T.C.C.B. — Interim / Quarterly Report 2021

Nov 29, 2021

Taichung Commercial Bank Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Three Months Ended March 31, 2021 and 2020 and Independent Auditors’ Review Report

INDEPENDENT AUDITORS’ REVIEW REPORT

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

Introduction

We have reviewed 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 March 31, 2021 and 2020, the consolidated statements of comprehensive income, changes in equity and cash flows for the three months then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Public Banks, Regulations Governing the Preparation of Financial Reports by Securities Firms, and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

We conducted our reviews in accordance with Statement of Auditing Standards No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity”. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our reviews, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as of March 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the three months 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 Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

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The engagement partners on the reviews resulting in this independent auditors’ review report are Wen-Yea Shyu and Shu-Lin Liu.

Deloitte & Touche Taipei, Taiwan Republic of China

May 6, 2021

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 review such consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ review 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’ review report and consolidated financial statements shall prevail.

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TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

ASSETS CASH AND CASH EQUIVALENTS (Note 6) DUE FROM THE CENTRAL BANK AND CALL LOANS TO OTHER BANKS (Notes 7 and 36) FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Note 8) FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (Note 9) INVESTMENTS IN DEBT INSTRUMENTS AT AMORTIZED COST (Notes 10 and 36) SECURITIES PURCHASED UNDER RESALE AGREEMENTS (Note 11) RECEIVABLES, NET (Notes 12 and 36) CURRENT TAX ASSETS (Note 4) NOTES DISCOUNTED AND LOANS, NET (Notes 13 and 35) INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD, NET (Note 14) RESTRICTED ASSETS, NET (Notes 15 and 36) OTHER FINANCIAL ASSETS, NET (Note 16) PROPERTIES AND EQUIPMENT, NET (Note 17) RIGHT-OF-USE ASSETS, NET (Note 18) INVESTMENT PROPERTIES, NET (Note 19) INTANGIBLE ASSETS, NET (Note 20) DEFERRED TAX ASSETS (Note 4) OTHER ASSETS (Notes 21 and 36) TOTAL LIABILITIES AND EQUITY DUE TO THE CENTRAL BANK AND OTHER BANKS (Note 22) FUNDS BORROWED FROM CENTRAL BANK AND OTHER BANKS (Notes 23 and 36) FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS (Note 8) SECURITIES SOLD UNDER REPURCHASE AGREEMENTS (Note 24) PAYABLES (Notes 25 and 35) CURRENT TAX LIABILITIES (Note 4) DEPOSITS AND REMITTANCES (Notes 26 and 35) BANK DEBENTURES (Notes 27 and 35) OTHER FINANCIAL LIABILITIES (Note 28) PROVISIONS (Notes 4 and 29) LEASE LIABILITIES (Note 18) DEFERRED TAX LIABILITIES (Note 4) 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		March 31, 2021 (Reviewed) Amount % $ 10,339,924 1 36,047,138 5 33,050,393 4 43,422,707 6 110,488,113 15 13,924,003 2 15,290,437 2 3,426 - 467,164,584 63 168,245 - 418,899 - - - 12,415,292 2 1,013,823 - 17,991 - 215,902 - 884,822 - 2,470,304 - $ 747,336,003 100 $ 7,238,615 1 9,681,398 1 716,971 - 6,095,540 1 7,256,869 1 412,170 - 639,883,008 86 11,500,000 2 2,238,046 - 1,464,292 - 1,044,568 - 111,021 - 950,679 - 688,593,177 92 41,516,943 6 803,606 - 9,469,859 1 150,243 - 5,223,044 1 1,579,131 - 58,742,826 8 58,742,826 8 $ 747,336,003 100		December 31, 2020 (Audited) Amount % $ 11,709,619 2 40,371,218 5 30,867,825 4 41,009,840 6 112,624,454 15 12,773,121 2 13,483,664 2 3,279 - 456,541,322 62 163,148 - 439,283 - 2,246 - 12,332,669 2 978,218 - 18,014 - 213,470 - 795,104 - 2,443,527 - $ 736,770,021 100 $ 7,037,338 1 8,510,652 1 785,819 - 2,300,077 - 7,349,384 1 162,112 - 636,589,468 87 11,500,000 2 1,695,813 - 1,424,492 - 1,006,781 - 111,021 - 975,311 - 679,448,268 92 41,516,943 6 803,606 - 9,469,859 1 150,243 - 4,077,345 1 1,303,757 - 57,321,753 8 57,321,753 8 $ 736,770,021 100		March 31, 2020 (Reviewed)
						Amount % $ 9,372,078 1 35,952,725 5 21,960,739 3 33,176,656 5 109,303,636 16 11,516,062 2 13,069,871 2 3,279 - 437,724,569 64 153,546 - 492,553 - 2,246 - 10,737,141 2 829,747 - 18,080 - 157,832 - 810,706 - 2,324,937 - $ 687,606,403 100 $ 6,930,567 1 5,615,044 1 387,676 - 11,368,863 2 5,829,957 1 570,886 - 586,072,481 85 14,000,000 2 1,437,697 - 1,363,794 - 847,667 - 111,021 - 920,833 - 635,456,486 92 37,088,349 6 726,981 - 8,188,237 1 150,243 - 5,181,199 1 814,908 - 52,149,917 8 52,149,917 8 $ 687,606,403 100

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 COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

INTEREST REVENUE (Notes 32 and 35) INTEREST EXPENSE (Notes 32 and 35) NET INTEREST NET INCOME AND LOSS OTHER THAN INTEREST Service fee income, net (Notes 32 and 35) Gains (losses) 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 (Note 32) Foreign exchange (losses) gains , net Impairment losses on assets (Notes 9, 10 and 32) Share of loss of associates for using the equity method (Note 14) Other non-interest gains (losses), net (Notes 29 and 32) TOTAL NET REVENUE BAD-DEBT EXPENSES AND PROVISION FOR LOSSES ON COMMITMENTS AND GUARANTEES (Notes 12, 13, 29 and 32) OPERATING EXPENSES Employee benefits expenses (Note 32) Depreciation and amortization expenses (Note 32) Other selling and administrative expenses (Notes 32 and 35) Total operating expenses PROFIT BEFORE INCOME TAX FROM CONTINUING OPERATIONS INCOME TAX EXPENSE (Notes 4 and 33) NET PROFIT FOR THE PERIOD		**For the Three Months **	**For the Three Months **	**Ended March 31 **
		2021 Amount % $ 3,018,566 92 (771,550) (24) 2,247,016 68 849,118 26 246,204 8 - - (54,559) (2) (1,911) - (773) - 3,428 - 3,288,523 100 (319,727) (10) (1,064,382) (32) (132,239) (4) (449,483) (14) (1,646,104) (50) 1,322,692 40 (192,448) (6) 1,130,244 34		2020
				Amount % $ 3,289,994 119 (1,167,201) (42) 2,122,793 77 751,904 27 (132,929) (5) 14,231 - 16,722 1 (2,465) - (1,917) - (501) - 2,767,838 100 (178,521) (7) (911,163) (33) (119,007) (4) (444,336) (16) (1,474,506) (53) 1,114,811 40 (235,121) (8) 879,690 32

(Continued)

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TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

OTHER COMPREHENSIVE INCOME Items that will not be reclassified subsequently to profit or loss: Unrealized gains (losses) on investments in equity instruments at fair value through other comprehensive income Share of the other comprehensive income (losses) of associates accounted for using the equity method Income tax (expense) benefit 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 (loss), net of income tax Items that may be reclassified subsequently to profit or loss: Exchange differences on the translation of financial statements of foreign operations Unrealized gains 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 income (loss) for the period, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE PERIOD EARNINGS PER SHARE (Note 34) Basic Diluted		**For the Three Months **	**For the Three Months **	**Ended March 31 **
		2021 Amount % $ 183,319 6 5,870 - (16) - 189,173 6 50,195 1 51,461 2 101,656 3 290,829 9 $ 1,421,073 43 $ 0.27 $ 0.27		2020
				Amount % $ (212,687) (8) (1,325) - 10,282 - (203,730) (8) 9,729 - 155,022 6 164,751 6 (38,979) (2) $ 840,711 30 $ 0.23 $ 0.23
		$		$

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 (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

BALANCE AT JANUARY 1, 2020 Net profit for the three months ended March 31, 2020 Other comprehensive income (loss) for the three months ended March 31, 2020, net of income tax Total comprehensive income (loss) for the three months ended March 31, 2020 Disposals of investments in equity instruments designated as at fair value through other comprehensive income BALANCE AT MARCH 31, 2020 BALANCE AT JANUARY 1, 2021 Net profit for the three months ended March 31, 2021 Other comprehensive income for the three months ended March 31, 2021, net of income tax Total comprehensive income for the three months ended March 31, 2021 Disposals of investments in equity instruments designated as at fair value through other comprehensive income BALANCE AT MARCH 31, 2021				Equity Attributable to Owners of the Bank	Other Equity Exchange Differences on Translation of Financial Statements of Unrealized Gains (Losses) on Financial Assets at Fair Value Through Other Foreign Operations Comprehensive Income $ (96,316) $ 949,508 - - 9,729 (48,708) 9,729 (48,708) - 695 $ (86,587) $ 901,495 $ (121,110) $ 1,424,867 - - 50,195 240,634 50,195 240,634 - (15,455) $ (70,915) $ 1,650,046	Total Equity $ 51,309,206 879,690 (38,979) 840,711 - $ 52,149,917 $ 57,321,753 1,130,244 290,829 1,421,073 - $ 58,742,826
		Capital Stock Ordinary Shares Capital Surplus $ 37,088,349 $ 726,981 - - - - - - - - $ 37,088,349 $ 726,981 $ 41,516,943 $ 803,606 - - - - - - - - $ 41,516,943 $ 803,606		Retained Earnings Legal Reserve Special Reserve Unappropriated Earnings $ 8,188,237 $ 150,243 $ 4,302,204 - - 879,690 - - - - - 879,690 - - (695) $ 8,188,237 $ 150,243 $ 5,181,199 $ 9,469,859 $ 150,243 $ 4,077,345 - - 1,130,244 - - - - - 1,130,244 - - 15,455 $ 9,469,859 $ 150,243 $ 5,223,044

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 (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expense Amortization expense Provision for bad debts expense, commitments and guarantees liabilities (Gain) loss on financial assets and liabilities at fair value through profit or loss (Gain) loss on disposal of properties and equipment Interest expense Interest revenue Dividend income Net changes in provision for losses on others 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 (gain) loss 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 (used in) generated from operations Interest received Dividends received		For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 1,322,692 116,249 15,990 319,727 (246,204) (1,202) 771,550 (3,018,566) - - 773 - 1,911 (369,939) (1,751) (2,411,462) (549,804) (1,088,461) (1,824,274) (10,837,889) (4) 68,395 201,277 (916,751) 3,795,463 (245,761) 3,293,540 22,439 (21,486) (58,028) (8,161,344) (9,250,114) 3,024,779 -	2020 $ 1,114,811 105,065 13,942 178,521 132,929 3 1,167,201 (3,289,994) (180) 2,500 1,917 (14,051) 2,465 268,416 (382) (1,431,648) (95,037) 3,129,771 (329,854) (2,480,826) 67 (121,915) 403,507 (694,030) 999,838 (369,670) 2,750,524 124,909 (12,478) (24,794) 3,280,012 2,963,175 3,386,531 180 (Continued)

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TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

Interest paid Income tax paid Net cash (used in) generated from operating activities 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 repayments 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 Net cash generated from (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Borrowings (repayment of funds) from Central Bank and other banks Proceeds from commercial papers issued Proceeds from guarantee deposits received Repayments of principal portion of lease liabilities Net cash generated from (used in) financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH AND CASH EQUIVALENTS HELD IN FOREIGN CURRENCIES NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD		For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ (617,054) (32,271) (6,874,660) (2,556,913) 393,976 (234,309,596) 236,770,385 (136,437) 1,254 (76,588) (17,015) 69,066 1,170,746 519,794 33,396 (61,234) 1,662,702 50,195 (5,092,697) 46,249,219 $ 41,156,522	2020 $ (955,691) (42,732) 5,351,463 (3,915,758) 2,279,899 (195,462,587) 193,900,000 (107,730) 393 (446,376) (17,959) (3,770,118) (476,996) 138,705 46,885 (47,078) (338,484) 9,729 1,252,590 38,341,346 $ 39,593,936

(Continued)

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TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

RECONCILIATIONS OF THE AMOUNTS IN THE CONSOLIDATED STATEMENTS OF CASH FLOWS WITH THE EQUIVALENT ITEMS REPORTED IN THE CONSOLIDATED BALANCE SHEETS AT MARCH 31, 2021 AND 2020 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 period		**March 31 **	**March 31 **
		2021 $ 10,339,924 16,892,595 13,924,003 $ 41,156,522	2020 $ 9,372,078 18,705,796 11,516,062 $ 39,593,936

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

(Concluded)

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TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) (Reviewed, Not Audited)

1. GENERAL INFORMATION

Taichung Commercial Bank Co., Ltd. (the “Bank”), formerly known as Taichung District Association Saving Co., Ltd. (Taichung District Association) was established on September 27, 1952 by the Taiwan Provincial Government. It was incorporated in April 1953 and started operation in August of the same year. In July of 1975, the Banking Law was revised and implemented. On January 1, 1978, the Taichung District Association Saving Co., Ltd. (Taichung District Association) 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 March 31, 2021, the Bank had a business department, a trust department, a foreign exchange transaction department, 81 domestic branches, a Malaysia Labuan branch and an offshore banking unit (OBU). The operations of the Bank consist of planning, managing, operating a trust business and overseas financial business. These operations are regulated under the Bank Law of the Republic of China (“ROC”).

At the time of the establishment, the amount of capital invested by the Bank was $500 thousand. In order to improve the capital structure and cooperate with the government decree, the Bank has successively applied for increase and decrease of capital. As of March 31, 2021, the Bank’s capital amount was $41,516,943 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 May 6, 2021.

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 “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

Except for the following, the initial application of the amendments to the IFRSs endorsed and issued into effect by the FSC did not have any material impact on the Group’s accounting policies:

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform - Phase 2”

The Group elected to apply the practical expedient provided in the amendments to deal with the changes in the basis for determining contractual cash flows of financial assets, financial liabilities or lease liabilities resulting from the interest rate benchmark reform. The changes are accounted for by updating the effective interest rate at the time the basis is changed, provided the changes are necessary

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as a direct consequence of the reform and the new basis is economically equivalent to the previous basis.

For the hedging relationships that are subject to the reform, the Group applies the following temporary exceptions:

• 1) The changes to the hedging relationship that are needed to reflect the changes required by the reform are treated as a continuation of the existing hedging relationship.

• 2) If an alternative benchmark rate that is reasonably expected to be separately identifiable within a period of 24 months, the Group designates the rate as a non-contractually specified risk component.

• 3) After a cash flow hedging relationship is amended, the amount accumulated in the gain/(loss) on hedging instruments of cash flow hedge is deemed to be based on the alternative benchmark rate on which the hedged future cash flows are determined.

• 4) The Group allocates the hedged items of a group hedge that is subject to the reform to subgroups based on whether the hedged items have been changed to reference an alternative benchmark rate, and designates the hedged benchmark rate separately.

• b. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

New IFRSs “Annual Improvements to IFRS Standards 2018-2020” Amendments to IFRS 3 “Reference to the Conceptual Framework” 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 IAS 1 “Classification of Liabilities as Current or Non-current” Amendments to IAS 1 “Disclosure of Accounting Policies” Amendments to IAS 8 “Definition of Accounting Estimates” Amendments to IAS 16 “Property, Plant and Equipment - Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract”

Effective Date Announced by IASB (Note 1)

January 1, 2022 (Note 2) January 1, 2022 (Note 3) To be determined by IASB January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 (Note 6) January 1, 2023 (Note 7) January 1, 2022 (Note 4) January 1, 2022 (Note 5)

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

• Note 2: The amendments to IFRS 9 will be applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” will be applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022.

• Note 3: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.

• Note 4: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2022.

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• Note 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

• Note 6: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.

• Note 7: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.

Amendments to IAS 1 “Disclosure of Accounting Policies”

The amendments specify that the Group should refer to the definition of material to determine its material accounting policy information to be disclosed. Accounting policy information is material if it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments also clarify that:

• Accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed;

• The Group may consider the accounting policy information as material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial; and

• Not all accounting policy information relating to material transactions, other events or conditions is itself material.

The amendments also illustrate that accounting policy information is likely to be considered as material to the financial statements if that information relates to material transactions, other events or conditions and:

• 1) The Group changed its accounting policy during the reporting period and this change resulted in a material change to the information in the financial statements;

• 2) The Group chose the accounting policy from options permitted by the standards;

• 3) The accounting policy was developed in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” in the absence of an IFRS that specifically applies;

• 4) The accounting policy relates to an area for which the Group is required to make significant judgements or assumptions in applying an accounting policy, and the Group discloses those judgements or assumptions; or

• 5) The accounting is complex and users of the financial statements would otherwise not understand those material transactions, other events or conditions.

Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have 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 SIGNIFICANT ACCOUNTING POLICIES

• 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 IAS 34 “Interim Financial Reporting” as endorsed and issued into effect by the FSC. Disclosure information included in the consolidated financial statements is less than those required in a complete set of annual financial statements.

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 39 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:

Investor Company Subsidiary Main Business and Products Taichung Commercial Bank Co., Ltd. Taichung Bank Insurance Brokers Co. 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(%)

March 31, 2021 December 31, 2020 March 31, 2020 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 -

  - Note: Taichung Commercial Bank Securities Co., Ltd. was newly established by a resolution of the board of directors of Taichung Commercial Bank Securities Co., Ltd. on June 12, 2020. Taichung Bank Venture Capital Co., Ltd. with the reinvestment amount is $210,000 thousand.

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

• e. Other significant accounting policies

Except for the following, please refer to the consolidated financial statements for the year ended December 31, 2020.

• 1) Employee benefits

Retirement benefits

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant plan amendments, settlements, or other significant one-off events.

- 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.

• 2) Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. Interim period income taxes are assessed on an annual basis and calculated by applying to an interim period’s pre-tax income the tax rate that would be applicable to expected total annual earnings.

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.

• 14 -

The Group considers the economic implications of the COVID-19 when making its critical accounting 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.

The same critical accounting judgments and key sources of estimation uncertainty have been followed in these consolidated financial statements as were applied in the preparation of the Group’s consolidated financial statements for the year ended December 31, 2020. Please refer to Note 5 to the consolidated financial statements as of December 31, 2020 for the details of critical accounting judgments and key sources of estimation uncertainty.

6. CASH AND CASH EQUIVALENTS

March 31, 2021 Cash on hand $ 4,248,079 Checks for clearing 853,748 Due from banks 5,238,097 $ 10,339,924	December 31, 2020 March 31, 2020 $ 4,414,344 $ 4,117,811 1,249,821 751,005 6,045,454 4,503,262 $ 11,709,619 $ 9,372,078

• a. The loss allowance was 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 March 31, 2021, December 31, 2020 and March 31, 2020.

• b. Reconciliations of cash and cash equivalents between the consolidated statements of cash flows and the consolidated balance sheets as of March 31, 2021 and 2020 are shown in the consolidated statements of cash flows. Reconciliations as of December 31, 2020 are stated below:

Reconciliations of the amounts in the consolidated statements of cash flows with the equivalent items reported in the consolidated balance sheets at December 31, 2020 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 resell 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, 2020 $ 11,709,619 21,766,479 12,773,121 $ 46,249,219

• 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 March 31, 2021, December 31, 2020 and March 31, 2020, which were transferred to the refundable deposits. Refer to Note 21.

• 15 -

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

March 31, 2021 Deposit reserves Deposit reserves for checking accounts $ 14,065,763 Deposit reserves for demand accounts 19,007,643 Inter-bank clearing account 1,998,605 Deposit reserves for foreign currency deposits 74,175 Call loans to banks 840,952 Deposit reserves for trust compensation 60,000 $ 36,047,138	December 31, 2020 March 31, 2020 $ 19,301,038 $ 16,319,718 18,458,399 17,093,319 2,017,397 1,515,492 73,057 60,446 461,327 903,750 60,000 60,000 $ 40,371,218 $ 35,952,725

• a. The loss allowance was 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 March 31, 2021, December 31, 2020 and March 31, 2020.

• 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. In addition, the Group deposited reserves in the amount of $5,000,000 thousand for demand accounts on deposits paid to other securities lender project from Central Bank on March 31, 2021 and December 31, 2020. Refer to Note 36.

• c. The Group deposited the reserves for trust compensation on government bonds measured at amortized cost on March 31, 2021, December 31, 2020 and March 31, 2020, with a nominal amount of $60,000 thousand. Refer to Note 36.

8. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

March 31, 2021 Financial assets at FVTPL Commercial papers $ 27,020,789 Domestic listed shares and emerging market shares 851,472 Domestic unlisted shares 17,533 Foreign listed shares 133,221 PEM group policy assets 807,291 Beneficiary certificates 531,961 Corporate bonds 281,394 Asset swap contracts 2,857,607 Cross-currency swap contracts 125,952 Foreign exchange forward contracts 84,551 Cross-currency option contracts 330,812 Interest rate-linked structured instrument 7,810 $ 33,050,393

December 31, 2020 March 31, 2020 $ 24,872,947 $ 17,622,360 862,462 615,477 7,508 - 88,533 - 799,269 1,016,633 363,744 219,250 203,112 85,860 3,048,884 1,893,360 96,053 128,298 168,822 157,697 354,336 209,332 2,155 12,472 $ 30,867,825 $ 21,960,739 (Continued)

• 16 -

March 31, 2021 Financial liabilities at FVTPL Cross-currency swap contracts $ 277,040 Foreign exchange forward contracts 98,026 Cross-currency option contracts 334,095 Interest rate-linked structured instrument 7,810 $ 716,971	December 31, 2020 March 31, 2020 $ 369,085 $ 122,838 66,415 58,019 348,164 194,347 2,155 12,472 $ 785,819 $ 387,676 (Concluded)

• 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 arising from transactions such as import/export and currency exchange, to avoid the risks arising from the business and to flatten the demand for foreign exchange funds arising from non-transactional operations.

• b. The nominal principal amounts of outstanding derivative contracts as of March 31, 2021, December 31, 2020 and March 31, 2020 were as follows:

Asset swap contracts Cross-currency swap contracts Foreign exchange forward contracts Cross-currency option contracts Interest rate-linked structured instrument contracts	March 31, 2021 Contract Amounts Interest Rate Range $ 2,846,800 0.85%-3.75% 9,622,852 - 6,847,613 - 31,209,872 - 129,685 5.20%-6.20%	December 31, 2020 Contract Amounts Interest Rate Range $ 3,039,300 0.90%-3.50% 9,459,647 - 7,224,302 - 23,537,713 - 109,938 5.25%-6.20%	March 31, 2020
			Contract Amounts Interest Rate Range $ 1,892,500 0.90%-1.20% 6,561,268 - 5,898,285 - 18,895,445 - 124,909 6.54%-6.74%

9. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

March 31, 2021 Investments in equity instruments at FVTOCI $ 3,964,318 Investments in debt instruments at FVTOCI 39,458,389 $ 43,422,707 a. Investments in equity instruments at FVTOCI March 31, 2021 Domestic listed shares $ 2,832,319 Domestic unlisted shares 820,070 Foreign listed shares 311,929 $ 3,964,318	December 31, 2020 March 31, 2020 $ 3,176,107 $ 1,944,343 37,833,733 31,232,313 $ 41,009,840 $ 33,176,656 December 31, 2020 March 31, 2020 $ 2,113,147 $ 1,056,515 751,556 640,582 311,404 247,246 $ 3,176,107 $ 1,944,343

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.

• 17 -

Dividend income of $0 thousand and $180 thousand was recognized in profit or loss for the three months ended March 31, 2021 and 2020, respectively. Those were related to investments held as of March 31, 2021 and 2020, respectively.

b. Investments in debt instruments at FVTOCI

March 31, 2021 Corporate bonds $ 28,445,342 Government bonds 5,300,359 Foreign bonds 3,503,364 Bank debentures 2,209,324 $ 39,458,389 Foreign bonds denominated in foreign currencies were as follows: March 31, 2021 USD $ 50,000 CNY 445,000 AUD 6,000	December 31, 2020 March 31, 2020 $ 26,959,132 $ 22,451,052 5,379,466 5,980,384 3,486,270 796,130 2,008,865 2,004,747 $ 37,833,733 $ 31,232,313 December 31, 2020 March 31, 2020 $ 50,000 $ 26,000 445,000 - 6,000 -

• 1) The Group recognized impairment loss of $(2,622) thousand and $(1,166) thousand for the three months ended March 31, 2021 and 2020, respectively, after assessing the expected credit losses of the investments in debt instruments at FVTOCI.

• 2) Refer to Note 39 for information relating to their credit risk management and impairment.

10. INVESTMENTS IN DEBT INSTRUMENTS AT AMORTIZED COST

March 31, 2021 Foreign bonds $ 26,677,560 Government bonds 12,634,427 NCDs issued by the CBC 61,170,000 Corporate bonds 10,958,401 Credit certificate - 111,440,388 Less: Allowance for impairment loss (33,675) Less: Withdrawal of reserves for trust compensation and refundable deposits (918,600) $ 110,488,113	December 31, 2020 March 31, 2020 $ 24,794,803 $ 25,792,892 12,654,717 13,217,637 64,970,000 59,835,000 11,159,474 11,412,793 - 9,360 113,578,994 110,267,682 (34,140) (43,146) (920,400) (920,900) $ 112,624,454 $ 109,303,636

• 18 -

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

		December 31,
	March 31, 2021	2020	March 31, 2020
USD	$ 720,159	$ 661,159	$ 680,159
CNY	865,000	890,000	730,000
AUD	76,000	66,000	61,000
ZAR	370,000	490,000	570,000

• b. As of March 31, 2021, December 31, 2020 and March 31, 2020, the government bonds and the foreign bonds at amortized cost amounted to $1,200,000 thousand and $5,032,516 thousand (US$176,400 thousand), $1,200,000 thousand and $1,123,960 thousand (US$40,000 thousand), $2,000,000 thousand and $9,804,341 thousand (US$324,400 thousand), respectively, which had been sold under repurchase agreements. Refer to Note 40 for information relating to their carrying amount.

• c. The Group recognized the gain on reversal of impairment loss of $711 thousand and the impairment loss of $(1,299) thousand for the three months ended March 31, 2021 and 2020, respectively, after assessing the expected credit losses of the investments in debt instruments at amortized cost.

• d. Refer to Note 39 for information relating to their credit risk management and impairment.

11. SECURITIES PURCHASED UNDER RESALE AGREEMENTS

Securities purchased under resale agreements in the amounts of $13,924,003 thousand, $12,773,121 thousand and $11,516,062 thousand as of March 31, 2021, December 31, 2020 and March 31, 2020 would be subsequently resold for $13,924,957 thousand, $12,774,072 thousand and $11,517,282 thousand, respectively, with interest rate ranging from 0.20% to 0.21%, 0.21% to 0.25% and 0.40% to 0.43%, respectively.

12. RECEIVABLES, NET

March 31, 2021 Notes receivable $ 5,326,036 Receivables on credit cards 681,203 Accounts receivable factored without recourse 153,578 Acceptances 669,014 Interest receivables 1,087,898 Receivables on foreign currency settlement 1,543,298 Lease receivables 3,590,947 Assignment receivables 982,906 Receivables on securities settlement 1,929,227 Other receivables 404,600 16,368,707 Less: Unrealized interest income (760,217) Less: Allowance for doubtful accounts (318,053) $ 15,290,437

December 31, 2020 March 31, 2020 $ 4,694,417 $ 4,318,827 742,251 654,933 154,805 496,524 443,447 627,609 1,049,138 1,177,830 1,082,521 1,474,209 3,461,743 3,159,090 991,861 998,405 1,324,586 758,135 584,053 334,239 14,528,822 13,999,801 (722,637) (609,573) (322,521) (320,357) $ 13,483,664 $ 13,069,871

• 19 -

• a. Movements in the total carrying amount of receivables for the three months ended March 31, 2021 and 2020 were as follows:

For the three months ended March 31, 2021

	**12-month ECLs **	**12-month ECLs **		Lifetime ECL	Credit- impaired Financial Assets	Credit- impaired Financial Assets		Total
Balance at January 1, 2021 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 March 31, 2021		$ 73,430,829 (151,798) (12,279) 32,487 3,597,158 - (5,980,752) (722) $ 70,914,923		$ 371,436 151,916 (7,867) (32,349) 477 (15,727) (69,942) 3,191 $ 401,135		$ 313,418 (118) 20,146 (138) 33 (49,130) (55,993) 7,172 $ 235,390		$ 74,115,683 - - - 3,597,668 (64,857) (6,106,687) 9,641 $ 71,551,448

For the three months ended March 31, 2020

	**12-month ECLs **	**12-month ECLs **		Lifetime ECL	Credit- impaired Financial Assets	Credit- impaired Financial Assets		Total
Balance at January 1, 2020 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 March 31, 2020		$ 62,904,165 (264,468) (24,249) 4,170 5,051,059 - (2,706,006) (39,234) $ 64,925,437		$ 557,317 264,805 (10,533) (4,089) 484 (340) (44,773) (1,388) $ 761,483		$ 315,071 (337) 34,782 (81) 126 (18,269) (14,724) 7,368 $ 323,936		$ 63,776,553 - - - 5,051,669 (18,609) (2,765,503) (33,254) $ 66,010,856

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, receivables on sale of securities, receivables on securities settlement, other receivables, other financial assets (including delinquent receivables not arising from loans) and refundable deposits.

• 20 -

• b. Movements in the allowance for doubtful accounts of receivables for the three months ended March 31, 2021 and 2020 were as follows:

For the three months ended March 31, 2021

		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, 2021 Reconciliation arising from financial instruments recognized at the beginning of the period: 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 March 31, 2021		$ 91,312 (2,768) (126) 1,982 (22,884) 33,808 - - - (3,870) $ 97,454		$ 9,199 2,798 (353) (1,868) (1,841) 35 - (15,727) - 18,425 $ 10,668		$ 174,311 (30) 479 (114) (14,370) 24 - (38,195) - 29,493 $ 151,598		$ 274,822 - - - (39,095) 33,867 - (53,922) - 44,048 $ 259,720		$ 49,220 - - - - - 19,691 (10,935) 4,128 - $ 62,104		$ 324,042 - - - (39,095) 33,867 19,691 (64,857) 4,128 44,048 $ 321,824

For the three months ended March 31, 2020

		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, 2020 Reconciliation arising from financial instruments recognized at the beginning of the period: 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 March 31, 2020		$ 95,880 (4,846) (170) 739 (26,862) 25,796 - - - (1,566) $ 88,971		$ 11,625 5,050 (485) (680) 1,028 16 - (340) - 2,084 $ 18,298		$ 165,224 (204) 655 (59) (1,357) 35 - (5,665) - 5,871 $ 164,500		$ 272,729 - - - (27,191) 25,847 - (6,005) - 6,389 $ 271,769		$ 23,828 - - - - - 35,629 (12,604) 3,928 - $ 50,781		$ 296,557 - - - (27,191) 25,847 35,629 (18,609) 3,928 6,389 $ 322,550

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

c. Refer to Note 36 for information relating to notes receivable as a guarantee for interbank financing.

• 21 -

13. NOTES DISCOUNTED AND LOANS, NET

March 31, 2021 Bills negotiated $ 248,765 Overdrafts 1,367 Secured overdrafts 32,819 Accounts receivable financing 37,461 Securities margin loans receivables 1,193,635 Short-term unsecured loans 41,939,571 Short-term secured loans 100,326,854 Medium-term unsecured loans 59,188,354 Medium-term secured loans 113,546,222 Long-term unsecured loans 7,394,971 Long-term secured loans 149,108,675 Delinquent loans 771,094 473,789,788 Add: Adjustment of premium or discount 29,837 Less: Allowance for doubtful accounts (6,655,041) $ 467,164,584

December 31, 2020 March 31, 2020 $ 293,388 $ 141,121 1,310 908 30,988 38,309 51,149 69,459 1,099,366 640,267 39,175,727 42,350,357 101,315,539 101,555,995 54,480,676 47,909,873 110,808,195 103,826,084 6,842,847 5,388,652 147,939,346 141,322,644 814,242 1,011,046 462,852,773 444,254,715 23,940 23,780 (6,335,391) (6,553,926) $ 456,541,322 $ 437,724,569

• a. As of March 31, 2021, December 31, 2020 and March 31, 2020, the delinquent loans on which interest ceased to accrue amounted to $762,252 thousand, $805,311 thousand and $996,703 thousand, respectively. The unrecognized interest revenues on these loans were $4,810 thousand, $18,132 thousand and $6,580 thousand as of March 31, 2021, December 31, 2020 and March 31, 2020, respectively.

• b. There was no credit loan written off without a lawsuit for the three months ended March 31, 2021 and 2020.

• c. Movements in the total carrying amount of notes discounted and loans for the three months ended March 31, 2021 and 2020 were as follows:

For the three months ended March 31, 2021

	**12-month ECLs **	**12-month ECLs **		Lifetime ECL	Credit- impaired Financial Assets	Credit- impaired Financial Assets		Total
Balance at January 1, 2021 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 at March 31, 2021		$ 439,608,628 (3,805,194) (98,317) 1,228,993 80,896,082 - (58,726,990) (9,565,630) $ 449,537,572		$ 14,857,468 3,813,171 (517,762) (1,227,564) 595,188 - (1,376,201) (296,456) $ 15,847,844		$ 8,410,617 (7,977) 616,079 (1,429) 32,549 (105,851) (395,324) (114,455) $ 8,434,209		$ 462,876,713 - - - 81,523,819 (105,851) (60,498,515) (9,976,541) $ 473,819,625

• 22 -

For the three months ended March 31, 2020

	**12-month ECLs **	**12-month ECLs **		Lifetime ECL	Credit- impaired Financial Assets	Credit- impaired Financial Assets		Total
Balance at January 1, 2020 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 atMarch31,2020		$ 415,543,744 (2,760,738) (347,056) 1,027,798 82,974,459 - (69,982,149) (8,443,907) $ 418,012,151		$ 16,873,865 2,830,011 (1,370,837) (1,007,400) 405,600 (1,834) (2,088,509) 223,573 $ 15,864,469		$ 9,554,442 (69,273) 1,717,893 (20,398) 107,793 (299,864) (617,222) 28,504 $ 10,401,875		$ 441,972,051 - - - 83,487,852 (301,698) (72,687,880) (8,191,830) $ 444,278,495

• d. Movements in the allowance for doubtful accounts of notes discounted and loans for the three months ended March 31, 2021 and 2020 were as follows:

For the three months ended March 31, 2021

		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, 2021 Reconciliation arising from financial instruments recognized at the beginning of the period: 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 atMarch31,2021		$ 1,725,305 (9,733) (686) 55,478 (354,217) 500,500 - - - (134,756) $ 1,781,891		$ 925,826 10,382 (67,829) (55,137) (71,707) 34,637 - - - 191,911 $ 968,083		$ 1,856,155 (649) 68,515 (341) (78,041) 23,251 - (22,375) - 130,045 $ 1,976,560		$ 4,507,286 - - - (503,965) 558,388 - (22,375) - 187,200 $ 4,726,534		$ 1,828,105 - - - - - (26,996) (83,476) 210,874 - $ 1,928,507		$ 6,335,391 - - - (503,965) 558,388 (26,996) (105,851) 210,874 187,200 $ 6,655,041

• 23 -

For the three months ended March 31, 2020

		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, 2020 Reconciliation arising from financial instruments recognized at the beginning of the period: 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 March 31, 2020		$ 1,776,628 (5,437) (1,017) 43,680 (477,245) 514,917 - - - (147,692) $ 1,703,834		$ 852,354 14,393 (89,053) (40,995) (83,886) 11,278 - (550) - 155,224 $ 818,765		$ 2,468,257 (8,956) 90,070 (2,685) (145,502) 33,391 - (115,334) - 122,178 $ 2,441,419		$ 5,097,239 - - - (706,633) 559,586 - (115,884) - 129,710 $ 4,964,018		$ 1,476,478 - - - - - 171,928 (185,814) 127,316 - $ 1,589,908		$ 6,573,717 - - - (706,633) 559,586 171,928 (301,698) 127,316 129,710 $ 6,553,926

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.		March 31, 2021 Amount Proportion of Ownership (%) $ 168,245 38.46		December 31, 2020		March 31, 2020
				Amount Proportion of Ownership (%) $ 163,148 38.46		Amount Proportion of Ownership (%) $ 153,546 38.46

The share of profit (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 Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ (773)	2020 $ (1,917)

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

• 24 -

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

		December 31,
	March 31, 2021	2020	March 31, 2020
Restricted assets - cash in banks	$ 389,445	$ 436,106	$ 488,430
Collections from underwriting	-	-	154
Payments pending settlement	29,454	3,177	3,969
	$ 418,899	$ 439,283	$ 492,553

Refer to Note 36 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

			December 31,	December 31,
	March 31, 2021			2020	March 31, 2020
Other delinquent receivables, net	$	-	$	2,246	$	2,246
Other delinquent receivables, net were as follows:
			December 31,
	March 31, 2021			2020	March 31, 2020
Delinquent receivables not arising from loans	$	3,771	$	3,767	$	4,439
Less: Allowance for doubtful accounts (Note 12)		(3,771)		(1,521)		(2,193)
	$	-	$	2,246	$	2,246

• 25 -

17. PROPERTIES AND EQUIPMENT, NET

Cost Balance, January 1, 2021 Additions Disposals Reclassifications Exchange differences, net Balance, March 31, 2021 Accumulated depreciation Balance, January 1, 2021 Additions Disposals Exchange differences, net Balance, March 31, 2021 Impairment Balance, January 1, 2021 Balance, March 31, 2021 Balance, March 31, 2021 Cost Balance, January 1, 2020 Additions Disposals Exchange influence Balance, March 31, 2020 Accumulated depreciation Balance, January 1, 2020 Additions Disposals Exchange influence Balance, March 31, 2020 Impairment Balance, January 1, 2020 Balance, March 31, 2020 Balance, March 31, 2020				**For the Three **	Months Ended Mar	ch 31, 2021
		Land $ 7,847,588 - - - - 7,847,588 - - - - - 77,000 77,000 $ 7,770,588	Building and Structures $ 2,101,530 - - - - 2,101,530 1,231,486 9,620 - - 1,241,106 - - $ 860,424	Transportation Equipment $ 59,101 188 (880 ) - 11 58,420 36,075 1,639 (879 ) 6 36,841 - - $ 21,579 **For the Three **	Miscellaneous Equipment $ 2,009,496 39,595 (3,623 ) 173 387 2,046,028 1,596,941 40,838 (3,572 ) 277 1,634,484 - - $ 411,544 Months Ended Mar	Lease Improvement $ 8,975 223 - - - 9,198 3,001 405 - - 3,406 - - $ 5,792 ch 31, 2020	Construction in Progress $ 3,250,482 96,431 - (1,548 ) - 3,345,365 - - - - - - - $ 3,345,365	Total $ 15,277,172 136,437 (4,503 ) (1,375 ) 398 15,408,129 2,867,503 52,502 (4,451 ) 283 2,915,837 77,000 77,000 $ 12,415,292
		Land $ 7,847,588 - - - 7,847,588 - - - - - 77,000 77,000 $ 7,770,588	Building and Structures $ 2,101,530 - - - 2,101,530 1,191,481 10,005 - - 1,201,486 - - $ 900,044	Transportation Equipment $ 54,053 52 - (16) 54,089 29,932 1,590 - (7) 31,515 - - $ 22,574	Miscellaneous Equipment $ 1,900,254 13,588 (3,238 ) (397) 1,910,207 1,453,794 41,812 (2,842 ) (338) 1,492,426 - - $ 417,781	Lease Improvement $ 7,799 - - - 7,799 1,632 339 - - 1,971 - - $ 5,828	Construction in Progress $ 1,526,236 94,090 - - 1,620,326 - - - - - - - $ 1,620,326	Total $ 13,437,460 107,730 (3,238 ) (413) 13,541,539 2,676,839 53,746 (2,842 ) (345) 2,727,398 77,000 77,000 $ 10,737,141

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 2 to 5 years Miscellaneous equipment 1 to 15 years Lease improvements 2 to 5 years

• 26 -

18. LEASE ARRANGEMENTS

a. Right-of-use assets

March 31, 2021 Carrying amount Land and buildings $ 854,254 Transportation equipment 159,569 $ 1,013,823 Additions to right-of-use assets Depreciation charge for right-of-use assets Land and buildings Transportation equipment	December 31, 2020 March 31, 2020 $ 789,200 $ 771,155 189,018 58,592 $ 978,218 $ 829,747 For the Three Months Ended March 31	December 31, 2020 March 31, 2020 $ 789,200 $ 771,155 189,018 58,592 $ 978,218 $ 829,747 For the Three Months Ended March 31	December 31, 2020 March 31, 2020 $ 789,200 $ 771,155 189,018 58,592 $ 978,218 $ 829,747 For the Three Months Ended March 31	December 31, 2020 March 31, 2020 $ 789,200 $ 771,155 189,018 58,592 $ 978,218 $ 829,747 For the Three Months Ended March 31
			2021 $ 142,056 $ 33,224 30,500 $ 63,724	2020 $ 22,569 $ 34,453 16,843 $ 51,296

Except for the aforementioned addition and recognized depreciation, the Group did not have significant sublease or impairment of right-of-use assets during the three months ended March 31, 2021 and 2020.

• b. Lease liabilities

		December 31,
	March 31, 2021	2020	March 31, 2020
Carrying amounts	$ 1,044,568	$ 1,006,781	$ 847,667
Range of discount rates for lease liabilities was as follows:
		December 31,
	March 31, 2021	2020	March 31, 2020
Land	1.01%-4.14%	1.01%-4.14%	1.01%-4.14%
Buildings	1.01%-5.95%	1.01%-5.95%	1.01%-5.95%
Transportation equipment	1.01%-5.96%	1.01%-5.96%	1.01%-5.96%

c. Material lease-in activities and terms

The Group leases domestic offices, ATM sites and business cars 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.

• 27 -

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 Three Months Ended **March 31 **	For the Three Months Ended **March 31 **	For the Three Months Ended **March 31 **
		2021 $ 613 $ 2,172 $ (74,002)	2020 $ 848 $ 1,738 $ (57,861)

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, January 1, 2021 Balance, March 31, 2021 Accumulated depreciation Balance, January 1, 2021 Additions Balance, March 31, 2021 Balance, March 31, 2021 Cost Balance, January 1, 2020 Balance, March 31, 2020 Accumulated depreciation Balance, January 1, 2020 Additions Balance, March 31, 2020 Balance, March 31, 2020		For the Three Months Ended March 31, 2021	For the Three Months Ended March 31, 2021
		Land Structures Total $ 15,801 $ 5,972 $ 21,773 15,801 5,972 21,773 - 3,759 3,759 - 23 23 - 3,782 3,782 $ 15,801 $ 2,190 $ 17,991 For the Three Months Ended March 31, 2020
		Land Structures $ 15,801 $ 5,972 15,801 5,972 - 3,670 - 23 - 3,693 $ 15,801 $ 2,279	Total $ 21,773 21,773 3,670 23 3,693 $ 18,080

• 28 -

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

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

• b. The fair values of the investment properties of the Group on December 31, 2020 and 2019 were $53,579 thousand and $53,847 thousand, respectively. The fair value was not evaluated by independent qualified professional valuers. 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. There was no significant change in the fair value of March 31, 2021 and 2020 compared to December 31, 2020 and 2019.

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

• d. The maturity analysis of lease payments receivable under operating leases of investment properties as of March 31, 2021, December 31, 2020 and March 31, 2020 is as follows:

				December	December	31,
		March	31, 2021		2020		March	31, 2020
Year	1	$	864	$	864		$	429
Year	2		864			-		-
Year	3		864			-		-
Year	4		864			-		-
Year	5		432			-		-
		$	3,888	$	864		$	429

20. INTANGIBLE ASSETS, NET

			December 31,	December 31,
	March 31, 2021			2020	March 31, 2020
Business rights	$	28,000	$	28,000	$	28,000
Computer software		187,902		185,470		129,832
	$	215,902	$	213,470	$	157,832

• 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 March 31, 2021, there was no impairment loss of the business rights.

• 29 -

• b. Movements of intangible assets were as follows:

Balance, January 1 Additions Amortization Reclassifications Exchange differences, net Balance, March 31	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 213,470 17,015 (15,990) 1,375 32 $ 215,902	2020 $ 153,125 17,959 (13,942) 680 10 $ 157,832

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

Computer software 1-5 years

21. OTHER ASSETS, NET

		December 31,
	March 31, 2021	2020	March 31, 2020
Refundable deposits	$ 2,273,247	$ 2,198,459	$ 2,118,349
Prepayments	194,531	136,226	205,573
Receipts under payment for shares underwriting	-	107,826	-
Others	2,526	1,016	1,015
	$ 2,470,304	$ 2,443,527	$ 2,324,937

As of March 31, 2021, December 31, 2020 and March 31, 2020, the time deposits and government bonds at amortized cost in the amounts of $1,058,600 thousand, $1,060,400 thousand and $1,060,900 thousand, respectively, 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 36.

22. DUE TO THE CENTRAL BANK AND OTHER BANKS

		December 31,
	March 31, 2021	2020	March 31, 2020
Call loans from banks	$ 6,770,928	$ 6,411,231	$ 6,604,460
Due to Chunghwa Post Co., Ltd.	167,674	326,094	326,094
Due to banks	300,013	300,013	13
	$ 7,238,615	$ 7,037,338	$ 6,930,567

• 30 -

23. FUNDS BORROWED FROM CENTRAL BANK AND OTHER BANKS

		December 31,
	March 31, 2021	2020	March 31, 2020
Funds borrowed from central bank	$ 2,403,680	$ 2,167,280	$	-
Funds borrowed from other banks	7,277,718	6,343,372		5,615,044
	$ 9,681,398	$ 8,510,652	$	5,615,044
Funds borrowed from central banks (%)	0.10	0.10		-
Funds borrowed from other banks (%)	0.95-5.23	0.95-5.23		1.44-5.44

Refer to Note 36 for information relating to collateral provided for funds borrowed from central bank and other banks.

24. SECURITIES SOLD UNDER REPURCHASE AGREEMENTS

March 31, 2021 Government bonds $ 1,204,175 Foreign bonds 4,891,365 $ 6,095,540	December 31, 2020 March 31, 2020 $ 1,203,592 $ 2,004,704 1,096,485 9,364,159 $ 2,300,077 $ 11,368,863

The details of repurchase price and interest rate at the end of the period were as follows:

March 31, 2021 Government bonds $ 1,204,461 Foreign bonds 4,894,463 $ 6,098,924 Government bonds 0.17%-0.18% Foreign bonds 0.26%-0.34% The foreign bonds denominated in foreign currencies were as follows: March 31, 2021 USD $ 171,452	December 31, 2020 March 31, 2020 $ 1,203,981 $ 2,005,641 1,097,527 9,408,404 $ 2,301,508 $ 11,414,045 0.20%-0.21% 0.40%-0.50% 0.38% 1.83%-1.95% December 31, 2020 March 31, 2020 $ 39,022 $ 309,836

• 31 -

25. PAYABLES

March 31, 2021 Accounts payable for delivery $ 1,916,516 Foreign currency settlement payable 1,543,148 Accrued expenses 1,022,102 Notes and checks in clearing 853,748 Acceptances 670,772 Interest payable 480,767 Factored accounts payable 103,482 Collections payable 45,432 Other payables 620,902 $ 7,256,869 DEPOSITS AND REMITTANCES March 31, 2021 Checking $ 6,975,463 Demand 171,013,409 Demand savings 150,857,625 Time 156,952,923 Time savings 154,047,375 Remittances 36,213 $ 639,883,008 BANK DEBENTURES March 31, 2021 Subordinated financial debenture $ 11,500,000

December 31, 2020 March 31, 2020 $ 1,526,955 $ 576,616 1,083,053 1,470,542 1,653,548 950,713 1,249,821 751,005 455,797 628,712 327,521 676,602 105,876 49,851 144,075 35,487 802,738 690,429 $ 7,349,384 $ 5,829,957 December 31, 2020 March 31, 2020 $ 8,826,292 $ 6,192,901 171,324,169 141,954,556 150,643,016 134,410,111 150,519,288 144,418,247 155,188,149 159,070,917 88,554 25,749 $ 636,589,468 $ 586,072,481 December 31, 2020 March 31, 2020 $ 11,500,000 $ 14,000,000

26. DEPOSITS AND REMITTANCES

27. BANK DEBENTURES

• a. The Bank issued first subordinated financial debenture and second subordinated financial debenture on June 25, 2013 and December 16, 2013, respectively, which were approved under ruling reference No. 10200089330 issued by the Banking Bureau of the FSC on April 8, 2013. Details of the financial subordinated debenture’s issuance are summarized as follows:

• 1) Total approved principal: $6,000,000 thousand.

• 2) Principal issued:

  • a) Debenture I on 2013: $2,500,000 thousand.

  • b) Debenture II on 2013: $3,000,000 thousand.

• 32 -

• 3) Denomination:

  • a) Debenture I on 2013: $500 thousand, issued at par.

  • b) Debenture II on 2013: $500 thousand, issued at par.

• 4) Period:

  • a) Debenture I on 2013: 7 years with maturities on June 25, 2020.

  • b) Debenture II on 2013: 6 years with maturities on December 16, 2019.

• 5) Nominal interest rate:

  • a) Debenture I on 2013: Fixed interest rate, 2.1%.

  • b) Debenture II on 2013: Fixed interest rate, 2.1%.

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

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

• b. 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 subordinated financial 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.

• c. 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 on 2016: $1,500,000 thousand.

  • b) Debenture I on 2017: $1,000,000 thousand. c) Debenture II on 2017: $500,000 thousand.

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

• 33 -

• 3) Denomination:

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

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

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

  • d) Debenture III on 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.

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

• d. 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 on 2017: $1,350,000 thousand.

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

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

• 3) Denomination:

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

  • c) Debenture I on 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.

• e. 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.

• 34 -

• 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.

28. OTHER FINANCIAL LIABILITIES

			December 31,	December 31,
	March 31, 2021			2020	March 31, 2020
Commercial papers payable	$	2,108,361	$	1,588,567	$	1,312,788
Structured commodity principal		129,685		107,246		124,909
	$	2,238,046	$	1,695,813	$	1,437,697
PROVISIONS
			December 31,
	March 31, 2021			2020	March 31, 2020
Provision for employee benefits	$	1,067,796	$	1,089,282	$	1,121,294
Provision for losses on guarantees		290,463		235,963		174,463
Other provision		16,901		13,097		14,395
Provision for loan commitments		73,792		72,060		53,642
Provision for outstanding loss		15,340		14,090		-
	$	1,464,292	$	1,424,492	$	1,363,794
a. Details of provision for employee benefits were	as follows:
			December 31,
	March 31, 2021			2020	March 31, 2020
Benefit plans	$	889,878	$	913,854	$	957,990
Preferential interest on employees’ deposits		140,654		139,406		132,606
Other long-term employee benefit liabilities		37,264		36,022		30,698
	$	1,067,796	$	1,089,282	$	1,121,294

29. PROVISIONS

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.

• 35 -

The amounts of contributions paid by the Group in accordance with the defined contribution plan and recognized in the consolidated statements of comprehensive income were $26,484 thousand and $24,347 thousand for the three months ended March 31, 2021 and 2020, respectively.

2) Defined benefit plans

The defined benefit plan adopted of the Bank in accordance with the Labor Standards Law 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 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.

An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit plans in accordance with the pension cost rate for the three months ended March 31, 2021 and 2020 was as follows:

Operating expenses	For the Three Months Ended **March 31 **	For the Three Months Ended **March 31 **	For the Three Months Ended **March 31 **
		2021 $ 3,147	2020 $ 4,121

• 3) Preferential interest on employees’ deposits plan

The Bank had 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, and the preferential interest on employee’s deposit liabilities were carried out by qualified actuaries.

For the three months ended March 31, 2021 and 2020, the expenses under preferential interest on employees’ deposits plan recognized in the consolidated statements of comprehensive income amounted to $1,248 thousand and $1,173 thousand, respectively.

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.

For the three months ended March 31, 2021 and 2020, the Group recognized total expenses related to the long-term employee benefits in the consolidated statements of comprehensive income were $1,242 thousand and $1,179 thousand, respectively.

• 36 -

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

For the three months ended March 31, 2021

		12-month ECLs		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, 2021 Reconciliation arising from financial instruments recognized at the beginning of the period: 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 March 31, 2021		$ 168,958 (1,698) (608) - (93,860) 122,863 - - - (2,320) $ 193,335		$ 4,799 1,698 (871) - (2,306) 1,139 - - - 24,852 $ 29,311		$ 36,355 - 1,479 - - - - - - 29,887 $ 67,721		$ 210,112 - - - (96,166) 124,002 - - - 52,419 $ 290,367		$ 25,851 - - - - - (25,755) - - - $ 96		$ 235,963 - - - (96,166) 124,002 (25,755) - - 52,419 $ 290,463

• 37 -

For the three months ended March 31, 2020

		12-month ECLs		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, 2020 Reconciliation arising from financial instruments recognized at the beginning of the period: 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 March 31, 2020		$ 109,720 (284) (115) 4,104 (55,745) 62,565 - - - (8,495) $ 111,750		$ 1,778 10,216 - (768) (1,010) 33 - - - (4,018) $ 6,231		$ 58,621 (9,932) 115 (3,336) (765) 1,659 - - - 3,970 $ 50,332		$ 170,119 - - - (57,520) 64,257 - - - (8,543) $ 168,313		$ 4,344 - - - - - 1,806 - - - $ 6,150		$ 174,463 - - - (57,520) 64,257 1,806 - - (8,543) $ 174,463

For the three months ended March 31, 2021 and 2020, a provision was recognized for bad-debt expense, commitments and guarantees.

• 38 -

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

For the three months ended March 31, 2021

		12-month ECLs		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, 2021 Reconciliation arising from financial instruments recognized at the beginning of the period: 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 March 31, 2021		$ 9,157 - - - (6,662) 10,516 - - - (1,462) $ 11,549		$ 3,263 - - - (3,263) - - - - - $ -		$ - - - - - - - - - - $ -		$ 12,420 - - - (9,925) 10,516 - - - (1,462) $ 11,549		$ 677 - - - - - 4,675 - - - $ 5,352		$ 13,097 - - - (9,925) 10,516 4,675 - - (1,462) $ 16,901

• 39 -

For the three months ended March 31, 2020

		12-month ECLs		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, 2020 Reconciliation arising from financial instruments recognized at the beginning of the period: 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 March 31, 2020		$ 9,638 - - - (7,344) 8,065 - - - (1,658) $ 8,701		$ - - - - - - - - - - $ -		$ 7 - - - (7) 30 - - - - $ 30		$ 9,645 - - - (7,351) 8,095 - - - (1,658) $ 8,731		$ 2,233 - - - - - 3,431 - - - $ 5,664		$ 11,878 - - - (7,351) 8,095 3,431 - - (1,658) $ 14,395

For the three months ended March 31, 2021 and 2020, a provision was recognized for bad debts expense, commitments and guarantees.

• 40 -

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

For the three months ended March 31, 2021

		12-month ECLs		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, 2021 Reconciliation arising from financial instruments recognized at the beginning of the period: 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 March 31, 2021		$ 58,968 (3) (363) 657 (5,117) 8,829 - - - (543) $ 62,428		$ 7,205 3 343 (657) (5,388) - - - - 89 $ 1,595		$ 2,555 - 20 - (71) - - - - (20) $ 2,484		$ 68,728 - - - (10,576) 8,829 - - - (474) $ 66,507		$ 3,332 - - - - - 3,953 - - - $ 7,285		$ 72,060 - - - (10,576) 8,829 3,953 - - (474) $ 73,792

• 41 -

For the three months ended March 31, 2020

		12-month ECLs		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, 2020 Reconciliation arising from financial instruments recognized at the beginning of the period: 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 March 31, 2020		$ 48,760 (3) (1) 666 (354) 4,995 - - - (9,983) $ 44,080		$ 1,848 3 (13) (666) (99) - - - - 172 $ 1,245		$ 4,025 - 14 - (4,025) - - - - (14) $ -		$ 54,633 - - - (4,478) 4,995 - - - (9,825) $ 45,325		$ 8,724 - - - - - (407) - - - $ 8,317		$ 63,357 - - - (4,478) 4,995 (407) - - (9,825) $ 53,642

For the three months ended March 31, 2021 and 2020, a provision was recognized for bad debt expense, commitments and guarantees.

• e. Please refer to Note 37 for the amount of $15,340 thousand and $14,090 thousand for the outstanding compensation provision of the Bank on March 31, 2021 and December 31, 2020.

30. OTHER LIABILITIES

		December 31,
	March 31, 2021	2020	March 31, 2020
Guarantee deposits received	$ 600,544	$ 567,148	$ 628,949
Advance receipts	269,828	318,649	221,206
Credit transactions	986	3,604	1,084
Others	79,321	85,910	69,594
	$ 950,679	$ 975,311	$ 920,833

• 42 -

31. EQUITY

• a. Share capital

Ordinary shares

March 31, 2021 Number of shares authorized (in thousands) 6,150,000 Shares authorized $ 61,500,000 Number of shares issued and fully paid (in thousands) 4,151,694 Shares issued $ 41,516,943	December 31, 2020 March 31, 2020 6,150,000 4,320,000 $ 61,500,000 $ 43,200,000 4,151,694 3,708,835 $ 41,516,943 $ 37,088,349

Ordinary shares issued have a par value of $10, carry one vote per share and carry the right to receive dividends.

As of March 31, 2020, the Bank had issued ordinary shares totaling $37,088,349 thousand, divided into 3,708,835 thousand ordinary shares at $10 par value per share. In September 2020, the Bank transferred $1,928,594 thousand of unappropriated earnings to ordinary shares, consisting of 192,859 thousand ordinary shares at par value of $10 per share. In July 2020, 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 $10.2 per share issued at premium. On October 13, 2020, the above transaction was approved under ruling reference No. 1090359541 issued by the Banking Bureau of the FSC and the subscription base date was determined as at December 17, 2020. As of March 31, 2021, the Bank had increased ordinary shares to $41,516,943 thousand, divided into 4,151,694 thousand ordinary shares at $10 par value per share.

b. Capital surplus

		December 31,
	March 31, 2021	2020	March 31, 2020
May be used to offset a deficit, distributed as
cash dividends, or
transferred to share capital*
Issuance of ordinary shares	$ 713,633	$ 713,633	$ 663,633
May be used to offset a deficit only
Issuance of ordinary shares - employee share
options	58,664	58,664	32,124
Expired employee share options	6,767	6,767	6,682
Share of changes in capital surplus of
associates	16,813	16,813	16,813
Conversion of bank debentures’ components	7,729	7,729	7,729
	$ 803,606	$ 803,606	$ 726,981

• 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).

• 43 -

• 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 a legal reserve of 30% of the remaining profit, 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, operation and investment needs. When dividends are declared, cash dividends must be at least 10% of total dividends declared.

An appropriation of earnings to a 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 Law 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 risk 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 reversed amount.

According to Order No. 1010012865 issued by the FSC (repealed at December 31, 2021), Order No. 1010047490 issued by the FSC (repealed at March 31, 2021), 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 appropriating 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 use 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 arising from financial technology development within the amount of the abovementioned special reserve from 2016 to 2018.

The appropriations of earnings for 2020 had been proposed by board of directors on February 25, 2021 and 2019 were approved in the shareholders’ meetings on June 30, 2020, respectively, as follows:

Legal reserve Cash dividends Share dividends	Appropriation of Earnings 2020 2019 $ 1,207,149 $ 1,281,622 996,407 1,038,474 1,868,262 1,928,594	Dividends Per Share (NT$)
		2020 2019 $ - $ - 0.24 0.28 0.45 0.52

• 44 -

The appropriations of earnings for 2020 are subject to the resolution of the shareholders’ meeting to be held on May 28, 2021.

d. Other equity items

Exchange Differences on Translation of the Financial Statements of Foreign Operations Unrealized Gain on Financial Assets at FVTOCI Balance at January 1, 2021 $ (121,110) $ 1,424,867 Recognized for the period Unrealized gains Equity instruments - 183,319 Debt instruments - 48,839 Net remeasurement of loss allowance - debt instruments - 2,622 Share from associates accounted for using the equity method - 5,870 Cumulative unrealized gain of equity instruments transferred to retained earnings due to disposal - (15,455) Cumulative translation adjustment Exchange differences for current period 50,195 - Income tax related to other comprehensive income - (16) Balance at March 31, 2021 $ (70,915) $ 1,650,046 Balance at January 1, 2020 $ (96,316) $ 949,508 Recognized for the period Unrealized gains Equity instruments - (212,687) Debt instruments - 153,856 Net remeasurement of loss allowance - debt instruments - 1,166 Share from associates accounted for using the equity method - (1,325) Cumulative unrealized loss of equity instruments transferred to retained earnings due to disposal - 695 Cumulative translation adjustment Exchange differences for current period 9,729 - Income tax related to other comprehensive income - 10,282 Balance at March 31, 2020 $ (86,587) $ 901,495

Total $ 1,303,757 183,319 48,839 2,622 5,870 (15,455) 50,195 (16) $ 1,579,131 $ 853,192 (212,687) 153,856 1,166 (1,325) 695 9,729 10,282 $ 814,908

• 45 -

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 Service fee income, net Service fee income Brokering Trust business Loans Guarantee Others Service fee expense Commission Cross-bank transactions Others		For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 2020 $ 2,442,834 $ 2,692,240 19,021 31,982 373,163 413,450 83,392 69,360 82,399 56,782 9,455 9,714 6,614 13,911 1,546 2,403 142 152 3,018,566 3,289,994 (594,840) (920,812) (110,305) (131,790) (46,505) (58,557) (900) (893) (3,403) (46,245) (1,691) (290) (9,983) (8,197) (3,923) (417) (771,550) (1,167,201) $ 2,247,016 $ 2,122,793 For the Three Months Ended March 31
			2021 $ 265,762 321,115 181,977 48,932 90,042 907,828 (21,264) (9,901) (27,545) (58,710) $ 849,118	2020 $ 315,022 252,396 140,406 35,510 73,125 816,459 (28,832) (8,777) (26,946) (64,555) $ 751,904

• b. Service fee income, net

• 46 -

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 fair value through profit or loss

Realized profit and loss Commercial papers Shares Beneficiary certificates Derivative financial instruments Corporate bonds Valuation Commercial papers Shares Beneficiary certificates PEM Group policy assets Derivative financial instruments Corporate bonds	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 15,440 63,206 3,969 105,572 - 188,187 (2,701) 49,378 13,257 (4,209) 525 1,767 58,017 $ 246,204	2020 $ 29,204 (33,263) (47,767) (11,771) 906 (62,691) (831) (86,872) (36,757) (20,861) 75,104 (21) (70,238) $ (132,929)

• 1) For the three months ended March 31, 2021 and 2020, realized profit or loss of gain on financial assets and liabilities at fair value through profit or loss included disposal profit (loss) amounted to $157,020 thousand and $(97,172) thousand, dividend income amounted to $1,101 thousand and $781 thousand and interest revenue amounted to $30,066 thousand and $33,700 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 Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ - - $ -	2020 $ 180 14,051 $ 14,231

• 47 -

e. Impairment losses on financial assets

Investments in debt instruments at FVTOCI Financial assets at amortized cost	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ (2,622) 711 $ (1,911)	2020 $ (1,166) (1,299) $ (2,465)

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

For the Three Months Ended March 31 2021 2020 Gains (losses) on disposal of properties and equipment $ 1,202 $ (3) Others 2,226 (498) $ 3,428 $ (501) Bad-debt expenses and provision for losses on commitments and guarantees For the Three Months Ended March 31 2021 2020 Bad debts on receivables $ 57,818 $ 40,979 Bad debts on notes discounted and loans 202,198 147,451 Losses on guarantees 54,500 - (Reversal of) loan commitments 1,426 (9,909) Others 3,785 - $ 319,727 $ 178,521 Employee benefits expenses For the Three Months Ended March 31 2021 2020 Salaries $ 933,446 $ 756,843 Labor and health insurance 54,533 64,958 Pension expense 29,631 28,468 Other employee expenses 46,772 60,894 $ 1,064,382 $ 911,163	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 2020 $ 57,818 $ 40,979 202,198 147,451 54,500 - 1,426 (9,909) 3,785 - $ 319,727 $ 178,521 For the Three Months Ended **March 31 **
		2021 $ 933,446 54,533 29,631 46,772 $ 1,064,382	2020 $ 756,843 64,958 28,468 60,894 $ 911,163

g. Bad-debt expenses and provision for losses on commitments and guarantees

h. Employee benefits expenses

• 48 -

• i. Compensation of employees 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 three months ended March 31, 2021 and 2020, respectively, were as follows:

Accrual rate

Employees’ compensation Remuneration of directors Amount	For the Three Months Ended **March 31 **
	2021 2020 0.72% 0.78% 2.07% 1.50%

Employees’ compensation Remuneration of directors	For the Three Months Ended **March 31 **	For the Three Months Ended **March 31 **	For the Three Months Ended **March 31 **
		2021 $ 9,664 $ 27,700	2020 $ 8,923 $ 19,500

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.

The appropriations of employees’ compensation and remuneration of directors for 2020 and 2019 that were resolved by the Bank’s board of directors on February 25, 2021 and February 25, 2020 respectively, are as shown below:

Employees’ compensation Remuneration of directors		Cash
		2020 $ 35,975 $ 96,195	2019 $ 38,880 $ 77,759

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, 2020 and 2019.

Information on the employees’ compensation and remuneration of directors resolved by the Bank’s board of directors in 2021 and 2020 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

• 49 -

• j. Depreciation and amortization expenses

Properties and equipment Investment properties Right-of-use assets Intangible assets	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 52,502 23 63,724 15,990 $ 132,239	2020 $ 53,746 23 51,296 13,942 $ 119,007

k. Other selling and administrative expenses

Taxes Professional service Advertisement Insurance Entertainment Donation Postage Others	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 179,237 42,919 21,914 44,472 15,831 16,848 15,788 112,474 $ 449,483	2020 $ 178,902 35,265 29,787 41,566 11,986 22,000 15,305 109,525 $ 444,336

33. INCOME TAXES RELATING TO CONTINUING OPERATIONS

• a. Income tax recognized in profit or loss

Major components of income tax expense were as follows:

Current tax In respect of the current period Deferred tax In respect of the current period Income tax expense recognized in profit or loss	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 282,182 (89,734) $ 192,448	2020 $ 228,505 6,616 $ 235,121

• 50 -

• b. Income tax recognized in other comprehensive income

Deferred tax In respect of the current period Fair value changes of financial assets at FVTOCI	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ (16)	2020 $ 10,282

c. Income tax assessments

The income tax returns of Taichung Commercial Bank Co., Ltd., Taichung Bank Insurance Brokers Co. and Taichung Commercial Bank Securities Co., Ltd., through 2019 have been assessed by the tax authorities, while the income tax returns of Taichung Bank Leasing Corporation Limited through 2018 have been assessed and approved by the tax authorities.

34. EARNINGS PER SHARE

Basic earnings per share Diluted earnings per share	Unit: NT$ Per Share For the Three Months Ended March 31	Unit: NT$ Per Share For the Three Months Ended March 31	Unit: NT$ Per Share For the Three Months Ended March 31
		2021 $ 0.27 $ 0.27	2020 $ 0.23 $ 0.23

The weighted average number of shares outstanding used for the earnings per share computation was adjusted retroactively for the issuance of bonus shares. The basic and diluted earnings per share adjusted retrospectively for the three months ended March 31, 2020 were as follows:

	Unit:	NT$ Per Share
	Before	After
	Retrospective	Retrospective
	Adjustment	Adjustment
Basic earnings per share	$ 0.24	$ 0.23
Diluted earnings per share	$ 0.24	$ 0.23

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 basic earnings per share Earnings used in the computation of diluted earnings per share		For the Three Months Ended **March 31 **	For the Three Months Ended **March 31 **
		2021 $ 1,130,244 $ 1,130,244	2020 $ 879,690 $ 879,690

• 51 -

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 Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 4,151,694 2,875 4,154,569	2020 3,901,694 2,961 3,904,655

If the Group offered to settle the compensation or bonuses paid to employees in cash or shares, the Group assumed that the entire amount of the compensation or bonuses will be settled in shares, and the resulting potential shares were 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. RELATED-PARTY TRANSACTIONS

Related Party Relationship with the Group Parent company of the Bank Legal director of the Bank Legal directors of the Bank

China Man-Made Fiber Corporation Hsu Tian Investment Co., Ltd.

Pan Asia Chemical Co., Ltd. and Ho Yang Management Consultant Co., Ltd. (Note 2)

Kuei-Fong Wang (Note 1) Te-Wei Chia (Note 1)

Natural director of the Bank General manager and legal representatives of the Bank’s director Independent directors of the Bank

Hsin-Chang Tsai, Li-Woon Lim, Pi-Ta Chen, Chien-An Shin (Note 1) Jin-Yi Lee (Note 2)

Independent director of the Bank

Legal representatives of the Bank’s director

Hsin-Ching Chang, Wei-Liang Lin, Ming-Hsiung Huang, Siou-Huei Ye, Shih-Yi Chiang, Li-Tzu Lai (Note 1) Lai-Hsing Tsai, Chien-Hui Huang, Ming-Shan Chuang (Note 2)

Legal representatives of the Bank’s director

24 persons including the Chairman and general manager’s spouse

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

41 persons including the director of the Board’s spouse

6 persons including Yi-Yuan Tung

17 persons including associate general manager’s spouse

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

106 persons including Hung-Lung Tsai 11 persons including Kuei-Hsien Wang

Taichung Bank Securities Investment Trust Co., Ltd.

(Continued)

• 52 -

Relationship with the Group

Related Party

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 Hammock (Hong Kong) Company Limited Hebei Hanoshi Contact Lens Co., Ltd. Chou Chin Industrial Co., Ltd. Chou Chang Co., Ltd. Pan Feng Enterprise Co., Ltd. Greenworld Food Co., Ltd. Nan Chung Petrochemical Corporation Je Mi Fang Corporation Rai Chia Investment Co., Ltd. Xiang Fong Development Co., Ltd. Reliance Securities Co., Ltd. Sheen Ren Knitting Factory Co., Ltd. Ta Fa Investment Co., Ltd. Formosa Imperial Wineseller Corp. Tou Ming Industry Limited Company Jin Bang Ge Industrial Company Limited. Ta Yi Development Co., Ltd. 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. Chen Teng Public Relations (Shanghai) Company Shanghai Bomi Consulting management Limited Company Shuo-Jung Co., Ltd. Fengteng Co., Ltd. Shanghai Nianjia Culture Communication Co., Ltd. General Pride Enterprise Co., Ltd. Fengqi Investment Co., Ltd. Reliance Kuan Chun Venture Capital Co., Ltd. Reliance Securities Investment Consultant Co., Ltd. Reliance Kuan Chun Venture Management Consulting Co., Ltd.

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 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

(Concluded)

• 53 -

• Note 1: 12 directors out of 24 directors (including 4 independent directors), were elected at the shareholders’ meeting of the Bank on June 30, 2020. The followings were respectively elected as directors: Kuei-Fong Wang and Ming-Hsiung Huang (legal representative of Hsu Tian Investment Co., Ltd), Wei-Liang Lin (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), Hsin-Ching Chang (legal representative of Hsu Tian Investment Co., Ltd), Siou-Huei Ye (legal representative of Hsu Tian Investment Co., Ltd), Li-Tzu Lai (legal representative of Hsu Tian Investment Co., Ltd), Hsin-Chang Tsai (independent directors of the Bank), Li-Woon Lim (independent directors of the Bank), Chien-An Shin (independent directors of the Bank) and Pi-Ta Chen (independent directors of the Bank).

Note 2: Resigned after the shareholders’ meeting of the Bank on June 30, 2020.

Significant transactions between the Group and related party are as follows

• a. Loans

For the three months ended March 31, 2021

Balance, Numbers/ Name Highest Balance End of the Year Employees consumption loans 13 $ 4,817 $ 3,897 Loans on mortgage 40 167,541 153,199 Other loans Lee OO 2,414 2,379 Chang OO 4,500 - Liu OO 1,774 1,342 Tsai OO 5,000 - Lin OO 412 389 Chiu OO 1,500 1,500 Chen OO 30,000 30,000 Fang OO 9,616 9,616 Wang OO 3,000 3,000 Lin OO 17,600 17,300 Tsai OO 248 214 Liang OO 767 737 Ye OO 11,000 11,000 Huang OO 1,435 1,401 Jhuang OO 1,314 1,275 Chiu OO 2,935 2,859 Hsu OO 2,200 2,200

Compliance The Difference Between Related and Performing Loans Overdue Loans Interest Revenue Collaterals Non-related Party $ 3,897 $ - $ 17 Credit loans None 153,199 - 462 Real estate None 2,379 - 8 Real estate None - - 4 Real estate None 1,342 - 5 Real estate None - - 8 Real estate None 389 - - Real estate None 1,500 - 6 Real estate None 30,000 - 112 Real estate None 9,616 - 33 Real estate None 3,000 - 4 Real estate None 17,300 - 66 Real estate None 214 - 1 Real estate None 737 - 2 Real estate None 11,000 - 33 Real estate None 1,401 - 5 Real estate None 1,275 - 3 Real estate None 2,859 - 9 Real estate None 2,200 - 8 Real estate None

For the three months ended March 31, 2020

Balance, Numbers/ Name Highest Balance End of the Year Employees consumption loans 10 $ 3,223 $ 2,830 Loans on mortgage 33 128,168 110,113 Other loans Lee OO 2,552 2,518 Liu OO 1,911 1,877 Fang OO 4,916 3,416 Lin OO 18,800 18,500 Tsai OO 380 347 Liang OO 886 857 Ye OO 11,000 11,000 Huang OO 1,570 1,536 Chiu OO 3,238 3,163

Compliance The Difference Between Related and Performing Loans Overdue Loans Interest Revenue Collaterals Non-related Party $ 2,830 $ - $ 14 Credit loans None 110,113 - 396 Real estate None 2,518 - 10 Real estate None 1,877 - 7 Real estate None 3,416 - 5 Real estate None 18,500 - 83 Real estate None 347 - 2 Real estate None 857 - 3 Real estate None 11,000 - 41 Real estate None 1,536 - 7 Real estate None 3,163 - 12 Real estate None

• 54 -

According to Articles 32 and 33 of the Banking Law, 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.

b. Deposits

Taichung Bank Securities Investment Trust Co., Ltd. Taichung Commercial Bank Workers’ Welfare Commission China Man-Made Fiber Corporation Taichung Commercial Bank Cultural and Educational Foundation Formosa Imperial Wineseller Corp. Greenworld Food Co., Ltd. Pan Asia Chemical Corporation Pan Feng Enterprise Co., Ltd. Chou Chin Industrial Co., Ltd. Chou Chang Co., Ltd. Shuo-Jung Co., Ltd. Je Mi Fang Corporation Hsu Tian Investment Co., Ltd. Reliance Securities Co., Ltd. Pan Asia Investment Co., Ltd. Deh Hsing Investment Co., Ltd. Others Taichung Bank Securities Investment Trust Co., Ltd. Taichung Commercial Bank Workers’ Welfare Commission China Man-Made Fiber Corporation Taichung Commercial Bank Cultural and Educational Foundation Formosa Imperial Wineseller Corp. Greenworld Food Co., Ltd. Pan Asia Chemical Corporation Pan Feng Enterprise Co., Ltd. Chou Chin Industrial Co., Ltd. Chou Chang Co., Ltd. Je Mi Fang Corporation Hsu Tian Investment Co., Ltd.	For the Three Months Ended March 31, 2021
	Ending Balance Interest Ratio Interest Expense $ 111,158 0.00-0.79 $ 198 148,898 0.01-4.80 1,696 66,247 0.01-0.05 7 8,218 0.01-0.84 17 7 0.04 - 2,707 0.04 - 63,655 0.01-0.04 3 315 0.04 - 14,519 0.01-0.04 - 84 0.01 - 13,929 0.01 - 20,086 0.04-0.81 35 59,259 0.01-0.05 - 13,766 0.04-0.55 18 7 0.01 - 6,834 0.04 1 396,091 0.00-4.80 884 $ 925,780 $ 2,859 For the Three Months Ended March 31, 2020
	Ending Balance Interest Ratio Interest Expense $ 172,696 0.00-1.05 $ 324 149,045 0.01-5.09 1,820 58,802 0.01-0.15 9 8,245 0.01-0.84 22 551 0.04 - 4,404 0.04 - 8,960 0.01-0.04 3 141 0.04 - 17,930 0.01-0.04 1 4,728 0.01 - 14,903 0.04 3 281 0.01-0.15 - (Continued)

• 55 -

Reliance Securities Co., Ltd. Shuo-Jung Co., Ltd. Deh Hsing Investment Co., Ltd. Others	For the Three Months Ended March 31, 2020	For the Three Months Ended March 31, 2020
	Ending Balance Interest Ratio $ 13,678 0.04-0.80 15,244 0.01 6,830 0.04 336,941 0.00-5.09 $ 813,379	Interest Expense $ 26 - 1 1,060 $ 3,269 (Concluded)

The interest rates did not significantly differ from those with ordinary customers except for the interest rates on the Bank’s employee deposits at 4.80% and 5.09% as of March 31, 2021 and 2020, 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.

As of March 31, 2021 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 on 2015, first no due date non-cumulative
		subordinated financial debenture on 2016, first 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, second no due date non-cumulative
		subordinated financial debenture on 2018
Others	3,750,000	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, 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

• 56 -

The interest payables on the financial debentures of the above-mentioned related parties were $121,444 thousand, $47,108 thousand and $130,129 thousand on March 31, 2021, December 31, 2020 and March 31, 2020, respectively. The interest expenses were $74,336 thousand and $79,993 thousand for the three months ended March 31, 2021 and 2020, respectively.

• d. Service fee income

Taichung Bank Securities Investment Trust Co., Ltd.	For the Three Months Ended **March 31 **	For the Three Months Ended **March 31 **	For the Three Months Ended **March 31 **
		2021 $ 161	2020 $ 154

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. Je Mi Fang Corporation Pan Feng Enterprise Co., Ltd.	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 196 - - $ 196	2020 $ 169 22 50 $ 241

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

• f. Compensation of directors and key management personnel

For the three months ended March 31, 2021 and 2020, 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 Three Months Ended **March 31 **	For the Three Months Ended **March 31 **	For the Three Months Ended **March 31 **
		2021 $ 93,850 434 1 $ 94,285	2020 $ 73,411 327 4 $ 73,742

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36. PLEDGED ASSETS

			December 31,	December 31,
	March 31, 2021			2020	March 31, 2020
Call loans to other banks - time deposits	$	200,000	$	200,000	$	200,000
Restricted assets - cash in banks		389,445		436,106		488,430
Notes receivable		2,550,571		2,426,158		2,607,788
Investments in debt instruments at amortized cost
- government bonds		918,600		920,400		920,900
Deposit reserves for demand accounts		5,000,000		5,000,000		-
	$	9,058,616	$	8,982,664	$	4,217,118

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

		December 31,
	March 31, 2021	2020	March 31, 2020
Guarantee to district court for litigation	$ 358,600	$ 360,400	$ 360,900
Collateral for overdraft of clearing account	500,000	500,000	500,000
Reserve of trust compensation	60,000	60,000	60,000
	$ 918,600	$ 920,400	$ 920,900

37. 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 March 31, 2021, December 31, 2020 and March 31, 2020 were as follows:

• a. Significant commitments

		December 31,
	March 31, 2021	2020	March 31, 2020
Loan commitments (excluding credit card)	$ 144,455,362	$ 143,630,068	$ 136,227,772
Loan commitments - credit card	13,108,907	12,799,065	12,193,390
Guarantee receivables	25,430,343	22,879,091	17,513,156
Trust liabilities	72,285,995	65,050,103	64,968,372
Letters of credit	4,245,721	3,430,243	3,125,236
Lease contract commitment	2,759,641	2,121,644	1,204,224

• 58 -

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

Trust Account Balance Sheet March 31, 2021

Trust Assets Amount Trust Liabilities Cash in banks $ 4,880,912 Securities under custody Short-term investments 56,826,465 payable Structured finance instruments 1,276,095 Trust capital Real estate Net income Land 3,089,313 Deferred carryover amounts Buildings 206,847 Securities under custody 6,006,363 Trust assets $ 72,285,995 Trust liabilities Trust Account Asset Items March 31, 2021 Item Cash in banks Short-term investments Structured finance instruments Real estate Land Buildings Securities under custody Trust Account Income Statement Three Months Ended March 31, 2021 Trust income Interest revenue Trust expense Management fee Tax Income before income tax Income tax expense Net income

Amount $ 6,006,363 66,279,632 271,724 (271,724) $ 72,285,995 Amount $ 4,880,912 56,826,465 1,276,095 3,089,313 206,847 6,006,363 $ 72,285,995 Amount $ 592,711 (320,987) - 271,724 - $ 271,724

• 59 -

Trust Account Balance Sheet December 31, 2020

Trust Assets Amount Trust Liabilities Cash in banks $ 4,689,969 Securities under custody Short-term investments 53,842,003 payable Structured finance instruments 1,406,286 Trust capital Real estate Net income Land 2,056,768 Deferred carryover amounts Buildings 136,691 Securities under custody 2,918,386 Trust assets $ 65,050,103 Trust liabilities Trust Account Asset Items December 31, 2020 Item Cash in banks Short-term investments Structured finance instruments Real estate Land Buildings Securities under custody Trust Account Income Statement Year Ended December 31, 2020 Trust income Interest revenue Trust expense Management fee Tax Income before income tax Income tax expense Net income

Amount $ 2,918,386 62,131,717 1,569,531 (1,569,531) $ 65,050,103 Amount $ 4,689,969 53,842,003 1,406,286 2,056,768 136,691 2,918,386 $ 65,050,103 Amount $ 2,641,698 (1,072,146) (21) 1,569,531 - $ 1,569,531

• 60 -

Trust Account Balance Sheet March 31, 2020

Trust Assets Amount Trust Liabilities Cash in banks $ 5,149,764 Securities under custody Short-term investments 50,484,105 payable Structured finance instruments 1,742,416 Trust capital Real estate Net income Land 1,546,707 Deferred carry-over amounts Buildings 122,712 Securities under custody 5,922,668 Trust assets $ 64,968,372 Trust liabilities Trust Account Asset Items March 31, 2020 Item Cash in banks Short-term investments Structured finance instruments Real estate Land Buildings Securities under custody Trust Account Income Statement Three Months Ended March 31, 2020 Trust income Interest revenue Trust expense Management fee Tax Income before income tax Income tax expense Net income

Amount $ 5,922,668 59,045,704 459,940 (459,940) $ 64,968,372 Amount $ 5,149,764 50,484,105 1,742,416 1,546,707 122,712 5,922,668 $ 64,968,372 Amount $ 712,144 (252,204) - 459,940 - $ 459,940

• c. Maturity analysis of lease commitments and capital expenditures

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

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.

• 61 -

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 Group 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 Group entered into a contract of planning, design and supervision worth $480,492 thousand with YSL Architects & Associates.

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

Financing lease income

March 31, 2021 Year 1 $ 3,024,358 Year 2 347,254 Year 3 25,325 Year 4 13,030 Year 5 13,030 Year 6 onwards 167,950 $ 3,590,947 Present value of financing lease income March 31, 2021 Year 1 $ 2,693,590 Year 2 310,177 Year 3 14,322 Year 4 3,541 Year 5 3,897 Year 6 onwards 92,726 $ 3,118,253 Capital expenditure commitment March 31, 2021 Year 1 $ 3,940,701 Year 2 3,271,309 Year 3 1,236,643 Year 4 14,394 Year 5 - $ 8,463,047

December 31, 2020 March 31, 2020 $ 2,259,461 $ 2,774,597 785,605 159,547 219,267 13,315 13,030 13,300 13,030 13,300 171,350 185,031 $ 3,461,743 $ 3,159,090 December 31, 2020 March 31, 2020 $ 2,006,629 $ 2,508,500 712,027 143,370 188,214 2,852 3,457 3,133 3,805 3,459 93,881 97,020 $ 3,008,013 $ 2,758,334 December 31, 2020 March 31, 2020 $ 3,949,454 $ 1,887,810 3,309,926 4,211,569 1,236,643 3,241,159 14,394 776,895 - 14,394 $ 8,510,417 $ 10,131,827

• 62 -

• 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 is now in the High Court Taichung Branch as 2020 renewed trial No. 78. 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 and accounted for the interest expense of $1,250 thousand for the three months ended March 31, 2021. Movements of the outstanding loss provision were as follows:

	For the Three
	Months Ended
	March 31, 2021
Balance, January 1, 2021	$ 14,090
Loss provision	1,250
Balance, March 31, 2021	$ 15,340

For the three months ended March 31, 2021, the loss provision was recognized for interest expense.

38. 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

March 31, 2021

Carrying Amount Financial assets Investments in debt instruments at amortized cost $ 111,406,713 Financial liabilities Financial liabilities at amortized cost Bank debentures 11,500,000	Fair Value
	Level 1 Level 2 Level 3 Total $ 85,285,684 $ 27,069,912 $ - $ 112,355,596 - 11,683,787 - 11,683,787

• 63 -

December 31, 2020

Carrying Amount Financial assets Investments in debt instruments at amortized cost $ 113,544,854 Financial liabilities Financial liabilities at amortized cost Bank debentures 11,500,000 March 31, 2020 Carrying Amount Financial assets Investments in debt instruments at amortized cost $ 110,224,536 Financial liabilities Financial liabilities at amortized cost Bank debentures 14,000,000	Fair Value
	Level 1 Level 2 Level 3 Total $ 89,450,493 $ 25,317,446 $ - $ 114,767,939 - 11,663,699 - 11,663,699 Fair Value
	Level 1 Level 2 Level 3 Total $ 84,952,864 $ 25,988,575 $ - $ 110,941,439 - 14,206,585 - 14,206,585

• 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 Foreign listed 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			March 31,	2021
		Total $ 3,406,732 27,020,789 851,472 133,221 17,533 531,961 281,394 807,291 $ 33,050,393 $ 820,070 2,832,319 311,929	Level 1 $ - 27,020,789 810,971 133,221 - 531,961 281,394 - $ 28,778,336 $ - 2,832,319 311,929	Level 2 $ 3,406,732 - 40,501 - - - - 807,291 $ 4,254,524 $ - - -	Level 3 $ - - - - 17,533 - - - $ 17,533 $ 820,070 - - (Continued)

• 64 -

Investments in debt instruments Domestic corporate bonds Domestic government bonds Foreign bonds Bank debentures Financial liabilities at FVTPL Derivative financial liabilities			March 31,	2021
		Total $ 28,445,342 5,300,359 3,503,364 2,209,324 $ 43,422,707 $ 716,971	Level 1 $ 28,445,342 5,300,359 - 2,209,324 $ 39,099,273 $ -	Level 2 Level 3 $ - $ - - - 3,503,364 - - - $ 3,503,364 $ 820,070 $ 716,971 $ - (Concluded)

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	$ 7,508	$ 25		$ 10,000	$ -		$ -		$ -	$ 17,533
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	$ 751,556	$ 68,514		$ -	$	-	$ -		$ -	$ 820,070
Financial assets at FVTPL						December 31, 2020
				Total $ 3,670,250 24,872,947 862,462 88,533 7,508 363,744 203,112 799,269 $ 30,867,825 $ 751,556 2,113,147 311,404 26,959,132 5,379,466 3,486,270 2,008,865 $ 41,009,840 $ 785,819		Level 1 $ - 24,872,947 794,600 88,533 - 363,744 203,112 - $ 26,322,936 $ - 2,113,147 311,404 26,959,132 5,379,466 - 2,008,865 $ 36,772,014 $ -		Level 2 $ 3,670,250 - 67,862 - - - - 799,269 $ 4,537,381 $ - - - - - 3,486,270 - $ 3,486,270 $ 785,819		Level 3 $ - - - - 7,508 - - - $ 7,508 $ 751,556 - - - - - - $ 751,556 $ -

• 65 -

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	$ -	$ 8		$45,000	$ -		$ -		$ 37,500	$ 7,508
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	$ 664,957	$ 86,599		$ -	$	-	$	-	$ -	$ 751,556
Financial assets at FVTPL						March 31,		2020
				Total $ 2,401,159 17,622,360 615,477 219,250 85,860 1,016,633 $ 21,960,739 $ 640,582 1,056,515 247,246 22,451,052 5,980,384 796,130 2,004,747 $ 33,176,656 $ 387,676		Level 1 $ - 17,622,360 588,966 219,250 85,860 - $ 18,516,436 $ - 1,056,515 247,246 22,451,052 5,980,384 - 2,004,747 $ 31,739,944 $ -		Level 2 $ 2,401,159 - 26,511 - - 1,016,633 $ 3,444,303 $ - - - - - 796,130 - $ 796,130 $ 387,676		Level 3 $ - - - - - - $ - $ 640,582 - - - - - - $ 640,582 $ -

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 FVTOCI Unlisted shares	$ 664,957	$ (24,375)	$ -	$ -	$ -	$ -	$ 640,582

There were no transfers between Levels 1 and 2 in the current and prior period.

• 66 -

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

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

Valuation Techniques and Inputs

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 March 31, 2021, December 31, 2019 and March 31, 2020, were as follows:

Items	Fair value on March 31, 2021	Fair value on December 31, 2020	Fair value on March 31, 2020	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	$ 17,533 820,070	$ 7,508 751,556	$ - 640,582	Seller’s quote (Monte Carlo Simulation Method) Seller’s quote (Monte Carlo Simulation Method)	Volatility rate Minority equity volatility rate Volatility rate	31.00%-32.00% 9.21%-43.03% 17.23%-35.76%	The lower the volatility rate, the higher the fair value The lower the minority equity volatility rate, the higher the fair value The lower the volatility rate, the higher the fairvalue

• 4) The assessment of Level 3 fair value

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

• 67 -

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

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

Risk Factor			Sensitivity Rate	Sensitivity Rate		Impact
Liquidity discount ratio				10%		$ (20,106)
Categories of financial instruments
			December 31,
	March 31, 2021			2020	March 31, 2020
Financial assets
Financial assets at FVTPL	$	33,050,393	$	30,867,825	$	21,960,739
Financial assets at amortized cost (Note 1)		655,946,345		650,143,386		619,552,089
Financial assets at FVTOCI
Equity instruments		3,964,318		3,176,107		1,944,343
Debt instruments		39,458,389		37,833,733		31,232,313
Financial liabilities
Financial liabilities at FVTPL		716,971		785,819		387,676
Financial liabilities at amortized cost (Note 2)		684,494,020		675,549,880		631,883,558

• 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, 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 Central Bank and other banks, securities sold under repurchase agreements, payables, deposits and remittances, bank debentures, other financial liabilities, and guarantee deposits received.

39. 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.

• 68 -

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 programme.

• 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.

Market risk measurement can use a variety of effective measures to properly measure risk, including but not limited to the following methods: Statistical basis of 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.

• 69 -

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 rate-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, EUR LIBOR, GBP LIBOR and JPY LIBOR. It is expected that the US Secured Overnight Financing Rate (SOFR) will replace the USD LIBOR, the euro short-term rate (ESTER) will replace the EURO LIBOR, the Sterling Overnight Index Average (SONIA) will replace the GBP LIBOR, and the Tokyo Overnight Average Rate (TONAR) will replace the JPY 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-bank 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. On March 31, 2021, the Group has identified all the information systems and internal processes that need to be updated, and completed some of the updates. The Group has begun to discuss with the counterparty of the financial instrument how to amend the affected contract, and the amendment is expected to be completed in September 2021.

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Changes in interest rate indicators have mainly caused the Group to face basic interest rate risks. If the Group fails to complete the contract modification negotiation with the counterparty of the financial instrument before LIBOR exits, it will cause significant uncertainty in the interest rate base applicable to the financial instrument in the future, and trigger the unexpected interest rate risk of the Group. As of March 31, 2021, the 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 are summarized as follows:

Non-derivative Financial Notes discounted and loans, net USD LIBOR EUR LIBOR GBP LIBOR JPY LIBOR Receivables USD LIBOR Funds borrowed from central bank and other banks USD LIBOR Financial assets at amortized cost USD LIBOR	Amount	Amount
	Financial assets $ 34,670,727 938,063 5,491 4,373,422 39,987,703 13,758 - 8,296,233 $ 48,297,694	Financial Liabilities $ - - - - - 570,580 - $ 570,580

• 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.

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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 March 31, 2021, December 31, 2020 and March 31, 2020 would have increased/decreased by $864,431 thousand, $876,160 thousand and $747,468 thousand, respectively, and other equity would have decreased/increased by $1,872,504 thousand, $1,796,491 thousand and $1,934,422 thousand, respectively.

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 March 31, 2021, December 31, 2020 and March 31, 2020 would have increased/increased by $2,149 thousand, and decreased/increased by $3,336 thousand and $21,351 thousand, respectively, and other equity would have increased/decreased by $128,836 thousand, $125,310 thousand and $45,164 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 March 31, 2021, December 31, 2020 and March 31, 2020 would have increased/decreased by $230,128 thousand, $198,337 thousand and $125,209 thousand, respectively, and other equity would have increased/decreased by $594,648 thousand, $476,416 thousand and $291,651 thousand, respectively.

• 72 -

The summary of sensitivity analysis was as follows:

March 31, 2021

March 31, 2021	March 31, 2021	March 31, 2021	March 31, 2021
Main Risk	Range of Change	Influence Amount
		Other Equity	Income
Interest risk	Interest rate curve rises 100BPS Interest rate curve falls 100BPS	$ (1,872,504) 1,872,504	$ 864,431 (864,431)
Exchange rate risk	USD/NTD, CNY/NTD, AUD/NTD increase by 3% USD/NTD, CNY/NTD, AUD/NTD decrease by 3%	128,836 (128,836)	2,149 (2,149)
Equity securities price risk	Equity securities prices rise by 15% Equity securities prices fall by 15%	594,648 (594,648)	230,128 (230,128)

	December 31, 2020
Main Risk	Range of Change	Influence Amount
		Other Equity	Income
Interest risk	Interest rate curve rises 100BPS Interest rate curve falls 100BPS	$ (1,796,491) 1,796,491	$ 876,160 (876,160)
Exchange rate risk	USD/NTD, CNY/NTD, AUD/NTD increase by 3% USD/NTD, CNY/NTD, AUD/NTD decrease by 3%	125,310 (125,310)	(3,336) 3,336
Equity securities price risk	Equity securities prices rise by 15% Equity securities prices fall by 15%	476,416 (476,416)	198,337 (198,337)

	March 31, 2020
Main Risk	Range of Change	Influence Amount
		Other Equity	Income
Interest risk	Interest rate curve rises 100BPS Interest rate curve falls 100BPS	$ (1,934,422) 1,934,422	$ 747,468 (747,468)
Exchange rate risk	USD/NTD, CNY/NTD, AUD/NTD increase by 3% USD/NTD, CNY/NTD, AUD/NTD decrease by 3%	45,164 (45,164)	(21,351) 21,351
Equity securities price risk	Equity securities prices rise by 15% Equity securities prices fall by 15%	291,651 (291,651)	125,209 (125,209)

• 2) Credit risk

• a) The source and definition of credit risk

Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in 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 March 31, 2021, the ratio of loans with collateral to the total amount of loans was approximately 77%. The ratio of financing guarantees to commercial letters of collateral held was approximately 29%, 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. Loan’s 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 Taiwan Corporate Credit Rating Index (TCRI)

The TCRI rating of the listed cabinet company corresponding to the external rating has been reduced from the investment grade to the non-investment grade, that is, the credit risk has 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 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 impairment loss according to the lifetime ECLs of financing commitments. The credit quality of the Group’s 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 becomes 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 company’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:

March 31, 2021

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, 2020 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 Book Value $ 8,434,209 235,390 329,267 7,785 42,651 $ 9,049,302 Total Book Value $ 8,410,617 313,418 93,398 7,668 42,651 $ 8,867,752	Allowance for Impairment Loss Total Value of Exposure $ (1,976,560) $ 6,457,649 (151,598) 83,792 (67,721) 261,546 (7,785) - (2,484) 40,167 $ (2,206,148) $ 6,843,154 Allowance for Impairment Loss Total Value of Exposure $ (1,856,155) $ 6,554,462 (174,311) 139,107 (36,355) 57,043 (7,668) - (2,555) 40,096 $ (2,077,044) $ 6,790,708	Fair Value of Collateral $ 6,457,649 66,764 119,632 - - $ 6,644,045 Fair Value of Collateral $ 6,554,462 135,350 38,599 - - $ 6,728,411

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March 31, 2020

Financial assets that were impaired Notes discounted and loans Receivables Guarantees and letters of credit Debt instruments Total financial assets that were impaired	Total Book Value $ 10,401,875 323,936 154,502 17,608 $ 10,897,921	Allowance for Impairment Loss Total Value of Exposure $ (2,441,419) $ 7,960,456 (164,500) 159,436 (50,362) 104,140 (17,608) - $ (2,673,889) $ 8,224,032	Fair Value of Collateral $ 7,960,456 101,320 62,628 - $ 8,124,404

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.

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:

			December 31,	December 31,
	March 31, 2021			2020	March 31, 2020
Irrevocable loan commitments	$	9,678,886	$	9,034,662	$	6,619,992
Credit card commitments		13,108,907		12,799,065		12,193,390
Guarantee receivables		25,430,343		22,879,091		17,513,156
Letters of credit		4,245,721		3,430,243		3,125,236

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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 March 31, 2021 Private enterprise $ 270,993,286 Natural person 234,951,558 Government agencies 2,000,000 Others 2,050,411 $ 509,995,255 Credit Risk Profile by Group or Industry March 31, 2021 Natural person $ 234,951,558 Manufacturing 81,972,418 Commercial 56,649,009 Real estate and leasing 67,624,930 Construction industry 19,648,983 Servicing 12,685,705 Finance and insurance 18,455,199 Transportation warehousing and information communication 9,796,512 Others 8,210,941 $ 509,995,255 Credit Risk Profile by Region March 31, 2021 Domestic $ 474,758,732 Asia 19,685,056 North America 11,509,874 Others 4,041,593 $ 509,995,255

December 31, 2020 March 31, 2020 $ 258,337,959 $ 251,299,153 233,179,736 217,772,961 2,000,000 - 2,115,584 2,411,352 $ 495,633,279 $ 471,483,466 December 31, 2020 March 31, 2020 $ 233,179,736 $ 217,772,961 79,457,394 83,200,496 55,547,537 55,540,226 64,886,449 61,924,439 18,197,580 14,445,627 11,949,359 11,373,247 16,104,068 11,789,290 8,304,507 8,468,438 8,006,649 6,968,742 $ 495,633,279 $ 471,483,466 December 31, 2020 March 31, 2020 $ 464,495,184 $ 436,989,805 18,134,544 18,089,894 9,234,010 12,030,639 3,769,541 4,373,128 $ 495,633,279 $ 471,483,466

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Credit Risk Profile by Collateral March 31, 2021 Unsecured $ 82,150,990 Secured Real estate 378,430,721 Letter of bank guarantee 17,415,070 Chattel 6,151,159 Debenture 15,300,224 Notes receivable 1,806,239 Stocks 4,661,817 Others 4,079,035 $ 509,995,255	December 31, 2020 March 31, 2020 $ 73,988,829 $ 75,284,749 373,358,179 355,305,890 17,302,660 14,996,756 6,075,503 6,080,211 15,051,165 12,608,347 1,656,269 1,560,674 4,634,756 2,413,380 3,565,918 3,233,459 $ 495,633,279 $ 471,483,466

• 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.

• 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

March 31, 2021

Product category Corporate loans Consumer loans Others Total book value Allowance for doubtful accounts Difference of impairment loss under regulations			Notes Discounted and Loans	Notes Discounted and Loans	Notes Discounted and Loans
	Stage 1 12-month ECLs $ 229,582,617 219,925,367 29,588 449,537,572 (1,781,891 ) - $ 447,755,681		Stage 2 Lifetime ECL $ 4,405,146 11,442,144 554 15,847,844 (968,083 ) - $ 14,879,761		Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ 5,531,914 $ - 2,902,600 - (305) - 8,434,209 - (1,976,560 ) - - (1,928,507) $ 6,457,649 $ (1,928,507)	Total $ 239,519,677 234,270,111 29,837 473,819,625 (4,726,534 ) (1,928,507) $ 467,164,584

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Product category Corporate loans Consumer loans Others Total book value Allowance for doubtful accounts Difference of impairment loss under regulations Product category Corporate loans Consumer loans Total book value Allowance for doubtful accounts Difference of impairment loss under regulations Product category Consumer loans Total book value Allowance for doubtful accounts Difference of impairment loss under regulations					Receivables
	Stage 1 12-month ECLs $ 11,107,759 2,620,125 57,187,039 70,914,923 (97,454 ) - $ 70,817,469		Difference of Impairment Loss Stage 2 Stage 3 under Lifetime ECL Lifetime ECL Regulations $ 377,642 $ 146,191 $ - 23,481 37,679 - 12 51,520 - 401,135 235,390 - (10,668 ) (151,598 ) - - - (62,104) $ 390,467 $ 83,792 $ (62,104) Irrevocable Loan Commitments			Total $ 11,631,592 2,681,285 57,238,571 71,551,448 (259,720 ) (62,104) $ 71,229,624
			Difference of Impairment Loss Stage 2 Stage 3 under Lifetime ECL Lifetime ECL Regulations $ 14,250 $ 42,651 $ - - - - 14,250 42,651 - (362 ) (2,484 ) - - - (5,921) $ 13,888 $ 40,167 $ (5,921) Credit Card Commitments			Total $ 8,694,753 984,133 9,678,886 (60,489 ) (5,921) $ 9,612,476
			Stage 2 Lifetime ECL $ 48,096 48,096 (1,233 ) - $ 46,863		Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ - $ - - - - - - (1,364) $ - $ (1,364)	Total $ 13,108,907 13,108,907 (6,018 ) (1,364) $ 13,101,525

Product category Corporate loans Total book value Allowance for doubtful accounts Difference of impairment loss under regulations			Guarantee Receivables	Guarantee Receivables	Guarantee Receivables
	Stage 1 12-month ECLs $ 24,452,033 24,452,033 (193,335 ) - $ 24,258,698		Stage 2 Lifetime ECL $ 649,043 649,043 (29,311 ) - $ 619,732		Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ 329,267 $ - 329,267 - (67,721 ) - - (96) $ 261,546 $ (96)	Total $ 25,430,343 25,430,343 (290,367 ) (96) $ 25,139,880

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Product category Corporate loans Total book value Allowance for doubtful accounts Difference of impairment loss under regulations			Letters of Credit
	Stage 1 12-month ECLs $ 4,245,721 4,245,721 (11,549 ) - $ 4,234,172	Stage 2 Lifetime ECL $ - - - - $ -	Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ - $ - - - - - - (5,352) $ - $ (5,352)	Total $ 4,245,721 4,245,721 (11,549 ) (5,352) $ 4,228,820

December 31, 2020

Product category Corporate loans Consumer loans Others Total book value Allowance for doubtful accounts Difference of impairment loss under regulations Product category Corporate loans Consumer loans Others Total book value Allowance for doubtful accounts Difference of impairment loss under regulations			Notes Discounted and Loans	Notes Discounted and Loans	Notes Discounted and Loans
	Stage 1 12-month ECLs $ 222,080,175 217,504,666 23,787 439,608,628 (1,725,305 ) - $ 437,883,323		Stage 2 Lifetime ECL $ 2,875,763 11,981,206 499 14,857,468 (925,826 ) - $ 13,931,642		Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ 5,459,606 $ - 2,951,357 - (346) - 8,410,617 - (1,856,155 ) - - (1,828,105) $ 6,554,462 $ (1,828,105) Receivables	Total $ 230,415,544 232,437,229 23,940 462,876,713 (4,507,286 ) (1,828,105) $ 456,541,322
			Stage 2 Lifetime ECL $ 347,443 23,982 11 371,436 (9,199 ) - $ 362,237		Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ 224,116 $ - 37,115 - 52,187 - 313,418 - (174,311 ) - - (49,220) $ 139,107 $ (49,220)	Total $ 10,071,035 2,225,562 61,819,086 74,115,683 (274,822 ) (49,220) $ 73,791,641

• 84 -

Product category Corporate loans Consumer loans Total book value Allowance for doubtful accounts Difference of impairment loss under regulations			Irrevocable Loan Commitments	Irrevocable Loan Commitments	Irrevocable Loan Commitments
	Stage 1 12-month ECLs $ 7,906,111 1,040,000 8,946,111 (54,238 ) - $ 8,891,873		Stage 2 Lifetime ECL $ 45,900 - 45,900 (5,349 ) - $ 40,551		Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ 42,651 $ - - - 42,651 - (2,555 ) - - (2,536) $ 40,096 $ (2,536)	Total $ 7,994,662 1,040,000 9,034,662 (62,142 ) (2,536) $ 8,969,984

Product category Consumer loans Total book value Allowance for doubtful accounts Difference of impairment loss under regulations Product category Corporate loans Total book value Allowance for doubtful accounts Difference of impairment loss under regulations Product category Corporate loans Total book value Allowance for doubtful accounts Difference of impairment loss under regulations			Credit Card Commitments	Credit Card Commitments
	Stage 1 12-month ECLs $ 12,726,008 12,726,008 (4,730 ) - $ 12,721,278		Difference of Impairment Loss Stage 2 Stage 3 under Lifetime ECL Lifetime ECL Regulations $ 73,057 $ - $ - 73,057 - - (1,856 ) - - - - (796) $ 71,201 $ - $ (796) Guarantee Receivables		Total $ 12,799,065 12,799,065 (6,586 ) (796) $ 12,791,683
			Stage 2 Lifetime ECL $ 78,172 78,172 (4,799 ) - $ 73,373		Total $ 22,879,091 22,879,091 (210,112 ) (25,851) $ 22,643,128
			Stage 2 Lifetime ECL $ 70,000 70,000 (3,263 ) - $ 66,737	Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ - $ - - - - - - (677) $ - $ (677)	Total $ 3,430,243 3,430,243 (12,420 ) (677) $ 3,417,146

• 85 -

March 31, 2020

Product category Corporate loans Consumer loans Others Total book value Allowance for doubtful accounts Difference of impairment loss under regulations Product category Corporate loans Consumer loans Others Total book value Allowance for doubtful accounts Difference of impairment loss under regulations Product category Corporate loans Consumer loans Total book value Allowance for doubtful accounts Difference of impairment loss under regulations Product category Consumer loans Total book value Allowance for doubtful accounts Difference of impairment loss under regulations			Notes Discounted and Loans	Notes Discounted and Loans	Notes Discounted and Loans
	Stage 1 12-month ECLs $ 217,679,861 200,310,350 21,940 418,012,151 (1,703,834 ) - $ 416,308,317		Stage 2 Lifetime ECL $ 2,519,426 13,343,168 1,875 15,864,469 (818,765 ) - $ 15,045,704		Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ 6,963,113 $ - 3,438,797 - (35) - 10,401,875 - (2,441,419 ) - - (1,589,908) $ 7,960,456 $ (1,589,908) Receivables	Total $ 227,162,400 217,092,315 23,780 444,278,495 (4,964,018 ) (1,589,908) $ 437,724,569
			Difference of Impairment Loss Stage 2 Stage 3 under Lifetime ECL Lifetime ECL Regulations $ 730,958 $ 237,587 $ - 30,514 35,141 - 11 51,208 - 761,483 323,936 - (18,298 ) (164,500 ) - - - (50,781) $ 743,185 $ 159,436 $ (50,781) Irrevocable Loan Commitments			Total $ 10,308,399 1,591,112 54,111,345 66,010,856 (271,769 ) (50,781) $ 65,688,306
			Difference of Impairment Loss Stage 2 Stage 3 under Lifetime ECL Lifetime ECL Regulations $ - $ - $ - - - - - - - - - - - - (4,707) $ - $ - $ (4,707) Credit Card Commitments			Total $ 6,494,392 125,600 6,619,992 (39,553 ) (4,707) $ 6,575,732
			Stage 2 Lifetime ECL $ 47,146 47,146 (1,245 ) - $ 45,901		Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ - $ - - - - - - (3,610) $ - $ (3,610)	Total $ 12,193,390 12,193,390 (5,772 ) (3,610) $ 12,184,008

• 86 -

Product category Corporate loans Consumer loans Total book value Allowance for doubtful accounts Difference of impairment loss under regulations			Guarantee Receivables	Guarantee Receivables	Guarantee Receivables
	Stage 1 12-month ECLs $ 17,263,972 25,200 17,289,172 (111,750 ) - $ 17,177,422		Stage 2 Lifetime ECL $ 69,691 - 69,691 (6,231 ) - $ 63,460		Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ 154,293 $ - - - 154,293 - (50,332 ) - - (6,150) $ 103,961 $ (6,150)	Total $ 17,487,956 25,200 17,513,156 (168,313 ) (6,150) $ 17,338,693

Product category Corporate loans Total book value Allowance for doubtful accounts Difference of impairment loss under regulations				Letters of Credit	Letters of Credit
	Stage 1 12-month ECLs $ 3,125,027 3,125,027 (8,701 ) - $ 3,116,326		Stage 2 Lifetime ECL $ - - - - $ -		Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ 209 $ - 209 - (30 ) - - (5,664) $ 179 $ (5,664)	Total $ 3,125,236 3,125,236 (8,731 ) (5,664) $ 3,110,841

ii. Debt instrument investments

March 31, 2021

Product category (Note) Investment grade bond Non-investment grade bond Total book value Allowance for impairment Difference of impairment loss under regulations Product category (Note) Investment grade bond Non-investment grade bond Others (NCDs issued by the CBC) Total book value Allowance for impairment Difference of impairment loss under regulations			Financial Assets	Financial Assets	at FVTOCI
	Stage 1 Stage 2 Stage 3 12-month ECLs Lifetime ECL Lifetime ECL Total $ 39,481,736 $ - $ - $ 39,481,736 - - - - 39,481,736 - - 39,481,736 (23,347 ) - - (23,347 ) - - - - $ 39,458,389 $ - $ - $ 39,458,389 Investments in Debt Instruments at Amortized Cost
			Stage 2 Lifetime ECL $ - - - - - - $ -		Stage 3 Lifetime ECL $ - 7,785 - 7,785 (7,785 ) - $ -	Total $ 50,262,603 7,785 61,170,000 111,440,388 (33,675 ) - $ 111,406,713

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.

• 87 -

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

March 31, 2021

		Financial Assets
	Financial Assets	at Amortized
	at FVTOCI	Cost
Total book value	$ 39,015,882	$ 111,440,388
Loss allowance	(23,347)	(33,675)
Amortized cost	38,992,535	111,406,713
Fair value adjustment	465,854	-
	$ 39,458,389	$ 111,406,713

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

Credit Rating	Definition	Recognition Basis	Expected Credit Loss	Total Book Value at March 31, 2021	Total Book Value at March 31, 2021
				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 recoverthe debt.	12-month expected credit losses Lifetime expected credit losses (no credit impaired) Lifetime expected credit losses (credit impaired) Write-off	0.00%-0.42% 100%	$ 39,015,882 - - -	$ 111,432,603 - 7,785 -

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, January 1, 2021 Change credit rating Normal turned to abnormal Abnormal turned to default Default turned to write off Purchase of new debt instruments	Credit Rating
	Normal (12-month Expected Credit Losses) Abnormal (Lifetime ECL and Not Credit Impaired) Default (Lifetime ECL and Credit Impaired) $ 20,708 $ - $ - - - - - - - - - - 3,457 - - (Continued)

• 88 -

Dispose Model/risk parameter change Exchange rate and other changes Loss allowance, March 31, 2021 Financial assets at amortized cost Balance, January 1, 2021 Change credit rating Normal turned to abnormal Abnormal turned to default Default turned to write off Purchase of new debt instruments Dispose Model/risk parameter change Exchange rate and other changes Loss allowance, March 31, 2021	Credit Rating
	Normal (12-month Expected Credit Losses) Abnormal (Lifetime ECL and Not Credit Impaired) Default (Lifetime ECL and Credit Impaired) $ (166) $ - $ - - - - (652) - - $ 23,347 $ - $ - $ 26,472 $ - $ 7,668 - - - - - - - - - 908 - - (807) - - - - - (683) - 117 $ 25,890 $ - $ 7,785 (Concluded)

December 31, 2020

Product category (Note) Investment grade bond Non-investment grade bond Total book value Allowance for impairment Difference of impairment loss under regulations Product category (Note) Investment grade bond Non-investment grade bond Others (NCDs issued by the CBC) Total book value Allowance for impairment Difference of impairment loss under regulations			Financial Assets	Financial Assets	at FVTOCI
	Stage 1 Stage 2 Stage 3 12-month ECLs Lifetime ECL Lifetime ECL Total $ 37,854,441 $ - $ - $ 37,854,441 - - - - 37,854,441 - - 37,854,441 (20,708 ) - - (20,708 ) - - - - $ 37,833,733 $ - $ - $ 37,833,733 Investments in Debt Instruments at Amortized Cost
			Stage 2 Lifetime ECL $ - - - - - - $ -		Stage 3 Lifetime ECL $ - 7,668 - 7,668 (7,668 ) - $ -	Total $ 48,601,326 7,668 64,970,000 113,578,994 (34,140 ) - $ 113,544,854

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.

• 89 -

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, 2020

		Financial Assets
	Financial Assets	at Amortized
	at FVTOCI	Cost
Total book value	$ 37,437,409	$ 113,578,994
Loss allowance	(20,708)	(34,140)
Amortized cost	37,416,701	113,544,854
Fair value adjustment	417,032	-
	$ 37,833,733	$ 113,544,854

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

Credit Rating	Definition	Recognition Basis	Expected Credit Loss	Total Book Value at December 31, 2020	Total Book Value at December 31, 2020
				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%-0.44% 100%	$ 37,437,409 - - -	$ 113,571,326 - 7,668 -

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, January 1, 2020 Change credit rating Normal turned to abnormal Abnormal turned to default Default turned to write off Purchase of new debt instruments	Credit Rating
	Normal (12-month Expected Credit Losses) Abnormal (Lifetime ECL and Not Credit Impaired) Default (Lifetime ECL and Credit Impaired) $ 15,405 $ - $ - - - - - - - - - - 8,900 - - (Continued)

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Dispose Model/risk parameter change Exchange rate and other changes Loss allowance, December 31, 2020 Financial assets at amortized cost Balance, January 1, 2020 Change credit rating Normal turned to abnormal Abnormal turned to default Default turned to write off Purchase of new debt instruments Dispose Model/risk parameter change Exchange rate and other changes Loss allowance, December 31, 2020 March 31, 2020

Credit Rating

Normal (12-month Expected Credit Losses) Abnormal (Lifetime ECL and Not Credit Impaired) Default (Lifetime ECL and Credit Impaired) $ (4,556) $ - $ - - - - 959 - - $ 20,708 $ - $ - $ 24,185 $ - $ 17,477 - - - - - - - - - 1,777 - - (2,178) - (9,136) - - - 2,688 - (673) $ 26,472 $ - $ 7,668 (Concluded)

Product category (Note) Investment grade bond Non-investment grade bond Total book value Allowance for impairment Difference of impairment loss under regulations Product category (Note) Investment grade bond Non-investment grade bond Others (NCDs issued by the CBC) Total book value Allowance for impairment Difference of impairment loss under regulations			Financial Assets	Financial Assets	at FVTOCI
	Stage 1 Stage 2 Stage 3 12-month ECLs Lifetime ECL Lifetime ECL Total $ 31,248,886 $ - $ - $ 31,248,886 - - - - 31,248,886 - - 31,248,886 (16,573 ) - - (16,573 ) - - - - $ 31,232,313 $ - $ - $ 31,232,313 Investments in Debt Instruments at Amortized Cost
			Stage 2 Lifetime ECL $ - - - - - - $ -		Stage 3 Lifetime ECL $ - 17,608 - 17,608 (17,608 ) - $ -	Total $ 50,415,074 17,608 59,835,000 110,267,682 (43,146 ) - $ 110,224,536

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.

• 91 -

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

March 31, 2020

		Financial Assets
	Financial Assets	at Amortized
	at FVTOCI	Cost
Total book value	$ 30,936,902	$ 110,267,682
Loss allowance	(16,573)	(43,146)
Amortized cost	30,920,329	110,224,536
Fair value adjustment	311,984	-
	$ 31,232,313	$ 110,224,536

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

Credit Rating	Definition	Recognition Basis	Expected Credit Loss	Total Book Value at March 31, 2020	Total Book Value at March 31, 2020
				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%-0.45% 100%	$ 30,936,902 - - -	$ 110,250,074 - 17,608 -

• 92 -

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, January 1, 2020 Change credit rating Normal turned to abnormal Abnormal turned to default Default turned to write off Purchase of new debt instruments Dispose Model/risk parameter change Exchange rate and other changes Loss allowance, March 31, 2020 Financial assets at amortized cost Balance, January 1, 2020 Change credit rating Normal turned to abnormal Abnormal turned to default Default turned to write off Purchase of new debt instruments Dispose Model/risk parameter change Exchange rate and other changes Loss allowance, March 31, 2020	Credit Rating
	Normal (12-month Expected Credit Losses) Abnormal (Lifetime ECL and Not Credit Impaired) Default (Lifetime ECL and Credit Impaired) $ 15,405 $ - $ - - - - - - - - - - 2,025 - - (1,040) - - - - - 183 - - $ 16,573 $ - $ - Credit Rating
	Normal (12-month Expected Credit Losses) Abnormal (Lifetime ECL and Not Credit Impaired) Default (Lifetime ECL and Credit Impaired) $ 24,185 $ - $ 17,477 - - - - - - - - - 802 - - (278) - - - - - 829 - 131 $ 25,538 $ - $ 17,608

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 stock or readily realizable marketable securities, allocation of the period, absorbing deposits or financial borrowings, etc.

• 93 -

• 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.

March 31, 2021	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 Central Bank and other banks Securities sold under repurchase agreements Payables Deposits and remittances Bank debentures Lease liabilities Other items ofcashoutflow on maturity	$ 7,070,941 2,375,641 2,366,224 5,055,646 47,796,070 - 23,282 1,465,509	$ 730 2,085,409 3,732,700 447,923 73,142,328 - 46,484 794,995	$ 2,565 1,846,568 - 275,908 81,912,661 84,514 69,198 107,865	$ 164,379 1,063,377 - 744,338 153,248,753 90,343 134,502 122,049	$ - 2,310,403 - 276,326 284,065,067 11,500,000 907,777 348,173	$ 7,238,615 9,681,398 6,098,924 6,800,141 640,164,879 11,674,857 1,181,243 2,838,591
December 31, 2020	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 Central Bank and other banks Securities sold under repurchase agreements Payables Deposits and remittances Bank debentures Lease liabilities Other items ofcashoutflow on maturity	$ 6,349,048 1,539,096 500,808 5,001,989 45,141,230 - 23,102 1,240,211	$ 520,616 2,216,952 1,800,700 1,109,106 72,625,586 - 45,988 430,793	$ 730 1,356,893 - 200,384 74,402,845 - 67,624 110,947	$ 166,944 1,369,444 - 458,730 159,652,783 64,553 132,372 158,947	$ - 2,028,267 - 273,148 285,008,498 11,500,000 863,279 322,063	$ 7,037,338 8,510,652 2,301,508 7,043,357 636,830,942 11,564,553 1,132,365 2,262,961
March 31, 2020	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 Central Bank and other banks Securities sold under repurchase agreements Payables Deposits and remittances Bank debentures Lease liabilities Other items of cash outflow on maturity	$ 6,604,474 1,128,365 5,299,459 3,509,019 43,418,882 - 17,235 797,363	$ 730 1,787,138 6,114,586 448,486 66,940,339 2,514,095 34,424 724,944	$ 2,565 1,878,093 - 219,860 77,690,940 90,286 41,090 56,998	$ 322,798 624,433 - 628,900 152,189,422 97,115 75,897 119,733	$ - 197,015 - 393,095 246,261,999 11,500,000 794,199 367,608	$ 6,930,567 5,615,044 11,414,045 5,199,360 586,501,582 14,201,496 962,845 2,066,646

• 94 -

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.

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 amounts shown on the consolidated balance sheets. The maturity analysis of derivative financial liabilities was as follows:

March 31, 2021	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	$ 23,743	$ 39,308	$ 109,288	$ 74,580	$ -	$ 246,919
Total	$23,743	$ 39,308	$109,288	$ 74,580	$ -	$246,919
December 31, 2020	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	$ 24,773	$ 44,804	$ 43,391	$ 69,429	$ -	$ 182,397
Total	$24,773	$44,804	$43,391	$ 69,429	$ -	$182,397
March 31, 2020	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	$ 18,755	$ 27,474	$ 35,767	$ 29,925	$ -	$111,921
Total	$18,755	$27,474	$ 35,767	$29,925	$ -	$111,921

• 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:

March 31, 2021	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	$ 3,163,344 3,131,955	$ 4,735,304 4,594,067	$ 4,064,457 3,950,354	$ 2,773,406 2,723,073	$ - -	$ 14,736,511 14,399,449
Total outflows Total inflows	3,163,344 3,131,955	4,735,304 4,594,067	4,064,457 3,950,354	2,773,406 2,723,073	- -	14,736,511 14,399,449
Netflows	$ (31,389 )	$ (141,237)	$ (114,103 )	$ (50,333 )	$ -	$ (337,062)

• 95 -

December 31, 2020	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	$ 2,614,662 2,594,219	$ 3,270,267 3,212,438	$ 2,811,080 2,682,555	$ 3,880,455 3,698,415	$ - -	$ 12,576,464 12,187,627
Total outflows Total inflows	2,614,662 2,594,219	3,270,267 3,212,438	2,811,080 2,682,555	3,880,455 3,698,415	- -	12,576,464 12,187,627
Netflows	$ (20,443 )	$ (57,829 )	$ (128,525 )	$ (182,040 )	$ -	$ (388,837)
March 31, 2020	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	$ 1,580,955 1,503,675	$ 2,561,494 2,482,981	$ 1,464,549 1,445,741	$ 778,297 774,150	$ - -	$ 6,385,295 6,206,547
Total outflows Total inflows	1,580,955 1,503,675	2,561,494 2,482,981	1,464,549 1,445,741	778,297 774,150	- -	6,385,295 6,206,547
Netflows	$ (77,280 )	$ (78,513 )	$ (18,808 )	$ (4,147)	$ -	$ (178,748 )

• 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.

March 31, 2021	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	$ 9,067,830 1,272,411 5,272,316 2,496,322	$ 19,952,554 2,568,352 7,316,832 172,983	$ 30,661,524 391,699 1,437,734 25,275	$ 59,033,398 13,259 2,925,506 53,321	$ 38,848,963 - 8,477,955 11,740	$157,564,269 4,245,721 25,430,343 2,759,641
Total	$ 18,108,879	$ 30,010,721	$ 32,516,232	$ 62,025,484	$ 47,338,658	$189,999,974
December 31, 2020	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	$ 7,704,768 979,316 6,861,342 1,814,198	$ 19,126,700 2,071,735 5,126,641 222,188	$ 29,632,011 347,453 705,627 10,582	$ 62,958,367 31,739 2,513,448 64,393	$ 37,007,287 - 7,672,033 10,283	$ 156,429,133 3,430,243 22,879,091 2,121,644
Total	$ 17,359,624	$ 26,547,264	$ 30,695,673	$ 65,567,947	$ 44,689,603	$184,860,111
March 31, 2020	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	$ 10,120,680 992,032 4,354,671 1,084,598	$ 16,357,058 1,844,646 4,858,874 69,464	$ 31,741,219 200,169 1,749,617 13,999	$ 59,825,297 88,389 1,506,815 36,163	$ 30,376,908 - 5,043,179 -	$ 148,421,162 3,125,236 17,513,156 1,204,224
Total	$ 16,551,981	$ 23,130,042	$ 33,705,004	$ 61,456,664	$ 35,420,087	$170,263,778

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

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

• 96 -

40. TRANSFERS OF FINANCIAL ASSETS

The 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:

		March 31, 2021
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
Investments in debt instruments at amortized cost Securities sold under repurchase agreements	$ 6,249,681	$ 6,095,540	$ 6,400,935	$ 6,095,540	$ 305,395

	December 31, 2020	December 31, 2020	December 31, 2020
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
Investments in debt instruments at amortized cost Securities sold under repurchase agreements	$2,342,355	$2,300,077	$2,392,483	$2,300,077	$ 92,406
		March 31, 2020
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
Investments in debt instruments at FVTOCI Securities and under repurchase agreements Investments in debt instruments at amortized cost Securities sold under repurchase agreements	$ 316,932 10,756,252	$ 241,869 11,126,994	$ 248,854 11,888,811	$ 241,869 11,126,994	$ 6,985 761,817

41. OFFSETTING OF 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.

• 97 -

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

March 31, 2021

Gross Amounts Gross Amounts of Recognized Financial Liabilities Net Amounts of Financial Assets Presented in Financial Assets of Recognized Financial Assets Offset in the Balance Sheets the Balance Sheets Securities purchased under resale agreements $ 13,924,003 $ - $ 13,924,003 Gross Amounts of Recognized Gross Amounts of Recognized Financial Assets Offset Net Amounts of Financial Liabilities Presented in Financial Liabilities Financial Liabilities in the Balance Sheets the Balance Sheets Securities sold under repurchase agreements$ 6,095,540 $ - $ 6,095,540 December 31, 2020 Gross Amounts Gross Amounts of Recognized Financial Liabilities Net Amounts of Financial Assets Presented in Financial Assets of Recognized Financial Assets Offset in the Balance Sheets the Balance Sheets Securities purchased under resale agreements $ 12,773,121 $ - $ 12,773,121 Gross Amounts of Recognized Gross Amounts of Recognized Financial Assets Offset Net Amounts of Financial Liabilities Presented in Financial Liabilities Financial Liabilities in the Balance Sheets the Balance Sheets Securities sold under repurchase agreements$ 2,300,077 $ - $ 2,300,077 March 31, 2020 Gross Amounts Gross Amounts of Recognized Financial Liabilities Net Amounts of Financial Assets Presented in Financial Assets of Recognized Financial Assets Offset in the Balance Sheets the Balance Sheets Securities purchased under resale agreements $ 11,516,062 $ - $ 11,516,062 Gross Amounts of Recognized Gross Amounts of Recognized Financial Assets Offset Net Amounts of Financial Liabilities Presented in Financial Liabilities Financial Liabilities in the Balance Sheets the Balance Sheets Securities sold under repurchase agreements$ 11,368,863 $ - $ 11,368,863	Related Amounts Not Offset in the Balance Sheets Financial Instruments Cash Collateral Received $ 13,924,003 $ - Related Amounts Not Offset in the Balance Sheets Financial Instruments Cash Collateral Pledged $ 6,095,540 $ - Related Amounts Not Offset in the Balance Sheets Financial Instruments Cash Collateral Received $ 12,773,121 $ - Related Amounts Not Offset in the Balance Sheets Financial Instruments Cash Collateral Pledged $ 2,300,077 $ - Related Amounts Not Offset in the Balance Sheets Financial Instruments Cash Collateral Received $ 11,516,062 $ - Related Amounts Not Offset in the Balance Sheets Financial Instruments Cash Collateral Pledged $ 11,368,863 $ -	Net Amount $ -
		Net Amount $ -
		Net Amount $ -
		Net Amount $ -
		Net Amount $ -
		Net Amount $ -

• 98 -

42. INFORMATION ABOUT THE BANK

a. Asset quality

Category	Items	Items			March 31, 2021					March 31, 2020
			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		$ 460,286	$155,379,505	0.30%	$ 1,537,560	334.04%	$ 629,858	$147,778,323	0.43%	$ 1,479,565	234.90%
	Unsecured		124,867	84,116,658	0.15%	2,807,536	2,248.42%	389,670	79,367,414	0.49%	2,877,100	738.34%
Consumer loans	Mortgage (Note4)		92,996	58,636,862	0.16%	929,327	999.32%	138,139	55,071,920	0.25%	914,077	661.71%
	Cashcard		-	7	-	1	-	-	22	-	2	-
	Microcredit(Note5)		1,083	903,857	0.12%	79,202	7,313.20%	2,791	844,380	0.33%	81,427	2,917.48%
	Other (Note 6)	Secured	327,636	149,659,805	0.22%	883,767	269.74%	409,032	144,742,018	0.28%	808,432	197.65%
		Unsecured	21,760	23,899,459	0.09%	417,087	1,916.76%	60,993	15,810,371	0.39%	392,925	644.21%
Loans			1,028,628	472,596,153	0.22%	6,654,480	646.93%	1,630,483	443,614,448	0.37%	6,553,528	401.94%
Category		Items			March 31, 2021					March 31, 2020
			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			$ 3,656	$ 681,447	0.54%	$ 28,917	790.95%	$ 3,700	$ 655,445	0.56%	$ 24,185	653.65%
Accounts rec	eivable without reco	urse(Note 7)	-	153,578	-	4,718	-	-	496,524	-	10,607	-

• 99 -

Non-reportable overdue loans and receivables

	March 31, 2021	March 31, 2021	March 31, 2020	March 31, 2020
	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)	$ 1,441	$ 763	$ 1,977	$ 1,049
Amount received from performance of debt negotiation program (Note 9)	8,556	19,044	9,019	17,663
Total	9,997	19,807	10,996	18,712

• 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).

• 100 -

b. Concentration of credit extensions

(In Thousands of New Taiwan Dollars, %)

Year	March 31, 2021
Top 10 Rank (Note 1)	Group (Note 2)	Total Credit (Note 3)	Percentage of Net Worth (%)
1	Group A 016700 real estate development activities	$ 4,717,086	8.03
2	Group B 016700 real estate development activities	2,737,788	4.66
3	Group C 010892 manufacture of macaroni, noodles, couscous and similar farinaceous products	2,699,345	4.60
4	Group D 016700realestate development activities	2,511,470	4.28
5	Group E 012411smelting andrefining of ironand steel	2,327,287	3.96
6	Group F 016700 real estate development activities	2,196,191	3.74
7	Group G 016700 real estate development activities	1,800,313	3.06
8	Group H 012630 barePrinted circuit boardsmanufacturing	1,750,393	2.98
9	Group I 013822 hazardousindustrialwaste treatment	1,370,804	2.33
10	Group J 015010 vesselcarriers	1,352,107	2.30

• 101 -

**Year **	March 31, 2020
Top 10 Rank (Note 1)	Group (Note 2)	Total Credit (Note 3)	Percentage of Net Worth (%)
1	Group C 010892 manufacture of macaroni, noodles, couscous and similar farinaceous products	$ 2,502,297	4.80
2	Group D 016700realestate development activities	2,401,990	4.61
3	Group B 016811 real estate activities for sale and rental with own or leased property	2,363,429	4.53
4	Group F 016700 real estate development activities	2,335,543	4.48
5	Group E 012411 smelting and refining of iron and steel	2,272,976	4.36
6	Group A 016700 real estate development activities	2,261,214	4.34
7	Group G 016700realestate development activities	2,122,916	4.07
8	Group K 015500 accommodation	2,085,229	4.00
9	Group L 014612wholesale ofbrick, sand, cement and products	1,552,114	2.98
10	Group M 016499 other Financial intermediation	1,506,314	2.89

• 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 March 31, 2021

(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	$ 503,142,773	$12,319,931	$ 8,333,810	$ 92,307,107	$ 616,103,621
Interest-sensitive liabilities	144,983,186	335,866,277	100,395,708	8,708,284	589,953,455
Interest sensitivity gap	358,159,587	(323,546,346)	(92,061,898)	83,598,823	26,150,166
Net equity					58,742,826
Ratio of interest-sensitive assets to liabilities					104.43%
Ratio of interest sensitivity gap tonet equity					44.52%

• 102 -

March 31, 2020

(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	$ 465,347,236	$ 8,346,850	$ 6,691,346	$ 87,808,463	$ 568,193,895
Interest-sensitiveliabilities	142,897,233	297,686,523	100,072,058	5,417,213	546,073,027
Interest sensitivity gap	322,450,003	(289,339,673)	(93,380,712)	82,391,250	22,120,868
Net equity					52,149,917
Ratio of interest-sensitive assets to liabilities					104.05%
Ratio of interest sensitivity gap to net equity					42.42%

• 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).

Interest Rate Sensitivity March 31, 2021

(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	$1,301,829	$ 352,457	$ 132,973	$ 334,073	$2,121,332
Interest-sensitive liabilities	741,458	1,163,486	284,816	-	2,189,760
Interest sensitivity gap	560,371	(811,029)	(151,843)	334,073	(68,428)
Net equity					2,059,057
Ratio of interest-sensitive assets to liabilities					96.88%
Ratio of interest sensitivity gap tonet equity					(3.32%)

March 31, 2020

(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	$ 1,151,818	$ 356,330	$ 7,004	$ 431,146	$ 1,946,298
Interest-sensitiveliabilities	853,450	846,087	260,459	-	1,959,996
Interest sensitivity gap	298,368	(489,757)	(253,455)	431,146	(13,698)
Net equity					1,725,504
Ratio of interest-sensitive assets to liabilities					99.30%
Ratio of interest sensitivity gap to net equity					(0.79%)

• 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.

• 103 -

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	March 31, 2021	March 31, 2020
Return on total assets	Pretax	0.18	0.16
	After tax	0.15	0.13
Return on net equity	Pretax	2.24	2.09
	Aftertax	1.95	1.70
Profit margin		37.35	34.73

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 three months ended March 31, 2021 and 2020.

• e. Maturity analysis of assets and liabilities

Maturity Analysis of Assets and Liabilities March 31, 2021

(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	$ 663,915,382	$ 75,729,951	$ 65,412,916	$ 36,397,421	$ 55,050,329	$101,946,343	$ 329,378,422
Major capital outflow on maturity	788,282,984	27,528,506	31,759,830	82,102,640	112,322,165	183,784,450	350,785,393
Gap	(124,367,602)	48,201,445	33,653,086	(45,705,219 )	(57,271,836 )	(81,838,107)	(21,406,971)

March 31, 2020

(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
Main capital inflow on maturity	$ 612,242,439	$ 80,328,749	$ 46,562,936	$ 36,915,218	$ 53,879,108	$ 93,754,444	$ 300,801,984
Main capital outflow on maturity	727,597,169	24,165,105	29,512,115	80,005,689	106,377,698	181,300,288	306,236,274
Gap	(115,354,730)	56,163,644	17,050,821	(43,090,471)	(52,498,590)	(87,545,844)	(5,434,290)

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 March 31, 2021

(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
Majorcapital inflow on maturity	$ 2,632,936	$ 352,033	$ 321,259	$ 385,454	$ 362,619	$ 1,211,571
Majorcapital outflow on maturity	3,191,769	582,426	885,573	525,227	920,760	277,783
Gap	(558,833 )	(230,393 )	(564,314 )	(139,773 )	(558,141 )	933,788

• 104 -

March 31, 2020

			(In Thousands of U.S. Dollars)	(In Thousands of U.S. Dollars)	(In Thousands of U.S. Dollars)	(In Thousands of U.S. Dollars)
	Total		Remaining Period to Maturity
		0-30 Days	31-90 Days	91-180 Days	181 Days- 1 Year	Over 1 Year
Main capital inflow on maturity	$ 2,268,401	$ 302,671	$ 313,126	$ 273,899	$ 112,707	$ 1,265,998
Main capital outflow on maturity	2,842,541	678,544	792,270	444,134	769,364	158,229
Gap	(574,140 )	(375,873 )	(479,144 )	(170,235 )	(656,657 )	1,107,769

• 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.

43. 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) The 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.

• 105 -

2) Tier 2 capital

The 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 book value 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.

44. 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 Due to the Central Bank and other banks Funds borrowed from Central Bank and other banks Deposits and remittances Financial liabilities at fair value through profit or loss Other financial liabilities Payables Lease liabilities Securities sold under repurchased agreements Provisions Other liabilities New Taiwan dollars exchange rate

March 31, 2021

USD CNY JPY AUD EUR Others Total $ 1,207,270 $ 1,313,052 $ 402,634 $ 115,809 $ 181,719 $ 346,404 $ 3,566,888 473,582 86,900 - - - 354,645 915,127 1,169,114 - - - 2,561 141,031 1,312,706 1,736,710 1,948,572 - 130,011 - - 3,815,293 35,805,219 1,116,060 846,298 81,885 1,125,820 987,983 39,963,265 1,610,025 3,163,585 230,279 3,180 491,167 56,704 5,554,940 20,544,501 3,757,945 - 1,649,572 - 709,059 26,661,077 535,738 86,900 - - - 22 622,660 713,227 - 257,700 - - - 970,927 - 2,798,416 - - - - 2,798,416 56,818,666 3,896,134 689,043 2,153,803 586,457 1,860,867 66,004,970 319,924 34,661 - - 2,871 7,810 365,266 - - - - 129,685 129,685 1,089,352 528,593 177,110 18,846 210,815 14,963 2,039,679 - 40,450 - - - 4,775 45,225 4,891,365 - - - - - 4,891,365 23,210 - - - - - 23,210 121,406 15,414 358 - 11,327 - 148,505 28.53 4.35 0.26 21.71 33.48

• 106 -

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 Due to the Central Bank and other banks Funds borrowed from Central Bank and other banks Deposits and remittances Financial liabilities at fair value through profit or loss Other financial liabilities Payables Lease liabilities Securities sold under repurchased 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 Due to the Central Bank and other banks Funds borrowed from Central Bank and other banks Deposits and remittances Financial liabilities at fair value through profit or loss Other financial liabilities Payables Lease liabilities Securities sold under repurchased agreements Provisions Other liabilities New Taiwan dollars exchange rate	December 31, 2020
	USD CNY JPY AUD EUR Others Total $ 3,859,375 $ 487,676 $ 369,085 $ 135,056 $ 137,767 $ 496,070 $ 5,485,029 73,057 86,340 - - - 374,987 534,384 1,189,924 - - - 3,509 90,688 1,284,121 1,736,382 1,928,804 - 132,488 - - 3,797,674 31,203,325 1,112,690 413,612 81,659 1,176,027 1,017,500 35,004,813 805,151 2,967,309 209,852 14,156 445,269 68,749 4,510,486 18,565,402 3,842,754 - 1,428,655 - 941,953 24,778,764 495,580 86,340 - - - 1 581,921 702,478 - 408,753 - - - 1,111,231 - 2,222,528 - - - - 2,222,528 54,085,876 4,231,763 635,885 2,261,598 563,925 2,236,821 64,015,868 304,098 36,706 - - 3,780 2,154 346,738 - - - - - 107,246 107,246 1,093,982 193,025 198,722 162,732 61,890 59,780 1,770,131 - 41,981 - - - 5,529 47,510 1,096,485 - - - - - 1,096,485 21,174 - - - - - 21,174 109,079 7,932 234 - 8,518 - 125,763 28.10 4.32 0.27 21.65 34.55 March 31, 2020
	USD CNY JPY AUD EUR Others Total $ 1,237,696 $ 607,449 $ 760,410 $ 96,490 $ 219,775 $ 400,000 $ 3,321,820 60,446 93,610 - 614,790 - 195,350 964,196 1,327,158 23,595 - 890 - 12,471 1,364,114 1,043,376 - - - - - 1,043,376 35,048,108 1,185,943 419,828 179,239 146,581 814,626 37,794,325 1,479,828 2,956,104 561,002 3,767 81,799 203,540 5,286,040 20,571,192 3,108,940 - 1,136,378 - 960,133 25,776,643 444,958 85,100 - - - - 530,058 604,460 - - - - - 604,460 51,379 2,199,702 - - - - 2,251,081 49,287,539 3,215,552 712,628 2,158,012 545,979 1,896,996 57,816,706 217,059 - - 133 - 12,472 229,664 - - - - - 124,909 124,909 1,219,008 124,113 587,933 13,534 103,087 262,693 2,310,368 - 46,509 - - - 6,744 53,253 9,364,159 - - - - - 9,364,159 28,855 - - - - - 28,855 76,704 10,273 154 - 7,402 - 94,533 30.22 4.26 0.28 18.63 33.24

• 107 -

45. CASH FLOW INFORMATION

Changes in Liabilities Arising from Financing Activities

For the three months ended March 31, 2021

Opening Balance Funds borrowed from Central Bank and other banks $ 8,510,652 Commercial papers 1,588,567 Guarantee deposits received 567,148 Bank debentures 11,500,000 Lease liabilities 1,006,781 $ 23,173,148 For the three months ended March 31, 2020 Opening Balance Funds borrowed from Central Bank and other banks $ 6,092,040 Commercial papers 1,174,083 Guarantee deposit received 582,064 Lease liabilities 895,285 $ 8,743,472	Cash Inflows (Outflows) $ 1,170,746 519,794 33,396 - (61,234) $ 1,662,702 Cash Inflows (Outflows) $ (476,996 ) 138,705 46,885 (47,078) $ (338,484)		Non-cash Changes New Leases End of Lease Term $ - $ - - - - - - - 142,056 (43,035) $ 142,056 $ (43,035) Non-cash Changes New Leases Lease Term End $ - $ - - - - - 22,569 (23,109) $ 22,569 $ (23,109)		Closing Balance $ 9,681,398 2,108,361 600,544 11,500,000 1,044,568
					$ 24,934,871
					Closing Balance $ 5,615,044 1,312,788 628,949 847,667
Funds borrowed from Central Bank and other banks Commercial papers Guarantee deposit received Lease liabilities
			New Leases $ - - - 22,569 $ 22,569
					$ 8,404,448

46. OTHER SIGNIFICANT EVENT

Due to the impact of the COVID-19 pandemic, future economic and financial development are uncertain. The Group strengthened its management towards the provision of loans, monitored and assessed financial information (including net revenue, expected impairment loss, operating expenses and capital adequacy ratio, etc.) by applying stress testing under additional pressure. Based on the information available as of the balance sheet date, the epidemic did not have significant influence on the Group’s ability to continue as a going concern, asset impairment and financing risk.

47. 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 are as follows:

Northern area Central area Southern area OBU Overseas branch Head office and others

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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 three months ended March 31, 2021 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 For the three months ended March 31, 2020 Interest revenue Interest expense Net revenue Net income and loss other than interest Service fee income Gain on financial instrument Others Bad - debt expenses and provision for losses on commitments and guarantees Operating expenses Income before income tax	Northern Area $ 757,078 (320,671) 436,407 147,769 1,802 4,646 (144,526 ) (209,801) $ 236,297 $ 833,201 (403,330) 429,871 112,481 5,411 2,974 (141,318 ) (197,272) $ 212,147	Central Area $ 1,101,683 (321,393) 780,290 238,614 13,300 5,806 (80,996 ) (380,448) $ 576,566 $ 1,244,545 (408,390) 836,155 199,562 15,832 6,756 (7,116 ) (366,284) $ 684,905	Southern Area $ 646,412 (202,122) 444,290 152,206 4,715 5,310 446,686 (256,575) $ 796,632 $ 761,361 (267,188) 494,173 121,242 6,416 5,504 (9,815 ) (250,377) $ 367,143	OBU $ 334,274 (138,482) 195,792 44,790 (40,669 ) 50,293 (12,365 ) - $ 237,841 $ 471,677 (282,771) 188,906 26,163 43,721 (61,586 ) (55,389 ) - $ 141,815	Overseas Branch $ 21,418 (4,547) 16,871 2,790 - (1,153 ) (6,048 ) (8,826) $ 3,634 $ 20,643 (8,217) 12,426 444 - 4,730 (91 ) (8,420) $ 9,089	Head Office and Others $ 740,450 (367,084) 373,366 262,949 264,372 (97,199 ) (522,478 ) (809,288) $ (528,278) $ 648,804 (487,542) 161,262 292,012 (194,460 ) 76,655 35,208 (670,965) $ (300,288)	Adjustment and Write-off $ (582,749 ) 582,749 - - - (18,834 ) - 18,834 $ - $ (690,237 ) 690,237 - - - (18,812 ) - 18,812 $ -	Total $ 3,018,566 (771,550) 2,247,016 849,118 243,520 (51,131 ) (319,727 ) (1,646,104) $ 1,322,692 $ 3,289,994 (1,167,201) 2,122,793 751,904 (123,080 ) 16,221 (178,521 ) (1,474,506) $ 1,114,811

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

b. Segment assets

Segment Assets March 31, 2021 Northern area $ 141,083,824 Central area 198,821,929 Southern area 85,188,792 OBU 62,683,359 Overseas branch 3,195,689 Head office and others 256,362,410 $ 747,336,003	December 31, 2020 March 31, 2020 $ 139,108,081 $ 132,190,171 196,947,682 187,909,077 99,754,054 98,242,845 56,666,372 59,898,364 2,615,256 1,713,979 241,678,576 207,651,967 $ 736,770,021 $ 687,606,403

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.

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d. Geographical information

Location Taiwan Asia America		For the Three Months Ended March 31	For the Three Months Ended March 31
		2021 $ 3,217,299 70,966 258 $ 3,288,523	2020 $ 2,719,283 47,324 1,231 $ 2,767,838

• 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.

48. 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 and disposed of at costs or prices of at least NT$300millionor 10% ofthe paid-incapital.	None
2	Acquisition of individual real estate at costs of at least NT$300 million or 10% ofthe paid-incapital.	None
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% ofthe paid-incapital.	None
6	Sale of nonperforming loans.	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	Related information and proportionate share in investees.	Exempt from disclosure in the review report
2	Financing provided.	Table1
3	Endorsement/guarantee provided.	Table 2
4	Marketable securities held.	Table 3
5	Marketable securities acquired and disposed of at costs or prices of at least NT$300millionor 10% ofthe paid-incapital	None
6	Derivative transactions.	Note 8
7	Other significant transactions which may affect the decisions of users of financial reports.	None

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• 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 4 (attached).

• d. Business relationships and significant transactions between the parent company and subsidiaries: Table 5 (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 6).

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TABLE 1

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS

FOR THE THREE MONTHS ENDED MARCH 31, 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No. (Note 1)	Lender	Borrower	Financial Statements Accounts (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	Wan Ku Fu Co., Ltd. Da Fang Skill Color Marketing Consulting Co., Ltd. Qiyi Integrated Marketing Co., Ltd TCCBL Co., Ltd. (B.V.I.)	Other receivables Other receivables Other receivables Other receivables	Not related Not related Not related Related	$ 121,829 178,152 176,081 9,534	$ 114,460 172,544 170,436 9,534	$ 93,355 172,544 170,436 9,534	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	$ - - - -	Business turnover Business turnover Business turnover Business turnover	$ 934 1,725 1,704 95	Real estate Real estate Real estate None	$ 86,610 180,000 372,093 -	$ 195,689 195,689 195,689 195,689	$ 782,757 782,757 782,757 782,757	Note 9 Note 9 Note 9 Note 9
2	TCCBL Co., Ltd. (B.V.I.)	Cross Border Profits Limited	Other receivables	Not related	5,395	-	-	4-10	Necessary for short-term financing	-	Business turnover	-	Margin	2,853	79,234	316,934	Note 10

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

Note 10: TCCBL Co., Ltd. (B.V.I.) 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 TCCBL Co., Ltd. (B.V.I.).

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TABLE 2

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE THREE MONTHS ENDED MARCH 31, 2021 (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.)	Direct shareholding of 100% of subsidiary	$ 11,741,352	$ 632,228	$ 342,348	$ -	$ -	17.49	$ 19,568,920	-	-	-
2	Taichung Bank Leasing Corporation Limited	Taichung Bank Financial Leasing (Suzhou) Co., Ltd.	Indirect shareholding of 100% of subsidiary	11,741,352	2,157,097	2,117,544	1,957,939	-	108.21	19,568,920	-	-	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.

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TABLE 3

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD MARCH 31, 2021

(In Thousands of New Taiwan Dollars or Shares)

Name of Holding Company	Type and Name of Marketable Securities	Relationship	Financial Statements Account		March 31, 2021	March 31, 2021		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 Association 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	196,463 128,600 140,429 12,000 30,000 - 21,000	$ 1,956,892 1,873,041 1,607,865 168,245 792,335 746,881 212,055	100 100 100 38 100 100 100	$ 1,956,892 1,873,041 1,607,865 168,245 792,335 746,881 212,055

Note: The financial industry, the insurance industry and the securities industry are exempt from disclosure.

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TABLE 4

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

INVESTMENT IN MAINLAND CHINA FOR THE THREE MONTHS ENDED MARCH 31, 2021 (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, 2021	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of March 31, 2021	% Ownership of Direct or Indirect Investment	Investment Gain	Carrying Value as of March 31, 2021	Accumulated Inward Remittance of Earnings as of March 31, 2021
							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	$ 5,524 (CNY 1,275 thousand)	$ 746,881 (CNY 171,894 thousand)	$ -
Accumulated Investment in Mainland China as of March 31, 2021		Investment Amount Approved by the Investment Commission, MOEA		Maximum Investment Allowable (Note 2)
$893,373		$893,373		$1,174,135

Note 1: Recognition of investment gains and losses based on the financial statements reviewed 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$4.35, CNY1=NT$4.33).

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TABLE 5

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

BUSINESS RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS BETWEEN THE PARENT COMPANY AND SUBSIDIARIES FOR THE THREE MONTHS ENDED MARCH 31, 2021

(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	March 31, 2021 Taichung Commercial Bank Co., Ltd.	Taichung Insurance Brokers Co. Taichung Insurance Brokers Co. Taichung Insurance Brokers Co. Taichung Commercial Bank Securities Co., Ltd. Taichung Bank Leasing Corporation Limited. Taichung Bank Venture Capital Co., Ltd.	a a a a a a	Deposits and remittances Service fee income Receivables Deposits and remittances Deposits and remittances Deposits and remittances	$ 1,384,816 50,001 16,667 38,086 75,917 184,686	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	19,382 19,582	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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• 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 March 31, 2021 and 2020. 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 three months ended March 31, 2021 and 2020.

• Note 5: Referring to transactions exceeding $10,000 thousand.

(Concluded)

• 117 -

TABLE 6

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

INFORMATION OF MAJOR SHAREHOLDERS MARCH 31, 2021

Name of Major Shareholder	Shares	Shares
	Number of Shares	Percentage of Ownership (%)
China Man-Made Fiber Corporation Pan Asia Chemical Corporation	913,492,857 234,255,531	22.00 5.64

• 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.

• 118 -