TBB — Interim / Quarterly Report 2023

Nov 14, 2023

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Stock Code:2834

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors’ Review Report For the Three Months Ended March 31, 2023 and 2022

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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Table of contents

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

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KPMG

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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 March 31, 2023 and 2022, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the three months ended March 31, 2023 and 2022, 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 the Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” of the Republic of China. 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 Standards on Auditing of the Republic of China 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 March 31, 2023 and 2022, and of its consolidated financial performance and its consolidated cash flows for the three months ended March 31, 2023 and 2022 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.

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.

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The engagement partners on the reviews resulting in this independent auditors’ review report are LEE, FENG HUI and TSAI, PEI JU.

KPMG

Taipei, Taiwan (Republic of China) May 4, 2023

Notes to Readers

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

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

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with Standards on Auditing as of March 31, 2023 and 2022

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

March 31, 2023, December 31, 2022, and March 31, 2022

(Expressed in Thousands of New Taiwan Dollars)

Assets 11000 Cash and cash equivalents (Notes 6(a) and 7) 11500 Due from the Central Bank and call loans to banks (Notes 6(b) and 7) 12000 Financial assets at fair value through profit or loss (Note 6(c)) 12100 Financial assets at fair value through other comprehensive income (Notes 6(g) and (q)) 12200 Investment in debt instruments at amortized cost (Note 6(h)) 12500 Securities purchased under resell agreements (Note 6(d)) 13000 Receivables (Note 6(e)) 13200 Current tax assets 13500 Discounts and loans, net (Notes 6(f) and 7) 15000 Investments accounted for using equity method (Note 6(i)) 15500 Other financial assets (Note 6(j)) 18500 Property and equipment, net (Note 6(k)) 18600 Right-of-use assets, net (Note 6(l)) 19000 Intangible assets, net 19300 Deferred tax assets (Note 6(z)) 19500 Other assets, net (Note 6(m)) Total assets	March 31, 2023 Amount % $ 33,446,182 2 130,516,819 6 58,702,891 3 180,468,371 9 252,444,976 12 928,606 - 10,195,743 - 350,790 - 1,387,582,428 67 472 - 9,676 - 14,073,323 1 1,198,588 - 818,624 - 1,685,815 - 10,621,586 - $ 2,083,044,890 100	December 31, 2022 Amount % 49,260,262 2 148,557,744 7 33,913,114 2 160,000,410 8 236,774,247 11 797,893 - 9,057,109 - 350,069 - 1,400,112,365 68 808 - 10,315 - 14,121,833 1 1,212,593 - 757,216 - 1,777,199 - 15,782,948 1 2,072,486,125 100	March 31, 2022 Amount % 27,640,735 1 146,057,016 7 40,299,039 2 168,342,848 8 282,491,269 14 19,176,457 1 8,102,224 1 351,118 - 1,308,272,958 65 2,000 - 30,516 - 14,297,349 1 1,128,040 - 716,278 - 1,878,386 - 7,314,813 - 2,026,101,046 100 Liabilities and Equity Liabilities 21000 Deposits from the Central Bank and banks (Notes 6(n) and 7) 21500 Due to the Central Bank and banks (Note 6(o)) 22000 Financial liabilities at fair value through profit or loss (Notes 6(p) and (t)) 22500 Notes and bonds issued under repurchase agreement (Note 6(q)) 23000 Payables (Note 6(r)) 23200 Current tax liabilities 23500 Deposits and remittances (Notes 6(s) and 7) 24000 Bank notes payable (Note 6(t)) 25500 Other financial liabilities (Note 6(u)) 25600 Provisions (Note 6(v)) 26000 Lease liabilities (Note 6(w)) 29300 Deferred tax liabilities (Note 6(z)) 29500 Other liabilities (Note 6(x)) Total liabilities Equity attributable to owners of parent 31101 Common stock (Note 6(y)) 31500 Capital Surplus (Note 6(y)) Retained earnings: 32001 Legal reserve (Note 6(y)) 32003 Special reserve (Note 6(y)) 32005 Unappropriated retained earnings (Note 6(y)) 32500 Other equity interest (Note 6(y)) Total equity Total liabilities and equity	March 31, 2023		December 31, 2022		March 31, 2022
				Amount %		Amount %		Amount %
				$ 179,381,934 9 1,111,880 - 9,504,436 - 2,442,317 - 19,277,531 1 1,476,431 - 1,698,724,963 82 52,250,000 3 3,256,479 - 2,622,080 - 1,217,956 - 879,056 - 1,604,486 - 1,973,749,549 95 80,296,934 4 815,900 - 17,239,615 1 185,128 - 12,812,000 - (2,054,236) - 109,295,341 5 $ 2,083,044,890 100		194,966,177 9 1,131,025 - 9,925,525 - 2,462,991 - 21,493,131 1 1,101,015 - 1,673,580,263 81 52,250,000 4 2,910,581 - 2,676,102 - 1,239,919 - 879,056 - 3,763,082 - 1,968,378,867 95 80,296,934 4 815,900 - 17,239,615 1 185,128 - 9,339,356 - (3,769,675) - 104,107,258 5 2,072,486,125 100		114,298,313 6 50,371,139 2 8,701,659 - 2,094,646 - 11,290,070 1 439,932 - 1,673,451,821 83 52,250,000 3 3,587,701 - 3,267,933 - 1,140,500 - 879,056 - 1,810,585 - 1,923,583,355 95 77,431,952 4 815,900 - 15,693,140 1 185,128 - 7,351,893 - 1,039,678 - 102,517,691 5 2,026,101,046 100

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 Standards on Auditing

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the three months ended March 31, 2023 and 2022

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

41000 Interest income (Notes 6(ad) and 7) 51000 Less: Interest expenses (Notes 6(ad) and 7) Net interest revenue Net revenue other than interest 49100 Net service fee revenue (Notes 6(ae) and 13) 49200 (Loss) gain on financial assets or liabilities measured at fair value through profit or loss (Note 6(af)) 49310 Realized gain on financial assets at fair value through other comprehensive income (Note 6(ag)) 49450 Gain arising from derecognition of financial assets measured at amortized cost (Note 6(h)) 49600 Foreign exchange gain 49700 (Impairment loss on assets) reversal of impairment loss on assets (Note 6(ah)) 49750 Share of profit of associates and joint ventures accounted for using equity method (Notes 6(h) and 6(ai)) 49800 Net other revenue other than interest income (Note 6(aj)) 49831 Net securities brokering revenue Net revenue 58200 Bad debts expense, commitment and guarantee liability provision (Note 6(ak)) Operating expenses 58500 Employee benefits expenses (Note 6(al)) 59000 Depreciation and amortization expense (Note 6(am)) 59500 Other general and administrative expense (Note 6(an)) Total operating expense 61001 Income from continuing operation before tax 61003 Less: Income tax expenses (Note 6(z)) Net income 65000 Other comprehensive income: 65200 Components of other comprehensive income that will not be reclassified to profit or loss 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(z)) Components of other comprehensive income that will not be reclassified to profit or loss 65300 Components of other comprehensive income that will be reclassified to profit or loss 65301 Exchange difference on translation 65308 Losses from investments in debt instruments measured at fair value through other comprehensive income 65320 Less: Income tax related to components of other comprehensive income that will be reclassified to profit or loss (Note 6(z)) Components of other comprehensive income that will be reclassified to profit or loss 65000 Other comprehensive income Total comprehensive income Earnings per share (in NT dollar) (Note 6(ab)) Basic earnings per share (in NT dollar) Diluted earnings per share (in NT dollar)	For the three month	s ended March 31 2022 Amount % 6,367,825 102 (1,676,793) (27) 4,691,032 75 1,153,092 20 (127,633) (2) 28,476 - 285 - 326,762 5 (4,780) - - - 56,145 1 89,434 1 6,212,813 100 (255,260) (4) (2,105,807) (34) (315,719) (5) (946,907) (15) (3,368,433) (54) 2,589,120 42 464,859 8 2,124,261 34 907,963 15 - - 907,963 15 597,846 10 (2,669,666) (43) 102,685 2 (2,174,505) (35) (1,266,542) (20) 857,719 14 0.26 0.26
	2023 Amount % $ 11,390,191 143 (6,634,416) (83) 4,755,775 60 1,242,057 16 1,776,106 22 17,506 - 29 - 99,220 1 (7,935) - (336) - 7,232 - 74,046 1 7,963,700 100 (238,356) (3) (2,186,978) (27) (314,062) (4) (1,125,470) (14) (3,626,510) (45) 4,098,834 52 626,190 8 3,472,644 44 1,050,129 13 - - 1,050,129 13 (186,371) (2) 818,356 10 (33,325) - 665,310 8 1,715,439 21 $ 5,188,083 65 $ 0.43 $ 0.43

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 Standards on Auditing

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the three months ended March 31, 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

Balance at January 1, 2022

Net income for the three months ended March 31, 2022

Other comprehensive income for the three months ended March 31, 2022 Total comprehensive income for the three months ended March 31, 2022

Balance at March 31, 2022

Balance at January 1,2023

Net income for the three months ended March 31, 2023 Other comprehensive income for the three months ended March 31, 2023 Total comprehensive income for the three months ended March 31, 2023

Balance at March 31, 2023

						Attributable to	owners of parent	owners of parent				Other equity interest Unrealized gains Exchange differences on translation of foreign financial statements (losses) on financial assets measured at fair value through other comprehensive income	Other equity interest Unrealized gains Exchange differences on translation of foreign financial statements (losses) on financial assets measured at fair value through other comprehensive income	Other equity interest Unrealized gains Exchange differences on translation of foreign financial statements (losses) on financial assets measured at fair value through other comprehensive income	Total
Share capital		Capital surplus				Retained	earnings
Common stock				Legal reserve		Special reserve		Unappropriated retained earnings		Total		Exchange differences on translation of foreign financial statements
$ 77,431,952 - - - $ 77,431,952 $ 80,296,934 - - - $ 80,296,934		815,900 - -		15,693,140 - -		185,128 - -		5,227,632 2,124,261 -		21,105,900 2,124,261 -		(1,807,265) - 478,277 478,277 (1,328,988) (597,833) - (149,097) (149,097) (746,930)		4,113,485 - (1,744,819) (1,744,819) 2,368,666 (3,171,842) - 1,864,536 1,864,536 (1,307,306)	101,659,972 2,124,261 (1,266,542)
		-		-		-		2,124,261		2,124,261					857,719
		815,900		15,693,140		185,128		7,351,893		23,230,161					102,517,691
		815,900 - -		17,239,615 - -		185,128 - -		9,339,356 3,472,644 -		26,764,099 3,472,644 -					104,107,258 3,472,644 1,715,439
		-		-		-		3,472,644		3,472,644					5,188,083
		815,900		17,239,615		185,128		12,812,000		30,236,743					109,295,341

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 Standards on Auditing

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the three months ended March 31, 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

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

For the three months endedMarch 31 2023 2022 $ 4,098,834 2,589,120 247,395 257,592 66,667 58,127 218,182 251,559 (690,469) 236,094 6,634,416 1,676,793 (29) (285) (11,390,191) (6,367,825) 19,645 (3,429) 712 7,130 336 - 250 51 7,935 4,780 - (3,769) (4,885,151) (3,883,182) 18,042,820 12,058,601 (24,329,932) (173,709) (130,713) (11,345,183) (1,074,170) (567,508) 12,363,233 (6,163,824) 3,587 388 3,789,176 4,622,830 8,664,001 (1,568,405) (15,584,243) 11,757,998 (190,465) 574,601 (20,674) 33,953 (4,238,553) (11,850,285) 25,144,700 4,794,999 345,898 (777,593) (74,080) (156,611) 5,382,583 4,377,062 14,046,584 2,808,657 9,161,433 (1,074,525) 13,260,267 1,514,595 11,280,077 6,447,520 (4,661,479) (1,363,877) (72,396) (57,309) 19,806,469 6,540,929 (18,602,850) (12,576,514) (174,550,465) (167,615,497) 158,875,394 164,160,018 - (2,000) (92,454) (56,164) - 28 1,185,811 (1,233,446) (132,596) (80,258) (33,317,160) (17,403,833) (19,145) 109,549 (2,178,771) 192,805 (126,144) (113,760) 20,175 (1,122,593) (2,303,885) (933,999) 496 (6,394) (15,814,080) (11,803,297) 49,260,262 39,444,032 $ 33,446,182 27,640,735

2023 $ 4,098,834 247,395 66,667 218,182 (690,469) 6,634,416 (29) (11,390,191) 19,645 712 336 250 7,935 - (4,885,151) 18,042,820 (24,329,932) (130,713) (1,074,170) 12,363,233 3,587 3,789,176 8,664,001 (15,584,243) (190,465) (20,674) (4,238,553) 25,144,700 345,898 (74,080) 5,382,583 14,046,584 9,161,433 13,260,267 11,280,077 (4,661,479) (72,396) 19,806,469 (18,602,850) (174,550,465) 158,875,394 - (92,454) - 1,185,811 (132,596) (33,317,160) (19,145) (2,178,771) (126,144) 20,175 (2,303,885) 496 (15,814,080) 49,260,262 $ 33,446,182

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 Standards on Auditing as of March 31, 2023 and 2022

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

March 31, 2023 and 2022

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

(1) Company history

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

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

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

• (c) International banking business; and

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

As of March 31, 2023, the Bank not only sets up the business dept., international dept., securities dept. and trust dept. under head office but also has 124 domestic branches, 1 offshore banking unit, 8 overseas branches, 1 oversea representative office and 16 securities brokerage locations.

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

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

As of March 31, 2023, December 31 and March 31, 2022, the Bank and subsidiaries has 5,531, 5,581 and 5,419 employees, respectively.

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

The consolidated financial statements were authorized for issuance by the board of directors on May 4, 2023.

(3) New standards, amendments and interpretations adopted:

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

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

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

(Continued)

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

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

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

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

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

• ●Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”

• ●IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”

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

• ●Amendments to IFRS 17 “Initial Application of IFRS 17 and IFRS 9 – Comparative Information “

• ●IFRS16 “Requirements for Sale and Leaseback Transactions”

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

(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.

(b) Basis of preparation

• (i) Basis of measurement

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

• 1) Financial instruments measured at fair value through profit or loss are measured at fair value (including derivative instruments);

• 2) Financial instrument measured at fair value through other comprehensive income; and

• 3) The net defined benefit liability (asset) is recognized as fair value of plan assets, less present value of defined benefit obligation and the effect of the asset ceiling in Note 4(m).

(Continued)

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

(ii) Consolidation of financial statement

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

(iii) Functional and presentation currency

The functional currency of each entities is determined based on the primary economic environment in which the entities operate. The consolidated financial statements are presented in New Taiwan Dollar, which is the Bank’ s functional currency. All financial information presented in New Taiwan Dollar has been rounded to the nearest thousand.

(c) Basis of consolidation

(i) Subsidiary

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

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

(ii) Elimination of intra-group transaction

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

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.	Established location Main business scope	Shareholding (Holding %)	Shareholding (Holding %)
		March 31, 2023	December 31, 2022 March 31, 2022 100 100 100 100 100 100 100 100
	Taiwan Leasing business China Leasing business Cambodia Financial company Taiwan Investing business	100 100 100 100

(Continued)

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

TBB Consulting Co., Ltd.	Established location Main business scope	Shareholding (Holding %)	Shareholding (Holding %)
		March 31, 2023	December 31, 2022 March 31, 2022 100 100
	Taiwan Consulting business	100

(d) Foreign currencies

(i) Foreign currency transactions

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

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the presentation currency at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the presentation currency at the average exchange rate. Exchange differences are recognized in other comprehensive income.

When a foreign operation is disposed of such that control, significant influence, or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Bank and subsidiaries disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non controlling interests. When the the Bank and subsidiaries disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, Exchange differences arising from such a monetary item that are considered to form part of the net investment in the foreign operation are recognized in other comprehensive income.

(Continued)

12

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

(e) Cash and cash equivalents

Cash and cash equivalent comprise cash on hand, petty cash, foreign currency on hand and cash in banks, but excludes those items which are designated for specific purposes or restricted by contracts and law.

(f) Financial instruments

Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Bank and subsidiaries becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

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

On initial recognition, a financial asset is classified as measured at: amortized cost; fair value through other comprehensive income (FVOCI) – debt investment; FVOCI – equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Bank and subsidiaries changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the next reporting period following the change in the business model.

• 1) Investment in debt instruments measured at amortized cost

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

• ‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

(Continued)

13

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

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

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

• ‧ it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

• ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

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

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

Dividend income is recognized in profit or loss on the date on which the Bank and subsidiaries’ right to receive payment is established.

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

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

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

• 4)

• Discount and loans, net

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

• ‧ Payment of principal or interest is very likely not to be redeemed as per contracts.

(Continued)

14

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

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

• 5) Impairment of financial assets

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

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

‧ debt securities that are determined to have low credit risk at the reporting date; and

• ‧ other debt securities, receivables, loan commitments and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instruments is less than 12 months).

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

When determining whether the credit risk of financial asset has increased significantly since initial recognition and when estimating ECL, the Bank and subsidiaries considers reasonable and supportable information that is relevant and available (without undue cost or effort). This includes both quantitative and qualitative information and analysis, based on the Bank and subsidiaries’ historical experience, informed credit assessment and including forward-looking information.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls. The difference between the cash flows due to the Bank and subsidiaries expects to receive. ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Bank and subsidiaries assesses whether financial assets carried at amortized cost, debt securities at FVOCI, loan commitments and contracts of financial guarantee are credit-impaired. A financial asset is “credit-impaired” when one or move events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data:

(Continued)

15

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

• ‧ significant financial difficulty of the borrower or issuer;

• ‧ a breach of contract such as a default or being past due;

• ‧ the restructuring of a loan or advance by the borrowers on terms that the borrowers would not consider otherwise;

• ‧ it is probable that the borrower will enter bankruptcy or other financial reorganization;

• ‧ the disappearance of an active market for a security because of financial difficulties; or

• ‧ to purchase or initiate financial assets at a substantial discount that reflects the credit losses that have occurred.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognized in other comprehensive income instead of reducing the carrying amount of the asset.

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

• ‧ 1% of the first class credit assets deducted by the amount of credit assets from the government.

• ‧ 2% of the second class credit assets.

• ‧ 10% of the third class credit assets.

• ‧ 50% of the fourth class credit assets.

• ‧ 100% of the fifth class credit assets.

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

Unrecoverable overdue loans and bad debts of the Bank and subsidiaries, which are not able to be recovered after the overdue collection process, are written-off after deducting the recoverable portion. Upon approval by the board of directors and notification to supervisors, the excess amount of written off loans over such allowance or reserve is reflected as a current loss.

(Continued)

16

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

(ii) Financial liabilities

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

1) Financial liabilities held for trading

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

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

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

• (iii) Reclassification of financial instruments

The Bank and subsidiaries only reclassified all affected financial assets in accordance with the regulations when changing the business model of managing financial assets. These changes are expected to be extremely infrequent. In addition, the Bank and subsidiaries must not reclassify any financial assets and liabilities of equity instruments.

If the Bank and subsidiaries reclassify financial assets in accordance with the aforesaid circumstances, the reclassification shall be postponed from the reclassification date, and any previously recognized gains, losses (including impairment losses or reversal of impairment loss) or interest shall not be restated.

• (iv) Derecognition of financial assets and liabilities

The Bank and subsidiaries derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Bank and subsidiaries neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Bank and subsidiaries enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

(Continued)

17

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

The Bank and subsidiaries derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Bank and subsidiaries also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

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

(v) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Bank and subsidiaries currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(vi) Interest rate benchmark reform

When the basis for determining the contractual cash flows of a financial asset or financial liability measured at amortized cost changes as a result of interest rate benchmark reform, the Bank and subsidiaries updates the effective interest rate of the financial asset or financial liability to reflect the change that is required by the reform.

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

• the change is necessary as a direct consequence of the reform; and

• the new basis for determining the contractual cash flows is economically equivalent to the previous basis - i.e. the basis immediately before the change.

When changes were made to a financial asset or financial liability in addition to change to the basis for determining the contractual cash flows required by interest rate benchmark reform, the Bank and subsidiaries first updates the effective interest rate of the financial asset or financial liability to reflect the changes that is required by interest rate benchmark reform. Thereafter, the Bank and subsidiaries will applied the policies on accounting for modifications to the additional changes.

(g) Investment in associates

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

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

(Continued)

18

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

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

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

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

(h) Impairment loss on non-financial assets

The Bank and subsidiaries reviews the carrying amounts of its non-financial assets (other than contract assets and deferred tax assets) to determine whether there is any indication of impairment on the balance sheet date. If any such indication exists, then the asset’ s recoverable amount is estimated.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units (CGUs).

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a 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.

• (i) Property, plant and equipment

• (i) Recognition and measurement

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

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

(Continued)

19

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

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

(ii) Subsequent expenditure

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

(iii) Depreciation

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property and equipment.

Land is not depreciated.

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

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

The Bank and subsidiaries reviews and adjusts the residual value and the useful lives of assets at the end of each fiscal year. Whenever there is evidence indicating that the carrying amount is unable to be recovered due to environmental activities or changes, the Bank and subsidiaries evaluates the impairment loss of assets.

(j) Leases

At inception of a contract, the Bank and subsidiaries assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

(i) As a leasee

The Bank and subsidiaries recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

(Continued)

20

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

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Bank and subsidiaries incremental borrowing rate. Generally, the Bank and subsidiaries uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

• － fixed payments, including in substance fixed payments;

• － variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• －

• －

• amounts expected to be payable under a residual value guarantee; and

• payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

• －

• there is a change in future lease payments arising from the change in an index or rate; or

• － there is a change in the Bank and subsidiaries estimates of the amount expected to be payable under a residual value guarantee; or

• － there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or

• － there is a change of its assessment on whether it will exercise an extension or termination option; or

• －

• there are any lease modifications

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

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Bank and subsidiaries accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognizes in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Bank and subsidiaries has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Bank and subsidiaries recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(Continued)

21

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

(ii) As a leasor

When the Bank and subsidiaries acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Bank and subsidiaries makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Bank and subsidiaries considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

(k) Deferred assets

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

(l) Collaterals

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

(m) Provisions

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

(n) Employee benefits

(i) Short term employee benefit

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

(ii) Retirement benefit

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

(Continued)

22

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

Defined contribution plan refers to the plan that the Bank and subsidiaries annually provides certain amount of money to funds to fulfill the obligation. The Bank and subsidiaries provides pension based on compulsory obligation, contracts or voluntary will to public or private managed pension funds. If certain pension fund fails to pay the employees the benefit which they deserve for the service they provided, the Bank and subsidiaries does not hold legal or constructive obligation to pay additional provision. The Bank and subsidiaries recognizes the pension fund provided as current pension cost on accrual basis.

The Bank’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 and subsidiaries’ obligations and that are denominated in the same currency in which the benefits are expected to be paid.

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

If the benefits of a plan are improved, the pension cost incurred from the portion of the increase benefit relating to past service by employees, is recognized immediately in profit or loss.

The remeasurements of defined benefit liability (asset) include:

• 1) Actuarial gains and losses;

• 2) Return on plan assets, excluding net interest on the net defined benefit liability (asset); and

• 3) The effect of the asset ceiling, excluding net interest on the net defined benefit liability (asset).

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

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

(Continued)

23

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

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

(iii) Deposits with favorable rate

The Bank and subsidiaries provides deposits with favorable rate to employees, which include current employee fix amount deposits with favorable rate and retired employee fix amount deposits with favorable rate. The rate difference between the favorable rate and the market rate belongs to the category of employee benefit.

According to article 28 of “ Regulations Governing the Preparation of Financial Report by Public Banks” , the additional interests result from the difference between deposit with favorable rate and the deposits with market interest rate shall be calculated by actuary per the regulations related to defined benefit plan in IAS 19 . The parameters of actuarial assumptions shall follow the regulations of the competent authority.

In accordance with the regulation of “Discussion of the employee benefit actuarial assumption related matter for adopting IAS 19 with respect to the additional interest of employee deposits with favorable rate” issued by the Banking Bureau, the difference between the actual payment and the estimated retirement benefit obligation is deemed as changes in accounting estimate and is recognized in profit or loss.

(iv) Termination benefits

Termination benefits are recognized as an obligation when the Bank and subsidiaries is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. The Bank and subsidiaries recognizes liabilities when a formal irrevocable termination project is undertaken or when benefit is provided for encouraging voluntary resignation. If benefits are payable more than 12 months after the reporting period, then they are discounted to their present value.

(o) Income taxes

The income tax expenses have been prepared and disclosed in accordance with paragragh B12 of IAS 34 “Interim Financial Reporting”.

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. 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.

(Continued)

24

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

(p) Revenue recognition

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

The revenue of handling fee is recognized when cash collected or when the process of the profit are mostly completed. In addition, for the individual loan which does not belong to labor service and the handling fee is over 1% of the principal, the interest rate shall be adjusted from the original agreed interest rate to the effective interest rate. For the individual loan which does not belong to the service and the handling fee is less than 1% of the principal, the recognition of the revenue should be deferred and be recognized as revenue during the loan period.

(q) Earnings per share (EPS)

The Bank and subsidiaries discloses the basic and diluted earnings per share attributable to ordinary shareholders of the bank. Basic earnings per share is calculated as the profit attributable to ordinary shareholders of the bank divided by the weighted average number of ordinary shares outstanding. Diluted earnings per share is calculated as the profit attributable to ordinary shareholders of the Bank divided by the weighted average number of ordinary shares outstanding after adjustment for the effects of all potentially dilutive ordinary shares, such as stock that issued for employee bonuses.

(r) Operating segments

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

(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 Reporying” 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 next period.

(Continued)

25

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

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year is as follows. Those assumptions and estimation have been updated to reflect the impact of COVID-19 pandemic and Russia-Ukraine war:

(a) Impairment losses on loans

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

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

(b) Retirement benefit

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

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

(c) Fair value of financial instruments

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

(Continued)

26

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

(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	March 31, 2023 $ 12,163,418 929,226 5,575,431 14,778,107 $ 33,446,182	December 31, 2022 14,042,641 988,995 11,029,785 23,198,841 49,260,262	March 31, 2022
			11,538,917 839,867 1,901,217 13,360,734 27,640,735

• (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	March 31, 2023 $ 64,238,235 42,080 66,236,504 110,000 (110,000) $ 130,516,819	December 31, 2022 85,208,065 39,664 63,310,015 110,000 (110,000) 148,557,744	March 31, 2022
			69,471,708 39,160 76,546,148 110,000 (110,000) 146,057,016

As of March 31, 2023, December 31 and March 31, 2022, in accordance with the Banking Law and the Central Bank Law, the required reserve deposited by the Bank with the Central Bank amounted to $63,767,625, $84,763,295 and $68,971,620 of which $48,590,939, $47,637,794 and $44,888,953 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 March 31, 2023, December 31 and March 31, 2022 are guaranteed by the deposit reserve of the Central Bank as required, $0, $0 and $39,000,000 respectively, please refer to 6(o) for the information of due to the Central Bank and banks.

As of March 31, 2023, December 31 and March 31, 2022, the Bank’ s subsidiaries and overseas branches, in compliance with the Central Bank’ s reserve requirement set by local authorities, deposited $135,290, $134,809 and $165,588 and in reserve, of which $51,891, $52,137 and $55,337 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 March 31, 2023, December 31 and March 31, 2022, the required reserve with the Central Bank amounted to $335,320, $309,961 and $334,500 respectively, and its use was unrestricted.

(Continued)

27

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

As of March 31, 2023, December 31 and March 31, 2022, deposits transferred to the Central Bank collected from the armed forces, prisons, and other treasury deposits were restricted.

Effective January 20, 2001, in accordance with the requirement of the Central Bank of China, the Bank complies with Clause 34 of the Trust Law to treat the discretionary trust of investments in overseas marketable securities as a default loss reserve. As of March 31, 2023, December 31 and March 31, 2022, the Bank deposited marketable securities of $110,000, $110,000 and $110,000 as trust fund reserves.

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

Financial assets at fair value through profit or loss, mandatorily measured at fair value : Derivative instruments not used for hedging: Foreign exchange forward contracts Currency swap contracts Foreign currency options-buy Stock index futures Interest rate swap Non-derivative financial assets Commercial paper Listed stocks Unlisted stocks Beneficiary certificates Financial debentures Total	March 31, 2023 $ 7,347 1,398,021 14,442 26,846 6,254 55,113,443 1,031,474 398,178 506,886 200,000 $ 58,702,891	December 31, 2022 27,271 1,088,827 17,813 26,860 5,896 30,907,810 752,713 471,554 414,370 200,000 33,913,114	March 31, 2022
			20,498 316,121 4,048 28,745 6,784 38,267,622 549,124 277,156 343,231 485,710
			40,299,039

Derivative financial instruments are used for hedging foreign exchange risk and interest rate risk arising from operating, financing and investing activities. The Bank and subsidiaries held derivative financial instruments which did not apply to hedge accounting are as follows (reported as financial assets mandatorily measured at fair value through profit or loss and financial liabilities held for trading)

Currency swaps contract Interest rate swaps contract Option contract - buy Option contract - sell Forward foreign exchange contract	March 31, 2023 $ 246,706,272 12,559,268 1,188,000 1,188,000 1,713,242	December 31, 2022 March 31, 2022 260,470,257 209,015,689 12,665,622 11,131,987 1,229,230 878,070 1,229,230 878,070 2,786,130 3,311,647

(Continued)

28

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

(d) Securities purchased under resell agreements

Securities under resell agreements Face amount Resell period Range of resell interest rate Resell price	March 31, 2023 $ 928,606 930,000 2023.04.10~2023.04.11 1.26% $ 929,153	December 31, 2022 797,893 800,000 2023.01.05 1.24% 798,576	March 31, 2022 19,176,457
			19,189,600
			2022.04.01~2022.04.27
			0.31%~0.58% 19,182,464

(e) Receivables, net

Interest receivable Acceptances receivable Accrued income Accounts receivable Spot exchange receivable-foreign currencies Refinacing guaranty deposits Guaranteed proceeds receivable from refinacing Credit cards accounts receivable Receivable price of securities purchased for customers Settlement price Installment receivables and leases Other receivables Sub-total Less: Allowance for bad debts Total	March 31, 2023 $ 4,204,963 977,827 421,678 1,279,967 40,236 9,885 8,237 1,019,078 140,061 269,392 1,450,881 494,210 10,316,415 (120,672) $ 10,195,743	December 31, 2022 4,123,259 791,284 140,805 1,262,213 9,096 1,505 1,158 1,098,733 179,159 - 1,320,741 233,198 9,161,151 (104,042) 9,057,109	March 31, 2022
			2,688,565 1,154,706 174,217 921,315 45,312 2,165 1,804 946,063 236,980 275,342 1,238,238 533,898 8,218,605 (116,381) 8,102,224

The outstanding contract amount of financial assets that have been written off and still have recourse as of March 31, 2023, December 31 and March 31, 2022 were $86,717,453, $85,659,528 and $85,369,683 respectively.

(Continued)

29

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

The change in allowance for bad debts was as follows:

Beginning balance Provision (reversal) Write-off Foreign exchange Ending balance	For the three months ended March 31,	For the three months ended March 31,
	2023 $ 104,042 17,135 (610) 105 $ 120,672	2022
		118,111 (3,171) - 1,441 116,381

(f) 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	March 31, 2023 $ 224,688 573,741 26,540 947,185 167,853,240 218,800,024 2,466,033 174,336,802 293,602,618 35,232,577 509,645,153 1,291,643 1,405,000,244 (274,060) (17,143,756) $ 1,387,582,428	December 31, 2022 111,492 631,574 30,781 934,845 175,758,201 222,836,626 2,672,159 182,824,935 293,811,922 36,127,193 500,599,070 2,154,653 1,418,493,451 (302,470) (18,078,616) 1,400,112,365	March 31, 2022 295,025 721,648 34,412 2,113,573 163,329,250 209,630,887 3,235,830 163,041,198 285,938,533 31,209,452 463,372,602 1,668,764 1,324,591,174 (255,215) (16,063,001) 1,308,272,958

(Continued)

30

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

The change in allowance for bad debts was as follows:

Beginning balance Provision Transfer out Write-off Write-off recovered Foreign exchange Ending balance	For the three months ended March 31,	For the three months ended March 31,
	2023 $ 18,078,616 207,768 (2,015) (1,447,031) 317,057 (10,639) $ 17,143,756	2022
		15,576,817 265,968 (3,652) (303,377) 506,379 20,866 16,063,001

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

Investment in debt instruments measured at fair value through other comprehensive income： Government bonds Corporate bonds Financial debentures Negotiable certificates of deposit Subtotal Investment in equity instruments measured at fair value through other comprehensive income： Listed stocks Unlisted stocks Real Estate Investment Trust Subtotal Total	March 31, 2023 $ 51,352,303 71,779,590 35,732,920 585,641 159,450,454 15,384,683 5,489,844 143,390 21,017,917 $ 180,468,371	December 31, 2022 48,754,854 60,445,796 32,639,581 - 141,840,231 12,676,936 5,337,461 145,782 18,160,179 160,000,410	March 31, 2022
			48,836,779 61,286,371 33,571,993 -
			143,695,143
			19,276,507 5,222,611 148,587 24,647,705 168,342,848

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

The Bank and subsidiaries assessed that the above bond investments were held within a business model whose objective was achieved by both collecting contractual cash flows and selling financial assets. The bond investments have been classified as the financial asset measured at fair value through other comprehensive income. Some of the investment in debt instruments measured at fair value through other comprehensive income are used as resell condition. Please refer to Note 6 (q) for more details.

(Continued)

31

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

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

The Bank and subsidiaries designated the investments shown above as equity securities as at fair value through other comprehensive income because these equity securities represent those investments intending to hold for long-term for strategic purpose.

The Bank and subsidiaries designated the investments shown above as equity instrument as at fair value through other comprehensive income; therefore, the Bank and subsidiaries recognized $17,413 and $27,856, respectively as dividend revenue for the three months ended March 31, 2023 and 2022.

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

• (iv) The Bank and subsidiaries assessed the impairment of financial assets measured at fair value through other comprehensive income as of March 31, 2023 and 2022. The changes in allowance for credit losses attribute to the financial assets were as follows:

Beginning balance Provision Foreign exchange Ending balance	For the three months ended March 31,	For the three months ended March 31,
	2023 $ 90,852 3,534 (161) $ 94,225	2022
		87,792 4,575 451
		92,818

• (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	March 31, 2023 $ 206,420,000 29,364,324 8,728,134 7,947,837 63,924 252,524,219 (79,243) $ 252,444,976	December 31, 2022 195,595,000 24,370,304 7,481,434 9,337,858 64,523 236,849,119 (74,872) 236,774,247	March 31, 2022
			236,195,000 24,228,892 8,432,883 13,662,355 60,018 282,579,148 (87,879) 282,491,269

(Continued)

32

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

The Bank and subsidiaries assessed that these financial assets were held to collect the contractual cash flows, which consisted solely of payments of principal and interest on principal amount outstanding. Therefore, these investments were classified as financial assets measured at amortized cost.

(i) Please refer to Note 6(ap) for credit risk.

• (ii) The pledged assets provided by the above investment in debt instruments at amortized cost were shown follows:

Reserve for provisional seizure by the court, international card payment reserve, trust claim reserve and operating guaranty funds 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	March 31, 2023 $ 985,000 - 63,924 2,000,000 29,000,000 200,000 20,000,000 $ 52,248,924	December 31, 2022 854,500 - 64,523 2,000,000 29,000,000 200,000 20,000,000 52,119,023	March 31, 2022
			994,300 11,300,000 60,018 2,000,000 29,000,000 200,000 20,000,000
			63,554,318

(iii) The Bank and subsidiaries assessed the impairment of investment in debt instruments at amortized cost as of March 31, 2023 and 2022. The changes in allowance for credit losses attribute to these financial assets were as follows:

Beginning balance Provision Foreign exchange Ending balance	For the three months ended March 31,	For the three months ended March 31,
	2023 $ 74,872 4,401 (30) $ 79,243	2022
		87,478 205 196
		87,879

(Continued)

33

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

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

Corporate bonds Corporate bonds	For the three months ended March 31, 2023	For the three months ended March 31, 2023
	The carrying amount at the date of derecognition Gain (Loss) on disposal $ 2,654 29 For the three months ended March 31, 2022	Gain (Loss) on disposal
		29
	The carrying amount at the date of derecognition $ 32,559	Gain (Loss) on disposal
		285

For the three months ended March 31, 2023 and 2022, it is due to the advanced redemption of the issuer.

• (i) Investments accounted for using equity method

• (i) Associates

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

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

March 31, 2023 Carrying amount of individually insignificant associates’ equity $ 472 Attributable to the Bank and subsidiaries: Net income Total comprehensive income	March 31, 2023	December 31, 2022 March 31, 2022 808 2,000 For the three months ended March 31,	March 31, 2022
			2,000
		2023 $ (336) $ (336)	2022
			-
			-

• (ii) Guarantee

As of March 31, 2023, the Bank and subsidiaries did not provide any investments accounted for using the equity method as collateral for its loans.

(Continued)

34

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

(j) Other financial assets, net

Overdue receivable Less: Allowance for bad debts, overdue receivable Total	March 31, 2023 $ 23,487 (13,811) $ 9,676	December 31, 2022 58,786 (48,471) 10,315	March 31, 2022 81,817 (51,301) 30,516

The change in allowance for bad debts was as follows:

Beginning balance Reversal Transfer in Write-off Written-off recovered Ending balance	For the three months ended March 31,	For the three months ended March 31,
	2023 $ 48,471 (4,963) 2,015 (35,985) 4,273 $ 13,811	2022
		51,392 (5,614) 3,652 (3,133) 5,004
		51,301

(k) Property and equipment, net

March 31, 2023	Cost $ 6,743,535 8,119,331 2,697,431 268,759 656,573 218,128 19,940 146,676 $ 18,870,373 Cost $ 6,743,535 8,116,339 2,696,721 272,344 658,114 205,430 20,225 130,457 $ 18,843,165	Revaluation increment 2,986,161 31,184 - - - - - - 3,017,345 Revaluation increment 2,986,161 31,184 - - - - - - 3,017,345	Accumulated depreciation - 4,837,819 2,029,682 229,591 560,276 128,242 - - 7,785,610 Accumulated depreciation - 4,790,018 2,012,107 230,440 557,596 119,731 - - 7,709,892	Accumulated impairment 14,031 14,754 - - - - - - 28,785 Accumulated impairment 14,031 14,754 - - - - - - 28,785	Total 9,715,665 3,297,942 667,749 39,168 96,297 89,886 19,940 146,676 14,073,323 Total 9,715,665 3,342,751 684,614 41,904 100,518 85,699 20,225 130,457 14,121,833
Land Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Construction in progress Prepayment for equipment Total December 31, 2022
Land Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Construction in progress Prepayment for equipment Total

(Continued)

35

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

March 31, 2022	Cost $ 6,743,535 8,058,098 2,687,434 270,093 648,518 201,295 6,651 147,666 $ 18,763,290	Revaluation increment 2,986,161 31,184 - - - - - - 3,017,345	Accumulated depreciation - 4,642,874 1,947,540 225,653 546,385 92,049 - - 7,454,501	Accumulated impairment 14,031 14,754 - - - - - - 28,785	Total 9,715,665 3,431,654 739,894 44,440 102,133 109,246 6,651 147,666
Land Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Construction in progress Prepayment for equipment Total
					14,297,349

Change of cost

Land Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Construction in progress Prepayment for equipment Total Land Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Construction in progress Prepayment for equipment Total	January 1, 2023 $ 9,729,696 8,147,523 2,696,721 272,344 658,114 205,430 20,225 130,457 $ 21,860,510 January 1, 2022 $ 9,729,696 8,049,138 2,393,432 272,502 647,036 162,953 40,547 573,971 $ 21,869,275	Increase - 2,992 51,585 497 3,036 13,379 - 48,277 119,766 Increase - 40,144 297,514 302 2,439 38,294 351 4,777 383,821	Decrease - - 50,360 3,969 4,125 - 285 31,989 90,728 Decrease - - 6,099 3,050 2,460 378 34,247 431,282 477,516	Foreign Exchange - - (515) (113) (452) (681) - (69) (1,830) Foreign Exchange - - 2,587 339 1,503 426 - 200 5,055	March 31, 2023
					9,729,696 8,150,515 2,697,431 268,759 656,573 218,128 19,940 146,676
					21,887,718
					March 31, 2022 9,729,696 8,089,282 2,687,434 270,093 648,518 201,295 6,651 147,666
					21,780,635

Change of depreciation

Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Total	January 1, 2023 $ 4,790,018 2,012,107 230,440 557,596 119,731 $ 7,709,892	Increase 47,801 68,544 3,212 7,160 9,090 135,807	Decrease - 50,134 3,961 4,109 - 58,204	Foreign Exchange - (835) (100) (371) (579) (1,885)	March 31, 2023 4,837,819 2,029,682 229,591 560,276 128,242
					7,785,610

(Continued)

36

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

Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Total	January 1, 2022 $ 4,592,658 1,865,901 225,193 539,601 83,416 $ 7,306,769	Increase 50,216 85,705 3,208 8,349 8,930 156,408	Decrease - 6,085 3,023 2,422 378 11,908	Foreign Exchange - 2,019 275 857 81 3,232	March 31, 2022 4,642,874 1,947,540 225,653 546,385 92,049
					7,454,501

Accumulated impairment

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

When the Bank and subsidiaries first adopted IFRSs, it elected to apply the revaluation amount calculated per the regulation of GAAP of R.O.C as the original cost on the transition date.

As of March 31, 2023, December 31 and March 31, 2022, 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 March 31, 2023, December 31 and March 31, 2022, land which was occupied all amounted to $5,496. Except for a portion of the land that had been negotiated with the occupant to collect the rent; the Bank intends to participate in land auction, urban renewal or by other appropriate means in due course.

(l) Right-of-use assets

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

March 31, 2023	Cost $ 1,934,983 26,388 85,034 13,689 $ 2,060,094	Accumulated depreciation 800,243 26,339 29,031 5,893 861,506	Accumulated impairment - - - - -	Total 1,134,740 49 56,003 7,796
Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total
				1,198,588

(Continued)

37

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

December 31, 2022	Cost $ 1,857,074 26,497 77,477 12,403 $ 1,973,451 Cost $ 1,765,740 26,791 75,682 11,178 $ 1,879,391	Accumulated depreciation 706,516 26,408 22,728 5,206 760,858 Accumulated depreciation 670,954 26,384 50,217 3,796 751,351	Accumulated impairment - - - - - Accumulated impairment - - - - -	Total 1,150,558 89 54,749 7,197
Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total March 31, 2022
				1,212,593
				Total 1,094,786 407 25,465 7,382
Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total
				1,128,040

Change of cost

January 1, 2023 Buildings $ 1,857,074 Machinery and equipment 26,497 Transportation equipment 77,477 Miscellaneous equipment 12,403 Total $ 1,973,451 January 1, 2022 Buildings $ 1,795,803 Machinery and equipment 27,842 Transportation equipment 74,819 Miscellaneous equipment 10,337 Total $ 1,908,801 Change of depreciation January 1, 2023 Buildings $ 706,516 Machinery and equipment 26,408 Transportation equipment 22,728 Miscellaneous equipment 5,206 Total $ 760,858	Increase 90,833 - 7,558 1,359 99,750 Increase 266,941 - 2,010 1,135 270,086 Increase 104,583 40 6,314 760 111,697	Decrease 8,972 109 - 73 9,154 Decrease 302,373 1,051 1,182 294 304,900 Decrease 8,972 109 - 73 9,154	Foreign Exchange (3,952) - (1) - (3,953) Foreign Exchange 5,369 - 35 - 5,404 Foreign Exchange (1,884) - (11) - (1,895)	March 31, 2023 1,934,983 26,388 85,034 13,689
				2,060,094
				March 31, 2022 1,765,740 26,791 75,682 11,178
				1,879,391
				March 31, 2023 800,243 26,339 29,031 5,893
				861,506

Change of depreciation

(Continued)

38

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

							Foreign
		January 1, 2022		Increase		Decrease	Exchange	March 31, 2022
	Buildings	$	683,580		96,092	111,742 3,024		670,954
	Machinery and equipment		27,272		163	1,051 -		26,384
	Transportation equipment		45,301		5,327		514 103	50,217
	Miscellaneous equipment		3,353		653		210 -	3,796
	Total	$	759,506		102,235	113,517 3,127		751,351
(m)	Other assets, net
							December 31,
				March		31, 2023	2022 March 31, 2022
	Office supplies			$		29,388	29,019	28,792
	Prepayments				8,376,936		8,168,184	4,395,578
	Operating guarantee	deposits and				33,631	31,753	31,753
	settlement fund
	Guarantee deposits paid				1,455,735		2,641,545	1,647,851
	Deferred assets					124	128	171
	Temporary payments and suspense					547,508	4,675,748	1,081,726
	accounts
	Proceeds of settlement and margin trading					1,832	60,139	23,083
	Other assets					176,432	176,432	105,859
	Total			$	10,621,586		15,782,948	7,314,813
(n)	Deposits from the Central Bank and banks
							December 31,
				March		31, 2023	2022 March 31, 2022
	Deposits from the Central Bank			$		270,143	232,262	591,466
	Due from the Central Bank				14,611,200		14,133,500	11,432,000
	Deposits from banks					225,209	705,261	343,111
	Call loans from banks				21,587,043		31,549,533	33,739,768
	Overdrafts on banks					593,794	1,084,076	930,423
	Deposits transferred	from Chunghwa Post			142,094,545		147,261,545	67,261,545
	Co., Ltd.
	Total			$	179,381,934		194,966,177	114,298,313

(Continued)

39

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

(o) Due to the Central Bank and banks

Agricultural Bank of Taiwan First Commercial Bank Bank of Kaohsiung Co., Ltd. (OBU) Sunny Commercial Bank (OBU) KGI Commercial Bank Co., Ltd. (OBU) Bank of Panshin Total Unused credit lines Agricultural Bank of Taiwan First Commercial Bank Bank of Kaohsiung Co., Ltd. (OBU) Sunny Commercial Bank (OBU) KGI Commercial Bank Co., Ltd. (OBU) Bank of Panshin Total Unused credit lines			March 31, 2023
	Currency TWD TWD USD USD USD USD	Interest Rate 1.457% 1.45%~1.575% 6.315% 6.169%~6.345% 6.310%~6.458% 6.60%	Maturity Date 2023.10.13 2023.4.25 2023.6.10 2023.8.4~2023.8.26 2023.4.7~2023.7.12 2023.8.18 December 31, 2022	Original Amount NTD Amount 200,000 $ 200,000 90,000 90,000 10,000 304,400 9,000 273,960 7,000 213,080 1,000 30,440 $ 1,111,880 $ 1,512,218
	Currency TWD TWD USD USD USD USD	Interest Rate 1.332% 1.450%~1.575% 5.50% 5.642%~5.887% 5.326%~6.261% 6.60%	Maturity Date 2023.10.13 2023.2.16~2023.4.25 2023.6.10 2023.8.4~2023.8.26 2023.1.10~2023.4.7 2023.5.10~2023.8.18	Original Amount NTD Amount 100,000 $ 100,000 140,000 140,000 10,000 307,250 9,000 276,525 7,000 215,075 3,000 92,175 $ 1,131,025 $ 1,447,949	NTD Amount

(Continued)

40

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

				March 31, 2022	March 31, 2022
							Original		NTD
	Currency	Interest Rate		Maturity	Date		Amount		Amount
Central Bank	TWD	0.10%	2022.6.30				49,713,800	$	49,713,800
Bank of Kaohsiung Co.,	USD	1.74%	2023.6.10				12,000		342,960
Ltd. (OBU)
Sunny Commercial Bank	USD	2.00%	2022.8.27				6,000		171,480
(OBU)
KGI Commercial Bank	USD	1.73%~2.01%	2023.1.10~2023.3.1				5,000		142,899
Co., Ltd. (OBU)
Total								**$ **	50,371,139
Unused credit lines								$	1,778,420
Financial liabilities at fair value through profit or loss
					December 31,
		March	31, 2023		2022		March 31, 2022
Financial liabilities designated at fair
value through profit or loss：
Financial debentures		$	9,177,983			9,367,595			8,482,025
Financial liabilities held	for trading：
Derivative instruments not used for
hedging
Foreign exchange forward contracts				6,010		10,932			58,721
Currency swap contracts				301,046		524,421			149,995
Foreign currency option-sell				14,478		17,864			4,055
Interest rate contract				4,919			4,713		6,863
Total		$	9,504,436			9,925,525			8,701,659

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

Please refer to 6(t) for the information of financial liabilities designated at fair value through profit and loss.

Please refer to 6(c) for the nominal amount of unsettled financial derivatives instrument contracts of March 31, 2023, December 31 and March 31, 2022.

(Continued)

41

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

• (q) Notes and bonds issued under repurchase agreement

Assets	March 31, 2023	March 31, 2023	March 31, 2023	March 31, 2023
	Par value	Selling Price (Recognized in securities sold under repurchase agreements)	Designated repurchase amount	Designated repurchase date
Financial assets at fair value through other comprehensive income	$ 2,587,930	2,442,317	2,452,394	Prior to July 1, 2024
Assets	December 31, 2022
	Par value	Selling Price (Recognized in securities sold under repurchase agreements)	Designated repurchase amount	Designated repurchase date
Financial assets at fair value through other comprehensive income	$ 2,616,634	2,462,991	2,472,765	Prior to July 1, 2024
Assets	March 31, 2022
	Par value	Selling Price (Recognized in securities sold under repurchase agreements)	Designated repurchase amount	Designated repurchase date
Financial assets at fair value through other comprehensive income	$ 2,208,165	2,094,646	2,102,686	Prior to July 1, 2024

(Continued)

42

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

(r) Payables

Accrued interest Accounts payable Acceptances Accrued expenses Collection payable Deposits received from securities borrowers Guaranteed price deposits received from securities borrowers Spot exchange payable, foreign currencies Other payables Prices payable of securities sold for customers Settlement payable Other Total (s) Deposits and remittances Savings deposits Time deposits Demand deposits Checking account deposits Remittances Total	March 31, 2023 $ 6,404,245 5,590,384 983,690 3,416,238 665,717 67,729 67,707 21,951 1,651,616 401,483 - 6,771 $ 19,277,531 March 31, 2023 $ 745,831,354 455,860,194 475,473,805 21,164,495 395,115 $ 1,698,724,963	December 31, 2022 4,435,668 11,042,992 802,824 3,277,743 676,888 116,196 108,289 13,625 834,692 137,155 40,444 6,615 21,493,131 December 31, 2022 737,659,280 436,771,576 465,429,114 33,292,182 428,111 1,673,580,263	March 31, 2022
			2,780,329 1,937,607 1,186,085 2,849,525 702,132 74,406 73,148 39,562 1,131,851 502,912 - 12,513
			11,290,070
			March 31, 2022
			707,483,637 473,926,751 470,510,521 21,179,810 351,102
			1,673,451,821

(Continued)

43

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

(t) Bank notes payable

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

(Continued)

44

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

Bonds		T	erms of Transactions		Bond I	ssued
	Issue date	Maturity date	Interest Rate & repayment	Type		Amount
2021-1	11/17/2021	None	The debentures bear an annual interest rate of 1.60%.Simple interest is accrued and paid annually. After calculating the early redeemable bond is in line with the capital adequacy ratio under the consent of the competent authority, the debentures are redeemable per face value plus accrued interest at the interest payment date after five years and a month from the issue date .	Perpetual non- accumulated subordinated financial debentures	March 31, 2023 $ 8,000,000 $ 52,250,000	December 31, 2022 8,000,000 52,250,000	March 31, 2022
							8,000,000
							52,250,000

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

Bonds		T	erms of Transactions		Bond I	ssued
	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	March 31, 2023 $ 3,652,800 5,479,200 45,983 $ 9,177,983	December 31, 2022 3,687,000 5,530,500 150,095 9,367,595	March 31, 2022
							3,429,600 5,144,400 (91,975)
							8,482,025

(Continued)

45

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

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 market 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	March 31, 2023 $ 9,177,983 237,290 45,983 March 31, 2023 $ 3,256,479	December 31, 2022 9,367,595 170,133 150,095 December 31, 2022 2,910,581	March 31, 2022
			8,482,025 133,093 (91,975) March 31, 2022
			3,587,701

(u) Other financial liabilities

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

• (v) Provisions

Provision for guarantee liabilities Provision for loan commitments Indeterminate indemnity provisions Provision for employee benefits Total	March 31, 2023 $ 256,674 100,513 74,802 2,190,091 $ 2,622,080	December 31, 2022 237,076 100,236 74,619 2,264,171 2,676,102	March 31, 2022
			254,806 79,016 73,181 2,860,930 3,267,933

Change of provision

Provision for guarantee liabilities Provision for loan commitments Indeterminate indemnity provisions Provision for employee benefits Total	January 1, 2023 $ 237,076 100,236 74,619 2,264,171 $ 2,676,102	Increase 19,645 529 183 50,237 70,594	Decrease - - - 121,312 121,312	Use - - - 3,005 3,005	Foreign exchange (47) (252) - - (299)	March 31, 2023
						256,674 100,513 74,802 2,190,091
						2,622,080

(Continued)

46

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

Provision for guarantee liabilities Provision for loan commitments Indeterminate indemnity provisions Provision for employee benefits Total	January 1, 2022 $ 258,065 71,423 73,181 3,017,541 $ 3,420,210	Increase - 7,130 - 52,942 60,072	Decrease 3,429 - - 205,130 208,559	Use - - - 4,423 4,423	Foreign exchange 170 463 - - 633	March 31, 2022
						254,806 79,016 73,181 2,860,930
						3,267,933

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

(w) Lease liabilities

Lease liabilities as follows:

Less than one year More than one year	March 31, 2023 $ 381,760 $ 836,196	December 31, 2022 387,320 852,599	March 31, 2022
			339,354 801,146

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities Expenses relating to short-term leases Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets	For the three months ended March 31,	For the three months ended March 31,
	2023 $ 4,360 $ 4,970 $ 4,002	2022
		4,020
		4,289
		3,620

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

Total cash outflow for leases	For the three months ended March 31,	For the three months ended March 31,
	2023 $ 135,116	2022
		121,669

(i) Real estate leases

The Bank and subsidiaries leased buildings for its office space. Some leases include an option to renew the lease for an additional period of the same duration after the end of the contract term.

Some leases provide for additional rent payments that are based on changes in local price indices. Some also require the Bank and subsidiaries to make payments that relate to the property taxes levied on the lessor and insurance payments made by the lessor; these amounts are generally determined monthly.

(Continued)

47

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

(ii) Other leases

The Bank and subsidiaries leased machinery and transportation equipment with lease terms of one to four years. In some cases, the Bank and subsidiaries has options to purchase the assets at the end of the contract term; in other cases, it guarantees the residual value of the leased assets at the end of the contract term.

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

(x) Other liabilities

Advance interest receipts Unearned revenue Other advance receipts Guarantee deposits received Others Total	March 31, 2023 $ 4,385 345,120 54,966 1,194,004 6,011 $ 1,604,486	December 31, 2022 6,396 315,153 62,411 3,372,775 6,347 3,763,082	March 31, 2022
			2,140 292,759 49,257 1,461,033 5,396
			1,810,585

(y) Equity

(i) Common stock

As of March 31, 2023, December 31 and March 31, 2022, the Bank’s authorized capital were $100,000,000, $100,000,000 and $80,000,000, and the paid-in capital for common shares of the Bank were $80,296,934, $80,296,934 and $77,431,952, the face value of each share is $10. The outstanding shares were 8,029,693, 8,029,693 and 7,743,195 shares, respectively.

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

(ii) Capital surplus

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

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

(Continued)

48

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

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

(iii) Earnings distribution and dividend policy

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

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

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

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

(Continued)

49

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

On March 15, 2023, the Bank's board of directors resolved to appropriate the 2022 earnings. On June 17, 2022, the shareholder's meetings resolved to distribute the 2021 earnings. The earnings were appropriated as follows:

Dividends to common shareholders Stock dividends Cash dividends Total	2022 Distribution rate (NT dollar) Amount $ 0.24 1,927,126 0.10 802,969 $ 2,730,095	2021	2021
		Distribution rate (NT dollar) 0.37 0.10	Amount
			2,864,982 774,320
			3,639,302

(iv) Other equity interest

January 1, 2023 Share of other comprehensive income of associates and joint ventures accounted for using equity method Investment in debt instruments measured at fair value through other comprehensive income -Unrealized amount -Realized amount Foreign currency translation difference－Exchange difference March 31, 2023 January 1, 2022 Share of other comprehensive income of associates and joint ventures accounted for using equity method Investment in debt instruments measured at fair value through other comprehensive income -Unrealized amount -Realized amount Foreign currency translation difference－Exchange difference March 31, 2022	Unrealized gains from financial assets measured at fair value through other comprehensive income $ (3,171,842) 1,285 1,863,344 (93) - $ (1,307,306) $ 4,113,485 175 (1,744,374) (620) - $ 2,368,666	Exchange differences on translation of foreign financial statements (597,833) 5,388 - - (154,485) (746,930) (1,807,265) 25,612 - - 452,665 (1,328,988)	Total (3,769,675) 6,673 1,863,344 (93) (154,485) (2,054,236) 2,306,220 25,787 (1,744,374) (620) 452,665 1,039,678

(Continued)

50

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

(z) Income taxes

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

Current tax expense Current period Adjustment for prior period Deferred tax expense Origination and reversal of temporary different Income tax expenses	For the three months ended March 31, 2023 2022 $ 519,270 501,446 (17,803) - 501,467 501,446 124,723 (36,587) $ 626,190 464,859
	2023 $ 519,270 (17,803) 501,467 124,723 $ 626,190

• (ii) 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 on debt instruments at fair value through other comprehensive income Total	For the three months ended March 31, 2023 2022 $ (37,274) 119,569 3,949 (16,884) $ (33,325) 102,685
	2023 $ (37,274) 3,949 $ (33,325)

• (iii) Uncertainty over income tax treatments

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

• (iv) The Bank’s income tax returns through 2017, 2019 and 2021 have been assessed by the Tax Authority.

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

(Continued)

51

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

(aa) Provision for employee benefit

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

Defined benefit plan Employee deposits with favorable rate	March 31, 2023 $ 1,127,842 1,062,249 $ 2,190,091	December 31, 2022 1,211,918 1,052,253 2,264,171	March 31, 2022
			1,799,612 1,061,318
			2,860,930

In 2022, 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 March 31, 2022 and 2021 by the Bank and subsidiaries.

The Bank and subsidiaries recognized the expenses amounting to $40,274 and $42,954 for the three months ended March 31, 2023 and 2022, respectively.

(i) 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 $46,595 and $42,110 for the three months ended March 31, 2023 and 2022, respectively.

(ii) Employee deposit with favorable rate

In 2022, 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, 2022 and 2021 by the Bank and subsidiaries.

The Bank and subsidiaries recognized expenses amounting to $63,950 and $62,788 for the three months ended March 31, 2023 and 2022, respectively.

(Continued)

52

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

(ab) 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 March 31,
	2023 $ 3,472,644 8,029,693 $ 0.43 12,005 8,041,698 $ 0.43	2022
		2,124,261
		8,029,693
		0.26
		8,377
		8,038,070
		0.26

Note 1: The earnings per share for the years ended December 31, 2022 has applied retrospective adjustments.

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

• (ac) Employees and directors' remuneration

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

For the three months ended March 31, 2023 and 2022, the estimated employee remuneration were $157,686 and $103,805, and the estimated directors' remuneration were $18,922 and $12,457, 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, 2022 and 2021, the employees' remuneration was accrued at $451,457 and $371,068 and the directors' remuneration was accrued at $75,243 and $37,107, respectively.

The employees' and directors' remuneration for 2022 have not yet been paid.

There is no difference with actual distribution for 2021 remuneration. The information is available at the Market Observation Post System website.

(Continued)

53

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

(ad) Net interest revenue

Interest income: Loans Secured loans Bills negotiated Bank overdrafts Discounts Time deposit from Central Bank Due from the Central Bank Call loans to banks Bonds International credit card Overdue loans Bills Due from Banks Others Subtotal Interest expense: Deposits Deposits from banks Call loans from banks Financial debentures Notes and bond issued under repurchase agreement Others Subtotal Total	For the three months ended March 31,	For the three months ended March 31,
	2023 $ 2,983,997 5,994,038 2,245 5,615 8,497 477,176 102,369 697,003 889,310 8,715 57,540 13,960 42,204 107,522 11,390,191 5,944,168 98 459,451 187,370 4,877 38,452 6,634,416 $ 4,755,775	2022
		1,322,941 3,928,339 514 2,911 1,983 189,660 23,867 163,885 526,838 9,007 94,826 12,458 25,224 65,372
		6,367,825
		1,436,816 9 31,923 187,382 896 19,767
		1,676,793
		4,691,032

(Continued)

54

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

(ae) Net service fee revenue

Service fee income: Remittance service fee Import bills negotiated service fee Export bills negotiated service fee Letter of credit service fee Certification service fee Acceptance service fee Trust service fee Guarantee service fee Agency service fee Interbank service fee Card service fee Insurance commission Custodian service fee Foreign currency service fee Commission of futures Loan service fee Miscellaneous fees Subtotal Service fee expense: Foreign currency service fee Interbank service fee Trust service fee Agency service fee IC card service fee Check clearing service fee Remittance service fee Custodian service fee Call loans service fee Miscellaneous fees Subtotal Total	For the three months ended March 31,	For the three months ended March 31,
	2023 $ 15,676 9,635 2,585 1,619 685 487 115,505 61,885 6,312 27,060 46,108 776,878 46,156 18,505 577 175,257 47,615 1,352,545 8,225 42,574 338 360 29,088 2,128 1,233 14,355 5,677 6,510 110,488 $ 1,242,057	2022
		15,792 11,773 3,446 2,366 277 361 189,085 61,558 10,873 28,929 25,007 368,727 52,891 21,819 500 176,441 277,295
		1,247,140
		7,174 43,681 166 423 16,300 2,386 1,407 15,708 1,130 5,673
		94,048
		1,153,092

(Continued)

55

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

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

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

For the three months ended March 31, 2023 2022 $ - (5,636) 3,137 (3,948) 232,289 24,012 (46,489) 12,847 1,995 709 (196) (1,962) (18,399) (7,435) 518,132 (254,681) 690,469 (236,094) - 6,437 57,882 15,543 (17,017) (60) - (7,335) 345 (2,130) 878,089 53,076 919,299 65,531 1,353 1,092 164,985 41,838 $ 1,776,106 (127,633)

2023 $ - 3,137 232,289 (46,489) 1,995 (196) (18,399) 518,132 690,469 - 57,882 (17,017) - 345 878,089 919,299 1,353 164,985 $ 1,776,106

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

Gain on disposal of government bonds Gain on disposal of corporate bonds Loss on disposal of financial debentures Dividend revenue Total	For the three months ended March 31, 2023 2022 $ - 479 93 244 - (103) 17,413 27,856 $ 17,506 28,476
	2023 $ - 93 - 17,413 $ 17,506

(Continued)

56

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

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

Investment in debt instrument measured at fair value through other comprehensive income Investment in debt instrument measured at amortized cost Total	For the three months ended March 31, 2023 2022 $ (3,534) (4,575) (4,401) (205) $ (7,935) (4,780)
	2023 $ (3,534) (4,401) $ (7,935)

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

Investment income - Media Talk Consulting Co., Ltd.	For the three months	ended March 31,
	2023 $ (336)	2022
		-

• (aj) Net other revenue other than interest income

Rental revenue of operating assets Loss on disposal and retirement of property and equipment Loss of account error Gold deposit book Other operating expense Other miscellaneous income Total	For the three months ended March 31, 2023 2022 $ 2,396 2,040 (250) (51) (23) (41) 329 890 (10,154) (10,125) 14,934 63,432 $ 7,232 56,145
	2023 $ 2,396 (250) (23) 329 (10,154) 14,934 $ 7,232

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

Discounted and loans Call loans to banks Receivables and other financial assets Subtotal Provisions for guarantee liabilities Provisions for loan commitments Total	For the three months ended March 31, 2023 2022 $ 207,768 265,968 (1,758) (5,624) 12,172 (8,785) 218,182 251,559 19,645 (3,429) 529 7,130 $ 238,356 255,260
	2023 $ 207,768 (1,758) 12,172 218,182 19,645 529 $ 238,356

(Continued)

57

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

(al) Employee benefits expenses

Salary expense Labor and health insurance Pension expense Directors' remuneration Other employee benefits Total	For the three months ended March 31,	For the three months ended March 31,
	2023 $ 1,763,396 137,520 86,718 22,686 176,658 $ 2,186,978	2022
		1,705,377 129,851 84,875 16,283 169,421
		2,105,807

(am) Depreciation and amortization expense

Depreciation Property and equipment Right-of-use assets Amortization Computer software Other deferred charges Total	For the three months ended March 31,	For the three months ended March 31,
	2023 $ 135,698 111,697 66,663 4 $ 314,062	2022
		155,357 102,235 58,123 4
		315,719

(Continued)

58

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

(an) Other general and administrative expense

Compensation loss Utilities fee Postage and telecommunication fee Transportation fee Printing and advertisement fee Repair and maintenance fee Insurance fee Professional service fee Materials and supplies Rental expenses Duties and levies Membership, donation and partaking Storage, packing and processing fee Cash transit fee Others Total	For the three months ended March 31,	For the three months ended March 31,
	2023 $ 134 17,292 63,724 5,963 57,166 77,257 112,480 54,877 40,636 8,972 478,850 164,778 11,028 16,923 15,390 $ 1,125,470	2022
		4 16,879 60,508 5,299 48,123 91,854 95,458 53,209 26,066 7,909 342,967 152,674 11,770 18,148 16,039
		946,907

(ao) Financial Instruments

(i) Fair value information

1) General description

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

The financial instruments are record as fair value when original recognizing, usually refer to the transaction price in many circumstances. Except some amortized cost financial instruments, the financial instruments are measured in fair value. A quoted market price in an active market provides the most reliable evidence of fair value. If financial instruments are without active market, the Bank and subsidiaries adopted the value technique, refer to Bloomberg, Reuters or the price at which the asset could be bought or sold in a current transaction between willing parties.

(Continued)

59

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

• 2) The definition of fair value hierarchy

• a) Level 1

The input of this level is quoted prices in active markets for identical financial instruments. The active market is a market in which transactions for the homogenous assets or liabilities take place with sufficient frequency and volume to provide pricing information. The stock of listed company and the beneficiary certificates, government bonds and the derivative financial instruments with public quote inactive market processed by the Bank and subsidiaries belong to Level 1.

b) Level 2

The input of this level is other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). The investments with lower trade volume such as government bonds, corporate bonds, financial debentures, convertible corporate bonds and derivative instruments, including financial debentures the Bank and subsidiaries issued are belong to Level 2.

c) Level 3

The input is unobservable for the asset or liability in market or counterparty prices. Unobservable inputs like: Option pricing model using the historical volatility. Because the historical volatility cannot represent the future volatility expected value of whole market participants. The input parameter used to measure the fair value of this level is not based on data that can be obtained in the market but using a combination of complex market prices to estimate their values. The assets have been categorized as a Level 3, due to their fair market value cannot be directly calculated. The equity instruments with no active market which the Bank and subsidiaries invested are Level 3.

(Continued)

60

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

• 3) Based on fair value measurement

• a) The fair value hierarchy of information

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

Assets and Liabilities		March 31, 2023	March 31, 2023
	Total $ 1,429,652 200,000 55,620,329 20,874,527 158,864,813 729,031 9,177,983 1,452,910 326,453	Level 1 1,031,474 - 323,123 15,384,683 92,485,401 143,390 - 26,846 -	Level 2 Level 3 - 398,178 200,000 - 55,113,443 183,763 - 5,489,844 66,379,412 - 585,641 - 9,177,983 - 1,426,064 - 326,453 -
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

(Continued)

61

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

Assets and Liabilities		December 31, 2022	December 31, 2022
		Level 1 752,713 - 250,691 12,676,936 91,536,068 145,782 - 26,860 -	Level 2 Level 3 - 471,554 200,000 - 30,907,810 163,679 - 5,337,461 50,304,163 - - - 9,367,595 - 1,139,807 - 557,930 -
Instruments measured at fair value on a recurring basis
Non-derivative financial assets and liabilities:

(Continued)

62

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

Assets and Liabilities		March 31, 2022	March 31, 2022
		Level 1 549,124 285,710 206,224 19,276,507 92,956,884 148,587 - 28,745 -	Level 2 Level 3 - 277,156 200,000 - 38,267,622 137,007 - 5,222,611 50,738,259 - - - 8,482,025 - 347,451 - 219,634 -
Instruments measured at fair value on a recurring basis
Non-derivative financial assets and liabilities:

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

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

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

(Continued)

63

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

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

The financial asset's fair value is estimated on the basis of the result of a valuation technique, the Bank and subsidiaries adopted that refers to quoted prices provided by financial institutions. Ask (bid) is used to evaluate the selling (buying) position by the Bank and subsidiaries if the quoted price include ask and bid price. If there is not a quoted price for the financial asset, transaction price close to the balance sheet date is the fair value.

Fair value of financial derivatives is the amount of cash to be paid or to be received by the Bank and subsidiaries, assuming that the contract will be terminated on the balance sheet date. The Bank and subsidiaries adopts mark-to-model prices which are usually adopted among the banking industry, such as Discounted-Cash-Flow model and Black-Scholes model. The Bank and subsidiaries adopts the price data from Reuters and Bloomberg to calculate the fair value of the holding position. The aforesaid price data is based upon the middle price and used consistently by the Bank. Furthermore, the fair value of the embedded financial derivatives is calculated based upon the quote from the counterparty, and separately calculated in accordance with the contracts.

• c) Adjustment for fair value

• i) The restraint of evaluation model and uncertain inputs

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

ii) Credit risk value adjustment

The Bank and subsidiaries’ credit risk value adjustment of OTC transaction derivative instruments can be divided to Credit value adjustments (CVA) and debit value adjustments (DVA). To reflect the fair value of the counterparty or the default, and the Bank and subsidiaries may not be received or paid full market value of trading possibilities.

(Continued)

64

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

The Bank and subsidiaries would calculate credit valuation adjustment (CVA) by assessing probability of default (PD) and loss given default (LGD) of the counterparty before multiplying exposure at default (EAD) of the counterparty. On the contrary, debit valuation adjustment (DVA).

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

• d) Transfers between Level 1 and Level 2

There were no transfers between Level 1 and 2 for the three months ended March 31, 2023 and 2022.

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

Changes of financial assets categorized in Level 3 :

Name		For t	For t	he three months	ended March 31,	2023
	Beginning balance	Valuation profit and loss		Incr	ease	Decr	ease Transfer out from Level 3 Ending balance - 581,941 - 5,489,844
		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 Name	$ 635,233 5,337,461	(45,155) -	- 152,383 For t	21,750 - he three months	- - ended March 31,	29,887 - 2022
	Beginning balance	Valuation profit and loss		Incr	ease	Decr	ease Transfer out from Level 3 (Note) Ending balance 29,484 414,163 - 5,222,611
		Recognized in profit or loss	Recognized in other comprehensive income	Purchase or issue	Transfer into Level 3	Sale Disposition or Settlement
Financial assets at fair value through profit or loss Investments in equity instruments measured at fair value through other comprehensive income	$ 508,481 4,974,579	10,886 -	- 248,032	18,536 -	- -	94,256 -

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

(Continued)

65

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

• f) Profit and loss information of Level 3

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

Recognized on profit and loss (reported as unrealized gain (loss) from investments instruments measured at fair value through profit and loss) Recognized on other comprehensive income (reported as unrealized gain (loss) from investments instruments measured at fair value through other comprehensive income)	For the three months ended March 31,
	2023 2022 $ (72,102) 10,886 152,383 248,032

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

The Bank and subsidiaries’ financial instruments that use Level 3 inputs to measure fair value include financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. Without active market quotation, the Bank and subsidiaries takes professional financial information vendors and widely used by market participants for evaluation or counterparty quotation as reference. The unobservable inputs are as follows :

Financial asset at fair value through profit or loss Private fund Unlisted stocks Financial assets at fair value through other comprehensive income Unlisted stocks			March 31, 2023
	fair value $ 183,763 398,178 5,489,844	valuation methods assets approach market approach market approach assets approach income approach income approach	significant unobservable inputs liquidity discount liquidity discount liquidity discount sustainable growth rate cost of equity	range inter-relationship between significant unobservable inputs and fair value measurement 0.00%~10.00% The higher market liquidity discount, the lower fair value. 0.00%~36.89% The higher market liquidity discount, the lower fair value. 8.68%~28.98% The higher market liquidity discount, the lower fair value. 0.00%~1.55% The higher sustainable growth rate, the higher fair value. 10.77%~12.49% The higher rate of cost of equity, the lower fair value.

(Continued)

66

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

Financial assets at fair value through profit or loss Private fund Unlisted stocks Financial assets at fair value through other comprehensive income Unlisted stocks Financial assets at fair value through profit or loss Private fund Unlisted stocks Financial assets at fair value through other comprehensive income Unlisted stocks			December 31, 2022
	fair value $ 163,679 471,554 5,337,461	valuation methods assets approach market approach market approach assets approach income approach income approach	significant unobservable inputs liquidity discount liquidity discount liquidity discount sustainable growth rate cost of equity March 31, 2022	range inter-relationship between significant unobservable inputs and fair value measurement 0.00%~10.00% The higher market liquidity discount, the lower fair value. 0.00%~36.67% The higher market liquidity discount, the lower fair value. 8.62%~29.95% The higher market liquidity discount, the lower fair value. 0.00%~1.55% The higher sustainable growth rate, the higher fair value. 10.96%~12.68% The higher rate of cost of equity, the lower fair value.
	fair value $ 137,007 277,156 5,222,611	valuation methods assets approach market approach market approach assets approach income approach income approach	significant unobservable inputs liquidity discount liquidity discount liquidity discount sustainable growth rate cost of equity	range inter-relationship between significant unobservable inputs and fair value measurement 0.00%~10.00% The higher market liquidity discount, the lower fair value. 0.00%~39.63% The higher market liquidity discount, the lower fair value. 8.67%~34.52% The higher market liquidity discount, the lower fair value. 0.00%~1.48% The higher sustainable growth rate, the higher fair value. 10.50%~12.30% The higher rate of cost of equity, the lower fair value.

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

Valuation techniques used by the Bank and subsidiaries for fair value measurements of financial instruments are appropriate. However, the use of different valuation models or inputs could lead to different outcomes of fair value measurements. The following are the impact on the other comprehensive profit and loss if using different assumptions:

(Continued)

67

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

i) Assets approach/ Market approach

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

March 31, 2023 Financial assets at fair value through profit or loss Unlisted stocks and private fund Financial assets at fair value through other comprehensive income Unlisted stocks December 31, 2022 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 March 31, 2022 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%) $ 34,807 (34,807) 318,414 (318,414) the effects to the net income and other comprehensive income Favorable changes (-5%) Unfavorable changes (5%) $ 36,225 (36,225) 309,605 (309,605) the effects to the net income and other comprehensive income Favorable changes (-5%) Unfavorable changes (5%) $ 31,520 (31,520) 304,494 (304,494)

(Continued)

68

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

ii) Income approach

Adopting the income approach to evaluate Level 3 financial instruments of the Bank and subsidiaries. The evaluation parameters are divided into sustainable growth rate and cost of equity capital. The effects of the two evaluation parameters on the other comprehensive profit and loss are as follows:

1. sustainable growth rate

March 31, 2023 Financial assets at fair value through other comprehensive income Unlisted stocks December 31, 2022 Financial assets at fair value through other comprehensive income Unlisted stocks March 31, 2022 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%) $ 3,104 (2,910) the effects to other comprehensive income Favorable changes (0.3%) Unfavorable changes (-0.3%) $ 2,975 (2,781) the effects to other comprehensive income Favorable changes (0.3%) Unfavorable changes (-0.3%) $ 3,234 (3,040)

(Continued)

69

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

2. cost of equity

the effects to other comprehensive income

March 31, 2023 Financial assets at fair value through other comprehensive income Unlisted stocks December 31, 2022 Financial assets at fair value through other comprehensive income Unlisted stocks March 31, 2022 Financial assets at fair value through other comprehensive income Unlisted stocks	Favorable changes (-3%) Unfavorable changes (3%) $ 64,542 (31,372) the effects to other comprehensive income Favorable changes (-3%) Unfavorable changes (3%) $ 61,250 (30,146) the effects to other comprehensive income Favorable changes (-3%) Unfavorable changes (3%) $ 68,362 (32,604)

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

• 4) Not based on fair value measurement

• a) Fair value information

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

(Continued)

70

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

Debt instruments measured at amortized cost Debt instruments measured at amortized cost Debt instruments measured at amortized cost	March 31, 2023	March 31, 2023
	Book value Fair value $ 252,444,976 252,484,119 December 31, 2022	Fair value
	Book value Fair value $ 236,774,247 236,657,427 March 31, 2022	Fair value
	Book value $ 282,491,269	Fair value
		282,947,599

• b) The fair value hierarchy of information

Assets and Liabilities		March 31, 2023	March 31, 2023
	Total $ 252,484,119	Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) 37,981,679 214,502,440 - December 31, 2022
Debt instruments measured at amortized cost Assets and Liabilities
	Total $ 236,657,427	Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) 31,336,817 205,320,610 - March 31, 2022
Debt instruments measured at amortized cost Assets and Liabilities
	Total $ 282,947,599	Quoted prices in active markets for identical assets (Level 1) 32,050,352	Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) 250,897,247 -
Debt instruments measured at amortized cost

• c) Valuation techniques

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

• i) Cash and cash equivalents, due from Central Bank and call loans to banks, securities purchased under resell agreements, receivables, overdue receivables, exchange bills negotiated guarantee deposits paid, temporary payments and suspense accounts, proceeds of settlement and credit transaction, deposits from Central Bank and other banks, securities sold under repurchase agreements, payables, other financial liabilities, guarantee deposits received and temporary receipts and suspense accounts: since these instruments have short maturities, the book value is adopted as a reasonable basis in estimating the fair value.

(Continued)

71

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

     - ii) Discounts and loans (including non-performing loans): the interest rate of bank loans, dependent on the benchmark interest rate which plus or minus the input value (i.e. motorized interest rate), said market rates, therefore, the book value of financial assets is equivalent to their fair value. Among the case of fixed interest rate, the estimated fair value of long-term loans using the discounted value of its expected cash flows, but this is minority, so the book value of financial assets is equivalent to their fair value.

     - iii) Investment in debt instruments at amortized cost: the quoted price is regarded as its fair value. If there is no quoted price in an active market for the financial asset, its fair value is estimated on the basis of the result of a valuation technique.

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

        2. Corporate bonds and bank debentures (NTD): the present value or fair price of Taipei Exchange determined using the future cash flow of yield curve discounting evaluation.

  - d) Deposits and remittance: to determine the fair value, considered Banking industry characteristics, the market interest rates (i.e. market price) is the fair value. And deposits are mostly due within one year, the carrying amounts is the fair value of reasonable basis. The fixed interest rate of long-term deposits should be estimated by the discounted value of its expected cash flows at fair value, and its maturity date no longer than three years, so its estimated fair value of the carrying amount is considered reasonable.

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

• (ap) Financial Risk Information

• (i) General description

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

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

(Continued)

72

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

• (ii) Risk management organization structure

• 1) Risk Management Committee

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

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

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

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

• d) Supervise the Bank and subsidiaries’ capital adequacy management.

• e) Conduct or supervise the issues that have to report to Risk Management Committee according to the regulations drawn by the competent authority at home and abroad.

• f) Conduct or supervise other risk management related issues.

Risk Management Department is the assistant unit of the Risk Management Committee. The responsibility of the Risk Management Department is to execute preparing sittings agenda, convening sittings, agenda processing, taking meeting minutes and tracking resolution and regularly report the important resolution and various risk exposure to the board of (executive) directors.

• 2)

• Assets and Liabilities Management Committee

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

(Continued)

73

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

3) Credit Examination Committee

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

4) Overdue Loans Clearing Committee

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

• 5) Cyber Security Management Committee

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

• (iii) Credit risk

• 1) Source and definition of credit risk

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

• 2) Credit risk management policy

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

• a) Fully understand the credit status and ratings of loan customers and trade counterparties as well as the purposes and payments of loans.

• b) Prudently evaluates the credit risk status of loan customers and trade counterparties and consider the adequacy of collaterals and guarantees to assess risk and profit.

• c) Establish credit rating mechanism for loan customers or apply the ratings from outside credit rating institutions as the reference for undertaking credit cases or interest rate determination.

• d) Modify relevant regulations to control the credit risk to a tolerable extent for the Bank.

(Continued)

74

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

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

• a) Credit Business (Including loan commitments and guarantees)

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

i) Categorization of credit assets

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

ii) Categorization of credit quality

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

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

• b) Due from other banks and call loans to banks

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

c) Debt instrument investments and derivative financial instruments

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

(Continued)

75

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

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

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

At each reporting date, the Bank and subsidiaries shall assess the change in the risk of a default occurring over the expected life of the various credit assets and financial assets to determine whether the credit risk has increased significantly since initial recognition. To make that assessment, the Bank and subsidiaries considers reasonable and supportable information (including forward-looking information) that is indicative of significant increases in credit risk since initial recognition. The main considerations include:

• a) credit assets

• i) The borrowers failed to pay the principal and interest overdue for more than 30 days, less than 90 days;

• ii) When the Bank and subsidiaries conduct review or follow-up review of the relevant management procedures after loan, it knows that the financial report of the borrowers have been issued by the accountant and it has issued opinions of the significant doubt on the ability to continue as a going concern;

• iii) The deposits and assets of borrowers are compulsorily executed, besides, the deposits are compulsorily executed because of tax arrears. However, the borrowers that have enough deposit to bear the cost that assessed by the Bank and subsidiaries is except;

• iv) The bank knows (if it has received the notice from court) that the collaterals are compulsory executed by other banks;

• v) Borrowers were notified the refund by the Bank and did not conduct refund notice;

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

• vii) Because the borrowers have been involved in litigation and unfavorable judgments, their ability of credit performance is affected;

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

(Continued)

76

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

• b) Debt instrument investments

  • i) The latest credit rating on the report date was non-investment grade and fell more than two levels than the original rating, or;

  • ii) Investment target evaluation loss is up to 30% of investment cost.

• 4) The credit risk has not increased significantly or judged as low credit risk on the report date

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

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

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

• a) Credit assets

• i) Significant financial difficulty of the issuer or the borrower;

• ii) A breach of contract, such as a default or past due event ;

• iii) The lender(s) of the borrower, for economic or contractual reasons relating to the borrower’ s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;

• iv) It is becoming probable that the borrower will enter bankruptcy or other financial reorganization;

• v) The disappearance of an active market for that financial asset because of financial difficulties;

• vi) The purchase or origination of a financial asset at a considerable amount of discount that reflects the incurred credit losses;

(Continued)

77

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

• b) Debt instrument investments

  • i) Significant financial difficulty of the issuer;

  • ii) The disappearance of an active market for that financial asset because of financial difficulties;

  • iii) The purchase or origination of a financial asset at a considerable amount of discount that reflects the incurred credit losses.

  • iv) Counterparty defaulting on agreement of other financial instruments (e.g. transactions settlement failure, a bank decide to execute early termination of transactions, or loans originated from derivatives settlement failure).

• 6) Write-off policy

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

The following are indicators that the financial assets are uncollectible:

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

• 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.

(Continued)

78

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

• 7) Modification of contractual cash flow of financial assets

The Bank and subsidiaries may revise the contractual cash flow of the credit asset due to the borrower's financial difficulties in negotiating, increasing the recovery rate of the borrowers that have problems, or maintaining the customer relationship. The modification of the contractual terms of the credit asset may include extending the contract period, modifying the payment time of interest, and modifying agreement rate and so on. If the contractual cash flow modification of the credit asset is due to the financial difficulty of the borrower, it is deemed as an impairment of the financial asset. If the contractual cash flow modification is not due to the financial difficulties of the borrower, the existing or projected unfavorable changes in the operating, financial or economic conditions under the borrower's performance or the borrower's ability to make the borrower's ability to perform its debt obligations vary significantly. The cause of anomalies or other bad debts is supplemented by an assessment of whether the credit risk of financial assets has increased significantly.

• 8) Measuring the expected credit losses

• a) Adoption of methods and assumptions

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

(Continued)

79

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

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

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

If the credit risk on a credit asset has not increased significantly since initial recognition or the credit asset has low credit risk at the reporting date, the Bank and subsidiaries shall measure the allowance for impairment using the 12-month expected credit losses; if the credit risk on a financial instrument has increased significantly or credit-impaired since initial recognition, the Bank and subsidiaries shall measure the allowance for impairment using the lifetime expected credit losses.

In order to measure expected credit losses, the Bank and subsidiaries considers the default probability (Probability of default, "PD") of borrowers, and loss given default rate ("LGD") multiplying the exposure at default (“ EAD” ), taking into account the time value of money as well evaluate 12-month and lifetime loss.

(Continued)

80

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

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

The Bank and subsidiaries measures the EAD based on the book value of loans at reporting date. When estimating the 12-month and lifetime expected credit losses of the loan commitments and financial guarantee contracts, the definition of the credit risk increasing significantly and the credit-impaired assets are based on the rules mentioned above. Additionally, in order to determine the EAD used to calculate expected credit loss of off-balance sheet items, the Bank and subsidiaries adopts the credit conversion factor (CCF) of standardized approach in credit risk which is legislated in the regulation of Proprietary Capital and Risk Capital of Banks.

b) Consideration of forward-looking information

The Bank and subsidiaries obtains forward-looking information which it takes into consideration when determining whether the credit risk of financial instruments has increased significantly since initial recognition and assessing the expected credit losses. The Bank and subsidiaries identified the relevant macroeconomic factors for credit risk of each portfolio by analyzing the historically data. These macroeconomic factors include Taiwan GDP (not seasonally adjusted), Taiwan's actual industrial production index, Taiwan's annual growth rate of retail sales, Taiwan's real sales price index, unemployment rate (seasonally adjusted), Cathay National Real Estate Index (national), Taiwan's real consumer price index (Not seasonally adjusted) and Taiwan's annual growth in retail sales or other factors. The various economic factors and their impacts on Probability of Default (“PD”) are different depending on the type of financial instruments.

In order to determine the credit risk of investment in debt instruments at amortized cost and at fair value through other comprehensive income has increased significantly, the Bank and subsidiaries uses the changes of external ratings published by international credit rating agencies as the quantitative indicators, while the assessment of expected credit losses are calculated by using the external ratings, as well as PD and Loss Given Default (“LGD”), published by Moody’s. Since the international credit rating agencies have already considered the forwardlooking information while evaluating the credit ratings, which the Bank and subsidiaries considered to be appropriate after its assessment, the credit ratings will be included in the Bank and subsidiaries’ assessment of related expected credit losses.

(Continued)

81

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

• 9) Credit risk hedging or diminishing.

• a) Collaterals

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

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

• i) In order to avoid the situation that the credit risk of single customer being too high, the credit limit of an individual, a related party or a related enterprise shall be in conformity with “Authorization method for subsection 3 of Article 33 of the Banking Act of the Republic of China” and the credit limit authorization steps are regulated in the Key Points of Credit Engagement Authorization and the Key Points of Credit Engagement Authorization for Overseas Branches of the Bank.

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

• c) General agreement of net amount settlement

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

(Continued)

82

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

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 has been credit derogated and the collateral for mitigating potential losses are as follows:

March 31, 2023 Impairment financial assets： Receivables Accounts receivables Interest receivable Discounts and loans Overdue receivable Total impairment financial assets December 31, 2022 Impairment financial assets： Receivables Accounts receivables Interest receivable Discounts and loans Overdue receivable Total impairment financial assets	Carrying amount $ 91,932 40,712 19,434,957 23,487 $ 19,591,088 Carrying amount $ 75,222 42,578 20,309,083 58,786 $ 20,485,669	Allowance impairment 23,931 9,241 4,344,768 13,178 4,391,118 Allowance impairment 10,034 7,050 4,784,155 15,898 4,817,137	Exposure (measured at amortized cost) 68,001 31,471 15,090,189 10,309 15,199,970 Exposure (measured at amortized cost) 65,188 35,528 15,524,928 42,888 15,668,532	Value of collateral
				91,932 - 23,131,622 -
				23,223,554
				Value of collateral
				73,243 - 22,707,890 -
				22,781,133

(Continued)

83

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

March 31, 2022 Impairment financial assets： Receivables Acceptances receivables Interest receivable Discounts and loans Overdue receivable Total impairment financial assets	Carrying amount $ 58,865 32,358 19,611,553 81,817 $ 19,784,593	Allowance impairment 23,835 6,622 3,464,329 25,484 3,520,270	Exposure (measured at amortized cost) 35,030 25,736 16,147,224 56,333 16,264,323	Value of collateral 58,865 - 20,670,638 - 20,729,503

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	March 31, 2	023 % % 63.49 % 0.46 % 4.02 % 0.20 % 24.96 % 0.55 % 6.19 % 0.13 % 100.00	December 31	, 2022 % % 63.09 % 0.45 % 4.98 % 0.21 % 24.40 % 0.49 % 6.14 % 0.24 % 100.00	**March 31, **	2022
	Amount $ 892,036,174 6,415,252 56,543,516 2,781,815 350,627,569 7,688,023 87,005,410 1,902,485 $ 1,405,000,244		Amount 894,970,270 6,415,252 70,682,095 2,919,516 346,079,715 6,899,993 87,153,772 3,372,838 1,418,493,451		Amount 840,483,438 4,330,091 72,744,462 2,917,343 318,525,037 3,762,414 78,697,035 3,131,354 1,324,591,174	% % 63.45 % 0.33 % 5.49 % 0.22 % 24.05 % 0.28 % 5.94 % 0.24 % 100.00
Private business Public business Government institution Nonprofit organization Individual Foreign financial institution Foreign non-financial institution Foreign individual Total

• b) By geographic area

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

Area	March 31, 2	023 % % 93.12 % 6.88 % 100.00	December 31	, 2022 % % 93.13 % 6.87 % 100.00	March 31,	2022
	Amount $ 1,308,404,326 96,595,918 $ 1,405,000,244		Amount 1,321,066,848 97,426,603 1,418,493,451		Amount 1,239,000,371 85,590,803 1,324,591,174	% % 93.54 % 6.46 % 100.00
Domestic Foreign Total

(Continued)

84

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

• c) By collateral

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

Collateral	March 31, 2	023 % % 18.03 % 0.61 % 1.68 % 63.06 % 1.07 % 0.15 % 14.71 % 0.69 % 100.00	December 31	, 2022 % % 19.16 % 0.63 % 1.63 % 61.93 % 1.12 % 0.17 % 14.71 % 0.65 % 100.00	March 31, 2	022
	Amount $ 253,395,332 8,539,205 23,617,680 886,011,375 15,001,906 2,178,604 206,609,483 9,646,659 $ 1,405,000,244		Amount 271,796,900 8,846,336 23,134,859 878,535,410 15,849,874 2,414,280 208,721,552 9,194,240 1,418,493,451		Amount 244,083,271 9,253,162 23,539,258 808,728,534 15,263,025 2,610,068 210,994,567 10,119,289 1,324,591,174	% % 18.43 % 0.70 % 1.78 % 61.05 % 1.15 % 0.20 % 15.93 % 0.76 % 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	Maximum credit risk exposure	Maximum credit risk exposure	Maximum credit risk exposure
	March 31, 2023 $ 66,866,962 18,153,397 8,790,053 24,394,937 $ 118,205,349	December 31, 2022 64,987,007 18,839,955 8,129,149 22,056,496 114,012,607	March 31, 2022
Issued and irrevocable loan commitments Irrevocable credit card loan commitments Letters of credit issued yet unused Various guarantee proceeds Total			45,936,973 19,467,148 11,682,869 24,091,106
			101,178,096

The Management of the Bank and subsidiaries evaluated the credit risk exposure and believed that it is able to continuously control and minimize the off-balance sheet credit risk exposure due to its strict appraisal process and regular subsequent examination.

(Continued)

85

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

b) The credit quality analyses of the financial assets i) Credit quality analysis of discounts and loans, receivables, guarantee and commitments

March 31, 2023	12-month ECL	12-month ECL	12-month ECL	12-month ECL	12-month ECL	12-month ECL	12-month ECL		Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－ 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	$ 398,374	218,024	188,171	45	3,904	205,884	1,014,402	1,080	1,721	1,334	-	487	54	4,676	-	568	1,018,510
Acceptances receivable	585,875	258,083	93,341	1,479	-	39,049	977,827	-	-	-	-	-	-	-	-	9,778	968,049
Other receivables	432,899	2,106,408	516,131	36,592	27,860	3,560,649	6,680,539	464	1,045	2,171	596	2,023	126,964	133,263	132,644	110,326	6,836,120
Discounts and loans
Private banking	134,352,519	133,810,195	69,437,818	3,388,357	953,505	5,811,963	347,754,357	43,975	152,910	259,753	27,384	124,035	15,232	623,289	4,152,408	4,090,931	348,439,123
Corporate banking	261,990,883	353,322,157	265,993,944	27,940,226	17,362,992	108,006,196	1,034,616,398	335,778	402,562	567,512	313,537	529,643	422,211	2,571,243	15,282,549	13,052,825	1,039,417,365
Other financial assets
Overdue receivable	-	-	-	-	-	-	-	-	-	-	-	-	-	-	23,487	13,811	9,676
Total	$ 397,760,550	489,714,867	336,229,405	31,366,699	18,348,261	117,623,741	1,391,043,523	381,297	558,238	830,770	341,517	656,188	564,461	3,332,471	19,591,088	17,278,239	1,396,688,843
Guarantee and commitments	$ 28,531,684	14,601,791	6,526,041	233,214	46,764	67,789,205	117,728,699	96,868	241,802	1,173	-	727	1	340,571	136,079	357,187	117,848,162
December 31, 2022	12-month ECL								Lifetime ECL－not impaired						Lifetime ECL－ impaired
	Excellent	Good	Medium	Acceptable	Under standard	No rating	Subtotal	Excellent	Good	Medium	Acceptable	Under standard	No rating	Subtotal	High risk	Allowance impairment	Total
Receivable
Credit card	$ 426,421	227,850	196,313	79	4,913	238,053	1,093,629	1,688	1,452	1,618	-	326	20	5,104	-	569	1,098,164
Acceptances receivable	375,279	232,317	119,969	25,670	-	38,049	791,284	-	-	-	-	-	-	-	-	7,913	783,371
Other receivables	401,011	1,898,488	493,641	35,741	24,719	3,526,312	6,379,912	408	945	1,952	897	2,387	149,816	156,405	117,800	95,560	6,558,557
Discounts and loans
Private banking	130,698,330	132,157,479	70,280,524	3,199,945	1,062,127	6,962,188	344,360,593	56,031	137,190	252,638	22,912	111,432	36,101	616,304	4,475,656	4,181,307	345,271,246
Corporate banking	245,799,786	365,067,368	272,870,989	26,218,577	15,363,104	125,044,694	1,050,364,518	288,453	355,127	556,056	930,623	562,350	150,344	2,842,953	15,833,427	13,897,309	1,055,143,589
Other financial assets
Overdue receivable	-	-	-	-	-	-	-	-	-	-	-	-	-	-	58,786	48,471	10,315
Total	$ 377,700,827	499,583,502	343,961,436	29,480,012	16,454,863	135,809,296	1,402,989,936	346,580	494,714	812,264	954,432	676,495	336,281	3,620,766	20,485,669	18,231,129	1,408,865,242
Guarantee and commitments	$ 26,669,887	15,125,762	5,916,207	174,424	45,746	65,833,294	113,765,320	43,098	11,091	421	-	98	-	54,708	192,579	337,312	113,675,295
March 31, 2022	12-month ECL								Lifetime ECL－not impaired						Lifetime ECL－ impaired
	Excellent	Good	Medium	Acceptable	Under standard	No rating	Subtotal	Excellent	Good	Medium	Acceptable	Under standard	No rating	Subtotal	High risk	Allowance impairment	Total
Receivable
Credit card	$ 344,257	192,240	213,476	247	8,009	183,282	941,511	428	1,392	1,470	-	1,218	44	4,552	-	1,551	944,512
Acceptances receivable	331,119	461,469	273,330	4,508	-	84,280	1,154,706	-	-	-	-	-	-	-	-	11,547	1,143,159
Other receivables	236,992	1,650,485	386,197	32,578	24,802	2,515,866	4,846,920	99	517	3,422	1,742	1,572	202,749	210,101	91,223	103,283	5,044,961
Discounts and loans
Private banking	117,094,545	117,289,120	68,226,878	3,549,358	1,537,573	8,748,175	316,445,649	41,213	105,467	229,880	105,747	152,684	22,045	657,036	4,553,706	3,627,896	318,028,495
Corporate banking	188,111,309	320,263,219	295,293,191	32,653,371	18,497,450	129,060,511	983,879,051	78,630	364,009	1,635,055	698,431	778,058	443,702	3,997,885	15,057,847	12,435,105	990,499,678
Other financial assets
Overdue receivable	-	-	-	-	-	-	-	-	-	-	-	-	-	-	81,817	51,301	30,516
Total	$ 306,118,222	439,856,533	364,393,072	36,240,062	20,067,834	140,592,114	1,307,267,837	120,370	471,385	1,869,827	805,920	933,532	668,540	4,869,574	19,784,593	16,230,683	1,315,691,321
Guarantee and commitments	$ 27,220,076	19,406,934	6,784,345	720,535	98,392	46,885,328	101,115,610	41,304	2,665	2,848	-	343	-	47,160	15,326	333,822	100,844,274

(Continued)

86

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

ii) Debt instruments

March 31, 2023	12-month ECL	12-month ECL	12-month ECL	12-month ECL	12-month ECL		Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－not impaired	Lifetime ECL－ 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	$ 66,965,054	-	-	-	66,965,054	-	-	-	-	-	-	66,965,054	19,040
NT bonds	92,485,400	-	-	-	92,485,400	-	-	-	-	-	-	92,485,400	75,185
Investment in debt instruments at amortized cost
Overseas bonds	14,111,895	-	-	-	14,111,895	-	-	-	-	-	-	14,111,895	2,457
NT bonds	31,928,400	-	-	-	31,928,400	-	-	-	-	-	-	31,928,400	15,811
Certificates of deposit with the Central Bank	206,420,000	-	-	-	206,420,000	-	-	-	-	-	-	206,420,000	60,959
Negotiable certificates of deposit	63,924	-	-	-	63,924	-	-	-	-	-	-	63,924	16
Total	$ 411,974,673	-	-	-	411,974,673	-	-	-	-	-	-	411,974,673	173,468
December 31, 2022	12-month ECL						Lifetime ECL－not impaired				Lifetime ECL－ impaired
	Investment	Sub investment	High risk	No rating	Subtotal	Investment	Sub investment	High risk	No rating	Subtotal	High risk	Total	Accumulated impairment(Note)
Investment in debt instruments measured at fair value through other comprehensive income
Overseas bonds	$ 50,304,163	-	-	-	50,304,163	-	-	-	-	-	-	50,304,163	15,793
NT bonds	91,536,068	-	-	-	91,536,068	-	-	-	-	-	-	91,536,068	75,059
Investment in debt instruments at amortized cost
Overseas bonds	10,420,185	-	-	-	10,420,185	-	-	-	-	-	-	10,420,185	3,247
NT bonds	30,769,411	-	-	-	30,769,411	-	-	-	-	-	-	30,769,411	13,846
Certificates of deposit with the Central Bank	195,595,000	-	-	-	195,595,000	-	-	-	-	-	-	195,595,000	57,763
Negotiable certificates of deposit	64,523	-	-	-	64,523	-	-	-	-	-	-	64,523	16
Total	$ 378,689,350	-	-	-	378,689,350	-	-	-	-	-	-	378,689,350	165,724
March 31, 2022	12-month ECL						Lifetime ECL－not impaired				Lifetime ECL－ impaired
	Investment	Sub investment	High risk	No rating	Subtotal	Investment	Sub investment	High risk	No rating	Subtotal	High risk	Total	Accumulated impairment(Note)
Investment in debt instruments measured at fair value through other comprehensive income
Overseas bonds	$ 50,738,260	-	-	-	50,738,260	-	-	-	-	-	-	50,738,260	16,200
NT bonds	92,956,883	-	-	-	92,956,883	-	-	-	-	-	-	92,956,883	76,618
Investment in debt instruments at amortized cost
Overseas bonds	14,599,022	-	-	-	14,599,022	-	-	-	-	-	-	14,599,022	5,202
NT bonds	31,725,108	-	-	-	31,725,108	-	-	-	-	-	-	31,725,108	12,910
Certificates of deposit with the Central Bank	236,195,000	-	-	-	236,195,000	-	-	-	-	-	-	236,195,000	69,752
Negotiable certificates of deposit	60,018	-	-	-	60,018	-	-	-	-	-	-	60,018	15
Total	$ 426,274,291	-	-	-	426,274,291	-	-	-	-	-	-	426,274,291	180,697

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

(Continued)

87

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

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

March 31, 2023	Maximum credit risk exposure $ 200,000 55,113,443 1,031,474 398,178 506,886 1,452,910 Maximum credit risk exposure $ 200,000 30,907,810 752,713 471,554 414,370 1,166,667 Maximum credit risk exposure $ 485,710 38,267,622 549,124 277,156 343,231 376,196	Collateral Enhancement of other credit - - - - - - - - - - 469,189 798,636 Collateral Enhancement of other credit - - - - - - - - - - 2,527,996 727,720 Collateral Enhancement of other credit - - - - - - - - - - 655,169 752,390
Financial assets at fair value through profit or loss －Debt investments －Commercial paper －Listed stocks －Unlisted stocks －Beneficiary certificates －Derivative instrument December 31, 2022
Financial assets at fair value through profit or loss －Debt investments －Commercial paper －Listed stocks －Unlisted stocks －Beneficiary certificates －Derivative instruments March 31, 2022
Financial assets at fair value through profit or loss －Debit investments －Commercial paper －Listed stocks －Unlisted stocks －Beneficiary certificates －Derivative instrument

(Continued)

88

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

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

• a) Receivables

Beginning balance Changes in financial instruments that have been identified at the beginning of the period： －Transferred to 12-months ECL －Transferred to lifetime ECL －Transferred to the credit- impaired financial assets －The financial assets that have been derecognized New financial assets originated or purchased 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		Fo	r the three mont	hs ended March 31, 2023	hs ended March 31, 2023	Total
	12-month ECL $ 29,630 113 (33) (8) (8,461) 15,792 3,070 - $ 40,103	Lifetime ECL－not impaired 10,712 (21) 66 (99) (26) 67 (3,995) - 6,704	Lifetime ECL－ impaired 17,084 (92) (33) 107 (4,375) 3,539 16,942 - 33,172	Impaired (IFRS9) 57,426 - - - (12,862) 19,398 16,017 - 79,979	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 46,616 - - - - - - (5,923) 40,693
						104,042 - - - (12,862) 19,398 16,017 (5,923) 120,672

(Continued)

89

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

Beginning balance Changes in financial instruments that have been identified at the beginning of the period： －Transferred to 12-months ECL －Transferred to lifetime ECL －Transferred to the credit- impaired financial assets －The financial assets that have been derecognized New financial assets originated or purchased Other changes Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-Performing and Non-Accrual Loans " Ending balance		Fo	r the three mont	hs ended March 31, 2022	hs ended March 31, 2022	Total
	12-month ECL $ 31,774 30,778 (2,540) (2,077) (6,983) 11,725 (28,307) - $ 34,370	Lifetime ECL－not impaired 6,068 (1,031) 6,049 (2,955) (8) 68 (1,891) - 6,300	Lifetime ECL－ impaired 28,695 (29,747) (3,509) 5,032 (2,415) 2,141 30,260 - 30,457	Impaired (IFRS9) 66,537 - - - (9,406) 13,934 62 - 71,127	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 51,574 - - - - - - (6,320) 45,254
						118,111 - - - (9,406) 13,934 62 (6,320) 116,381

(Continued)

90

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

b) Discounts and loans

Beginning balance Changes in financial instruments that have been identified at the beginning of the period： －Transferred to 12-months ECL －Transferred to lifetime ECL －Transferred to the credit- impaired financial assets －The financial assets that have been derecognized New financial assets originated or purchased Write-off Other changes Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-Performing and Non-Accrual Loans " Ending balance		Fo	r the three mont	hs ended March 31, 2023	hs ended March 31, 2023	Total
	12-month ECL $ 5,882,540 69,074 (5,133) (5,538) (1,310,205) 1,309,149 - (55,499) - $ 5,884,388	Lifetime ECL－not impaired 138,138 (4,806) 27,124 (18,447) (75,344) 1,245 - (13,845) - 54,065	Lifetime ECL－ impaired 4,784,155 (64,268) (21,991) 23,985 (279,942) 51,287 (1,436,711) 1,288,253 - 4,344,768	Impaired (IFRS9) 10,804,833 - - - (1,665,491) 1,361,681 (1,436,711) 1,218,909 - 10,283,221	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 7,273,783 - - - - - - - (413,248) 6,860,535
						18,078,616 - - - (1,665,491) 1,361,681 (1,436,711) 1,218,909 (413,248) 17,143,756

(Continued)

91

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

Beginning balance Changes in financial instruments that have been identified at the beginning of the period： －Transferred to 12-months ECL －Transferred to lifetime ECL －Transferred to the credit- impaired financial assets －The financial assets that have been derecognized New financial assets originated or purchased Write-off Other changes Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-Performing and Non-Accrual Loans " Ending balance		Fo	r the three mont	hs ended March 31, 2022	hs ended March 31, 2022	Total
	12-month ECL $ 4,166,467 28,221 (2,504) (2,101) (1,121,139) 1,079,035 - 14,722 - $ 4,162,701	Lifetime ECL－not impaired 129,977 (1,031) 6,013 (2,955) (4,402) 12,522 - (12,083) - 128,041	Lifetime ECL－ impaired 3,635,336 (27,190) (3,509) 5,056 (209,539) 57,805 (297,612) 303,982 - 3,464,329	Impaired (IFRS9) 7,931,780 - - - (1,335,080) 1,149,362 (297,612) 306,621 - 7,755,071	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 7,645,037 - - - - - - - 662,893 8,307,930
						15,576,817 - - - (1,335,080) 1,149,362 (297,612) 306,621 662,893 16,063,001

(Continued)

92

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

• c) Other financial assets

Beginning balance Changes in financial instruments that have been identified at the beginning of the period： －The financial assets that have been derecognized New financial assets originated or purchased Write-off Other changes Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-Performing and Non-Accrual Loans " Ending balance Beginning balance Changes in financial instruments that have been identified at the beginning of the period： －The financial assets that have been derecognized New financial assets originated or purchased Write-off Other changes Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-Performing and Non-Accrual Loans " Ending balance		Fo	r the three mont	hs ended March 31, 2023	hs ended March 31, 2023	Total
	12-month ECL $ - - - - - - $ -	Lifetime ECL－not impaired - - - - - - - Fo	Lifetime ECL－ impaired 15,898 (3) 1,760 (35,985) 31,508 - 13,178 r the three mont	Impaired (IFRS9) Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 15,898 32,573 (3) - 1,760 - (35,985) - 31,508 - - (31,940) 13,178 633 hs ended March 31, 2022
						48,471 (3) 1,760 (35,985) 31,508 (31,940) 13,811 Total
		Lifetime ECL－not impaired - - - - - - -	Lifetime ECL－ impaired 25,545 (1) 2,524 (3,703) 1,119 - 25,484	Impaired (IFRS9) 25,545 (1) 2,524 (3,703) 1,119 - 25,484	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 25,847 - - - - (30) 25,817
						51,392 (1) 2,524 (3,703) 1,119 (30) 51,301

(Continued)

93

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

d) Guarantee and commitments

			For	the three months	the three months	ended March	31, 2023
							Impairment difference
							of "Regulations
							Governing the
							Procedures for
							Banking
							Institutions to
							Evaluate Assets and
			Lifetime	Lifetime			Deal with Non-
		12-month	ECL－not	ECL－		Impaired	Performing and Non-
		ECL	impaired	impaired		(IFRS9)	Accrual Loans"	Total
Beginning balance	$	178,812	57	61,625		240,494	96,818	337,312
Changes in financial instruments
that have been identified at the
beginning of the period：
－Transferred to 12-months		-	-	-		-	-	-
ECL
－Transferred to lifetime ECL		(4)	4	-		-	-	-
－The financial assets that		(30,446)	(4)	(5,668)		(36,118)	-	(36,118)
have been derecognized
New financial assets originated or		38,935	828		154	39,917	-	39,917
purchased
Other changes		(3,194)	-	-		(3,194)	-	(3,194)
Impairment difference of		-	-	-		-	19,270	19,270
"Regulations Governing the
Procedures for Banking
Institutions to Evaluate Assets
and Deal with Non-Performing
and Non-Accrual Loans "
Ending balance	$	184,103	885	56,111		241,099	116,088	357,187
			For	the three months		ended March	31, 2022

						Impairment difference
						of "Regulations
						Governing the
						Procedures for
						Banking
						Institutions to
						Evaluate Assets and
			Lifetime	Lifetime		Deal with Non-
		12-month	ECL－not	ECL－	Impaired	Performing and Non-
		ECL	impaired	impaired	(IFRS9)	Accrual Loans"	Total
Beginning balance	$	149,354	69	6,786	156,209	173,279	329,488
Changes in financial instruments
that have been identified at the
beginning of the period：
－Transfer to 12-months ECL		2,557	-	(2,557)	-	-	-
－Transfer to lifetime ECL		(74)	74	-	-	-	-
－Transferred to the credit-		(3)	-	3	-	-	-
impaired financial assets
－The financial assets that		(35,784)	(60)	(2,003)	(37,847)	-	(37,847)
have been derecognized
New financial assets originated or		43,181	4	13	43,198	-	43,198
purchased
Other changes		(1,819)	46	117	(1,656)	-	(1,656)
Impairment difference of		-	-	-	-	639	639
"Regulations Governing the
Procedures for Banking
Institutions to Evaluate Assets
and Deal with Non-Performing
and Non-Accrual Loans "
Ending balance	$	157,412	133	2,359	159,904	173,918	333,822

(Continued)

94

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

e) Debts investments

Beginning balance Additions Derecognition Other changes Ending balance Beginning balance Additions Derecognition Other changes Ending balance	For the three months ended March 31, 2023 12-month ECL Lifetime ECL －not impaired Lifetime ECL －impaired Total $ 165,724 - - 165,724 59,158 - - 59,158 (50,718) - - (50,718) (696) - - (696) $ 173,468 - - 173,468 For the three months ended March 31, 2022 12-month ECL Lifetime ECL －not impaired Lifetime ECL －impaired Total $ 175,270 - - 175,270 53,824 - - 53,824 (49,224) - - (49,224) 827 - - 827 $ 180,697 - - 180,697	For the three months ended March 31, 2023 12-month ECL Lifetime ECL －not impaired Lifetime ECL －impaired Total $ 165,724 - - 165,724 59,158 - - 59,158 (50,718) - - (50,718) (696) - - (696) $ 173,468 - - 173,468 For the three months ended March 31, 2022 12-month ECL Lifetime ECL －not impaired Lifetime ECL －impaired Total $ 175,270 - - 175,270 53,824 - - 53,824 (49,224) - - (49,224) 827 - - 827 $ 180,697 - - 180,697	For the three months ended March 31, 2023 12-month ECL Lifetime ECL －not impaired Lifetime ECL －impaired Total $ 165,724 - - 165,724 59,158 - - 59,158 (50,718) - - (50,718) (696) - - (696) $ 173,468 - - 173,468 For the three months ended March 31, 2022 12-month ECL Lifetime ECL －not impaired Lifetime ECL －impaired Total $ 175,270 - - 175,270 53,824 - - 53,824 (49,224) - - (49,224) 827 - - 827 $ 180,697 - - 180,697
	12-month ECL $ 175,270 53,824 (49,224) 827 $ 180,697	Lifetime ECL －not impaired - - - - -	Lifetime ECL －impaired - - - - -

• 14) Collateral management policy

• a) Collaterals are recognized under the account of other assets per the rules of “Regulations Governing the Preparation of Financial Reports by Public Banks”.

b) Details were as follows:

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

(Continued)

95

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

(iv) Liquidity risk

• 1) The origin and definition of liquidity risk

Liquidity risk refers to the potential financial loss results from the inability to liquidate assets or obtain finance to fulfill the financial obligation which is going to mature with sufficient fund, such as early rescind of time deposits, the channels and terms to call loan from other bank are deteriorated due to the influence of specific markets and the default of loan customers worsen and it is harder for the Bank to receive payments and liquidate financial instruments. The abovementioned situations may diminish the source of cash for the Bank to undertake loan business, trades and investment activities. Under some extreme circumstances, the lack of liquidity may increase the potential possibility of reduction of the overall position of consolidated financial statement, sale of assets and inability to fulfill loan obligation. Liquidity risk is an inherent risk of bank operations and is influenced by specific or overall events in various markets. Those events include but not limited to: Credit event, merger or buyout, systematic strike and natural disaster.

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

• a) Policy

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

  • ii) Established “Directions Governing the Capital Liquidity Risk Management of Taiwan Business Bank” and “Remarks Governing the Capital Liquidity Risk Management of Taiwan Business Bank” to serve as guidance to effectively control capital liquidity risk.

  • iii) Overseas branches shall regulate the code of conduct for liquidity risk management based on business characteristics and the regulations of local authorities. After being approved by the general manager, the Risk Management Department will be in charge of monitoring liquidity risk.

• b) Process

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

  • ii) Risk Management Department is in charge of the identification, measurement, supervision and control of capital liquidity risk to establish a firm operation process and structure.

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

(Continued)

96

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

• c) Measurement

  • i) Maturity gap: To place the inflows and outflows of capital into various time zones accordingly based on the remaining days to maturity and calculate the gap of capital of each time zone in order to measure the capital deficiency of each time zone.

  • ii) Loan-deposit ratio: To calculate the deposits the Bank received which are used to conduct loan business. In other words, the percentage of the total loan amount accounts for the total deposit amount.

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

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

• 3) Financial assets possessed for managing liquidity risk and maturity analysis for nonderivative financial liability

• a) Financial assets possessed for managing liquidity risk

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

(Continued)

97

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

• b) Maturity analysis for non-derivative financial liabilities

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

Major matured cash outflow Deposits from the Central Bank and banks Overdrafts on banks Call loans from the Central Bank and banks Due to the Central Bank and banks Financial liabilities designated at fair value through profit or loss Notes and bonds issued under repurchase agreement Interest payable Deposits transferred from Chunghwa Post Co., Ltd. Demand deposits Time deposits Remittance Bank notes payable Cumulative earnings on appropriated loan fund Lease liabilities			March 31, 2023	March 31, 2023
	0-30 days $ 1,094,247,779 495,352 593,794 34,313,799 150,880 - 914,392 700,035 4,280,000 951,269,001 101,086,984 395,115 - 1,500 46,927	31-90 days 185,877,453 - - 1,580,103 304,400 - 586,228 2,161,994 3,000,000 - 178,179,074 - - 4,750 60,904	91 days-1 year 563,657,322 - - 304,341 656,600 - 395,260 3,405,987 124,814,545 - 425,924,820 - 7,790,000 91,840 273,929	1-5 years 60,588,586 - - - - - 546,437 136,211 10,000,000 - 41,862,478 - 6,210,000 1,117,420 716,040	Over 5 years Total 49,596,617 1,953,967,757 - 495,352 - 593,794 - 36,198,243 - 1,111,880 9,177,983 9,177,983 - 2,442,317 18 6,404,245 - 142,094,545 - 951,269,001 7,491 747,060,847 - 395,115 38,250,000 52,250,000 2,040,969 3,256,479 120,156 1,217,956

(Continued)

98

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

Major matured cash outflow Deposits from the Central Bank and banks Overdrafts on banks Call loans from the Central Bank and banks Due to the Central Bank and banks Financial liabilities designated at fair value through profit or loss Notes and bonds issued under repurchase agreement Interest payable Deposits transferred from Chunghwa Post Co., Ltd. Demand deposits Time deposits Remittance Bank notes payable Cumulative earnings on appropriated loan fund Lease liabilities Major matured cash outflow Deposits from the Central Bank and banks Overdrafts on banks Call loans from the Central Bank and banks Due to the Central Bank and banks Financial liabilities designated at fair value through profit or loss Notes and bonds issued under repurchase agreement Interest payable Deposits transferred from Chunghwa Post Co., Ltd. Demand deposits Time deposits Remittance Bank notes payable Cumulative earnings on appropriated loan fund Lease liabilities			December 31, 2022	December 31, 2022
	0-30 days $ 1,097,763,808 937,523 1,084,076 27,012,375 92,175 - 458,662 317,254 9,820,000 954,030,572 103,528,154 428,111 - 2,250 52,656	31-90 days 221,732,162 - - 18,670,658 111,450 - 157,550 1,288,484 21,196,335 - 180,237,487 - - 3,750 66,448	91 days-1 year 1-5 years 480,666,633 92,838,661 - - - - - - 927,400 - - - 1,292,066 554,713 2,711,772 118,148 75,185,210 41,060,000 - - 392,763,469 42,587,346 - - 7,400,000 6,600,000 118,500 1,198,580 268,216 719,874 March 31, 2022		Over 5 years Total 49,342,955 1,942,344,219 - 937,523 - 1,084,076 - 45,683,033 - 1,131,025 9,367,595 9,367,595 - 2,462,991 10 4,435,668 - 147,261,545 - 954,030,572 5,124 719,121,580 - 428,111 38,250,000 52,250,000 1,587,501 2,910,581 132,725 1,239,919
	0-30 days $ 1,115,290,725 934,577 930,423 35,073,032 - - 63,695 611,162 10,227,000 936,433,606 130,627,059 351,102 - 3,250 35,819	31-90 days 218,237,082 - - 7,888,251 49,713,800 - 622,746 548,004 20,495,210 - 138,904,091 - - 7,500 57,480	91 days-1 year 462,746,287 - - 2,210,485 314,379 - 55,495 1,546,509 36,539,335 - 421,743,779 - - 90,250 246,055	1-5 years 80,186,867 - - - 342,960 - 1,352,710 74,651 - - 45,390,800 - 30,700,000 1,664,920 660,826	Over 5 years Total 31,995,513 1,908,456,474 - 934,577 - 930,423 - 45,171,768 - 50,371,139 8,482,025 8,482,025 - 2,094,646 3 2,780,329 - 67,261,545 - 936,433,606 1,384 736,667,113 - 351,102 21,550,000 52,250,000 1,821,781 3,587,701 140,320 1,140,500

(Continued)

99

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

• 4) Derivative financial liabilities maturity analysis

• a) Derivative financial instruments settled by net amount

The derivative instruments of the Bank and subsidiaries whose possession are settled by net amount include foreign derivative instruments, such as non-delivery forward contracts and net-delivery foreign exchange option. After evaluation the Bank concluded that the maturity date is the basic element to comprehend all the derivative financial instruments listed in the consolidated financial statement. The amount disclosed is based on the cash flows of the contracts and thus part of the amount disclosed may not correspond to the amount disclosed in the consolidated financial statement. As of and March 31, 2022, the Bank and subsidiaries had no derivative financial instruments settled by net amount. As of March 31, 2023 and December 31, 2022, maturity analysis for the derivative financial liabilities settled by net amount is as follows:

Derivative financial liabilities at fair value through profit or loss －Foreign exchange derivative instrument Derivative financial liabilities at fair value through profit or loss －Foreign exchange derivative instrument			March 31, 2023	March 31, 2023
	0-30 days $ -	31-90 days -	91-180 days 181 days to 1 year 117 237 December 31, 2022		Over 1 year -	Total
						354
	0-30 days $ -	31-90 days 825	91-180 days 225	181 days to 1 year -	Over 1 year -	Total
						1,050

(Continued)

100

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

• b) Derivative financial instruments settled by gross amount

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

• i) Foreign exchange derivative financial instrument: Foreign exchange options settled by gross amount, foreign exchange forward contracts and currency swap contracts.

• ii) Interest rate derivative financial instruments: interest rate swap contracts.

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

March 31, 2023 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 December 31, 2022 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 $ 8,366,380 8,746,811 - - 8,366,380 8,746,811 $ (380,431) 0-30 days $ 25,782,525 27,862,886 - - 25,782,525 27,862,886 $ (2,080,361)	31-90 days 14,753,052 14,875,515 1,181 2,244 14,754,233 14,877,759 (123,526) 31-90 days 45,415,630 48,002,551 1,168 2,021 45,416,798 48,004,572 (2,587,774)	91-180 days 7,530,392 7,509,640 594 753 7,530,986 7,510,393 20,593 91-180 days 11,979,083 12,577,650 587 724 11,979,670 12,578,374 (598,704)	181 days to 1 year 3,753,381 3,718,916 2,942 3,833 3,756,323 3,722,749 33,574 181 days to 1 year 3,463,765 3,500,326 2,955 3,742 3,466,720 3,504,068 (37,348)	Over 1 year - - - - - - - Over 1 year - - 1,174 1,568 1,174 1,568 (394)	Total 34,403,205 34,850,882 4,717 6,830 34,407,922 34,857,712 (449,790) Total 86,641,003 91,943,413 5,884 8,055 86,646,887 91,951,468 (5,304,581)

(Continued)

101

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

March 31, 2022 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 $ 4,086,606 3,989,353 - - 4,086,606 3,989,353 $ 97,253	31-90 days 8,267,305 8,057,065 1,194 1,109 8,268,499 8,058,174 210,325	91-180 days 3,105,645 3,040,223 587 627 3,106,232 3,040,850 65,382	181 days to 1 year 2,137,766 2,080,696 2,936 3,191 2,140,702 2,083,887 56,815	Over 1 year - - 4,716 6,034 4,716 6,034 (1,318)	Total 17,597,322 17,167,337 9,433 10,961
						17,606,755
						17,178,298
						428,457

5) Maturity analysis of off-balance sheet items

March 31, 2023 Issued and irrevocable loan commitments Irrevocable credit card loan commitments Letters of credit issued yet unused Other guarantees Total December 31, 2022 Issued and irrevocable loan commitments Irrevocable credit card loan commitments Letters of credit issued yet unused Other guarantees Total March 31, 2022 Issued and irrevocable loan commitments Irrevocable credit card loan commitments Letters of credit issued yet unused Other guarantees Total	0-30 days $ 287,583 1,480 2,249,272 2,543,933 $ 5,082,268 0-30 days $ 1,997,541 1,117 2,016,789 2,667,240 $ 6,682,687 0-30 days $ 482,337 2,146 3,391,749 2,025,628 $ 5,901,860		31-90 days		91-180 days		181 days to 1 year		Over 1 year 38,612,522 17,350,164 2,253 15,284,447 71,249,386 Over 1 year 35,575,997 18,432,747 54,706 15,393,282 69,456,732 Over 1 year 32,241,765 19,021,328 - 13,106,132 64,369,225	Total 66,866,962 18,153,397 8,790,053 24,394,937
			21,919,470 37,090 5,054,663 1,743,137 28,754,360 31-90 days		1,761,371 54,965 1,300,313 1,610,973 4,727,622 91-180 days		4,286,016 709,698 183,552 3,212,447 8,391,713 181 days to 1 year
										118,205,349
										Total 64,987,007 18,839,955 8,129,149 22,056,496
			512,056 34,225 4,985,416 1,001,432 6,533,129 31-90 days		22,218,395 55,553 716,174 656,793 23,646,915 91-180 days		4,683,018 316,313 356,064 2,337,749 7,693,144 181 days to 1 year
										114,012,607
										Total 45,936,973 19,467,148 11,682,869 24,091,106
			334,335 49,013 6,745,517 5,518,962 12,647,827		2,666,794 70,154 1,472,429 1,418,903 5,628,280		10,211,742 324,507 73,174 2,021,481 12,630,904
										101,178,096

(Continued)

102

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

• 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:

March 31, 2023 Operating lease income (lessor) December 31, 2022 Operating lease income (lessor) March 31, 2022 Operating lease income (lessor)	Below 1 year $ 2,044 Below 1 year $ 1,027 Below 1 year $ 2,802	1-5 years 2,588 1-5 years 1,389 1-5 years 1,848	Over 5 years Total - 4,632 Over 5 years Total - 2,416 Over 5 years Total - 4,650

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

March 31, 2023 Machinery and equipment Transportation equipment Right-of-use assets Miscellaneous equipment Total December 31, 2022 Machinery and equipment Transportation equipment Right-of-use assets Miscellaneous equipment Total March 31, 2022 Machinery and equipment Transportation equipment Right-of-use assets Miscellaneous equipment Total	Below 1 year $ 1,713,719 408 58 859 $ 1,715,044 Below 1 year $ 1,496,409 2,098 620 1,024 $ 1,500,151 Below 1 year $ 1,288,885 14 308 750 $ 1,289,957	1-5 years - - - - - 1-5 years - - 85 - 85 1-5 years - - 103 - 103	Over 5 years - - - - - Over 5 years - - - - - Over 5 years - - - - -	Total
				1,713,719 408 58 859
				1,715,044
				Total
				1,496,409 2,098 705 1,024
				1,500,236
				Total
				1,288,885 14 411 750
				1,290,060

(Continued)

103

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

(v) Market risk

1) Definition of market risk

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

• 2) Policies and procedures of market risk management

• a) Strategy

  • i) To carry out market risk management, achieve operation target and maintain healthy capital adequacy by following “ Directions Governing the Market Risk Management of Taiwan Business Bank” and other relevant regulations.

  • ii) Under the risk tolerance approved by the board of directors or board of executive directors, the Bank applies various risk control mechanism to effectively deploy and manage capital in order to maintain the market risk exposure within the tolerable extent and achieve earning target.

• b) Policies and procedures

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

• 3) Process for market risk management

• 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.

(Continued)

104

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

• b) Risk measurement

• i) Annually based on the business development of transaction units and submit to the board of directors or board of executive directors for approval. For the units which the positions and limits remain unchanged after evaluation, they can put the positions and limits into practice after receiving the approval from the general manager.

• ii) The risk measurements (or evaluations) of the financial instruments of the Bank are conducted through different information systems. For the market data and parameters of the models applied for evaluation, they shall be random inspected regularly to determine the rationality.

• c) Risk monitoring

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

• ii) All financial transactions are equipped with different regulations in terms of limit of loss and stop-limit. Provided that the valuation loss amount is over the limit, a stop-limit, suspension and subsequent risk control will be executed.

• d) Risk report

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

• 4) Scope and method of market risk management

• a) Foreign exchange risk management

  • i) Definition of foreign exchange risk management

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

• ii) Applicable scope

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

• iii) Purpose for foreign exchange risk management

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

(Continued)

105

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

• iv) Procedures of foreign exchange risk management

• In order to control foreign exchange transaction risk, the Bank established trade position authorization standard for financial transaction operations, trade units and traders in current regulations. In addition, for non-commercial business foreign exchange operation, all trade units submit the required amounts of position annually based on operation status. Risk management department will evaluated the requirement and submit to the board of directors’ (executive directors) for approval. The demand will be executed after the board of directors approved. For the units which the positions remain unchanged after evaluation, they can put the positions into practice after receiving the approval from the general manager.

• The trade units conduct various foreign financial product business, they shall fully understand the content of commodities, the risk tolerance and trade purpose. Trade units shall establish financial products trading strategies based on market status in the meeting every morning and submit the risk-benefit evaluation in the meeting minutes for the department heads to review. The trading shall follow the relevant authorization rules of the Bank and the stop-limit of all trade positions shall be executed reliably.

• v) Process of foreign exchange risk management

• Identification and measurement

  • a. Risk Management department established risk factor chart based on different financial transactions to effectively identify risk factors and market risk resources. In addition, the financial transactions which the Bank and subsidiaries conducts deal with simple type financial products. For complex financial products, the Bank and subsidiaries conducts back-to-back hedge covering to effectively avoid market risk.

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

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

(Continued)

106

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

  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

• i) Definition of equity security risk

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

• ii) Applicable scope

Financial instruments similar to equity security in all trading books.

• iii) Purpose of equity security risk management

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

• iv) Procedures of equity security risk management

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

• The trade units shall predict the possible trend of domestic stock market based on the information of foreign and domestic security markets so as to set up the operation strategies and directions. The traders shall pay close attention to the market trend when the market opens so as to conduct security transactions and the operations as well as the meeting minutes shall be submitted to the department heads to review.

(Continued)

107

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

• v) 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.

• c) Interest rate risk management

• i) Definition of interest rate risk

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

• ii) Applicable scope

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

(Continued)

108

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

• iii) Purpose of interest rate risk management

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

• iv) Procedures of interest rate risk management

• In order to control interest rate risk, the Bank established trade position authorization standard for financial transaction operations, trade units and trade counterparties in current regulations. In addition, for the positions held for trading, all trade units submit the required amounts of position annually based on operation status. Risk management department will evaluate the requirement and submit to the board of directors or executive directors for approval. The demand will be executed after the board of directors approved.

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

• v) Process of interest rate risk management

• Identification and measurement

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

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

• 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.

(Continued)

109

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

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

• d) Concentration management

  • i) The trade counterparties of the Bank are mostly financial institutions. To avoid the risk being over concentrated and enhance credit risk management, the Bank established financial institution credit risk limit based on the world ranking of Level 1 capital and credit ratings from The Banker. The trade units shall also pay attention to the changes of the credit status of individual financial institution as well as the changes of the national credit rating to conduct the transaction prudently.

  • ii) For equity security investments, the Bank set up limits for single institution and single related party.

• 5) Interest rate risk management of the banking book

• a) The definition and management purpose for the interest rate risk of the banking book

  • i) The interest rate risk of the banking book refers to the negative effect towards the future net interest income or economic value of equity results from the fluctuation of interest rate. Net Interest Income (hereafter NII) is the total amount of interest revenue deducted by the total amount of interest expense; Economic Value of Equity (hereafter EVE) is the total discounted future cash inflow from assets deducted by the total discounted future cash outflow from liabilities.

  • ii) The management purpose of the interest rate risk management of the banking book is to control the negative effect from the interest rate risk fluctuation towards NII or EVE within the approved limit extent.

• b) The process for the interest rate risk management of the banking book

  • i) Identification and measurement

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

(Continued)

110

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

ii) Monitoring and report

The Bank established limits of the ratio between interest-rate-sensitivity assets and interest-rate-sensitivity liabilities, the effect to NII in 1 year when the market interest rate parallel changes 1 BP and the effect to EVE when the market interest rate 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.

6) Value at Risk

• a) Description of Value at Risk

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

• b) Value at Risk models and assumptions

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

• c) The limit of Value at Risk model

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

• i) Value at Risk cannot reflect the losses result from other type of risks, such as credit risk and liquidity risk.

• ii) Value at Risk measures the possible loss of the position on hand at the end of the transaction day, but it cannot reflect the distribution of the part which actual loss exceeds Value at Risk.

• iii) Value at Risk model is based on historical data to evaluate the amount, and therefore it may not be able to predict the future changes of risk factors, especially for those exceptions result from significant market fluctuation.

(Continued)

111

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

• 7) Foreign exchange risk disclosure and sensitivity analysis

• a) Foreign exchange risk exposure

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

Significant net positions of foreign currencies (Market risk)

March 31, 2023

Currency USD JPY AUD ZAR SGD	Foreign currency amount (in thousands) NT$ amount $ 440,020 13,394,209 2,184,559 499,609 13,883 284,185 60,228 102,869 1,958 44,936

Significant net positions of foreign currencies (Market risk) December 31, 2022

Currency USD JPY AUD ZAR EUR	Foreign currency amount (in thousands) NT$ amount $ 504,348 15,496,092 2,069,083 480,234 14,865 308,895 46,223 83,617 809 26,503

Significant net positions of foreign currencies (Market risk) March 31, 2022

Currency USD JPY CNY AUD ZAR	Foreign currency amount (in thousands) NT$ amount $ 486,649 13,908,428 2,180,177 510,379 65,678 295,157 13,335 286,036 40,826 80,509

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

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

(Continued)

112

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

ii) Assets and liabilities of foreign currency

March 31, 2023

	March 31, 2023
Currency	Monetary financial assets Foreign currency amount (in thousands) Spot rate NTD amount $ 15,946,234 30.4400 485,403,362 4,955,714 20.4700 101,443,466 12,349,635 4.4420 54,857,080 159,592,635 0.2287 36,498,836 5,259,337 3.8770 20,390,450 311,290 33.2200 10,341,054 4,303,683 1.7080 7,350,691 29,117 37.7700 1,099,749 28,506 19.1500 545,890 16,106 22.5300 362,868 8,108 22.9500 186,079 62,742 2.9400 184,461 Non-monetary financial assets 1,026 30.4400 31,231	Monetary financial liabilities
		Foreign currency amount (in thousands) Spot rate NTD amount 15,465,018 30.4400 470,755,147 4,856,762 20.4700 99,417,918 12,140,831 4.4420 53,929,572 158,117,712 0.2287 36,161,521 4,811,807 3.8770 18,655,376 311,297 33.2200 10,341,286 4,302,906 1.7080 7,349,363 29,152 37.7700 1,101,071 28,639 19.1500 548,437 16,125 22.5300 363,296 8,080 22.9500 185,436 62,716 2.9400 184,385 Non-monetary financial liabilities
USD AUD CNY JPY HKD EUR ZAR GBP NZD CAD SGD SEK USD
		- - -

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

	December 31, 2022
	Monetary financial assets	Monetary financial liabilities
Currency		Foreign currency amount (in thousands) Spot rate NTD amount 15,291,888 30.7250 469,843,260 4,890,551 20.7800 101,625,650 11,749,698 4.4110 51,827,917 183,141,677 0.2321 42,507,183 5,348,671 3.9400 21,073,764 352,361 32.7600 11,543,346 4,249,572 1.8090 7,687,476 45,236 37.0700 1,676,899 34,124 19.4500 663,712 14,475 22.6800 328,293 7,969 22.8700 182,251 34,431 2.9400 101,227 - - 119,278 Non-monetary financial liabilities
USD AUD CNY JPY HKD EUR ZAR GBP NZD CAD SGD SEK Others (Note) USD
		- - -

(Continued)

113

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

	March 31, 2022	March 31, 2022	March 31, 2022
	Monetary financial assets		NTD amount 412,107,906 129,655,512 23,426,654 22,455,812 19,415,368 15,756,654 5,117,157 1,721,855 976,741 370,081 211,363 114,911 77,078	Monetary financial liabilities
Currency	Foreign currency amount (in thousands) $ 14,419,451 6,044,546 5,212,880 95,924,017 5,317,822 493,166 2,594,907 45,855 48,984 16,189 10,003 3,711 -	Spot rate 28.5800 21.4500 4.4940 0.2341 3.6510 31.9500 1.9720 37.5500 19.9400 22.8600 21.1300 30.9650 -		Foreign currency amount (in thousands) 13,862,929 5,952,771 5,011,102 94,596,528 4,938,896 493,712 2,593,619 45,920 48,987 16,467 9,905 3,738 -	Spot rate NTD amount 28.5800 396,202,511 21.4500 127,686,938 4.4940 22,519,894 0.2341 22,145,047 3.6510 18,031,909 31.9500 15,774,098 1.9720 5,114,617 37.5500 1,724,296 19.9400 976,801 22.8600 376,436 21.1300 209,293 30.9650 115,747 - 78,815
USD AUD CNY JPY HKD EUR ZAR GBP NZD CAD SGD CHF Others (Note)

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%.

Currency USD AUD HKD JPY GBP SGD ZAR SEK CHF CAD THB EUR NZD CNY Total		March 31, 2023	March 31, 2023	March 31, 2023
	Depreciate	by 1% Equity (63,799) (24,393) (21,003) (3,423) - - - - - - - - - - (112,618)	Appreciate by 1%
	Income $ (20,118) 4,123 3,008 91 1 (11) (15) (1) 18 19 4 (44) 18 (56,628) $ (69,535)		Income 20,118 (4,123) (3,008) (91) (1) 11 15 1 (18) (19) (4) 44 (18) 56,628 69,535	Equity 63,799 24,393 21,003 3,423 - - - - - - - - - -
				112,618

(Continued)

114

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

Currency USD AUD HKD JPY GBP SGD ZAR CHF CAD THB EUR NZD CNY Total Currency USD AUD HKD JPY GBP SGD ZAR SEK CHF CAD THB EUR NZD CNY Total			December 31, 2022	December 31, 2022	December 31, 2022
	Depreciate		by 1% Appreciate by 1% Equity Income Equity (63,299) 44,000 63,299 (23,440) (4,060) 23,440 (19,240) (3,029) 19,240 (3,450) 161 3,450 - 15 - - 9 - - 31 - - (51) - - 5 - - 4 - - 37 - - 10 - - 55,663 - (109,429) 92,795 109,429 March 31, 2022	Appreciate by 1%
	Income $ (44,000) 4,060 3,029 (161) (15) (9) (31) 51 (5) (4) (37) (10) (55,663) $ (92,795)				Equity 63,299 23,440 19,240 3,450 - - - - - - - - -
					109,429
		Depreciate	by 1% Equity (58,696) (23,697) (16,278) (3,262) - - - - - - - - - - (101,933)	Appreciate by 1%
				Income 43,878 (4,310) (2,785) (88) (4) 25 27 (7) (8) (72) (10) (185) 7 52,003 88,471	Equity 58,696 23,697 16,278 3,262 - - - - - - - - - -
					101,933

(Continued)

115

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

• 8) Interest rate risk disclosure and sensitivity analysis

a) Interest rate sensitivity analysis

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

Currency Trading book TWD Banking book TWD USD AUD HKD CNY ZAR Total	March 31, 2023	March 31, 2023	March 31, 2023
	Interest rate increases by 1 bp Income Equity $ (814) (2,537) - (48,049) - (22,911) - (311) - (144) - (1,186) - (144) $ (814) (75,282)	Interest rate decreases by 1 bp
	Income $ (814) - - - - - - $ (814)	Income 814 - - - - - - 814	Equity 2,537 48,049 22,911 311 144 1,186 144
			75,282

Currency Trading book TWD Banking book TWD USD AUD HKD CNY ZAR Total	December 31, 2022	December 31, 2022	December 31, 2022
	Interest rate increases by 1 bp Income Equity $ (512) (2,661) - (46,200) - (3,993) - (364) - (70) - (1,335) - (161) $ (512) (54,784)	Interest rate decreases by 1 bp
	Income $ (512) - - - - - - $ (512)	Income 512 - - - - - - 512	Equity 2,661 46,200 3,993 364 70 1,335 161
			54,784

(Continued)

116

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

Currency Trading book TWD Banking book TWD USD AUD HKD CNY ZAR Total	March 31, 2022	March 31, 2022	March 31, 2022
	Interest rate increases by 1 bp Income Equity $ (364) (3,213) - (53,446) - (12,052) - (864) - (7) - (1,549) - (172) $ (364) (71,303)	Interest rate decreases by 1 bp
	Income $ (364) - - - - - - $ (364)	Income 364 - - - - - - 364	Equity 3,213 53,446 12,052 864 7 1,549 172
			71,303

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		March 31, 2023 in 1 year Effect on EVE USD TWD USD (26,976) (5,544,372) (96,469) 25,622 11,623,107 73,145 December 31, 2022 in 1 year Effect on EVE USD TWD USD (24,074) (5,148,928) (58,960) 22,469 13,788,825 27,772 March 31, 2022 in 1 year Effect on EVE USD TWD USD (29,517) (5,346,039) (34,033) (8,247) 12,044,501 38,969
	Effect on NII
	TWD 3,923,822 (4,341,856)
	Effect on NII
	TWD 3,962,492 (4,598,328)
	Effect on NII	in 1 year USD (29,517) (8,247)
	TWD 3,747,048 (5,857,968)

9) Managing interest rate benchmark reform

A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates (IBORs) with alternative nearly risk-free rates (referred to as ‵ IBOR reform’ ). The Bank and subsidiaries has exposures to IBORs on its financial instruments that will be replaced or reformed as part of these market-wide initiatives. The Bank and subsidiaries considers that a contract is not yet transitioned to an alternative benchmark rate when interest under the contract is indexed to a benchmark rate that is still subject to IBOR reform ,even if it includes a fallback clause that deals with the cessation of the existing IBOR (referred to as an ‵unreformed contract’).

(Continued)

117

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

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

The following tables show the total amounts of unreformed contracts and those with appropriate fallback language on March 31, 2023, December 31 and March 31, 2022. The amounts of financial assets and liabilities are shown at their carrying amounts, and derivatives are shown at their notional amounts.

March 31, 2023 Financial assets Discounts and loans Bond Investments Financial liabilities Due to the Central Bank and banks Derivatives Interest rate swaps December 31, 2022 Financial assets Discounts and loans Bond Investments Financial liabilities Due to the Central Bank and banks Derivatives Interest rate swaps March 31, 2022 Financial assets Discounts and loans Bond Investments Receivable Financial liabilities Due to the Central Bank and banks Derivatives Interest rate swaps	USD L	IBOR	EUR L	IBOR	GBP L	IBOR	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	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 - - - - - - - - - - - - - - - - - - - - - - - - - -
	$ 44,565,000 15,162,000 821,000 5,479,000 55,072,000 17,391,000 891,000 5,531,000 68,714,000 22,727,000 14,000 915,000 8,574,000	25,017,000 913,000 - 5,479,000 23,939,000 1,259,000 - 5,531,000 29,166,000 1,174,000 14,000 - 8,574,000	- - - - - - - - 163,000 - - - -	- - - - - - - - 163,000 - - - -	- - - - - - - - - - - - -	- - - - - - - - - - - - -	- - - - - - - - 93,000 - - - -	- - - - - - - - 93,000 - - - -

(Continued)

118

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

• 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 % Change Equity security price increases by 1 % Equity security price decreases by 1 %	Currency TWD USD TWD USD Currency TWD USD TWD USD Currency TWD TWD		March 31, 2023
			Income Equity 4,759 - 10 - (4,759) - (10) - December 31, 2022
			Income Equity 3,359 - 10 - (3,359) - (10) - March 31, 2022
			Income Equity 3,279 - (3,279) -

• b) Value at Risk of equity security

Value at Risk	From April 1, 2022 to March 31, 2023	From April 1, 2022 to March 31, 2023	From April 1, 2022 to March 31, 2023
	Average	Maximum	Minimum
Equity security risk	4,998	12,339	1,399
Value at Risk	For the year ended December 31, 2022
	Average	Maximum	Minimum
Equity security risk	5,038	13,963	1,399
Value at Risk	From April 1, 2021 to March 31, 2022
	Average	Maximum	Minimum
Equity security risk	6,634	13,963	2,342

(Continued)

119

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

(vi) Transferred financial assets that are not fully derecognized

The transactions, relating to transferred financial assets not qualifying for full derecognition, the Bank and subsidiaries conducts during daily operation mostly involve securities lending in accordance to repurchase agreements. Since the right to receive contractual cash flow has been transferred to others and the Bank and subsidiaries’ obligation to repurchase the transferred assets for a fixed price at a future date is recognized under liability, for these transactions, the Bank and subsidiaries cannot use, sell or pledge those transferred financial assets in availability period, the Bank and subsidiaries has interest rate risk and credit risk, the said transferred assets are not fully derecognized.

As of March 31, 2023, December 31 and March 31, 2022, there were not any financial assets of the Bank that are not fully derecognized.

(vii) Offsetting financial assets and financial liabilities

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

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

				March 31, 2023	March 31, 2023	March 31, 2023					Net amount (e)=(c)-(d) (599,738) Net amount (e)=(c)-(d) (1,127,367) Net amount (e)=(c)-(d) (2,704,621)
	Financial assets un		d	er offsetting or general agreement of ne			t	amount settlement	o	r similar norm
Item	Gross amounts of recognized financial assets (a)			Gross amounts of financial liabilities offset in the balance sheet (b)		Net amount of financial assets presented in the balance sheet (c)=(a)-(b)		Amounts not balance	s s	et off in the heet (d) Cash collateral received 469,189
								Financial instruments (Note)
Derivative financial instruments	$ 668,087			-		668,087 March 31, 2023		798,636
F	i	nancial liabilities u	n	der offsetting or general agreement of n			e	t amount settlemen	t	or similar norm
Item		Gross amounts of recognized financial liabilities (a)		Gross amounts of financial assets offset in the balance sheet (b)		Net amount of financial liabilities presented in the balance sheet (c)=(a)-(b)		Amounts not balance	s s	et off in the heet (d) Cash collateral pledged 1,236,559
								Financial instrument (Note)
Derivative financial instruments	$ 109,192			- D	e	109,192 cember 31, 2022		-
		Financial assets un	d	er offsetting or general agreement of ne			t	amount settlement	o	r similar norm
Item		Gross amounts of recognized financial assets (a)		Gross amounts of financial liabilities offset in the balance sheet (b)		Net amount of financial assets presented in the balance sheet (c)=(a)-(b)		Amounts not balance	set off in the sheet(d) Cash collateral received 2,527,996
							i	Financial nstruments (Note)
Derivative financial instruments	$ 551,095			-		551,095		727,720

(Continued)

120

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

				December 31, 2022	December 31, 2022	December 31, 2022					Net amount (e)=(c)-(d) (2,192,753) Net amount (e)=(c)-(d) (1,204,733) Net amount (e)=(c)-(d) (1,319,548)
F	inancial liabilities u		n	der offsetting or general agreement of n			e	t amount settlemen	t or similar norm
Item	Gross amounts of recognized financial liabilities (a)			Gross amounts of financial assets offset in the balance sheet (b)		Net amount of financial liabilities presented in the balance sheet (c)=(a)-(b)		Amounts not balance	set off in the sheet(d) Cash collateral pledged 2,422,569
								Financial instruments (Note)
Derivative financial instruments	$ 229,816			-		229,816 March 31, 2022		-
		Financial assets un	d	er offsetting or general agreement of ne			t	amount settlement	o	r similar norm
Item		Gross amounts of recognized financial assets (a)		Gross amounts of financial liabilities offset in the balance sheet (b)		Net amount of financial assets presented in the balance sheet (c)=(a)-(b)		Amounts not balance	s s	et off in the heet (d) Cash collateral received 655,169
								Financial instruments (Note)
Derivative financial instruments	$ 202,826			-		202,826 March 31, 2022		752,390
F	i	nancial liabilities u	n	der offsetting or general agreement of n			e	t amount settlemen	t	or similar norm
Item		Gross amounts of recognized financial liabilities (a)		Gross amounts of financial assets offset in the balance sheet (b)		Net amount of financial liabilities presented in the balance sheet (c)=(a)-(b)		Amounts not balance	s s	et off in the heet (d) Cash collateral pledged 1,447,194
								Financial instruments (Note)
Derivative financial instruments	$ 127,646			-		127,646		-

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

• (aq) Capital Management

• (i) The Bank takes business development and risk control into consideration and calculates capital adequacy per “ Regulations Governing the Capital Adequacy Ratio and Capital Category of Banks” and “ Calculation Methods and Forms of Proprietary Capital and Risk Capital of Banks”. The ratio between proprietary capital and risk capital shall remain above the regulated minimum ratio.

• (ii) In order to maintain adequate capital and reach a balance between risk control and business development, the Bank established “Directions Governing Capital Adequacy” as the guidance for controlling capital adequacy. The scope of the directions includes, except for the least capital requirements for credit risk, market risk and operation risk, significant risk such as banking book interest rate risk, liquidity risk and concentration risk. In addition, in order to link business strategies, capital and risk management, the Bank sets up capital management plan annually for the president’s approval and reports to Risk Management Committee and the board of directors quarterly about relevant risks and capital control status.

• (iii) The Bank identifies, measures, monitors and reports various risks based on the directions, notices and relevant rules of competent authority regarding credit risk, market risk, operation risk, interest rate risk of the banking book, and liquidity risk so as to be familiar with current business environment and monitors and adjusts capital adequacy effectively.

(Continued)

121

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

• (iv) To cope with the implementation of new Basel Accord, the Bank set up complete risk management system, risk management operation tracking procedures to provide the management with appropriate risk management information for making decisions. Therefore, the Bank is able to maintain adequate capital within the tolerable extent and to ensure the provision of proprietary capital of the Bank corresponds with the overall operating risk characteristics of the Bank.

• 1) Tier 1 capital

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

  • b) Other Tier 1 capital: 25% of the perpetual non-accumulated subordinated financial debentures deducted by the major investment on financial related business.

• 2) Tier 2 capital

The item includes perpetual accumulated subordinated financial debentures, long term subordinated debenture, real estate retained earning increment arising from applying the fair value or the revaluation reserve as the deemed cost when first adopting IFRSs, 45% of unrealized gain on financial assets measured at fair value through other comprehensive income, and 50% of the major investment on financial related business.

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

The Bank and subsidiaries’ investing and financing activities which did not affect the current cash flow for the nine months ended March 31, 2023 and 2022 were carried out to acquire right-of-use assets under leases. Please refer to Note 6(l).

Reconciliation of liabilities arising from financing activities were as follows:

Financial liabilities at fair value through profit or loss Bank notes payable Lease liabilities Total liabilities from financing activities	January 1, 2023 $ 9,367,595 52,250,000 1,239,919 $ 62,857,514	Cash flows - - (126,144) (126,144)	Non-cash changes Foreign exchange rate movement Fair value changes Other changes (85,500) (104,112) - - - - 71 - 104,110 (85,429) (104,112) 104,110	Non-cash changes Foreign exchange rate movement Fair value changes Other changes (85,500) (104,112) - - - - 71 - 104,110 (85,429) (104,112) 104,110	March 31, 2023 9,177,983 52,250,000 1,217,956
			Foreign exchange rate movement (85,500) - 71 (85,429)	Fair value changes (104,112) - - (104,112)
					62,645,939

(Continued)

122

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

Financial liabilities at fair value through profit or loss Bank notes payable Lease liabilities Total liabilities from financing activities	January 1, 2022 $ 8,293,730 52,250,000 1,149,456 $ 61,693,186	Cash flows - - (113,760) (113,760)	Non-cash changes Foreign exchange rate movement Fair value changes Other changes 277,500 (89,205) - - - - (25,338) - 130,142 252,162 (89,205) 130,142	Non-cash changes Foreign exchange rate movement Fair value changes Other changes 277,500 (89,205) - - - - (25,338) - 130,142 252,162 (89,205) 130,142	March 31, 2022 8,482,025 52,250,000 1,140,500
			Foreign exchange rate movement 277,500 - (25,338) 252,162	Fair value changes (89,205) - - (89,205)
					61,872,525

(as) Structured entities that not included in consolidated financial reports

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

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

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

Private fund Asset securitization product Total	March 31, 2023 $ 183,763 550,236 $ 733,999	December 31, 2022 163,679 560,023 723,702	March 31, 2022
			137,007 656,739
			793,746

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

Assets held by the Bank and subsidiaries	March 31, 2023 $ 183,763 469,131 81,105 $ 733,999	December 31, 2022 163,679 475,485 84,538 723,702	March 31, 2022
Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Investments in debt instruments at amortized cost Total			137,007 534,998 121,741
			793,746

(Continued)

123

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

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

• (iv) As of March 31, 2023, December 31 and March 31, 2022, the Bank and subsidiaries has not provided any financial support to its special purpose entities that is not included in consolidated financial reports.

(7) Related-party transactions

• (a) Names and relationship with related parties

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

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

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

• (b) Significant transactions with related parties

• (i) Due from banks

Bank of Taiwan Bank of Taiwan	March 31, 2023	March 31, 2023
	Amount % $ 652,127 4.41 December 31, 2022	%
		4.41
		%
		0.71

(Continued)

124

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

March 31, 2022 Amount % Bank of Taiwan $ 205,473 1.54 Interest rates are the same as those with regular clients. (ii) Call loans to banks March 31, 2023 December 31, 2022 March 31, 2022 Bank of Taiwan $ 456,600 - - Interest Income Highest balance For the three months ended March 31, 2023 Annual interest rate Bank of Taiwan $ 1,436,808 2,203 1.24%~5.15% Interest income Highest balance For the three months ended March 31, 2022 Annual interest rate Bank of Taiwan $ 673,778 274 0.13%~2.53% Interest rates are the same as those with regular clients. (iii) Call loans from banks	March 31, 2022 Amount % Bank of Taiwan $ 205,473 1.54 Interest rates are the same as those with regular clients. (ii) Call loans to banks March 31, 2023 December 31, 2022 March 31, 2022 Bank of Taiwan $ 456,600 - - Interest Income Highest balance For the three months ended March 31, 2023 Annual interest rate Bank of Taiwan $ 1,436,808 2,203 1.24%~5.15% Interest income Highest balance For the three months ended March 31, 2022 Annual interest rate Bank of Taiwan $ 673,778 274 0.13%~2.53% Interest rates are the same as those with regular clients. (iii) Call loans from banks	March 31, 2022 Amount % Bank of Taiwan $ 205,473 1.54 Interest rates are the same as those with regular clients. (ii) Call loans to banks March 31, 2023 December 31, 2022 March 31, 2022 Bank of Taiwan $ 456,600 - - Interest Income Highest balance For the three months ended March 31, 2023 Annual interest rate Bank of Taiwan $ 1,436,808 2,203 1.24%~5.15% Interest income Highest balance For the three months ended March 31, 2022 Annual interest rate Bank of Taiwan $ 673,778 274 0.13%~2.53% Interest rates are the same as those with regular clients. (iii) Call loans from banks	March 31, 2022 Amount % Bank of Taiwan $ 205,473 1.54 Interest rates are the same as those with regular clients. (ii) Call loans to banks March 31, 2023 December 31, 2022 March 31, 2022 Bank of Taiwan $ 456,600 - - Interest Income Highest balance For the three months ended March 31, 2023 Annual interest rate Bank of Taiwan $ 1,436,808 2,203 1.24%~5.15% Interest income Highest balance For the three months ended March 31, 2022 Annual interest rate Bank of Taiwan $ 673,778 274 0.13%~2.53% Interest rates are the same as those with regular clients. (iii) Call loans from banks
		For the three months ended March 31, 2023 2,203 Interest	Annual interest rate 1.24%~5.15% income
		For the three months ended March 31, 2022 274	Annual interest rate 0.13%~2.53%

Bank of Taiwan Bank of Taiwan Bank of Taiwan	March 31, 2023 $ 4,261,600 Highest balance $ 7,950,920 Highest balance $ 6,459,697	March 31, 2023 $ 4,261,600 Highest balance $ 7,950,920 Highest balance $ 6,459,697	December 31, 2022 March 31, 2022 1,786,360 4,059,650 Interest Expense	December 31, 2022 March 31, 2022 1,786,360 4,059,650 Interest Expense
	$
				For the three months ended March 31, 2023 Annual interest rate 34,508 1.10%~5.23% Interest Expense
				For the three months ended March 31, 2022 Annual interest rate 3,146 0.04%~5.00%

Interest rates are the same as those with regular clients.

(Continued)

125

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

(iv) Deposits

Others Others Others	March 31, 2023	March 31, 2023
	Amount % $ 2,229,444 0.13 December 31, 2022	%
		0.13
		%
		0.11

Interest rates are the same as those with regular clients.

(v) Credit

March 31, 2	March 31, 2	March 31, 2	March 31, 2	023	023	023	023
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	44	14,403	13,214	13,214	-	none	none
Self-use home mortgages loans	133	554,182	543,938	543,938	-	real estate	none
Others	Natural person	605,165	591,276	591,276	-	real estate	none
December 31, 2022
Category	Number of clients or name of relatedparty	Highest balance	Ending balance	Performing situations		Collaterals	Transaction terms are different to regular clients
				Performing loan	Non-performing Loans
Employee consumer loans	46	18,311	14,727	14,727	-	none	none
Self-use home mortgages loans	127	557,503	511,280	511,280	-	real estate	none
Others	Natural person	617,163	590,656	590,656	-	real estate	none
March 31, 2				022
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	44	15,306	14,516	14,516	-	none	none
Self-use home mortgages loans	127	474,569	467,474	467,474	-	real estate	none
Others	Natural person	471,283	467,085	467,085	-	real estate	none

(Continued)

126

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

(vi) Donation:

Small and Medium Enterprise Credit Guarantee Fund of Taiwan Taiwan Business Bank Guild Total	For the three months ended March 31,	For the three months ended March 31,
	2023 $ 90,344 4,200 $ 94,544	2022
		79,634 2,500
		82,134

(vii) Guarantees: None. (viii) Service fees: None. (ix) Rental revenue: None.

(x) Derivatives financial instrument transactions: None.

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

(xii) Unearned revenue:

March 31, 2023 TBB No. 1 Venture Capital Limited Partnership $ 12,786 (xiii) Other revenue: TBB No. 1 Venture Capital Limited Partnership Media Talk Consultants Co., Ltd. Total (c) Major management salary information Salary and other short-term employee benefits Post-employment benefits Total	March 31, 2023	December 31, 2022 March 31, 2022 - 12,844 For the three months ended March 31,	March 31, 2022
			12,844
		2023 2022 $ 4,262 4,110 10 - $ 4,272 4,110 For the three months ended March 31,	2022
			4,110 -
			4,110
		2023 $ 35,939 635 $ 36,574	2022
			28,810 616
			29,426

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

(Continued)

127

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

(9) Commitments and contingencies:

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

Marketable securities held for custody Bills collected for others Bills lent for others Guarantees and letters of credit Trust liabilities Items held for custody Registered government bonds for sale Registered short-term bills for sale Guarantee notes payable	March 31, 2023 $ 8,603,353 37,885,578 49,349,679 33,184,990 223,681,741 765,038 67,010,900 4,241,397 52,185,000	December 31, 2022 March 31, 2022 8,659,768 9,185,197 43,238,126 47,449,491 49,785,210 41,227,250 30,185,645 35,773,975 218,150,077 220,384,725 901,998 1,004,278 66,327,700 67,368,900 4,290,113 3,656,022 54,054,530 63,492,900

• (b) Unrecognized contractual commitments:

As of March 31, 2023, December 31 and March 31, 2022, major constructions in progress and purchases amounted to $1,073,882, $1,018,993 and $721,800 respectively, of which $954,492, $911,848 and $589,357 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 plus interest, losses, and expenses for the L/C. On August 31, 2005, the Court of Commerce of Brussels rendered its judgment which the Bank has to make compensation of USD$7,674 plus interest to I.C.C.I.. The Bank has engaged a local attorney in Belgium to formally file an appeal. In February 2011, Court of Appeal in Brussels had made an intermediate adjudication which I.C.C.I and the Bank are both responsible for the offense. Furthermore, on November 16, 2011, the judgment of the court indicated that the Bank should be responsible for 90% of the negligence proportion. In terms of the judgment of the court of the second instance, the Bank has filed an appeal on November 3, 2011. On February 6, 2013, the court overruled the Bank’s appeal and the Bank lost the case. However, the Bank and I.C.C.I couldn't reach an agreement on the exchange rate and the calculation of the compensation. In October 2016, I.C.C.I initiated a case with the Court of Frankfurt in Germany, applied for seizing the Bank account in Germany, and the Bank lodged guaranty money of EUR $13,200 to the court to rescind the order for attachment.

(Continued)

128

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

In July 2017, I.C.C.I applied for compulsory execution to the guaranty money, the court has transferred the guaranty money to I.C.C.I. The Bank then filed a lawsuit objecting to the debt through the attorney. The case was dismissed by the Court of Frankfurt in November 2018, and remanded back to trial court in November 2019 after the Bank's appeal was granted by the High Court of Frankfurt. I.C.C.I. has filed a statement of grounds for objection to the Federal Supreme Court of Justice on March 16, 2019. And request to revoke the "Return of the Judgment of the Frankfurt High Court". The Bank has appointed a lawyer to act as an attorney in the Federal Supreme Court of Justice and filed a defense against I.C.C.I. of objections. The case is currently being tried by the Regional Court of Frankfurt. The Federal Supreme Court of Justice has denied the I.C.C.I interlocutory appeal on May 20, 2021. In October and November 2019, the Bank received subpoenas from the court of the Democratic Republic of Congo by a third person Star Marine, who demanded I.C.C.I to pay USD$1,130 in compensation and held the Bank as jointly liable, and by I.C.C.I, which demanded the Bank to pay USD$20,060 less its reimbursed amount to make a security deposit of EUR$14,000. The Bank has engaged local attorneys to represent itself in court. The Court of Congo will merge the two cases for court. In April 2021, the translation of judgement from the Court of Congo, judgeing that the Bank should pay around EUR$20,060 for I.C.C.I. Also, I.C.C.I must compensate Star Marine for USD$1,130 as well as make a security deposit of EUR$14,000 in the domestic bank in Congo. According to the statement of plaintiff and considering that I.C.C.I has already received about EUR $14,860, an addition of $73,181 has been provision for lawsuit in 2021. Please refer to Note 6(v) for more details. As of March 31, 2023, the Bank has accrued the compensation of $259,635 and EUR$9,660.

(10) Losses from disasters:None

(11) Subsequent Events:None

(12) Others:

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

• (i) Loan quality:

Items	Month/Year	Month/Year	March 31, 2023	March 31, 2023	March 31, 2023	March 31, 2023	March 31, 2023
			Non-performing loans	Total loans	Non-performing loan ratio	Allowance for credit losses	Coverage ratio
Corporate finance	Secured		1,357,326	713,406,779	0.19 %	8,635,639	636.22 %
	Unsecured		283,562	353,687,866	0.08 %	4,417,186	1,557.75 %
Consumer finance	Residence mortgages(Note 4)		137,250	176,145,450	0.08 %	2,126,835	1,549.61 %
	Cash cards		-	-	- %	-	- %
	Microcredit(Note 5)		3,859	302,849	1.27 %	6,937	179.76 %
	Others (Note 6)	Secured	157,973	148,378,741	0.11 %	1,792,767	1,134.86 %
		Unsecured	16,462	13,078,559	0.13 %	164,392	998.61 %
Total loan busin	ess		1,956,432	1,405,000,244	0.14 %	17,143,756	876.28 %
			Overdue receivables	Total receivables	Delinquency ratio	Allowance for credit losses	Coverage ratio
Credit cards bus	iness		671	1,041,788	0.06 %	13,603	2,027.27 %
Account receiva (Note 7)	ble factoring-without recourse		-	-	- %	-	- %

(Continued)

129

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

Items	Month/Year	Month/Year	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022
			Non-performing loans	Total loans	Non-performing loan ratio	Allowance for credit losses	Coverage ratio
Corporate finance	Secured		1,602,465	713,092,812	0.22 %	8,945,106	558.21 %
	Unsecured		691,641	372,391,080	0.19 %	4,952,203	716.01 %
Consumer finance	Residence mortgages(Note 4)		187,800	170,335,261	0.11 %	2,130,940	1,134.69 %
	Cash cards		-	-	- %	-	- %
	Microcredit(Note 5)		4,802	325,663	1.47 %	7,370	153.48 %
	Others (Note 6)	Secured	266,055	149,120,110	0.18 %	1,868,990	702.48 %
		Unsecured	14,614	13,228,525	0.11 %	174,007	1,190.69 %
total loan busine	ss		2,767,377	1,418,493,451	0.20 %	18,078,616	653.28 %
			Overdue receivables	Total receivables	Delinquency ratio	Allowance for credit losses	Coverage ratio
Credit cards bus	iness		437	1,122,771	0.04 %	14,292	3,270.48 %
Account receiva (Note 7)	ble factoring-without recourse		-	-	- %	-	- %
Items	Month/Year		March 31, 2022
			Non-performing loans	Total loans	Non-performing loan ratio	Allowance for credit losses	Coverage ratio
Corporate finance	Secured		1,232,164	679,532,690	0.18 %	8,024,807	651.28 %
	Unsecured		707,085	340,182,929	0.21 %	4,410,298	623.73 %
Consumer finance	Residence mortgages(Note 4)		183,644	145,767,078	0.13 %	1,726,283	940.02 %
	Cash cards		-	1	- %	-	- %
	Microcredit(Note 5)		6,375	385,838	1.65 %	9,068	142.24 %
	Others (Note 6)	Secured	278,836	147,773,212	0.19 %	1,753,999	629.04 %
		Unsecured	14,128	10,949,426	0.13 %	138,546	980.65 %
Total loan busin	ess		2,422,232	1,324,591,174	0.18 %	16,063,001	663.15 %
			Overdue receivables	Total receivables	Delinquency ratio	Allowance for credit losses	Coverage ratio
Credit cards bus	iness		406	973,830	0.04 %	17,623	4,340.64 %
Account receiva (Note 7)	ble factoring-without recourse		-	-	- %	-	- %

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

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

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

• 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.

(Continued)

130

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

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

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

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

Overdue loans and receivables exempted from reporting

March 31, 2023 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) $ 235 1,033 Pursuant to a contract under a debt liquidation plan and a debt relief plan (Note 2) 60,095 21,005 Total $ 60,330 22,038	March 31, 2023	March 31, 2023	December	31, 2022	March 31, 2022	March 31, 2022
	Loans may be exempted from reporting as a non-performing loan	Receivables may be exempted from reporting as overdue receivables	Loans may be exempted from reporting as a non-performing loan	Receivables may be exempted from reporting as overdue receivables	Loans may be exempted from reporting as a non-performing loan	Receivables may be exempted from reporting as overdue receivables
		1,033 21,005 22,038	258 54,109 54,367	1,112 22,489 23,601	343 51,740 52,083	1,389 25,972
						27,361

• Note 1: In accordance with Jin-Kuan-Yin-(1)-Zi No. 09510001270, dated April 25, 2006, a bank is required to make supplemental disclosure of credit information which was approved under the debt coordination mechanism of unsecured consumer debts by the Bankers Association of the R.O.C.

• Note 2: In accordance with Jin-Kuan-Yin-(1)-Zi No. 09700318940, dated September 15, 2008 and Jin-Kuan-Yin-Fa-Zi No. 10500134790, dated September 20, 2016, a bank is required to make supplemental disclosure of credit information once debtors apply for pre-negotiation, pre-conciliation, relief and liquidation under the “ Consumer Debt Clearance Act.”

(Continued)

131

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

(ii) Concentration of credit extensions

March 31, 2023

Concentration of credit extensions	Concentration of credit extensions	Concentration of credit extensions	Concentration of credit extensions
March 31, 2023
Ranking	Group enterprise	Credit amount	Credit amount to equity ratio (%)
1	A company. (Railway transportation)	21,203,082	% 19.40
2	B group. (Real estate for sale and rental with own or leased property)	16,356,886	% 14.97
3	C group. (Other holding)	10,607,981	% 9.71
4	D group. (Steel rolling and extruding)	9,223,588	% 8.44
5	E group. (Real estate development)	8,989,925	% 8.23
6	F group. (Liquid crystal panel and components manufacturing)	6,878,706	% 6.29
7	G group. (Real estate development)	6,485,765	% 5.93
8	H group. (Real estate development)	6,094,212	% 5.58
9	I group. (Computers manufacturing)	5,746,068	% 5.26
10	J group. (Computers manufacturing)	4,261,600	% 3.90

December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022
Ranking	Group enterprise	Credit amount	Credit amount to equity ratio (%)
1	A company. (Railway transportation)	21,202,474	% 20.37
2	B group. (Real estate for sale and rental with own or leased property)	16,381,315	% 15.74
3	C group. (Other holding)	9,788,164	% 9.40
4	E group. (Real estate development)	8,982,725	% 8.63
5	D group. (Steel rolling and extruding)	8,715,755	% 8.37
6	I group. (Computers manufacturing)	6,523,340	% 6.27
7	G group. (Real estate development)	6,261,408	% 6.01
8	H group. (Real estate development)	6,027,170	% 5.79
9	F group. (Liquid crystal panel and components manufacturing)	5,531,674	% 5.31
10	K group. (Financial leasing)	4,565,169	% 4.39

(Continued)

132

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

March 31, 2022	March 31, 2022	March 31, 2022	March 31, 2022
Ranking	Group enterprise	Credit amount	Credit amount to equity ratio (%)
1	A company. (Railway transportation)	23,637,474	% 23.06
2	B group. (Real estate for sale and rental with own or leased property)	11,386,083	% 11.11
3	E group. (Real estate development)	9,020,525	% 8.80
4	D group. (Steel rolling and extruding)	8,871,177	% 8.65
5	C group. (Other holding)	7,954,544	% 7.76
6	G group. (Real estate development)	6,398,106	% 6.24
7	H group. (Real estate development)	5,926,472	% 5.78
8	I group. (Computers manufacturing)	5,489,615	% 5.35
9	K group. (Financial Leasing)	4,511,541	% 4.40
10	J group. (Computers manufacturing)	4,001,200	% 3.90

• 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.

(Continued)

133

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

(iii) Interest rate-sensitivity information

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

Unit : %

March 31, 2023	March 31, 2023	March 31, 2023	March 31, 2023	March 31, 2023	March 31, 2023
Item	1~90 days	91~180 days	181days~1year	over 1 year	total
Interest rate-sensitive assets	$ 1,466,480,441	61,060,905	35,385,387	137,650,072	1,700,576,805
Interest rate-sensitive liabilities	1,326,264,047	66,406,615	61,310,893	49,682,499	1,503,664,054
Interest rate sensitivity gap	140,216,394	(5,345,710)	(25,925,506)	87,967,573	196,912,751
Net worth					109,295,341
Ratio of interest rate-sensitive assets to liabilities (%)					113.10
Ratio of interest rate-sensitive gap to net worth (%)					180.17

December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022
Item	1~90 days	91~180 days	181days~1year	over 1 year	total
Interest rate-sensitive assets	$ 1,464,207,488	24,207,477	42,324,132	136,449,514	1,667,188,611
Interest rate-sensitive liabilities	1,333,797,410	31,475,346	65,933,051	49,486,811	1,480,692,618
Interest rate sensitivity gap	130,410,078	(7,267,869)	(23,608,919)	86,962,703	186,495,993
Net worth					104,107,258
Ratio of interest rate-sensitive assets to liabilities (%)					112.60
Ratio of interest rate-sensitive gap to net worth (%)					179.14
March 31, 2022
Item	1~90 days	91~180 days	181days~1year	over 1 year	total
Interest rate-sensitive assets	$ 1,365,945,758	50,439,830	56,852,236	180,571,717	1,653,809,541
Interest rate-sensitive liabilities	1,277,574,545	93,151,698	79,993,772	57,718,141	1,508,438,156
Interest rate sensitivity gap	88,371,213	(42,711,868)	(23,141,536)	122,853,576	145,371,385
Net worth					102,517,691
Ratio of interest rate-sensitive assets to liabilities (%)					109.64
Ratio of interest rate-sensitive gap to net worth (%)					141.80

• Note 1 Listed amount refers to the Bank's amount of N.T. dollars and does not include contingent assets or liabilities.

• Note 2 Interest rate-sensitive assets and liabilities refer to revenues or costs of interest– yielding assets and interest–bearing liabilities, which are affected by interest rate fluctuations.

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

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

(Continued)

134

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

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

Unit : In Thousands of US Dollars, %

March 31, 2023	March 31, 2023	March 31, 2023	March 31, 2023	March 31, 2023	March 31, 2023
Item	1~90 days	91~180 days	181days~1year	over 1 year	total
Interest rate-sensitive assets	$ 4,735,125	284,451	143,238	1,702,314	6,865,128
Interest rate-sensitive liabilities	7,603,218	2,325,558	1,486,809	-	11,415,585
Interest rate sensitivity gap	(2,868,093)	(2,041,107)	(1,343,571)	1,702,314	(4,550,457)
Net worth					3,590,517
Ratio of interest rate-sensitive assets to liabilities (%)					60.14
Ratio of interest rate-sensitive gap to net worth (%)					(126.74)

December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022
Item	1~90 days	91~180 days	181days~1year	over 1 year	total
Interest rate-sensitive assets	$ 5,161,097	219,595	116,768	993,718	6,491,178
Interest rate-sensitive liabilities	7,302,641	1,388,445	2,402,052	1,139	11,094,277
Interest rate sensitivity gap	(2,141,544)	(1,168,850)	(2,285,284)	992,579	(4,603,099)
Net worth					3,388,357
Ratio of interest rate-sensitive assets to liabilities (%)					58.51
Ratio of interest rate-sensitive gap to net worth (%)					(135.85)
March 31, 2022
Item	1~90 days	91~180 days	181days~1year	over 1 year	total
Interest rate-sensitive assets	$ 5,257,332	316,813	101,512	921,484	6,597,141
Interest rate-sensitive liabilities	7,097,957	1,838,609	1,481,026	-	10,417,592
Interest rate sensitivity gap	(1,840,625)	(1,521,796)	(1,379,514)	921,484	(3,820,451)
Net worth					3,587,043
Ratio of interest rate-sensitive assets to liabilities (%)					63.33
Ratio of interest rate-sensitive gap to net worth (%)					(106.51)

• Note 1 Listed amount refers to the Bank's amount of US dollars and does not include contingent assets or liabilities.

• Note 2 Interest rate-sensitive assets and interest rate-sensitive liabilities refer to the interest yielding assets and interest-bearing liabilities which the revenue and cost are affected by interest rate fluctuation.

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

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

(Continued)

135

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

(iv) Profitability

Unit: %

			Unit: %
Item		March 31, 2023	March 31, 2022
The ratio of return on assets	Before income tax	0.20	0.13
	After income tax	0.17	0.10
The ratio of return on equity	Before income tax	3.84	2.54
	After income tax	3.25	2.08
Net income ratio		43.61	34.19

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

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

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

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

• (v) Maturity analysis for assets and liabilities

1) Maturity analysis in New Taiwan dollars

		March 31, 2023	March 31, 2023	March 31, 2023	March 31, 2023	March 31, 2023	March 31, 2023
	Total	Amount during the maturity period from the balance sheet date to due date
		0-10days	11-30days	31-90days	91-180days	181days-1year	Over 1 year
Major maturity capital inflow	$ 1,793,456,327	137,263,058	194,732,460	185,304,930	181,097,829	176,134,091	918,923,959
Major maturity capital outflow	2,208,278,362	37,730,814	103,042,625	218,034,777	236,065,411	448,730,050	1,164,674,685
Gap	(414,822,035)	99,532,244	91,689,835	(32,729,847)	(54,967,582)	(272,595,959)	(245,750,726)

Note: Listed amounts are denominated in New Taiwan dollars of the Bank and subsidiaries, including loan commitments of credit agreement and estimates to outflow $409,337,559.

(Continued)

136

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

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

Note: Listed amounts are denominated in New Taiwan dollars of the Bank and subsidiaries, including loan commitments of credit agreement and estimates to outflow $390,839,630.

		March 31, 2022	March 31, 2022	March 31, 2022	March 31, 2022	March 31, 2022	March 31, 2022
	Total	Amount during the maturity period from the balance sheet date to due date
		0-10days	11-30days	31-90days	91-180days	181days-1year	Over 1 year
Major maturity capital inflow	$ 1,776,277,144	151,435,253	199,029,794	165,633,562	182,348,210	193,635,661	884,194,664
Major maturity capital outflow	2,147,776,563	49,501,763	111,974,421	198,727,832	307,692,790	372,574,251	1,107,305,506
Gap	(371,499,419)	101,933,490	87,055,373	(33,094,270)	(125,344,580)	(178,938,590)	(223,110,842)

Note: Listed amounts are denominated in New Taiwan dollars of the Bank and subsidiaries, including loan commitments of credit agreement and estimates to outflow $367,616,811.

2) Maturity analysis in US dollars

Unit : In Thousands of US Dollars

		March 31, 2023	March 31, 2023	March 31, 2023	March 31, 2023	March 31, 2023
	Total	Amount during the maturity period from the balance sheet date to due date
		0-30days	31-90days	91-180days	181days-1year	Over 1 year
Major maturity capital inflow	$ 16,442,024	4,496,933	3,908,754	1,864,432	1,741,716	4,430,189
Major maturity capital outflow	17,288,938	4,093,595	4,108,433	3,551,569	2,599,703	2,935,638
Gap	(846,914)	403,338	(199,679)	(1,687,137)	(857,987)	1,494,551

Note: Listed amounts are denominated in US dollars of the Bank and subsidiaries, including loan commitments of credit agreement and estimates to outflow USD $883,795.

(Continued)

137

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

		December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022
	Total	Amount during the maturity period from the balance sheet date to due date
		0-30days	31-90days	91-180days	181days-1year	Over 1 year
Major maturity capital inflow	$ 16,353,649	5,107,519	4,629,214	1,287,440	1,713,177	3,616,299
Major maturity capital outflow	17,155,496	3,645,117	4,045,473	2,484,679	3,910,394	3,069,833
Gap	(801,847)	1,462,402	583,741	(1,197,239)	(2,197,217)	546,466

Note: Listed amounts are denominated in US dollars of the Bank and subsidiaries, including loan commitments of credit agreement and estimates to outflow USD $912,002.

	$912,002.
		March 31, 2022
	Total	Amount during the maturity period from the balance sheet date to due date
		0-30days	31-90days	91-180days	181days-1year	Over 1 year
Major maturity capital inflow	$ 14,895,226	3,040,141	3,353,994	1,305,649	3,424,829	3,770,613
Major maturity capital outflow	15,533,873	3,830,420	2,392,567	2,436,726	2,767,051	4,107,109
Gap	(638,647)	(790,279)	961,427	(1,131,077)	657,778	(336,496)

Note: Listed amounts are denominated in US dollars of the Bank and subsidiaries, including loan commitments of credit agreement and estimates to outflow USD $788,932.

(Continued)

138

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

(13) Other disclosures:

• (a) Information on significant transactions:

• (i) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 10% of the capital stock: None.

• (ii) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 10% of the capital stock: None.

• (iii) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 10% of the capital stock: None.

• (iv) Service charge discounts on transactions with related parties in an aggregate amount of NT$5 million or more: None.

• (v) Receivables from related parties with amounts exceeding the lower of NT$300 million or 10% of the capital stock: None.

• (vi) Information on NPL disposal transaction: None.

• (vii) Types of securitization instruments approved to be issued pursuant to financial assets securitization rules or real estate securitization rules and other relevant information: None.

(viii) Business relationships and significant intercompany transactions:

No (Note 1)	Trader	Counterparty	Relationship (Note 2)	Transaction status for the three months ended March 31, 2023	Transaction status for the three months ended March 31, 2023	Transaction status for the three months ended March 31, 2023	Transaction status for the three months ended March 31, 2023
				Account	Amount	Terms	Percentage accounted for consolidated net revenue or total assets
0	Taiwan Business Bank, Ltd.	TBB International Leasing Co., Ltd.	1	Deposits and remittances	11,280	No difference with non- related parties	- %
1	TBB International Leasing Co., Ltd.	Taiwan Business Bank, Ltd.	2	Right-of-use assets	57	No difference with non- related parties	- %
1	TBB International Leasing Co., Ltd.	Taiwan Business Bank, Ltd.	2	Lease liabilities	58	No difference with non- related parties	- %
0	Taiwan Business Bank, Ltd.	TBB International Leasing Co., Ltd.	1	Net revenue other than interest	173	No difference with non- related parties	- %
0	Taiwan Business Bank, Ltd.	TBB Venture Capital Co., Ltd.	1	Deposits and remittances	116,902	No difference with non- related parties	0.01 %
2	TBB Venture Capital Co., Ltd.	Taiwan Business Bank, Ltd.	2	Right-of-use assets	605	No difference with non- related parties	- %
2	TBB Venture Capital Co., Ltd.	Taiwan Business Bank, Ltd.	2	Lease liabilities	610	No difference with non- related parties	- %
0	Taiwan Business Bank, Ltd.	TBB Venture Capital Co., Ltd.	1	Net revenue other than interest	44	No difference with non- related parties	- %
0	Taiwan Business Bank, Ltd.	Taiwan Business Bank International Leasing Co., Ltd.	1	Deposits and remittances	134,326	No difference with non- related parties	0.01 %
0	Taiwan Business Bank, Ltd.	TBB Consulting Co., Ltd.	1	Deposits and remittances	72,024	No difference with non- related parties	- %
0	Taiwan Business Bank, Ltd.	TBB Consulting Co., Ltd.	1	Net revenue other than interest	243	No difference with non- related parties	- %
3	TBB Consulting Co., Ltd.	Taiwan Business Bank, Ltd.	2	Right-to-use assets	3,376	No difference with non- related parties	- %
3	TBB Consulting Co., Ltd.	Taiwan Business Bank, Ltd.	2	Lease liabilities	3,401	No difference with non- related parties	- %
2	TBB Venture Capital Co., Ltd.	TBB Consulting Co., Ltd.	3	Business expenses	6,749	No difference with non- related parties	- %
2	TBB Venture Capital Co., Ltd.	TBB Consulting Co., Ltd.	3	Accounts payable	64,737	No difference with non- related parties	- %

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

(1) Zero stands for the parent company

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

1. There are three kinds of relationships with counterparty

(1) Parent company to subsidiary

(2) Subsidiary to parent company

(3) Between subsidiaries

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

(Continued)

139

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

(b) Information on investees:

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

(Unit : thousand shares)

Name of investee	Location	Main business scope	Shareholding ratio	Book value	Investment gain (loss)	The cross holding of the B	The cross holding of the B	ank and its related parties	ank and its related parties	Note
						Number of shares	Number of proforma shares	Total
								Number of shares	Shareholding ratio
TBB International Leasing Co., Ltd.	Taiwan	Leasing business	100.00 %	1,534,428	12,634	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 %	605,640	(13,098)	20	-	20	100.00 %	〞
TBB Venture Capital Co., Ltd.	Taiwan	Investing business	100.00 %	1,460,251	200,454	105,000	-	105,000	100.00 %	〞
TBB Consulting Co., Ltd.	Taiwan	Consulting business	100.00 %	100,429	2,482	5,000	-	5,000	100.00 %	〞
Media Talk Consulting Co., Ltd.	Taiwan	Investing cultural and creative business	20.00 %	472	(336)	200	-	200	20.00 %

(ii) Loans to others:

NO.	Creditor	Debtor	Interaction Account	Related party	Highest Amount	Ending balance	Actual drawdown amount	Range of interest rate	Nature of the loan	Dealing amount	The necessary reason for short-term loans	Allowance for bad debts	Guarantee	Guarantee	Limited amount for individual object	Total limited amount for loan
													Name	Value
1	TBB International Leasing Co., Ltd.	Chao-Yang International Co., Ltd.	Financial receivables	No	10,115	6,761	20,000	2%~10%	2	-	To the lender for buying goods	68	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Hsin Chuan Construc-tion Co., Ltd.	Financial receivables	No	54,430	37,746	100,000	2%~10%	2	-	To the lender for buying goods	377	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Sian Shang Frozen Food Co., Ltd	Financial receivables	No	8,442	5,072	20,000	2%~10%	2	-	To the lender for buying goods	51	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Xi Quan Restaurant Co., Ltd	Financial receivables	No	98,957	96,241	100,000	2%~10%	2	-	To the lender for buying goods	962	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Acon-Holding INC.	Financial receivables	No	60,000	30,000	60,000	2%~10%	2	-	To the lender for buying goods	300	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Pei Xian Seafood Co., Ltd	Financial receivables	No	10,115	6,761	20,000	2%~10%	2	-	To the lender for buying goods	68	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Maw Shing Top Co., Ltd.	Financial receivables	No	9,616	6,891	15,000	2%~10%	2	-	To the lender for buying goods	69	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Yu Ding Investment Co., Ltd	Financial receivables	No	46,989	40,925	50,000	2%~10%	2	-	To the lender for buying goods	409	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Chaishan Foods Co., Ltd.	Financial receivables	No	50,000	41,847	50,000	2%~10%	2	-	To the lender for buying goods	418	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Chao-Chi Property Management Consulting Co.,Ltd	Financial receivables	No	8,835	6,335	15,000	2%~10%	2	-	To the lender for buying goods	63	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Tai Chang Fiber Co., Ltd	Financial receivables	No	8,851	6,351	15,000	2%~10%	2	-	To the lender for buying goods	64	None	-	379,101	1,516,403

(Continued)

140

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

NO.	Creditor	Debtor	Interaction Account	Related party	Highest Amount	Ending balance	Actual drawdown amount	Range of interest rate	Nature of the loan	Dealing amount	The necessary reason for short-term loans	Allowance for bad debts	Guarantee	Guarantee	Limited amount for individual object	Total limited amount for loan
													Name	Value
1	TBB International Leasing Co., Ltd.	Risingsun Wide Food Corp.	Financial receivables	No	27,439	26,145	30,000	2%~10%	2	-	To the lender for buying goods	261	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Yu Cheng Precision Industry Co.,Ltd.	Financial receivables	No	8,054	6,060	12,000	2%~10%	2	-	To the lender for buying goods	61	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Jiou Chang Motor Co., Ltd.	Financial receivables	No	9,188	7,551	10,000	2%~10%	2	-	To the lender for buying goods	76	None	-	379,101	1,516,403
1	TBB International Leasing Co.,Ltd.	Liang-wei Tobacco & Liquor Co., Ltd.	Financial receivables	No	9,188	7,553	10,000	2%~10%	2	-	To the lender for buying goods	76	None	-	379,101	1,516,403
1	TBB International Leasing Co.,Ltd.	Jia Ho Food Co., Ltd.	Financial receivables	No	19,044	17,122	20,000	2%~10%	2	-	To the lender for buying goods	171	None	-	379,101	1,516,403

Note1: The meaning of the number is as follows.

(1) Zero stands for issuer.

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

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

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

(1) 1 stands for business relation.

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

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

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

(iii) Endorsements and guarantee for others: None

(iv) Acquisition of securities:

Company acquired	Type and name of the security	Relationship with the security issuer	Account	At the end of the period	At the end of the period	At the end of the period	At the end of the period	Note
				Number of shares	Carrying amount	Share proportion	Market price
TBB International Leasing Co., Ltd.	Taiwan Buisness International Leasing Co., Ltd.	Parent company	Investment under equity method	-	970,727	100.00 %	970,727	The transaction has been written off when preparing the consolidated financial statements.
TBB International Leasing Co., Ltd.	G12245、G12246	-	Financial assets at fair value through profit or loss	-	100,000	- %	100,000	Financial debentures
TBB Venture Capital Co., Ltd.	G12245	-	Financial assets at fair value through profit or loss	-	100,000	- %	100,000	Financial Debentures
TBB Venture Capital Co., Ltd.	Powerchip Semiconductor Manufacturing Corporation	-	Financial assets at fair value through profit or loss	250	8,275	0.01 %	8,275	Listed Stocks
TBB Venture Capital Co., Ltd.	Eir Genix, Inc.	-	Financial assets at fair value through profit or loss	845	98,443	0.28 %	98,443	OTC Stocks
TBB Venture Capital Co., Ltd.	Chenfull Precision Co.,Ltd.	-	Financial assets at fair value through profit or loss	380	34,390	0.64 %	34,390	OTC Stocks
TBB Venture Capital Co., Ltd.	Lungteh Shipbuilding Co., Ltd.	-	Financial assets at fair value through profit or loss	1,238	143,573	1.26 %	143,573	Listed Stocks
TBB Venture Capital Co., Ltd.	Ping Ho Environmental Technology Co., Ltd.	-	Financial assets at fair value through profit or loss	150	9,930	0.51 %	9,930	Emerging Stocks
TBB Venture Capital Co., Ltd.	Handa Pharmaceuticals, Inc.	-	Financial assets at fair value through profit or loss	1,141	224,721	0.88 %	224,721	Emerging Stocks

(Continued)

141

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

Company acquired	Type and name of the security	Relationship with the security issuer	Account	At the end of the period	At the end of the period	At the end of the period	At the end of the period	Note
				Number of shares	Carrying amount	Share proportion	Market price
TBB Venture Capital Co., Ltd.	Tigerair Taiwan Co.,Ltd.	-	Financial assets at fair value through profit or loss	1,765	75,983	0.44 %	75,983	Emerging Stocks
TBB Venture Capital Co., Ltd.	Energenesis Biomedical Co., Ltd.	-	Financial assets at fair value through profit or loss	340	22,542	0.51 %	22,542	Emerging Stocks
TBB Venture Capital Co., Ltd.	Evergreen Aviation Technologies Corporation	-	Financial assets at fair value through profit or loss	468	45,770	0.13 %	45,770	Listed Stocks
TBB Venture Capital Co., Ltd.	Locus Cell Co., Ltd.	-	Financial assets at fair value through profit or loss	1,362	63,946	0.68 %	63,946	Emerging Stocks
TBB Venture Capital Co., Ltd.	Starlux Airlines Co., Ltd.	-	Financial assets at fair value through profit or loss	3,735	119,894	0.21 %	119,894	Emerging Stocks
TBB Venture Capital Co., Ltd.	Pinkoi Inc.	-	Financial assets at fair value through profit or loss	93	27,888	0.53 %	27,888	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Song Chuan Precision Co., Ltd.	-	Financial assets at fair value through profit or loss	415	24,898	0.74 %	24,898	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Techplasma Technology Co., Ltd.	-	Financial assets at fair value through profit or loss	821	49,824	2.87 %	49,824	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Hephas Energy Co., Ltd.	-	Financial assets at fair value through profit or loss	680	25,016	2.96 %	25,016	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Ren Chin ElectricConductor Co., Ltd.	-	Financial assets at fair value through profit or loss	250	3,270	2.61 %	3,270	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Manford Machinery Co.,Ltd.	-	Financial assets at fair value through profit or loss	1,195	22,442	2.99 %	22,442	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Yuh Shan Enviromental Engineering Co., Ltd.	-	Financial assets at fair value through profit or loss	500	30,590	1.96 %	30,590	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Iovtec Co., Ltd.	-	Financial assets at fair value through profit or loss	424	22,171	2.93 %	22,171	Unlisted Stocks
TBB Venture Capital Co., Ltd.	e-Formula Technologies,Inc.	-	Financial assets at fair value through profit or loss	600	8,130	2.76 %	8,130	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Han-win Technology Co.,Ltd	-	Financial assets at fair value through profit or loss	453	5,882	2.20 %	5,882	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Ina Energy Corporation	-	Financial assets at fair value through profit or loss	2,000	29,100	0.99 %	29,100	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Amazing Cool Technology Corporation.	-	Financial assets at fair value through profit or loss	390	3,869	2.79 %	3,869	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Long-Shun Green Energy Technology Ltd.	-	Financial assets at fair value through profit or loss	720	22,536	2.40 %	22,536	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Gamamobi Taiwan Co.,Ltd.	-	Financial assets at fair value through profit or loss	200	1,690	1.00 %	1,690	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Toyo Automation Co.,Ltd.	-	Financial assets at fair value through profit or loss	250	16,620	0.95 %	16,620	Unlisted Stocks
TBB Venture Capital Co., Ltd.	aetherAI Co., Ltd.	-	Financial assets at fair value through profit or loss	400	10,000	0.69 %	10,000	Unlisted Stocks
TBB Venture Capital Co., Ltd.	GoodLinker Co., Ltd.	-	Financial assets at fair value through profit or loss	100	3,000	2.86 %	3,000	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Yiyi Pictures Co Ltd.	-	Financial assets at fair value through profit or loss	9	2,992	2.94 %	2,992	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Inbound Asia Co., Ltd.	-	Financial assets at fair value through profit or loss	83	3,000	0.50 %	3,000	Unlisted Stocks
TBB Venture Capital Co., Ltd.	TFBS Bioscience, Inc.	-	Financial assets at fair value through profit or loss	250	13,500	0.75 %	13,500	Unlisted Stocks

(Continued)

142

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

Company acquired	Type and name of the security	Relationship with the security issuer	Account	At the end of the period	At the end of the period	At the end of the period	At the end of the period	Note
				Number of shares	Carrying amount	Share proportion	Market price
TBB Venture Capital Co., Ltd.	Asia Hydrogen Energy Corporation	-	Financial assets at fair value through profit or loss	132	5,000	1.98 %	5,000	Unlisted Stocks
TBB Venture Capital Co., Ltd.	kuang shih AI Co., Ltd.	-	Financial assets at fair value through profit or loss	1,600	20,800	8.89 %	20,800	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Longwalk social enterprise, Co., Ltd.	-	Financial assets at fair value through profit or loss	120	3,000	12.77 %	3,000	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Carpost Co., Ltd.	-	Financial assets at fair value through profit or loss	330	3,960	2.84 %	3,960	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Honley Auto. Parts Co., Ltd.	-	Financial assets at fair value through profit or loss	3,000	36,000	2.95 %	36,000	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Taiwania Buffalo III Biotechnology Venture Capital LLP.	-	Financial assets at fair value through profit or loss	-	53,438	4.57 %	53,438	Private Fund
TBB Venture Capital Co., Ltd.	Ju He Venture Capital LLP.	-	Financial assets at fair value through profit or loss	-	18,878	2.46 %	18,878	Private Fund
TBB Venture Capital Co., Ltd.	TBB No. 1 Venture Capital Limited Partnership	-	Financial assets at fair value through profit or loss	-	11,602	1.12 %	11,602	Private Fund
TBB Venture Capital Co., Ltd.	Jia Da International Development Co., Ltd.	-	Financial assets at fair value through other comprehensive income	2,919	31,091	8.52 %	31,091	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Rising FinTech Corp.	-	Financial assets at fair value through profit or loss	38	3,000	2.29 %	3,000	Unlisted Stocks
TBB Consulting Co., Ltd.	Media Talk Consulting Co., Ltd.	Associates	Investment under equity method	-	472	20.00 %	472
TBB Consulting Co., Ltd.	TBB No. 1 Venture Capital Limited Partnership	-	Financial assets at fair value through profit or loss	-	1,160	0.11 %	1,160	Private Fund

(v) Accumulative purchases or sales of the same investee companies amounting to over $300,000 or 10% of paid-in capital: None.

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

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

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

• (ix) Receivables from related parties amounting to over $300,000 or 10% of paid-in capital: None.

• (x) Transactions of financial derivatives: None.

• (xi) Sale of non-performing loans information: None.

• (xii) Types of securitization instruments and related information approved by financial assets securitization rules or real estate securitization rules: None.

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

(Continued)

143

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

(c) Information on investments in Mainland China:

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

Name of investee company in Mainland China	Major business	Paid-in capital	Investment method (Note 1)	Accumulated amount transferred from Taiwan, beginning of the period	Investment transferred out or recovered	Investment transferred out or recovered	Accumulated amount transferred from Taiwan, end of the period	The current profit or loss of the investee (Note 2)	Shares directly or indirectly possessed by the Bank	Investment income for the period (Notes 2 and 4)	Ending 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)	(3)	3,910,537 (CNY800 million)	-	-	3,910,537 (CNY800 million)	-	Shanghai branch of the Bank, not an investee company	Note 4	4,319,176	None
Taiwan Business Bank , Ltd. Wuhan branch	Banking business	3,942,815 (CNY800 million) (Operating capital)	(3)	3,942,815 (CNY800 million)	-	-	3,942,815 (CNY800 million)	-	Wuhan branch of the Bank, not an investee company	Note 4	4,140,257	"
Taiwan Business Bank International Leasing Co., Ltd.	Leasing business	838,305 (CNY170 million) (Operating capital)	(1)	838,305 (CNY170 million)	-	-	838,305 (CNY170 million)	10,164 (2) c	100%	10,164 (2) c	970,727	"

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

• (1) Directly invest in Mainland China.

• (2) Investment in Mainland China companies through a third region.

• (3) Others: establishment of oversea branches

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

• (1) If the company is still in the preparation process, and does not have any investment gain or loss, please specify.

• (2) The bases for recognition of investment income or loss have three methods, please specify.

a. The audited financial reports that are issued by an international accounting firm which is connected to an accounting firm in Taiwan.

b The audited financial reports that are issued by the Taiwan parent company’s designated accounting firm.

c. Others

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

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

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

• (ii) Limitation on investment in Mainland China:

Name of Company	Accumulated 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)	65,577,205

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	1,301,907,315	% 16.21
National Development Fund, Executive Yuan	471,075,689	% 5.87

(Continued)

144

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

(14) Segment information:

(a) General information

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

(b) Segment information

For the three months ended March 31, 2023 Net interest revenue Net revenue other than interest Net revenue Bad debt expense, commitment and guarantee liability provision Operating expenses Income from continuing operation before tax Total assets Total liabilities	Banking Segment $ 4,687,484 2,246,318 6,933,802 (222,514) (3,433,105) $ 3,278,183 $ 2,069,018,063 $ 1,963,248,533	Securities, Trust, Insurance agent and Others 68,291 1,170,828 1,239,119 (15,842) (200,154) 1,023,123 18,269,672 11,043,113	Adjustment and Elimination - (209,221) (209,221) - 6,749 (202,472) (4,242,845) (542,097)	Total 4,755,775 3,207,925 7,963,700 (238,356) (3,626,510) 4,098,834 2,083,044,890 1,973,749,549

(Continued)

145

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

For the three months ended March 31, 2022	Banking Segment $ 4,610,851 888,213 5,499,064 (254,685) (3,203,292) $ 2,041,087 $ 2,011,146,618 $ 1,912,140,200	Securities, Trust, Insurance agent and Others 80,169 701,378 781,547 (575) (170,609) 610,363 18,881,422 12,146,986	Adjustment and Elimination 12 (67,810) (67,798) - 5,468 (62,330) (3,926,994) (703,831)	Total 4,691,032 1,521,781 6,212,813 (255,260) (3,368,433) 2,589,120 2,026,101,046 1,923,583,355
Net interest revenue Net revenue other than interest Net revenue Bad debt expense, commitment and guarantee liability provision Operating expenses Income from continuing operation before tax Total assets Total liabilities

(c) 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.

146

(English Translation of Financial Statements Originally Issued in Chinese.)

Reviewed only, not audited in accordance with generally standards as of March 31, 2023 and 2022.

TAIWAN BUSINESS BANK, LTD.

Balance Sheets of Security Division

March 31, 2023, December 31, 2022 and March 31, 2022

(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 127000 Intangible assets 129000 Other non-current assets Total non-current assets Total assets	March 31, 2023 Amount ％ $ 650,898 7 2,441,199 26 9,885 - 8,237 - 491,742 6 8,063 - 3,610,024 39 5,436,673 58 298,868 3 28,638 - 9,169 - 34,499 - 5,807,847 61 $ 9,417,871 100	December 31, 2022 Amount ％ 651,983 7 2,645,176 28 1,505 - 1,158 - 262,501 4 68,288 1 3,630,611 40 5,408,506 57 298,840 3 26,263 - 11,282 - 32,709 - 5,777,600 60 9,408,211 100	March 31, 2022
			Amount ％ 852,598 8 3,203,168 29 2,165 - 1,804 - 597,065 5 29,854 - 4,686,654 42 6,179,484 55 299,879 3 19,967 - 12,840 - 32,752 - 6,544,922 58 11,231,576 100

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 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	March 31, 2023 Amount % $ 741,992 8 67,729 1 67,707 1 402,809 4 38,644 - 1,318,881 14 20 - 5,802,765 62 5,802,785 62 7,121,666 76 2,200,000 23 185,127 2 36,746 - (125,668) (1) 2,296,205 24 $ 9,417,871 100	December 31, 2022		March 31, 2022
				Amount % 741,936 7 74,406 1 73,148 1 503,366 4 62,316 - 1,455,172 13 20 - 7,361,804 65 7,361,824 65 8,816,996 78 2,200,000 19 185,127 2 72,281 1 (42,828) - 2,414,580 22 11,231,576 100

147

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

TAIWAN BUSINESS BANK, LTD.

Statements of Comprehensive Income of Security Division

For the three months ended March 31, 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

For the three months 2023 Amount ％ Revenues： 401000 Brokerage handling fee revenue $ 81,981 68 401110 Handling fees from securities financing 265 - 421200 Interest revenue 37,749 31 424100 Future commission revenue 577 1 425300 Impairment loss (impairment gain and reversal of impairment loss) 2 - 428000 Other operating income 232 - 120,806 100 Expenses： 501000 Brokerage handling fee expenses 6,088 5 503000 Refinancing processing fee expenses 87 - 521200 Financial costs 1,053 1 528000 Other operating expenditure 219 - 530000 Operating expenses 69,473 58 602000 Other losses and (gains) 7,140 6 84,060 70 Net income 36,746 30 805000 Other comprehensive income： 805615 Unrealized gains (losses) from investment in debt instruments measured at fair value through other comprehensive income 30,784 25 805699 Add: Income tax related to components of other comprehensive income - - 805000 Other comprehensive income (net amount after tax) 30,784 25 Total comprehensive income $ 67,530 55	For the three months	ended March 31, 2022 Amount ％ 98,534 68 255 - 46,616 32 500 - 1 - 55 - 145,961 100 6,969 5 16 - 382 - 222 - 71,102 49 (5,011) (3) 73,680 51 72,281 49 (87,568) (60) - - (87,568) (60) (15,287) (11)