T.C.C.B. — Annual Report 2023

Dec 28, 2023

Taichung Commercial Bank Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2023 and 2022 and Independent Auditors’ Report

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The companies required to be included in the consolidated financial statements of affiliates in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” (the “Criteria”) for the year ended December 31, 2023 are all the same as the companies required to be included in the consolidated financial statements of parent and subsidiary companies as provided in International Financial Reporting Standard No. 10, “Consolidated Financial Statements”. Relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies. Hence, we did not prepare a separate set of consolidated financial statements of affiliates for the reporting purposes under the Criteria.

Very truly yours,

TAICHUNG COMMERCIAL BANK CO., LTD.

By

HSUEH-HSUAN LIAO Chairman February 23, 2024

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INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Taichung Commercial Bank Co., Ltd.

Opinion

We have audited the accompanying consolidated financial statements of Taichung Commercial Bank Co., Ltd. (the “Bank”) and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance sheets as of December 31, 2023 and 2022, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the “consolidated financial statements”).

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2023 and 2022, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Public Banks, Regulations Governing the Preparation of Financial Reports by Securities Firms, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into by the Financial Supervisory Commission (FSC) of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Financial Statement Audit and Attestation Engagements of Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2023. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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The following were the descriptions of the key audit matters in the audit of the consolidated financial statements of the Group for the year ended December 31, 2023:

Expected Credit Losses of Notes Discounted and Loans, Net

As described in Notes 13 and 32 to the consolidated financial statements, notes discounted and loans amounted to $541,844,103 thousand which accounted for 62% of total assets at December 31, 2023 and the expected credit losses of the notes discounted and loans amounted to $1,361,659 thousand which accounted for 8% of total net revenue for the year ended December 31, 2023. Due to the large amount, such accounts have a significant effect on the consolidated financial statements of the Group. In addition, the measurement of expected credit losses of notes discounted and loans involved various financial factors, such as probability of default and loss given default, which were determined by the management’s critical estimations and judgments, and also required compliance with relevant laws and regulations, and then recognized at the higher of the amount. Therefore, the expected credit loss of notes discounted and loans were identified as a key audit matter.

The relevant accounting policies, estimates, assumptions and other information are referred to in Notes 4, 5, 13 and 32 to the consolidated financial statements.

The main audit procedures performed for the expected credit losses of notes discounted and loans were as follows:

• We obtained an understanding of internal controls for the expected credit losses of notes discounted and loans of the Group. We also tested whether notes discounted and loans were categorized in accordance with the relevant laws and regulations issued by competent authorities.

• We obtained an understanding of and recalculated the key parameters (such as the probability of default and loss given default) for the expected credit losses of notes discounted and loans assessed by the Group to evaluate the reasonableness of expected credit losses. In addition, we examined whether the amount of expected credit losses compiled with relevant laws and regulations issued by authorities.

Other Matter

We have also audited the parent company only financial statements of the Bank as of and for the years ended December 31, 2023 and 2022 on which we have issued an unmodified opinion.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

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 Banks, Regulations Governing the Preparation of Financial Reports by Securities Firms, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

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Those charged with governance, including the audit committee, are responsible for overseeing the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Standards on Auditing of the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2023 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audits resulting in this independent auditors’ report are Shu-Lin Liu and Pan-Fa Wang.

Deloitte & Touche Taipei, Taiwan Republic of China February 25, 2024

Notice to Readers

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

For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

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TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2023 AND 2022

(In Thousands of New Taiwan Dollars)

ASSETS CASH AND CASH EQUIVALENTS (Notes 4 and 6) DUE FROM THE CENTRAL BANK AND CALL LOANS TO OTHER BANKS (Notes 4, 7 and 37) FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 4 and 8) FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (Notes 4 and 9) INVESTMENTS IN DEBT INSTRUMENTS AT AMORTIZED COST (Notes 4, 10 and 37) SECURITIES PURCHASED UNDER RESALE AGREEMENTS (Notes 4 and 11) RECEIVABLES, NET (Notes 4, 12 and 37) CURRENT TAX ASSETS (Notes 4 and 33) NOTES DISCOUNTED AND LOANS, NET (Notes 4, 13 and 36) INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD, NET (Notes 4 and 14) RESTRICTED ASSETS, NET (Notes 4, 15 and 37) OTHER FINANCIAL ASSETS, NET (Notes 4 and 16) PROPERTIES AND EQUIPMENT, NET (Notes 4 and 17) RIGHT-OF-USE ASSETS, NET (Notes 4 and 18) INVESTMENT PROPERTIES, NET (Notes 4, 19 and 37) INTANGIBLE ASSETS, NET (Notes 4 and 20) DEFERRED TAX ASSETS (Notes 4 and 33) OTHER ASSETS (Notes 4, 21 and 37) TOTAL LIABILITIES AND EQUITY DUE TO THE CENTRAL BANK AND OTHER BANKS (Note 22) FUNDS BORROWED FROM THE CENTRAL BANK AND OTHER BANKS (Notes 23 and 37) FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 4 and 8) SECURITIES SOLD UNDER REPURCHASE AGREEMENTS (Notes 4 and 24) PAYABLES (Notes 4, 25 and 36) CURRENT TAX LIABILITIES (Notes 4 and 33) DEPOSITS AND REMITTANCES (Notes 26 and 36) BANK DEBENTURES (Notes 27 and 36) OTHER FINANCIAL LIABILITIES (Note 28) PROVISIONS (Notes 4 and 29) LEASE LIABILITIES (Notes 4 and 18) DEFERRED TAX LIABILITIES (Notes 4 and 33) OTHER LIABILITIES (Note 30) Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE BANK (Note 31) Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Other equity Total equity attributable to owners of the Bank Total equity TOTAL		2023 Amount % $ 26,978,259 3 43,950,642 5 31,233,562 4 64,687,776 7 111,914,866 13 10,696,795 1 22,156,479 3 2 - 541,844,103 62 172,446 - 127,681 - 190,878 - 17,923,896 2 1,063,394 - 1,193,306 - 250,853 - 806,669 - 2,756,182 - $ 877,947,789 100 $ 11,615,468 1 12,482,762 2 2,971,490 - 5,756,555 1 10,969,541 1 831,989 - 728,915,771 83 16,500,000 2 7,658,434 1 1,318,560 - 1,093,882 - 109,486 - 1,208,867 - 801,432,805 91 52,260,953 6 1,528,256 - 13,760,327 2 308,196 - 6,960,395 1 1,696,857 - 76,514,984 9 76,514,984 9 $ 877,947,789 100		2022
				Amount % $ 25,760,718 3 40,921,600 5 29,009,114 4 45,228,975 6 104,757,966 13 11,643,340 1 14,434,692 2 - - 514,112,826 64 172,301 - 506,705 - 271,035 - 16,256,083 2 809,276 - 592,167 - 234,756 - 692,053 - 2,559,221 - $ 807,962,828 100 $ 8,703,740 1 8,898,102 1 1,630,985 - - - 9,427,839 1 554,448 - 683,104,149 85 16,500,000 2 6,670,510 1 1,237,517 - 852,915 - 109,486 - 1,043,511 - 738,733,202 91 50,154,465 7 1,528,256 - 12,141,002 1 149,077 - 5,416,510 1 (159,684) - 69,229,626 9 69,229,626 9 $ 807,962,828 100

The accompanying notes are an integral part of the consolidated financial statements.

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TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

INTEREST REVENUE (Notes 4, 32 and 36) INTEREST EXPENSE (Notes 32 and 36) NET INTEREST NET INCOME AND LOSS OTHER THAN INTEREST Service fee income, net (Notes 4, 32 and 36) Gains on financial assets and liabilities at fair value through profit or loss (Note 32) Realized gains on financial assets at fair value through other comprehensive income (Notes 4 and 32) Foreign exchange gains (losses), net (Note 4) Impairment losses on financial assets (Notes 4, 9, 10 and 32) Share of loss of associates accounted for using the equity method (Notes 4 and 14) Other non-interest gains, net (Notes 4, 29 and 32) TOTAL NET REVENUE PROVISION FOR BAD DEBTS EXPENSE, COMMITMENTS AND GUARANTEES (Notes 4, 12, 13 and 32)		2023 Amount % $ 21,251,086 122 (9,926,309) (57) 11,324,777 65 3,936,613 23 1,044,296 6 377,003 2 779,474 4 (535) - (1,373) - 37,416 - 17,497,671 100 (1,667,977) (10)		2022 Amount % $ 15,584,507 104 (4,809,525) (32) 10,774,982 72 3,316,809 22 969,538 6 239,967 2 (333,972) (2) (11,032) - (6,716) - 67,588 - 15,017,164 100 (1,252,450) (8)	Percentage Increase (Decrease)
					% 36 106 5 19 8 57 333 (95) (80) (45) 17 33 (Continued)

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TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING EXPENSES Employee benefits expenses (Notes 4, 29 and 32) Depreciation and amortization expenses (Notes 4 and 32) Other selling and administrative expenses (Notes 32 and 36) Total operating expenses PROFIT BEFORE INCOME TAX FROM CONTINUING OPERATIONS INCOME TAX EXPENSE (Notes 4 and 33) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans (Notes 4 and 29) Unrealized gains (losses) on investments in equity instruments at fair value through other comprehensive income (Note 4) Share of the other comprehensive income of associates accounted for using the equity method Income tax expense relating to items that will not be reclassified subsequently to profit or loss (Notes 4 and 33) Items that will not be reclassified subsequently to profit or loss, net of income tax		2023 Amount % $ (4,685,003) (27) (476,768) (2) (2,434,374) (14) (7,596,145) (43) 8,233,549 47 (1,412,115) (8) 6,821,434 39 (83,691) - 1,106,913 6 1,518 - 1,042 - 1,025,782 6		2022 Amount % $ (4,504,161) (30) (438,032) (3) (2,221,878) (15) (7,164,071) (48) 6,600,643 44 (1,256,438) (8) 5,344,205 36 62,887 - (131,867) (1) 13,893 - (15,836) - (70,923) (1)	Percentage Increase (Decrease)
					% 4 9 10 6 25 12 28 (233) 939 (89) 107 1,546 (Continued)

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TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Items that may be reclassified subsequently to profit or loss: Exchange differences on the translation of financial statements of foreign operations (Note 4) Unrealized gains (losses) on investments in debt instruments designated as at fair value through other comprehensive income Items that may be reclassified subsequently to profit or loss, net of income tax Other comprehensive (loss) income for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR EARNINGS PER SHARE (Note 34) Basic Diluted		2023 Amount % $ (53,275) - 996,051 5 942,776 5 1,968,558 11 $ 8,789,992 50 $ 1.31 $ 1.30		2022 Amount % $ 47,212 - (1,390,473) (9) (1,343,261) (9) (1,414,184) (10) $ 3,930,021 26 $ 1.07 $ 1.07	Percentage Increase (Decrease)
					% (213) 172 170 239 124
		$		$

The accompanying notes are an integral part of the consolidated financial statements.

(Concluded)

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TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2022 Appropriation of 2021 earnings Legal reserve Special reserve Cash dividends Share dividends Net profit for the year ended December 31, 2022 Other comprehensive income (loss) for the year ended December 31, 2022, net of income tax Total comprehensive income (loss) for the year ended December 31, 2022 Issuance of ordinary shares for cash (Note 31) Issuance of ordinary shares under employee share options (Note 35) Disposals of investments in equity instruments designated as at fair value through other comprehensive income BALANCE AT DECEMBER 31, 2022 Appropriation of 2022 earnings Legal reserve Special reserve Reversal of special reserve Cash dividends Share dividends Net profit for the year ended December 31, 2023 Other comprehensive income (loss) for the year ended December 31, 2023, net of income tax Total comprehensive income (loss) for the year ended December 31, 2023 Disposals of investments in equity instruments designated as at fair value through other comprehensive income BALANCE AT DECEMBER 31, 2023		Equity Attributable to Owners of the Bank	Other Equity Exchange Differences on Translating the Financial Statements of Unrealized Gains (Losses) on Financial Assets at Fair Value Through Other Foreign Comprehensive Operations Income $ (85,087) $ 1,393,132 - - - - - - - - - - 47,212 (1,512,522) 47,212 (1,512,522) - - - - - (2,419) (37,875) (121,809) - - - - - - - - - - - - (53,275) 2,088,865 (53,275) 2,088,865 - (179,049) $ (91,150) $ 1,788,007	Total Equity $ 63,459,985 - - (1,134,630) - 5,344,205 (1,414,184) 3,930,021 2,937,500 36,750 - 69,229,626 - - - (1,504,634) - 6,821,434 1,968,558 8,789,992 - $ 76,514,984
	Share Capital Ordinary Shares Capital Surplus $ 45,385,205 $ 1,054,006 - - - - - - 2,269,260 - - - - - - - 2,500,000 437,500 - 36,750 - - 50,154,465 1,528,256 - - - - - - - - 2,106,488 - - - - - - - - - $ 52,260,953 $ 1,528,256	Retained Earnings Unappropriated Legal Reserve Special Reserve Earnings $ 10,677,008 $ 149,678 $ 4,886,043 1,463,994 - (1,463,994) - (601) 601 - - (1,134,630) - - (2,269,260) - - 5,344,205 - - 51,126 - - 5,395,331 - - - - - - - - 2,419 12,141,002 149,077 5,416,510 1,619,325 - (1,619,325) - 159,684 (159,684) - (565) 565 - - (1,504,634) - - (2,106,488) - - 6,821,434 - - (67,032) - - 6,754,402 - - 179,049 $ 13,760,327 $ 308,196 $ 6,960,395

The accompanying notes are an integral part of the consolidated financial statements.

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TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expense Amortization expense Provision for bad debts expense, commitments and guarantees liabilities Gains on financial assets and liabilities at fair value through profit or loss (Gains) losses on disposal of properties and equipment Interest expense Interest revenue Dividend income Compensation cost of employee share options Share of loss of associates Gains on disposal of investments in debt instruments at fair value through other comprehensive income Impairment losses on financial assets Unrealized losses (gains) on foreign currency exchange Gain on lease suspension Total adjustment Net changes in operating assets and liabilities Due from the Central Bank and call loans to other banks Financial assets at fair value through profit or loss Receivables Notes discounted and loans Other financial assets Other assets Due to the Central Bank and other banks Financial liabilities at fair value through profit or loss Securities sold under repurchase agreements Payables Deposits and remittances Other financial liabilities Provision for employee benefits Other liabilities Changes in operating assets and liabilities Cash generated from (used in) operations Interest received Dividends received Interest paid Income tax paid Net cash generated from operating activities	2023 $ 8,233,549 394,907 81,861 1,667,977 (1,044,296) (823) 9,926,309 (21,251,086) (271,857) - 1,373 (105,146) 535 111,020 (21,329) (10,510,555) (1,012,772) 432,895 (7,128,362) (29,105,592) 79,770 325,179 2,911,728 (272,542) 5,756,555 1,132,457 45,811,622 (149,537) (76,801) 105,206 18,809,806 16,532,800 20,472,252 271,857 (9,512,064) (1,248,150) 26,516,695	2022 $ 6,600,643 367,543 70,489 1,252,450 (969,538) 405 4,809,525 (15,584,507) (239,900) 36,750 6,716 (67) 11,032 (1,516,680) (3,152) (11,758,934) (2,378,335) 7,856,511 244,707 (35,356,530) 150,956 476,565 4,750,040 (1,101,999) (1,205,559) (1,993,975) 23,987,915 3,404,995 (70,975) 59,056 (1,176,628) (6,334,919) 15,082,916 239,900 (4,475,670) (956,705) 3,555,522 (Continued)

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TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income Purchase of financial assets at amortized cost Proceeds from sale of financial assets at amortized cost Payments for properties and equipment Proceeds from disposal of properties and equipment Increase in refundable deposits Payments for intangible assets Payments for investment properties Net cash (used in) generated from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in funds borrowings from Central Bank and other banks Proceeds from commercial papers issued Proceeds from (refund of) guarantee deposits received Repayments of principal portion of lease liabilities Cash dividends distributed Cash capital increase Net cash generated from financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH AND CASH EQUIVALENTS HELD IN FOREIGN CURRENCIES NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2023 $ (36,165,312) 18,898,059 (640,667,263) 633,435,455 (1,883,003) 2,308 (133,116) (95,525) (675,165) (27,283,562) 3,584,660 1,137,461 60,150 (170,229) (1,504,634) - 3,107,408 (53,275) 2,287,266 55,897,012 $ 58,184,278	2022 $ (2,738,723) 4,656,798 (783,723,829) 789,824,504 (2,709,005) 3 (395,934) (82,979) (594,065) 4,236,770 (1,561,054) 617,346 (21,726) (147,016) (1,134,630) 2,937,500 690,420 47,212 8,529,924 47,367,088 $ 55,897,012 (Continued)

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TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars)

RECONCILIATIONS OF THE AMOUNTS IN THE CONSOLIDATED STATEMENTS OF CASH FLOWS WITH THE EQUIVALENT ITEMS REPORTED IN THE CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2023 AND 2022 Cash and cash equivalents in the consolidated balance sheets Due from the central bank and call loans to other banks in accordance with cash and cash equivalents under IAS 7 “Statement of Cash Flows” Securities purchased under resale agreements in accordance with cash and cash equivalents under IAS 7 “Statement of Cash Flows” Cash and cash equivalents at the end of the year		**December 31 **	**December 31 **
		2023 $ 26,978,259 20,509,224 10,696,795 $ 58,184,278	2022 $ 25,760,718 18,492,954 11,643,340 $ 55,897,012

The accompanying notes are an integral part of the consolidated financial statements.

(Concluded)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

1. GENERAL INFORMATION

Taichung Commercial Bank Co., Ltd. (the “Bank”), formerly known as Taichung District Association Saving Co., Ltd. It was established in April 1953 and started operations in August of the same year. In July of 1975, the Banking Act of the Republic of China was revised and implemented. On January 1, 1978, the Taichung District Association Saving Co., Ltd. was restructured into Taichung SME Bank Co., Ltd. (“Taichung SME Bank”) and its shares were listed on May 15, 1984.

In line with the national financial policy to provide public and social financial services and support the economic construction as well as the development of industrial and commercial, Taichung SME Bank was renamed as Taichung Commercial Bank Co., Ltd. in December 1998. As of December 31, 2023, the Bank had a business department, a trust department, a foreign exchange transaction department, 85 domestic branches, a Malaysia Labuan branch and an offshore banking unit (OBU) and Vietnam Ho Chi Minh Representative Office. The operations of the Bank consist of planning, managing, operating a trust business and overseas financial business. These operations are regulated under the Banking Act of the Republic of China (“ROC”).

At the time of establishment, the amount of capital invested by the Bank was $500 thousand. In line with the government degree, in order to improve the capital structure and cooperate with the government decree, the Bank has successively applied for the increase and decrease of capital. As of December 31, 2023, the Bank’s capital amount was $52,260,953 thousand.

The consolidated financial statements are presented in the Bank’s functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Bank’s board of directors on February 23, 2024.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

• a. Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the “IFRS Accounting Standards”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

The initial application of the amendments to the IFRS Accounting Standards endorsed and issued into effect by the FSC did not have any material impact on the Group’s accounting policies.

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• b. The IFRS Accounting Standards endorsed by the FSC for application starting from 2024

New, Amended and Revised Standards and Interpretations Amendments to IFRS 16 “Leases Liability in a Sale and Leaseback” 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”	Effective Date Announced by IASB (Note 1)
	January 1, 2024 (Note 2) January 1, 2024 January 1, 2024 January 1, 2024 (Note 3)

• Note 1: Unless stated otherwise, the above IFRS Accounting Standards are effective for annual reporting periods beginning on or after their respective effective dates.

• Note 2: A seller-lessee shall apply the Amendments to IFRS 16 retrospectively to sale and leaseback transactions entered into after the date of initial application of IFRS 16.

• Note 3: The amendments provide some transition relief regarding disclosure requirements.

As of the date the consolidated financial statements were authorized for issue, the Group has assessed that the application of above standards and interpretations will not have a material impact on the Group’s financial position and financial performance.

• c. The IFRS Accounting Standards in issue but not yet endorsed and issued into effect by the FSC

New IFRSs 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” Amendments to IFRS 17 Amendments to IFRS 17 “Initial Application of IFRS 9 and IFRS 17 Comparative Information” Amendments to IAS 21 “Lack of Exchangeability”	Effective Date Announced by IASB (Note 1)
	To be determined by IASB January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2025 (Note 2)

Note 1: Unless stated otherwise, the above IFRS Accounting Standards are effective for annual reporting periods beginning on or after their respective effective dates.

• Note 2: An entity shall apply those amendments for annual reporting periods beginning on or after January 1, 2025. Upon initial application of the amendments, the entity recognizes any effect as an adjustment to the opening balance of retained earnings. When the entity uses a presentation currency other than its functional currency, it shall, at the date of initial application, recognize any effect as an adjustment to the cumulative amount of translation differences in equity.

As of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact of the application of above standards and interpretations on the Group’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

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4. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION

• a. Statement of compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Public Banks, Regulations Governing the Preparation of Financial Reports by Securities Firms and IFRS Accounting Standards as endorsed and issued into effect by the FSC.

• b. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

• 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

• 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

• 3) Level 3 inputs are unobservable inputs for an asset or liability.

• c. Classification of current and non-current assets and liabilities

Accounts included in the Group’s consolidated financial statements are not classified as current or non-current but are stated in the order of their liquidity. Refer to Note 40 for the maturity analysis of assets and liabilities.

• d. Basis of consolidation

• 1) Principles for preparing consolidated financial statements

The consolidated financial statements incorporate the financial statements of the Bank and the entities controlled by the Bank (i.e. its subsidiaries).

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Group.

All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation.

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• 2) Subsidiaries included in the consolidated financial statements

The subsidiaries included in the consolidated financial statements are as follows:

Main Business and Investment Company Subsidiary Products Taichung Commercial Bank Co., Ltd. Taichung Bank Insurance Brokers Co., Ltd. Insurance broker industry Taichung Bank Leasing Corporation Limited Leasing business Taichung Commercial Bank Securities Co., Ltd. Securities industry Taichung Bank Leasing Corporation Limited TCCBL Co., Ltd. Financial leasing and investment business TCCBL Co., Ltd. Taichung Bank Financial Leasing (Suzhou) Co., Ltd. Financial leasing business Taichung Commercial Bank Securities Co., Ltd. Taichung Bank Venture Capital Co., Ltd. Venture capital business	Percentage of Equity Held
	December 31
	2023 2022 100 100 100 100 100 100 100 100 100 100 100 100

• 3) Subsidiaries not included in the consolidated financial statements: None.

• e. Foreign currencies

In preparing the Group’s consolidated financial statements, transactions in currencies other than the Group’s functional currency (i.e., foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income; in which cases, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary item denominated in a foreign currency and measured at historical cost is stated at the reporting currency as originally translated from the foreign currency.

For the purpose of presenting consolidated financial statements, the functional currencies of the entities included in the report are translated into the presentation currency, the New Taiwan dollar, as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; and income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

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f. Cash and cash equivalents

Cash and cash equivalents include cash on hand, demand deposits, time deposits that can be readily terminated without the deduction of principal, and highly liquid investments that are readily convertible to a known amount of cash and which are subject to an insignificant risk of changes in value. For the consolidated statements of cash flows, cash and cash equivalents include cash and cash equivalents on the consolidated balance sheets, due from the Central Bank and call loans to other banks and securities purchased under resale agreements that are in conformity with the definition of cash and cash equivalents in IAS 7 “Statement of Cash Flows”, as endorsed and issued into effect by the FSC.

• g. Bonds purchased under resale/notes issued under repurchase agreements

A bond purchased under resell/a note issued under repurchase agreements is considered as a financing transaction if the risk and reward are attributed to the dealer. When a bond is purchased under a resale agreement, its purchase price is listed as “bonds purchased under resale agreements”, an asset account. For a note issued under repurchase agreement, the selling price is listed as “notes issued under repurchase agreements”, a liability account. The difference between purchase (sale) price under the agreement and actual sale (purchase) price is recorded as interest income (expense).

• h. Investments in associates

An associate is an entity over which the Group has significant influence and which is neither a subsidiary nor an interest in a joint venture.

The Group uses the equity method to account for its investments in associates.

Under the equity method, investments in an associate are initially recognized at cost and adjusted thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of the associate. The Group also recognizes the changes in the Group’s share of the equity of associates attributable to the Group.

The entire carrying amount of an investment is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is not allocated to any asset, including goodwill that forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

When an entity in the Group transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the Group’s consolidated financial statements only to the extent that interests in the associate are not related to the Group.

• i. Property and equipment

Property and equipment are measured at cost less accumulated depreciation and accumulated impairment loss.

Depreciation of property and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effects of any changes in the estimates accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

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• j. Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties also include land held for a currently undetermined future use.

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss. Depreciation is recognized using the straight-line method.

On derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss.

• k. Intangible assets

• 1) Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful lives, residual values, and amortization methods are reviewed at the end of each reporting period, with the effect of any changes in the estimates accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are measured at cost less accumulated impairment loss.

• 2) Derecognition of intangible assets

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

• l. Impairment of property, plant and equipment, right-of-use asset, investment properties, intangible assets other than goodwill

At the end of each reporting period, the Group reviews the carrying amounts of its property, plant and equipment, right-of-use asset, investment properties and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to the individual cash-generating units; otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually and whenever there is an indication that the assets may be impaired.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized on the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

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m. Financial instruments

Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

a) Measurement categories

Financial assets are classified into the following categories: Financial assets at FVTPL, financial assets at amortized cost and investments in debt instruments and equity instruments at FVTOCI.

• i. Financial assets at FVTPL

Financial assets are classified as at FVTPL when such a financial asset is mandatorily classified as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI and debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria.

Financial assets at FVTPL are subsequently measured at fair value, and any dividends, interest earned and remeasurement gains or losses on such financial assets are recognized in gains on financial assets and liabilities at fair value through profit or loss. Fair value is determined in the manner described in Note 39.

• ii. Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

• i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

• ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, due from the Central Bank and call loans to other banks, securities purchased under resale agreements, notes discounted and loans, trade receivables at amortized cost, other financial assets and refundable deposits, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

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Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset, except for:

• i) Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such financial assets; and

• ii) Financial assets that are not credit-impaired on purchase or origination but have subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.

A financial asset is credit impaired when one or more of the following events have occurred:

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

• ii) Breach of contract, such as a default;

• iii) It is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization; or

• iv) The disappearance of an active market for that financial asset because of financial difficulties.

• iii. Investments in debt instruments at FVTOCI

Debt instruments that meet the following conditions are subsequently measured at FVTOCI:

• i) The debt instrument is held within a business model whose objective is achieved by both the collecting of contractual cash flows and the selling of such financial assets; and

• ii) The contractual terms of the debt instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Investments in debt instruments at FVTOCI are subsequently measured at fair value. Changes in the carrying amounts of these debt instruments relating to changes in foreign currency exchange rates, interest income calculated using the effective interest method and impairment losses or reversals are recognized in profit or loss. Other changes in the carrying amount of these debt instruments are recognized in other comprehensive income and will be reclassified to profit or loss when the investment is disposed of.

• iv. Investments in equity instruments at FVTOCI

On initial recognition, the Group may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments; instead, it will be transferred to retained earnings.

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Dividends on these investments in equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

b) Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables), investments in debt instruments that are measured at FVTOCI.

The Group always recognizes lifetime expected credit losses (ECLs) for notes discounted and loans, trade receivables. For all other financial instruments, the Group recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

For internal credit risk management purposes, the Group determines that the following situations indicate that a financial asset is in default (without taking into account any collateral held by the Group):

• i. Internal or external information show that the debtor is unlikely to pay its creditors.

• ii. When a financial asset is more than 90 days past due unless the Group has reasonable and corroborative information to support a more lagged default criterion.

According to the Regulations, the Group determines the allowance for credit losses by evaluating the recoverability of the outstanding balances of various loans at the balance sheet date. The allowances for doubtful accounts are determined based on management’s evaluation of the collectability of individual accounts, the borrowers’/clients’ financial condition and payment history. Such doubtful accounts are categorized into: Normal loans, need attention, less likely to be collectible in full, difficult to collect, and uncollectible accounts; and the allowance should be provided at 1%, 2%, 10%, 50%, and 100%, respectively, of the loan amount to meet the minimum requirement for each category. Under the rule No. 10010006830 issued by the Grouping Bureau of the FSC, additional allowance for doubtful accounts should be provided at 1% of the total loans. Under the rule No. 10300329440 issued by the Grouping Bureau of the FSC, allowance for doubtful accounts should be provided at 1.5% or more of the loans for real estate.

The Group recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and does not reduce the carrying amount of such a financial asset.

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c) Derecognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in a debt instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss which had been recognized in other comprehensive income is recognized in profit or loss. However, on derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

2) Equity instruments

Debt and equity instruments issued by the Group are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments issued by the Group are recognized at the proceeds received, net of direct issue costs.

3) Financial liabilities

• a) Subsequent measurement

Except the following situations, all financial liabilities are measured at amortized cost using the effective interest method:

i. Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when such financial liabilities are held for trading at FVTPL.

Financial liabilities at fair value through profit or loss are stated at fair value, and any dividends, interest earned and remeasurement gains or losses on such financial assets are recognized in gains on financial assets and liabilities at fair value through profit or loss. Fair value is determined in the manner described in Note 39.

ii. Financial guarantee contracts

Financial guarantee contracts issued by the Group, if not designated as at FVTPL, are subsequently measured at the higher of:

• i) The amount of the loss allowance reflecting expected credit losses; and

• ii) The amount initially recognized less, where appropriate, the cumulative amount of income recognized in accordance with the revenue recognition policies.

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b) Derecognition of financial liabilities

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

4) Derivative financial instruments

The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward contracts, cross-currency swap contracts, cross-currency option contracts, interest structured instrument contracts, non-deliverable forward contracts and asset swap contracts.

Derivatives are initially recognized at fair value at the date on which the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument; in which event, the timing of the recognition in profit or loss depends on the nature of the hedging relationship. When the fair value of a derivative financial instrument is positive, the derivative is recognized as a financial asset; when the fair value of a derivative financial instrument is negative, the derivative is recognized as a financial liability.

Derivatives embedded in hybrid contracts that contain financial asset host that is within the scope of IFRS 9 are not separated; instead, the classification is determined in accordance with the entire hybrid contract. Derivatives embedded in non-derivative host contracts that are not financial assets that is within the scope of IFRS 9 (e.g. financial liabilities) are treated as separate derivatives when they meet the definition of a derivative; their risks and characteristics are not closely related to those of the host contracts; and the host contracts are not measured at FVTPL.

5) Modification of financial instruments

For the changes in the basis for determining contractual cash flows of financial assets or financial liabilities resulting from the interest rate benchmark reform, the Group elects to apply the practical expedient in which the changes are accounted for by updating the effective interest rate at the time the basis is changed, provided the changes are necessary as a direct consequence of the reform and the new basis is economically equivalent to the previous basis. When multiple changes are made to a financial asset or a financial liability, the Group first applies the practical expedient to those changes required by interest rate benchmark reform, and then applies the requirements of modification of financial instruments to the other changes that cannot apply the practical expedient.

• n. Provisions (excluding amounts in provision for employee benefits)

Provisions are measured at the best estimate of the discounted cash flows of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

o. Revenue recognition

The Group identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

• 1) Interest income

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably.

• 24 -

2) Service fee and commissions income

The Group identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied. Service fee income and expenses are recognized when loans or other services are provided. If the contract between the labor service and the collection of consideration is within one year, the major financial components of the contract will not be adjusted.

3) Dividend income

Dividend income from investments is recognized when a shareholder’s right to receive payment has been established and provided that it is probable that the economic benefits will flow to the Group and that the amount of income can be measured reliably.

p. Leases

At the inception of a contract, the Group assesses whether the contract is, or contains, a lease.

1) The Group as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

When a lease includes both land and building elements, the Group assesses the classification of each element separately as a finance or an operating lease based on the assessment as to whether substantially all the risks and rewards incidental to ownership of each element have been transferred to the lessee. The lease payments are allocated between the land and the building elements in proportion to the relative fair values of the leasehold interests in the land element and building element of the lease at the inception of a contract. If the allocation of the lease payments can be made reliably, each element is accounted for separately in accordance with its lease classification. When the lease payments cannot be allocated reliably between the land and building elements, the entire lease is generally classified as a finance lease unless it is clear that both elements are operating leases; in which case, the entire lease is classified as an operating lease.

2) The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the Group’s consolidated financial statements.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

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Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments, variable lease payments which depend on an index or a rate. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Group remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line on the consolidated balance sheets.

Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods in which they are incurred.

The Group negotiates with the lessor for rent concessions as a direct consequence of the Covid-19 to change the lease payments originally due by June 30, 2022, that results in the revised consideration for the lease less than the consideration for the lease immediately preceding the change. There is no substantive change to other terms and conditions. The Group elects to apply the practical expedient to these rent concessions and, therefore, does not assess whether the rent concessions are lease modifications. Instead, the Group recognizes the reduction in lease payment in profit or loss as other non-interest gains, net in the period in which the events or conditions that trigger the concession occur, and makes a corresponding adjustment to the lease liability.

q. Employee benefits

1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.

2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as expenses when employees have rendered services entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost and net interest on the net defined benefit liabilities are recognized as employee benefits expense in the period in which they occur. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liabilities represent the actual deficit in the Group’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

• 26 -

• 3) Employee benefit - employees’ preferential deposits

The Group has granted a preferential interest rate to its current employees and retired employees for their deposits within a prescribed amount. The preferential interest rate in excess of market interest rate is considered employee benefits.

Under the “Regulations Governing the Preparation of Financial Reports by Public Bank”, if the Bank’s preferential deposit interest rate for an employee as stated in the employment contract exceeds the market interest rate, the excess will be subject to IAS 19 “Employee Benefits” upon the employee’s retirement. The actuarial valuation assumptions and parameters are based on the guidelines announced by authority.

• 4) Other long-term employee benefits

Other long-term employee benefits are accounted for in the same way as the accounting required for defined benefit plans except that remeasurement is recognized in profit or loss.

• r. Share-based payment arrangements

Employee share options granted to employees

The fair value at the grant date of the employee share options is expensed on a straight-line basis over the vesting period, based on the Group’s best estimates of the number of shares or options that are expected to ultimately vest, with a corresponding increase in capital surplus - employee share options. The expense is recognized in full at the grant date if the grants are vested immediately. The grant date of issued ordinary shares for cash which are reserved for employees is the date on which the board of directors approves the transaction.

At the end of each reporting period, the Group revises its estimate of the number of employee share options that are expected to vest. The impact of the revision of the original estimates is recognized in profit or loss such that the cumulative expenses reflect the revised estimate, with a corresponding adjustment to capital surplus - employee share options.

• s. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

• 1) Current tax

Income tax payable (recoverable) is based on taxable profit (loss) for the year determined according to the applicable tax laws of each tax jurisdiction.

According to the Income Tax Act, an additional tax on unappropriated earnings is provided for as income tax in the year the shareholders approve to retain earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

• 2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

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Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences and unused loss carryforwards to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

• 3) Current and deferred taxes for the year

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity; in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity, respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, the Group’s management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

Key Sources of Estimation Uncertainty

Estimated impairment of financial assets

The provision for impairment of loans, notes discounted, trade receivables, investments in debt instruments, and financial guarantee contracts is based on probability of default and loss given default. The Group uses judgment in making these assumptions and in selecting the inputs to the impairment calculation, based on the Group’s historical experience, existing market conditions as well as forward looking estimates as of the end of each reporting period. For details of the key assumptions and inputs used, see Notes 39 and 40. Where the actual future cash inflows are less than expected, a material impairment loss may arise.

• 28 -

6. CASH AND CASH EQUIVALENTS

Cash on hand Checks for clearing Due from banks		**December 31 **	**December 31 **
		2023 $ 4,483,977 4,215,282 18,279,000 $ 26,978,259	2022 $ 7,586,216 4,276,016 13,898,486 $ 25,760,718

• a. The loss allowance is measured at an amount equal to 12-month ECLs per historical experience and forward-looking information; there was no loss allowance on cash and cash equivalents as of December 31, 2023 and 2022.

• b. Reconciliations of cash and cash equivalents between the consolidated statements of cash flows and the consolidated balance sheets as of December 31, 2023 and 2022 were shown in the consolidated statements of cash flows.

• c. The amount of time deposits due from other banks as the operating deposit of Taichung Commercial Bank Securities Co., Ltd. was $200,000 thousand on December 31, 2023 and 2022, which were transferred to the refundable deposits. Refer to Note 21.

7. DUE FROM THE CENTRAL BANK AND CALL LOANS TO OTHER BANKS

Deposit reserves Deposit reserves for checking accounts Deposit reserves for demand accounts Inter-bank clearing account Deposit reserves for foreign currency deposits Call loans to banks Deposit reserves for trust compensation		December 31	December 31
		2023 $ 14,420,430 23,170,517 4,513,789 104,380 1,661,526 80,000 $ 43,950,642	2022 $ 12,018,774 22,270,486 4,515,145 95,201 1,951,994 70,000 $ 40,921,600

• a. The loss allowance is measured at an amount equal to 12-month ECLs per historical experience and forward-looking information; there was no loss allowance on due from the Central Bank and call loans to other banks as of December 31, 2023 and 2022.

• b. The monthly depository reserves to be deposited in the Central Bank of the Republic of China are calculated by applying the legally required reserve ratio to the monthly average balance of the reserve accounts. These reserve accounts can be used at any time but the demand accounts can only be used for monthly deposit reserve adjustments.

• c. The Group deposited the reserves for trust compensation on government bonds measured at amortized cost on December 31, 2023 and 2022, with a nominal amount of $80,000 thousand and $70,000 thousand, respectively. Refer to Note 37.

• 29 -

8. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets at FVTPL Commercial papers Domestic listed shares and emerging market shares Domestic unlisted shares PEM group policy assets Beneficiary certificates Corporate bonds Asset swap contracts Cross-currency swap contracts Foreign exchange forward contracts Cross-currency option contracts Interest rate-linked structured instruments Financial liabilities at FVTPL Cross-currency swap contracts Foreign exchange forward contracts Cross-currency option contracts Interest rate-linked structured instruments		December 31	December 31
		2023 $ 18,814,086 1,060,821 63,573 746,351 903,291 174,577 7,444,433 1,104,265 66,320 452,643 403,202 $ 31,233,562 $ 2,071,989 39,715 456,584 403,202 $ 2,971,490	2022 $ 18,158,908 682,938 87,095 875,684 290,350 587,037 6,609,438 617,521 105,601 544,909 449,633 $ 29,009,114 $ 564,281 67,728 549,343 449,633 $ 1,630,985

• a. The Group engages in exchange rate related derivative financial contracts, mainly to provide customers and the Group with hedging instruments for foreign exchange positions from transactions such as import/export and currency exchange, to avoid the risks from the business and to flatten the demand for foreign exchange funds from non-transactional operations.

• b. The nominal principal amounts of outstanding derivative contracts as of December 31, 2023 and 2022 were as follows:

Asset swap contracts Cross-currency swap contracts Foreign exchange forward contracts Cross-currency option contracts Interest rate-linked structured instrument contracts	December 31	December 31
	2023	2022 Contract Amount Interest Rate Range $ 6,577,200 0.80%-5.00% 44,882,911 - 4,304,938 - 43,191,197 - 3,989,488 1.50%-10.20%
	Contract Amount Interest Rate Range $ 7,398,800 0.85%-5.50% 80,607,610 - 2,321,961 - 49,032,868 - 3,839,951 0.00%-10.20%

• 30 -

9. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Investments in equity instruments at FVTOCI Investments in debt instruments at FVTOCI		December 31	December 31
		2023 $ 5,366,637 59,321,139 $ 64,687,776	2022 $ 5,152,992 40,075,983 $ 45,228,975

• a. Investments in equity instruments at FVTOCI

Domestic listed shares Domestic unlisted shares Foreign listed shares		December 31	December 31
		2023 $ 4,055,958 903,979 406,700 $ 5,366,637	2022 $ 3,926,732 898,032 328,228 $ 5,152,992

These investments in equity instruments are held for medium to long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Group’s strategy of holding these investments for long-term purposes.

The ordinary shares sold had a fair value of $1,781,282 thousand and $70,294 thousand and their related unrealized valuation gains of $179,049 thousand and $2,419 thousand were transferred from other equity to retained earnings in 2023 and 2022, respectively.

Dividend income of $271,857 thousand and $239,900 thousand was recognized in profit or loss for the years ended December 31, 2023 and 2022, respectively.

• b. Investments in debt instruments at FVTOCI

Corporate bonds Government bonds Foreign bonds Bank debentures		December 31	December 31
		2023 $ 30,306,167 9,499,322 17,635,583 1,880,067 $ 59,321,139	2022 $ 29,822,548 5,228,275 3,362,115 1,663,045 $ 40,075,983

Foreign bonds denominated in foreign currencies were as follows:

USD CNY AUD EUR GBP	December 31
	2023 2022 $ 240,300 $ 55,300 260,000 380,000 414,000 6,000 20,000 - 20,000 -

• 31 -

• 1) As of December 31, 2023, the foreign bonds at amortized cost amounted to $184,200 thousand (US$6,000 thousand), which had been sold under repurchase agreements. Refer to Note 41 for information relating to their carrying amounts.

• 2) The Group recognized impairment (loss) reversal of $(6,821) thousand and $2,868 thousand in 2023 and 2022, respectively, after assessing the expected credit losses of the investments in debt instruments at FVTOCI.

• 3) Refer to Note 40 for information relating to their credit risk management and impairment.

10. INVESTMENTS IN DEBT INSTRUMENTS AT AMORTIZED COST

Foreign bonds Government bonds NCDs issued by the CBC Corporate bonds Bank debentures Treasury bills Less: Allowance for impairment loss Less: Withdrawal of reserves for trust compensation and refundable deposits		December 31	December 31
		2023 $ 28,285,539 11,289,765 49,200,000 23,660,576 100,000 49,412 112,585,292 (39,926) (630,500) $ 111,914,866	2022 $ 28,442,213 11,070,175 49,350,000 16,314,020 100,000 148,280 105,424,688 (46,222) (620,500) $ 104,757,966

• a. The foreign bonds denominated in foreign currencies were as follows:

USD CNY AUD ZAR	December 31
	2023 2022 $ 708,797 $ 725,297 855,000 920,000 87,500 68,500 680,000 480,000

• b. As of December 31, 2023, the government bonds and the foreign bonds at amortized cost amounted to $870,000 thousand and $5,243,560 thousand (US$170,800 thousand), respectively, which had been sold under repurchase agreements. Refer to Note 41 for information relating to their carrying amount.

• c. The Group recognized reversal of impairment (loss) of $6,286 thousand and $(13,900) thousand in 2023 and 2022, respectively, after assessing the expected credit losses of the investments in debt instruments at amortized cost.

• d. Refer to Note 40 for information relating to their credit risk management and impairment.

• 32 -

11. SECURITIES PURCHASED UNDER RESALE AGREEMENTS

Securities purchased amounted to in the amounts of $10,696,795 thousand and $11,643,340 thousand under resale agreements as of December 31, 2023 and 2022 would subsequently sold for $10,701,501 thousand and $11,646,960 thousand, respectively, with interest rate ranging from 1.38% to 1.40% and 1.28%, respectively.

12. RECEIVABLES, NET

Notes receivable Receivables on credit cards Accounts receivable factored without recourse Acceptances Interest receivables Receivables on foreign currency settlement Lease receivables Assignment receivables Beneficiary right of trust receivables Receivables on securities settlement Other receivables Less: Unrealized interest income Less: Allowance for doubtful accounts		December 31	December 31
		2023 $ 8,971,691 770,595 144,660 602,675 2,436,690 4,137 6,365,406 1,538,231 1,236,811 1,569,709 507,180 24,147,785 (1,574,037) (417,269) $ 22,156,479	2022 $ 6,212,834 791,791 148,925 544,239 1,677,420 4,094 4,650,927 504,621 - 808,484 296,051 15,639,386 (834,356) (370,338) $ 14,434,692

• a. Movements in the total carrying amount of receivables for the years ended December 31, 2023 and 2022 were as follows:

2023

	12-month ECLs	12-month ECLs		Lifetime ECL	Credit- impaired Financial Assets	Credit- impaired Financial Assets		Total
Balance at January 1, 2023 Transfers to lifetime ECL Transfers to credit-impaired financial assets Transfers to 12-month ECLs New receivables purchased or originated Write-offs Derecognition Foreign exchange differences and other changes Balance at December 31, 2023		$ 82,750,786 (214,961) (128,079) 38,586 24,404,753 - (9,977,456) 136,106 $ 97,009,735		$ 396,675 215,071 (31,734) (30,111) 35,111 (7,177) (151,750) 28,243 $ 454,328		$ 778,507 (110) 159,813 (8,475) 36,172 (194,194) (38,393) 23,617 $ 756,937		$ 83,925,968 - - - 24,476,036 (201,371) (10,167,599) 187,966 $ 98,221,000

• 33 -

2022

	12-month ECLs	12-month ECLs		Lifetime ECL	Credit- impaired Financial Assets	Credit- impaired Financial Assets		Total
Balance at January 1, 2022 Transfers to lifetime ECL Transfers to credit-impaired financial assets Transfers to 12-month ECLs New receivables purchased or originated Write-offs Derecognition Foreign exchange differences and other changes Balance atDecember31,2022		$ 74,748,439 (283,946) (20,718) 58,288 17,166,456 - (9,287,883) 370,150 $ 82,750,786		$ 334,490 284,024 (214,881) (7,751) 28,143 (7,607) (39,513) 19,770 $ 396,675		$ 801,948 (78) 235,599 (50,537) 72,415 (270,057) (31,590) 20,807 $ 778,507		$ 75,884,877 - - - 17,267,014 (277,664) (9,358,986) 410,727 $ 83,925,968

The abovementioned carrying amounts of receivables include due from the banks, due from the Central Bank and call loans to other banks, securities purchased under resale agreements, notes receivable, receivables on credit cards, accounts receivable factored without recourse, acceptances, interest receivables, lease receivables, assignment receivables, beneficiary right of trust receivables, receivables on securities settlement, other receivables, other financial assets (including delinquent receivables not from loans) and refundable deposits.

• b. Movements in the allowance for doubtful accounts of receivables for the years ended December 31, 2023 and 2022 were as follows:

2023

		12-month ECLs	Lifetime ECL	Lifetime ECL		Credit- impaired Financial Assets	Impairment Loss Assessed under IFRS 9	Impairment Loss Assessed under IFRS 9	Difference of Impairment Loss under Regulations	Difference of Impairment Loss under Regulations		Total
Balance at January 1, 2023 Reconciliation from financial instruments recognized at the beginning of the year: Transfers to lifetime ECL Transfers to credit-impaired financial assets Transfers to 12-month ECLs Derecognition of financial assets in current period New financial assets purchased or originated Difference of impairment loss under regulations Write-offs Recovery of written-offs Foreign exchange differences and other changes Balance at December 31, 2023		$ 127,490 (2,911) (2,055) 4,037 (96,786) 137,935 - - - (11,389) $ 156,321		$ 9,604 2,977 (1,304) (1,106) (4,119) 1,257 - (7,178) - 8,919 $ 9,050		$ 196,536 (66) 3,359 (2,931) (11,036) 18,762 - (26,976) - 33,291 $ 210,939		$ 333,630 - - - (111,941) 157,954 - (34,154) - 30,821 $ 376,310		$ 152,676 - - - - - 158,149 (167,217) 13,706 - $ 157,314		$ 486,306 - - - (111,941) 157,954 158,149 (201,371) 13,706 30,821 $ 533,624

• 34 -

2022

		12-month ECLs	Lifetime ECL	Lifetime ECL		Credit- impaired Financial Assets	Impairment Loss Assessed under IFRS 9	Impairment Loss Assessed under IFRS 9	Difference of Impairment Loss under Regulations	Difference of Impairment Loss under Regulations		Total
Balance at January 1, 2022 Reconciliation from financial instruments recognized at the beginning of the year: Transfers to lifetime ECL Transfers to credit-impaired financial assets Transfers to 12-month ECLs Derecognition of financial assets in current period New financial assets purchased or originated Difference of impairment loss under regulations Write-offs Recovery of written-offs Foreign exchange differences and other changes Balance at December 31, 2022		$ 108,467 (3,099) (114) 23,532 (88,588) 108,823 - - - (21,531) $ 127,490		$ 7,900 3,144 (3,310) (1,239) (1,827) 2,116 - (7,607) - 10,427 $ 9,604		$ 239,926 (45) 3,424 (22,293) (31,057) 10,442 - (77,977) - 74,116 $ 196,536		$ 356,293 - - - (121,472) 121,381 - (85,584) - 63,012 $ 333,630		$ 104,485 - - - - - 212,795 (192,080) 27,476 - $ 152,676		$ 460,778 - - - (121,472) 121,381 212,795 (277,664) 27,476 63,012 $ 486,306

The allowance for doubtful accounts of the abovementioned receivables includes allowances for delinquent receivables not from loans, refer to Note 16.

c. Refer to Note 37 for information relating to notes receivable as a guarantee for interbank financing.

13. NOTES DISCOUNTED AND LOANS, NET

Bills negotiated Secured overdrafts Accounts receivable financing Securities margin loans receivables Short-term unsecured loans Short-term secured loans Medium-term unsecured loans Medium-term secured loans Long-term unsecured loans Long-term secured loans Delinquent loans Add: Adjustment of premium or discount Less: Allowance for doubtful accounts		December 31	December 31
		2023 $ 182,898 9,090 20,503 1,521,179 42,172,142 98,193,946 90,661,279 136,756,767 13,168,766 166,068,185 359,696 549,114,451 10,753 (7,281,101) $ 541,844,103	2022 $ 163,189 7,220 63,668 1,234,183 45,405,871 100,085,561 77,330,088 123,575,879 11,048,117 161,228,409 601,847 520,744,032 23,690 (6,654,896) $ 514,112,826

a. As of December 31, 2023 and 2022, the delinquent loans on which interest ceased to accrue amounted to $359,696 thousand and $601,847 thousand, respectively. The unrecognized interest receivables on these loans were $8,431 thousand and $14,619 thousand for the years ended December 31, 2023 and 2022, respectively.

• 35 -

• b. There was no credit loan written off without a lawsuit for the years ended December 31, 2023 and 2022.

• c. Movements in the total carrying amount of notes discounted and loans for the years ended December 31, 2023 and 2022 were as follows:

2023

	12-month ECLs	12-month ECLs		Lifetime ECL	Credit- impaired Financial Assets	Credit- impaired Financial Assets		Total
Balance at January 1, 2023 Transfers to lifetime ECL Transfers to credit-impaired financial assets Transfers to 12-month ECLs New notes discounted and loans purchased or originated Write-offs Derecognition Foreign exchange differences and other changes Balance atDecember31,2023		$ 499,535,755 (6,734,765) (1,668,229) 2,157,021 269,400,151 - (212,814,693) (23,370,947) $ 526,504,293		$ 14,044,049 6,747,423 (1,728,782) (2,143,805) 2,808,178 - (3,786,455) (792,895) $ 15,147,713		$ 7,187,918 (12,658) 3,397,011 (13,216) 160,741 (2,028,037) (995,767) (222,794) $ 7,473,198		$ 520,767,722 - - - 272,369,070 (2,028,037) (217,596,915) (24,386,636) $ 549,125,204

2022

	12-month ECLs	12-month ECLs		Lifetime ECL	Credit- impaired Financial Assets	Credit- impaired Financial Assets		Total
Balance at January 1, 2022 Transfers to lifetime ECL Transfers to credit-impaired financial assets Transfers to 12-month ECLs New notes discounted and loans purchased or originated Write-offs Derecognition Foreign exchange differences and other changes Balance atDecember31,2022		$ 465,545,307 (4,683,712) (767,134) 2,514,847 262,169,573 - (203,790,387) (21,452,739) $ 499,535,755		$ 12,243,822 4,711,081 (618,324) (2,470,294) 3,926,130 - (3,074,377) (673,989) $ 14,044,049		$ 8,698,694 (27,369) 1,385,458 (44,553) 98,131 (2,303,517) (538,339) (80,587) $ 7,187,918		$ 486,487,823 - - - 266,193,834 (2,303,517) (207,403,103) (22,207,315) $ 520,767,722

• 36 -

• d. Movements in the allowance for doubtful accounts of notes discounted and loans for the years ended December 31, 2023 and 2022 were as follows:

2023

		12-month ECLs	Lifetime ECL	Lifetime ECL		Credit- impaired Financial Assets	Impairment Loss Assessed under IFRS 9	Impairment Loss Assessed under IFRS 9	Difference of Impairment Loss under Regulations	Difference of Impairment Loss under Regulations		Total
Balance at January 1, 2023 Reconciliation from financial instruments recognized at the beginning of the year: Transfers to lifetime ECL Transfers to credit-impaired financial assets Transfers to 12-month ECLs Derecognition of financial assets in current period New financial assets purchased or originated Difference of impairment loss under regulations Write-offs Recovery of written-offs Foreign exchange differences and other changes Balance at December 31, 2023		$ 2,055,966 (13,081) (8,390) 160,922 (1,058,983) 1,283,873 - - - (275,311) $ 2,144,996		$ 1,156,156 14,235 (118,051) (159,757) (399,051) 156,533 - - - 313,642 $ 963,707		$ 1,634,126 (1,154) 126,441 (1,165) (164,138) 63,609 - (455,279) - 261,808 $ 1,464,248		$ 4,846,248 - - - (1,622,172) 1,504,015 - (455,279) - 300,139 $ 4,572,951		$ 1,808,648 - - - - - 1,192,333 (1,572,758) 1,279,927 - $ 2,708,150		$ 6,654,896 - - - (1,622,172) 1,504,015 1,192,333 (2,028,037) 1,279,927 300,139 $ 7,281,101

2022

		12-month ECLs	Lifetime ECL	Lifetime ECL		Credit- impaired Financial Assets	Impairment Loss Assessed under IFRS 9	Impairment Loss Assessed under IFRS 9	Difference of Impairment Loss under Regulations	Difference of Impairment Loss under Regulations		Total
Balance at January 1, 2022 Reconciliation from financial instruments recognized at the beginning of the year: Transfers to lifetime ECL Transfers to credit-impaired financial assets Transfers to 12-month ECLs Derecognition of financial assets in current period New financial assets purchased or originated Difference of impairment loss under regulations Write-offs Recovery of written-offs Foreign exchange differences and other changes Balance atDecember31,2022		$ 1,465,291 (7,906) (4,945) 87,883 (777,648) 1,285,136 - - - 8,155 $ 2,055,966		$ 608,655 10,493 (32,486) (82,908) (117,874) 428,742 - - - 341,534 $ 1,156,156		$ 1,857,339 (2,587) 37,431 (4,975) (72,084) 42,936 - (421,822) - 197,888 $ 1,634,126		$ 3,931,285 - - - (967,606) 1,756,814 - (421,822) - 547,577 $ 4,846,248		$ 2,750,165 - - - - - (268,609) (1,881,695) 1,208,787 - $ 1,808,648		$ 6,681,450 - - - (967,606) 1,756,814 (268,609) (2,303,517) 1,208,787 547,577 $ 6,654,896

• 37 -

14. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD, NET

The following table shows the Group’s proportion of ownership and voting right of associates at the end of the reporting date:

Associates that are not individually material Taichung Bank Securities Investment Trust Co., Ltd.		December 31	December 31	December 31
		2023 Amount Proportion of Ownership (%) $ 172,446 38.46		2022
				Amount Proportion of Ownership (%) $ 172,301 38.46

The share of loss of the investments in associates accounted for using the equity method was as follows:

Investee Company Taichung Bank Securities Investment Trust Co., Ltd.	For the Year Ended	For the Year Ended	December 31
		2023 $ (1,373)	2022 $ (6,716)

Investment was accounted for using the equity method and the share of loss of the investment was calculated based on financial statements which have been audited.

The Group is the single largest shareholder of Taichung Bank Securities Investment Trust Co., Ltd. with 38.46% interest in the investee, in which the remaining interest is held by several other shareholders. The Group considered the absolute size of its holding, and the relative size and dispersion of the other shareholdings in Taichung Bank Securities Investment Trust Co., Ltd. and concluded that it does not have control over Taichung Bank Securities Investment Trust Co., Ltd. The management of the Group considered the Group as exercising significant influence over Taichung Bank Securities Investment Trust Co., Ltd. and, therefore, classified Taichung Bank Securities Investment Trust Co., Ltd. as associate of the Group.

15. RESTRICTED ASSETS, NET

Restricted assets - cash in banks Pending settlement payments		December 31	December 31
		2023 $ 123,040 4,641 $ 127,681	2022 $ 504,576 2,129 $ 506,705

Refer to Note 37 for information relating to the restricted assets - cash in banks, which are used as collateral for financing to other banks.

16. OTHER FINANCIAL ASSETS, NET

Other delinquent receivables, net		December 31	December 31
		2023 $ 190,878	2022 $ 271,035

• 38 -

Other delinquent receivables, net were as follows:

Delinquent receivables not from loans Less: Allowance for doubtful accounts (Note 12)

	December 31	December 31
	2023 $ 307,233 (116,355) $ 190,878	2022 $ 387,003 (115,968) $ 271,035

17. PROPERTIES AND EQUIPMENT, NET

Cost Balance at January 1, 2023 Additions Disposals Reclassifications Exchange differences, net Balance at December 31, 2023 Accumulated depreciation Balance at January 1, 2023 Additions Disposals Exchange differences, net Balance at December 31, 2023 Impairment Balance at January 1, 2023 Balance at December 31, 2023 Balance at December 31, 2023 Cost Balance at January 1, 2022 Additions Disposals Reclassifications Exchange differences, net Balance at December 31, 2022 Accumulated depreciation Balance at January 1, 2022 Additions Disposals Reclassifications Exchange differences, net Balance at December 31, 2022 Impairment Balance at January 1, 2022 Balance at December 31, 2022 Balance at December 31, 2022				2023
		Land $ 7,859,148 - - - - 7,859,148 - - - - - 77,000 77,000 $ 7,782,148	Buildings and Structures Transportation Equipment $ 2,187,301 $ 70,162 45,108 2,605 - (6,504 ) - - - (161) 2,232,409 66,102 1,312,047 51,013 57,613 7,014 - (5,798 ) - (111) 1,369,660 52,118 - - - - $ 862,749 $ 13,984	Miscellaneous Equipment $ 2,145,461 87,877 (111,117 ) 19,470 (672) 2,141,019 1,786,170 131,825 (110,947 ) (642) 1,806,406 - - $ 334,613 2022	Lease Improvements $ 43,637 61,325 (812 ) - (1) 104,149 13,228 14,635 (203 ) - 27,660 - - $ 76,489	Construction in Progress $ 7,189,832 1,686,088 - (22,007 ) - 8,853,913 - - - - - - - $ 8,853,913	Total $ 19,495,541 1,883,003 (118,433 ) (2,537 ) (834) 21,256,740 3,162,458 211,087 (116,948 ) (753) 3,255,844 77,000 77,000 $ 17,923,896
		Land $ 7,859,148 - - - - 7,859,148 - - - - - - 77,000 77,000 $ 7,782,148	Buildings and Structures Transportation Equipment $ 2,110,482 $ 65,086 76,819 5,325 - (401 ) - - - 152 2,187,301 70,162 1,267,495 43,401 44,552 7,935 - (392 ) - - - 69 1,312,047 51,013 - - - - $ 875,254 $ 19,149	Miscellaneous Equipment $ 2,119,596 104,735 (82,259 ) 1,964 1,425 2,145,461 1,719,631 147,471 (81,860 ) - 928 1,786,170 - - $ 359,291	Lease Improvements $ 25,210 18,213 - - 214 43,637 5,767 7,455 - - 6 13,228 - - $ 30,409	Construction in Progress $ 4,689,196 2,503,913 - (3,277 ) - 7,189,832 - - - - - - - - $ 7,189,832	Total $ 16,868,718 2,709,005 (82,660 ) (1,313 ) 1,791 19,495,541 3,036,294 207,413 (82,252 ) - 1,003 3,162,458 77,000 77,000 $ 16,256,083

• 39 -

The above items of property and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

Building and structures Building 30 to 60 years Renovation 10 to 29 years Transportation equipment 3 to 5 years Miscellaneous equipment 1 to 15 years Lease improvements 2 to 5 years

18. LEASE ARRANGEMENTS

• a. Right-of-use assets

Carrying amount Land and buildings Transportation equipment Additions to right-of-use assets Depreciation charge for right-of-use assets Land and buildings Transportation equipment		**December 31 **	**December 31 **	**December 31 **
	2023 2022 $ 1,008,643 $ 767,353 54,751 41,923 $ 1,063,394 $ 809,276 For the Year Ended December 31
			2023 $ 595,256 $ 157,140 21,389 $ 178,529	2022 $ 207,780 $ 139,421 18,811 $ 158,232

The Group suspended the leases of some land and buildings and transportation equipment before the leases expired. The amount of right-of-use assets derecognized was $162,394 thousand and $59,921 thousand for the years ended December 31, 2023 and 2022, respectively. The disposal gain of $21,329 thousand and $3,152 thousand was recognized for the years ended December 31, 2023 and 2022.

Except for the aforementioned suspension and addition and recognized depreciation, the Group did not have significant sublease or impairment of right-of-use assets for the years ended December 31, 2023 and 2022.

• b. Lease liabilities

Carrying amount		December 31	December 31
		2023 $ 1,093,882	2022 $ 852,915

• 40 -

Range of discount rates for lease liabilities was as follows:

Land Buildings Transportation equipment	December 31
	2023 2022 1.01%-4.14% 1.01%-4.14% 1.01%-5.95% 1.01%-5.95% 1.01%-5.96% 1.01%-5.96%

c. Material lease-in activities and terms

The Group leases domestic offices, ATM sites and transportation equipment with lease terms of 1 to 15 years. The lease contract specifies that lease payments will be adjusted on the basis of changes in market rental rates. The Group does not have bargain purchase options to acquire the leasehold land and buildings at the end of the lease terms.

d. Other lease information

Lease arrangements under operating leases for the leasing out of freehold properties are set out in Note 19.

Expenses relating to short-term leases Expenses relating to low-value asset leases Total cash outflow for leases	For the Year Ended	For the Year Ended	December 31
		2023 $ 6,341 $ 11,441 $ (212,932)	2022 $ 3,783 $ 11,383 $ (191,914)

The Group’s leases of certain office equipment qualify as short-term leases and leases of certain computer equipment qualify as low-value asset leases. The Group has elected to apply the recognition exemption and thus, did not recognize right-of-use assets and lease liabilities for these leases.

19. INVESTMENT PROPERTIES, NET

Cost Balance at January 1, 2023 Additions Reclassifications Balance at December 31, 2023 Accumulated depreciation Balance at January 1, 2023 Additions Balance at December 31, 2023 Balance at December 31, 2023			2023
		Land $ 464,341 600,871 - 1,065,212 - - - $ 1,065,212	Structures Investment Properties Under Construction $ 91,104 $ 38,620 44,179 30,115 - (68,735) 135,283 - 1,898 - 5,291 - 7,189 - $ 128,094 $ -	Total $ 594,065 675,165 (68,735) 1,200,495 1,898 5,291 7,189 $ 1,193,306

• 41 -

Cost Balance at January 1, 2022 Additions Balance at December 31, 2022 Accumulated depreciation Balance at January 1, 2022 Additions Balance at December 31, 2022 Balance at December 31, 2022			2022
		Land $ - 464,341 464,341 - - - $ 464,341	Structures Investment Properties Under Construction $ - $ - 91,104 38,620 91,104 38,620 - - 1,898 - 1,898 - $ 89,206 $ 38,620	Total $ - 594,065 594,065 - 1,898 1,898 $ 592,167

• a. The investment properties are depreciated using the straight-line method over their estimated useful lives as follows:

Building and structures Building 20 to 60 years Renovation 10 to 25 years

• b. Investment properties under construction were completed and leased in 2023, the lease contract engaged for the finance lease conditions, so the Group transferred substantially all of the risk incidental to the ownership of the assets recognized under lease receivables.

• c. On July 11, 2022 and July 25, 2023, the Group acquired investment properties in Taipei Daan District and Kaohsiung Sanmin District through business combination, and the fair value was NT$703,174 thousand and NT$560,439 thousand, respectively, which was evaluated by independent qualified professional appraisers. The Group’s management team evaluated the fair value of investment properties and the amount was close to the carrying amount.

• d. The fair value of the investment properties of the Group on December 31, 2023 and 2022 was $1,250,000 thousand and $638,620 thousand, respectively. The fair value was not evaluated by independent qualified professional appraisers. The valuation was arrived at by reference to the market evidence of transaction price for similar properties, and the fair value was measured by using Level 3 inputs.

• e. The abovementioned investment properties were leased out for 5 to 17 years. The lessees do not have bargain purchase options to acquire the investment properties at the expiry of the lease periods.

• 42 -

• f. The maturity analysis of lease payments receivable under operating leases of investment properties as of December 31, 2023 was as follows:

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 onwards		December 31	December 31
		2023 $ 24,000 24,000 24,000 14,000 - - $ 86,000	2022 $ 25,906 30,154 30,154 30,241 20,345 85,234 $ 222,034

20. INTANGIBLE ASSETS, NET

Business rights Computer software		**December 31 **	**December 31 **
		2023 $ 28,000 222,853 $ 250,853	2022 $ 28,000 206,756 $ 234,756

• a. Business rights of the Group arose from the transfer of Fengxing Securities Co., Ltd., which was classified as intangible assets with indefinite useful lives and not subject to amortization. As of December 31, 2023, no impairment loss of the business rights.

• b. Movements of intangible assets were as follows:

Balance at January 1, 2023 Additions Amortization Reclassifications Exchange differences, net Balance at December 31, 2023	**For the Year Ended **	**For the Year Ended **	December 31
		2023 $ 234,756 95,525 (81,861) 2,537 (104) $ 250,853	2022 $ 220,723 82,979 (70,489) 1,313 230 $ 234,756

Computer software is amortized on a straight-line basis over its estimated useful life as follows: Computer software 1 to 5 years

• 43 -

21. OTHER ASSETS, NET

Refundable deposits Prepayments Receipts under payment for shares underwriting Others		December 31	December 31
		2023 $ 2,417,719 331,064 4,848 2,551 $ 2,756,182	2022 $ 2,274,603 166,689 93,783 24,146 $ 2,559,221

As of December 31, 2023 and 2022, the government bonds at amortized cost, which amounted to $550,500 thousand, were pledged as collateral to the district court for litigation related to the overdraft of the U.S. dollar clearing account and the guarantee deposits of business operations. These amounts were stated as refundable deposits. Refer to Note 37.

22. DUE TO THE CENTRAL BANK AND OTHER BANKS

Call loans from banks Due to Chunghwa Post Co., Ltd. Due to banks		**December 31 **	**December 31 **
		2023 $ 11,600,000 12,700 2,768 $ 11,615,468	2022 $ 8,650,000 53,687 53 $ 8,703,740

23. FUNDS BORROWED FROM THE CENTRAL BANK AND OTHER BANKS

Funds borrowed from other banks Funds borrowed from other banks (%)		**December 31 **	**December 31 **
		2023 $ 12,482,762 1.78-5.44	2022 $ 8,898,102 1.75-6.77

Refer to Note 37 for information relating to collateral provided for funds borrowed from the Central Bank and other banks.

24. SECURITIES SOLD UNDER REPURCHASE AGREEMENTS

Government bonds Foreign bonds		December 31	December 31
		2023 $ 870,000 4,886,555 $ 5,756,555	2022 $ - - $ -

• 44 -

Foreign bonds denominated in foreign currencies were as follows:

December 31 2023 2022 USD $ 159,171 $ - The details of repurchase price and interest rate at the end of year were as follows: December 31 2023 2022 Government bonds $ 870,954 $ - Foreign bonds 4,956,294 - $ 5,827,248 $ - Government bonds 1.20%-1.22% - Foreign bonds 5.65%-5.85% -			December 31	December 31
		2023 $ 870,954 4,956,294 $ 5,827,248 1.20%-1.22% 5.65%-5.85%		2022 $ - - $ - - -

25. PAYABLES

Notes and checks in clearing Accrued expenses Accounts payable for delivery Interest payable Acceptances Collections payable Factored accounts payable Foreign currency settlement payable Other payables		December 31	December 31
		2023 $ 4,215,282 2,458,632 1,691,473 1,021,982 603,967 60,633 33,345 3,747 880,480 $ 10,969,541	2022 $ 4,276,016 2,130,489 791,988 612,737 544,899 141,778 14,994 5,227 909,711 $ 9,427,839

26. DEPOSITS AND REMITTANCES

Checking Demand Demand savings Time Time savings Remittances		December 31	December 31
		2023 $ 11,983,839 203,927,408 167,281,466 145,375,176 200,320,855 27,027 $ 728,915,771	2022 $ 11,528,762 195,777,314 162,103,208 135,448,254 178,202,610 44,001 $ 683,104,149

• 45 -

27. BANK DEBENTURES

Subordinated financial debenture

	December 31	December 31
	2023 $ 16,500,000	2022 $ 16,500,000

• a. The Bank issued first subordinated financial debenture on December 28, 2015, which was approved under ruling reference No. 10400200460 issued by the Banking Bureau of the FSC on August 26, 2015. Details of the financial subordinated debenture’s issuance are summarized as follows:

• 1) Total approved principal: $1,500,000 thousand.

• 2) Principal issued: $1,500,000 thousand.

• 3) Denomination: $10,000 thousand, issued at par.

• 4) Period: No due date.

• 5) Nominal interest rate: According to the interest rate of one-year time savings deposit of Chunghwa Post Co., Ltd., plus 3.08%.

• 6) Repayment: To be executed according to the issuance.

• 7) The interest will be paid annually from the issuance date.

• b. The Bank issued first no due date non-cumulative subordinated financial debenture, second no due date non-cumulative subordinated financial debenture, third no due date non-cumulative subordinated financial debenture and first no due date non-cumulative subordinated financial debenture on March 28, 2017, May 18, 2017, August 28, 2017 and December 28, 2016, respectively, which were approved under ruling reference No. 10500210950 issued by the Banking Bureau of the FSC on September 2, 2016. Details of the subordinated financial debenture’s issuance are summarized as follows:

• 1) Total approved principal: $3,500,000 thousand.

• 2) Principal issued:

  • a) Debenture I in 2016: $1,500,000 thousand.

  • b) Debenture I in 2017: $1,000,000 thousand.

  • c) Debenture II in 2017: $500,000 thousand.

  • d) Debenture III in 2017: $500,000 thousand.

• 3) Denomination:

  • a) Debenture I in 2016: $10,000 thousand, issued at par.

  • b) Debenture I in 2017: $10,000 thousand, issued at par.

  • c) Debenture II in 2017: $10,000 thousand, issued at par.

  • d) Debenture III in 2017: $10,000 thousand, issued at par.

• 4) Period: No due date.

• 5) Nominal interest rate: According to the interest rate of one-year time savings deposit of Chunghwa Post Co., Ltd., plus 3.08%.

• 6) Repayment: To be executed according to the issuance.

• 46 -

• 7) The interest will be paid annually from the issuance date.

• c. The Bank issued first no due date non-cumulative subordinated financial debenture, fourth no due date non-cumulative subordinated financial debenture and fifth no due date non-cumulative subordinated financial debenture on April 25, 2018, December 5, 2017 and December 27, 2017, respectively, which were approved under ruling reference No. 10600229120 issued by the Banking Bureau of the FSC on September 22, 2017. Details of the subordinated financial debenture’s issuance are summarized as follows:

• 1) Total approved principal: $5,000,000 thousand.

• 2) Principal issued:

  • a) Debenture IV in 2017: $1,350,000 thousand.

  • b) Debenture V in 2017: $2,650,000 thousand.

  • c) Debenture I in 2018: $1,000,000 thousand.

• 3) Denomination:

  • a) Debenture IV in 2017: $10,000 thousand, issued at par.

  • b) Debenture V in 2017: $10,000 thousand, issued at par.

  • c) Debenture I in 2018: $10,000 thousand, issued at par.

• 4) Period: No due date.

• 5) Nominal interest rate: According to the interest rate of one-year time savings deposit of Chunghwa Post Co., Ltd., plus 3.08%.

• 6) Repayment: To be executed according to the issuance.

• 7) The interest will be paid annually from the issuance date.

• d. The Bank issued second no due date non-cumulative subordinated financial debenture on December 18, 2018, which was approved under ruling reference No. 10702156550 issued by the Banking Bureau of the FSC on August 23, 2018. Details of the subordinated financial debenture issuance is summarized as follows:

• 1) Total approved principal: $1,500,000 thousand.

• 2) Principal issued: $1,500,000 thousand.

• 3) Denomination: $10,000 thousand, issued at par.

• 4) Period: No due date.

• 5) Nominal interest rate: According to the interest rate of one-year time savings deposit of Chunghwa Post Co., Ltd., plus 3.08%.

• 6) Repayment: To be executed according to the issuance.

• 7) The interest will be paid annually from the issuance date.

• e. The Bank issued first subordinated financial debenture on December 27, 2021, which was approved under ruling reference No. 1100226929 issued by the Banking Bureau of the FSC on October 12, 2021. Detail of the subordinated financial debenture issuance is summarized as follows:

• 1) Total approved principal: $5,000,000 thousand.

• 47 -

• 2) Principal issued: $5,000,000 thousand.

• 3) Denomination: $10,000 thousand, issued at par.

• 4) Period: 7 years with maturities on December 27, 2028.

• 5) Nominal interest rate: Fixed interest, 1.2%.

• 6) Repayment: The subordinated financial debenture will be paid on the maturity date.

• 7) The interest will be paid annually from the issuance date.

28. OTHER FINANCIAL LIABILITIES

Commercial papers payable Structured commodity principal		**December 31 **	**December 31 **
		2023 $ 3,818,483 3,839,951 $ 7,658,434	2022 $ 2,681,022 3,989,488 $ 6,670,510

29. PROVISIONS

Provision for employee benefits Provision for losses on guarantees Provision for loan commitments Provision for outstanding loss Other provision		December 31	December 31
		2023 $ 833,142 307,263 136,042 29,090 13,023 $ 1,318,560	2022 $ 826,252 275,963 93,388 24,090 17,824 $ 1,237,517

• a. Details of provision for employee benefits were as follows:

Benefit plans Preferential interest on employees’ deposits Other long-term employee benefit liabilities		**December 31 **	**December 31 **
		2023 $ 629,295 162,038 41,809 $ 833,142	2022 $ 631,542 154,244 40,466 $ 826,252

• 1) Defined contribution plans

The Group adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

• 48 -

The amounts of contributions paid by the Group in accordance with the defined contribution plan and recognized in the statements of comprehensive income were $141,950 thousand and $123,946 thousand for the years ended December 31, 2023 and 2022, respectively.

2) Defined benefit plans

The defined benefit plan adopted of the Bank of the Group in accordance with the Labor Standards Act is operated by the government of the ROC. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Bank contributes amounts equal to 10% of total monthly salaries and wages of general employees that applicable to old seniority personnel (excluding appointed managers) to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Bank assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Bank is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Bank has no right to influence the investment policy and strategy.

The amounts included in the consolidated balance sheets in respect of the Bank’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Deficit Net defined benefit liabilities		December 31	December 31
		2023 $ 1,563,251 (933,956) 629,295 $ 629,295	2022 $ 1,576,488 (944,946) 631,542 $ 631,542

Movements in net defined benefit liabilities were as follows:

Present Value of the Defined Benefit Obligation Fair Value of the Plan Assets Balance at January 1, 2022 $ 1,676,309 $ (900,461) Service cost Current service cost 6,191 - Net interest expense (income) 10,477 (5,724) Recognized in profit or loss 16,668 (5,724) Remeasurement Return on plan assets (excluding amounts included in net interest) - (67,225) Actuarial gain - changes in financial assumptions (129,359) - Actuarial loss - experience adjustments 111,189 - Recognized in other comprehensive income (18,170) (67,225) Contributions from the employer - (57,691) Benefits paid (86,155) 86,155 Company paid (12,164) - Balance at December 31, 2022 1,576,488 (944,946)

Net Defined Benefit Liabilities $ 775,848 6,191 4,753 10,944 (67,225) (129,359) 111,189 (85,395) (57,691) - (12,164) 631,542 (Continued)

• 49 -

Present Value of the Defined Benefit Obligation Fair Value of the Plan Assets Service cost Current service cost $ 4,378 $ - Net interest expense (income) 23,647 (14,613) Recognized in profit or loss 28,025 (14,613) Remeasurement Return on plan assets (excluding amounts included in net interest) - (5,322) Actuarial loss - changes in financial assumptions 32,062 - Actuarial loss - experience adjustments 23,426 - Recognized in other comprehensive income 55,488 (5,322) Contributions from the employer - (56,798) Benefits paid (87,723) 87,723 Company paid (9,027) - Balance at December 31, 2023 $ 1,563,251 $ (933,956)

Net Defined Benefit Liabilities $ 4,378 9,034 13,412 (5,322) 32,062 23,426 50,166 (56,798) - (9,027) $ 629,295 (Concluded)

An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit plans was as follows:

Operating expenses	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2023 $ 13,412	2022 $ 10,944

Through the defined benefit plans under the Labor Standards Act, the Bank is exposed to the following risks:

• a) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.

• b) Interest risk: A decrease in the government or corporate bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.

• c) Salary risk: The present value of the defined benefit obligation is calculated using the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

• 50 -

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate(s) Expected rate(s) of salary increase	**December 31 **
	2023 2022 1.25% 1.50% 1.50% 1.50%

If possible reasonable change in each of the significant actuarial assumptions occur and all other assumptions remain constant, the present value of the defined benefit obligation will increase (decrease) as follows:

Discount rate(s) 0.25% increase 0.25% decrease Expected rate(s) of salary increase 0.25% increase 0.25% decrease		December	31
		2023 $ (32,063) $ 32,996 $ 32,325 $ (31,567)	2022 $ (34,495) $ 35,557 $ 34,914 $ (34,037)

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Expected contributions to the plan for the next year Average duration of the defined benefit obligation		December	31
		2023 $ 57,650 8.3 years	2022 $ 58,557 8.9 years

• 3) Preferential interest on employees’ deposits plan

The Group has revised the interest rate of the employees’ savings deposit since December 21, 2014, in accordance with the regulations of the Financial Management Law No. 10110000850 and the Regulations Governing the Preparation of Financial Reports by Public Banks. The estimation of preferential interest on employee’s deposit liabilities was carried out by qualified actuaries.

The amounts included in the consolidated balance sheets in respect of the preferential interest on employee’s deposit plan were as follows:

Present value of the preferential interest on deposits Fair value of plan assets Deficit Provision for preferential interest on deposits		December 31	December 31
		2023 $ 162,038 - 162,038 $ 162,038	2022 $ 154,244 - 154,244 $ 154,244

• 51 -

Movements in preferential interest on employees’ deposits obligation were as follows:

	Present Value	Present Value
		of the
	Preferential				Net Preferential
	Interest on				Interest on
	Employees’				Employees’
		Deposits	Fair Value of		Deposits
	Obligation		the Plan Assets		Liabilities
Balance at January 1, 2022	$ 147,633		$	-	$	147,633
Service cost
Past service cost		11,114		-		11,114
Net interest expense		5,306		-		5,306
Recognized in profit or loss		16,420		-		16,420
Remeasurement
Actuarial loss - experience adjustments		22,508		-		22,508
Recognized in other comprehensive
income		22,508		-		22,508
Company paid		(32,317)		-		(32,317)
Balance at December 31, 2022		154,244		-		154,244
Service cost
Past service cost		6,594		-		6,594
Net interest expense		5,524		-		5,524
Recognized in profit or loss		12,118		-		12,118
Remeasurement
Actuarial loss - demographic
assumptions change		4,244		-		4,244
Actuarial loss - experience adjustments		29,281		-		29,281
Recognized in other comprehensive
income		33,525		-		33,525
Company paid		(37,849)		-		(37,849)
Balance at December 31, 2023	$ 162,038		$	-	$	162,038

An analysis by function of the amounts recognized in profit or loss in respect of the preferential interest on employees’ deposits plan was as follows:

Operating expenses	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2023 $ 12,118	2022 $ 16,420

The actuarial valuations of the present value of preferential interest on employees’ deposits obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate(s) Expected return on employees’ deposits Excess interest rate Preferential deposit withdrawal rate	December 31
	2023 2022 4.00% 4.00% 2.00% 2.00% 2.00% 2.00% 3.25% 3.50%

• 52 -

If possible reasonable change in each of the significant actuarial assumptions occurs and all other assumptions remain constant, the present value of preferential interest on employees’ deposits obligation will increase (decrease) as follows:

Discount rate(s) 0.25% increase 0.25% decrease Preferential deposit withdrawal rate 0.25% increase 0.25% decrease		**December **	**31 **
		2023 $ (3,944) $ 4,116 $ 4,244 $ (4,419)	2022 $ (3,720) $ 3,882 $ 4,013 $ (4,179)

The sensitivity analysis presented above may not be representative of the actual change in the present value of preferential interest on employees’ deposits obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Expected contributions to the plan for the next year Average duration of preferential interest on employees’ deposits obligation		December	31
		2023 $ - 10.3 years	2022 $ - 10.2 years

• 4) Other long-term employee benefit liabilities

Other long-term employee benefits of the Bank of the Group are long-term disability benefits. If the employee does not encounter any casualty due to occupational disaster or accidental death, the Bank will pay the pension according to the seniority.

The amounts of total expense recognized by the Bank in the consolidated statements of comprehensive income for long-term employee benefits in 2023 and 2022 were $1,540 thousand and $4,851 thousand, respectively. As of December 31, 2023 and 2022, other long-term employee benefit liabilities were $41,809 thousand and $40,466 thousand, respectively.

• 53 -

• b. Movements of the provision for losses on guarantees were as follows:

2023

		12-month ECLs	Lifetime ECL	Lifetime ECL		Credit- impaired Financial Assets	Impairment Loss Assessed under IFRS 9	Impairment Loss Assessed under IFRS 9	Difference of Impairment Loss under Regulations	Difference of Impairment Loss under Regulations		Total
Balance at January 1, 2023 Reconciliation from financial instruments recognized at the beginning of the year: Transfers to lifetime ECL Transfers to credit-impaired financial assets Transfers to 12-month ECLs Derecognition of financial assets in current period New financial assets purchased or originated Difference of impairment loss under regulations Foreign exchange differences and other changes Balance at December 31, 2023		$ 193,788 (173) (23) 1,089 (106,096) 140,141 - (11,483) $ 217,243		$ 20,588 173 - (1,089) (15,764) 1,857 - (127) $ 5,638		$ 34,996 - 23 - - 256 - 1,820 $ 37,095		$ 249,372 - - - (121,860) 142,254 - (9,790) $ 259,976		$ 26,591 - - - - - 20,696 - $ 47,287		$ 275,963 - - - (121,860) 142,254 20,696 (9,790) $ 307,263

2022

		12-month ECLs	Lifetime ECL	Lifetime ECL		Credit- impaired Financial Assets	Impairment Loss Assessed under IFRS 9	Impairment Loss Assessed under IFRS 9	Difference of Impairment Loss under Regulations	Difference of Impairment Loss under Regulations		Total
Balance at January 1, 2022 Reconciliation from financial instruments recognized at the beginning of the year: Transfers to lifetime ECL Transfers to 12-month ECLs Derecognition of financial assets in current period New financial assets purchased or originated Difference of impairment loss under regulations Foreign exchange differences and other changes Balance atDecember31,2022		$ 171,880 (40) 495 (115,154) 134,724 - 1,883 $ 193,788		$ 7,782 40 (495) (3,631) 16,140 - 752 $ 20,588		$ 33,375 - - - - - 1,621 $ 34,996		$ 213,037 - - (118,785) 150,864 - 4,256 $ 249,372		$ 84,926 - - - - (58,335) - $ 26,591		$ 297,963 - - (118,785) 150,864 (58,335) 4,256 $ 275,963

In 2023 and 2022, a provision was recognized for bad debts expense, commitments and guarantees.

• 54 -

• c. Movements of the other provision were as follows:

2023

		12-month ECLs	Lifetime ECL	Lifetime ECL		Credit- impaired Financial Assets	Impairment Loss Assessed under IFRS 9	Impairment Loss Assessed under IFRS 9	Difference of Impairment Loss under Regulations	Difference of Impairment Loss under Regulations		Total
Balance at January 1, 2023 Reconciliation from financial instruments recognized at the beginning of the year: Transfers to lifetime ECL Transfers to credit-impaired financial assets Transfers to 12-month ECLs Derecognition of financial assets in current period New financial assets purchased or originated Difference of impairment loss under regulations Foreign exchange differences and other changes Balance at December 31, 2023		$ 8,267 - - - (8,145) 9,788 - (95) $ 9,815		$ 9,214 - - - (9,214) - - - $ -		$ - - - - - - - - $ -		$ 17,481 - - - (17,359) 9,788 - (95) $ 9,815		$ 343 - - - - - 2,865 - $ 3,208		$ 17,824 - - - (17,359) 9,788 2,865 (95) $ 13,023

2022

		12-month ECLs	Lifetime ECL	Lifetime ECL		Credit- impaired Financial Assets	Impairment Loss Assessed under IFRS 9	Impairment Loss Assessed under IFRS 9	Difference of Impairment Loss under Regulations	Difference of Impairment Loss under Regulations		Total
Balance at January 1, 2022 Reconciliation from financial instruments recognized at the beginning of the year: Transfers to lifetime ECL Transfers to credit-impaired financial assets Transfers to 12-month ECLs Derecognition of financial assets in current period New financial assets purchased or originated Difference of impairment loss under regulations Foreign exchange differences and other changes Balance at December 31, 2022		$ 8,629 - - - (8,552) 8,261 - (71) $ 8,267		$ - - - - - 9,214 - - $ 9,214		$ - - - - - - - - $ -		$ 8,629 - - - (8,552) 17,475 - (71) $ 17,481		$ 4,226 - - - - - (3,883) - $ 343		$ 12,855 - - - (8,552) 17,475 (3,883) (71) $ 17,824

In 2023 and 2022, a provision was recognized for bad debts expense, commitments and guarantees.

• 55 -

• d. Movements of the loan commitments were as follows:

2023

		12-month ECLs	Lifetime ECL	Lifetime ECL		Credit- impaired Financial Assets	Impairment Loss Assessed under IFRS 9	Impairment Loss Assessed under IFRS 9	Difference of Impairment Loss under Regulations	Difference of Impairment Loss under Regulations		Total
Balance at January 1, 2023 Reconciliation from financial instruments recognized at the beginning of the year: Transfers to lifetime ECL Transfers to credit-impaired financial assets Transfers to 12-month ECLs Derecognition of financial assets in current period New financial assets purchased or originated Difference of impairment loss under regulations Foreign exchange differences and other changes Balance at December 31, 2023		$ 77,787 (9) (2) 1,021 (24,750) 62,551 - (1,892) $ 114,706		$ 1,648 9 (14) (1,021) (34) 1,390 - (76) $ 1,902		$ 11,897 - 16 - (1,658) - - (16) $ 10,239		$ 91,332 - - - (26,442) 63,941 - (1,984) $ 126,847		$ 2,056 - - - - - 7,139 - $ 9,195		$ 93,388 - - - (26,442) 63,941 7,139 (1,984) $ 136,042

2022

		12-month ECLs	Lifetime ECL	Lifetime ECL		Credit- impaired Financial Assets	Impairment Loss Assessed under IFRS 9	Impairment Loss Assessed under IFRS 9	Difference of Impairment Loss under Regulations	Difference of Impairment Loss under Regulations		Total
Balance at January 1, 2022 Reconciliation from financial instruments recognized at the beginning of the year: Transfers to lifetime ECL Transfers to credit-impaired financial assets Transfers to 12-month ECLs Derecognition of financial assets in current period New financial assets purchased or originated Difference of impairment loss under regulations Foreign exchange differences and other changes Balance at December 31, 2022		$ 45,923 (6) (1) 1,798 (9,148) 41,259 - (2,038) $ 77,787		$ 2,576 6 (18) (1,798) (702) 774 - 810 $ 1,648		$ 12,005 - 19 - (108) - - (19) $ 11,897		$ 60,504 - - - (9,958) 42,033 - (1,247) $ 91,332		$ 4,643 - - - - - (2,587) - $ 2,056		$ 65,147 - - - (9,958) 42,033 (2,587) (1,247) $ 93,388

In 2023 and 2022, a provision was recognized for bad debts expense, commitments and guarantees.

• e. The outstanding loss provision of the Bank were as follows:

Balance at January 1 Recognized Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ 24,090 5,000 $ 29,090	2022 $ 19,090 5,000 $ 24,090

• 56 -

The amount of $5,000 thousand for the outstanding loss provision of the Bank in 2023 and 2022 was recognized for interest expense, please refer to Note 38 for contingent liabilities.

30. OTHER LIABILITIES

Guarantee deposits received Advance receipts Credit transactions Others		**December 31 **	**December 31 **
		2023 $ 680,421 491,200 3,397 33,849 $ 1,208,867	2022 $ 620,271 385,190 240 37,810 $ 1,043,511

31. EQUITY

• a. Capital stock

Ordinary shares

Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		**December 31 **	**December 31 **
		2023 7,770,000 $ 77,700,000 5,226,095 $ 52,260,953	2022 7,770,000 $ 77,700,000 5,015,447 $ 50,154,465

Ordinary shares issued at par value of $10. Each share has one voting right and the right to receive dividends.

As of January 1, 2022, the Bank had issued ordinary shares totaling $45,385,205 thousand, divided into 4,538,521 thousand ordinary shares at par value of $10 per share. In July 2022, the Bank transferred $2,269,260 thousand of unappropriated earnings to ordinary shares, consisting of 226,926 thousand ordinary shares at par value of $10 per share. In June 2022, the board of directors of the Bank resolved to issue 250,000 thousand ordinary shares with a par value of $10, for a consideration of $11.75 per share issued at premium. On September 22, 2022, the above transaction was approved under ruling reference No. 1110356507 issued by the Banking Bureau of the FSC and the subscription base date was determined as at December 16, 2022. As of December 31, 2022, the Bank had increased ordinary shares to $50,154,465 thousand, divided into 5,015,447 thousand ordinary shares at $10 par value per share.

In July 2023, the Bank transferred $2,106,488 thousand of unappropriated earnings to ordinary shares, consisting of 210,649 thousand ordinary shares at par value of $10 per share. As of December 31, 2023, the Bank had increased ordinary shares to $52,260,953 thousand, divided into 5,226,095 thousand ordinary shares at $10 par value per share.

• 57 -

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital* Issuance of ordinary shares Issuance of ordinary shares - employee share options Expired employee share options May be used to offset a deficit only Share of changes in capital surplus of associates Conversion of bank debentures’ components		December 31	December 31
		2023 $ 1,381,133 115,707 6,874 16,813 7,729 $ 1,528,256	2022 $ 1,381,133 115,707 6,874 16,813 7,729 $ 1,528,256

• Such capital surplus may be used to offset a deficit; in addition, when the Bank has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Bank’s capital surplus and to once a year).

c. Appropriation of earnings and dividend policy

Under the Bank’s dividend policy as set forth in the Articles, where the Bank made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve of 30% of the remaining profit, however, provided that the legal reserve amounts to the total paid-in capital, the legal reserve need not be set aside, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Bank’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for the distribution of dividends and bonuses to shareholders. For the policies on the distribution of employees’ compensation and remuneration of directors, refer to employees’ compensation and remuneration of directors in Note 32.

The appropriation of earnings mentioned above shall be retained by the board of directors in accordance with the changing operating environment, operating and investment needs. When dividends are declared, cash dividends must be at least 10% of total dividends declared.

An appropriation of earnings to the legal reserve shall be made until the legal reserve equals the Bank’s paid-in capital. The legal reserve may be used to offset deficits. If the Bank has no deficit and the legal reserve has exceeded 25% of the Bank’s paid-in capital, the excess may be transferred to capital or distributed in cash.

In addition, the Banking Act limits the appropriation of cash dividends to 15% of the Bank’s paid-in capital. But when the legal reserve equals the Bank’s paid-in capital, this 15% limit may be waived. If the ratio of own capital to risky assets does not meet the standards set by the competent authority, the appropriation of earnings in cash or other assets should be subject to the restrictions or prohibitions of the relevant regulations.

Under related regulations, a special reserve is appropriated from the balance of the retained earnings at an amount from the net income and unappropriated earnings that is equal to the debit balance of accounts in the shareholders’ equity section. Afterward, if there is any reversal of the decrease in shareholders’ equity, the Bank is allowed to appropriate retained earnings from the reversal amount.

• 58 -

According to Order No. 1090150022 issued by the FSC, Order No. 10901500221 issued by the FSC and International Financial Reporting Standards and “Q&A on the application of the reference to the special reserve following adoption of IFRSs”, retained earnings should be appropriated to or reversed from a special reserve by the Bank. Afterward, if there is any reversal of the decrease in other shareholders’ equity, the Bank is allowed to appropriate retained earnings from the reversal amount. According to Order No. 10510001510 issued by the FSC, a special reserve should be appropriated between 0.5% and 1% of net income after tax when banks appropriate earnings of 2016 through 2018. After that, under No. 10802714560 issued by the FSC, the Bank no longer uses special reserve to protect the right of its employee in response to the developments of financial technology since 2019. From the fiscal year of 2019, the Bank can reverse the amount of expenditure of employees’ transfer from financial technology development within the amount of the abovementioned special reserve from 2016 to 2018.

The appropriations of earnings for 2022 and 2021 approved in the shareholders’ meetings on May 15, 2023 and May 17, 2022, respectively, as follows:

Legal reserve Special reserve Reverse a special reserve Cash dividends Share dividends	Appropriation of Earnings 2022 2021 $ 1,619,325 $ 1,463,994 159,684 - (565) (601) 1,504,634 1,134,630 2,106,488 2,269,260	Dividends Per Share (NT$)
		2022 2021 $ - $ - - - - - 0.30 0.25 0.42 0.50

The appropriations of earnings for 2023 which had been proposed by the Bank’s board of directors on February 23, 2024 were as follows:

	Appropriation	Dividends Per	Dividends Per
	of Earnings	Share	(NT$)
Legal reserve	$ 2,080,035	$	-
Reverse a special reserve	(160,454)		-
Cash dividends	2,090,438		0.40
Share dividends	2,926,613		0.56

The appropriations of earnings for 2023 are subject to the resolution of the shareholders’ meeting to be held on May 24, 2024.

• 59 -

d. Other equity items

Exchange Differences on Translating the Financial Statements of Foreign Operations Unrealized (Losses) Gains on Financial Assets at FVTOCI Balance at January 1, 2023 $ (37,875) $ (121,809) Recognized for the year Unrealized gains (losses) Equity instruments - 1,106,913 Debt instruments - 989,230 Net remeasurement of loss allowance - debt instruments - 6,821 Share from associates accounted for using the equity method - 1,597 Cumulative unrealized gain of equity instruments transferred to retained earnings due to disposal - (179,049) Cumulative translation adjustment Exchange differences for current period (53,275) - Income tax related to other comprehensive income - (15,696) Balance at December 31, 2023 $ (91,150) $ 1,788,007 Balance at January 1, 2022 $ (85,087) $ 1,393,132 Recognized for the year Unrealized losses Equity instruments - (131,867) Debt instruments - (1,387,605) Net remeasurement of loss allowance - debt instruments - (2,868) Share from associates accounted for using the equity method - 13,076 Cumulative unrealized gain of equity instruments transferred to retained earnings due to disposal - (2,419) Cumulative translation adjustment Exchange differences for current period 47,212 - Income tax related to other comprehensive income - (3,258) Balance at December 31, 2022 $ (37,875) $ (121,809)

Total $ (159,684) 1,106,913 989,230 6,821 1,597 (179,049) (53,275) (15,696) $ 1,696,857 $ 1,308,045 (131,867) (1,387,605) (2,868) 13,076 (2,419) 47,212 (3,258) $ (159,684)

• 60 -

32. NET PROFIT FROM CONTINUING OPERATIONS

Net profit from continuing operations was attributable to:

• a. Net interest

Interest revenue Notes discounted and loans Due from banks and call loans to the other banks Investment in securities Installment plan Rental Revolving interests of credit cards Securities purchased under resale agreements Accounts receivable factoring without recourse Others Interest expense Deposits Financial debentures Funds borrowed from the Central Bank and other banks Due to the Central Bank and other banks Securities sold under repurchase agreements Structured instruments Lease liabilities Others	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2023 $ 16,516,632 521,589 3,008,462 496,630 524,841 32,070 133,805 15,825 1,232 21,251,086 (8,381,385) (574,016) (584,745) (2,747) (75,861) (259,880) (24,921) (22,754) (9,926,309)	2022 $ 12,524,076 334,880 1,883,674 353,412 369,907 32,326 71,148 14,312 772 15,584,507 (3,874,478) (513,943) (274,599) (1,008) (4,806) (93,708) (29,732) (17,251) (4,809,525)

$ 11,324,777 $ 10,774,982

b. Service fee income, net

Service fee income Insurance brokering Securities brokering Trust business Loans Guarantee Others Service fee expense Commission Cross-bank transactions Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ 1,176,570 311,953 1,085,558 1,090,825 280,589 427,525 4,373,020 (220,040) (37,293) (179,074) (436,407) $ 3,936,613	2022 $ 802,715 262,679 938,378 935,503 244,788 412,734 3,596,797 (87,242) (37,164) (155,582) (279,988) $ 3,316,809

• 61 -

The Group provides custody, trust, investment management and consultancy services to third parties, so the Group’s activities involve the planning, management and trading decisions of financial instruments. For the trust funds or investment portfolios that are managed and used on behalf of the trustee, the independent accounting reports and preparation of financial statements for internal management purposes are not included in the Group’s consolidated financial statements.

• c. Gain on financial assets and liabilities at FVTPL

Realized profit or loss Commercial papers Shares Beneficiary certificates Derivative financial instruments Corporate bonds Other Valuation Commercial papers Shares Beneficiary certificates PEM Group policy assets Derivative financial instruments Corporate bonds	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ 295,782 358,313 13,017 1,227,824 8,539 - 1,903,475 3,533 36,372 101,170 19,096 (1,018,071) (1,279) (859,179) $ 1,044,296	2022 $ 181,327 91,167 (33,100) 898,485 945 7,897 1,146,721 14,098 (183,309) (184,699) (20,112) 199,984 (3,145) (177,183) $ 969,538

• 1) For the years ended December 31, 2023 and 2022, realized profit or loss of financial assets and liabilities at FVTPL included gains on disposal amounted to $1,365,611 thousand and $815,910 thousand, dividend income amounted to $44,425 thousand and $29,040 thousand and interest revenue amounted to $493,439 thousand and $301,771 thousand, respectively.

• 2) Net income from exchange rate commodities includes realized and unrealized gains and losses on exchange forward contracts, cross-currency options and cross-currency swaps. The translation gains or losses included net income from exchange rate commodities when significant assets and liabilities denominated in foreign currencies classified as at FVTPL are not designated for hedging relationship.

• d. Realized gains on financial assets at fair value through other comprehensive income

Dividend income Gain on disposal of bonds	For the Year Ended	For the Year Ended	December 31
		2023 $ 271,857 105,146 $ 377,003	2022 $ 239,900 67 $ 239,967

• 62 -

e. (Impairment losses) reversal of impairment losses on financial assets

Investments in debt instruments at FVTOCI Financial assets at amortized cost	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ (6,821) 6,286 $ (535)	2022 $ 2,868 (13,900) $ (11,032)

f. Other non-interest gains (losses), net

Gains (losses) on disposal of properties and equipment Others Provision for bad debts expense, commitments and guarantees Bad debts on receivables Bad debts on notes discounted and loans Losses (reversal of losses) on guarantees Loan commitments Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2023 2022 $ 823 $ (405) 36,593 67,993 $ 37,416 $ 67,588 **For the Year Ended December 31 **
		2023 $ 237,156 1,361,659 31,300 42,662 (4,800) $ 1,667,977	2022 $ 273,804 969,901 (22,000) 25,938 4,807 $ 1,252,450

g. Provision for bad debts expense, commitments and guarantees

h. Employee benefits expenses

Salaries Labor and health insurance Pension expense Other employee expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ 4,041,742 267,813 155,362 220,086 $ 4,685,003	2022 $ 3,898,509 258,862 134,890 211,900 $ 4,504,161

• 63 -

• i. Employees’ compensation and remuneration of directors

According to the Articles of Incorporation of the Bank, the Bank accrues employees’ compensation and remuneration of directors at rates of 0.5%-3% and no higher than 2.5%, respectively, of net profit before income tax, employees’ compensation and remuneration of directors. The employees’ compensation and the remuneration of directors for the years ended December 31, 2023 and 2022, which were approved by the Bank’s board of directors on February 23, 2024 and 2023 were as follows:

Accrual rate

Employees’ compensation Remuneration of directors Amount Employees’ compensation Remuneration of directors	For the Year Ended	For the Year Ended	December 31
	2023 0.75% 2.50% **For the Year Ended **		2022 0.75% 2.50% **December 31 **
		2023 $ 62,490 $ 208,301	2022 $ 50,173 $ 167,245

If there is a change in the amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in the accounting estimate.

There was no difference between the actual amounts of employee’s compensation and remuneration of directors paid and the amounts recognized in the consolidated financial statements for the years ended December 31, 2022 and 2021.

Information on the employees’ compensation and remuneration of directors resolved by the Bank’s board of directors is available at the Market Observation Post System website of the Taiwan Stock Exchange.

• j. Depreciation and amortization expenses

Properties and equipment Investment properties Right-of-use assets Intangible assets	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2023 $ 211,087 5,291 178,529 81,861 $ 476,768	2022 $ 207,413 1,898 158,232 70,489 $ 438,032

• 64 -

k. Other selling and administrative expenses

Taxes Professional service Insurance Entertainment Donation Advertising Postage Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ 1,029,527 148,690 201,759 104,580 122,222 81,851 75,633 670,112 $ 2,434,374	2022 $ 829,494 258,541 191,457 103,931 95,739 51,204 77,202 614,310 $ 2,221,878

33. INCOME TAXES RELATING TO CONTINUING OPERATIONS

• a. Income tax recognized in profit or loss

Major components of income tax expense were as follows:

For the Year Ended December 31 2023 2022 Current tax In respect of the current year $ 1,527,661 $ 1,100,790 Income tax on unappropriated earnings 409 633 Adjustments for prior year (2,381) 3,552 Deferred tax In respect of the current year (113,574) 151,463 Income tax expense recognized in profit or loss $ 1,412,115 $ 1,256,438 A reconciliation of accounting profit and income tax expense was as follows: For the Year Ended December 31 2023 2022 Profit before tax from continuing operations $ 8,233,549 $ 6,600,643 Income tax expense calculated at the statutory rate $ 1,646,709 $ 1,320,128 Non-deductible expenses in determining taxable income 5,567 26,763 Tax-exempt income (269,394) (102,016) Income tax on unappropriated earnings 409 633 Adjustments for prior years’ tax (2,381) 3,552 Unrecognized deductible temporary differences (712) 3,231 Basic tax payable difference 26,891 - Effect of different tax rates of group entities operating in other jurisdictions 5,026 4,147 Income tax expense recognized in profit or loss $ 1,412,115 $ 1,256,438	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2023 $ 8,233,549 $ 1,646,709 5,567 (269,394) 409 (2,381) (712) 26,891 5,026 $ 1,412,115	2022 $ 6,600,643 $ 1,320,128 26,763 (102,016) 633 3,552 3,231 - 4,147 $ 1,256,438

• 65 -

• b. Income tax (expense) benefit recognized in other comprehensive income

Deferred tax In respect of the current year Fair value changes of financial assets at FVTOCI Remeasurement of defined benefit plans Total income tax benefit (expense) expense recognized in other comprehensive income	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ (15,696) 16,738 $ 1,042	2022 $ (3,258) (12,578) $ (15,836)

c. Current tax assets and liabilities

Current tax assets Income tax receivable Current tax liabilities Income tax payable		December 31	December 31
		2023 $ 2 $ 831,989	2022 $ - $ 554,448

d. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2023

Deferred tax assets Temporary differences Property, plant and equipment Unrealized losses on structure notes payment Defined benefit obligations Allowance for doubtful accounts Others Deferred tax liabilities Temporary differences Provision for land value increment tax	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income Closing Balance $ 3,644 $ - $ - $ 3,644 254,163 (3,819) - 250,344 165,250 (15,360) 16,738 166,628 304,502 130,052 - 434,554 (35,506) 2,701 (15,696) (48,501) $ 692,053 $ 113,574 $ 1,042 $ 806,669 $ 109,486 $ - $ - $ 109,486

• 66 -

For the year ended December 31, 2022

Deferred tax assets Temporary differences Property, plant and equipment Unrealized losses on structure notes payment Defined benefit obligations Allowance for doubtful accounts Others Deferred tax liabilities Temporary differences Provision for land value increment tax	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income Closing Balance $ 3,644 $ - $ - $ 3,644 250,140 4,023 - 254,163 192,024 (14,196) (12,578) 165,250 396,170 (91,668) - 304,502 17,374 (49,622) (3,258) (35,506) $ 859,352 $ (151,463) $ (15,836) $ 692,053 $ 109,486 $ - $ - $ 109,486

e. Unused loss carryforwards and deductible temporary differences for which no deferred tax assets have been recognized in the consolidated balance sheets

Deductible temporary differences Share of subsidiaries Allowance for doubtful accounts Unrealized evaluation (gain) loss Unrealized expenses	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2023 $ (146,317) 344,853 - 2,037 $ 200,573	2022 $ (68,972) 323,998 (4,478) - $ 250,548

• f. Income tax assessments

The income tax returns of Taichung Commercial Bank Co., Ltd., Taichung Bank Insurance Brokers Co., Ltd., Taichung Bank Leasing Corporation Limited, and Taichung Commercial Bank Securities Co., Ltd. through 2021 have been assessed and approved by the tax authorities.

34. EARNINGS PER SHARE

Unit: NT$ Per Share

Basic earnings per share Diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2023 $ 1.31 $ 1.30	2022 $ 1.07 $ 1.07

• 67 -

The weighted average number of shares outstanding used for the earnings per share computation was adjusted retrospectively for the issuance of bonus shares. The basic and diluted earnings per share adjusted retrospectively for the year ended December 31, 2022 were as follows:

	Unit:	NT$ Per Share
	Before	After
	Retrospective	Retrospective
	Adjustment	Adjustment
Basic earnings per share	$ 1.12	$ 1.07
Diluted earnings per share	$ 1.12	$ 1.07

The earnings and weighted average number of ordinary shares outstanding used in the computation of earnings per share were as follows:

Net profit for the period

Earnings used in the computation of earnings per share	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2023 $ 6,821,434	2022 $ 5,344,205

The weighted average number of ordinary shares outstanding (in thousands of shares) was as follows:

Weighted average number of ordinary shares used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares Employees’ compensation or bonuses issued to employees Weighted average number of ordinary shares used in the computation of diluted earnings per share	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2023 5,226,095 4,472 5,230,567	2022 4,977,015 4,565 4,981,580

The Group may settle the compensation or bonuses paid to employees in cash or shares; therefore, the Group assumes that the entire amount of the compensation or bonuses will be settled in shares, and the resulting potential shares will be included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

35. SHARE-BASED PAYMENT ARRANGEMENTS

According to the Company Act, the Bank remains 15% of shares as provision for subscription by qualified employees when there is issuance of ordinary shares for cash. On October 17, 2022 qualified employees were granted 37,500 thousand options. Each option entitles the holder with the right to subscribe for one ordinary share of the Bank. The options were granted at an exercise price of $11.75.

• 68 -

Information on employee share options was as follows:

Balance at January 1 Options granted Options exercised Options expired Balance at December 31 Options exercisable, end of the year Weighted-average fair value of options granted ($)	For the Year Ended December 31, 2022
	Number of Options (In Thousands of Units) Weighted- average Exercise Price ($) - $ - 37,500 11.75 (37,415) 11.75 (85) 11.75 - - $ 0.98

Options granted by Taichung Commercial Bank Co., Ltd. in October 2022 are priced using the Black-Scholes pricing model, and the inputs to the model are as follows:

2022 Grant-date share price $12.65 Exercise price $11.75 Volatility 17.76% Duration 57 days Dividend yield 0% Risk-free interest rate 1.01%

Compensation costs recognized were $36,750 thousand for the years ended December 31, 2022.

36. RELATED-PARTY TRANSACTIONS

Related Party China Man-Made Fiber Corporation Hsu Tian Investment Co., Ltd. Kuei-Fong Wang (Note 2) Chien-An Shin (Notes 2 and 3) Te-Wei Chia (Note 2) Jinyi Li, Hsin-Chang Tsai, Li-Woon Lim, Pi-Ta Chen (Note 2) Hsueh-Hsuan Liao (Note 3), Shih-Yi Chiang (Note 2), Ying-Hui Wu (Note 2) Wei-Liang Lin (Note 1), Hsin-Ching Chang, Ming-Hsiung Huang, Siou-Huei Ye, Li-Tzu Lai (Note 4)	Relationship with the Group
	Parent company of the Bank Legal director of the Bank Natural director of the Bank Vice chairman of the Bank General manager and legal representatives of the Bank’s director Independent director of the Bank Legal representatives of the Bank’s director Legal representatives of the Bank’s director

(Continued)

• 69 -

Relationship with the Group

Related Party

23 persons including the Chairman and general manager’s spouse

22 persons including the director of the Board’s spouse

7 persons including Kaiyu Lin

19 persons including associate general manager’s spouse

112 persons including Hung-Lung Tsai 12 persons including Kuei-Hsien Wang

Taichung Bank Securities Investment Trust Co., Ltd.

Pan Asia Chemical Co., Ltd. China Fiber Investment Co., Ltd. Pan Asia Investment Co., Ltd. Taichung Commercial Bank Cultural and Educational Foundation, Taichung Commercial Bank Workers’ Welfare Commission Deh Hsing Investment Co., Ltd. Iolite Company Limited (Note 5) Hammock (Hong Kong) Company Limited Hebei Hanoshi Contact Lens Co., Ltd. Chou Chin Industrial Co., Ltd. Chou Chang Co., Ltd. Greenworld Food Co., Ltd. Nan Chung Petrochemical Corporation Xiang Fong Development Co., Ltd. (Note 5) Reliance Securities Co., Ltd. Sheen Ren Knitting Factory Co., Ltd. Ta Fa Investment Co., Ltd. Formosa Imperial Wineseller Corp. Yu Hui Limited Formosawine Vintners Corporation Bomi International Co., Ltd. Shanghai Bomi Food Co., Ltd. Noble House Global Limited Noble House Glory Corporation Wang Wanjin Culture and Education Foundation Chaoqing Investment Co., Ltd. Sheng Yuan Ze Investment Limited Company Pan Hsu Investment Co., Ltd. Precious Wealth International Limited Storm Model Management Co., Ltd. Bonwell Praise Co., Ltd. (Note 5) Chen Teng Public Relations (Shanghai) Company (Note 5) Shanghai Bomi Consulting management Limited Company Shuo-Jung Co., Ltd. Shanghai Nianjia Culture Communication Co., Ltd. (Note 5)

The spouses and second-degree relatives, etc. of the Bank’s chairman and general managers The spouses and children of the Bank’s directors

Key management personnel The spouses and children of the Bank’s associate general managers

Managers of the Bank The spouses and children of the parent company’s chairman and general managers Associate accounted for using the equity method

Related party in substance Related party in substance Related party in substance Related party in substance

Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance Related party in substance

(Continued)

• 70 -

Relationship with the Group

Related Party

General Pride Enterprise Co., Ltd. Related party in substance Fengqi Investment Co., Ltd. Related party in substance Reliance Kuan Chun Venture Capital Co., Ltd. Related party in substance Reliance Securities Investment Consultant Co., Ltd. Related party in substance Reliance Kuan Chun Venture Management Consulting Co., Related party in substance Ltd. Shen Ching Investment Co., Ltd. Related party in substance Lei Fu Life Business Co., Ltd. Related party in substance Chi Da Investment Co., Ltd. Related party in substance Syu Yi Investment Co., Ltd. Related party in substance Yao Shang Investment Co., Ltd. Related party in substance China Man-Made Fiber Entertainment Co., Ltd. Related party in substance Dr. Brain Lab Technology Co., Ltd. Related party in substance Bang-Yu Co., Ltd. Related party in substance

(Concluded)

• Note 1: Wei-Liang, Lin, the legal representative of Hsu Tian Investment Co., Ltd., was discharged on February 9, 2023.

• Note 2: 9 directors (including 4 independent directors) were elected at the shareholders’ meeting of the Bank on May 15, 2023. The followings were respectively elected as directors: Kuei-Fong Wang and Chien-An Shih (legal representative of Hsu Tian Investment Co., Ltd.), Te-Wei Chia (legal representative of Hsu Tian Investment Co., Ltd.), Shih-Yi Chiang (legal representative of Hsu Tian Investment Co., Ltd.), Ying-Hui Wu (legal representative of Hsu Tian Investment Co., Ltd.), Jin-Yi Lee (independent directors of the Bank), Li-Woon Lim (independent directors of the Bank), Hsin-Chang Tsai (independent directors of the Bank) and Pi-Ta Chen (independent directors of the Bank).

• Note 3: Chien-An, Shih, the legal representative of Hsu Tian Investment Co., Ltd., was resigned on December 14, 2023, and designated Hsueh-Hsuan, Liao on December 28, 2023.

• Note 4: Li-Tzu, Lai, the legal representative of Hsu Tian Investment Co., Ltd., was stepped down on May 15, 2023.

• Note 5: Iolite Company Limited, Xiang Fong Development Co., Ltd., Bonwell Praise Co., Ltd., Chen Teng Public Relations (Shanghai) Company, Shanghai Nianjia Culture Communication Co., Ltd., was sold on January 31, September 30 and December 11, 2023, respectively.

• 71 -

Significant transactions between the Group and its related parties:

• a. Loans

For the year ended December 31, 2023

Balance at Numbers/ Name Highest Balance End of the Year Employees’ consumption loans 10 $ 4,952 $ 3,007 Loans on mortgage 43 280,456 206,484 Other loans Huang OO 1,159 1,020 Huang OO 2,224 1,463 Ye OO 11,000 11,000 Lee OO 2,133 1,995 Hsu OO 2,200 - Chen OO 40,000 40,000 Yang OO 4,465 4,119 Lin OO 229 138 Wang OO 3,000 3,000 Fang OO 9,716 3,310 Chang OO 1,726 1,656 Liang OO 525 403 Liao OO 5,500 5,500 Chang OO 2,500 2,500 Chiu OO 2,317 2,009

Compliance The Difference Between Related and Performing Loans Overdue Loans Interest Revenue Collateral Non-related Party $ 3,007 $ - $ 83 Credit loans None 206,484 - 3,845 Real estate None 1,020 - 21 Real estate None 1,463 - 32 Real estate None 11,000 - 219 Real estate None 1,995 - 42 Real estate None - - 49 Real estate None 40,000 - 816 Real estate None 4,119 - 93 Real estate None 138 - - Real estate None 3,000 - 74 Real estate None 3,310 - 136 Real estate None 1,656 - 40 Real estate None 403 - 9 Real estate None 5,500 - 132 Real estate None 2,500 - 56 Real estate None 2,009 - 41 Real estate None

For the year ended December 31, 2022

Balance at Numbers/ Name Highest Balance End of the Year Employees’ consumption loans 11 $ 5,272 $ 3,652 Loans on mortgage 40 264,509 195,517 Other loans Zeng OO 101 62 Lee OO 2,273 2,133 Zeng OO 4,140 - Liu OO 322 - Tsai OO 5,000 - Lin OO 321 229 Wang OO 6,000 3,000 Chen OO 80,000 40,000 Fang OO 35,132 11,716 Lin OO 16,400 15,200 Chang OO 1,750 1,726 Tsai OO 114 - Liang OO 646 525 Ye OO 22,000 11,000 Huang OO 1,298 1,159 Wang OO 6,120 - Chiu OO 2,627 2,317 Hsu OO 2,200 2,200 Huang OO 15,000 2,224 Chang OO 2,500 2,500

Compliance The Difference Between Related and Performing Loans Overdue Loans Interest Revenue Collateral Non-related Party $ 3,652 $ - $ 65 Credit loans None 195,517 - 2,348 Real estate None 62 - 2 Real estate None 2,133 - 34 Real estate None - - 63 Real estate None - - - Real estate None - - 2 Real estate None 229 - - Real estate None 3,000 - 60 Real estate None 40,000 - 678 Real estate None 11,716 - 190 Real estate None 15,200 - 281 Real estate None 1,726 - 12 Real estate None - - 1 Real estate None 525 - 8 Real estate None 11,000 - 165 Real estate None 1,159 - 18 Real estate None - - 28 Real estate None 2,317 - 34 Real estate None 2,200 - 38 Real estate None 2,224 - 108 Real estate None 2,500 - 44 Real estate None

According to Articles 32 and 33 of the Banking Act, credit loans cannot be made to related party except loans to government and consumers; secured loans to related party shall be provided with adequate collateral, and the terms of credits to related party should be similar to those for third parties.

• 72 -

b. Deposits

Taichung Bank Securities Investment Trust Co., Ltd. Taichung Commercial Bank Workers’ Welfare Commission China Man-Made Fiber Corporation Reliance Securities Co., Ltd. Taichung Commercial Bank Cultural and Educational Foundation Formosa Imperial Wineseller Corp. Greenworld Food Co., Ltd. Pan Asia Chemical Co., Ltd. Chou Chin Industrial Co., Ltd. Chou Chang Co., Ltd. Pan Hsu Investment Co., Ltd. Yu Hui Limited Hsu Tian Investment Co., Ltd. Shuo-Jung Co., Ltd. Deh Hsing Investment Co., Ltd. Pan Asia Investment Co., Ltd. Syu Yi Investment Co., Ltd. Yao Shang Investment Co., Ltd. Chi Da Investment Co., Ltd. Fengqi Investment Co., Ltd. Lei Fu Life Business Co., Ltd. China Man-Made Fiber Entertainment Co., Ltd. Others	For the Year Ended December 31, 2023	For the Year Ended December 31, 2023
	Ending Balance Interest Ratio $ 93,189 0.00-1.58 139,904 0.01-5.63 98,070 0.01-1.30 10,255 0.58-1.34 8,240 0.01-1.59 7 0.58 3,941 0.58 28,440 0.01-0.58 108,455 0.01-0.58 1,957 0.01 2 0.01 4 0.01 36,287 0.01-1.30 624 0.01 34,032 0.58-1.30 7 0.01 6,417 0.58 6,417 0.58 6,417 0.58 4 0.58 3,712 0.58 1 0.58 435,600 0.00-6.20 $ 1,021,982	Interest Expense $ 1,055 8,565 350 120 126 - 15 206 14 - - - 7 - 162 - 26 26 26 - 6 - 7,399 $ 18,103

• 73 -

Taichung Bank Securities Investment Trust Co., Ltd. Taichung Commercial Bank Workers’ Welfare Commission China Man-Made Fiber Corporation Reliance Securities Co., Ltd. Taichung Commercial Bank Cultural and Educational Foundation Formosa Imperial Wineseller Corp. Greenworld Food Co., Ltd. Pan Asia Chemical Co., Ltd. Chou Chin Industrial Co., Ltd. Chou Chang Co., Ltd. Pan Hsu Investment Co., Ltd. Yu Hui Limited Hsu Tian Investment Co., Ltd. Shuo-Jung Co., Ltd. Deh Hsing Investment Co., Ltd. Pan Asia Investment Co., Ltd. Syu Yi Investment Co., Ltd. Yao Shang Investment Co., Ltd. Chi Da Investment Co., Ltd. Fengqi Investment Co., Ltd. Lei Fu Life Business Co., Ltd. China Man-Made Fiber Entertainment Co., Ltd. Others	For the Year Ended December 31, 2022	For the Year Ended December 31, 2022
	Ending Balance Interest Ratio $ 98,124 0.00-1.09 149,903 0.01-5.38 126,235 0.01-1.05 10,135 0.46-0.97 8,209 0.01-1.47 181 0.46 3,772 0.46 34,408 0.01-0.46 10,038 0.01-0.46 - 0.01 8 0.01 4 0.01 14,438 0.01-1.05 5,488 0.01 8,237 0.17-1.05 7 0.01 4,178 0.46 4,178 0.46 4,178 0.46 5 0.46 1,561 0.46 1 0.46 360,005 0.00-5.38 $ 843,293	Interest Expense $ 634 7,523 104 78 91 - 5 46 9 - - - 4 2 93 - 5 5 5 - 3 1 4,482 $ 13,090

The interest rates did not significantly differ from those with ordinary customers except for the interest rates on the Bank’s employee deposits at 5.63% and 5.38% as of December 31, 2023 and 2022, respectively.

c. Financial debentures

The Bank issued, first no due date non-cumulative subordinated financial debenture on 2015, first no due date non-cumulative subordinated financial debenture on 2016, first no due date non-cumulative subordinated financial debenture, second no due date non-cumulative subordinated financial debenture, third no due date non-cumulative subordinated financial debenture, fourth no due date non-cumulative subordinated financial debenture and fifth no due date non-cumulative subordinated financial debenture on 2017, first no due date non-cumulative subordinated financial debenture and second no due date non-cumulative subordinated financial debenture on 2018, and entrusted Concord Securities Co., Ltd. and KGI Securities Co., Ltd. as financial advisors for the issuance and collection of bonds.

• 74 -

As of December 31, 2023, the related party subscribed for the financial debentures issued by the Bank through underwriting brokers as follows:

Counterparty	Subscription	Period
Hsu Tian Investment Co.,	$ 4,000,000	First no due date non-cumulative subordinated financial
Ltd.		debenture in 2015, first no due date non-cumulative
		subordinated financial debenture in 2016, first no
		due date non-cumulative subordinated financial
		debenture and fifth no due date non-cumulative
		subordinated financial debenture in 2017, first no
		due date non-cumulative subordinated financial
		debenture, second no due date non-cumulative
		subordinated financial debenture in 2018
Others	3,740,000	First no due date non-cumulative subordinated financial
		debenture in 2015, first no due date non-cumulative
		subordinated financial debenture in 2016, first no
		due date non-cumulative subordinated financial
		debenture, second no due date non-cumulative
		subordinated financial debenture, third no due date
		non-cumulative subordinated financial debenture,
		fourth no due date non-cumulative subordinated
		financial debenture, fifth no due date non-cumulative
		subordinated financial debenture in 2017, first no
		due date non-cumulative subordinated financial
		debenture and second no due date non-cumulative
		subordinated financial debenture in 2018

The interest payables on the financial debentures of the above-mentioned related parties were $56,156 thousand and $51,852 thousand on December 31, 2023 and 2022. The interest expenses were $346,212 thousand and $306,218 thousand in 2023 and 2022, respectively.

• d. Service fee income

Taichung Bank Securities Investment Trust Co., Ltd.	For the Year Ended	For the Year Ended	December 31
		2023 $ 1,627	2022 $ 2,473

The above amounts are for the promotion and channel revenue, etc. The price of transactions with its related party is similar to those of the non-related party.

• e. Other expenses

Greenworld Food Co., Ltd.	For the Year Ended	For the Year Ended	December 31
		2023 $ 1,965	2022 $ 1,326

The above amounts are other business expenses. The price of transactions with its related party is similar to those of the non-related party.

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f. Lease arrangements

Line Item Related Party Category/Name Lease liabilities Related party in substance Yu Hui Limited Related party in substance General Pride Enterprise Co., Ltd. Related Party Category/Name Interest expense Related party in substance Yu Hui Limited General Pride Enterprise Co., Ltd.		December	31
	2023 $ 3,582 $ 179 For the Year Ended		2022 $ 6,582 $ 531 December 31
		2023 $ 107 $ 8	2022 $ 170 $ 8

The lease period and rent payment are in accordance with the contract. The general lease period is 2 to 5 years, and the payment is mainly made on a monthly basis.

• g. Refundable deposits

Yu Hui Limited.	For the Year Ended	For the Year Ended	December 31
		2023 $ 544	2022 $ 544

h. Compensation of directors and key management personnel

For the years ended December 31, 2023 and 2022, the amounts of compensation of directors and key management personnel were as follows:

Short-term benefits Post-employee benefits Other long-term benefits	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2023 $ 392,604 13,745 8 $ 406,357	2022 $ 331,503 1,119 4 $ 332,626

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37. PLEDGED ASSETS

Call loans to other banks - time deposits Restricted assets - cash in banks Notes receivable Investment properties Investments in debt instruments at amortized cost - government bonds		December 31	December 31
		2023 $ 200,000 123,040 6,373,255 644,314 630,500 $ 7,971,109	2022 $ 200,000 504,576 3,044,289 - 620,500 $ 4,369,365

Call loans to other banks - time deposits were the provision for operation deposit. Restricted assets - cash in banks, notes receivable and investment properties were the guarantee for financing to other banks. Government bonds were pledged as collateral to the district court for litigation related to the overdraft of the clearing account and the compensation reserve for the securities firm and the trust business. The details were as follows:

Guarantee to district court for litigation Reserve of trust compensation Collateral for overdraft of clearing account		**December 31 **	**December 31 **
		2023 $ 50,500 80,000 500,000 $ 630,500	2022 $ 50,500 70,000 500,000 $ 620,500

38. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in Notes 8, 11 and 24, significant commitments and contingencies of the Group as of December 31, 2023 and 2022 were as follows:

a. Significant commitments

Loan commitments (excluding credit cards) Loan commitments - credit cards Guarantee receivables Trust liabilities Letters of credit Lease contract commitments	**December 31 **
	2023 2022 $ 193,158,508 $ 171,409,708 14,759,255 14,958,648 30,437,196 27,269,501 97,964,074 84,321,674 3,813,732 3,350,494 6,826,165 3,477,185

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• b. According to Article 17 of the Implementation Rules of Trust Act, the Bank should disclose its balance sheet of trust account and its asset items, which were as follows:

Trust Account Balance Sheet December 31, 2023

Trust Asset Cash in banks Debentures Shares Funds Structured finance instruments Real estate Land Buildings Securities under custody Trust assets	Amount Trust Liability $ 7,463,891 Securities under custody 16,451,588 payable 4,630,816 Trust capital 44,570,998 Net income 1,967,801 Deferred carryover amounts 18,228,109 124,324 4,526,547 $ 97,964,074 Trust liabilities	Amount $ 4,526,547 93,437,527 1,521,788 (1,521,788)
		$ 97,964,074

Note: On December 31, 2023, the bank’s Offshore Banking Unit invested in foreign securities under specific purpose trust accounts amounting to $2,820,860 thousand.

Trust Account Asset Items December 31, 2023 Item Cash in banks Debentures Shares Funds Structured finance instruments Real estate Land Buildings Securities under custody	Amount $ 7,463,891 16,451,588 4,630,816 44,570,998 1,967,801 18,228,109 124,324 4,526,547 $ 97,964,074

Trust Account Income Statement Year Ended December 31, 2023 Trust income Interest revenue Trust expense Management fee Tax Income before income tax Income tax expense Net income	Amount $ 2,606,145 (1,083,950) (407) 1,521,788 - $ 1,521,788

• 78 -

Trust Account Balance Sheet December 31, 2022

Trust Asset Cash in banks Debentures Shares Funds Structured finance instruments Real estate Land Buildings Securities under custody Trust assets	Amount Trust Liability $ 6,123,483 Securities under custody 11,201,507 payable 4,873,628 Trust capital 46,912,839 Net income 1,679,542 Deferred carryover amounts 9,428,737 129,873 3,972,065 $ 84,321,674 Trust liabilities	Amount $ 3,972,065 80,349,609 1,468,359 (1,468,359)
		$ 84,321,674

Note: On December 31, 2022, the bank’s Offshore Banking Unit invested in foreign securities under specific purpose trust accounts amounting to $2,672,714 thousand.

Trust Account Asset Items December 31, 2022

Item Cash in banks Debentures Shares Funds Structured finance instruments Real estate Land Buildings Securities under custody	Amount $ 6,123,483 11,201,507 4,873,628 46,912,839 1,679,542 9,428,737 129,873 3,972,065 $ 84,321,674

Trust Account Income Statement Year Ended December 31, 2022 Trust income Interest revenue Trust expense Management fee Tax Income before income tax Income tax expense Net income	Amount $ 2,405,773 (937,253) (161) 1,468,359 - $ 1,468,359

• c. Maturity analysis of lease commitments and capital expenditures

The lease contract commitments of the Group include operating leases and finance leases.

• 79 -

Operating lease commitment is the minimum lease payment when the Group is lessee or lessor with non-cancellation condition. The lease contract commitments of the operating leases are referred to in Note 19.

The finance lease commitments refer to the total lease investment of the lessor under the finance lease conditions and the present value of the minimum lease payments receivable.

Capital expenditure commitments represent contractual commitments for the acquisition of capital expenditures on construction and equipment.

Considering the expansion of business scale and the increasing number of employees in the future, the Bank held a tender for the construction project of head office through an online open bidding process on February 11, 2019. Dacin Construction Co., Ltd. and Earthpower Co., Ltd. won the bidding, both parties entered into a joint venture agreement worth $11,160,000 thousand on March 29, 2019, and started construction on April 27, 2019. In order to improve construction safety, both parties agreed to change the “reverse drilling steel column well type foundation alternative construction method” and the “raft foundation beam structure optimization alternative plan”. The first supplementary agreement was made on January 8, 2021, and the total contract price after the change is $11,155,943 thousand. In addition, the second supplementary agreement was processed on May 9, 2022, and the total contract price after the change was $11,154,971 thousand. The Group entered into a contract of planning, design and supervision with YSL Architects & Associates, and the contract price was worth $480,492 thousand. The Group entered into a contract of planning, design and supervision with Rich Honour Design Group, and the estimated contract price was $195,000 thousand.

Maturity analysis of lease commitments and capital expenditures is summarized as follows:

Financing lease income

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 onwards		**December 31 **	**December 31 **
		2023 $ 3,997,722 1,831,376 289,159 19,058 19,106 211,567 $ 6,367,988	2022 $ 3,045,375 1,161,828 276,855 12,739 12,739 141,798 $ 4,651,334

Present value of financing lease income

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 onwards		**December 31 **	**December 31 **
		2023 $ 3,530,448 1,702,872 269,103 7,508 8,166 139,340 $ 5,657,437	2022 $ 2,678,140 1,076,999 258,615 4,354 4,765 85,295 $ 4,108,168

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Capital expenditure commitment

Year 1 Year 2 Year 3		December 31	December 31
		2023 $ 3,934,181 176,209 - $ 4,110,390	2022 $ 3,026,937 2,176,974 32,464 $ 5,236,375

• d. The Bank and Pihsiang Energy Technology Co., Ltd. are parties in a consumer consignment litigation. The Taichung District Court of first instance issued a civil judgment on the 2018 case No. 598 that the Bank lost the case on February 4, 2020. The claim of Pihsiang Energy Technology Co., Ltd. against the Bank is $100 million, and the interest shall be calculated at 5% per annum from April 10, 2018 to the settlement date. The litigation costs shall be borne by the defendant (i.e., the Bank). The appointed lawyer of the Bank assessed that the content of the original judgment is contradictory and unprovoked. Therefore, the Bank filed an appeal on February 27, 2020, and was in the High Court Taichung Branch as 2020 renewed trial No. 78. After the second instance, the High Court Taichung Branch reappealed to trial No. 78 of 2020 on March 29, 2022, ruling that the Bank won the case. However, the plaintiff refused to accept the judgment of the second instance and filed an appeal, the Supreme Court remanded the case to the High Court Taichung Branch. According to the civil judgment on the 2018 case No. 598 on February 4, 2020, the Bank has prepared in advance the outstanding indemnities (statutory fruits and litigation costs) of the open litigation. As of December 31, 2023, the outstanding loss provision were $29,090 thousand, please refer to Note 29 for movements of the outstanding loss provision.

39. FINANCIAL INSTRUMENTS

• a. Fair value of financial instruments not measured at fair value

Except as detailed in the following table, the carrying amounts of financial instruments recognized in the consolidated financial statements approximate their fair values or that the fair values cannot be reasonably measured. Therefore, those were not disclosed in this note.

• 1) Fair value hierarchy

December 31, 2023

Carrying Amount Financial assets Investments in debt instruments at amortized cost $ 112,545,366 Financial liabilities Financial liabilities at amortized cost Bank debentures 16,500,000	Fair Value
	Level 1 Level 2 Level 3 Total $ 84,256,467 $ 27,477,571 $ - $ 111,734,038 - 16,370,469 - 16,370,469

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December 31, 2022

Carrying Amount Financial assets Investments in debt instruments at amortized cost $ 105,378,466 Financial liabilities Financial liabilities at amortized cost Bank debentures 16,500,000	Fair Value
	Level 1 Level 2 Level 3 Total $ 76,715,095 $ 27,222,061 $ - $ 103,937,156 - 16,643,094 - 16,643,094

• 2) Valuation techniques and inputs applied for Level 2 fair value measurement

Financial Instruments Non-derivatives	Valuation Techniques and Inputs
	The market transaction price in the non-active market is taken as the fair value.

• b. Fair value of financial instruments measured at fair value on a recurring basis

• 1) Fair value hierarchy

Financial assets at FVTPL Derivative financial assets Commercial papers Domestic listed shares and emerging market shares Domestic unlisted shares Beneficiary certificates Domestic corporate bonds Others Financial assets at FVTOCI Investments in equity instruments Domestic unlisted shares Domestic listed shares Foreign listed shares Investments in debt instruments Domestic corporate bonds Domestic government bonds Foreign bonds Bank debentures Financial liabilities at FVTPL Derivative financial liabilities			December 31, 2023	December 31, 2023
		Total $ 9,470,863 18,814,086 1,060,821 63,573 903,291 174,577 746,351 $ 31,233,562 $ 903,979 4,055,958 406,700 30,306,167 9,499,322 17,635,583 1,880,067 $ 64,687,776 $ 2,971,490	Level 1 $ - 18,814,086 903,090 - 903,291 174,577 - $ 20,795,044 $ - 4,055,958 406,700 30,306,167 9,499,322 - 1,880,067 $ 46,148,214 $ -	Level 2 $ 9,470,863 - 157,731 - - - 746,351 $ 10,374,945 $ - - - - - 17,635,583 - $ 17,635,583 $ 2,971,490	Level 3 $ - - - 63,573 - - - $ 63,573 $ 903,979 - - - - - - $ 903,979 $ -

• 82 -

Reconciliation of Level 3 fair value measurements of financial instruments:

Item	Beginning Balance	Valuation Gains (Losses)	Valuation Gains (Losses)	Increase	Increase	Increase	Decrease	Decrease	Decrease	Ending Balance
				Buy or Issue	Transfer in		Sell, **Disposal **		Transfer Out
Financial assets at FVTPL Unlisted shares	$ 87,095	$ (15,592)		$ 49,700	$ -		$ -		$ 57,630	$ 63,573
Item	Beginning Balance	Valuation Gains (Losses)		Increase			Decrease			Ending Balance
				Buy or Issue	Transfer in		Sell, Disposal		Transfer Out
Financial assets at FVTOCI Unlisted shares	$ 898,032	$ 5,947		$ -	$	-	$ -		$ -	$ 903,079
Financial assets at FVTPL Derivative financial assets Commercial papers Domestic listed shares and emerging market shares Domestic unlisted shares Beneficiary certificates Domestic corporate bonds Others Financial assets at FVTOCI Investments in equity instruments Domestic unlisted shares Domestic listed shares Foreign listed shares Investments in debt instruments Domestic corporate bonds Domestic government bonds Foreign bonds Bank debentures Financial liabilities at FVTPL Derivative financial liabilities						December 31, 2022
				Total $ 8,327,102 18,158,908 682,938 87,095 290,350 587,037 875,684 $ 29,009,114 $ 898,032 3,926,732 328,228 29,822,548 5,228,275 3,362,115 1,663,045 $ 45,228,975 $ 1,630,985		Level 1 $ - 18,158,908 643,358 - 290,350 587,037 - $ 19,679,653 $ - 3,926,732 328,228 29,822,548 5,228,275 - 1,663,045 $ 40,968,828 $ -		Level 2 $ 8,327,102 - 39,580 - - - 875,684 $ 9,242,366 $ - - - - - 3,362,115 - $ 3,362,115 $ 1,630,985		Level 3 $ - - - 87,095 - - - $ 87,095 $ 898,032 - - - - - - $ 898,032 $ -

Reconciliation of Level 3 fair value measurements of financial instruments:

Item	Beginning Balance	Valuation Gains (Losses)	Increase	Increase	Decrease	Decrease	Ending Balance
			Buy or Issue	Transfer in	Sell, Disposal	Transfer Out
Financial assets at FVTPL Unlisted shares	$ 81,611	$ 5,484	$ -	$ -	$ -	$ -	$ 87,095
Item	Beginning Balance	Valuation Gains (Losses)	Increase		Decrease		Ending Balance
			Buy or Issue	Transfer in	Sell, Disposal	Transfer Out
Financial assets at FVTOCI Unlisted shares	$ 810,234	$ 87,798	$ -	$ -	$ -	$ -	$ 898,032

There were no transfers between Levels 1 and 2 for the years ended December 31, 2023 and 2022.

• 83 -

• 2) Valuation techniques and inputs applied for Level 2 fair value measurement

Financial Instruments

Valuation Techniques and Inputs

Non-derivatives Derivatives Option contracts Cross-currency swap contracts, foreign exchange forward contracts Asset swap contract Structured finance instruments Interest rate-linked structured instruments

The market transaction price in the non-active market is taken as the fair value. Valuation model: The execution price, maturity date, market volatility, interest rate and exchange rate set by the contract are used as valuation parameters. The model with closed-form solution is then used for valuation. Discounted cash flow: Future cash flows are estimated based on observable forward exchange rates at the end of the reporting period and forward rates of contracts, discounted at a rate that reflects the credit risk of various counterparties. The closing price for convertible corporate bond minus bond value. The pure bond value is discounted by the cash flow provided by the convertible corporate bond in accordance with Taiwan Bills Index Rate (TAIBIR). The counterparty quotes.

• 3) The quantitative information on fair value of significant unobservable input (Level 3)

The quantitative information on unobservable inputs of the financial instruments classified as Level 3, and held by the Group on December 31, 2023 and 2022, were as follows:

Items	Fair Value on December 31, 2023	Fair Value on December 31, 2022	Valuation Techniques	Significant Unobservable Input	Range (Weighted- average)	Relationship Between Inputs and Fair Value
Financial assets at fair value through profit or loss Domestic unlisted shares Financial assets at fair value through other comprehensive income Domestic unlisted shares	$ 63,573 903,979	$ 87,095 898,032	Seller’s quote (Monte Carlo Simulation Method) Seller’s quote (Monte Carlo Simulation Method)	Volatility rate Volatility rate	33.00% 21.91%-21.92%	The lower the volatility rate, the higher the fair value The lower the volatility rate, the higher the fair value

• 4) The assessment of fair value in Level 3

The Group assessed fair value in accordance with valuation report provided by independent company, and compiled the evaluation results into a quarterly report presented to the board of directors.

• 84 -

• 5) Sensitivity analysis of Level 3 fair value if reasonable possible alternative assumptions may be used.

The Group adopts multiple approaches to estimate the volatility rate of quantitative information on its significant unobservable input. The sensitivity analysis based on category of assets is as follows:

December 31, 2023 Significant Unobservable Input Liquidity discount ratio December 31, 2022 Significant Unobservable Input Liquidity discount ratio Categories of financial instruments Financial assets Financial assets at FVTPL Financial assets at amortized cost (Note 1) Financial assets at FVTOCI Equity instruments Debt instruments Financial liabilities Financial liabilities at FVTPL Financial liabilities at amortized cost (Note 2)

Sensitivity Rate Impact Increase 10% $ (23,816) Decrease 10% 23,816 Sensitivity Rate Impact Increase 10% $ (23,496) Decrease 10% 23,496 December 31

2023 2022 $ 31,233,562 $ 29,009,114 760,282,270 714,777,268 5,366,637 5,152,992 59,321,139 40,075,983 2,971,490 1,630,985 794,578,952 733,924,611

• c. Categories of financial instruments

• Note 1: The balances include financial assets at amortized cost, which comprise cash and cash equivalents, due from the Central Bank and call loans to other banks, investments in debt instruments at amortized cost, securities purchased under resale agreements, receivables, notes discounted and loans, restricted assets, refundable deposits, receipts under payment for shares underwriting and other financial assets.

• Note 2: The balances include financial liabilities at amortized cost, which comprise due to the Central Bank and other banks, funds borrowed from the Central Bank and other banks, securities sold under repurchase agreements, payables, deposits and remittances, bank debentures, other financial liabilities, and guarantee deposits received.

• 85 -

40. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Overview

The financial risk management objectives of the Group is to achieve the goal of balancing risk tolerance, business objectives and external legal restrictions. These risks include market risks (including interest rate, exchange rate, equity securities and product price) and liquidity risks of on and off-balance sheet business.

The Group has formulated a relevant risk management policy, which has been approved by the board of directors to effectively identify, measure, monitor and control credit risk, market risk and liquidity risk.

Risk Management Organizational Structure

The board of directors is the highest decision-making unit for the Group’s corporate risk management and assumes the ultimate responsibility for risk management. The Group has a risk management committee and a risk management department, which grants risk authority and confers responsibilities on the relevant departments to ensure the smooth operation of risk management. The responsibilities of the committee are as follows:

• a. Consideration of the risk management program.

• b. Consideration and review of risk limits.

• c. Consideration of the bill on institutionalization of risk management.

• d. Report to the board of directors regularly.

Members of the risk management committee set up various risk management measurement indicators according to the nature of their business and the scope of their duties, and the risk management department should report to the risk management committee to provide a reference for senior decision-making.

1) Market risk

• a) The source and definition of market risk

Market risks refer to the loss due to the changes in market price, such as the changes of the market interest rate, the exchange rate, the share price and the product price.

• b) Market risk management policy

The objective of the Group market risk management is to develop a sound and effective market risk management mechanism that is consistent with the size, nature and complexity of the Group’s business to ensure that the risks borne by the Group can be properly managed and market risks are effectively identified, measured, monitored and controlled, and strike a balance between the level of risk tolerance and the expected level of compensation.

• c) Market risk management process

• i. Identification and measurement

The relevant market risks should be assessed through appropriate procedures to consider whether the risk is within an acceptable risk range before new products, business activities, processes and systems are rolled out or operated. The relevant units should use the methods of business analysis or product analysis to identify the sources of market risks, define the market risk factors of each financial commodity and make appropriate specifications.

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Market risk measurement can use a variety of effective measures to properly measure risk, including but not limited to the following methods: Statistical basis measures, sensitivity analysis and situational analysis. The risk management department should measure the risk of the site on a daily basis and conduct regular stress tests to measure the amount of abnormal losses that may occur under the current or historical extremes.

ii. Monitoring and reporting

The risk management department should report to the risk management committee and the board of directors regularly on the implementation of the Group’s market risk management, including the Group’s market risk allocation, risk level, profit and loss status, quota usage and compliance with relevant market risk management regulations and suggestions. The authorities also set up relevant limit management, stop loss mechanism, overrun treatment and exception management methods to effectively monitor market risks. In the event of an overrun or exception, it should be notified immediately to facilitate the immediate response.

d) Interest rate risk

i. Definition of interest rate risk

Interest rate risk refers to the change in interest rate, which causes the Group to bear the risk of changes in the fair value of the interest rate risk or the loss of surplus liquidity. The main sources of risk include deposits and interest-related securities.

ii. Measurement methods and management procedures

The Group monitors the interest rate risk system, sets the scope of the indicators to regularly monitor and report the results to the asset and liability management committee, the risk management committee and the board of directors, and adjusts according to the overall operating conditions of the Group. In addition, the Group measures the interest rate risk by DV01, assuming that the interest rate curve has a parallel shift of 100 basis points, the degree of impact on earnings and equity is used to control the interest rate risk.

iii. The effect of interest rate benchmark reform

For the financial instruments of the Group affected by changes in interest rate benchmark, the linked indicator interest rate include USD LIBOR. It is expected that the US Secured Overnight Financing Rate (SOFR) will replace the USD LIBOR. However, there is a fundamental difference between the replacement interest rate and LIBOR. LIBOR is a forward-looking interest rate indicator that implies market expectations for future interest rate trends, and includes inter-Group credit discounts. Each alternative interest rate is a retrospective interest rate indicator calculated with reference to actual transaction data, and does not include a credit discount. Therefore, when an existing contract is modified from a linked LIBOR to a linked alternative interest rate, additional adjustments must be made to the aforementioned differences to ensure that the interest rate basis before and after the modification is economically equivalent.

The Group has formulated a LIBOR conversion plan to deal with risk management policy adjustments, internal process adjustments, information system updates, financial instrument evaluation model adjustments, and related accounting or tax issues that are required to meet the changes in interest rate benchmark. As of December 31, 2023, no financial instruments of the Group that have been affected by the change in interest rate benchmark and have not yet converted to alternative interest rate benchmark.

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e) Exchange rate risk

• i. Definition of exchange rate risk

Exchange rate risk is the gain or loss resulting from the conversion of two different currencies at different times. The Group’s exchange rate risk is mainly due to the changes in spot and forward foreign exchange rates of the business operations. Since the foreign exchange transactions are mostly based on the principle of flattening the customer’s position for the day, the exchange rate risk is relatively small.

• ii. Measurement methods and management procedures

The Group adopts the quota management mechanism for the exchange rate risk system, sets the business quota and overnight limit for each currency, controls the maximum net foreign exchange position that can be held by all levels of personnel, and sets the maximum transaction amount according to the counterparty, and monitors it regularly. The results will be reported to the risk management committee and the board of directors for discussion.

In addition, the Group assesses the degree of impact on earnings and equity under the hypothetical scenarios when the USD/NTD, CNY/NTD, and AUD/NTD separately appreciates/depreciates by 3%, in order to control exchange rate risk.

• f) Equity securities price risk

• i. Definition of equity securities price risk

The market risk of the Group’s equity securities is the individual risk arising from changes in the market price of individual equity securities and the general market risk arising from changes in the overall market price. The main risks include listed shares and beneficiary certificates.

• ii. Measurement methods and management procedures

The Group adopts a quota management mechanism for the equity securities price risk, ensuring that all levels are traded within the authorized amount, and sets up relevant mechanisms for stop loss control, and regularly reports the monitoring results to the risk management committee and the board of directors for discussion.

In addition, the Group assesses the degree of impact on earnings and equity under the hypothetical scenarios when the price of equity securities rises/falls by 15% in order to control the risk of equity securities.

g) Market risk sensitivity analysis

Interest risk

The Group assumed that when other factors remain unchanged, if the yield curve increased/decreased by 100 basis points, the income before income tax of the Group as of December 31, 2023 and 2022 would have increased/decreased by $628,343 thousand and $716,053 thousand respectively, and other equity would have decreased/increased by $3,349,442 thousand and $1,659,054 thousand, respectively.

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Exchange rate risk

The Group assumed that when other factors remain unchanged, if the exchange rate of USD/NTD, CNY/NTD, and AUD/NTD appreciated/depreciated by 3%, the income before income tax as of December 31, 2023 and 2022 would have increased/decreased by $117,501 thousand and decreased/increased by $98,017 thousand, respectively, and other equity would have increased/decreased by $407,747 thousand and $134,382 thousand, respectively.

Equity securities price risk

The Group assumed that when other factors remain unchanged, if the price of equity securities increased/decreased by 15%, the income before income tax as of December 31, 2023 and 2022 would have increased/decreased by $304,153 thousand and $159,057 thousand, respectively, and other equity would have increased/decreased by $804,996 thousand and $772,949 thousand, respectively.

The summary of sensitivity analysis was as follows:

	December 31, 2023
Main Risk	Range of Change	Influence Amount
		Other Equity	Income
Interest risk	Interest rate curve rises 100BPS Interestrate curvefalls100BPS	$ (3,349,442) 3,349,442	$ 628,343 (628,343)
Exchange rate risk	USD/NTD, CNY/NTD, AUD/NTD increase by 3% USD/NTD, CNY/NTD, AUD/NTD decrease by 3%	407,747 (407,747)	117,501 (117,501)
Equity securities price risk	Equity securities prices rise by 15% Equity securities pricesfallby15%	804,996 (804,996)	304,153 (304,153)

	December 31, 2022
Main Risk	Range of Change	Influence Amount
		Other Equity	Income
Interest risk	Interest rate curve rises 100BPS Interest rate curve falls 100BPS	$ (1,659,054) 1,659,054	$ 716,053 (716,053)
Exchange rate risk	USD/NTD, CNY/NTD, AUD/NTD increase by 3% USD/NTD, CNY/NTD, AUD/NTD decrease by 3%	134,382 (134,382)	98,017 (98,017)
Equity securities price risk	Equity securities prices rise by 15% Equity securities pricesfallby15%	772,949 (772,949)	159,057 (159,057)

2) Credit risk

a) The source and definition of credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group. Credit risk exists in both on and off-balance sheet items. The on-balance sheet exposures to credit risks are mainly from notes discounted and loans, the credit card business, due from other banks and call loans to other banks, acceptances, investments in debt instruments and derivatives. The off-balance sheet exposures to credit risks are mainly from financial guarantees, letter of credits and loan commitments.

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b) Credit risk management policy

Before launching new products or businesses, the Group ensures compliance with all applicable rules and regulations and identifies relevant credit risks. On December 31, 2022, the ratio of loans with collateral to the total amount of loans was approximately 74%. The ratio of financing guarantees to commercial letters of collateral held was approximately 27%, and the collateral required for loans, loan commitments or guarantees is usually in the forms of cash, inventories, liquid securities or other asset in circulation. If the customers default, the Group will execute its rights on collateral in accordance with the terms of contracts.

• c) Credit risk management program

The measurement and management of credit risks from the Group’s main businesses were as follows:

• i. Loans business (including loan commitments and guarantees)

• i) Determination that credit risk has increased significantly since the initial recognition.

The Group assesses the change in the probability of default of loans during the lifetime on each reporting date to determine if the credit risk has increased significantly since the initial recognition. In order to make this assessment, the Group’s considerations show the reasonable and supportable information that the credit risk has increased significantly since the initial recognition (including forward-looking information). The main considerations include:

Quantitative indicators

• Changes in external credit ratings of the Taiwan Corporate Credit Rating Index (TCRI)

The TCRI rating of a company listed on the Taipei Exchange corresponding to its external rating has been reduced from investment grade to non-investment grade, that is, the credit risk has been significantly increased since the initial recognition.

• Information on overdue status

When the contract amount is overdue for more than one month, it is determined that the credit risk of the financial asset has increased significantly since the initial recognition.

Qualitative indicators

• Unfavorable changes in the current or projected operating, financial or economic conditions that are expected to result in significant changes in the ability of the debtor to perform debt obligations.

• Significant changes in actual or expected results of the debtor’s operations.

• The credit risk of other financial instruments from the same debtor has increased significantly.

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• ii) Definition of default and credit-impaired financial assets

The definition of financial asset default is the same as that of financial asset credit impairment. If one or more of the following conditions are met, the Group determines that the financial asset has defaulted and becomes credit impaired:

Quantitative indicators

• Changes in external TCRI credit ratings

The TCRI rating of the listed cabinet company is default grade, which means that the credit has been deducted since the initial recognition.

• Information on overdue status

When the contract amount is overdue for more than three months, it is determined that the credit of the financial asset has been impaired since the initial recognition.

Qualitative indicators

If there is evidence that the borrower will not be able to pay the contract, or that the borrower has significant financial difficulties, such as:

• The debtor has gone bankrupt or may have called for bankruptcy or financial restructuring.

• Other debt instrument contracts of the debtor have defaulted.

• Due to the economic or contractual reasons associated with the debtor’s financial difficulties, the debtor’s creditors give the borrower an unconfirmed concession and report the overdue loan.

The aforementioned default and credit impairment definitions are used to consolidate all financial assets held by the Group and are consistent with the definitions used for the internal credit risk management purposes of the financial assets, and are also applied to the relevant impairment assessment model.

iii) Measurement of expected credit losses

In order to assess the expected credit losses, the Group divides the credit assets into the following combinations according to the credit risk characteristics such as the use of borrowing, industrial nature, collateral type and borrowing status.

Product Portfolio Corporate loans - secured Corporate loans Corporate loans - unsecured House mortgage Consumer loans - secured Consumer loans - unsecured Consumer loans Credit loans Debit card Credit card

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The Group evaluates loss allowance of financial assets, which credit risk does not significantly increase after initial recognition based on 12-month expected credit losses. The Group evaluates loss allowance of financial assets, which credit risk significantly increases after initial recognition based on lifetime expected credit losses.

In order to evaluate expected credit losses, the Group takes into consideration the debtor’s probability of default (PD) within the next 12 months, which includes the loss given default (LGD), the results are then multiplied by the exposure at default (EAD), while also considering the effect of time value of money to calculate the expected credit losses during the duration of 12 months.

PD is the default percentage of a borrower. LGD is the loss ratio once a borrower default. The Group applied PD and LGD to evaluate loan business impairment based on each portfolio’s historical information calculated internally (i.e. credit loss experience), and adjusted historical data based on current observable information and forward-looking macroeconomic information calculated by using direct estimation method.

The Group evaluates the loan default risk by using packet direct estimation method. The Group calculates 12 month and lifetime ECLs of financing commitments based on direct estimation method. The Group uses credit conversion factor to calculate the portion of financing commitments expected to be used in 12 months after the record date and the credit duration to calculate the default exposure amount of ECLs.

Consideration of forward-looking estimation

In estimating the expected credit losses, the Group uses forward-looking economic factors that affect credit risk and expected credit losses to consider forward-looking information. Forward-looking information is based on the Taiwan National Development Council’s regular promulgation of the “Benefit Strategy Signal” of Taiwan’s overall prosperity as indicators, which are divided into boom expansion period, contraction period and flat period. The Group evaluates the economic situation to adjust the default probability every quarter, and then incorporates it into the overall expected credit loss assessment.

ii. Debt instrument investments

The Group considers the historical default loss rate provided by the external rating agencies and the current financial status of the debtor to calculate 12-month and lifetime ECLs of financing commitments in debt instrument investments.

The securities held by the Group recognize the expected credit losses according to the lifetime ECLs of financing commitment. The credit quality of the Group’s judgment securities was as follows:

• i) The determination that the credit risk has increased significantly since the initial recognition

The Group assesses the change in the probability of default of debt instrument investments during the lifetime on each reporting date to determine if the credit risk has increased significantly since the initial recognition. In order to make this assessment, the Group’s considerations show the reasonable and supportable information that the credit risk has increased significantly since the initial recognition. The main considerations include:

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Quantitative indicators

• At the time of initial recognition, the issuer’s credit rating is above the investment grade, but at the financial reporting date, the issuer’s credit rating is reduced to a non-investment grade.

• For debt instrument investments on the initial recognition date, the issuer’s credit rating is below the non-investment grade and the credit rating on the reporting date has not changed.

• When the issuer’s credit rating is a non-investment grade, the reported daily credit rating is reduced to a certain extent.

Qualitative indicators

• The credit rating of the issuer indicates that its credit risk has increased significantly.

• The fair value of the debt instrument investments has significantly and adversely changed on the reporting date.

• ii) Definition of default and credit-impaired financial assets

If the debt instrument investment meets one or more of the following conditions, it determines that the financial asset has defaulted and become credit impaired.

Quantitative indicators

• Debt instrument investments, such as bonds, have become credit impaired since they were purchased.

• The default rate for credit rating of the issuer or debt instrument investments will be adjusted on the reporting date.

Qualitative indicators

• The issuer modifies the issue conditions of the debt instrument investments due to financial difficulties or fails to pay the principal or interest according to the conditions of the issue.

• The issuer or the guarantee institution has ceased operations or has applied for reorganization, bankruptcy, dissolution, and sale of major assets that have a significant impact on the Group’s continued operations.

Measurement of expected credit losses

• In order to evaluate expected credit losses, the Group takes into consideration the debtor’s probability of default (PD) within the next 12 months, which includes the loss given default (LGD), the results are then multiplied by the exposure at default (EAD), while also considering the effect of time value of money to calculate the expected credit losses during the duration of 12 months.

• Comparing the risk of default on the debt instrument with the default risk at the time of initial recognition, and considering the reasonable and corroborative information for a significant increase in credit risk since the initial recognition, to determine whether the financial instrument’s credit risk has increased significantly since the initial recognition.

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• Those who meet the normal credit risk status will estimate the expected loss amount based on the one-year probability of default (PD).

• Those who meet the significant increase in credit risk status must consider the duration of the assets and calculate the probability of default (PD) for each duration. If the cash flow of the contract in the future period (i.e., the default exposure amount of each period) can be assessed, the cash flow method is used to assess the expected amount of credit loss, and if the cash flow of each period cannot be assessed, the current risk calculation method is used.

  • Those who meet the abnormal credit risk status are considered to be 100%, and will not consider the probability of default in each duration. Only consider the relevant recoverable amount and evaluate the overall expected credit loss amount.

  • Debt instrument investments’ probability of default is the value released by external credit rating agencies, which implies the possibility of future market fluctuations.

• d) Credit risk hedging or mitigation policies

• i. Collaterals

The Group implements a series of policies and measures to reduce credit risks when granting of credit. One of the commonly used methods is to require borrowers to provide collaterals. To enforce the rights to collaterals, the Group manages and assesses the collaterals according to the procedures adopted in determining the scope of collateralization and valuation of collaterals.

The main types of collateral for granting credit are as follows:

• i) Real estate.

ii) Chattels and rights of pledge.

iii) Guarantee from external agency.

To enhance guarantee of transaction risk, the Group’s demand for collaterals depends on the nature of derivative transactions as follows:

• i) Guarantee of amount invested: Asking different ratio of guarantee based on the credit rating scale of clients.

• ii) Guarantee of high-risk transactions: Asking for collaterals when option contracts are under resale agreement.

• iii) Performance bond (loss on investment position): Asking for collaterals when loss on investment position exceeds the limit of approved market value.

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The Group closely observed the value of pledged financial assets and evaluated which financial assets had been impaired in order to recognize allowance for impairment. Credit-impaired financial assets and their pledged values which eliminate potential loss, are as follows:

December 31, 2023

Financial assets that were impaired Notes discounted and loans Receivables Guarantees and letters of credit Debt instruments Others Total financial assets that were impaired December 31, 2022 Financial assets that were impaired Notes discounted and loans Receivables Guarantees and letters of credit Debt instruments Others Total financial assets that were impaired

Total Carrying Amount Allowance for Impairment Loss Total Value of Exposure Fair Value of Collateral $ 7,473,198 $ (1,464,248) $ 6,008,950 $ 6,008,950 756,937 (210,939) 545,998 512,717 106,609 (37,095) 69,514 46,927 8,378 (8,378) - - 53,019 (10,239) 42,780 - $ 8,398,141 $ (1,730,899) $ 6,667,242 $ 6,568,594 Total Carrying Amount Allowance for Impairment Loss Total Value of Exposure Fair Value of Collateral $ 7,187,918 $ (1,634,126) $ 5,553,792 $ 5,553,792 778,507 (196,536) 581,971 568,506 90,196 (34,996) 55,200 37,864 8,380 (8,380) - - 79,019 (11,897) 67,122 - $ 8,144,020 $ (1,885,935) $ 6,258,085 $ 6,160,162

ii. Credit risk concentration limits and control

To avoid the concentration of credit risks, the Group has included credit limits for the same person (entity) and for the same related-party corporation (group) based on the credit risk arising from loans, securities investment and derivatives transactions.

Meanwhile, for trading and banking book investments, the Group has set a ratio, which is the credit limit of a single issuer in proportion to the total securities position. The Group has also included credit limits for a single counterparty and a single group.

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In addition, to manage the concentration risk of the financial assets, the Group has set credit limits by industry, conglomerate, country and transactions collateralized by shares, and integrated within one system to supervise the concentration of credit risk in these categories. The Group monitors concentration of each asset and controls various types of credit risk concentration in a single transaction involving counterparties, groups, related-party corporations, industries and nations.

iii. Other credit enhancements

To reduce its credit risks, the Group stipulates in its credit contracts the term for offsetting which clearly stated that the Group reserves the right to offset the borrowers’ debt against their deposits in the Group.

e) Maximum exposure to credit risk

The maximum exposures of assets on the consolidated balance sheets to credit risks without consideration of guarantees or other credit enforcement instruments approximate the assets’ carrying amounts. The maximum exposures of off-balance sheet items to credit risks without consideration of guarantees or other credit enforcement instrument were as follows:

Irrevocable loan commitments Credit card commitments Guarantee receivables Letters of credit	December 31
	2023 2022 $ 17,858,544 $ 11,709,253 14,759,255 14,958,648 30,437,196 27,269,501 3,813,732 3,350,494

The management of the Group believes their abilities to minimize the credit risk exposures of the off-balance sheet items are mainly attributed to their rigorous evaluation of extended credit and the periodic reviews of these credits.

f) Credit risk concentration of the Group

When the counterparty of financial product transactions is concentrated on one person, or when there are several counterparties but they are mostly engaged in similar economic activities and have similar economic characteristics, causing their abilities to fulfill contract obligations to be similarly affected by economic or other situations, credit risk concentration is deemed to have occurred. The characteristics of significant credit risk concentration include the nature of the debtor’s activities. The Group’s transactions are not concentrated on a single customer or counterparty but spread among counterparties with similar industry types and operating regions. The contract amounts of significant credit risk concentration was as follows:

Counterparty Private enterprise Natural person Government agencies Others		December 31	December 31
		2023 $ 302,467,216 288,104,811 1,473,625 5,928,101 $ 597,973,753	2022 $ 285,611,571 271,000,752 1,262,000 2,605,667 $ 560,479,990

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Credit Risk Profile by Group or Industry Natural person Manufacturing Commercial Real estate and leasing Construction industry Servicing Finance and insurance Transportation warehousing and information communication Others Credit Risk Profile by Region Domestic Asia North America Others Credit Risk Profile by Collateral Unsecured Secured Real estate Letter of bank guarantee Chattel Debenture Notes receivable Shares Others		**December 31 **	**December 31 **
		2023 2022 $ 288,104,811 $ 271,000,752 81,857,283 83,555,861 51,187,123 51,870,453 86,670,196 73,337,914 31,210,873 25,904,700 13,309,103 12,033,816 21,799,135 23,922,705 9,229,174 8,691,538 14,606,055 10,162,251 $ 597,973,753 $ 560,479,990 December 31
		2023 2022 $ 559,552,578 $ 525,300,491 26,042,242 23,083,178 7,053,277 9,297,320 5,325,656 2,799,001 $ 597,973,753 $ 560,479,990 December 31
		2023 $ 100,050,882 436,774,312 17,705,647 10,089,119 17,769,006 2,484,120 8,479,180 4,621,487 $ 597,973,753	2022 $ 92,060,824 410,025,605 17,280,784 7,661,747 18,955,531 1,664,987 7,499,794 5,330,718 $ 560,479,990

• g) Write-off policy

If one of the following events have occurred, overdue loans and delinquent receivables should have the estimated recoverable amount deducted and should then be written off as bad debts:

• The debtor may not recover all or part of the obligatory claim due to dissolution, disappearance, settlement, bankruptcy or other reasons.

• The appraisal value of collateral and asset of the main and subordinate debtors are very low, or the compensation is not available after deducting the amount of the first mortgage, or it is not beneficial that execution fee is close to or may exceed the Bank’s reimbursable amount.

• The collateral and the assets of the main and subordinate debtors are auctioned off at multiple auctions, of which the Bank did not receive any benefit.

• 97 -

• Overdue loans and delinquent receivables which have been overdue for more than 2 years have been collected but not yet received.

• The minimum payable amount of credit card which is overdue for six months that should be written off in three months.

• h) Information of credit quality

• i. Notes discounted, loans and receivables

December 31, 2023

Notes Discounted and Loans

Product category Corporate loans Consumer loans Others Total carrying amount Allowance for doubtful accounts Difference of impairment loss under regulations Product category Corporate loans Consumer loans Others Total carrying amount Allowance for doubtful accounts Difference of impairment loss under regulations Product category Corporate loans Consumer loans Total carrying amount Allowance for doubtful accounts Difference of impairment loss under regulations	Stage 1 12-month ECLs $ 253,385,461 273,108,459 10,373 526,504,293 (2,144,996 ) - $ 524,359,297		Stage 2 Lifetime ECL $ 3,554,650 11,592,785 278 15,147,713 (963,707 ) - $ 14,184,006		Stage 3 Lifetime ECL $ 4,765,071 2,708,025 102 7,473,198 (1,464,248 ) - $ 6,008,950 Receivables	Difference of Impairment Loss under Regulations $ - - - - - (2,708,150) $ (2,708,150)	Total $ 261,705,182 287,409,269 10,753 549,125,204 (4,572,951 ) (2,708,150) $ 541,844,103
			Difference of Impairment Stage 2 Stage 3 Loss under Lifetime ECL Lifetime ECL Regulations $ 417,856 $ 690,903 $ - 36,471 39,964 - 1 26,070 - 454,328 756,937 - (9,050 ) (210,939 ) - - - (157,314) $ 445,278 $ 545,998 $ (157,314) Irrevocable Loan Commitments				Total $ 19,588,533 2,556,514 76,075,953 98,221,000 (376,310 ) (157,314) $ 97,687,376
			Stage 2 Lifetime ECL $ - - - - - $ -		Stage 3 Lifetime ECL $ 53,019 - 53,019 (10,239 ) - $ 42,780	Difference of Impairment Loss under Regulations $ - - - - (8,567) $ (8,567)	Total $ 16,627,000 1,231,544 17,858,544 (120,093 ) (8,567) $ 17,729,884

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Credit Card Commitments

Product category Consumer loans Total carrying amount Allowance for doubtful accounts Difference of impairment loss under regulations Product category Corporate loans Consumer loans Total carrying amount Allowance for doubtful accounts Difference of impairment loss under regulations Product category Corporate loans Total carrying amount Allowance for doubtful accounts Difference of impairment loss under regulations	Stage 1 12-month ECLs $ 14,673,946 14,673,946 (4,852 ) - $ 14,669,094		Stage 2 Stage 3 Lifetime ECL Lifetime ECL $ 85,309 $ - 85,309 - (1,902 ) - - - $ 83,407 $ - Guarantee Receivables	Stage 2 Stage 3 Lifetime ECL Lifetime ECL $ 85,309 $ - 85,309 - (1,902 ) - - - $ 83,407 $ - Guarantee Receivables	Stage 2 Stage 3 Lifetime ECL Lifetime ECL $ 85,309 $ - 85,309 - (1,902 ) - - - $ 83,407 $ - Guarantee Receivables	Difference of Impairment Loss under Regulations $ - - - (628) $ (628)	Total $ 14,759,255 14,759,255 (6,754 ) (628) $ 14,751,873
			Stage 2 Lifetime ECL $ 88,071 - 88,071 (5,638 ) - $ 82,433			Difference of Impairment Loss under Regulations $ - - - - (47,287) $ (42,287)	Total $ 30,432,196 5,000 30,437,196 (259,976 ) (47,287) $ 30,129,933
			Stage 2 Lifetime ECL $ - - - - $ -		Stage 3 Lifetime ECL $ - - - - $ -	Difference of Impairment Loss under Regulations $ - - - (3,208) $ (3,208)	Total $ 3,813,732 3,813,732 (9,815 ) (3,208) $ 3,800,709

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December 31, 2022

Product category Corporate loans Consumer loans Others Total carrying amount Allowance for doubtful accounts Difference of impairment loss under regulations Product category Corporate loans Consumer loans Others Total carrying amount Allowance for doubtful accounts Difference of impairment loss under regulations Product category Corporate loans Consumer loans Total carrying amount Allowance for doubtful accounts Difference of impairment loss under regulations			Notes Discounted and Loans	Notes Discounted and Loans	Notes Discounted and Loans	Notes Discounted and Loans
	Stage 1 12-month ECLs $ 242,007,307 257,505,411 23,037 499,535,755 (2,055,966 ) - $ 497,479,789		Stage 2 Lifetime ECL $ 3,782,197 10,261,354 498 14,044,049 (1,156,156 ) - $ 12,887,893		Stage 3 Lifetime ECL $ 4,754,053 2,433,710 155 7,187,918 (1,634,126 ) - $ 5,553,792 Receivables	Difference of Impairment Loss under Regulations $ - - - - - (1,808,648) $ (1,808,648)	Total $ 250,543,557 270,200,475 23,690 520,767,722 (4,846,248 ) (1,808,648) $ 514,112,826
			Difference of Impairment Stage 2 Stage 3 Loss under Lifetime ECL Lifetime ECL Regulations $ 367,145 $ 706,839 $ - 29,526 44,000 - 4 27,668 - 396,675 778,507 - (9,604 ) (196,536 ) - - - (152,676) $ 387,071 $ 581,971 $ (152,676) Irrevocable Loan Commitments				Total $ 14,099,366 1,653,998 68,172,604 83,925,968 (333,630 ) (152,676) $ 83,439,662
			Stage 2 Lifetime ECL $ - - - - - $ -		Stage 3 Lifetime ECL $ 79,019 - 79,019 (11,897 ) - $ 67,122	Difference of Impairment Loss under Regulations $ - - - - (1,617) $ (1,617)	Total $ 10,397,585 1,311,668 11,709,253 (84,389 ) (1,617) $ 11,623,247

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Credit Card Commitments

Product category Consumer loans Total carrying amount Allowance for doubtful accounts Difference of impairment loss under regulations	Stage 1 12-month ECLs $ 14,888,343 14,888,343 (5,295 ) - $ 14,883,048		Stage 2 Lifetime ECL $ 70,305 70,305 (1,648 ) - $ 68,657		Stage 3 Lifetime ECL $ - - - - $ -	Difference of Impairment Loss under Regulations $ - - - (439) $ (439)	Total $ 14,958,648 14,958,648 (6,943 ) (439) $ 14,951,266

Product category Corporate loans Total carrying amount Allowance for doubtful accounts Difference of impairment loss under regulations Product category Corporate loans Total carrying amount Allowance for doubtful accounts Difference of impairment loss under regulations			Guarantee Receivables	Guarantee Receivables	Guarantee Receivables
	Stage 1 12-month ECLs $ 27,052,806 27,052,806 (193,788 ) - $ 26,859,018		Stage 2 Lifetime ECL $ 126,499 126,499 (20,588 ) - $ 105,911			Difference of Impairment Loss under Regulations $ - - - (26,591) $ (26,591)	Total $ 27,269,501 27,269,501 (249,372 ) (26,591) $ 26,993,538
			Stage 2 Lifetime ECL $ 200,000 200,000 (9,214 ) - $ 190,786		Stage 3 Lifetime ECL $ - - - - $ -	Difference of Impairment Loss under Regulations $ - - - (343) $ (343)	Total $ 3,350,494 3,350,494 (17,481 ) (343) $ 3,332,670

ii. Debt instrument investments

December 31, 2023

Product category (Note) Investment grade bond Non-investment grade bond Total carrying amount Allowance for impairment Difference of impairment loss under regulations			Financial Assets	Financial Assets	at FVTOCI
	Stage 1 12-month ECLs $ 59,355,080 - 59,355,080 (33,941 ) - $ 59,321,139		Stage 2 Lifetime ECL $ - - - - - $ -		Stage 3 Lifetime ECL $ - - - - - $ -	Total $ 59,355,080 - 59,355,080 (33,941 ) - $ 59,321,139

• 101 -

Product category (Note) Investment grade bond Non-investment grade bond Others (NCDs issued by the CBC) Total carrying amount Allowance for impairment Difference of impairment loss under regulations	Investments in Debt Instruments at Amortized Cost	Investments in Debt Instruments at Amortized Cost	Investments in Debt Instruments at Amortized Cost	Investments in Debt Instruments at Amortized Cost	Investments in Debt Instruments at Amortized Cost	Investments in Debt Instruments at Amortized Cost
	Stage 1 12-month ECLs $ 63,327,503 - 49,249,411 112,576,914 (31,548 ) - $ 112,545,366		Stage 2 Lifetime ECL $ - - - - - - $ -		Stage 3 Lifetime ECL $ - 8,378 - 8,378 (8,378 ) - $ -	Total $ 63,327,503 8,378 49,249,411 112,585,292 (39,926 ) - $ 112,545,366

Note: The bond rating is based on the original credit rating of Moody’s, Fitch (Fitch), Standard & Poor’s (S&P) and China Credit Rating.

The breakdown below shows the Group’s investments in debt instruments classified as financial assets at FVTOCI and financial assets at amortized cost:

December 31, 2023

		Financial Assets
	Financial Assets	at Amortized
	at FVTOCI	Cost
Total carrying amount	$ 59,590,634	$ 112,585,292
Loss allowance	(33,941)	(39,926)
Amortized cost	59,556,693	112,545,366
Fair value adjustment	(235,554)	-
	$ 59,321,139	$ 112,545,366

The Group’s current credit risk rating mechanism and the total carrying amount of the investments in debt instruments of each credit rating are as follows:

Credit Rating	Definition	Recognition Basis	Expected Credit Loss	Total Carrying Amount	Total Carrying Amount
				Financial Assets at FVTOCI	Financial Assets at Amortized Cost
Normal (Stage 1) Abnormal (Stage 2) Default (Stage 3) Write offs	The debtor has a low credit risk and is fully capable of paying off contractual cash flows. Credit risk has increased significantly since the initial recognition. There is evidence that the credit is impaired. There is evidence that the debtor is facing serious financial difficulties and The Group cannot reasonably expect to recoverthe debt.	12-month expected credit losses Lifetime expected credit losses (no credit impaired) Lifetime expected credit losses (credit impaired) Write-off	0.00%-0.53% 100%	$ 59,590,634 - - -	$ 112,576,914 - 8,378 -

• 102 -

With respect to the Group’s investments in debt instruments at FVTOCI and at amortized cost, information on the changes in their loss allowance summarized by credit risk rating is as follows:

Financial assets at FVTOCI Balance at January 1, 2023 Change in credit rating Normal turned to abnormal Abnormal turned to default Default turned to write off Purchase of new debt instruments Disposal Model/risk parameter change Exchange rate and other changes Loss allowance at December 31, 2023 Financial assets at amortized cost Balance at January 1, 2023 Change in credit rating Normal turned to abnormal Abnormal turned to default Default turned to write off Purchase of new debt instruments Disposal Model/risk parameter change Exchange rate and other changes Loss allowance at December 31, 2023

Credit Rating

Normal (12-month Expected Credit Losses) Abnormal (Lifetime ECL and Not Credit Impaired) Default (Lifetime ECL and Credit Impaired) $ 27,120 $ - $ - - - - - - - - - - 18,918 - - (7,743) - - - - - (4,354) - - $ 33,941 $ - $ - $ 22,742 $ 15,100 $ 8,380 15,100 (15,100) - - - - - - - 15,345 - - (7,982) - - - - - (13,657) - (2) $ 31,548 $ - $ 8,378

December 31, 2022

Product category (Note) Investment grade bond Non-investment grade bond Total carrying amount Allowance for impairment Difference of impairment loss under regulations			Financial Assets	Financial Assets	at FVTOCI
	Stage 1 12-month ECLs $ 40,103,103 - 40,103,103 (27,120 ) - $ 40,075,983		Stage 2 Lifetime ECL $ - - - - - $ -		Stage 3 Lifetime ECL $ - - - - - $ -	Total $ 40,103,103 - 40,103,103 (27,120 ) - $ 40,075,983

• 103 -

Product category (Note) Investment grade bond Non-investment grade bond Others (NCDs issued by the CBC) Total carrying amount Allowance for impairment Difference of impairment loss under regulations	Investments in Debt Instruments at Amortized Cost	Investments in Debt Instruments at Amortized Cost	Investments in Debt Instruments at Amortized Cost	Investments in Debt Instruments at Amortized Cost	Investments in Debt Instruments at Amortized Cost	Investments in Debt Instruments at Amortized Cost
	Stage 1 12-month ECLs $ 54,515,788 - 49,498,280 104,014,068 (22,742 ) - $ 103,991,326		Stage 2 Lifetime ECL $ 1,402,240 - - 1,402,240 (15,100 ) - $ 1,387,140		Stage 3 Lifetime ECL $ - 8,380 - 8,380 (8,380 ) - $ -	Total $ 55,918,028 8,380 49,498,280 105,424,688 (46,222 ) - $ 105,378,466

Note: The bond rating is based on the original credit rating of Moody’s, Fitch (Fitch), Standard & Poor’s (S&P) and China Credit Rating.

The breakdown below shows the Group’s investments in debt instruments classified as financial assets at FVTOCI and financial assets at amortized cost:

		Financial Assets
	Financial Assets	at Amortized
	at FVTOCI	Cost
Total carrying amount	$ 41,327,887	$ 105,424,688
Loss allowance	(27,120)	(46,222)
Amortized cost	41,300,767	105,378,466
Fair value adjustment	(1,224,784)	-
	$ 40,075,983	$ 105,378,466

The Group’s current credit risk rating mechanism and the total carrying amount of the investments in debt instruments of each credit rating are as follows:

Credit Rating	Definition	Recognition Basis	Expected Credit Loss	Total Carrying Amount	Total Carrying Amount
				Financial Assets at FVTOCI	Financial Assets at Amortized Cost
Normal (Stage 1) Abnormal (Stage 2) Default (Stage 3) Write offs	The debtor has a low credit risk and is fully capable of paying off contractual cash flows. Credit risk has increased significantly since the initial recognition. There is evidence that the credit is impaired. There is evidence that the debtor is facing serious financial difficulties and the Bank cannot reasonably expect to recover the debt.	12-month expected credit losses Lifetime expected credit losses (no credit impaired) Lifetime expected credit losses (credit impaired) Write-off	0.00%-0.06% 0.83%-1.32% 100%	$ 41,327,887 - - -	$ 104,014,068 1,402,240 8,380 -

• 104 -

With respect to the Group’s investments in debt instruments at FVTOCI and at amortized cost, information on the changes in their loss allowance summarized by credit risk rating is as follows:

Financial assets at FVTOCI Balance at January 1, 2022 Change in credit rating Normal turned to abnormal Abnormal turned to default Default turned to write off Purchase of new debt instruments Disposal Model/risk parameter change Exchange rate and other changes Loss allowance at December 31, 2022 Financial assets at amortized cost Balance at January 1, 2022 Change in credit rating Normal turned to abnormal Abnormal turned to default Default turned to write off Purchase of new debt instruments Disposal Model/risk parameter change Exchange rate and other changes Loss allowance at December 31, 2022

Credit Rating

Normal (12-month Expected Credit Losses) Abnormal (Lifetime ECL and Not Credit Impaired) Default (Lifetime ECL and Credit Impaired) $ 29,891 $ - $ - - - - - - - - - - 639 - - (1,657) - - - - - (1,753) - - $ 27,120 $ - $ - $ 23,109 $ - $ 7,554 (15,100) 15,100 - - - - - - - 7,336 - - (7,078) - - - - - 14,475 - 826 $ 22,742 $ 15,100 $ 8,380

• 3) Liquidity risk

• a) The source and definition of liquidity risk:

Liquidity risk refers to the potential loss resulting from the shortage of funds in acquiring assets or repaying debts on maturity, such as the cash outflow arising from the depositors’ withdrawal of deposits, loan drawdown, other interests, expenses, or off-balance sheet transactions. To ensure sufficient capital liquidity, measures that can be taken include enough cash buffer in shares or readily realizable marketable securities, allocation of the period, absorbing deposits or financial borrowings, etc.

• 105 -

b) The Group’s liquidity risk policies

The Group establishes a strategy based on the conservatism principle to diversify the source and duration of funds, participates in the fund’s lending market and maintains strong relationship with fund providers to ensure the stability and reliability of funding sources.

The Group formulates relevant standards including risk identification, measurement, monitoring and reporting in order to control and grasp the potential adverse effects, regularly performs stress tests and analyzes the crisis situation to mitigate impact of excessive capital flows, establishes a limit monitoring mechanism, and sets management indicators such as liquidity ratios, cash flow gaps, etc.

The Group’s liquidity risk management unit is the Asset and Liability Management Committee (hereinafter referred to as the “Committee”). The Committee must adopt necessary monitoring steps to maintain adequate liquidity and ensure that certain committees should regularly report to the board of directors for effective management of liquidity risks.

Maturity analysis of non-derivative financial liabilities

The Group disclosed the analysis of cash outflows from non-derivative financial liabilities by the residual maturities as of the balance sheet date. The amounts used in the maturity analyses of derivative financial liabilities are based on contractual cash flows, so some of these amounts may not correspond to the amounts shown on the consolidated balance sheets.

December 31, 2023	0-30 Days	31-90 Days	91-180 Days	181 Days - **1 Year **	Over 1 Year	Total
Due to the Central Bank and other banks Funds borrowed from the Central Bank and other banks Bonds purchased under resale agreements Payables Deposits and remittances Bank debentures Lease liabilities Other items ofcashoutflow on maturity	$ 11,602,768 3,194,052 5,206,532 10,567,990 73,970,358 - 17,463 2,057,114	$ - 2,957,588 620,716 1,800,480 91,688,110 - 34,926 1,816,659	$ 730 1,501,076 - 173,482 91,729,323 - 51,651 50,162	$ 11,970 653,720 - 781,438 171,796,556 77,820 101,039 416,545	$ - 4,176,326 - 350,698 300,445,050 16,500,000 975,690 3,998,375	$ 11,615,468 12,482,762 5,827,248 13,674,088 729,629,397 16,577,820 1,180,769 8,338,855
December 31, 2022	0-30 Days	31-90 Days	91-180 Days	181 Days - **1 Year **	Over 1 Year	Total
Due to the Central Bank and other banks Funds borrowed from the Central Bank and other banks Payables Deposits and remittances Bank debentures Lease liabilities Other items of cash outflow on maturity	$ 8,702,273 595,482 9,156,221 57,407,306 - 15,329 1,723,635	$ - 3,010,784 713,207 93,823,189 - 30,804 943,549	$ 730 2,408,823 582,054 122,763,117 - 43,779 818,529	$ 737 1,129,083 343,950 124,054,389 71,967 85,883 196,423	$ - 1,753,930 260,582 285,517,592 16,500,000 776,242 3,608,645	$ 8,703,740 8,898,102 11,056,014 683,565,593 16,571,967 952,037 7,290,781

Maturity analysis of derivative financial liabilities

• a) Derivative instruments settled at net amounts

Derivative instruments settled at net amounts include:

Foreign exchange derivative instruments: Foreign exchange forward contracts and cross-currency option contracts.

• 106 -

The Group assesses the maturity dates of derivative contracts to understand the basic elements of all derivative financial instruments shown on the consolidated balance sheets. The amounts used in the consolidated balance sheets are based on contractual cash flows. Therefore, some amounts may not correspond to the consolidated balance sheets. The maturity analysis of derivative financial liabilities was as follows:

December 31, 2023	0-30 Days	31-90 Days	91-180 Days	181 Days - 1 Year	Over 1 Year	Total
Derivative financial liabilities at FVTPL Foreign currency derivatives	$ 71,178	$ 74,330	$ 104,523	$ 51,317	$ -	$ 301,348
December 31, 2022	0-30 Days	31-90 Days	91-180 Days	181 Days - 1 Year	Over 1 Year	Total
Derivative financial liabilities at FVTPL Foreign currency derivatives	$ 58,272	$ 125,454	$ 116,544	$ 85,040	$ -	$ 385,310

• b) Derivative instruments settled at gross amounts

Derivative instruments settled at gross amounts include:

Foreign exchange derivatives instruments: Foreign exchange forward contracts and cross-currency swap contracts.

The Group disclosed the analysis of derivative instruments to be settled at gross amount by the residual maturities as of the balance sheet date. The Group assesses the maturity dates of derivative contracts to understand the basic elements of all derivative financial instruments shown in the balance sheets. The amounts used in the maturity analyses of derivative financial liabilities are based on contractual cash flows, so some of these amounts may not correspond to the amounts shown on the consolidated balance sheets. The maturity analysis of derivative financial liabilities settled at gross amounts was as follows:

December 31, 2023	0-30 Days	31-90 Days	91-180 Days	181 Days - **1 Year **	Over 1 Year	Total
Derivative financial liabilities at FVTPL Foreign currency derivatives Outflows Inflows	$ 41,435,207 40,557,512	$ 31,075,829 30,359,075	$ 3,583,548 3,448,072	$ 12,246,113 11,864,271	$ - -	$ 88,340,697 86,228,930
Total outflows Total inflows	41,435,207 40,557,512	31,075,829 30,359,075	3,583,548 3,448,072	12,246,113 11,864,271	- -	88,340,697 86,228,930
Netflows	$ (877,695 )	$ (716,754)	$ (135,476 )	$ (381,842)	$ -	$ (2,111,767)
December 31, 2022	0-30 Days	31-90 Days	91-180 Days	181 Days - **1 Year **	Over 1 Year	Total
Derivative financial liabilities at FVTPL Foreign currency derivatives Outflows Inflows	$ 17,935,625 17,720,731	$ 7,870,492 7,598,820	$ 2,694,326 2,595,045	$ 910,033 863,855	$ - -	$ 29,410,476 28,778,451
Total outflows Total inflows	17,935,625 17,720,731	7,870,492 7,598,820	2,694,326 2,595,045	910,033 863,855	- -	29,410,476 28,778,451
Netflows	$ (214,894)	$ (271,672)	$ (99,281)	$ (46,178 )	$ -	$ (632,025 )

• 107 -

• 4) Maturity analysis of off-balance-sheet items

The following table shows the Group’s maturity analysis of off-balance sheet items based on the residual maturities from the consolidated balance sheets. For the financial guarantee contract issued, the maximum amount of guarantee is included in the earliest period that may be required to perform the guarantee. The amounts in the table below were prepared on contractual cash flow basis; therefore, some disclosed amounts would not match with the consolidated balance sheets.

December 31, 2023	0-30 Days	31-90 Days	91-180 Days	181 Days - **1 Year **	Over 1 Year	Total
Loan commitments Letters of credit Guarantee receivables Lease contract commitment	$ 9,929,270 1,681,152 6,982,654 5,438,394	$ 21,454,892 1,744,003 4,169,771 485,766	$ 37,547,101 382,161 2,259,268 480,632	$ 70,202,205 6,416 3,866,828 421,373	$ 68,784,295 - 13,158,675 -	$ 207,917,763 3,813,732 30,437,196 6,826,165
Total	$ 24,031,470	$ 27,854,432	$ 40,669,162	$ 74,496,822	$ 81,942,970	$248,994,856
December 31, 2022	0-30 Days	31-90 Days	91-180 Days	181 Days - **1 Year **	Over 1 Year	Total
Loan commitments Letters of credit Guarantee receivables Lease contract commitment	$ 9,837,095 966,386 4,810,563 2,814,549	$ 19,810,438 2,083,566 6,111,423 246,797	$ 31,619,264 288,243 1,167,508 161,104	$ 70,681,639 12,299 3,306,319 254,735	$ 54,419,920 - 11,873,688 -	$ 186,368,356 3,350,494 27,269,501 3,477,185
Total	$ 18,428,593	$ 28,252,224	$ 33,236,119	$ 74,254,992	$ 66,293,608	$220,465,536

• 5) Cash flow and fair value risk of interest rate fluctuation

The floating-rate assets/liabilities held by the Bank may be exposed to risks of future cash inflow/outflow. Since the risk is considered substantial, it is therefore hedged by the Group.

41. TRANSFERS OF FINANCIAL ASSETS

Transferred Financial Assets That Do Not Qualify for Derecognition

Most of the transferred financial assets of the Group that are not derecognized in their entirety are securities sold under repurchase agreements. According to these transactions, the right of receiving cash flows from the transferred financial assets would be transferred to other entities and the associated liabilities of the Group’s obligation to repurchase the transferred financial assets at a fixed price in the future would be recognized. As the Group is restricted to use, sell or pledge the transferred financial assets throughout the term of transaction, and is still exposed to interest rate risks and credit risks on these instruments, the transferred financial assets are not derecognized in their entirety. The details of financial assets that were not derecognized in their entirety and the associated financial liabilities were as follows:

	December 31, 2023	December 31, 2023	December 31, 2023
Category of Financial Assets	Carrying Amount of Transferred Financial Assets	Carrying Amount of Associated Financial Liabilities	Fair Value of Transferred Financial Assets	Fair Value of Associated Financial Liabilities	Fair Value of Net Position
Financial assets at FVTOCI Securities sold under repurchase agreements Investments in debt instruments at amortized cost Securities sold under repurchase agreements	$ 182,810 6,043,264	$ 147,284 5,609,271	$ 162,089 5,903,831	$ 147,284 5,609,271	$ 14,805 294,560

• 108 -

42. OFFSETTING FINANCIAL ASSETS AND FINANCIAL LIABILITIES

The Group did not hold financial instruments covered by Section 42 of the IAS 32 “Financial Instruments: Presentation” endorsed by the Financial Supervisory Commission; thus, it made an offset of financial assets and liabilities and reported the net amount in the consolidated balance sheets.

The Group engages in transactions on the following financial assets and liabilities that are not subject to balance sheet offsetting based on IAS 32 but are under master netting arrangements or similar agreements. These agreements allow both the Group and its counterparties to opt for the net settlement of financial assets and financial liabilities. If one party defaults, the other party may choose net settlement.

The netting information of financial assets and financial liabilities is set out below:

December 31, 2023

Gross Amounts Gross Amounts of Recognized Financial Liabilities Net Amounts of Financial Assets Presented Financial Assets of Recognized Financial Assets Offset in the Balance Sheets in the Balance Sheets Securities purchased under resale agreements $ 10,696,795 $ - $ 10,696,795 Gross Amounts Gross Amounts of Recognized Financial Net Amounts of Financial Liabilities of Recognized Financial Liabilities Liabilities Offset in the Balance Sheets Financial Assets Presented in the Balance Sheets Securities sold under repurchase agreements$ 5,756,555 $ - $ 5,756,555 December 31, 2022 Gross Amounts Gross Amounts of Recognized Financial Liabilities Net Amounts of Financial Assets Presented Financial Assets of Recognized Financial Assets Offset in the Balance Sheets in the Balance Sheets Securities purchased under resale agreements $ 11,643,340 $ - $ 11,643,340	Related Amounts Not Offset in the Balance Sheets Financial Instruments Cash Collateral Received $ 10,696,795 $ - Related Amounts Not Offset in the Balance Sheets Financial Instruments Cash Collateral Received $ 5,756,555 $ - Related Amounts Not Offset in the Balance Sheets Financial Instruments Cash Collateral Received $ 11,643,340 $ -	Net Amount $ -
		Net Amount $ -
		Net Amount $ -

• 109 -

43. INFORMATION ABOUT THE BANK

a. Asset quality

Category	Items	Items			December 31, 2023					December 31, 2022
			Non-performing Loan (Note 1)	Total Loan	NPL Ratio (Note 2)	Allowance For Loan Losses	Coverage Ratio (Note 3)	Non-performing Loan (Note 1)	Total Loan	NPL Ratio (Note 2)	Allowance For Loan Losses	Coverage Ratio (Note 3)
Corporate loans	Secured		$ 262,155	$155,084,145	0.17%	$ 2,148,434	819.53%	$ 356,934	$151,757,965	0.24%	$ 1,742,917	488.30%
	Unsecured		40,748	106,600,114	0.04%	1,612,376	3,956.95%	26,809	98,766,960	0.03%	1,618,539	6,037.30%
Consumer loans	Mortgage (Note4)		221,953	82,297,524	0.27%	1,241,832	559.50%	135,497	72,455,523	0.19%	1,086,696	802.01%
	Cash card		-	-	-	-	-	-	-	-	-	-
	Microcredit (Note 5)		1,361	673,649	0.20%	8,690	638.50%	2,086	928,828	0.22%	12,337	591.42%
	Other (Note 6)	Secured	219,602	166,961,744	0.13%	1,848,250	841.64%	229,450	161,245,185	0.14%	1,706,989	743.95%
		Unsecured	32,567	35,976,096	0.09%	420,932	1,292.51%	31,468	34,355,388	0.09%	486,831	1,547.07%
Loans			778,386	547,593,272	0.14%	7,280,514	935.33%	782,244	519,509,849	0.15%	6,654,309	850.67%
Category		Items			December 31, 2023					December 31, 2022
			Overdue Receivable	Accounts Receivable	Delinquency Ratio	Allowance for Credit Losses	Coverage Ratio	Overdue Receivable	Accounts Receivable	Delinquency Ratio	Allowance for Credit Losses	Coverage Ratio
Credit card			$ 1,113	$ 770,844	0.14%	$ 20,188	1,813.84%	$ 1,196	$ 792,342	0.15%	$ 27,284	2,281.27%
Accountsrec	eivable withoutreco	urse (Note7)	-	144,660	-	7,905	-	-	148,925	-	7,906	-

• 110 -

Non-reportable overdue loans and receivables

	December 31, 2023	December 31, 2023	December 31, 2022	December 31, 2022
	Non-reportable NPL Balance	Non-reportable Overdue Receivable Balance	Non-reportable NPL Balance	Non-reportable Overdue Receivable Balance
Non-reportable amount upon performance of debt negotiationprogram(Note 8)	$ 412	$ 255	$ 682	$ 502
Amount received from performance of debt negotiation program (Note 9)	8,019	12,128	9,284	13,990
Total	8,431	12,383	9,966	14,492

• Note 1: The amount recognized as non-performing loans (NPL) is in compliance with the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans”. Non-performing credit loans represent the amounts of non-performing loans reported to the FSC, as required by the FSC in its letter dated July 6, 2005 (Ref. No. 0944000378).

• Note 2: Non-performing loan ratio = Non-performing loans ÷ Outstanding loan balance; Non-performing credit loan ratio = Non-performing loans ÷ Accounts receivable balance.

• Note 3: Allowance for doubtful accounts ratio = Allowance for doubtful accounts in loans ÷ Overdue loans; Allowance for doubtful accounts ratio of credit card = Allowance for doubtful accounts in credit cards ÷ Overdue loans.

• Note 4: Home mortgage refers to financing obtained to buy, build, or fix houses owned by the borrowers’ spouse or children, with the house used as loan collateral.

• Note 5: Microcredit is covered by the FSC pronouncement dated December 19, 2005 (Ref No. 09440010950) and is excluded from credit card and cash card loans.

• Note 6: “Others” under consumer loans refers to secured or unsecured loans other than mortgage loans, cash cards, microcredit, and credit cards.

• Note 7: As required by the FSC in its letter dated July 19, 2005 (Ref No. 094000494), a provision for bad debts is recognized once no compensation is made by a factor or insurance company for accounts receivable factored without recourse.

• Note 8: Accounts under “loans not required to be classified as NPL upon performance of a debt negotiation program” and “accounts receivable not required to be classified as overdue receivable upon debt negotiation program” were processed according the FSC pronouncement dated April 25, 2006 (Ref No. 09510001270).

• Note 9: Accounts under “loans not required to be classified as NPL upon performance of a debt discharge program and rehabilitation program” and “accounts receivable not required to be classified as overdue receivable upon debt discharge program and rehabilitation program” were processed according the FSC pronouncement dated September 15, 2008 (Ref No. 09700318940), the FSC pronouncement dated September 20, 2016 (Ref No. 10500134790).

• 111 -

b. Concentration of credit extensions

(In Thousands of New Taiwan Dollars, %)

Year	December 31, 2023
Top 10 Rank (Note 1)	Group (Note 2)	Total Credit (Note 3)	Percentage of Net Worth (%)
1	Group A 016700 real estate development activities	$ 4,464,568	5.83
2	Group B 016700 real estate development activities	4,052,468	5.30
3	Group C 016700 real estate development activities	2,854,700	3.73
4	Group D 016499 other financial intermediation	2,462,170	3.22
5	Group E 012411 smelting and refining of iron and steel	2,429,343	3.17
6	Group F 016700 real estate development activities	1,764,986	2.31
7	Group G 010892 manufacture of macaroni, noodles, couscous and similar farinaceous products	1,707,194	2.23
8	Bank H 016700realestate development activities	1,648,140	2.15
9	Group I 014100 construction industry	1,497,104	1.96
10	Group J 013822waste treatmentindustry	1,462,326	1.91

Year	December 31, 2022
Top 10 Rank (Note 1)	Group (Note 2)	Total Credit (Note 3)	Percentage of Net Worth (%)
1	Group A 016700 real estate development activities	$ 5,021,523	7.25
2	Group K 016700 real estate development activities	3,790,746	5.48
3	Group C 016700 real estate development activities	2,619,968	3.78
4	Group L 014290 civil engineering construction	2,145,417	3.10
5	Group E 012411 smelting and refining of iron and steel	1,935,822	2.80
6	Group H 016700 real estate development activities	1,828,917	2.64
7	Group G 010892 manufacture of macaroni, noodles, couscous and similar farinaceous products	1,806,030	2.61
8	Bank I 014100 construction industry	1,800,380	2.60
9	Group M 016499 other financial intermediation	1,694,364	2.45
10	Group N 012630 bare printed circuit boardsmanufacturing	1,677,686	2.42

• 112 -

• Note 1: The ranking is arranged in descending order of the outstanding loan balance, excluding all the government entities and nation-owned enterprises. If the borrower is a member company of a group, then the disclosed amount will be the total granted loan amount for that entire group. (i.e., Group A real estate development activities).

• Note 2: According to Article 6 of the “Supplementary Provisions to the Stock Exchange Corporation Criteria for the Review of Securities Listings”, Group refers to the entity that has a controlling or subordinate relationship with the counterparty that obtained loans from the Bank.

• Note 3: Credit balance means the sum of all the loans (including import bill negotiated, discounted export bills negotiated, overdrafts, short-term secured and unsecured loans, securities margin loan receivables, medium-term secured and unsecured loans, long-term secured and unsecured loans and delinquent receivables), exchange bills negotiated, accounts receivable factored without recourse, acceptances receivable, and guarantees issued.

• c. Interest rate sensitivity information

Interest Rate Sensitivity December 31, 2023 (In Thousands of New Taiwan Dollars, %)	Interest Rate Sensitivity December 31, 2023 (In Thousands of New Taiwan Dollars, %)	Interest Rate Sensitivity December 31, 2023 (In Thousands of New Taiwan Dollars, %)	Interest Rate Sensitivity December 31, 2023 (In Thousands of New Taiwan Dollars, %)	Interest Rate Sensitivity December 31, 2023 (In Thousands of New Taiwan Dollars, %)	Interest Rate Sensitivity December 31, 2023 (In Thousands of New Taiwan Dollars, %)
Items	1 to 90 Days	91 to 180 Days	181 Days to One Year	Over One Year	Total
Interest-sensitive assets	$ 561,918,709	$ 5,722,640	$ 7,699,476	$124,846,576	$ 700,187,401
Interest-sensitive liabilities	181,288,145	377,626,703	86,850,531	9,169,678	654,935,057
Interest sensitivity gap	380,630,564	(371,904,063)	(79,151,055)	115,676,898	45,252,344
Net equity					76,514,984
Ratio of interest-sensitive assets to liabilities					106.91%
Ratio of interest sensitivity gap tonet equity					59.14%

December 31, 2022

(In Thousands of New Taiwan Dollars, %)

Items	1 to 90 Days	91 to 180 Days	181 Days to One Year	Over One Year	Total
Interest-sensitive assets	$ 533,316,870	$ 13,603,764	$ 13,332,755	$ 97,341,828	$ 657,595,217
Interest-sensitive liabilities	186,729,333	354,942,588	68,228,832	8,934,801	618,835,554
Interest sensitivity gap	346,587,537	(341,338,824)	(54,896,077)	88,407,027	38,759,663
Net equity					69,229,626
Ratio of interest-sensitive assets to liabilities					106.26%
Ratio of interest sensitivity gap tonet equity					55.99%

• Note 1: The above amounts included only the New Taiwan dollar amounts held by the head office and branches of the Bank (i.e., excluding foreign currency).

• Note 2: Interest rate-sensitive assets and liabilities mean the revenues or costs of interest-earning assets and interest-bearing liabilities affected by interest rate changes.

• 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 (in New Taiwan dollars).

• 113 -

Interest Rate Sensitivity December 31, 2023

(In Thousands of U.S. Dollars, %)

Items	1 to 90 Days	91 to 180 Days	181 Days to **One Year **	Over One Year	Total
Interest-sensitive assets	$ 1,563,571	$ 115,543	$ 54,594	$ 676,100	$ 2,409,808
Interest-sensitiveliabilities	1,596,783	1,066,377	289,586	-	2,952,746
Interest sensitivity gap	(33,212)	(950,834)	(234,992)	676,100	(542,938)
Net equity					2,492,345
Ratio of interest-sensitive assets to liabilities					81.61%
Ratio of interest sensitivity gap to net equity					(21.78%)

December 31, 2022

(In Thousands of U.S. Dollars, %)

Items	1 to 90 Days	91 to 180 Days	181 Days to One Year	Over One Year	Total
Interest-sensitive assets	$ 1,580,836	$ 119,596	$ 29,367	$ 430,111	$ 2,159,910
Interest-sensitive liabilities	994,087	1,111,779	290,778	9,590	2,406,234
Interest sensitivity gap	586,749	(992,183)	(261,411)	420,521	(246,324)
Net equity					2,254,302
Ratio of interest-sensitive assets to liabilities					89.76%
Ratio of interest sensitivity gap tonet equity					(10.93%)

• Note 1: The above amounts included only the U.S. dollar amounts held by the head office, domestic branches, OBU and overseas branches of the Bank and excluded contingent assets and contingent liabilities.

• Note 2: Interest rate-sensitive assets and liabilities mean the revenues or costs of interest-earning assets and interest-bearing liabilities affected by interest rate changes.

• 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 (in U.S. dollars).

• d. Profitability

Unit: %

	Items	December 31, 2023	December 31, 2022
Return on total assets	Pretax	0.97	0.83
	Aftertax	0.82	0.69
Return on net equity	Pretax	11.06	9.76
	After tax	9.36	8.06
Profitmargin		41.93	38.15

Note 1: Return on total assets = Income before (after) income tax ÷ Average total assets.

• Note 2: Return on equity = Income before (after) income tax ÷ Average equity.

• Note 3: Net income ratio = Income after income tax ÷ Total net revenues.

• Note 4: Income before (after) income tax represents income for the years ended December 31, 2023 and 2022.

• 114 -

• e. Maturity analysis of assets and liabilities

Maturity Analysis of Assets and Liabilities December 31, 2023

(In Thousands of New Taiwan Dollars)

	Total		**Period **	Remaining until D	ue Date and Amo	unt Due
		0-10 Days	11-30 Days	31-90 Days	91-180 Days	181 Days - **1 Year **	Over 1 Year
Major capital inflow on maturity	$768,051,330	$ 82,704,794	$ 56,523,371	$ 45,533,005	$ 55,359,383	$117,023,970	$410,906,807
Major capital outflow on maturity	938,552,036	42,528,422	42,719,282	108,070,504	132,594,108	224,681,146	387,958,574
Gap	(170,500,706)	40,176,372	13,804,089	(62,537,499)	(77,234,725)	(107,657,176)	(22,948,233)

December 31, 2022

(In Thousands of New Taiwan Dollars)

	Total		**Period **	Remaining until D	ue Date and Amo	unt Due
		0-10 Days	11-30 Days	31-90 Days	91-180 Days	181 Days - **1 Year **	Over 1 Year
Major capital inflow on maturity	$719,581,681	$ 87,869,117	$ 46,318,450	$ 39,703,466	$ 67,850,512	$119,682,541	$ 358,157,595
Major capital outflow on maturity	869,931,286	35,110,040	41,863,762	102,458,862	163,273,569	162,255,702	364,969,351
Gap	(150,349,605 )	52,759,077	4,454,688	(62,755,396 )	(95,423,057)	(42,573,161)	(6,811,756 )

Note: The above amounts included only the New Taiwan dollar amounts held by the head office and domestic branches of the Bank (excluding foreign currency).

Maturity Analysis of Assets and Liabilities December 31, 2023

(In Thousands of U.S. Dollars)

	Total		Remaining Period to Maturity	Remaining Period to Maturity	Remaining Period to Maturity
		0-30 Days	31-90 Days	91-180 Days	181 Days - 1 Year	Over 1 Year
Major capital inflow on maturity	$ 4,418,319	$ 1,285,574	$ 645,249	$ 257,721	$ 456,567	$ 1,773,208
Major capital outflow on maturity	5,118,011	1,848,710	1,086,478	668,124	1,052,599	462,100
Gap	(699,692 )	(563,136 )	(441,229 )	(410,403 )	(596,032 )	1,311,108

December 31, 2022

(In Thousands of U.S. Dollars)

	Total		Remaining Period to Maturity	Remaining Period to Maturity	Remaining Period to Maturity
		0-30 Days	31-90 Days	91-180 Days	181 Days - 1 Year	Over 1 Year
Major capital inflow on maturity	$ 3,331,509	$ 930,995	$ 647,289	$ 313,817	$ 190,396	$ 1,249,012
Major capital outflow on maturity	3,952,581	1,007,088	1,124,128	547,858	907,992	365,515
Gap	(621,072 )	(76,093 )	(476,839 )	(234,041 )	(717,596 )	883,497

• Note 1: The above amounts included only the U.S. dollar amounts held by the head office, domestic branches, OBU and overseas branches of the Bank and excluded contingent assets and contingent liabilities.

• Note 2: When the OBU’s assets account for 10% of total assets of the Bank, the Bank should provide complimentary disclosed information.

• 115 -

44. CAPITAL MANAGEMENT

• a. The purpose of capital management is to meet the criteria set by administration which is the basic goal of the Group’s capital management. The calculation method of the relevant qualified eligible capital and legal capital should be handled in accordance with the regulations of the competent authority.

To maintain the ratio of eligible capital to risk-weighted assets above the target level, the capital management structure of the Group should be properly planned depending on the conditions of capital market, the characteristics of various capital instruments, the efficiency of capital utilization and the impact of operational performance.

• b. The Group follows the relevant regulations of the competent authority and the internal operating procedures of the Bank, to regularly disclose relevant information on capital adequacy and report to the competent authority on a quarterly basis.

Self-owned capital of the Bank is divided into Tier 1 capital and Tier 2 capital according to principles of capital adequacy management.

• 1) The term “Net Tier 1 Capital” shall mean the aggregate amount of net common Equity Tier 1 and net additional Tier 1 Capital.

• a) Common equity Tier 1 capital consists of the common shares and additional paid-in capital in excess of par - common shares, the capital collected in advance, the capital reserves, the statutory surplus reserves, the special reserves, the accumulated profit or loss, the non-controlling interests and other items of interest.

• b) Additional Tier 1 capital consists of non-cumulative perpetual preferred shares and its capital share premium, the non-cumulative perpetual subordinated debts, the non-cumulative perpetual preferred shares and its capital share premium, and the non-cumulative perpetual subordinated debts which are issued by banks’ subsidiaries, and are not directly or indirectly held by banks.

2) Tier 2 capital

Tier 2 capital consists of cumulative perpetual preferred shares and its capital share premium, the cumulative perpetual subordinated debts, the convertible subordinated debts, the long-term subordinated debts, the non-perpetual preferred shares and its capital share premium, when applying International Financial Reporting Standards in real estate and using the fair value method or the re-estimated value method as the deemed cost for the first time, the difference in amount between the deemed cost and the carrying amount recognized in retained earnings, the 45% of unrealized gains on changes in the fair value of investment properties using the fair value method, as well as the 45% of unrealized gains on available-for-sale financial assets, the operational reserves and loan-loss provisions and the cumulative perpetual preferred shares and its capital share premium, the cumulative perpetual subordinated debts, the convertible subordinated debts, the long-term subordinated debts, and the non-perpetual preferred shares and its capital share premiums, which are issued by banks’ subsidiaries, and are not directly or indirectly held by banks.

• 116 -

c. Capital adequacy ratio (CAR)

(Unit: In Thousands of New Taiwan Dollars, %)

Items	Year	Year	December 31, 2023	December 31, 2022
Eligible capital	Common equity		$ 74,539,797	$ 68,474,651
	Other Tier 1capital		11,500,000	11,500,000
	Tier 2 capital		11,651,115	11,202,188
	Eligible capital		97,690,912	91,176,839
Risk-weighted assets	Credit risk	Standardized approach	596,233,852	540,288,772
		Internal ratings-based approach	-	-
		Securitization	-	-
	Operational risk	Basic indicator approach	28,802,988	25,176,050
		Standardized approach/alternative standardized approach	-	-
		Advanced measurement approach	-	-
	Market risk	Standardized approach	18,000,738	12,872,888
		Internal model approach	-	-
	Risk-weighted assets		643,037,578	578,337,710
Capital adequacy ratio (%)			15.19%	15.77%
Ratio of common equity to risk-weighted assets (%)			11.59%	11.84%
Ratio of Tier 1 capital to risk-weighted assets (%)			13.38%	13.83%
Leverageratio (%)			9.27%	9.40%

• Note 1: Eligible capital and risk-weighted assets are calculated under the “Regulations Governing the Capital Adequacy Ratio of Banks” and “Explanation of Methods for Calculating the Eligible Capital and Risk-Weighted Assets of Banks”.

• Note 2: Annual financial statements should include capital adequacy ratio of the current and prior year. Semi-annual financial statements in addition to exposing the current and prior year’s financial status, should also include the capital adequacy ratio at the end of prior year.

• Note 3: Formulas used were as follows:

• 1) Eligible capital = Common equity + Other Tier 1 capital + Tier 2 capital.

• 2) Risk-weighted assets = Risk-weighted asset for credit risk + Capital requirements for operational risk and market risk x 12.5.

• 3) Capital adequacy ratio = Eligible capital ÷ Risk-weighted assets.

• 4) Ratio of the common equity to risk-weighted assets = Common equity ÷ Risk-weighted assets.

• 5) Ratio of Tier 1 capital to risk-weighted assets = (Common equity + Other Tier 1 capital) ÷ Risk-weighted assets.

• 6) Leverage ratio = Tier 1 capital ÷ Exposure measurement.

• Note 4: Exempt from disclosure in the preparation of the first and third quarters of the financial reports.

• 117 -

45. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

Details of significant assets and liabilities denominated in foreign currencies were as follows:

Financial assets in foreign currencies Cash and cash equivalents Due from the Central Bank and call loans to other banks Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Notes discounted and loans Receivables Financial assets at amortized cost Other assets Financial liabilities in foreign currencies Funds borrowed from the Central Bank and other banks Deposits and remittances Financial liabilities at fair value through profit or loss Other financial liabilities Payables Lease liabilities Notes issued under repurchase agreements Provisions Other liabilities New Taiwan dollars exchange rate Financial assets in foreign currencies Cash and cash equivalents Due from the Central Bank and call loans to other banks Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Notes discounted and loans Receivables Financial assets at amortized cost Other assets Financial liabilities in foreign currencies Funds borrowed from the Central Bank and other banks Deposits and remittances Financial liabilities at fair value through profit or loss Other financial liabilities Payables Lease liabilities Provisions Other liabilities New Taiwan dollars exchange rate	December 31, 2023
	USD CNY JPY AUD EUR Others Total $ 11,955,576 $ 2,301,166 $ 1,163,143 $ 161,960 $ 578,846 $ 552,091 $ 16,712,782 1,240,280 86,520 - - - 439,105 1,765,905 1,595,572 - - - - 54,356 1,649,928 7,655,047 1,122,688 - 7,785,503 711,874 767,171 18,042,283 30,609,277 2,250,650 597,442 1,374,190 555,224 214,619 35,601,402 1,081,224 5,503,414 209,269 93,911 17,965 201,898 7,107,681 21,611,093 3,697,430 - 1,834,870 - 1,125,762 28,269,155 1,209,664 - - - - 228 1,209,892 - 5,035,670 - - - - 5,035,670 83,073,540 3,700,225 2,520,255 2,033,455 575,265 1,807,788 93,710,528 732,882 - - - - 54,356 787,238 2,796,770 - - - - 1,043,181 3,839,951 659,250 66,426 208,267 5,507 4,718 134,171 1,078,339 - 40,009 - - - 16,301 56,310 4,886,555 - - - - - 4,886,555 27,383 - - - - - 27,383 60,044 72,218 5,549 - 553 82 138,446 30.70 4.33 0.22 20.98 33.98 December 31, 2022
	USD CNY JPY AUD EUR Others Total $ 9,527,681 $ 1,128,203 $ 803,424 $ 197,957 $ 486,572 $ 546,630 $ 12,690,467 832,241 88,160 - - - 1,126,794 2,047,195 1,792,730 4,478 - - - 138,956 1,936,164 1,927,861 1,648,980 - 113,502 - - 3,690,343 30,917,527 1,024,811 1,474,882 78,487 1,234,882 599,686 35,330,275 829,905 4,012,178 241,772 17,466 10,231 103,348 5,214,900 22,068,806 4,053,954 - 1,419,170 - 868,909 28,410,839 968,486 - - - - - 968,486 - 3,652,448 - - - - 3,652,448 71,102,367 3,121,409 1,775,057 1,784,323 681,192 1,707,104 80,171,452 828,637 - - - 138,956 967,593 2,844,053 - - - - 1,145,435 3,989,488 469,660 75,895 239,674 1,014 3,756 21,489 811,488 - 32,365 - - - 7,039 39,404 27,730 - - - - - 27,730 135,641 46,773 2,439 - 55,379 - 240,232 30.71 4.41 0.23 20.82 32.71

• 118 -

46. CASH FLOW INFORMATION

Changes in Liabilities Arising from Financing Activities

For the year ended December 31, 2023

Funds borrowed from the Central Bank and other banks Commercial papers Guarantee deposits received Bank debentures Lease liabilities	Opening Balance $ 8,898,102 2,681,022 620,271 16,500,000 852,915 $ 29,552,310	Cash Inflows (Outflows) $ 3,584,660 1,137,461 60,150 - (170,229) $ 4,612,042		Non-cash Changes	Non-cash Changes	Other (Note) $ - - - - (337) $ (337)	Closing Balance $ 12,482,762 3,818,483 680,421 16,500,000 1,093,882
				New Leases $ - - - - 595,256 $ 595,256	End of Lease Term $ - - - - (183,723) $ (183,723)
							$ 34,575,548

For the year ended December 31, 2022

Funds borrowed from the Central Bank and other banks Commercial papers Guarantee deposits received Bank debentures Lease liabilities	Opening Balance $ 10,459,156 2,063,676 641,997 16,500,000 853,218 $ 30,518,047	Cash Inflows (Outflows) $ (1,561,054 ) 617,346 (21,726 ) - (147,016) $ (1,112,450)		Non-cash Changes	Non-cash Changes	Other (Note) $ - - - - 2,006 2,006	Closing Balance $ 8,898,102 2,681,022 620,271 16,500,000 852,915
				New Leases $ - - - - 207,780 $ 207,780	End of Lease Term $ - - - - (63,073) $ (63,073)
							$ 29,552,310

Note: The number of foreign currency exchange rate effects.

47. EVENTS AFTER REPORTING PERIODS

In order to obtain a platform for the development of banking business in the western United States and improve international competitiveness to enhance the economic benefits of the overall scale, on October 1, 2022, the Bank’s board of directors resolved to acquire American Continental Bancorp, headquartered in Industrial City, California, for an estimated consideration of $41.4834 per share. The amount of consolidated net value of American Continental Bancorp on the settlement date, after verification by an accountant, is based on the multiplier of 1.83 to determine the purchase price. The case is subject for approval by the competent authorities of both parties before the subsequent transactions can be completed. Upon completion of the transaction, American Continental Bancorp will become a 100% owned subsidiary of the Bank.

Considering the rapid and unpredictable changes in the global political and economic environment, as well as the fact that the commitments and conditions stated in the merger agreement and plan had not been fulfilled completely as of the termination date, the Bank announced on October 14, 2023 the cease of acquisition with American Continental Bancorp along with a payment of US$500 thousand.

• 119 -

48. SIGNIFICANT EVENTS AFTER REPORTING PERIODS

In order to investigate violations of the Securities and Exchange Act, the prosecution went to Taichung Bank Corporation, Taichung Bank Insurance Brokers Co., Ltd. and Taichung Bank Leasing Corporation Limited to conduct searches on January 30, 2024. The chairmen of Taichung Bank Corporation and Taichung Bank Insurance Brokers Co., Ltd. were released on bail on February 1, 2024, as ordered by the Taiwan New Taipei District Court.

According to the sanction No. 11302700994 issued by the Financial Supervisory Commission, Wang Gui-feng was suspended from performing his duties as the chairman for three months. The board of directors of Taichung Bank Corporation elected Liao Hsueh-Hsuan as the proxy, effective from the day after the aforementioned letter was delivered (February 2, 2024) for three months, to exercise the authority of the chairman.

Wang Gui-feng, who was suspended from duty at Taichung Bank Corporation, was remanded in custody by the Taiwan New Taipei District Court on February 25, 2024. Taichung Bank Corporation has already elected Liao Hsueh-Hsuan, the executive director, to act as the acting chairman, and the daily business and operations are stable, with no material impact on financial operations of the Group.

49. OPERATING SEGMENT FINANCIAL INFORMATION

Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. The Group’s reportable segments include Northern area, Central area, Southern area, OBU, Overseas branch, Head office and others.

a. Segment revenues and results

The analysis of the Group’s revenue and results from continuing operations by reportable segment is as follows:

For the year ended December 31, 2023 Interest revenue Interest expense Net revenue Net income and loss other than interest Service fee income Gain on financial instruments Others Provision for bad debts expense, commitments and guarantee liabilities Operating expenses Income (loss) before income tax	Northern Area $ 5,028,951 (2,806,413) 2,222,538 863,633 - 22,477 (521,812 ) (948,208) $ 1,638,628	Central Area $ 7,292,538 (3,294,993) 3,997,545 1,311,268 - 30,288 (464,695 ) (1,555,198) $ 3,319,208	Southern Area $ 4,513,819 (2,168,540) 2,345,279 743,445 - 26,183 (570,728 ) (1,049,555) $ 1,494,624	OBU $ 3,637,553 (2,920,249) 717,304 98,575 173,501 88,042 (352,831 ) (43,707) $ 680,884	Overseas Branch $ 353,697 (220,852) 132,845 26,254 - (1,009 ) (33,260 ) (56,459) $ 68,371	Head Office and Others Adjustment and Write-off Total $ 5,316,069 $ (4,891,541 ) $ 21,251,086 (3,406,803) 4,891,541 (9,926,309) 1,909,266 - 11,324,777 893,438 - 3,936,613 1,245,890 - 1,419,391 725,552 (74,643 ) 816,890 275,349 - (1,667,977 ) (4,017,661) 74,643 (7,596,145) $ (1,031,834) $ - $ 8,233,549 (Continued)

• 120 -

For the year ended December 31, 2022 Interest revenue Interest expense Net revenue Net income and loss other than interest Service fee income Gain on financial instruments Others Provision for bad debts expense, commitments and guarantee liabilities Operating expenses Income (loss) before income tax	Northern Area $ 3,691,926 (1,784,202) 1,907,724 774,741 - 12,798 (2,216,448 ) (872,214) $ (393,399)	Central Area $ 5,457,618 (2,026,907) 3,430,711 1,156,534 - 32,343 (678,248 ) (1,502,804) $ 2,438,536	Southern Area $ 3,086,398 (1,202,493) 1,883,905 644,354 - 26,900 (310,177 ) (1,003,831) $ 1,241,151	OBU $ 2,105,755 (1,637,646) 468,109 94,246 55,375 (33,875 ) (100,425 ) (41,121) $ 442,309	Overseas Branch $ 146,903 (63,366) 83,537 8,632 - (3,004 ) (16,098 ) (45,103) $ 27,964	Head Office and Others Adjustment and Write-off Total $ 4,239,342 $ (3,143,435 ) $ 15,584,507 (1,238,346) 3,143,435 (4,809,525) 3,000,996 - 10,774,982 638,302 - 3,316,809 1,136,382 - 1,191,757 (227,128 ) (74,418 ) (266,384 ) 2,068,946 - (1,252,450 ) (3,773,416) 74,418 (7,164,071) $ 2,844,082 $ - $ 6,600,643 (Concluded)

This measure is provided to the chief operating decision maker for resources allocation and measurement of segment performance.

b. Segment assets

Segment Assets Northern area Central area Southern area OBU Overseas branch Head office and others		December 31	December 31
		2023 $ 182,825,064 205,326,414 107,313,190 76,433,229 6,708,099 299,341,793 $ 877,947,789	2022 $ 160,603,482 215,134,508 86,083,892 65,078,723 3,697,399 277,364,824 $ 807,962,828

c. Revenue from major products and services

The Group is mainly involved in the business of earning interest revenue; therefore, no product or service information is available.

d. Geographical information

Location Taiwan Asia America	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2023 $ 17,037,150 457,645 2,876 $ 17,497,671	2022 $ 14,672,958 342,795 1,411 $ 15,017,164

e. Information about major customers

The interest revenue of the Group from any single customer does not exceed 10% of the total interest revenue; therefore, information on major customers is not available.

• 121 -

50. ADDITIONAL DISCLOSURES

• a. Information about significant transactions and investees:

Disclosures of relevant information in accordance with Article 18 of Regulations Governing the Preparation of Financial Reports by Public Banks are as follows:

No.	Item	Note
1	Marketable securities acquired or disposed of at costs or prices of at least NT$300 million or 10% of the paid-in capital.	None
2	Acquisition of individual real estate at costs of at least NT$300 million or 10% of the paid-in capital.	Table 1
3	Disposal of individual real estate at prices of at least NT$300 million or 10% of the paid-in capital.	None
4	Allowance of service fees to related party amounting to at least NT$5 million.	None
5	Receivables from related party amounting to at least NT$300 million or 10% of the paid-in capital.	None
6	Sale of nonperformingloans.	None
7	Financial asset securitization and real estate securitization.	None
8	Other significant transactions which may affect the decisions of users of financial reports.	None

• b. The related information of the Group’s investees (Note):

No.	Item	Note
1	Relatedinformationand proportionate sharein investees.	Table2
2	Financing provided.	Table 3
3	Endorsement/guarantee provided.	Table 4
4	Marketable securitiesheld.	Table 5
5	Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 10% of the paid-in capital	Table 6
6	Derivative transactions.	Note 8
7	Other significant transactions which may affect the decisions of users of financial reports.	None

Note: Subsidiaries are exempt from disclosure if they belong to the financial, insurance, and securities industries, and the main business items of business registration include fund loans to others, endorsements, and trading of securities.

• c. Investment in mainland China: Table 7 (attached).

• d. Business relationships and significant transactions between the parent company and subsidiaries: Table 8 (attached).

• e. Information of major shareholders: List all shareholders with ownership of 5% or greater showing the name of the shareholder, the number of shares owned, and percentage of ownership of each shareholder (Table 9).

• 122 -

TABLE 1

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST NT$300 MILLION OR 10% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2023

(In Thousands of New Taiwan Dollars)

Buyer	Property	Event Date	Transaction Amount	Payment Status	Counterparty	Relationship	Information on Previous Title Transfer If Counterparty Is A Related Party	Information on Previous Title Transfer If Counterparty Is A Related Party	Information on Previous Title Transfer If Counterparty Is A Related Party	Information on Previous Title Transfer If Counterparty Is A Related Party	Pricing Reference	Purpose of Acquisition	Other Terms
							Property Owner	Relationship	Transaction Date	Amount
Taichung Bank Leasing Corporation Limited	Land and buildings	July 25, 2023	$ 641,890	All paid	Orient Europharma Co., Ltd, He Ciang Co., Ltd., and Ai Ssu Chia Investment Co., Ltd.	-	-	-	-	$ -	According to market review and valuation report	For self-use and rent	According to contract

Note 1: If the acquired assets should be valued in accordance with the regulations, the valuation results should be indicated in the reference column for price determination.

• Note 2: The paid-in capital refers to the paid-in capital of the parent. If the issuer’s shares have no par value or each share has a non-NT$10 nominal value, the transaction rate of 10% of the paid-in capital is calculated based on 10% of the equity attributable to the owners of the parent company on the balance sheet.

• Note 3: The date of occurrence of the fact refers to the date of signing the transaction, the date of payment, the date of entrustment transaction, the date of transfer, the date of the resolution of the board of directors or other dates on which the transaction item and transaction amount are fully determined.

• 123 -

TABLE 2

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

THE RELATED INFORMATION AND PROPORTIONATE SHARE IN INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2023

(In Thousands of New Taiwan Dollars)

Investor Company	Investee Company (Note 1)	Location	Main Businesses and Products	Percentage of Ownership	Carrying Value	Investment Gain (Loss)	Proportionate Share of the Bank (Note	Proportionate Share of the Bank (Note	and Its Affiliates in Investees 1)	and Its Affiliates in Investees 1)	Note
							Shares (In Thousands)	Pro Forma Shares (Note 2)	Total
									Shares (In Thousands)	Percentage of Ownership
Taichung Commercial Bank Co., Ltd. Taichung Bank Leasing Corporation Limited TCCBL Co., Ltd. (B.V.I.) Taichung Commercial Bank Securities Co., Ltd.	Taichung Bank Insurance Brokers Co. Taichung Bank Securities Investment Trust Co., Ltd. Taichung Commercial Bank Securities Co., Ltd. Taichung Bank Leasing Corporation Limited TCCBL Co., Ltd. (B.V.I.) Taichung Bank Financial Leasing (Suzhou) Co., Ltd. Taichung Bank Venture Capital Co., Ltd.	Taichung City Taipei City Taichung City Taipei City British Virgin Islands Suzhou Taipei City	Insurance broker industry Securities investment trust industry Securities industry Leasing business Financial leasing and investment business Financial leasing business Venture capital business	100.00 38.46 100.00 100.00 100.00 100.00 100.00	$ 2,074,740 172,446 1,924,376 2,369,513 962,838 909,258 214,565	$ 309,910 (1,373) 222,823 194,473 77,345 74,646 11,495	128,600 19,783 162,450 220,631 30,000 - 21,000	- - - - - - -	128,600 19,783 162,450 200,631 30,000 - 21,000	100.00 63.41 100.00 100.00 100.00 100.00 100.00

Note 1: Shares or pro forma shares held by the Bank, directors, supervisors, president, vice president and affiliates have all been included in accordance with the Company Act.

Note 2: a. Pro forma shares are shares assumed to be obtained through buying equity-based securities or entering into equity-linked derivative contracts for purposes defined in Article 74 of the Banking Law. b. Equity-based securities, such as convertible bonds and warrants, are covered by Article 11 of “Securities and Exchange Law Enforcement Rules.”

c. Derivative contracts, such as share options, are those conforming to the definition of derivatives in International Financial Reporting Standard 9.

Note 3: This table of “information of investees’ names, locations, etc.” can only be seen in the first and third quarter’s financial statements.

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TABLE 3

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No. (Note 1)	Lender	Borrower	Financial Statement Account (Note 2)	Related Party	Highest Balance for the Period (Note 3)	Ending Balance (Note 8)	Actual Amount Borrowed	Interest Rate (%)	Nature of Financing (Note 4)	Business Transaction Amount (Note 5)	Reasons for Short-term Financing (Note 6)	Allowance for Impairment Loss	Collateral	Collateral	Financing Limit for Each Borrower (Note 7)	Aggregate Financing Limit (Note 7)	Note
													Item	Value
1	Taichung Bank Leasing Corporation Limited	Qiyi Intergrated Marketing Co., Ltd. Shihlien International Investment Corp. Zong Hui Construction Shanyue Development Co., Ltd. Song Ying Consultant Ltd. Quan Fu Development Co., Ltd. Da Fang Skill Color Marketing Consultant Co., Ltd. Hong Shu Building Co., Ltd. TCCBL Co., Ltd. (B.V.I.)	Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables - related party	Not related Not related Not related Not related Not related Not related Not related Not related Related	$ 117,528 100,000 200,000 150,000 50,000 126,150 100,000 46,000 10,273	$ - - 186,000 147,006 49,700 125,640 95,855 45,816 -	$ - - 186,000 147,006 49,700 125,640 95,855 45,816 -	4-10 4-10 4-10 4-10 4-10 4-10 4-10 4-10	Necessary for short-term financing Necessary for short-term financing Necessary for short-term financing Necessary for short-term financing Necessary for short-term financing Necessary for short-term financing Necessary for short-term financing Necessary for short-term financing Necessary for short-term financing	$ - - - - - - - - -	Business turnover Business turnover Business turnover Business turnover Business turnover Business turnover Business turnover Business turnover Business turnover	$ - - 1,860 1,470 497 1,256 959 458 -	Real estate None Real estate Real estate Real estate Real estate Real estate Real estate None	$ - - 70,040 125,805 32,510 100,920 573,977 15,248 -	$ 236,951 236,951 236,951 236,951 236,951 236,951 236,951 236,951 236,951	$ 947,805 947,805 947,805 947,805 947,805 947,805 947,805 947,805 947,805	Note 9 Note 9 Note 9 Note 9 Note 9 Note 9 Note 9 Note 9 Note 9

Note 1: The description of the number column is as follows:

a. Issuer: 0.

b. The invested company is numbered sequentially by the Arabic number 1 according to the company.

Note 2: Items such as accounts receivable, corporate receivables, shareholder transactions, prepayments, provisional payments, etc., which are provided by financing are required to be filled in this field.

Note 3: The annual fund is provided to others to the highest balance.

Note 4: Nature of financing should be filled with business contracts or those who have short-term financing.

Note 5: Nature of the loan of the business contracts should be filled with the amount of business transactions. The amount of business transactions refers to the amount of business transactions between the company that lends the funds and the target of last year’s loan.

Note 6: Nature of the loan required for short-term financing should specify the reasons for the loans and the use of funds for the loan, such as repayment of loans, purchase of equipment, business turnover, etc.

Note 7: The company shall fill in the borrowing limit and total limit for individual objects according to the operating procedures and explains the calculation method of the total limit in the column Note.

Note 8: If the board of directors of the public offering company according to Article 14 (1) of the Public Offering Company’s Financing and Endorsement Guarantee Processing Guidelines will make a resolution, the amount of the resolution of the board of directors shall be included in the announcement balance to disclose its risk; however, if the funds are repaid, the balance after repayment should be disclosed to reflect the adjustment of risk. If the public offering company authorizes the chairman of the board to allocate or repay the loan in a certain amount and within one year according to the resolution of the board of directors in accordance with Article 14 (2) of the handling criteria, the fund’s loan and the amount approved by the board of directors shall be the declared balance. Although the funds will be repaid afterwards, the consideration may still be re-loaned. Therefore, the fund loan and the amount approved by the board of directors should still be used as the announced balance.

Note 9: Taichung Bank Leasing Corporation Limited should not exceed 10% of its own net value for a single enterprise. The total amount of financing provided to others is limited to 40% of the net value of Taichung Bank Leasing Corporation Limited.

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TABLE 4

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Endorser/Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limit on Endorsement/ Guarantee Given on Behalf of Each Party (Note 1)	Maximum Amount Endorsed/ Guaranteed During the Period (Note 2)	Outstanding Endorsement/ Guarantee at the End of the Period	Actual Borrowing Amount	Amount Endorsed/ Guaranteed by Collateral	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Aggregate Endorsement/ Guarantee Limit (Note 1)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries (Note 3)	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent (Note 3)	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China (Note 3)
		Name	Relationship
1	Taichung Bank Leasing Corporation Limited	TCCBL Co., Ltd. (B.V.I.) Taichung Bank Financial Leasing (Suzhou) Co., Ltd.	Direct shareholding of 100% of subsidiary Indirect shareholding of 100% of subsidiary	$ 14,217,078 14,217,078	$ 92,220 6,507,280	$ - 6,214,740	$ - 3,534,924	$ - -	- 262.28	$ 23,695,130 23,695,130	- -	- -	- Y

Note 1: According to Taichung Bank Leasing Corporation Limited’s “Operating Procedures to Fund Endorsement and Guarantee”, the endorsement limit to single company cannot surpass six times of Taichung Bank Leasing Corporation Limited’s audited net worth. The endorsement limits to all subsidiaries cannot surpass 10 times of Taichung Bank Leasing Corporation Limited’s audited net worth.

Note 2: The maximum balance guaranteed for endorsement of others during the year.

Note 3: It is a guarantor of the listed parent company to the endorsement of the subsidiary, the subsidiary company’s endorsement to the listed parent company and the endorsement of the mainland area must be filled with Y.

Note 4: The balance of Taichung Bank Leasing Corporation Limited’s endorsement guarantee for a single enterprise (Taichung Bank Financial Leasing (Suzhou) Co., Ltd.) has reached the amount based on the announcement standard of the parent company China Man-Made Fiber Corporation mainly due to exchange rate changes.

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TABLE 5

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars or Shares)

Name of Holding Company	Type and Name of Marketable Securities	Relationship	Financial Statement Account		December 31, 2023	December 31, 2023		Note
				Number of Shares	Carrying Amount (Note)	Percentage of Ownership (%)	Market Value or Net Asset Value (Note)
Taichung Commercial Bank Co., Ltd. Taichung Bank Leasing Corporation Limited TCCBL Co., Ltd. (B.V.I.) Taichung Bank Securities Co., Ltd.	Domestic unlisted shares Taichung Bank Leasing Corporation Limited Taichung Bank Insurance Brokers Co., Ltd. Taichung Bank Securities Co., Ltd. Taichung Bank Securities Investment Trust Co., Ltd. Foreign unlisted shares TCCBL Co., Ltd. (B.V.I.) Foreign unlisted shares Taichung Bank Financial Leasing (Suzhou) Co., Ltd. Domestic unlisted shares Taichung Bank Venture Capital Co., Ltd.	Subsidiary Subsidiary Subsidiary Associate Sub-subsidiary Sub-subsidiary Sub-subsidiary	Investment accounted for using the equity method Investment accounted for using the equity method Investment accounted for using the equity method Investment accounted for using the equity method Investment accounted for using the equity method Investment accounted for using the equity method Investment accounted for using the equity method	220,631 128,600 162,450 12,000 30,000 - 21,000	$ 2,369,513 2,074,740 1,924,376 172,446 962,838 909,258 214,565	100 100 100 38 100 100 100	$ 2,369,513 2,074,740 1,924,376 172,446 962,838 909,258 214,565

Note: The financial industry, the insurance industry and the securities industry are exempt from disclosure.

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TABLE 6

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

10% OR MORE OF THE ACCUMULATED PURCHASE AND SALE AMOUNT OF ONE MARKETABLE SECURITY IS NT$330 MILLION FOR THE YEAR ENDED DECEMBER 31, 2023

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name	Securities Type and Name	Accounting Account	Name	Relationship	January 1, 2023	January 1, 2023	Buy in	Buy in		Sell	Sell		December 31, 2023	December 31, 2023
					Number of Shares	Amount	Number of Shares	Amount	Number of Shares	Amount	Amount	Gains and Losses on Disposal	Number of Shares	Amount
Taichung Insurance Brokers Co., Ltd.	Share TAIWAN TEA CORPORATION	Financial assets measured at fair value through other comprehensive income	-	-	27,578	$ 447,786	-	$ -	27,578	$ 633,097	$ 447,786	$ 185,311	-	$ -

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TABLE 7

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

INVESTMENT IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2023 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company Name	Main Businesses and Products	Main Businesses and Products	Total Amount of Paid-in Capital	Total Amount of Paid-in Capital	Investment Type	Accumulated Outflow of Investment from Taiwan as of January 1, 2023	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2023	% Ownership of Direct or Indirect Investment	Investment Gain	Carrying Value as of December 31, 2023	Accumulated Inward Remittance of Earnings as of December 31, 2023
							Outflow	Inflow
Taichung Bank Financial Leasing (Suzhou) Co., Ltd.	Financial leasing business		$ 893,373 (CNY 186,329 thousand)		Investment in mainland China companies through an existing company established in a third region.	$ 893,373 (CNY 186,329 thousand)	$ -	$ -	$ 893,373 (CNY 186,329 thousand)	100	$ 74,646 (CNY 16,998 thousand)	$ 909,258 (CNY 210,185 thousand)	$ -
Accumulated Investment in Mainland China as of December 31, 2023		Investment Amount Approved by the Investment Commission, MOEA			Maximum Investment Allowable (Note 2)
$893,373		$893,373			$1,421,708

Note 1: Recognition of investment gains and losses based on the financial statements audited by the parent company’s accountant.

Note 2: Based on the Investment Commission’s “Regulation on the Examination of Investment or Technical Cooperation in Mainland China”, investments are limited to the regulation of Taichung Bank Leasing Corporation Limited’s calculation.

Note 3: Foreign currency involved translation into the New Taiwan dollar at the spot rate and average exchange rate on the date of the financial statements (CNY1=NT$4.33, CNY1=NT$4.39).

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TABLE 8

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

BUSINESS RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS BETWEEN THE PARENT COMPANY AND SUBSIDIARIES FOR THE YEAR ENDED DECEMBER 31, 2023

(In Thousands of New Taiwan Dollars)

No. (Note 1)	Transaction Company	Counterparty	Transaction Flow (Note 2)		Description of Transactions	Description of Transactions
				Financial Statement Account	Amount (Note 3)	Trading Terms	Transaction Amount/Total Consolidated Net Revenue or Total Consolidated Assets (%) (Note 4)
0	Taichung Commercial Bank Co., Ltd.	Taichung Insurance Brokers Co., Ltd. Taichung Insurance Brokers Co., Ltd. Taichung Insurance Brokers Co., Ltd. Taichung Insurance Brokers Co., Ltd. Taichung Commercial Bank Securities Co., Ltd. Taichung Bank Leasing Corporation Limited Taichung Bank Venture Capital Co., Ltd.	a a a a a a a	Deposits and remittances Service fee income Receivables Interest Deposits and remittances Deposits and remittances Deposits and remittances	$ 2,589,723 351,383 241,086 13,769 36,251 62,473 50,610	The terms for the transactions between the company and related parties are similar to those for unrelated parties. The terms for the transactions between the company and related parties are similar to those for unrelated parties. The terms for the transactions between the company and related parties are similar to those for unrelated parties. The terms for the transactions between the company and related parties are similar to those for unrelated parties. The terms for the transactions between the company and related parties are similar to those for unrelated parties. The terms for the transactions between the company and related parties are similar to those for unrelated parties. The terms for the transactions between the company and related parties are similar to those for unrelated parties.	- 2 - - - - -
1	Taichung Commercial Bank Securities Co., Ltd.	Taichung Commercial Bank Co., Ltd. Taichung Commercial Bank Co., Ltd.	b b	Right-of-use assets Lease liabilities	17,440 17,878	The terms for the transactions between the company and related parties are similar to those for unrelated parties. The terms for the transactions between the company and related parties are similar to those for unrelated parties.	- -
2	Taichung Bank Leasing Corporation Limited.	Taichung Commercial Bank Co., Ltd. Taichung Commercial Bank Co., Ltd.	b b	Right-of-use assets Lease liabilities	22,821 23,165	The terms for the transactions between the company and related parties are similar to those for unrelated parties. The terms for the transactions between the company and related parties are similar to those for unrelated parties.	- -
							(Continued)

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(Concluded)

Note 1: The parent company and subsidiaries are numbered as follows:

• a. Parent company: 0.

• b. Subsidiaries are numbered sequentially from 1.

Note 2: Transaction flows are as follows:

• a. From parent company to subsidiary,

• b. From subsidiary to parent company, and

• c. Between subsidiaries.

Note 3: Have been eliminated on consolidation.

• Note 4: Percentage to the consolidated total assets is calculated by dividing the amount of a particular asset or liability account by the consolidated total assets as of December 31, 2023. Percentage to the consolidated total revenues is calculated by dividing the amount of a particular revenue or cost or expense account by the consolidated total operating revenues for the year ended December 31, 2023.

• Note 5: Referring to transactions exceeding $10,000 thousand.

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TABLE 9

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

INFORMATION OF MAJOR SHAREHOLDERS DECEMBER 31, 2023

Name of Major Shareholder	Shares	Shares
	Number of Shares	Percentage of Ownership (%)
China Man-Made Fiber Corporation Pan Asia Chemical Corporation	1,123,052,504 287,994,872	21.49 5.51

• Note 1: According to Article 25 of the Banking Act of the Republic of China, the same person or same related party who individually, jointly or collectively acquires more than 5% of a bank’s outstanding voting shares shall report such fact to the authorities within 10 days from the date of acquisition.

• Note 2: If the shares of the major shareholders in the above table are held by trustees, the shareholdings should be separately disclosed by the trust accounts opened by the trustee. As for shareholders’ handling of insider shareholding declarations with more than 10% of their shares in accordance with the Securities Exchange Act, their shareholdings include their own shareholdings plus those shares held under trust accounts with the right to utilize the trust assets, etc. For more information on insider shareholding declarations, please refer to the market observation post system website of the TWSE.

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