202,267,917) (148,234,850) 189,268,485 180,489,725 (301,271) (362,297) 46 27 1,297,779 406,986 (229,533) (98,886) (44,800,242) 20,262,311 17,525,000 16,306,645 - 20,000,000 (1,000,000) (14,000,000) - 561,859 (336,172) - (311,273) (321,564) (2,244,394) (448,606) - (1,426,397) 13,633,161 20,671,937 (17,906) (18,214) 927,896 933,785 30,817,437 31,395,561 $ 31,745,333 32,329,346
	2021 $ 4,425,662 652,006 122,181 3,971,449 364,537 4,747,270 (103,486) (17,988,615) 41,112 81,860 584 - 17,110 - (8,093,992) (119,021,659) (32,414,623) (11,920,812) 35,377,787 (51,801,573) 8,251 1,671,404 (178,101,225) (23,779,415) 13,094 5,315 (26,906,287) 252,910,830 (1,034,074) (158,627) 201,050,836 22,949,611 14,855,619 19,281,281 17,982,991 (4,702,639) (448,750) 32,112,883 (32,567,831) (202,267,917) 189,268,485 (301,271) 46 1,297,779 (229,533) (44,800,242) 17,525,000 - (1,000,000) - (336,172) (311,273) (2,244,394) - 13,633,161 (17,906) 927,896 30,817,437 $ 31,745,333
		(7,804,352)
		42,091,000 (1,725,558) 2,755,017 (14,647,681) (55,464,875) 8,405 (5,346,385)
		(32,330,077)
		9,946,922 (1,037,385) 2,159,452 20,400,747 (46,120,261) (926,526) (2,979)
		(15,580,030)
		(47,910,107)
		(55,714,459)
		(51,885,223) 19,907,106 (7,294,758) (709,374)
		(39,982,249)
		(11,938,394) (148,234,850) 180,489,725 (362,297) 27 406,986 (98,886)
		20,262,311
		16,306,645 20,000,000 (14,000,000) 561,859 - (321,564) (448,606) (1,426,397)
		20,671,937
		(18,214) 933,785 31,395,561
		32,329,346

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese.) REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING STANDARDS AS OF SEPTEMBER 30, 2021 AND 2020 TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements September 30, 2021 and 2020 (Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

1. Company history

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

(A) As prescribed by the Banking Law, provides professional services tailored to the needs of small and medium-size businesses;
(B) Trust and securities brokerage businesses as approved by the relevant authority;
(C) International banking business; and
(D) Other relevant businesses as authorized by the relevant authority in-charge.

As of September 30, 2021, the Bank not only sets up the business dept., international dept., securities dept. and trust dept. under head office but also has 124 domestic branches, 1 offshore banking unit, 8 overseas branches, 1 oversea representative office and 16 securities brokerage locations.

The Bank became listed on the Taiwan Stock Exchange on January 3, 1998.

Under the ” Statute for Privatization of State Enterprises” and upon the approval of Taiwan Province Government, the shares of the Bank owned by the provincial government were sold to the public. In line with privatization of the three other major Taiwan province government owned run commercial banks, the Bank had completed its own privatization on January 22, 1998.

As of September 30, 2021, December 31 and September 30, 2020, the Bank and subsidiaries has 5,512, 5,411 and 5,422 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 October 29, 2021.

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

3. New standards, amendments and interpretations adopted:

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

The details of impact on the Bank and subsidiaries’ adoption of the new amendments beginning January 1, 2021 are as follows:

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

The Bank and subsidiaries applied the Phase 2 amendments retrospectively. However, in accordance with the exceptions permitted in the Phase 2 amendments, the Bank and subsidiaries has elected not to restate the prior period to reflect the application of these amendments, including not providing additional disclosures for 2020. There is no impact on opening equity balances as a result of retrospective application.

The Phase 2 amendments provide practical relief from certain requirements in the standards. These reliefs relate to modifications of financial instruments and lease contracts or hedging relationships when a benchmark interest rate in a contract is replaced with a new alternative benchmark rate.

When the basis for determining the contractual cash flows of a financial instrument is changed as a direct consequence of interest rate benchmark reform and is made on an economically equivalent basis, the Phase 2 amendments provide a practical expedient to update the effective interest rate of a financial instrument before applying the existing requirements in the standards. The amendments also provide an exception to use a revised discount rate that reflects the change in interest rate when remeasuring a lease liability because of a lease modification that is required by interest rate benchmark reform.

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

The details of related disclosures are disclosed in Note 4(F) and 6(AN) for risk managements..

(ii) Other amendments

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

●Amendments to IFRS 4 “ Extension of the Temporary Exemption from Applying IFRS 9”

～ 9 ～

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

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

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

－
●Amendments to IAS 16 “Property, Plant and Equipment Proceeds before Intended Use”
－
●Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”
●Annual Improvements to IFRS Standards 2018–2020
●Amendments to IFRS 3 “Reference to the Conceptual Framework”
(c) The impact of IFRS issued by IASB but not yet endorsed by the FSC

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

Standards or Effective date per Interpretations Content of amendment IASB Amendments to IAS 1 The key amendments to IAS 1 include: January 1, 2023 “Disclosure of Accounting ●requiring companies to disclose their Policies”

●requiring companies to disclose their material accounting policies rather than their significant accounting policies;
●clarifying that accounting policies related to immaterial transactions, other events or conditions are themselves immaterial and as such need not be disclosed; and
●clarifying that not all accounting policies that relate to material transactions, other events or conditions are themselves material to a company’s financial statements.

～ 10 ～

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

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

Content of amendment
Effective date per
IASB
The
amendments
introduce
a
new
definition
for
accounting
estimates:
clarifying that they are monetary amounts
in the financial statements that are subject
to measurement uncertainty.
The
amendments
also
clarify
the
relationship between accounting policies
and accounting estimates by specifying that
a company develops an accounting estimate
to achieve the objective set out by an
accounting policy.
January 1, 2023

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

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

●Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”
●IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”
●Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”
●Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

4. Summary of significant accounting policies

(A) Statement of compliance

These consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Public Held Banks (hereinafter referred to as the Regulation) and the preparation and guidelines of IAS 34 “Interim Financial Reporting” which are endorsed and issued into effect by FSC and do not include all of the information required by 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) for a complete set of annual consolidated financial statements.

～ 11 ～

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

(B) Basis of preparation

(a) Basis of measurement

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

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

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

(a) 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.

～ 12 ～

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

(b) Elimination of intra-group transaction

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

List of subsidiaries in the consolidated financial statements:

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 Leasing business Leasing business Financial company Investing business Consulting business		Shareholding (Holding %)
			September 30, 2021 100 100 100 100 100	December 31, 2020 September 30, 2020 100 100 100 100 100 100 100 100 - -
	Taiwan China Cambodia Taiwan Taiwan

(D) Foreign currency

(a) Foreign currency transaction

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies on the end of each subsequent reporting period (hereinafter referred to as the reporting date) are retranslated to the functional currency at the exchange rate of Bank of Taiwan at 10 AM. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured based on historical cost are translated using the exchange rate at the date of translation. Foreign currency differences arising on retranslation are recognized in profit or loss, except for the equity instruments measured at fair value through other comprehensive income which are recognized in other comprehensive income arising on the retranslation.

～ 13 ～

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

(b) Foreign operations

The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to the Bank and subsidiaries' functional currency (not the currency under highly inflation economy) by the following procedures:

(1) Assets and liabilities are translated at the date of the statement of financial position;
(2) Profit and loss are translated at the average rate (unless the exchange rate of the period fluctuates intensively, then it applies the exchange rate on the trade date);
(3) Foreign currency differences are recognized in other comprehensive income.

All the translation differences arising from above procedures are presented in the foreign currency translation reserve in equity. The exchange difference from translating net investments in foreign operations is recognized in other comprehensive income. When a foreign operation is wholly or partially disposed, 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.

(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.

(a) Financial assets

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

On initial recognition, a financial asset is classified as measured at: amortized cost; fair value through other comprehensive income (FVOCI) – debt investment; FVOCI – equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Bank 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.

～ 14 ～

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

(1) Investment in debt instruments measured at amortized cost

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

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

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

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

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

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

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

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

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.

～ 15 ～

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

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

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

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

(4) Discount and loans, net

Discount and loans are recorded as initial fair value including direct transaction cost, and the subsequent measurement recognizes interest income via effective interest rate method if there is not much difference then it can adopt straight line method and is booked as per amortized cost deducted by impairment loss. Interest accrual on discount and loans are suspended if either of the following occurs:

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

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

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

～ 16 ～

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

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 expect 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;
‧ 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.

～ 17 ～

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

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

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

The allowance for bad debts and guarantee liability provisions were assessed by the previously stated method shall not be less than the amount regulated by “ Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-Performing and Non-Accrual Loans.

Unrecoverable overdue loans and bad debts of the Bank 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.

(b) Financial liabilities

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

(1) Financial liabilities held for trading

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

～ 18 ～

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

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

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

The Bank 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.

(d) Derecognition of financial assets and liabilities

The Bank and subsidiaries shall derecognize a financial asset when the contractual rights to the cash flows from the financial asset expire or when the Bank and subsidiaries transfer substantially all the risks and rewards of ownership of the financial assets. A financial liability should be removed from the balance sheet when, and only when, it is extinguished, that is, when the obligation specified in the contract is either discharged or cancelled or expires. If the bonds or stocks are taken as collateral, shall not be derecognized because the Bank and subsidiaries have retained substantially all the risks and rewards of ownership. This is also applicable when the Bank and subsidiaries conduct securitization transactions and still retain some of the risks.

(e) Financial instruments offsetting

A financial asset and a financial liability should be offset and the net amount reported when, and only when, an entity has a legally enforceable right to set off the amounts; and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

～ 19 ～

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

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

Modifications of financial instruments

If 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, then the Bank and subsidiaries update the effective interest rate of the financial asset or financial liability to reflect the change that is required by the reform.

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

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

If changes are made to a financial asset or financial liability in addition to changes made to the basis for determining the contractual cash flows required by interest rate benchmark reform, then the Bank and subsidiaries first update the effective interest rate of the financial asset or financial liability to reflect the changes that are required by interest rate benchmark reform. Subsequently, the Bank and subsidiaries apply the policies on accounting for modifications set out above 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).

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.

～ 20 ～

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

(H) Property and Equipment

(a) Recognition and measurement

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

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

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

(b) Subsequent expenditure

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

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 fiscal year. Whenever there is evidence indicating that the carrying amount is unable to be recovered due to environmental activities or changes, the Bank and subsidiaries evaluate the impairment loss of assets.

～ 21 ～

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

(I) Lease

(a) Identifying a lease

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. To assess whether a contract conveys the right to control the use of an identified asset, the Bank and subsidiaries assesses whether:

the contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and
the Bank and subsidiaries has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
the Bank and subsidiaries has the right to direct the use of the asset throughout the period of use only if either:
- (1) the Bank and subsidiaries has the right to direct how and for what purpose the asset is used throughout the period of use; or
- (2) the relevant decisions about how and for what purpose the asset is used are predetermined and:
  - the Bank and subsidiaries has the right to operate the asset throughout the period of use, without the supplier having the right to change those operating instructions; or
  - the Bank and subsidiaries designed the asset in a way that predetermines how and for what purpose it will be used throughout the period of use.
(b) As a lessee

The Bank 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.

～ 22 ～

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

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

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

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Bank 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 recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

～ 23 ～

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

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.

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) Deferred assets

The costs of installation for utilities, including electricity and water, as well as security facilities, are capitalized and amortized equally over 5 years.

(K) Collaterals

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

(L) Provisions

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

(M) Employee benefit

(a) Short term employee benefit

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

～ 24 ～

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

(b) 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 provides pension fund per the regulations of the local authorities.

Defined contribution plan refers to the plan that the Bank and subsidiaries annually provide certain amount of money to funds to fulfill the obligation. The Bank and subsidiaries provide 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’ s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognized past service costs and the fair value of any plan assets are deducted. The discount rate is the yield at the reporting date on government bonds that have maturity dates approximating the terms of the Bank’ s obligations and that are denominated in the same currency in which the benefits are expected to be paid.

The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Bank, the recognized asset is limited to the total of the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the Bank 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).

～ 25 ～

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

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

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

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

(c) Deposits with favorable rate

The Bank 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.

(d) 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 recognize 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.

～ 26 ～

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

(N) Income tax

Income tax expenses for the period are best estimated by multiplying pre-tax income for the interim reporting period by the effective annual tax rate as forecasted by the management.

Temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases shall be measured based on the tax rates that have been enacted or substantively enacted at the time of the asset or liability is recovered or settled, and be recognized directly in equity or other comprehensive income as tax expense.

(O) Revenue recognition

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

(P) 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.

(Q) Operating segments

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

～ 27 ～

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

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

The preparation of the consolidated financial statements in conformity with the Regulations and the IFRSs (in accordance with IAS 34 “ Interim Financial Reporting” and endorsed by the FSC) requires management to make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

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

Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements is as follows:

(A) Impairment losses on loans

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

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

(B) Retirement benefit

The present value of the retirement benefit obligation is the actuarial result based on several assumptions. Any change of the assumptions may influence the carrying amount of the retirement benefit obligation.

The assumptions applied to determine net pension cost (revenue) include the discount rate. The Bank and subsidiaries determine the appropriate discount rate at the end of each year and apply it to calculate the present value of the future cash outflows which are to be paid to the retirement benefit obligation. To determine the appropriate discount rate, the Bank and subsidiaries should consider the interest rate of high-quality corporate bonds and government bonds. The currency of the retirement benefit shall be the same as that of the high-quality corporate bond or government bonds and the duration till maturity date shall comply with the duration of the related pension obligation. Other significant assumptions of retirement benefit obligation are based on the current market situation.

～ 28 ～

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

6. Explanation of significant accounts

(A) Cash and cash equivalents

Cash and cash equivalents
Petty cash and revolving funds Foreign currencies on hand Checks for clearing Due from other banks Total	September 30, 2021 $ 10,719,626 884,679 2,546,930 17,594,098 $ 31,745,333	December 31, 2020 9,974,072 953,700 3,212,602 16,677,063 30,817,437	September 30, 2020
			10,074,649 982,124 5,437,925 15,834,648
			32,329,346

(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	September 30, 2021 $ 102,806,549 37,046 130,364,320 90,000 (90,000) $ 233,207,915	December 31, 2020 46,325,385 55,339 67,814,944 90,000 (90,000) 114,195,668	September 30, 2020 44,803,417 28,499 38,515,206 90,000 (90,000) 83,347,122

As of September 30, 2021, December 31 and September 30, 2020, in accordance with the Banking Law and the Central Bank Law, the required reserve deposited by the Bank with the Central Bank amounted to $102,308,250, $45,813,518 and $44,367,530 of which $44,053,256, $37,579,517 and $37,154,849 respectively, were restricted and such restriction may only be lifted when the required reserve is adjusted to a lower amount. The Bank and subsidiaries cooperated with the Central Bank to undertake financing loans for small and medium enterprises that are affected by the severe and the special infectious pneumonia epidemic, As of September 30, 2021, December 31 and September 30, 2020 are guaranteed by the deposit reserve of the Central Bank as required, $35,000,000, $30,000,000 and $30,000,000 respectively, please refer to 6(N) for the information of due to the Central Bank and banks.

As of September 30, 2021, December 31 and September 30, 2020, the Bank’s subsidiaries and overseas branches, in compliance with the Central Bank’s reserve requirement set by local authorities, deposited $117,606, $202,049 and $131,293 and in reserve, of which $75,364, $56,642 and $50,314 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 September 30, 2021, December 31 and September 30, 2020, the required reserve with the Central Bank amounted to $380,693, $309,818 and $304,594 respectively, and its use was unrestricted.

～ 29 ～

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

As of September 30, 2021, December 31 and September 30, 2020, 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 September 30, 2021, December 31 and September 30, 2020, the Bank deposited marketable securities of $90,000 as trust fund reserves.

Financial assets designated at fair value through profit or loss： Corporate bonds Financial assets at fair value through profit or loss, mandatorily measured at fair value : Derivative instruments not used for hedging: Foreign exchange forward contracts Currency swap contracts Foreign currency options-call Stock index futures Interest Rate Swap Non-derivative financial assets Commercial paper Listed stocks Unlisted stocks Beneficiary certificates Convertible corporate bonds Financial debentures Total	September 30, 2021 $ - 7,339 435,854 1,882 28,744 7,843 39,124,089 449,114 283,587 6,540,335 159,612 479,606 $ 47,518,005	December 31, 2020 84,377 55,129 527,767 6,592 72,747 28,623 12,414,244 271,669 310,620 267,054 51,700 1,507,034 15,597,556	September 30, 2020
			115,748 29,057 713,174 5,169 72,658 40,537 25,705,947 60,119 235,710 220,610 299,112 1,548,298
			29,046,139

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)

～ 30 ～

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

September 30, 2021 Currency swaps contract $ 126,156,009 Interest rate swaps contract 11,837,725 Option contract - buy 659,470 Option contract - sell 659,470 Forward foreign exchange contract 2,521,520 (D) Securities purchased under resell agreements September 30, 2021 Securities under resell agreements $ 18,052,974 Face amount 18,061,400 Resell period 2021.10.01~2021.10.28 Range of resell interest rate 0.21%~0.26% Resell price $ 18,056,005 (E) Receivables, net September 30, 2021 Interest receivable $ 2,507,096 Acceptances receivable 1,110,477 Accrued incomes 126,124 Accounts receivable 1,040,785 Dividends receivable 26,370 Accounts receivable factoring without recourse - Spot exchange receivable-foreign currencies 5,369 Refinancing guaranty deposits - Guaranteed proceeds receivable from refinancing - Credit cards accounts receivable 982,820 Receivable price of securities purchased for customers 658,537 Settlement price - Installment receivables and leases 1,223,353 Notes receivables 514 Other receivables 517,381 Sub-total 8,198,826 Less: Allowance for bad debts (127,357) Total $ 8,071,469	December 31, 2020 156,328,006 13,920,619 886,607 886,607 2,817,826 December 31, 2020 6,132,162 6,135,000 2021.01.04~2021.01.25 0.23%~0.26% 6,132,615 December 31, 2020 2,517,204 1,283,753 69,435 1,023,164 - - 35,719,388 6,272 6,360 1,090,030 246,189 452,602 753,061 - 419,263 43,586,721 (138,564) 43,448,157	September 30, 2020 194,670,971 14,458,847 1,229,176 1,229,176 3,502,382 September 30, 2020 10,644,096 10,653,000 2020.10.05~2020.10.29 0.28%~0.30% 10,645,944 September 30, 2020 2,611,727 1,008,483 65,554 1,080,218 400 1,821 34,338,618 3,743 4,159 1,082,134 186,503 - 725,521 - 590,969 41,699,850 (143,559) 41,556,291

～ 31 ～

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

The outstanding contract amount of financial assets that have been written off and still have recourse as of September 30, 2021, December 31 and September 30, 2020 were $84,528,817, $81,728,304 and $79,747,909 respectively.

The change in allowance for bad debts was as follows:

Beginning balance
(Reversal) provision
Write-off
Foreign exchange
Ending balance
Discounts and loans, net
Import/export bills negotiated
Bills and notes discounted
Overdrafts
Secured overdrafts
Short-term loans
Short-term secured loans
Margin loans receivable
Medium-term loans
Medium-term secured loans
Long-term loans
Long-term secured loans
Overdue loans
Sub-total
Less: Adjustment of discount and
premium
Less: Allowance for bad debts
Total

For the nine months ended September 30,
2021
2020
$ 138,564
151,590
(10,759)
8,688
-
(15,693)
(448)
(1,026)
$
127,357
143,559
September 30, 2021
December 31, 2020
September 30, 2020
$ 374,219
149,837
162,028
873,360
835,280
562,703
37,012
22,354
29,587
2,287,311
1,456,408
1,843,145
154,158,280
142,677,907
149,526,559
205,012,844
197,006,073
196,434,277
2,784,148
2,504,189
2,157,284
154,886,158
154,862,508
156,223,076
277,314,157
260,308,203
235,072,384
28,799,195
25,097,549
24,813,382
443,148,300
433,675,772
429,248,353
3,472,402
5,699,161
4,550,942
1,273,147,386
1,224,295,241
1,200,623,720
(237,269)
(253,001)
(250,609)
(15,337,247)
(14,326,157)
(15,615,992)
$
1,257,572,870
1,209,716,083
1,184,757,119

(F) Discounts and loans, net

～ 32 ～

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

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 nine months ended September 30, 2021 2020 $ 14,326,157 13,341,368 3,989,895 3,237,128 (10,128) (14,440) (3,641,862) (1,722,039) 692,434 790,135 (19,249) (16,160) $ 15,337,247 15,615,992
	2021 $ 14,326,157 3,989,895 (10,128) (3,641,862) 692,434 (19,249) $ 15,337,247

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

Investment in debt instruments measured at fair value through other comprehensive income： Government bonds Corporate bonds Financial debentures Subtotal Investment in equity instruments measured at fair value through other comprehensive income： Listed stocks Unlisted stocks Real Estate Investment Trust Subtotal Total	September 30, 2021 $ 43,567,153 54,235,809 31,874,306 129,677,268 14,686,434 5,210,544 45,840 19,942,818 $ 149,620,086	December 31, 2020 34,724,023 46,029,075 23,339,038 104,092,136 8,736,348 4,478,071 49,295 13,263,714 117,355,850	September 30, 2020
			39,045,730 40,182,320 23,808,044
			103,036,094
			7,184,189 4,444,475 49,753
			11,678,417
			114,714,511

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 (P) for more details.

～ 33 ～

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

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 $677,510, $330,299, $881,635 and $511,208, respectively as dividend revenue for the three months and nine months ended September 30, 2021 and 2020. In which, the disposal equity instruments were recognized $40,827, $103,124, $44,127 and $117,041 as dividend revenue for the three months and nine months ended September 30, 2021 and 2020.

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 $717,323, $2,369,270, $801,669, $2,610,237. And gains (losses) on disposal are $33,653, $(2,351), $35,192 and $(1,350) for the three months and nine months ended September 30, 2021 and 2020. Therefore, accumulated gains on disposal were transferred from other equity to retained earnings.

Please refer to Note 6(AN) for the credit risk (including the impairment in debt instruments) and market risk information.
The Bank and subsidiaries assessed the impairment of financial assets measured at fair value through other comprehensive income as of September 30, 2021 and 2020. The changes in allowance for credit losses attribute to the financial assets were as follows:

Beginning balance Provision Foreign exchange Ending balance	For the nine months ended September 30,	For the nine months ended September 30,
	2021 $ 66,454 16,506 (167) $ 82,793	2020
		52,299 9,062 (232) 61,129

～ 34 ～

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

(H) Investment in debt instruments at amortized cost

Certificates of deposit with the Central Bank Government bonds Corporate bonds Financial debentures Negotiable certificates of deposit Subtotal Less:Accumulated impairment Total	September 30, 2021 $ 190,210,000 26,479,417 9,488,187 14,946,125 58,485 241,182,214 (76,475) $ 241,105,739		December 31, 2020 161,705,000 29,584,857 13,464,156 23,044,358 280,925 228,079,296 (75,964) 228,003,332	September 30, 2020 153,805,000 30,959,711 14,411,778 31,427,903 289,835 230,894,227 (77,329) 230,816,898

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.

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

Reserve for provisional seizure by the court, international card payment reserve, trust claim reserve and operating guaranty funds Central Bank Financing Guarantee Overseas branches required reserve of overdraft guarantee Daylight overdraft guarantee (Certificates of deposit with the Central Bank) Guarantee for borrowing US dollars Guarantee for borrowing JPY dollars Sponsorship of Treasury Affairs Total	September 30, 2021 $ 876,700 11,300,000 58,485 2,000,000 23,000,000 200,000 16,200,000 $ 53,635,185		December 31, 2020 812,600 - - 2,000,000 23,000,000 200,000 - 26,012,600	September 30, 2020
				961,300 - - 2,000,000 23,000,000 200,000 -
				26,161,300

～ 35 ～

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

The Bank and subsidiaries assessed the impairment of investment in debt instruments at amortized cost as of September 30, 2021 and 2020. The changes in allowance for credit losses attribute to these financial assets were as follows:

losses attribute to these financial assets were as	follows:
Beginning balance Provision (Reversal) Foreign exchange Ending balance	For the nine months ended September 30, 2021 2020 $ 75,964 90,411 604 (12,566) (93) (516) $ 76,475 77,329
	2021 $ 75,964 604 (93) $ 76,475

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

For the three months ended September 30, 2021 The carrying amount at the date of derecognition Gain (Loss) on disposal $ - - 59,889 470 776,075 22,829 $ 835,964 23,299 For the three months ended September 30, 2020 The carrying amount at the date of derecognition Gain (Loss) on disposal $ 93,399 780	For the nine months ended September 30, 2021	For the nine months ended September 30, 2021
	The carrying amount at the date of derecognition Gain (Loss) on disposal 791,559 78,951 210,918 1,706 776,075 22,829 1,778,552 103,486 For the nine months ended September 30, 2020	Gain (Loss) on disposal
		78,951 1,706 22,829
		103,486
The carrying amount at the date of derecognition $ 93,399	The carrying amount at the date of derecognition 227,898	Gain (Loss) on disposal
		1,849

For the three months and nine months ended September 30, 2021 and 2020, the following reasons that caused the Bank and subsidiaries dispose part of its financial assets measured at amortized cost for the mandatorily redemption of the bond issuers, and the purpose of fund management

(I) Other financial assets

Other financial assets
Overdue receivable Less: Allowance for bad debts, overdue receivable Total	September 30, 2021 $ 62,439 (49,798) $ 12,641	December 31, 2020 68,832 (55,051) 13,781	September 30, 2020 71,109 (56,737)
			14,372

～ 36 ～

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

The change in allowance for bad debts was as follows:

Beginning balance Reversal Transfer in Write-off Written-off recovered Ending balance	For the nine months ended September 30, 2021 2020 $ 55,051 85,901 (17,239) (17,289) 10,128 14,440 (12,846) (42,051) 14,704 15,736 $ 49,798 56,737
	2021 $ 55,051 (17,239) 10,128 (12,846) 14,704 $ 49,798

(J) Property and equipment, net

September 30, 2021	Cost $ 6,743,535 7,963,007 2,323,987 273,911 648,135 171,830 64,945 487,211 $ 18,676,561 Cost $ 6,743,535 7,930,240 2,273,606 275,438 608,684 168,234 12,246 514,215 $ 18,526,198 Cost $ 6,743,535 7,910,617 2,243,569 277,715 588,354 158,798 2,617 505,124 $ 18,430,329	Revaluation increment 2,986,161 31,184 - - - - - - 3,017,345 Revaluation increment 2,986,161 31,184 - - - - - - 3,017,345 Revaluation increment 2,986,161 31,184 - - - - - - 3,017,345	Accumulated depreciation - 4,544,862 1,829,890 226,949 539,267 90,819 - - 7,231,787 Accumulated depreciation - 4,404,411 1,771,978 232,974 521,029 69,460 - - 6,999,852 Accumulated depreciation - 4,356,879 1,754,427 237,438 503,412 76,887 - - 6,929,043	Accumulated impairment 14,031 14,754 - - - - - - 28,785 Accumulated impairment 14,031 14,754 - - - - - - 28,785 Accumulated impairment 14,031 14,754 - - - - - - 28,785	Total 9,715,665 3,434,575 494,097 46,962 108,868 81,011 64,945 487,211
Land Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Construction in progress Prepayment for equipment Total December 31, 2020
					14,433,334
					Total 9,715,665 3,542,259 501,628 42,464 87,655 98,774 12,246 514,215
Land Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Construction in progress Prepayment for equipment Total September 30, 2020
					14,514,906
					Total 9,715,665 3,570,168 489,142 40,277 84,942 81,911 2,617 505,124
Land Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Construction in progress Prepayment for equipment Total
					14,489,846

～ 37 ～

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

Change of cost

Land Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Construction in progress Prepayment for equipment Total Land Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Construction in progress Prepayment for real estate Prepayment for equipment Total	January 1, 2021 $ 9,729,696 7,961,424 2,273,606 275,438 608,684 168,234 12,246 514,215 $ 21,543,543 January 1, 2020 $ 9,724,121 7,893,705 2,336,544 279,967 582,107 151,713 16,346 120 405,727 $ 21,390,350	Increase - 32,767 144,106 15,068 58,374 7,413 56,534 51,690 365,952 Increase 5,575 48,096 134,440 11,187 26,109 27,832 15,787 5,455 146,429 420,910	Decrease - - 91,837 16,114 17,389 1,070 3,835 78,658 208,903 Decrease - - 226,763 13,534 18,996 19,606 29,516 5,575 46,688 360,678	Foreign Exchange - - (1,888) (481) (1,534) (2,747) - (36) (6,686) Foreign Exchange - - (652) 95 (866) (1,141) - - (344) (2,908)	September 30, 2021
					9,729,696 7,994,191 2,323,987 273,911 648,135 171,830 64,945 487,211
					21,693,906
					September 30, 2020 9,729,696 7,941,801 2,243,569 277,715 588,354 158,798 2,617 - 505,124
					21,447,674

Change of depreciation

Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Total Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Total	January 1, 2021 $ 4,404,411 1,771,978 232,974 521,029 69,460 $ 6,999,852 January 1, 2020 $ 4,213,708 1,840,547 240,449 493,441 75,183 $ 6,863,328	Increase 140,451 150,305 10,315 36,699 24,204 361,974 Increase 143,171 139,504 10,532 29,466 20,779 343,452	Decrease - 91,359 16,075 17,276 1,070 125,780 Decrease - 223,622 13,397 18,832 18,231 274,082	Foreign Exchange - (1,034) (265) (1,185) (1,775) (4,259) Foreign Exchange - (2,002) (146) (663) (844) (3,655)	September 30, 2021 4,544,862 1,829,890 226,949 539,267 90,819
					7,231,787
					September 30, 2020 4,356,879 1,754,427 237,438 503,412 76,887
					6,929,043

～ 38 ～

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

Accumulated impairment

Land Buildings Total Land Buildings Total	January 1, 2021 $ 14,031 14,754 $ 28,785 January 1, 2020 $ 14,031 14,754 $ 28,785	Increase - - - Increase - - -	Decrease - - - Decrease - - -	Foreign Exchange - - - Foreign Exchange - - -	September 30, 2021 14,031 14,754
					28,785
					September 30, 2020 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 September 30, 2021, December 31 and September 30, 2020, the appreciation from revaluation of properties all amounted to $3,017,345. Reserve for land incremental tax all amounted to $879,056 (Recognized under deferred tax liabilities).

As of September 30, 2021, December 31 and September 30, 2020, land which was illegally occupied all amounted to $5,496. Except for a portion of the land that was still under negotiation with the occupant; in addition, the Bank intends to participate in land auction, urban renewal or by other appropriate means in due course.

(K) Right-of-use assets, net

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:

September 30, 2021	Cost $ 1,794,225 27,843 73,200 10,085 $ 1,905,353 Cost $ 1,538,073 43,406 67,794 7,603 $ 1,656,876	Accumulated depreciation 635,219 27,050 40,387 3,248 705,904 Accumulated depreciation 503,033 40,895 36,156 3,035 583,119	Accumulated impairment - - - - - Accumulated impairment - - - - -	Total 1,159,006 793 32,813 6,837
Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total December 31, 2020
				1,199,449
				Total 1,035,040 2,511 31,638 4,568
Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total
				1,073,757

～ 39 ～

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

September 30, 2020	Cost $ 1,407,039 63,552 67,457 6,682 $ 1,544,730	Accumulated depreciation 436,224 59,484 31,171 2,777 529,656	Accumulated impairment - - - - -	Total 970,815 4,068 36,286 3,905
Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total
				1,015,074

Change of cost

Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total	January 1, 2021 $ 1,538,073 43,406 67,794 7,603 $ 1,656,876 January 1, 2020 $ 1,299,279 74,915 60,417 5,729 $ 1,440,340	Increase 423,959 - 17,825 4,065 445,849 Increase 259,778 2 13,859 1,145 274,784	Decrease 160,857 15,563 12,396 1,583 190,399 Decrease 153,540 11,365 6,762 192 171,859	Foreign Exchange (6,950) - (23) - (6,973) Foreign Exchange 1,522 - (57) - 1,465	September 30, 2021 1,794,225 27,843 73,200 10,085
					1,905,353
					September 30, 2020 1,407,039 63,552 67,457 6,682
					1,544,730

Change of depreciation

Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total	January 1, 2021 $ 503,033 40,895 36,156 3,035 $ 583,119 January 1, 2020 $ 301,019 64,743 21,514 1,505 $ 388,781	Increase 285,944 1,718 15,899 1,776 305,337 Increase 284,913 6,106 16,443 1,464 308,926	Decrease 152,985 15,563 11,652 1,563 181,763 Decrease 149,350 11,365 6,762 192 167,669	Foreign Exchange (773) - (16) - (789) Foreign Exchange (358) - (24) - (382)	September 30, 2021 635,219 27,050 40,387 3,248
					705,904
					September 30, 2020 436,224 59,484 31,171 2,777
					529,656

～ 40 ～

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

(L) Other assets, net

Office supplies Prepayments Operating guarantee deposits and settlement fund Guarantee deposits paid Deferred assets Proceeds of settlement and margin trading Total Deposits from the Central Bank 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	September 30, 2021 $ 28,562 4,261,717 31,450 476,076 166 160,598 $ 4,958,569 and banks September 30, 2021 $ 214,901 9,469,000 555,287 16,163,408 557,483 67,461,545 $ 94,421,624	December 31, 2020 29,165 6,229,552 28,319 1,773,855 166 180,047 8,241,104 December 31, 2020 281,121 11,802,000 619,499 36,445,088 777,971 68,275,360 118,201,039	September 30, 2020
			28,921 8,213,876 28,319 815,393 171 937,237
			10,023,917
			September 30, 2020
			299,177 12,175,800 510,094 32,305,731 1,174,372 68,275,360
			114,740,534

(M) Deposits from the Central Bank and banks

(N) Due to the Central Bank and banks

Central Bank Agricultural Bank of Taiwan Sunny Commercial Bank (OBU) Bank of Kaohsiung Co.,Ltd. (OBU) Total Unused credit lines			September 30, 2021
	Currency TWD TWD USD USD	Interest Rate 0.1% 0.83%~0.9% 1.62% 1.63%	Maturity Date 2022.6.30 2021.10.19 2022.8.27 2023.6.10	Original Amount NTD Amount 46,013,800 $ 46,013,800 50,000 50,000 6,000 167,100 12,000 334,200 $ 46,565,100 $ 4,647,600

～ 41 ～

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

		December 31, 2020
Currency TWD USD USD USD	Interest Rate 0.1% 2.26% 1.76% 1.77%	Maturity Date 2021.12.31 2021.5.28 2021.8.27 2023.6.10 September 30, 2020	Original Amount NTD Amount 28,450,000 $ 28,450,000 3,000 84,300 6,000 168,600 12,000 337,200 $ 29,040,100 $ 2,262,400

Currency TWD USD USD USD	Interest Rate 0.1% 2.26% 1.76% 1.77%	Maturity Date 2021.3.27 2021.5.28 2020.8.27 2023.6.10	Original Amount NTD Amount 16,450,000 $ 16,450,000 3,000 86,970 6,000 173,940 12,000 347,880 $ 17,058,790 $ 14,265,960	NTD Amount

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

Financial liabilities designated at fair value through profit or loss： Financial debentures Financial liabilities held for trading： Derivative instruments not used for hedging Foreign exchange forward contracts Currency swap contracts Foreign currency option-put Interest rate contract Total	September 30, 2021 $ 8,287,725 7,537 215,391 1,881 9,924 $ 8,522,458	December 31, 2020 8,411,020 3,768 181,994 6,599 35,621 8,639,002	September 30, 2020 8,612,981 38,701 253,951 5,169 50,297
			8,961,099

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

Please refer to 6(S) 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 September 30, 2021, December 31 and September 30, 2020.

(P) Notes and bonds issued under repurchase agreement

Assets	September 30, 2021	September 30, 2021	September 30, 2021	September 30, 2021
	Par value	Selling Price (Recognized in securities sold under repurchase agreements)	Designated repurchase amount	Designated repurchase date
Financial assets at fair value through other comprehensive income	$ 2,156,951	2,061,306	2,068,875	Prior to July 1, 2024
	-	-	-

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


Assets	September 30, 2020
	Par value	Selling Price (Recognized in securities sold under repurchase agreements)	Designated repurchase amount	Designated repurchase date
Financial assets measured at fair value through profit or loss	$ 2,995,941	3,028,033	3,034,761	Prior to August 24, 2023

～ 43 ～

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

(Q) Payables

Accrued interest Accounts payable Acceptances Accrued expenses Collection payable Deposits received from securities borrowers Guaranteed price deposits received from securities borrowers Accounts payable factoring Spot exchange payable, foreign currencies Other payables Prices payable of securities sold for customers Dividends payable Settlement payable Other Total	September 30, 2021 $ 2,417,593 2,580,495 1,119,960 2,480,685 10,775,742 77,686 105,362 - 5,160 887,784 112,686 751,471 536,809 6,151 $ 21,857,584	December 31, 2020 2,372,962 3,229,502 1,303,348 2,559,675 690,663 112,416 150,740 - 35,716,094 944,149 683,596 2,624 - 21,306 47,787,075	September 30, 2020
			2,415,089 6,471,955 1,017,854 2,299,752 2,989,298 82,863 90,159 1,821 34,317,574 1,712,478 146,084 2,633 35,860 21,939
			51,605,359

(R) Deposits and remittances

Deposits and remittances
Savings deposits Time deposits Demand deposits Checking account deposits Remittances Total	September 30, 2021 $ 697,301,725 476,260,219 475,176,716 22,308,931 435,239 $ 1,671,482,830	December 31, 2020 679,271,179 337,823,523 375,308,422 25,741,910 426,966 1,418,572,000	September 30, 2020
			655,703,827 359,243,598 352,854,153 20,842,883 284,825
			1,388,929,286

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

(S) Bank notes payable

Bonds			Terms of Transactions		Bond Is	sued
	Issue date	Maturity date	Interest Rate & repayment	Type		Amount
2013-2A 2013-2B 2015-2A 2015-2B 2016-1P 2016-2 2017-1A 2017-1B 2017-1C 2017-2 2018-1 2018-2 2019-1A 2019-1B	11/25/2013 11/25/2013 08/31/2015 08/31/2015 09/20/2016 12/20/2016 03/28/2017 03/28/2017 03/28/2017 05/23/2017 01/05/2018 08/20/2018 03/21/2019 03/21/2019	11/25/2020 11/25/2020 08/31/2023 08/31/2025 None 12/20/2023 03/28/2024 03/28/2025 03/28/2027 05/23/2027 01/05/2021 08/20/2028 03/21/2026 03/21/2029	(A) The debentures bear annual interest rate, which is the index rate plus 0.52%. The index rate is the average offer of 90-days CP which is indicated in Reuter's page 6165 at 11 A.M Taipei time, 2 operation days prior to the interest commencement date. (B) Since January 1, 2015 according to various indicators of interest rate changes during the value date two business days before the pricing (FIXING) Bank of the Republic of China Business Association National Union RCAs website "Taipei fixing the financial sector call loan rate (TAIBOR)" three- month interest rate fixing. Simple interest rate is accrued four times a year and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.92%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 2.05%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 2.10%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 3.2%. Simple interest is accrued and paid annually. The debentures are redeemable per face value plus accrued interest at interest payment date after five years and three months from the issued date under the consent of the competent authority The debentures bear an annual interest rate of 1.40%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.50%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.60%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.85%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.85%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 0.7%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.45%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.20%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.30%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity.	Unsecured subordinated long-term financial debentures 〞〞〞 Perpetual non- accumulated subordinated financial debentures Unsecured subordinated long-term financial debentures 〞〞〞〞 Unsecured senior long- term financial debentures Unsecured subordinated long-term financial debentures 〞〞	September 30, 2021 $ - - 4,700,000 300,000 8,000,000 2,700,000 390,000 250,000 3,360,000 1,300,000 - 5,450,000 1,000,000 4,800,000	December 31, 2020 September 30, 2020 - 3,100,000 - 2,900,000 4,700,000 4,700,000 300,000 300,000 8,000,000 8,000,000 2,700,000 2,700,000 390,000 390,000 250,000 250,000 3,360,000 3,360,000 1,300,000 1,300,000 1,000,000 1,000,000 5,450,000 5,450,000 1,000,000 1,000,000 4,800,000 4,800,000

～ 45 ～

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

Bonds			Terms of Transactions		Bond Is	sued
	Issue date	Maturity date	Interest Rate & repayment	Type		Amount
2020-1 2020-2	03/25/2020 08/13/2020	03/25/2030 None	The debentures bear an annual interest rate of 0.8%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity. The debentures bear an annual interest rate of 1.62%.Simple interest is accrued and paid annually. After calculating the early redeemable bond is in line with the capital adequacy ratio under the consent of the competent authority, the debentures are redeemable per face value plus accrued interest at the interest payment date after five years and a month from the issue date .	〞 Perpetual non- accumulated subordinated financial debentures	September 30, 2021 $ 10,000,000 10,000,000 $ 52,250,000	December 31, 2020 10,000,000 10,000,000 53,250,000	September 30, 2020
							10,000,000 10,000,000
							59,250,000

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 Is	sued
	Issue date	Maturity date	Interest Rate & repayment	Type		Amount
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	September 30, 2021 $ 3,342,000 5,013,000 (67,275) $ 8,287,725	December 31, 2020 3,372,000 5,058,000 (18,980) 8,411,020	September 30, 2020
							3,478,800 5,218,200 (84,019
							8,612,981

～ 46 ～

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

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

Fair value of corporate bonds Fair value increase (decrease) not attributable to changes in market conditions that give rise to credit risk Difference between the carrying value and the amount payable at the end of the contract term Other financial liabilities Cumulative earnings on appropriated loans fund	September 30, 2021 $ 8,287,725 75,457 (67,275) September 30, 2021 $ 4,458,292	December 31, 2020 8,411,020 55,154 (18,980) December 31, 2020 5,492,366	September 30, 2020 8,612,981 22,766 (84,019) September 30, 2020 5,908,558

(T) Other financial liabilities

Cumulative earnings on appropriated loan fund is the project contract signed by National Development Fund, Executive Yuan, Small and Medium Enterprise Administration, Ministry of Economic Affairs, and the Bank. The Bank appropriates the fund to the companies which meet the conditions for loans. The fund is classified as principal account, interest yielding account, loaned account and un-loaned account. These accounts are used for transferring accounts and paying the deposit interests for each project contract.

(U) Provisions

Provisions
Provision for guarantee liabilities Provision for loan commitments Indeterminate indemnity provisions Provision for employee benefits Total	September 30, 2021 $ 259,414 61,268 73,181 2,963,608 $ 3,357,471	December 31, 2020 218,351 52,831 - 3,122,235 3,393,417	September 30, 2020
			200,539 35,793 - 2,922,578
			3,158,910

Change of provision

Provision for guarantee liabilities Provision for loan commitments Indeterminate indemnity provisions Provision for employee benefits Total	January 1, 2021 $ 218,351 52,831 - 3,122,235 $ 3,393,417	Increase 41,112 8,679 73,181 163,643 286,615	Decrease - - - 284,888 284,888	Use - - - 37,382 37,382	Foreign exchange (49) (242) - - (291)	September 30, 2021
						259,414 61,268 73,181 2,963,608
						3,357,471

～ 47 ～

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

Provision for guarantee liabilities Provision for loan commitments Provision for employee benefits Total	January 1, 2020 $ 200,948 31,498 2,925,557 $ 3,158,003	Increase - 4,357 172,839 177,196	Decrease 293 - 137,611 137,904	Use - - 38,207 38,207	Foreign exchange (116) (62) - (178)	September 30, 2020
						200,539 35,793 2,922,578
						3,158,910

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

(V) Lease liabilities

Lease liabilities as follows:

Lease liabilities as follows:
Less than one year More than one year	September 30, 2021 $ 344,982 $ 843,454	December 31, 2020 336,968 725,053	September 30, 2020
			304,806
			686,499

The amounts recognized in profit or loss were as follows:

For the three months ended September 30, 2021 2020 $ 4,608 4,149 $ 2,764 1,038 $ 4,023 3,645	For the nine months ended September 30,	For the nine months ended September 30,
2021 $ 4,608 $ 2,764 $ 4,023	2021 13,478 10,687 10,945	2020
		12,363
		6,184
		11,598

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

Total cash outflow for leases	For the nine months 30,	ended September
	2021 $ 346,383	2020
		351,709

(a) 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.

～ 48 ～

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

(b) 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.

(W) Other liabilities

Advance interest receipts Unearned revenue Other advance receipts Guarantee deposits received Temporary receipts and suspense accounts Others Total	September 30, 2021 $ 2,954 277,513 52,825 1,264,519 394,470 5,812 $ 1,998,093	December 31, 2020 2,707 254,962 86,658 1,600,690 2,625,821 7,821 4,578,659	September 30, 2020
			2,162 234,026 65,457 1,864,141 1,231,449 5,664
			3,402,899

(X) Equity

(a) Common stock

As of September 30, 2021, December 31 and September 30, 2020, the Bank’s authorized capital were $80,000,000 and the paid-in capital for common shares of the Bank were $77,431,952, $74,885,834 and $74,885,834, the face value of each share is $10. The outstanding shares were 7,743,195, 7,488,584 and 7,488,584 thousand shares, respectively.

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

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

～ 49 ～

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

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

(b) Capital surplus

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

Additional paid-in capital	September 30, 2021 $ 815,900	December 31, 2020 815,900	September 30, 2020
			815,900

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

(c) Earnings distribution and dividend policy

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

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.

～ 50 ～

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

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

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

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

(d) Other equity interest

January 1, 2021 Investment in debt instruments measured at fair value through other comprehensive income -Unrealized amount -Realized amount Foreign currency translation difference－Exchange difference Disposal of investments in equity instruments measured at fair value through other comprehensive income September 30, 2021 January 1, 2020 Investment in debt instruments measured at fair value through other comprehensive income -Unrealized amount -Realized amount Foreign currency translation difference－Exchange difference Disposal of investments in equity instruments measured at fair value through other comprehensive income September 30, 2020	Unrealized gains from financial assets measured at fair value through other comprehensive income $ 5,187,824 (54,386) (225,501) - (35,192) $ 4,872,745 $ 4,541,167 566,241 (385,744) - 1,350 $ 4,723,014	Exchange differences on translation of foreign financial statements (1,476,771) - - (257,591) - (1,734,362) (862,866) - - (377,697) - (1,240,563)	Total 3,711,053 (54,386) (225,501) (257,591) (35,192)
			3,138,383
			3,678,301 566,241 (385,744) (377,697) 1,350
			3,482,451

～ 51 ～

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

(Y) Income taxes

(a) The income tax expenses were as follows:

Current tax expense Current period Adjustment for prior period Deferred tax expense Reversal of temporary different Income tax expenses	For the three months ended September 30, 2021 2020 $ 16,924 321,267 53 - 16,977 321,267 137,170 (197,483) $ 154,147 123,784	For the nine months ended September 30, 2021 2020 612,520 739,794 (1,995) (54,603) 610,525 685,191 (81,999) (318,920) 528,526 366,271
	2021 $ 16,924 53 16,977 137,170 $ 154,147	2021 612,520 (1,995) 610,525 (81,999) 528,526

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

Items that may be reclassified subsequently to profit or loss Exchange differences on translation of foreign financial statements (Losses) gains on debt instruments at fair value through other comprehensive income Total	For the three months ended September 30, 2021 2020 $ (25,643) (29,476) (3,245) 3,808 $ (28,888) (25,668)	For the nine months ended September 30, 2021 2020 (64,398) (94,424) (7,369) 7,307 (71,767) (87,117)
	2021 $ (25,643) (3,245) $ (28,888)	2021 (64,398) (7,369) (71,767)

(d) Uncertainty over income tax treatments

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

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

～ 52 ～

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

(f) The income tax returns of the subsidiaries TBB Venture Capital Co., Ltd., and TBB International Leasing Co., Ltd. have been assessed until 2019 by the Tax Authority.

(Z) Provision for employee benefit

As of September 30, 2021, December 31 and September 30, 2020, the balance of provision for employee benefit of the Bank and subsidiaries were as follows:

Defined benefit plan Employee deposits with favorable rate	September 30, 2021 $ 2,005,418 958,190 $ 2,963,608	December 31, 2020 2,190,568 931,667 3,122,235	September 30, 2020
			1,993,418 929,160
			2,922,578

(a) Defined benefit plan

In 2020, there is apparently no evidence of any material market volatility, material curtailment, reimbursement and settlement or other material one-time events. Therefore, the pension cost for the interim periods are assessed and discovered at the actuarial costs that were determined on December 31, 2020 and 2019 by the Bank and subsidiaries.

The Bank and subsidiaries recognized the expenses amounting to $45,706, $49,055, $137,118 and $147,152 for the three months and nine months ended September 30, 2021 and 2020, respectively.

(b) Defined contribution plan

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 $38,748, $35,522, $117,797 and $106,764 for the three months and nine months ended September 30, 2021 and 2020, respectively.

In 2020, there is apparently no evidence of any material market volatility, material curtailment, reimbursement and settlement or other material one-time events. Therefore, the interest cost for the interim periods are assessed and disclosed at the actuarial costs that were determined on December 31, 2020 and 2019 by the Bank and subsidiaries.

The Bank and subsidiaries recognized expenses amounting to $60,740, $58,832, $180,463 and $174,102 for the three months and nine months ended September 30, 2021 and 2020, respectively.

～ 53 ～

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

(AA) Earnings per share

Earnings per share
Net income Weighted average number of common stock shares outstanding (in thousands) (Note 1) Basic earnings per shares (in dollars) Dilutive potential common shares (in thousands) (Note 1,2) Weighted average number of shares outstanding for diluted EPS (in thousands) Diluted earnings per shares (in dollars)	For the three months ended September 30,		For the nine months ended September 30,
	2021 $ 1,398,327 7,743,195 $ 0.18 10,063 7,753,258 $ 0.18	2020 1,204,794 7,743,195 0.16 8,279 7,751,474 0.16	2021 3,897,136 7,743,195 0.50 24,828 7,768,023 0.50	2020
				3,462,965
				7,743,195
				0.45
				24,841
				7,768,036
				0.45

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

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

(AB) Employees and directors' remuneration

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

For the three months and nine months ended September 30, 2021 and 2020, the estimated employee remuneration were $94,251, $76,382, $235,402 and $229,191, and the estimated directors' remuneration were $9,425, $8,463, $26,361 and $24,456, 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.

For the years ended December 31, 2020 and 2019, the employees' remuneration was accrued at $217,393 and $384,639 and the directors' remuneration was accrued at $33,748 and $50,456 respectively. There is no difference with actual distribution of 2020 and 2019 remuneration. The information is available at the Market Observation Post System website.

～ 54 ～

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

(AC) Net interest revenue

For the three months ended September 30,	For the three months ended September 30,	For the nine months ended September 30,	For the nine months ended September 30,
2021 $ 1,247,499 3,815,027 443 3,120 2,482 160,241 24,055 149,108 512,783 9,312 34,667 8,009 48,953 64,024 6,079,723 1,328,431 3,741 18,999 182,155 900 18,576 1,552,802 $ 4,526,921	2020	2021 3,693,023 11,309,249 1,455 10,054 6,683 440,519 65,196 398,589 1,572,150 29,813 110,622 14,704 155,041 181,517 17,988,615 3,929,765 11,960 84,799 664,204 3,428 53,114 4,747,270 13,241,345	2020
	1,306,516 3,519,574 389 3,029 2,431 143,896 20,919 92,585 595,062 10,542 90,732 8,756 51,221 69,524 5,915,176 1,581,125 2,252 51,882 312,477 1,168 11,672 1,960,576 3,954,600		4,450,934 10,925,175 1,874 9,606 12,559 559,184 77,466 492,251 1,949,488 34,140 187,726 34,435 178,406 209,065
			19,122,309
			5,816,971 4,934 331,323 893,269 3,989 35,882
			7,086,368
			12,035,941

～ 55 ～

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

(AD) Net service fee revenue

For the three months ended September 30,	For the three months ended September 30,	For the nine months ended September 30,	For the nine months ended September 30,
2021 $ 16,179 11,654 3,407 1,887 239 461 269,509 59,852 7,814 19,588 28,667 386,523 54,741 23,186 873 170,946 34,058 1,089,584 6,014 32,017 192 424 15,431 2,280 1,275 16,190 2,703 - 4,585 81,111 $ 1,008,473	2020	2021 48,445 32,989 9,757 5,809 1,044 1,234 846,895 174,508 24,329 67,376 82,553 603,990 153,919 69,164 3,173 498,097 102,557 2,725,839 18,976 111,247 635 1,203 46,633 7,036 3,855 43,965 8,457 10 14,852 256,869 2,468,970	2020
	18,169 8,421 2,806 1,932 566 229 226,968 54,819 29,038 22,373 37,592 111,876 42,730 22,711 1,353 208,946 34,431		52,702 26,555 8,698 6,017 1,507 822 551,031 160,857 77,983 65,479 85,535 481,329 126,494 68,631 4,122 561,639 90,621
	824,960		2,370,022
	6,206 40,040 237 420 16,339 2,454 1,242 13,474 2,149 76 5,347 87,984 736,976		22,420 117,692 813 1,193 48,134 7,306 3,696 40,516 5,649 1,048 14,433
			262,900
			2,107,122

～ 56 ～

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

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

Valuation gains (losses): Government bonds Corporate bonds Financial debentures Listed stocks Unlisted stocks Beneficiary certificates Private fund Commercial paper Derivative financial instruments Subtotal Disposal gains (losses): Government bonds Corporate bonds Financial debentures Listed stocks Beneficiary certificates Commercial paper Derivative financial instruments Subtotal Dividend revenue Interest income Total	For the three months ended September 30,	For the three months ended September 30,		For the nine months ended September 30,	For the nine months ended September 30,
	2021 $ - (6,432) (251,394) (8,306) (8,286) 1,884 (1,427) 3,239 (85,412) (356,134) - 8,641 - (29,282) 485 (2,446) 341,256 318,654 5,374 27,655 $ (4,451)	2020		2021 - (5,674) (223,621) 84,616 (34,195) (9,458) 3,677 (3,546) (176,336) (364,537) - 30,650 (1,349) (31,909) 13,893 (4,380) 694,667 701,572 6,224 51,083 394,342	2020
		- (1,385) (247,523) (13,443) 9,111 (10,768) 200 (1,756) (41,005) (306,569) (362) 9,244 - (7,376) 27,087 (904) 426,298 453,987 5,225 27,428 180,071			(5,051) 4,747 (261,198) (18,139) 20,933 5,991 (250) 851 (5,236) (257,352) 29,821 11,233 (5,425) (25,590) 16,896 (2,260) 918,235 942,910 5,318 96,785 787,661

～ 57 ～

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

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

For the three months ended September 30,	For the three months ended September 30,	For the nine months ended September 30,	For the nine months ended September 30,
2021 $ 52,985 24,121 526 677,510 $ 755,142	2020	2021 169,801 25,047 30,653 881,635 1,107,136	2020
	165,002 3,000 40,562 330,299		341,558 3,624 40,562 511,208
	538,863		896,952

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

For the three months ended September 30,	For the three months ended September 30,	For the nine months ended September 30,	For the nine months ended September 30,
2021 $ (7,561) 483 $ (7,078)	2020	2021 (16,506) (604) (17,110)	2020
	(4,660) (1,183) (5,843)		(9,062) 12,566
			3,504

(AH) Net other revenue other than interest income

For the three months ended September 30,	For the three months ended September 30,	For the nine months ended September 30,	For the nine months ended September 30,
2021 $ 1,612 - (190) (161) 727 (30,242) 76,775 $ 48,521	2020	2021 5,463 (366) (584) (295) 2,185 (116,755) 224,041 113,689	2020
	2,294 - (1,179) (49) 1,583 (9,255) 115,876 109,270		7,084 (371) (1,636) (602) 3,725 (49,206) 190,709
			149,703

～ 58 ～

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

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

For the three months ended September 30,	For the three months ended September 30,	For the nine months ended September 30,	For the nine months ended September 30,
2021 $ 1,673,961 9,648 - (5,421) 1,678,188 29,552 (2,724) $ 1,705,016	2020	2021 3,989,895 9,552 - (27,998) 3,971,449 41,112 8,679 4,021,240	2020
	1,276,309 4,123 2 7,077		3,237,128 (5,819) - (8,601)
			3,222,708 (293) 4,357
			3,226,772

(AJ) Employee benefits expenses

For the three months ended September 30,	For the three months ended September 30,	For the nine months ended September 30,	For the nine months ended September 30,
2021 $ 1,740,780 126,393 84,266 11,163 166,171 $ 2,128,773	2020	2021 5,082,432 391,290 254,349 34,686 488,526 6,251,283	2020
	1,619,840 120,803 84,389 12,056 146,392		4,914,370 365,251 253,350 35,182 478,149
	1,983,480		6,046,302

(AK) Depreciation and amortization expense

For the three months ended September 30,	For the three months ended September 30,	For the nine months ended September 30,	For the nine months ended September 30,
2021 $ 115,337 102,137 44,309 - $ 261,783	2020	2021 346,669 305,337 122,181 - 774,187	2020
	111,611 104,056 42,248 -		330,130 308,926 107,064 1
	257,915		746,121

～ 59 ～

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

(AL) Other general and administrative expense

For the three months ended September 30,	For the three months ended September 30,	For the nine months ended September 30,	For the nine months ended September 30,
2021 $ - 29,674 56,265 4,856 42,049 57,434 89,782 52,422 41,489 6,787 316,038 172,385 10,193 15,013 15,004 $ 909,391	2020	2021 23 66,788 165,717 14,503 81,108 182,424 240,987 160,426 122,541 21,632 926,708 495,065 34,215 47,955 43,256 2,603,348	2020
	20 29,289 58,194 7,114 42,609 75,772 84,993 53,508 25,050 6,775 291,784 145,628 16,072 19,118 18,513		75 67,866 161,198 20,448 82,044 190,238 258,601 155,326 70,372 17,782 899,285 427,316 41,478 65,409 48,947
	874,439		2,506,385

(AM)Financial Instruments

(a) Fair value information

(1) General description

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The financial instruments are record as fair value when original recognizing, usually refer to the transaction price in many circumstances. Except some amortized cost financial instruments, the financial instruments are measured in fair value. A quoted market price in an active market provides the most reliable evidence of fair value. If financial instruments are without active market, the Bank 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.

～ 60 ～

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

(2) The definition of fair value hierarchy

A. Level 1

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

～ 61 ～

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

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

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

Assets and Liabilities		September	30, 2021
	Total $ 732,701 639,218 45,664,424 19,896,978 129,677,268 45,840 8,287,725 481,662 234,733	Level 1 449,114 279,606 6,439,361 14,686,434 80,628,197 45,840 - 28,744 -	Level 2 Level 3 - 283,587 359,612 - 39,124,089 100,974 - 5,210,544 49,049,071 - - - 8,287,725 - 452,918 - 234,733 -
Instruments measured at fair value on a recurring basis
Non-derivative financial assets and liabilities:
Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss, mandatorily measure at fair value Security Investments Bond Investments Others Financial assets at fair value through other comprehensive income Security Investments Bond Investments Others Financial liabilities at fair value through profit or loss Financial liabilities designated at fair value through profit or loss Derivative financial assets and liabilities
Assets: Financial assets at fair value through profit or loss Liabilities: Financial liabilities at fair value through profit or loss

～ 62 ～

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

Assets and Liabilities		December 31, 2020	December 31, 2020
	Total t $ 582,289 1,558,734 12,681,298 84,377 13,214,419 104,092,136 49,295 8,411,020 690,858 227,982	Level 1 271,669 1,307,034 162,556 - 8,736,348 67,247,661 49,295 - 72,747 -	Level 2 Level 3 - 310,620 251,700 - 12,414,244 104,498 84,377 - - 4,478,071 36,844,475 - - - 8,411,020 - 618,111 - 227,982 -
Instruments measured at fair value on a recurring basis
Non-derivative financial assets and liabilities:
Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss, mandatorily measure a fair value Security Investments Bond Investments Others Financial assets designated at fair value through profit or loss Financial assets at fair value through other comprehensive income Security Investments Bond Investments Other Financial liabilities at fair value through profit or loss Financial liabilities designated at fair value through profit or loss Derivative financial assets and liabilities
Assets: Financial assets at fair value through profit or loss Liabilities: Financial liabilities at fair value through profit or loss

～ 63 ～

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

Assets and Liabilities		September	30, 2020
	Total t $ 295,829 1,847,410 25,926,557 115,748 11,628,664 103,036,094 49,753 8,612,981 860,595 348,118	Level 1 60,119 1,348,298 122,710 - 7,184,189 67,684,192 49,753 - 72,658 -	Level 2 Level 3 - 235,710 499,112 - 25,705,947 97,900 115,748 - - 4,444,475 35,351,902 - - - 8,612,981 - 787,937 - 348,118 -
Instruments measured at fair value on a recurring basis
Non-derivative financial assets and liabilities:
Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss, mandatorily measure a fair value Security Investments Bond Investments Others Financial assets designated at fair value through profit or loss Financial assets at fair value through other comprehensive income Security Investments Bond Investments Other Financial liabilities at fair value through profit or loss Financial liabilities designated at fair value through profit or loss Derivative financial assets and liabilities
Assets: Financial assets at fair value through profit or loss Liabilities: Financial liabilities at fair value through profit or loss

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

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

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

～ 64 ～

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

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 markto-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
a. The restraint of evaluation model and uncertain inputs

The estimates of output-based value using the evaluation model, which may not reflect the Bank's all related factors. Therefore, the estimated value of the evaluation model will be appropriately adjusted according to the extra parameters such as model risk or liquidity risk. Information and price parameters used in the evaluation process after careful assessment, and appropriately adjusted according to the current market situation.

b. Credit risk value adjustment

The Bank 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.

～ 65 ～

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

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 assess the probability of default on the assumption of 60%, but at the risk of the nature and circumstances of available data, we may use other loss given default assumptions.

D. Transfers between Level 1 and Level 2

The Bank and subsidiaries have the stock of Lungteh Shipbuilding Co Ltd., classified as financial assets at fair value through profit or loss. In January 2021, Lungteh Shipbuilding Co Ltd. has obtained emerging stock market registration, turing to have quoted price in an active market. Therefore, the measurement of fair value was transferred from Level 3 to Level 1.

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		For th	For th	e nine months en	ded September 30, 2021	ded September 30, 2021
	Beginning balance	Valuation profit and loss		Incr	ease	Decr	ease Transfer out from Level 3 Ending balance 56,429 384,561 - 5,210,544
		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	$ 415,118 4,478,071	(30,769) -	- 705,409	63,841 27,064	- -	7,200 -

Name		For th	For th	e nine months en	ded September 30, 2020	ded September 30, 2020
	Beginning balance	Valuation profit and loss		Incr	ease	Decr	ease Transfer out from Level 3 Ending balance - 333,610 - 4,444,475
		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	$ 194,051 4,154,137	20,297 -	- 290,338	119,262 -	- -	- -

～ 66 ～

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

F. Profit and loss information of Level 3

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

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) 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 nine months ended September 30,
	2021 2020 $ (30,769) 20,297 705,409 290,338 For the three months ended September 30,
	2021 2020 $ (9,758) 8,924 282,540 224,882

～ 67 ～

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

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”. On December 31, 2020, except the amount of financial asset at fair value through other comprehensive income that is $2,927 hasn't been evaluated, since it was purchased in December 2020. Others, without active market quotation, the Bank and subsidiaries take professional financial information vendors and widely used by market participants for evaluation or counterparty quotation as reference. The unobservable inputs are as follows :

fair value Financial asset at fair value through profit or loss Private fund $ 100,974 Unlisted stocks 283,587 Financial assets at fair value through other comprehensive income Unlisted stocks 5,210,544			September 30, 2021
		valuation methods assets approach market approach market approach assets 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 10% The higher market liquidity discount, the lower fair value. 0%~39.62% The higher market liquidity discount, the lower fair value. 8.75%~34.65%. The higher market liquidity discount, the lower fair value. 0%~1.36% The higher sustainable growth rate, the higher fair value. 9.95%~11.81% The higher rate of cost of equity, the lower fair value.

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

Financial assets at fair value through profit or loss Private fund Unlisted stocks Financial assets at fair value through other comprehensive income Unlisted stocks 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, 2020
	fair value $ 104,498 310,620 4,475,144	valuation methods assets approach market approach market approach assets approach income approach	significant unobservable inputs liquidity discount liquidity discount liquidity discount sustainable growth rate cost of equity September 30, 2020	range inter-relationship between significant unobservable inputs and fair value measurement 10% The higher market liquidity discount, the lower fair value. 0%~34.47% The higher market liquidity discount, the lower fair value. 8.94%~34.79% The higher market liquidity discount, the lower fair value. 0%~1.45% The higher sustainable growth rate, the higher fair value. 8.30%~11.51% The higher rate of cost of equity, the lower fair value.
	fair value $ 97,900 235,710 4,444,475	valuation methods assets approach market approach market approach assets 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 10% The higher market liquidity discount, the lower fair value. 22.54%~34.51% The higher market liquidity discount, the lower fair value. 8.98%~34.85% The higher market liquidity discount, the lower fair value. 0%~1.58% The higher sustainable growth rate, the higher fair value. 8.38%~11.59% The higher rate of cost of equity, the lower fair value.

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

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

Valuation techniques used by the Bank 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 profit and loss if using different assumptions:

a. Assets approach/ Market approach

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

September 30, 2021 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 December 31, 2020 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%) $ 31,276 (31,276) 306,430 (306,430) the effects to the net income and other comprehensive income Favorable changes (-5%) Unfavorable changes (5%) $ 17,067 (17,067) 247,738 (247,774)

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

		the effects to the net income and other	the effects to the net income and other
		comprehensive	income
		Favorable	Unfavorable
		changes (-5%)	changes (5%)
September 30, 2020
Financial assets at fair value through profit
or loss
Unlisted stocks and private fund	$	16,514	(16,514)
Financial assets at fair value through other
comprehensive income
Unlisted stocks		248,220	(248,255)
b. 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
	the effects to other comprehensive income
		Favorable	Unfavorable
		changes (0.3%)	changes (-0.3%)
September 30, 2021
Financial assets at fair value through other
comprehensive income
Unlisted stocks	$	3,587	(3,273)
	the effects to other comprehensive income
		Favorable	Unfavorable
		changes (0.3%)	changes (-0.3%)
December 31, 2020
Financial assets at fair value through other
comprehensive income
Unlisted stocks	$	6,616	(6,074)

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

September 30, 2020
Financial assets at fair value through other
comprehensive income
Unlisted stocks
2)
cost of equity
September 30, 2021
Financial assets at fair value through other
comprehensive income
Unlisted stocks
December 31, 2020
Financial assets at fair value through other
comprehensive income
Unlisted stocks
September 30, 2020
Financial assets at fair value through other
comprehensive income
Unlisted stocks

the effects to other comprehensive income
Favorable
changes (0.3%)
Unfavorable
changes (-0.3%)
$ 6,493
(5,996)
the effects to other comprehensive income
Favorable
changes (-3%)
Unfavorable
changes (3%)
$ 75,458
(34,688)
the effects to other comprehensive income
Favorable
changes (-3%)
Unfavorable
changes (3%)
$ 141,859
(53,302)
the effects to other comprehensive income
Favorable
changes (-3%)
Unfavorable
changes (3%)
$ 140,175
(52,293)

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

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

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

The following chart presents the financial instruments not based on fair value measurement of the Bank 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 Debt instruments measured at amortized cost	September	30, 2021
	Book value Fair value $ 241,105,739 242,453,506 December 31, 2020	Fair value
	Book value $ 228,003,332 September	Fair value
		229,803,196 30, 2020
	Book value $ 230,816,898	Fair value
		232,781,610

B. The fair value hierarchy of information

Assets and Liabilities		September	30, 2021
	Total $ 242,453,506	Quoted prices in active markets for identical assets (Level 1) 36,028,578 December	Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) 206,424,928 - 31, 2020
Debt instruments measured at amortized cost Assets and Liabilities
	Total $ 229,803,196	Quoted prices in active markets for identical assets (Level 1) 43,000,581 September	Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) 186,802,615 - 30, 2020
Debt instruments measured at amortized cost Assets and Liabilities
	Total $ 232,781,610	Quoted prices in active markets for identical assets (Level 1) 45,294,454	Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) 187,487,156 -
Debt instruments measured at amortized cost

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

C. Valuation techniques

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

a. Cash and cash equivalents, due from Central Bank and call loans to banks, securities purchased under resell agreements, receivables, overdue receivables, exchange bills negotiated guarantee deposits paid, temporary payments and suspense accounts, proceeds of settlement and credit transaction, deposits from Central Bank and other banks, securities sold under repurchase agreements, payables, other financial liabilities, guarantee deposits received and temporary receipts and suspense accounts: since these instruments have short maturities, the book value is adopted as a reasonable basis in estimating the fair value.
b. Discounts and loans (including non-performing loans): the interest rate of bank loans, dependent on the benchmark interest rate which plus or minus the input value (i.e. motorized interest rate), said market rates, therefore, the book value of financial assets is equivalent to their fair value. Among the case of fixed interest rate, the estimated fair value of long-term loans using the discounted value of its expected cash flows, but this is minority, so the book value of financial assets is equivalent to their fair value.
c. Investment in debt instruments at amortized cost: the quoted price is regarded as its fair value. If there is no quoted price in an active market for the financial asset, its fair value is estimated on the basis of the result of a valuation technique.
1) Central Government Securities (NTD): using the comment of “Bonds a fair price for each of times” from Taipei Exchange.
2) Corporate bonds and bank debentures (NTD): the present value or fair price of Taipei Exchange determined using the future cash flow of yield curve discounting evaluation.
d. Deposits and remittance: to determine the fair value, considered Banking industry characteristics, the market interest rates (i.e. market price) is the fair value. And deposits are mostly due within one year, the carrying amounts is the fair value of reasonable basis. The fixed interest rate of long-term deposits should be estimated by the discounted value of its expected cash flows at fair value, and its maturity date no longer than three years, so its estimated fair value of the carrying amount is considered reasonable.

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

e. Bank debentures payable: The bank debentures payable, issued by the Bank and subsidiaries, whose stated rate was equal the effective rate, using discounted cash flow projections to estimate the fair value, equivalent to its book value.

(AN) Financial Risk Information

(a) General description

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

The Bank's Financial Risk Management policy is to establish a risk management mechanism in terms of risk identification, risk measurement, risk monitoring, and risk control and to construct the overall risk management system. It is to facilitate the business model with appropriate risk management and to control the rationality between risks and rewards under the premise of legal capital ratio in order to achieve operating targets and increase the value of the Bank for the shareholders. The scope covers the management of credit risk, market risk, operation risk, banking book interest rate risk, capital liquidity risk, and capital adequacy.

(b) Risk management organization structure
(1) Risk Management Committee

The chairperson of the Risk Management Committee is appointed by the president. The chairpersons include general manager, deputy general manager of the nonregulatory compliance in head office and department directors of head office (excluding the director of audit department in the Board). This Committee is set up for the purpose of establishing a sound risk management system, strengthening risk management and the implementation of the Bank's risk management and monitoring. The meeting will be held once a month in principle. The meeting can be held by the chairman of the Committee when it necessary. The duties are as follows:

A. Conduct Analysis and response project when significant domestic and foreign economic, financial and industrial risk management occur.
B. Risk management report of various risk exposure and agenda processing.
C. The processing of examination of the risk management relevant policy of the Bank and limitations, management indices and the response project when the risk exceeds the limitations.
D. Supervise the Bank and subsidiaries' capital adequacy management.

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

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 non-performing loans and approaches to handle overdue loans.

(5) Cyber Security Management Committee

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

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

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

Credit risk refers to the default risk resulted from the inability to fulfill the contract obligations due to deteriorating financial status of trade counterparties, pessimistic external economic situation or other factors. The primary source of the credit risk of the Bank is the loan business, such as loans of various terms, guarantees and letters of credit, loan commitments, etc., in addition, other sources of credit risk include call loans from banks, securities investments, derivative financial instrument transactions, etc.

(2) Credit risk management policy

In order to control the credit risk to a tolerable scope, the Bank continuously conduct below operations:

A. Fully understand the credit status and ratings of loan customers and trade counterparties as well as the purposes and payments of loans.
B. Prudently evaluates the credit risk status of loan customers and trade counterparties and consider the adequacy of collaterals and guarantees to assess risk and profit.
C. Establish credit rating mechanism for loan customers or apply the ratings from outside credit rating institutions as the reference for undertaking credit cases or interest rate determination.
D. Modify relevant regulations to control the credit risk to a tolerable extent for the Bank.

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

The credit risk management procedure and measurement methods of the Bank's major business are as follows:

A. Credit Business (Including loan commitments and guarantees)

The categorization and credit quality rating of credit assets are as follows:

a. Categorization of credit assets

The credit assets are classified into 5 categories. Except for normal credit assets which are classified as the first category, others are classified, based on the assurance status and the time overdue, as second category (need attention), third category (possible to recover), fourth category (difficult to retrieve) and the fifth category (unable to retrieve). In order to manage creditor's rights, the Bank established “ Regulations Governing the Procedures to Evaluate Assets and Deal with Non-performing/Non-accrual Loans” , “ Regulations Governing the Reconciliation of Nonperforming/Non-accrual Loans” and its operating procedure “ Operating procedure Governing the Collection of Non-performing/Non-accrual Loans” and “Code of Conduct to Deal With Non-Performing Loans” to serve as the guidelines for dealing with non-performing credit and overdue loans collection.

b. Categorization of credit quality

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

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

B. Due from other banks and call loans to banks

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

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

C. Debt instrument investments and derivative financial instruments

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

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

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

At each reporting date, the Bank 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 consider reasonable and supportable information (including forward-looking information) that is indicative of significant increases in credit risk since initial recognition. The main considerations include:

A. credit assets
a. The borrowers failed to pay the principal and interest overdue for more than 30 days, less than 90 days;
b. When the Bank 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;
c. The deposits and assets of borrowers are compulsorily executed, besides, the deposits are compulsorily executed because of tax arrears. However, the borrowers that have enough deposit to bear the cost that assessed by the Bank and subsidiaries are except;
d. The bank knows (if it has received the notice from court) that the collaterals are compulsory executed by other banks;
e. Borrowers were notified the refund by the Bank and did not conduct refund notice;

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

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

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

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

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

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

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

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

A. Credit assets
a. Significant financial difficulty of the issuer or the borrower;
b. A breach of contract, such as a default or past due event ;
c. The lender(s) of the borrower, for economic or contractual reasons relating to the borrower’ s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;

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

  - d. It is becoming probable that the borrower will enter bankruptcy or other financial reorganization;

  - e. The disappearance of an active market for that financial asset because of financial difficulties;

  - f. The purchase or origination of a financial asset at a considerable amount of discount that reflects the incurred credit losses;

B. Debt instrument investments
- a. Significant financial difficulty of the issuer;
- b. The disappearance of an active market for that financial asset because of financial difficulties;
- c. The purchase or origination of a financial asset at a considerable amount of discount that reflects the incurred credit losses.
- d. Counterparty defaulting on agreement of other financial instruments (e.g. transactions settlement failure, a bank decide to execute early termination of transactions, or loans originated from derivatives settlement failure).
(6) Write-off policy

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

The following are indicators that the financial assets are uncollectible:

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

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

(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.

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

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

collateral:
Corporate banking	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 12month 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.

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

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

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

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

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

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

B. Limit of credit risk and the control of credit risk concentration
a. In order to avoid the situation that the credit risk of single customer being too high, the credit limit of an individual, a related party or a related enterprise shall be in conformity with “ Authorization method for subsection 3 of Article 33 of the Banking Act of the Republic of China” and the credit limit authorization steps are regulated in the Key Points of Credit Engagement Authorization and the Key Points of Credit Engagement Authorization for Overseas Branches of the Bank.
b. To enhance the risk concentration management, the Bank established regulations in terms of countries, financial institutions, industries and group enterprises. The relevant limits are reviewed and approved annually and the usage of the credit is monitored on a daily basis. In addition, the results are reported regularly.
C. General agreement of net amount settlement

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

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

D. Enhancement of other credit

The assessment of credit business applies to credit 5P principles, credit risk is offset by dividing self-liquidating loan commitments as the main, and set the accounts to master the repayment of cash flow. Also, in terms of the credit agreement stipulates the offset. (i.e. all kinds of deposits, except prohibition of low or the party's agreement, the Bank can set off all the debts), thus to reduce the loan amount, shorter loan repayment period or are considered part or all of expiration of acceleration clauses. To strengthen the protection of creditor and reduce credit risk, using qualified and effective enhancement, such as the requirement of real property, personal property, demand deposits, time deposits, securities and the guarantee of financial institution or the credit guarantee mechanism approved by government. (e.g. R.O.C SMEG, Agricultural Credit Guarantee Fund, Overseas Credit Guarantee Fund)

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

September 30, 2021 Impairment financial assets： Receivables Accounts receivables Interest receivable Discounts and loans Overdue receivable Total impairment financial assets December 31, 2020 Impairment financial assets： Receivables Accounts receivables Interest receivable Discounts and loans Overdue receivable Total impairment financial assets	Carrying amount $ 56,550 36,572 22,841,602 62,439 $ 22,997,163 Carrying amount $ 27,269 26,687 25,375,566 68,832 $ 25,498,354	Allowance impairment 16,695 5,386 3,994,632 19,775 4,036,488 Allowance impairment 27,269 5,304 5,219,221 23,121 5,274,915	Exposure (measured at amortized cost) 39,855 31,186 18,846,970 42,664 18,960,675 Exposure (measured at amortized cost) - 21,383 20,156,345 45,711 20,223,439	Value of collateral
				32,805 - 24,997,524 -
				25,030,329
				Value of collateral
				26,575 - 26,211,067 -
				26,237,642

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September 30, 2020 Impairment financial assets： Receivables Acceptances receivables Interest receivable Discounts and loans Overdue receivable Total impairment financial assets	Carrying amount $ 38,466 29,217 25,288,806 71,109 $ 25,427,598	Allowance impairment 25,366 6,580 5,207,427 24,021 5,263,394	Exposure (measured at amortized cost) 13,100 22,637 20,081,379 47,088 20,164,204	Value of collateral
				36,436 - 27,346,818 -
				27,383,254

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:

A. By industry

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

Industry	September 30,	2021 % % 64.31 % 0.32 % 5.14 % 0.23 % 24.25 % 0.27 % 5.28 % 0.20 % 100.00	December 31,	2020 % % 63.52 % 0.89 % 4.40 % 0.23 % 24.98 % 0.30 % 5.53 % 0.15 % 100.00	September 30,	2020
	Amount $ 818,731,985 4,130,068 65,420,660 2,876,514 308,735,526 3,505,961 67,166,920 2,579,752 $ 1,273,147,386		Amount 777,673,749 10,940,025 53,863,302 2,868,681 305,732,834 3,721,990 67,672,995 1,821,665 1,224,295,241		Amount 754,297,752 6,810,005 62,438,853 2,876,437 299,505,651 3,839,191 69,492,681 1,363,150 1,200,623,720	% % 62.82 % 0.57 % 5.20 % 0.24 % 24.95 % 0.32 % 5.79 % 0.11 % 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	September 30,	2021 % % 94.25 % 5.75 % 100.00	December 31,	2020 % % 94.02 % 5.98 % 100.00	September 30,	2020
	Amount $ 1,199,894,753 73,252,633 $ 1,273,147,386		Amount 1,151,078,591 73,216,650 1,224,295,241		Amount 1,125,928,698 74,695,022 1,200,623,720	% % 93.78 % 6.22 % 100.00
Domestic Foreign Total

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C. By collateral

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

Collateral	September 30,	2021 % % 18.08 % 0.70 % 1.80 % 60.86 % 1.30 % 0.28 % 16.23 % 0.75 % 100.00	December 31,	2020 % % 18.40 % 0.75 % 1.60 % 61.66 % 1.53 % 0.30 % 15.04 % 0.72 % 100.00	September 30,	2020
	Amount $ 230,228,200 8,968,852 22,886,187 774,782,493 16,544,932 3,558,355 206,687,512 9,490,855 $ 1,273,147,386		Amount 225,320,364 9,175,475 19,544,832 754,931,145 18,785,101 3,724,442 183,962,821 8,851,061 1,224,295,241		Amount 235,961,445 8,507,493 18,985,669 739,113,855 18,589,480 3,397,751 166,809,568 9,258,459 1,200,623,720	% % 19.65 % 0.71 % 1.58 % 61.56 % 1.55 % 0.28 % 13.90 % 0.77 % 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.

(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 Issued and irrevocable loan commitments Irrevocable credit card loan commitments Letters of credit issued yet unused Various guarantee proceeds Total	Maximum credit risk exposure	Maximum credit risk exposure	Maximum credit risk exposure
	September 30, 2021 $ 58,446,862 19,861,805 10,260,760 24,804,517 $ 113,373,944	December 31, 2020 61,833,395 20,067,204 8,892,012 20,636,932 111,429,543	September 30, 2020 64,821,028 20,226,316 6,695,361 18,857,000
			110,599,705

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.

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

September 30, 2021	12-month ECL	12-month ECL	12-month ECL	12-month ECL	12-month ECL	12-month ECL	12-month ECL		Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－ impaired
	Excellent	Good	Medium	Acceptable	Under standard	No rating	Subtotal	Excellent	Good	Medium	Acceptable	Under standard	No rating	Subtotal	High risk	Allowance impairment	Total
Receivable
Credit card	$ 323,813	227,514	200,765	424	5,851	219,848	978,215	450	1,249	1,275	16	757	858	4,605	-	1,499	981,321
Acceptances receivable	259,776	598,034	189,257	11,305	24,655	27,450	1,110,477	-	-	-	-	-	-	-	-	11,105	1,099,372
Other receivables	224,198	1,562,352	504,282	30,605	12,658	2,458,790	4,792,885	1,948	11,754	9,551	8,356	5,186	107,641	144,436	93,122	114,753	4,915,690
Discounts and loans
Private banking	111,147,686	114,936,170	65,993,569	4,216,861	1,479,787	7,734,179	305,508,252	16,846	80,891	188,212	27,119	83,267	10,943	407,278	5,399,748	3,661,822	307,653,456
Corporate banking	164,801,929	280,462,833	294,502,170	32,670,416	13,603,699	118,116,347	904,157,394	1,400,096	10,845,805	13,142,058	6,872,424	5,430,433	2,542,044	40,232,860	17,441,854	11,675,425	950,156,683
Other financial assets
Overdue receivable	-	-	-	-	-	-	-	-	-	-	-	-	-	-	62,439	49,798	12,641
Total	$ 276,757,402	397,786,903	361,390,043	36,929,611	15,126,650	128,556,614	1,216,547,223	1,419,340	10,939,699	13,341,096	6,907,915	5,519,643	2,661,486	40,789,179	22,997,163	15,514,402	1,264,819,163
Guarantee and commitments	$ 26,627,111	17,963,606	8,127,710	959,403	105,749	59,053,860	112,837,439	101,910	25,957	38,476	-	-	347,408	513,751	22,754	320,682	113,053,262

December 31, 2020	12-month ECL								Lifetime ECL－not impaired						Lifetime ECL－ impaired
	Excellent	Good	Medium	Acceptable	Under standard	No rating	Subtotal	Excellent	Good	Medium	Acceptable	Under standard	No rating	Subtotal	High risk	Allowance impairment	Total
Receivable
Credit card	$ 465,192	151,235	203,982	21,460	1,927	240,049	1,083,845	1,568	717	3,049	215	138	498	6,185	-	2,045	1,087,985
Acceptances receivable	271,727	689,404	111,845	5,812	12,400	192,565	1,283,753	-	-	-	-	-	-	-	-	12,837	1,270,916
Other receivables	200,365	1,071,736	443,197	38,386	9,723	2,606,887	4,370,294	2,344	19,338	11,165	7,828	1,395	81,438	123,508	53,956	123,682	4,424,076
Discounts and loans
Private banking	114,964,176	108,069,036	66,948,050	4,917,753	990,763	5,026,892	300,916,670	5,485	172,716	157,123	31,627	148,272	693	515,916	6,121,914	3,467,633	304,086,867
Corporate banking	159,077,810	276,441,887	269,775,572	33,545,450	9,752,131	107,943,286	856,536,136	2,615,868	14,235,894	13,636,440	6,744,478	1,197,555	2,520,718	40,950,953	19,253,652	10,858,524	905,882,217
Other financial assets
Overdue receivable	-	-	-	-	-	-	-	-	-	-	-	-	-	-	68,832	55,051	13,781
Total	$ 274,979,270	386,423,298	337,482,646	38,528,861	10,766,944	116,009,679	1,164,190,698	2,625,265	14,428,665	13,807,777	6,784,148	1,347,360	2,603,347	41,596,562	25,498,354	14,519,772	1,216,765,842
Guarantee and commitments	$ 26,160,471	14,889,757	5,567,518	945,234	330,756	62,931,925	110,825,661	44,927	37,019	40,993	14	-	433,734	556,687	47,195	271,182	111,158,361

September 30, 2020	12-month ECL								Lifetime ECL－not impaired						Lifetime ECL－ impaired
	Excellent	Good	Medium	Acceptable	Under standard	No rating	Subtotal	Excellent	Good	Medium	Acceptable	Under standard	No rating	Subtotal	High risk	Allowance impairment	Total
Receivable
Credit card	$ 424,606	132,702	203,457	22,325	2,000	292,933	1,078,023	470	1,169	1,920	155	143	254	4,111	-	2,838	1,079,296
Acceptances receivable	273,907	395,602	195,674	10,347	3,763	129,190	1,008,483	-	-	-	-	-	-	-	-	10,085	998,398
Accounts receivable factoring	-	-	-	-	-	1,821	1,821	-	-	-	-	-	-	-	-	18	1,803
Other receivables	191,164	1,097,341	436,450	31,559	10,523	2,814,830	4,581,867	2,955	18,911	16,561	8,223	19,389	46,597	112,636	67,683	130,618	4,631,568
Discounts and loans
Private banking	113,768,036	99,220,816	64,924,688	5,422,591	945,929	9,912,182	294,194,242	19,750	121,478	190,135	50,970	69,546	931	452,810	6,221,751	3,782,037	297,086,766
Corporate banking	157,060,585	290,343,831	223,099,030	31,153,266	9,896,615	123,938,710	835,492,037	2,477,752	13,398,107	12,384,265	7,338,541	6,901,645	2,695,515	45,195,825	19,067,055	11,833,955	887,920,962
Other financial assets
Overdue receivable	-	-	-	-	-	-	-	-	-	-	-	-	-	-	71,109	56,737	14,372
Total	$ 271,718,298	391,190,292	288,859,299	36,640,088	10,858,830	137,089,666	1,136,356,473	2,500,927	13,539,665	12,592,881	7,397,889	6,990,723	2,743,297	45,765,382	25,427,598	15,816,288	1,191,733,165
Guarantee and commitments	$ 24,496,653	13,529,498	4,243,657	785,582	391,138	66,463,175	109,909,703	60,620	36,313	46,579	14	30,397	470,630	644,553	45,449	236,332	110,363,373

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b. Debt instruments

September 30, 2021	12-month ECL	12-month ECL	12-month ECL	12-month ECL	12-month ECL	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－ impaired
	Investment	Sub investment	High risk	No rating	Subtotal	Investment	Sub investment	High risk	No rating	Subtotal	High risk	Total	Accumulated impairment (Note)
Investment in debt instruments measured at fair value through other comprehensive income
Overseas bonds	$ 49,049,071	-	-	-	49,049,071	-	-	-	-	-	-	49,049,071	15,627
NT bonds	80,628,197	-	-	-	80,628,197	-	-	-	-	-	-	80,628,197	67,166
Investment in debt instruments at amortized cost
Overseas bonds	15,979,917	-	-	-	15,979,917	-	-	-	-	-	-	15,979,917	6,156
NT bonds	34,933,812	-	-	-	34,933,812	-	-	-	-	-	-	34,933,812	14,132
Certificates of deposit with the Central Bank	190,210,000	-	-	-	190,210,000	-	-	-	-	-	-	190,210,000	56,172
Negotiable certificates of deposit	58,485	-	-	-	58,485	-	-	-	-	-	-	58,485	15
Total	$ 370,859,482	-	-	-	370,859,482	-	-	-	-	-	-	370,859,482	159,268

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

September 30, 2020	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－ 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	$ 35,351,902	-	-	-	35,351,902	-	-	-	-	-	-	35,351,902	11,184
NT bonds	67,684,192	-	-	-	67,684,192	-	-	-	-	-	-	67,684,192	49,945
Investment in debt instruments at amortized cost
Overseas bonds	33,027,426	-	-	-	33,027,426	-	-	-	-	-	-	33,027,426	13,222
NT bonds	43,771,966	-	-	-	43,771,966	-	-	-	-	-	-	43,771,966	18,596
Certificates of deposit with the Central Bank	153,805,000	-	-	-	153,805,000	-	-	-	-	-	-	153,805,000	45,421
Negotiable certificates of deposit	289,835	-	-	-	289,835	-	-	-	-	-	-	289,835	90
Total	$ 333,930,321	-	-	-	333,930,321	-	-	-	-	-	-	333,930,321	138,458

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

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

September 30, 2021 Financial assets at fair value through profit or loss －Debt investments －Commercial paper －Listed stocks －Unlisted stocks －Beneficiary certificates －Derivative instrument December 31, 2020 Financial assets at fair value through profit or loss －Debt investments －Commercial paper －Listed stocks －Unlisted stocks －Beneficiary certificates －Derivative instruments September 30, 2020 Financial assets at fair value through profit or loss －Debit investments －Commercial paper －Listed stocks －Unlisted stocks －Beneficiary certificates －Derivative instrument	Maximum credit risk exposure $ 639,218 39,124,089 449,114 283,587 6,540,335 481,662 Maximum credit risk exposure $ 1,643,111 12,414,244 271,669 310,620 267,054 690,858 Maximum credit risk exposure $ 1,963,158 25,705,947 60,119 235,710 220,610 860,595	Collateral Enhancement of other credit - - - - - - - - - - 562,071 720,420 Collateral Enhancement of other credit - - - - - - - - - - 882,623 700,109 Collateral Enhancement of other credit - - - - - - - - - - 1,183,778 470,287

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

A. Receivables

	For	the nine months	ended September 30, 2021	ended September 30, 2021	Total
12-month ECL $ 38,014 173 (4) (86) (8,235) 22,659 (16,714) - $ 35,807	Lifetime ECL－not impaired 3,567 (12) 15 (63) (188) 76 11,261 - 14,656	Lifetime ECL－ impaired 32,573 (161) (11) 149 (2,765) 10,010 (17,714) - 22,081	Impaired (IFRS9) 74,154 - - - (11,188) 32,745 (23,167) - 72,544	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 64,410 - - - - - - (9,597) 54,813
					138,564 - - - (11,188) 32,745 (23,167) (9,597)
					127,357

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	For	the nine months	ended September 30, 2020	ended September 30, 2020	Total
12-month ECL $ 42,858 152 (102) (20) (5,570) 17,020 - (6,593) - $ 47,745	Lifetime ECL－not impaired 1,456 (68) 112 (91) (259) 526 - 6,448 - 8,124	Lifetime ECL－ impaired 67,513 (84) (10) 111 (5,492) 3,343 (14,985) (18,450) - 31,946	Impaired (IFRS9) 111,827 - - - (11,321) 20,889 (14,985) (18,595) - 87,815	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 39,763 - - - - - - - 15,981 55,744
					151,590 - - - (11,321) 20,889 (14,985) (18,595) 15,981
					143,559

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B. Discounts and loans

	For	the nine months	ended September 30, 2021	ended September 30, 2021	Total
12-month ECL $ 3,133,215 301,598 (4,102) (17,268) (1,389,065) 1,534,748 - (377,015) - $ 3,182,111	Lifetime ECL－not impaired 951,010 (6,172) 12,000 (15,248) (96,999) 72,152 - 114,632 - 1,031,375	Lifetime ECL－ impaired 5,219,221 (295,426) (7,898) 32,516 (797,750) 252,807 (3,156,044) 2,747,206 - 3,994,632	Impaired (IFRS9) 9,303,446 - - - (2,283,814) 1,859,707 (3,156,044) 2,484,823 - 8,208,118	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 5,022,711 - - - - - - - 2,106,418 7,129,129
					14,326,157 - - - (2,283,814) 1,859,707 (3,156,044) 2,484,823 2,106,418
					15,337,247

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	For	the nine months	ended September 30, 2020	ended September 30, 2020	Total
12-month ECL $ 2,197,066 103,869 (75,019) (16,948) (1,037,417) 1,686,614 - 210,089 - $ 3,068,254	Lifetime ECL－not impaired 197,473 (39,779) 76,275 (22,686) (25,437) 307,359 - 2,846,196 - 3,339,401	Lifetime ECL－ impaired 5,722,768 (64,090) (1,256) 39,634 (1,088,229) 395,420 (1,697,570) 1,900,750 - 5,207,427	Impaired (IFRS9) 8,117,307 - - - (2,151,083) 2,389,393 (1,697,570) 4,957,035 - 11,615,082	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 5,224,061 - - - - - - - (1,223,151) 4,000,910
					13,341,368 - - - (2,151,083) 2,389,393 (1,697,570) 4,957,035 (1,223,151)
					15,615,992

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C. Other financial assets

	For	the nine months	ended September 30, 2021	ended September 30, 2021	Total
12-month ECL $ - - - - - - $ -	Lifetime ECL－not impaired - - - - - - -	Lifetime ECL－ impaired 23,121 (82) 8,811 (12,846) 771 - 19,775	Impaired (IFRS9) 23,121 (82) 8,811 (12,846) 771 - 19,775	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 31,930 - - - - (1,907) 30,023
					55,051 (82) 8,811 (12,846) 771 (1,907)
					49,798

	For	the nine months	ended September 30, 2020	ended September 30, 2020	Total
12-month ECL $ - - - - - - $ -	Lifetime ECL－not impaired - - - - - - -	Lifetime ECL－ impaired 53,947 (8) 13,127 (41,584) (1,461) - 24,021	Impaired (IFRS9) 53,947 (8) 13,127 (41,584) (1,461) - 24,021	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 31,954 - - - - 762 32,716
					85,901 (8) 13,127 (41,584) (1,461) 762
					56,737

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D. Guarantee and commitments

	For	the nine months	ended September 30, 2021	ended September 30, 2021	Total
12-month ECL $ 106,670 (13) (3) (38,656) 46,996 3,682 - $ 118,676	Lifetime ECL－not impaired 880 13 (3) (189) 729 57 - 1,487	Lifetime ECL－ impaired 6,699 - 6 (5,520) 2,977 1,077 - 5,239	Impaired (IFRS9) 114,249 - - (44,365) 50,702 4,816 - 125,402	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 156,933 - - - - - 38,347 195,280
					271,182 - - (44,365) 50,702 4,816 38,347
					320,682

For the nine months ended September 30, 2020

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	12-month ECL $ 59,045 55 (550) (2) (18,669) 33,160 10,066 - $ 83,105	Lifetime ECL－not impaired 338 (55) 550 - (135) 411 278 - 1,387	Lifetime ECL－ impaired 17,220 - - 2 (14,134) 1,809 360 - 5,257	Impaired (IFRS9) 76,603 - - - (32,938) 35,380 10,704 - 89,749	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 155,843 - - - - - - (9,260) 146,583	Total
						232,446 - - - (32,938) 35,380 10,704 (9,260)
						236,332

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E. Debts investments

For the nine months ended September 30,	For the nine months ended September 30,	For the nine months ended September 30,	2021 Total
12-month ECL Lifetime ECL －not impaired Lifetime ECL －impaired $ 142,418 - - 77,208 - - (57,544) - - (2,814) - - $ 159,268 - - For the nine months ended September 30,
			142,418 77,208 (57,544) (2,814) 159,268 2020 Total
	Lifetime ECL －not impaired - - - - -	Lifetime ECL －impaired - - - - -
			142,710 56,860 (44,359) (16,753) 138,458

(14)Collateral management policy

A. Collaterals are recognized under the account of other assets per the rules of “Regulations Governing the Preparation of Financial Reports by Public Banks”.
B. Details were as follows:

Collaterals refer to the collaterals provided by clients as guarantee which are undertaken through public auction when the debtor is not able to fulfill its obligation. The collaterals assumed are recognized using the prices undertaken per the rules of “Regulations Governing the Preparation of Financial Reports by Public Banks” and measured by the book value or the fair value deducted by cost of sale, whichever is lower, at the end of the period. Collaterals will be sold when they are available to be sold and the proceeds received will be used to reduce the book amount of collaterals.

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

Liquidity risk refers to the potential financial loss results from the inability to liquidate assets or obtain finance to fulfill the financial obligation which is going to mature with sufficient fund, such as early rescind of time deposits, the channels and terms to call loan from other bank are deteriorated due to the influence of specific markets and the default of loan customers worsen and it is harder for the Bank to receive payments and liquidate financial instruments. The abovementioned situations may diminish the source of cash for the Bank to undertake loan business, trades and investment activities. Under some extreme circumstances, the lack of liquidity may increase the potential possibility of reduction of the overall position of 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
a. In accordance with the target and limit for liquidity risk management approved by the board of directors and monitor all liquidity risk positions.
b. Established “Directions Governing the Capital Liquidity Risk Management of Taiwan Business Bank” and “Remarks Governing the Capital Liquidity Risk Management of Taiwan Business Bank” to serve as guidance to effectively control capital liquidity risk.
c. Overseas branches shall regulate the code of conduct for liquidity risk management based on business characteristics and the regulations of local authorities. After being approved by the general manager, the Risk Management Department will be in charge of monitoring liquidity risk.
B. Process
a. Finance Department is in charge of daily capital deployment to ensure that the capital is sufficient to cope with various demands for capital.
b. Risk Management Department is in charge of the identification, measurement, supervision and control of capital liquidity risk to establish a firm operation process and structure.

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  - c. Risk Management Department reports the result of capital liquidity risk measurement to the Assets and Liabilities Management Committee on a monthly basis and reports the results of capital liquidity risk and pressure test to the board of directors quarterly.

C. Measurement
- a. Maturity gap: To place the inflows and outflows of capital into various time zones accordingly based on the remaining days to maturity and calculate the gap of capital of each time zone in order to measure the capital deficiency of each time zone.
- b. Loan-deposit ratio: To calculate the deposits the Bank received which are used to conduct loan business. In other words, the percentage of the total loan amount accounts for the total deposit amount.
- c. Capital concentration and stability: In order to prevent the Bank from overrelying on single trade counterparty, product or market, the Bank observes several aspects such as the changes in large time deposit customers, the percentage of demand deposits and the continuity of deposits.
- d. Pressure test: Except for monitoring the capital demand under normal circumstances, the Bank conducts pressure test regularly in order to evaluate the capital liquidity under abnormal circumstances and ensure that the Bank is equipped with sufficient capital.
(3) Financial assets possessed for managing liquidity risk and maturity analysis for nonderivative financial liability
A. Financial assets possessed for managing liquidity risk

The Bank and subsidiaries possesses cash and other high liquidity interest yielding assets to cope with payment obligations and potential emergent capital demands in the market. The assets possessed for managing liquidity risk include cash and cash equivalent, due from the Central Bank and call loans to banks, financial assets at fair value through profit or loss, discounts and loans, financial assets measured at fair value through other comprehensive income and investment in debt instruments at amortized cost.

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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			September 30, 2021	September 30, 2021
	0-30 days $ 1,090,099,210 770,188 557,483 16,905,995 50,000 - 64,992 719,923 10,090,000 931,465,573 129,009,400 435,239 - 3,250 27,167	31-90 days 226,526,334 - - 8,169,516 - - 677,700 902,942 23,472,210 - 185,240,357 - 8,000,000 5,000 58,609	91 days-1 year 1-5 years 459,849,668 70,840,148 - - - - 556,897 - 46,180,900 334,200 - - 55,454 1,263,160 731,774 62,951 33,899,335 - - - 378,055,602 47,275,796 - - - 19,340,000 110,500 1,901,500 259,206 662,541 December 31, 2020		Over 5 years Total 35,817,546 1,883,132,906 - 770,188 - 557,483 - 25,632,408 - 46,565,100 8,287,725 8,287,725 - 2,061,306 3 2,417,593 - 67,461,545 - 931,465,573 863 739,582,018 - 435,239 24,910,000 52,250,000 2,438,042 4,458,292 180,913 1,188,436
	0-30 days $ 949,614,285 900,620 777,971 33,177,364 - - 488,948 550,776 10,800,000 813,419,351 88,025,858 426,966 1,000,000 250 46,181	31-90 days 166,776,471 - - 12,082,474 - - 185,344 891,394 20,120,150 - 133,435,966 - - 6,670 54,473	91 days-1 year 425,441,692 - - 2,987,250 28,702,900 - 594,313 872,656 37,355,210 - 346,582,629 - 8,000,000 110,420 236,314	1-5 years 59,010,406 - - - 337,200 - 787,386 58,128 - - 36,679,797 - 18,340,000 2,220,250 587,645	Over 5 years Total 37,614,645 1,638,457,499 - 900,620 - 777,971 - 48,247,088 - 29,040,100 8,411,020 8,411,020 - 2,055,991 8 2,372,962 - 68,275,360 - 813,419,351 1,433 604,725,683 - 426,966 25,910,000 53,250,000 3,154,776 5,492,366 137,408 1,062,021

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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			September 30, 2020	September 30, 2020
	0-30 days $ 898,573,217 809,271 1,174,372 32,220,938 - - 1,103,062 471,329 11,130,000 759,873,219 91,482,131 284,825 - 4,000 20,070	31-90 days 202,983,891 - - 6,856,360 - - 1,439,721 952,416 20,672,210 - 167,003,197 - 6,000,000 9,000 50,987	91 days-1 year 394,589,962 - - 5,404,233 16,710,910 - 68,869 928,201 36,473,150 - 333,674,180 - 1,000,000 96,670 233,749	1-5 years 66,312,551 - - - 347,880 - 416,381 63,137 - - 36,610,096 - 26,340,000 1,993,660 541,397	Over 5 years Total 38,474,955 1,600,934,576 - 809,271 - 1,174,372 - 44,481,531 - 17,058,790 8,612,981 8,612,981 - 3,028,033 6 2,415,089 - 68,275,360 - 759,873,219 1,638 628,771,242 - 284,825 25,910,000 59,250,000 3,805,228 5,908,558 145,102 991,305

(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 nondelivery 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 September 30, 2021 and December 31, 2020, the Bank and subsidiaries had no derivative financial instruments settled by net amount. As of September 30, 2020, maturity analysis for the derivative financial liabilities settled by net amount are as follows:

		September	30, 2020
0-30 days $ 5	31-90 days 420	91-180 days -	181 days to 1 year -	Over 1 year -	Total
					425

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B. Derivative financial instruments settled by gross amount

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

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

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

September 30, 2021 Derivative financial instruments at fair value through profit or loss Foreign exchange derivative instruments Cash outflow Cash inflow Interest rate derivative instrument Cash outflow Cash inflow Total cash outflow Total cash inflow Net cash flow	0-30 days $ 6,837,064 6,842,642 - - 6,837,064 6,842,642 $ (5,578)	31-90 days 11,485,729 11,399,118 1,206 912 11,486,935 11,400,030 86,905	91-180 days 12,479,563 12,375,546 7,881 2,821 12,487,444 12,378,367 109,077	181 days to 1 year 2,505,522 2,479,683 2,373 2,355 2,507,895 2,482,038 25,857	Over 1 year - - 8,377 10,084 8,377 10,084 (1,707)	Total 33,307,878 33,096,989 19,837 16,172
						33,327,715
						33,113,161
						214,554

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December 31, 2020 Derivative financial instruments at fair value through profit or loss Foreign exchange derivative instruments Cash outflow Cash inflow Interest rate derivative instrument Cash outflow Cash inflow Total cash outflow Total cash inflow Net cash flow September 30, 2020 Derivative financial instruments at fair value through profit or loss Foreign exchange derivative instruments Cash outflow Cash inflow Interest rate derivative instrument Cash outflow Cash inflow Total cash outflow Total cash inflow Net cash flow	0-30 days $ 18,587,554 18,999,896 - 671 18,587,554 19,000,567 $ (413,013) 0-30 days $ 25,714,916 25,850,625 13,804 836 25,728,720 25,851,461 $ (122,741)	31-90 days 20,742,526 21,036,931 7,903 1,071 20,750,429 21,038,002 (287,573) 31-90 days 13,605,857 13,883,942 1,206 1,067 13,607,063 13,885,009 (277,946)	91-180 days 14,038,845 14,267,128 14,547 6,907 14,053,392 14,274,035 (220,643) 91-180 days 14,385,388 14,724,301 8,115 8,425 14,393,503 14,732,726 (339,223)	181 days to 1 year 8,411,846 8,406,666 9,222 6,513 8,421,068 8,413,179 7,889 181 days to 1 year 7,411,907 7,563,463 23,202 13,607 7,435,109 7,577,070 (141,961)	Over 1 year - - 18,690 15,276 18,690 15,276 3,414 Over 1 year 27,200 28,990 20,110 18,523 47,310 47,513 (203)	Total 61,780,771 62,710,621 50,362 30,438 61,831,133 62,741,059 (909,926) Total 61,145,268 62,051,321 66,437 42,458 61,211,705 62,093,779 (882,074)

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(5) Maturity analysis of off-balance sheet items

The table below shows the maturity analysis of the off-balance sheet items of the Bank based on the remaining days from the consolidated financial statement date to the contract maturity date. For the financial guarantee contracts issued, the maximum amount of the guarantee is listed in the earliest time zone that the guarantee may be executed. 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.

31-90 days	91-180 days	181 days to 1 year	Total 58,446,862 19,861,805 10,260,760 24,804,517
3,560,821 122,924 6,163,663 6,200,486 16,047,894 31-90 days	1,024,899 67,142 684,429 1,075,932 2,852,402 91-180 days	4,059,041 176,121 222,006 3,659,317 8,116,485 181 days to 1 year
			113,373,944
			Total 61,833,395 20,067,204 8,892,012 20,636,932
338,189 336 5,464,898 2,859,595 8,663,018 31-90 days	4,349,374 300,316 604,705 1,189,714 6,444,109 91-180 days	27,261,664 1,150,378 258,636 3,635,884 32,306,562 181 days to 1 year
			111,429,543
			Total 64,821,028 20,226,316 6,695,361 18,857,000
368,206 308,996 4,233,810 1,700,724 6,611,736	1,095,052 431,905 728,398 1,001,458 3,256,813	9,462,245 1,176,708 132,071 2,588,477 13,359,501
			110,599,705

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(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:

September 30, 2021 Operating lease income (lessor) December 31, 2020 Operating lease income (lessor) September 30, 2020 Operating lease income (lessor)	Below 1 year $ 3,565 Below 1 year $ 660 Below 1 year $ 849	1-5 years 1,362 1-5 years - 1-5 years 96	Over 5 years Total - 4,927 Over 5 years Total - 660 Over 5 years Total - 945

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

September 30, 2021 Machinery and equipment Transportation equipment Right-of-use assets Miscellaneous equipment Total December 31, 2020 Machinery and equipment Transportation equipment Right-of-use assets Miscellaneous equipment Total September 30, 2020 Machinery and equipment Transportation equipment Right-of-use assets Miscellaneous equipment Total	Below 1 year $ 1,145,046 1,313 510 1,255 $ 1,148,124 Below 1 year $ 1,478,133 2,986 1,260 26,900 $ 1,509,279 Below 1 year $ 908,283 2,504 2,521 1,950 $ 915,258	1-5 years - - 287 - 287 1-5 years - - 805 - 805 1-5 years - - 993 - 993	Over 5 years - - - - - Over 5 years - - - - - Over 5 years - - - - -	Total
				1,145,046 1,313 797 1,255
				1,148,411
				Total
				1,478,133 2,986 2,065 26,900
				1,510,084
				Total
				908,283 2,504 3,514 1,950
				916,251

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

(e) Market risk
(1) Definition of market risk

Market risk refers to the possible loss of the Bank’s business in or off the balance sheet results from the disadvantageous fluctuation in market price in terms of interest rates, stock prices, foreign exchange rates and commodity prices.

(2) Policies and procedures of market risk management

A. Strategy
a. To carry out market risk management, achieve operation target and maintain healthy capital adequacy by following “Directions Governing the Market Risk Management of Taiwan Business Bank” and other relevant regulations.
b. Under the risk tolerance approved by the board of directors or board of executive directors, the Bank applies various risk control mechanism to effectively deploy and manage capital in order to maintain the market risk exposure within the tolerable extent and achieve earning target.
B. Policies and procedures

In order to establish the market risk management mechanism and ensure that the market risk is within the tolerable extent, the Bank set up directions governing the market risk management, remarks governing the limit of market risk and financial product valuation procedures as the primary management guidance. Other than what is stated above, the Bank also establish limit control mechanism in terms of trade positions, stop-limit, suspensions and lines of alert based on the operation notices and procedures of different financial instruments, including fix income instruments, equity securities, foreign exchange transaction and derivative financial instruments.

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

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

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B. Risk measurement
a. Annually based on the business development of transaction units and submit to the board of directors or board of executive directors for approval. For the units which the positions and limits remain unchanged after evaluation, they can put the positions and limits into practice after receiving the approval from the general manager.
b. The risk measurements (or evaluations) of the financial instruments of the Bank are conducted through different information systems. For the market data and parameters of the models applied for evaluation, they shall be random inspected regularly to determine the rationality.
C. Risk monitoring
a. Valuation reports of various financial instruments are prepared regularly for executives to review and serve as the guidance for daily risk management operation.
b. All financial transactions are equipped with different regulations in terms of limit of loss and stop-limit. Provided that the valuation loss amount is over the limit, a stop-limit, suspension and subsequent risk control will be executed.
D. Risk report

Risk management department report current market risk management status of the Bank to directors, executive directors and executives to facilitate them to control the risk exposure status and adjust management procedures properly.

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

Foreign exchange risk refers to the potential profit or loss of the foreign currency financial instruments which results from the transition among fluctuating currencies.

b. Applicable scope

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

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c. Purpose for foreign exchange risk management

To avoid loss of earnings or deterioration of financial status due to intensive fluctuation of foreign exchange and to increase capital deployment efficiency and business operation integrity.

d. Procedures of foreign exchange risk management
1) In order to control foreign exchange transaction risk, the Bank established trade position authorization standard for financial transaction operations, trade units and traders in current regulations. In addition, for non-commercial business foreign exchange operation, all trade units submit the required amounts of position annually based on operation status. Risk management department will evaluated the requirement and submit to the board of directors’ (executive directors) for approval. The demand will be executed after the board of directors approved. For the units which the positions remain unchanged after evaluation, they can put the positions into practice after receiving the approval from the general manager.
2) The trade units conduct various foreign financial product business, they shall fully understand the content of commodities, the risk tolerance and trade purpose. Trade units shall establish financial products trading strategies based on market status in the meeting every morning and submit the risk-benefit evaluation in the meeting minutes for the department heads to review. The trading shall follow the relevant authorization rules of the Bank and the stop-limit of all trade positions shall be executed reliably.
e. Process of foreign exchange risk management
1) Identification and measurement
- A) Risk Management department established risk factor chart based on different financial transactions to effectively identify risk factors and market risk resources. In addition, the financial transactions which the Bank 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.

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     - C) Positions of the trading book shall be evaluated daily where the positions of the banking book shall be evaluated monthly. When there are public quotes for financial instruments, the quotes shall be the prior evaluation prices. If the financial instruments are evaluated by models, then they shall be evaluated by mathematic models prudently and the assumptions and parameters of the models shall be reviewed regularly.

  - 2) Monitoring and report

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

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

B. Equity security risk management
a. Definition of equity security risk

The market risks of the equity securities possessed by the Bank include the individual risk results from the market price fluctuation of individual equity security and the general market risk results from overall market price fluctuation.

b. Applicable scope

Financial instruments similar to equity security in all trading books.

c. Purpose of equity security risk management

To avoid loss of earnings or deterioration of financial status due to intensive fluctuation of equity securities and to increase capital deployment efficiency and business operation integrity.

d. Procedures of equity security risk management
1) All trade units submit the required amounts of position annually base on operation status. Risk management department will evaluate the requirement and submit to the board of directors or executive directors. The demand will be executed after approved by the board of directors.

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2) The trade units shall predict the possible trend of domestic stock market based on the information of foreign and domestic security markets so as to set up the operation strategies and directions. The traders shall pay close attention to the market trend when the market opens so as to conduct security transactions and the operations as well as the meeting minutes shall be submitted to the department heads to review.
e. Process of equity security risk management
1) Identification and measurement
- A) The risk management department apply Value at Risk models to measure the market risk of equity security investment. Furthermore, based on the trade units' operation demand and the risk limit established by the Bank’ s risk tolerance, the risk management units effectively control the variation of risk factors under an acceptable extent.
- B) Trading book position shall be evaluated daily. When there is a public quote in the market, the quote shall be adopted as the prior evaluation price. If the transaction is in secondary market and the liquidity is high, the closing price can be adopted as the evaluation price. If the financial instruments are evaluated by models, then they shall be evaluated by mathematic models prudently and the assumptions and parameters of the models shall be reviewed regularly.
2) Monitoring and report
- A) When the evaluation loss of equity security investment is over the limit, the trade units shall execute a stop-limit per regulations. If the loss amount reaches the suspension warning line or suspension limit of the financial transaction, risk management units shall report to the general manager. Provided that the loss amount reaches the annual suspension line, risk management department shall report to the board of directors or executive directors.
- 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.

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

Interest rate risk refers to the price decline of the Bank’s financial products which contain interest risk factors due to the disadvantageous changes in interest rate.

b. Applicable scope

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

c. Purpose of interest rate risk management

To avoid loss of earnings or deterioration of financial status due to intensive fluctuation of interest rate and to increase capital deployment efficiency and business operation integrity.

d. Procedures of interest rate risk management
1) In order to control interest rate risk, the Bank established trade position authorization standard for financial transaction operations, trade units and trade counterparties in current regulations. In addition, for the positions held for trading, all trade units submit the required amounts of position annually based on operation status. Risk management department will evaluate the requirement and submit to the board of directors or executive directors for approval. The demand will be executed after the board of directors approved.
2) The trade units shall consider safety, liquidity and profitability and gather market information to assess the potential risk and benefit. In additional, the trade units shall choose investment target prudently through analyzing the issuers’ credit, financial status, country risks and interest rate trends.
e. Process of interest rate risk management
1) Identification and measurement
- A) The risk management department establish risk factor charts base on different financial transaction to effectively identify risk factors and market risk resources. In addition, the financial transactions which the Bank conducts deal with simple type financial products. For complex financial products, the Bank conducts back-to-back hedge covering to effectively avoid market risk.

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

  - 2) Monitoring and report

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

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

D. Concentration management
a. The trade counterparties of the Bank are mostly financial institutions. To avoid the risk being over concentrated and enhance credit risk management, the Bank established financial institution credit risk limit based on the world ranking of Level 1 capital and credit ratings from The Banker. The trade units shall also pay attention to the changes of the credit status of individual financial institution as well as the changes of the national credit rating to conduct the transaction prudently.
b. For equity security investments, the Bank set up limits for single institution and single related party.

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(5) Interest rate risk management of the banking book
A. The definition and management purpose for the interest rate risk of the banking book
- a. The interest rate risk of the banking book refers to the negative effect towards the future net interest income or economic value of equity results from the fluctuation of interest rate. Net Interest Income (hereafter NII) is the total amount of interest revenue deducted by the total amount of interest expense; Economic Value of Equity (hereafter EVE) is the total discounted future cash inflow from assets deducted by the total discounted future cash outflow from liabilities.
- b. The management purpose of the interest rate risk management of the banking book is to control the negative effect from the interest rate risk fluctuation towards NII or EVE within the approved limit extent.
B. The process for the interest rate risk management of the banking book
- a. Identification and measurement

When the Bank conducts interest rate related products, it identifies the reprising risk, yield curve risk, basis risk and option characteristic risk and measures the possible influence on the earnings and economic value results from interest rate fluctuation.

b. Monitoring and report

The Bank established limits of the ratio between interest-rate-sensitivity assets and interest-rate-sensitivity liabilities, the effect to NII in 1 year when the market interest rate parallel changes 1 BP and the effect to EVE when the market interest rate parallel changes 200 BP to control the banking book interest rate risk. The results of interest rate risk measurement are reported to the Assets and Liabilities Management Committee monthly and to the board of directors or executive directors quarterly. When the measurement result is over the limit, relevant units shall be convened to establish responding plan and the plan shall be submitted to the Assets and Liabilities Management Committee for discussion. After the plan is approved by the general manager, it shall be executed by the relevant business units and report to the board of directors or executive directors.

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(6) Value at Risk
A. Description of Value at Risk

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

B. Value at Risk models and assumptions

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

C. The limit of Value at Risk model

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

a. Value at Risk cannot reflect the losses result from other type of risks, such as credit risk and liquidity risk.
b. Value at Risk measures the possible loss of the position on hand at the end of the transaction day, but it cannot reflect the distribution of the part which actual loss exceeds Value at Risk.
c. Value at Risk model is based on historical data to evaluate the amount, and therefore it may not be able to predict the future changes of risk factors, especially for those exceptions result from significant market fluctuation.

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

	Significant net positions of foreign currencies (Market risk)	Significant net positions of foreign currencies (Market risk)
	September 30, 2021
	Currency Foreign currency amount (in thousands) NT$ amount USD $ 428,958 11,946,480 JPY 2,005,560 499,585 CNY 72,434 311,539 AUD 15,549 311,446 HKD 9,856 35,255 Significant net positions of foreign currencies (Market risk)

	December 31, 2020
	Currency USD JPY CNY EUR AUD Significant net positions of	Foreign currency amount (in thousands) NT$ amount $ 440,115 12,367,232 2,022,710 551,188 66,291 286,709 5,401 186,821 5,013 108,531 foreign currencies (Market risk)
	September 30, 2020
	Currency USD JPY CNY AUD SEK	Foreign currency amount (in thousands) NT$ amount $ 442,918 12,840,193 2,121,908 582,252 132,288 562,753 13,473 278,824 18,803 60,922

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

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

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b. Assets and liabilities of foreign currency

	September 30, 2021	September 30, 2021	September 30, 2021
Currency	Monetary financial asse		ts NTD amount 365,687,516 80,602,222 27,158,351 23,976,753 18,573,980 13,451,035 6,210,804 948,883 945,650 389,961 219,106 145,498	Monetary financial liabilities
	Foreign currency amount (in thousands) $ 13,130,611 4,024,075 6,314,427 96,253,526 5,192,614 416,183 3,382,791 49,550 25,251 17,839 10,709 -	Spot rate 27.8500 20.0300 4.3010 0.2491 3.5770 32.3200 1.8360 19.1500 37.4500 21.8600 20.4600 -		Foreign currency amount (in thousands) 12,550,884 3,935,907 6,101,802 94,869,914 4,823,546 417,404 3,381,436 49,362 24,373 18,131 10,728 -	Spot rate NTD amount 27.8500 349,554,259 20.0300 78,836,217 4.3010 26,243,850 0.2491 23,632,096 3.5770 17,253,824 32.3200 13,490,497 1.8360 6,208,316 19.1500 945,282 37.4500 912,769 21.8600 396,344 20.4600 219,495 - 150,725
USD AUD CNY JPY HKD EUR ZAR NZD GBP CAD SGD Others (Note)

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

	December 31, 2020	December 31, 2020
	Monetary financial assets	NTD amount 360,420,744 102,002,828 44,725,962 23,271,352 20,372,903 12,553,022 8,695,284 1,275,364 1,006,074 394,742 155,101 118,651 83,141 ssets 145,586	Monetary financial liabilities
Currency	Foreign currency amount (in thousands) Spot rate $ 12,821,180 28.1000 4,711,447 21.6500 10,341,263 4.3250 85,399,458 0.2725 5,621,662 3.6240 362,909 34.5900 4,526,436 1.9210 62,764 20.3200 26,234 38.3500 17,894 22.0600 7,292 21.2700 34,592 3.4300 - - Non-monetary financial a		Foreign currency amount (in thousands) Spot rate NTD amount 12,222,317 28.1000 343,447,108 4,634,864 21.6500 100,344,806 10,135,870 4.3250 43,837,638 84,061,617 0.2725 22,906,791 5,236,467 3.6240 18,976,956 363,008 34.5900 12,556,447 4,524,811 1.9210 8,692,162 62,734 20.3200 1,274,755 26,199 38.3500 1,004,732 17,894 22.0600 394,742 7,483 21.2700 159,163 33,662 3.4300 115,461 - - 93,168 Non-monetary financial liabilities
USD AUD CNY JPY HKD EUR ZAR NZD GBP CAD SGD SEK Others (Note) USD
	5,181 28.1000		- - -

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

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	September 30, 2020	September 30, 2020
	Monetary financial assets	NTD amount 378,659,901 95,013,084 68,979,269 16,664,443 20,988,106 9,713,469 7,619,383 1,231,969 1,711,932 482,851 107,378 240,878 77,866 ssets 122,715	Monetary financial liabilities
Currency	Foreign currency amount (in thousands) Spot rate $ 13,061,742 28.9900 4,591,113 20.6950 16,215,155 4.2540 60,730,478 0.2744 5,611,793 3.7400 285,187 34.0600 4,450,574 1.7120 64,299 19.1600 45,884 37.3100 22,282 21.6700 5,065 21.2000 74,345 3.2400 - - Non-monetary financial a		Foreign currency amount (in thousands) Spot rate NTD amount 12,494,758 28.9900 362,223,034 4,519,267 20.6950 93,526,231 16,018,947 4.2540 68,144,601 59,410,658 0.2744 16,302,285 5,211,469 3.7400 19,490,894 285,479 34.0600 9,723,415 4,448,552 1.7120 7,615,921 64,394 19.1600 1,233,789 45,991 37.3100 1,715,924 22,272 21.6700 482,634 6,668 21.2000 141,362 74,854 3.2400 242,527 - - 79,533 Non-monetary financial liabilities
USD AUD CNY JPY HKD EUR ZAR NZD GBP CAD SGD SEK Others (Note) USD
	4,233 28.9900		- - -

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

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%.

	September 30, 2021 by 1% Appreciate by 1% Equity Income Equity (55,157) 51,665 55,157 (21,693) (4,145) 21,693 (15,361) (2,770) 15,361 (3,294) 344 3,294 - 350 - - (4) - - 27 - - (18) - - (20) - - (68) - - (14) - - (389) - - 43 - - 50,775 - (95,505) 95,776 95,505	September 30, 2021 by 1% Appreciate by 1% Equity Income Equity (55,157) 51,665 55,157 (21,693) (4,145) 21,693 (15,361) (2,770) 15,361 (3,294) 344 3,294 - 350 - - (4) - - 27 - - (18) - - (20) - - (68) - - (14) - - (389) - - 43 - - 50,775 - (95,505) 95,776 95,505	September 30, 2021 by 1% Appreciate by 1% Equity Income Equity (55,157) 51,665 55,157 (21,693) (4,145) 21,693 (15,361) (2,770) 15,361 (3,294) 344 3,294 - 350 - - (4) - - 27 - - (18) - - (20) - - (68) - - (14) - - (389) - - 43 - - 50,775 - (95,505) 95,776 95,505
Depreciate	by 1% Equity (55,157) (21,693) (15,361) (3,294) - - - - - - - - - - (95,505)
Income $ (51,665) 4,145 2,770 (344) (350) 4 (27) 18 20 68 14 389 (43) (50,775) $ (95,776)		Income 51,665 (4,145) (2,770) 344 350 (4) 27 (18) (20) (68) (14) (389) 43 50,775 95,776
			95,505

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		December 31, 2020	December 31, 2020	December 31, 2020
Depreciate		by 1% Appreciate by 1% Equity Income Equity (54,119) 94,813 54,119 (20,838) (4,317) 20,838 (16,090) (2,844) 16,090 (3,839) (2) 3,839 - 32 - - (41) - - 33 - - 32 - - (41) - - (59) - - (24) - - 14 - - 50,706 - (94,886) 138,302 94,886 September 30, 2020	Appreciate by 1%
Income $ (94,813) 4,317 2,844 2 (32) 41 (33) (32) 41 59 24 (14) (50,706) $ (138,302)				Equity 54,119 20,838 16,090 3,839 - - - - - - - - -
				94,886

	Depreciate	by 1% Equity (55,126) (19,010) (17,290) (3,598) - - - - - - - - - - (95,024)	Appreciate by 1%
			Income (37,476) (7,210) (2,975) (5,476) (20) (340) 36 (17) (24) 5 7 (140) (11) 2,920 (50,721)	Equity 55,126 19,010 17,290 3,598 - - - - - - - - - -
				95,024

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(8) Interest rate risk disclosure and sensitivity analysis
A. Interest rate sensitivity analysis

The assumption of interest rate sensitivity analysis is, under the circumstance that other conditions remain the same, the yield of the market increase or decrease by 1 basis point (1 bp).

September 30, 2021	September 30, 2021	September 30, 2021
Interest rate increases by 1 bp Interest rate decreases by 1 bp Income Equity Income Equity $ (376) (3,718) 376 3,718 - (52,413) - 52,413 - (16,248) - 16,248 - (900) - 900 - (16) - 16 - (2,251) - 2,251 - (234) - 234 $ (376) (75,780) 376 75,780 December 31, 2020	Interest rate decreases by 1 bp
Income $ (376) - - - - - - $ (376)		Equity 3,718 52,413 16,248 900 16 2,251 234
		75,780

	Interest rate decreases by 1 bp
	Income 131 - 2 - - - - 133	Equity 4,161 43,732 10,477 639 35 2,587 284
		61,915

September 30, 2020	September 30, 2020	September 30, 2020
Interest rate increases by 1 bp Income Equity $ (197) (3,341) - (68,863) - (12,450) - (673) - (47) - (2,603) - (265) $ (197) (88,242)	Interest rate decreases by 1 bp
Income $ (197) - - - - - - $ (197)	Income 197 - - - - - - 197	Equity 3,341 68,863 12,450 673 47 2,603 265
		88,242

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

Scenario Interest rate increases by 100 bp Interest rate decreases by 100 bp Scenario Interest rate increases by 100 bp Interest rate decreases by 100 bp Scenario Interest rate increases by 100 bp Interest rate decreases by 100 bp		September 30, 2021 in 1 year Effect on EVE USD TWD USD (35,034) (4,434,806) (55,046) 2,515 3,110,456 71,841 December 31, 2020 in 1 year Effect on EVE USD TWD USD (28,815) (823,603) (50,085) 4,141 3,263,342 40,109 September 30, 2020 in 1 year Effect on EVE USD TWD USD (26,139) (1,876,690) (56,586) 4,265 2,158,036 33,435
	Effect on NII
	TWD 3,827,771 (5,046,881)
	Effect on NII
	TWD 3,709,697 (4,860,513)
	Effect on NII	in 1 year USD (26,139) 4,265
	TWD 3,492,705 (4,750,482)

－ (9) Interest Rate Benchmark Reform Phase 2

A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates (IBORs) with alternative nearly risk-free rates. The Bank and subsidiaries have exposures to IBORs on its financial instruments that will be reformed as part of these marketwide initiatives.

The Bank and subsidiaries anticipate that IBOR reform will impact its operational and risk management processes. The main risks to which the Bank and subsidiaries is exposed as a result of IBOR reform are operational. For example, the renegotiation of borrowing contracts through bilateral negotiation with creditors, implementing new fallback clauses with its derivative counterparties, updating of contractual terms, and revision of operational controls related to the reform.

The working group provides periodic reports to the management on exposure area and implementation of the LIBOR interest rate conversion plan.

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

The following tables show the total amounts of unreformed contracts and those with

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appropriate fallback language on September 30 and January 1, 2021. The amounts of financial assets and liabilities are shown at their carrying amounts, and derivatives are shown at their notional amounts.

September 30, 2021 Financial assets Discounts and loans Bond Investments Receivables Financial lliabilities Due to the Central Bank and banks Derivatives Interest rate swaps January 1, 2021 Financial assets Discounts and loans Bond Investments Receivables Financial lliabilities Due to the Central Bank and banks Derivatives Interest rate swaps	USD L	IBOR	EUR L	IBOR	GBP LI	BOR	JPY L	IBOR	CHF LIBOR
	Total amount of unreformed contracts	Amount with appropriate fallback clause	Total amount of unreformed contracts	Amount with appropriate fallback clause	Total amount of unreformed contracts - - - - - 7,000 - - - -	Amount with appropriate fallback clause	Total amount of unreformed contracts	Amount with appropriate fallback clause	Total amount of unreformed contracts Amount with appropriate fallback clause - - - - - - - - - - 10,000 - - - - - - - - -
	$ 79,053,000 23,456,000 14,000 1,170,000 9,469,000 76,178,000 28,370,000 42,000 1,461,000 11,802,000	18,142,000 42,000 14,000 - 9,469,000 5,849,000 - - - -	472,000 - - - - 906,000 - - - -	86,000 - - - - 102,000 - - - -		- - - - - - - - - -	1,959,000 - - - - 1,809,000 - - - -	11,000 - - - - 193,000 - - - -

(10) Equity security risk disclosure and sensitivity analysis

A. Equity security sensitivity analysis (Changes by 1%)

The assumption of equity security sensitivity analysis is, under the circumstance that other conditions remain the same, the price of equity security increased or decreased by 1%.

Change Equity security price increases by 1 % Equity security price decreases by 1 % Change Equity security price increases by 1 % Equity security price decreases by 1 %	Currency TWD USD TWD USD Currency TWD USD TWD USD	September 30, 2021
		Income Equity 65,394 - 7 - (65,394) - (7) - December 31, 2020
		Income Equity 2,053 - 52 - (2,053) - (52) -

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Change Equity security price increases by 1 % Equity security price decreases by 1 %	Currency USD USD	September 30, 2020
		Income Equity 42 - (42) -

B. Value at Risk of equity security

Value at Risk	From October 1, 2020 to September 30, 2021	From October 1, 2020 to September 30, 2021	From October 1, 2020 to September 30, 2021
	Average	Maximum	Minimum
Equity security risk	7,453	14,786	3,114

Value at Risk	For the year ended December 31, 2020
	Average	Maximum	Minimum
Equity security risk	6,749	15,917	1,668

Value at Risk	From October 1, 2019 to September 30, 2020
	Average	Maximum	Minimum
Equity security risk	5,769	15,917	1,668

(f) Transferred financial assets that are not fully derecognized

The transactions, relating to transferred financial assets not qualifying for full derecognition, the Bank and subsidiaries conduct during daily operation mostly involve securities lending in accordance to repurchase agreements. Since the right to receive contractual cash flow has been transferred to others and the Bank 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 have interest rate risk and credit risk, the said transferred assets are not fully derecognized.

As of September 30, 2021, December 31 and September 30, 2020, there were not any financial assets of the Bank that are not fully derecognized.

(g) Offsetting financial assets and financial liabilities

The Bank and subsidiaries have an exercisable master netting arrangement or similar agreement in place with counterparties. When both parties reach a consensus regarding net settlement, the aforesaid exercisable master netting arrangement or similar agreement can be net settled by offsetting financial assets and financial liabilities. If not, the transaction can be settled at total amount. In the event of default involving one of the parties, the other party can have the transaction net settled.

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

		September 30, 2021	September 30, 2021	et amount settlement or similar norm Amounts not set off in the balance sheet (d) Financial instruments (Note) Cash collateral received Net amount (e)=(c)-(d) 720,420 562,071 (1,099,501)
Financial assets under		offsetting or general agreement of n
Item	Gross amounts of recognized financial assets (a)	Gross amounts of financial liabilities offset in the balance sheet (b)	Net amount of financial assets presented in the balance sheet (c)=(a)-(b)
				Financial instruments (Note)
Derivative financial instruments	$ 182,990	-	182,990	720,420

September 30, 2021	September 30, 2021	September 30, 2021	September 30, 2021	net amount settlement or similar norm Amounts not set off in the balance sheet (d) Financial instruments (Note) Cash collateral pledged Net amount (e)=(c)-(d) - 275,787 (164,910)
Financial liabilities under offsetting or general agreement of
Item	Gross amounts of recognized financial liabilities (a)	Gross amounts of financial assets offset in the balance sheet (b)	Net amount of financial liabilities presented in the balance sheet (c)=(a)-(b)
				Financial instruments (Note)
Derivative financial instruments	$ 110,877	-	110,877	-

		December 31, 2020	December 31, 2020	et amount settlement or similar norm Amounts not set off in the balance sheet(d) Financial instruments (Note) Cash collateral received Net amount (e)=(c)-(d) 700,109 882,623 (1,191,541)
Financial assets under		offsetting or general agreement of n
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
				Financial instruments (Note)
Derivative financial instruments	$ 391,191	-	391,191	700,109

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

		September 30, 2020	September 30, 2020	et amount settlement or similar norm Amounts not set off in the balance sheet (d) Financial instruments (Note) Cash collateral received Net amount (e)=(c)-(d) 470,287 1,183,778 (1,237,855)
Financial assets under		offsetting or general agreement of n
Item	Gross amounts of recognized financial assets (a)	Gross amounts of financial liabilities offset in the balance sheet (b)	Net amount of financial assets presented in the balance sheet (c)=(a)-(b)
				Financial instruments (Note)
Derivative financial instruments	$ 416,210	-	416,210	470,287

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September 30, 2020	September 30, 2020	September 30, 2020	September 30, 2020	net amount settlement or similar norm Amounts not set off in the balance sheet (d) Financial instruments (Note) Cash collateral pledged Net amount (e)=(c)-(d) - 564,374 (399,726)
Financial liabilities under offsetting or general agreement of
Item	Gross amounts of recognized financial liabilities (a)	Gross amounts of financial assets offset in the balance sheet (b)	Net amount of financial liabilities presented in the balance sheet (c)=(a)-(b)
				Financial instruments (Note)
Derivative financial instruments	$ 164,648	-	164,648	-

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

(AO) Capital Management

(a) The Bank takes business development and risk control into consideration and calculates capital adequacy per “Regulations Governing the Capital Adequacy Ratio and Capital Category of Banks” and “Calculation Methods and Forms of Proprietary Capital and Risk Capital of Banks” . The ratio between proprietary capital and risk capital shall remain above the regulated minimum ratio.
(b) In order to maintain adequate capital and reach a balance between risk control and business development, the Bank established “Directions Governing Capital Adequacy” as the guidance for controlling capital adequacy. The scope of the directions includes, except for the least capital requirements for credit risk, market risk and operation risk, significant risk such as banking book interest rate risk, liquidity risk and concentration risk. In addition, in order to link business strategies, capital and risk management, the Bank sets up capital management plan annually for the president’s approval and reports to Risk Management Committee and the board of directors quarterly about relevant risks and capital control status.
(c) The Bank identifies, measures, monitors and reports various risks based on the directions, notices and relevant rules of competent authority regarding credit risk, market risk, operation risk, interest rate risk of the banking book, and liquidity risk so as to be familiar with current business environment and monitors and adjusts capital adequacy effectively.
(d) To cope with the implementation of new Basel Accord, the Bank set up complete risk management system, risk management operation tracking procedures to provide the management with appropriate risk management information for making decisions. Therefore, the Bank is able to maintain adequate capital within the tolerable extent and to ensure the provision of proprietary capital of the Bank corresponds with the overall operating risk characteristics of the Bank.

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(1) Tier 1 capital
A. Common stock equity: The item includes common stock deducted by treasury stock, goodwill and other intangible assets, deferred tax assets based on future profit status of the Bank, unrealized gain on financial assets measured at fair value through other comprehensive income, operating reserve and deficiency of allowance for bad debts, real estate retained earning increment arising from applying the fair value or the revaluation reserve as the deemed cost when first adopting IFRSs, and 25% of the major investment on financial related business.
B. Other Tier 1 capital: 25% of the perpetual non-accumulated subordinated financial debentures deducted by the major investment on financial related business.
(2) Tier 2 capital

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.

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

The Bank's investing and financing activities which did not affect the current cash flow for the nine months ended September 30, 2021 and 2020 were carried out to acquire right-of-use assets under leases. Please refer to Note 6(K).

Reconciliation of liabilities arising from financing activities were as follows:

Non-cash changes Foreign exchange rate movement Fair value changes Other changes (75,000) (48,295) - - - - (8,161) - 459,327 (83,161) (48,295) 459,327	Non-cash changes Foreign exchange rate movement Fair value changes Other changes (75,000) (48,295) - - - - (8,161) - 459,327 (83,161) (48,295) 459,327	September 30, 2021 8,287,725 52,250,000 1,188,436
Foreign exchange rate movement (75,000) - (8,161) (83,161)	Fair value changes (48,295) - - (48,295)
		61,726,161

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Non-cash changes Foreign exchange rate movement Fair value changes Other changes (300,000) (36,201) - - - - (3,097) - 287,146 (303,097) (36,201) 287,146	Non-cash changes Foreign exchange rate movement Fair value changes Other changes (300,000) (36,201) - - - - (3,097) - 287,146 (303,097) (36,201) 287,146	September 30, 2020 8,612,981 59,250,000 991,305
Foreign exchange rate movement (300,000) - (3,097) (303,097)	Fair value changes (36,201) - - (36,201)
		68,854,286

(AQ) Structured entities that not included in consolidated financial reports
(a) The table below presents the types of structured entities that the Bank and subsidiaries do 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

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

follow:
Private fund Asset securitization product Total	September 30, 2021 $ 100,974 435,249 $ 536,223	December 31, 2020 104,498 819,768 924,266	September 30, 2020
			97,900 1,006,751
			1,104,651

Assets held by the Bank and subsidiaries	September 30, 2021 $ 100,974 245,298 189,951 $ 536,223	December 31, 2020 104,498 415,351 404,417 924,266	September 30, 2020
Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Investments in debt instruments at amortized cost Total			97,900 513,234 493,517
			1,104,651

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

(d) As of September 30, 2021, December 31 and September 30, 2020, the Bank and subsidiaries has not provided any financial support to its special purpose entities that are not included in consolidated financial reports.

7. RELATED-PARTY TRANSACTIONS

(A) Names of related parties and relationship

Name of related party Bank of Taiwan Ministry of Finance, R.O.C National Revelopment Fund, Executive Yuan (Note 1) Land Bank of Taiwan (Note 2) Taiwan Business Bank Guild Small and Medium Enterprise Credit Guarantee Fund of Taiwan Others	Relationship with the Bank and subsidiaries
	Corporate director of the Bank Corporate director of the Bank Corporate director of the Bank Corporate director of the Bank Corporate director of the Bank Substantive related parties Management and other related parties of the Bank

Note 1: Become a related party commencing from the third quarter of 2021.

Note 2: No longer a related party commencing from the third quarter of 2021

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

Due from banks
Bank of Taiwan Bank of Taiwan Land Bank of Taiwan Total	September 30, 2021
	Amount % $ 218,728 1.24 December 31, 2020	%
		1.24
		%
		0.85 0.08
		0.93

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Bank of Taiwan Land Bank of Taiwan Total	September 30, 2020	September 30, 2020
	Amount $ 169,900 5,265 $ 175,165	%
		1.07 0.03
		1.10

Interest rates are the same as those with regular clients.

(b) Deposits from banks

Land Bank of Taiwan Land Bank of Taiwan	December 31, 2020	December 31, 2020
	Amount % $ 1,999 0.32 September 30, 2020	%
		0.32
		%
		0.38

Interest rates are the same as those with regular clients.

Bank of Taiwan Bank of Taiwan Land Bank of Taiwan Total Bank of Taiwan Land Bank of Taiwan Total	September 30, 2021 December 31, 2020 September 30, 2020 $ 236,555 - - Interest Income Highest balance For the three months ended September 30, 2021 For the nine months ended September 30, 2021 Annual interest rate $ 3,038,983 463 819 0.14%~3.8% 1,507,961 - 1,069 0.09%~3.3% $ 4,546,944 463 1,888 Interest income Highest balance For the three months ended September 30, 2020 For the nine months ended September 30, 2020 Annual interest rate $ 1,759,283 781 3,731 0.19%~3.12% 4,026,868 1,246 1,500 0.15%~2.55% $ 5,786,151 2,027 5,231	September 30, 2020 -

Interest rates are the same as those with regular clients.

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(d) Call loans from banks

Bank of Taiwan Land Bank of Taiwan Total Bank of Taiwan Land Bank of Taiwan Total Bank of Taiwan Land Bank of Taiwan Total	September 30, 2021 December 31, 2020 September 30, 2020 $ 5,051,033 4,309,375 3,086,490 - - 42,540 $ 5,051,033 4,309,375 3,129,030 Interest Expense Highest balance For the three months ended September 30, 2021 For the nine months ended September 30, 2021 Annual interest rate $ 7,487,419 3,781 13,192 0.01%~2.7% 1,384,796 - 135 0.09%~2.35% $ 8,872,215 3,781 13,327 Interest Expense Highest balance For the three months ended September 30, 2020 For the nine months ended September 30, 2020 Annual interest rate $ 5,446,280 2,336 3,187 0.12%~3.35% 4,512,609 181 2,074 0.1%~6% $ 9,958,889 2,517 5,261	September 30, 2020 3,086,490 42,540
		3,129,030

Interest rates are the same as those with regular clients.

(e) Deposits

Others Others Others	September 30, 2021	September 30, 2021
	Amount % $ 1,578,200 0.10 December 31, 2020	%
		0.10
		%
		0.09

Interest rates are the same as those with regular clients.

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(f) Credit

Credit	Credit	Credit	Credit	Credit	Credit	Credit	Credit
September 30, 2021
Category	Number of clients or name of relatedparty	Highest balance	Ending balance	Performing situations		Collaterals	Transaction terms are different to regular clients
				Performing loan	Non-performing Loans
Employee consumer loans	40	17,353	13,924	13,924	-	none	none
Self-use home mortgages loans	121	482,934	454,394	454,394	-	real estate	none
Others	Natural person	496,723	464,599	464,599	-	real estate	none

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

September 30, 2020
Category	Number of clients or name of relatedparty	Highest balance	Ending balance	Performing situations		Collaterals	Transaction terms are different to regular clients
				Performing loan	Non-performing Loans
Employee consumer loans	29	13,111	11,162	11,162	-	none	none
Self-use home mortgages loans	102	443,328	385,144	385,144	-	real estate	none
Others	Natural person	414,219	403,943	403,943	-	real estate	none

(g) Donation:

For the three months ended September 30,	For the three months ended September 30,	For the nine months ended September 30,	For the nine months ended September 30,
2021 $ 94,466 - $ 94,466	2020	2021 283,400 2,500 285,900	2020
	82,482 -		247,446 2,500
	82,482		249,946

(h) Guarantees: None.
(i) Service fees: None.
(j) Rental revenue: None.
(k) Derivatives financial instrument transactions: None.
(l) Sales of Non–Performing Loans Transactions: None.

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For the three months ended September 30,	For the three months ended September 30,	For the nine months ended September 30,	For the nine months ended September 30,
2021 $ 24,964 668 $ 25,632	2020 24,131 691 24,822	2021 72,973 2,008 74,981	2020
			70,589 1,962
			72,551

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

9. Commitments and contingencies

(A) Significant commitments and contingencies were as follows:

Marketable securities held for custody Bills collected for others Bills lent for others Guarantees and letters of credit Collaterals received Trust liabilities Items held for custody Registered government bonds for sale Registered short-term bills for sale Guarantee notes payable	September 30, 2021 $ 9,780,986 47,154,310 39,795,991 35,065,277 - 209,690,308 1,188,230 63,377,300 2,680,210 53,626,700	December 31, 2020 September 30, 2020 10,522,496 10,613,634 43,458,651 37,909,566 32,385,246 32,216,353 29,528,944 25,552,361 426 426 174,773,364 168,766,406 1,138,192 1,093,873 57,191,300 62,356,200 2,050,801 2,073,248 26,061,610 26,211,310

(B) Unrecognized contractual commitments:

As of September 30, 2021, December 31 and September 30, 2020, major constructions in progress and purchases amounted to $1,091,306, $1,067,016 and $1,071,144 respectively, of which $540,920, $528,273 and $543,116 respectively, remained unpaid.

(C) In 1996, the Bank’ s World Trade Center Branch was sued for handling a letter of credit export collection from Chin Seen Industrial Co., which allegedly used a forged export document and failed to ship the goods to the importer, the International Comagnie de Commercialization et d’ Invertissement (I.C.C.I.) of the Republic of Zaire, suffered a loss thereon. In November 1998, I.C.C.I. initiated a case with the Court of Commerce of Brussels in Belgium, requested the L/C opening bank (Banque Bruxelles Lambert, or BBL) and the Bank to jointly pay compensation of USD$7,830 thousand plus interest, losses, and expenses for the L/C. On August 31, 2005, the Court of Commerce of Brussels rendered its judgment which the Bank has to make compensation of USD$7,674 thousand plus interest to I.C.C.I.. The Bank has engaged a local attorney in Belgium to formally file an appeal. In February

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2011, Court of Appeal in Brussels had made an intermediate adjudication which I.C.C.I and the Bank are both responsible for the offense. Furthermore, on November 16, 2011, the judgment of the court indicated that the Bank should be responsible for 90% of the negligence proportion. In terms of the judgment of the court of the second instance, the Bank has filed an appeal on November 3, 2011. On February 6, 2013, the court overruled the Bank’ s appeal and the Bank lost the case. However, the Bank and I.C.C.I couldn't reach an agreement on the exchange rate and the calculation of the compensation. In October 2016, I.C.C.I initiated a case with the Court of Frankfurt in Germany, applied for seizing the Bank account in Germany, and the Bank lodged guaranty money of EUR $13,200 thousand to the court to rescind the order for attachment.

In July 2017, I.C.C.I applied for compulsory execution to the guaranty money, the court has transferred the guaranty money to I.C.C.I. The Bank then filed a lawsuit objecting to the debt through the attorney. The case was dismissed by the Court of Frankfurt in November 2018, and remanded back to trial court in November 2019 after the Bank's appeal was granted by the High Court of Frankfurt. I.C.C.I. has filed a statement of grounds for objection to the German Federal Court on March 16, 2019. And request to revoke the "Return of the Judgment of the Frankfurt High Court". The German Federal Court requires the Bank to file a defense against I.C.C.I. of objections before July 16, 2019. The Bank has appointed a lawyer to act as an attorney in the German Federal Court and raised a pleading The German Federal Court has denied the I.C.C.I interlocutory appeal on May 20, 2021. In October and November 2019, the Bank received subpoenas from the court of the Democratic Republic of Congo by a third person Star Marine, who demanded I.C.C.I to pay USD$1,130 thousand in compensation and held the Bank as jointly liable, and by I.C.C.I, which demanded the Bank to pay USD$20,060 thousand less its reimbursed amount to make a security deposit of EUR$14,000 thousand. The Bank has engaged local attorneys to represent itself in court. The Court of Congo will merge the two cases for court. In April 2021, the translation of judgement from the Court of Congo, judgeing that the Bank should pay around EUR$20,060 thousand for I.C.C.I. Also, I.C.C.I must compensate Star Marine for USD$1,130 thousand as well as make a security deposit of EUR$14,000 thousand in the domestic bank in Congo. I.C.C.I has been paid around EUR$14,860 thousand. According to the statement of plantiff and considering that I.C.C.I has already received about EUR $14,860 thousand, an addition of $73,181 thousand has been provision for lawsuit in 2021. Please refer to Note 6(U) for more details. As of September 30, 2021, the Bank has accrued the compensation of $258,197 and EUR$9,660 thousand.

10. Losses from disasters: None.

11. Subsequent events: None.

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12. Others

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

Items	Month/Year	Month/Year	September 30, 2021	September 30, 2021	September 30, 2021	September 30, 2021	September 30, 2021
			Non-performing loans	Total loans	Non-performing loan ratio	Allowance for credit losses	Coverage ratio
Corporate finance	Secured		2,400,765	656,170,015	0.37 %	7,735,962	322.23 %
	Unsecured		546,507	321,775,049	0.17 %	4,070,696	744.86 %
Consumer finance	Residence mortgages(Note 4)		302,583	138,108,380	0.22 %	1,619,390	535.19 %
	Cash cards		-	3	- %	-	- %
	Microcredit(Note 5)		8,273	440,265	1.88 %	11,103	134.21 %
	Others (Note 6)	Secured	450,897	145,875,522	0.31 %	1,716,875	380.77 %
		Unsecured	308,483	10,778,152	2.86 %	183,221	59.39 %
Total loan busin	ess		4,017,508	1,273,147,386	0.32 %	15,337,247	381.76 %
			Overdue receivables	Total receivables	Delinquency ratio	Allowance for credit losses	Coverage ratio
Credit cards bus	iness		1,121	1,013,031	0.11 %	19,069	1,701.07 %
Account receiva (Note 7)	ble factoring-without recourse		-	-	- %	-	- %

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

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Items	Month/Year	Month/Year	September 30, 2020	September 30, 2020	September 30, 2020	September 30, 2020	September 30, 2020
			Non-performing loans	Total loans	Non-performing loan ratio	Allowance for credit losses	Coverage ratio
Corporate finance	Secured		3,177,325	592,349,407	0.54 %	7,458,573	234.74 %
	Unsecured		649,396	317,542,632	0.20 %	4,437,712	683.36 %
Consumer finance	Residence mortgages(Note 4)		414,945	140,352,790	0.30 %	1,763,720	425.05 %
	Cash cards		-	8	- %	-	- %
	Microcredit(Note 5)		17,481	534,251	3.27 %	18,276	104.55 %
	Others (Note 6)	Secured	681,218	140,377,644	0.49 %	1,780,808	261.42 %
		Unsecured	59,837	9,466,988	0.63 %	156,903	262.22 %
Total loan busin	ess		5,000,202	1,200,623,720	0.42 %	15,615,992	312.31 %
			Overdue receivables	Total receivables	Delinquency ratio	Allowance for credit losses	Coverage ratio
Credit cards bus	iness		1,789	1,117,464	0.16 %	23,796	1,330.13 %
Account receiva (Note 7)	ble factoring-without recourse		-	1,821	- %	18	- %

Note 1 Non-performing loans represent the amount of overdue loans as reported in accordance with the "Regulations on the Procedures for Banking Institutions to Evaluate Assets and Deal with Past Due/Non-performing Loans". The credit card overdue loans represent the amount of overdue loans as reported in accordance with Jin-Kuan-Yin-(4)-Zi No. 0944000378, dated July 6, 2005.
Note 2 Non-performing loan ratio = Non-performing loans ÷ total loans; Credit card delinquency ratio = Overdue receivables÷ receivables
Note 3 Coverage ratio for loans = allowance for credit losses ÷ non-performing loans; Coverage ratio for credit card business = allowance for credit losses ÷ overdue receivables.
Note 4 For residential mortgage loans, a borrower provides his/her (or spouse’ s or minor child’ s) house as collateral in full and pledges it to the financial institution for the purpose of obtaining funds to purchase property and to construct or repair a house.
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.

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Overdue loans and receivables exempted from reporting

September 30, 2021 Loans may be exempted from reporting as a non- performing loan Receivables may be exempted from reporting as overdue receivables Pursuant to a contract under a debt negotiation plan (Note1) $ 400 1,601 Pursuant to a contract under a debt liquidation plan and a debt relief plan (Note 2) 54,195 27,488 Total $ 54,595 29,089	September 30, 2021	September 30, 2021	December 31, 2020	December 31, 2020	September 30, 2020	September 30, 2020
	Loans may be exempted from reporting as a non- performing loan	Receivables may be exempted from reporting as overdue receivables	Loans may be exempted from reporting as a non- performing loan	Receivables may be exempted from reporting as overdue receivables	Loans may be exempted from reporting as a non- performing loan 580 63,677 64,257	Receivables may be exempted from reporting as overdue receivables
		1,601 27,488 29,089	536 63,956 64,492	2,135 30,612 32,747		2,311 31,229 33,540

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.”

(b) Concentration of credit extensions

Concentration of credit extensions	Concentration of credit extensions	Concentration of credit extensions	Concentration of credit extensions
September 30, 2021
Ranking	Group enterprise	Credit amount	Credit amount to equity ratio (%)
1	A company. (Railway transportation)	25,098,474	% 24.78
2	B group. (Real estate for sale and rental with own or leased property)	10,747,458	% 10.61
3	C group. (Steel rolling and extruding)	9,568,651	% 9.45
4	D group. (Real estate development)	8,747,025	% 8.64
5	E group. (Other holding)	8,717,472	% 8.61
6	F group. (Computers manufacturing)	7,592,294	% 7.50
7	G group. (Real estate development)	6,317,002	% 6.24
8	H group. (Real estate development)	5,659,156	% 5.59
9	I group. (Liquid crystal panel and components manufacturing)	4,729,188	% 4.67
10	J group. (Air transportation)	4,435,333	% 4.38

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

September 30, 2020	September 30, 2020	September 30, 2020	September 30, 2020
Ranking	Group enterprise	Credit amount	Credit amount to equity ratio (%)
1	A company. (Railway transportation)	25,098,474	% 25.78
2	E group. (Other holding)	9,506,800	% 9.76
3	C group. (Steel rolling and extruding)	9,419,122	% 9.67
4	D group. (Real estate development)	8,226,492	% 8.45
5	B group. (Real estate for sale and rental with own or leased property)	7,226,211	% 7.42
6	J group. (Air transportation)	6,347,890	% 6.52
7	F group. (Computer manufacturing)	6,339,425	% 6.51
8	G group. (Real estate development)	6,290,279	% 6.46
9	H group. (Real estate development)	5,196,282	% 5.34
10	I group. (Liquid crystal panel and components manufacturing)	4,870,500	% 5.00

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Note 1 The top ten enterprise groups other than government or stated-owned enterprises are ranked according to their total outstanding credit amount. If the borrowers belong to an enterprise group, the aggregate credit balance of the enterprise should be calculated and disclosed as a code number for each such borrower together with an indication of the borrowers’ line of business. In addition, if the borrowers are enterprise groups, the enterprise group’s industry sector with the maximum exposure to credit risk in its main industry sector should be disclosed, along with the “class” of the industry, in compliance with the Standard Industrial Classification System of the R.O.C. posted by the Directorate-General of Budget, Accounting and Statistics, Executive Yuan, R.O.C.
Note 2 Enterprise group is as defined in Article 6 of the “Supplementary Provisions to the Taiwan Stock Exchange Corporation Rules for Review of Securities Listings”.
Note 3 Consists of loans (import/export bills negotiated, bills and notes discounted, overdrafts, short-term loans, short-term secured loans, margin loans receivable, medium-term loans, medium-term secured loans, long-term loans, long-term secured loans, overdue loans), exchange bills negotiated, accounts receivable factoring without recourse, bankers’ acceptance receivable, guarantees proceeds.
Note 4 In the calculation of Credit amount to equity ratio, the domestic bank should be calculated in the net value of head office. The Foreign bank should be calculated in the net value of Taiwan branch.
(c) Interest rate-sensitivity information
(1) Analysis of interest rate-sensitive assets and liabilities (New Taiwan dollars)

Unit : %

Unit : %	Unit : %	Unit : %	Unit : %	Unit : %	Unit : %
September 30, 2021
Item	1~90 days	91~180 days	181days~1year	over 1 year	total
Interest rate-sensitive assets	$ 1,355,905,262	21,775,283	41,784,500	131,599,529	1,551,064,574
Interest rate-sensitive liabilities	1,289,109,511	69,661,175	108,900,208	53,855,397	1,521,526,291
Interest rate sensitivity gap	66,795,751	(47,885,892)	(67,115,708)	77,744,132	29,538,283
Net worth					101,269,549
Ratio of interest rate-sensitive assets to liabilities (%)					101.94
Ratio of interest rate-sensitive gap to net worth (%)					29.17

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

September 30, 2020	September 30, 2020	September 30, 2020	September 30, 2020	September 30, 2020	September 30, 2020
Item	1~90 days	91~180 days	181days~1year	over 1 year	total
Interest rate-sensitive assets	$ 1,239,472,623	26,376,626	17,500,133	122,104,461	1,405,453,843
Interest rate-sensitive liabilities	1,074,534,234	63,976,771	84,946,242	58,354,290	1,281,811,537
Interest rate sensitivity gap	164,938,389	(37,600,145)	(67,446,109)	63,750,171	123,642,306
Net worth					97,356,134
Ratio of interest rate-sensitive assets to liabilities (%)					109.65
Ratio of interest rate-sensitive gap to net worth (%)					127.00

Note 1 Listed amount refers to the Bank's amount of N.T. dollars and does not include contingent assets or liabilities.
Note 2 Interest rate-sensitive assets and liabilities refer to revenues or costs of interest–yielding assets and interest–bearing liabilities, which are affected by interest rate fluctuations.
Note 3 Interest rate-sensitivity gap = Interest rate-sensitive assets - Interest-ratesensitive liabilities.
Note 4 Ratio of interest rate-sensitive assets to liabilities=Interest rate-sensitive assets ÷ Interest rate-sensitive liabilities (New Taiwan dollars interest-ratesensitive assets and New Taiwan dollars interest-rate-sensitive liabilities).
(2) Analysis of the interest-sensitive assets and liabilities (US dollars)

Unit : In Thousands of US Dollars, %

Unit : In Thousands of US Dollars, %	Unit : In Thousands of US Dollars, %	Unit : In Thousands of US Dollars, %	Unit : In Thousands of US Dollars, %	Unit : In Thousands of US Dollars, %	Unit : In Thousands of US Dollars, %
September 30, 2021
Item	1~90 days	91~180 days	181days~1year	over 1 year	total
Interest rate-sensitive assets	$ 6,159,954	1,509,369	545,253	815,801	9,030,377
Interest rate-sensitive liabilities	7,002,121	1,093,641	1,237,166	-	9,332,928
Interest rate sensitivity gap	(842,167)	415,728	(691,913)	815,801	(302,551)
Net worth					3,636,250
Ratio of interest rate-sensitive assets to liabilities (%)					96.76
Ratio of interest rate-sensitive gap to net worth (%)					(8.32)

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

September 30, 2020	September 30, 2020	September 30, 2020	September 30, 2020	September 30, 2020	September 30, 2020
Item	1~90 days	91~180 days	181days~1year	over 1 year	total
Interest rate-sensitive assets	$ 4,607,591	497,507	165,671	566,021	5,836,790
Interest rate-sensitive liabilities	5,998,395	1,083,584	590,256	-	7,672,235
Interest rate sensitivity gap	(1,390,804)	(586,077)	(424,585)	566,021	(1,835,445)
Net worth					3,358,266
Ratio of interest rate-sensitive assets to liabilities (%)					76.08
Ratio of interest rate-sensitive gap to net worth (%)					(54.65)

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

(d) Profitability

Unit: %

			Unit: %
Item		September 30, 2021	September 30, 2020
The ratio of return on assets	Before income tax	0.23	0.22
	After income tax	0.21	0.20
The ratio of return on equity	Before income tax	4.43	3.97
	After income tax	3.90	3.59
Net income ratio		21.56	21.17

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

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

Note 3 Net income ratio = Net income after income tax expense ÷ Net revenue.

Note 4 Income before (after) income tax expense refers to income accumulated from January of the current year to the current period end.

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

		September 30, 2021	September 30, 2021	September 30, 2021	September 30, 2021	September 30, 2021	September 30, 2021
	Total	Amount during the maturity period from the balance sheet date to due date
		0-10days	11-30days	31-90days	91-180days	181days-1year	Over 1 year
Major maturity capital inflow	$ 1,720,139,600	202,810,917	175,630,006	171,840,018	163,962,597	148,497,046	857,399,016
Major maturity capital outflow	2,074,909,481	48,543,364	114,124,019	262,953,309	230,483,126	320,939,483	1,097,866,180
Gap	(354,769,881)	154,267,553	61,505,987	(91,113,291)	(66,520,529)	(172,442,437)	(240,467,164)

Note: Listed amounts are denominated in New Taiwan dollars of the Bank and subsidiaries, including loan commitments of credit agreement and estimates to outflow $349,794,130.

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

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

		September 30, 2020	September 30, 2020	September 30, 2020	September 30, 2020	September 30, 2020	September 30, 2020
	Total	Amount during the maturity period from the balance sheet date to due date
		0-10days	11-30days	31-90days	91-180days	181days-1year	Over 1 year
Major maturity capital inflow	$ 1,512,608,228	122,035,232	170,164,801	163,923,171	171,689,572	118,615,059	766,180,393
Major maturity capital outflow	1,898,902,133	67,171,104	94,787,103	226,270,236	244,739,809	303,988,993	961,944,888
Gap	(386,293,905)	54,864,128	75,377,698	(62,347,065)	(73,050,237)	(185,373,934)	(195,764,495)

Note: Listed amounts are denominated in New Taiwan dollars of the Bank and subsidiaries, including loan commitments of credit agreement and estimates to outflow $377,084,720.

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(2) Maturity analysis in US dollars

Unit : In Thousands of US Dollars

		Unit : In Thousands of US Dollars	Unit : In Thousands of US Dollars	Unit : In Thousands of US Dollars	Unit : In Thousands of US Dollars	Unit : In Thousands of US Dollars
		September 30, 2021
	Total	Amount during the maturity period from the balance sheet date to due date
		0-30days	31-90days	91-180days	181days-1year	Over 1 year
Major maturity capital inflow	$ 13,538,188	3,055,602	2,656,441	2,243,693	2,256,557	3,325,895
Major maturity capital outflow	14,084,510	3,015,906	2,894,728	1,905,525	2,001,496	4,266,855
Gap	(546,322)	39,696	(238,287)	338,168	255,061	(940,960)

Note: Listed amounts are denominated in US dollars of the Bank and subsidiaries, including loan commitments of credit agreement and estimates to outflow USD $746,308.

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

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

		September 30, 2020	September 30, 2020	September 30, 2020	September 30, 2020	September 30, 2020
	Total	Amount during the maturity period from the balance sheet date to due date
		0-30days	31-90days	91-180days	181days-1year	Over 1 year
Major maturity capital inflow	$ 13,414,813	3,737,627	3,344,522	1,571,353	1,402,456	3,358,855
Major maturity capital outflow	14,056,192	3,894,051	3,546,158	1,882,646	1,252,301	3,481,036
Gap	(641,379)	(156,424)	(201,636)	(311,293)	150,155	(122,181)

Note: Listed amounts are denominated in US dollars of the Bank and subsidiaries, including loan commitments of credit agreement and estimates to outflow USD $849,604.

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13. Other disclosures

(A) Information on significant transactions:

(a) Cumulative purchase or sale of the same investee’s capital stock up to $300,000 or 10% of paid-in capital: None.
(b) Acquisition of real estate amounting to over $300,000 or 10% of paid-in capital: None.
(c) Disposal of real estate amounting to over $300,000 or 10% of paid-in capital: None.
(d) Discount of commissions fees with related parties amounting to over $5,000: None.
(e) Receivables from related parties amounting to over $300,000 or 10% of paid-in capital: None.
(f) Sale of non-performing loans information: None.
(g) Types of securitization instruments and related information approved by financial assets securitization rules or real estate securitization rules: None.
(h) Business relationship and significant transactions with the subsidiaries:

No (Note 1)	Trader	Counterparty	Relationship (Note 2)	Transaction status for the nine months ended September 30, 2021	Transaction status for the nine months ended September 30, 2021	Transaction status for the nine months ended September 30, 2021	Transaction status for the nine months ended September 30, 2021
				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	23,062	No difference with non-related parties	- %
1	TBB International Leasing Co., Ltd.	Taiwan Business Bank,Ltd.	2	Right-to-use assets	1,074	No difference with non-related parties	- %
1	TBB International Leasing Co., Ltd.	Taiwan Business Bank,Ltd.	2	Lease liabilities	1,087	No difference with non-related parties	- %
0	Taiwan Business Bank,Ltd.	TBB International Leasing Co., Ltd.	1	Net revenue otherthan interest	519	No difference with non-related parties	- %
0	Taiwan Business Bank,Ltd.	TBB Venture Capital Co., Ltd.	1	Deposits and remittances	290,397	No difference with non-related parties	0.01 %
2	TBB Venture CapitalCo., Ltd.	Taiwan Business Bank,Ltd.	2	Right-to-use assets	626	No difference with non-related parties	- %
2	TBB Venture CapitalCo., Ltd.	Taiwan Business Bank,Ltd.	2	Lease liabilities	640	No difference with non-related parties	- %
0	Taiwan Business Bank,Ltd.	TBB Venture Capital Co., Ltd.	1	Net revenue otherthan interest	266	No difference with non-related parties	- %
0	Taiwan Business Bank,Ltd.	Taiwan Business Bank International Leasing Co., Ltd.	1	Deposits and remittances	95,929	No difference with non-related parties	- %
0	Taiwan Business Bank,Ltd.	TBB Consulting Co., Ltd	1	Deposits and remittances	50,000	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.

2.There are three kinds of relationships with counterparty

(1) Parent company to subsidiary
(2) Subsidiary to parent company
(3) Between subsidiaries

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(i) Other significant transactions that might have influence over the decision-making process of the financial statements users: None.
(B) Information of investees:
(a) The following is the information on investees (excluding investment in mainland China):

(Unit : thousand shares)

Name of investee	Location	Main business scope	Shareholding ratio	Book value	Investment gain (loss)	The cross holding of the	The cross holding of the	Bank and its related parties	Bank and its related parties	Note
						Number of shares	Number of proforma shares	Total
								Number of shares	Shareholding ratio
TBB International Leasing Co., Ltd.	Taiwan	Leasing business	100.00 %	1,444,199	16,540	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 %	564,915	17,709	20	-	20	100.00 %	〞
TBB Venture Capital Co., Ltd.	Taiwan	Investing business	100.00 %	1,043,466	49,282	100,000	-	100,000	100.00 %	〞
TBB Consulting Co., Ltd	Taiwan	Consulting business	100.00 %	50,000	-	5,000	-	5,000	100.00 %	〞

(b) Loans to others:

NO.	Creditor	Debtor	Interaction Account	Related party	Highest Amount	Ending balance	Actual drawdown amount	Range of interest rate	Nature of the loan	Dealing amount	The necessary reason for short-term loans	Allowance for bad debts	Guarantee	Guarantee	Limited amount for individual object	Total limited amount for loan
													Name	Value
1	TBB International Leasing Co.,Ltd.	Xi Quan Restaurant Co., Ltd	Financial receivables	No	52,487	43,935	53,540	2%~10%	2	-	To the lender for buying goods	852	None	-	357,895	1,431,582
1	TBB International Leasing Co.,Ltd.	Chao- Yang Internation al Co.,Ltd	Financial receivables	No	32,690	15,091	20,000	2%~10%	2	-	To the lender for buying goods	303	None	-	357,895	1,431,582
1	TBB International Leasing Co.,Ltd.	Hsin Chuan Construc- tion Co., Ltd	Financial receivables	No	146,155	79,357	100,000	2%~10%	2	-	To the lender for buying goods	1,523	None	-	357,895	1,431,582
1	TBB International Leasing Co.,Ltd.	Sian Shang Frozen Food Co.,Ltd	Financial receivables	No	33,944	15,091	20,000	2%~10%	2	-	To the lender for buying goods	303	None	-	357,895	1,431,582
1	TBB International Leasing Co.,Ltd.	Hsin Dan Co.,Ltd	Financial receivables	No	32,351	27,080	33,000	2%~10%	2	-	To the lender for buying goods	525	None	-	357,895	1,431,582
1	TBB International Leasing Co.,Ltd.	Advanced- Connectek Inc.	Financial receivables	No	30,000	17,591	30,000	2%~10%	2	-	To the lender for buying goods	332	None	-	357,895	1,431,582
1	TBB International Leasing Co.,Ltd.	Pei Xian Seafood Co.,Ltd	Financial receivables	No	20,000	15,091	20,000	2%~10%	2	-	To the lender for buying goods	303	None	-	357,895	1,431,582

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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.	Yu Shen Constructi on Co.,Ltd	Financial receivables	No	20,000	20,000	20,000	2%~10%	2	-	To the lender for buying goods	403	None	-	357,895	1,431,582

Note1：The meaning of the number is as follows.

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

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

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

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

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

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

(c) Endorsements and guarantee for others: None
(d) Acquisition of securities:

Company acquired	Type and name of the security	Relationship with the security issuer	Account	At the end of the period	At the end of the period	At the end of the period	At the end of the period	Note
				Number of shares	Carrying amount	Share proportion (Note 2)	Market price (Note 1)
Taiwan Business Bank International Leasing Co., Ltd.	Unlisted	The investee under the equity method of the subsidiary TBB International Leasing Co.,Ltd.	Investment under equity method	-	887,234	100.00 %	887,234	The transaction has been written off when preparing the consolidated financial statements.

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

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

(e) Accumulative purchases or sales of the same investee companies amounting to over $300,000 or 10% of paid-in capital: None.
(f) Acquisition of real estate amounting to over $300,000 or 10% of paid-in capital: None.
(g) Disposition of real estate amounting to over $300,000 or 10% of paid-in capital: None.
(h) Discount of commissions and handling fees with related parties amounting to over $5,000: None.
(i) Receivables from related parties amounting to over $300,000 or 10% of paid-in capital: None.
(j) Transactions of financial derivatives: None.
(k) Sale of non-performing loans information: None.
(l) Types of securitization instruments and related information approved by financial assets securitization rules or real estate securitization rules: None.

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(m) Other significant transactions that might have substantial influence over the decision making of the financial statement users: None.

(C) Information on investments in Mainland China：

(a) Name and major business item of the investee in China：

Name of investee company in Mainland China	Major business	Paid-in capital	Investment method (Note 1)	Accumulated amount transferred from Taiwan, beginning of theperiod	Investment transferred out or recovered	Investment transferred out or recovered	Accumulated amount transferred from Taiwan, end of theperiod	The current profit or loss of the investee (Note 2)	Shares directly or indirectly possessed by the Bank	Investment income for the period (Notes 2 and 4)	Ending carring value of investment	Accumulated inward remittance of earnings as of the end of period
					Transferred out	Recovered
Taiwan Business Bank , Ltd. Shanghai branch	Banking business	3,910,537 (CNY800 million) (Operating capital)	( c )	3,910,537 (CNY800 million)	-	-	3,910,537 (CNY800 million)	-	Shanghai branch of the Bank, not an investee company	Note 4	3,938,096	None
Taiwan Business Bank , Ltd. Wuhan branch	Banking business	3,942,815 (CNY800 million) (Operating capital)	( c )	3,942,815 (CNY800 million)	-	-	3,942,815 (CNY800 million)	-	Wuhan branch of the Bank, not an investee company	Note 4	3,793,317	"
Taiwan Business Bank International Leasing Co., Ltd.	Leasing business	838,305 (CNY170 million) (Operating capital)	( a )	838,305 (CNY170 million)	-	-	838,305 (CNY170 million)	13,416 2(c)	100%	13,416 2(c)	887,234	"

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

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

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

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

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

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

(b) Limit of investment in China：

Name of Company	Accumulated outflow of investment from Taiwan to Mainland China, as of the end of period	Investment amount authorized by Investment Commission, MOEA	Upper limit on investment authorized by Investment Commission, MOEA
Taiwan Business Bank, Ltd.(Note)	8,691,657 (CNY 1,770 million)	8,691,657 (CNY 1,770 million)	60,761,729

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	1,214,173,562	% 16.21
National Development Fund, Executive Yuan	439,330,543	% 5.86

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14. SEGMENT INFORMATION

(A) General information

The chief operating decision maker is the general manager of the Bank and subsidiaries who is in charge of all major projects' approval, budget review and performance measurement. In order to express operating activities legitimately, the reportable segments of the Bank are Bank segment, Securities segment, Trust segment, Insurance agency segment and Others. Securities segment, Trust segment, Insurance agency segment and Other segments don't meet the quantitative thresholds, therefore regarded as the same reporting segment. The main operations of the banking segment are engaged in the deposits, remittance and loans in New Taiwanese Dollars or foreign currencies, as well as securities investments. The major operating activities of securities segment are securities brokerage, financing, ancillary business of futures trading and providing clients a platform for securities investment. The trust segment mainly provides customers relevant financial services, including securities under writing, custodian bank service, new type trust business and specific trust funds investing in domestic or foreign securities. Insurance agency segment primarily provides life and property insurance products to clients. Other segments include all the business of subsidiaries, which main operations are leasing, financing, 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 three months ended September 30, 2021 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	Bank Segment $ 4,443,479 1,563,506 6,006,985 (1,702,413) (3,128,129) $ 1,176,443	Securities, Trust, Insurance agent and Others 83,436 471,875 555,311 (2,603) (172,072) 380,636	Adjustment and Elimination 6 (4,865) (4,859) - 254 (4,605)	Total 4,526,921 2,030,516 6,557,437 (1,705,016) (3,299,947) 1,552,474

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

For the three months ended September 30, 2020 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 For the nine months ended September 30, 2021 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 $	For the three months ended September 30, 2020 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 For the nine months ended September 30, 2021 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 $	For the three months ended September 30, 2020 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 For the nine months ended September 30, 2021 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 $	Bank Segment $ 3,887,959 1,659,563 5,547,522 (1,268,999) (2,969,853) $ 1,308,670 Banking Segment 13,012,270 3,780,997 16,793,267 (4,022,937) (9,162,332) 3,607,998 1,995,781,744 1,897,655,729	Bank Segment $ 3,887,959 1,659,563 5,547,522 (1,268,999) (2,969,853) $ 1,308,670 Banking Segment 13,012,270 3,780,997 16,793,267 (4,022,937) (9,162,332) 3,607,998 1,995,781,744 1,897,655,729	Bank Segment $ 3,887,959 1,659,563 5,547,522 (1,268,999) (2,969,853) $ 1,308,670 Banking Segment 13,012,270 3,780,997 16,793,267 (4,022,937) (9,162,332) 3,607,998 1,995,781,744 1,897,655,729	Securities, Trust, Insurance agent and Others 66,632 109,719 176,351 (2,792) (146,235) 27,324 Securities, Trust, Insurance agent and Others 229,057 1,137,691 1,366,748 1,697 (467,250) 901,195 18,134,137 11,888,023		Adjustment and Elimination 9 (7,679) (7,670) - 254 (7,416) Adjustment and Elimination 18 (84,313) (84,295) - 764 (83,531) (3,564,239) (461,659)	Total 3,954,600 1,761,603 5,716,203 (1,271,791) (3,115,834) 1,328,578 Total 13,241,345 4,834,375 18,075,720 (4,021,240) (9,628,818) 4,425,662 2,010,351,642 1,909,082,093
				Banking Segment 13,012,270 3,780,997 16,793,267 (4,022,937) (9,162,332) 3,607,998 1,995,781,744 1,897,655,729
	$ $ $ $

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

For the nine months ended September 30, 2020 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 $ 11,817,455 3,762,582 15,580,037 (3,239,616) (8,890,829) $ 3,449,592 $ 1,742,155,790 $ 1,647,461,660	Securities, Trust, Insurance agent and Others 218,459 620,481 838,940 12,844 (408,744) 443,040 16,109,805 10,893,529	Adjustment and Elimination 27 (64,188) (64,161) - 765 (63,396) (2,977,445) (423,173)	Total
				12,035,941 4,318,875 16,354,816 (3,226,772) (9,298,808) 3,829,236 1,755,288,150 1,657,932,016

(C) Significant client information:

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

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(English Translation of Financial Statements Originally Issued in Chinese.) Reviewed only, not audited in accordance with generally accepted auditing standards as of September 30, 2021 and 2020.

TAIWAN BUSINESS BANK, LTD.

Balance Sheets of Security Division

September 30, 2021, December 31, 2020 and September 30, 2020

(Expressed in Thousands of New Taiwan Dollars)

Assets Current Assets： 113200 Current financial assets at fair value through other comprehensive income 114030 Margin loans receivable 114040 Refinancing margin 114050 Refinancing collateral receivable 114130 Accounts receivable 119000 Other current assets Total current assets Non-current Assets： 123200 Non-current financial assets at fair value through other comprehensive income 123300 Non-current financial assets at amortized cost 125000 Property and equipment, net 125800 Right-of-use assets, net 127000 Intangible assets 129000 Other non-current assets Total non-current assets Total assets		September 30, 2021 Amount ％ 915,813 8 2,756,003 24 - - - - 731,203 6 169,442 2 4,572,461 40 6,353,253 56 302,854 3 17,551 - - - 12,569 - 32,449 1 6,718,676 60 $ 11,291,137 100	December 31, 2020 Amount ％ 216,098 2 2,482,515 22 6,272 - 6,360 - 765,787 7 189,407 1 3,666,439 32 7,176,579 64 322,385 3 16,573 - 74 - 12,907 - 29,176 1 7,557,694 68 11,224,133 100	September 30, 2020 Amount ％ 305,991 3 2,135,711 21 3,743 - 4,159 - 249,357 3 947,778 9 3,646,739 36 6,231,756 61 328,769 3 10,984 - - - 7,009 - 29,018 - 6,607,536 64 10,254,275 100 Liabilities and equity Current Liabilities： 214010 Liabilities for bonds with attached repurchase agreements 214040 Securities financing refundable deposits 214050 Deposits payable for securities financing 214130 Accounts payable 216000 Current lease liabilities 219000 Other current liabilities Total current liabilities 229030 Guaranteed deposits received 229110 Inter-department accounts, credit Total non-current liabilities Total liabilities 301110 Assigned working capital 304020 Special reserve 304040 Unappropriated retained earnings 305290 Other equity, other Total equity Total liabilities and equity	September 30, 2021 Amount % $ 798,146 7 77,686 1 105,362 1 649,934 6 - - 208,315 2 1,839,443 17 20 - 6,589,006 58 6,589,026 58 8,428,469 75 2,200,000 19 185,127 2 349,471 3 128,070 1 2,862,668 25 $ 11,291,137 100	December 31, 2020		September 30, 2020
						Amount % 830,820 7 112,416 1 150,740 1 683,961 6 74 - 238,032 1 2,016,043 16 20 - 6,352,049 57 6,352,069 57 8,368,112 73 2,200,000 20 185,127 2 284,204 3 186,690 2 2,856,021 27 11,224,133 100		Amount % 1,858,997 17 82,863 1 90,159 1 182,763 2 125 - 975,454 10 3,190,361 31 20 - 4,296,336 42 4,296,356 42 7,486,717 73 2,200,000 21 185,127 2 208,626 2 173,805 2 2,767,558 27 10,254,275 100

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(English Translation of Financial Statements Originally Issued in Chinese.) Reviewed only, not audited in accordance with generally accepted auditing standards.

TAIWAN BUSINESS BANK, LTD.

Statements of Comprehensive Income of Security Division

For the three and nine months ended September 30, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

nded September 30,	For the nine months e	nded September 30,
2020	2021 Amount ％ 488,299 77 1,151 - 137,188 22 - - 3,173 1 43 - 192 - 630,046 100 33,238 6 89 - 2,191 - 672 - 252,099 40 (7,714) (1) 280,575 45 349,471 55 (58,620) (9) - - (58,620) (9) 290,851 46	2020
Amount ％ 115,410 67 343 - 40,223 24 13,666 8 1,353 1 617 - 156 - 171,768 100 7,556 4 43 - 760 1 231 - 72,690 42 159 - 81,439 47 90,329 53 4,523 3 - - 4,523 3 94,852 56		Amount ％ 281,655 64 877 - 123,501 28 25,785 6 4,122 1 1,524 1 241 - 437,705 100 18,054 4 161 - 2,733 1 716 - 202,803 46 4,612 1 229,079 52 208,626 48 92,221 21 - - 92,221 21 300,847 69

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AI assistant

TBB — Interim / Quarterly Report 2021

52201_rns_2021-12-21_d581fd8c-e0ed-4316-9237-323ade4e5595.pdf

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Financial Statements

Table of Contents

KPMG

Independent Auditors’ Review Report

Introduction

Scope of Review

Conclusion

Notes to Readers

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

September 30, 2021, December 31, and September 30, 2020

(Expressed in Thousands of New Taiwan Dollars)

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the three and nine months ended September 30, 2021 and 2020

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the nine months ended September 30, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

1. Company history

2. Approval date and procedures of the consolidated financial statements

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

3. New standards, amendments and interpretations adopted:

(ii) Other amendments

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

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

4. Summary of significant accounting policies

(A) Statement of compliance

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

(B) Basis of preparation

(C) Basis of consolidation

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

(b) Elimination of intra-group transaction

(D) Foreign currency

(a) Foreign currency transaction

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

(b) Foreign operations

(E) Cash and cash equivalents

(F) Financial Instruments

(a) Financial assets

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

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

(H) Property and Equipment

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

(I) Lease

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

(J) Deferred assets

(K) Collaterals

(L) Provisions

(M) Employee benefit

(b) Retirement benefit

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

(c) Deposits with favorable rate

(d) Termination benefits

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

(N) Income tax

(O) Revenue recognition

(P) Earnings per share (EPS)

(Q) Operating segments

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

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

(A) Impairment losses on loans

(B) Retirement benefit

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

6. Explanation of significant accounts

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

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

(F) Discounts and loans, net

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

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

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

(H) Investment in debt instruments at amortized cost

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

(I) Other financial assets

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

TBB Interim / Quarterly Report 2021