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

Taichung Commercial Bank Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Nine Months Ended September 30, 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 September 30, 2021 and 2020, the consolidated statements of comprehensive income for the three months ended September 30, 2021 and 2020 and for the nine months ended September 30, 2021 and 2020, the consolidated statements of changes in equity and cash flows for the nine 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 September 30, 2021 and 2020, its consolidated financial performance for the three months ended September 30, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the nine months ended September 30, 2021 and 2020 in accordance with the Regulations Governing the Preparation of Financial Reports by Public 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.

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 November 4, 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.

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 RESELL 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 THE 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		September 30, 2021 (Reviewed) Amount % $ 15,306,763 2 35,159,928 5 32,591,744 5 45,420,863 6 106,968,801 14 13,298,572 2 14,867,809 2 - - 466,431,753 62 167,360 - 382,193 - - - 13,292,542 2 836,502 - 17,947 - 210,626 - 802,618 - 2,544,124 - $ 748,300,145 100 $ 5,265,859 1 10,165,119 2 529,839 - 1,204,989 - 6,917,990 1 206,252 - 646,174,062 86 11,500,000 2 2,665,478 - 1,404,233 - 877,604 - 111,021 - 1,085,721 - 688,108,167 92 43,385,205 6 803,606 - 10,677,008 1 149,678 - 3,645,121 1 1,531,360 - 60,191,978 8 60,191,978 8 $ 748,300,145 100		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		September 30, 2020 (Reviewed)
						Amount % $ 11,880,929 2 33,525,924 5 25,367,651 3 38,955,524 5 112,351,823 16 12,217,335 2 11,552,013 2 3,363 - 450,373,747 63 165,101 - 424,907 - 4,746 - 12,237,584 2 1,037,456 - 18,036 - 190,345 - 870,696 - 2,653,879 - $ 713,831,059 100 $ 7,026,107 1 7,738,085 1 473,634 - 3,224,876 - 7,885,296 1 73,096 - 617,160,528 87 11,500,000 2 1,685,164 - 1,368,104 - 1,062,110 - 111,021 - 885,599 - 660,193,620 92 39,016,943 6 726,981 - 9,469,859 1 150,243 - 3,016,377 1 1,257,036 - 53,637,439 8 53,637,439 8 $ 713,831,059 100

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

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) (Losses) gains on financial assets and liabilities at fair value through profit or loss (Note 32) Realized gains on financial assets at fair value through other comprehensive income (Note 32) Foreign exchange gains, net Reversal of (impairment losses) on financial assets (Notes 9, 10 and 32) Share of gain (loss) of associates accounted for using the equity method (Note 14) Other non-interest gains, net (Notes 29 and 32) TOTAL NET REVENUE PROVISION FOR BAD DEBTS EXPENSE, 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 Ended September 30	For the Three Months Ended September 30	For the Three Months Ended September 30		For the Nine Months	Ended September 30	Ended September 30
		2021		2020		2021		2020
		Amount % $ 3,076,449 91 (728,123) (22) 2,348,326 69 859,671 25 (19,447 ) - 136,361 4 58,933 2 586 - 279 - 3,382 - 3,388,091 100 (23,142) (1) (1,136,466 ) (33 ) (128,776 ) (4 ) (568,097) (17) (1,833,339) (54) 1,531,610 45 (241,084) (7) 1,290,526 38		Amount % $ 2,912,789 95 (887,936) (29) 2,024,853 66 777,941 25 (178 ) - 113,652 4 150,110 5 448 - (839 ) - 2,687 - 3,068,674 100 (218,794) (7) (998,710 ) (33 ) (121,645 ) (4 ) (467,039) (15) (1,587,394) (52) 1,262,486 41 (166,285) (5) 1,096,201 36		Amount % $ 9,158,685 92 (2,247,342) (23) 6,911,343 69 2,486,777 25 355,673 4 149,056 1 64,626 1 (2,446 ) - (402 ) - 13,281 - 9,977,908 100 (696,120) (7) (3,276,354 ) (33 ) (391,176 ) (4 ) (1,447,678) (14) (5,115,208) (51) 4,166,580 42 (599,736) (6) 3,566,844 36		Amount % $ 9,189,570 108 (3,039,082) (36) 6,150,488 72 2,134,870 25 (61,993 ) (1 ) 147,763 2 139,060 2 (6,673 ) - (2,510 ) - 14,273 - 8,515,278 100 (398,611) (5) (2,909,593 ) (34 ) (359,281 ) (4 ) (1,374,722) (16) (4,643,596) (54) 3,473,071 41 (536,032) (6) 2,937,039 35 (Continued)

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)

For the Three Months Ended September 30	For the Three Months Ended September 30	For the Nine Months	Ended September 30
2021	2020	2021	2020
Amount % $ (33,371 ) (1 ) 4,674 - 2,639 - (26,058) (1) (1,268 ) - 15,949 1 14,681 1 (11,377) - $ 1,279,149 38 $ 0.30 $ 0.30	Amount % $ 40,197 1 3,653 - (3,848) - 40,002 1 827 - 106,593 4 107,420 4 147,422 5 $ 1,243,623 41 $ 0.27 $ 0.27	Amount % $ 281,401 3 4,614 - (636) - 285,379 3 34,791 - (20,382) - 14,409 - 299,788 3 $ 3,866,632 39 $ 0.82 $ 0.82	Amount % $ 141,281 2 10,823 - (74) - 152,030 2 (12,484 ) - 290,122 3 277,638 3 429,668 5 $ 3,366,707 40 $ 0.72 $ 0.72




$	$	$	$

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

(Concluded)

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 Appropriation of 2019 earnings Legal reserve Cash dividends Share dividends Net profit for the nine months ended September 30, 2020 Other comprehensive (loss) income for the nine months ended September 30, 2020, net of income tax Total comprehensive income (loss) for the nine months ended September 30, 2020 Disposal of investments in equity instruments designated as at fair value through other comprehensive income BALANCE AT SEPTEMBER 30, 2020 BALANCE AT JANUARY 1, 2021 Appropriation of 2020 earnings Legal reserve Special reserve Cash dividends Share dividends Net profit for the nine months ended September 30, 2021 Other comprehensive income for the nine months ended September 30, 2021, net of income tax Total comprehensive income for the nine months ended September 30, 2021 Disposals of investments in equity instruments designated as at fair value through other comprehensive income BALANCE AT SEPTEMBER 30, 2021		Equity Attributable to Owners of the Bank	Other Equity Exchange Differences on Translating the Financial Statements of Unrealized Gains (Losses) on Financial Assets at Fair Value Through Other Foreign Comprehensive Operations Income $ (96,316) $ 949,508 - - - - - - - - (12,484) 442,152 (12,484) 442,152 - (25,824) $ (108,800) $ 1,365,836 $ (121,110) $ 1,424,867 - - - - - - - - - - 34,791 264,997 34,791 264,997 - (72,185) $ (86,319) $ 1,617,679	Total Equity $ 51,309,206 - (1,038,474) - 2,937,039 429,668 3,366,707 - $ 53,637,439 $ 57,321,753 - - (996,407) - 3,566,844 299,788 3,866,632 - $ 60,191,978
	Capital Stock Ordinary Shares Capital Surplus $ 37,088,349 $ 726,981 - - - - 1,928,594 - - - - - - - - - $ 39,016,943 $ 726,981 $ 41,516,943 $ 803,606 - - - - - - 1,868,262 - - - - - - - - - $ 43,385,205 $ 803,606	Retained Earnings Unappropriated Legal Reserve Special Reserve Earnings $ 8,188,237 $ 150,243 $ 4,302,204 1,281,622 - (1,281,622) - - (1,038,474) - - (1,928,594) - - 2,937,039 - - - - - 2,937,039 - - 25,824 $ 9,469,859 $ 150,243 $ 3,016,377 $ 9,469,859 $ 150,243 $ 4,077,345 1,207,149 - (1,207,149) - (565) 565 - - (996,407) - - (1,868,262) - - 3,566,844 - - - - - 3,566,844 - - 72,185 $ 10,677,008 $ 149,678 $ 3,645,121

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

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 expenses Amortization expenses Provision for bad debts expense, commitments and guarantees liabilities (Gains) losses on financial assets and liabilities at fair value through profit or loss Gain 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 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 Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 4,166,580 343,548 47,628 696,120 (355,673) (1,114) 2,247,342 (9,158,685) (144,329) - 402 (4,727) 2,446 310,142 (5,803) (6,022,703) (1,087,950) (520,343) (1,556,492) (10,423,207) 3,340 3,517 (1,771,479) (1,103,883) (1,095,088) (681,746) 9,584,594 50,636 (48,988) (30,534) (8,677,623) (10,533,746) 9,329,992 144,329	2020 $ 3,473,071 315,657 43,624 398,611 61,993 (280) 3,039,082 (9,189,570) (87,920) (1,165) 2,510 (59,843) 6,673 944,804 (1,139) (4,526,963) (1,101,237) (206,205) 928,629 (15,214,651) (1,782) (600,421) 499,047 (608,072) (7,144,149) 1,651,818 33,838,571 126,614 (42,990) (4,346) 12,120,826 11,066,934 9,583,687 87,920 (Continued)

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 sale of financial assets at amortized cost Payments for properties and equipment Proceeds from disposal of properties and equipment Increase in refundable deposits Payments for intangible assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Borrowings from Central Bank and other banks Proceeds from commercial papers issued Repayments of bank debentures Proceeds from (refund of) guarantee deposits received Repayments of principal portion of lease liabilities Cash dividends distributed 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 Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ (1,985,240) (560,467) (3,605,132) (6,643,951) 2,410,896 (672,525,496) 677,821,764 (1,117,391) 1,253 (50,824) (42,240) (145,989) 1,654,467 919,029 - 140,944 (178,348) (996,407) 1,539,685 34,791 (2,176,645) 46,249,219 $ 44,072,574	2020 $ (2,793,721) (911,863) 17,032,957 (12,844,657) 5,873,738 (589,161,984) 583,827,560 (1,717,304) 765 (237,079) (72,842) (14,331,803) 1,646,045 384,467 (2,500,000) (8,797) (142,198) (1,038,474) (1,658,957) (12,484) 1,029,713 38,341,346 $ 39,371,059

(Continued)

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 SEPTEMBER 30, 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 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 period		September 30	September 30
		2021 $ 15,306,763 15,467,239 13,298,572 $ 44,072,574	2020 $ 11,880,929 15,272,795 12,217,335 $ 39,371,059

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

(Concluded)

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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 operations in August of the same year. In July 1975, the Banking Act of the Republic of China 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 September 30, 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 Banking Act of the Republic of China (“ROC”).

At the time of establishment, the amount of capital invested by the Bank was $500 thousand. In line with the government degree, in order to improve the capital structure and cooperate with the government decree, the Bank has successively applied for the increase and decrease of capital. As of September 30, 2021, the Bank’s capital amount was $43,385,205 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 November 4, 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

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updating the effective interest rate at the time the basis is changed, provided the changes are necessary as a direct consequence of the reform and the new basis is economically equivalent to the previous basis.

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. The IFRSs endorsed by the FSC for application starting from 2022

Effective Date New IFRSs Announced by IASB “Annual Improvements to IFRS Standards 2018-2020” January 1, 2022 (Note 1) Amendments to IFRS 3 “Reference to the Conceptual Framework” January 1, 2022 (Note 2) Amendments to IAS 16 “Property, Plant and Equipment - Proceeds January 1, 2022 (Note 3) before Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a January 1, 2022 (Note 4) Contract”

Note 1: 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 2: 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 3: 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, 2021.
Note 4: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

As of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of above 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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c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

Effective Date New IFRSs Announced by IASB (Note 1)

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 January 1, 2023 Amendments to IAS 1 “Classification of Liabilities as Current or January 1, 2023 Non-current” Amendments to IAS 1 “Disclosure of Accounting Policies” January 1, 2023 (Note 2) Amendments to IAS 8 “Definition of Accounting Estimates” January 1, 2023 (Note 3) Amendments to IAS 12 “Deferred Tax related to Assets and January 1, 2023 (Note 4) Liabilities arising from a Single Transaction”

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 will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 3: 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.
Note 4: Except for deferred taxes that will be recognized on January 1, 2022 for temporary differences associated with leases and decommissioning obligations, the amendments will be applied prospectively to transactions that occur on or after January 1, 2022.

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;
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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.

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 these interim 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 that 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 the 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).

13 -

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.

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., Ltd. Insurance broker industry Taichung Bank Leasing Corporation Limited Leasing business Taichung Commercial Bank Securities Co., Ltd. Securities industry Taichung Bank Leasing Corporation Limited TCCBL Co., Ltd. Financial leasing and investment business TCCBL Co., Ltd. Taichung Bank Financial Leasing (Suzhou) Co., Ltd. Financial leasing business Taichung Commercial Bank Securities Co., Ltd. Taichung Bank Venture Capital Co., Ltd. Venture capital business	Percentage of Equity Held(%)
	September 30, 2021 December 31, 2020 September 30, 2020 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 -

Investor Company
Subsidiary
Main Business and
Products
Taichung Commercial Bank Co., Ltd. Taichung Bank Insurance Brokers Co., Ltd.
Insurance broker industry
Taichung Bank Leasing Corporation Limited Leasing business
Taichung Commercial Bank Securities Co.,
Ltd.
Securities industry
Taichung Bank Leasing Corporation
Limited
TCCBL Co., Ltd.
Financial leasing and
investment business
TCCBL Co., Ltd.
Taichung Bank Financial Leasing (Suzhou)
Co., Ltd.
Financial leasing business
Taichung Commercial Bank Securities
Co., Ltd.
Taichung Bank Venture Capital Co., Ltd.
Venture capital business

Percentage of Equity Held(%)

September 30,
2021
December 31,
2020
September 30,
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 for an interim period are accounted for in the same way as the accounting required for defined benefit plans except that annual 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.

14 -

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

The Group considers the recent development of the COVID-19 in Taiwan and its economic environment implications when making its critical accounting estimates in cash flow projections, growth rate, discount rate, profitability, etc. 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

September 30, 2021 Cash on hand $ 4,185,659 Checks for clearing 921,592 Due from banks 10,199,512 $ 15,306,763	December 31, 2020 September 30, 2020 $ 4,414,344 $ 4,490,870 1,249,821 2,220,161 6,045,454 5,169,898 $ 11,709,619 $ 11,880,929

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 September 30, 2021, December 31, 2020 and September 30, 2020.
b. Reconciliations of cash and cash equivalents between the consolidated statements of cash flows and the consolidated balance sheets as of September 30, 2021 and 2020 are shown in the consolidated statements of cash flows. Reconciliations as of December 31, 2020 are stated below:

	December 31,
	2020
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	$ 11,709,619
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”	21,766,479
Securities purchased under resell agreements in accordance with cash and cash
equivalents under IAS 7 “Statement of Cash Flows”	12,773,121
Cash and cash equivalents at the end of the year	$ 46,249,219

15 -
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 September 30, 2021, December 31, 2020 and September 30, 2020, which were transferred to the refundable deposits. Refer to Note 21.

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

September 30, 2021 Deposit reserves Deposit reserves for checking accounts $ 9,830,504 Deposit reserves for demand accounts 19,546,609 Inter-bank clearing account 4,019,363 Deposit reserves for foreign currency deposits 75,181 Call loans to banks 1,628,271 Deposit reserves for trust compensation 60,000	December 31, 2020 September 30, 2020 $ 19,301,038 $ 12,425,261 18,458,399 18,108,129 2,017,397 1,998,913 73,057 75,309 461,327 858,312 60,000 60,000

$ 35,159,928 $ 40,371,218 $ 33,525,924

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 September 30, 2021, December 31, 2020 and September 30, 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 September 30, 2021, December 31,2020 and September 30, 2020. Refer to Note 36.
c. The Group deposited the reserves for trust compensation on government bonds measured at amortized cost on September 30, 2021, December 31, 2020 and September 30, 2020, with a nominal amount of $60,000 thousand. Refer to Note 36.

8. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

	September 30,	December 31,	September 30,
	2021	2020	2020
Financial assets at FVTPL
Commercial papers	$ 25,535,700	$ 24,872,947	$ 20,399,973
Domestic listed shares and emerging market
shares	711,860	862,462	690,571
Domestic unlisted shares	46,290	7,508	37,500
Foreign listed shares	-	88,533	-
PEM group policy assets	805,986	799,269	801,209
Beneficiary certificates	534,016	363,744	287,577
Corporate bonds	434,065	203,112	141,161
Asset swap contracts	4,052,263	3,048,884	2,546,402
Cross-currency swap contracts	95,257	96,053	121,237
Foreign exchange forward contracts	45,731	168,822	89,109
			(Continued)

16 -

September 30, 2021 Cross-currency option contracts $ 323,402 Interest rate-linked structured instruments 7,174 $ 32,591,744 Financial liabilities at FVTPL Cross-currency swap contracts 163,587 Foreign exchange forward contracts 33,080 Cross-currency option contracts 325,998 Non-deliverable forward contracts - Interest rate-linked structured instruments 7,174 $ 529,839	December 31, 2020 September 30, 2020 $ 354,336 $ 252,283 2,155 629 $ 30,867,825 $ 25,367,651 369,085 185,297 66,415 34,173 348,164 252,435 - 1,100 2,155 629 $ 785,819 $ 473,634 (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 September 30, 2021, December 31, 2020 and September 30, 2020 were as follows:

Asset swap contracts Cross-currency swap contracts Foreign exchange forward contracts Cross-currency option contracts Non-deliverable forward contracts Interest rate-linked structured instrument contracts	September 30, 2021 Contract Amount Interest Rate Range $ 4,037,900 0.80%-4.25% 12,082,404 - 6,885,287 - 40,683,209 - - - 157,882 5.00%-6.20%	December 31, 2020 Contract Amount 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%	September 30, 2020
			Contract Amount Interest Rate Range $ 2,541,300 0.90%-3.50% 7,620,135 - 7,187,787 - 26,335,046 - 115,860 - 126,614 6.20%-6.75%

9. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

September 30, 2021 Investments in equity instruments at FVTOCI $ 3,890,094 Investments in debt instruments at FVTOCI 41,530,769 $ 45,420,863	December 31, 2020 September 30, 2020 $ 3,176,107 $ 2,740,101 37,833,733 36,215,423 $ 41,009,840 $ 38,955,524

a. Investments in equity instruments at FVTOCI

	September 30,	December 31,	September 30,
	2021	2020	2020
Domestic listed shares	$ 2,744,604	$ 2,113,147	$ 1,663,402
Domestic unlisted shares	831,171	751,556	778,983
Foreign listed shares	314,319	311,404	297,716
	$ 3,890,094	$ 3,176,107	$ 2,740,101

17 -

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.

Dividend income of $134,111 thousand, $77,994 thousand, $144,329 thousand and $87,920 thousand were recognized in profit or loss for the three months ended September 30, 2021 and 2020 and for the nine months ended September 30, 2021 and 2020, respectively.

b. Investments in debt instruments at FVTOCI

September 30, 2021 Corporate bonds $ 31,033,757 Government bonds 5,160,426 Foreign bonds 3,128,378 Bank debentures 2,208,208 $ 41,530,769	December 31, 2020 September 30, 2020 $ 26,959,132 $ 26,228,004 5,379,466 5,581,002 3,486,270 2,399,499 2,008,865 2,006,918 $ 37,833,733 $ 36,215,423

Foreign bonds denominated in foreign currencies were as follows:

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2021		2020		2020
USD	$	39,000	$	50,000	$	39,500
CNY		445,000		445,000		260,000
AUD		6,000		6,000		6,000

1) The Group recognized impairment (loss) of $(685) thousand, $15 thousand, $(5,839) thousand and $(4,049) thousand for the three months ended September 30, 2021 and 2020 and for the nine months ended September 30, 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

Foreign bonds Government bonds NCDs issued by the CBC Corporate bonds Less: Allowance for impairment loss Less: Withdrawal of reserves for trust compensation and refundable deposits		September 30, 2021 $ 23,779,911 11,594,596 62,035,000 10,506,497 107,916,004 (30,603) (916,600) $ 106,968,801		December 31, 2020 $ 24,794,803 12,654,717 64,970,000 11,159,474 113,578,994 (34,140) (920,400) $ 112,624,454		September 30, 2020 $ 25,400,717 12,675,397 64,070,000 11,160,571 113,306,685 (34,462) (920,400) $ 112,351,823

18 -
a. The foreign bonds denominated in foreign currencies were as follows:

	September 30,	December 31,	September 30,
	2021	2020	2020
USD	$ 662,197	$ 661,159	$ 670,159
CNY	800,000	890,000	890,000
AUD	53,000	66,000	66,000
ZAR	450,000	490,000	490,000

b. As of September 30, 2021, December 31, 2020 and September 30, 2020, the government bonds and the foreign bonds at amortized cost amounted to $1,200,000 thousand and $0 (US$0), $1,200,000 thousand and $1,123,960 thousand (US$40,000 thousand) and $1,200,000 thousand and $2,039,136 thousand (US$70,400 thousand), respectively, which had been sold under repurchase agreements. Refer to Note 40 for information relating to their carrying amounts.
c. The Group recognized impairment (loss) of $1,271 thousand, $433 thousand, $3,393 thousand and $(2,624) thousand for the three months ended September 30, 2021 and 2020 and for the nine months ended September 30, 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 RESELL AGREEMENTS

Securities purchased amounted to $13,298,572 thousand, $12,773,121 thousand and $12,217,335 thousand under repurchase agreements as of September 30, 2021, December 31, 2020 and September 30, 2020, were subsequently sold for $13,299,339 thousand, $12,774,072 thousand and $12,218,539 thousand, respectively, with interest rates ranging from 0.22% to 0.23%, 0.21% to 0.25% and 0.28% to 0.29%, respectively.

12. RECEIVABLES, NET

September 30,
2021
Notes receivable
$ 6,205,521
Receivables on credit cards
712,652
Accounts receivable factored without recourse
308,326
Acceptances
711,295
Interest receivables
1,008,231
Receivables on foreign currency settlement
3,398
Lease receivables
3,927,760
Assignment receivables
905,614
Receivables on securities settlement
1,832,195
Other receivables

390,248

16,005,240
Less: Unrealized interest income
(807,844)
Less: Allowance for doubtful accounts

(329,587)

$ 14,867,809

December 31,
2020
September 30,
2020
$ 4,694,417 $ 4,316,484

742,251
698,905

154,805
145,957

443,447
531,439

1,049,138
976,801

1,082,521
631,765

3,461,743
3,259,716

991,861
753,985

1,324,586
620,060

584,053

556,758

14,528,822
12,491,870

(722,637)
(654,369)

(322,521)

(285,488)
$ 13,483,664
$ 11,552,013

19 -
a. Movements in the total carrying amount of receivables for the nine months ended September 30, 2021 and 2020 were as follows:

For the nine months ended September 30, 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 September 30, 2021		$ 73,430,829 (189,227) (73,762) 34,591 8,869,702 - (7,499,042) 864,619 $ 75,437,710		$ 371,436 189,691 (36,878) (34,416) 1,267 (14,729) (82,324) 2,797 $ 396,844		$ 313,418 (464) 110,640 (175) 31,078 (121,134) (82,908) 12,911 $ 263,366		$ 74,115,683 - - - 8,902,047 (135,863) (7,664,274) 880,327 $ 76,097,920

For the nine months ended September 30, 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 September 30, 2020		$ 62,904,165 (133,702) (53,837) 7,341 6,227,712 - (5,262,172) (228,217) $ 63,461,290		$ 557,317 134,222 (138,401) (7,178) 3,572 (423) (301,110) (6,015) $ 241,984		$ 315,071 (520) 192,238 (163) 31,978 (118,704) (99,967) 10,526 $ 330,459		$ 63,776,553 - - - 6,263,262 (119,127) (5,663,249) (223,706) $ 64,033,733

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 resell agreements, notes receivable, receivables on credit cards, accounts receivable factored without recourse, acceptances, interest receivables, lease receivables, assignment receivables, 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 nine months ended September 30, 2021 and 2020 were as follows:

For the nine months ended September 30, 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 September 30, 2021		$ 91,312 (3,166) (1,139) 2,211 (35,960) 74,431 - - - (24,562) $ 103,127		$ 9,199 3,388 (917) (2,124) (2,308) 85 - (14,729) - 15,608 $ 8,202		$ 174,311 (222) 2,056 (87) (34,368) 22,760 - (71,813) - 83,561 $ 176,198		$ 274,822 - - - (72,636) 97,276 - (86,542) - 74,607 $ 287,527		$ 49,220 - - - - - 31,141 (49,321) 11,447 - $ 42,487		$ 324,042 - - - (72,636) 97,276 31,141 (135,863) 11,447 74,607 $ 330,014

For the nine months ended September 30, 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 September 30, 2020		$ 95,880 (1,304) (494) 1,205 (51,082) 51,785 - - - (11,402) $ 84,588		$ 11,625 1,673 (2,633) (1,077) (7,169) 565 - (423) - 2,026 $ 4,587		$ 165,224 (369) 3,127 (128) (32,660) 10,973 - (43,701) - 60,944 $ 163,410		$ 272,729 - - - (90,911) 63,323 - (44,124) - 51,568 $ 252,585		$ 23,828 - - - - - 74,353 (75,003) 11,267 - $ 34,445		$ 296,557 - - - (90,911) 63,323 74,353 (119,127) 11,267 51,568 $ 287,030

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

Bills negotiated Overdrafts Secured overdrafts Accounts receivable financing Securities margin loans receivables Short-term unsecured loans Short-term secured loans Medium-term unsecured loans Medium-term secured loans Long-term unsecured loans Long-term secured loans Delinquent loans Add: Adjustment of premium or discount Less: Allowance for doubtful accounts	September 30, 2021 $ 311,348 1,433 8,792 39,662 1,326,766 40,834,715 98,732,018 58,199,293 113,963,581 8,357,182 150,060,803 937,728 472,773,321 30,667 (6,372,235) $ 466,431,753	December 31, 2020 $ 293,388 1,310 30,988 51,149 1,099,366 39,175,727 101,315,539 54,480,676 110,808,195 6,842,847 147,939,346 814,242 462,852,773 23,940 (6,335,391) $ 456,541,322	September 30, 2020 $ 345,783 687 26,088 68,038 1,016,352 40,193,932 100,501,803 54,560,597 107,069,733 6,115,636 145,820,721 1,430,715 457,150,085 20,802 (6,797,140) $ 450,373,747

a. As of September 30, 2021, December 31, 2020 and September 30, 2020, the delinquent loans on which interest ceased to accrue amounted to $937,728 thousand, $814,242 thousand and $1,430,715 thousand, respectively. The unrecognized interest receivables on these loans were $16,152 thousand, $18,132 thousand and $24,229 thousand as of September 30, 2021, December 31, 2020 and September 30, 2020, respectively.
b. There was no credit loan written off without a lawsuit for the nine months ended September 30, 2021 and 2020.
c. Movements in the total carrying amount of notes discounted and loans for the nine months ended September 30, 2021 and 2020 were as follows:

For the nine months ended September 30, 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 September 30, 2021		$ 439,608,628 (5,986,416) (635,244) 2,348,777 188,247,289 - (152,885,264) (20,106,747) $ 450,591,023		$ 14,857,468 6,032,193 (832,461) (2,325,227) 1,047,435 - (3,316,503) (699,133) $ 14,763,772		$ 8,410,617 (45,777) 1,467,705 (23,550) 139,853 (968,567) (1,284,941) (246,147) $ 7,449,193		$ 462,876,713 - - - 189,434,577 (968,567) (157,486,708) (21,052,027) $ 472,803,988

22 -

For the nine months ended September 30, 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 at September30,2020		$ 415,543,744 (6,404,508) (693,022) 2,517,913 196,572,970 - (162,537,506) (13,867,947) $ 431,131,644		$ 16,873,865 6,637,971 (1,603,415) (2,504,873) 1,228,874 (1,834) (4,281,055) (223,413) $ 16,126,120		$ 9,554,442 (233,463) 2,296,437 (13,040) 375,746 (487,805) (1,587,289) 8,095 $ 9,913,123		$ 441,972,051 - - - 198,177,590 (489,639) (168,405,850) (14,083,265) $ 457,170,887

d. Movements in the allowance for doubtful accounts of notes discounted and loans for the nine months ended September 30, 2021 and 2020 were as follows:

For the nine months ended September 30, 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 September30,2021		$ 1,725,305 (11,841) (3,290) 98,949 (802,936) 774,283 - - - (363,958) $ 1,416,512		$ 925,826 15,635 (89,512) (96,649) (141,266) 46,324 - - - 89,373 $ 749,731		$ 1,856,155 (3,794) 92,802 (2,300) (257,321) 43,069 - (255,256) - 244,840 $ 1,718,195		$ 4,507,286 - - - (1,201,523) 863,676 - (255,256) - (29,745) $ 3,884,438		$ 1,828,105 - - - - - 900,368 (713,311) 472,635 - $ 2,487,797		$ 6,335,391 - - - (1,201,523) 863,676 900,368 (968,567) 472,635 (29,745) $ 6,372,235

23 -

For the nine months ended September 30, 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 September 30, 2020		$ 1,776,628 (12,240) (3,922) 86,512 (895,004) 995,266 - - - (213,417) $ 1,733,823		$ 852,354 181,222 (100,426) (85,274) (179,080) 47,658 - (550) - 196,530 $ 912,434		$ 2,468,257 (168,982) 104,348 (1,238) (328,379) 204,012 - (180,957) - 210,897 $ 2,307,958		$ 5,097,239 - - - (1,402,463) 1,246,936 - (181,507) - 194,010 $ 4,954,215		$ 1,476,478 - - - - - 200,755 (308,132) 473,824 - $ 1,842,925		$ 6,573,717 - - - (1,402,463) 1,246,936 200,755 (489,639) 473,824 194,010 $ 6,797,140

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.		September 30, 2021		December 31, 2020		September 30, 2020
		Amount Proportion of Ownership (%) $ 167,360 38.46		Amount Proportion of Ownership (%) $ 163,148 38.46		Amount Proportion of Ownership (%) $ 165,101 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 September 30 2021 2020 $ 279 $ (839)	For the Three Months Ended September 30 2021 2020 $ 279 $ (839)	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 279		2021 $ (402)	2020 $ (2,510)

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.

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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

		September 30,	December 31,	September 30,
		2021	2020	2020
Restricted	assets - cash in banks	$ 370,923	$ 436,106	$ 422,893
Payments	pending settlement	11,270	3,177	2,014
		$ 382,193	$ 439,283	$ 424,907

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

	September	30,	December	December	31,	September 30,	September 30,
	2021			2020			2020
Other delinquent receivables, net	$	-	$	2,246		$	2,246
Time deposits with original maturities of more
than 3 months		-			-		2,500
	$	-	$	2,246		$	4,746

The interest rate of time deposits with original maturities of more than 3 months was 0.82% on September 30, 2020.

Other delinquent receivables, net were as follows:

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2021		2020		2020
Delinquent receivables not arising from loans	$	427	$	3,767	$	3,788
Less: Allowance for doubtful accounts (Note 12)		(427)		(1,521)		(1,542)
	$	-	$	2,246	$	2,246

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17. PROPERTIES AND EQUIPMENT, NET

Cost Balance, January 1, 2021 Additions Disposals Reclassifications Exchange differences, net Balance, September 30, 2021 Accumulated depreciation Balance, January 1, 2021 Additions Disposals Reclassifications Exchange differences, net Balance, September 30, 2021 Impairment Balance, January 1, 2021 Balance, September 30, 2021 Balance, September 30, 2021 Cost Balance, January 1, 2020 Additions Disposals Exchange differences, net Balance, September 30, 2020 Accumulated depreciation Balance, January 1, 2020 Additions Disposals Exchange differences, net Balance, September 30, 2020 Impairment Balance, January 1, 2020 Balance, September 30, 2020 Balance, September 30, 2020			For the Nine Mo	nths Ended September 30, 2021	nths Ended September 30, 2021
		Land $ 7,847,588 227 - - - 7,847,815 - - - - - - 77,000 77,000 $ 7,770,815	Buildings and Structures Transportation Equipment $ 2,101,530 $ 59,101 5,827 1,301 - (1,455 ) - 6,239 - (6) 2,107,357 65,180 1,231,486 36,075 28,970 5,326 - (1,454 ) - 2,256 - (6) 1,260,456 42,197 - - - - $ 846,901 $ 22,983 For the Nine Mo	Miscellaneous Equipment Lease Improvements $ 2,009,496 $ 8,975 118,270 7,825 (22,143 ) - (6,066 ) - (181) - 2,099,376 16,800 1,596,941 3,001 119,002 1,468 (22,005 ) - (2,256 ) - (128) - 1,691,554 4,469 - - - - $ 407,822 $ 12,331 nths Ended September 30, 2020		Construction in Progress $ 3,250,482 983,941 - (2,733 ) - 4,231,690 - - - - - - - - $ 4,231,690	Total $ 15,277,172 1,117,391 (23,598 ) (2,560 ) (187 ) 16,368,218 2,867,503 154,766 (23,459 ) - (134) 2,998,676 77,000 77,000 $ 13,292,542
		Land $ 7,847,588 - - - 7,847,588 - - - - - 77,000 77,000 $ 7,770,588	Buildings and Structures Transportation Equipment $ 2,101,530 $ 54,053 - 530 - (126 ) - (28) 2,101,530 54,429 1,191,481 29,932 30,007 4,704 - (126 ) - (8) 1,221,488 34,502 - - - - $ 880,042 $ 19,927	Miscellaneous Equipment $ 1,900,254 104,981 (19,002 ) (771) 1,985,462 1,453,794 126,771 (18,517 ) (426) 1,561,622 - - $ 423,840	Lease Improvements $ 7,799 318 - - 8,117 1,632 1,009 - - 2,641 - - $ 5,476	Construction in Progress $ 1,526,236 1,611,475 - - 3,137,711 - - - - - - - $ 3,137,711	Total $ 13,437,460 1,717,304 (19,128 ) (799) 15,134,837 2,676,839 162,491 (18,643 ) (434) 2,820,253 77,000 77,000 $ 12,237,584

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

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18. LEASE ARRANGEMENTS

a. Right-of-use assets

Carrying amounts Land and buildings Transportation equipment Additions to right-of-use assets Depreciation charge for right-of-use assets Land and buildings Transportation equipment	September 30, 2021 December 31, 2020 September 30, 2020 $ 815,118 $ 789,200 $ 818,940 21,384 189,018 218,516 $ 836,502 $ 978,218 $ 1,037,456 For the Three Months Ended September 30 For the Nine Months Ended September 30 2021 2020 2021 2020 $ 21,722 $ 279,734 $ 230,244 $ 362,325 $ 33,900 $ 32,897 $ 100,977 $ 99,850 27,992 18,664 87,738 53,249 $ 61,892 $ 51,561 $ 188,715 $ 153,099	September 30, 2021 December 31, 2020 September 30, 2020 $ 815,118 $ 789,200 $ 818,940 21,384 189,018 218,516 $ 836,502 $ 978,218 $ 1,037,456 For the Three Months Ended September 30 For the Nine Months Ended September 30 2021 2020 2021 2020 $ 21,722 $ 279,734 $ 230,244 $ 362,325 $ 33,900 $ 32,897 $ 100,977 $ 99,850 27,992 18,664 87,738 53,249 $ 61,892 $ 51,561 $ 188,715 $ 153,099	September 30, 2021 December 31, 2020 September 30, 2020 $ 815,118 $ 789,200 $ 818,940 21,384 189,018 218,516 $ 836,502 $ 978,218 $ 1,037,456 For the Three Months Ended September 30 For the Nine Months Ended September 30 2021 2020 2021 2020 $ 21,722 $ 279,734 $ 230,244 $ 362,325 $ 33,900 $ 32,897 $ 100,977 $ 99,850 27,992 18,664 87,738 53,249 $ 61,892 $ 51,561 $ 188,715 $ 153,099	September 30, 2021 December 31, 2020 September 30, 2020 $ 815,118 $ 789,200 $ 818,940 21,384 189,018 218,516 $ 836,502 $ 978,218 $ 1,037,456 For the Three Months Ended September 30 For the Nine Months Ended September 30 2021 2020 2021 2020 $ 21,722 $ 279,734 $ 230,244 $ 362,325 $ 33,900 $ 32,897 $ 100,977 $ 99,850 27,992 18,664 87,738 53,249 $ 61,892 $ 51,561 $ 188,715 $ 153,099	September 30, 2021 December 31, 2020 September 30, 2020 $ 815,118 $ 789,200 $ 818,940 21,384 189,018 218,516 $ 836,502 $ 978,218 $ 1,037,456 For the Three Months Ended September 30 For the Nine Months Ended September 30 2021 2020 2021 2020 $ 21,722 $ 279,734 $ 230,244 $ 362,325 $ 33,900 $ 32,897 $ 100,977 $ 99,850 27,992 18,664 87,738 53,249 $ 61,892 $ 51,561 $ 188,715 $ 153,099
		2021 $ 21,722 $ 33,900 27,992 $ 61,892		2021 $ 230,244 $ 100,977 87,738 $ 188,715	2020 $ 362,325 $ 99,850 53,249 $ 153,099

The Group suspended the leases of some land and buildings and transportation equipment before the leases expired. The amount of right-of-use assets was derecognized was $95,002 thousand, $5,735 thousand, $182,917 thousand, and $52,324 thousand for the three months ended September 30, 2021 and 2020 and for the nine months ended September 30, 2021 and 2020, respectively, and disposal gain of $1,942 thousand, $78 thousand, $5,803 thousand, $1,139 thousand was recognized for the three months ended September 30, 2021 and 2020 and for the nine months ended September 30, 2021 and 2020, respectively.

Except for the aforementioned suspension and addition and recognized depreciation, the Group did not have significant sublease or impairment of right-of-use assets during the nine months ended September 30, 2021 and 2020.

b. Lease liabilities

	September 30,	December 31,	September 30,
	2021	2020	2020
Carrying amounts	$ 877,604	$ 1,006,781	$ 1,062,110
Range of discount rate for lease liabilities was as follows:
	September 30,	December 31,	September 30,
	2021	2020	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%

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c. Material lease-in activities and terms

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

d. Other lease information

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

Expenses relating to short-term leases Expenses relating to low-value asset leases Total cash outflow for leases	For the Three Months Ended September 30 2021 2020 $ 637 $ 705 $ 2,401 $ 1,888 $ (71,114) $ (58,901)	For the Three Months Ended September 30 2021 2020 $ 637 $ 705 $ 2,401 $ 1,888 $ (71,114) $ (58,901)	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 637 $ 2,401 $ (71,114)		2021 $ 1,811 $ 6,801 $ (215,952)	2020 $ 2,245 $ 5,661 $ (175,546)

The Group leases certain office equipment under leases which qualify as short-term leases and certain computer equipment under leases which 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, September 30, 2021 Accumulated depreciation Balance, January 1, 2021 Additions Balance, September 30, 2021 Balance, September 30, 2021 Cost Balance, January 1, 2020 Balance, September 30, 2020	For the Nine Months Ended September 30, 2021	For the Nine Months Ended September 30, 2021	For the Nine Months Ended September 30, 2021	For the Nine Months Ended September 30, 2021
	Land Structures Total $ 15,801 $ 5,972 $ 21,773 15,801 5,972 21,773 - 3,759 3,759 - 67 67 - 3,826 3,826 $ 15,801 $ 2,146 $ 17,947 For the Nine Months Ended September 30, 2020
		Land $ 15,801 15,801	Structures $ 5,972 5,972	Total $ 21,773 21,773 (Continued)

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Accumulated depreciation Balance, January 1, 2020 Additions Balance, September 30, 2020 Balance, September 30, 2020	For the Nine Months Ended September 30, 2020	For the Nine Months Ended September 30, 2020	For the Nine Months Ended September 30, 2020	For the Nine Months Ended September 30, 2020
		Land $ - - - $ 15,801	Structures $ 3,670 67 3,737 $ 2,235	Total $ 3,670 67 3,737 $ 18,036 (Concluded)

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 as of September 30, 2021 and 2020 compared to that of 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 September 30, 2021, December 31, 2020 and September 30, 2020 is as follows:

	September 30,	September 30,	December 31,	December 31,	September	September	30,
		2021		2020		2020
Year 1	$	864	$	864	$		-
Year 2		864		-			-
Year 3		864		-			-
Year 4		864		-			-
	$	3,456	$	864	$		-
INTANGIBLE ASSETS, NET
	September 30,		December 31,		September		30,
		2021		2020		2020
Business rights	$	28,000	$	28,000	$	28,000
Computer software		182,626		185,470		162,345
	$	210,626	$	213,470	$	190,345

20. INTANGIBLE ASSETS, NET

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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 September 30, 2021, there was no impairment loss of the business rights.
b. Movements of intangible assets were as follows:

Balance, January 1 Additions Amortization Reclassifications Exchange differences, net Balance, September 30		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 213,470 42,240 (47,628) 2,560 (16) $ 210,626	2020 $ 153,125 72,842 (43,624) 8,093 (91) $ 190,345

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

	September 30,	December 31,	September 30,
	2021	2020	2020
Refundable deposits	$ 2,245,483	$ 2,198,459	$ 1,908,552
Prepayments	181,986	136,226	219,054
Receipts under payment for shares underwriting	114,681	107,826	524,861
Others	1,974	1,016	1,412
	$ 2,544,124	$ 2,443,527	$ 2,653,879

As of September 30, 2021, December 31, 2020 and September 30, 2020, the time deposits and government bonds at amortized cost, which amounted to $1,056,600 thousand, $1,060,400 thousand and $1,060,400 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 classified under refundable deposits. Refer to Note 36.

22. DUE TO THE CENTRAL BANK AND OTHER BANKS

	September 30,	December 31,	September 30,
	2021	2020	2020
Call loans from banks	$ 5,100,000	$ 6,411,231	$ 6,400,000
Due to Chunghwa Post Co., Ltd.	165,846	326,094	326,094
Due to banks	13	300,013	300,013
	$ 5,265,859	$ 7,037,338	$ 7,026,107

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23. FUNDS BORROWED FROM THE CENTRAL BANK AND OTHER BANKS

September 30, 2021 Funds borrowed from the central bank $ 3,069,280 Funds borrowed from other banks 7,095,839 $ 10,165,119 Funds borrowed from the central bank (%) 0.10 Funds borrowed from other banks (%) 0.95-5.45	December 31, 2020 September 30, 2020 $ 2,167,280 $ 1,749,180 6,343,372 5,988,905 $ 8,510,652 $ 7,738,085 0.10 0.10 0.95-5.23 1.00-5.31

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

24. SECURITIES SOLD UNDER REPURCHASE AGREEMENTS

	September 30,	December 31,	September 30,
	2021	2020	2020
Government bonds	$ 1,204,989	$ 1,203,592	$ 1,203,055
Foreign bonds	-	1,096,485	2,021,821
	$ 1,204,989	$ 2,300,077	$ 3,224,876

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

	September	September	30,	December 31,	September 30,	September 30,
		2021		2020		2020
Government bonds	$	1,205,307		$ 1,203,981	$	1,203,395
Foreign bonds			-	1,097,527		2,022,949
	$	1,205,307		$ 2,301,508	$	3,226,344
Government bonds	0.17%-0.18%			0.20%-0.21%	0.25%-0.26%
Foreign bonds		-		0.38%	0.34%-0.35%
The foreign bonds denominated in foreign	currencies were as follows:
	September		30,	December 31,	September 30,
		2021		2020		2020
USD		$	-	$ 39,022		$ 69,802

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25. PAYABLES

Accrued expenses Accounts payable for delivery Notes and checks in clearing Acceptances Interest payable Collections payable Factored accounts payable Foreign currency settlement payable Other payables DEPOSITS AND REMITTANCES Checking Demand Demand savings Time Time savings Remittances	September 30, 2021 $ 1,829,086 1,416,096 921,592 712,828 585,873 370,100 115,598 3,660 963,157 $ 6,917,990 September 30, 2021 $ 6,805,271 187,762,723 154,808,323 142,267,573 154,469,780 60,392 $ 646,174,062	December 31, 2020 $ 1,653,548 1,526,955 1,249,821 455,797 327,521 144,075 105,876 1,083,053 802,738 $ 7,349,384 December 31, 2020 $ 8,826,292 171,324,169 150,643,016 150,519,288 155,188,149 88,554 $ 636,589,468	September 30, 2020 $ 1,482,315 747,159 2,220,161 533,420 710,453 785,644 111,594 631,905 662,645 $ 7,885,296 September 30, 2020 $ 6,637,778 158,222,906 140,396,488 157,124,241 154,746,175 32,940 $ 617,160,528

26. DEPOSITS AND REMITTANCES

27. BANK DEBENTURES

September 30, 2021 Subordinated financial debenture $ 11,500,000	December 31, 2020 September 30, 2020 $ 11,500,000 $ 11,500,000

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.
3) Denomination:
- a) Debenture I on 2013: $500 thousand, issued at par.
- b) Debenture II on 2013: $500 thousand, issued at par.
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4) Period:

  - a) Debenture I on 2013: 7 years with maturity on June 25, 2020.

  - b) Debenture II on 2013: 6 years with maturity 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.
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.
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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.
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%.
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6) Repayment: To be executed according to the issuance.
7) The interest will be paid annually from the issuance date.

28. OTHER FINANCIAL LIABILITIES

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2021		2020		2020
Commercial papers payable	$	2,507,596	$	1,588,567	$	1,558,550
Structured commodity principal		157,882		107,246		126,614
	$	2,665,478	$	1,695,813	$	1,685,164
PROVISIONS
	September 30,		December 31,		September 30,
		2021		2020		2020
Provision for employee benefits	$	1,040,294	$	1,089,282	$	1,090,782
Provision for losses on guarantees		277,963		235,963		199,963
Other provision		12,864		13,097		10,634
Provision for loan commitments		55,272		72,060		66,725
Provision for outstanding loss		17,840		14,090		-
	$	1,404,233	$	1,424,492	$	1,368,104
a. Details of provision for employee benefits were	as follows:
	September 30,		December 31,		September 30,
		2021		2020		2020
Benefit plans	$	858,417	$	913,854	$	922,773
Preferential interest on employees’ deposits		143,150		139,406		134,953
Other long-term employee benefit liabilities		38,727		36,022		33,056
	$	1,040,294	$	1,089,282	$	1,090,782

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.

The amounts of contributions paid by the Group in accordance with the defined contribution plan and recognized in the consolidated statements of comprehensive income for the three months ended September 30, 2021 and 2020 and for the nine months ended September 30, 2021 and 2020 in the amounts of $27,819 thousand, $25,399 thousand, $81,957 thousand and $74,902 thousand, respectively.

35 -

2) Defined benefit plans

The defined benefit plan adopted by the Bank of the Group in accordance with the Labor Standards Act is operated by the government of the ROC. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Bank contributes amounts equal to 10% of total monthly salaries and wages 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 nine months ended September 30, 2021 and 2020 is as follows:

Operating expenses	For the Three Months Ended September 30 2021 2020 $ 3,147 $ 4,167	For the Three Months Ended September 30 2021 2020 $ 3,147 $ 4,167	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 3,147		2021 $ 9,441	2020 $ 12,455

3) Preferential interest on employees’ deposit plans

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

For the three months ended September 30, 2021 and 2020 and for the nine months ended September 30, 2021 and 2020, the related expenses under preferential interest on employees’ deposits plan recognized in the consolidated statements of comprehensive income amounted to $1,248 thousand, $1,173 thousand, $3,744 thousand and $3,520 thousand, respectively.

4) Other long-term employee benefit liabilities

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

For the three months ended September 30, 2021 and 2020 and for the nine months ended September 30, 2021 and 2020, the Group recognized $1,242 thousand, $1,179 thousand, $3,726 thousand and $3,537 thousand of total expenses related to the long-term employee benefits in the consolidated statements of comprehensive income, respectively.

36 -
b. Movements of the provision for losses on guarantees were as follows:

For the nine months ended September 30, 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 Foreign exchange differences and other changes Balance at September30,2021		$ 168,958 (1,848) (5) 740 (104,584) 122,872 - (13,995) $ 172,138		$ 4,799 1,848 - (740) (3,384) 9,940 - 21,581 $ 34,044		$ 36,355 - 5 - - - - (1,872) $ 34,488		$ 210,112 - - - (107,968) 132,812 - 5,714 $ 240,670		$ 25,851 - - - - - 11,442 - $ 37,293		$ 235,963 - - - (107,968) 132,812 11,442 5,714 $ 277,963

For the nine months ended September 30, 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 Foreign exchange differences and other changes Balance at September30,2020		$ 109,720 (54) (6) 7,402 (72,856) 110,532 - (11,786) $ 142,952		$ 1,778 54 - (768) (1,010) 2,164 - 725 $ 2,943		$ 58,621 - 6 (6,634) (15,608) - - (496) $ 35,889		$ 170,119 - - - (89,474) 112,696 - (11,557) $ 181,784		$ 4,344 - - - - - 13,835 - $ 18,179		$ 174,463 - - - (89,474) 112,696 13,835 (11,557) $ 199,963

For the nine months ended September 30, 2021 and 2020, a provision was recognized for bad-debt expense, commitments and guarantees.

37 -
c. Movements of the other provision were as follows:

For the nine months ended September 30, 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 Foreign exchange differences and other changes Balance at September30,2021		$ 9,157 - - - (8,934) 9,685 - (196) $ 9,712		$ 3,263 - - - (3,263) - - - $ -		$ - - - - - - - - $ -		$ 12,420 - - - (12,197) 9,685 - (196) $ 9,712		$ 677 - - - - - 2,475 - $ 3,152		$ 13,097 - - - (12,197) 9,685 2,475 (196) $ 12,864

For the nine months ended September 30, 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 Foreign exchange differences and other changes Balance at September30,2020		$ 9,638 - - - (9,638) 9,182 - - $ 9,182		$ - - - - - - - - $ -		$ 7 - - - (7) - - - $ -		$ 9,645 - - - (9,645) 9,182 - - $ 9,182		$ 2,233 - - - - - (781) - $ 1,452		$ 11,878 - - - (9,645) 9,182 (781) - $ 10,634

For the nine months ended September 30, 2021 and 2020, a provision was recognized for bad-debt expense, commitments and guarantees.

38 -

d. Movements of the loan commitments were as follows:

For the nine months ended September 30, 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 Foreign exchange differences and other changes Balance at September30,2021		$ 58,968 (2) (310) 1,773 (26,525) 15,005 - (1,474) $ 47,435		$ 7,205 2 296 (1,773) (5,397) 32 - 125 $ 490		$ 2,555 - 14 - (686) - - (14) $ 1,869		$ 68,728 - - - (32,608) 15,037 - (1,363) $ 49,794		$ 3,332 - - - - - 2,146 - $ 5,478		$ 72,060 - - - (32,608) 15,037 2,146 (1,363) $ 55,272

For the nine months ended September 30, 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 Foreign exchange differences and other changes Balance at September30,2020		$ 48,760 (4) (2) 1,689 (3,375) 16,822 - (5,916) $ 57,974		$ 1,848 4 (7) (1,689) (137) 956 - 464 $ 1,439		$ 4,025 - 9 - (4,025) 1,672 - (9) $ 1,672		$ 54,633 - - - (7,537) 19,450 - (5,461) $ 61,085		$ 8,724 - - - - - (3,084) - $ 5,640		$ 63,357 - - - (7,537) 19,450 (3,084) (5,461) $ 66,725

For the nine months ended September 30, 2021 and 2020, a provision was recognized for bad-debt expense, commitments and guarantees.

e. Please refer to Note 37 for the amount of $17,840 thousand and $14,090 thousand for the outstanding compensation provision of the Bank on September 30, 2021 and December 31, 2020.
39 -

30. OTHER LIABILITIES

September 30, 2021 Guarantee deposits received $ 708,092 Advance receipts 287,119 Credit transactions 4,465 Others 86,045 $ 1,085,721 EQUITY a. Share capital Ordinary shares September 30, 2021 Number of shares authorized (in thousands) 6,150,000 Shares authorized $ 61,500,000 Number of shares issued and fully paid (in thousands) 4,338,521 Shares issued $ 43,385,205	December 31, 2020 September 30, 2020 $ 567,148 $ 573,267 318,649 225,372 3,604 2,720 85,910 84,240 $ 975,311 $ 885,599 December 31, 2020 September 30, 2020 6,150,000 6,150,000 $ 61,500,000 $ 61,500,000 4,151,694 3,901,694 $ 41,516,943 $ 39,016,943

31. EQUITY

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

As of January 1, 2020, the Bank had issued ordinary shares totaling $37,088,349 thousand, divided into 3,708,835 thousand ordinary shares at par value of $10 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. As of September 30, 2020, the Bank had increased the number of ordinary shares to $39,016,943 thousand, consisting of 3,901,694 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.

In September 2021, the Bank transferred $1,868,262 thousand of unappropriated earnings to ordinary shares, consisting of 186,826 thousand ordinary shares at par value of $10 per share. As of September 30, 2021, the Bank had increased ordinary shares to $43,385,205 thousand, consisting of 4,338,521 thousand ordinary shares at par value of $10 per share.

40 -

b. Capital surplus

	September 30,	December 31,	September 30,
	2021	2020	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).
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.

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

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

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

41 -

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 and 2019 had been approved in the shareholders’ meeting of the Bank on July 1, 2021 and June 30, 2020, respectively, as follows:

Legal reserve Special reserve Cash dividends Share dividends	Appropriation of Earnings 2020 2019 $ 1,207,149 $ 1,281,622 (565) - 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

d. Other equity items

Exchange
Differences on
Translating 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 (losses)
Equity instruments
-
281,401
Debt instruments
-
(26,221)
Net remeasurement of loss allowance - debt
instruments
-
5,839
Share from associates accounted for using
the equity method
-
4,614
Cumulative unrealized gain of equity
instruments transferred to retained earnings
due to disposal
-
(72,185)
Cumulative translation adjustment
Exchange differences for current period
34,791
-
Income tax related to other comprehensive
income

-

(636)

Balance at September 30, 2021
$ (86,319)
$ 1,617,679

Total
$ 1,303,757
281,401

(26,221)

5,839

4,614

(72,185)
34,791

(636)
$ 1,531,360

(Continued)

42 -

Exchange
Differences on
Translating the
Financial
Statements of
Foreign
Operations
Unrealized
Gain on
Financial Assets
at FVTOCI
Balance at January 1, 2020
$ (96,316) $ 949,508

Recognized for the period
Unrealized gains
Equity instruments
-
141,281
Debt instruments
-
286,073
Net remeasurement of loss allowance - debt
instruments
-
4,049
Share from associates accounted for using
the equity method
-
10,823
Cumulative unrealized gain of equity
instruments transferred to retained earnings
due to disposal
-
(25,824)
Cumulative translation adjustment
Exchange differences for current period
(12,484)
-
Income tax related to other comprehensive
income

-

(74)

Balance at September 30, 2020
$ (108,800)
$ 1,365,836

Total
$ 853,192

141,281
286,073

4,049

10,823

(25,824)
(12,484)

(74)
$ 1,257,036
(Concluded)

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 resell agreements Accounts receivable factoring without recourse Others		For the Three Months Ended September 30 2021 2020 $ 2,489,368 $ 2,378,977 18,125 20,890 370,221 363,293 92,238 68,018 90,316 63,251 8,172 8,929 5,488 7,519 2,445 1,820 76 92 3,076,449 2,912,789		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 2,489,368 18,125 370,221 92,238 90,316 8,172 5,488 2,445 76 3,076,449		2021 $ 7,422,161 54,551 1,109,937 270,367 251,507 26,024 18,003 5,840 295 9,158,685	2020 $ 7,519,126 73,840 1,148,841 205,186 178,254 27,741 29,874 6,397 311 9,189,570 (Continued)

43 -

Interest expense Deposits Financial debentures Funds borrowed from the Central Bank and other banks Due to the Central Bank and other banks Securities sold under repurchase agreements Structured instruments Lease liabilities Others		For the Three Months Ended September 30 2021 2020 $ (551,605) $ (715,911) (112,757) (117,971) (46,914) (35,302) (353) (1,094) (1,158) (4,117) (2,115) (2,066) (9,276) (9,204) (3,945) (2,271) (728,123) (887,936) $ 2,348,326 $ 2,024,853		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ (551,605) (112,757) (46,914) (353) (1,158) (2,115) (9,276) (3,945) (728,123) $ 2,348,326		2021 $ (1,715,137) (334,593) (141,613) (1,981) (7,351) (5,606) (28,992) (12,069) (2,247,342) $ 6,911,343	2020 $ (2,409,679) (380,614) (134,082) (2,707) (79,137) (4,372) (25,442) (3,049) (3,039,082) $ 6,150,488 (Concluded)

b. 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 September 30 2021 2020 $ 268,725 $ 301,261 329,381 299,058 183,047 131,492 54,674 34,711 90,709 78,791 926,536 845,313 (18,392) (26,404) (8,753) (9,543) (39,720) (31,425) (66,865) (67,372) $ 859,671 $ 777,941		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 268,725 329,381 183,047 54,674 90,709 926,536 (18,392) (8,753) (39,720) (66,865) $ 859,671		2021 $ 837,892 919,740 501,259 155,248 268,199 2,682,338 (60,857) (28,468) (106,236) (195,561) $ 2,486,777	2020 $ 814,780 763,718 411,258 107,037 224,810 2,321,603 (71,747) (27,022) (87,964) (186,733) $ 2,134,870

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.

44 -
c. Gain on financial assets and liabilities at fair value through profit or loss

Realized profit or 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 September 30 2021 2020 $ 15,422 $ 17,126 (17,784) 65,199 24,559 10,483 (54,868) (50,684) 1,530 - (31,141) 42,124 (56) 348 (13,792) 3,828 (25,487) 12,388 4,139 (6,917) 50,983 (52,282) (4,093) 333 11,694 (42,302) $ (19,447) $ (178)	For the Three Months Ended September 30 2021 2020 $ 15,422 $ 17,126 (17,784) 65,199 24,559 10,483 (54,868) (50,684) 1,530 - (31,141) 42,124 (56) 348 (13,792) 3,828 (25,487) 12,388 4,139 (6,917) 50,983 (52,282) (4,093) 333 11,694 (42,302) $ (19,447) $ (178)	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 15,422 (17,784) 24,559 (54,868) 1,530 (31,141) (56) (13,792) (25,487) 4,139 50,983 (4,093) 11,694 $ (19,447)		2021 $ 46,428 106,071 32,315 1,077 2,000 187,891 733 33,274 40,189 13,852 80,301 (567) 167,782 $ 355,673	2020 $ 67,999 67,258 (35,999) 55,982 906 156,146 (7,645) 1,814 30,336 (198,811) (44,538) 705 (218,139) $ (61,993)

1) For the nine months ended September 30, 2021 and 2020, realized profit or loss of gain on financial assets and liabilities at fair value through profit or loss included disposal profit amounted to $68,069 thousand and $45,468 thousand, dividend income amounted to $27,624 thousand and $26,616 thousand and interest revenue amounted to $92,198 thousand and $84,062 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 September 30 2021 2020 $ 134,111 $ 77,994 2,250 35,658 $ 136,361 $ 113,652	For the Three Months Ended September 30 2021 2020 $ 134,111 $ 77,994 2,250 35,658 $ 136,361 $ 113,652	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 134,111 2,250 $ 136,361		2021 $ 144,329 4,727 $ 149,056	2020 $ 87,920 59,843 $ 147,763

45 -

e. Reversal of (impairment losses) on financial assets

Investments in debt instruments at FVTOCI Financial assets at amortized cost Other non-interest gains (losses), (Losses) gains on disposal of properties and equipment Others	For the Three Months Ended September 30 2021 2020 $ (685) $ 15 1,271 433 $ 586 $ 448 net For the Three Months Ended September 30 2021 2020 $ (73) $ 235 3,455 2,452 $ 3,382 $ 2,687	For the Three Months Ended September 30 2021 2020 $ (685) $ 15 1,271 433 $ 586 $ 448 net For the Three Months Ended September 30 2021 2020 $ (73) $ 235 3,455 2,452 $ 3,382 $ 2,687	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
			2021 2020 $ (5,839) $ (4,049) 3,393 (2,624) $ (2,446) $ (6,673) For the Nine Months Ended September 30
		2021 $ (73) 3,455 $ 3,382		2021 $ 1,114 12,167 $ 13,281	2020 $ 280 13,993 $ 14,273

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

g. Provision for bad debts expense, commitments and guarantee liabilities

Bad debts on receivables (Reversal of) bad debts on notes discounted and loans Losses on guarantees (Reversal of) loan commitments Others	For the Three Months Ended September 30 2021 2020 $ 28,552 $ 41,875 (10,408) 157,366 14,000 11,500 (5,001) 8,053 (4,001) - $ 23,142 $ 218,794	For the Three Months Ended September 30 2021 2020 $ 28,552 $ 41,875 (10,408) 157,366 14,000 11,500 (5,001) 8,053 (4,001) - $ 23,142 $ 218,794		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 28,552 (10,408) 14,000 (5,001) (4,001) $ 23,142		2021 $ 130,832 540,118 42,000 (16,608) (222) $ 696,120	2020 $ 100,281 268,555 25,500 4,275 - $ 398,611

h. Employee benefits expenses

Salaries Labor and health insurance Pension expense Other employee expenses		For the Three Months Ended September 30 2021 2020 $ 989,588 $ 866,715 57,708 51,318 30,966 29,566 58,204 51,111 $ 1,136,466 $ 998,710		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 989,588 57,708 30,966 58,204 $ 1,136,466		2021 $ 2,859,454 170,086 91,398 155,416 $ 3,276,354	2020 $ 2,489,827 167,639 87,357 164,770 $ 2,909,593

46 -
i. Employees’ compensation and remuneration of directors

According to the Articles of Incorporation of the Bank, the Bank accrues employees’ compensation and remuneration of directors at rates of 0.5%-3% and no higher than 2.5%, respectively, of net profit before income tax, employees’ compensation and remuneration of directors. For the three months ended September 30, 2021 and 2020 and for the nine months ended September 30, 2021 and 2020, the accrual rates and amounts of employees’ compensation and the remuneration of directors were as follows:

Accrual rate

Employees’ compensation Remuneration of directors	For the Nine Months Ended September 30
	2021 2020 0.75% 0.94% 2.48% 1.50%

Amount

Employees’ compensation Remuneration of directors	For the Three Months Ended September 30 2021 2020 $ 11,526 $ 9,469 $ 37,950 $ 18,954	For the Three Months Ended September 30 2021 2020 $ 11,526 $ 9,469 $ 37,950 $ 18,954	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 11,526 $ 37,950		2021 $ 31,731 $ 104,850	2020 $ 32,884 $ 52,385

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.

47 -

j. Depreciation and amortization expenses

For the Three Months Ended September 30 2021 2020 Properties and equipment $ 50,897 $ 54,762 Investment properties 22 22 Right-of-use assets 61,892 51,561 Intangible assets 15,965 15,300 $ 128,776 $ 121,645 Other selling and administrative expenses For the Three Months Ended September 30 2021 2020 Taxes $ 181,375 $ 163,055 Professional service 64,470 34,349 Advertisement 42,457 31,554 Insurance 44,950 37,933 Entertainment 15,865 20,676 Donation 23,502 38,956 Postage 17,938 16,830 Others 177,540 123,686 $ 568,097 $ 467,039		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 2020 $ 154,766 $ 162,491 67 67 188,715 153,099 47,628 43,624 $ 391,176 $ 359,281 For the Nine Months Ended September 30
		2021 $ 539,076 154,915 51,999 132,579 51,066 67,194 51,788 399,061 $ 1,447,678	2020 $ 497,829 130,520 95,585 119,852 46,565 97,123 48,844 338,404 $ 1,374,722

k. Other selling and administrative expenses

33. INCOME TAXES RELATING TO CONTINUING OPERATIONS

a. Income tax recognized in profits or loss

Major components of income tax expense were as follows:

Current tax In respect of the current period Income tax on unappropriated earnings Adjustments for prior periods Deferred tax In respect of the current period Income tax expense recognized in profit or loss	For the Three Months Ended September 30 2021 2020 $ 227,301 $ 229,510 - - 422 (87) 13,361 (63,138) $ 241,084 $ 166,285	For the Three Months Ended September 30 2021 2020 $ 227,301 $ 229,510 - - 422 (87) 13,361 (63,138) $ 241,084 $ 166,285	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 227,301 - 422 13,361 $ 241,084		2021 $ 631,255 77 (23,446) (8,150) $ 599,736	2020 $ 601,711 1,169 (3,118) (63,730) $ 536,032

48 -

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 September 30 2021 2020 $ 2,639 $ (3,848)	For the Three Months Ended September 30 2021 2020 $ 2,639 $ (3,848)	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 2,639		2021 $ (636)	2020 $ (74)

c. Income tax assessments

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

34. EARNINGS PER SHARE

Unit: NT$ Per Share

Basic earnings per share Diluted earnings per share	For the Three Months Ended September 30 2021 2020 $ 0.30 $ 0.27 $ 0.30 $ 0.27	For the Three Months Ended September 30 2021 2020 $ 0.30 $ 0.27 $ 0.30 $ 0.27	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 0.30 $ 0.30		2021 $ 0.82 $ 0.82	2020 $ 0.72 $ 0.72

The weighted average number of shares outstanding used for the earnings per share computation was adjusted retrospectively for the issuance of bonus shares. The basic and diluted earnings per share adjusted retrospectively for the nine months ended September 30, 2020 were as follows:

	Unit:	NT$ Per Share
	Before	After
	Retrospective	Retrospective
	Adjustment	Adjustment
Basic earnings per share	$ 0.75	$ 0.72
Diluted earnings per share	$ 0.75	$ 0.72

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 September 30 2021 2020 $ 1,290,526 $ 1,096,201 $ 1,290,526 $ 1,096,201		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 1,290,526 $ 1,290,526		2021 $ 3,566,844 $ 3,566,844	2020 $ 2,937,039 $ 2,937,039

49 -

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 September 30 2021 2020 4,338,521 4,077,271 2,735 3,211 4,341,256 4,080,482	For the Three Months Ended September 30 2021 2020 4,338,521 4,077,271 2,735 3,211 4,341,256 4,080,482	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 4,338,521 2,735 4,341,256		2021 4,338,521 3,406 4,341,927	2020 4,077,271 3,889 4,081,160

Since 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
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)
Hsin-Chang Tsai, Li-Woon Lim, Pi-Ta Chen, Chien-An
Shin (Note 1)
Jin-Yi Lee (Note 2)
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)
24 persons including the Chairman and general manager’s
spouse
41 persons including the director of the Board’s spouse
7 persons including Yi-Yuan Tung

Relationship with the Group

Parent company of the Bank
Legal director of the Bank
Legal directors of the Bank
Natural director of the Bank
General manager and legal representatives
of the Bank’s director
Independent director of the Bank
Independent director of the Bank
Legal representatives of the Bank’s director
Legal representatives of the Bank’s director
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
(Continued)

50 -

Relationship with the Group

Related Party

17 persons including associate general manager’s spouse

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

Taichung Bank Securities Investment Trust Co., Ltd.

China Fiber Investment Co., Ltd. Pan Asia Investment Co., Ltd. Taichung Commercial Bank Cultural and Educational Foundation, Taichung Commercial Bank Workers’ Welfare Commission Deh Hsing Investment Co., Ltd. Iolite Company Limited 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.

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

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

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

(Continued)

51 -

Relationship with the Group

Related Party

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. Shen Ching Investment Co., Ltd. Fu Ching Co., Ltd. Lei Fu Life Business 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

(Concluded)

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 its related parties

a. Loans

For the nine months ended September 30, 2021

Balance,
Numbers/
Name
Highest
Balance
End of the
Period
Employees’
consumption loans
13
$ 6,117
$ 4,180
Loans on mortgage
42
237,541
169,257
Other loans
Zeng OO
138
110
Lee OO
2,414
2,309
Chang OO
4,500
-
Liu OO
1,774
329
Tsai OO
5,000
-
Lin OO
412
344
Chiu OO
1,500
-
Chen OO
70,000
40,000
Fang OO
31,032
15,416
Wang OO
3,000
3,000
Lin OO
25,600
16,700
Tsai OO
248
147
Liang OO
767
677
Ye OO
11,000
11,000
Huang OO
1,435
1,332
Chuang OO
1,314
-
Chiu OO
2,935
2,705
Hsu OO
2,200
2,200
Huang OO
15,000
15,000

Compliance
The
Difference
Between
Related and
Performing
Loans
Overdue
Loans
Interest
Revenue
Collateral
Non-related
Party
$ 4,180
$ -
$ 47
Credit loans
None
169,257
-
1,365
Real estate
None
110
-
2
Real estate
None
2,309
-
23
Real estate
None
-
-
4
Real estate
None
329
-
8
Real estate
None
-
-
8
Real estate
None
344
-
-
Real estate
None
-
-
13
Real estate
None
40,000
-
389
Real estate
None
15,416
-
129
Real estate
None
3,000
-
30
Real estate
None
16,700
-
238
Real estate
None
147
-
3
Real estate
None
677
-
6
Real estate
None
11,000
-
102
Real estate
None
1,332
-
14
Real estate
None
-
-
7
Real estate
None
2,705
-
25
Real estate
None
2,200
-
24
Real estate
None
15,000
-
-
Real estate
None

52 -

For the nine months ended September 30, 2020

Balance,
Numbers/
Name
Highest
Balance
End of the
Period
Employees’
consumption loans
12
$ 4,029
$ 3,067
Loans on mortgage
35
180,915
125,027
Other loans
Lee OO
2,552
2,449
Liu OO
1,911
1,809
Lin OO
504
435
Fang OO
21,732
11,816
Lin OO
18,800
17,900
Tsai OO
380
281
Liang OO
886
797
Ye OO
11,000
11,000
Huang OO
1,570
1,469
Chiu OO
3,238
3,012

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

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 Chou Chin Industrial Co., Ltd. Chou Chang Co., Ltd. Je Mi Fang Corporation Yu Hui Limited Hsu Tian Investment Co., Ltd. Pan Asia Investment Co., Ltd. Pan Hsu Investment Co., Ltd. Reliance Securities Co., Ltd. Shuo-Jung Co., Ltd. Deh Hsing Investment Co., Ltd. Fengqi Investment Co., Ltd. Others	For the Nine Months Ended September 30, 2021	For the Nine Months Ended September 30, 2021
	Ending Balance Interest Ratio $ 134,179 0.00-0.79 135,575 0.01-4.80 51,509 0.01-0.05 8,257 0.01-0.84 66 0.04 6,260 0.04 64,463 0.01-0.04 16,864 0.01-0.04 3,444 0.01 20,155 0.04-0.81 4 0.01 25,810 0.01-0.05 7 0.01 8 0.01 10,044 0.04-0.55 36,638 0.01 1 0.04 6 0.04 386,497 0.00-4.80 $ 899,787	Interest Expense $ 493 5,234 18 51 - 1 7 1 - 104 - 1 - - 53 1 1 - 2,711 $ 8,676

53 -

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 Yu Hui Limited Hsu Tian Investment Co., Ltd. Pan Asia Investment Co., Ltd. Pan Hsu Investment Co., Ltd. Reliance Securities Co., Ltd. Shuo-Jung Co., Ltd. Deh Hsing Investment Co., Ltd. Others	For the Nine Months Ended September 30, 2020	For the Nine Months Ended September 30, 2020
	Ending Balance Interest Ratio $ 165,492 0.00-1.05 144,687 0.01-4.80 127,662 0.01-0.05 8,285 0.01-0.84 659 0.04 6,557 0.04 22,843 0.01-0.04 198 0.04 28,990 0.01-0.04 4,784 0.01 20,020 0.04-0.81 4 0.01 37,905 0.01-0.04 6 0.01 4 0.01 13,730 0.04-0.55 15,401 0.01 6,833 0.04 315,388 0.00-4.80 $ 919,448	Interest Expense $ 886 5,450 20 55 - 1 5 - 1 - 9 - 1 - - 78 - 3 2,900 $ 9,409

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% as of September 30, 2021, December 31, 2020 and September 30, 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.

54 -

As of September 30, 2021, the related party subscribed for the financial debentures issued by the Bank through underwriting brokers were as follows:

Counterparty	Subscription	Period
Hsu Tian Investment	$ 4,000,000	First no due date non-cumulative subordinated financial
Co., 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

The interest payables on the financial debentures of the abovementioned related parties amounted to $182,347 thousand, $47,108 thousand and $193,399 thousand on September 30, 2021, December 31, 2020 and September 30, 2020, respectively. The interest expenses amounted to $75,988 thousand, $79,588 thousand, $225,486 thousand and $239,574 thousand for the three months ended September 30, 2021 and 2020, and for the nine months ended September 30, 2021 and 2020, respectively.

d. Service fee income

Taichung Bank Securities Investment Trust Co., Ltd.	For the Three Months Ended September 30 2021 2020 $ 222 $ 129	For the Three Months Ended September 30 2021 2020 $ 222 $ 129	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 222		2021 $ 590	2020 $ 425

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 September 30 2021 2020 $ 215 $ 349 - - - 80 $ 215 $ 429	For the Three Months Ended September 30 2021 2020 $ 215 $ 349 - - - 80 $ 215 $ 429	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 215 - - $ 215		2021 $ 564 - - $ 564	2020 $ 901 1,472 161 $ 2,534

55 -

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. Remuneration of directors and key management personnel

For the three months ended September 30, 2021 and 2020 and for the nine months ended September 30, 2021 and 2020, the amounts of remuneration of directors and key management personnel were as follows:

Short-term benefits Post-employee benefits Other long-term benefits	For the Three Months Ended September 30 2021 2020 $ 70,440 $ 54,711 287 328 - 4 $ 70,727 $ 55,043	For the Three Months Ended September 30 2021 2020 $ 70,440 $ 54,711 287 328 - 4 $ 70,727 $ 55,043	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 70,440 287 - $ 70,727		2021 $ 233,874 862 2 $ 234,738	2020 $ 177,077 982 13 $ 178,072

36. PLEDGED ASSETS

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2021		2020		2020
Call loans to other banks - time deposits	$	200,000	$	200,000	$	200,000
Restricted assets - cash in banks		370,923		436,106		422,893
Notes receivable		3,099,029		2,426,158		2,327,677
Investments in debt instruments at amortized cost
- government bonds		916,600		920,400		920,400
Deposit reserves for demand accounts		5,000,000		5,000,000		5,000,000
	$	9,586,552	$	8,982,664	$	8,870,970

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

	September 30,	December 31,	September 30,
	2021	2020	2020
Guarantee to district court for litigation	$ 356,600	$ 360,400	$ 360,400
Collateral for overdraft of clearing account	500,000	500,000	500,000
Reserve of trust compensation	60,000	60,000	60,000
	$ 916,600	$ 920,400	$ 920,400

56 -

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 September 30, 2021, December 31, 2020 and September 30, 2020 were as follows:

a. Significant commitments

		September 30,	September 30,	December 31,	September 30,	September 30,
			2021	2020		2020
Loan commitments (excluding credit		cards) $ 145,808,568		$ 143,630,068	$	142,279,682
Loan commitments - credit cards			13,600,717	12,799,065		12,670,498
Guarantee receivables			26,703,920	22,879,091		19,536,341
Trust liabilities			74,076,899	65,050,103		64,713,932
Letters of credit			4,418,696	3,430,243		3,301,684
Lease contract commitments			1,159,906	2,121,644		2,125,587
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
		September 30, 2021
Trust Assets		Amount	Trust Liabilities			Amount
Cash in banks	$	5,848,424	Securities under custody
Debentures		7,597,784	payable		$	5,142,520
Stocks		3,129,302	Trust capital			68,934,379
Funds		46,529,340	Net income			899,077
Structured finance instruments		1,593,483	Deferred carryover amounts			(899,077)
Real estate
Land		4,101,659
Buildings		134,387
Securities under custody		5,142,520
Trust assets	$	74,076,899	Trust liabilities		$	74,076,899
		Trust Account Asset Items
		September 30, 2021
Item						Amount
Cash in banks					$	5,848,424
Debentures						7,597,784
Stocks						3,129,302
Funds						46,529,340
Structured finance instruments						1,593,483
Real estate
Land						4,101,659
Buildings						134,387
Securities under custody						5,142,520
					$	74,076,899

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:
57 -

Trust Account Income Statement Nine Months Ended September 30, 2021

Trust income Interest revenue Trust expense Management fee Tax Income before income tax Income tax expense Net income Trust Assets Cash in banks Debentures Stocks Funds Structured finance instruments Real estate Land Buildings Securities under custody Trust assets Item Cash in banks Debentures Stocks Funds Structured finance instruments Real estate Land Buildings Securities under custody	Trust Account Balance Sheet December 31, 2020 Amount Trust Liabilities $ 4,689,969 Securities under custody 7,976,548 payable 2,285,436 Trust capital 43,580,019 Net income 1,406,286 Deferred carryover amounts 2,056,768 136,691 2,918,386 $ 65,050,103 Trust liabilities Trust Account Asset Items December 31, 2020	Amount $ 1,817,987 (918,910) - 899,077 - $ 899,077 Amount $ 2,918,386 62,131,717 1,569,531 (1,569,531) $ 65,050,103 Amount $ 4,689,969 7,976,548 2,285,436 43,580,019 1,406,286 2,056,768 136,691 2,918,386 $ 65,050,103

58 -

Trust Account Income Statement Year Ended December 31, 2020

Amount

Trust income Interest revenue Trust expense Management fee Tax Income before income tax Income tax expense Net income Trust Assets Cash in banks Debentures Stocks Funds Structured finance instruments Real estate Land Buildings Securities under custody Trust assets Item Cash in banks Debentures Stocks Funds Structured finance instruments Real estate Land Buildings Securities under custody	Trust Account Balance Sheet September 30, 2020 Amount Trust Liabilities $ 4,586,339 Securities under custody 7,629,576 payable 1,839,313 Trust capital 43,425,981 Net income 1,316,282 Deferred carryover amounts 1,641,939 133,940 4,140,562 $ 64,713,932 Trust liabilities Trust Account Asset Items September 30, 2020	$ 2,641,698 (1,072,146) (21) 1,569,531 - $ 1,569,531 Amount $ 4,140,562 60,573,370 1,228,699 (1,228,699) $ 64,713,932 Amount $ 4,586,339 7,629,576 1,839,313 43,425,981 1,316,282 1,641,939 133,940 4,140,562 $ 64,713,932

59 -

Trust Account Income Statement Nine Months Ended September 30, 2020

Trust income Interest revenue Trust expense Management fee Tax Income before income tax Income tax expense Net income	Amount $ 1,996,340 (767,641) - 1,228,699 - $ 1,228,699

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.

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

			September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
				2021		2020		2020
Year	1		$ 3,363,720		$ 2,259,461		$ 2,135,237
Year	2			318,622		785,605		724,972
Year	3			62,003		219,267		198,697
Year	4			12,739		13,030		13,030
Year	5			12,739		13,030		13,030
Year	6	onwards		157,937		171,350		174,750
			$ 3,927,760		$ 3,461,743		$ 3,259,716

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Present value of financing lease income

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2021		2020		2020
Year 1	$ 2,993,485		$ 2,006,629		$	1,901,142
Year 2		290,723		712,027		661,091
Year 3		51,198		188,214		165,460
Year 4		3,890		3,457		3,376
Year 5		4,257		3,805		3,715
Year 6 onwards		91,408		93,881		95,009
	$ 3,434,961		$ 3,008,013		$	2,829,793
Capital expenditure commitment
	September 30,		December 31,		September 30,
		2021		2020		2020
Year 1	$ 1,997,741		$ 3,949,454		$	203,194
Year 2		2,580,464		3,309,926		3,987,621
Year 3		3,068,448		1,236,643		3,213,827
Year 4		-		14,394		1,236,643
	$ 7,646,653		$ 8,510,417		$	8,641,285

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. Movements of the outstanding loss provision were as follows:

	September 30,
	2021
Balance, January 1, 2021	$ 14,090
Loss provision	3,750
Balance, September 30, 2021	$ 17,840

For the nine months ended September 30, 2021, the loss provision was the recognized interest expense.

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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

September 30, 2021

Carrying Amount Financial assets Investments in debt instruments at amortized cost $ 107,885,401 Financial liabilities Financial liabilities at amortized cost Bank debentures 11,500,000 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 September 30, 2020 Carrying Amount Financial assets Investments in debt instruments at amortized cost $ 113,272,223 Financial liabilities Financial liabilities at amortized cost Bank debentures 11,500,000	Fair Value
	Level 1 Level 2 Level 3 Total $ 84,576,542 $ 24,076,759 $ - $ 108,653,301 - 11,636,349 - 11,636,349 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 $ 88,457,336 $ 25,903,097 $ - $ 114,360,433 - 11,663,367 - 11,663,367

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

Financial Instruments Valuation Techniques and Inputs

Non-derivatives

The market transaction price in the non-active market is taken as the fair value.

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

1) Fair value hierarchy

Financial assets at FVTPL Derivative financial assets Commercial papers Domestic listed shares and emerging market shares Domestic unlisted shares Beneficiary certificates Domestic corporate bonds Others Financial assets at FVTOCI Investments in equity instruments Domestic unlisted shares Domestic listed shares Foreign listed shares Investments in debt instruments Domestic corporate bonds Domestic government bonds Foreign bonds Bank debentures Financial liabilities at FVTPL Derivative financial liabilities			September 30, 2021	September 30, 2021
		Total $ 4,523,827 25,535,700 711,860 46,290 534,016 434,065 805,986 $ 32,591,744 $ 831,171 2,744,604 314,319 31,033,757 5,160,426 3,128,378 2,208,208 $ 45,420,863 $ 529,839	Level 1 $ - 25,535,700 649,964 - 534,016 434,065 - $ 27,153,745 $ - 2,744,604 314,319 31,033,757 5,160,426 - 2,208,208 $ 41,461,314 $ -	Level 2 $ 4,523,827 - 61,896 - - - 805,986 $ 5,391,709 $ - - - - - 3,128,378 - $ 3,128,378 $ 529,839	Level 3 $ - - - 46,290 - - - $ 46,290 $ 831,171 - - - - - - $ 831,171 $ -

Reconciliation of Level 3 fair value measurements of financial instruments:

Item	Beginning Balance	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	$ 6,282	$ 32,500	$ -		$ -		$ -	$ 46,290

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	$ 79,615	$ -	$	-	$ -		$ -	$ 831,171
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		Level 1 $ - 24,872,947 794,600 88,533 - 363,744 203,112 - $ 26,322,936		Level 2 $ 3,670,250 - 67,862 - - - - 799,269 $ 4,537,381		Level 3 $ - - - - 7,508 - - - $ 7,508 (Continued)

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Financial assets at FVTOCI Investments in equity instruments Domestic unlisted shares Domestic listed shares Foreign listed shares Investments in debt instruments Domestic corporate bonds Domestic government bonds Foreign bonds Bank debentures Financial liabilities at FVTPL Derivative financial liabilities			December 31, 2020	December 31, 2020
		Total $ 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 $ - 2,113,147 311,404 26,959,132 5,379,466 - 2,008,865 $ 36,772,014 $ -	Level 2 Level 3 $ - $ 751,556 - - - - - - - - 3,486,270 - - - $ 3,486,270 $ 751,556 $ 785,819 $ - (Concluded)

Reconciliation of Level 3 fair value measurements of financial instruments:

Item	Beginning Balance	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 FVOCI Unlisted shares	$ 664,957	$ 86,599	$ -	$	-	$ -		$ -	$ 751,556
Financial assets at FVTPL					September 30, 2020
			Total $ 3,009,660 20,399,973 690,571 37,500 287,577 141,161 801,209 $ 25,367,651 $ 778,983 1,663,402 297,716 26,228,004 5,581,002 2,399,499 2,006,918 $ 38,955,524 $ 473,634		Level 1 $ - 20,399,973 660,730 - 287,577 141,161 - $ 21,489,441 $ - 1,663,402 297,716 26,228,004 5,581,002 - 2,006,918 $ 35,777,042 $ -		Level 2 $ 3,009,660 - 29,841 - - - 801,209 $ 3,840,710 $ - - - - - 2,399,499 - $ 2,399,499 $ 473,634		Level 3 $ - - - 37,500 - - - $ 37,500 $ 778,983 - - - - - - $ 778,983 $ -

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Reconciliation of Level 3 fair value measurements of financial instruments:

Item	Beginning Balance	Valuation Gains (Losses)	Increase	Increase	Decrease	Decrease	Ending Balance
			Buy or Issue	Transfer in	Sell, Disposal	Transfer Out
Financial assets at FVTPL Unlisted shares	$ -	$ -	$ 37,500	$ -	$ -	$ -	$ 37,500

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	$ 114,026	$ -	$ -	$ -	$ -	$ 778,983

There were no transfers between Levels 1 and 2 for the nine months ended September 30, 2021 and 2020.

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.

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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 September 30, 2021, December 31, 2020 and September 30, 2020, were as follows:

Items	Fair value on September 30, 2021	Fair value on December 31, 2020	Fair value on September 30, 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	$ 46,290 831,171	$ 7,508 751,556	$ 37,500 778,983	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% 24.37%-24.78%	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 fair value

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.

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:

September 30, 2021
Significant Unobservable Input	Sensitivity Rate	Impact
Liquidity discount ratio	Increase 10%	$ (21,103)
	Decrease 10%	21,103
December 31, 2020
Significant Unobservable Input	Sensitivity Rate	Impact
Liquidity discount ratio	Increase 10%	$ (16,463)
	Decrease 10%	16,463
September 30, 2020
Significant Unobservable Input	Sensitivity Rate	Impact
Liquidity discount ratio	Increase 10%	$ (18,245)
	Decrease 10%	18,245

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c. Categories of financial instruments

	September 30,	December 31,	September 30,
	2021	2020	2020
Financial assets
Financial assets at FVTPL	$ 32,591,744	$ 30,867,825	$ 25,367,651
Financial assets at amortized cost (Note 1)	654,775,983	650,143,386	634,764,837
Financial assets at FVTOCI
Equity instruments	3,890,094	3,176,107	2,740,101
Debt instruments	41,530,769	37,833,733	36,215,423
Financial liabilities
Financial liabilities at FVTPL	529,839	785,819	473,634
Financial liabilities at amortized cost (Note 2)	684,601,589	675,549,880	656,793,323

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, investment in debt instrument at amortized cost, securities purchased under resell agreements, receivables, notes discounted and loans, restricted assets, refundable deposits, receipts under payment for shares underwriting and other financial assets.
Note 2: The balances include financial liabilities at amortized cost, which comprise due to the Central Bank and other banks, funds borrowed from the Central Bank and other banks, securities sold under repurchase agreements, payables, deposits and remittances, bank debentures, other financial liabilities, and guarantee deposits received.

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.

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.
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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.

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.

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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 September 30, 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 October 2021.

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 September 30, 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:

summarized as follows:
Non-derivative Financial Notes discounted and loans, net USD LIBOR EUR LIBOR GBP LIBOR JPY LIBOR	Amount
	Financial Assets $ 30,520,000 841,000 5,000 348,000 31,714,000	Financial Liabilities $ - - - - - (Continued)

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Non-derivative Financial Receivables USD LIBOR Funds borrowed from the central bank and other banks USD LIBOR Financial assets at amortized cost USD LIBOR	Amount	Amount
	Financial Assets $ 13,428 - 7,532,000 $ 39,259,428	Financial Liabilities $ - 473,365 - $ 473,365 (Concluded)

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 JPY/NTD separately appreciates/depreciates by 3%, in order to control exchange rate risk.

f) Equity securities price risk
i. Definition of equity securities price risk

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

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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 rate 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 September 30, 2021, December 31, 2020 and September 30, 2020 would have increased/decreased by $779,615 thousand, $876,160 thousand and $632,419 thousand, respectively, and other equity would have decreased/increased by $1,917,856 thousand, $1,796,491 thousand and $2,191,464 thousand, respectively.

Exchange rate risk

The Group assumed that when other factors remain unchanged, if the exchange rate of USD/NTD, CNY/NTD, and JPY/NTD appreciated/depreciated by 3%, the income before income tax as of September 30, 2021, December 31, 2020 and September 30, 2020 would have decreased/increased by $28,014 thousand, $28,759 thousand and $23,689 thousand, respectively, and other equity would have increased/decreased by $112,648 thousand, $121,412 thousand and $90,243 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 September 30, 2021, December 31, 2020 and September 30, 2020 would have increased/decreased by $193,825 thousand, $198,337 thousand and $152,347 thousand, respectively, and other equity would have increased/decreased by $583,514 thousand, $476,416 thousand and $411,015 thousand, respectively.

The summary of sensitivity analysis was as follows:

	September 30, 2021
Main Risk	Range of Change	Influence Amount
		Other Equity	Income
Interest risk	Interest rate curve rises 100BPS Interestrate curvefalls100BPS	$ (1,917,856) 1,917,856	$ 779,615 (779,615)
Exchange rate risk	USD/NTD, CNY/NTD, JPY/NTD increase by 3% USD/NTD, CNY/NTD, JPY/NTD decrease by 3%	112,648 (112,648)	(28,014) 28,014
Equity securities price risk	Equity securities prices rise by 15% Equity securities prices fall by 15%	583,514 (583,514)	193,825 (193,825)

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	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, JPY/NTD increase by 3% USD/NTD, CNY/NTD, JPY/NTDdecrease by 3%	121,412 (121,412)	(28,759) 28,759
Equity securities price risk	Equity securities prices rise by 15% Equity securities prices fall by 15%	476,416 (476,416)	198,337 (198,337)

	September 30, 2020
Main Risk	Range of Change	Influence Amount
		Other Equity	Income
Interest risk	Interest rate curve rises 100BPS Interest rate curve falls 100BPS	$ (2,191,464) 2,191,464	$ 632,419 (632,419)
Exchange rate risk	USD/NTD, CNY/NTD, JPY/NTD increase by 3% USD/NTD, CNY/NTD, JPY/NTD decrease by 3%	90,243 (90,243)	(23,689) 23,689
Equity securities price risk	Equity securities prices rise by 15% Equity securities prices fall by 15%	411,015 (411,015)	152,347 (152,347)

2) Credit risk

a) Defining credit risk

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

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 September 30, 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 26%, 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.

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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 initial recognition

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

Quantitative indicators

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

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

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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

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.

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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:

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.
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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 Group’s continued operations.

Measurement of expected credit losses

In order to evaluate expected credit losses, the Group takes into consideration the debtor’s probability of default (PD) within the next 12 months, which includes the loss given default (LGD), the results are then multiplied by the exposure at default (EAD), while also considering the effect of time value of money to calculate the expected credit losses during the duration of 12 months.
Comparing the risk of default on the debt instrument with the default risk at the time of initial recognition, and considering the reasonable and corroborative information for a significant increase in credit risk since the initial recognition, to determine whether the financial instrument’s credit risk has increased significantly since the initial recognition.
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.
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- 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. Collateral

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 collateral. To enforce the rights to collateral, the Group manages and assesses the collateral according to the procedures adopted in determining the scope of collateralization and valuation of collateral.

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 collateral 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 collateral when option contracts are under resell agreement.
iii) Performance bond (loss on investment position): Asking for collateral when loss on investment position exceeds the limit of approved market value.

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:

September 30, 2021

			Allowance for
	Total Book		Impairment	Total Value of		Fair Value of
		Value	Loss		Exposure	Collateral
Financial assets that
were impaired
Notes discounted
and loans	$	7,449,193	$ (1,718,195)	$	5,730,998	$ 5,730,998
Receivables		263,366	(176,198)		87,168	87,168
						(Continued)

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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 September 30, 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 $ 91,540 7,599 32,000 $ 7,843,698 Total Book Value $ 8,410,617 313,418 93,398 7,668 42,651 $ 8,867,752 Total Book Value $ 9,913,123 330,459 92,708 7,904 27,930 $ 10,372,124	Allowance for Impairment Loss Total Value of Exposure $ (34,488) $ 57,052 (7,599) - (1,869) 30,131 $ (1,938,349) $ 5,905,349 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 Allowance for Impairment Loss Total Value of Exposure $ (2,307,958) $ 7,605,165 (163,410) 167,049 (35,889) 56,819 (7,904) - (1,672) 26,258 $ (2,516,833) $ 7,855,291	Fair Value of Collateral $ 39,124 - - $ 5,857,290 Fair Value of Collateral $ 6,554,462 135,350 38,599 - - $ 6,728,411 Fair Value of Collateral $ 7,605,165 135,222 38,599 - - $ 7,778,986

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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:

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2021		2020		2020
Irrevocable loan commitments	$	9,301,217	$	9,034,662	$	9,106,381
Credit card commitments		13,600,717		12,799,065		12,670,498
Guarantee receivables		26,703,920		22,879,091		19,536,341
Letters of credit		4,418,696		3,430,243		3,301,684

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.

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f) Credit risk concentration of the Group

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

Counterparty Private enterprise Natural person Government agencies Others Credit Risk Profile by Group or Industry Natural person Manufacturing Commercial Real estate and leasing Construction industry Servicing Finance and insurance Transportation warehousing and information communication Others Credit Risk Profile by Region Domestic Asia North America Others	September 30, 2021 $ 267,118,751 241,120,576 1,000,000 2,288,961 $ 511,528,288 September 30, 2021 $ 241,120,576 80,517,778 53,515,343 68,501,284 21,604,370 11,123,020 18,484,887 8,666,159 7,994,871 $ 511,528,288 September 30, 2021 $ 479,530,396 19,233,917 9,838,085 2,925,890 $ 511,528,288	December 31, 2020 $ 258,337,959 233,179,736 2,000,000 2,115,584 $ 495,633,279 December 31, 2020 $ 233,179,736 79,457,394 55,547,537 64,886,449 18,197,580 11,949,359 16,104,068 8,304,507 8,006,649 $ 495,633,279 December 31, 2020 $ 464,495,184 18,134,544 9,234,010 3,769,541 $ 495,633,279	September 30, 2020 $ 255,884,008 226,906,651 1,000,000 2,059,878 $ 485,850,537 September 30, 2020 $ 226,906,651 82,354,489 55,043,242 63,440,783 15,814,774 11,553,895 14,986,604 8,333,372 7,416,727 $ 485,850,537 September 30, 2020 $ 453,079,953 17,973,909 10,967,316 3,829,359 $ 485,850,537

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Credit Risk Profile by Collateral Unsecured Secured Real estate Letter of bank guarantee Chattel Debenture Notes receivable Stocks Others	September 30, 2021 $ 80,977,080 378,120,911 18,040,189 6,592,855 16,053,921 1,875,362 5,478,714 4,389,256 $ 511,528,288	December 31, 2020 $ 73,988,829 373,358,179 17,302,660 6,075,503 15,051,165 1,656,269 4,634,756 3,565,918 $ 495,633,279	September 30, 2020 $ 75,212,507 365,589,699 17,190,574 5,893,695 13,324,198 1,574,156 3,983,325 3,082,383 $ 485,850,537

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

September 30, 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 $ 223,536,946 227,024,088 29,989 450,591,023 (1,416,512 ) - $ 449,174,511		Stage 2 Lifetime ECL $ 4,202,738 10,560,470 564 14,763,772 (749,731 ) - $ 14,014,041		Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ 4,626,121 $ - 2,822,958 - 114 - 7,449,193 - (1,718,195 ) - - (2,487,797) $ 5,730,998 $ (2,487,797)	Total $ 232,365,805 240,407,516 30,667 472,803,988 (3,884,438 ) (2,487,797 ) $ 466,431,753

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Product category Corporate loans Consumer loans Others Total book value Allowance for doubtful accounts Difference of impairment loss under regulations					Receivables
	Stage 1 12-month ECLs $ 12,188,133 2,279,663 60,969,914 75,437,710 (103,127 ) - $ 75,334,583		Stage 2 Lifetime ECL $ 379,038 17,773 33 396,844 (8,202 ) - $ 388,642		Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ 173,780 $ - 38,604 - 50,982 - 263,366 - (176,198 ) - - (42,487) $ 87,168 $ (42,487)	Total $ 12,740,951 2,336,040 61,020,929 76,097,920 (287,527 ) (42,487) $ 75,767,906

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 $ 7,596,829 1,658,138 9,254,967 (42,488 ) - $ 9,212,479		Stage 2 Lifetime ECL $ 14,250 - 14,250 (308 ) - $ 13,942		Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ 32,000 $ - - - 32,000 - (1,869 ) - - (3,224) $ 30,131 $ (3,224)	Total $ 7,643,079 1,658,138 9,301,217 (44,665 ) (3,224) $ 9,253,328

	Credit Card Commitments	Credit Card Commitments
Stage 1 12-month ECLs $ 13,598,976 13,598,976 (4,947 ) - $ 13,594,029	Difference of Impairment Loss Stage 2 Stage 3 under Lifetime ECL Lifetime ECL Regulations $ 1,741 $ - $ - 1,741 - - (182 ) - - - - (2,254) $ 1,559 $ - $ (2,254) Guarantee Receivables		Total $ 13,600,717 13,600,717 (5,129 ) (2,254) $ 13,593,334

	Stage 2 Lifetime ECL $ 752,507 752,507 (34,044 ) - $ 718,463	Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ 91,540 $ - 91,540 - (34,488 ) - - (37,293) $ 57,052 $ (37,293)	Total $ 26,703,920 26,703,920 (240,670 ) (37,293) $ 26,425,957

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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 $ 4,418,696 4,418,696 (9,712 ) - $ 4,408,984		Stage 2 Lifetime ECL $ - - - - $ -		Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ - $ - - - - - - (3,152) $ - $ (3,152)	Total $ 4,418,696 4,418,696 (9,712 ) (3,152) $ 4,405,832

December 31, 2020

	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

	Difference of Impairment Loss Stage 2 Stage 3 under Lifetime ECL Lifetime ECL Regulations $ 347,443 $ 224,116 $ - 23,982 37,115 - 11 52,187 - 371,436 313,418 - (9,199 ) (174,311 ) - - - (49,220) $ 362,237 $ 139,107 $ (49,220) Irrevocable Loan Commitments		Total $ 10,071,035 2,225,562 61,819,086 74,115,683 (274,822 ) (49,220) $ 73,791,641

	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

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Credit Card Commitments

Product category Consumer loans Total book value Allowance for doubtful accounts Difference of impairment loss under regulations	Stage 1 12-month ECLs $ 12,726,008 12,726,008 (4,730 ) - $ 12,721,278		Stage 2 Lifetime ECL $ 73,057 73,057 (1,856 ) - $ 71,201		Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ - $ - - - - - - (796) $ - $ (796)	Total $ 12,799,065 12,799,065 (6,586 ) (796) $ 12,791,683

	Guarantee Receivables	Guarantee Receivables
Stage 1 12-month ECLs $ 22,707,521 22,707,521 (168,958 ) - $ 22,538,563	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

September 30, 2020

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 $ 221,078,281 210,033,768 19,595 431,131,644 (1,733,823 ) - $ 429,397,821		Stage 2 Lifetime ECL $ 3,133,570 12,991,195 1,355 16,126,120 (912,434 ) - $ 15,213,686		Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ 6,731,177 $ - 3,182,094 - (148) - 9,913,123 (2,307,958 ) - - (1,842,925) $ 7,605,165 $ (1,842,925)	Total $ 230,943,028 226,207,057 20,802 457,170,887 (4,954,215 ) (1,842,925) $ 450,373,747

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Product category Corporate loans Consumer loans Others Total book value Allowance for doubtful accounts Difference of impairment loss under regulations					Receivables
	Stage 1 12-month ECLs $ 9,437,296 1,410,340 52,613,654 63,461,290 (84,588 ) - $ 63,376,702		Stage 2 Lifetime ECL $ 219,814 22,138 32 241,984 (4,587 ) - $ 237,397		Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ 246,483 $ - 32,970 - 51,006 - 330,459 - (163,410 ) - - (34,445) $ 167,049 $ (34,445)	Total $ 9,903,593 1,465,448 52,664,692 64,033,733 (252,585 ) (34,445) $ 63,746,703

	Irrevocable Loan Commitments	Irrevocable Loan Commitments
Stage 1 12-month ECLs $ 7,912,851 1,165,600 9,078,451 (53,279 ) - $ 9,025,172	Difference of Impairment Loss Stage 2 Stage 3 under Lifetime ECL Lifetime ECL Regulations $ - $ 27,930 $ - - - - - 27,930 - - (1,672 ) - - - (4,392) $ - $ 26,258 $ (4,392) Credit Card Commitments		Total $ 7,940,781 1,165,600 9,106,381 (54,951 ) (4,392) $ 9,047,038

	Stage 2 Lifetime ECL $ 60,088 60,088 (1,439 ) - $ 58,649	Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ - $ - - - - - - (1,248) $ - $ (1,248)	Total $ 12,670,498 12,670,498 (6,134 ) (1,248) $ 12,663,116

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 $ 19,387,354 19,387,354 (142,952 ) - $ 19,244,402		Stage 2 Lifetime ECL $ 56,279 56,279 (2,943 ) - $ 53,336		Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ 92,708 $ - 92,708 - (35,889 ) - - (18,179) $ 56,819 $ (18,179)	Total $ 19,536,341 19,536,341 (181,784 ) (18,179) $ 19,336,378

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Letters of Credit

Product category Corporate loans Total book value Allowance for doubtful accounts Difference of impairment loss under regulations	Stage 1 12-month ECLs $ 3,301,684 3,301,684 (9,182 ) - $ 3,292,502		Stage 2 Lifetime ECL $ - - - - $ -		Difference of Impairment Loss Stage 3 under Lifetime ECL Regulations $ - $ - - - - - - (1,452) $ - $ (1,452)	Total $ 3,301,684 3,301,684 (9,182 ) (1,452) $ 3,291,050

	Financial Assets	at FVTOCI
Stage 1 Stage 2 Stage 3 12-month ECLs Lifetime ECL Lifetime ECL Total $ 41,557,306 $ - $ - $ 41,557,306 - - - - 41,557,306 - - 41,557,306 (26,537 ) - - (26,537 ) - - - - $ 41,530,769 $ - $ - $ 41,530,769 Investments in Debt Instruments at Amortized Cost
	Stage 2 Lifetime ECL $ - - - - - - $ -	Stage 3 Lifetime ECL $ - 7,599 - 7,599 (7,599 ) - $ -	Total $ 45,873,405 7,599 62,035,000 107,916,004 (30,603 ) - $ 107,885,401

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

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

September 30, 2021

September 30, 2021
		Financial Assets
	Financial Assets	at Amortized
	at FVTOCI	Cost
Total book value	$ 41,166,485	$ 107,916,004
Loss allowance	(26,537)	(30,603)
Amortized cost	41,139,948	107,885,401
Fair value adjustment	390,821	-
	$ 41,530,769	$ 107,885,401

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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	Total Book Value
				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%-0.42% 100%	$ 41,166,485 - - -	$ 107,908,405 - 7,599 -

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 in 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, September 30, 2021	Credit Rating
	Normal (12-month Expected credit Losses) Abnormal (Lifetime ECL and not Credit Impaired) Default (Lifetime ECL and Credit Impaired) $ 20,708 $ - $ - - - - - - - - - - 7,414 - - (790) - - - - - (795) - - $ 26,537 $ - $ -

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Credit Rating	Credit Rating	Credit Rating	Credit Rating
Normal (12-month Expected credit Losses) Abnormal (Lifetime ECL and not Credit Impaired) Default (Lifetime ECL and Credit Impaired) $ 26,472 $ - $ 7,668 - - - - - - - - - 1,199 - - (3,716) - - - - - (951) - (69) $ 23,004 $ - $ 7,599 Financial Assets at FVTOCI

	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.

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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	Total Book Value
				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 its loss allowance summarized by credit risk rating is as follows:

Financial assets at FVTOCI Balance, January 1, 2020 Changes credit rating Normal turned to abnormal Abnormal turned to default Default turned to write off Purchase of new debt instruments Disposal Model/risk parameter change Exchange rate and other changes Loss allowance, December 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 $ - $ - - - - - - - - - - 8,900 - - (4,556) - - - - - 959 - - $ 20,708 $ - $ -

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Financial assets at amortized cost Balance, January 1, 2020 Changes credit rating Normal turned to abnormal Abnormal turned to default Default turned to write off Purchase of new debt instruments Disposal Model/risk parameter change Exchange rate and other changes Loss allowance, December 31, 2020 September 30, 2020	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 - - - - - - - - - 1,777 - - (2,178) - (9,136) - - - 2,688 - (673) $ 26,472 $ - $ 7,668

	Financial Assets	at FVTOCI
Stage 1 Stage 2 Stage 3 12-month ECLs Lifetime ECL Lifetime ECL Total $ 36,234,868 $ - $ - $ 36,234,868 - - - - 36,234,868 - - 36,234,868 (19,445 ) - - (19,445 ) - - - - $ 36,215,423 $ - $ - $ 36,215,423 Investments in Debt Instruments at Amortized Cost
	Stage 2 Lifetime ECL $ - - - - - - $ -	Stage 3 Lifetime ECL $ - 7,904 - 7,904 (7,904 ) - $ -	Total $ 49,228,781 7,904 64,070,000 113,306,685 (34,462 ) - $ 113,272,223

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.

90 -

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

September 30, 2020

September 30, 2020
		Financial Assets
	Financial Assets	at Amortized
	at FVTOCI	Cost
Total book value	$ 35,790,659	$ 113,306,685
Loss allowance	(19,445)	(34,462)
Amortized cost	35,771,214	113,272,223
Fair value adjustment	444,209	-
	$ 36,215,423	$ 113,272,223

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	Total Book Value
				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%-0.74% 100%	$ 35,790,659 - - -	$ 113,298,781 - 7,904 -

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 in 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, September 30, 2020	Credit Rating
	Normal (12-month Expected credit Losses) Abnormal (Lifetime ECL and not Credit Impaired) Default (Lifetime ECL and Credit Impaired) $ 15,405 $ - $ - - - - - - - - - - 7,840 - - (4,247) - - - - - 447 - - $ 19,445 $ - $ -

91 -

Financial assets at amortized cost Balance, January 1, 2020 Change in 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, September 30, 2020	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 - - - - - - - - - 1,665 - - (2,068) - (9,136) - - - 2,776 - (437) $ 26,558 $ - $ 7,904

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.

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.

92 -

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.

September 30, 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 the Central Bank and other banks Securities sold under repurchase agreements Payables Deposits and remittances Bank debentures Lease liabilities Other items ofcashoutflow on maturity	$ 5,100,013 766,889 804,355 5,228,123 62,277,326 - 22,556 1,647,344	$ 164,379 1,794,667 400,952 685,005 80,471,346 256,121 28,595 916,997	$ - 2,346,528 - 1,261,453 74,647,649 - 42,499 230,067	$ 1,467 518,300 - 133,727 132,226,310 26,324 81,813 192,085	$ - 4,738,735 - 368,156 296,834,217 11,500,000 823,064 387,077	$ 5,265,859 10,165,119 1,205,307 7,676,464 646,456,848 11,782,445 998,527 3,373,570

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 the 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

September 30, 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 the Central Bank and other banks Securities sold under repurchase agreements Payables Deposits and remittances Bank debentures Lease liabilities Other items ofcashoutflow on maturity	$ 6,700,013 1,208,449 702,741 5,003,607 57,012,820 - 23,116 1,140,003	$ 164,379 1,475,651 2,523,603 507,507 85,867,500 273,547 46,205 570,790	$ 158,420 1,432,340 - 1,074,504 76,781,998 - 68,465 53,807	$ 3,295 1,982,178 - 268,689 134,837,808 26,324 133,509 165,975	$ - 1,639,467 - 342,569 263,048,951 11,500,000 925,466 327,856	$ 7,026,107 7,738,085 3,226,344 7,196,876 617,549,077 11,799,871 1,196,761 2,258,431

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:

September 30, 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	$ 42,324	$ 69,089	$ 51,673	$ 53,373	$ -	$ 216,459
Total	$ 42,324	$ 69,089	$ 51,673	$ 53,373	$ -	$ 216,459

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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	$ 116,105	$ -	$ 229,073
Total	$ 24,773	$ 44,804	$ 43,391	$ 116,105	$ -	$ 229,073

September 30, 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	$ 8,600	$ 39,220	$ 58,272	$ 71,061	$ -	$ 177,153
Total	$ 8,600	$ 39,220	$ 58,272	$ 71,061	$ -	$ 177,153

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:

September 30, 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	$ 7,374,279 7,329,694	$ 3,558,863 3,479,749	$ 1,599,908 1,580,926	$ 2,779,144 2,737,664	$ - -	$ 15,312,194 15,128,033
Total outflows Total inflows	7,374,279 7,329,694	3,558,863 3,479,749	1,599,908 1,580,926	2,779,144 2,737,664	- -	15,312,194 15,128,033
Netflows	$ (44,585 )	$ (79,114)	$ (18,982)	$ (41,480 )	$ -	$ (184,161)

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)

September 30, 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	$ 3,417,614 3,368,291	$ 703,498 691,043	$ 1,888,508 1,861,221	$ 4,912,127 4,795,026	$ - -	$ 10,921,747 10,715,581
Total outflows Total inflows	3,417,614 3,368,291	703,498 691,043	1,888,508 1,861,221	4,912,127 4,795,026	- -	10,921,747 10,715,581
Netflows	$ (49,323 )	$ (12,455 )	$ (27,287)	$ (117,101)	$ -	$ (206,166 )

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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.

September 30, 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	$ 7,022,869 1,269,483 5,058,414 958,889	$ 18,727,216 2,944,942 8,408,200 155,012	$ 29,546,055 198,106 1,768,795 14,947	$ 60,846,159 6,165 3,163,233 31,058	$ 43,266,986 - 8,305,278 -	$ 159,409,285 4,418,696 26,703,920 1,159,906
Total	$ 14,309,655	$ 30,235,370	$ 31,527,903	$ 64,046,615	$ 51,572,264	$191,691,807

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

September 30, 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	$ 8,230,094 870,656 4,859,090 1,691,511	$ 21,941,967 2,246,173 6,464,450 399,997	$ 26,870,445 117,813 881,101 -	$ 64,407,440 67,042 1,903,381 34,079	$ 33,500,234 - 5,428,319 -	$ 154,950,180 3,301,684 19,536,341 2,125,587
Total	$ 15,651,351	$ 31,052,587	$ 27,869,359	$ 66,411,942	$ 38,928,553	$179,913,792

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.

40. TRANSFERS OF FINANCIAL ASSETS

Transferred Financial Assets That Do Not Qualify for Derecognition

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

	September 30, 2021	September 30, 2021	September 30, 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	$1,212,277	$1,204,989	$1,244,208	$1,204,989	$ 39,219

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	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

	September 30, 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	$ 3,264,349	$ 3,224,876	$ 3,372,773	$ 3,224,876	$ 147,897

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.

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

September 30, 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 resell agreements$ 13,298,572 $ - $ 13,298,572 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$ 1,204,989 $ - $ 1,204,989	Related Amounts Not Offset in the Balance Sheets Financial Instruments Cash Collateral Received $ 13,298,572 $ - Related Amounts Not Offset in the Balance Sheets Financial Instruments Cash Collateral Pledged $ 1,204,989 $ -	Net Amount $ -
		Net Amount $ -

96 -

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 resell 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 September 30, 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 resell agreements$ 12,217,335 $ - $ 12,217,335 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$ 3,224,876 $ - $ 3,224,876	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 $ 12,217,335 $ - Related Amounts Not Offset in the Balance Sheets Financial Instruments Cash Collateral Pledged $ 3,224,876 $ -	Net Amount $ -
		Net Amount $ -
		Net Amount $ -
		Net Amount $ -

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42. INFORMATION ABOUT THE BANK

a. Asset quality

Category	Items	Items			September 30, 2021					September 30, 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		$ 474,453	$151,454,394	0.31%	$ 1,514,591	319.23%	$ 616,594	$151,318,128	0.41%	$ 1,522,466	246.92%
	Unsecured		204,393	80,886,231	0.25%	2,340,631	1,145.16%	403,927	79,613,169	0.51%	2,955,542	731.70%
Consumer loans	Mortgage (Note4)		160,627	61,513,280	0.26%	960,434	597.93%	134,915	56,162,112	0.24%	894,928	663.33%
	Cashcard		-	5	-	1	-	-	18	-	2	-
	Microcredit(Note5)		2,046	930,818	0.22%	61,481	3,004.94%	2,197	851,481	0.26%	82,107	3,737.23%
	Other (Note 6)	Secured	256,562	150,535,762	0.17%	1,128,789	439.97%	362,018	146,939,750	0.25%	934,540	258.15%
		Unsecured	38,409	26,126,065	0.15%	365,729	952.20%	58,981	21,249,074	0.28%	407,157	690.32%
Loans			1,136,490	471,446,555	0.24%	6,371,656	560.64%	1,578,632	456,133,732	0.35%	6,796,742	430.55%

Category		Items			September 30, 2021					September 30, 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			$ 2,617	$ 713,061	0.37%	$ 25,868	988.46%	$ 2,216	$ 699,182	0.32%	$ 25,054	1,130.60%
Accounts rec	eivable without reco	urse(Note 7)	-	308,326	-	4,659	-	-	145,957	-	5,914	-

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Non-reportable overdue loans and receivables

	September 30, 2021	September 30, 2021	September 30, 2020	September 30, 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)	$ 1,277	$ 708	$ 1,697	$ 884
Amount received from performance of debt negotiation program (Note 9)	10,417	18,205	8,026	18,852
Total	11,694	18,913	9,723	19,736

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).
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b. Concentration of credit extensions

(In Thousands of New Taiwan Dollars, %)

Year	September 30, 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	$ 4,401,401	7.31
2	Group B 016700 real estate development activities	2,599,114	4.32
3	Group C 016700 real estate development activities	2,326,951	3.87
4	Group D 016700 real estate development activities	2,176,191	3.62
5	Group E 012411 smelting and refining of iron and steel	2,136,396	3.55
6	Group F 016700 real estate development activities	1,906,450	3.17
7	Group G 014290 civil engineering construction	1,774,780	2.95
8	Group H 010892 manufacture of macaroni, noodles, couscous and similar farinaceous products	1,749,577	2.91
9	Group I 012630 bare printed circuit boardsmanufacturing	1,729,113	2.87
10	Group J 013822 hazardousindustrialwaste treatment	1,470,594	2.44

100 -

Year	September 30, 2020
Top 10 Rank (Note 1)	Group (Note 2)	Total Credit (Note 3)	Percentage of Net Worth (%)
1	Group A 016700 real estate development activities	$ 4,527,227	8.44
2	Group C 016811 real estate activities for sale and rental with own or leased property	2,494,650	4.65
3	Group H 010892 manufacture of macaroni, noodles, couscous and similar farinaceous products	2,485,776	4.63
4	Group B 016700 real estate development activities	2,446,000	4.56
5	Group E 012411 smelting and refining of iron and steel	2,321,020	4.33
6	Group D 016700 real estate development activities	2,257,493	4.21
7	Group K 015500 accommodation	2,085,229	3.89
8	Group L 016700realestate development activities	1,937,777	3.61
9	Group M 012699 manufacture of other electronic parts and components not elsewhere classified	1,762,563	3.29
10	Group J 013822 hazardous industrial waste treatment	1,371,591	2.56

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.
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c. Interest rate sensitivity information

Interest Rate Sensitivity September 30, 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	$ 507,397,071	$ 7,622,117	$ 8,970,652	$ 96,731,089	$ 620,720,929
Interest-sensitive liabilities	160,968,499	344,900,804	78,593,222	7,449,928	591,912,453
Interest sensitivity gap	346,428,572	(337,278,687)	(69,622,570)	89,281,161	28,808,476
Net equity					60,191,978
Ratio of interest-sensitive assets toliabilities					104.87%
Ratio of interest sensitivity gap to net equity					47.86%

September 30, 2020

(In Thousands of New Taiwan Dollars, %)	(In Thousands of New Taiwan Dollars, %)	(In Thousands of New Taiwan Dollars, %)	(In Thousands of New Taiwan Dollars, %)	(In Thousands of New Taiwan Dollars, %)	(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	$476,826,981	$ 6,888,166	$16,697,247	$ 92,423,790	$ 592,836,184
Interest-sensitive liabilities	170,617,022	308,510,557	83,448,089	6,124,566	568,700,234
Interest sensitivity gap	306,209,959	(301,622,391)	(66,750,842)	86,299,224	24,135,950
Net equity					53,637,439
Ratio of interest-sensitive assets to liabilities					104.24%
Ratio of interest sensitivity gap tonet equity					45.00%

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 September 30, 2021 (In Thousands of U.S. Dollars, %)	Interest Rate Sensitivity September 30, 2021 (In Thousands of U.S. Dollars, %)	Interest Rate Sensitivity September 30, 2021 (In Thousands of U.S. Dollars, %)	Interest Rate Sensitivity September 30, 2021 (In Thousands of U.S. Dollars, %)	Interest Rate Sensitivity September 30, 2021 (In Thousands of U.S. Dollars, %)	Interest Rate Sensitivity September 30, 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	$ 1,441,415	$ 346,146	$ 74,625	$ 284,283	$ 2,146,469
Interest-sensitive liabilities	590,196	1,329,577	257,632	-	2,177,405
Interest sensitivity gap	851,219	(983,431)	(183,007)	284,283	(30,936)
Net equity					2,161,680
Ratio of interest-sensitive assets toliabilities					98.58%
Ratio of interest sensitivity gap to net equity					(1.43%)

102 -

September 30, 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	$ 1,249,488	$ 286,685	$ 106,622	$ 332,981	$ 1,975,776
Interest-sensitive liabilities	604,700	1,139,739	272,447	-	2,016,886
Interest sensitivity gap	644,788	(853,054)	(165,825)	332,981	(41,110)
Net equity					1,851,802
Ratio of interest-sensitive assets toliabilities					97.96%
Ratio of interest sensitivity gap to net equity					(2.22%)

Note 1: The above amounts included only the U.S. dollar amounts held by the head office, domestic branches, OBU and overseas branches of the Bank and excluded contingent assets and contingent liabilities.
Note 2: Interest rate-sensitive assets and liabilities mean the revenues or costs of interest-earning assets and interest-bearing liabilities affected by interest rate changes.
Note 3: Interest rate sensitivity gap = Interest rate-sensitive assets - Interest rate-sensitive liabilities.
Note 4: Ratio of interest rate-sensitive assets to liabilities = Interest rate-sensitive assets ÷ Interest rate-sensitive liabilities (in U.S. dollars)
d. Profitability

Unit: %

	Items	September 30, 2021	September 30, 2020
Return on total assets	Pretax	0.56	0.49
	After tax	0.49	0.43
Return on net equity	Pretax	6.96	6.49
	After tax	6.07	5.60
Profitmargin		39.06	37.52

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 nine months ended September 30, 2021 and 2020.
103 -
e. Maturity analysis of assets and liabilities

Maturity Analysis of Assets and Liabilities September 30, 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	$ 666,271,559	$ 79,317,949	$ 60,437,515	$ 37,425,496	$ 53,225,458	$100,930,604	$ 334,934,537
Major capital outflow on maturity	796,375,341	33,350,117	39,707,489	88,315,367	107,859,485	163,635,865	363,507,018
Gap	(130,103,782)	45,967,832	20,730,026	(50,889,871)	(54,634,027)	(62,705,261)	(28,572,481)

September 30, 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
Major capital inflow on maturity	$ 638,644,207	$ 72,593,092	$ 59,952,728	$ 34,824,292	$ 49,897,434	$103,259,151	$ 318,117,510
Major capital outflow on maturity	759,105,962	28,899,317	40,443,421	95,276,487	106,138,944	164,673,802	323,673,991
Gap	(120,461,755 )	43,693,775	19,509,307	(60,452,195 )	(56,241,510 )	(61,414,651)	(5,556,481)

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 September 30, 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	$ 2,687,549	$ 581,865	$ 392,191	$ 400,289	$ 256,727	$ 1,056,477
Majorcapital outflow on maturity	3,222,616	583,104	873,508	515,303	905,973	344,728
Gap	(535,067 )	(1,239 )	(481,317 )	(115,014 )	(649,246 )	711,749

September 30, 2020

(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	$ 2,399,418	$ 399,036	$ 238,005	$ 241,381	$ 314,630	$ 1,206,366
Majorcapital outflow on maturity	3,031,726	515,529	762,724	559,752	919,787	273,934
Gap	(632,308 )	(116,493 )	(524,719 )	(318,371 )	(605,157 )	932,432

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.
104 -

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

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

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

1) The term “Net Tier 1 Capital” shall mean the aggregate amount of net common Equity Tier 1 and net additional Tier 1 Capital.
a) Common equity Tier 1 capital consists of the common shares and additional paid-in capital in excess of par - common shares, the capital collected in advance, the capital reserves, the statutory surplus reserves, the special reserves, the accumulated profit or loss, the non-controlling interests and other items of interest.
b) Additional Tier 1 capital consists of non-cumulative perpetual preferred shares and its capital share premium, the non-cumulative perpetual subordinated debts, the non-cumulative perpetual preferred shares and its capital share premium, and the non-cumulative perpetual subordinated debts which are issued by banks’ subsidiaries, and are not directly or indirectly held by banks.
2) Tier 2 capital

Tier 2 capital consists of cumulative perpetual preferred shares and its capital share premium, the cumulative perpetual subordinated debts, the convertible subordinated debts, the long-term subordinated debts, the non-perpetual preferred shares and its capital share premium, when applying International Financial Reporting Standards in real estate and using the fair value method or the re-estimated value method as the deemed cost for the first time, the difference in amount between the deemed cost and the 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	September 30, 2021
	USD CNY JPY AUD EUR Others Total $ 6,875,003 $ 688,402 $ 752,313 $ 101,641 $ 253,378 $ 423,421 $ 9,094,158 1,244,672 86,080 - 160,640 - 212,060 1,703,452 1,160,030 - - - - 5,371 1,165,401 1,395,143 1,926,825 - 120,729 - - 3,442,697 (Continued)

105 -

Notes discounted and loans
Receivables
Financial assets at
amortized cost
Other assets
Financial liabilities in
foreign currencies
Funds borrowed from the
Central Bank and other
banks
Deposits and remittances
Financial liabilities at fair
value through profit or
loss
Other financial liabilities
Payables
Lease liabilities
Provisions
Other liabilities
New Taiwan dollars
exchange rate

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 the
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

September 30, 2021

USD
CNY
JPY
AUD
EUR
Others
Total
$ 31,287,283 $ 1,330,218 $ 813,033 $ 75,299 $ 1,009,463 $ 849,988 $ 35,365,284
777,341
3,390,842
249,234
6,610
19,105
18,718
4,461,850
18,429,789
3,441,595
-
1,063,956
-
829,539
23,764,879
367,423
-
-
-
-
210
367,633
-
2,709,505
-
-
-
-
2,709,505
60,567,058
4,272,051
821,102
2,032,792
702,191
1,762,950
70,158,144
278,283
12,508
-
-
112
5,371
296,274
33,136
-
-
-
-
124,746
157,882
580,151
119,763
247,567
1,404
13,819
4,920
967,624
-
37,051
-
-
-
4,778
41,829
22,653
-
-
-
-
-
22,653
228,896
24,470
2,908
-
9,055
-
265,329
27.85
4.30
0.25
20.08
32.32
(Concluded)
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

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

September 30, 2020

USD
CNY
JPY
AUD
EUR
Others
Total
$ 2,623,952 $ 1,125,747 $ 400,317 $ 97,943 $ 187,393 $ 330,636 $ 4,765,988
75,309
233,750
-
206,100
-
418,462
933,621
1,076,054
2,497
-
-
3,984
629
1,083,164
1,468,509
1,103,569
-
125,137
-
-
2,697,215

33,126,642
1,035,010
400,431
77,288
1,116,346
1,086,655
36,842,372
1,064,221
2,722,156
256,451
2,898
51,287
29,946
4,126,959
19,403,813
3,783,751
-
1,360,074
-
836,646
25,384,284
269,820
-
-
-
-
-
269,820
-
2,556,599
-
-
-
-
2,556,599
56,335,926
3,547,870
690,984
2,230,370
548,533
1,779,318
65,133,001
226,033
-
-
-
4,278
629
230,940
-
-
-
-
-
126,614
126,614
560,469
141,659
185,977
2,411
91,727
14,189
996,432
-
43,212
-
-
-
6,167
49,379
2,021,821
-
-
-
-
-
2,021,821
22,377
-
-
-
-
-
22,377
74,891
8,277
1,816
-
6,880
-
91,864
28.97
4.25
0.27
20.61
33.96

45. CASH FLOW INFORMATION

Changes in Liabilities Arising from Financing Activities

For the nine months ended September 30, 2021

Funds borrowed from the Central Bank and other banks Commercial papers Bank debentures Guarantee deposits received Lease liabilities	Opening Balance $ 8,510,652 1,588,567 11,500,000 567,148 1,006,781 $ 23,173,148	Cash Inflows (Outflows) $ 1,654,467 919,029 - 140,944 (178,348) $ 2,536,092		Non-cash Changes New Leases End of Lease Term $ - $ - - - - - - - 230,244 (181,073) $ 230,244 $ (181,073)	Closing Balance $ 10,165,119 2,507,596 11,500,000 708,092 877,604 $ 25,758,411
				New Leases $ - - - - 230,244 $ 230,244

For the nine months ended September 30, 2020

Funds borrowed from the Central Bank and other banks Commercial papers Bank debentures Guarantee deposits received Lease liabilities	Opening Balance $ 6,092,040 1,174,083 14,000,000 582,064 895,285 $ 22,743,472	Cash Inflows (Outflows) $ 1,646,045 384,467 (2,500,000 ) (8,797 ) (142,198) $ (620,483)		Non-cash Changes New Leases End of Lease Term $ - $ - - - - - - - 362,325 (53,302) $ 362,325 $ (53,302)	Closing Balance $ 7,738,085 1,558,550 11,500,000 573,267 1,062,110 $ 22,432,012
				New Leases $ - - - - 362,325 $ 362,325

107 -

46. OTHER SIGNIFICANT EVENTS

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

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 nine months ended September 30, 2021 Interest revenue Interest expense Net revenue Net income and loss other than interest Service fee income Gain on financial instruments Others Bad-debt expenses and provision for losses on commitments and guarantees Operating expenses Income before income tax For the nine months ended September 30, 2020 Interest revenue Interest expense Net revenue Net income and loss other than interest Service fee income Gain on financial instruments Others Bad-debt expenses and provision for losses on commitments and guarantees Operating expenses Income before income tax	Northern Area $ 2,276,750 (943,101) 1,333,649 435,627 7,709 12,043 60,821 (615,189) $ 1,234,660 $ 2,413,410 (1,109,397) 1,304,013 343,339 14,336 10,933 (323,378 ) (597,749) $ 751,494	Central Area $ 3,339,178 (973,238) 2,365,940 701,091 49,193 18,054 156,581 (1,091,383) $ 2,199,476 $ 3,506,123 (1,068,466) 2,437,657 613,147 44,079 17,506 (1,823 ) (1,083,810) $ 2,026,756	Southern Area $ 2,087,143 (598,150) 1,488,993 453,094 13,156 14,929 (584,689 ) (752,723 ) $ 632,760 $ 2,158,542 (704,777) 1,453,765 377,156 16,051 14,805 35,094 (742,301) $ 1,154,570	OBU $ 974,245 (381,274) 592,971 90,372 9,052 50,035 10,632 - $ 753,062 $ 1,194,020 (617,645) 576,375 79,555 50,660 (21,095 ) (18,789 ) - $ 666,706	Overseas Branch $ 62,204 (14,872) 47,332 4,684 - 304 (5,903 ) (24,849) $ 21,568 $ 60,734 (17,922) 42,812 5,155 - 12,874 (10,485 ) (21,439) $ 28,917	Head Office and Others Adjustment and Write-off $ 2,227,713 $ (1,808,548 ) (1,145,255) 1,808,548 1,082,458 - 801,909 - 422,771 - 38,818 (56,276 ) (333,562 ) - (2,687,340) 56,276 $ (674,946) $ - $ 1,801,785 $ (1,945,044 ) (1,465,919) 1,945,044 335,866 - 716,518 - (48,539 ) - 174,790 (56,480 ) (79,230 ) - (2,254,777) 56,480 $ (1,155,372) $ -	Total $ 9,158,685 (2,247,342) 6,911,343 2,486,777 501,881 77,907 (696,120 ) (5,115,208) $ 4,166,580 $ 9,189,570 (3,039,082) 6,150,488 2,134,870 76,587 153,333 (398,611 ) (4,643,596) $ 3,473,071

108 -

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

b. Segment assets

Segment Assets Northern area Central area Southern area OBU Overseas branch Head office and others	September 30, 2021 $ 138,510,094 199,730,037 86,922,219 55,395,907 2,975,775 264,766,113 $ 748,300,145	December 31, 2020 $ 139,108,081 196,947,682 99,754,054 56,666,372 2,615,256 241,678,576 $ 736,770,021	September 30, 2020 $ 137,674,315 194,164,981 99,666,764 58,188,426 2,481,167 221,655,406 $ 713,831,059

c. Revenue from major products and services

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

d. Geographical information

Location Taiwan Asia America		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 9,765,879 211,307 722 $ 9,977,908	2020 $ 8,359,392 153,469 2,417 $ 8,515,278

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.

109 -

48. ADDITIONAL DISCLOSURES

a. Information about significant transactions and investees:

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

No.	Item	Note
1	Marketable securities acquired or disposed of at costs or prices of at least NT$300 million or 10% of the paid-in capital.	None
2	Acquisition of individual real estate at costs of at least NT$300 million or 10% of the paid-in capital.	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% of the paid-in capital.	None
6	Sale of nonperformingloans.	None
7	Financial asset securitization and real estate securitization.	None
8	Other significant transactions which may affect the decisions of users of financial reports.	None

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

No.	Item	Note
1	Related information and proportionate share in investees.	Exempt from disclosure in the reviewreport
2	Financing provided.	Table 1
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$300 million or 10% of the paid-in capital	None
6	Derivative transactions.	Note 8
7	Other significant transactions which may affect the decisions of users of financial reports.	None

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

c. Investments 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).
110 -

TABLE 1

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No. (Note 1)	Lender	Borrower	Financial Statement Account (Note 2)	Related Party	Highest Balance for the Period (Note 3)	Ending Balance (Note 8)	Actual Amount Borrowed	Interest Rate (%)	Nature of Financing (Note 4)	Business Transaction Amount (Note 5)	Reasons for Short-term Financing (Note 6)	Allowance for Impairment Loss	Collateral	Collateral	Financing Limit for Each Borrower (Note 7)	Aggregate Financing Limit (Note 7)	Note
													Item	Value
1	Taichung Bank Leasing Corporation Limited	Wan Ku Fu Co., Ltd. Da Fang Skill Color Marketing Consultant Co., Ltd. Qiyi Intergrated Marketing Co., Ltd. TCCBL Co., Ltd. (B.V.I.)	Other receivables Other receivables Other receivables Other receivables - related party	Not related Not related Not related Related	$ 121,829 178,152 180,000 9,534	$ 55,149 161,029 180,000 9,305	$ 55,149 161,029 180,000 9,305	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	$ 551 1,610 1,800 93	Real estate Real estate Real estate None	$ 86,610 180,000 326,301 -	$ 200,230 200,230 200,230 200,230	$ 800,920 800,920 800,920 800,920	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	2,785	80,461	321,843	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 NINE MONTHS ENDED SEPTEMBER 30, 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 Amount Borrowed	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	$ 12,013,806	$ 632,228	$ 542,978	$ -	$ -	27.12	$ 20,023,010	-	-	-
2	Taichung Bank Leasing Corporation Limited	Taichung Bank Financial Leasing (Suzhou) Co., Ltd.	Indirect shareholding of 100% of subsidiary	12,013,806	2,491,034	2,480,750	1,679,673	-	123.89	20,023,010	-	-	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 SEPTEMBER 30, 2021

(In Thousands of New Taiwan Dollars or Shares)

Name of Holding Company	Type and Name of Marketable Securities	Relationship	Financial Statement Account		September 30, 2021	September 30, 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 Associate Sub-subsidiary Sub-subsidiary Sub-subsidiary	Investment accounted for using the equity method Investment accounted for using the equity method Investment accounted for using the equity method Investment accounted for using the equity method Investment accounted for using the equity method Investment accounted for using the equity method Investment accounted for using the equity method	198,964 128,600 146,748 12,000 30,000 - 21,000	$ 2,002,301 1,844,826 1,687,728 167,360 804,607 759,860 210,719	100 100 100 38 100 100 100	$ 2,002,301 1,844,826 1,687,728 167,360 804,607 759,860 210,719

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

INVESTMENTS IN MAINLAND CHINA FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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 September 30, 2021	% Ownership of Direct or Indirect Investment	Investment Gain	Carrying Value as of September 30, 2021	Accumulated Inward Remittance of Earnings as of September 30, 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	$ 25,625 (CNY 5,928 thousand)	$ 759,860 (CNY 176,547 thousand)	$ -

Accumulated Investment in Mainland China as of September 30, 2021		Investment Amount Approved by the Investment Commission, MOEA		Maximum Investment Allowable (Note 2)
$893,373		$893,373		$1,201,381

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$4.30, CNY1=NT$4.32).

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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 NINE MONTHS ENDED SEPTEMBER 30, 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	September 30, 2021 Taichung Commercial Bank Co., Ltd.	Taichung Insurance Brokers Co., Ltd. Taichung Insurance Brokers Co., Ltd. Taichung Insurance Brokers Co., Ltd. Taichung Commercial Bank Securities Co., Ltd. Taichung Commercial Bank Securities Co., Ltd. Taichung Bank Leasing Corporation Limited. Taichung Bank Venture Capital Co., Ltd.	a a a a a a a	Deposits and remittances Service fee income Receivables Deposits and remittances General and administrative Deposits and remittances Deposits and remittances	$ 1,296,842 150,003 16,667 129,786 27,740 94,512 156,934	The terms for the transactions between the company and related parties are similar to those for unrelated parties. The terms for the transactions between the company and related parties are similar to those for unrelated parties. The terms for the transactions between the company and related parties are similar to those for unrelated parties. The terms for the transactions between the company and related parties are similar to those for unrelated parties. The terms for the transactions between the company and related parties are similar to those for unrelated parties. The terms for the transactions between the company and related parties are similar to those for unrelated parties. The terms for the transactions between the company and related parties are similarto thoseforunrelated parties.	- 2 - - - - -
1	Taichung Commercial Bank Securities Co., Ltd.	Taichung Commercial Bank Co., Ltd. Taichung Commercial Bank Co., Ltd.	b b	Right-of-use assets Lease liabilities	17,860 18,090	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)

115 -
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 September 30, 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 nine months ended September 30, 2021 and 2020.
Note 5: Referring to transactions exceeding $10,000 thousand.

(Concluded)

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TABLE 6

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

INFORMATION OF MAJOR SHAREHOLDERS SEPTEMBER 30, 2021

Name of Major Shareholder	Shares	Shares
	Number of Shares	Percentage of Ownership (%)
China Man-Made Fiber Corporation Pan Asia Chemical Corporation	954,600,035 244,797,029	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.
117 -

AI assistant

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

52197_rns_2021-11-29_958006ce-083f-463e-9273-8e8a2c3cb143.pdf

Taichung Commercial Bank Co., Ltd. and Subsidiaries

INDEPENDENT AUDITORS’ REVIEW REPORT

Introduction

Scope of Review

Conclusion

Notice to Readers

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

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

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

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

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

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

TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

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

Effective Date New IFRSs Announced by IASB (Note 1)

Amendments to IAS 1 “Disclosure of Accounting Policies”

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1) Employee benefits

Retirement benefits

- Other long term employee benefits

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

6. CASH AND CASH EQUIVALENTS

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

8. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

9. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

b. Investments in debt instruments at FVTOCI

10. INVESTMENTS IN DEBT INSTRUMENTS AT AMORTIZED COST

11. SECURITIES PURCHASED UNDER RESELL AGREEMENTS

12. RECEIVABLES, NET

13. NOTES DISCOUNTED AND LOANS, NET

For the nine months ended September 30, 2020

For the nine months ended September 30, 2020

14. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD, NET

15. RESTRICTED ASSETS, NET

16. OTHER FINANCIAL ASSETS, NET

17. PROPERTIES AND EQUIPMENT, NET

18. LEASE ARRANGEMENTS

a. Right-of-use assets

b. Lease liabilities

c. Material lease-in activities and terms

d. Other lease information

19. INVESTMENT PROPERTIES, NET

20. INTANGIBLE ASSETS, NET

21. OTHER ASSETS, NET

22. DUE TO THE CENTRAL BANK AND OTHER BANKS

23. FUNDS BORROWED FROM THE CENTRAL BANK AND OTHER BANKS

24. SECURITIES SOLD UNDER REPURCHASE AGREEMENTS

25. PAYABLES

26. DEPOSITS AND REMITTANCES

27. BANK DEBENTURES

4) Period:

28. OTHER FINANCIAL LIABILITIES

29. PROVISIONS

2) Defined benefit plans

4) Other long-term employee benefit liabilities

For the nine months ended September 30, 2021

For the nine months ended September 30, 2020

d. Movements of the loan commitments were as follows:

For the nine months ended September 30, 2021

For the nine months ended September 30, 2020

30. OTHER LIABILITIES

31. EQUITY

b. Capital surplus

32. NET PROFIT FROM CONTINUING OPERATIONS

e. Reversal of (impairment losses) on financial assets

Accrual rate

Amount

j. Depreciation and amortization expenses

k. Other selling and administrative expenses

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