Stock Code:2834

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors’ Review Report For the Six Months Ended June 30, 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.

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 Page

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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	Page
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KPMG

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

Independent Auditors’ Review Report

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

Introduction

We have reviewed the accompanying consolidated balance sheets of Taiwan Business Bank, Ltd. and subsidiaries as of June 30, 2023 and 2022, and the related consolidated statements of comprehensive income for the three months and six months ended June 30, 2023 and 2022, as well as the changes in equity and cash flows for the six months ended June 30, 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 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 June 30, 2023 and 2022, and of its consolidated financial performance for the three months and six months ended June 30, 2023 and 2022, as well as its consolidated cash flows for the six months ended June 30, 2023 and 2022 in accordance with the Regulations Governing the Preparation of Financial Reports by Public Held Banks 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.

3-1

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) August 16, 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.

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

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

June 30, 2023, December 31, 2022, and June 30, 2022

(Expressed in Thousands of New Taiwan Dollars)

June 30, 2023	December 31, 2022	December 31, 2022	June 30, 2022
Amount % $ 171,901,318 8 1,212,500 - 9,591,566 1 2,397,309 - 16,345,749 1 671,902 - 1,704,474,195 82 60,250,000 3 3,224,904 - 2,623,950 - 1,272,263 - 879,056 - 1,995,556 - 1,976,840,268 95 80,296,934 4 1,927,127 - 815,900 - 20,028,865 1 3,954,803 - 6,722,539 - (1,018,895) - 112,727,273 5 $ 2,089,567,541 100	Amount	%	Amount % 117,416,238 6 922,315 - 9,540,288 1 2,439,839 - 25,549,427 1 488,100 - 1,664,104,418 84 52,250,000 3 3,549,679 - 3,296,143 - 1,174,082 - 879,056 - 3,780,848 - 1,885,390,433 95 77,431,952 4 2,864,982 - 815,900 - 17,239,615 1 185,128 - 3,574,973 - (3,049,975) - 99,062,575 5 1,984,453,008 100
	194,966,177 1,131,025 9,925,525 2,462,991 21,493,131 1,101,015 1,673,580,263 52,250,000 2,910,581 2,676,102 1,239,919 879,056 3,763,082
	1,968,378,867

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the three and six months ended June 30, 2023 and 2022

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

For the six months ended June 30	For the six months ended June 30	For the six months ended June 30
2023	% 150 (89) 61 14 19 4 - 1 - - - 1 100 (5) (30) (4) (14) (48) 47 8 39 15 - 15 1 4 - 5 20 59 0.77 0.77	2022 Amount 13,813,296 (3,993,474) 9,819,822 2,115,230 (489,017) 700,854 510 542,160 1,624 (223) 64,240 171,026 12,926,226 (965,459) (4,412,280) (617,285) (1,859,069) (6,888,634) 5,072,133 911,489 4,160,644 (1,375,499) - (1,375,499) 980,343 (5,419,645) 168,920 (4,608,222) (5,983,721) (1,823,077)
Amount 23,874,942 (14,228,865) 9,646,077 2,283,183 3,091,601 564,008 78 99,282 (12,093) (808) 61,862 167,713 15,900,903 (829,513) (4,720,476) (631,270) (2,285,219) (7,636,965) 7,434,425 1,232,068 6,202,357 2,461,799 - 2,461,799 121,539 662,829 25,540 758,828 3,220,627 9,422,984

See accompanying notes to consolidated financial statements.

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

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity For the six months ended June 30, 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

				Attributable to owners of parent	Attributable to owners of parent	Attributable to owners of parent	Attributable to owners of parent		Other equity interest Unrealized gains Exchange differences on translation of foreign financial statements (losses) on financial assets measured at fair value through other comprehensive income	Other equity interest Unrealized gains Exchange differences on translation of foreign financial statements (losses) on financial assets measured at fair value through other comprehensive income	Other equity interest Unrealized gains Exchange differences on translation of foreign financial statements (losses) on financial assets measured at fair value through other comprehensive income	Total
Share capital			Capital surplus		Retained earnings
Common stock	Stock dividend to be distributed			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 4,160,644 -	21,105,900 4,160,644 -		(1,807,265) - 784,275 784,275 - - - - (1,022,990) (597,833) - 97,232 97,232 - - - - - (500,601)	4,113,485 - (6,767,996) (6,767,996) - - - 627,526 (2,026,985) (3,171,842) - 3,123,395 3,123,395 - - - - (469,847) (518,294)	101,659,972 4,160,644 (5,983,721) (1,823,077) - (774,320) - - 99,062,575 104,107,258 6,202,357 3,220,627 9,422,984 - - (802,969) - - 112,727,273
		-	-	-	-		4,160,644	4,160,644
		- - 2,864,982 -	- - - -	1,546,475 - - -	- - - -
		2,864,982	815,900	17,239,615	185,128
		- - -	815,900 - -	17,239,615 - -	185,128 - -
		-	-	-	-
		- - - 1,927,127 -	- - - - -	2,789,250 - - - -	- 3,769,675 - - -
		1,927,127	815,900	20,028,865	3,954,803

See accompanying notes to consolidated financial statements.

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

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the six months ended June 30, 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 (Reversal of impairment loss) impairment loss on financial assets Other items Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Changes in operating assets: Decrease in due from the central bank and call loans to banks (Increase) decrease in financial assets at fair value through profit or loss (Increase) decrease in securities purchased under resell agreements Increase in receivables Increase in discounts and loans Decrease in other financial assets Decrease 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) increase in payable Increase (decrease) 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) from investing activities Cash flows (used in) from financing activities: Increase (Decrease) in due to the central bank and banks Proceeds from issuing bank notes payable (Decrease) Increase in guarantee deposits received Payment of lease liabilities Increase (Decrease) in other liabilities Net cash flows from (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 six months ended June 30 2023 2022 $ 7,434,425 5,072,133 492,716 497,838 138,554 119,447 804,577 919,688 (705,930) 599,905 14,228,865 3,993,474 (78) (510) (23,874,942) (13,813,296) 30,817 5,990 (5,511) 39,781 808 223 629 301 12,093 (1,624) - (3,784) (8,877,402) (7,642,567) 35,996,498 22,650,349 (30,921,374) 29,323,313 (1,439,485) 7,831,274 (1,969,171) (3,299,455) (5,470,376) (44,353,610) 7,143 3,624 5,799,409 63,703 2,002,644 12,219,198 (23,064,859) 14,875,923 (76,795) 826,018 (65,682) 379,146 (8,213,451) 1,066,388 30,893,932 (4,552,404) 314,323 (815,615) (77,669) (170,888) (290,201) 11,608,568 1,712,443 23,827,766 (7,164,959) 16,185,199 269,466 21,257,332 23,259,426 13,567,842 (12,199,590) (3,292,389) (1,347,445) (162,932) 9,981,857 31,369,853 (28,588,607) (16,186,278) (174,550,465) (135,635,813) 168,699,757 154,932,444 - (2,000) (227,221) (128,378) - 28 1,103,816 (498,415) (197,070) (144,533) (33,759,790) 2,337,055 81,475 (49,339,275) 8,000,000 - (1,806,676) 2,147,775 (231,259) (210,429) 39,150 (1,107,300) 6,082,690 (48,509,229) 10,452 (805) (17,684,791) (14,803,126) 49,260,262 39,444,032 $ 31,575,471 24,640,906
	2023 $ 7,434,425 492,716 138,554 804,577 (705,930) 14,228,865 (78) (23,874,942) 30,817 (5,511) 808 629 12,093 - (8,877,402) 35,996,498 (30,921,374) (1,439,485) (1,969,171) (5,470,376) 7,143 5,799,409 2,002,644 (23,064,859) (76,795) (65,682) (8,213,451) 30,893,932 314,323 (77,669) (290,201) 1,712,443 (7,164,959) 269,466 23,259,426 (12,199,590) (1,347,445) 9,981,857 (28,588,607) (174,550,465) 168,699,757 - (227,221) - 1,103,816 (197,070) (33,759,790) 81,475 8,000,000 (1,806,676) (231,259) 39,150 6,082,690 10,452 (17,684,791) 49,260,262 $ 31,575,471

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
(Reversal of impairment loss) impairment loss on financial assets
Other items
Total adjustments to reconcile profit (loss)
Changes in operating assets and liabilities:
Changes in operating assets:
Decrease in due from the central bank and call loans to banks
(Increase) decrease in financial assets at fair value through profit or loss
(Increase) decrease in securities purchased under resell agreements
Increase in receivables
Increase in discounts and loans
Decrease in other financial assets
Decrease 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) increase in payable
Increase (decrease) 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) from investing activities
Cash flows (used in) from financing activities:
Increase (Decrease) in due to the central bank and banks
Proceeds from issuing bank notes payable
(Decrease) Increase in guarantee deposits received
Payment of lease liabilities
Increase (Decrease) in other liabilities
Net cash flows from (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 six months ended June 30
2023
2022
$ 7,434,425
5,072,133
492,716
497,838
138,554
119,447
804,577
919,688
(705,930)
599,905
14,228,865
3,993,474
(78)
(510)
(23,874,942)
(13,813,296)
30,817
5,990
(5,511)
39,781
808
223
629
301
12,093
(1,624)
-
(3,784)
(8,877,402)
(7,642,567)
35,996,498
22,650,349
(30,921,374)
29,323,313
(1,439,485)
7,831,274
(1,969,171)
(3,299,455)
(5,470,376)
(44,353,610)
7,143
3,624
5,799,409
63,703
2,002,644
12,219,198
(23,064,859)
14,875,923
(76,795)
826,018
(65,682)
379,146
(8,213,451)
1,066,388
30,893,932
(4,552,404)
314,323
(815,615)
(77,669)
(170,888)
(290,201)
11,608,568
1,712,443
23,827,766
(7,164,959)
16,185,199
269,466
21,257,332
23,259,426
13,567,842
(12,199,590)
(3,292,389)
(1,347,445)
(162,932)
9,981,857
31,369,853
(28,588,607)
(16,186,278)
(174,550,465)
(135,635,813)
168,699,757
154,932,444
-
(2,000)
(227,221)
(128,378)
-
28
1,103,816
(498,415)
(197,070)
(144,533)
(33,759,790)
2,337,055
81,475
(49,339,275)
8,000,000
-
(1,806,676)
2,147,775
(231,259)
(210,429)
39,150
(1,107,300)
6,082,690
(48,509,229)
10,452
(805)
(17,684,791)
(14,803,126)
49,260,262
39,444,032
$
31,575,471
24,640,906

2023
$ 7,434,425
492,716
138,554
804,577
(705,930)
14,228,865
(78)
(23,874,942)
30,817
(5,511)
808
629
12,093
-
(8,877,402)
35,996,498
(30,921,374)
(1,439,485)
(1,969,171)
(5,470,376)
7,143
5,799,409
2,002,644
(23,064,859)
(76,795)
(65,682)
(8,213,451)
30,893,932
314,323
(77,669)
(290,201)
1,712,443
(7,164,959)
269,466
23,259,426
(12,199,590)
(1,347,445)
9,981,857
(28,588,607)
(174,550,465)
168,699,757
-
(227,221)
-
1,103,816
(197,070)
(33,759,790)
81,475
8,000,000
(1,806,676)
(231,259)
39,150
6,082,690
10,452
(17,684,791)
49,260,262
$
31,575,471

See accompanying notes to consolidated financial statements.

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

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

June 30, 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 June 30, 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 June 30, 2023, December 31 and June 30, 2022, the Bank and subsidiaries has 5,612, 5,581 and 5,617 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 August 16, 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”
●Amendments to IAS 8 “Definition of Accounting Estimates”

(Continued)

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

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

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

●Amendments to IAS 12 “International Tax Reform—Pillar Two Model Rules”
(b) The impact of IFRS issued by the FSC but not yet effective

The Bank and subsidiaries assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2024, would not have a significant impact on its consolidated financial statements:

●Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”
●Amendments to IAS 1 “Non-current Liabilities with Covenants”
●Amendments to IAS 7 and IFRS 7 “Supplier Finance Arrangements”
●Amendments to IFRS 16 “Lease Liability in a Sale and Leaseback”
(e) The impact of IFRS issued by IASB but not yet endorsed by the FSC

The Group 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”

(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.

Except as described below, the significant accounting policies adopted in the accompanying consolidated financial statements are the same as the consolidated financial statements as of and for the year ended December 31, 2022. Please refer to Note 4 of the consolidated financial statements as of and for the year ended December 31, 2022 for the detail disclosures of significant accounting policies.

(Continued)

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

(b) Basis of consolidation

List of subsidiaries in the consolidated financial statements:

TBB International Leasing Co., Ltd. Taiwan Business Bank International Leasing Co., Ltd. TBB (Cambodia) Microfinance Institution Plc TBB Venture Capital Co., Ltd. TBB Consulting Co., Ltd.	Established location Main business scope	Shareholding (Holding %)	Shareholding (Holding %)
		June 30, 2023	December 31, 2022 June 30, 2022 100 100 100 100 100 100 100 100 100 100
	Taiwan Leasing business China Leasing business Cambodia Financial company Taiwan Investing business Taiwan Consulting business	100 100 100 100 100

(c) Income taxes

The income tax expenses have been prepared and disclosed in accordance with paragraph 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 and deferred income tax expenses are apportioned based on the proportion of expected income tax expenses for the year and deferred income tax expense. 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.

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

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

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

(Continued)

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:

(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)

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	June 30, 2023 $ 10,822,842 915,605 2,514,301 17,322,723 $ 31,575,471	December 31, 2022 14,042,641 988,995 11,029,785 23,198,841 49,260,262	June 30, 2022
			11,185,701 875,473 2,250,851 10,328,881
			24,640,906

(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	June 30, 2023 $ 64,689,379 40,129 47,834,723 120,000 (120,000) $ 112,564,231	December 31, 2022 85,208,065 39,664 63,310,015 110,000 (110,000) 148,557,744	June 30, 2022
			62,124,463 32,024 73,294,562 110,000 (110,000)
			135,451,049

As of June 30, 2023, December 31 and June 30, 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 $64,224,016, $84,763,295 and $61,701,188 of which $49,210,309, $47,637,794 and $44,266,109 respectively, were restricted and such restriction may only be lifted when the required reserve is adjusted to a lower amount.

As of June 30, 2023, December 31 and June 30, 2022, the Bank’s subsidiaries and overseas branches, in compliance with the Central Bank’ s reserve requirement set by local authorities, deposited $118,236, $134,809 and $139,886 and in reserve, of which $50,612, $52,137 and $56,972 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 June 30, 2023, December 31 and June 30, 2022, the required reserve with the Central Bank amounted to $347,127, $309,961 and $283,389 respectively, and its use was unrestricted.

(Continued)

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

As of June 30, 2023, December 31 and June 30, 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 June 30, 2023, December 31 and June 30, 2022, the Bank deposited marketable securities of $120,000, $110,000 and $110,000 as trust fund reserves.

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	June 30, 2023 $ 8,158 1,474,403 9,886 26,872 4,947 61,742,295 1,018,985 419,894 377,814 200,000 $ 65,283,254	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	June 30, 2022
			16,736 468,712 1,860 28,779 5,826 9,230,644 602,510 291,199 179,152 200,000
			11,025,418

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	June 30, 2023 $ 228,469,560 12,503,912 1,382,890 1,382,890 1,857,295	December 31, 2022 June 30, 2022 260,470,257 240,673,759 12,665,622 11,533,367 1,229,230 1,037,023 1,229,230 1,037,023 2,786,130 3,202,199

(Continued)

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

(d) Securities purchased under resell agreements

Securities purchased under resell agreements
Securities under resell agreements Face amount Resell period Range of resell interest rate Resell price	June 30, 2023 $ 2,237,378 2,242,100 2023.07.07~2023.07.17 1.37%~1.42% $ 2,238,973	December 31, 2022 797,893
		800,000
		2023.01.05
		1.24% 798,576

(e) Receivables, net

Interest receivable Acceptances receivable Accrued income Accounts receivable Spot exchange receivable-foreign currencies Refinancing guaranty deposits Guaranteed proceeds receivable from refinacing Credit cards accounts receivable Receivable price of securities purchased for customers Settlement price Installment receivables and leases Notes receivables Sub-total Less: Allowance for bad debts Total	June 30, 2023 $ 4,686,824 1,095,455 741,319 1,450,308 45,126 6,503 5,554 1,458,894 344,607 53,861 1,425,795 379,031 11,693,277 (108,354) $ 11,584,923	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	June 30, 2022
			3,044,556 1,370,606 754,199 2,444,121 3,823 40 45 933,615 1,060,941 - 1,262,209 432,388
			11,306,543 (111,903)
			11,194,640

The outstanding contract amount of financial assets that have been written off and still have recourse as of June 30, 2023, December 31 and June 30, 2022 were $87,049,698, $85,659,528 and $86,405,677 respectively.

(Continued)

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 (f) Discounts and loans, net	For the six months ended June 30,	For the six months ended June 30,
	2023 $ 104,042 4,987 (610) (65) $ 108,354	2022
		118,111 (8,224) - 2,016 111,903

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	June 30, 2023 $ 238,684 669,908 30,372 2,637,020 159,737,765 219,775,421 2,641,429 181,938,607 298,419,754 35,176,481 519,914,747 1,393,823 1,422,574,011 (250,519) (17,492,936) $ 1,404,830,556	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	June 30, 2022 214,766 617,270 34,054 2,653,237 170,169,824 218,435,665 2,726,026 168,952,809 285,372,123 33,255,258 477,387,948 2,034,949 1,361,853,929 (286,057) (15,804,452) 1,345,763,420

(Continued)

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 six months ended June 30,	For the six months ended June 30,
	2023 $ 18,078,616 814,208 (5,355) (2,196,698) 806,882 (4,717) $ 17,492,936	2022
		15,576,817 929,814 (10,501) (1,601,290) 877,261 32,351
		15,804,452

(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	June 30, 2023 $ 52,519,547 75,764,713 36,320,906 601,980 165,207,146 20,839,149 5,513,766 143,497 26,496,412 $ 191,703,558	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	June 30, 2022
			48,874,637 62,740,646 32,952,990 -
			144,568,273
			16,488,752 5,712,584 147,730
			22,349,066
			166,917,339

(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)

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 $546,451 , $668,386 , $563,864 and $696,242, respectively as dividend revenue for the three months and six months ended June 30, 2023 and 2022.

In which, the disposal equity instruments were recognized $58,770 , $226,611 , $58,770 and $226,611 as dividend revenue for the three months and six months ended June 30, 2023 and 2022.

The Bank and subsidiaries sold the investments which were measured as at fair value through other comprehensive income due to assets allocation. The fair value of disposed investments are $1,344,737 , $4,174,052 , $1,344,737 and $4,174,052. And (losses) gains on disposal are $469,847 , $(627,526) , $469,847 and $(627,526) for the three months and six months ended June 30, 2023 and 2022. Therefore, accumulated gains on disposal were transferred from other equity to retained earnings.

(iii) Please refer to Note 6(ap) for the credit risk (including the impairment in debt instruments) and market risk information.
(iv) The Bank and subsidiaries assessed the impairment of financial assets measured at fair value through other comprehensive income as of June 30, 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 six months ended June 30,	For the six months ended June 30,
	2023 $ 90,852 9,901 186 $ 100,939	2022
		87,792 5,833 1,023
		94,648

(Continued)

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

(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	June 30, 2023 $ 189,320,000 29,471,297 9,514,824 14,328,390 65,394 242,699,905 (77,108) $ 242,622,797	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	June 30, 2022
			216,000,000 24,236,500 6,299,350 13,228,969 62,444
			259,827,263 (80,464)
			259,746,799

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

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

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

Reserve for provisional seizure by the court, international card payment reserve, trust claim reserve and operating guaranty funds Overseas branches required reserve of overdraft guarantee Daylight overdraft guarantee (Certificates of deposit with the Central Bank) Guarantee for borrowing US dollars Guarantee for borrowing JPY dollars Sponsorship of Treasury Affairs Total	June 30, 2023 $ 1,062,400 65,394 2,000,000 29,000,000 200,000 - $ 32,327,794	December 31, 2022 854,500 64,523 2,000,000 29,000,000 200,000 20,000,000 52,119,023	June 30, 2022
			878,500 62,444 2,000,000 29,000,000 200,000 20,000,000
			52,140,944

(Continued)

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

(iii) The Bank and subsidiaries assessed the impairment of investment in debt instruments at amortized cost as of June 30, 2023 and 2022. The changes in allowance for credit losses attribute to these financial assets were as follows:

attribute to these financial assets were as follows:
Beginning balance Provision Foreign exchange Ending balance	For the six months ended June 30,
	2023 $ 74,872 2,192 44 $ 77,108	2022
		87,478 (7,457) 443
		80,464

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

Corporate bonds Corporate bonds	For the three months ended June 30, 2023 The carrying amount at the date of derecognition Gain (Loss) on disposal $ 4,425 49 For the three months ended June 30, 2022 The carrying amount at the date of derecognition Gain (Loss) on disposal $ 24,814 225	For the six months ended June 30, 2023	For the six months ended June 30, 2023
		The carrying amount at the date of derecognition Gain (Loss) on disposal 7,079 78 For the six months ended June 30, 2022	Gain (Loss) on disposal
			78
		The carrying amount at the date of derecognition 57,373	Gain (Loss) on disposal
			510

For the three months and six months ended June 30, 2023 and 2022, it is due to the advanced redemption of the issuer.

(i) Investments accounted for using equity method

(i) Associates

The Bank and subsidiaries had significant influence on Media Talk Consultants Co., Ltd. by investing 2 million dollars on December 22, 2021 and holding 20% equity on it. The establishment registration was completed on January 19, 2022. In addition, since Media Fund 1, which was planned to be raised, was not as well funded as expected and the accumulated losses of Media Talk Consultants Co., Ltd. had exceeded 70% of the paid-in capital at the end of 2022, it has ceased its operation with effect from May 1, 2023, after prudent assessment.

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

Carrying amount of individually insignificant associates’ equity	June 30, 2023 $ -	December 31, 2022 808	June 30, 2022
			1,777

(Continued)

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

For the three months ended June 30, 2023 2022 $ (472) (223) $ (472) (223)	For the six months ended June 30,	For the six months ended June 30,
2023 $ (472) $ (472)	2023 (808) (808)	2022
		(223)
		(223)

(ii) Guarantee

As of June 30, 2023, the Bank and subsidiaries did not provide any investments accounted for using the equity method as collateral for its loans.

(j) Other financial assets, net

Overdue receivable Less: Allowance for bad debts, overdue receivable Total	June 30, 2023 $ 22,113 (12,863) $ 9,250	December 31, 2022 58,786 (48,471) 10,315	June 30, 2022 80,839 (56,056) 24,783

The change in allowance for bad debts was as follows:

Beginning balance Reversal Transfer in Write-off Written-off recovered Ending balance	For the six months ended June 30,	For the six months ended June 30,
	2023 $ 48,471 (11,433) 5,355 (39,341) 9,811 $ 12,863	2022
		51,392 (9,966) 10,501 (5,153) 9,282
		56,056

(k) Property and equipment, net

June 30, 2023	Cost $ 6,743,535 8,122,136 2,695,680 265,727 654,532 202,198 24,290 222,599 $ 18,930,697	Revaluation increment 2,986,161 31,184 - - - - - - 3,017,345	Accumulated depreciation - 4,885,377 2,067,281 227,363 561,229 115,804 - - 7,857,054	Accumulated impairment 14,031 14,754 - - - - - - 28,785
Land Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Construction in progress Prepayment for equipment Total

(Continued)

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

December 31, 2022	Cost $ 6,743,535 8,116,339 2,696,721 272,344 658,114 205,430 20,225 130,457 $ 18,843,165 Cost $ 6,743,535 8,062,862 2,732,675 270,859 651,996 201,053 7,055 135,218 $ 18,805,253	Revaluation increment 2,986,161 31,184 - - - - - - 3,017,345 Revaluation increment 2,986,161 31,184 - - - - - - 3,017,345	Accumulated depreciation - 4,790,018 2,012,107 230,440 557,596 119,731 - - 7,709,892 Accumulated depreciation - 4,692,490 2,008,589 226,777 551,295 100,661 - - 7,579,812	Accumulated impairment 14,031 14,754 - - - - - - 28,785 Accumulated impairment 14,031 14,754 - - - - - - 28,785	Total 9,715,665 3,342,751 684,614 41,904 100,518 85,699 20,225 130,457
Land Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Construction in progress Prepayment for equipment Total June 30, 2022
					14,121,833
					Total 9,715,665 3,386,802 724,086 44,082 100,701 100,392 7,055 135,218
Land Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Construction in progress Prepayment for equipment Total
					14,214,001

Change of cost

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	Increase - 5,797 81,925 2,774 7,363 18,363 5,265 133,961 255,448	Decrease - - 83,705 9,447 10,749 20,273 1,200 42,054 167,428	Foreign Exchange - - 739 56 (196) (1,322) - 235 (488)	June 30, 2023
					9,729,696 8,153,320 2,695,680 265,727 654,532 202,198 24,290 222,599
					21,948,042

(Continued)

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

Land Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Construction in progress Prepayment for equipment Total	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 - 44,908 349,728 3,132 8,671 38,753 755 12,706 458,653	Decrease - - 14,906 5,145 5,353 668 34,247 451,576 511,895	Foreign Exchange - - 4,421 370 1,642 15 - 117 6,565	June 30, 2022 9,729,696 8,094,046 2,732,675 270,859 651,996 201,053 7,055 135,218
					21,822,598

Change of depreciation

Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Total Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Leasehold improvements Total	January 1, 2023 $ 4,790,018 2,012,107 230,440 557,596 119,731 $ 7,709,892 January 1, 2022 $ 4,592,658 1,865,901 225,193 539,601 83,416 $ 7,306,769	Increase 95,359 138,117 6,305 14,373 17,837 271,991 Increase 99,832 153,868 6,402 15,694 18,423 294,219	Decrease - 83,165 9,429 10,678 20,273 123,545 Decrease - 14,668 5,112 5,295 668 25,743	Foreign Exchange - 222 47 (62) (1,491) (1,284) Foreign Exchange - 3,488 294 1,295 (510) 4,567	June 30, 2023 4,885,377 2,067,281 227,363 561,229 115,804
					7,857,054
					June 30, 2022 4,692,490 2,008,589 226,777 551,295 100,661
					7,579,812

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 - - -	June 30, 2023 14,031 14,754
					28,785
					June 30, 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.

(Continued)

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

As of June 30, 2023, December 31 and June 30, 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 June 30, 2023, December 31 and June 30, 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:

June 30, 2023	Cost $ 2,071,894 26,388 83,277 14,207 $ 2,195,766 Cost $ 1,857,074 26,497 77,477 12,403 $ 1,973,451 Cost $ 1,767,710 26,791 46,647 11,498 $ 1,852,646	Accumulated depreciation 887,443 26,357 33,455 6,371 953,626 Accumulated depreciation 706,516 26,408 22,728 5,206 760,858 Accumulated depreciation 652,167 26,504 19,621 4,284 702,576	Accumulated impairment - - - - - Accumulated impairment - - - - - Accumulated impairment - - - - -	Total 1,184,451 31 49,822 7,836
Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total December 31, 2022
				1,242,140
				Total 1,150,558 89 54,749 7,197
Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total June 30, 2022
				1,212,593
				Total 1,115,543 287 27,026 7,214
Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total
				1,150,070

Change of cost

Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total	January 1, 2023 $ 1,857,074 26,497 77,477 12,403 $ 1,973,451	Increase 237,954 - 7,558 2,176 247,688	Decrease 26,527 109 1,733 372 28,741	Foreign Exchange 3,393 - (25) - 3,368	June 30, 2023 2,071,894 26,388 83,277 14,207
					2,195,766

(Continued)

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

Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total	January 1, 2022 $ 1,795,803 27,842 74,819 10,337 $ 1,908,801	Increase 382,884 - 9,141 1,648 393,673	Decrease 398,627 1,051 37,583 487 437,748	Foreign Exchange (12,350) - 270 - (12,080)	June 30, 2022 1,767,710 26,791 46,647 11,498
					1,852,646

Change of depreciation

Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total Buildings Machinery and equipment Transportation equipment Miscellaneous equipment Total	January 1, 2023 $ 706,516 26,408 22,728 5,206 $ 760,858 January 1, 2022 $ 683,580 27,272 45,301 3,353 $ 759,506	Increase 206,769 58 12,470 1,537 220,834 Increase 192,360 283 10,724 1,303 204,670	Decrease 26,527 109 1,733 372 28,741 Decrease 225,485 1,051 36,487 372 263,395	Foreign Exchange 685 - (10) - 675 Foreign Exchange 1,712 - 83 - 1,795	June 30, 2023 887,443 26,357 33,455 6,371
					953,626
					June 30, 2022 652,167 26,504 19,621 4,284
					702,576

(m) Other assets, net

Office supplies Prepayments Operating guarantee deposits and settlement fund Guarantee deposits paid Deferred assets Temporary payments and suspense accounts Proceeds of settlement and margin trading Other assets Total	June 30, 2023 $ 28,889 4,202,654 33,631 1,537,730 120 3,011,130 1,647 185,453 $ 9,001,254	December 31, 2022 29,019 8,168,184 31,753 2,641,545 128 4,675,748 60,139 176,432 15,782,948	June 30, 2022
			29,185 4,397,786 31,753 912,820 168 6,018,263 865 141,145
			11,531,985

(Continued)

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

(n) Deposits from the Central Bank and banks

Deposits from the Central Bank Due from the Central Bank Deposits from banks Call loans from banks Overdrafts on banks Deposits transferred from Chunghwa Post Co., Ltd. Total	June 30, 2023 $ 268,252 14,947,200 146,237 21,048,593 676,491 134,814,545 $ 171,901,318	December 31, 2022 232,262 14,133,500 705,261 31,549,533 1,084,076 147,261,545 194,966,177	June 30, 2022
			192,285 12,191,350 1,019,878 36,291,089 460,091 67,261,545
			117,416,238

(o) Due to the Central Bank and banks

Agricultural Bank of Taiwan Mega International Commercial Bank First Commercial Bank Bank of Kaohsiung Co.,Ltd. (OBU) Sunny Commercial Bank (OBU) KGI Commercial Bank Co., Ltd. (OBU) Chang Hwa Commercial Bank ,Ltd. (OBU) Total Unused credit lines			June 30, 2023
	Currency TWD TWD TWD USD USD USD USD	Interest Rate 1.457% 1.630% 1.750% 7.110% 6.654%~6.663% 6.698%~6.711% 6.770%	Maturity Date 2023.10.13 2023.9.15 2023.10.25~2024.2.8 2026.6.10 2023.8.4~2023.8.26 2023.7.10~2023.7.12 2024.4.27	Original Amount NTD Amount 284,000 $ 284,000 30,000 30,000 120,000 120,000 10,000 311,400 9,000 280,260 5,000 155,700 1,000 31,140 $ 1,212,500 $ 1,584,465

(Continued)

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

Agricultural Bank of Taiwan First Commercial Bank Bank of Kaohsiung Co., Ltd. (OBU) Sunny Commercial Bank (OBU) KGI Commercial Bank Co., Ltd. (OBU) Bank of Panshin Total Unused credit lines			December 31, 2022
	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

Mega International Commercial Bank 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			June 30, 2022
	Currency TWD TWD USD USD USD USD	Interest Rate 0.90%-1% 0.80%-1% 2.52% 3.03% 2.49%-3.11% 2.88%	Maturity Date 2022.11.9 2023.2.16 2023.6.10 2022.8.27 2023.1.10~2023.6.2 2023.5.10	Original Amount NTD Amount 25,000 $ 25,000 35,000 35,000 12,000 356,820 6,000 178,410 9,000 267,615 2,000 59,470 $ 922,315 $ 1,261,555

(Continued)

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

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

Financial liabilities designated at fair value through profit or loss`：` Financial debentures Financial liabilities held for trading`：` Derivative instruments not used for hedging Foreign exchange forward contracts Currency swap contracts Foreign currency option-sell Interest rate contract Total	June 30, 2023 $ 9,277,020 21,995 279,569 9,909 3,073 $ 9,591,566	December 31, 2022 9,367,595 10,932 524,421 17,864 4,713 9,925,525	June 30, 2022
			8,746,658 41,110 745,412 1,862 5,246 9,540,288

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 June 30, 2023, December 31 and June 30, 2022.

(q) Notes and bonds issued under repurchase agreement

Assets	June 30, 2023	June 30, 2023	June 30, 2023	June 30, 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	$ 2,598,689	2,397,309	2,406,015	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

(Continued)

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

Assets	June 30, 2022	June 30, 2022	June 30, 2022	June 30, 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	$ 2,594,359	2,439,839	2,448,002	Prior to July 1, 2024

(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 Dividends payable Settlement payable Other Total (s) Deposits and remittances Savings deposits Time deposits Demand deposits Checking account deposits Remittances Total	June 30, 2023 $ 6,456,210 2,675,600 1,115,555 2,725,999 854,716 102,154 112,499 90,362 1,013,143 386,657 805,693 - 7,161 $ 16,345,749 June 30, 2023 $ 749,628,092 468,023,103 464,689,928 21,834,393 298,679 $ 1,704,474,195	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	June 30, 2022
			3,164,367 2,499,104 1,383,079 2,227,586 13,459,053 86,602 95,141 12,662 792,055 621,993 776,953 427,701 3,131
			25,549,427
			June 30, 2022
			709,409,873 459,284,396 473,386,438 21,665,530 358,181
			1,664,104,418

(Continued)

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	June 30, 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 June 30, 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)

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 2023-1	11/17/2021 06/20/2023	None 06/20/2030	The debentures bear an annual interest rate of 1.60%.Simple interest is accrued and paid annually. After calculating the early redeemable bond is in line with the capital adequacy ratio under the consent of the competent authority, the debentures are redeemable per face value plus accrued interest at the interest payment date after five years and a month from the issue date . The debentures bear an annual interest rate of 2.10%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity.	Perpetual non- accumulated subordinated financial debentures Unsecured subordinated long-term financial debentures	June 30, 2023 $ 8,000,000 8,000,000 $ 60,250,000	December 31, 2022 8,000,000 - 52,250,000	June 30, 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	June 30, 2023 $ 3,736,800 5,605,200 (64,980) $ 9,277,020	December 31, 2022 3,687,000 5,530,500 150,095 9,367,595	June 30, 2022
							3,568,200 5,352,300 (173,842)
							8,746,658

(Continued)

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	June 30, 2023 $ 9,277,020 223,307 (64,980) June 30, 2023 $ 3,224,904	December 31, 2022 9,367,595 170,133 150,095 December 31, 2022 2,910,581	June 30, 2022
			8,746,658 223,440 (173,842) June 30, 2022
			3,549,679

(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	June 30, 2023 $ 267,937 94,522 74,989 2,186,502 $ 2,623,950	December 31, 2022 237,076 100,236 74,619 2,264,171 2,676,102	June 30, 2022
			264,440 111,869 73,181 2,846,653 3,296,143

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 30,817 - 370 100,473 131,660	Decrease - 5,881 - 156,386 162,267	Use - - - 21,756 21,756	Foreign exchange 44 167 - - 211	June 30, 2023
						267,937 94,522 74,989 2,186,502
						2,623,950

(Continued)

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 5,990 39,781 - 105,879 151,650	Decrease - - - 242,765 242,765	Use - - - 34,002 34,002	Foreign exchange 385 665 - - 1,050	June 30, 2022
						264,440 111,869 73,181 2,846,653
						3,296,143

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	June 30, 2023 $ 370,136 $ 902,127	December 31, 2022 387,320 852,599	June 30, 2022
			358,958
			815,124

The amounts recognized in profit or loss were as follows:

For the three months ended June 30, 2023 2022 $ 4,373 4,131 $ 3,415 3,378 $ 4,092 3,888	For the six months ended June 30,	For the six months ended June 30,
2023 $ 4,373 $ 3,415 $ 4,092	2023 8,733 8,385 8,094	2022
		8,151
		7,667
		7,508

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

Total cash outflow for leases	For the six months ended June 30,	For the six months ended June 30,
	2023 $ 247,738	2022
		225,604

(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)

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	June 30, 2023 $ 6,504 342,646 61,696 1,566,099 18,611 $ 1,995,556	December 31, 2022 6,396 315,153 62,411 3,372,775 6,347 3,763,082	June 30, 2022
			3,552 284,552 71,248 3,416,003 5,493
			3,780,848

(y) Equity

(i) Common stock

As of June 30, 2023, December 31 and June 30, 2022, the Bank’ s authorized capital were $100,000,000, $100,000,000 and $100,000,000, 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 16, 2023, the Bank increased its capital from the retained earnings by $1,927,127 and issued 192,713 shares. The capital increase has been approved by Financial Supervisory Commission and came into effect on August 16, 2023.

Pursuant to the resolution approved by the regular stockholders’ meeting of the Bank on June 17, 2022, the Bank increased its capital from the retained earnings by $2,864,982 and issued 286,498 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.

(Continued)

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

(ii) Capital surplus

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

Additional paid-in capital	June 30, 2023 $ 815,900	December 31, 2022 815,900	June 30, 2022
			815,900

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

(iii) Earnings distribution and dividend policy

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

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)

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

On June 16, 2023 and June 17, 2022, the shareholder's meetings resolved to distribute the 2022 and 2021 earnings, respectively. The earnings were appropriated as follows:

Dividends to common shareholders Stock dividends Cash dividends Total	2022 Distribution rate (NT dollar) Amount $ 0.24 1,927,127 0.10 802,969 $ 2,730,096	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 financial assets measured at fair value through other comprehensive income -Unrealized amount -Realized amount Foreign currency translation difference`－`Exchange difference Disposal of investments in equity instruments measured at fair value through other comprehensive income June 30, 2023 January 1, 2022 Share of other comprehensive income of associates and joint ventures accounted for using equity method Investment in financial assets measured at fair value through other comprehensive income -Unrealized amount -Realized amount Foreign currency translation difference`－`Exchange difference Disposal of investments in equity instruments measured at fair value through other comprehensive income June 30, 2022	Unrealized gains from financial assets measured at fair value through other comprehensive income $ (3,171,842) 3,094 3,120,445 (144) - (469,847) $ (518,294) $ 4,113,485 (4,963) (6,758,421) (4,612) - 627,526 $ (2,026,985)	Exchange differences on translation of foreign financial statements (597,833) (22,150) - - 119,382 - (500,601) (1,807,265) 16,071 - - 768,204 - (1,022,990)	Total (3,769,675) (19,056) 3,120,445 (144) 119,382 (469,847) (1,018,895) 2,306,220 11,108 (6,758,421) (4,612) 768,204 627,526 (3,049,975)

(Continued)

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

(z) Income taxes

(i) The income tax expenses were as follows:

For the three months ended June 30, 2023 2022 Current tax expense Current period $ 566,286 324,776 Adjustment for prior period 78,732 5,401 Additional surtax on undistributed retained earnings 1,949 1,297 Income Basic Tax 11,271 - 658,238 331,474 Deferred tax expense Reversal and origination of temporary different (54,299) 107,145 Changes in unrecognized deductible temporary different 1,939 8,011 Income tax expenses $ 605,878 446,630	For the six months ended June 30,	For the six months ended June 30,
	2023 1,085,556 60,929 1,949 11,271 1,159,705 70,424 1,939 1,232,068	2022
		826,222 5,401 1,297 -
		832,920 70,558 8,011
		911,489

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

For the three months ended June 30, 2023 2022 $ 61,581 76,499 (2,716) (10,264) $ 58,865 66,235	For the six months ended June 30,	For the six months ended June 30,
2023 $ 61,581 (2,716) $ 58,865	2023 24,307 1,233 25,540	2022
		196,068 (27,148)
		168,920

(Continued)

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

(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.
(aa) Provision for employee benefit

As of June 30, 2023, December 31 and June 30, 2022, the balance of provision for employee benefit of the Bank and subsidiaries was as follows:

Defined benefit plan Employee deposits with favorable rate	June 30, 2023 $ 1,114,257 1,072,245 $ 2,186,502	December 31, 2022 1,211,918 1,052,253 2,264,171	June 30, 2022
			1,775,348 1,071,305
			2,846,653

(i) Defined benefit plan

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 December 31, 2022 and 2021 by the Bank and subsidiaries.

The Bank and subsidiaries recognized the expenses amounting to $40,247 , $42,959 , $80,521 and $85,913 for the three months and six months ended June 30, 2023 and 2022, respectively.

(ii) 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 $45,391 , $42,220 , $91,986 and $84,330 for the three months and six months ended June 30, 2023 and 2022, respectively.

(iii) 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.

(Continued)

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

The Bank and subsidiaries recognized expenses amounting to $64,073 , $63,937 , $128,023 and $126,725 for the three months and six months ended June 30, 2023 and 2022, respectively.

(ab) Earnings per share

For the three months ended June 30, 2023 2022 $ 2,729,713 2,036,383 8,029,693 8,029,693 $ 0.34 0.25 18,645 14,051 8,048,338 8,043,744 $ 0.34 0.25	For the six months ended June 30,	For the six months ended June 30,
2023 $ 2,729,713 8,029,693 $ 0.34 18,645 8,048,338 $ 0.34	2023 6,202,357 8,029,693 0.77 29,710 8,059,403 0.77	2022
		4,160,644
		8,029,693
		0.52
		23,372
		8,053,065
		0.52

Adjusted earnings per share after approvement of increasing capital from the retained earnings of the Bank and subsidiaries were as follow:

For the three months ended June 30, 2023 2022 $ 2,729,713 2,036,383 8,222,406 8,222,406 $ 0.33 0.25 19,092 14,389 8,241,498 8,236,795 $ 0.33 0.25	For the six months ended June 30,	For the six months ended June 30,
2023 $ 2,729,713 8,222,406 $ 0.33 19,092 8,241,498 $ 0.33	2023 6,202,357 8,222,406 0.75 30,423 8,252,829 0.75	2022
		4,160,644
		8,222,406
		0.51
		23,933
		8,246,339
		0.50

Note 1: The earnings per share for the six months June 30, 2022 has applied retrospective adjustments.

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

(Continued)

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

(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 and six months ended June 30, 2023 and 2022, the estimated employee remuneration were $265,686 , $156,504 , $423,372 and $260,309, and the estimated directors' remuneration were $18,923 , $15,650 , $37,845 and $28,107, 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.

There is no difference with actual distribution for 2022 and 2021 remuneration. The information is available at the Market Observation Post System website.

(Continued)

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

(ad) Net interest revenue

For the three months ended June 30, 2023 2022 $ 3,267,850 1,683,492 6,418,476 4,495,833 1,260 1,039 6,539 3,517 7,577 2,840 524,529 288,598 123,762 40,129 532,262 183,829 1,174,542 604,734 8,593 8,815 246,935 35,691 22,371 5,751 55,218 21,210 94,837 69,993 12,484,751 7,445,471 6,887,313 1,999,405 111 956 475,248 106,039 194,351 189,463 8,091 1,248 29,335 19,570 7,594,449 2,316,681 $ 4,890,302 5,128,790	For the six months ended June 30,	For the six months ended June 30,
2023 $ 3,267,850 6,418,476 1,260 6,539 7,577 524,529 123,762 532,262 1,174,542 8,593 246,935 22,371 55,218 94,837 12,484,751 6,887,313 111 475,248 194,351 8,091 29,335 7,594,449 $ 4,890,302	2023 6,251,847 12,412,514 3,505 12,154 16,074 1,001,705 226,131 1,229,265 2,063,852 17,308 304,475 36,331 97,422 202,359 23,874,942 12,831,481 209 934,699 381,721 12,968 67,787 14,228,865 9,646,077	2022
		3,006,433 8,424,172 1,553 6,428 4,823 478,258 63,996 347,714 1,131,572 17,822 130,517 18,209 46,434 135,365
		13,813,296
		3,436,221 965 137,962 376,845 2,144 39,337
		3,993,474
		9,819,822

(Continued)

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

(ae) Net service fee revenue

For the three months ended June 30, 2023 2022 $ 16,305 15,593 11,068 13,685 2,612 3,562 2,114 2,256 343 399 683 411 126,266 152,609 66,127 61,444 6,475 8,789 27,766 26,050 35,575 23,866 496,517 360,006 49,710 51,491 19,527 21,208 748 777 234,010 269,080 60,801 44,743 1,156,647 1,055,969 7,987 7,529 50,262 42,676 398 194 319 368 29,021 16,707 1,855 2,110 1,185 1,373 15,447 15,353 3,357 1,735 1 20 5,689 5,766 115,521 93,831 $ 1,041,126 962,138	For the six months ended June 30,	For the six months ended June 30,
2023 $ 16,305 11,068 2,612 2,114 343 683 126,266 66,127 6,475 27,766 35,575 496,517 49,710 19,527 748 234,010 60,801 1,156,647 7,987 50,262 398 319 29,021 1,855 1,185 15,447 3,357 1 5,689 115,521 $ 1,041,126	2023 31,981 20,703 5,197 3,733 1,028 1,170 241,771 128,012 12,787 54,826 81,683 1,273,395 95,866 38,032 1,325 409,267 108,416 2,509,192 16,212 92,836 736 679 58,109 3,983 2,418 29,802 9,034 1 12,199 226,009 2,283,183	2022
		31,385 25,458 7,008 4,622 676 772 341,694 123,002 19,662 54,979 48,873 728,733 104,382 43,027 1,277 445,521 322,038
		2,303,109
		14,703 86,357 360 791 33,007 4,496 2,780 31,061 2,865 20 11,439
		187,879
		2,115,230

(Continued)

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

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

Valuation gains (losses): Corporate bonds Financial debentures Listed stocks and emerging stocks Unlisted stocks Beneficiary certificates Private fund Commercial paper Derivative financial instruments Subtotal Disposal gains (losses): Corporate bonds Financial debentures Listed stocks and emerging stocks Unlisted stocks Beneficiary certificates Commercial paper Derivative financial instruments Subtotal Dividend revenue Interest income Total	For the three months ended June 30, 2023 2022 $ - - 7,163 (13,058) (53,837) 56,215 (12,946) 30,043 1,459 (8,719) (8,069) (8,885) 532 8,592 81,159 (427,999) 15,461 (363,811) - - - (4,097) 88,657 (37,549) - (210) 3,906 (10,017) 87 (1,418) 987,630 14,297 1,080,280 (38,994) 14,663 7,186 205,091 34,235 $ 1,315,495 (361,384)	For the six months ended June 30, 2023 2022 - (5,636) 10,300 (17,006) 178,452 80,227 (59,435) 42,890 3,454 (8,010) (8,265) (10,847) (17,867) 1,157 599,291 (682,680) 705,930 (599,905) - 6,437 - (4,097) 146,539 (22,006) (17,017) (270) 3,906 (17,352) 432 (3,548) 1,865,719 67,373 1,999,579 26,537 16,016 8,278 370,076 76,073 3,091,601 (489,017)
	2023 $ - 7,163 (53,837) (12,946) 1,459 (8,069) 532 81,159 15,461 - - 88,657 - 3,906 87 987,630 1,080,280 14,663 205,091 $ 1,315,495	2023 - 10,300 178,452 (59,435) 3,454 (8,265) (17,867) 599,291 705,930 - - 146,539 (17,017) 3,906 432 1,865,719 1,999,579 16,016 370,076 3,091,601

(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 Gain (Loss) on disposal of financial debentures Dividend revenue Total	For the three months ended June 30, 2023 2022 $ - 3,725 51 262 - 5 546,451 668,386 $ 546,502 672,378	For the six months ended June 30, 2023 2022 - 4,204 144 506 - (98) 563,864 696,242 564,008 700,854
	2023 $ - 51 - 546,451 $ 546,502	2023 - 144 - 563,864 564,008

(Continued)

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 June 30, 2023 2022 $ (6,367) (1,258) 2,209 7,662 $ (4,158) 6,404	For the six months ended June 30,	For the six months ended June 30,
	2023 $ (6,367) 2,209 $ (4,158)	2023 (9,901) (2,192) (12,093)	2022
			(5,833) 7,457 1,624

(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 June 30, 2023 2022 $ (472) (223)	For the six months ended June 30,	For the six months ended June 30,
	2023 $ (472)	2023 (808)	2022 (223)

(aj) Net other revenue other than interest income

Rental revenue of operating assets Rental expense of operating assets Loss on disposal and retirement of property and equipment Loss of account error Gold deposit book Other operating expense Other miscellaneous income Total	For the three months ended June 30, 2023 2022 $ 2,699 2,091 (435) (385) (379) (250) (65) (1) 618 682 (20,549) (8,944) 72,741 14,902 $ 54,630 8,095	For the six months ended June 30,	For the six months ended June 30,
	2023 $ 2,699 (435) (379) (65) 618 (20,549) 72,741 $ 54,630	2023 5,095 (435) (629) (88) 947 (30,703) 87,675 61,862	2022
			4,131 (385) (301) (42) 1,572 (19,069) 78,334 64,240

(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 June 30, 2023 2022 $ 606,440 663,846 (1,427) 13,688 (18,618) (9,405) 586,395 668,129 11,172 9,419 (6,410) 32,651 $ 591,157 710,199	For the six months ended June 30,	For the six months ended June 30,
	2023 $ 606,440 (1,427) (18,618) 586,395 11,172 (6,410) $ 591,157	2023 814,208 (3,185) (6,446) 804,577 30,817 (5,881) 829,513	2022
			929,814 8,064 (18,190) 919,688 5,990 39,781 965,459

(Continued)

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

(al) Employee benefits expenses

Employee benefits expenses
Salary expense Labor and health insurance Pension expense Directors' remuneration Other employee benefits Total	For the three months ended June 30, 2023 2022 $ 2,107,504 1,891,440 153,416 142,039 85,437 85,028 22,662 19,377 164,479 168,589 $ 2,533,498 2,306,473	For the six months ended June 30,
	2023 $ 2,107,504 153,416 85,437 22,662 164,479 $ 2,533,498	2023 3,870,900 290,936 172,155 45,348 341,137 4,720,476	2022
			3,596,817 271,890 169,903 35,660 338,010
			4,412,280

(am) Depreciation and amortization expense

For the three months ended June 30, 2023 2022 $ 136,184 137,811 109,137 102,435 71,883 61,317 4 3 $ 317,208 301,566	For the six months ended June 30,	For the six months ended June 30,
2023 $ 136,184 109,137 71,883 4 $ 317,208	2023 271,882 220,834 138,546 8 631,270	2022
		293,168 204,670 119,440 7
		617,285

(Continued)

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

(an) Other general and administrative expense

For the three months ended June 30, 2023 2022 $ 124 - 19,860 18,427 60,702 63,601 9,607 6,335 52,663 38,713 74,624 37,648 111,563 92,714 67,495 52,696 29,644 26,025 7,507 7,266 514,868 375,529 166,354 150,025 11,550 10,916 15,208 16,210 17,980 16,057 $ 1,159,749 912,162	For the six months ended June 30,	For the six months ended June 30,
2023 $ 124 19,860 60,702 9,607 52,663 74,624 111,563 67,495 29,644 7,507 514,868 166,354 11,550 15,208 17,980 $ 1,159,749	2023 258 37,152 124,426 15,570 109,829 151,881 224,043 122,372 70,280 16,479 993,718 331,132 22,578 32,131 33,370 2,285,219	2022
		4 35,306 124,109 11,634 86,836 129,502 188,172 105,905 52,091 15,175 718,496 302,699 22,686 34,358 32,096
		1,859,069

(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)

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)

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		June 30, 2023	June 30, 2023
	Total $ 1,438,879 200,000 62,120,109 26,352,915 164,605,166 745,477 9,277,020 1,524,266 314,546	Level 1 1,018,985 - 194,650 20,839,149 95,835,921 143,497 - 26,872 -	Level 2 Level 3 - 419,894 200,000 - 61,742,295 183,164 - 5,513,766 68,769,245 - 601,980 - 9,277,020 - 1,497,394 - 314,546 -
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)

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)

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

Assets and Liabilities	June 30, 2022	June 30, 2022
	Level 1 602,510 - 26,280 16,488,752 94,053,986 147,730 - 28,779 -	Level 2 Level 3 - 291,199 200,000 - 9,230,644 152,872 - 5,712,584 50,514,287 - - - 8,746,658 - 493,134 - 793,630 -
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)

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)

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 six months ended June 30, 2023 and 2022.

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

Changes of financial assets categorized in Level 3 :

Name		Fo	Fo	r the six months	ended June 30, 2	023
	Beginning balance	Valuation profit and loss		Incr	ease	Decr	ease Transfer out from Level 3 Ending balance 13,500 603,059 - 5,513,766
		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	(67,699) -	- 176,305 Fo	78,912 - r the six months	- - ended June 30, 2	29,887 - 022
	Beginning balance	Valuation profit and loss		Incr	ease	Decr	ease Transfer out from Level 3 (Note) Ending balance 86,056 444,071 - 5,712,584
		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	32,044 -	- 738,005	43,286 -	- -	53,684 -

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

(Continued)

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 six months ended June 30,
	2023 2022 $ (67,699) 31,684 176,305 738,005

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			June 30, 2023
	fair value $ 183,164 419,894 5,513,766	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%~42.74% The higher market liquidity discount, the lower fair value. 12.89%~29.98% The higher market liquidity discount, the lower fair value. 0.00%~1.53% The higher sustainable growth rate, the higher fair value. 10.40%~12.04% The higher rate of cost of equity, the lower fair value.

(Continued)

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 June 30, 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 $ 152,872 291,199 5,712,584	valuation methods assets approach market approach market approach assets approach income approach income approach	significant unobservable inputs liquidity discount liquidity discount liquidity discount sustainable growth rate cost of equity	range inter-relationship between significant unobservable inputs and fair value measurement 0.00%~10.00% The higher market liquidity discount, the lower fair value. 0.00%~36.67% The higher market liquidity discount, the lower fair value. 8.65%~34.46% The higher market liquidity discount, the lower fair value. 0.00%~1.49% The higher sustainable growth rate, the higher fair value. 10.84%~12.56% The higher rate of cost of equity, the lower fair value.

(Continued)

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

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:

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:

June 30, 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	the effects to the net income and other comprehensive income Favorable changes (-5%) Unfavorable changes (5%) $ 36,382 (36,382) 319,242 (319,242) the effects to the net income and other comprehensive income Favorable changes (-5%) Unfavorable changes (5%) $ 36,225 (36,225) 309,605 (309,605)

(Continued)

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

			the effects to the net income and	the effects to the net income and
			other comprehensive income
			Favorable	Unfavorable
			changes (-5%)	changes (5%)
June 30, 2022
Financial assets at fair value through profit
	or loss
	Unlisted stocks and private fund	$	27,926	(27,926)
Financial assets at fair value through other
	comprehensive income
	Unlisted stocks		329,672	(329,672)
Inc	ome approach
Ad	opting the income approach to evaluate Level 3 financial instruments of
the	Bank and subsidiaries. The evaluation parameters			are divided into
sus	tainable growth rate and cost of equity capital. The effects of the two
eva	luation parameters on the other comprehensive profit and loss are as
foll	ows:
1.	sustainable growth rate
			the effects to other comprehensive
			income
			Favorable	Unfavorable
			changes (0.3%)	changes (-0.3%)
June 30, 2023
Financial assets at fair value through other
	comprehensive income
	Unlisted stocks	$	3,428	(3,234)
			the effects to other comprehensive
			income
			Favorable	Unfavorable
			changes (0.3%)	changes (-0.3%)
December 31, 2022
Financial assets at fair value through other
	comprehensive income
	Unlisted stocks	$	2,975	(2,781)

ii) Income approach

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

1. sustainable growth rate

(Continued)

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

June 30, 2022
Financial assets at fair value through other
comprehensive income
Unlisted stocks
2.
cost of equity
June 30, 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
June 30, 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%)
$ 2,975
(2,846)
the effects to other comprehensive
income
Favorable
changes (-3%)
Unfavorable
changes (3%)
$ 72,044
(34,023)
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%)
$ 62,415
(30,599)

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.

(Continued)

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

4) Not based on fair value measurement
a) Fair value information

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

Debt instruments measured at amortized cost Debt instruments measured at amortized cost Debt instruments measured at amortized cost	June 30, 2023	June 30, 2023
	Book value $ 242,622,797 December	Fair value
		242,585,750 31, 2022
	Book value Fair value $ 236,774,247 236,657,427 June 30, 2022	Fair value
	Book value $ 259,746,799	Fair value
		259,782,983

b) The fair value hierarchy of information

Assets and Liabilities		June 30, 2023	June 30, 2023
	Total $ 242,585,750	Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) 38,837,106 203,748,644 - 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 - June 30, 2022
Debt instruments measured at amortized cost Assets and Liabilities
	Total $ 259,782,983	Quoted prices in active markets for identical assets (Level 1) 29,846,952	Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) 229,936,031 -
Debt instruments measured at amortized cost

(Continued)

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

c) Valuation techniques

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

i) Cash and cash equivalents, due from Central Bank and call loans to banks, securities purchased under resell agreements, receivables, overdue receivables, exchange bills negotiated guarantee deposits paid, temporary payments and suspense accounts, proceeds of settlement and credit transaction, deposits from Central Bank and other banks, securities sold under repurchase agreements, payables, other financial liabilities, guarantee deposits received and temporary receipts and suspense accounts: since these instruments have short maturities, the book value is adopted as a reasonable basis in estimating the fair value.
ii) Discounts and loans (including non-performing loans): the interest rate of bank loans, dependent on the benchmark interest rate which plus or minus the input value (i.e. motorized interest rate), said market rates, therefore, the book value of financial assets is equivalent to their fair value. Among the case of fixed interest rate, the estimated fair value of long-term loans using the discounted value of its expected cash flows, but this is minority, so the book value of financial assets is equivalent to their fair value.
iii) Investment in debt instruments at amortized cost: the quoted price is regarded as its fair value. If there is no quoted price in an active market for the financial asset, its fair value is estimated on the basis of the result of a valuation technique.
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.

(Continued)

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

(ap) Financial Risk Information
(i) General description

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

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

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

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

a) Conduct Analysis and response project when significant domestic and foreign economic, financial and industrial risk management occur.
b) Risk management report of various risk exposure and agenda processing.
c) The processing of examination of the risk management relevant policy of the Bank and limitations, management indices and the response project when the risk exceeds the limitations.
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.

(Continued)

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

2) Assets and Liabilities Management Committee

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

3) Credit Examination Committee

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

4) Overdue Loans Clearing Committee

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

5) Cyber Security Management Committee

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

(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.

(Continued)

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

2) Credit risk management policy

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

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

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

a) Credit Business (Including loan commitments and guarantees)

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

i) Categorization of credit assets

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

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.

(Continued)

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

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

b) Due from other banks and call loans to banks

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

c) Debt instrument investments and derivative financial instruments

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

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

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

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

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

(Continued)

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

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

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

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

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

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

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

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

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

(Continued)

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

5) Definitions of default and credit-impaired financial assets

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

a) Credit assets
- i) Significant financial difficulty of the issuer or the borrower;
- ii) A breach of contract, such as a default or past due event ;
- iii) The lender(s) of the borrower, for economic or contractual reasons relating to the borrower’ s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;
- iv) It is becoming probable that the borrower will enter bankruptcy or other financial reorganization;
- v) The disappearance of an active market for that financial asset because of financial difficulties;
- vi) The purchase or origination of a financial asset at a considerable amount of discount that reflects the incurred credit losses;
b) Debt instrument investments
- i) Significant financial difficulty of the issuer;
- ii) The disappearance of an active market for that financial asset because of financial difficulties;
- iii) The purchase or origination of a financial asset at a considerable amount of discount that reflects the incurred credit losses.
- iv) Counterparty defaulting on agreement of other financial instruments (e.g. transactions settlement failure, a bank decide to execute early termination of transactions, or loans originated from derivatives settlement failure).
6) Write-off policy

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

The following are indicators that the financial assets are uncollectible:

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

(Continued)

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

b) After the collateral and the assets of the principal and subordinate debtors have been priced low or deducted from the first-order mortgage, they cannot be repaid, the execution costs are close or may exceed the Bank’s reimbursable amount, and the implementation is not beneficial.
c) The collateral and the property of the principal and subordinate debtors were auctioned off at no cost and were not bought by anyone, and there was no one have substantial benefits.
d) Overdue loan and non-accrual loan have exceeded the liquidation period for two years.

The Bank and subsidiaries, whose written-off claims may still have ongoing recourse, continues to follow laws and regulations to pursue the proceedings.

7) Modification of contractual cash flow of financial assets

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

8) Measuring the expected credit losses
a) Adoption of methods and assumptions

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

(Continued)

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)

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)

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)

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:

June 30, 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 $ 113,856 50,482 18,970,680 22,113 $ 19,157,131 Carrying amount $ 75,222 42,578 20,309,083 58,786 $ 20,485,669	Allowance impairment 9,037 9,662 4,267,143 12,241 4,298,083 Allowance impairment 10,034 7,050 4,784,155 15,898 4,817,137	Exposure (measured at amortized cost) 104,819 40,820 14,703,537 9,872 14,859,048 Exposure (measured at amortized cost) 65,188 35,528 15,524,928 42,888 15,668,532	Value of collateral
				107,936 - 22,935,007 -
				23,042,943
				Value of collateral
				73,243 - 22,707,890 -
				22,781,133

(Continued)

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

June 30, 2022 Impairment financial assets`：` Receivables Acceptances receivables Interest receivable Discounts and loans Overdue receivable Total impairment financial assets	Carrying amount $ 65,333 37,105 19,834,495 80,839 $ 20,017,772	Allowance impairment 2,824 6,297 4,351,517 24,134 4,384,772	Exposure (measured at amortized cost) 62,509 30,808 15,482,978 56,706 15,633,001	Value of collateral
				65,333 - 21,921,648 - 21,986,981

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	June 30, 20	23 % % 62.79 % 1.30 % 3.42 % 0.20 % 25.46 % 0.51 % 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	June 30, 2	022
	Amount $ 893,198,429 18,483,571 48,692,228 2,754,506 362,239,223 7,249,458 88,056,042 1,900,554 $ 1,422,574,011		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 861,939,838 4,223,770 73,738,477 2,907,507 327,776,549 3,937,569 84,201,692 3,128,527 1,361,853,929	% % 63.29 % 0.31 % 5.41 % 0.22 % 24.07 % 0.29 % 6.18 % 0.23 % 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	June 30, 20	23 % % 93.17 % 6.83 % 100.00	December 31	, 2022 % % 93.13 % 6.87 % 100.00	June 30, 2	022
	Amount $ 1,325,367,957 97,206,054 $ 1,422,574,011		Amount 1,321,066,848 97,426,603 1,418,493,451		Amount 1,270,586,141 91,267,788 1,361,853,929	% % 93.30 % 6.70 % 100.00
Domestic Foreign Total

(Continued)

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	June 30, 20	23 % % 17.67 % 0.56 % 1.62 % 63.34 % 1.00 % 0.18 % 14.99 % 0.64 % 100.00	December 31	, 2022 % % 19.16 % 0.63 % 1.63 % 61.93 % 1.12 % 0.17 % 14.71 % 0.65 % 100.00	June 30, 2	022
	Amount $ 251,429,338 7,945,862 23,054,976 901,015,156 14,258,325 2,499,160 213,220,855 9,150,339 $ 1,422,574,011		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 255,772,512 9,650,939 22,567,345 837,784,426 14,851,300 2,358,931 210,421,321 8,447,155 1,361,853,929	% % 18.78 % 0.71 % 1.66 % 61.52 % 1.09 % 0.17 % 15.45 % 0.62 % 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
	June 30, 2023 $ 111,332,833 17,905,137 8,582,850 25,726,091 $ 163,546,911	December 31, 2022 64,987,007 18,839,955 8,129,149 22,056,496 114,012,607	June 30, 2022
Issued and irrevocable loan commitments Irrevocable credit card loan commitments Letters of credit issued yet unused Various guarantee proceeds Total			78,259,461 19,489,913 11,634,237 25,093,611
			134,477,222

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)

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

June 30, 2023	12-month ECL	12-month ECL	12-month ECL	12-month ECL	12-month ECL	12-month ECL	12-month ECL	Lifetime ECL`－`not impaired	Lifetime ECL`－`not impaired	Lifetime ECL`－`not impaired	Lifetime ECL`－`not impaired	Lifetime ECL`－`not impaired	Lifetime ECL`－`not impaired	Lifetime ECL`－`not impaired	Lifetime ECL`－` impaired
	Excellent	Good	Medium	Acceptable	Under standard	No rating	Subtotal	Excellent	Good	Medium	Acceptable	Under standard	No rating	Subtotal	High risk	Allowance impairment	Total
Receivable
Credit card	$ 570,955	241,307	182,690	27	3,832	455,190	1,454,001	880	1,295	2,451	-	151	116	4,893	-	1,214	1,457,680
Acceptances receivable	568,144	408,677	47,306	6,399	-	64,929	1,095,455	-	-	-	-	-	-	-	-	10,955	1,084,500
Other receivables	451,022	2,094,960	525,017	44,307	26,311	4,177,634	7,319,251	303	3,035	1,690	523	1,778	107,734	115,063	164,338	96,185	7,502,467
Discounts and loans
Private banking	140,725,332	138,968,758	69,654,027	3,228,329	1,061,475	5,752,578	359,390,499	34,727	199,413	303,672	11,197	144,584	18,142	711,735	4,037,543	4,256,471	359,883,306
Corporate banking	263,462,385	362,729,335	266,564,726	32,371,706	16,976,500	98,105,451	1,040,210,103	139,354	1,066,132	301,401	289,097	406,546	1,088,464	3,290,994	14,933,137	13,236,465	1,045,197,769
Other financial assets
Overdue receivable	-	-	-	-	-	-	-	-	-	-	-	-	-	-	22,113	12,863	9,250
Total	$ 405,777,838	504,443,037	336,973,766	35,650,768	18,068,118	108,555,782	1,409,469,309	175,264	1,269,875	609,214	300,817	553,059	1,214,456	4,122,685	19,157,131	17,614,153	1,415,134,972
Guarantee and commitments	$ 28,901,686	13,859,261	7,695,346	438,183	38,283	112,303,716	163,236,475	19,822	153,948	347	-	2,288	145	176,550	133,886	362,459	163,184,452

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

June 30, 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	$ 348,234	193,409	203,808	169	6,238	178,717	930,575	443	651	1,215	-	700	31	3,040	-	525	933,090
Acceptances receivable	434,833	543,257	340,323	17,376	-	34,817	1,370,606	-	-	-	-	-	-	-	-	13,706	1,356,900
Other receivables	272,070	1,734,563	449,356	35,855	25,466	4,228,371	6,745,681	86	778	1,519	2,047	1,626	195,195	201,251	102,438	97,672	6,951,698
Discounts and loans
Private banking	120,508,779	123,080,337	69,485,659	3,569,399	1,032,204	7,730,699	325,407,077	12,479	84,758	267,437	107,200	199,462	17,933	689,269	4,808,730	3,572,085	327,332,991
Corporate banking	204,787,195	332,920,999	292,129,011	32,695,789	18,061,106	131,996,338	1,012,590,438	104,284	445,852	514,171	1,450,032	367,889	450,422	3,332,650	15,025,765	12,232,367	1,018,716,486
Other financial assets
Overdue receivable	-	-	-	-	-	-	-	-	-	-	-	-	-	-	80,839	56,056	24,783
Total	$ 326,351,111	458,472,565	362,608,157	36,318,588	19,125,014	144,168,942	1,347,044,377	117,292	532,039	784,342	1,559,279	569,677	663,581	4,226,210	20,017,772	15,972,411	1,355,315,948
Guarantee and commitments	$ 29,328,320	17,717,792	7,763,788	236,313	72,051	79,210,867	134,329,131	2,786	2,812	294	203	4,635	-	10,730	137,361	376,309	134,100,913

(Continued)

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

ii) Debt instruments

June 30, 2023	12-month ECL	12-month ECL	12-month ECL	12-month ECL	12-month ECL	Lifetime ECL`－`not impaired	Lifetime ECL`－`not impaired	Lifetime ECL`－`not impaired	Lifetime ECL`－`not impaired	Lifetime ECL`－`not impaired	Lifetime ECL`－` impaired
	Investment	Sub investment	High risk	No rating	Subtotal	Investment	Sub investment	High risk	No rating	Subtotal	High risk	Total	Accumulated impairment(Note)
Investment in debt instruments measured at fair value through other comprehensive income
Overseas bonds	$ 68,769,245	-	-	-	68,769,245	-	-	-	-	-	-	68,769,245	21,011
NT bonds	95,835,921	-	-	-	95,835,921	-	-	-	-	-	-	95,835,921	79,695
Negotiable certificates of deposit	601,980	-	-	-	601,980	-	-	-	-	-	-	601,980	233
Investment in debt instruments at amortized cost
Overseas bonds	20,637,494	-	-	-	20,637,494	-	-	-	-	-	-	20,637,494	4,790
NT bonds	32,677,017	-	-	-	32,677,017	-	-	-	-	-	-	32,677,017	16,393
Certificates of deposit with the Central Bank	189,320,000	-	-	-	189,320,000	-	-	-	-	-	-	189,320,000	55,909
Negotiable certificates of deposit	65,394	-	-	-	65,394	-	-	-	-	-	-	65,394	16
Total	$ 407,907,051	-	-	-	407,907,051	-	-	-	-	-	-	407,907,051	178,047

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

June 30, 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	$ 50,014,614	-	-	-	50,014,614	-	-	-	-	-	-	50,014,614	15,621
NT bonds	94,553,659	-	-	-	94,553,659	-	-	-	-	-	-	94,553,659	79,027
Investment in debt instruments at amortized cost
Overseas bonds	13,860,169	-	-	-	13,860,169	-	-	-	-	-	-	13,860,169	4,789
NT bonds	29,904,650	-	-	-	29,904,650	-	-	-	-	-	-	29,904,650	11,872
Certificates of deposit with the Central Bank	216,000,000	-	-	-	216,000,000	-	-	-	-	-	-	216,000,000	63,788
Negotiable certificates of deposit	62,444	-	-	-	62,444	-	-	-	-	-	-	62,444	15
Total	$ 404,395,536	-	-	-	404,395,536	-	-	-	-	-	-	404,395,536	175,112

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

(Continued)

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:

June 30, 2023	Maximum credit risk exposure $ 200,000 61,742,295 1,018,985 419,894 377,814 1,524,266 Maximum credit risk exposure $ 200,000 30,907,810 752,713 471,554 414,370 1,166,667 Maximum credit risk exposure $ 200,000 9,230,644 602,510 291,199 179,152 521,913	Collateral Enhancement of other credit - - - - - - - - - - 764,462 798,176 Collateral Enhancement of other credit - - - - - - - - - - 2,527,996 727,720 Collateral Enhancement of other credit - - - - - - - - - - 2,611,212 664,295
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 June 30, 2022
Financial assets at fair value through profit or loss `－`Debit investments `－`Commercial paper `－`Listed stocks `－`Unlisted stocks `－`Beneficiary certificates `－`Derivative instrument

(Continued)

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

		For the six mont	hs ended June 30, 2023	hs ended June 30, 2023	Total
12-month ECL $ 29,630 207 (34) (41) (11,202) 21,560 (2,640) - $ 37,480	Lifetime ECL`－`not impaired 10,712 (27) 46 (55) (60) 77 (3,636) - 7,057	Lifetime ECL`－` impaired 17,084 (180) (12) 96 (4,652) 4,413 1,950 - 18,699	Impaired (IFRS9) 57,426 - - - (15,914) 26,050 (4,326) - 63,236	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 46,616 - - - - - - (1,498) 45,118
					104,042 - - - (15,914) 26,050 (4,326) (1,498)
					108,354

(Continued)

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

		For the six mont	hs ended June 30, 2022	hs ended June 30, 2022	Total
12-month ECL $ 31,774 93 (5) (12) (11,271) 29,230 (559) - $ 49,250	Lifetime ECL`－`not impaired 6,068 (13) 13 (14) (79) 127 445 - 6,547	Lifetime ECL`－` impaired 28,695 (80) (8) 26 (2,726) 2,859 (19,645) - 9,121	Impaired (IFRS9) 66,537 - - - (14,076) 32,216 (19,759) - 64,918	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 51,574 - - - - - - (4,589) 46,985
					118,111 - - - (14,076) 32,216 (19,759) (4,589)
					111,903

(Continued)

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

b) Discounts and loans

		For the six mont	hs ended June 30, 2023	hs ended June 30, 2023	Total
12-month ECL $ 5,882,540 104,367 (17,441) (11,311) (2,096,442) 1,740,190 - (791,496) - $ 4,810,407	Lifetime ECL`－`not impaired 138,138 (11,137) 24,777 (12,020) (79,691) 3,137 - 184,545 - 247,749	Lifetime ECL`－` impaired 4,784,155 (93,230) (7,336) 23,331 (1,120,797) 99,895 (2,175,786) 2,756,911 - 4,267,143	Impaired (IFRS9) 10,804,833 - - - (3,296,930) 1,843,222 (2,175,786) 2,149,960 - 9,325,299	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 - - - - - - - 893,854 8,167,637
					18,078,616 - - - (3,296,930) 1,843,222 (2,175,786) 2,149,960 893,854
					17,492,936

(Continued)

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

		For the six mont	hs ended June 30, 2022	hs ended June 30, 2022	Total
12-month ECL $ 4,166,467 118,949 (6,182) (10,707) (1,695,677) 2,196,354 - 787,798 - $ 5,557,002	Lifetime ECL`－`not impaired 129,977 (12,958) 10,607 (4,586) (19,711) 19,008 - 78,359 - 200,696	Lifetime ECL`－` impaired 3,635,336 (105,991) (4,425) 15,293 (899,609) 723,573 (1,584,839) 2,572,179 - 4,351,517	Impaired (IFRS9) 7,931,780 - - - (2,614,997) 2,938,935 (1,584,839) 3,438,336 - 10,109,215	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 - - - - - - - (1,949,800) 5,695,237
					15,576,817 - - - (2,614,997) 2,938,935 (1,584,839) 3,438,336 (1,949,800)
					15,804,452

(Continued)

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

c) Other financial assets

		For the six mont	hs ended June 30, 2023	hs ended June 30, 2023	Total
12-month ECL $ - - - - - - $ -	Lifetime ECL`－`not impaired - - - - - - -	Lifetime ECL`－` impaired 15,898 (6) 4,242 (39,401) 31,508 - 12,241 For the six 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 (6) - 4,242 - (39,401) - 31,508 - - (31,951) 12,241 622 hs ended June 30, 2022
					48,471 (6) 4,242 (39,401) 31,508 (31,951)
					12,863
					Total
	Lifetime ECL`－`not impaired - - - - - - -	Lifetime ECL`－` impaired 25,545 (3) 4,468 (5,723) (153) - 24,134	Impaired (IFRS9) 25,545 (3) 4,468 (5,723) (153) - 24,134	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 25,847 - - - - 6,075 31,922
					51,392 (3) 4,468 (5,723) (153) 6,075
					56,056

(Continued)

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

d) Guarantee and commitments

		For the six mont	hs ended June 30, 2023	hs ended June 30, 2023	Total
12-month ECL $ 178,812 - (50,513) 65,151 (35,552) - $ 157,898	Lifetime ECL`－`not impaired 57 - (24) 1,090 (4) - 1,119	Lifetime ECL`－` impaired 61,625 - (5,986) - (12,761) - 42,878 For the six 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" 240,494 96,818 - - (56,523) - 66,241 - (48,317) - - 63,746 201,895 160,564 hs ended June 30, 2022
					337,312 - (56,523) 66,241 (48,317) 63,746
					362,459
					Total
	Lifetime ECL`－`not impaired 69 - - (65) 4 (4) - 4	Lifetime ECL`－` impaired 6,786 (2,543) 456 (2,316) - 53,089 - 55,472	Impaired (IFRS9) 156,209 - - (55,729) 72,837 78,335 - 251,652	Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- Performing and Non- Accrual Loans" 173,279 - - - - - (48,622) 124,657
					329,488 - - (55,729) 72,837 78,335 (48,622)
					376,309

(Continued)

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 six months ended June 30, 2023 12-month ECL Lifetime ECL `－`not impaired Lifetime ECL `－`impaired Total $ 165,724 - - 165,724 70,236 - - 70,236 (58,521) - - (58,521) 608 - - 608 $ 178,047 - - 178,047 For the six months ended June 30, 2022 12-month ECL Lifetime ECL `－`not impaired Lifetime ECL `－`impaired Total $ 175,270 - - 175,270 56,521 - - 56,521 (57,138) - - (57,138) 459 - - 459 $ 175,112 - - 175,112	For the six months ended June 30, 2023 12-month ECL Lifetime ECL `－`not impaired Lifetime ECL `－`impaired Total $ 165,724 - - 165,724 70,236 - - 70,236 (58,521) - - (58,521) 608 - - 608 $ 178,047 - - 178,047 For the six months ended June 30, 2022 12-month ECL Lifetime ECL `－`not impaired Lifetime ECL `－`impaired Total $ 175,270 - - 175,270 56,521 - - 56,521 (57,138) - - (57,138) 459 - - 459 $ 175,112 - - 175,112	For the six months ended June 30, 2023 12-month ECL Lifetime ECL `－`not impaired Lifetime ECL `－`impaired Total $ 165,724 - - 165,724 70,236 - - 70,236 (58,521) - - (58,521) 608 - - 608 $ 178,047 - - 178,047 For the six months ended June 30, 2022 12-month ECL Lifetime ECL `－`not impaired Lifetime ECL `－`impaired Total $ 175,270 - - 175,270 56,521 - - 56,521 (57,138) - - (57,138) 459 - - 459 $ 175,112 - - 175,112
	12-month ECL $ 175,270 56,521 (57,138) 459 $ 175,112	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)

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)

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)

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			June 30,	2023
	0-30 days $ 1,119,715,577 414,489 676,491 24,992,977 155,700 - 1,411,582 1,359,078 5,000,000 939,739,119 145,610,782 298,679 - 3,250 53,430	31-90 days 207,061,774 - - 9,134,417 310,260 - 423,296 1,713,869 10,000,000 - 180,700,256 - 4,700,000 2,750 76,926	91 days-1 year 524,437,719 - - 1,868,399 435,140 - 562,431 3,275,277 119,814,545 - 395,069,317 - 3,090,000 82,830 239,780	1-5 years 51,462,961 - - - 311,400 - - 107,957 - - 43,051,034 - 6,210,000 1,080,830 701,740	Over 5 years Total 57,787,688 1,960,465,719 - 414,489 - 676,491 - 35,995,793 - 1,212,500 9,277,020 9,277,020 - 2,397,309 29 6,456,210 - 134,814,545 - 939,739,119 5,008 764,436,397 - 298,679 46,250,000 60,250,000 2,055,244 3,224,904 200,387 1,272,263

(Continued)

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 480,666,633 - - - 927,400 - 1,292,066 2,711,772 75,185,210 - 392,763,469 - 7,400,000 118,500 268,216 June 30,	1-5 years 92,838,661 - - - - - 554,713 118,148 41,060,000 - 42,587,346 - 6,600,000 1,198,580 719,874 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 $ 1,120,019,646 1,212,163 460,091 26,047,882 - - 451,896 717,873 11,560,000 937,635,964 141,532,891 358,181 - 2,250 40,455	31-90 days 185,632,563 - - 19,388,139 178,410 - 150,329 813,778 20,947,000 - 144,084,550 - - 5,250 65,107	91 days-1 year 429,855,519 - - 3,046,418 743,905 - 1,009,247 1,549,535 34,754,545 - 388,392,723 - - 105,750 253,396	1-5 years 69,164,463 - - - - - 828,367 83,177 - - 52,095,829 - 14,000,000 1,467,330 689,760	Over 5 years Total 49,095,405 1,853,767,596 - 1,212,163 - 460,091 - 48,482,439 - 922,315 8,746,658 8,746,658 - 2,439,839 4 3,164,367 - 67,261,545 - 937,635,964 4,280 726,110,273 - 358,181 38,250,000 52,250,000 1,969,099 3,549,679 125,364 1,174,082

(Continued)

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 June 30, 2022 and 2023, maturity analysis for the derivative financial liabilities settled by net amount is as follows:

		June 30,	2023
0-30 days $ 931	31-90 days 1,718	91-180 days 181 days to 1 year 1,751 780 December 31, 2022		Over 1 year -	Total
					5,180

0-30 days $ -	31-90 days 825	91-180 days 225 June 30,	181 days to 1 year - 2022	Over 1 year -	Total
					1,050

0-30 days $ -	31-90 days 346	91-180 days -	181 days to 1 year -	Over 1 year -	Total
					346

(Continued)

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:

June 30, 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 $ 20,411,147 20,064,886 - - 20,411,147 20,064,886 $ 346,261 0-30 days $ 25,782,525 27,862,886 - - 25,782,525 27,862,886 $ (2,080,361)	31-90 days 32,835,895 32,057,453 594 1,129 32,836,489 32,058,582 777,907 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 4,576,709 4,390,182 1,181 1,894 4,577,890 4,392,076 185,814 91-180 days 11,979,083 12,577,650 587 724 11,979,670 12,578,374 (598,704)	181 days to 1 year 14,043,497 13,510,844 1,761 2,324 14,045,258 13,513,168 532,090 181 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 71,867,248 70,023,365 3,536 5,347 71,870,784 70,028,712 1,842,072 Total 86,641,003 91,943,413 5,884 8,055 86,646,887 91,951,468 (5,304,581)

(Continued)

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

June 30, 2022 0-30 days 31-90 days Derivative financial instruments at fair value through profit or loss `－`Foreign exchange derivative instruments `－`Cash outflow $ 3,246,082 17,284,197 `－`Cash inflow 3,068,261 17,934,884 `－`Interest rate derivative instrument `－`Cash outflow - 587 `－`Cash inflow - 649 Total cash outflow 3,246,082 17,284,784 Total cash inflow 3,068,261 17,935,533 Net cash flow $ 177,821 (650,749) 5) Maturity analysis of off-balance sheet June 30, 2023 0-30 days 31-90 days Issued and irrevocable loan commitments $ 734,138 505,065 Irrevocable credit card loan commitments 1,521 37,999 Letters of credit issued yet unused 1,669,691 5,967,447 Other guarantees 2,923,686 2,416,382 Total $ 5,329,036 8,926,893 December 31, 2022 0-30 days 31-90 days Issued and irrevocable loan commitments $ 1,997,541 512,056 Irrevocable credit card loan commitments 1,117 34,225 Letters of credit issued yet unused 2,016,789 4,985,416 Other guarantees 2,667,240 1,001,432 Total $ 6,682,687 6,533,129 June 30, 2022 0-30 days 31-90 days Issued and irrevocable loan commitments $ 6,846 3,453,173 Irrevocable credit card loan commitments 3,169 48,436 Letters of credit issued yet unused 3,051,429 7,672,232 Other guarantees 2,227,723 5,138,842 Total $ 5,289,167 16,312,683	91-180 days 28,265,930 30,059,373 1,181 1,298 28,267,111 30,060,671 (1,793,560) items 91-180 days	181 days to 1 year 19,173,212 20,645,944 2,936 3,373 19,176,148 20,649,317 (1,473,169) 181 days to 1 year
505,065 37,999 5,967,447 2,416,382 8,926,893 31-90 days	1,253,871 251,216 783,114 1,028,579 3,316,780 91-180 days	47,836,888 1,073,300 162,598 2,795,637 51,868,423 181 days to 1 year
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
3,453,173 48,436 7,672,232 5,138,842 16,312,683	8,051,009 127,027 775,499 1,079,685 10,033,220	29,715,727 417,150 103,293 1,684,943 31,921,113

(Continued)

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:

June 30, 2023 Operating lease income (lessor) December 31, 2022 Operating lease income (lessor) June 30, 2022 Operating lease income (lessor)	Below 1 year $ 1,939 Below 1 year $ 1,027 Below 1 year $ 1,932	1-5 years 2,103 1-5 years 1,389 1-5 years 1,626	Over 5 years Total - 4,042 Over 5 years Total - 2,416 Over 5 years Total - 3,558

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:

June 30, 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 June 30, 2022 Machinery and equipment Transportation equipment Right-of-use assets Miscellaneous equipment Total	Below 1 year $ 1,462,658 408 58 5,695 $ 1,468,819 Below 1 year $ 1,496,409 2,098 620 1,024 $ 1,500,151 Below 1 year $ 1,290,076 90 180 2,241 $ 1,292,587	1-5 years - - - - - 1-5 years - - 85 - 85 1-5 years - - 107 - 107	Over 5 years - - - - - Over 5 years - - - - - Over 5 years - - - - -	Total
				1,462,658 408 58 5,695
				1,468,819
				Total
				1,496,409 2,098 705 1,024
				1,500,236
				Total
				1,290,076 90 287 2,241
				1,292,694

(Continued)

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)

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)

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)

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)

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)

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)

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)

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)

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)

June 30, 2023

Currency USD JPY AUD ZAR CNY	Foreign currency amount (in thousands) NT$ amount $ 395,277 12,308,926 1,978,421 425,361 15,306 315,151 54,151 89,782 19,372 83,009

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

Significant net positions of foreign currencies (Market risk)	Significant net positions of foreign currencies (Market risk)
June 30, 2022
Currency USD JPY AUD EUR CNY	Foreign currency amount (in thousands) NT$ amount $ 496,689 14,769,047 2,047,825 445,812 14,159 289,552 58,542 259,751 2,933 91,040

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)

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

ii) Assets and liabilities of foreign currency

June 30, 2023

	June 30, 2023	June 30, 2023
Currency	Monetary financial assets Foreign currency amount (in thousands) Spot rate NTD amount $ 14,996,544 31.1400 466,992,380 5,016,613 20.5900 103,292,062 10,217,036 4.2850 43,779,999 132,223,918 0.2150 28,428,142 5,278,678 3.9730 20,972,188 413,164 33.8300 13,977,338 4,438,332 1.6580 7,358,754 25,582 39.2900 1,005,117 30,045 18.9200 568,451 16,045 23.5000 377,058 6,272 22.9600 144,005 - - 226,316		Monetary financial liabilities
	Foreign currency amount (in thousands) $ 14,996,544 5,016,613 10,217,036 132,223,918 5,278,678 413,164 4,438,332 25,582 30,045 16,045 6,272 -	Spot rate 31.1400 20.5900 4.2850 0.2150 3.9730 33.8300 1.6580 39.2900 18.9200 23.5000 22.9600 -	Foreign currency amount (in thousands) 14,570,905 4,911,579 9,998,583 130,752,978 4,801,693 412,913 4,441,567 25,465 29,949 15,801 6,260 -	Spot rate NTD amount 31.1400 453,737,982 20.5900 101,129,412 4.2850 42,843,928 0.2150 28,111,890 3.9730 19,077,126 33.8300 13,968,847 1.6580 7,364,118 39.2900 1,000,520 18.9200 566,635 23.5000 371,324 22.9600 143,730 - 230,322
USD AUD CNY JPY HKD EUR ZAR GBP NZD CAD SGD Others (Note)

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)

100

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

			June 30, 2022
	Monetary financial assets		NTD amount 462,872,125 107,671,827 42,685,670 21,691,052 19,518,511 15,954,870 6,858,546 1,371,703 769,101 358,306 187,261 131,597 92,137	Monetary financial liabilities
Currency	Foreign currency amount (in thousands) $ 15,566,576 5,265,126 9,620,390 99,637,352 5,151,362 514,010 3,751,940 38,050 41,618 15,538 8,771 4,228 -	Spot rate 29.7350 20.4500 4.4370 0.2177 3.7890 31.0400 1.8280 36.0500 18.4800 23.0600 21.3500 31.1250 -		Foreign currency amount (in thousands) 15,021,800 5,175,882 9,422,564 98,300,155 4,767,683 514,565 3,752,925 38,170 41,780 15,637 9,014 4,230 -	Spot rate NTD amount 29.7350 446,673,210 20.4500 105,846,787 4.4370 41,807,918 0.2177 21,399,944 3.7890 18,064,751 31.0400 15,972,098 1.8280 6,860,347 36.0500 1,376,029 18.4800 772,094 23.0600 360,589 21.3500 192,449 31.1250 131,659 - 96,236
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%.

June 30, 2023

		June 30,	2023	2023
Currency USD AUD HKD JPY GBP SGD ZAR SEK CHF CAD THB EUR NZD CNY Total	Depreciate	by 1% Equity (66,672) (25,678) (21,721) (3,266) - - - - - - - - - - (117,337)	Appreciate by 1%
	Income $ (4,465) 4,047 3,078 62 (49) (7) 52 3 13 (42) 24 (128) (25) (55,486) $ (52,923)		Income 4,465 (4,047) (3,078) (62) 49 7 (52) (3) (13) 42 (24) 128 25 55,486 52,923	Equity 66,672 25,678 21,721 3,266 - - - - - - - - - -
				117,337

(Continued)

101

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

	December 31, 2022	December 31, 2022	December 31, 2022
Depreciate	by 1% Equity (63,299) (23,440) (19,240) (3,450) - - - - - - - - - (109,429)	Appreciate by 1%
Income $ (44,000) 4,060 3,029 (161) (15) (9) (31) 51 (5) (4) (37) (10) (55,663) $ (92,795)		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

	June 30,	2022	2022
Depreciate	by 1% Equity (62,836) (22,001) (17,269) (2,954) - - - - - - - - - - (105,060)	Appreciate by 1%
Income $ (42,910) 3,862 2,901 29 24 48 16 26 1 36 15 177 23 (50,761) $ (86,513)		Income 42,910 (3,862) (2,901) (29) (24) (48) (16) (26) (1) (36) (15) (177) (23) 50,761 86,513	Equity 62,836 22,001 17,269 2,954 - - - - - - - - - -
			105,060

(Continued)

102

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).

June 30,	2023	2023
Interest rate increases by 1 bp Income Equity $ (734) (2,401) - (51,003) - (28,242) - (585) - (206) - (1,017) - (128) $ (734) (83,582)	Interest rate decreases by 1 bp
Income $ (734) - - - - - - $ (734)	Income 734 - - - - - - 734	Equity 2,401 51,003 28,242 585 206 1,017 128
		83,582

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)

103

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

June 30,	2022	2022
Interest rate increases by 1 bp Income Equity $ (160) (2,965) - (50,169) - (13,476) - (465) - (61) - (1,708) - (182) $ (160) (69,026)	Interest rate decreases by 1 bp
Income $ (160) - - - - - - $ (160)	Income 160 - - - - - - 160	Equity 2,965 50,169 13,476 465 61 1,708 182
		69,026

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		June 30,
	Effect on NII
	TWD 4,117,478 (4,435,154)
	Effect on NII	in 1 year USD (24,074) 22,469 June 30,
	TWD 3,962,492 (4,598,328)
	Effect on NII	in 1 year USD (28,732) 9,071
	TWD 3,937,134 (5,514,602)

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)

104

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

The Bank and subsidiaries’ main 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 in 2021.

The following tables show the total amounts of unreformed contracts and those with appropriate fallback language on June 30, 2023, December 31 and June 30, 2022. The amounts of financial assets and liabilities are shown at their carrying amounts, and derivatives are shown at their notional amounts.

June 30, 2023 Financial assets Discounts and loans (Note 1) Bond Investments (Note 2) Financial liabilities Due to the Central Bank and banks Derivatives Interest rate swaps December 31, 2022 Financial assets Discounts and loans (Note 1) Bond Investments (Note 2) Financial liabilities Due to the Central Bank and banks Derivatives Interest rate swaps June 30, 2022 Financial assets Discounts and loans (Note 1) Bond Investments (Note 2) 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 - - - - - - - - - - - - - - - - - - - - - - - -
	$ 26,120,000 6,554,000 436,000 5,605,000 55,072,000 17,391,000 891,000 5,531,000 65,691,262 21,265,000 952,000 8,921,000	21,086,000 622,000 - 5,605,000 23,939,000 1,259,000 - 5,531,000 28,228,015 1,221,000 - 8,921,000	- - - - - - - - 7,125 - - -	- - - - - - - - 7,125 - - -	- - - - - - - - - - - -	- - - - - - - - - - - -	- - - - - - - - 43,448 - - -	- - - - - - - - 43,448 - - -

Note 1 : Position of concentration of credit extensions without appropriate fallback clause will be due for settlement during the current year or in the event of contractual changes, which will not affect the accrual of interest.

Note 2 : Bond investments without appropriate fallback clause will be converted using the interest rate recommended for conversion by the U.S. Alternative Reference Rates Committee (ARRC).

(Continued)

105

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 TWD Currency TWD USD TWD USD Currency TWD TWD		June 30, 2023
			Income Equity 4,437 - (4,437) - December 31, 2022

			Income Equity 3,359 - 10 - (3,359) - (10) - June 30, 2022

			Income Equity 1,504 - (1,504) -

b) Value at Risk of equity security

Value at Risk	From July 1, 2022 to June 30, 2023	From July 1, 2022 to June 30, 2023	From July 1, 2022 to June 30, 2023
	Average	Maximum	Minimum
Equity security risk	6,663	17,827	2,716

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 July 1, 2021 to June 30, 2022
	Average	Maximum	Minimum
Equity security risk	6,152	13,963	1,399

(Continued)

106

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 June 30, 2023, December 31 and June 30, 2022, there were not any financial assets of the Bank that are not fully derecognized.

(vii) Offsetting financial assets and financial liabilities

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

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

liabilities:
				June 30, 2023							Net amount (e)=(c)-(d) (815,891)
	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 764,462
								Financial instruments (Note)
Derivative financial instruments	$ 746,747			-		746,747 June 30, 2023		798,176
											Net amount (e)=(c)-(d) (1,207,331)
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 1,330,262
								Financial instrument (Note)
Derivative financial instruments	$ 122,931			- D	e	122,931 cember 31, 2022		-
											Net amount (e)=(c)-(d) (2,704,621)
		Financial assets un	d	er offsetting or general agreement of ne			t	amount settlement	o	r similar norm
Item		Gross amounts of recognized financial assets (a)		Gross amounts of financial liabilities offset in the balance sheet (b)		Net amount of financial assets presented in the balance sheet (c)=(a)-(b)		Amounts not balance	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)

107

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

				December 31, 2022	December 31, 2022					Net amount (e)=(c)-(d) (2,192,753)
F	inancial liabilities u		n	der offsetting or general agreement of n		e	t amount settlemen	t or similar norm
Item	Gross amounts of recognized financial liabilities (a)			Gross amounts of financial assets offset in the balance sheet (b)	Net amount of financial liabilities presented in the balance sheet (c)=(a)-(b)		Amounts not balance	set off in the sheet(d) Cash collateral pledged 2,422,569
							Financial instruments (Note)
Derivative financial instruments	$ 229,816			-	229,816 June 30, 2022		-
										Net amount (e)=(c)-(d) (3,044,740)
		Financial assets un	d	er offsetting or general agreement of ne		t	amount settlement	o	r similar norm
Item		Gross amounts of recognized financial assets (a)		Gross amounts of financial liabilities offset in the balance sheet (b)	Net amount of financial assets presented in the balance sheet (c)=(a)-(b)		Amounts not balance	s s	et off in the heet (d) Cash collateral received 2,611,212
							Financial instruments (Note)
Derivative financial instruments	$ 230,767			-	230,767 June 30, 2022		664,295
										Net amount (e)=(c)-(d) (336,049)
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 711,301
							Financial instruments (Note)
Derivative financial instruments	$ 375,252			-	375,252		-

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)

108

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.

(Continued)

109

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

Item			June 30, 2023	December 31, 2022	June 30, 2022
Eligible capital	Common stock equity		107,330,893	100,331,196	94,830,691
	Other tier 1 capital		18,000,000	18,000,000	18,000,000
	Tier 2 capital		47,370,713	40,103,704	39,992,650
	Eligible Capital		172,701,606	158,434,900	152,823,341
Risk- weighted assets	Credit risk	Standardized approach	1,205,937,816	1,188,123,617	1,149,357,561
		Internal ratings-based approach	-	-	-
		Securitization	-	-	-
	Operational risk	Basic indicator approach	-	-	-
		Standardized approach/selective standardized approach	43,118,270	43,118,270	39,081,382
		Advanced measurement approach	-	-	-
	Market risk	Standardized approach	46,534,625	38,716,513	30,656,250
		Internal model approach	-	-	-
	Total risk-weighted assets		1,295,590,711	1,269,958,400	1,219,095,193
Capital adequacy ratio			% 13.33	% 12.48	% 12.54
Common stock equity/ Risk-weighted assets ratio			% 8.28	% 7.90	% 7.78
Tier 1 capital / Risk-weighted assets ratio			% 9.67	% 9.32	% 9.26
Leverage ratio			% 5.70	% 5.47	% 5.42

The formulas of the table are listed as follows:

a) The eligible capital, risk-weighted assets and exposure are calculated per “Regulations Governing the Capital Adequacy and Capital Category of Banks” and “The Calculation and Forms of Eligible Capital and Risk Assets of Banks”.
b) The Bank shall fill out the capital adequacy of this period and last period. For the semi-annual report, the Bank shall disclose the capital adequacy of this period and last period and additionally disclose the capital adequacy of the previous period ended December 31.
c) Note 1. Eligible Capital = Common stock equity ＋ Other Tier 1 Capital ＋ Tier 2 Capital
Note 2. Total risk-weighted assets = Credit risk weighted asset ＋ (operational risk charge ＋ market risk charge) × 12.5
Note 3. Capital adequacy ratio= Eligible Capital ÷ Risk weighted asset.
Note 4. Common stock equity / Risk-weighted assets ratio= Common stock equity / total risk weighted assets

(Continued)

110

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

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

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

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

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

The Bank and subsidiaries’ investing and financing activities which did not affect the current cash flow for the six months ended June 30, 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:

Non-cash changes Foreign exchange rate movement Fair value changes Other changes 124,500 (215,075) - - - - 7,182 - 256,421 131,682 (215,075) 256,421	Non-cash changes Foreign exchange rate movement Fair value changes Other changes 124,500 (215,075) - - - - 7,182 - 256,421 131,682 (215,075) 256,421	June 30, 2023 9,277,020 60,250,000 1,272,263
Foreign exchange rate movement 124,500 - 7,182 131,682	Fair value changes (215,075) - - (215,075)
		70,799,283

Non-cash changes Foreign exchange rate movement Fair value changes Other changes 624,000 (171,072) - - - - (21,931) - 256,986 602,069 (171,072) 256,986	Non-cash changes Foreign exchange rate movement Fair value changes Other changes 624,000 (171,072) - - - - (21,931) - 256,986 602,069 (171,072) 256,986	June 30, 2022 8,746,658 52,250,000 1,174,082
Foreign exchange rate movement 624,000 - (21,931) 602,069	Fair value changes (171,072) - - (171,072)
		62,170,740

(Continued)

111

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

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

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

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

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

Private fund Asset securitization product Total	June 30, 2023 $ 183,164 539,879 $ 723,043	December 31, 2022 163,679 560,023 723,702	June 30, 2022
			152,872 605,458
			758,330

(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	June 30, 2023 $ 183,164 461,266 78,613 $ 723,043	December 31, 2022 163,679 475,485 84,538 723,702	June 30, 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			152,872 502,288 103,170
			758,330

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 June 30, 2023, December 31 and June 30, 2022, the Bank and subsidiaries has not provided any financial support to its special purpose entities that is not included in consolidated financial reports.

(Continued)

112

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

(7) Related-party transactions

(a) Names and relationship with related parties

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

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

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

(b) Significant transactions with related parties
(i) Due from banks

Bank of Taiwan Bank of Taiwan Bank of Taiwan	June 30,	2023
	Amount % $ 712,439 4.11 December 31, 2022	%
		4.11
		%
		0.71
		2022
		%
		1.68

Interest rates are the same as those with regular clients.

(Continued)

113

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

(ii) Call loans to banks

						December 31,
				June 30, 2023		2022	June 30, 2022
Bank of Taiwan			$	311,400		-	-
						Interest Income
				For the three		For the six
				months ended		months ended	Annual
	Highest balance			June 30, 2023		June 30, 2023	interest rate
Bank of Taiwan	$	1,541,660		2,395		4,598	1.24%~5.50%
						Interest income
				For the three		For the six
				months ended		months ended	Annual
	Highest balance			June 30, 2022		June 30, 2022	interest rate
Bank of Taiwan	$	673,778			90	364	0.13%~2.53%

Interest rates are the same as those with regular clients.

(iii) Call loans from banks

					December 31,
				June 30, 2023	2022	June 30, 2022
Bank of Taiwan			$	3,269,700	1,786,360	3,056,995
					Interest Expense
				For the three	For the six
				months ended	months ended	Annual
	Highest balance			June 30, 2023	June 30, 2023	interest rate
Bank of Taiwan	$	17,989,169		45,985	80,493	0.68%~5.50%
					Interest Expense
				For the three	For the six
				months ended	months ended	Annual
	Highest balance			June 30, 2022	June 30, 2022	interest rate
Bank of Taiwan	$	8,434,803		13,353	16,499	0.04%~5.00%

Interest rates are the same as those with regular clients.

(iv) Deposits

Others	June 30,	2023
	Amount $ 2,047,871	%
		0.12

(Continued)

114

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

		December 31, 2022	December 31, 2022
		Amount	%
Others	$	1,851,872		0.11
		June 30, 2022
		Amount	%
Others	$	1,697,034		0.10

Interest rates are the same as those with regular clients.

(v) Credit

Credit	Credit	Credit	Credit
June 30, 20				23
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	39	14,403	11,960	11,960	-	none	none
Self-use home mortgages loans	123	554,182	500,147	500,147	-	real estate	none
Others	Natural person	605,165	548,066	548,066	-	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

June 30, 20				22
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	16,350	14,710	14,710	-	none	none
Self-use home mortgages loans	124	474,569	450,234	450,234	-	real estate	none
Others	Natural person	513,937	495,798	495,798	-	real estate	none

(vi) Donation:

Small and Medium Enterprise Credit Guarantee Fund of Taiwan Taiwan Business Bank Guild Total	For the three months ended June 30, 2023 2022 $ 90,339 79,632 - - $ 90,339 79,632	For the six months ended June 30,	For the six months ended June 30,
	2023 $ 90,339 - $ 90,339	2023 180,683 4,200 184,883	2022
			159,266 2,500 161,766

(Continued)

115

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

(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:

TBB No. 1 Venture Capital Limited Partnership	June 30, 2023 $ 8,524	December 31, 2022 -	June 30, 2022
			8,594

(xiii) Other revenue:

For the three months ended June 30, 2023 2022 $ 4,262 4,250 - - $ 4,262 4,250	For the six months ended June 30,	For the six months ended June 30,
2023 $ 4,262 - $ 4,262	2023 8,524 10 8,534	2022
		8,360 -
		8,360

For the three months ended June 30 2023 2022 $ 38,259 32,209 663 581 $ 38,922 32,790	For the six months ended June 30,	For the six months ended June 30,
2023 $ 38,259 663 $ 38,922	2023 74,198 1,298 75,496	2022
		61,019 1,197
		62,216

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

(Continued)

116

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	June 30, 2023 $ 8,522,895 39,614,103 49,814,901 34,308,941 224,030,899 752,917 68,283,600 3,085,671 32,262,400	December 31, 2022 June 30, 2022 8,659,768 8,927,350 43,238,126 45,970,806 49,785,210 39,702,076 30,185,645 36,727,848 218,150,077 218,933,715 901,998 998,928 66,327,700 67,538,300 4,290,113 2,742,726 54,054,530 52,078,530

(b) Unrecognized contractual commitments:

As of June 30, 2023, December 31 and June 30, 2022, major constructions in progress and purchases amounted to $1,135,785, $1,018,993 and $760,348 respectively, of which $965,223, $911,848 and $646,025 respectively, remained unpaid.

(c) The Bank’ s trust department plans, manages, and operates trust services in accordance with the Banking Law and Trust Law. Special purpose funds are used to invest in marketable securities and the Bank also manages trust funds. The trust information as of June 30, 2023, December 31 and June 30, 2022 is as follows:

Trust Balance Sheet

June 30, 2023, December 31 and June 30, 2022

Trust Assets	June 30, 2023 $ 7,218,363 1,132,495 70,999,855 4,790,994 24,358,254 115,122,204 408,734 $ 224,030,899	December 31, 2022 6,303,284 928,987 73,259,462 2,935,786 21,657,475 112,621,601 443,482 218,150,077	June 30, 2022
Cash in Bank Stocks Funds Bonds Real estate Securities custody Other assets Total trust assets			6,792,863 890,498 74,418,433 1,751,970 18,797,531 115,806,519 475,901
			218,933,715

(Continued)

117

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

Trust Liabilities	June 30, 2023 $ - 115,122,204 108,820,024 (411,889) 500,560 $ 224,030,899	December 31, 2022 9 112,621,601 105,439,231 (332,731) 421,967 218,150,077	June 30, 2022 9 115,806,519 103,051,190 (403,208) 479,205 218,933,715
Payables Securities held for custody Trust capital Accumulated loss Net income Total trust liabilities

Trust Property Accounts

June 30, 2023, December 31 and June 30, 2022

Investment in	June 30, 2023 $ 7,218,363 1,132,495 70,999,855 4,790,994 15,356,005 64,122 8,938,127 115,122,204 408,734 $ 224,030,899	December 31, 2022 6,303,284 928,987 73,259,462 2,935,786 14,422,800 29,556 7,205,119 112,621,601 443,482 218,150,077	June 30, 2022
Cash in bank Stocks Funds Bonds Real estate Land Buildings Construction in progress Securities in custody Other assets Total			6,792,863 890,498 74,418,433 1,751,970 13,385,245 32,698 5,379,588 115,806,519 475,901
			218,933,715

Note: As of June 30, 2023, December 31 and June 30, 2022, the amounts above included OBU transaction on “ foreign currency designated trust funds investment in foreign negotiable securities business” amounting to $1,557,466, $1,580,471 and $1,519,642, respectively.

(Continued)

118

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

Trust Income Statement

For the six months ended June 30, 2023 and 2022

Investment items Trust Revenue Interest income Realized capital gain-fund Realized gain-stocks Realized gain-bonds Dividend revenue Other revenues Sub-total Trust Expense Administrative expenses Postage and telecommunication expense Duties Realized loss-stocks Realized loss-bonds Other expenses Sub-total Income before income tax Income tax expense Net income	For the six months ended June 30 2023 2022 $ 83,744 32,405 215,193 238,981 1,340 - 409 4,267 1,033,300 1,082,788 2,380 2,031 1,336,366 1,360,472 24,675 20,648 197 401 9 8 807,050 854,748 1,628 3,688 1,945 1,740 835,504 881,233 500,862 479,239 (302) (34) $ 500,560 479,205
	2023 $ 83,744 215,193 1,340 409 1,033,300 2,380 1,336,366 24,675 197 9 807,050 1,628 1,945 835,504 500,862 (302) $ 500,560

(Continued)

119

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

(d) In 1996, the Bank’ s World Trade Center Branch was sued for handling a letter of credit export collection from Chin Seen Industrial Co., which allegedly used a forged export document and failed to ship the goods to the importer, the International Comagnie de Commercialization et d’ Invertissement (I.C.C.I.) of the Republic of Zaire, suffered a loss thereon. In November 1998, I.C.C.I. initiated a case with the Court of Commerce of Brussels in Belgium, requested the L/C opening bank (Banque Bruxelles Lambert, or BBL) and the Bank to jointly pay compensation of USD$7,830 plus interest, losses, and expenses for the L/C. On August 31, 2005, the Court of Commerce of Brussels rendered its judgment which the Bank has to make compensation of USD$7,674 plus interest to I.C.C.I.. The Bank has engaged a local attorney in Belgium to formally file an appeal. In February 2011, Court of Appeal in Brussels had made an intermediate adjudication which I.C.C.I and the Bank are both responsible for the offense. Furthermore, on November 16, 2011, the judgment of the court indicated that the Bank should be responsible for 90% of the negligence proportion. In terms of the judgment of the court of the second instance, the Bank has filed an appeal on November 3, 2011. On February 6, 2013, the court overruled the Bank’s appeal and the Bank lost the case. However, the Bank and I.C.C.I couldn't reach an agreement on the exchange rate and the calculation of the compensation. In October 2016, I.C.C.I initiated a case with the Court of Frankfurt in Germany, applied for seizing the Bank account in Germany, and the Bank lodged guaranty money of EUR $13,200 to the court to rescind the order for attachment.

In July 2017, I.C.C.I applied for compulsory execution to the guaranty money, the court has transferred the guaranty money to I.C.C.I. The Bank then filed a lawsuit objecting to the debt through the attorney. The case was dismissed by the Court of Frankfurt in November 2018, and remanded back to trial court in November 2019 after the Bank's appeal was granted by the High Court of Frankfurt. I.C.C.I. has filed a statement of grounds for objection to the Federal 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, judging that the Bank should pay around EUR$20,060 for I.C.C.I. Also, I.C.C.I must compensate Star Marine for USD$1,130 as well as make a security deposit of EUR$14,000 in the domestic bank in Congo. According to the statement of plaintiff and considering that I.C.C.I has already received about EUR $14,860, an addition of $74,989 has been provision for lawsuit in 2021. Please refer to Note 6(v) for more details. As of June 30, 2023, the Bank has accrued the compensation of $259,635 and EUR$9,660.

(10) Losses from disasters:None

(11) Subsequent Events:None

(Continued)

120

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

(12) Others:

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

Items	Month/Year	Month/Year	June 30, 2023	June 30, 2023	June 30, 2023	June 30, 2023	June 30, 2023
			Non-performing loans	Total loans	Non-performing loan ratio	Allowance for credit losses	Coverage ratio
Corporate finance	Secured		1,518,651	723,641,760	0.21 %	8,800,711	579.51 %
	Unsecured		624,264	349,208,684	0.18 %	4,435,754	710.56 %
Consumer finance	Residence mortgages(Note 4)		172,752	186,210,521	0.09 %	2,260,662	1,308.62 %
	Cash cards		-	-	- %	-	- %
	Microcredit(Note 5)		4,502	289,978	1.55 %	6,609	146.80 %
	Others (Note 6)	Secured	161,659	150,156,712	0.11 %	1,822,357	1,127.28 %
		Unsecured	14,095	13,066,356	0.11 %	166,843	1,183.70 %
Total loan busin	ess		2,495,923	1,422,574,011	0.18 %	17,492,936	700.86 %
			Overdue receivables	Total receivables	Delinquency ratio	Allowance for credit losses	Coverage ratio
Credit cards bus	iness		828	1,480,245	0.06 %	13,315	1,608.09 %
Account receiva (Note 7)	ble factoring-without recourse		-	-	- %	-	- %

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		-	-	- %	-	- %

(Continued)

121

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

Items	Month/Year	Month/Year	June 30, 2022	June 30, 2022	June 30, 2022	June 30, 2022	June 30, 2022
			Non-performing loans	Total loans	Non-performing loan ratio	Allowance for credit losses	Coverage ratio
Corporate finance	Secured		1,395,785	695,451,865	0.20 %	7,849,307	562.36 %
	Unsecured		719,447	352,134,824	0.20 %	4,383,060	609.23 %
Consumer finance	Residence mortgages(Note 4)		194,577	152,960,788	0.13 %	1,732,083	890.18 %
	Cash cards		-	-	- %	-	- %
	Microcredit(Note 5)		7,540	364,035	2.07 %	9,063	120.20 %
	Others (Note 6)	Secured	353,548	148,432,986	0.24 %	1,679,211	474.96 %
		Unsecured	27,400	12,509,431	0.22 %	151,728	553.75 %
Total loan busin	ess		2,698,297	1,361,853,929	0.20 %	15,804,452	585.72 %
			Overdue receivables	Total receivables	Delinquency ratio	Allowance for credit losses	Coverage ratio
Credit cards bus	iness		1,836	961,144	0.19 %	16,522	899.89 %
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.
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.

(Continued)

122

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

Overdue loans and receivables exempted from reporting

June 30, 2023	June 30, 2023	December	31, 2022	June 30, 2022	June 30, 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
	957 19,566 20,523	258 54,109 54,367	1,112 22,489 23,601	316 50,522 50,838	1,313 24,381
					25,694

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.”
(ii) Concentration of credit extensions

Concentration of credit extensions	Concentration of credit extensions	Concentration of credit extensions	Concentration of credit extensions
June 30, 2023
Ranking	Group enterprise	Credit amount	Credit amount to equity ratio (%)
1	A company. (Railway transportation)	20,228,842	% 17.94
2	B group. (Real estate for sale and rental with own or leased property)	16,397,040	% 14.55
3	C group. (Other holding)	10,079,675	% 8.94
4	D group. (Steel rolling and extruding)	9,425,530	% 8.36
5	E group. (Real estate development)	8,974,925	% 7.96
6	F group. (Liquid crystal panel and components manufacturing)	7,884,842	% 6.99
7	G group. (Real estate development)	6,614,805	% 5.87
8	H group. (Computers manufacturing)	6,293,329	% 5.58
9	I group. (Real estate development)	6,121,264	% 5.43
10	J group. (Financial leasing)	4,964,422	% 4.40

(Continued)

123

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

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

June 30, 2022
Ranking	Group enterprise	Credit amount	Credit amount to equity ratio (%)
1	A company. (Railway transportation)	21,202,474	% 21.41
2	B group. (Real estate for sale and rental with own or leased property)	13,967,611	% 14.10
3	D group. (Steel rolling and extruding)	9,447,481	% 9.54
4	E group. (Real estate development)	8,998,025	% 9.09
5	C group. (Other holding)	6,637,863	% 6.70
6	I group. (Real estate development)	6,524,484	% 6.59
7	G group. (Real estate development)	5,549,004	% 5.60
8	H group. (Computers manufacturing)	5,469,566	% 5.52
9	J group. (Financial Leasing)	5,159,532	% 5.21
10	K group. (Public transportation)	4,252,688	% 4.29

Note 1 The top ten enterprise groups other than government or stated-owned enterprises are ranked according to their total outstanding credit amount. If the borrowers belong to an enterprise group, the aggregate credit balance of the enterprise should be calculated and disclosed as a code number for each such borrower together with an indication of the borrowers’ line of business. In addition, if the borrowers are enterprise groups, the enterprise group’s industry sector with the maximum exposure to credit risk in its main industry sector should be disclosed, along with the “ class” of the industry, in compliance with the Standard Industrial Classification System of the R.O.C. posted by the Directorate-General of Budget, Accounting and Statistics, Executive Yuan, R.O.C.

(Continued)

124

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

Note 2 Enterprise group is as defined in Article 6 of the “Supplementary Provisions to the Taiwan Stock Exchange Corporation Rules for Review of Securities Listings”.
Note 3 Consists of loans (import/export bills negotiated, bills and notes discounted, overdrafts, short-term loans, short-term secured loans, margin loans receivable, medium-term loans, medium-term secured loans, long-term loans, long-term secured loans, overdue loans), exchange bills negotiated, accounts receivable factoring without recourse, bankers’ acceptance receivable, guarantees proceeds.
Note 4 In the calculation of Credit amount to equity ratio, the domestic bank should be calculated in the net value of head office. The Foreign bank should be calculated in the net value of Taiwan branch.
(iii) Interest rate-sensitivity information
1) Analysis of interest rate-sensitive assets and liabilities (New Taiwan dollars)

Unit : %

June 30, 2023	June 30, 2023	June 30, 2023	June 30, 2023	June 30, 2023	June 30, 2023
Item	1~90 days	91~180 days	181days~1year	over 1 year	total
Interest rate-sensitive assets	$ 1,485,915,811	56,609,231	38,241,004	135,434,287	1,716,200,333
Interest rate-sensitive liabilities	1,327,798,754	58,224,986	63,936,451	58,334,661	1,508,294,852
Interest rate sensitivity gap	158,117,057	(1,615,755)	(25,695,447)	77,099,626	207,905,481
Net worth					112,727,273
Ratio of interest rate-sensitive assets to liabilities (%)					113.78
Ratio of interest rate-sensitive gap to net worth (%)					184.43

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

June 30, 2022
Item	1~90 days	91~180 days	181days~1year	over 1 year	total
Interest rate-sensitive assets	$ 1,313,229,611	83,556,822	29,567,080	179,065,004	1,605,418,517
Interest rate-sensitive liabilities	1,224,955,115	87,227,120	61,496,796	57,190,388	1,430,869,419
Interest rate sensitivity gap	88,274,496	(3,670,298)	(31,929,716)	121,874,616	174,549,098
Net worth					99,062,575
Ratio of interest rate-sensitive assets to liabilities (%)					112.20
Ratio of interest rate-sensitive gap to net worth (%)					176.20

(Continued)

125

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

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

Unit : In Thousands of US Dollars, %

June 30, 2023	June 30, 2023	June 30, 2023	June 30, 2023	June 30, 2023	June 30, 2023
Item	1~90 days	91~180 days	181days~1year	over 1 year	total
Interest rate-sensitive assets	$ 4,423,455	304,673	135,220	1,876,842	6,740,190
Interest rate-sensitive liabilities	8,097,815	1,524,817	1,598,761	-	11,221,393
Interest rate sensitivity gap	(3,674,360)	(1,220,144)	(1,463,541)	1,876,842	(4,481,203)
Net worth					3,620,015
Ratio of interest rate-sensitive assets to liabilities (%)					60.07
Ratio of interest rate-sensitive gap to net worth (%)					(123.79)

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)

June 30, 2022
Item	1~90 days	91~180 days	181days~1year	over 1 year	total
Interest rate-sensitive assets	$ 5,768,489	421,509	51,791	957,943	7,199,732
Interest rate-sensitive liabilities	7,782,921	1,635,242	1,285,244	-	10,703,407
Interest rate sensitivity gap	(2,014,432)	(1,213,733)	(1,233,453)	957,943	(3,503,675)
Net worth					3,331,514
Ratio of interest rate-sensitive assets to liabilities (%)					67.27
Ratio of interest rate-sensitive gap to net worth (%)					(105.17)

(Continued)

126

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

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

(iv) Profitability

Unit: %

			Unit: %
Item		June 30, 2023	June 30, 2022
The ratio of return on assets	Before income tax	0.36	0.25
	After income tax	0.30	0.21
The ratio of return on equity	Before income tax	6.86	5.05
	After income tax	5.72	4.15
Net income ratio		39.01	32.19

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

		June 30, 2023	June 30, 2023	June 30, 2023	June 30, 2023	June 30, 2023	June 30, 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	$ 1,815,483,794	168,280,649	169,645,545	165,582,128	200,601,962	172,788,916	938,584,594
Major maturity capital outflow	2,277,466,491	48,808,662	94,424,032	204,576,065	279,269,861	458,121,554	1,192,266,317
Gap	(461,982,697)	119,471,987	75,221,513	(38,993,937)	(78,667,899)	(285,332,638)	(253,681,723)

(Continued)

127

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

Note: Listed amounts are denominated in New Taiwan dollars of the Bank and subsidiaries, including loan commitments of credit agreement and estimates to outflow $463,462,743.

		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.

		June 30, 2022	June 30, 2022	June 30, 2022	June 30, 2022	June 30, 2022	June 30, 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	$ 1,728,319,340	139,232,735	142,361,711	150,068,188	219,413,498	179,403,953	897,839,255
Major maturity capital outflow	2,116,686,322	55,131,235	147,836,788	194,237,600	251,457,149	359,002,601	1,109,020,949
Gap	(388,366,982)	84,101,500	(5,475,077)	(44,169,412)	(32,043,651)	(179,598,648)	(211,181,694)

Note: Listed amounts are denominated in New Taiwan dollars of the Bank and subsidiaries, including loan commitments of credit agreement and estimates to outflow $386,011,584.

2) Maturity analysis in US dollars

Unit : In Thousands of US Dollars

		June 30, 2023	June 30, 2023	June 30, 2023	June 30, 2023	June 30, 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	$ 15,508,613	2,989,970	3,030,261	1,559,567	3,296,330	4,632,485
Major maturity capital outflow	16,476,780	4,538,595	4,341,250	2,147,447	2,739,738	2,709,750
Gap	(968,167)	(1,548,625)	(1,310,989)	(587,880)	556,592	1,922,735

Note: Listed amounts are denominated in US dollars of the Bank and subsidiaries, including loan commitments of credit agreement and estimates to outflow USD $949,706.

(Continued)

128

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.
		June 30, 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	$ 15,948,369	4,459,778	3,042,248	1,640,489	3,188,308	3,617,546
Major maturity capital outflow	16,653,216	3,365,434	3,571,551	2,542,264	2,905,003	4,268,964
Gap	(704,847)	1,094,344	(529,303)	(901,775)	283,305	(651,418)

Note: Listed amounts are denominated in US dollars of the Bank and subsidiaries, including loan commitments of credit agreement and estimates to outflow USD $836,722.

(Continued)

129

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 six months ended June 30, 2023	Transaction status for the six months ended June 30, 2023	Transaction status for the six months ended June 30, 2023	Transaction status for the six months ended June 30, 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	38,125	No difference with non- related parties	- %
1	TBB International Leasing Co., Ltd.	Taiwan Business Bank, Ltd.	2	Right-of-use assets	4,025	No difference with non- related parties	- %
1	TBB International Leasing Co., Ltd.	Taiwan Business Bank, Ltd.	2	Lease liabilities	4,033	No difference with non- related parties	- %
0	Taiwan Business Bank, Ltd.	TBB International Leasing Co., Ltd.	1	Net revenue other than interest	393	No difference with non- related parties	- %
0	Taiwan Business Bank, Ltd.	TBB Venture Capital Co., Ltd.	1	Deposits and remittances	120,956	No difference with non- related parties	0.01 %
2	TBB Venture Capital Co., Ltd.	Taiwan Business Bank, Ltd.	2	Right-of-use assets	563	No difference with non- related parties	- %
2	TBB Venture Capital Co., Ltd.	Taiwan Business Bank, Ltd.	2	Lease liabilities	569	No difference with non- related parties	- %
0	Taiwan Business Bank, Ltd.	TBB Venture Capital Co., Ltd.	1	Net revenue other than interest	87	No difference with non- related parties	- %
0	Taiwan Business Bank, Ltd.	Taiwan Business Bank International Leasing Co., Ltd.	1	Deposits and remittances	258,162	No difference with non- related parties	0.01 %
0	Taiwan Business Bank, Ltd.	TBB Consulting Co., Ltd.	1	Deposits and remittances	74,708	No difference with non- related parties	- %
0	Taiwan Business Bank, Ltd.	TBB Consulting Co., Ltd.	1	Net revenue other than interest	486	No difference with non- related parties	- %
3	TBB Consulting Co., Ltd.	Taiwan Business Bank, Ltd.	2	Right-to-use assets	3,141	No difference with non- related parties	- %
3	TBB Consulting Co., Ltd.	Taiwan Business Bank, Ltd.	2	Lease liabilities	3,169	No difference with non- related parties	- %
2	TBB Venture Capital Co., Ltd.	TBB Consulting Co., Ltd.	3	Business expenses	14,348	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.

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)

130

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 %	1,513,256	25,999	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 %	640,236	7,079	20	-	20	100.00 %	`〞`
TBB Venture Capital Co., Ltd.	Taiwan	Investing business	100.00 %	1,451,326	189,720	105,000	-	105,000	100.00 %	`〞`
TBB Consulting Co., Ltd.	Taiwan	Consulting business	100.00 %	60,913	6,100	5,000	-	5,000	100.00 %	`〞`
Media Talk Consulting Co., Ltd.	Taiwan	Investing cultural and creative business	20.00 %	-	(808)	200	-	200	20.00 %

(ii) Loans to others:

NO.	Creditor	Debtor	Interaction Account	Related party	Highest Amount	Ending balance	Actual drawdown amount	Range of interest rate	Nature of the loan	Dealing amount	The necessary reason for short-term loans	Allowance for bad debts	Guarantee	Guarantee	Limited amount for individual object	Total limited amount for loan
													Name	Value
1	TBB International Leasing Co., Ltd.	Chao-Yang International Co., Ltd.	Financial receivables	No	10,115	1,672	20,000	2%-10%	2	-	To the lender for buying goods	17	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Hsin Chuan Construc-tion Co., Ltd.	Financial receivables	No	104,430	62,703	100,000	2%-10%	2	-	To the lender for buying goods	627	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Sian Shang Frozen Food Co., Ltd	Financial receivables	No	8,442	-	20,000	2%-10%	2	-	To the lender for buying goods	-	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Xi Quan Restaurant Co., Ltd	Financial receivables	No	98,957	89,380	100,000	2%-10%	2	-	To the lender for buying goods	894	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Acon-Holding INC.	Financial receivables	No	60,000	22,583	30,000	2%-10%	2	-	To the lender for buying goods	226	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Pei Xian Seafood Co., Ltd	Financial receivables	No	10,115	1,672	20,000	2%-10%	2	-	To the lender for buying goods	17	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Maw Shing Top Co., Ltd.	Financial receivables	No	9,616	2,760	15,000	2%-10%	2	-	To the lender for buying goods	28	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Yu Ding Investment Co., Ltd	Financial receivables	No	46,989	31,729	50,000	2%-10%	2	-	To the lender for buying goods	317	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Chaishan Foods Co., Ltd.	Financial receivables	No	50,000	29,484	50,000	2%-10%	2	-	To the lender for buying goods	295	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Chao-Chi Property Management Consulting Co.,Ltd	Financial receivables	No	8,835	2,549	15,000	2%-10%	2	-	To the lender for buying goods	25	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Tai Chang Fiber Co., Ltd	Financial receivables	No	8,851	2,558	15,000	2%-10%	2	-	To the lender for buying goods	26	None	-	379,101	1,516,403

(Continued)

131

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	24,189	30,000	2%-10%	2	-	To the lender for buying goods	242	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Yu Cheng Precision Industry Co.,Ltd.	Financial receivables	No	8,054	3,045	12,000	2%-10%	2	-	To the lender for buying goods	30	None	-	379,101	1,516,403
1	TBB International Leasing Co., Ltd.	Jiou Chang Motor Co., Ltd.	Financial receivables	No	9,188	5,069	10,000	2%-10%	2	-	To the lender for buying goods	51	None	-	379,101	1,516,403
1	TBB International Leasing Co.,Ltd.	Liang-wei Tobacco & Liquor Co., Ltd.	Financial receivables	No	9,188	5,072	10,000	2%-10%	2	-	To the lender for buying goods	51	None	-	379,101	1,516,403
1	TBB International Leasing Co.,Ltd.	Jia Ho Food Co., Ltd.	Financial receivables	No	19,044	14,212	20,000	2%-10%	2	-	To the lender for buying goods	142	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 Business International Leasing Co., Ltd.	Parent company	Investment under equity method	-	945,099	100.00 %	945,099	The transaction has been written off when preparing the consolidated financial statements.
TBB International Leasing Co., Ltd.	G12245`、`G12246	-	Financial assets at fair value through profit or loss	-	100,000	- %	100,000	Financial debentures
TBB Venture Capital Co., Ltd.	G12245	-	Financial assets at fair value through profit or loss	-	100,000	- %	100,000	`〞`
TBB Venture Capital Co., Ltd.	Energenesis Biomedical Co., Ltd.	-	Financial assets at fair value through profit or loss	340	26,520	0.45 %	26,520	Listed Stocks
TBB Venture Capital Co., Ltd.	Powerchip Semiconductor Manufacturing Corporation	-	Financial assets at fair value through profit or loss	250	7,738	0.01 %	7,738	`〞`
TBB Venture Capital Co., Ltd.	Lungteh Shipbuilding Co., Ltd.	-	Financial assets at fair value through profit or loss	928	94,625	0.86 %	94,625	`〞`
TBB Venture Capital Co., Ltd.	Evergreen Aviation Technologies Corporation	-	Financial assets at fair value through profit or loss	213	23,856	0.06 %	23,856	`〞`
TBB Venture Capital Co., Ltd.	Eir Genix, Inc.	-	Financial assets at fair value through profit or loss	845	94,640	0.28 %	94,640	OTC Stocks
TBB Venture Capital Co., Ltd.	Chenfull Precision Co., Ltd.	-	Financial assets at fair value through profit or loss	240	30,240	0.41 %	30,240	`〞`

(Continued)

132

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.	Ping Ho Environmental Technology Co., Ltd.	-	Financial assets at fair value through profit or loss	150	9,435	0.51 %	9,435	Emerging Stocks
TBB Venture Capital Co., Ltd.	Handa Pharmaceuticals, Inc.	-	Financial assets at fair value through profit or loss	1,141	200,195	0.88 %	200,195	`〞`
TBB Venture Capital Co., Ltd.	Tigerair Taiwan Co., Ltd.	-	Financial assets at fair value through profit or loss	972	44,777	0.22 %	44,777	`〞`
TBB Venture Capital Co., Ltd.	Locus Cell Co., Ltd.	-	Financial assets at fair value through profit or loss	1,344	51,072	0.67 %	51,072	`〞`
TBB Venture Capital Co., Ltd.	Starlux Airlines Co., Ltd.	-	Financial assets at fair value through profit or loss	4,963	169,987	0.27 %	169,987	`〞`
TBB Venture Capital Co., Ltd.	TFBS Bioscience, Inc.	-	Financial assets at fair value through profit or loss	250	16,850	0.75 %	16,850	`〞`
TBB Venture Capital Co., Ltd.	Song Chuan Precision Co., Ltd.	-	Financial assets at fair value through profit or loss	415	65,008	0.74 %	65,008	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Techplasma Technology Co., Ltd.	-	Financial assets at fair value through profit or loss	862	46,235	2.87 %	46,235	`〞`
TBB Venture Capital Co., Ltd.	Hephas Energy Co., Ltd.	-	Financial assets at fair value through profit or loss	816	30,175	2.96 %	30,175	`〞`
TBB Venture Capital Co., Ltd.	Ren Chin ElectricConductor Co., Ltd.	-	Financial assets at fair value through profit or loss	250	4,653	2.61 %	4,653	`〞`
TBB Venture Capital Co., Ltd.	Manford Machinery Co.,Ltd.	-	Financial assets at fair value through profit or loss	1,195	21,474	2.99 %	21,474	`〞`
TBB Venture Capital Co., Ltd.	Yuh Shan Enviromental Engineering Co., Ltd.	-	Financial assets at fair value through profit or loss	562	19,662	1.94 %	19,662	`〞`
TBB Venture Capital Co., Ltd.	Iovtec Co., Ltd.	-	Financial assets at fair value through profit or loss	485	13,964	2.93 %	13,964	`〞`
TBB Venture Capital Co., Ltd.	e-Formula Technologies,Inc.	-	Financial assets at fair value through profit or loss	600	11,778	2.76 %	11,778	`〞`
TBB Venture Capital Co., Ltd.	Han-win Technology Co.,Ltd	-	Financial assets at fair value through profit or loss	453	5,302	2.20 %	5,302	`〞`
TBB Venture Capital Co., Ltd.	Ina Energy Corporation	-	Financial assets at fair value through profit or loss	2,000	40,160	0.99 %	40,160	`〞`
TBB Venture Capital Co., Ltd.	Amazing Cool Technology Corporation.	-	Financial assets at fair value through profit or loss	390	3,444	2.79 %	3,444	`〞`
TBB Venture Capital Co., Ltd.	Long-Shun Green Energy Technology Ltd.	-	Financial assets at fair value through profit or loss	1,045	41,800	2.99 %	41,800	`〞`
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	`〞`
TBB Venture Capital Co., Ltd.	Toyo Automation Co.,Ltd.	-	Financial assets at fair value through profit or loss	263	12,269	0.95 %	12,269	`〞`
TBB Venture Capital Co., Ltd.	aetherAI Co., Ltd.	-	Financial assets at fair value through profit or loss	400	3,080	0.69 %	3,080	`〞`
TBB Venture Capital Co., Ltd.	GoodLinker Co., Ltd.	-	Financial assets at fair value through profit or loss	1,600	12,896	8.89 %	12,896	`〞`
TBB Venture Capital Co., Ltd.	Yiyi Pictures Co Ltd.	-	Financial assets at fair value through profit or loss	3,000	19,410	2.95 %	19,410	`〞`
TBB Venture Capital Co., Ltd.	Inbound Asia Co., Ltd.	-	Financial assets at fair value through profit or loss	600	21,000	1.53 %	21,000	`〞`
TBB Venture Capital Co., Ltd.	TFBS Bioscience, Inc.	-	Financial assets at fair value through profit or loss	400	12,000	0.46 %	12,000	`〞`

(Continued)

133

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.	GoodLinker Co., Ltd.	-	Financial assets at fair value through profit or loss	100	787	2.86 %	787	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Yiyi Pictures Co Ltd.	-	Financial assets at fair value through profit or loss	9	2,688	2.94 %	2,688	`〞`
TBB Venture Capital Co., Ltd.	Inbound Asia Co., Ltd.	-	Financial assets at fair value through profit or loss	83	2,096	0.50 %	2,096	`〞`
TBB Venture Capital Co., Ltd.	Asia Hydrogen Energy Corporation	-	Financial assets at fair value through profit or loss	132	1,216	1.98 %	1,216	`〞`
TBB Venture Capital Co., Ltd.	Longwalk social enterprise, Co., Ltd.	-	Financial assets at fair value through profit or loss	120	436	12.77 %	436	`〞`
TBB Venture Capital Co., Ltd.	Carpost Co., Ltd.	-	Financial assets at fair value through profit or loss	330	4,412	2.84 %	4,412	`〞`
TBB Venture Capital Co., Ltd.	Rising FinTech Corp.	-	Financial assets at fair value through profit or loss	38	3,000	2.29 %	3,000	`〞`
TBB Venture Capital Co., Ltd.	Taiwania Buffalo III Biotechnology Venture Capital LLP.	-	Financial assets at fair value through profit or loss	-	53,156	4.57 %	53,156	Private Fund
TBB Venture Capital Co., Ltd.	Ju He Venture Capital LLP.	-	Financial assets at fair value through profit or loss	-	18,522	2.46 %	18,522	`〞`
TBB Venture Capital Co., Ltd.	TBB No. 1 Venture Capital Limited Partnership	-	Financial assets at fair value through profit or loss	-	13,137	1.12 %	13,137	`〞`
TBB Venture Capital Co., Ltd.	Outstanding Capital Limited Partnership	-	Financial assets at fair value through profit or loss	-	8,975	4.86 %	8,975	`〞`
TBB Venture Capital Co., Ltd.	Pinkoi Inc.	-	Financial assets at fair value through profit or loss	93	19,262	0.53 %	19,262	Unlisted Stocks
TBB Venture Capital Co., Ltd.	Jia Da International Development Co., Ltd.	-	Financial assets at fair value through other comprehensive income	2,919	32,901	8.52 %	32,901	`〞`
TBB Consulting Co., Ltd.	Media Talk Consulting Co., Ltd.	Associates	Investment under equity method	200	-	20.00 %	-
TBB Consulting Co., Ltd.	TBB No.1 Venture Limited Partnership	-	Financial assets at fair value through profit or loss	-	1,314	0.11 %	1,314	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)

134

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 carrying value of investment	Accumulated inward remittance of earnings as of the end of period
					Transferred out	Recovered
Taiwan Business Bank , Ltd. Shanghai branch	Banking business	3,910,537 (CNY800 million) (Operating capital)	(3)	3,910,537 (CNY800 million)	-	-	3,910,537 (CNY800 million)	-	Shanghai branch of the Bank, not an investee company	Note 4	4,392,057	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	4,179,056	"
Taiwan Business Bank International Leasing Co., Ltd.	Leasing business	838,305 (CNY170 million) (Operating capital)	(1)	838,305 (CNY170 million)	-	-	838,305 (CNY170 million)	18,958 (2) c	100%	18,958 (2) c	945,099	"

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)	67,636,364

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)

135

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 June 30, 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	Banking Segment $ 4,819,976 2,363,650 7,183,626 (606,850) (3,831,506) $ 2,745,270	Securities, Trust, Insurance agent and Others 70,326 717,276 787,602 15,693 (186,548) 616,747	Adjustment and Elimination - (34,025) (34,025) - 7,599 (26,426)	Total 4,890,302 3,046,901 7,937,203 (591,157) (4,010,455) 3,335,591

(Continued)

136

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

For the three months ended June 30, 2022 Net interest revenue Net revenue other than interest Net revenue Bad debt expense, commitment and guarantee liability provision Operating expenses Income from continuing operation before tax For the six months ended June 30, 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 For the six months ended June 30, 2022	Banking Segment $ 5,048,109 1,056,977 6,105,086 (732,905) (3,353,499) $ 2,018,682 Banking Segment $ 9,507,460 4,609,968 14,117,428 (829,364) (7,264,611) $ 6,023,453 $ 2,075,389,262 $ 1,966,194,764 Banking Segment $ 9,658,960 1,945,190 11,604,150 (987,590) (6,556,791) $ 4,059,769 $ 1,969,604,127 $ 1,873,665,996	Securities, Trust, Insurance agent and Others 80,693 641,845 722,538 22,706 (171,712) 573,532 Securities, Trust, Insurance agent and Others 138,617 1,888,104 2,026,721 (149) (386,702) 1,639,870 18,362,886 11,164,380 Securities, Trust, Insurance agent and Others 160,862 1,343,223 1,504,085 22,131 (342,321) 1,183,895 18,687,229 12,228,882	Adjustment and Elimination (12) (114,199) (114,211) - 5,010 (109,201) Adjustment and Elimination - (243,246) (243,246) - 14,348 (228,898) (4,184,607) (518,876) Adjustment and Elimination - (182,009) (182,009) - 10,478 (171,531) (3,838,348) (504,445)	Total 5,128,790 1,584,623 6,713,413 (710,199) (3,520,201) 2,483,013 Total 9,646,077 6,254,826 15,900,903 (829,513) (7,636,965) 7,434,425 2,089,567,541 1,976,840,268 Total 9,819,822 3,106,404 12,926,226 (965,459) (6,888,634) 5,072,133 1,984,453,008 1,885,390,433
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

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

AI assistant

TBB — Interim / Quarterly Report 2023

52201_rns_2023-11-14_6b4c810b-ca60-493a-9ea5-b078c43d2c4a.pdf

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Financial Statements

Table of contents

KPMG

Independent Auditors’ Review Report

Introduction

Scope of Review

Conclusion

KPMG

Notes to Readers

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

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

June 30, 2023, December 31, 2022, and June 30, 2022

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the three and six months ended June 30, 2023 and 2022

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

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

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity For the six months ended June 30, 2023 and 2022

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

TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the six months ended June 30, 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

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

June 30, 2023 and 2022

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

(1) Company history

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

(3) New standards, amendments and interpretations adopted:

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

(4) Summary of significant accounting policies:

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

(b) Basis of consolidation

(c) Income taxes

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

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

(a) Impairment losses on loans

(b) Retirement benefit

(c) Fair value of financial instruments

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

(6) Explanation of significant accounts:

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

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

(e) Receivables, net

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

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

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

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

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

(i) Associates

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

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

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

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

(l) Right-of-use assets

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

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

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

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

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

(r) Payables

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

(t) Bank notes payable

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

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

(u) Other financial liabilities

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

(w) Lease liabilities

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

(ii) Other leases

(x) Other liabilities

(y) Equity

(i) Common stock

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

TBB Interim / Quarterly Report 2023