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UBOT Annual Report 2014

Jul 28, 2015

52203_rns_2015-07-28_b84fe25a-ed9e-471b-926f-66b510252e31.pdf

Annual Report

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Stock Code:2838

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Date of Publication: May 2015 This Annual Report may be accessed on the Market Observation Post System (http://newmops.tse.com.tw) and on the Bank’s Website (http://www.ubot.com.tw)

The English version of annual report is a brief translation and is not part of official document of the shareholder’s meeting. The Chinese version shall prevail if there is any difference between these two.

2014 Annual Report

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I-Hsuan Weng
Authorized by Union Culture Foundation
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I. Spokesman

Name: Mr. Herman Tu / Title: Senior Executive Vice President

Tel.: 02-27180001

E-mail: [email protected] Second Spokesman Name: Mr. Yanger Yang / Title: Department Manager Tel.: 02-27180001

E-mail: [email protected]

II. Head Office/Domestic Branch, address, and telephone: Please refer to page 148 ~151.

III. Stock Registration Office

Name: MasterLink Securities Corp. Homepage: http://www.masterlink.com.tw Address: B1, No.35, Ln. 11, Guangfu N. Rd., Taipei City

Tel: (02) 2768-6688

IV. Credit Ratings Institution

Name: Taiwan Ratings Corp. Homepage: http://www.taiwanratings.com.tw Address: 49F, No.7, Hsin-Yi Rd., Sec. 5, Taipei, Taiwan Tel.: (02) 8722-5800

V. CPA for Financial Statement Auditing

Name: Mr. Terence Huang / Mr. Vincent Cheng Company: T N Soong & Co and Deloitte & Touche Homepage: http://www.deloitte.com.tw Address: 12F, No.156, Minsheng E. Rd., Sec. 3, Taipei, Taiwan Tel.: (02) 2545-9988

VI. Offshore marketable securities exchange company and transaction information: None

VII. Homepage: http://www.ubot.com.tw

Table of Contents

Letter to Shareholders ................................................................................................................................... 01 Bank Profile ...................................................................................................................................................... 05 Corporate Governance ................................................................................................................................. 06 1. Organization Structure ....................................................................................................................... 06 2. Information on Directors, Supervisors and Executive Officers ........................................................ 09 3. Execution of Corporate Governance................................................................................................... 43 4. Information on CPA Professional Fees................................................................................................ 67 5. Information on change of CPA............................................................................................................ 68 6. The Chairman, President and Executive Officers in charge of the Bank’s financial or accounting affairs who have, during the past year, served a position in the CPA firm to which or its affiliated enterprises the independent auditor(s) belong to.................................. 68 7. Transfer of Equity and Changes in Equity Used as Collateral by Directors, Supervisors, Managers, and Others Required to Report Equity in accordance with Paragraph 3, Article 25 of the Banking Act. .. ....................................................................................................................... 68 8. Information on Top 10 Shareholders Being the Related Parties......................................................... 72 9. Ownership of Investee Companies .................................................................................................... 74 Fund Raising Status ......................................................................................................................................... 76 1. Capital and Share ............................................................................................................................... 76 2. Issuance of Financial Debentures ...................................................................................................... 81 3. Issuance of Preferred Stock ................................................................................................................ 82 4. The status of Overseas Depository Receipts and Employee Stock Option ....................................... 82 5. Acquisitions or Disposition of Other Financial Institutions................................................................ 82 6. Fund Utilization Plan and Execution Status ...................................................................................... 82 Operational Highlights .................................................................................................................................... 84 1. Business Description .......................................................................................................................... 84 2. Employee Analysis ............................................................................................................................. 94 3. Corporate Responsibility and Ethical Conduct ................................................................................. 96 4. Facilities of Information Technology ................................................................................................. 98 5. Labor Relations .................................................................................................................................. 99 6. Major Contracts .................................................................................................................................. 99 7. Securitization Commodities approved by the competent authority and relevant information launched in accordance with Financial Asset Securitization Act or Real Estate Securitization Act in recent years ........................................................................103 Financial Highlights ..................................................................................................................................... 104 1. Condensed Balance Sheets, Income Statements and Auditors’ Opinions for the most recent five years ................................................................................................................................................. 104 2. Financial Analysis and Capital Adequacy Ratio .............................................................................. 113 3. Supervisors’ Report for the 2014 Financial Statements .................................................................. 127 4. Financial Statements for 2014........................................................................................................... 127 5. Any Financial Difficulties Experienced by the Bank and its Affiliated Enterprises in the Past Year and Current Year up to the Printing Date of the Annual Report, if yes, please narrate the impact upon the Bank’s financial conditions ...................................................... 127 Analysis of the Financial Status and Operating Results & Risk Management ................................... 128 1. Financial Status ................................................................................................................................. 128 2. Results of Operation ......................................................................................................................... 129 3. Cash Flow ...........................................................................................................................................130 4. The Impact of Major Capital Expenditures on the Bank’s Financial & Business Operations for the recent years ................................................................................................................................. 130 5. Reinvestment Policy, the Main Reasons for Profit or Loss, Corrective Action Plan in last year, and

Table of Contents

Investment Plan for the Next Year ................................................................................................... 130 6. Risk Management ............................................................................................................................ 131 7. Contingency Plan ...............................................................................................................................144 8. Other Important Matters ....................................................................................................................144 Affiliate and Special Notes .......................................................................................................................... 145 1. Information on Affiliated Enterprises .............................................................................................. 145 2. Private placement of marketable securities and financial debentures in the past year and current year up to the printing date of the annual report ....................................................... 147 3. Shares of the Bank held or disposed of by subsidiaries in the past year and current year up to the printing date of the annual report .............................................................................. 147 4. Other Necessary Supplements ......................................................................................................... 147 5. Up to the printing date of the annual report, any event which has a material impact on shareholders’ equity or securities prices pursuant to Article 36.2.2 of the Security and Exchange Law ................................................................................................................................. 147 Bank Directory ............................................................................................................................................. 148

Appendix 1: Financial Statements for the Years Ended December 31, 2014 and 2013 and Independent Auditors’ Report ...................................................................................... 152

Letter to Shareholders

1. Results of Operation for 201 4

(1) Domestic and International Financial Environment The global economy recovered in 2014, though the recovery strength was less than the expected, primarily because the performance of main economies varied, among which the performance of the US economy was better, but that of Eurozone and Japan was weak. Therefore, the monetary policies in these main economies varied, which thereby resulted in increase in fluctuation in international financial markets. Recently, the international oil price dropped significantly, the inflation in many countries became sluggish, and the economic prospects remained uncertain. Most of the international organizations modified their global economic growth forecast downward in 2015. Notwithstanding, the forecast was still higher than that in 2014. Backed up by the stable international economic recovery, the economic growth remained mild in Taiwan. Meanwhile, benefited from funding by foreign investment, the TWSE stock rose. This was helpful to raise the investment income of the banking industry. Notwithstanding, upon implementation of the banking industry’s enhanced house loan risk control measures in Taiwan, the centralization of real estate loans declined, and the percentages for the purchase of homes in specific districts and the loans for luxury houses dropped, while the interest rate on house loans increased, which was helpful for the banking industry in Taiwan to well found its operation and promote financial stability.

  • (2) Changes in Bank Organization

The Bank now operates 90 domestic branches with the addition of a new branch in 2014.

  • (3) Business Plan, Results of Operations and Budget Execution Status

Thanks to the dedication of our employees, the Bank is pleased to report outstanding performance across the various areas of business in 2014. With regard to profitability, the Bank reported an after-tax net income of NT$ 3.094 billion for the year ended December 31, 2014, representing a growth of 7.88% against 2013; earnings per share (EPS) was NT$1.26, return on assets (ROA) was 0.67% and return on equity (ROE) was 10.23%; The Bank was able to maintain sound asset quality, reporting an NPL ratio of 0.09% and bad debt coverage ratio of 1102.08%.

For many years now, the Bank has developed its various business based on the strategies of maintaining consistent growth and dedicating to cultivation of local business. On January 19, 2015, Taiwan Ratings Corp awarded our Bank its long- and short-term issuer credit rating for “twA” and “twA-1” respectively, and the outlook on the long-term rating is stable. Overall, the Bank’s operating status, capital and profitability standing and asset quality are well recognized. The Bank also

1

Letter to Shareholders

outperformed the indigenous banks average on several other indicators.

  • (4) Revenue/Expenditure and Profitability

  • For the year ended December 31, 2014, the Bank reported a net interest income of NT$ 6.026 billion, net non-interest income of NT$2.824 billion and net profit of NT$ 8.850 billion, representing an increase of NT$0.371 billion or 4.38% against NT$8.479 billion for the previous year; after adding reversal of bad debts totaling NT$495 million and deducting operating expenses totaling NT$5.669 billion, the before-tax income amounted to NT$3.676 billion for year 2014, which represents an increase of NT$337 million or 10.09% against 2013’s.

2. Credit Rating

redit Rating
Rating Agency Date of
Rating		 Rating Results Outlook
Taiwan Ratings
Corporation		 Jan. 19, 2015 Long-Term:
twA		 Short-Term:
twA-1		 Stable

3. 2015 Business Plan

  • (1) We adopt the market share-oriented strategy, offer competitive innovative services, and expand various business sizes actively. For the purpose of business, we insist on the spirit of local services and establish long-term relations with customers to create the win-win situation for the both sides:

  • Deposit business: Continue upgrading the added functions of deposit accounts to enhance the bank-customer relationship; offer mobile ATM cards and mobile banking accounts to provide depositors with omnibus payment tools; plan various deposit development projects for different groups to secure a higher number of demand deposit accounts and new customers.

  • Corporate banking: Adjust the product pricing strategy to increase profitability; enhance risk management to maintain fair asset quality; develop industrial and commercial corporate banking and give priority to make loans of self-liquidating nature and loans to manufacturing plants based in Taiwan to enhance the financing of the general industries; take advantage of applying for credit guarantee fund and seeking for good quality collateral to enhance the loan security; enhance SME loans in line with the government policies, and also collocate the governments' related loan projects.

  • Consumer banking: Promote housing loans stably and choose owner occupants who possess sound repayment capabilities; accept better objects in the secondary market as collateral primarily; seek affiliation with premium car dealers to offer special car loans in order to stabilize the sources of loans for second-hand cars; exert the value of branch channels, adopt segment marketing per the market demand and continue observing changes in the market; design consumer banking

Letter to Shareholders 

  - projects for different target groups from time to time according to market demand.

  1. Credit card: Continue the “2% rebate on even days” event, execute promotional projects in line with seasonable projects or channels, cultivate the usage of Union Bank cards as principal cards, and increase the market share of debit cards; expand the business team and enhance digital application channels; develop credit card mobile payment business; continuously develop large-sized and medium-sized merchants and chain stores, and promote unionpay cards and instalment acquiring business.

  2. Wealth management: Further develop relations with customers; enhance development of effective clients to improve market share; continue to introduce diversified products (e.g., ETF, domestic structured notes, and foreign bonds, et al.) to offer wealth manager clients with a diversified range of asset allocation choices.

  3. (2) Channel development:

  4. The Bank operates 90 domestic branches and has been granted approval by the Financial Supervisory Commission to set up our Hong Kong branch, which is a part of our plan to expand our business territory overseas in line with globalization of the financial market.

  5. The Bank has expanded our ATM service network to offer customers more convenient services and through which we hope to enhance our corporate image and reputation. As of December 31, 2014, the Bank has installed a total 727 ATMs to service our clients.

  6. (3) Business targets for 2015

  7. Deposits expect to grow by 11.51%, reaching NT$ 442.5 billion by the end of 2015.

  8. Loans expect to grow by 5.04%, reaching NT$ 274.3 billon (excluding credit cards) by the end of 2015.

  9. Foreign exchange turnover is forecasted to reach US 4.821 billion.

  10. Improvement in business performance targets: including a suppressed NPL ratio or one that is lower than the industry average and improvement in capital level to meet the requirement of 2019 in accordance with IFRS and Basel III..

4. External Factors and Future Development Strategies

We expect that the global economic growth rate of 2015 will be higher than that of 2014. The domestic economy is growing. Meanwhile, adjustment on the loan structure resulting in increase in the spread income will drive the enterprises’ demand for funding and willingness to invest the market effectively and thereby support the loan business growth and expansion of wealth management market to seek profit. The banking industry’s vision is expected to be optimistic. We forecast that the economy in the banking industry appears to be booming in 2015.

3

Letter to Shareholders

To meet with the challenges of different variations in the future, the Bank’s main strategies and targets will be: to enhance market share and the scale of core profit-making business (Such as: SME loan, consumer banking and wealth management), to actively exert the branch network’s efficiency and competitiveness, to improve business performance and build a well-rounded financial operating system to serve the customers.

We are very grateful to you for your long-term patronage and strong support in the past. We will endeavor to present a marvelous feat of performance under the Bank’s operating mottoes of “Enthusiasm, Soundness, Efficiency and Innovation” through improving the quality of service and strengthening customer-bank relationships. Your continued support and encouragement in the future would be much appreciated. Yours sincerely,

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董事長

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Chairman Shiang-Chang Lee

總經理

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President Jeff Lin

4

BANK PROFILE

1. Date of Establishment and History

Union Bank of Taiwan was the third private-owned bank approved by the government to be established in the awakening of banking liberalization and globalization. The founders of the Bank shared a common interest of running a perpetual business and together they set up the preparatory office on Mar. 29, 1989 and business operation initiated on Jan. 21, 1992. The Bank was officially listed on the OTC on Sep. 19, 1995 and the Taiwan Stock Exchange Corporate on Jun. 29, 1998, and has now become a widely acclaimed and recognized listed company. The Bank set up the Ho Chi Minh City Representative Office in Vietnam and Hong Kong Representative Office in Hong Kong on February 25, 1998 and August 24, 1999, respectively. To expand business channels and the scale of operations, the Bank acquired Chung Shing Bank unconditionally on March 19, 2005.

2. Merger, Acquisition, Reinvestment in Affiliated Enterprises and Corporate Restructure During 2014 and Current Year Up to the Printing Date of the Annual Report : Refer to “Affiliated and Special Notes” .

3. Is the Bank a Member Firm of a Specific Financial Holding Company

The Bank is a commercial bank limited by shares, but not a member of a financial holding company.

4. Significant Transfers or Changes in Shareholding of Directors, Supervisors and Parties Required to Declare Ownership of Shares Under Paragraph 3, Article 25 of the Banking Act. Refer to “Transfer of Equity and Changes in Equity Used as Collateral by Directors, Supervisors, Managers, and Others Required to Report Equity in accordance with Paragraph 3, Article 25 of the Banking Act” of the “Corporate Governance Report” .

5. Changes in Management Rights, Management Mode or Other Significant business Changes During 2014 and Current Year Up to the Printing Date of the Annual Report :

None

5

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Legal Affair & Compliance Dept.
Domestic & Overseas Branches
Operations Center Business Dept.
General Affairs Dept. International Banking Dept.
Trust Dept.
Wealth Management Dept.
Credit Card & Payment Finance
Corporate Loans Policy &
Division
Administration Dept.
Bills Finance Dept.
Consumer Credit Dept.
Risk Management Dept.
Salary and Remuneration Vehicle Loan Dept.
Committee Real Estate Management Dept.
Consumer Banking Dept.
Treasury Dept.
Board of Director Securities Finance Dept.
Conference Service Product Development &
Division Marketing Dept.
Human Resources Dept.
Business Planning &
Chief Auditor Administration Dept. Information Technology Dept.
Audit Dept.
Officer of H.Q.
Chief Compliance
Supervisor
Resident Supervisor
Meeting Board of Directors Chairman President
Shareholders’ Senior Exective Vice President
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Corporate Governance

  • (2) Responsibilities of each department : Audit Department:

Responsible for performing internal audit, planning internal controls systems and reviewing credit applications.

Business Planning & Administration Department:

Responsible for the Bank’s organizational system, execution of budgets, risk management and deposit-taking and remittance businesses.

Product Development & Marketing Department:

Responsible for the planning and promotion of e-Commerce businesses.

Treasury Department:

Responsible for the Bank’s fund appropriation and assets and liabilities management.

Real Estate Management Department:

Responsible for the appraisal of real estate collaterals and management of collateral received for loans.

Risk Management Department:

Responsible for managing the Bank’s credit risks, market risks and operational risks.

Bills Finance Department:

Responsible for planning pursuing and managing the bills and bonds business.

Legal Affairs & Compliance Department:

Responsible for compliance affairs, processing of legal actions for the Bank, research of and advice on legal issues.

Corporate Loan Policy & Administration Department:

Responsible for the promotion and management of corporate banking businesses.

Wealth Management Department:

Responsible for the promotion of wealth management businesses and administration of wealth management personnel.

General Affairs Department:

Response for the procurement of supplies, management of the bank’s properties and acting as the bank’s treasurer.

Operations Center:

Responsible for the establishment of files, disposition of transactional accounts and management of archives.

Information Technology Department:

Responsible for the design, execution and maintenance of the Bank’s computer system.

Human Resources Department:

Responsible for planning human resources.

7

Corporate Governance

Securities Finance Department:

Responsible for entrusted trading, underwriting and purchase of marketable securities.

Consumer Banking Department:

Responsible for the promotion and management of consumer banking businesses.

Vehicle Loan Department:

Responsible for planning, promoting and managing the vehicle loan business.

Consumer Credit Department:

Responsible for the promotion and management of consumer credit businesses.

Credit Card & Payment Finance Division:

Responsible for the development of affairs related to credit cards and merchants, and processing of micro loans.

Trust Department:

Responsible for trust business, custodian banking and certification services.

International Banking Department:

Responsible for foreign exchange businesses and establishing and managing the overseas branches.

8

Corporate Governance

2. Information on Directors, Supervisors, and Executive Officers

(1) Directors and Supervisors

  • A. General Information

Recordation Date: March 31, 2015�Shares Holding Recordation Date: April 28, 2015� Unit: Shares；%: Note1

Current Current Other Executive Officers, Other Executive Officers, Other Executive Officers,
Shareholding
Shareholding Shareholding Directors or Supervisors Are
Current Under
at of Spouse & Spouse or Within Second-degree
Shareholding Other’s
Appointment Minor Relatives of Consanguinity to
Title Current Positions in
Children Each Other
Date of Initial Experience & the
Title Name Date of Elected Term Shares Shareholding
Ratio		 Shares Shareholding
Ratio		 Shares Shareholding
Ratio		 Shares Shareholding
Ratio
Appointment Qualification Bank and Other
Company
Title Name Relation
Chairman Shiang-Chang
Lee		 2012.06.22 3 Yrs 1991.12.10 1,016,944 0.052% 1,273,528 0.05% 1,997,122 0.08% - - National Taiwan
University;
President of UBOT		 Union Finance
International (HK)
Director–
Taiwan Futures
Exchange supervisor		 None None None
Independent
Managing
Director		 Kao-Jing Wang 2012.06.22 3 Yrs 2009.06.19 - - - - - - - - Master’s Degree,
University of North
Dakota;
SEVP, Bank of Taiwan		 - None None None
Managing
Director		 Chen-Chern
Investment Co.,
Representative:
Zhen-Xong Jiang		 2012.06.22 3 Yrs 2012.06.22 51,707,476 2.653% 117,952,491 4.81% 2,450,997 0.10% - - National Defense
Medical School;
Commissioner of
International Rotary
Club		 . None None None
Independent
Director		 Zen-Fa Lu 2012.06.22 3 Yrs 2009.06.19 - - - - - - - - Judicial Training
Program, The Judges
and Prosecutors
Training Institute;
Prosecutor General of
Supreme Prosecutors
Office		 None None None

9

Corporate Governance

Current Current Other Executive Officers, Other Executive Officers, Other Executive Officers,
Shareholding
Shareholding Shareholding Directors or Supervisors Are
Current Under
at of Spouse & Spouse or Within Second-degree
Shareholding Other’s
Appointment Minor Relatives of Consanguinity to
Title Current Positions in
Children Each Other
Date of Initial Experience & the
Title Name Date of Elected Term Shares Shareholding
Ratio		 Shares Shareholding
Ratio		 Shares Shareholding
Ratio		 Shares Shareholding
Ratio
Appointment Qualification Bank and Other
Company
Title Name Relation
Director Yu-Quan Lee 2012.06.22 3 Yrs 2009.06.19 2,650,963 0.136% 3,319,828 0.13% - - - - National Taiwan
Normal University;
Supervisor of First
Commercial Bank		 Manager and
Chairman of TWT
Communication
Corp.;
Director of Taiwan 1st
Media Co., Ltd.;
Director of Yu-Quan
Multiple Development
Co., Ltd.
Director of Tien-How
Construction Co., Ltd.
T-Movies Co.,Ltd.		 None None None
Director Union Enterprise
Construction Co.,
Ltd.
Representative:
Jeff Lin		 2012.06.22 3 Yrs 1991.12.10 68,477,951 3.514% 85,755,684 3.49% 5,278,043 0.21% - - Master’s Degree,
National Taiwan
University;
President of Union
Bank of Taiwan		 Supervisor of Union
Recreation
Enterprise Co., Ltd.;
President of Union
Bank of Taiwan.
Director of The
Liberty Times
Managing Director of
Union Dyeing and
Finishing Co., Ltd.
Director of Union
Finance International
(HK)		 None None None
Director Chen-Chern
Investment Co.,
Representative:
Yao-Nan Lai		 2012.06.22 3 Yrs 2012.06.22 51,707,476 2.653% 117,952,491 4.81% 759,220 0.03% - - National Taiwan
University
Chairman of Union
Bills Finance Corp		 - None None None

10

Corporate Governance

Current Current Other Executive Officers, Other Executive Officers, Other Executive Officers,
Shareholding
Shareholding Shareholding Directors or Supervisors Are
Current Under
at of Spouse & Spouse or Within Second-degree
Shareholding Other’s
Appointment Minor Relatives of Consanguinity to
Title Current Positions in
Children Each Other
Date of Initial Experience & the
Title Name Date of Elected Term Shares Shareholding
Ratio		 Shares Shareholding
Ratio		 Shares Shareholding
Ratio		 Shares Shareholding
Ratio
Appointment Qualification Bank and Other
Company
Title Name Relation
Director Yu-Pang Co., Ltd.
Representative:
Sue-Feng Tsao		 2012.06.22 3 Yrs 1994.06.01 28,605,984 1.468% 35,823,584 1.46% 3,335 - - - Taipei Commercial
Academy
Director of Tien-Sheng
Investment Co., Ltd.		 Director of
Hung-Peng
Construction
Enterprise Co., Ltd.;
Supervisor of Union
Realestate
Management Corp.;
Director of
Tien-Sheng
Investment Co.,Ltd.		 None None None
Director Chi-Shun
Investment Co.,
Ltd.
Representative:
Jin-Fu Liu		 2012.06.22 3 Yrs 2012.06.22 70,115,261 3.598% 89,135,105 3.63% - - - - Taipei Technical
Academy;
Director of Li-Chang
Ceramics Co., Ltd.		 Director of Li-Chang
Ceramics Co., Ltd.		 None None None
Resident
Supervisor		 Pao-Shing
Investment Co.,
Ltd.
Representative:
Jia-Yi Wang		 2012.06.22 3 Yrs 2006.06.09 68,525,970 3.516% 85,815,817 3.50% - - - - Judicial Training
Program, The Judges
and Prosecutors
Training Institute;
President of Supreme
Court		 - None None None
Supervisor Pao-Shing
Investment Co.,
Ltd.
Representative:
Zhen-Lu Lin		 2012.06.22 3 Yrs 2006.06.09 68,525,970 3.516% 85,815,817 3.50% 454,391 0.01% - - National Taiwan
University; President of
Formosa Transnational
Attorneys At Law
-		 None None None

11

Corporate Governance

Current Current Other Executive Officers, Other Executive Officers, Other Executive Officers,
Shareholding
Shareholding Shareholding Directors or Supervisors Are
Current Under
at of Spouse & Spouse or Within Second-degree
Shareholding Other’s
Appointment Minor Relatives of Consanguinity to
Title Current Positions in
Children Each Other
Date of Initial Experience & the
Title Name Date of Elected Term
Shares		 Shareholding
Ratio		 Shares Shareholding
Ratio		 Shares Shareholding
Ratio		 Shares Shareholding
Ratio
Appointment Qualification Bank and Other
Company
Title Name Relation
Supervisor Pai-Sheng
Investment Co.,
Ltd.
Representative:
Si-Yong Lin		 2012.06.22 3 Yrs 2012.06.22 98,498,074 5.055% 125,454,092 5.11% 1,688,394 0.06% - - National Taiwan
Normal University
Director of Hong-Bung
Construction Enterprise
Co., Ltd.
Supervisor of Lung
Shan Lin Realestate
Management Corp.;
Director of Union
Optronics Corp.;
Chairman of Green
Island Hotel Co., Ltd.;
Director of Sun-Che
Investment Co., Ltd.;
Director of Jen-Yo
Investment Co. Ltd.;
Director of Yeh-Shan
Construction Co.,
Ltd.; Director of
Chu-Pao Investment
Co., Ltd.; Director of
Pai-Sheng Investment
Co., Ltd.; Director of
Union Realestate
Management Corp.;
Director of Union
Dyeing and Finishing
Co., Ltd.; Supervisor
of Lung Shan Lin
Enterprise Co., Ltd.;
Manager and Director
of Hong-Bung
Construction
Enterprise Co., Ltd.;
Responsible Person of
Ren-Shun Café.
Supervisor of
Song-Mai investment
Director of
Kang-Hong
investment Co.,Ltd		 None None None

12

Corporate Governance

B. Major Institutional Shareholders

Name of Shareholder Major Shareholders of Institutional Shareholder
Yu-Pang Co., Ltd. Lin Chang Su-O, Jeff Lin
Union Enterprise Construction
Co.,Ltd.		 Lin Chang Su-O, Hong-Bang Lin
Pao-Shing Investment Co., Ltd. Chiu-Tze Lin, Hsiu-Ching Lee
Chen-Chern Investment Co., Ltd. Tsong-Yu Lee,Lin Chang Su-O
Chi-Shun Investment Co., Ltd. Jyh-Dong Chen, Union Enterprise Construction Co., Ltd.
Pai-Sheng Investment Co., Ltd. Si-Yong Lin, Hsiu-Ching Lee

C. Major Shareholders of Institutional Shareholders

Name of Shareholder Major Shareholders of Institutional Shareholder
Union Enterprise Construction
Co., Ltd.		 Lin Chang Su-O, Hong-Bang Lin

D. Professional Knowledge and Independence Information of Directors and Supervisors

Qualification
Over five years of experience in related fields and

the following professional qualification
 Independent Status
(Note 2)		 Serving as an
(Note 1) independent director of
other public companies
Name (1) (2) (3) (1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

13

Corporate Governance

Qualification
Over five years of experience in related fields and

the following professional qualification
 Independent Status
(Note 2)		 Serving as an
(Note 1) independent director of
other public companies
Name (1) (2) (3) (1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
Shiang-ChangLee ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ -
Kao-JingWang ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ -
Zhen-XongJiang ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ -
Zen-Fa Lu ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ -
Jin-Fu Liu ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ -
Yu-Quan Lee ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ -
Jeff Lin ˇ ˇ ˇ ˇ ˇ ˇ -
Yao-Nan Lai ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ -
Sue-FengTsao ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ -
Jia-Yi Wang ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ -
Zhen-Lu Lin ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ -
Si-YongLin ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ -

Note 1: With over 5 years of work experience and the following professional qualification

  • (1): Instructor, or higher up, of a public or private junior college, college or university, in Business, Law, Finance, Accounting or other departments as required by corporate business.

  • (2): Judge, prosecutor, solicitor, Certified Public Account or professionally qualified and technical person as required by the company.

  • (3): Experience in Business, Law, Finance, Accounting or as required by corporate business.

  • Note 2: Two years before the directors and supervisors are elected or during the period they are on the jobs, if they meet the following criteria, please make a “ˇ” mark in the space under the criteria codes.

  • (1): Not an employee of the Bank; nor an employee of its affiliated enterprises.

  • (2): Not a director or supervisor of the Bank or its affiliated enterprises (Does not include the independent directors of the Bank or its parent company or subsidiaries in which the Bank holds more than 50% of the shares).

  • (3): Not directly or indirectly own more than 1% of the Bank’s outstanding shares; nor is one of the top ten non-institutional shareholders of the Bank.

  • (4): Not a spouse or within second-degree relation or third-degree immediate relation to any person specified in the preceding three criteria.

  • (5): Not a director, supervisor, or employee of a legal entity which directly owns more than 5% of the Bank’s issued shares; nor a director, supervisor or employee of

14

Corporate Governance

the top five legal entities which are owners of the Bank’s issued shares.

  • (6): Not a director, supervisor, or manager of a company which has a business relationship with the Bank; nor a shareholder who owns more than 5% of such a company.

  • (7): Not an owner, partner, director, supervisor, manager or spouse of any sole proprietor business, partnership, company or institution which has provided the Bank and its affiliates with financial, business consulting, or legal services. Excluding members of the remuneration committee that exercise powers in accordance with Article 7 of the Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter.

  • (8): Not a spouse or within second-degree relation to other directors.

  • (9): Not a person under the circumstances specified in Article 30 of the R.O.C. Company Act.

  • (10): Not a government agency, juristic person or its representative pursuant to Article 27 of the R.O.C. Company Act.

E. Director and Supervisors’ Training Records
Date of Training Has the Director or
Supervisor Met the
Title Name Organizer Course Name Hours
Training
From To
RequirementsNote
Chairman Shiang-Chang
Lee		 2014.12.05 2014.12.05 Board of Directors Practices and
Corporate Governance Workshop
(Conflict of Interest and Execution of
Audit Committee and Independent
Directors)		 3 Yes
Taiwan Academy of
Banking and Finance
Independent
Managing
Director
Kao-Jing Wang		 2014.12.05 2014.12.05 Board of Directors Practices and
Corporate Governance Workshop
(Conflict of Interest and Execution of
Audit Committee and Independent
Directors)		 3 Yes
Taiwan Academy of
Banking and Finance
Managing
Director		 Zhen-Xong
Jiang		 2014.12.05 2014.12.05 Board of Directors Practices and
Corporate Governance Workshop
(Conflict of Interest and Execution of
Audit Committee and Independent
Directors)		 3 Yes
Taiwan Academy of
Banking and Finance
Independent
Director		 Zen-Fa Lu 2014.12.05 2014.12.05 Board of Directors Practices and
Corporate Governance Workshop
(Conflict of Interest and Execution of
Audit Committee and Independent
Directors)		 3 Yes
Taiwan Academy of
Banking and Finance.

15

Corporate Governance

Date of Training Has the Director or
Supervisor Met the
Title Name Organizer Course Name Hours
Training
From To
RequirementsNote
Director Jin-Fu Liu 2014.12.05 2014.12.05 Board of Directors Practices and
Corporate Governance Workshop
(Conflict of Interest and Execution of
Audit Committee and Independent
Directors)		 3 Yes
Taiwan Academy of
Banking and Finance
Director Yu-Quan Lee 2014.12.05 2014.12.05 Board of Directors Practices and
Corporate Governance Workshop
(Conflict of Interest and Execution of
Audit Committee and Independent
Directors)		 3 Yes
Taiwan Academy of
Banking and Finance
Director Jeff Lin 2014.12.05 2014.12.05 Board of Directors Practices and
Corporate Governance Workshop
(Conflict of Interest and Execution of
Audit Committee and Independent
Directors)		 3 Yes
Taiwan Academy of
Banking and Finance
Director Sue-Feng Tsao 2014.12.05 2014.12.05 Board of Directors Practices and
Corporate Governance Workshop
(Conflict of Interest and Execution of
Audit Committee and Independent
Directors)		 3 Yes
Taiwan Academy of
Banking and Finance
Resident
Supervisor		 Jia-Yi Wang 2014.12.05 2014.12.05
Board of Directors Practices and
Corporate Governance Workshop
(Conflict of Interest and Execution of
Audit Committee and Independent
Directors)		 3 Yes
Taiwan Academy of
Banking and Finance
Supervisor Zhen-Lu Lin 2014.12.05 2014.12.05
Board of Directors Practices and
Corporate Governance Workshop
(Conflict of Interest and Execution of
Audit Committee and Independent
Directors)		 3 Yes
Taiwan Academy of
Banking and Finance

16

Corporate Governance

Date of Training Has the Director or
Supervisor Met the
Title Name Organizer Course Name Hours
Training
From To
RequirementsNote
Supervisor Si-Yong Lin 2014.12.05 2014.12.05 Board of Directors Practices and
Corporate Governance Workshop
(Conflict of Interest and Execution of
Audit Committee and Independent
Directors)		 3 Yes
Taiwan Academy of
Banking and Finance

(2) President, SEVP, Chief Auditor, EVP and Managers of Departments/Branches

Recordation Date: March 31, 2014�Shares Holding Recordation Date: April 7, 2013� Unit: Shares；%

Shareholding Shareholding Shareholdi Shareholdi
Managers are Spouse or Within
of Spouse & ng Under
Shareholding Second-degree of Consanguinity to
Minor Others’
Each Other
Children Title
Date
Title Name Share % Share % Share % Education/Experience Also Serve Concurrently As
Appointed
Title Name Relation
President LIN,
HONG-LIAN
(Jeff Lin)		 2006.08.02 5,278,043 0.21% 0 0 0 0 Master’s Degree,
National Taiwan
University;
SEVP of UBOT		 Supervisor of Union Recreation
Enterprise Corp.; Director of
The Liberty Times; Executive
Director of Union Dyeing and
Finishing Co., Ltd. Union Finance
International (HK) Director
None		 None None
SEVP CHAN,
YING-PO
(Yin-Bor Chan)		 2006.07.01 345,914 0.01% 0 0 0 0 Tamkang University;
EVP of UBOT		 Supervisor of Union Finance &
Leasing
(International) Co., Ltd.		 None None None

17

Corporate Governance

Shareholding Shareholding Shareholdi Shareholdi
Managers are Spouse or Within
of Spouse & ng Under
Shareholding Second-degree of Consanguinity to
Minor Others’
Each Other
Children Title
Date
Title Name Share % Share % Share % Education/Experience Also Serve Concurrently As
Appointed
Title Name Relation
SEVP & GM of
Risk Management
Dept.		 TU,
HER-MAN
(Herman Tu)		 2006.07.01 202,522 0 0 0 0 0 Chinese Culture
University;
EVP of UBOT		 Director of Union Finance &
Leasing
(International) Co., Ltd.		 None None None
SEVP LIU,
CHENG-YU
(Cheng-Yu
Liu)		 2010.07.01 26,827 0 0 0 0 0 Takming College
EVP of UBOT		 Director of Union Information
Technology Co., Ltd.
Union Finance International (HK)
Director		 None None None
Chief Auditor KANG,
KUO-PAO
(Kuo-Pao
Kang)		 2010.11.01 21,885 0 0 0 0 0 National Chiao Tung
University;
VP & Branch Manager of
E. Taipei Branch of
UBOT		 - None None None
VP & GM of
Legal Affair and
Compliance Dept.		 KAO,
YAO-TSUNG
(Yan-Tsung
Kao)		 2009.04.01 32,766 0 0 0 0 0 Soochow University
VP & Branch Manager of
Fucheng
Branch		 - None None None
EVP & GM of
Vehicle Loan
Department		 HSIEH
CHENG-JUH
(Cheng-Juh
Hsieh)		 2011.04.01 278,966 0.01% 0 0 0 0 University of South
Australia Graduate
School
General Manager of
Union Finance & Leasing
(International)
Corporation		 Director of Union Finance &
Leasing (Int’l) Corporation,
Director of Union Capital
(Cayman) Corp, Director of
New Asian Ventures Ltd.		 None None None

18

Corporate Governance

Shareholding Shareholding Shareholdi Shareholdi
Managers are Spouse or Within
of Spouse & ng Under
Shareholding Second-degree of Consanguinity to
Minor Others’
Each Other
Children Title
Date
Title Name Share % Share % Share % Education/Experience Also Serve Concurrently As
Appointed
Title Name Relation
EVP & GM of
Consumer
Banking Dept.		 HSIA ,
KUO – HSIEN
(Kuo-Shien
Shia)		 2005.06.27 20,474 0 9,469 0 0 0 Tamkang University;
Manager of Cathay
United Bank		 Supervisor of Union Insurance
Broker Co., Ltd. & Union
Insurance Agent Co., Ltd.		 None None None
SVP CHIEN,
HUNG-MING
(Peter Chien)		 2006.06.26 110,941 0 0 0 0 0 Panchiao Senior High
School;
VP & Branch Manager of
Hsinchung Branch of
UBOT		 - None None None
VP & GM of
Business Planning
& Admin. Dept.		 YANG,
CHU-CHANG
(Yanger Yang)		 2006.06.22 18,638 0 0 0 0 0 Master’s Degree, Tunghai
University; VP and
Deputy GM of Business
Planning & Admin. Dept.
of UBOT
Director of Lian-An Service
Co. Ltd. & I Pass Corporation.		 None None None
VP & GM of
Consumer Credit
Dept.		 TANG,
PI-CHIU
(Joy Tang)		 2004.03.22 54,787 0 0 0 0 0 Master’s Degree,
Memphis State
University;
VP & Deputy GM of
Consumer Banking
Dept.		 - None None None
VP & GM of
Trust
Dept.		 TSAI,
HANN-TSAU
(Hann-Tsau
Tsai)		 2006.06.22 230,627 0 1,892 0 0 0 Chung Yuan Christian
University;
VP & GM of Business
Planning & Admin. Dept
of UBOT		 - None None None
VP & GM of
Wealth
Management
Dept.		 ��� ��N�-Y�
(Sophie Hsu)		 2005.11.21 15,750 0 0 0 0 0 Master’s Degree, Canada
Royal University;
Executive VP of Business
Development Dept. of
ING		 Director of Union Insurance
Broker Co., Ltd. & Union
Insurance Agent Co., Ltd.		 None None None

19

Corporate Governance

Shareholding Shareholding Shareholdi Shareholdi
Managers are Spouse or Within
of Spouse & ng Under
Shareholding Second-degree of Consanguinity to
Minor Others’
Each Other
Children Title
Date
Title Name Share % Share % Share % Education/Experience Also Serve Concurrently As
Appointed
Title Name Relation
VP & GM of
Securities Finance
Dept.		 YANG,
HUI-CHIN		 2013.03.20 0 0 0 0 0 0 Feng Jia University
First Securities Fong
Yuan Branch Manager		 - None None None
VP & GM of Bills
Finance Dept.		 LEE,
YAO-HSIEN
(Yao-Hsien
Lee)		 2010.08.16 73,471 0 0 0 0 0 Feng Jia University
Manager of Union Bills
Finance Corp.		 - None None None
VP & GM of
Treasury Dept.		 TANG,
CHIAN-YANG
(Tarsicio Tong)
1998.09.01		 69,634 0 0 0 0 0 National Taiwan
University;
VP & Deputy GM of IBD
of UBOT		 - None None None
VP & GM of
Corporate Loans
Policy & Admin.
Dept.		 LIU,
CHUEH-LING		 2014.4.01 21,579 0 0 0 0 0 Master’s degree, George
Washington University
Deputy GM of Corporate
Loans Policy & Admin
Dept.
VP & GM of Real
Estate
Management
Dept.		 LI, JUN-NAN
(Michael Lee)		 2004.03.05 12,839 0 0 0 0 0 Master’s Degree,
National Cheng Chi
University;
VP & Branch Manager of
HueilongBranch		 - None None None
VP & GM of
Product
Development
&Marketing Dept.		 SHENG,
PI - SHIA
(Pauline
Sheng)		 2008.11.01 17,604 0 0 0 0 0 Tamkang University;
VP & Branch Manager of
Wenlin Mini Branch		 Director of Euroc III Venture
Capital. Corp.		 None None None

20

Corporate Governance

Shareholding Shareholding Shareholdi Shareholdi
Managers are Spouse or Within
of Spouse & ng Under
Shareholding Second-degree of Consanguinity to
Minor Others’
Each Other
Children Title
Date
Title Name Share % Share % Share % Education/Experience Also Serve Concurrently As
Appointed
Title Name Relation
VP & GM of
Information
Technology Dept.		 YANG,
FENG-JUNG
(Luke Yang)		 2006.07.01 76,131 0 0 0 0 0 Master’s Degree,
National Taiwan
University;
Deputy GM of IT Dept.
of UBOT		 Director of Union Information
Technology Co., Ltd.		 None None None
VP & GM of
Human Resources
Dept.		 LIN,
HSIAO-CHEN
(Michael Lin)		 1999.12.01 19,485 0 0 0 0 0 National Chung Hsing
University;
VP & Deputy GM of
Human Resources
Dept.		 - None None None
VP & GM of
General Affairs
Dept.		 CHANG,
YU-CHANG
(Russell YC
Chang)		 2003.10.01 121,087 0 0 0 0 0 Taiwan Institute of
Technology;
VP & Deputy GM of
General Affairs
Dept.		 - None None None
VP & GM of
Operations Center		 HSUEH,
SHU-FENG
(Shu-Feng
Hsueh)		 2005.09.06 16,887 0 2,028 0 0 0 National Cheng Chi
University;
AVP of Hsintien Branch		 - None None None
Executive
Director of Credit
Card & Payment
Finance Division.		 LIN,
YU-TANG
(Terrence Lin)		 2012.08.15 0 0 0 0 0 Master’s degree, National
Taiwan University
Citi Bank, Vice President,
Credit Card Dept.
Director of Union Insurance
Broker Co., Ltd. & Union
Insurance Agent Co., Ltd.;
Supervisor of Union
Information Technology Co.,
Ltd.
Director of I Pass Corporation		 None None None

21

Corporate Governance

Shareholding Shareholding Shareholdi Shareholdi
Managers are Spouse or Within
of Spouse & ng Under
Shareholding Second-degree of Consanguinity to
Minor Others’
Each Other
Children Title
Date
Title Name Share % Share % Share % Education/Experience Also Serve Concurrently As
Appointed
Title Name Relation
VP &GM of
International
Banking
Department		 TSENG,
MENG -YUN
(Connie Tseng)		 2010.09.01 12,943 0 0 0 0 0 Master’s degree of
National University, USA
CA;
VP of International
Banking Dept. and OBU,
Jih Sun Commercial
Bank		 Union Finance International
(HK) Director		 None None None
VP & GM of
Branch of OBU
and Rep. of Hong
Kong Rept. Office
& Ho Chi Minh
Rept. Office		 LU,
MEI-CHIH
(Lisa Lu)		 2010.09.01 43,680 0 0 0 0 0 MBA University of
Birmingham, UK;
AVP of OBU and
representative of Hong
Kong Representative
Office & Ho Chi Minh
Representative Office
(FRM)		 - None None None
VP & GM of
Business Dept.		 YU,
LIN-SHENG
(Lin-Sheng Yu)		 2008.05.05 17,411 0 0 0 0 0 National Taiwan Ocean
University;
VP & Branch Manager of
Luchou
Branch		 - None None None
VP & Branch
Manager of Taipei
Branch		 Jen-Chung
Cheng		 2013.05.16 14,825 0 0 0 0 0 National Cheng Chi
University; VP & Branch
Manager of Taoyuan
Branch		 - None None None
VP & Branch
Manager of
Taoyuan Branch		 Ching-Shou
Liu		 2013.05.16 27,239 0 0 0 0 0 National Taipei College
of Commerce-Open
Junior College of
Commerce
VP & Branch Manager of
TaoyingBranch		 - None None None

22

Corporate Governance

Shareholding Shareholding Shareholdi Shareholdi
Managers are Spouse or Within
of Spouse & ng Under
Shareholding Second-degree of Consanguinity to
Minor Others’
Each Other
Children Title
Date
Title Name Share % Share % Share % Education/Experience Also Serve Concurrently As
Appointed
Title Name Relation
VP & Branch
Manager of
Taichung Branch		 Meng-Hsia Wu 2007.11.05 53,728 0 0 0 0 0 National Tsao-Tun
Commercial & Industrial
Vocational Senior High
School;
VP & Branch Manager of
Minchuan Branch		 - None None None
VP & Branch
Manager of
Nanking E. Road
Branch		 Ching-Wen
Chen		 2006.07.01 14,437 0 0 0 0 0 Soochow University;
VP & Branch Manager of
Shuanho Branch		 - None None None
VP & Branch
Manager of
Chungli Branch		 Chang-Yung
Chen		 2000.08.23 145,777 0 0 0 0 0 National Taipei College
of Commerce- Open
Junior College of
Commerce;
VP & Branch Manager of
Neili Branch		 - None None None
VP & Branch
Manager of
Sanchung Branch		 Steven Huang 2007.06.01 25,693 0 0 0 0 0 Graduate Institute of the
University of North
Alabama; VP & Branch
Manager of Houpu
Branch		 - None None None
VP & Branch
Manager of East
Taipei Branch		 Zhi-Zhong
Zhang		 2010.12.01 32,007 0 0 0 0 0 National Chao Tung
University
VP & Branch Manager of
Changchun Branch		 - None None None

23

Corporate Governance

Shareholding Shareholding Shareholdi Shareholdi
Managers are Spouse or Within
of Spouse & ng Under
Shareholding Second-degree of Consanguinity to
Minor Others’
Each Other
Children Title
Date
Title Name Share % Share % Share % Education/Experience Also Serve Concurrently As
Appointed
Title Name Relation
VP & Branch
Manager of
Kaohsiung Branch
Zong-Hul
Huang		 2008.06.01 13,095 0 0 0 0 0 Feng Chia University;
Manager of Kaohsiung
Corporate Banking
Center		 - None None None
VP & Branch
Manager of
Panchiao Branch		 Jacky Liao 2009.04.01 9,412 0 0 0 0 0 Chungyu Institute of
Technology;
Deputy manager of Taipei
Corporate Banking
Center
-		 None None None
VP & Branch
Manager of
Tainan Branch		 Ping-Hui Lin 2008.05.16 13,883 0 0 0 0 0 Aletheia University;
Manager of En Tie Bank		 - None None None
VP & Branch
Manager of
Yuanlin Branch		 Wen-Jui Chou 2013.04.01 9,527 0 0 0 0 0 Master’s Degree,
Tamkang University;
Branch manager of
Minchuan Branch of Bill
Finance Dept.		 - None None None
VP & Branch
Manager of Jenai
Branch		 Wendy Chi 2009.11.16 55,586 0 0 0 0 0 Master’s Degree,
University of Texas;
VP & Branch Manager of
Kungkuan Branch		 - None None None
VP & Branch
Manager of
Nankan Branch		 Ching-Chung
Lin		 2006.07.01 118,700 0 0 0 0 0 Chinese Culture
University;
VP & Branch Manager of
Tatze Branch		 - None None None

24

Corporate Governance

Shareholding Shareholding Shareholdi Shareholdi
Managers are Spouse or Within
of Spouse & ng Under
Shareholding Second-degree of Consanguinity to
Minor Others’
Each Other
Children Title
Date
Title Name Share % Share % Share % Education/Experience Also Serve Concurrently As
Appointed
Title Name Relation
VP & Branch
Manager of
Hsinchu Branch		 Denfer Hung 2009.12.06 14,805 0 0 0 0 0 Tunghai University;
Manager of Standard
Chartered Bank		 - None None None
VP & Branch
Manager of
Luchou Branch		 Yeong-Jin
Hwang		 2008.05.05 12,178 0 0 0 0 0 Master’s Degree,
University of Dallas.
VP & Manager of Taipei
Corporate Banking
Center		 - None None None
VP & Branch
Manager of
Chiuju Branch		 Lister Lee 2000.06.01 76,826 0 0 0 0 0 National Cheng Kung
University- Open Junior
College of Commerce;
Manager of Kaohsiung
Bank		 - None None None
VP & Branch
Manager of
Shuanho Branch		 Chang-Chen
Lin		 2012.07.09 9,884 0 0 0 0 0 National Taiwan
University
VP & Deputy Branch
Manager of Hsintien
Branch		 - None None None
VP & Branch
Manager of
Hueilong Branch		 Ru-Ji Cheng 2004.03.05 11,883 0 0 0 0 0 Feng Chia University;
VP & Deputy branch
Manager of Taoyuan
Branch		 - None None None
VP & Branch
Manager of
Chiayi Branch		 Liang- Kuei
Kuo		 2013.08.12 0 0 0 0 0 0 National Yunlin
University of Science and
Technology;
Tainan Branch manager
of J.P.Morgan Asset
Management		 - None None None

25

Corporate Governance

Shareholding Shareholding Shareholdi Shareholdi
Managers are Spouse or Within
of Spouse & ng Under
Shareholding Second-degree of Consanguinity to
Minor Others’
Each Other
Children Title
Date
Title Name Share % Share % Share % Education/Experience Also Serve Concurrently As
Appointed
Title Name Relation
VP & Branch
Manager of
Kungkuan Branch		 Fang-Ni
Wang		 2014.4.1 10,659 0 0 0 0 0 Master’s Degree,
National Central
University;
AVP & Division Head of
Corporate loans policy&
Administration Dept.		 - None None None
VP & Branch
Manager of Neili
Branch		 Shen-Yung
Peng		 2013.04.01 26,716 0 5,973 0 0 0 Ching Yun University;
VP & Branch Manager of
Tunhwa Branch		 - None None None
VP & Branch
Manager of
Chunghsiao
Branch		 Jane Lu 2003.10.01 44,739 0 0 0 0 0 Master’s Degree,
University of Illinois;
VP & Branch Manager of
Tunghua Mini Branch		 - None None None
VP & Branch
Manager of
Hsinchuang
Branch		 Jeffery Tsai 2006.06.26 33,278 0 0 0 0 0 Master’s Degree, Fu Jen
Catholic University;
VP & Deputy Branch
Manager of Hsinchuang
Branch		 - None None None
VP & Branch
Manager of
Fengshan Branch		 Kuen-Yuan
Tsai		 1999.10.25 15,153 0 0 0 0 0 Feng Chia University;
VP & Deputy Branch
Manager of Kaohsiung
Branch		 Conducting business
Shareholder of chinho Co.Ltd.		 None None None
VP & Branch
Manager of
Taoying Branch		 Jyh-Chiang,
Huang		 2013.05.16 59,918 0 15,493 0 0 0 National Chiao Tung
University
VP & Branch Manager of
Dajhu Branch		 - None None None

26

Corporate Governance

Shareholding Shareholding Shareholdi Shareholdi
Managers are Spouse or Within
of Spouse & ng Under
Shareholding Second-degree of Consanguinity to
Minor Others’
Each Other
Children Title
Date
Title Name Share % Share % Share % Education/Experience Also Serve Concurrently As
Appointed
Title Name Relation
VP & Branch
Manager of
Lungtan Branch		 Lawrence Chen 2009.12.01 31,094 0 0 0 0 0 Master’s Degree,
National Central
University;
VP & Branch Manager of
Neili Branch		 - None None None
VP & Branch
Manager of
Hsintien Branch		 Shih-Shien
Chene		 2012.07.09 0 0 0 0 0 0 National Taiwan
University of Science and
Technology;
Sindian Branch Manager
of Yuanta Bank		 - None None None
VP & Branch
Manager of Tatze
Branch		 Tereasa Lin 2009.01.01 11,638 0 0 0 0 0 Chihlee Institute of
Technology;
Head of Jenai Consumer
loan center, Consumer
BankingDept.		 - None None None
VP & Branch
Manager of
Chungshan Mini
Branch		 Ye-Yan Lin 2013.11.25 9,588 0 0 0 0 0 Taibei High School,
Manager of Business
Dept.		 - None None None
VP & Branch
Manager of
Wenshin Branch		 Amy Chung 2009.01.01 20,943 0 0 0 0 0 National Cheng Kung
University; AVP &
Division Head of
Minchuan Branch		 - None None None
VP & Branch
Manager of
Chienshin Branch		 Tawei Shih 2009.12.06 11,767 0 0 0 0 0 Master’s Degree,
Tamkang University;
VP & Branch Manager of
Hsinchu Branch		 - None None None

27

Corporate Governance

Shareholding Shareholding Shareholdi Shareholdi
Managers are Spouse or Within
of Spouse & ng Under
Shareholding Second-degree of Consanguinity to
Minor Others’
Each Other
Children Title
Date
Title Name Share % Share % Share % Education/Experience Also Serve Concurrently As
Appointed
Title Name Relation
VP & Branch
Manager of
Chungho Branch		 Wu-Lien Peng 2009.11.16 409,400 0.01% 11,744 0 0 0 National Taipei College
of Commerce- Open
Junior College of
Commerce;
VP & Branch Manager of
Jenai Branch		 - None None None
VP & Branch
Manager of Neihu
Branch		 CM Hwang 2011.11.01 317,701 0.01% 0 0 0 0 Chung Yuan Christian
University;
VP & Branch Manager of
Hoping Branch		 - None None None
VP & Branch
Manager of
Dayuan Branch		 Chu-Shih Wei 2009.04.07 9,412 0 0 0 0 0 Feng Chia University;
Manager of Standard
Chartered Bank		 - None None None
VP & Branch
Manager of
Yungho Branch		 Hsiu-Yun Su 2005.03.19 11,195 0 0 0 0 0 Master’s Degree, Dallas
Baptist
University;
Manager of Chung Shing
Bank		 - None None None
VP & Branch
Manager of
Chungkung Mini
Branch		 Wen-Chien
Chien		 2001.01.15 38,860 0 0 0 0 0 Ming Chuan College;
VP & Deputy Branch
Manager of Chunghsiao
Branch		 - None None None
VP & Branch
Manager of
Tonghwa Mini
Branch		 Mei-Lan Lin 2007.10.01 8,626 0 0 0 0 0 Soochow University;
AVP & Division Head of
Consumer Credit Dept.		 - None None None

28

Corporate Governance

Shareholding Shareholding Shareholdi Shareholdi
Managers are Spouse or Within
of Spouse & ng Under
Shareholding Second-degree of Consanguinity to
Minor Others’
Each Other
Children Title
Date
Title Name Share % Share % Share % Education/Experience Also Serve Concurrently As
Appointed
Title Name Relation
VP & Branch
Manager of
Shihtung Branch		 Kuang-Han Liu 2009.12.01 9,601 0 0 0 0 0 National Taipei College
of Commerce;
Manager of Taipei
Consumer Loan Center
Consumer BankingDept.		 - None None None
VP & Branch
Manager of
Breeze Center
Mini Branch		 Chia-Wei Lin 2013.11.25 8,296 0 0 0 0 0 Tung Hai University;
Manager of Sanchung
Branch		 - None None None
VP & Branch
Manager of
Changchun
Branch		 Patty Chen 2013.03.21 8,852 0 0 0 0 0 Open Business College
Affiliated with National
Taipei College of
Business
Manager of Wealth
Management Dept.		 - None None None
VP & Branch
Manager of
Sungchiang
Branch		 Chien-Lung
Chen		 2013.11.25 95,064 0 0 0 0 0 Master’s Degree, Aletheia
University;
VP & Branch Manager of
Breeze Center Mini
Branch
-		 None None None
VP & Branch
Manager of Taan
Branch		 Chien-Hui
Li		 2011.11.01 8,287 0 0 0 0 0 Soochow University;
Head of Jenai Loan
Center,
Consumer Banking
Department		 - None None None

29

Corporate Governance

Shareholding Shareholding Shareholdi Shareholdi
Managers are Spouse or Within
of Spouse & ng Under
Shareholding Second-degree of Consanguinity to
Minor Others’
Each Other
Children Title
Date
Title Name Share % Share % Share % Education/Experience Also Serve Concurrently As
Appointed
Title Name Relation
VP & Branch
Manager of
Yungchi Branch		 Candy Lin 2011.07.16 30,941 0 0 0 0 0 National Chung Hsing
University;
Head of Chunghsiao
Loan Center,
Consumer Banking
Department		 - None None None
VP & Branch
Manager of
Wenlin Branch		 Ju-Ling Kuo 2008.11.01 136,720 0 0 0 0 0 Takming College;
VP & Deputy GM of
Consumer Banking Dept.		 - None None None
VP & Branch
Manager of
Tungmen Branch		 Jimy Chou 2007.06.11 10,168 0 0 0 0 0 Master’s Degree,
National Taipei
University;
VP & Deputy GM of
Consumer BankingDept.		 - None None None
VP & Branch
Manager of
Tunhwa Branch		 Gary Tsai 2013.04.01 8,895 0 0 0 0 0 Lunghwa University of
Science and Technology;
Head of Nanking E. Rd.
Loan Center Consumer
BankingDept.		 - None None None
VP & Branch
Manager of Hsihu
Branch		 Mary Huang 2006.12.01 9,213 0 0 0 0 0 National Taipei College
of Commerce- Open
Junior College of
Commerce;
Senior AVP of Luchou
Branch		 - None None None

30

Corporate Governance

Shareholding Shareholding Shareholdi Shareholdi
Managers are Spouse or Within
of Spouse & ng Under
Shareholding Second-degree of Consanguinity to
Minor Others’
Each Other
Children Title
Date
Title Name Share % Share % Share % Education/Experience Also Serve Concurrently As
Appointed
Title Name Relation
VP & Branch
Manager of
Beitou Mini
Branch		 Wen-Chi
Chiang		 2014.11.17 5,163 0 3,693 0 0 0 National Chiao-Tong
University; Head of Jenai
Loan Center Consumer
Banking Dept.		 - None None None
VP & Branch
Manager of North
Sanchung Branch		 Teh-Chin Tsai 2005.03.19 116,046 0 0 0 0 0 Kai Nan High School of
Commercial and Industry;
Senior AVP of Sanchung
Branch
-		 None None None
VP & Branch
Manager of
Houpu Branch		 Su-Yean Lo 2007.06.26 9,439 0 0 0 0 0 National Changhua
Senior School of
Commerce;
AVP of Houpu Branch		 - None None None
VP & Branch
Manager of North
Chungho Mini
Branch		 Hedy Wei 2010.08.16 7,637 0 0 0 0 0 Chinese Culture
University;
AVP of Chungho Branch		 - None None None
VP & Branch
Manager of Fuguo
Branch
Shis-Wen Lu		 2005.03.19 8,439 0 4,023 0 0 0 Takming Junior College
of Commerce;
Head of Consumer
Banking Dept.		 - None None None
VP & Branch
Manager of Shulin
Branch
Yen-Jou Liu		 2012.05.03 16,128 0 0 0 0 0 Shih Hsin Senior high
School;
V.P. & Deputy Branch
Manager of Hueilong
Branch		 - None None None

31

Corporate Governance

Shareholding Shareholding Shareholdi Shareholdi
Managers are Spouse or Within
of Spouse & ng Under
Shareholding Second-degree of Consanguinity to
Minor Others’
Each Other
Children Title
Date
Title Name Share % Share % Share % Education/Experience Also Serve Concurrently As
Appointed
Title Name Relation
VP & Branch
Manager of
Hsichih Branch		 Hung-Min
Chen		 2012.07.09 27,568 0 231 0 0 0 Feng Chia University;
VP & Branch Manager of
Shuanho Branch		 - None None None
VP & Branch
Manger of North
Taoyuan Branch		 Kuo-Kuang
Chou		 2015.01.05 7,206 0 0 0 0 0 National Taipei College
of Commerce- Open
Junior College of
Commerce ; Head of
Daye Loan Center
Consumer BankingDept.		 - None None None
VP & Branch
Manager of North
Chungli Branch		 James Tsai 2015.01.05 43,858 0 0 0 0 0 Tamkang University;
Head of Consumer
Banking Dept.		 - None None None
VP & Branch
Manager of North
Taichung Branch		 Hui-Fen Chao 2005.03.19 87,765 0 0 0 0 0 Chihlee Institute of
Technology;
Senior AVP of Wenshin
Branch		 - None None None
VP & Branch
Manager of
Minchuan Branch		 Jeng-Ping Liu 2007.11.05 67,062 0 0 0 0 0 Graduate School of
Dayeh University;
VP & Branch Manager of
Taichung Branch		 - None None None
VP & Branch
Manager of
Hsitun Branch		 Shih-Yuan
Liaw		 2005.03.19 7,813 0 0 0 0 0 Hsinming Commercial
School;
Manager of Chung Shing
Bank		 - None None None

32

Corporate Governance

Shareholding Shareholding Shareholdi Shareholdi
Managers are Spouse or Within
of Spouse & ng Under
Shareholding Second-degree of Consanguinity to
Minor Others’
Each Other
Children Title
Date
Title Name Share % Share % Share % Education/Experience Also Serve Concurrently As
Appointed
Title Name Relation
VP & Branch
Manager of
Shingchung
Branch		 Chiung-Yu O 2005.03.19 17,353 0 0 0 0 0 Feng Chia University;
Manager of Wenshin
Branch		 - None None None
VP & Branch
Manager of
Beitun Branch		 Chien-Tsung
Wu		 2005.03.19 25,346 0 0 0 0 0 The Overseas Chinese
Institute of Technology;
Manager of National
Cash Card
Department		 - None None None
VP & Branch
Manager of S.
Yuanlin Branch		 Wu-Yuan
Chen		 2005.03.19 44,146 0 0 0 0 0 National Open
University;
Senior AVP of National
Cash Card Dept.		 - None None None
VP & Branch
Manager of East
Chiayi Branch		 Shan-Chih Yen 2005.03.19 52,818 0 3,342 0 0 0 Master’s Degree, Chiayi
University; Senior AVP of
National Cash Card Dept.
Supervisor of Zhong-Guan
Foods Enterprise Co., Ltd.		 None None None
VP & Branch
Manager of
Fucheng Branch		 Hsien-Ming
Yen		 2009.04.01 12,037 0 0 0 0 0 Feng Chia University;
VP & Branch Manager of
South Tainan Branch		 - None None None
VP & Branch
Manager of
Fongyuan Branch		 Ta-Yu Chin 2006.12.04 38,295 0 0 0 0 0 Tamkang University;
VP & Deputy Branch
Manager of Wenshin
Branch		 - None None None

33

Corporate Governance

Shareholding Shareholding Shareholdi Shareholdi
Managers are Spouse or Within
of Spouse & ng Under
Shareholding Second-degree of Consanguinity to
Minor Others’
Each Other
Children Title
Date
Title Name Share % Share % Share % Education/Experience Also Serve Concurrently As
Appointed
Title Name Relation
VP & Branch
Manager of
Fuchiang Branch		 Chin-Chung
Kuan		 2010.12.06 10,922 0 0 0 0 0 Feng Jia University;
Senior Manager,
Chinatrust Commercial
Bank		 - None None None
VP & Branch
Manager of
Kaiyuan Branch		 Roger Chang 2005.03.19 4,490 0 0 0 0 0 National Open
University;
Head of Consumer
Banking Dept.		 - None None None
VP & Branch
Manager of South
Tainan Branch		 Yu-Show Hsu 2009.04.01 22,745 0 0 0 0 0 Kun Shan University;
Senior AVP of Tainan
Branch		 - None None None
VP & Branch
Manager of
Lingya Branch		 Feng-Li Lin 2005.03.19 41,227 0 0 0 0 0 Feng Chia University;
VP & Deputy Branch
Manager of Kaohsiung
Branch		 Director of I Pass Corporation None None None
VP & Branch
Manager of North
Kaohsiung Branch
Miao-Hui Yeh		 2005.03.19 86,918 0 0 0 0 0 Master’s Degree, New
York University;
VP & Deputy Branch
Manager of Chiuju
Branch		 - None None None
VP & Branch
Manager of
Sanmin Branch		 Miranda Tsai 2009.08.01 13,266 0 0 0 0 0 Tamkang University;
Senior AVP of Kaohsiung
Branch		 - None None None

34

Corporate Governance

Shareholding Shareholding Shareholdi Shareholdi
Managers are Spouse or Within
of Spouse & ng Under
Shareholding Second-degree of Consanguinity to
Minor Others’
Each Other
Children Title
Date
Title Name Share % Share % Share % Education/Experience Also Serve Concurrently As
Appointed
Title Name Relation
VP & Branch
Manager of
Wuchia Branch		 I-Wen Ho 2005.03.19 49,881 0 0 0 0 0 Master’s Degree,
National Chung Hsing
University;
VP & Deputy Branch
Manager of Fengshan
Branch		 - None None None
VP & Branch
Manager of
Pingtung Branch		 Chi-Fang Chu 2014.03.19 4,717 0 0 0 0 0 Master’s Degree,
National Kaohsiung First
University of Science and
Technology;
Manager of Pingtung
Branch		 - None None None
VP & Branch
Manager of
Hoping Branch		 Tsai-Ling
Liao		 2011.11.01 0 0 0 0 0 0 Taipei College of
Commerce;
VP & Branch Manager of
Taan Branch		 None None None
VP & Branch
Manager of
Yongchun Branch		 Wen-Hui Lin 2006.07.19 43,356 0 0 0 0 0 Tamkang University;
VP & Deputy Branch
Manager of Taipei Branch		 - None None None
VP & Branch
Manager of
Tenshin Branch		 Kuan-Hong
Lee		 2013.12.01 6,513 0 0 0 0 Tamkang University;
Head of Jenai Loan
Center, Consumer
Banking Department		 - None None None

35

Corporate Governance

Shareholding Shareholding Shareholdi Shareholdi
Managers are Spouse or Within
of Spouse & ng Under
Shareholding Second-degree of Consanguinity to
Minor Others’
Each Other
Children Title
Date
Title Name Share % Share % Share % Education/Experience Also Serve Concurrently As
Appointed
Title Name Relation
VP & Branch
Manager of
Ankang Branch		 Chan-Kwei
Chen		 2009.12.01 62,249 0 0 0 0 0 Feng Chia University;
VP & Branch Manager of
Shihtung Branch		 - None None None
VP & Branch
Manager of Dajhu
Branch		 Mei-Ling Lee 2013.05.16 21,405 0 0 0 0 0 Hsin Wu Business
College,
Senior AVP, Dajhu
Branch		 - None None None
VP & Branch
Manager of
Gueishan Branch		 Shiu-Ju Huang 2010.12.01 8,479 0 0 0 0 0 Takming College;
Senior AVP, Nankan
Branch		 - None None None
VP & Branch
Manager of
Linkou Branch		 Shiu-Lan Hsieh 2008.12.04 27,029 0 0 0 0 0 National Taipei College
of Commerce- Open
Junior College of
Commerce
VP & Deputy Branch
Manager of Taipei
Corporate Banking
Center		 - None None None
VP & Branch
Manager of Wugu
Branch		 Chao-Chuen
Chuang		 2009.11.01 7,872 0 0 0 0 0 Master’s degree, Fo
Guang University; VP&
Branch
Manager of Wugu Branch
-		 None None None

36

Corporate Governance

Shareholding Shareholding Shareholdi Shareholdi
Managers are Spouse or Within
of Spouse & ng Under
Shareholding Second-degree of Consanguinity to
Minor Others’
Each Other
Children Title
Date
Title Name Share % Share % Share % Education/Experience Also Serve Concurrently As
Appointed
Title Name Relation
VP & Branch
Manager of
Gaorong Branch		 Jung-Hsiang
Chung		 2009.12.11 12,943 0 0 0 0 0 Feng Chia University;
Manager of Standard
Chartered Bank		 - None None None
VP & Branch
Manager of Daye
Branch		 Richard Yang 2010.1.14 9,884 0 0 0 0 0 National Taiwan
University;
VP& Branch Manager of
Taoyuan Corporate
BankingCenter		 - None None None
VP & Branch
Manager of Luzhu
Branch
Jenny Cheng		 2011.07.09 23,370 0 0 0 0 0 National Sun Yat-sen
University
Senior AVP of Gueishan
Branch		 - None None None
VP & Branch
Manager of
Tucheng Branch		 Kun-Cheng
Zhou		 2010.1.25 12,275 0 0 0 0 0 National Chung Hsing
University; VP&
Branch manager of
Ankang Branch		 - None None None
VP & Branch
Manager of South
Taoyuan Branch		 Chang-Fu Tsai 2010.3.30 10,354 0 0 0 0 0 Feng Jia University;
AVP, SME Banking and
Risk Management Dept.,
Standard Chartered Bank		 - None None None
VP & Branch
Manager of
Sanxia Branch		 Chia-Yu Chuo 2013.08.05 9,288 0 0 0 0 0 Master’s degree, Yuan Ze
University
Head of Taoying Loan
Center, Consumer
Banking Department		 None None

37

Corporate Governance

Shareholding Shareholding Shareholdi Shareholdi
Managers are Spouse or Within
of Spouse & ng Under
Shareholding Second-degree of Consanguinity to
Minor Others’
Each Other
Children Title
Date
Title Name Share % Share % Share % Education/Experience Also Serve Concurrently As
Appointed
Title Name Relation
VP & Branch
Manager of
Donghu Branch		 Chien-Chung
Su		 2014.01.07 5,612 0 0 0 0 0 Soochow University,
VP & Deputy Branch
Manager of Taipei
Corporate Banking
Center		 None None

Note 1: The Nationality of President, SEVP, EVP and VP from P.17 to P.38 are Taiwan.

38

Unit: NT Dollar Thousand, December 31,2014 Re muneration from Invest ee Companies Excluding Subsidiaries ee Companies Excluding Subsidiaries 286 Nil Nil Nil Nil Nil Nil Nil Nil Note 1 :Remuneration to the driver amounted to NT$816,000.
Total of
as a %		 (A, B,C,D, E,F & G)
of Net profit after tax		 All Companies in the
Consolidated Statement		 0.43%
The Bank 0.43%
Remuneration of Part-time Employees Total No. of
Shares Issued for
Employee Stock
Option (H)		 All Companies in the
Consolidated Statement		 0
The Bank 0
Earnings
Distribution for
Employees’ Bonus
(G)		 All Companies in
the Consolidated
Statement		 Stock Dividend 0
Cash Dividend 0
The Bank Stock Dividend 0
Cash Dividend 0
Termination
payment and
pension costs(F)		 All Companies in the
Consolidated Statement		 0
The Bank 0
Salaries, Bonus
and Special
Allowance(E)		 All Companies in the
Consolidated Statement		 0
The Bank 0
Total o
% of		 f (A,B,C and D) as a
Net profit after tax		 All Companies in the
Consolidated Statement		 0.43%
The Bank 0.43%
Directors’ Remuneration Costs Incurred to
Perform Duties(D)		 All Companies in the
Consolidated Statement		 2,457
The Bank 2,457
Director’s
Remuneration (C)		 All Companies in the
Consolidated Statement		 2,715
The Bank 2,715
Termination
payment and
pension costs(B)		 All Companies in the
Consolidated Statement		 0
The Bank 0
Remuneration (A) All Companies in the
Consolidated Statement		 8,142
The Bank 8,142
Name Shiang-Chang
Lee		 Kao-Jing Wang Chen-Chern
Investment Co.,
Representative:
Zhen-Xong Jiang		 Zen-Fa Lu Chi-Shun
Investment Co.,
Representative:
Jin-Fu Liu		 Yu-Quan Lee Union Enterprise
Construction Co.,
Ltd.
Representative:
Jeff Lin		 Chen-Chern
Investment Co.,
Representative:
Yao-Nan Lai		 Yu-Pang
Investment Co.,
Representative:
Sue-Feng Tsao
Title Chairman Independent
Managing
Director		 Managing
Director		 Independent
Director		 Director Director Director Director Director

Corporate Governance

Remuneration Range

Unit: NT Dollar

Range of Remuneration Name of Directors Name of Directors Name of Directors Name of Directors
Total of A,B,C and D Total of A, B,C,D, E,F & G
Paid to Directors All the Companies in All the Companies in
UBOT
the Consolidated
UBOT
the Consolidated
Statement Statement
Less than 2,000,000 Kao-Jing Wang,
Zhen-Xong Jiang,
Zen-Fa Lu,
Jin-Fu Liu,
Yu-Quan Lee,
Jeff Lin,
Yao-Nan Lai,
Sue-Feng Tsao,		 Kao-Jing Wang,
Zhen-Xong Jiang,
Zen-Fa Lu,
Jin-Fu Liu,
Yu-Quan Lee,
Jeff Lin,
Yao-Nan Lai,
Sue-Feng Tsao,		 Kao-Jing Wang,
Zhen-Xong Jiang,
Zen-Fa Lu,
Jin-Fu Liu,
Yu-Quan Lee,
Jeff Lin,
Yao-Nan Lai,
Sue-Feng Tsao,







 Kao-Jing Wang,
Zhen-Xong Jiang,
Zen-Fa Lu,
Jin-Fu Liu,
Yu-Quan Lee,
Jeff Lin,
Yao-Nan Lai,
Sue-Feng Tsao,
5,000,000 (inclusive)～
10,000,000(non-inclusive)		 Shiang-Chang Lee Shiang-Chang Lee Shiang-Chang Lee
 Shiang-Chang Lee
Total 9 9 9 9

B. Supervisor’s Remuneration

Unit: NT Dollar Thousand, December 31, 2014

Title Supervisors’ Remuneration Supervisors’ Remuneration Supervisors’ Remuneration Supervisors’ Remuneration Supervisors’ Remuneration Supervisors’ Remuneration Supervisors’ Remuneration Supervisors’ Remuneration Total of
(A+B+C+D) as a
% of Net profit
 Total of
(A+B+C+D) as a
% of Net profit
 Remuneration
from Investee
Companies
Excluding
Subsidiaries
Remuneration Termination Earning
 Costs Incurred
to Perform
payment and Distribution for
Director’s
Name (A) pension costs
Remuneration		 Duties
 after tax
(B) (C) (D)
U
B
O
T		 All
Companies
in the
Consolidated
Statement		 U
B
O
T		 All
Companies
in the
Consolidated
Statement		 U
B
O
T		 All
Companies
in the
Consolidated
Statement		 U
B
O
T		 All
Companies
in the
Consolidated
Statement		 U
B
O
T		 All
Companies
in the
Consolidated
Statement
Resident
Supervisor		 Pao-Shing
Investment
Co., Ltd.
Representative:
Jia-Yi Wang		 840 840 0 0 760 760 564 564 0.06% 0.06% Nil
Supervisor Pao-Shing
Investment
Co., Ltd.
Representative:
Zhen-Lu Lin
Supervisor Pai-Sheng
Investment
Co., Ltd.
Representative:
Si-YongLin

40

Corporate Governance

Remuneration Range

Unit: NT Dollar

Name of Supervisors Name of Supervisors
Range of Remuneration
Total of A,B,C and D

Paid to Supervisors
UBOT All the Companies in the
Financial Statement
Less than 2,000,000 Jia-Yi Wang, Zhen-Lu Lin, Si-Yong Lin,
 Jia-Yi Wang, Zhen-Lu Lin, Si-Yong Lin,
Total 3 3

C. President, Senior Executive Vice Presidents & Chief Auditor’s Remuneration and Range

Unit: NT Dollar Thousand, December 31, 2014

Remuneration
(A)		 Remuneration
(A)		 Termination
payment and		 Termination
payment and		 Bonus &
Special		 Bonus &
Special		 Employees’
Bonus from		 Employees’
Bonus from		 Employees’
Bonus from		 Employees’
Bonus from		 Total of
(A+B+C+D)
% f		 Total of
(A+B+C+D)
% f		 Total No. of
Shares Issued
for Employee
Stock Option		 Total No. of
Shares Issued
for Employee
Stock Option		 Remuneration from Investee
Companies Excluding Subsidiaries
pension costs Allowance Earnings as a o
Nt fit

(B)		 (C) (D) e pro
after tax
Title Name T
Ba		 All Compa
Financial		 T
Ba		 All Compa
Financial		 T
Ba		 All Compa
Financial		 The
Bank		 All Companies
in the
Financial
Statement		 The
Bank		 All Companies in the
Financial Statement		 The
Bank		 All Companies in the
Financial Statement
he
nk		 nies in the
Statement		 he
nk		 nies in the
Statement		 he
nk		 nies in the
Statement		 Cash
Dividend		 Stock
Dividend		 Cash
Dividend		 Stock
Dividend
President Jeff Lin 10,599 10,599 0 0 4,007 4,007 0 837 0 837 0.49 0.49 0 0 Nil
SEVP Yin-Bor
Chan
SEVP Herman
Tu
SEVP Cheng-
Yu Liu
Chief
Auditor		 Kuo-
Pao Kang

Note : Remuneration to the Company’s three drivers totalled NT$ 1,985,000.

Unit: NT Dollar

Range of Remuneration Paid to President Senior Name of President,Senior Executive Vice Presidents & Chief Auditor Name of President,Senior Executive Vice Presidents & Chief Auditor
,
Executive Vice Presidents & Chief Auditor		 UBOT All the Companies in the
Financial Statement
Less than NT$2,000,000 Jeff Lin Jeff Lin
NT$2,000,000 (inclusive)～NT$5,000,000 Herman Tu, Yin-Bor Chan,
Cheng-Yu Liu,Kuo-Pao Kang		 Herman Tu, Yin-Bor Chan,
Cheng-Yu Liu,Kuo-Pao Kang
Total 5 5

41

Corporate Governance

D. Bonus to Managers :

Unit NT Dollar Thousand, Dec 31 2014

Total as % of Net
Title Name Stock Dividend Cash dividend Total
Profit after Tax
Please refer Page 17 to Page 38. 9561 0 9561 0.31

Note: The employee bonus to managers to be distributed as approved by the Board of Directors before the shareholders’ meeting for the motion of distribution of earnings for the most recent year (the projected amount based on the proportion of distribution last year).

  • (4) Analysis of Payments of Remuneration to Directors, Supervisors, President, Senior Executive Vice President and Chief Auditor, as a percentage of net profit after tax in the latest two years, Remuneration Policy, Standard and Combination, Procedure for determining remuneration and their relationship to operating results and future risk

  • A. The remuneration paid to Directors, Supervisors, President, Senior Executive Vice President and Chief Auditor in 2013 is NT$28,633,000 and its ratio to net profit after tax is 0.99%.

  • B. The remuneration paid to Directors, Supervisors, President, Senior Executive Vice President and Chief Auditor in 2014 is NT$30,316,000 and its ratio to net profit after tax is 0.97%.

  • C. Remuneration paid to directors and supervisors primarily include meeting attendance fees and salaries. All remuneration is paid on a fixed basis. The President did not receive any form of remuneration. Remuneration to SEVPs and Chief Auditor was made in accordance with their respective experience, degree of business involvement and contribution, and compare with the salary and remuneration standard of the Industry peers. The salary and remuneration schedule will be submitted to the Board of Directors for resolution after it is examined by Salary and Remuneration Committee. The Board is authorized to determine remuneration which is granted to the management pursuant to the Bank’s Articles of Incorporations. In addition to monthly basic salaries and allowances, executives may also be eligible for the annual and the performance bonuses and the employee bonuses depending on the Bank’s annual results of operation and individual performance. As such, remuneration to SEVPs and Chief Auditor is closely related to the Bank’s operating performance. The occurrence of major risk events that may impair the Bank’s goodwill, or incidents of deficiency in internal management, or employee fraud would vastly affect the amount of bonuses to SEVPs and the Chief Auditor. The Risk Management Dept. should report directly to the Board of Directors regarding the status of the Bank’s risk control and risk exposure on a semi-annual basis.

42

Corporate Governance

3. Execution of Corporate Governance

(1) Board of Directors

The Board of Directors held 6 meetings in 2014. The status of attendance was as follows:

Title Name Attendance
in Person		 By Proxy Attendance
Rate(%)		 p.s.
Chairman Shiang-ChangLee 6 0 100%
Independent
Managing
Director		 Kao-Jing Wang 6 0 100%
Managing
Director		 Chen-Chern Investment Co.,
Representative:
Zhen-Xong
Jiang		 6 0 100%
Independent
Director		 Zen-Fa Lu 6 0 100%
Director Yu-Quan Lee 3 0 50%
Director Union Enterprise Construction Co.,
Ltd.
Representative: Jeff Lin		 6 0 100%
Director Chen-Chern Investment Co.,
Representative: Yao-Nan Lai		 6 0 100%
Director Yu-Pang Investment Co.,
Representative: Sue-FengTsao		 6 0 100%
Director Chi-Shun Investment Co.,
Representative: Jin-Fu Liu		 5 0 83.33%
Other supplementary notes:
1. Written or otherwise recorded resolutions on which an independent director had a dissenting
opinion or qualified opinion as stipulated in Article 14-3 of the Securities and Exchange Act:
None.
2. Execution status of directors, avoidance on motions with conflict of interests. The names of
directors, the content of the motion, the reasons of avoidance, and the voting participation status
should be clearlystated:
Meeting
Name of Director
Proposal
Reasons of Recusal
Participated
in Voting
13~~th~~meeting/8~~th~~Board
Jeff Lin
Donation
Stakeholder
No
14~~th~~meeting/8~~th~~Board
Jeff Lin ,Zhen-Xong
Jiang, Yao-Nan Lai,
Jin-Fu Liu, Sue-Feng
Tsao
Property Rental
Stakeholder
No
3. Measures taken to strengthen the functionality of the Board:
(1)
The Bank, in accordance with the regulation in Article 14-2 of Securities and Exchange Act, sets two seats
of independent directors and enacts “Guideline governing the responsibilities of independent directors in
Union Bank of Taiwan Co., Ltd.” to adhere. It also formulates “Rules for the conduct of directors meetings
in Union Bank of Taiwan Co., Ltd.” for following in the execution of meetings. The regulation clearly
defines if a director attend a meeting where there might be a conflict of interests involves with the director,
he/she should voluntarily excuse himself/herself to the motion and should not participate in the voting,
he/she should also not represent other directors in exercise voting rights; all the directors in the Bank must
comply with the regulation.
(2)
The Bank establishes a Salary and Remuneration Committee under the Board of Directors and sets
“Regulation governing the organization of Salary and Remuneration Committee in Union Bank of Taiwan
Co., Ltd.”. The major responsibilities of the Committee is to set and regularly review the pertaining policy,
system, standard and structure, and conduct the performance evaluation and of directors, supervisors and
management executives.

43

Corporate Governance

  • (2) Supervisors’ Attendance in Board Meeting(The Bank has not yet instituted an audit committee.）

The Board of Directors held 6 meetings in 2014.The status of attendance is as follows:

Title Name No. of actual
attendance		 % of actual
attendance		 p.s.
Resident Supervisor Pao-Shing Investment Co., Ltd.
Representative: Jia-Yi Wang		 6 100%
Supervisor Pao-Shing Investment Co., Ltd.
Representative: Zhen-Lu Lin		 6 100%
Supervisor Pai-Sheng Investment Co., Ltd.
Representative: Si-YongLin		 5 83.33%
Other supplementary notes:
1. Composition and Responsibilities of Supervisors：
(1) Communication between Supervisors and Bank employees or shareholders: The Bank’s
Supervisors communicate with employees and shareholders from time to time in writing
or by telephone and fax. The Bank’s official website also provides the avenue for
communication between stakeholders and Supervisors. There is also a resident
Supervisor to fully render the supervisory function.
(2) Communication between Supervisors and Internal Chief Auditor and Independent
Accountants: The Bank’s Supervisors communicate with internal chief auditor and
independent accountants from time to time by correspondence or through telephone.
Periodic meetings are convened during the year to discuss the Bank’s financial
statements, major audit adjustments or revisions to the promulgation of regulations.
The meetings ensure sound communication of the relevant matters between the
concerned parties.
2. Any opinion put forward by the Supervisor(s) shall include the date of the Board Meeting,
term, details of the proposal, results of the Board resolution and the Bank’s action on
handling the Supervisors’ opinion:
Board of Directors
Meeting Date and
Session
Contents of the
Motion
Statements of
Opinion
Board of Directors
Resolution and
Handling
Jan 22, 2014
11thMeeting of 8th
Board of Directors
For discussion
about the Bank’s
“Business
Strategies and
Operation Policies
for Various
Business Lines”
and “Budget of the
Bank and Various
Business Lines”
2014.
Suggest that Paragraph
1. Deposit Business (1)
in the Motion should
be amended as “to
solicit mass demand
deposits and new
customers”.
Business Planning &
Administration Dept. made
the amendments directly.
The other parts of the
Motion were approved
unanimously.
July 9, 2014
14th Meeting of 8th
Board of Directors
Reporting of the
execution of legal
compliance matters
for the six months
ended December
31, 2014.
Please state (6)
self-assessment on
compliance affairs and
whether the business
unit’s actual audit
result is somewhat
defective? Further,
Default Loans Management
Dept.: The defect refers to
the contents omitted or
completed in error by the
unit personnel, which is
identified as the deficiency
of internal operation

44

Corporate Governance

whether the clerks of
Yuanlin Branch,
Sanchung Branch of
Securities Finance
Dept. and Kaohsiung
Securities Branch who
were against rules are
disciplined?		 management. The
responsible supervising unit
has been asked to enhance
the supervision.
Human Resources Dept.:
The clerks of Yuanlin
Branch and Sanchung
Securities Branch of
Securities Finance Dept.
against rules have been
disciplined.
Default Loans Management
Dept.: The employee
involved in the case about
the Kaohsiung Securities
Branch was found to be the
customer’s relative, who
made the payment on behalf
of the customer in order to
refer some fund to the
customer. The Branch has
been reminded of the case.
The other issues are
recorded for reference.
Board of Directors
Meeting Date and
Session		 Contents of the
Motion		 Statements of Opinion Board of Directors
Resolution and Handling
July 9, 2014
14thMeeting of 8th
Board of Directors		 Motion for
discussion about
amendments to the
Bank’s “Articles of
Association” by
renaming “Credit
Card Center” into
“Credit Card &
Payment Finance
Division” to be in
line with the
business
development of
Credit Card Center,
and consolidation
of subordinated
units and additional
functions to deal
with adjustment and
operation of the
new organization.		 Suggest that Article 18
of the Articles of
Association, the
functions of
Compliance Dept.
subordinated to the
Credit Card & Payment
Finance Division
should be corrected as
“management of
contract over legal
action”.		 Business Planning &
Administration Dept. made
the correction directly.
The others were approved
unanimously.
August 20, 2014
15thMeeting of 8th
Board of Directors		 Motion for
discussion about
amendments to the
Bank’s limits on
loan by taking into
consideration of
various limits on
loan for various
industries in order
to make
improvement
accordingto the		 Why is the calculations
of the two business
lines, “Agricultural
Foods and Medical
Healthcare Business”
which differ from each
other significantly in
the attached table
consolidated?		 Corporate Loan Policy &
Administration Dept.: The
business line was
categorized based on the
external entities’ industries.
In consideration of the few
volume of agricultural foods
and medical healthcare
business undertaken by the
Bank , the calculations
thereof were consolidated.
Notwithstanding,the Bank

45

Corporate Governance

FSC’s opinion upon
inspection.		 would attend to it with
caution in the future. The
others were approved
unanimously.
November 12, 2014
16thMeeting of 8th
Board of Directors		 Report on minute of
meeting for
discussion about
deficiencies in
internal control
system.		 Suggest that the safe
custody management
operation (e.g., record
sample, control over
the principal/backup
keys, and limit on the
number of persons
entering the vault to
open the safe in one
time should be based
on the policy
applicable in the same
trade and then an audit
should be conducted
with a view to
confirming whether the
existing operation is
fair or not.		 Business Planning &
Administration Dept. will
verify the policy applicable
in the same trade and then
proceed with discussion.
The others were recorded
for reference.

  • (3) Items to be disclosed in Accordance with “Principles Governing Corporate Governance Practices of Banks”: Please Refer to the Bank’s Official Website: http://www.ubot.com.tw

  • (4) Status of implementation of The Corporate Governance, stating Discrepancy, if any, with Best Corporate Governance Practices of Banks and giving Reasons:

Implementation Status(Note 1) Implementation Status(Note 1) Discrepancy, if any,
with Best Corporate
Item Governance
Yes No Memo
Practices of Banks
and Reasons
1.
The Bank’s shareholder
structure and shareholder
equity
(1) Way in which the Bank
defines any internal
operating procedure to
deal with suggestions,
questions, disputes and
legal actions from
shareholders, and to
implement the
procedure.
ｖ		 (1) According to the Bank’s Corporate
Governance Best-Practice Principles,
the Bank has delegated the spokesman
and deputy spokesman and established
an email box to take care of the
suggestions, questions and disputes
from shareholders. A dispute, if any,
will be handed over to the Bank’s legal
counsel. The way to contact said
spokesman is disclosed in the
“investor relations” on the Bank’s
website and on the cover page of the
Bank’s annual report.
No material discrepancy

46

Corporate Governance

Implementation Status(Note 1) Implementation Status(Note 1) Discrepancy, if any,
with Best Corporate
Item Governance
Yes No Memo
Practices of Banks
and Reasons
(2) Ways in which the Bank
regularly monitors the
list of key shareholders
who have management
control of the Bank, or
those who have ultimate
control of key
shareholders.
(3) Ways in which the Bank
establishes proper risk
control mechanisms and
firewalls between the
Bank and its affiliated
enterprises.


ｖ
ｖ
Meanwhile, the Bank has also
established the e-Service Center
responsible for answering to and
processing of the questions raised by
customers via phone, processing of
customers’ complaints and opinions,
and follow-up on various assignments.
Therefore, the inquiries about the
Bank’s business and shareholders’
suggestions or disputes may be
referred to the related units by
customer service attendants, if
necessary.
(2) Based on the information detailed in
the current Shareholder Register on the
ex-dividend date, the Bank will report
changes in shareholding to Taiwan
Stock Exchange Corp. on a monthly
basis pursuant to Article 25 of the
Securities and Exchange Act and keep
track of the shareholding status of
major shareholders.
(3) The Bank has put in place the
“Standards Governing Supervision and
Control by the Union Bank of Taiwan
Over Subsidiaries” and “Operational
Standards for Non-Credit Transactions
Between Union Bank of Taiwan and
Related Parties”, which stipulate the
risk management policies between the
Bank and its subsidiaries.		 No material discrepancy
No material discrepancy
2. Composition and
responsibilities of Board
of Directors:
(1) Whether the Bank, in
addition to establishing
the remuneration
committee and audit
committee pursuant to
laws, is willing to
establish any other
functional committees
voluntarily?		 ｖ (1)
1 The Bank has set up a Remuneration
Committee according to regulations
and the Bank’s Article of
Incorporation in 19th Meeting of 7th
Board of Directors on August 24,
2011 and formulated “Regulations
Governing the Organization of
Remuneration Committee” for
compliance.
2 The Bank has established the
supervisor system. “Rules Governing
the Duties and Powers of
Supervisors” were formulated and
adopted in the general shareholders’
meeting held on June 22,
2012.Pursuant to Jin-Kuan-Zheng-Fa
Order No. 10200531121 issued by the
Financial Supervisory Commission on
December 31, 2013, the Bank may
establish an Audit Committee to
No material discrepancy

47

Corporate Governance

Implementation Status(Note 1) Implementation Status(Note 1) Discrepancy, if any,
with Best Corporate
Item Governance
Yes No Memo
Practices of Banks
and Reasons
(2) Regular evaluation of
external auditors’
independence.		 V replace supervisors upon expiration of
the term of office of current directors
and supervisors (the directors of 9th
Board of Directors were re-elected in
June 2015).
3 Additionally, in order to strengthen
management mechanism, the Bank
has set up committees such as “Asset
Liability Management Committee”,
“Operation Automation
Committee”, “Investment and Credit
Examination Committee”, “Overdue
Credit, Overdue Loan and
Non-Performing Loan Handling
Committee”, “Trust Property
Examination Committee” and
“Human Resource Arbitration
Committee”, and their resolutions are
all submitted to relevant level of
authorities for approval according to
Regulations governing separation of
duties.
(2) The Bank evaluates the independence
of the CPA each year in accordance
with the CPA Standard of Professional
Ethics and Corporate Governance
Best-Practice Principles for
TWSE/GTSM Listed Companies, and
submits the evlauationevaluation result
to the Board of Directors for review.
1.
The CPA never holds the position of
director/supervisor or manager of the
Bank, or thea position likely to render
significant influence on the Bank.
2.
The CPA does not have any direct or
significantly indirect financial interest
with the Bank.
3.
The CPA never acts as the Bank’s
independent auditor for seven years.
4.
The Statement of Independence has
been issued by the CPA.
Upon evaluation, the independent auditor
retained by the Bank is held meeting
the independence requirements under
the corporate governance.
3. Establishment of
communication channels
with stakeholders
V		 The Bank, in accordance with the Banking
Law, establishes files of related parties,
regularly controls and updates the related
parties’ information. In addition,related		 No material discrepancy.

48

Corporate Governance

Implementation Status(Note 1) Implementation Status(Note 1) Discrepancy, if any,
with Best Corporate
Item Governance
Yes No Memo
Practices of Banks
and Reasons
parties should also contact with the Bank
through mail, telephone, fax and internet
etc. All communication channels are easily
accessible and smooth.
4.
Information Disclosure
(1) Establishment of
corporate website to
disclose information
regarding the Bank's
financials, business and
corporate governance
status.
(2) Other information
disclosure channels (e.g.
English website,
designating particular
person to handle
information collection
and disclosure,
appointing spokesperson,
webcasting investor
conference)
V
V		 1.
The Bank has regularly disclosed
financial and corporate governance
status in the Bank’s website (Web
address: http://www.ubot.com.tw), and
will disclose related information
following the relevant regulations of
the competent authority.
2.
Information Disclosure Method
(1) A designated department is to take
charge of the collection and
disclosure of information on the
Bank’s website.
(2) The Bank has set spokesperson and
acting spokesperson position to be
the sole outlet of the statement to
the publics, and the Bank has also
formulated “Procedures for
Handling Significant Internal
Information” for compliance.
(3) The annual report is prepared each
year, disclosing the relevant
information in accordance with the
“Standards Governing Information
to be published in the Annual
Report of Banks”.		 No material discrepancy.
5.
Other important
information that helps to
understand the Bank’s
corporate governance
status (such as rights of
employees, care for
employees, investor
relations, rights of
stakeholders, Directors’
and Supervisors’ training
records, implementation
of risk management
policies and risk
evaluation measures,
implementation of
customers protection
policies, purchasing
liability insurance for
directors and
supervisors, and donate
to political parties,
related parties and
charitable foundations):
V		 (1) Rights of employees and care for
employees: The Bank has put in place
the “Rules of Employment” to clearly
define the rights and obligations of the
Bank and employees. The Bank also
convenes regular labor relations
meeting to enhance the
bank-employee relationships and
ensure rights of employees. In
addition, the Bank undertakes
evaluation of the various remuneration
and welfare policies to maximize
benefits for the employees. The Bank
has also put in place the “Criteria for
Prevention, Reporting and Punishment
of Sexual Harassment Incidences” to
ensure equal employment
opportunities and human dignity.
(2) Investor relations: The Bank has set
up an investors relationship window
for a smooth communication channel.
(3) Any transaction between the Bank and
our stakeholders are carried out
treated in accordance with the
“Operational Standards for
Non-Credit Transactions Between
Union Bank of Taiwan and Related



No material discrepancy.

49

Corporate Governance

Implementation Status(Note 1) Implementation Status(Note 1) Discrepancy, if any,
with Best Corporate
Item Governance
Yes No Memo
Practices of Banks
and Reasons
Parties” and relevant regulations
governing credit transactions.
(4) Directors and Supervisors’ training
records: the Bank’s directors and
supervisors have taken related
trainings of practical operation and
company governance. The record may
be accessed on the Market
Observation Post System
(http://newmops.tse.com.tw) and is
included in the annual report.
(5) Risk management policy and
execution of the risk evaluation
standards:
The Bank has put in place a Risk
Management Policy, established
necessary risk management system
and standard to effectively manage
risks. (Qualitative and quantitative
information for assessing the various
risks. Please see Pages 108~128.).
(6) The implementation of customers
protection policies:
Customers may offer comments or
lodge complaints on the website or via
the hotline for complaints and
suggestions. The Bank’s responsible
department will re-direct the issues to
the relevant department for handling
and follow-up. The Bank has also
put in place the “Criteria and
Operational Regulations Governing
the Management of Suspected Illegal
or Abnormal Deposit Account” and
the “Organization of the Customer
Dispute Processing Team &
Procedures for Handling Customer
Disputes” to protect the rights of
customers. Take the initiative to care
and effectively remind customers to
prevent the suffering of loss from
being cheated.
(7) Purchasing liability insurance for
directors and supervisors: It is not a
constraint to purchase liability
insurance for directors and supervisors
in accordance with the Article 48 of
the “Corporate Governance
Best-Practice Principles for Banking
Business”, the Bank does not purchase
the mentioned liability insurance.
(8) Donation to Political Parties, Related
Parties and Charitable Foundations:
a.
The Bank established the “Union
Bank Foundation” in 1998 with the
aim of stimulating the continuation
of local art and sponsored the
various art awards including the
“Union Bank Emerging Artist
Award” and “Union Bank Art


50

Corporate Governance

Implementation Status(Note 1) Implementation Status(Note 1) Discrepancy, if any,
with Best Corporate
Item Governance
Yes No Memo
Practices of Banks
and Reasons
Impression Award” and art
exhibitions as well as purchasing
the winning artwork each year.
This year, the Bank offered a total
of NT$2,866,610 in sponsorship
money to these events.
b.
In support of promoting the local
music and art events and the
cultivation of cultural events, the
Bank became a major sponsor of the
“Kaohsiung City Philharmonic
Cultural and Arts Foundation” from
2011 and assisting the Foundation
to host regular, special, community
and campus musical events and
concerts. In 2014, the Bank
offered a total of NT$2,600,000 in
sponsorship money to these events.
c.
The Bank partnered with Kaohsiung
Rapid Transit Corp. to run the
“Whistering Filming with
Companionship”, “HAPPI Walking
Fun”, “KRTC Prestige Lecture
Class” and “Winter Sun to
Communicate Heartwarming
Happiness” to communicate the
new happy series activities. In
2014, the budget sponsored by the
Bank totaled NT$500,000.
d.
In August 2014, the Bank donated
NT$10 million to the exclusive
donation account of Kaohsiung City
Government. The Bank also took
part in the art healing plan for
mental disordered children in Q4,
and subscribed the tickets for the
children’s two public shows in
North and South Taiwan. The
budget sponsored by the Bank was
about NT$440,000.
6 If the Bank has a self
corporate governance
evaluation or has
authorized any other
professional organization
to conduct such an
evaluation, the evaluation
results, please specify the
board of director’s
suggestions, the results of
self-evaluation or
commissioned evaluation,
major deficiencies or
suggestions, and
improvements should be
stated,if any (Note 2).		 V The Bank prepares the self-evaluation
report periodically. The Bank has also made
the various information disclosures in
accordance with the “Corporate Governance
Best-Practice Principles for Banking
Business” and made improvements
according to the corporate governance
evaluation result of the “Corporate
Governance Center” of Taiwan Stock
Exchange Corp.
No material discrepancy.

51

Corporate Governance

Note 1: The status of operation must be specified in the Memo section, irrelevant with whether the answer is “Yes” or “No".

  • Note 2: The corporate governance self-evaluation report referred to herein means the report stating a company’s self-evaluation and remark on the operation and status of corporate governance of the company based on the scope of the company’s corporate governance self-evaluation.

52

Corporate Governance

  • (5) The composition, responsibilities and operation status of the Salary and Remuneration Committee of the Bank:

  • A. Members of Salary and Remuneration Committee of the Bank

Title Qualification
Name		 Over five years
of experience in
related fields and
the following
professional
qualification
(Note 1)		 Over five years
of experience in
related fields and
the following
professional
qualification
(Note 1)		 Over five years
of experience in
related fields and
the following
professional
qualification
(Note 1)		 Independent Status Independent Status Independent Status Independent Status Serving as
an
independent
director of
other public
companies		 p.s.
(Note 3)

(Note 2)
(1) (2) (3) (1) (2) (3) (4) (5) (6) (7) (8)
Independent
Director		 Zen-Fa Lu ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ 0 qualified
Other Lee, Hau-Sen ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ 0
Other Lee,
Tzung-Hang		 ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ 0

Note 1:With over 5 years of work experience and the following professional qualification

  • (1): Instructor, or higher up, of a public or private junior college, college or university, in Business, Law, Finance, Accounting or other departments as required by corporate business.

  • (2): Judge, prosecutor, solicitor, Certified Public Account or professionally qualified and technical person as required by the company.

  • (3): Experience in Business, Law, Finance, Accounting or as required by corporate business.

Note 2:Two years before the directors and supervisors are elected or during the period they are on the jobs, if they

  • meet the following criteria, please make a “ˇ” mark in the space under the criteria codes.

  • (1): Not an employee of the Bank; nor an employee of its affiliated enterprises.

  • (2): Not a director or supervisor of the Bank or its affiliated enterprises (Does not include the independent directors of the Bank or its parent company or subsidiaries in which the Bank holds more than 50% of the shares).

  • (3): Not directly or indirectly own more than 1% of the Bank’s outstanding shares; nor is one of the top ten non-institutional shareholders of the Bank.

  • (4): Not a spouse or within second-degree relation or third-degree immediate relation to any person specified in the preceding three criteria.

  • (5): Not a director, supervisor, or employee of a legal entity which directly owns more than 5% of the Bank’s issued shares; nor a director, supervisor or employee of the top five legal entities which are owners of the Bank’s issued shares.

  • (6): Not a director, supervisor, or manager of a company which has a business relationship with the Bank; nor a shareholder who owns more than 5% of such a company.

  • (7): Not an owner, partner, director, supervisor, manager or spouse of any sole proprietor business, partnership, company or institution which has provided the Bank and its affiliates with financial, business consulting, or legal services.

  • (8): Not a person under the circumstances specified in Article 30 of the R.O.C. Company Act.

  • Note 3: For a member who is also a director, explain if he or she meets the criteria set out in Paragraph 5, Article 6 of the “Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter”.

    • B. Operations of Salary and Remuneration Committee of the Bank

      • a. There are three people in the Salary and Remuneration Committee of the Bank.

      • b. The term of commissioner:2012,7,4 to 2015,6,21. Salary and Remuneration Committee of the Bank held 2 meetings in 2014. The status of attendance was as follows:

Title Name Attendance in
Person		 By Proxy Attendance Rate (%) p.s.
Convenor Zen-Fa Lu 2 0 100%
Commissioner Lee, Hau-Sen 2 0 100%

53

Corporate Governance

Commissioner Lee, Tzung-Hang 2 0 100%
Other Necessary Notes:
1
Board of directors decline to adopt or require to modify recommendations of the remuneration committee:
None.
2
Resolutions of the remuneration committee to which a member or members of the committee has or have
expressed dissents or reservations which were recorded or made in writing: None.

54

Corporate Governance

(6) Fulfillment of Corporate Social Responsibilities:

Item Implementation Status(Note 1) Implementation Status(Note 1) Implementation Status(Note 1) Discrepancy, if any, with
Corporate Governance
Best-Practice Principles
for TWSE/GTSM Listed
Companies and Reasons
Yes No Memo (Note 2)
1. Exercising Corporate Governance:
(1) Formulation of the corporate social
responsibility policies or systems and
review of the status and results of
implementation.
(2) Whether the Bank has hold regular
social
responsibility educational and
training activities?
(3) Whether the Bank has established a
dedicated unit (concurrently engaged in)
to promote corporate social
responsibilityunder supervision bythe




V
V
V		 (1) The Bank has enacted its
corporate social responsibility
best-practice principles at 18th
Meeting of 8thBoard of
Directors on March 18, 2015,
and submitted the motion for
the same to the shareholders’
meeting and then implemented
the same as the basis to be
bound by the Bank and its
subsidiaries. Further, the
“Corporate Social
Responsibility Committee”
established by the Bank would
review the status and
implementation effect of the
Bank's corporate social
responsibility policy.
(2) According to the Bank’s
corporate social responsibility
best-practice principles, the
Bank would hold regular
educational and training
activities each year, including
propagation of the Bank’s
corporate social responsibility
policy, system and related
management policy and
specific boosting program
approved upon resolution of the
Board of Directors,
arrangement of
directors/supervisors to attend
the corporate governance
programs organized by the
training organizations, and
arrangement of the Bank’s staff
to attend compliance
educational and training
programs.
(3) The Bank enacted the
“Regulations Governing
Establishment of Corporate
Social Responsibility
Committee” in January2015
No material discrepancy

55

Corporate Governance

Item Implementation Status(Note 1) Implementation Status(Note 1) Implementation Status(Note 1) Discrepancy, if any, with
Corporate Governance
Best-Practice Principles
for TWSE/GTSM Listed
Companies and Reasons
Yes No Memo (Note 2)
high-rank management authorized by the
board of directors who shall be
responsible for reporting the status
thereof to the board of directors?
(4) Whether the Bank has defined some
reasonable compensation policy,
integrated corporate social responsibility
with employees’ performance evaluation,
and established some clear and effective
reward/disciplinary system?

V		 and established the Bank’s
“Corporate Social
Responsibility Committee”
responsible for consolidating
the Bank’s corporate social
responsibility policy,
management policy and
specific boosting programs, and
reporting the status thereof to
the Board of Directors to fulfill
its corporate social
responsibility.
(4) The Bank’s “Guidelines for
Payroll under Personnel
Management Regulations” have
defined the standards about
granting of salary, allowance,
compensation and bonus. In
addition to the fixed monthly
salary, the Bank would grant
employees the year-end bonus
and employee bonus based on
the entire operating results and
personal performance, and also
defined reasonable
compensation policy by
integrating the corporate social
responsibility policy.
Compensation policy: the
Bank enacts the “Criteria for
Handling Employee
Merit/Disciplinary Incidents”
separately.
2. Fostering a Sustainable Environment:
(1) The Bank’s endeavor to utilize all
resources more efficiently and use
renewable materials that have a low
impact on the environment to improve
sustainability of natural resources.		 V (1) Promote and urge employees to
recycle used resources and reduce
the amount of wastes. Give priority
to the use of green energy products
with Green Building Material
Certification Logo, Environmental
Protection Certification Logo and
Water Saving Certification Logo.
We have set up a database of the
various idle facility and equipment,
which is to be checked prior to
procurement of new office
equipment to ensure that existing		 No material discrepancy

56

Corporate Governance

Item Implementation Status(Note 1) Implementation Status(Note 1) Implementation Status(Note 1) Discrepancy, if any, with
Corporate Governance
Best-Practice Principles
for TWSE/GTSM Listed
Companies and Reasons
Yes No Memo (Note 2)
(2) Establishment of proper environment
management systems based on the
characteristics of its industry.
(3) Monitoring of the impact of climate
change on the Bank’s operations and
execution of greenhouse gas inspection
and establishment of company strategies
for energy conservation and carbon
reduction and greenhouse gas reduction.		 V
V		 resources are used efficiently.
Environmental friendly products
will be considered as the first
priority where new equipment is to
be purchased.
(2) The Bank delegated the
personnel dedicated to
environmental management in
General Affairs Dept., who should
be responsible for establishing the
environmental management system.
For the time being, they would
conduct the environmental
inspection about concentration of
CO2 and lighting brightness once
per six months according to the
occupational safety & hygiene laws
and regulations to control the quality
of air indoor and maintain the
adequate brightness in the
operational environment.
(3) The Bank is scheduled to
execute the greenhouse gas
inspection and disclosure and to
enact the energy saving and carbon
reduction and greenhouse gas
reduction strategies in 2015.
3.
Preserving Public Welfare
(1) Whether the Bank has established the
related management policies and
procedures in accordance with the
relevant laws and international human
right conventions?
(2) Whether the Bank has established any
employee complaining mechanism and
channel, and taken care of the complaint
adequately?
(3) Whether the Bank has provided safe and
healthful work environments and
training on safety and health for
employees on a regular basis?		 V
V
V		 (1) The Bank complies with the
related labor laws and regulations
and also respects the standard labor
human right conventions recognized
internationally, protect employees’
legal interest and right and
non-discrimination employment
policy, establish adequate
management policies and procedure,
and execute the same precisely.
(2) The Bank has defined the
“employee complaining system” and
would take care of complaints
adequately.
(3) The Bank provides employees
with safe and healthy work
environment and performs labor


No material discrepancy

57

Corporate Governance

Item Implementation Status(Note 1) Implementation Status(Note 1) Implementation Status(Note 1) Discrepancy, if any, with
Corporate Governance
Best-Practice Principles
for TWSE/GTSM Listed
Companies and Reasons
Yes No Memo (Note 2)
safety & health on-the-job education
and training periodically.
(4) Whether the Bank has constructed the
periodical communication mechanism
with employees and also informs them
of operational change that might cause
major impact to them in reasonable
manner?
( 5)Whether the Bank has established some
effective career development training
plan for employees?
(6) Whether the Bank has established the
related consumer protection policies and
complaining procedures toward the
R&D, procurement, production,
operation and service procedures?		 ｖ
ｖ
ｖ		 (4) The Bank has instituted several
mechanisms including the
web-based “Employees Corner” and
“Employee Comments and
Suggestions Form” to provide
employees with the opportunity to
offer comments and suggestions at
any time.
(5) In order to upgrade employees’
expertise, the Bank will organize
various training programs and
workshops and assign staff to attend
various external professional
training programs from time to time
each year. Further, the training of
the Bank clerks’ career capability is
also executed through the job
rotation system.
(6) In order to protect consumers’
interest and right, the Bank has
defined the “Procedure for
Processing of Customers’
Complaints” which would be
applied when any customer raises
any dispute over the Bank’s products
and services in person or via the
Bank, the competent authority or
any other complaining channels, by
phone or email, or in writing, or via
fax. Meanwhile, the dedicated unit
would be responsible for following
up the case to resolve the dispute for
customers efficiently and rapidly,
and also analyzing and gather
statistics of the complaints to order
various units to investigate and
make improvement, so as to prevent
the same case from arisingagain. In
No material discrepancy

58

Corporate Governance

Item Implementation Status(Note 1) Implementation Status(Note 1) Implementation Status(Note 1) Discrepancy, if any, with
Corporate Governance
Best-Practice Principles
for TWSE/GTSM Listed
Companies and Reasons
Yes No Memo (Note 2)
(7) Whether the Bank markets and labels
products and services in accordance with
the related laws and international
practices?
ｖ		 addition to the hotline for customers’
complaints, the Bank also
establishes the “Taskforce Dedicated
to processing of Consumers’
Dispute” to resolve dispute
independently and ensure that the
customers’ problems may be
resolved amicably.
(7) The Bank is used to marketing
and labeling products and services in
accordance with various laws and
regulations. If necessary, the Bank
will also ask the Legal Affairs &
Compliance Dept. for opinion.

(8) Whether the Bank has assessed the
supplier's record about environmental
protection and society before trading with
the supplier?
(9) Whether the contract between the Bank
and its main supplier includes the provision
stating that where the supplier is suspected
of violating its corporate social
responsibility policies or renders
remarkable effect to the environment and
society adversely, the Bank may terminate
or rescind the contract at any time?
ｖ
ｖ		 (8) Before trading with any supplier,
the Bank would meet the relevant
requirements according to the
Bank’s procurement-related
regulations and corporate social
responsibility best-practice
principles.
(9) When the Bank is aware of any
supplier suspected of violating its
corporate social responsibility and
renders remarkable effect on the
environment or society (e.g., the
food safety issue) during any special
marketing activities, the Bank would
stop the activities immediately.
No material discrepancy
4. Enhancing Disclosure of Corporate Social
Responsibility(CSR) Information:
Whether the Bank has disclosed relevant and
reliable information relating to corporate
social responsibility on its website or Market
Observation Post System?		 ｖ The Bank has installed the CSR area
on its website to disclose its CSR
philosophy and policy.
Meanwhile, the Bank would disclose
the important information related to
the Bank’s CSR on MOPS. By
No material discrepancy

59

Corporate Governance

Item Implementation Status(Note 1) Implementation Status(Note 1) Implementation Status(Note 1) Discrepancy, if any, with
Corporate Governance
Best-Practice Principles
for TWSE/GTSM Listed
Companies and Reasons
Yes No Memo (Note 2)
preparing the CSR report, the Bank
states its efforts and policies in
respect of economy, society and
environment. The report is posted on
the Bank’s website available for
access and downloading by the
public.
5.
If the Bank has established its own corporate social responsibility best-practice principles based on the “Corporate
Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies”, please describe any
discrepancy between the policies and their implementation: The Bank has put in place its own “Corporate Social
Responsibility Best-Practice Principles” upon approval of 18thMeeting of 8thBoard of Directors on March 18, 2015
and would implement the same upon resolution at a shareholders’ meeting. The Bank upholds the belief of “giving
back to society what we have benefited from it” and is dedicated to promoting the various charitable events on a
long-term basis as a way of fulfilling our corporate social responsibilities and also comply with the “Corporate
Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies”. Therefore, there is no material
discrepancy.
6.
Other important information to facilitate better understanding of the Bank’s corporate social responsibility practices
(e.g., environmental protection, community involvement, social contribution, social work, social welfare, consumer
rights, human rights, safety and hygiene and the adopted policies and measures to fulfill corporate social
responsibilities and the status ofperformingsuch responsibilities).
7.
If any of the Bank’s products or the CSR Report has been accredited to the standards of an external validation
agency, provide details: None.
  • Note 1: The status of operation must be specified in the Memo section, irrelevant with whether the answer is “Yes” or “No". Note 2: Where the Bank has prepared the CSR report, the memo section may specify the way to access the CSR report and be replaced by index pages.

(7) Fulfillment of ethical Management and Adopted measures:

Item Implementation Status(Note 1) Implementation Status(Note 1) Implementation Status(Note 1) Discrepancy, if any, with
Ethical Corporate
Management Best-Practice
Principles for
TWSE/GTSM Listed
Companies and Reasons
Yes No Memo
1. Formulate the Policy and Procedures for
Ethical Management
(1) Whether the Bank has expressly stated
the ethical policy and its fulfillment by the
board of directors and the management in its
Articles
of
Incorporation
and
public
documents?



V		 (1) The Bank has defined the
“Union Bank of Taiwan Ethical
Corporate Management
Best-Practice Principles” upon
approval of the Board of
Directors on March 18, 2015,
and also expressly stated in
these Principles that the Board
of Directors and management		 No material discrepancy

60

Corporate Governance

Item Implementation Status(Note 1) Implementation Status(Note 1) Implementation Status(Note 1) Discrepancy, if any, with
Ethical Corporate
Management Best-Practice
Principles for
TWSE/GTSM Listed
Companies and Reasons
Yes No Memo
(2) Whether the Bank has defined the policy
against unethical conduct, and expressly
stated the SOP, guidelines and reward and
disciplinary & complaining systems for
misconduct, and also implemented the policy
precisely?
(3) Whether the Bank takes any prevention
measures against the operating activities
involving high unethical conduct under
Paragraph 2 of Article 7 of the "Ethical
Corporate
Management
Best
Practice
Principles
for
TWSE/GTSM
Listed
Companies" or within other operating areas?










V
V		 shall commit to fulfill these
Principles actively.
In order to perform the
commitment, the Bank asks the
Audit Dept. to supervise
fulfillment of the ethical
corporate management policy
and check whether there is any
unethical conduct in the Bank,
and evaluate the compliance
about the related operational
flows to produce report to the
Board of Directors.
(2) To define the policy against
unethical conduct, the Bank has
expressly stated the Bank’s
operating procedures, conduct
guidelines, and reward and
disciplinary & complaining
system for misconduct in the
Bank’s H.R. management
regulations and work rules.
(3) Each of the Bank’s business lines
is subject to strict internal
control and risk control. In
addition to following the
requirements of competent
authorities and competent
entities in charge of the
business lines, the Bank also
establishes such units as
compliance, audit and risk
management. The prevention
programs referred to in the
preceding paragraph also define
the relevant regulations
prohibiting bribery to ensure
the Company’s ethical
management. Meanwhile, the
Bank’s directors will adhere to
the high self-discipline
principle, and recuse
themselves from any discussion
or voting for any motions in
which they have conflict of
interest voluntarily, and are free
from any unjust enrichment
resulting in damage to the
interest and right of the Bank’s
customers and shareholders.
2. Implementation of Ethnical Management
(1) Whether the Bank has evaluated the
ethical record of trading counterparts and
specificallyset out the ethical management


V		 (1) The Bank’s business activities
shall avoid any trading with persons
with unethical record,and the Bank


No material discrepancy

61

Corporate Governance

Implementation Status (Note 1) Discrepancy, if any, with Ethical Corporate Management Best-Practice Item Yes No Memo Principles for TWSE/GTSM Listed Companies and Reasons clause in business contract? plans to expressly state the clause about compliance with the Bank’s ethical management policy in contracts. Meanwhile, before conclusion of any contract, the Bank V will have the contract reviewed by the legal affairs unit to ensure the right, obligation and validity of the contract. (2) Whether the Bank has established a (2) The Bank appoints the Audit dedicated unit (concurrently engaged in) to Dept. to supervise the promotion of promote ethical corporate management under V the Bank’s ethical management supervision by the board of directors who policy and execution of the Bank’s shall be responsible for reporting the status prevention programs, and to report thereof to the board of directors periodically? to the Board of Directors periodically. (3) Whether the Bank has defined the policy (3) The Bank’s policy and channel to prevent conflict of interest and to offer V against conflict of interest are appropriate channels for providing a separately defined in the work rules, statement in regard to the situation, and employees’ service rules, employee implemented the same precisely? complaining system (counterpart: employees) and parliamentary rules for directors’ meetings (counterpart: directors), both of which are implemented precisely. (4) Whether the Bank has implemented (4) The Bank’s accounting system is effective accounting policies and internal established under the generally controls system established by the Bank to accepted accounting principles. carry out ethical management and the status V The Bank’s internal control system of audits conducted by internal auditors or is established under the external auditors? “Implementation Rules of Internal Audit and Internal Control System of Financial Holding Companies and Banking Industries”, in order to promote the corporate well-founded operation and ensure fulfillment of operating effect and efficiency, reliability of related financial statements and compliance with laws. Audit units will also review the design and validity of execution of the internal control system through the internal audit system and self-audit system.

(5) Whether the Bank has organized internal/external educational and training programs for ethical corporate management periodically?

(5) According to the Bank’s ethical corporate management best-practice principles, the Bank will organize the internal propagation activity to communicate the importance of ethics to directors, employees and appointees from time to time. The related staff will also attend the related workshops and educational training programs organized by

62

Corporate Governance

Item Implementation Status(Note 1) Implementation Status(Note 1) Implementation Status(Note 1) Discrepancy, if any, with
Ethical Corporate
Management Best-Practice
Principles for
TWSE/GTSM Listed
Companies and Reasons
Yes No Memo
external entities.
3. Status of the Bank's complaint system
(1) Whether the Bank has defined a specific
complaints
and
rewards
system,
and
established
some
convenient
complaint
channel, and assigned competent dedicated
personnel to deal with the situation?
(2) Whether the Bank has defined the
standard
operating
procedure
and
non-disclosure
mechanism
toward
the
investigation on the complaints as accepted?
(3) Whether the Bank has adopted the
measures for protecting complainants from
inappropriate disciplinary actions due to their
complaints?









V
V
V		 The
Bank’s
ethical
corporate
management best-practice principles
have
defined
the
relevant
complaining
and
operating
procedures.
The
Bank
also
established an internal independent
email box and hotline for complaints
available to the Bank’s internal and
external personnel. The dedicated
unit
will
designate
competent
dedicated personnel subject to the
circumstances, declare in writing to
keep confidential the complainant’s
ID and contents of the complaint
and
undertake
to
protect
complainants from unfair treatment
due to the complaints.















No material discrepancy
4. Enhancing Information Disclosure
(1) Whether the Bank has disclosed the
content and the status of implementation of
its ethical corporate management best
practice principles on its websites and the
MOPS?		 V








The “Corporate Governance Area” is
set up on the Bank’s website to
disclose the requirements about
ethical
corporate
management
best-practice principles and status of
the
implementation
thereof.
Further,
for
transparency
of
information, the related information
has been also uploaded to the MOPS
for access byinvestors.








No material discrepancy
5. If the Bank has established corporate ethical management based on “Corporate Ethical Management Best Practice
Principles for TWSE/GTSM-Listed Companies”, please describe any discrepancy between the policies and their
implementation: The Bank has established the “Union Bank of Taiwan Corporate Ethical Management Best Practice
Principles” and “Work Rules” setting out that employees are required to carry out their duties ethically and dutifully and
comply with regulatory requirements, policies, and service standards prescribed by the Bank. The company shall be
managed in accordance with regulatory requirements and internal procedures to maximise investor benefits. There is no
discrepancy between the Bank's operation of ethical management and said “Corporate Ethical Management Best Practice
Principles for TWSE/GTSE-Listed Companies”.
6. Other important information beneficial in understanding the status of implementation of the Bank’s ethical management
practices (such as the Bank’s review and revision to the ethnical management principles): The Bank has expressly stated in
the “Union Bank of Taiwan Corporate Ethical Management Best Practice Principles” that the Board of Directors and
management shall undertake to implement the regulations under the Principles. In order to perform the undertaking, the
Bank has the Audit Dept. supervise the status of implementation of ethical management policies and audit whether there is
any unethical conduct in the Bank periodically, and evaluate compliance of the related business flows, and produce the
related report to the Board of Directors.

Note 1: The status of operation must be specified in the Memo section, irrelevant with whether the answer is “Yes” or “No".

(8) Operating procedure for internal important information:

  • In order to establish the Bank’s fair important internal information processing and disclosure mechanism to prevent information from being disclosed inadequately and to ensure the accuracy and consistency of the information released by the Bank to the public and enhance the control over prevention of insider trading, the Bank defined the “Operating Procedure for Processing of Important Internal Information”. Please refer to

63

Corporate Governance

the corporate governance at MOPS (http://mops.twse.com.tw).

  • (9) Corporate governance principles and methods for searching the relevant regulations: Please refer to the corporate governance at MOPS (http://mops.twse.com.tw).

  • (10) Other material information sufficient to enhance understanding of the status of the Bank’s corporate governance practices:

  • Please refer to the Bank’s website (http://www.ubot.com.tw).

  • ( 11 ) Execution of the Internal Controls System

  • A. Where an independent auditor is appointed to perform audit on the internal controls system, the auditor’s report shall be disclosed: None.

  • B. Statement of Internal Control:

Union Bank of Taiwan

Statement of Internal Controls System

March 23, 2015

To Financial Supervisory Commission: On behalf of Union Bank of Taiwan, we hereby state that from January 1, 2014 to December 31, 2014, we have duly complied with the “Enforcement Regulations for Bank Internal Audit Control System” in establishing its internal system, implementing risk management, designating an independent and objective department to conduct audits, and regularly reporting to the Board of Directors and the Supervisors. With respect to the securities business, evaluation of the effectiveness of the design and implementation of its internal control systems described in the “Regulations Governing the Establishment of Internal Control Systems of Service Enterprises in Securities and Futures Markets”, promulgated by the Securities and Futures Bureau, Financial Supervisory Commission. After prudent evaluation, all business units’ internal control and law compliance have been in effect during the year. This Statement will be included as the main content of the Bank’s annual report and prospectus, and be published to the public. If there is any illegal activity such as fraud or concealment, liabilities under Article 20, 32, 171, and 174 of the Securities and Exchange Law will be involved.

Chairman: Shiang-Chang Lee

President: Jeff Lin

==> picture [39 x 38] intentionally omitted <==

==> picture [38 x 35] intentionally omitted <==

64

Corporate Governance

Chief Auditor: Kuo-Pao Kang Compliance Officer of the Bank Yan-Tsung Kao

==> picture [37 x 30] intentionally omitted <==

==> picture [40 x 37] intentionally omitted <==

Attachment Internal Control Deficiencies and Improvement Plan

Deficiency Deficiency Improvement Plan Improvement Plan Estimated
Completion Date
None None None
Disclosed Matter Major Deficiency Status of Improvement
(1)
Responsible person or employees of
the Bank violated the law when
conducting business and resulted in
an indictment by a prosecutor.
None		 None
(2)
A fine was levied on the Bank by
the Financial Supervisory
Commission for violations of laws
and regulations.		 None None
(3)
Misconduct occurred and resulted
in the Financial Supervisory
Commission’s imposing strict
corrective measures.		 None None
(4)
Punishment imposed by the
Financial Supervisory Commission
in accordance with Paragraph 1,
Article 61-1 of the Banking Act of
ROC
None None
(5)
Accidents occurring as a result of a
fraud, major non-recurring
incidence or failure to comply with
the Guidelines for Maintaining the
Security of Financial Institutions, as
a result of which individual or
accumulated losses during the year
amounted to NT$ 50 million or
more and therefore the nature and
amount of loss for which shall be
disclosed.
None		 None
(6)
Other necessary disclosures
prescribed by the Financial
Supervisory Commission.		 None None

(13) Material Resolutions of Shareholders Meetings or Board of Directors Meetings During

65

Corporate Governance

the Current Fiscal Year up to the Date of Printing of the Annual Report

  • A. Major Resolutions of Shareholders’ Meeting of 2014 and their Implementation Status

  • a. Annual Accounts for 2013: Resolution Approved.

  • b. Appropriation of 2013 Earnings: Resolution Approved.

  • c. Amendments to the Bank’s “Articles of Incorporation” in part: Resolution Approved.

  • d. Amendments to the Bank’s “Operating Procedure for Acquisition or Disposition of Assets” in part: Resolution Approved.

  • e. Change of the Bank’s “Regulations Governing Election of Directors and Supervisors” into “Regulations Governing Election of Directors” and amendments to the Regulations in part: Resolution Approved.

  • f. Capital increase by capitalization of earnings and employee bonus and issuance of new shares: Resolution Approved.

  • B. Major Resolutions of Board Meetings During 2014 up to the Date of Printing of the Annual Report:

  • a. At 11[th] Meeting of 8[th] Board of Directors held on January 22, 2014, the directors resolved to approve the 2014 management strategies and various business policies and budgets.

  • b. At 12[th] Meeting of 8[th] Board of Directors held on March 19, 2014, the directors resolved to approve the “Articles of Incorporation”, “Operational Guidelines for Related Party Transactions Other Than Loans”, “Segregation of Responsibilities for Internal Assessment of Accounting Affairs”, “Procedures for Acquisition and Disposition of Assets” and change of the “Regulations Governing Election of Directors and Supervisors” to “Regulations Governing Election of Directors” as well as revision to parts of the regulations.

  • c. At 12th Meeting of 8th Board of Directors held on March 19, 2014, the directors resolved to approve the “2013 business report and individual financial statements audited by the external auditor (including the consolidated financial statements of subsidiaries)”, “2013 earnings appropriation” and “capital increase by capitalizing earnings and employee bonuses (appropriation of NT$2,283,020,875)”.

  • d. At 13th Meeting of 8th Board of Directors held on May 7, 2014, the directors resolved to approve the “Independence of CPAs and CPA Professional Fees”.

  • e. At 14th Meeting of 8th Board of Directors held on July 9, 2014, the directors resolved to set “August 2, 2014 to be the record date for distribution of stock dividends by capital increase and issuance of new shares”.

  • f. At 15th Meeting of the 8th Board of Directors held on August 20, 2014, the directors resolved to approve the “Individual Financial Statements for the period ended June 30, 2014 audited by external auditors and consolidated financial statements for the same period reviewed by the external auditors”.

  • g. At 17th Meeting of 8th Board of Directors held on February 11, 2015, the directors approved the “Budget of the Bank and Respective Business Line 2015”, “Operating Policy for Respective Business Line”, and proposal to issue subordinate debt for a total amount up to NT$ 5 billion (incl.) for maturities

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Corporate Governance

between 5.5 years (incl.) and 10 years (incl.).

  • h. At 17th meeting of 8th Board of Directors held on February 11, 2015, the directors resolved to approve the amendments to “Articles of Incorporation” and “Parliamentary Rules for Shareholders’ Meetings”, addition of “Articles of Association for Audit Committee”, abolishment of “the Regulations Governing Functions of Supervisors” and amendments to the “Parliamentary Rules for Directors’ Meetings”, amendments to the “Articles of Association, and rename of “Default Loans Management Dept.” into “Legal Affairs and Compliance Dept.”, and motion for delegation of the compliance officer of Head Office.

  • i. At 18th Meeting of 8th Board of Directors held on March 18, 2015, the directors resolved to approve the amendments to the “Regulations Governing Issuance of Financial Bonds”, supplementary amendments to the “Parliamentary Rules for Shareholders' Meetings”, re-enactment of the “Procedure for Election of Directors” and abolishment of the “Regulations Governing Election of Directors” to be in line with the “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies” amended by the competent authority, enactment of the “Corporate Social Responsibility Best-Practice Principles”, enactment of the “Ethical Corporate Management Best-Practice Principles”, and enactment of the “Corporate Governance Best-Practice Principles”.

(14) During the current fiscal year up to the date of printing of the annual report, a director or supervisor has expressed a dissenting opinion with respect to a material resolution passed by the board of directors, and said dissenting opinion has been recorded or prepared as a written declaration, disclose the principal context thereof: None.

(15) A summary of resignations and dismissals, during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report, of persons connected with the company’s financial report: None.

4. Information on CPA professional fees

(1)

Name ofCPA Firm Name of CPA AuditPeriod Note
T N Soong & Co and
Deloitte & Touche		 Terence Huang Vincent
Cheng		 January ~
December 2014

CPA Professional Fees Bracket

In NT$thousand In NT$thousand
Type of Fees
Fees Bracket		 Audit Fees Non-audit
Fees		 Total
1 Under 2,000 V
2 2,000 (incl.) ～4,000
3 4,000 (incl.) ～6,000
4 6,000 (incl.) ～8,000 V
5 8,000 (incl.) ～10,000 V

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Corporate Governance

Type of Fees
Fees Bracket		 Type of Fees
Fees Bracket		 Audit Fees Non-audit
Fees		 Total
6 10,000and above

  • (2) Disclosure of the amount and service contents of payment to external auditors, the employer of the external auditors and affiliates on non-audit fees accounted for 25% of the fees for financial audit services: None

  • (3) Change of audit engagement and that the audit fee for the year of change is less than that charged for the year prior to the change: None.

  • (4) Auditing fee is 15% or more below the fee charged for the previous year: None.

5. Information on change of CPA: None.

6. The Chairman, President and Executive Officers in charge of the Bank’s financial or accounting affairs who have, during the past year, served a position in the CPA firm to which or its affiliated enterprises the independent auditor(s) belong to : None.

7. Transfer of Equity and Changes in Equity Used as Collateral by Directors, Supervisors, Managers, and Others Required to Report Equity in accordance with Paragraph 3, Article 25 of the Banking Act. :

(1) Changes in shareholding

2014 2014 April 28, 2015 April 28, 2015
Title Name Shareholding Share Pledges Shareholding Share Pledges

Increase (Decrease)
Increase (Decrease)
Increase (Decrease)
Increase (Decrease)
Chairman Shiang-ChangLee 118,924 0 0 0
Independent
Director		 Kao-Jing Wang 0 0 0 0
Independent
Director		 Zen-Fa Lu 0 0 0 0
Director Union Construction
Enterprise Co.,Ltd.		 8,008,010 0 0 0
Director Chen-Chern
Investment Co.,Ltd.		 11,014,602 0 0 0
Director Yu-Pang Co., Ltd. 3,345,266 0 0 0
Director Chi-Shun Investment
Co.,Ltd.		 8,199,482 0 1,329,000 0
Managing
Director		 Chen-Chern
Investment Co.,Ltd.		 11,014,602 0 0 0
Director Yu-Quan Lee 310,011 0 0 0
Supervisor Pao-Shing
Investment Co.,Ltd.		 8,013,625 0 0 0
Supervisor Pao-Shing
Investment Co.,Ltd.		 8,013,625 0 0 0

68

Corporate Governance

2014 2014 April 28, 2015 April 28, 2015
Title Name Shareholding Share Pledges Shareholding Share Pledges

Increase (Decrease)
Increase (Decrease)
Increase (Decrease)
Increase (Decrease)
Supervisor Pai-Sheng Investment
Co.,Ltd.		 11,715,114 0 0 0
President Jeff Lin 492,872 0 0 0
SEVP Yin-Bor Chan 50,501 0 0 0
SEVP Herman Tu 36,870 0 0 0
SEVP Cheng-Yu Liu 16,153 0 0 0
Chief Auditor Kuo-Pao Kang 13,177 0 0 0
EVP Hsia, Kuo-Hsien 12,328 0 0 0
EVP Cheng-Juh Hsieh 40,416 0 0 0
Manager Michael Lin 11,732 0 0 0
Manager Wu-Lien Peng 46,833 0 0 0
Manager Lin-ShengYu 8,093 0 0 0
Manager Kuang-Han Liu 5,781 0 0 0
Manager Chan-Kwei Chen 11,846 0 0 0
Manager Jeng-PingLiu (12,357) 0 0 0
Manager WendyChi 11,416 0 0 0
Manager Ching-Shou Liu 14,151 0 0 0
Manager Chien-Hui Li 5,206 0 0 0
Manager Jen-ChungCheng 8,926 0 0 0
Manager PattyChen 4,759 0 0 0
Manager Su-Yean Lo 5,460 0 0 0
Manager Ru-Ji Cheng 6,856 0 0 0
Manager Liang-Kuei Kuo 0 0 0 0
Manager Hann-Tsau Tsai 29,007 0 0 0
Manager Chang-YungChen 22,461 0 0 0
Manager Wen-Chien Chien 8,745 0 0 0
Manager Chia-Yu Chuo 5,674 0 0 0
Manager JoyTang 11,371 0 0 0
Manager Luke Yang 15,968 0 0 0
Manager Buo-ChengLee 13,495 0 0 0
Manager Liu, Chueh-Ling 8,839 0 0 0
Manager Kuo-KuangChou 4,491 0 0 0
Manager Kuen-Yuan Tsai 8,418 0 0 0
Manager JackyLiao 5,667 0 0 0
Manager Rong-Hui Huang 8,226 0 0 0
Manager Jane Lu 10,432 0 0 0
Manager Wen-Chi Chiang 3,978 0 0 0
Manager HedyWei 4,352 0 0 0
Manager Yu-Hsiu Hsu 7,720 0 0 0
Manager Peter Chien 48,962 0 0 0
Manager Shih-Shien Chene 0 0 0 0
Manager Russell YC Chang 18,902 0 0 0
Manager Chang-Chen Lin 5,951 0 0 0
Manager GaryTsai 5,637 0 0 0

69

Corporate Governance

2014 2014 April 28, 2015 April 28, 2015
Title Name Shareholding Share Pledges Shareholding Share Pledges

Increase (Decrease)
Increase (Decrease)
Increase (Decrease)
Increase (Decrease)
Manager Mei-Lan Lin 4,876 0 0 0
Manager Yao-TsungKao 10,721 0 0 0
Manager Chu-Shih Wei 5,667 0 0 0
Manager Sophie Hsu 9,851 0 0 0
Manager Michael Lee 7,424 0 0 0
Manager Ching-ChungLin 17,441 0 0 0
Manager Denfer Hung 8,625 0 0 0
Manager Chien-LungChen 15,132 0 0 0
Manager Tawei Shih 7,085 0 0 0
Manager Shu-FengHsueh 6,557 0 0 0
Manager Lawrence Chen 9,140 0 0 0
Manager Yeong-Jin Hwang 7,333 0 0 0
Manager Meng-Hsia Wu 10,146 0 0 0
Manager Chien-ChungSu 5,612 0 0 0
Manager Hui-Chin Yang 0 0 0 0
Manager Ye-Yan Lin 6,139 0 0 0
Manager Ching-Wen Chen 8,351 0 0 0
Manager Chih-ChungChang 8,448 0 0 0
Manager Fang-Ni Wang 6,418 0 0 0
Manager LannyLiaw 0 0 0 0
Manager Yen-Jou Liu 5,972 0 5,000 0
Manager Pauline Sheng 8,191 0 0 0
Manager JimyChou 5,738 0 0 0
Manager Shen-YungPeng 2,750 0 0 0
Manager MaryHuang 5,547 0 0 0
Manager Terrence Lin 0 0 0 0
Manager Teh-Chin Tsai 15,062 0 0 0
Manager Huang-Wen Huang 10,301 0 0 0
Manager Hsiu-Yun Su 7,234 0 0 0
Manager Shis-Wen Lu 4,858 0 0 0
Manager Kuan-HongLee 4,104 0 0 0
Manager Hung-Min Chen 7,123 0 0 0
Manager James Tsai 10,502 0 0 0
Manager Hui-Fen Chao 14,409 0 5,000 0
Manager Chia-Wei Lin 5,581 0 0 0
Manager Shih-Yuan Liaw 4,704 0 0 0
Manager Chiung-Yu O 5,323 0 0 0
Manager Chien-ChungWu 6,299 0 0 0
Manager Wu-Yuan Chen 8,273 0 0 0
Manager Shan-Chih Yen 9,074 0 0 0
Manager Ta-Yu Chin 8,604 0 0 0
Manager Chi-FangChu 3,313 0 0 0
Manager CandyLin 7,259 0 0 0
Manager Roger Chang 1,307 0 0 0

70

Corporate Governance

2014 2014 April 28, 2015 April 28, 2015
Title Name Shareholding Share Pledges Shareholding Share Pledges

Increase (Decrease)
Increase (Decrease)
Increase (Decrease)
Increase (Decrease)
Manager Hsien-MingYen 7,529 0 0 0
Manager Feng-Li Lin 9,117 0 0 0
Manager Miao-Hui Yeh 12,905 0 0 0
Manager CM Huang 37,569 0 0 0
Manager I-Wen Ho 10,764 0 0 0
Manager JefferyTsai 10,171 0 0 0
Manager Ju-LingKuo 17,555 0 0 0
Manager Wen-Hui Lin 9,316 0 0 0
Manager Miranda Tsai 6,543 0 0 0
Manager Kuen-ChengChou 7,132 0 0 0
Manager Jyh-ChiangHuang 12,658 0 0 0
Manager JennyCheng 6,415 0 0 0
Manager Wen-Jui Chou 5,988 0 0 0
Manager Ping-Hul Lin 8,359 0 0 0
Manager Shiu-Lan Hsieh 8,630 0 0 0
Manager Tereasa Lin 7,048 0 0 0
Manager AmyChung 6,505 0 0 0
Manager Yao-Hsien Lee 15,131 0 0 0
Manager Chao-Chuan Chuang 4,740 0 0 0
Manager Jung-HsiangChung 7,793 0 0 0
Manager Richard Yang 5,951 0 0 0
Manager Chang-Fu Tsai 6,234 0 0 0
Manager Connie Tseng 7,793 0 0 0
Manager Lisa Lu 10,065 0 0 0
Manager Shiu-Ju Huang 4,862 0 0 0
Manager Chin-ChungKuan 6,287 0 0 0
Manager Ming-ChungGuo 0 0 0 0
Manager Mei-LingLee 7,595 0 0 0
Manager Yanger Yang 11,222 0 0 0
Manager Tarsicio Tong 15,979 0 0 0
Major
Shareholder		 Tsong-Li Investment
Co.,Ltd.		 26,520,269 0 0 0
Major
Shareholder		 Pai-Sheng
Investment Co.,Ltd.		 11,715,114 0 0 0
Major
Shareholder		 Tien-Sheng Investment
Co.,Ltd.		 11,408,270 0 0 0
Major
Shareholder		 Chen-Chern Investment
Co.,Ltd.		 11,014,602 0 0 0
Major
Shareholder		 Chien-Tuan Investment
Co.,Ltd.		 10,620,609 0 0 0
Major
Shareholder		 Wei-Chih Investment Co.,
Ltd.
9,830,613		 0 0 0
Major
Shareholder		 Chuo-Pao Investment
Co.,Ltd.		 9,567,286 0 0 0
Major
Shareholder		 Kun-Che Investment
Co.,Ltd.		 8,810,563 0 0 0
Major
Shareholder		 Jan-Pang Investment Co.,
Ltd.		 8,488,178 0 0 0

71

Corporate Governance

2014 2014 April 28, 2015 April 28, 2015
Title Name Shareholding Share Pledges Shareholding Share Pledges

Increase (Decrease)
Increase (Decrease)
Increase (Decrease)
Increase (Decrease)
Major
Shareholder		 Chi-Shun Investment Co.,
Ltd.		 8,199,482 0 1,329,000 0
Major
Shareholder		 Pao-Shing Investment
Co.,Ltd.		 8,013,625 0 0 0
Major
Shareholder		 Union Enterprise
Construction Co.,Ltd.		 8,008,010 0 0 0
Major
Shareholder		 Hung-Hsiang Investment
Co.,Ltd.		 7,930,290 0 0 0
Major
Shareholder		 Horng-Gow Investment
Co.,Ltd.		 7,416,845 0 0 0
Major
Shareholder		 Bai-Ing Investment Co.,
Ltd.		 7,306,573 0 0 0
Major
Shareholder		 Chen-Sheng Investment
Co.,Ltd.		 6,875,318 0 0 0
Major
Shareholder		 Lin, Chang Su-O 6,835,302 0 0 0
Major
Shareholder		 Lin Rong San Foundation
of Culture and Social
Welfare		 3,183,182 0 0 0
Major
Shareholder		 Horng-Pern Construction
Co.,Ltd.		 5,217,998 0 0 0
Major
Shareholder		 Horng-Pang Construction
Co.,Ltd.		 4,415,662 0 0 0
Major
Shareholder		 Union Recreation
Enterprise Co.,Ltd.		 3,873,899 0 0 0
Major
Shareholder		 Yu-Pang Co., Ltd. 3,345,266 0 0 0

(2) Information on Share Transfer: Not applicable as the counter parties to the share transfer are non-related parties.

(3) Information on Share Pledge: Not applicable as there is no change on the share pledge.

8. Information for Top 10 Shareholders Being the Related Parties

April 28 , 2015 Unit: Shares；%

Shareholder(Note 1) Shareholding Shareholding Spouse or minor Spouse or minor Top 10
shareholder
s being		 Top 10
shareholder
s being		 Name of and Relationship Between
the Top Ten Shareholders Being A
Related Party as Defined in
Statements of Financial Accounting
Standards No. 6		 Name of and Relationship Between
the Top Ten Shareholders Being A
Related Party as Defined in
Statements of Financial Accounting
Standards No. 6
children’s
the related
shareholding parties to
each other
Shares
(Preferred
Stock
Included)		 % Shares % Shares % Name Relation

72

Corporate Governance

Shareholder(Note 1) Shareholding Shareholding Spouse or minor Spouse or minor Top 10
shareholder
s being		 Top 10
shareholder
s being		 Name of and Relationship Between
the Top Ten Shareholders Being A
Related Party as Defined in
Statements of Financial Accounting
Standards No. 6		 Name of and Relationship Between
the Top Ten Shareholders Being A
Related Party as Defined in
Statements of Financial Accounting
Standards No. 6
children’s
the related
shareholding parties to
each other
Shares
(Preferred
Stock
Included)		 % Shares % Shares % Name Relation
Tsong Li
Investment Co., Ltd.
Representative:
Hong-BungLin		 196,922,448
0		 8.03%
0		 -
-		 -
-		 -
-		 -
-
Pai-Sheng
Investment Co., Ltd.
Representative:
Si-Yong Lin		 125,454,092
273,431		 5.11%
0.01%		 -
1,414,963		 -
0.05%		 -
-		 -
-		 Chu-Pao
Investment Co., Ltd.
Pai-Sheng
Investment Co., Ltd.		 The
Company’s
responsible
person is the
same as that of
the other
company
Tien-Sheng
Investment Co., Ltd.
Representative:
Sue-Feng Tsao		 122,168,179
3,335		 4.98%
0		 - - - -
Chen-Chern
Investment Co., Ltd.
Representative:
Chung- Yu Lee		 117,952,491
107,967		 4.81%
0
Chien-Yuan
Investment Co., Ltd.
Representative:
C.C. Chang		 113,733,325
527,886		 4.64%
0.02%		 -
-		 -
-		 -
-		 -
-		 - -
Wei-Chih
Investment Co., Ltd.
Representative:
S.S. Yeh		 105,273,459
0		 4.29%
0		 - - -
-		 -
-		 -

73

Corporate Governance

Shareholder(Note 1) Shareholding Shareholding Spouse or minor Spouse or minor Top 10
shareholder
s being		 Top 10
shareholder
s being		 Name of and Relationship Between
the Top Ten Shareholders Being A
Related Party as Defined in
Statements of Financial Accounting
Standards No. 6		 Name of and Relationship Between
the Top Ten Shareholders Being A
Related Party as Defined in
Statements of Financial Accounting
Standards No. 6
children’s
the related
shareholding parties to
each other
Shares
(Preferred
Stock
Included)		 % Shares % Shares % Name Relation
Chu-Pao
Investment Co., Ltd.
Representative:
Si-Yong Lin		 102,453,565
273,431		 4.18%
0.01%		 -
1,414,963		 -
0.05%		 - - Chu-Pao
Investment Co.,
Ltd.
Pai-Sheng
Investment Co.,
Ltd.		 The
Company’s
responsible
person is the
same as that
of the other
company
Kun-Che
Investment Co., Ltd.
Representative:
Y. C. Huang		 94,350,012
234,152		 3.84%
0%		 - - - - - -
Jen-Pang
Construction Co., Ltd.
Representative:
Lin Chang Su-O		 90,897,682
73,197,460		 3.70%
2.98%		 - - - - - -
Chi-Shun
Investment Co., Ltd.
Representative:
Jyh-Dong Chen		 89,135,105
301,889		 3.63%
0.01%		 - - - - - -

9. Ownership of Investee Companies

December 31, 2013 Unit: Shares；%

Investments from Investments from
Directors, Supervisors,
Invested by Executive Officers and
Total Investments
the Bank Directly or Indirectly
Investee CompaniesNote (A)
Controlled Entities of		 (C=A+B)
the Bank
(B)
Shares % Shares % Shares %
Union Finance Int’l (HK)Ltd. 30,000,000
99.99%		 2 0.000007% 30,000,002
100.00%
Union Information Technology Corp. 999,923
99.99%		 0
0.00%		 999,923
99.99%
Union Finance and Leasing Int’l Corp. 83,000,000
100.00%		 0
0.00%		 83,000,000
100.00%
Union Securities Investment Trust Corp. 10,500,000
35.00%		 2,595,656 8.65% 13,095,656 43.65%
Union Insurance Broker Company 500,000
100.00%		 0
0.00%		 500,000
100.00%

74

Corporate Governance

Investments from Investments from
Directors, Supervisors,
Invested by Executive Officers and
Total Investments
the Bank Directly or Indirectly
Investee CompaniesNote (A)
Controlled Entities of		 (C=A+B)
the Bank
(B)
Shares % Shares % Shares %
Union Real-Estate Management Corp. 2,000,000
40.00%		 1,450,000 29.00% 3,450,000 69.00%
Taiwan Asset Management Corp. 7,500,000
0.57%		 0
0.00%		 7,500,000
0.57%
Li Yu Venture Corporation 854,895 4.76% 0
0.00%		 854,895 4.76%
Taiwan Financial Asset Service Corp. 5,000,000
2.94%		 0
0.00%		 5,000,000
2.94%
Financial Information Service Co., Ltd. 10,774,125 2.39% 0
0.00%		 10,774,125 2.39%
Fu Hua Venture Corporation 1,650,000
5.00%		 0
0.00%		 1,650,000
5.00%
Jiao Da Venture Corporation 133,810 5.00% 0
0.00%		 133,810 5.00%
Taiwan Depository & Clearing Corp. 814,851 0.25% 0
0.00%		 814,851 0.25%
Taiwan Futures Exchange Co., Ltd. 5,905,525 2.04% 0
0.00%		 5,905,525 2.04%
Taipei Forex Inc. 160,000
0.81%		 0
0.00%		 160,000
0.81%
Huan Hua Securities Finance Co. 2,102,512 0.53% 0
0.00%		 2,102,512 0.53%
Lian An Service Corporation 125,000
5.00%		 0
0.00%		 125,000
5.00%
Taipower Corporation 394,879
0.0012%		 0
0.00%		 394,879
0.0012%
Sunny Asset Management Co. 386,376
6.44%		 0
0.00%		 386,376
6.44%
I-Pass Corporation 13,000,000 17.52% 0 0.00% 13,000,000 17.52%
Taiwan Mobile Payment Corporation 600,000 1% 0
0.00%		 600,000 1%

Note: Investments made in accordance with Article 74 of the Banking Act.

75

Fund Raising Status

1. Capital and Shares

(1) Sources of Capital

Authorized Capital Authorized Capital Paid-in Capital Paid-in Capital Remark Remark
Issued
Date
Price Shares Amount ($) Shares Amount ($) Source of Capital Other
Dec.
1991		 10 1,200,000,000 12,000,000,000 1,200,000,000 12,000,000,000 The promoters of a
company subscribed
shares for
9,600,000,000
Publicly soliciting
subscription to
shares for
2,400,000,000		 －
Jul
1995		 10 1,230,000,000 12,300,000,000 1,230,000,000 12,300,000,000 Capital Increase Via
Return Earning
Jul
1997		 10 1,281,660,000 12,816,600,000 1,281,660,000 12,816,000,000 Capital Increase Via
Return Earning
Jul
1998		 10 1,361,516,990 13,615,169,900 1,361,516,990 13,615,169,900 Capital Increase Via
Return Earning
Jul
1999		 10 1,418,700,704 14,187,007,040 1,418,700,704 14,187,007,040 Capital Increase Via
Return Earning
Jul
2000		 10 1,488,926,389 14,889,263,890 1,488,926,389 14,889,263,890 Capital Increase Via
Return Earning
Mar
2005		 10 2,488,926,389 24,889,263,890 1,788,926,389 17,889,263,890 Cash Capital Increase
Jun
2005		 10 2,488,926,389 24,889,263,890 1,825,394,074 18,253,940,740 C.B. Conversion
Dec.
2006		 10 2,488,926,389 24,889,263,890 1,827,797,807 18,277,978,070 C.B. Conversion
Mar
2007		 10 2,488,926,389 24,889,263,890 1,828,066,183 18,280,661,830 C.B. Conversion
Sep
2007		 10 3,000,000,000 30,000,000,000 2,228,066,183 22,280,661,830 Preferred Stocks of
Private Placement
Sep
2007		 10 3,000,000,000 30,000,000,000 2,318,824,429 23,188,244,290 C.B. Conversion
May
2010		 10 3,000,000,000 30,000,000,000 1,753,661,989 17,536,619,890 Capital reduction
offset loss
Sep
2010		 10 3,000,000,000 30,000,000,000 1,948,499,589 19,484,995,890 Capital Increase Via
Amalgamation
Sep
2012		 10 3,000,000,000 30,000,000,000 2,026,439,572 20,264,395,720 Capital Increase Via
Return Earning
Aug
2013		 10 3,000,000,000 30,000,000,000 2,216,525,121 22,165,251,210 Capital Increase Via
Return Earning & Bonus
Share
Aug
2014		 10 3,000,000,000 30,000,000,000 2,450,930,628 24,509,306,280 Capital Increase Via
Return Earning & Bonus
Share
Type of Shares
Common Stock		 Authorized Capital Authorized Capital Authorized Capital Remark
Listed shares
Issued Shares Unissued Shares Total
2,450,930,628 549,069,372 3,000,000,000

76

Fund Raising Status

(2) Shareholder Composition

(2) Shareholder Composition (2) Shareholder Composition (2) Shareholder Composition (2) Shareholder Composition (2) Shareholder Composition (2) Shareholder Composition (2) Shareholder Composition
April 28,2015
Shareholder Foreign

Government
 Financial
 Other Legal
Composition Individuals
Institutions &		 Total
Amount Agencies Institutions Entities
Individuals
No. of Shareholders 0 0 85 29,220 104 29,409
No. of Shares Held 0 0 1,914,048,159 460,272,163 76,610,306 2,450,930,628
% of Shareholding 0.00% 0.00% 78.09% 18.78% 3.13% 100%

(3) Distribution of Shareholding (Preferred Stock Included)

(3) Distribution of Shareholding (Preferred Stock Included) (3) Distribution of Shareholding (Preferred Stock Included) (3) Distribution of Shareholding (Preferred Stock Included) (3) Distribution of Shareholding (Preferred Stock Included)
Par valueper share NT$10;April 28,2015
Class of Shareholding Number of Shareholders Shareholding (Shares) Shareholding (%)
1 ~ 999 13,164 3,602,853 0.15%
1,000 ~ 5,000 7,854 18,621,482 0.76%
5,001 ~ 10,000 2,508 17,848,306 0.73%
10,001 ~ 15,000 3,061 36,987,377 1.51%
15,001 ~ 20,000 501 8,910,168 0.36%
20,001 ~ 30,000 635 15,470,844 0.63%
30,001 ~ 50,000 487 19,197,144 0.78%
50,001 ~ 100,000 506 35,335,713 1.44%
100,001 ~ 200,000 337 45,782,665 1.87%
200,001 ~ 400,000 163 45,917,198 1.87%
400,001 ~ 600,000 52 25,221,774 1.03%
600,001 ~ 800,000 29 19,998,259 0.82%
800,001 ~ 1,000,000 23 20,007,803 0.82%
Over 1,000,001 89 2,138,029,042 87.23%
Total 29,409 2,450,930,628 100.00%

(4) Major Shareholders

(4) Major Shareholders
April 28,2015
Shares % of shareholding
No. of shares Held
Major Shareholders
Tsong-Li Investment Co., Ltd. 196,922,448 8.03%
Pai-Sheng Investment Co., Ltd. 125,454,092 5.11%
Tien-Sheng Investment Co., Ltd. 122,168,179 4.98%
Chen-Chern Investment Co., Ltd. 117,952,491 4.81%
Chien-Yuan Investment Co., Ltd. 113,733,325 4.64%
Wei-Chih Investment Co., Ltd. 105,273,459 4.29%
Chu-Pao Investment Co., Ltd. 102,453,565 4.18%
Kun-Che Investment Co., Ltd. 94,350,012 3.84%
Jen-Pang Construction Co., Ltd. 90,897,682 3.70%
Chi-Shun Investment Co., Ltd. 89,135,105 3.63%
Pao-Shing Investment Co., Ltd. 85,815,817 3.50%
Union Enterprise Construction Co., Ltd. 85,755,684 3.49%

77

Fund Raising Status

Hung-Hsiang Investment Co., Ltd. 84,923,405 3.46%
Horng-Gow Construction Co., Ltd. 79,425,055 3.24%
Bai-Ing Investment Co., Ltd. 78,244,175 3.19%
Chen-Sheng Investment Co., Ltd. 73,625,984 3.00%
Lin, Chang Su-O 73,197,460 2.98%
Lin Rong San Foundation of Culture and Social Welfare 62,243,205 2.53%
Horng-Pern Construction Co., Ltd. 55,878,176 2.27%
Horng-Pang Construction Co., Ltd. 47,286,175 1.92%
Union Recreation Enterprise Co., Ltd. 41,484,570 1.69%
Yu-Pang Co., Ltd. 35,823,584 1.46%

Note: The list above shows shareholders with over 1% shareholding.

(5) Market Price, Net Worth, Earning & Dividend per Share and Other Relative Information for the Past Two Years
Year
2013 2014 Mar 31,2015
Item
Market price
per share		 Highest 11.95 11.45 10.70
Lowest 10.30 10.00 10.25
Average 11.06 10.68 10.48
Net Worth per
share		 Before Distribution 12.82 13.07 13.42Note5
After Distribution 11.60 Note4
-
Earning per
share		 Weighted Average Shares 2,427,976 2,488,322 2,450,930
EarningPer Share(NT$) 1.18 1.26 0.30Note5
Dividend per
share		 Cash Dividends - 0.26Note4
-
Stock
Dividends		 Dividends from
retained earning		 1.03 0.60Note4
-
Dividends from capital
reserve		 - - -
Accumulated Dividends - - -
Return on
investments		 Price/Earning RatioNote1 9.37 8.48 8.73
Price/Dividend RatioNote2 - 41.08 -
Cash dividends yield rateNote3 - 2.43% -

Notes:

  1. P/E ratio= Average closing share price for the current fiscal year/ earnings per share. P/E ratio in the first quarter of 2015 is annualized

  2. P/D ratio= Average closing share price for the current fiscal year/ cash dividends per share.

  3. Cash dividend yield to maturity= Cash dividends per share/ average closing share price for the current fiscal year.

  4. The distribution of 2014 earnings will be confirmed when it is passed by a resolution at the 2015 Shareholders’ meeting.

  5. Net worth per share and earnings per share, expect for financials of 2014, have been audited by independent auditors.

(6) Dividend Policy and Implementation

  • A. Dividend policy set out in the Bank’s Articles of Incorporation:

78

Fund Raising Status

In consideration of the Bank’s funding requirements and long-term financial planning, in principle, the Bank may distribute stock dividends if, after the distribution of the dividends, the ratio of the Bank’s core capital as a percentage of risk-based assets is less than the statutorily required ratio plus one percent point. However, the maximum cash profits which may be distributed shall not exceed fifteen percent (15%) of the Bank's paid-in capital unless and until the accumulated legal reserve equals the Bank's paid-in capital.

The Bank’s Articles of Incorporation provided that earnings, if any, shall first be used to make tax payments and offset against prior year losses and 30% of the remaining, if any, shall be set aside as a legal reserve. The Bank may, according to regulatory requirements and business needs, set aside or reverse a special reserve and distribute the remaining balance plus unappropraited earnings from the previous year in the form of preferred stock dividends and then common stock dividends. The remaining balance, if any, may be distributed in the following manner after a certain percentage is retained: 

  - a. At least 10% in employee bonus (excluding accumulated unappropriated earnings from prior years).

  - b. 0.5% for remuneration to directors and supervisors (excluding accumulated unappropriated earnings from prior years).

  - c. Bonuses to shareholders shall be proposed by the Board of Directors for a resolution in a general shareholders’ meeting.

  • B. Proposal for dividend distribution for the current year: The Board of Directors resolved in the meeting held on March 18, 2015 to approve the earnings distribution proposal for 2014 as follows: cash dividends on common shares totalling $637,241,963 and stock dividends on common shares $1,470,558,377 that is, a cash dividend of $0.26 per share and a stock dividend of $0.6 per share. The actual earnings per share distributed described above may be adjusted by the Board of Directors based on the number of outstanding shares as recorded in the common shareholders’ register on the record date.

  • (7) Impact on the bank’s Operations Results and Earning per Share resulting from the Proposal for Stock Dividend Distribution

Item Year Item Year Year2014
(Forecast)
BeginningPaid-In Capital 24,509,306,000
Stock and Cash Dividend in
this Year		 Cash Dividend per share 0.26 dollars
/per share
Capitalization of Retained Earnings Stock Dividend
per share		 0.06share
Capitalization of Capital Reserves Stock Dividend
per share		 None
Operation Result
Changes		 OperatingProfit (Note)
Ratio of Increase (Decrease) in Operating Profit
Compared to the sameperiod lastyear
Net Profit after Tax

79

Fund Raising Status

Item Year Year Year2014
(Forecast)
Ratio of Increase (Decrease) in After Tax Net Profit
Compared to the sameperiod lastyear
Earningsper Share(NT$)
Ratio of Increase (Decrease) in Earnings per share
Compared to the sameperiod lastyear
Annual Average Return on Investment (Reciprocal of
Annual Average Price/Earnings Ratio)
Pro forma Earnings
per Share and P/E
Ratio		 If Capitalization of Surplus is
all changed to the Issuance of
Cash Dividend		 Pro forma earnings per
share(NT$)
Pro forma annual average
return on investment
If Capitalization of Capital
Reserve in not conducted.		 Pro forma earnings per
share(NT$)
Pro forma annual average
return on investment
If Capitalization of Capital
Reserve is not conducted and
Capitalization of Surplus is all
changed to the Issuance of
Cash Dividend		 Pro forma earnings per
share(NT$)
Pro forma annual average
return on investment

  • Note: The Bank has not published the financial forecasts for the 2014 fiscal year. According to Tai-Tsai-Zheng Tze (1) Letter No. 00371 issued by the Ministry of Finance on February 1, 2010, companies that have not published their financial forecasts are not required to disclose this information.

  • (8) Employees’ Bonus and Directors’ & Supervisors’ Remuneration:

    • A. The percentages or ranges with respect to employee bonuses and director/supervisors’ remuneration, as set forth in the Bank’s Articles of Incorporation: Refer to the Bank’s Dividend Policy.

    • B. If the estimated bonus to employees and remuneration to directors and supervisors, differ from the actual amounts subsequently resolved by the stockholders meeting the differences are to be recorded the profit(loss) of the year as result of a change in accounting estimate.

    • C. The proposals to distribute employee bonuses as approved by the Board of Directors are as follows:

      • a. Employee bonuses, bonus shares, and remuneration to directors and supervisors: Remuneration to directors and supervisors amounts to NT$ 3,475,492, while employee bonuses total NT$69,509,836 for fiscal year 2014, among which remuneration to directors and supervisors is to be distributed in cash while bonuses to employees are to be distributed in bonus shares.

      • b. The amount of employee share bonus and the amount of employee share bonus as a percentage of the total amount of after-tax net income and employee bonuses: employee bonuses to be distributed are 6,619,984 shares (estimate only), which constitutes 4.308% of increase in capital by capitalization of earnings.

      • c. Computed earnings per share after taking into account employee bonuses and remuneration to directors and supervisors: Such earnings per share for fiscal year 2014 is NT$ 1.26.

    • D. If there is any discrepancy between the actual distribution of employee bonuses and director/supervisors’ remuneration for the previous fiscal year, and the recognized employee bonuses and director/supervisors’ remuneration: None.

80

Fund Raising Status

(9)Share Repurchases by the bank: None

2. Issuance of Financial Debentures
1st Subordinated 1st Subordinated 1st Subordinated 1st Subordinated
Type of Financial
Financial Financial Financial Financial
Debentures
Debentures issued in 2009 Debentures issued in 2011 Debentures issued in 2012 Debentures issued in 2013
Date & No.
Approved by Central
Competent Authority		 Jin-Kuan-Yin-Kuo-Zi-No.
09800384990
Sep. 4,2009		 Jin-Kuan-Yin-Kuo-Zi-No.
10000158270
May12,2011		 Jin-Kuan-Yin-Kuo-Zi-No.
10000387590
Nov. 8,2011		 Jin-Kuan-Yin-Kuo-Zi-No.
10200321780
Nov.20,2013
IssuingDate Dec. 30,2009 Jun. 15,2011 Mar. 1,2012 Dec 19,2013
Face Value 10,000,000 1,000,000 1,000,000 1,000,000
Issuance/ Trade Place Domestic Domestic Domestic Domestic
Currency NTD NTD NTD NTD
Issuance Price Issued at par Issued at par Issued at par Issued at par
Issuance Amount 0.9 billion 2 billion 1.5 billion 3 billion
Interest Rate 2.95%, fixed rate 2.78%, fixed rate 2.32%, fixed rate 2.10%, fixed rate
Term Maturity Date:
Jun. 30,2016		 Maturity Date:
Jun. 15,2018		 Maturity Date:
Mar. 1,2019		 Maturity Date:
Dec 19,2020
Order of Redemption Subordinate Subordinate Subordinate Subordinate
Guarantor Nil Nil Nil Nil
Trustee Nil Nil Nil Nil
Underwriter Nil Nil Nil Nil
Auditor S.S. Lai S.S. Lai S.S. Lai S.S. Lai
CPA Deloitte & Touche
(Terence Huang/
Jih-Yen Chang)		 Deloitte & Touche
(Terence Huang/
Jih-Yen Chang)		 Deloitte & Touche
(Terence Huang/
Jih-Yen Chang)		 Deloitte & Touche
(Terence Huang/
Vincent Cheng)
Certifying Financial
Institution		 “Book-Entry” “Book-Entry” “Book-Entry” “Book-Entry”
Method of
Redemption		 Repaid in full upon
maturity		 Repaid in full upon
maturity		 Repaid in full upon
maturity		 Repaid in full upon
maturity
Unredeemed Balance 0.9 billion 2 billion 1.5 billion 3 billion
Paid-in Capital For
the Previous Fiscal
Year		 23.19 billion 19.48 billion 19.48billion 20.26billion
After-tax Net Worth
for the Previous
Fiscal Year		 17.08 billion 20.09 billion 21.97 billion 24.07 billion
Performance Normal Normal Normal Normal
Redemption or Early
Redemption		 Nil Nil Nil Nil
Conversion &
Exchange Conditions		 Nil Nil Nil Nil
Restrictions terms Nil Nil Nil Nil
Fund Utilization Plan Improve financial structure
to raise capital adequacy		 Improve financial structure
to raise capital adequacy		 Improve financial structure
to raise capital adequacy		 Improve financial structure
to raise capital adequacy

81

Fund Raising Status

1st Subordinated 1st Subordinated 1st Subordinated 1st Subordinated
Type of Financial
Financial Financial Financial Financial
Debentures
Debentures issued in 2009 Debentures issued in 2011 Debentures issued in 2012 Debentures issued in 2013
ratio ratio ratio ratio
Balance of issued
debentures before
adding the declared
issue amount as a
percentage of
after-tax net worth for
the previous fiscal
year(%)
3.88%		 14.43% 20.03% 30.74%
Whether it is
accounted for as
qualified core capital
and type		 Tier 2 capital Tier 2 capital Tier 2 capital Tier 2 capital
Name of rating
agency, date and
result of rating		 Taiwan Ratings Corp.
twA-
Dec. 27,2012		 Taiwan Ratings Corp.
twA-
Dec. 27,2012		 Taiwan Ratings Corp.
twA-
Dec. 27,2012		 Taiwan Ratings Corp.
twBBB+
Dec. 11,2013

3. Issuance of Preferred Stock : None

4. The status of Overseas Depository Receipts and Employee Stock Option:

  • None

5. Acquisitions or Disposition of Other Financial Institutions

  • (1) Where the bank has acquired another financial institution through merger or acquisition in the most recent fiscal year, the annual report shall disclose the CPA’s opinion on the reasonableness of the share swap ratio: None.

  • (2) Mergers or acquisitions of other financial institutions in the past five years:

  • A. The Bank’s shareholders resolved in the general shareholders’ meeting held on April 23, 2010 to issue new shares to acquire Union Bills Finance Corporation. Procedures relating to the merger was completed on August 16, 2010.

  • B. Where the Bank has issued new shares for the acquisition of the shares of another financial institution, the annual report shall include an evaluation opinion prepared by the managing underwriter.

  • (3) Where the Board of Directors has, during the most recent fiscal year or the current fiscal year up to the date of printing of annual report, adopted a resolution approving issuance of new shares due to merger or acquisition of shares of another financial institution, the annual report shall disclose the state of implementation and the basic information of the institution merged or acquired: None.

6. Fund Utilization Plan and Execution Status

  1. Fund Utilization Plan

  2. A. Description of the plan: Please see pages 78-79 for details of previous public issues or private placement of securities and bank debentures.

82

Fund Raising Status

  • B. Uncompleted previous public issues or private placement of securities, or those completed in the most recent three years but have not yet fully yielded the planned benefits: None.

  • Execution Status Status of implementation: Pleasee see pages 103-126 for the Bank’s financial information and changes in the capital adequacy ratio for years 2010 through 2014.

83

Operational Highlights

1. Business Description

  • (1) Main Businesses

  • A. Primary Business Activities of the Respective Business Units

    • a. To accept all types of deposits.

    • b. To extend corporate loans, discount bills and notes, issue domestic letters of credit and conduct accounts receivable factoring.

    • c. To handle exports, imports, foreign remittances, foreign currency loans and guarantees.

    • d. To extend mortgage, auto loans, personal loans and other consumer credits, and provide credit card services.

    • e. Wealth management, trust, custodian business, safe-deposit box rental and certification services for marketable securities.

    • f. To trade marketable securities and futures on behalf of customers.

    • g. To provide peripheral financial services by acting as collecting and paying agent for public facilities fees, taxes and remittances.

    • h. To conduct other relevant businesses authorized by the competent authorities.

B. Operational Highlight

  • a. Deposits

Amount: NT$ Million

December 31,2014 December 31,2014 December 31,2013 December 31,2013 Comparison Comparison
Type Amount Ratio Amount Ratio Increase

Growth Rate%
(Decrease)
Current Deposit 171,329 42.8% 157,930 42.7% 13,399 8.5%
Time Deposit 229,164 57.2% 211,994 57.3% 17,170 8.1%
Total 400,493 100% 369,924 100% 30,569 8.3%

b. Loans

Amount: NT$ Million

December31,2014 December31,2014 December31,2013 December31,2013 Comparison Comparison
Type
Ratio Amount Ratio Increase
Amount Growth Rate%
(Decrease)
Consumer
Banking		 137,476 52.88% 129,005 55.61% 8,471 6.57%
Corporate Banking 122,491 47.12% 102,959 44.39% 19,532 18.97%
Total 259,967 100% 231,964 100% 28,003 12.07%

c. Foreign Exchange

Amount: US$Million
December31,2014
December31,2013
Comparison
Amount
Ratio
Amount
Ratio
Increase
(decrease)
Growth Rate%
108
2.5%
95
2.4%
13
13.7%
219
5%
208
5.2%
11
5.3%
4,056
92.5%
3,708
92.4%
348
9.4%
4,383
100%
4,011
100%
372
9.3%		 Amount: US$Million
December31,2014
December31,2013
Comparison
Amount
Ratio
Amount
Ratio
Increase
(decrease)
Growth Rate%
108
2.5%
95
2.4%
13
13.7%
219
5%
208
5.2%
11
5.3%
4,056
92.5%
3,708
92.4%
348
9.4%
4,383
100%
4,011
100%
372
9.3%		 Amount: US$Million
December31,2014
December31,2013
Comparison
Amount
Ratio
Amount
Ratio
Increase
(decrease)
Growth Rate%
108
2.5%
95
2.4%
13
13.7%
219
5%
208
5.2%
11
5.3%
4,056
92.5%
3,708
92.4%
348
9.4%
4,383
100%
4,011
100%
372
9.3%		 Amount: US$Million
December31,2014
December31,2013
Comparison
Amount
Ratio
Amount
Ratio
Increase
(decrease)
Growth Rate%
108
2.5%
95
2.4%
13
13.7%
219
5%
208
5.2%
11
5.3%
4,056
92.5%
3,708
92.4%
348
9.4%
4,383
100%
4,011
100%
372
9.3%		 Amount: US$Million
December31,2014
December31,2013
Comparison
Amount
Ratio
Amount
Ratio
Increase
(decrease)
Growth Rate%
108
2.5%
95
2.4%
13
13.7%
219
5%
208
5.2%
11
5.3%
4,056
92.5%
3,708
92.4%
348
9.4%
4,383
100%
4,011
100%
372
9.3%		 Amount: US$Million
December31,2014
December31,2013
Comparison
Amount
Ratio
Amount
Ratio
Increase
(decrease)
Growth Rate%
108
2.5%
95
2.4%
13
13.7%
219
5%
208
5.2%
11
5.3%
4,056
92.5%
3,708
92.4%
348
9.4%
4,383
100%
4,011
100%
372
9.3%
December31,2014 December31,2013 Comparison
Type Ratio Ratio Increase
Amount Amount Growth Rate%
(decrease)
Exports 108 2.5% 95 2.4% 13 13.7%
Imports 219 5% 208 5.2% 11 5.3%
Foreign
Remittances		 4,056 92.5% 3,708 92.4% 348 9.4%
Total 4,383 100% 4,011 100% 372 9.3%

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Operational Highlights

d. Trust & Wealth Management

Amount: NT$ Million

December 31, 2014 December 31, 2013 Comparison Comparison
Type
Increase
Amount Amount Growth Rate%
(decrease)
Trust Non-discretionary Money
Trust Invested in Securities		 36,493 35,652 841 2.36%
Fund Custody Business 8,046 9,672 (1,626) -16.81%
New Trusts 13,999 13,727 272 1.98%
Subtotal 58,538 59,051 (513) -0.87%
Ancillary
Service
Attestation For Issuance of
Securities		 21,788 17,433 4,355 24.98%
Total 80,326 76,484 3,842 5.02%

e. Credit Card Business

Unit: NT$ Million；Card

Item December 31,
2014		 December 31,
2013		 Comparison Comparison
Amount / Card Amount / Card Increase
(Decrease)		 Growth Rate%
Card in New Issue 167,197 193,140 (25,943) (13.43)%
Cards in
Circulation		 1,770,774 1,827,104 (56,330) (3.08)%
Valid cards 789,016 787,833 1,183 0.15%
Ratio of valid
cards		 44.56% 43.12% 1.44% 3.34%
Credit Amount 55,924 47,941 7,983 16.65%
Cash Advance
Amount		 1,957 1,712 245 14.31%
Accounts
Receivables		 12,866 12,194 672 5.51%
Revolving Credit
Balance		 5,118 5,453 (335) (6.14)%
Sales Amount 47,710 42,912 4,798 11.18%

f. Revenue and Percentage by Business

Item
% of Total Revenue 2014 % of Total Revenue 2013 Changes (%)
Corporate Banking 12.99% 13.53% -0.54%
Consumer Banking 25.60% 27.05% -1.46%
Trust &Wealth Management 7.80% 6.18% 1.62%
Investment Banking 15.80% 15.91% -0.11%
LeasingBusiness 17.68 19.10% -1.42%
Other 20.14% 18.23% 1.91%
Total 100% 100% 0.00%

(2) Business Plan for 2015

A. Deposit Business

Continue enhancing development of demand deposits:

a. Offer chip ATM card domestic/foreign debit and multinational (in the

85

Operational Highlights

territories of Japan) withdrawal operations to enhance the relations between customers and the Bank.

  • b. Offer mobile ATM cards and mobile banking accounts to provide depositors with omnibus payment tools.

  • c. Plan various deposit development projects for SMEs to secure a higher number of demand deposit accounts and new customers.

  • d. Continue developing solicitation of the Bank’s reciprocal trading counterparts for deposits.

  • e. Continue developing and increasing transactions of deposits with credit card authorization customers.

  • B. Loan Business

  • a. Corporate Banking

  • In line with the competent authority's policy, underwrite real estate loan with caution and make every endeavor to develop SME loans to disperse risk.

  • Under the circumstance and risk and income are attended to simultaneously, give priority to make loans of self-liquidating nature and loans to manufacturing plants based in Taiwan, and take advantage of applying for credit guarantee fund and seeking for good quality collateral to enhance the loan security.

  • b. Consumer Banking

Housing loans are primarily extended for purchasing of owner-occupied homes and to borrowers who are capable of making repayments. Affiliate with leading car dealers by offering car loan packages to strengthen the used-car loan market channels. Design the various types of consumer loan packages for different target groups based on market demands.

  • c. Bills Finance

Actively expand the sources of bills and strictly control credit risk of underwriting customer; improve trading turnover rate and the underwriting market share to create maximum profit. Flexibly adjust value at risk according to market trends and at the same time develop new RP clients that constitute a more stable source and less costly funds.

  • d. Strengthen loan reviews and enhance notification of abnormal cases to control the occurrence of NPL.

  • C. Foreign Exchange Business

  • a. Continue to develop the sources of foreign exchange businesses. Expand imports, exports and foreign exchange businesses to increase the Bank’s market share in the foreign exchange market.

  • b. Continue to expand international financial investment business to make the most effective use of funds and improve revenue.

  • c. Establish Hong Kong Branch to expand into overseas market and grab business opportunities overseas.

  • D. Trust and Wealth Management Business

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Operational Highlights

  • a. Continue to strengthen system functions in line with business development in order to enhance the quality of financial consulting services, operational efficiency and risk management.

  • b. Aggressively seek to take up the old and new fund custody business, and strengthen the control functions of personal trust and custody operation system.

  • c. Introduce the program of variable-amount subscription to a fund through a regular saving plan to promote stable growth in customers’ asset portfolios.

  • d. Enhance the launching of marketing and promotional campaigns. Provide differentiated services to different target groups. Introduce diverse products (such as: foreign bonds, ETF, structured notes and foreign currency insurance policies etc) to increase the diversity of the asset portfolio of wealth management clients and increase the size of assets managed by the Bank.

  • e. Continue to recruit new wealth management staff and provide training to bank employees to serve in the capacity as wealth management advisors. The long-term goal is to expand the size of the wealth management team to enhance the development of effective clients and hence the Bank’s share of the wealth management market.

  • E. Credit Card

a. Channels: Encourage branch employees to promote credit cards to increase the opportunities for cross selling; enhance the coordination with the issuance of cards by primary co-brand groups and in-store marketing events and develop new clientele in new territories through their unfolds the shop plan; enhance promotion of purchase online and via mobile phone, simplify the application procedure and enhance follow-up on card purchase after the branches’ promotion of credit cards, in order to be in line with Bank 3.0 policy.

b. Products: Release the brand new packaged leading co-brand cards; maintain the interest and right for premium cards and competitiveness of promotional activities to solicit and train fine-quality clientele; control the emerging mobile payment market and issue such mobile credit card as OTA and HCE successively to enhance the Bank's competitiveness in the market and solicit new clientele.

c. Campaign: Continue the “2% cash reward on even-number days” to cultivate the habit of using Union Bank credit cards for purchase and upgrade the market shares of debit amount and wallet; meanwhile, due to the increasingly prevailing payment e-ticketing micro payment, the merchants which accept micro payment are increasing day by day. The new market made by such prevailing payment tool makes the promotion of EasyCard and iPass debit become the highlight of promotional activity; therefore, the Bank enhances customers’ cycle management and works hard to promote various promotional activities

87

Operational Highlights

to upgrade the effective utilization ratio of the cards. 

  - d. Credit loan: Plan various micro loan projects and provide customers with diversified choices for products.

  - e. Digital finance: Offer the online application mechanism under which the application for micro loan may be filed via mobile device or network to provide customers with more convenient and repaid financial services.

  - f. Credit card acquiring business

  - Integrate the branches’ business, develop medium-large-scale and chain acquiring merchants, and continue developing other merchants’ acquiring business to increase the Bank’s debit amount and operating income.

  • Promote collecting business of China Union Pay Card, installment acquiring business and NCCC installment platform acquiring business to meet the increasing market demand and maximize operating revenue.

  • F. Ensure effective management of funds available to the Bank. Effectively utilize funds in line with the various business development initiatives to increase the Bank’s returns. We also maintain an appropriate level of liquid funds to ensure that the Bank has a sound liquidity level. For TMU business, besides continuing to service existing clients and offering them with real-time financial market information and products, we also aims at developing new clientele to increase the Bank’s business turnovers in deposits, loans and foreign exchange business.

  • (3) Market Analysis

  • A. Areas of Business Operation

As of the end of March 2015, the Bank has 90 domestic branches of which 47 branches in Greater Taipei area, 18 branches in Taoyuan and Hsin-Chu area, 10 branches in Taichung and Changhua area, 7 branches in Chiayi and Tainan area and 8 branches in Kaohsiung and Pingtung area. Additionally, there is an Offshore Banking Branch, and each one Representative Office in Vietnam and Hong Kong respectively.

  • B. Analysis of Supply/Demand and Growth in Future Market

We expect that the global economic growth rate in 2015 will be upgraded more than that in 2014. The domestic economy will remain growing. Meanwhile, the adjustment of loan structure resulting in increase in spread income will drive enterprises’ funding need and market's willingness in investment effectively, and support the growth of loan business and expansion of wealth management market to generate profit. Taiwan’s banking industry is expected to have optimistic prospects and upgrades in 2015.

88

Operational Highlights

In terms of business developments, we expect the corporate banking businesses to be the priority to be developed by the banking industry, especially loans to offshore enterprises. For SME loans, we will continue to offer facility and lending bank’s incentive aids to the SMEs which generate higher spread, subject to the relevant policies. Given the higher spread of SMEs, the banking industry will work hard to undertake SME loans to secure higher spread and operating revenue. For consumer banking business, the housing loan growth became sluggish due to the government’s several initiatives to suppress the real estate industry and to limit the house loan facility. Notwithstanding, the consumer non-secured loan business is expected to upgrade the Bank’s turnover; therefore, the consumer banking business appears to grow mildly. The wealth management business development is expected to expand significantly due to the global economic recovery and promotion of the RMB business in 2015.

  • C. Competitive Niches and Advantages/Disadvantages Relating to Development Prospects and Responsive Measures a、 Advantages

  • I. We expect that the global economic growth rate in 2015 will be upgraded more than that in 2014 and thereby drive enterprises’ funding need and market's willingness in investment effectively, and support the growth of loan business and expansion of wealth management market to generate profit.

  • II. Given the interest escalation, the competent authority’s enhancement of control measures to mitigate a price war in the banking industry and increase in undertaken volume of offshore business with higher spread resulting from the lifting of laws and regulations in 2015, the low-spread situation in the banking industry tends to be reversed positively and the banking industry is expected to continue self-regulating and controlling the loan interest rate, thus helpful for upgrading of its profitability.

  • III. The competent authority continues to open RMB operations and support development of the various derivative financial instruments, and accelerate permission of OBU to develop financial services for offshore customers. The Bank’s risk-free revenue from service charges increased accordingly.

b、 Disadvantages

  • I. The sluggish estate market and interest escalation in 2015 are likely to increase the risk over house loans. Besides, the real estate price is at its peak now and, therefore, the banking industry’s risk over tremendous house loans is increasing. Due to the uncertainty in international economic situation, the banking industry shall be careful to prevent risk over investments and loans.

  • II. Domestic banks are used to lacking the ability to innovating financial instruments. The salary level of Chinese banks’ high-rank human resources has risen above those of the domestic banks and, therefore, the domestic banks’ high-ranking human resources flow to China. This reflects the importance of valuing

89

Operational Highlights

talent cultivation and resolution of outflow of talents to the domestic banks.

  • III. The increasing exposure of the banking business in Taiwan to Mainland China is likely to squeeze the space and profitability of business expanded by the banking business in the market of Mainland China.

  • c、 Responsive Measures

  • I. In response to the implementation of New Basel Capital Accord and control of bank risks, the Bank has built a control system that could reasonably evaluate credit risk, interest rates risk, market risk and operation risk to increase the Bank’s asset quality.

  • II. Continue to conduct Small and Medium Enterprise (SME) lending business and expand the market share of higher interest spread products.

    • Reduce costs for housing and other unsecured personal consumer loans through simplification and standardization of operating procedure.

    • Designate customers with good credit to lower non-performing loans.

Strengthen the cross selling strategy with related enterprises. Maintain the balance between quality and quantity, and sustain a stable growth of profit. 

     - III. The house loan volume growth is sluggish in Taiwan and thereby suppresses the growth of entire consumer loan business.  Notably, to deal with the expanding loan clientele and rapid increase in business volume in the territories of China, the banking industry will also enhance the risk control to reduce risk.

     - IV. Value cultivation of talents to meet the need for diversification of business, and design novel financial instruments and provide customers with various financial services to become a well-rounded fine-quality financial institution.

  • (4) Research of Financial Products and Status of Business Development:

  • A. New financial instruments and the size of new business department(s) introduced during the past two years and the profit/loss status

    • a. Corporate Banking business continues to promote financial products such as good-quality stock financing loans, account receivable purchase and subsequent advance payment loans, convenient loans to SMEs, easy discounted notes, corporate banking foreclosure real estate loans to offer corporate customers multiple loan choices.

    • b. Proactively promote issuance of bills with 1-year plus maturity to offer customers more diverse choices for short and medium-term capital planning. As at December 31, 2014, the sales turnover of bills issued by the Bank amounted to NT$ 778 billion, a growth of 31% comparing to 2013.

    • c. Launch a number of NT dollar/Foreign Currency deposit products, such as “Excellent Interest Demand Savings Deposit”, “Excellent Interest Term Deposit”, “Excellent Interest Term Deposit for US and RMB”, and launch the “Preferential deposit project for civil servants and teachers”.

90

Operational Highlights

  • d. Consumer banking business also launched a “Preferential Micro-credit loan program for civil servants and teachers” to grab the vast civil servant and teacher market. However, housing mortgage business has not launched any new financial product due to the government’s “battling real estate speculation policy”.

  • e. Wealth Management Business

  • During 2014, the Bank has launched several stock funds and bond funds with stable returns in line with the global investment market sentiment and the bank actively assisted customers to adjust their asset allocation. As at December 31, 2014, the Bank had a total of 86,865 wealth management clients and total assets under management aggregated NT$185.3 billion, representing an increase of 16% from that of 2013.

  • f. In response to market trends, launch the credit card A/R business, automatic teller machine business, cash advances and balance inquiring business of China Union Pay card to increase relevant fee revenue.

g. Fortune Passbook business For the purpose of managing the children’s financial planning market, the Bank launched the “Fortune Passbook” for children under fifteen years of age. It integrates five major financial management services including NT dollar depositing, foreign-currency depositing, securities, funds and insurance claims trust and use “Savings Bring Simple Happiness” as the product’s major appeal and it offers preferential items such as customer preferential interest rates for NT dollar savings accounts (applicable to the announced interest rates for the Bank’s salary transfer customers), and special rates for securities and fund subscription orders placed through the Bank. As at December 31, 2014, NT dollar deposits of the Fortune Passbook holders amounted to NT$5,571,360,000 representing a 36.44% growth rate comparing to NT$4,083,360,000 as at December 31, 2013.It is obvious that the children’s wealth management market is on the growing trend. The Bank’s Fortune Passbook differentiates itself from those offered by other hanks. It offers special discounts for culture activities and parent-children financial planning educational programs. The Bank worked with the fine-quality child art & cultural merchants horizontally, including Sesame Street English, Cloud Gate Dance Theatre Foundation, Ju Percussion Music School, Language Canada Taipei, Paper Windmill Theatre, If Kids Theatre, Song Song Song Children’s & Puppet Threatre, Just Apple Theatre, Hsin Yi Parent-Child Game Bookstore and Education, Parenting, Family Style. Children may also attend the financial wealth management educational & promotional activities for “Junior Banker Wealth Management Camp”. In 2014, the Bank also organized a series of events to reward our customers including Gifts for Referrals, Anniversary Gifts, Visiting Gifts and Birthday Gifts. h. Visa ATM card operations The Bank has issued a total of 815,000 outstanding Visa ATM cards (less about 350,000 cards that expired) until the end of 2014, i.e., an increase by 8.4% compared with 752,000 cards in last year (2013). For marketing and promotion to the outsiders, the Bank engaged in the promotional activities tied in with segment marketing this year, by

91

Operational Highlights

release a total of 21 projects including free parking, refueling discount, e-shopping, movie, birthday person, the first brush, department store and supermarket, Joint Pass and cosmetic & drug. In terms of the effect achieved by the promotion, the entire debit amount and number of debit cards grew by 18% and 20% in 2014 from those in 2013. i. Promotion of Automated Service and Internet Banking 

  - I. The bank has installed ATMs and self-service banks along the Kaohsiung MRT network and Carrefour stores. Starting from January 2012, it has formed a strategic alliance with and installed ATMs in Hi-Life Convenience Store and O.K. Convenience Store to offer customers more convenient services.

  - II. The Bank introduced a mobile bank “Union Lohas APP” service through the e-Bank service in March 2012 featuring six major services including “Special Offers News, Special Offers Venue, Account Services, Financial Management News, Everyday Living News and Customer Service”. The service is free for downloading by anyone. Besides offering banking services including account inquiry, NT dollar transfers, foreign exchange purchase/sale, and bill payment, the built-in “cell phone coupons” function allows users to show discount coupons on the cell phone at over 5,000 participating merchants including leading convenience chain stores including FamilyMart, Hi-Life and OK-Mart, Taiwan Pelican Express Co., Ltd. and Pizza Hut to receive instant discounts. The service offers daily living convenience through the integrated e-banking facility.

  - III. The Bank launches the “Internet Banking Canteen” service for personal banking customers.  This service allows customers to download discount food coupons and discount coupons for selected products at Yesgogogo Shopping website.  With respect to Lohas APP, the Bank also launched the “Union Bank Lohas APP – Invite Birthday Persons to Have Delecious Sweet Potatoes”, and provided “35-dollar coupon of Family Mart upon three transfer exchanges by the given birthday persons” and preferential foreign exchange rate applicable to 7 special currency e-banking channels including “USD, Euro, AUD, NZD, RMB, JPY and HKD”, in hope of upgrading downloading volume and exchange frequency of customers with substantial rebate, and maintaining fair relations with customers and upgrading usage rates through the many offers for Internet shopping, purchases and prizes. On the business dimension, new applicants for the Bank’s e-banking services grew by 11% in 2014 comparing to 2013. The average number of logins, transactions and account inquiries for 2014 grew by 6%, 14% and 38% comparing to 2013.

  • j. New Business Departments Established in the Most Recent Two Years: None.

  • B. R&D Expenditure and achievement for the Last Two Years and a brief description of its Future Plan

  • a. R&D Expenditure and Results

Unit: NT Thousand Dollars

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Operational Highlights

Year
Item		 2014 2013
R&D Expenditure 3,890 1,560

  • I. The Company continued to enhance the service functions of mobile bank by providing more complete e-financial exchange services and also adding such life-style mobile services as mobile coupons, mobile video and news information, in order to upgrade the availability of e-financial services and preferential treatment information in 2013.

  • II. In 2014, the Bank continued to enhance the mobile banking service functions by strengthening the experience in applying e-financial exchange services to deal with the prevailing mobile application and also starting to plan various online application services. Meanwhile, the Bank started to provide the on-line customer service via email, in order to provide customers with more convenient mobile services via diversified service channels.

  • III. In 2014, the Bank’s e-financial services continue to aim at enhancing foreign exchange services and develop toward satisfaction of customers’ needs to develop the Bank’s e-financial services.

  • IV. In February 2014, the Company released the mobile phone credit card, which is the first Micro SD NFC mobile phone credit card officially certified by VISA domestically and also the first one free from the limit of single purchase by no more than NT$3,000 in the market. Further, it tied in with the functions of iPass to be applied to specific transportation means and also micro payment at various chain stores. The card won the referral prize by the panel of “Best Mobile Payment” in Asia Pacific Zone of Cards & Electronic Payments International (CEPI) 2014.

  • V. In order to reduce the operating cost and upgrade service quality, the Company has established the e-billing system to upgrade such e-billing services as deposits and trust fund.

  • b. Future R&D plan

  • I. Build online Loan Management System to streamline the credit granting process and enhance operation efficiency.

  • II. In order to reduce loan credit risk, the Bank will build an internal credit rating system to comply with the new Basel II Credit Risk framework.

  • III. Continue to develop diversified mobile phone credit card products to provide cardholders with more convenient life experience; upon the Bank’s enrollment to Taiwan Mobile Payment Corporation as a member, consumers may transmit their credit cards on air via OTA to enjoy safer and more repaid mobile payment services. In December 2014, the Bank received approval from the competent authority to launch the mobile phone credit cards in April 2015 officially. In the future, the Bank will plan to introduce the credit card services for cloud payment to offer customers low-cost, convenient solutions to help the Bank take the leadership in the mobile payment market.

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Operational Highlights 

  - IV. In light of the maturity of mobile devices and the network environment, the Bank’s R & D projects will be devoted to developing the applications used by mobile devices and design related services applications used in portable and convenient phablets.

  - V. Introduced related technology and planned to construct the Bank’s new online service website for PCs and mobile devices with the core design concept based on customers’ needs.

  - VI. To deal with the Call Center which has been used for many years, the Bank has commissioned some supplier to plan the upgrading and expansion programs, in order to continue receiving the OEM’s maintenance services, enhance the system virus protection, maintain normal operation of the system and also develop the call center’s value more extensively.

  • (5) Long-term and Short-term Business Development Plan

  • A. Short-term Business Development Plan: Please refer to “Chapter (2) 2015 Business Plan”.

  • B. Long-term Business Development Plan: Please refer to page 2 “4. External Factors and Future Development Strategies of I. Letter to Shareholders”

2. Employee Analysis

  • (1) Employee Data for the Last Two Years and Current Year Up to the Printing Date of the Annual Report:
Year End of 2013 End of 2014 Mar31, 2015
Number of
Employees		 Permanent 3,249 3,356 3,359
Temporary 0 0 0
Other 0 0 0
Total 3,249 3,356 3,359
Average age 36.50 36.58 36.77
Averageyear of service 8.31 8.48 8.64
Education Doctorate 0.03 0.03 0.03
Master 7.17 7.00 7.00
University (College) 85.32 86.17 86.04
Senior High School 7.33 6.70 6.85
Junior High School & Under 0.15 0.09 0.09
Type ofprofessional certification held byemployees End of 2013 End of 2014 Mar31,2015
Basic ProficiencyTest for International BankingPersonnel 291 285 283
ProficiencyTest on Foreign Exchange Trading 12 11 11
ProficiencyTest for Trust Operations Personnel 2,190 2,216 2,191
Subject Test - Laws and Regulations on Trust Businesses 20 21 21
Qualification exam for “General knowledge of Financial
Markets andprofessional code of Ethics”		 2,358 2,512 2,505
Financial Risk Manager(FRM) 3 3 3
Class B Accounts Clerk 7 8 8
Class C Accounts Clerk 111 105 108
Basic ProficiencyTest for Bank LendingPersonnel 406 403 393
Advanced ProficiencyTest for Bank LendingPersonnel 32 33 33
ProficiencyTest for Bank Collateral Appraisal Personnel 10 10 10
ProficiencyTest for Financial PlanningPersonnel 402 392 388
Structured Product Sales PersonnelQualification Test 186 214 216
Qualification exam for securities investment trust and
consultingregulations(including professional ethics rules)		 24 23 23
For taking “Investment trust & consulting
regulations(includingself-disciplinaryrules)” only		 647 667 669

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Operational Highlights
Year End of 2013 End of 2014 Mar31, 2015
Life insurance salesperson 2,424 2,547 2,547
Investment-oriented insurance salesperson 1,206 1,221 1,215
Fundamental Test of Investment-oriented insurance
salesperson and financial market		 193 204 203
Property Insurance Salesperson Registration
Certificate		 1,022 1,037 1,033
Qualification Test for Life Insurance Salesperson Selling
Non-Investment Type of Insurance Product in Foreign
Currency		 939 962 956
Futures specialist 324 317 316
Bill finance specialist 77 76 77
Labor safety and health specialists (Class B certificate for
labor safetyand hygiene)		 5 4 4
Class A Manager of Labor Safety& Health Affairs 50 51 50
Class B Manager of Labor Safety& Health Affairs 76 81 83
Class C Manager of Labor Safety& Health Affairs 19 22 22
Fire FightingAdministrator 127 132 132
First Aid Specialist 139 146 145
Bond Specialist 28 28 25
Basic ProficiencyTest on Internal Controls 1,805 1,790 1,775
Securities specialist 311 309 306
Senior securities specialist 239 234 235
Securities investment trust and consulting professionals 187 182 182
Securities investment Analyst 6 6 5
Specialist of “Margin and Stock Loans bySecurities Firms” 38 37 38
Assistant real estate Brokers 8 10 8

Note: Not include 2 employees of offshore units.

  • (2) Advanced Education and Training of Employees In response to the fast changing financial environment and for the purpose of enhancing the professional competency of our employees, the Bank organizes the various business seminars and symposiums each year as well as sends employees to attend the various external training programs. The bank also requests, where possible, the relevant staff at all levels to acquire the required certification. The bank aims to upgrade the capabilities in product innovation and improve the operational procedures.
Item Internalprogram Externalprogram Total
Number of employees trained 9,039 1,713 10,752
Total trainingexpense ( in NT$ thousand) 13,366 4,760 18,126

  • (3) Rules of Employee Behavior and Ethics The Bank has put in place the “Employment Standards” and “Employee Service Rules” to govern employees’ behaviors and dedication for works. The Bank motivates its employees to take the corporate mission above all personal pursuits and perform their duties in accordance with corporate rules to facilitate the development of the various businesses.

  • (4) Protection for Work Environment and Employee Safety

  • A. Access Security: The Bank has installed a premise access surveillance system to monitor people entering or leaving the office premise. The

95

Operational Highlights

system is linked to the police stations at all times and is subject to regular trial checks. Security guards stationed on site to ensure personnel and premise security.

  • B. Office Premises and Equipment: The Bank performs regular or random maintenance check on the various equipment in accordance with the relevant regulations on public safety and fire tests of office premises.

  • C. Security Maintenance: The security maintenance regulations enforced by the competent authority and Bankers’ Association prescribe that each retail office shall conduct anti-robbery rehearsals each year.

  • D. Physical and Mental Health：The Bank has set in place the “Procedures of Safety & Health Work” and “Automatic examination Plan”. The Bank also performs tests on work environment and conducts relevant employee safety and first aid training programs in accordance with the rules and regulations.

3. Corporate Responsibility and Ethical Conduct

  • (1) Proud Sponsor of the Union Cultural Foundation: In an effort to motivate the continuation of local art, the Bank established the “Union Cultural and Educational Foundation” in 1998. We have a long history of sponsoring the Union Art Competition (including “Union Emerging Artists Award” and “Union Fine Art Impression Award”) and art exhibition tours. In 2014, the Bank sponsored the foundation to host the “2014 Union Art Competition” and “2014 Union Exhibition Tours”, which aimed at encouraging local artists to uphold their creative spirit and realize their dreams. The Foundation also funded the “Taiwan Art Contribution Award” to showcase the work of prominent old-time artists. Mr. Hong Rui-Lin was the old-time artist recommended by the panel in 2014.

  • For seventeen years, the Bank has worked earnestly to provide winners of the Union Art Competition opportunities to showcase their work such as inviting them to give a lecture or be the judge in certain art and cultural events, to offer them opportunities to demonstrate their creative talent. The Bank also constructed the “Union Art Gallery” at the Formosa Boulevard Station of the Kaohsiung Metro for civilians to view and enjoy the artwork. We hope to achieve our aim of supporting and nurturing local art creators and continuing Taiwan’s art in the long run.

  • (2) Active Involvement in Community Events:

  • A. Community development: The Bank has assumed the responsibility to support the care and maintenance of the “Mingyou No. 2 Park” since 1997. The park provides local residents an ideal place for leisure and children a place to play. The park received outstanding rating among other Taipei metropolitan parks since 2000. The Bank received the silver diamond award of the “Annual Award for Perpetual Park Management” in 2005 and the excellence award for five consecutive years from 2006 through 2011.

  • B. School Development: Starting from November of 2011, the Bank took the responsibility of preserving the flower bed just in front of Luzhou Elementary School by outsourcing a service provider to take care of the maintenance.

96

Operational Highlights

(3) Promote Art and Culture Activities in association with Social Welfare

A. The Bank has put much effort into the promotion of arts and culture for years. In January 2014, the Bank's 22[nd] anniversary ceremony “Believe Happiness and Brave to Take Responsibility” integrated the children public welfare groups. “Taiwan Foundation for Rare Disorders-Heavenly Meloday Rare Disordered Children Chorus" was invited to perform on the site. In May, the Bank assisted with the organization of the “Cheers for Mums; Union Bank Helps You Build a Better Future” charity fair for Mother’s Day. Total proceeds $706,110 were donated to the “Union Bank Culture & Art Foundation” to support the Foundation’s work in cultural and art events and cultivation of talents. Further, the Bank organized the “Children Drawing Competition” in April and “Charitable Wealth Management Camp for Children” in July and August. B. In order to co-promote the local musical, art & cultural events and boost the development of cultural ecology, the Bank has sponsored “Kaohsiung Philharmonic Cultural & Arts Foundation” periodically since 2011. Meanwhile, the Bank will organize the periodic, special, community and campus musical concerts each year. The budget sponsored by the Bank totaled NT$2,600,000 in 2014.

(4) Caring for Local Farmers and Residents of Disaster Zones

The Bank launched the “Love to Share. Happy Gifts” event to coincide with Mother’s Day events in May, 2014.The Bank also purchased 28,400 carnations (costing $327,760 in total) for distribution to customers in hope of raising the public’s awareness of the hardship endured by local farmers and the importance of protecting our local agricultural market. In August 2014, the Bank donate NT$10 million to the exclusive donation account of Kaohsiung City Government to help the emergent relief for 81 Kaohsiung Explosion Accident.

(5) Web Accessibility

The Bank has undertaken the web accessibility campaign to enhance the accessibility of the Bank’s official, personal banking and corporate banking website by users with mental or physical disabilities. The website includes banners and pictures to show text explanation, advertised interest rates and exchange rates through movement of the cursor and disabled users are able to click on the options instead of dragging the cursor to show drop-down menus. Keyboard shortcut keys are also available to ensure full accessibility of the Bank’s websites by people with disabilities, which we consider as an important part of our social responsibilities.

(6) The Bank partnered with Kaohsiung Rapid Transit Corp. to run the “Whispering Filming with Companionship”, “HAPPI Walking Fun”, “KRTC Prestige Lecture Class”, “Winter Sun to Communicate Heartwarming Happiness”, “Let Children Know About the Beauty of Our Land”, “KRTC Fall Art Banquet” and “Winter Charity Activity” to communicate the new happy series activities. Base at the KRTC stops, the Bank communicated warm and love to others through charitable raising of supplies and resources and purchase of charity products, so as to extend the communication between KRTC and the citizens

97

Operational Highlights

and fulfill the concept about the city’s new happiness.

4. Facilities of Information Technology

  • (1) Maintenance and Allocation of Hardware & Software for major IT systems:

  • A. Production Computer Room: One IBM z/BC12 operation server and one IBMz/890 backup- server, two IBM 8870 diskettes driver, IBM 3590 Tape driver , Fujitsu Tape driver, fourteen IBM RS/6000, one IBM i520 and 100 PC servers.

  • B. Backup Computer Room: One IBM z/800 remote backup server, two IBM Shark-800 diskeet drive, IBM 2074 back-end controller, one set of 3590 and 3490 tape drive each, two IBM RS/6000, one IBM AS/400-720 and twelve PC servers.

  • C. Network: The operating system control room uses two CISCO 7206 routers, two CISCO 7507 routers, two CISCO 4507 routers. The backup control rooms uses three ASR1001 routers, three CISCO ASR1001 routers, and two CISCO 3750 routers via the DWDM connecting with the operating system and backup control rooms. Branches use CISCO 2811/2911 routers and connected to the operation system’s computer room via the CHT exclusive line (transaction), with connection to the backup control room routers via Asia Pacific Telecom FTTB 2M (non-transaction) as alternate, if necessary.

  • D. The Bank has signed maintenance contracts with the vendors for above hardwares and softwares.

  • (2) Future development or procurement plans:

  • A. Update of PC throughout the Bank.

  • B. Development of the control system for country risks.

  • C. Development of the registration system for loaning of book-entry government bonds.

  • D. Upgrading of the report inquiry system.

  • E. Upgrading of recording equipment system of call center.

  • F. Hardware and software upgrading of database storage.

  • G. Web Application Firewall Device.

  • H. Constructing Defend APT(Advanced Persistent Threat) system over the internet

  • I. Computer system information security evaluation and testing

  • (3) Emergency Backup and Security Protection Measures

  • A. Construct on-site backup device at Neihu computer room with Minsheng computer room serving as the remote backup support.

  • B. Off-site media backup and storage of sensitive documents, separately at Neihu and Minsheng computer rooms.

  • C. Installation of access control system, surveillance cameras, line control, fire safety equipment and environmental security systems to protect the IT equipment.

  • D. Using intrusion detector, setting internal/external firewalls and anti-spam system, scanning virus, Trojan horse or spy programs, updating virus-code and system patch to ensure internet and data transmission security.

  • E. Enact the “Plan for Union Bank of Taiwan IT Security Contingency” and conduct annual rehearsals of on-site and remote backup and fire safety in

98

Operational Highlights

accordance with the “Plan for Union Bank of Taiwan IT Disaster Contingency”.

5. Labor Relations

  • (1) Execution status of employee welfare and retirement policy, labor agreements and protection of employee welfare:

  • A. Establish the Employee Welfare Committee. Deduct 0.5% of employees’ monthly salaries and appropriate 0.1% of operating revenue and use the fund to administer employee welfare affairs such as Mother’s Day Fair and special allowances for marriage, funeral, birth (including spouse) and major accident.

  • B. In accordance with the Social Insurance Policy, the Bank administers Labor Insurance, National Health Insurance and Group Insurance (including term life insurance, group accident insurance, worker’s accident insurance, occupational injury insurance, cancer insurance and hospital and medical insurance for employees and their dependents).

  • C. Offer deposits, loans and unsecured consumer loan for staff at special rates.

  • D. The Employee Welfare Committee disburses bonus to employees on major festivals of the Lunar year.

  • E. Employee Retirement Policy has been set that any employee reaching retirement age or eligible for retirement pursuant to the Bank’s retirement policy is entitled to receive the retirement payout under the old pension system (Labor Standards Act). On the other hand, the Bank makes monthly contributions to individual retirement accounts for employees who apply for new pension system.

  • F. The Bank has set up rules for governing labor-management committee to maintain sound and harmonious labor-management relationship.

  • (2) Loss incurred as a result of labor disputes in the past year and current year up to the printing date of annual report, the amount of estimated potential loss and the bank’s responses. Where it is impossible to make a reasonable estimate, provide the reason: Since its inauguration, the Bank has not been involved in a labor dispute that resulted in a loss. We will review the various welfare policies every year for the best interest of our employees.

6. Major Contracts

Nature of Contract Concerned Parties Contract Period Content Restriction on
Contract
Insurance Contract Central Deposit
Insurance
Corporation		 Signed on Apr.
27, 1994		 Performance bond
agreement for the
solvency of financial
institution in paying
depositors		 None
Insurance Contract MSIG Mingtai
Insurance Co.,
Ltd.		 Jan. 21, 2015
To
Jan. 21,2016		 Bankers Blanket
Insurance		 None
Outsource
Contract		 Yesing
Technologies		 December 4,
2014		 Install Cami
customer service
via email for the
Bank		 None
Outsource Union Information Jul. 01,2001 Credit card None

99

Operational Highlights

Nature of Contract Concerned Parties Contract Period Content Restriction on
Contract
Contract Technology Corp. information
system
Outsource
Contract		 Financial
eSolution Co.,
Ltd.		 Apr. 14, 2008 Chip card
transactions
processing		 None
Outsource
Contract		 Union Information
Technology Corp.		 Jun. 16, 2008 Design and
maintenance of
Web		 None
Outsource
Contract		 Union Information
Technology Corp.		 Apr. 01, 2009 Collections
system of
Convenient Store
and tuition		 None
Outsource
Contract		 Union Information
Technology Corp.		 Jun. 01, 2011 e-Gift Voucher
Management
System		 None
Outsource
Contract		 Mohist Web
Technology Co.,
Ltd.		 Jul. 27, 2010 e-Gift Voucher
Management
System		 None
Outsource
Contract		 IBM Jul. 01, 2011 Credit card
information
system and
statementprinting		 None
Outsource
Contract		 Smart Star
Software Inc.		 Nov 05, 2012 Maintenance of
debt collection
System		 None
Outsource
Contract		 Gemalto Co., Ltd. Jul. 15, 2007 Manufacturing of
chipcredit cards		 None
Outsource
Contract		 Taiwan Name
Plate Co., Ltd.		 Dec. 10, 2007 Manufacturing of
chipcredit cards		 None
Outsource
Contract		 Foongtone
Technology Co.,
Ltd.		 Jun. 09, 2008 Manufacturing of
chip credit cards		 None
Outsource
Contract		 TECO Smart
Technologies Co.,
Ltd.		 Oct. 31,2014 Manufacturing of
chip credit cards		 None
Outsource
Contract		 Taiwan Name
Plate Co., Ltd.		 Jan. 23, 2008 Manufacturing of
chipATM cards		 None
Outsource
Contract		 Foongtone
Technology Co.,
Ltd.		 Jun. 02, 2008 Manufacturing of
chip ATM cards		 None
Outsource
Contract		 Taiwan Mobile
Payment
Corporation		 Dec. 17, 2014 Manufacturing of
credit cards for the
mobile payment
tools		 None
Outsource
Contract		 Yuen Foong
Paper Co., Ltd.		 Jan. 01, 2008 Printing of
withholding tax
statements		 None
Outsource
Contract		 Yuen Foong
Paper Co., Ltd.		 Nov. 01, 2008 Printing and
mailing
Statement		 None
Outsource
Contract		 Ma Chiu
Consulting
Management Co.
Ltd.		 Feb. 22, 2005 Household
registration and
financial/tax
information search		 None
Outsource
Contract		 SinLinYang
Business
ConsultingCo.,		 Apr. 24, 2009 Household
registration and
financial/tax		 None

100

Operational Highlights

Nature of Contract Concerned Parties Contract Period Content Restriction on
Contract
Ltd. information search
Outsource
Contract		 EVERY8D Co.,
LTD.		 Aug. 01, 2012 Messaging system
and message
deliveryservice		 None
Outsource
Contract		 Chunghwa Post
Co., Ltd.
Taipei Post		 Aug. 01, 2012 Printing,
enveloping and
delivery of credit
card notification
letter and
aerogram		 None
Outsource
Contract		 Hou Jeh Co., Ltd. Dec. 31, 2008 Enveloping of
credit card mails		 None
Outsource
Contract		 Philip Morris
International
Taiwan		 Nov. 20, 2012 Packaging and
delivery of credit
card redemptions		 None
Outsource
Contract		 SYSTEX
Corporation		 Sep. 01, 2012 Delivery of credit
card statements		 None
Outsource
Contract		 Chung Hwa
Express Corp.		 Jul. 01, 2008 Check clearing
house delivery
operation		 None
Outsource
Contract		 Leebao Security
Co., Ltd		 Aug. 01, 2008 Transportation of
valuable
securities and
cash		 None
Outsource
Contract		 Taiwan Security
Co., Ltd.		 Jan. 01, 2010 Transportation of
valuable
securities and
cash		 None
Outsource
Contract		 Jihsun Security
Co., Ltd.		 Dec. 01, 2012 Transportation of
valuable
securities and
cash		 None
Outsource
Contract		 Transnational
Group		 Jan. 01, 2013 Check clearing
house delivery
operation		 None
Outsource
Contract		 An Fong
Enterprise Co.,
Ltd.		 Oct. 01, 2008 ATM banknote
replenishment
and
troubleshooting
operation		 None
Outsource
Contract		 Lian-An Service
Co., Ltd.		 Jan. 01, 2010 ATM banknote
replenishment
and
troubleshooting
operation		 None
Outsource
Contract		 Chou Jin-Kuo
Conveyancing
Office		 Dec 1, 2014 Conveyancing
services		 None
Outsource
Contract		 Ja Chou
Conveyancing
Office		 Nov 17, 2014 Conveyancing
services		 None
Outsource
Contract		 Shih Chang-Chih
Conveyancing
Office		 Nov 25, 2014 Conveyancing
services		 None
Outsource Lee & Lin Real Dec 1,2014 Conveyancing None

101

Operational Highlights

Nature of Contract Concerned Parties Contract Period Content Restriction on
Contract
Contract Estate Consultant services
Outsource
Contract		 Lin Hsiu-Fan
Conveyancing
Office		 Dec. 01, 2014 Conveyancing
services		 None
Outsource
Contract		 Lin Yin-Hui
Conveyancing
Office		 Dec. 01, 2014 Conveyancing
services		 None
Outsource
Contract		 Hsin Yaun
Conveyancing
Office		 Nov 14, 2014 Conveyancing
services		 None
Outsource
Contract		 Yeah Ju-Cui
Conveyancing
Office		 Nov 25, 2014 Conveyancing
services		 None
Outsource
Contract		 Huang Jin-Yuan
Conveyancing
Office		 Dec. 01, 2014 Conveyancing
services		 None
Outsource
Contract		 Pu-Hsin
Conveyancing
Office		 Dec 1, 2014 Conveyancing
services		 None
Outsource
Contract		 Ho Yuan
Advertising Co.,
Ltd.		 Apr. 15, 2014 Contracted by
another entity to
process collaterals
accepted under
creditor right		 None
Outsource
Contract		 Tai Ding
Industrial Co.,
Ltd.		 Aug. 28, 2007 Lost car search
service		 None
Outsource
Contract		 Fong Tai
Management
Consulting Co.,
Ltd.		 Aug. 28, 2007 Lost car search
service		 None
Outsource
Contract		 Hong Jeh
Management
Consulting Co.,
Ltd.		 Dec. 01, 2009 Lost car search
service		 None
Outsource
Contract		 SinJang
Enterprise Co.,
Ltd.		 Jul. 01, 2006 Lost car resell None
Outsource
Contract		 Ho Rong Co.,
Ltd.		 Oct. 01, 2006 Lost car resell None
Outsource
Contract		 Yu San
Automobile Co.,
Ltd.		 Mar. 01, 2008 Lost car resell None
Outsource
Contract		 Chung Yu Credit
Finance & Credit
Management Co.,
Ltd.		 Jul. 01, 2007 Collection of
receivables		 None
Outsource
Contract		 E-HAO
MANAGEMENT
CONSULTANT
LTD		 Jul. 01, 2007 Collection of
receivables		 None
Outsource
Contract		 Pick International
Asset
Management Co.,
Ltd.		 Jul. 01, 2007 Collection of
receivables		 None
Outsource
Contract		 Justor Collection
Management Co.
Ltd.		 Jul. 01, 2007 Collection of
receivables		 None

102

Operational Highlights

Nature of Contract Concerned Parties Contract Period Content Restriction on
Contract
Outsource
Contract		 Win Trust
International
Asset
Management Co.,
Ltd.		 Jul. 01, 2007 Collection of
receivables		 None
Outsource
Contract		 Sparkle
Collection
Management Co.,
Ltd		 Jul. 01, 2007 Collection of
receivables		 None
Outsource
Contract		 Standard Finance
& Credit
Management Co.,
Ltd.		 Jul. 01, 2007 Collection of
receivables		 None
Outsource
Contract		 YuBan Credit
Management
Consulting Co.,
Ltd.		 Jul. 06, 2007 Collection of
receivables		 None
Outsource
Contract		 Asia Credit
Management Co.,
Ltd.		 Oct. 27, 2009 Collection of
receivables		 None
Outsource
Contract		 APEX Credit
Solutions Inc.		 Oct. 27, 2009 Collection of
receivables		 None
Outsource
Contract		 United Credit
Services Ltd.		 Oct. 27, 2009 Collection of
receivables		 None
Outsource
Contract		 Global Credit
Management Ltd.		 Oct. 01, 2011 Collection of
receivables		 None
Outsource
Contract		 Hung Lih Asset
Management
Consulting Co.,
Ltd.		 Oct. 01, 2011 Collection of
receivables		 None
Outsource
Contract		 Uni-President
Enterprises
Corporation		 Nov. 01, 2005 Collection of
consumer loan
payment		 None
Outsource
Contract		 Taiwan
FamilyMart Co.,
Ltd.		 Jun. 01, 2011 Collection of
consumer loan
payment		 None
Outsource
Contract		 Taiwan
FamilyMart Co.,
Ltd.		 Jun. 01, 2011 Collection of
credit card
payment		 None
Outsource
Contract		 Hi-Life
International Co.,
Ltd		 Sep. 25, 2012 Collection of
credit card
payment		 None
Major (Note) Contracts Including Technology Cooperation Agreement, Construction Agreement,
Long-term Loan Agreement and Other Agreements Sufficient to Impact the Rights of Depositors or
Shareholders:None.

7. Securitization Commodities approved by the competent authority and relevant information launched in accordance with Financial Asset Securitization Act or Real Estate Securitization Act in recent years: None

103

Financial Highlights

1. Condensed Balance Sheets, Income Statement and Auditors’ Opinions for the most recent five years.

�1� Condensed Consolidated Balance Sheets - IFRS

In NT$thousand In NT$thousand In NT$thousand In NT$thousand In NT$thousand In NT$thousand
Year
Item		 Financial Data for the Past Five Years�Note 1� Mar 31,2015 (Note2�
2010 2011 2012 2013 2014
Cash and equivalent, due from the
Central Bank and other banks		 Not Complied
with IFRS		 85,036,973
 79,101,215 76,850,501 71,673,483
Financial assets at fair value through
profit or loss		 8,297,349 10,115,316 18,614,020 18,849,111
Available-for-sale financial assets 10,331,378 8,711,283 13,974,008 14,977,548
Hedging derivative financial
instruments		 - - - -
Securities purchased under resell agreements 21,780,368 20,237,019 26,371,487 18,982,830
Receivable-Net 14,435,559 13,917,483 14,781,954 14,161,097
Current Tax asset 100,505 160,672 332,275 332,359
Available-for-sale asset-Net - - - -
Discounts & Loans-Net 199,788,512 227,974,804 255,787,180 271,379,325
Held-to-maturity financial asset 811,872 440,233 534,200 1,030,610
Equity Investment(Equity Method)- Net 54,490 54,294 54,183 54,027
Restricted assets - - - -
Other financial asset – Net 49,714,759 57,559,287 56,835,380 57,865,118
Property and equipment- Net 7,729,000 7,644,442 7,732,876 7,750,832
Investment property-Net 2,792,110 2,777,603 3,691,781 3,674,285
Intangible asset –Net 2,087,971 2,049,795 2,050,999 2,049,277
Deferred tax asset-Net 3,475,913 2,992,503 2,407,704 2,318,938
Other asset 6,629,256 6,419,023 6,463,385 6,852,636
Total asset 413,066,015 440,154,972 486,481,573 491,951,476
Due to the central bank and other banks 6,422,684 5,315,113 6,748,799 5,472,844
Call loans to the central banks and other
banks		 - - - -
Financial liability at fair value through
profit or loss		 27,417 16,006 211,084 256,152
Hedging derivative financial instruments - - - -
Securities sold under repurchase agreements 28,289,349 24,582,657 31,791,276 31,785,414
Payable 6,710,952 4,267,543 5,567,108 3,940,990
Current Income Tax liability 31,307 18,954 9,849 17,990

104

Financial Highlights

Year
Item		 Year
Item		 Financial Data for the Past Five Years�Note 1� Financial Data for the Past Five Years�Note 1� Financial Data for the Past Five Years�Note 1� Financial Data for the Past Five Years�Note 1� Financial Data for the Past Five Years�Note 1� Mar 31,2015 (Note2�
2010 2011 2012 2013 2014
Liabilities directly associated with assets
held f or sale		 - - - -
Deposit and remittance 336,561,067 364,084,582 395,852,404 402,780,663
Bank debentures 5,200,000 7,400,000 7,400,000 7,974,631
Liability component of preferred stocks - - - -
Other financial liability 1,285,497 2,180,986 2,517,176 2,472,999
Provision 811,124 769,416 959,941 967,223
Deferred tax liability 352,229 574,580 707,731 699,500
Other liability 2,132,118 2,264,761 2,409,132 2,411,543
T o t a l l i a b i l i t y Before dilution 387,823,744 411,474,598 454,174,500 458,779,949
After dilution 387,823,744 411,474,598 Note3 Note3
BIS total Equity 25,005,371 28,423,332 32,038,122 32,898,729
Capital stock Before dilution 20,264,396 22,165,651 24,509,306 24,509,306
After dilution 22,122,641 24,448,272 Note3 Note3
Capital surplus 32,413 34,288 33,006 33,006
Retained earnings Before dilution 4,574,007 5,391,915 6,126,910 6,853,503
After dilution 2,534,720 3,099,932 Note3 Note3
Others equity 134,555 831,878 1,368,900 1,502,914
Treasury Stock - - - -
Non control Interest 236,900 257,042 268,951 272,798
Total equity Before dilution 25,242,271 28,680,374 32,307,073 33,171,527
After dilution 25,061,229 28,671,412 Note3 Note3

Note 1：The Bank has adopted the International Financial Reporting Standards for less than five years. As such, we have prepared financial statements for the years 2010 and 2011 in accordance with the financial accounting standards of the Republic of China. Note 2: All financial data have been audited by independent auditors, with the exception of the first quarterly financial data for 2015. Note 3: The 2015 annual general shareholders’ meeting has yet to be held. As such, the amount after appropriation for 2014 was not provided.

105

Financial Highlights

�2� Condensed Balance Sheet-IFRS

In NT$ thousand

Year
Item		 Financial Financial Data for the Past Five Year�Note 1� Data for the Past Five Year�Note 1� Data for the Past Five Year�Note 1�
2010 2011 2012 2013 2014
Cash and equivalent, due from the
Central Bank and other banks		 Not Complied with IFRS 84,949,171 78,568,012 76,737,109
Financial assets at fair value
through profit or loss		 8,094,894 9,863,257 18,373,136
Available-for-sale financial assets 10,237,156 8,500,192 13,699,485
Hedging derivative financial
instruments		 - - -
Securities purchased under resell
agreements		 21,764,953 20,230,519 26,350,581
Receivable-Net 14,248,095 13,742,618 14,678,252
Current Tax asset 100,493 160,660 326,786
Available-for-sale asset-Net - - -
Discounts & Loans-Net 201,833,438 230,142,592 257,632,121
Held-to-maturity financial asset 811,872 428,017 521,266
Equity Investment(Equity Method)-
Net		 2,543,168 2,567,706 2,616,318
Restricted assets - - -
Other financial asset – Net 49,485,900 57,830,216 56,639,357
Property and equipment- Net 7,713,002 7,630,976 7,722,206
Investment property-Net - - -
Intangible asset -Net 2,082,738 2,044,866 2,046,198
Deferred tax asset-Net 3,305,217 2,826,055 2,245,936
Other asset 2,154,775 1,925,098 1,962,732
Total asset 409,324,872 436,460,784 481,551,483
Due to the central bank and other
banks		 5,115,437 4,924,611 6,164,744
Call loan to the central bank and
other banks		 - - -
Financial liability at fair value
through profit or loss		 27,417 16,006 211,084
Hedging derivative financial
instrument		 - - -

106

Financial Highlights

Financial Highlights Financial Highlights
Year
Item		 Financial Data for the Past Five Year�Note 1�
2010 2011 2012 2013 2014
Securities sold under repurchase
agreements		 28,289,349 24,582,657 31,791,276
Payable 6,581,310 4,168,148 5,456,071
Current Income Tax liability - - -
Liabilities directly associated with assets held for
sale		 - - -
Deposit and remittance 337,399,136 365,120,161 396,410,432
Bank debentures 5,200,000 7,400,000 7,400,000
Liability component of preferred
stocks		 - - -
Other financial liability 306,392 201,858 18,928
Provision 795,785 752,628 942,785
Deferred tax liability 334,380 556,558 699,730
Other liability 270,295 314,825 418,311
Total liability Before
dilution		 384,319,501 408,037,452 449,513,361
After dilution 384,319,501 408,037,452 Note3
Capital stock Before
dilution		 20,264,396 22,165,251 24,509,306
After
dilution		 22,122,641 24,448,272 Note3
Capital surplus 32,413 34,288 33,006
Retained earning Before
dilution		 4,574,007 5,391,915 6,126,910
After dilution 2,534,720 3,099,932 Note3
Other equity 134,555 831,878 1,368,900
Treasury stock - - -
Total equity Before
dilution		 25,005,371 28,423,332 32,038,122
After dilution 24,824,329 28,414,370 Note3

Note 1：The Bank has adopted the International Financial Reporting Standards for less than five years. As such, we have prepared financial statements for the years 2010 and 2011 in accordance with the financial accounting standards of the Republic of China. Note 2: All financial data have been audited by independent auditors , with the exception of the first quarterly financial data for 2015. Note 3: The 2015 annual general shareholders’ meeting has yet to be held. As such, the amount after appropriation for 2014 was not provided.

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Financial Highlights

�3� Condensed Balance Sheet- R.O.C. GAAP

IN NT$ thousand

Year
Item		 Year
Item		 Financial Data for The Past Five Years(Note1) Financial Data for The Past Five Years(Note1) Financial Data for The Past Five Years(Note1) Financial Data for The Past Five Years(Note1) Financial Data for The Past Five Years(Note1)
2010 2011 2012 2013 2014
Cash and cash equivalent, due
from the Central Bank and other
banks		 70,268,555
110,172,361		 Disclosed in Condensed Balance
Sheet - IFRS
Financial assets at fair value
throughprofit or loss		 3,017,823
8,167,543
Securities purchased under resell
agreements		 39,500
251,626
Available-for-sale financial assets 6,230,049 7,516,896
Discounts & loans 189,657,099
190,679,993
Receivables 16,808,438
15,086,661
Held-to-maturityinvestment 3,272,634
1,313,015
Equity investments- Equity
method		 1,050,576
1,114,794
Property& equipment 8,089,483
7,956,701
Intangibles 2,374,485
2,119,709
Other financial assets 57,137,087
49,631,216
Other assets 5,127,948
3,714,937
Total Assets 363,073,677
397,725,452
Call loans and due to banks 10,287,346
7,007,256
Deposits and remittance 289,605,854
322,756,910
Financial liabilities at fair value
throughprofit or loss		 51,584
33,852
Securities sold under repurchase
agreements		 33,596,926
34,522,173
Payables 3,838,896
5,847,302
Bank debentures 4,890,000
4,890,000
Liability component of preferred
stocks		 - -
Other financial liabilities 318,027
337,852
Other liabilities 390,574
365,444
Total
Liability		 Before dilution 342,979,207 375,760,789
After dilution 342,979,207 375,760,789
Capital
Stock		 Before dilution 19,484,996 19,484,996
After dilution 19,484,996 19,484,996
Capital surplus 33,811 33,811
Retained Before dilution 1,176,594 3,054,066

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Financial Highlights

earning After dilution 1,176,594 1,517,215
Unrealized profit/(loss) on
financial assets		 155,124 (167,173)
Cumulative translation
adjustments		 (640,778) (263,522)
Others (115,277) (177,515)
Total
shareholder’s
Equity		 Before dilution 20,094,470 21,964,663

After dilution		 20,094,470 21,207,212

Note 1: All financial data have been audited by independent auditors.

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Financial Highlights

� 4 � Condensed Consolidated Comprehensive Income Statement - IFRS
YEAR
Item		 Financial Data for the past five years�Note1� Mar 31, 2015
(Note 2)
2010 2011 2012 2013 2014
Interest Revenue Not Complied With
IFRS		 9,088,649 9,239,639 9,675,323 2,512,603
Less: interest expense 3,426,807 3,399,120 3,730,345 976,157
Net interest 5,661,842 5,840,519 5,944,978 1,536,446
Net revenue others than interest 3,628,689 4,650,027 4,989,963 1,189,514
Total net revenue 9,290,531 10,490,546 10,934,941 2,725,960
Provision reversal of allowance
for doubtful accounts		 (647,490) (95,868) (494,806) (27,231)
Operating expense 6,830,721 7,178,056 7,691,951 1,895,279
Income before income tax 3,107,300 3,408,358 3,737,796 857,912
Income tax (expense) revenue (460,977) (520,554) (614,311) (127,472)
Income after income tax 2,646,323 2,887,804 3,123,485 730,440
Discontinue segment profit/
loss		 - - - -
Net income 2,646,323 2,887,804 3,123,485 730,440
Other comprehensive income
after tax		 215,833 686,856 470,169 134,014
Total comprehensive income 2,862,156 3,574,660 3,593,654 864,454
Net income attributable to
owner’s of bank		 2,634,718 2,867,891 3,093,795 726,593
Net income attributable to
Non-controlling interests		 11,605 19,913 29,690 3,847
Net profit attributable to
owner’s of bank		 2,850,536 3,554,518 3,564,000 860,607
Net profit attributable to
Non-controlling interests		 11,620 20,142 29,654 3,847
Earning per share $1.28 $1.18 $1.26 $0.30

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Financial Highlights

� 5 � Condensed Comprehensive Income Statement - IFRS

In NT$ thousand

Year
Item		 Financial Data for The Past Five years�Note1� Financial Data for The Past Five years�Note1� Financial Data for The Past Five years�Note1�
2010 2011 2012 2013 2014
Interest Revenue Not Complied
With IFRS		 9,117,046 9,271,343 9,707,194
less: Interest Expense 3,382,254 3,350,022 3,681,523
Net Interest 5,734,792 5,921,321 6,025,671
Net revenues others than interest 1,706,763 2,557,835 2,823,844
Total net revenue 7,441,555 8,479,156 8,849,515
Provision reversal of allowance
for doubtful accounts		 (647,490) (95,890) (494,806)
Operating expenses 5,038,621 5,236,264 5,668,767
Income before income tax 3,050,424 3,338,782 3,675,554
Income tax revenue(expense) (415,706) (470,891) (581,759)
Income after income tax 2,634,718 2,867,891 3,093,795
Discontinue segment profit - - -
Net income 2,634,718 2,867,891 3,093,795
Other comprehensive income
after tax		 215,818 686,627 470,205
Total comprehensive income 2,850,536 3,554,518 3,564,000
Earning per share $1.28 $1.18 $1.26

Note 1：The Bank has adopted the International Financial Reporting Standards for less than five years. As such, we have prepared financial statements for the years 2010 and 2011 in accordance with the financial accounting standards of the Republic of China. Note 2: All financial data have been audited by independent auditors.

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Financial Highlights

� 6 � Condensed Income Statement –R.O.C. GAAP

In NT$ thousand

Year
Item		 Year
Item		 Financial data for the Past Five Years (Note) Financial data for the Past Five Years (Note) Financial data for the Past Five Years (Note) Financial data for the Past Five Years (Note) Financial data for the Past Five Years (Note)
2010 2011 2012 2013 2014
Net interest 6,650,288
6,662,353		 Disclosed in Condensed Income Statement - IFRS
Net revenues other than
interest		 250,278
644,539
Bad debts 409,502
121,500
Operating expenses 4,658,552
4,964,012
Income (loss) before income
tax
1,832,512
2,221,380
Income (loss) before
cumulative effect of
accountingchanges		 1,410,425
1,826,615
Profit (loss) of discontinued
operations(Net of tax)		 -
-
Extraordinary profit
(loss)(Net of tax)		 -
-
Cumulative effect of
accounting changes (Net of
tax)		 -
-
Net Income (loss) 1,410,425
1,826,615
Earning s(loss) per share($) $0.92
$0.95

Note: All financial data have been audited by independent auditors.

(7) Name of CPAs and the Auditors’ Opinion

Year CPA Firm Independent Auditors Audit Opinion
2010 Deloitte & Touche Terence Huang / Ray Chang Qualified opinion~~note~~
2011 Deloitte & Touche Terence Huang / Ray Chang Qualified opinion~~note~~
2012 Deloitte & Touche Terence Huang /Vincent Cheng Unqualified opinion
2013 Deloitte & Touche Terence Huang /Vincent Cheng Unqualified opinion
2014 Deloitte & Touche Terence Huang /Vincent Cheng Unqualified opinion

Note: A qualified audit opinion was issued on the Bank’s decision to amortize loss incurred from selling its non-performing loans on a straight-line basis over 60 months pursuant to the Financial Institutions Merger Act.

112

Financial Highlights

2. Financial Analysis and Capital Adequacy Ratio (1) Financial Analysis & Key Performance Index�KPI� A. Consolidated Financial Report.

In NT$thousand In NT$thousand In NT$thousand In NT$thousand In NT$thousand In NT$thousand
Year Financial Data for the Past Five Years (Note1)
Mar 31,2015
Item(Note3) 2010 2011 2012 2013 2014
Operating capability Loans to deposits ratio (%)



Not Complied with IFRS		 60.50 63.32 65.27 68.04
Non-performing loan ratio (%) 0.23 0.26 0.09 0.07
Interest expense to average total
deposits (%)		 1.04 0.97 0.98 0.98
Interest revenue to average total
loans (%)		 4.64 4.28 3.96 3.78
Total asset turnover (times) 0.0228 0.0246 0.0238 0.0223
Average net income per
employee		 2,670 2,974 3,014 3.007
Average earnings per employee 760 819 861 806
Profitability
 Return on tier 1 capital (%) 38.24 15.34 15.04 Note9
Return on assets (%) 0.65 0.68 0.67 0.60
Return on equity (%) 10.94 10.71 10.24 8.92
Net income ratio (%) 28.48 27.53 28.56 26.8
EPS (NT$) 1.28 1.18 1.26 0.30
Financial
Structure
 Total liabilities to total assets
ratio (%)		 93.86 93.46 93.32 93.22
Fixed assets to shareholders’
equity ratio (%)		 30.62 26.65 23.94 23.37
Growth rate Asset growth ratio (%) 2.39 6.56 10.53 1.12
Profitability growth ratio (%) 37.00 9.69 9.67 (8.19)
Cash Flow
 Cash flow ratio (%) - - - -
Cash flow adequacy ratio (%) 413.08 315.88 147.02 61.58
Cash flow reinvestment ratio
(%)		 - - - -
Liquid Reserve Ratio (%) 29.02 23.86 23.38 21.06
Balance of Secured Loans to Related Parties 1,395,602 1,840,562 1,781,537 1,819,784
Total Secured Loans to Related Parties as a
% of Total Loans		 0.65 0.76 0.65 0.62
Operation Sca Market share of asset (%) 1.00 0.97 0.99 Note 10
Market share of net worth
(%)		 0.96 1.01 1.03
Market share of deposits (%) 1.03 1.06 1.08
le Market share of loans (%) 0.93 1.03 1.10

113

Financial Highlights

Year Financial Data for the Past Five Years (Note1) Financial Data for the Past Five Years (Note1) Financial Data for the Past Five Years (Note1) Financial Data for the Past Five Years (Note1) Financial Data for the Past Five Years (Note1)
Mar 31,2015
Item(Note3) 2010 2011 2012 2013 2014
1.The decrease in the NPL ratio was primarily due to the quality of corporate banking loans.
2.Increase in asset growth was primarily due to an increase of $46,327 million in total assets in 2014, which was
higher compared to $27,089 million in 2013. Increase in total assets in 2014 was primarily contributed by increase
in discounts and loans of $27,812 million, and other financial assets of $19,896 million. Increase in total assets in
2013 was primarily contributed by increase in discounts and loans of $28,186 million, and other financial assets of
$7,844 million.
3. Profitability saw a decline primarily due to the amortization of non-performing loans disposed of in 2006.
Amortization of the non-performing loans concluded in 2011, however, the amortization expense had reduced a
certain amount of the Bank’s profits. The Bank’s profit saw a significant improvement from 2012 as the effect of
amortization no longer existed. Profitability continued to improve for the 2014 income year, though at a slower pace
compared to thepreviousyear.
  1. Profitability saw a decline primarily due to the amortization of non-performing loans disposed of in 2006. Amortization of the non-performing loans concluded in 2011, however, the amortization expense had reduced a certain amount of the Bank’s profits. The Bank’s profit saw a significant improvement from 2012 as the effect of amortization no longer existed. Profitability continued to improve for the 2014 income year, though at a slower pace compared to the previous year. Note 1：The Bank has adopted the International Financial Reporting Standards for less than five years. As such, we have prepared financial statements for the years 2010 and 2011 in accordance with the financial accounting standards of the Republic of China.

Note 2 : All financial data have been audited by independent auditors.

Note 3: Financial ratios are computed as follows:

  • I. Operating Capability

  • i. Loans to deposits ratio= Total loans/ total deposits (excluding redeposits of Chunghwa Post Co.) ii. Non-performing loan ratio= Total NPL/ total loans

  • iii. Interest expense to average total deposits= Deposits related interest expense/ average total deposits

  • iv. Interest revenue to average total loans= Loans related interest revenue/ average total loans

  • v. Total asset turnover= Net operating revenue/ average total assets

  • vi. Average net income per employee= Net operating revenue/ total number of employees.

  • vii. Average earnings per employee= Net income after tax/ total number of employees.

II. Profitability

  • i. Return on tier 1 capital= Net income before tax/ average total tier 1 capital.

  • ii. Return on assets= Net income after tax/ average total assets.

  • iii. Return on equity= Net income after tax/ average shareholders’ equity.

  • iv. Net Income ratio= Net income after tax/ net income.

  • v. Earnings per share= (Net Income after tax - preferred stock dividend)/weighted average outstanding shares

III. Financial structure

  • i. Total liabilities to total assets ratio=Total liabilities/total assets.

  • ii. Fixed assets and equipment to net worth ratio=Fixed assets and equipment , net/shareholders’ equity, net.

IV. Growth rate

  • i. Asset growth ratio= (Total assets as at the end of this year - total assets as at the end of last year)/total assets as at the end of last year..

  • ii. Profitability growth ratio=(Net income before tax for the current year- net income before tax for the past year)/net income before tax for the past year.

V. Cash flow

  • i. Cash flow ratio=Net cash from operating activities/(call loans to banks+ CD payable＋change in fair value of financial liabilities through the income statement＋repurchase securities payable＋Liabilities-current portion due within one year).

  • ii. Cash flow adequacy ratio=Net cash from operating activities for the past five years/(capital expenditure＋cash dividends) incurred for the past 5 years.

  • iii. Cash flow reinvestment ratio=Net cash from operating activities/net cash from investing activities.

  • VI. Liquid reserve ratio=Liquid assets statutorily required/reserve for liabilities.

VII. Operation scale

  • i. Market share of assets=Total assets/total assets of all authorized deposit-taking and loan-underwriting financial institutions*.

  • ii. Market share of net worth=Net worth/total net worth of all authorized deposit-taking and loan-underwriting financial institutions*.

  • iii. Market share of deposits=Total deposits/total deposits of all authorized deposit-taking and loan-underwriting financial institutions. iv. Market share of loans=Total loans/total loans of all authorized deposit- taking and loan-underwriting financial institutions.

  • Note 4: Total liabilities refer to the amount of liabilities after deducting performance guarantee reserve and contingency reserve.

Note 5: I. Measurement should be based on the weighted average number of common shares, not the number of issued shares

114

Financial Highlights

at year end. II. In any case where there is a cash capital increase or treasury stock transaction, the period of time in circulation shall be considered in calculating the weighted average number of shares. III. In the case of capital increase out of earnings or capital surplus, the calculation of earnings per share for the past fiscal year and the fiscal half-year shall be retrospectively adjusted based on the capital increase ratio, without the need to consider the issuance period for the capital increase. IV. If the preferred shares are non-convertible cumulative preferred shares, the dividend of the current year (whether issued or not) shall be subtracted from the net profit after tax, or added to the net loss after tax. V. In the case of non-cumulative preferred shares, if there is net profit after tax, dividend on preferred shares shall be subtracted from the net profit after tax; no adjustment is required to be made if the result of operation is a net loss. Note 6: All authorized deposit-taking and loan-underwriting financial institutions include all domestic bank, the local branches of foreign banks, credit cooperative associations, farmers’ & fishermen’s associations and trust & investment corps. Note 7 : Revenue refers to the sum of interest income and non-interest income. Note 8 : The following notes apply when conducting cash flow analysis: I. Net cash flow from operating activities means net cash in-flows from operating activities listed in the statement of cash flows. II. Capital expenditures means the amounts of cash out-flows for annual capital investment. III. Cash dividend includes cash dividends from both common shares and preferred shares. VI. Gross real estate and equipment refers to total real estate and equipment before deducting accumulated depreciation. Note 9: The BASEL 3 regulations require companies to prepare consolidated financial information every six months. Note 10 The Banking Bureau has scheduled to upload the data of domestic banks for March 2014 on May 15, 2014.

115

Financial Highlights

(B) Financial Analysis – Financial Report

In NT$ thousand

Year Year Financial Data for the Past Five Years (Note1) Financial Data for the Past Five Years (Note1) Financial Data for the Past Five Years (Note1) Financial Data for the Past Five Years (Note1) Financial Data for the Past Five Years (Note1)
Mar 31,2015(Note
Item 2010 2011 2012 2013 2014 2)
Operating capability Loans to deposits ratio (%)




Not Complied With
IFRS		 60.50 63.73 65.65 Consolidated
Statement Only
Non-performing loan ratio (%) 0.23 0.29 0.09
Interest expense to average total
deposits (%)		 1.03 0.95 0.97
Interest revenue to average total
loans (%)		 4.61 4.26 3.94
Total asset turnover (times) 0.0184 0.0201 0.0193
Average net income per
employee		 2,320 2,610 2,637
Average earnings per employee 822 883 922
Profitability
 Return on tier 1 capital (%) 15.07 15.24 14.72
Return on assets (%) 0.65 0.68 0.67
Return on equity (%) 11.00 10.74 10.23
Net income ratio (%) 35.41 33.82 34.96
EPS (NT$) 1.28 1.18 1.26
Financial
Structure
 Total liabilities to total assets
ratio (%)		 93.86 93.47 93.31
Fixed assets to shareholders’
equity ratio (%)		 30.85 26.85 24.10
Growth rate Asset growth ratio (%) 2.40 6.63 10.33
Profitability growth ratio (%) 37.32 9.45 10.09
Cash Flow
 Cash flow ratio (%) - - -
Cash flow adequacy ratio (%) 1388.05 1493.53 663.36
Cash flow reinvestment ratio
(%)		 - - -
Liquid Reserve Ratio (%) 29.02 23.86 23.38
Balance of Secured Loans to Related Parties 3,440,528 4,008,350 3,626,478
Total Secured Loans to Related Parties as a
% of Total Loans		 1.61 1.65 1.32
Operation Scale Market share of asset (%) 0.99 0.97 0.98
Market share of net worth
(%)		 0.95 1.00 1.02
Market share of deposits (%) 1.03 1.06 1.08
Market share of loans (%) 0.94 1.04 1.11

116

Financial Highlights

The reason of financial ratio fluctuation in recent year:

  1. The decrease in the NPL ratio was primarily due to the quality of corporate banking loans.

  2. Increase in asset growth was primarily due to an increase of $45,091 million in total assets in 2014, which was higher compared to $27,136 million in 2013. Increase in total assets in 2014 was primarily contributed by increase in discounts and loans of $27,490 million, and other financial assets of $19,829 million. Increase in total assets in 2013 was primarily contributed by increase in discounts and loans of $28,309 million, and other financial assets of $8,344 million.

Note 1：The Bank has adopted the International Financial Reporting Standards for less than five years. As such, we have prepared financial statements for the years 2010 and 2011 in accordance with the financial accounting standards of the Republic of China.

Note 2: All financial data for the most recent two years was audited by CPA . Note 3: Financial ratios are computed as follows:

I .Operating Capability

Loans to deposits ratio= Total loans/ total deposits (excluding redeposits of Chunghwa Post Co.) Non-performing loan ratio= Total NPL/ total loans.

Interest expense to average total deposits= Total interest expense/ average total deposits. Interest revenue to average total loans= Total interest revenue/ average total loans. Total asset turnover= Net operating revenue/ total assets. Average net income per employee= Net operating revenue/ total number of employees. Average earnings per employee= Net income after tax/ total number of employees.

II .Profitability

Return on tier 1 capital= Net income before tax/ average total tier 1 capital. Return on assets= Net income after tax/ average total assets. Return on equity= Net income after tax/ average shareholders’ equity. Net Income ratio= Net income after tax/ net income.

Earnings per share= (Net Income after tax - preferred stock dividend)/weighted average outstanding shares

III.Financial structure

Total liabilities to total assets ratio=Total liabilities/total assets.

Fixed assets to net worth ratio=Fixed assets, net/shareholders’ equity, net.

IV.Growth rate

Asset growth ratio= (Total assets as at the end of this year - total assets as at the end of last year)/total assets as at the end of last year..

Profitability growth ratio=(Net income before tax for the current year- net income before tax for the past year)/net income before tax for the past year.

V. Cash flow

Cash flow ratio=Net cash from operating activities/(call loans to banks+ CD payable＋change in fair value of financial liabilities through the income statement＋repurchase securities payable＋Liabilities-current portion due within one year). Cash flow adequacy ratio=Net cash from operating activities for the past five years/(capital expenditure＋cash dividends) incurred for the past 5 years.

Cash flow reinvestment ratio=Net cash from operating activities/net cash from investing activities.

VI.Liquid reserve ratio=Liquid assets statutorily required/reserve for liabilities.

VII.Operation scale

Market share of assets=Total assets/total assets of all authorized deposit-taking and loan-underwriting financial institutions*.

Market share of net worth=Net worth/total net worth of all authorized deposit-taking and loan-underwriting financial institutions*.

Market share of deposits=Total deposits/total deposits of all authorized deposit-taking and loan-underwriting financial institutions*.

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Financial Highlights

Market share of loans=Total loans/total loans of all authorized deposit- taking and loan-underwriting financial institutions*.

Note 4: Total liabilities refer to the amount of liabilities after deducting performance guarantee reserve and contingency reserve.

  • Note 5: I. Measurement should be based on the weighted average number of common shares, not the number of issued shares at year end.

  • II. In any case where there is a cash capital increase or treasury stock transaction, the period of time in circulation shall be considered in calculating the weighted average number of shares.

III. In the case of capital increase out of earnings or capital surplus, the calculation of earnings per share for the past fiscal year and the fiscal half-year shall be retrospectively adjusted based on the capital increase ratio, without the need to consider the issuance period for the capital increase.

IV. If the preferred shares are non-convertible cumulative preferred shares, the dividend of the current year (whether issued or not) shall be subtracted from the net profit after tax, or added to the net loss after tax.

V. In the case of non-cumulative preferred shares, if there is net profit after tax, dividend on preferred shares shall be subtracted from the net profit after tax; no adjustment is required to be made if the result of operation is a net loss.

Note 6: All authorized deposit-taking and loan-underwriting financial institutions include all domestic bank, the local branches of foreign banks, credit cooperative associations, farmers’ & fishermen’s associations and trust & investment corps.

Note 7: Revenue refers to the sum of interest income and non-interest income.

Note 8: The following notes apply when conducting cash flow analysis:

I. Net cash flow from operating activities means net cash in-flows from operating activities listed in the statement of cash flows.

II. Capital expenditures means the amounts of cash out-flows for annual capital investment. III. Cash dividend includes cash dividends from both common shares and preferred shares. IV. Gross real estate and equipment refers to total real estate and equipment before deducting accumulated depreciation.

(C) Financial Analysis - (R.O.C. GAAP)

NT$thousand;% NT$thousand;% NT$thousand;% NT$thousand;%
Year Financial Data in the past five years
Item 2010 2011 2012 2013 2014
Operating capability Loans to deposits ratio (%) 66.03 59.70 Disclosed in Financial Report of IFRS
Non-performing loan ratio (%) 0.74 0.36
Interest expense to average total
deposits (%)
0.90		 0.94
Interest revenue to average total
loans (%)
5.13		 5.00
Total asset turnover (times) 0.0190 0.0184
Average net income per
employee		 2,320 2,349
Average earnings per employee 474 587
Profi
tabili
ty		 Return on tier 1 capital (%) 14.68 15.28

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Financial Highlights

Year Year Financial Data in the past five years Financial Data in the past five years Financial Data in the past five years Financial Data in the past five years
Item 2010 2011 2012 2013 2014
Return on assets (%) 0.40 0.48
Return on equity (%) 7.50 8.69
Net income ratio (%) 20.44 25.00
EPS (NT$) 0.92 0.95
Financial
Structure
 Total liabilities to total assets
ratio (%)
94.44		 94.47
Fixed assets to shareholders’
equity ratio (%)
40.26		 36.23
Growth rate Asset growth ratio (%) 4.59 9.54
Profitability growth ratio (%) 172.28 21.22
Cash Flow
 Cash flow ratio (%) 12.16 9.50
Cash flow adequacy ratio (%) 2,664.04 2,533.15
Cash flow reinvestment ratio
(%)
54.14		 12.46
Liquid Reserve Ratio (%) 21.13 29.97
Balance of Secured Loans to Related Parties 3,623,169 3,022,980
Total Secured Loans to Related Parties as a
% of Total Loans		 1.81 1.49
Operation Scale Market share of asset (%) 0.97 1.00
Market share of net worth
(%)		 0.88 0.91
Market share of deposits (%) 0.96 1.02
Market share of loans (%) 0.96 0.92

Note1: All financial data for the most recent five years was audited by CPA . Note 2: Financial ratios are computed as follows:

I. Operating Capability

Loans to deposits ratio= Total loans/ total deposits (excluding redeposits of Chunghwa Post Co.) Non-performing loan ratio= Total NPL/ total loans

Interest expense to average total deposits= Total interest expense/ average total deposits Interest revenue to average total loans= Total interest revenue/ average total loans Total asset turnover= Net operating revenue/ total assets

Average net income per employee= Net operating revenue/ total number of employees. Average earnings per employee= Net income after tax/ total number of employees.

II. Profitability

Return on tier 1 capital= Net income before tax/ average total tier 1 capital. Return on assets= Net income after tax/ average total assets. Return on equity= Net income after tax/ average shareholders’ equity. Net Income ratio= Net income after tax/ net income. Earnings per share= (Net Income after tax - preferred stock dividend)/weighted average outstanding shares

III. Financial structure

Total liabilities to total assets ratio=Total liabilities/total assets. Fixed assets to net worth ratio=Fixed assets, net/shareholders’ equity, net.

IV. Growth rate

Asset growth ratio= (Total assets as at the end of this year - total assets as at the end of last year)/total assets as at the end of last year..

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Financial Highlights

Profitability growth ratio=(Net income before tax for the current year- net income before tax for the past year)/net income before tax for the past year.

V. Cash flow

Cash flow ratio=Net cash from operating activities/(call loans to banks+ CD payable＋change in fair value of financial liabilities through the income statement＋repurchase securities payable＋Liabilities-current portion due within one year).

Cash flow adequacy ratio=Net cash from operating activities for the past five years/(capital expenditure＋cash dividends) incurred for the past 5 years.

Cash flow reinvestment ratio=Net cash from operating activities/net cash from investing activities.

VI. Liquid reserve ratio=Liquid assets statutorily required/reserve for liabilities.

VII. Operation scale

Market share of assets=Total assets/total assets of all authorized deposit-taking and loan-underwriting financial institutions. Market share of net worth=Net worth/total net worth of all authorized deposit-taking and loan-underwriting financial institutions. Market share of deposits=Total deposits/total deposits of all authorized deposit-taking and loan-underwriting financial institutions. Market share of loans=Total loans/total loans of all authorized deposit- taking and loan-underwriting financial institutions.

Note 3: Total liabilities refer to the amount of liabilities after deducting performance guarantee reserve, reserve for securities trading loss, reserve for loss arising from breach of contract and contingency reserve.

Note 4: I .Measurement should be based on the weighted average number of common shares, not the number of issued shares at year end.

II. In any case where there is a cash capital increase or treasury stock transaction, the period of time in circulation shall be considered in calculating the weighted average number of shares.

III. In the case of capital increase out of earnings or capital surplus, the calculation of earnings per share for the past fiscal year and the fiscal half-year shall be retrospectively adjusted based on the capital increase ratio, without the need to consider the issuance period for the capital increase.

IV. If the preferred shares are non-convertible cumulative preferred shares, the dividend of the current year (whether

issued or not) shall be subtracted from the net profit after tax, or added to the net loss after tax.

V..In the case of non-cumulative preferred shares, if there is net profit after tax, dividend on preferred shares shall be subtracted from the net profit after tax; no adjustment is required to be made if the result of operation is a net loss.

Note 5: All authorized deposit-taking and loan-underwriting financial institutions include all domestic bank, the local branches of foreign banks, credit cooperative associations, farmers’ & fishermen’s associations and trust & investment corps.

Note 6 :Revenue refers to the sum of interest income and non-interest income.

Note 7 : The following notes apply when conducting cash flow analysis:

I. Net cash flow from operating activities means net cash in-flows from operating activities listed in the statement of cash flows.

II. Capital expenditures means the amounts of cash out-flows for annual capital investment.

III. Cash dividend includes cash dividends from both common shares and preferred shares.

IV. Gross real estate and equipment refers to total real estate and equipment before deducting accumulated

depreciation.

120

Financial Highlights

(2) Capital Adequacy

In NT$ thousand

Item Year(Note1) Year(Note1) Financial Data for the Past Five Years(Note2) Financial Data for the Past Five Years(Note2) Financial Data for the Past Five Years(Note2) Financial Data for the Past Five Years(Note2) Financial Data for the Past Five Years(Note2) Mar
31,2015
2010 2011 2012 2013 2014
Regulatory
Capital		 Common Stock Equity BASEL III NOT APPLICABLE 23,562,741 26,380,471 27,277,473
Other Tier1 Capital of Non- Common Stock
Equity		 0 0 0
Tier2 Capital 6,624,701 6,462,888 6,176,872
Regulatory Capital 30,187,442 32,843,359 33,454,345
Risk Weighted Assets Credit risk Standardized Approach 190,929,908 214,767,222 227,435,070
Internal Ratings-Based Approach - - -
Credit Valuation Adjustment
(CVA)		 18,320 8,416 5,212
Asset Securitization 1,219,545 1,262,627 1,248,604
Operation
risk		 Basic Indicator Approach 15,405,625 15,555,738 15,555,741
Standardized Approach/
Alternative Standardized
Approach		 - - -
Advanced Measurement
Approach		 - - -
Market
Risk		 Standardized Approach 9,234,588 17,206,850 16,623,466
Internal Model Approach - - -
Total Risk-weighted Assets 216,807,986 248,800,853 260,868,093
Capital Adequacy Ratio 13.92% 13.20% 12.82%
Ratio of tier 1 capital to risk-weighted assets 10.87% 10.60% 10.46%
Ratio of common stock equity to risk-weighted assets 10.87% 10.60% 10.46%
Leverage Ratio 5.15%

Note1: The financial data in 2013 was computed based on the BASEL3 standards and was audited by CPA with the exception of the first quarterly financial data for 2015.

Note2: Core capital, weighted risk-based assets and total exposures in this Table were calculated in accordance with the “Regulations Governing the Capital Adequacy and Capital Category of Banks” and “Explanation and Table of Computation of Banks’ Core Capital and Risk-Weighted Assets”.

Note3: The ratios are computed as follows:

  • i. Regulatory Capital = Common Stock Equity＋Other Tier1 Capital of Non- Common Stock Equity＋Tier2 Capital

  • ii. Total risk-weighted assets= Credit risk weighted assets＋(operational risk + market risk) capital appropriation* 12.5.

  • iii. Capital adequacy ratio= Regulatory capital/Total risk-weighted assets.

  • iv. Ratio of tier 1 capital to risk-weighted assets = (Common Stock Equity＋Other Tier1 Capital of Non- Common Stock Equity) /Total risk-weighted assets.

  • v. Ratio of Common Stock Equity l to risk-weighted assets = Common Stock Equity /Total risk-weighted assets.

  • vi. Gearing ratio=Tier 1 Capital- Net/ Total Risk Exposure.

121

Financial Highlights

(Consolidated )

In NT$ thousand

Item Year(Note1) Year(Note1) Financial Data for the Past Five Years(Note2) Financial Data for the Past Five Years(Note2) Financial Data for the Past Five Years(Note2) Financial Data for the Past Five Years(Note2) Financial Data for the Past Five Years(Note2)
2010 2011 2012 2013 2014
Regulatory
Capital		 Common Stock Equity BASELIII Not Applicable 23,436,734 26,284,281
Other Tier1 Capital of Non- Common Stock
Equity		 0 0
Tier2 Capital 9,229,142 9,094,428
Regulatory Capital 30,665,876 35,378,709
Risk Weighted Assets Credit risk Standardized Approach 199,593,002 222,034,638
Internal Ratings-Based Approach - -
Credit Valuation Adjustment
(CVA)		 18,320 8,416
Asset Securitization 1,252,907 1,262,627
Operation
risk		 Basic Indicator Approach 17,706,850 17,986,163
Standardized Approach/
Alternative Standardized
Approach		 - -
Advanced Measurement
Approach		 - -
Market
Risk		 Standardized Approach 10,280,113 18,233,988
Internal Model Approach - -
Total Risk-weighted Assets 228,851,192 259,525,832
Capital Adequacy Ratio 14.27% 13.63%
Ratio of tier 1 capital to risk-weighted assets 10.24% 10.13%
Ratio of common stock equity to risk-weighted assets 10.24% 10.13%
Leverage Ratio

Note1: The financial data in 2013 was computed based on the BASEL3 standards and was audited by CPA with the exception of the first quarterly financial data for 2014.

  • Note2: Core capital, weighted risk-based assets and total exposures in this Table were calculated in accordance with the “Regulations Governing the Capital Adequacy and Capital Category of Banks” and “Explanation and Table of Computation of Banks’ Core Capital and Risk-Weighted Assets”.

Note3: The ratios are computed as follows:

  • i. Regulatory Capital = Common Stock Equity＋Other Tier1 Capital of Non- Common Stock Equity＋Tier2 Capital

  • ii. Total risk-weighted assets= Credit risk weighted assets＋(operational risk + market risk) capital appropriation* 12.5.

  • iii. Capital adequacy ratio= Regulatory capital/Total risk-weighted assets.

  • iv. Ratio of tier 1 capital to risk-weighted assets = (Common Stock Equity＋Other Tier1 Capital of Non- Common Stock Equity) /Total risk-weighted assets.

  • v. Ratio of Common Stock Equity l to risk-weighted assets = Common Stock Equity /Total risk-weighted assets.

  • vi. Gearing ratio=Tier 1 Capital- Net/ Total Risk Exposure

122

Financial Highlights

$ thousand


In NT$thousand
In NT$thousand
In NT$thousand
Year(Note1) The capital adequacyof recent fiveyears
Item 2010 2011 2012
Common Stock 16,459,908 16,459,908 20,060,202
Irredeemable non-cumulative 0 0 0
preferred stock
Non-cumulative subordinate 0 0 0
debentures with no maturity
date
Capital collected in advance 0 0 0
Capital Surplus (excl. fixed 33,811 33,811 33,811
asset revaluation increment
surplus)
Legal Reserve 0 352,978 900,963
Special Reserve 0 874,473 608,209
Cumulative Profit/Loss 1,176,594 1,826,615 2,621,624
Tier1 capital MinorityShareholding 0 0 0
Other Shareholders’ Equity -801,428 -1,036,271 -1,137,674
Less: Goodwill 2,374,485 2,119,709 1,985,307
Unamortized loss on sale
0		 0 0
of delinquent loans
Deferred income tax 0 0 0
assets based on the
bank’s future
profitability
Unrealised gain on 0 0 0
available-for-sale
financial assets
Reg Deduction items 954,735 856,919 861,657
ulat Total Tier 1 Capital 13,539,665 15,534,886 20,240,171
ory Capital Irredeemable Cumulative 3,025,088 3,025,088 204,194
Preferred Stock
Cumulative subordinate 0 0 0
debentures with no maturity
date
Fixed asset revaluation 0 0 0
increment surplus
45% of unrealized gain on 90,224 192,628 351,934
financial assets available for
sale
Convertible bonds 0 0 0
Operating reserve and 0 0 656,743
allowance for bad debts
Tier2 Capital
Long-term subordinate 1,458,000 2,880,000 4,040,000
debentures
Redeemablepreferred stocks 0 0 0
The sum of irredeemable 0 0 0
non-cumulative preferred
stocks and non-cumulative
subordinate debentures with
no maturity in excess of 15%
of total Tier 1 Capital
Less: Deduction items 857,384 851,875 861,657
Less: 50% of Cumulative
0		 0 0
Loss
Total Tier 2 Capital 3,715,928 5,245,841 4,391,214
Tier3 Capital Short-term subordinate 0 0 0
debentures
Redeemablepreferred stock 0 0 0

123

Financial Highlights

Year(Note1) The capital adequacyof recent fiveyears The capital adequacyof recent fiveyears The capital adequacyof recent fiveyears
Item 2010 2011 2012
Total Tier 3 Capital 0 0 0
RegulatoryCapital 17,255,593 20,780,727 24,631,385
Standardized Approach 154,210,916 157,020,298 172,264,571
Internal Ratings-Based Approach 0 0 0
Credit risk Credit Valuation Adjustment 0 0 0
(CVA)
Ris Asset Securitization 629 0 2,173,343
k W Basic Indicator Approach 14,993,291 15,633,843 15,472,421
eighted Assets Standardized Approach/ 0 0 0
Operation
Alternative Standardized
risk Approach
Advanced Measurement
 0 0 0
Approach
Market Standardized Approach 3,225,875 5,666,525 6,945,775
Risk Internal Model Approach 0 0 0
Total Risk-weighted Assets 172,430,711 178,320,666 196,856,110
Capital AdequacyRatio 10.01% 11.65% 12.51%
Ratio of tier 1 capital to risk-weighted assets 7.85% 8.71% 10.28%
Ratio of tier 2 capital to risk-weighted assets 2.16% 2.94% 2.23%
Ratio of tier 3 capital to risk-weighted assets 0 0 0
Ratio of common stocks to total assets 4.53% 4.14% 4.93%

Note1: All financial data from 2010 to 2112 was audited by CPA with Basel 2.

Note2: Core capital, weighted risk-based assets and total exposures in this Table were calculated in accordance with the “Regulations Governing the Capital Adequacy and Capital Category of Banks” and “Explanation and Table of Computation of Banks’ Core Capital and Risk-Weighted Assets”.

Note3: The ratios are computed as follows:

i. Regulatory Capital = Tier 1 capital＋tier 2 capital＋tier 3 capital. ii. Total risk-weighted assets= Credit risk weighted assets＋(operational risk + market risk) capital appropriation* 12.5. iii. Capital adequacy ratio= Regulatory capital/Total risk-weighted assets. iv. Ratio of tier 1 capital to risk-weighted assets = Tier 1 capital/Total risk-weighted assets. v. Ratio of tier 2 capital to risk-weighted assets = Tier 2 capital/Total risk-weighted assets. vi. Ratio of tier 3 capital to risk-weighted assets = Tier 3 capital/Total risk-weighted assets. vii. Common Stock to Total Assets Ratio= Common Stock/Total Assets.

Note4: Any improvement measure to be taken when the ratio of core equity to risk-weighted assets(as calculated in accordance with article 44 of the Banking Act) is lower than the statutory ratio: Not applicable.

124

Financial Highlights

(Consolidated)
In NT$thousand		 (Consolidated)
In NT$thousand		 (Consolidated)
In NT$thousand
Year (Note1) Financial Data for the recent fiveyears(note2)
Item 2010 2011 2012
Regulatory
Capital		 Tier1
capital		 Common Stock 16,459,908 16,459,908 20,060,202
Irredeemable non-cumulative preferred
stock		 0 0 0
Non-cumulative subordinate debentures
with no maturitydate		 0 0 0
Capital collected in advance 0 0 0
Capital Surplus (excl. fixed asset
revaluation increment surplus)		 33,811 33,811 33,811
Legal Reserve 0 352,978 900,963
Special Reserve 0 874,473 608,209
Cumulative Profit/Loss 1,176,594 1,826,615 2,621,624
MinorityShareholding 214,532 225,047 236,568
Other Shareholders’ Equity -801,428 -1,036,271 -1,137,674
Less: Goodwill 2,374,485 2,119,709 1,985,307
Unamortized loss on sale of delinquent
loans		 0 0 0
Deduction items 508,339 364,323 340,871
Total Tier 1 Capital 14,200,593 16,252,529 20,997,525
Tier2
capital		 Irredeemable Cumulative Preferred Stock 3,025,088 3,025,088 204,194
Cumulative subordinate debentures with no
maturitydate		 0 0 0
Fixed asset revaluation increment surplus 0 0 0
45% of unrealized gain on financial assets
available for sale		 90,224 192,628 351,934
Convertible bonds 0 0 0
Operating reserve and allowance for bad
debts		 0 23,894 660,432
Long-term subordinate debentures 1,458,000 2,880,000 4,040,000
Redeemablepreferred stocks 0 0 0
The sum of irredeemable non-cumulative
preferred stocks and non-cumulative
subordinate debentures with no maturity in
excess of 15% of total Tier 1 Capital		 0 0 0
Less: Deduction items 410,987 364,323 340,871
Less: 50% of Cumulative Loss 0 0 0
Total Tier 2 Capital 4,162,325 5,757,287 4,915,689
Tier3
capital		 Short-term subordinate debentures 0 0 0
Redeemablepreferred stock 0 0 0
Total Tier 3 Capital 0 0 0
RegulatoryCapital 18,362,918 22,009,816 25,913,214
Risk-
weighted
Assets		 Credit risk Standardized Approach 161,235,905 164,071,544 179,355,940
Internal Ratings-Based Approach 0 0 0
Asset Securitization 54,476 37,186 2,210,034
Operational
risk		 Basic Indicator Approach 16,722,350 17,361,014 17,483,582
Standardized Approach/ Alternative
Standardized Approach		 0 0 0
Advanced Measurement Approach 0 0 0
Market risk Standardized Approach
 3,314,250 5,790,138 7,249,375
Internal Model Approach 0 0 0
Total Risk-weighted Assets 181,326,981 187,259,882 206,298,931

125

Financial Highlights

Year (Note1) Financial Data for the recent fiveyears(note2) Financial Data for the recent fiveyears(note2) Financial Data for the recent fiveyears(note2)
Item 2010 2011 2012
Capital AdequacyRatio 10.13% 11.75% 12.56%
Ratio of tier 1 capital to risk-weighted assets 7.83% 8.68% 10.18%
Ratio of tier 2 capital to risk-weighted assets 2.30% 3.07% 2.38%
Ratio of tier 3 capital to risk-weighted assets 0 0 0
Ratio of common stocks to total assets 4.50% 4.10% 4.88%

Note1: All financial data from 2010 to 2012 was audited by CPA with Basel 2.

  • Note2: Core capital, weighted risk-based assets and total exposures in this Table were calculated in accordance with the “Regulations Governing the Capital Adequacy and Capital Category of Banks” and “Explanation and Table of Computation of Banks’ Core Capital and Risk-Weighted Assets”.

Note3: The ratios are computed as follows:

  • I. Regulatory capital＝Tier 1 Capital＋Tier 2 Capital＋Tier 3 Capital

  • II. Total risk-weighted assets＝Credit risk weighted assets＋(operational risk + market risk) capital appropriation ×12.5.

  • III. Capital adequacy ratio＝Regulatory capital／Total risk-weighted assets.

  • IV. Tier 1 Capital to Risk Assets Ratio ＝ Tier 1 Capital／Total risk-weighted assets.

  • V. Tier 2 Capital to Risk Assets Ratio ＝ Tier 2 Capital／Total risk-weighted assets.

  • VI. Tier 3 Capital to Risk Assets Ratio ＝ Tier 3 Capital／Total risk-weighted assets.

  • VII. Common Stock to Total Assets Ratio＝ Common Stock／Total Assets.

  • Note4: Any improvement measure to be taken if the capital adequacy ratio (as calculated in accordance with article 44 of the Banking Act) is lower than the statutory ratio: Not applicable.

126

Financial Highlights

3. Supervisors’ Report for the 2014 Financial Statements

Union Bank of Taiwan Co., Ltd.

Supervisors’ Report

The Board of Directors of the Bank has prepared and submitted the 2014 Business Report, Financial Statements (Including Balance Sheet, Income Statement, Statement of Shareholders’ Equity, Statement of Cash Flows), and proposal for allocating profits, of which, the Financial statements (including consolidated statements of subsidiaries) have been audited by CPA Mr. Vincent Cheng and Mr. Terence Huang of Deloitte & Touche. The above Business Report, Financial Statements and proposal have been further determined to be correct and accurate by the supervisors. Hence, according to Article 219 of the Company Act, we hereby submit this report.

Resident Supervisor：Pao-Shing Co., Ltd. Representative：Jia-Yi Wang

Supervisor：Pao-Shing Investment Co., Ltd. Representative：Zhen-Lu Lin

Supervisor：Pai-Sheng Investment Co., Ltd. Representative：Si-Yong Lin

March 18, 2015

4. Financial Statements for 2014 : Please refer to Page 152 to Page 250.

5. Any Financial Difficulties Experienced by the Bank and its Affiliated Enterprises in the Past Year and Current Year up to the Printing Date of the Annual Report, if yes, please narrate the impact upon the Bank’s financial conditions: None.

127

Analysis of the Financial Status and Operating Results & Risk Management

1. Financial Status

1. Financial Status 1. Financial Status 1. Financial Status
In NT$thousand
Year Difference
Dec 31 2014 D 31 2013
Item . , ec. , Amount %
Cash & cash equivalent, Due
from Central Bank and other
banks		 76,850,501
79,101,215		 (2,250,714)
-3%
Financial assets at fair value
throughprofit or loss(note 1)		 18,614,020
10,115,316		 8,498,704
84%
Securities purchased under
re-sale agreements		 26,371,487
20,237,019		 6,134,468
30%
Account receivable – net 14,781,594
13,917,483		 864,111
6%
Current income tax asset 332,275
160,672		 171,603
107%
Discount&loans – net 255,787,180 227,974,804 27,812,376 12%
Financial assets available for
sale – net		 13,974,008
8,711,283		 5,262,725
60%
Held-to-maturity investment
financial asset(note 2)		 534,200
440,233		 93,967
21%
Stock investments accounted
for under the EquityMethod		 54,183
54,294		 (111)
0%
Other Financial Assets - net 56,835,380
57,559,287		 (723,907) -1%
Property &equipment – net 7,732,876 7,644,442 88,434
1%
Investmentproperty-net 3,691,781
2,777,603		 914,178
33%
Intangibles 2,050,999
2,049,795		 1,204
0%
Due to Central Bank & other
banks		 2,407,704
2,992,503		 (584,799)
-20%
Other assets 6,463,385
6,419,023		 44,362
1%
Total assets 486,481,573
440,154,972		 46,326,601
11%
Due to Central Bank & other
banks		 6,748,799
5,315,113		 1,433,686
27%
Financial liability at fair
value through profit or
loss(Notes 3)		 211,084
16,006		 195,078
1219%
Securities sold under
re-purchase agreement		 31,791,276
24,582,657		 7,208,619
29%
Accounts Payable(Notes4) 5,567,108
4,267,543		 1,299,565
30%
Current income tax liabilities 9,849
18,954		 (9,105) -48%
Deposit & remittance 395,852,404
364,084,582		 31,767,822
9%
Bank debentures 7,400,000 7,400,000 0 0%
Other financial
liability(Note5)		 2,517,176
2,180,986		 336,190
15%
Provision 959,941
769,416		 190,525
25%
Deferred income tax
liabilities		 707,731
574,580		 133,151
23%
Other liabilities 2,409,132
2,264,761		 144,371
6%
Total liabilities 454,174,500
411,474,598		 42,699,902
10%
Capital stock 24,509,306 22,165,251 2,344,055 11%
Capital surplus 33,006
34,288		 (1,282) -4%
Retained earnings 6,126,910
5,391,915		 734,995
14%
Others equity (note 6) 1,368,900
831,878		 537,022
65%

128

Analysis of the Financial Status and Operating Results & Risk Management

Total equity attributable to
owners of the Bank		 32,038,122
28,423,332		 3,614,790
13%
Non control interest 268,951
257,042		 11,909
5%
Total Equity 32,307,073 28,680,374 3,626,699 13%
Notes:
1. The increase in financial assets at fair value through profit or loss was due to and increase of $8,231 million
in total commercial paper investment in 2014.
2. The increase in held-to-maturity financial assets was due primarily to the increase of $3,467
million in Corporate Bond Investment in 2014.
3. The increase of financial liability was due to the increase of forward and options contracts in 2014.
4. The increase in Bank debentures was due to the increase in notes payable.
5. The increase in other financial liability was the increase of $519million in commercial paper
payable.
6. The increase in Other equity was due to the depreciation of NTD.

  1. The increase in financial assets at fair value through profit or loss was due to and increase of $8,231 million in total commercial paper investment in 2014.

  2. The increase in other financial liability was the increase of $519million in commercial paper payable.

2. Results of Operation

In NT$thousand In NT$thousand
2014 2013
Change in Change in
Itm
e Amount Amount Amount %
Interest Income
Income other than Interest
Income
Reversal of Bad debt expense
Operating expense
Wages & salaries
Depreciation &
amortization expense
Other business &
administrative expense
Income (loss) before tax
Income tax benefits (expense)
Consolidated income
Other comprehensive income,
net of income tax
Total comprehensive income		 2,971,179
1,634,372
3,086,400
 $5,944,978
4,989,963
(494,806)
7,691,951



2,838,048
1,660,786
2,679,222




 $5,840,519
4,650,027
(95,868)
7,178,056		 104,459
339,936
(398,938)
513,895
133,131
(26,414)
407,178		 2%
7%
416%
7%
5%
-2%
15%
10%
18%
8%
-32%
1%
3,737,796
614,311		 3,408,358
520,554		 329,438
93,757
$3,123,485 $2,887,804 235,681
470,169 686,856 (216,687)
$3,593,654 $3,574,660 18,994
Notes of change:
1.
The increase of net income other than interest was due mainly to the increase of business and
caused revenue increase.
2.
The decrease of bad debt expenses was due primarily to the decrease of bad debt collect and the
increase of assetquality.

129

Analysis of the Financial Status and Operating Results & Risk Management

3. Cash Flow

  • (1) Cash Flow Analysis for the Past Two Years
Year
2014 2013 Change in %
Item
Cash flow ratio (%) 3.3% - 3.3%
Cash flow adequacyratio(%) 147.02% 315.88% -168.86%
Cash flow satisfaction ratio(%) - - -
Analysis of changes in proportion:
1. The decrease in net cash flow adequacy ratio was due to the increase of operating activities causing
the increase of the capital expenditures. .
.

(2) Liquidity Analysis for the Next Year

(2) Liquidity Analysis for the Next Year (2) Liquidity Analysis for the Next Year (2) Liquidity Analysis for the Next Year (2) Liquidity Analysis for the Next Year (2) Liquidity Analysis for the Next Year (2) Liquidity Analysis for the Next Year
In NT$thousand
Opening balance Expected cash inflows
Total expected cash		 Expected Corrective measures for cash
of cash (outflows) from inflows (outflows) cash surplus (deficit) Deficiency
� operating activities � �+�+� Investment
� Plan Financing Plan
86,061,535 (22,503,280) 18,844,043 82,402,298 - -
1.
Cash flow analysis:
(1)
Operating activities: The increase was due to the growth of operating activities.
(2)
Investing and financing activities: The increase in the issue of Bank debentures to meet the business demand of
growth .
(3)
Measures to finance cash deficiency and liquidity analysis: None.

4. The Impact of Major Capital Expenditure on the Bank’s Financial Operations for the recent years

(1) Major Capital Expenditures and sources of funding:

In NT$thousand In NT$thousand In NT$thousand In NT$thousand In NT$thousand
Sources of
Date of		 Total Utilization of Actual or Estimated
Project Funding Completion Funding Source of Funding
Actual or Estimated

Required		 2011 2012 2013 2014 2015
Office equipment Self-
funding		 December
2015		 299,424 22,488 22,659 34,019 46,201 174,057
Transportation
equipment		 Self-
funding		 December
2015		 31,501 4,985 8,834 6,093 11,589 -
Other equipment Self-
funding		 December
2015		 199,214 5,367 5,426 4,891 6,935 176,595
Land Self-
funding		 December
2015		 237 0
237		 0 0 -
Building &
improvements		 Self-
funding		 December
2015		 140,434 414 31,359 47,295 61,366 -
  • (2) Expected benefits: Improve the Bank’s corporate image and service quality as well as maintain a stable service network and rental saving.

5. Reinvestment Policy, the Main Reasons for Profit or Loss, Corrective Action Plan in last year, and Investment Plan for the Next Year:

130

Analysis of the Financial Status and Operating Results & Risk Management

  • (1) Reinvestment Policy

The Bank’s basic principles of reinvestment are to be in line with the government policy, to carry out business diversification and to optimize capital utilization. In addition, the bank will coalesce its related financial business channels to provide customers with multiple services and to create an operating synergy for the group.

  • (2) The Main Reasons for Profit or Loss, and Corrective Action Plan in 2014 The Bank’s Investment profit recognized in 2014 totalled NT$159,000,000 and the main items recognized are the operating profit and cash dividend income of the reinvestment business.

  • (3) Improvement Plan

The Bank evaluates the performance and risks of our investee companies on a regular basis during the year. We adopt a proactive management approach in that we examine the financial and business status of investee companies from time to time and make adjustments accordingly to ensure performance.

  • (4) Investment Plan for the Next Year

Will depend on the overall economic environment and the Bank’s operating strategy.

6. Risk Management

  • (1) Qualitative and Quantitative Information About the Various Risks:

  • A. Credit Risk Management System and Capital Requirement:

    • a. Credit Risk Management System-2014

Item Contents

  1. Credit risk management strategy: The Bank has enacted UBOT credit risk management principle as the basis to plan, promote, manage and execute the credit risk.

  2. Credit risk management objective: The Bank has established credit risk management mechanism to lower credit risk, and to achieve the objective of operating and management, and to attain a balance between risk control and business development.

  3. Credit risk business development.

management strategies 3. Credit risk management policy: The Bank has aimed at maintaining an

and procedures adequate capital base within an acceptable level of credit risk to complete the objective of credit risk strategy and maximize revenue in after-risk-adjusted.

  1. Credit risk management procedure: The Bank has employed procedures such as risk recognition, risk measuring, risk offsetting, risk control and risk reporting etc. to establish risk management system.

  2. Credit risk

management organization and framework

  1. Board of Directors: The highest decision-making unit of the Bank’s credit risk management policy. Responsible for reviewing the Bank’s credit risk management policy.

  2. Assets and Liabilities Management Committee: Responsible for reviewing the implementation of the Bank’s credit risk management.

  3. Risk Management Dept.: Responsible for examining the risk management mechanisms established by the respective business administration

131

Analysis of the Financial Status and Operating Results & Risk Management

Item Contents
departments, performing the risk control and submitting the risk control
report to the Board of Directors regularly.
4. Business Planning and Administration Dept.: Responsible for formulating
the business management rules and control mechanisms and properly
supervising the performance of risk control of respective business unit.
5. Respective business units: Shall comply with the rules and regulations set
forth by the Business Planning and Administration Departments while
conductingtheir day-to-dayoperations.
3. Scope and
characteristics of
credit risk reporting
and measurement
system		 Scope of Risk Reporting
1. All business administration departments report to the Assets and Liabilities
Management Committee on a periodic basis regarding the status of business
promotion and execution as well as information on the allocation of
risk-based assets.
2. The Risk Management Dept. monitors the control of the Bank’s credit limits
on a periodic basis and reports to the Assets and Liabilities Committee with
respect to concentration of credit risks and achievement of the BIS targets
set for various business sectors. The Risk Management Dept. also reports to
the Board of Directors on the various business volumes achieved, status of
nonperforming loans, concentration of credit risks and the execution of
credit risk control measures.
Measurement System:
The Bank adopts the Standardized Approach to compute the capital requirement
and regularly generates official risk management reports. The Risk Management
Dept. and the respective business administration departments generate various
risk exposure reports by business, industry, country, group, credit concentration
and types of collateral, to effectively measure and manage the combination of
asset.
4. Credit risk hedging
or risk reduction
policies, and strategies
and procedures for
monitoring the
effectiveness of
hedges and risk
reduction tools		 The Bank employs suitable strategies such as eschewing, transfer, control and
undertaking to tackle possible credit risk losses of all business units according
to their respective business characteristics and cost-effective considerations.
The Bank’s IT system provides the relevant risk information to assist the Bank’s
management to perform risk monitoring procedures. The Risk Management
Dept. reports the status of risk control measures to the Board of Directors on a
six-monthly basis.
5.Method used to
provide the legal
capital		 Standard Method.

b. Exposure after risk reduction & capital requirement for standard method of credit risk calculation

As of Mar 31, 2015

In NT$ thousand

132

Analysis of the Financial Status and Operating Results & Risk Management
Capital
Type of exposure Exposure after risk reduction
requirement(Note)
Sovereign states 73,928,282 0
Public departments other than the centralgovernment 43,778,912 700,463
Banks(includingmultiple development banks) 20,892,619 640,080
Enterprises(includingsecurities and insurance companies) 55,600,369 4,335,571
Retailingcredits 132,017,891 8,676,472
Residential real estate 64,124,969 2,980,173
Investments in equitysecurities 85,178 27,257
Other assets 16,879,963 834,790
Total 407,308,183 18,194,806

Note: The capital requirement is exposure after risk reduction multiplying by the statutory minimum capital adequacy ratio.

B. Risk Management System, Risk Exposure and Capital Requirement of Asset Securitization : a. Risk Management System of Asset Securitization in 2014

Item Contents
1. Management
strategy and
procedure of
securitization		 (1)
Securitization Strategy: The current asset securitization investment
positions held by the Bank belong to the banking books. In principle
the bank does not act in the capacity of the originating bank of
securitization products, but rather plays as the investor to earn stable
income. The investment target products are mainly of the investment
grade with higher security.
(2)
Securitization procedure: Before making investment, the bank
evaluates the characteristics, credit rating, returns and risks of the
products to understand the security, liquidity and profitability.
Investment proposals should be submitted to the Board of Managing
Directors for approval, and regularly review the exposure status on
the investment targets.
2. Securitization
management
organization and
framework		 The Bank does not act as the originating bank of any securitized products. The
risks of positions invested are evaluated and reviewed by the investing unit and
the Bank’s risk management department periodically.
3. Scope and
characteristics of
securitization risk
report and measuring
system		 In addition to observing the global economy and market interest rate change in
connection with the investment on securitization products, regular evaluation and
monitoring on risk and income are performed periodically and the results are
submitted to Asset and Liability Management committee and the Board of
Director.
4. Securitization
hedging or risk
reduction policies,
and effective
strategies and
procedures for
controllingrisk		 The relevant units shall review and control the securitized products periodically.

133

Analysis of the Financial Status and Operating Results & Risk Management

Item Contents
hedging and risk
reduction tools
5. Approach to require
the authorized capital		 Standard Method
6. Disclosure of Marco
qualitative :
a. Objectives of
securitization
activities and the risk
of resecuritization.
b. Other risk of asset
securitization.
c. The role and the
degree of
involvement in
securitization
process.
d. The description of
monitoring tool in
credit and market
fluctuation related to
securitization
exposure.
e. Management
policy of offsetting
credit risk in
securitization and re
securitization.

Not applicable
since the Bank does not act as the originating bank of securitized product.
7. The description of
accounting policy of
bank’s
securitization..
8.Explian the exposure
of securitization and
ECAI in the banking
book
9. Explain major
change in the
quantities
information after
reporting period

134

Amount repurchased None c.
Exposure & Capital Requirement of Asset Securitization As of December
31, 2014
In NT$ thousand		 Bank Book
CMO
45,108,819
0
0
45,108,819
101,010
0
0
45,108,819
101,010
Trade Book
0
0
0
0
0
0
0
0
0
Non-originating bank
Subtotal
CMO
45,108,819
0
0
45,108,819
101,010
0
0
45,108,819
101,010
Originating bank
Bank Book		 Bank Book
CMO
45,108,819
0
0
45,108,819
101,010
0
0
45,108,819
101,010
Trade Book
0
0
0
0
0
0
0
0
0
Non-originating bank
Subtotal
CMO
45,108,819
0
0
45,108,819
101,010
0
0
45,108,819
101,010
Originating bank
Bank Book		 Bank Book
CMO
45,108,819
0
0
45,108,819
101,010
0
0
45,108,819
101,010
Trade Book
0
0
0
0
0
0
0
0
0
Non-originating bank
Subtotal
CMO
45,108,819
0
0
45,108,819
101,010
0
0
45,108,819
101,010
Originating bank
Bank Book		 Bank Book
CMO
45,108,819
0
0
45,108,819
101,010
0
0
45,108,819
101,010
Trade Book
0
0
0
0
0
0
0
0
0
Non-originating bank
Subtotal
CMO
45,108,819
0
0
45,108,819
101,010
0
0
45,108,819
101,010
Originating bank
Bank Book
Total Capital requirement prior to securitization
Capital requirement
(6) = (2) + (4)		 101,010 0 101,010
Exposures
(5) = (1) + (3)		 45,108,819 0 45,108,819
Outstanding balance
Portfolio Capital requirement (4) 0 0 0
Exposure Held or Purchased (3) 0 0 0
Conventional Capital requirement (2) 101,010 0 101,010
Exposures Subtotal (1) 45,108,819 0 45,108,819
The enhancement of credit provided 0 0 0
Total issue amount
Liquidity facilities provided 0 0 0
Held or Purchased 45,108,819 0 45,108,819
Type of exposure CMO CMO
Type of exposure

Book
Type
The role of bank		 Bank Book Trade Book Subtotal Bank Book
Type
Non-originating bank Originating ba

Operating Results
Trade Book
Subtotal
Total CMO 45,108,819 45,108,819 101,010 45,108,819 101,010
Item Account Initial Cost Cumulative
Valuation
Gain or Loss		 Cumulative
Impairment		 Carrying
Amount
CMO Held-to-maturity financial assets 27,276 0 0 27,276
CMO Non-active market debt instruments 45,048,743 0 103,260 44,945,483
Purchase Method of Cumulative
Name
 of
 Account
 Currency Issuer &
 Date Coupon
 Credit
Interest Payment
 Initial
 Valuation
 Cumulative
Impairme
Carrying
 Attac
hment		 Details
of Asset
Securities (Note) Place Maturity
Date		 Rate Rating & Principal
Repayment		 Cost Gain or
Loss		 nt Amount Point Pool
Ginnie Mae
CMO		 Non-active
market debt
instruments		 USD Ginnie
Mae		 20101230-
20141230		 2.5%~
5.5%		 Moody’s
Aaa
Fitch
AAA
S&P
AA+		 Monthly 35,089,998 0 79,808 35,010,190 N/A N/A
20160530-
20250519
Freddie
CMO		 Non-active
market debt
instruments		 USD Freddie
Mac		 20121030-
20121226		 3.0%~
3.5%		 Monthly 1,026,481 0 2,333 1,024,148
20171103-
20250610
Fannie Mae
CMO		 Non-active
market debt
instruments		 USD Fannie
Mae		 20121030 3.0% Monthly 1,270,269 0 2,333 1,266,607
20180508
136

Analysis of the Financial Status and Operating Results & Risk Management

ii. Securitized commodities held by the bank as the originator for the purpose of credit enhancement In NT$ thousand

Method of Cumulative Details Interest Name of Purchase Maturity Coupon Credit Initial Valuation Cumulative Carrying Attachment of Currency Payment & Securities Date Date Rate Rating Cost Gain or Impairment Amount Point Asset Principal Loss Pool Repayment None iii. Bank acting as the buyer or liquidating buyer of the impaired assets of Securitized commodities In NT$ thousand Name of Currency Issuer & Place Maturity Date Contract Details Status of Contract Execution Securities

None

III. Bank acting as the guarantor of, or the provider of liquidity facility for the Securitized commodities

In NT$ thousand Details of Name of Purchase Maturity Coupon Credit Attachment Currency Acting As Amount Asset Securities Date Date Rate Rating Point Pool None C. Operation Risk Management System and Capital Requirement a. Operation Risk Management System 2014 Item Risks Strategies: The Bank has enacted the “Operation Risk Management Guidelines of Union Bank of Taiwan” which 1. Operation risk serves as the basis for relevant business units to plan, promote, manage and execute operations risk management strategies and management. procedures Procedure: The Bank has built up an operation risk management mechanism through procedures for risk identification, assessment, measuring, monitoring and reporting.

137

Analysis of the Financial Status and Operating Results & Risk Management

Item Risks
2. Operational risk
management organization
and framework		 1.
Board of Directors: The top decision-making body of the Bank’s operational risk management
policy. Responsible for reviewing the Bank’s operational risk management policy.
2.
Assets and Liabilities Management Committee: Responsible for reviewing the implementation of
the Bank’s operational risk management.
3.
Risk Management Dept.: Responsible for examining the risk management mechanisms established
by the respective business administration departments, performing risk control and the submitting the
risk control report to the board of Directors regularly.
4.
Business Planning and Administration Dept.: Responsible for formulating the business management
rules and control mechanisms and supervising the performance of risk control of respective business
unit.
5.
All business units: Shall comply with the rules and regulations set forth by the Business
Administration departments in daily operations.
3. Scope and characteristics
of the operational risk
reporting and measurement
system		 1
The Bank adapts the “Guidelines for Collection of Operational Risk Information” and establishes the
“Operational Risk Reporting System” for all departments to report any operational risk incident to the
Risk Management Dept.
2
The Bank has put in place the “Operational Risk Indicators”. Upon setting the control
frequency and risk warning standards, the relevant departments are responsible for

providing the risk indicator values based on the risk control frequency to the Risk

Management Dept. Improvement measures are taken to address any risks that exceeded

the set standards.

3
The Bank has adopted the “Guidelines for Operational Risk Control Self-Assessment”
and established the “Operational Risk Control Self-Assessment” database to carry out
the operational risk control self-assessment throughout the Bank periodically.
4
The Risk Management Dept. reports the status control of “Operational risk events”,
“Operational risk indicators” and “Operational risk control self-assessment” to the
Assets and Liabilities Management Committee and Board of Directors on a regular
basis.
4. Operational risk hedging
or risk reduction policies,
and strategies and
procedures for monitoring
the effectiveness of
hedges and risk reduction
tools		 1.
The Bank evaluates the frequency and level of influence with respect to operation risk confronted and
adopts a series of risk reduction measures such as insurance, outsourcing operation, procedure
improvement, personnel training enhancement, urgent response actions set up and risk hedging.
2.
The Bank takes every possible operation risk into consideration and build up acceptable action
measures while enacting operation manual for core products. In addition, External and internal
auditing are the enhancements of operation risk prevention.
3.
Risk Management Dept. informs Assets and Liabilities Management Committee about
operation risk incidents collected quarterly and reports the Board of Director theoperation risk control
status of all business biannually.
5. Method used to provide
the legal capital		 Basic Indicator Approach.

b. Operation Risk Capital Requirement As of Dec.31, 2014

In NT$ thousand

138

Analysis of the Financial Status and Operating Results & Risk Management

Year Gross profit Capital requirement
2012 7,693,634
2013 8,470,659
2014 8,724,693
Total 24,889,186 1,244,459

D. Market Risk Management System and Capital Requirement － a. Market Risk Management System 2014

Item Contents
1. Market risk management
strategies and procedures		 1. The Bank has enacted “UNION BANK market risk management principle” approved
by the Board of Directors, as the basis for market risk management.
2. The management procedure of market risk management contains the following five
processes:
(1)
Risk Identification: For items on/off the Balance Sheet, the bank
identify the market risk factors of various products and
investment business to evaluate the risk and define management
procedure and control mechanism.
(2)
Risk Measurement: To cope with market risk quantification, there is at least one
assessment tool for each investment or transaction. The assessment tools include
mark-to-market, nominal principal, sensitivity analysis, value at risk and
pressure test.
(3)
Risk Monitoring: Clearly define risk limits on relevant operation
regulations for all business and monitor by frequency. Risk
Management Dept. is in charge of the summarization and
presentation of market risks for the Bank.
(4)
Risk Reporting: Risk Reporting is divided into routine reporting,
overrun reporting and exceptional reporting. Routine reports are
distributed to proper authorized level in accordance with the List
of Separation of Duties; overrun reports should explain overrun
status and suggest responsive measures; Exception reports are
submitted by business unit before an event due to temporary
business needs.
(5)
Risk reduction: Risk reduction procedures such as risk hedging, investment
portfolio adjustment, position allocation,stop-loss and close new transactions.
2. Market risk management
organization and framework		 1.
Board of Directors: The top decision-making body of the Bank’s market risk
management policy responsible for examining and approving the Bank’s market
risk policy and the total risk limit targets for all businesses, and setting and
modifying the Bank’s market risk management organization structure.
2.
Asset and Liability Management Committee: Examine the management reports and
information submitted by risk management department and the business units.
3.
Risk Management Dept.: It is a dedicated independent risk management unit
executing three pillars related operation of BASELΠmarket risk, planning and
building market risk measuring tools, and monitoring according to the risk limits for
different products.
4.
Business Units: responsible for the execution of daily market risk management for
the business they handle, and reporting the market risk and investment status related
information to proper authorization level.

139

Analysis of the Financial Status and Operating Results & Risk Management

Item Contents
3. Scope and characteristics of
the market risk reporting and
measurement system		 1.
Market Risk evaluated trading book position for various financial products and use
fair market value or evaluation model as basis to regularly evaluate the profit/loss
condition of the position held.
2.
All business units and Risk Management Department should make relevant
management reports regularly and submit to proper authorization level.
3.
Market risk management system combine with front-desk trading position and
middle desk evaluation to generate sufficient information for assisting all
management levels to execute each individual risk monitoring task, and can support
the capital calculation method selected by a bank to generate relevant internal and
external reports as the basis for management decision-making.
4. Market risk hedging or risk
reduction policies, and
strategies and procedures for
monitoring the effectiveness of
hedges and risk reduction tools		 When market risk is excessive or the position limit or stop-loss limit has been exceeded,
the bank will take following market risk reduction method: hedging, portfolio adjustment,
position adjustment, square stop-loss and stop new transaction.
5. Method used to provide the
legal capital		 Standardized Approach.
  • b. Market Risk Capital Requirement

December 31, 2014

In NT$thousand
Capital requirement
260,780
934,764
181,005
0
1,376,549
Type of risk Capital requirement
Interest rate risk 260,780
Equitysecurities risk 934,764
Foreign exchange risk 181,005
Product risk 0
Total 1,376,549
  • E. Liquidity Risk Including the Analysis of Maturities of Assets and Liabilities, and Also Specify the Approach to Manage the Liquidity of Assets and Maturity Gap: a. Maturity Analysis of NTD Assets and Liabilities

December 31, 2014

In NT$thousand In NT$thousand In NT$thousand In NT$thousand In NT$thousand In NT$thousand
The amount of remaining period to maturity
Item Total 181 days ~
0~10 days 11~30 days 31~90 days 91~180 days Over 1 year

1year
Main
capital
inflow on
maturity		 418,547,928 69,111,153 67,763,637 18,241,065 37,960,366 58,060,030 167,411,677
Main
capital
outflow on
maturity		 523,943,968 29,054,409 39,845,035 64,337,213 76,586,325 130,924,133 183,196,853
Gap -105,396,040 40,056,744 27,918,602 -46,096,148 -38,625,959 -72,864,103 -15,785,176

Note: The figures in above Table represent the New Taiwan Dollars (excluding foreign currency) assets and liabilities for Head Office, domestic branches and offshore offices.

140

Analysis of the Financial Status and Operating Results & Risk Management

b. Maturity Analysis of USD Assets and Liabilities December 31, 2014


December 31, 2014
December 31, 2014
December 31, 2014
December 31, 2014
December 31, 2014
In US$thousand
The amount of remaining period to maturity
Item Total
1~30 days 31~90 days 91~180 days 181 days ~1year Over 1year
Main capital
inflow on
maturity		 3,041,730 1,120,262 202,175 92,699 261,342 1,365,252
Main capital
outflow on
maturity		 3,041,680 1,287,046 526,655 653,823 233,672 340,484
Gap 50 -166,784 -324,480 -561,124 27,670 1,024,768

Note: The figures in above Table represent the foreign currency (in USD equivalent) assets and liabilities for the Head Office, domestic branches and offshore offices. 

  - c. Approach to Manage Assets and Liabilities

     - i. The Bank’s assets and liabilities management mechanism applies the asset and liability interest rate sensitivity and gap analysis for control purpose. Presently, the Bank has set up the Assets and Liabilities Management Committee to provide guidance and policy instruction and, to manage interest rate fluctuations and gaps. In addition to fully monitoring on interest rate, senior executive meetings are called from time to time as needed to exercise overall adjustment and review the Bank’s asset and liabilities structure, and present result to the Committee for approval.

     - ii. For the interest rate risk of NTD and foreign currencies, the Bank employ well-established trading and funding MIS to manage daily changes of deposit and loan amounts, as well as the cost and balance of deposits in various types and terms. In addition, it will produce the analysis of floating and fixed interest rate deposits and loans, the analysis of interest rate sensitivity and the analysis of interest rate spread. The Bank will utilize above mentioned information and analyses to set up strategies for interest rate adjustment.

     - iii. For foreign exchange risk, the Bank has designed independent and related procedures for transaction settlement, and has also applied the position control, individual trader position control and stop-loss control etc.

     - iv. For liquidity risk, the Bank strictly monitor cash on hands and the movement of deposits and loans every day. Meanwhile, the Bank has also launched the mechanism to forecast, measure, calculate and early warning for future needs and changes of funding so as to realize current assets to meet the needs.

  • (2) Domestic and Global Changes in Government Policies and Legal Environment, and the Effect on the Financial and Operational Status of the Bank, and Response Actions thereof:

  • A. For the Foreign Account Tax Compliance Act (“FATCA”) promulgated by the U.S.A., the Bank has signed a foreign financial institution agreement with IRS under the planning of the consultant, KPMG, and became a participating foreign financial institution (PFFI), in order to reduce the impact to be brought by FATCA to the

141

Analysis of the Financial Status and Operating Results & Risk Management

Bank’s business. Further, in order to provide IRS with the information about the US accounts and recalcitrant accounts, the Bank’s information system has been amended.

  • B. With respect to the Personal Information Protection Act and its enforcement rules, the Bank has increased the related internal control human resource and operating cost to fulfill the duty to inform and the exercising of rights of the concerned party. In addition, in response to the Regulations Governing the Protection of the Security of Personal Information File of Non-public Sector Organizations Designated by the Financial Supervisory Commission, the Bank has established the organization dedicated to managing protection of personal information took an inventory of all personal information files retained by various units, created personal information file list, proceed with personal information risk evaluation and analysis, and enact or amend the related internal regulations to reduce the risk over disclosure of personal information and damages caused therefore.

  • C. In response to the Financial Consumer Protection Act, the Bank will have various business departments/offices review, respond to, and also enhance the training on, the amended laws and regulations. Meanwhile, in response to the competent authority’s attitude toward opening of financial instruments and enhancement of bank risk management and customers’ interest and right protection, the Bank will strengthen the control over KYC and compliance with the sale process to avoid dispute over consumer banking.

  • D. Financial Supervisory Commission (“FSC”) demanded that for issuers who execute the long-term evolving credit card holder conversion mechanism, the “percentage of converted accounts” or “percentage of converted amount” shall attain 20% or more by the end of 2014. Until the end of December 2014, the Bank’s percentage of converted accounts was 20.34% (a total of 7,115 accounts, NT$$342 million), which met the FSC’s requirement.

  • E. FSC demanded that issuers should cut the revolving credit interest rate applicable to the “credit card holders who have made repayment and had fair credit record in the most recent year” to 16% or below, as of October 1, 2014. Therefore, the Bank is expected to cut the interest rate applicable to about 60,000 credit card holders of the Bank to 16% or below and thereby result in decrease of the interest revenue by about NT$6,750 thousand in 2014.

  • F. In order to boost well-founded finance and fulfill the tax system reform for fair taxation, the Government has increased the business tax rate applicable to the sales of “the banking, insurance business engaged in banking concurrently, and insurance business” from 2% to 5% as of July 1, 2014. As a result, the taxation increased by about NT$148 million in 2014.

  • G. In order to enhance banks' ability to recover short-term liquidity and measure whether banks own sufficient qualified high-quality current assets to meet the cash outflow need for next 30 days under the scenario of pressure, FSC and Central Bank set forth the “Standards Implementing the Liquidity Coverage Ratio of Banks” and also promulgated the “Notes to Calculation of Liquidity Coverage Ratio and Form”. Said standards are scheduled to be enforced as of January 1, 2015. The Bank’s liquidity coverage ratio calculated per the standards is 219.32%, higher than the minimum requirement (60%) in 2015. Therefore, it is not necessary for the Bank to take any response actions preliminarily.

142

Analysis of the Financial Status and Operating Results & Risk Management

  • (3) The Effect of Technological and Industrial Changes on the Bank’s Financial Position and its Response Actions thereof: None.

  • (4) The effect of change in the Bank’s corporate image on the Bank and its response actions:

Adhering to the sustainable management philosophy for “Passion, Stability, Efficiency, Innovation”, the Bank insists on developing the local financial market thoroughly and soundly. In 2014, the Bank continued releasing the Bank’s image advertisement, “A Business Manager’s Story”, which tells the true story about how a business manager of the Bank encouraged customers to manage wealth with petty cash fund, in order to boost the Bank’s service image primarily and then upgrade the Bank's corporate identity for “Savings and Simple Happiness”. Meanwhile, the Bank has carried out its principal business, finance, diligently and also continued promoting the common art & cultural practices among nationals and feeding back to the society through public welfare activities. The Bank sponsored “Union Bank of Taiwan Foundation” to organize artistic competitions each year to pass on the local arts & cultures of Taiwan, and child painting contests and child wealth management experiencing camp to root and cultivate the elite seeds for Taiwan through some activities, and the “Union Bank of Taiwan's Sharing of Love and Happy Gifts” event, on a regular basis, to support farmers in Taiwan physically. In the future, the Bank will still take the philosophy for “develop locally and strive for happiness” as the first priority and achieve more excellent performance in financial business. Meanwhile, the Bank will continue to feed back to the society to extend happiness to everyone limitlessly.

To effectively control communication quality with the media and avoid improper handling of public relation crisis that may impact the Bank’s corporate identity, the Bank has implemented the spokesperson mechanism and set “Union Bank of Taiwan Operation Crisis Counter Measures” and “Internal significant information handling procedures”. Once there is incident damaging the corporate identity, the system will notify the relevant units according to notification SOP (standard operating procedure). The spokesperson is solely responsible for answering questions and making statements to the public to prevent damage from spreading, and effectively protect the Bank’s goodwill and brand image.

  • (5) Expected Result and Possible Risks of Mergers and Acquisitions and Response Actions thereof: None

  • (6) Expected Result for Establishing More Business Locations, Possible Risk and Response Actions Thereof:

  • The establishment of business unit will not only increase transaction volume of deposits/loans/wealth management but also improve profits as well as provide comprehensive services to our customers. Effectively nevertheless, there is possibility that the economy of scale may not be achieved due to poor branch location or the business activities may be below our expectation. The Bank will then access the needs for relocation.

  • (7) Risk in the Over Concentration of Business and Response Action thereof: When business is concentrated, it could easily make business income source

143

Analysis of the Financial Status and Operating Results & Risk Management

over-concentrated in one single industry or single customer group. It is vulnerable to industry cycle and could heighten the risks borne by the Bank. The Bank’s current credit and investment related business are all based on and executed within the internal quota policy. The Bank has set regulations such as “Credit/Market Risk Management Guideline”, “Regulations governing the Management of Enterprise Group Credit Risk”, “Foreign Currency Security Investment Processing Guideline”, “Foreign Currency Credit and Country Risk Management Approach”, and “Investment Policy” to strenghten the management of risk quota for all business.

The Bank’s Risk Management Department also monitors credit quota, controls status and reports the credit concentration regularly to Asset and Liability Management Committee and the Board of Directors.

  • (8) The Effect of Change in the Management of the Bank, Possible Risk and Response Action Thereof: The Bank was founded with the mission for sustainable operation. We maintain the management concepts of “Enthusiasm”, “Stability”, “Efficiency” and “Innovation” to provide financial products and services that meet the needs of customers and to service the general public. The Bank employs professional managerial officers to manage the businesses and as such, the Bank’s business management will not change or be impacted significantly as a result of changes in management power. The Bank shall provide the relevant internal management information and enhance the transparency of information disclosure in the event of a change in management power in order to secure investor and consumer confidence.

(9) The effect that large transfer in shares of director or supervisor, or shareholders holding more than ten percent of shares of the company, Possible Risk and Response Action: There has been no significant change in share ownership of the Bank’s shareholders, directors and supervisors. The Bank employs professional managerial officers to manage the Bank’s business. Therefore, the Bank’s operational management wil not be impacted as a result of a significant change in share ownership. The Bank shall ensure infromation transparency in the event of a significant tranfer or change in share ownership and files a declaration and makes public announcement with respect to the changes in accordance with the relevant banking regulations to secure investor and consumer confidence.

  • (10) Legal Actions and Non-contentious Matters: None.

  • (11) Other Major Risks and Response Actions thereof: None.

7. Contingency Plan

The Bank has enacted the “Essential Points for Urgent Response Action to Disasters” and has set up a crisis management taskforce, urgent contact and report mechanism to execute the disaster rescue measures effectively. The various business units shall perform the disaster education training and drill in accordance with the Bank’s “Instructions to Safety Protection” and “Safety Protection Drill Implementation Plan”, and shall also check and maintain the safety facilities more than twice a year.

8. Other Important Matters: None

144

Affiliated and Special Notes

1. Information on Affiliated Enterprises

(1) Organization Chart

Shareholding(%)

==> picture [449 x 212] intentionally omitted <==

----- Start of picture text -----

99.99% Union Finance Int’l (HK) Ltd 100% Union Capital (Cayman) Corp.
100%
Union Capital (Singapore)
99.99% Union Information Technology Co.,Ltd
Holding Pte. Ltd.
Kabuskiki Kaisha
100% Union Finance &Leasing (Int’l) Corp. 100% UCJ1
51%
35%
49%
Union Securities Investment Trust Tokutei Mokuteki
Kaisha SSG15
100%
100% Union Insurance Broker Co.,Ltd New Asian Venture
----- End of picture text -----

Amount in NT$ thousand

Date of Main Business or Production
Paid-in
Name of Enterprise Establishme Address
nt Capital Activities
Union Finance
International (HK) Ltd		 1996.04.23 Unit 18, 35/F, West Tower, Shun Tak
Centre, 200 Connaught Road, Central,
HongKong		 106,589 Import and export financing
Union Information
Technology Co., Ltd.		 1998.08.10 10F, No. 109, Sec. 3, Minsheng E. Road,
Taipei, Taiwan		 10,000 Distribution of computer hardware and
software, development of system programs,
outsourcing of system construction, website
design and e-commerce services
Union Finance &
Leasing (Int’l) Co., Ltd.		 1996.11.11 9F, 137, Sec. 2, Nanking E. Road, Taipei,
Taiwan		 830,000 Installment purchases, leasing, auto loan and
car rental business
Union Securities
Investment Trust Co.,
Ltd.		 1998.12.22 6F, 137, Sec. 2, Nanking E. Road, Taipei,
Taiwan		 300,000 Securities investment trust
Union Insurance Broker
Co., Ltd.		 1997.08.04 3F, 137, Sec. 2, Nanking E. Road, Taipei,
Taiwan		 5,000 Life insurance agency, Property insurance
agency
Union Capital (Cayman)
Corp.
1997.07.23		 P.O.Box 1034,George Town, Grand
Cayman, Cayman Islands, British West
Indies.		 1,644 Installment purchase and lease investment
businesses
New Asian Ventures
Ltd.		 1997.10.27 P.O.Box 957,Offshore Incorporations
Centre,Road Town,Tortola , British Virgin
Islands.		 1 Installment purchase and lease investment
businesses
Union Capital
(Singapore)Holding Pte.
Ltd.		 2014.9.12 50 RAFFLES PLACE
#25-03
SINGAPORE LAND TOWER
SINGAPORE(048623)		 - Lease investment businesses。
Kabuskiki Kaisha UCJ1 2014.9.12 1 Chome 11, Kanda Jinbocho,
Chiyoda ,Tokyo, Japan		 122,497 Lease investment businesses。

145

Affiliated and Special Notes

960,551 Lease investment businesses。

2014.9.19

Chiyoda ,Tokyo , Japan

Tokutei Mokuteki Kaisha SSG15

1 Chome 11, Kanda Jinbocho,

(2) Information on Directors, Supervisors and President of Affiliated Enterprises

December 31, 2014

Shareholding Shareholding
Name of Title
Name of Representative
Enterprise Shares %
Union Finance
International (HK) Ltd		 Director Union Bank of Taiwan (Representative: Jeff Lin) 30,000,000 99.999994%
Director Union Bank of Taiwan(Representative: Shiang-ChangLee) 2 0.000006%
Director Union Bank of Taiwan (Representative: Cheng-Yu Liu) - 0.00%
Director Union Bank of Taiwan (Representative: Connie Tseng) - 0.00%
Director & President Union Bank of Taiwan(Representative: Amanda Lin) - 0.00%
Union Information
Technology Co.,
Ltd.		 Chairman Union Bank of Taiwan(Representative: Angela Shen) 999,923 99.99~~%~~
Director Union Bank of Taiwan(Representative: Cheng-Yu Liu)
Director Union Bank of Taiwan (Representative: Luke Yang)
Supervisor Union Bank of Taiwan (Representative: Terrence Lin)
President Angela Shen - 0.00%
Union Securities
Investment Trust
Co., Ltd.		 Chairman Kun-Che Investment Co., Ltd.(Representative: Ming-HsingHo) 5,399,667 17.99~~%~~
Director Kun-Che Investment Co., Ltd. (Representative: Wen-MingLee)
Director Kun-Che Investment Co., Ltd.(Representative: Ti-Mao Lee)
Supervisor Kun-Che Investment Co., Ltd.(Representative: Chao-Hsuan Tsai))
President Lin-Yu Fan - 0.00%
Union Finance &
Leasing
(International) Co.,
Ltd.		 Chairman Union Bank of Taiwan (Representative: Wei-Shin Shen) 83,000,000 100.00~~%~~
Director Union Bank of Taiwan(Representative: Herman Tu)
Director Union Bank of Taiwan(Representative: Cheng-Juh Hsieh)
Supervisor Union Bank of Taiwan(Representative: Yin-Bor Chan)
President Wei-Shin Shen - 0.00%
Union Insurance
Broker Co., Ltd.		 Chairman Union Bank of Taiwan(Representative: Chun-Hsien Chang) 500,000 100.00~~%~~
Director Union Bank of Taiwan(Representative: Terrence Lin)
Director Union Bank of Taiwan(Representative: Sophie Hsu)
Supervisor Union Bank of Taiwan Co., Ltd.(Representative: Kuo-Shian Shia)
President Chun-Hsien Chang - 0.00%
Union Capital
(Cayman) Corp		 Director Union Finance & Leasing (International) Co., Ltd.
(Representative: Wei-Shin Shen)		 50,000 100.00~~%~~
Director Union Finance & Leasing (International) Co., Ltd.
(Representative: Cheng-Juh Hsieh)
New Asian Ventures
Ltd.		 Director
 Union Finance & Leasing (International) Co., Ltd.
(Representative: Wei-Shin Shen)		 1 100.00~~%~~
Director Union Finance & Leasing (International) Co., Ltd.
(Representative: Cheng-Juh Hsieh)
Union Capital
(Singapore)Holding
Pte. Ltd.		 Director Union Capital (Cayman) Corp
(Representative: Wei-Shin Shen)		 0 0
Director Ru-Jwu Tsai 0 0
Kabuskiki Kaisha
UCJ1		 Director Union Finance Capital (Singapore)Holding Pte. Ltd.
(Representative: Wei-Shin Shen)		 9 100%
Tokutei Mokuteki
Kaisha SSG15		 Director Union Finance Capital (Singapore)Holding Pte. Ltd.
(Representative: Wei-Shin Shen)		 35,575 49%
Director Kabuskiki Kaisha UCJ1
(Representative: Cheng-Juh Hsieh)		 37,026 51%

146

Affiliated and Special Notes

(3) General Information of Affiliated Enterprises

December 31, 2014 In NT$ thousand except Earnings Per Share (NT$)

Earnings
Total Operating
Operatin		 Net Income
Paid-in Total Assets Net Worth
Per Share
Name of Enterprise
Capital Liabilities Income g Profit (Loss) After
After-tax
Tax ($)
Union Finance
International (H.K.) Ltd.
Note1		 122,692 327,102 245,834 81,267 7,619 (8,478) 1,699 0.14
Union Information
Technology Co.,Ltd.		 10,000 83,293 66,824 16,469 130,179 5,586 9,289 9.29
Union Finance &
Leasing (International)
Co.,Ltd.		 830,000 8,969,466 6,675,124 2,294,342 2,034,495 151,491 122,329 1.47
Union Securities
Investment Trust Co.,
Ltd.		 300,000 436,519 22,750 413,769 146,507 33,596 45,676 1.52
Union Insurance Broker
Co., Ltd.		 5,000 39,284 14,029 25,255 854,461 12,621 10,731 21.46
Union Capital (Cayman)
Corp.
1,552		 965,938 501,198 464,740 2,817 (1,225) (5,619) -
New Asian Ventures Ltd.
1		 80,006 20 79,986 150 79 952 952.00

Note : HKD/TWD:4.089743 HKD/SGD:3.923160

JPY/TWD:0.265134 JPY/SGD:0.269970

  • (4) Relationships between the business activities conducted by affiliated enterprises: please refer to Page 145 to Page 147.

2. Private placement of marketable securities and financial debentures in the past year and current year up to the printing date of the annual report: None.

3. Shares of the Bank held or disposed of by subsidiaries in the past year and current year up to the printing date of the annual report:

None.

4. Other necessary supplements: None.

5. In the past year and current year up to the printing date of the annual report, any event which has a material impact on shareholders’ equity or securities prices pursuant to Article 36.2.2 of the Security and Exchange Law: None.

147

Bank Directory

Bank Directory

Branch Name Address Telephone
Head Office 3F, No.109, Sec. 3, Minsheng E. Rd., Songshan District, Taipei City 105, Taiwan (R.O.C.) (02)2718-0001
International Banking Dept 2F, No.109, Sec. 3, Minsheng E. Rd., Songshan District, Taipei City 105, Taiwan (R.O.C.) (02)2718-0001
Trust Department 3F, No.137, Sec. 2, Nanjing E. Rd., Chungshan District, Taipei City 104, Taiwan (R.O.C.) (02)2507-4066
Credit & Payment Dept. 5F, No.399, Rueiguang Rd., Neihu District, Taipei City 114, Taipei City 105, Taiwan (R.O.C.) (02)2545-5168
Offshore Banking Branch 2F, No.109, Sec. 3, Minsheng E. Rd., Songshan District, Taipei City 105, Taiwan (R.O.C.) (02)2718-0001
Business Department No.105, Sec. 1, Chengde Rd., Datong District, Taipei City 103, Taiwan (R.O.C.) (02)2556-8500
Taipei Branch 1F, No.109, Sec. 3, Minsheng E. Rd., Songshan District, Taipei City 105, Taiwan (R.O.C.) (02)2718-0001
Changchun Branch No.328, Changchun Rd., Jhongshan District, Taipei City 104, Taiwan (R.O.C.) (02)2545-5588
Nanking East Road Branch No.137, Sec. 2, Nanjing E. Rd., Jhongshan District, Taipei City 104, Taiwan (R.O.C.) (02)2515-1333
East Taipei Branch No.217, Sec. 5, Nanjing E. Rd., Songshan District, Taipei City 105, Taiwan (R.O.C.) (02)2753-0900
Chunghsiao Branch 2F., No.5, Lane 223, Sec. 4, Jhongsiao E. Rd., Da-an District, Taipei City 106, Taiwan (R.O.C.) (02)2773-3456
Jenai Branch No.179, Yanji St., Da’an District, Taipei City 106, Taiwan (R.O.C.) (02)2781-3366
Tungmen Branch No.101, Sec. 2, Sinyi Rd., Jhongjheng District, Taipei City 100, Taiwan (R.O.C.) (02)2358-2345
Hoping Branch No.68-2, Sec. 3, Heping E. Rd., Da-an District, Taipei City 106, Taiwan (R.O.C.) (02)2735-2828
Chungshan Mini Branch No.83, Sec. 2, Jhongshan N. Rd., Jhongshan District, Taipei City 104, Taiwan (R.O.C.) (02)2571-7890
Kungkuan Branch No.272, Sec. 3, Roosevelt Rd., Jhongjheng District, Taipei City 100, Taiwan (R.O.C.) (02)2369-2678
Sungchiang Branch No.228, Songjiang Rd., Jhongshan District, Taipei City 104, Taiwan (R.O.C.) (02)2561-6601
Breeze Center Mini Branch 2F., No.39, Sec. 1, Fusing S. Rd., Songshan District, Taipei City 105, Taiwan (R.O.C.) (02)8772-2858
Tunhwa Branch No.209-1, Sec. 1, Dunhua S. Rd., Da-an District, Taipei City 106, Taiwan (R.O.C.) (02)8773-3588
Taan Branch No.165, Sec. 4, Hsin-I. Rd., Da-an District, Taipei City 106, Taiwan (R.O.C.) (02)2704-9588
Tonghwa Mini Branch No.74, Tonghua St., Da-an District, Taipei City 106, Taiwan (R.O.C.) (02)2739-5888
Yongchun Branch No.453, Sec. 5, Jhongsiao E. Rd., Sinyi District, Taipei City 110, Taiwan (R.O.C.) (02)2748-0188
Yungchi Branch No.306, Yongji Rd., Sinyi District, Taipei City 110, Taiwan (R.O.C.) (02)2748-0329
Neihu branch No.399, Rueiguang Rd., Neihu District, Taipei City 114, Taiwan (R.O.C.) (02)2658-6121

148

Bank Directory


Branch Name
Address
Telephone
Donghu Branch
No.150-3, Sec. 6, Minquan E. Rd., Neihu District, Taipei City 114, Taiwan (R.O.C.)
(02)-2796-7779
Hsihu Branch
No.88, Sec. 1, Neihu Rd., Neihu District, Taipei City 114, Taiwan (R.O.C.)
(02)8797-1537
Tachih Branch
No.649, Mingshuei Rd., Jhongshan District, Taipei City 104, Taiwan (R.O.C.)
(02)2532-3836
Shihtung Branch
No.9, Lane 91, Shihdong Rd., Shihlin District, Taipei City 111, Taiwan (R.O.C.)
(02)2875-6161
Wenlin Branch
No.758, Wunlin Rd., Shihlin District, Taipei City 111, Taiwan (R.O.C.)
(02)2835-1818
Beitou Mini Branch
No.68, Sec. 1, Jhongyang N. Rd., Beitou District, Taipei City 112, Taiwan (R.O.C.)
(02)2896-6333
Panchiao Branch
No.226, Mincyuan Rd., Banciao District, New Taipei City 220, Taiwan (R.O.C.)
(02)2965-6600
Houpu Branch
No.77, Chongcing Rd., Banciao District, New Taipei City 220, Taiwan (R.O.C.)
(02)2964-2777
Sanchung Branch
No.10, Sec. 3, Chongsin Rd., Sanchong District, New Taipei City 241, Taiwan (R.O.C.)
(02)2977-7666
North Sanchung Branch
No.245, Jhengyi N. Rd., Sanchong District, New Taipei City 241, Taiwan (R.O.C.)
(02)2982-6226
Tenshin Branch
No.16, Sec. 3, Jhongsiao Rd., Sanchong District, New Taipei City 241, Taiwan (R.O.C.)
(02)8982-1155
JiSian Branch
No.329, Wuhua St., Sanchong Dist., New Taipei City 241, Taiwan (R.O.C.)
(02)2855-9996
Sanxia Branch
No.261、263, Xuecheng Rd., Sanxia Dist., New Taipei City 237, Taiwan (R.O.C.)
(02)2673-0808
Luchou Branch
No.80, Jhongjheng Rd., Lujhou District, New Taipei City 247, Taiwan (R.O.C.)
(02)2848-5577
Chungho Branch
No.150, Jian 1st Rd., Jhonghe District, New Taipei City 235, Taiwan (R.O.C.)
(02)8226-5168
North Chungho Mini Branch
No.122, Sec. 3, Jhongshan Rd., Jhonghe District, New Taipei City 235, Taiwan (R.O.C.)
(02)2221-9698
Shuanho Branch
No.222, Jhongjheng Rd., Yonghe District, New Taipei City 234, Taiwan (R.O.C.)
(02)2945-9898
Yungho Branch
No.137, Sec. 2, Yonghe Rd., Yonghe District, New Taipei City 234, Taiwan (R.O.C.)
(02)8660-0808
Hsintien Branch
No.100, Mincyuan Rd., Sindian District, New Taipei City 231, Taiwan (R.O.C.)
(02)2219-9989
Ankang Branch
No.161, Sec. 2, Ankang Rd., Sindian District, New Taipei City 231, Taiwan (R.O.C.)
(02)2211-9088
Hsinchung Branch
No.601, Sihyuan Rd., Sinjhuang District, New Taipei City 242, Taiwan (R.O.C.)
(02)8522-7799
Fuguo Branch
No.108, Fuguo Rd., Sinjhuang District, New Taipei City 242, Taiwan (R.O.C.)
(02)2205-2299
Chungkung Mini Branch
No.308, Jhonggang Rd., Sinjhuang District, New Taipei City 242, Taiwan (R.O.C.)
(02)2276-9678
Wugu Branch
No.6-1, Sec.3, Chengtai Rd., Wugu District, New Taipei City 248, Taiwan (R.O.C.)
(02)2291-5888
Linkou Branch
No.468, Jhongsiao Rd., Linkou District, New Taipei City 244, Taiwan (R.O.C.)
(02)2600-6969
Branch Name
Address
Telephone
Donghu Branch
No.150-3, Sec. 6, Minquan E. Rd., Neihu District, Taipei City 114, Taiwan (R.O.C.)
(02)-2796-7779
Hsihu Branch
No.88, Sec. 1, Neihu Rd., Neihu District, Taipei City 114, Taiwan (R.O.C.)
(02)8797-1537
Tachih Branch
No.649, Mingshuei Rd., Jhongshan District, Taipei City 104, Taiwan (R.O.C.)
(02)2532-3836
Shihtung Branch
No.9, Lane 91, Shihdong Rd., Shihlin District, Taipei City 111, Taiwan (R.O.C.)
(02)2875-6161
Wenlin Branch
No.758, Wunlin Rd., Shihlin District, Taipei City 111, Taiwan (R.O.C.)
(02)2835-1818
Beitou Mini Branch
No.68, Sec. 1, Jhongyang N. Rd., Beitou District, Taipei City 112, Taiwan (R.O.C.)
(02)2896-6333
Panchiao Branch
No.226, Mincyuan Rd., Banciao District, New Taipei City 220, Taiwan (R.O.C.)
(02)2965-6600
Houpu Branch
No.77, Chongcing Rd., Banciao District, New Taipei City 220, Taiwan (R.O.C.)
(02)2964-2777
Sanchung Branch
No.10, Sec. 3, Chongsin Rd., Sanchong District, New Taipei City 241, Taiwan (R.O.C.)
(02)2977-7666
North Sanchung Branch
No.245, Jhengyi N. Rd., Sanchong District, New Taipei City 241, Taiwan (R.O.C.)
(02)2982-6226
Tenshin Branch
No.16, Sec. 3, Jhongsiao Rd., Sanchong District, New Taipei City 241, Taiwan (R.O.C.)
(02)8982-1155
JiSian Branch
No.329, Wuhua St., Sanchong Dist., New Taipei City 241, Taiwan (R.O.C.)
(02)2855-9996
Sanxia Branch
No.261、263, Xuecheng Rd., Sanxia Dist., New Taipei City 237, Taiwan (R.O.C.)
(02)2673-0808
Luchou Branch
No.80, Jhongjheng Rd., Lujhou District, New Taipei City 247, Taiwan (R.O.C.)
(02)2848-5577
Chungho Branch
No.150, Jian 1st Rd., Jhonghe District, New Taipei City 235, Taiwan (R.O.C.)
(02)8226-5168
North Chungho Mini Branch
No.122, Sec. 3, Jhongshan Rd., Jhonghe District, New Taipei City 235, Taiwan (R.O.C.)
(02)2221-9698
Shuanho Branch
No.222, Jhongjheng Rd., Yonghe District, New Taipei City 234, Taiwan (R.O.C.)
(02)2945-9898
Yungho Branch
No.137, Sec. 2, Yonghe Rd., Yonghe District, New Taipei City 234, Taiwan (R.O.C.)
(02)8660-0808
Hsintien Branch
No.100, Mincyuan Rd., Sindian District, New Taipei City 231, Taiwan (R.O.C.)
(02)2219-9989
Ankang Branch
No.161, Sec. 2, Ankang Rd., Sindian District, New Taipei City 231, Taiwan (R.O.C.)
(02)2211-9088
Hsinchung Branch
No.601, Sihyuan Rd., Sinjhuang District, New Taipei City 242, Taiwan (R.O.C.)
(02)8522-7799
Fuguo Branch
No.108, Fuguo Rd., Sinjhuang District, New Taipei City 242, Taiwan (R.O.C.)
(02)2205-2299
Chungkung Mini Branch
No.308, Jhonggang Rd., Sinjhuang District, New Taipei City 242, Taiwan (R.O.C.)
(02)2276-9678
Wugu Branch
No.6-1, Sec.3, Chengtai Rd., Wugu District, New Taipei City 248, Taiwan (R.O.C.)
(02)2291-5888
Linkou Branch
No.468, Jhongsiao Rd., Linkou District, New Taipei City 244, Taiwan (R.O.C.)
(02)2600-6969
Branch Name
Address
Telephone
Donghu Branch
No.150-3, Sec. 6, Minquan E. Rd., Neihu District, Taipei City 114, Taiwan (R.O.C.)
(02)-2796-7779
Hsihu Branch
No.88, Sec. 1, Neihu Rd., Neihu District, Taipei City 114, Taiwan (R.O.C.)
(02)8797-1537
Tachih Branch
No.649, Mingshuei Rd., Jhongshan District, Taipei City 104, Taiwan (R.O.C.)
(02)2532-3836
Shihtung Branch
No.9, Lane 91, Shihdong Rd., Shihlin District, Taipei City 111, Taiwan (R.O.C.)
(02)2875-6161
Wenlin Branch
No.758, Wunlin Rd., Shihlin District, Taipei City 111, Taiwan (R.O.C.)
(02)2835-1818
Beitou Mini Branch
No.68, Sec. 1, Jhongyang N. Rd., Beitou District, Taipei City 112, Taiwan (R.O.C.)
(02)2896-6333
Panchiao Branch
No.226, Mincyuan Rd., Banciao District, New Taipei City 220, Taiwan (R.O.C.)
(02)2965-6600
Houpu Branch
No.77, Chongcing Rd., Banciao District, New Taipei City 220, Taiwan (R.O.C.)
(02)2964-2777
Sanchung Branch
No.10, Sec. 3, Chongsin Rd., Sanchong District, New Taipei City 241, Taiwan (R.O.C.)
(02)2977-7666
North Sanchung Branch
No.245, Jhengyi N. Rd., Sanchong District, New Taipei City 241, Taiwan (R.O.C.)
(02)2982-6226
Tenshin Branch
No.16, Sec. 3, Jhongsiao Rd., Sanchong District, New Taipei City 241, Taiwan (R.O.C.)
(02)8982-1155
JiSian Branch
No.329, Wuhua St., Sanchong Dist., New Taipei City 241, Taiwan (R.O.C.)
(02)2855-9996
Sanxia Branch
No.261、263, Xuecheng Rd., Sanxia Dist., New Taipei City 237, Taiwan (R.O.C.)
(02)2673-0808
Luchou Branch
No.80, Jhongjheng Rd., Lujhou District, New Taipei City 247, Taiwan (R.O.C.)
(02)2848-5577
Chungho Branch
No.150, Jian 1st Rd., Jhonghe District, New Taipei City 235, Taiwan (R.O.C.)
(02)8226-5168
North Chungho Mini Branch
No.122, Sec. 3, Jhongshan Rd., Jhonghe District, New Taipei City 235, Taiwan (R.O.C.)
(02)2221-9698
Shuanho Branch
No.222, Jhongjheng Rd., Yonghe District, New Taipei City 234, Taiwan (R.O.C.)
(02)2945-9898
Yungho Branch
No.137, Sec. 2, Yonghe Rd., Yonghe District, New Taipei City 234, Taiwan (R.O.C.)
(02)8660-0808
Hsintien Branch
No.100, Mincyuan Rd., Sindian District, New Taipei City 231, Taiwan (R.O.C.)
(02)2219-9989
Ankang Branch
No.161, Sec. 2, Ankang Rd., Sindian District, New Taipei City 231, Taiwan (R.O.C.)
(02)2211-9088
Hsinchung Branch
No.601, Sihyuan Rd., Sinjhuang District, New Taipei City 242, Taiwan (R.O.C.)
(02)8522-7799
Fuguo Branch
No.108, Fuguo Rd., Sinjhuang District, New Taipei City 242, Taiwan (R.O.C.)
(02)2205-2299
Chungkung Mini Branch
No.308, Jhonggang Rd., Sinjhuang District, New Taipei City 242, Taiwan (R.O.C.)
(02)2276-9678
Wugu Branch
No.6-1, Sec.3, Chengtai Rd., Wugu District, New Taipei City 248, Taiwan (R.O.C.)
(02)2291-5888
Linkou Branch
No.468, Jhongsiao Rd., Linkou District, New Taipei City 244, Taiwan (R.O.C.)
(02)2600-6969
Branch Name
Address
Telephone
Donghu Branch
No.150-3, Sec. 6, Minquan E. Rd., Neihu District, Taipei City 114, Taiwan (R.O.C.)
(02)-2796-7779
Hsihu Branch
No.88, Sec. 1, Neihu Rd., Neihu District, Taipei City 114, Taiwan (R.O.C.)
(02)8797-1537
Tachih Branch
No.649, Mingshuei Rd., Jhongshan District, Taipei City 104, Taiwan (R.O.C.)
(02)2532-3836
Shihtung Branch
No.9, Lane 91, Shihdong Rd., Shihlin District, Taipei City 111, Taiwan (R.O.C.)
(02)2875-6161
Wenlin Branch
No.758, Wunlin Rd., Shihlin District, Taipei City 111, Taiwan (R.O.C.)
(02)2835-1818
Beitou Mini Branch
No.68, Sec. 1, Jhongyang N. Rd., Beitou District, Taipei City 112, Taiwan (R.O.C.)
(02)2896-6333
Panchiao Branch
No.226, Mincyuan Rd., Banciao District, New Taipei City 220, Taiwan (R.O.C.)
(02)2965-6600
Houpu Branch
No.77, Chongcing Rd., Banciao District, New Taipei City 220, Taiwan (R.O.C.)
(02)2964-2777
Sanchung Branch
No.10, Sec. 3, Chongsin Rd., Sanchong District, New Taipei City 241, Taiwan (R.O.C.)
(02)2977-7666
North Sanchung Branch
No.245, Jhengyi N. Rd., Sanchong District, New Taipei City 241, Taiwan (R.O.C.)
(02)2982-6226
Tenshin Branch
No.16, Sec. 3, Jhongsiao Rd., Sanchong District, New Taipei City 241, Taiwan (R.O.C.)
(02)8982-1155
JiSian Branch
No.329, Wuhua St., Sanchong Dist., New Taipei City 241, Taiwan (R.O.C.)
(02)2855-9996
Sanxia Branch
No.261、263, Xuecheng Rd., Sanxia Dist., New Taipei City 237, Taiwan (R.O.C.)
(02)2673-0808
Luchou Branch
No.80, Jhongjheng Rd., Lujhou District, New Taipei City 247, Taiwan (R.O.C.)
(02)2848-5577
Chungho Branch
No.150, Jian 1st Rd., Jhonghe District, New Taipei City 235, Taiwan (R.O.C.)
(02)8226-5168
North Chungho Mini Branch
No.122, Sec. 3, Jhongshan Rd., Jhonghe District, New Taipei City 235, Taiwan (R.O.C.)
(02)2221-9698
Shuanho Branch
No.222, Jhongjheng Rd., Yonghe District, New Taipei City 234, Taiwan (R.O.C.)
(02)2945-9898
Yungho Branch
No.137, Sec. 2, Yonghe Rd., Yonghe District, New Taipei City 234, Taiwan (R.O.C.)
(02)8660-0808
Hsintien Branch
No.100, Mincyuan Rd., Sindian District, New Taipei City 231, Taiwan (R.O.C.)
(02)2219-9989
Ankang Branch
No.161, Sec. 2, Ankang Rd., Sindian District, New Taipei City 231, Taiwan (R.O.C.)
(02)2211-9088
Hsinchung Branch
No.601, Sihyuan Rd., Sinjhuang District, New Taipei City 242, Taiwan (R.O.C.)
(02)8522-7799
Fuguo Branch
No.108, Fuguo Rd., Sinjhuang District, New Taipei City 242, Taiwan (R.O.C.)
(02)2205-2299
Chungkung Mini Branch
No.308, Jhonggang Rd., Sinjhuang District, New Taipei City 242, Taiwan (R.O.C.)
(02)2276-9678
Wugu Branch
No.6-1, Sec.3, Chengtai Rd., Wugu District, New Taipei City 248, Taiwan (R.O.C.)
(02)2291-5888
Linkou Branch
No.468, Jhongsiao Rd., Linkou District, New Taipei City 244, Taiwan (R.O.C.)
(02)2600-6969
Branch Name Address Telephone
Donghu Branch No.150-3, Sec. 6, Minquan E. Rd., Neihu District, Taipei City 114, Taiwan (R.O.C.) (02)-2796-7779
Hsihu Branch No.88, Sec. 1, Neihu Rd., Neihu District, Taipei City 114, Taiwan (R.O.C.) (02)8797-1537
Tachih Branch No.649, Mingshuei Rd., Jhongshan District, Taipei City 104, Taiwan (R.O.C.) (02)2532-3836
Shihtung Branch No.9, Lane 91, Shihdong Rd., Shihlin District, Taipei City 111, Taiwan (R.O.C.) (02)2875-6161
Wenlin Branch No.758, Wunlin Rd., Shihlin District, Taipei City 111, Taiwan (R.O.C.) (02)2835-1818
Beitou Mini Branch No.68, Sec. 1, Jhongyang N. Rd., Beitou District, Taipei City 112, Taiwan (R.O.C.) (02)2896-6333
Panchiao Branch No.226, Mincyuan Rd., Banciao District, New Taipei City 220, Taiwan (R.O.C.) (02)2965-6600
Houpu Branch No.77, Chongcing Rd., Banciao District, New Taipei City 220, Taiwan (R.O.C.) (02)2964-2777
Sanchung Branch No.10, Sec. 3, Chongsin Rd., Sanchong District, New Taipei City 241, Taiwan (R.O.C.) (02)2977-7666
North Sanchung Branch No.245, Jhengyi N. Rd., Sanchong District, New Taipei City 241, Taiwan (R.O.C.) (02)2982-6226
Tenshin Branch No.16, Sec. 3, Jhongsiao Rd., Sanchong District, New Taipei City 241, Taiwan (R.O.C.) (02)8982-1155
JiSian Branch No.329, Wuhua St., Sanchong Dist., New Taipei City 241, Taiwan (R.O.C.) (02)2855-9996
Sanxia Branch No.261、263, Xuecheng Rd., Sanxia Dist., New Taipei City 237, Taiwan (R.O.C.) (02)2673-0808
Luchou Branch No.80, Jhongjheng Rd., Lujhou District, New Taipei City 247, Taiwan (R.O.C.) (02)2848-5577
Chungho Branch No.150, Jian 1st Rd., Jhonghe District, New Taipei City 235, Taiwan (R.O.C.) (02)8226-5168
North Chungho Mini Branch No.122, Sec. 3, Jhongshan Rd., Jhonghe District, New Taipei City 235, Taiwan (R.O.C.) (02)2221-9698
Shuanho Branch No.222, Jhongjheng Rd., Yonghe District, New Taipei City 234, Taiwan (R.O.C.) (02)2945-9898
Yungho Branch No.137, Sec. 2, Yonghe Rd., Yonghe District, New Taipei City 234, Taiwan (R.O.C.) (02)8660-0808
Hsintien Branch No.100, Mincyuan Rd., Sindian District, New Taipei City 231, Taiwan (R.O.C.) (02)2219-9989
Ankang Branch No.161, Sec. 2, Ankang Rd., Sindian District, New Taipei City 231, Taiwan (R.O.C.) (02)2211-9088
Hsinchung Branch No.601, Sihyuan Rd., Sinjhuang District, New Taipei City 242, Taiwan (R.O.C.) (02)8522-7799
Fuguo Branch No.108, Fuguo Rd., Sinjhuang District, New Taipei City 242, Taiwan (R.O.C.) (02)2205-2299
Chungkung Mini Branch No.308, Jhonggang Rd., Sinjhuang District, New Taipei City 242, Taiwan (R.O.C.) (02)2276-9678
Wugu Branch No.6-1, Sec.3, Chengtai Rd., Wugu District, New Taipei City 248, Taiwan (R.O.C.) (02)2291-5888
Linkou Branch No.468, Jhongsiao Rd., Linkou District, New Taipei City 244, Taiwan (R.O.C.) (02)2600-6969

149

Bank Directory


Branch Name
Address
Telephone
Shulin Branch
No.275, Jhonghua Rd., Shulin District, New Taipei City 238, Taiwan (R.O.C.)
(02)8685-8939
Hsichih Branch
No.159, Sec. 1, Sintai 5th Rd., Sijhih District, New Taipei City 221, Taiwan (R.O.C.)
(02)8642-5289
Tucheng Branch
No.3, Chengtian Rd., Tucheng District, New Taipei City 236, Taiwan (R.O.C.)
(02)2268-1799
Taoyuan Branch
No.332, Sianfu Rd., Taoyuan District City, Taoyuan City 330, Taiwan (R.O.C.)
(03)339-5300
North Taoyuan Branch
No.191, Yong-an Rd., Taoyuan District City, Taoyuan City 330, Taiwan (R.O.C.)
(03)339-6262
South Taoyuan Branch
Building A, No.1308, Zhongshan Rd., Taoyuan District, Taoyuan City 330, Taiwan (R.O.C.)
(03)369-7388
Taoying Branch
No.343, Taoying Rd., Taoyuan District, Taoyuan City 330, Taiwan (R.O.C.)
(03)377-9797
Daye Branch
No.388, Sec. 1, Daye Rd., Taoyuan District, Taoyuan City 330, Taiwan (R.O.C.)
(03)357-7388
Chungli Branch
No.62, Sec. 1, Jhongyang W. Rd., Jhongli District, Taoyuan City 320, Taiwan (R.O.C.)
(03)426-5111
North Chungli Branch
No.222, Yuanhua Rd., Jhongli District, Taoyuan City 320, Taiwan (R.O.C.)
(03)426-1133
Neili Branch
No. 258, Sec. 1, Jhonghua Rd., Jhongli District, Taoyuan City 320, Taiwan (R.O.C.)
(03)435-1288
Chenshin Branch
No.189, Jianxing Rd., Jhongli District, Taoyuan City 320, Taiwan (R.O.C.)
(03)428-0808
Gaorong Branch
No.226, Sec. 5, Minzu Rd., Zhongli District, Taoyuan City 320, Taiwan (R.O.C.)
(03)490-9777
Nankan Branch
No.137, Jhongjheng Rd., Lujhu District, Taoyuan City 338, Taiwan (R.O.C.)
(03)322-9699
Dajhu Branch
No.43, Dasin Rd., Lujhu District, Taoyuan City 338, Taiwan (R.O.C.)
(03)313-4688
Luzhu Branch
No.3, Sec. 1, Ren’ai Rd., Luzhu District , Taoyuan City 338, Taiwan (R.O.C.)
(03)222-1389
Hueilong Branch
No.253, Sec. 1, Wanshou Rd., Gueishan District, Taoyuan City 333, Taiwan (R.O.C.)
(02)8209-0808
Gueishan Branch
No.688, Sec. 2, Wanshou Rd., Gueishan District, Taoyuan City 333, Taiwan (R.O.C.)
(03)319-2323
Lungtan Branch
No.245, Jhongjheng Rd., Longtan District, Taoyuan City 325, Taiwan (R.O.C.)
(03)470-9188
Tayuan Branch
No.56, Jhongjheng E. Rd., Dayuan District, Taoyuan City 337, Taiwan (R.O.C.)
(03)385-0505
Hsinchu Branch
No.107, Jhongjheng Rd., Hsinchu City 300, Taiwan (R.O.C.)
(03)524-9966
Taichung Branch
No.9-5, Sec.2, Taiwan Blvd., Situn District, Taichung City 407, Taiwan (R.O.C.)
(04)2328-5666
North Taichung Branch
No.13, Sec. 3, Wunsin Rd., Situn District, Taichung City 407, Taiwan (R.O.C.)
(04)2311-8555
Wenhsin Branch
No.208-1, Sec. 4, Wunsin Rd., North District, Taichung City 404, Taiwan (R.O.C.)
(04)2298-0808
Beitun Branch
No.701, Sec. 4, Wunsin Rd., Beitun District, Taichung City 406, Taiwan (R.O.C.)
(04)2245-2636
Branch Name
Address
Telephone
Shulin Branch
No.275, Jhonghua Rd., Shulin District, New Taipei City 238, Taiwan (R.O.C.)
(02)8685-8939
Hsichih Branch
No.159, Sec. 1, Sintai 5th Rd., Sijhih District, New Taipei City 221, Taiwan (R.O.C.)
(02)8642-5289
Tucheng Branch
No.3, Chengtian Rd., Tucheng District, New Taipei City 236, Taiwan (R.O.C.)
(02)2268-1799
Taoyuan Branch
No.332, Sianfu Rd., Taoyuan District City, Taoyuan City 330, Taiwan (R.O.C.)
(03)339-5300
North Taoyuan Branch
No.191, Yong-an Rd., Taoyuan District City, Taoyuan City 330, Taiwan (R.O.C.)
(03)339-6262
South Taoyuan Branch
Building A, No.1308, Zhongshan Rd., Taoyuan District, Taoyuan City 330, Taiwan (R.O.C.)
(03)369-7388
Taoying Branch
No.343, Taoying Rd., Taoyuan District, Taoyuan City 330, Taiwan (R.O.C.)
(03)377-9797
Daye Branch
No.388, Sec. 1, Daye Rd., Taoyuan District, Taoyuan City 330, Taiwan (R.O.C.)
(03)357-7388
Chungli Branch
No.62, Sec. 1, Jhongyang W. Rd., Jhongli District, Taoyuan City 320, Taiwan (R.O.C.)
(03)426-5111
North Chungli Branch
No.222, Yuanhua Rd., Jhongli District, Taoyuan City 320, Taiwan (R.O.C.)
(03)426-1133
Neili Branch
No. 258, Sec. 1, Jhonghua Rd., Jhongli District, Taoyuan City 320, Taiwan (R.O.C.)
(03)435-1288
Chenshin Branch
No.189, Jianxing Rd., Jhongli District, Taoyuan City 320, Taiwan (R.O.C.)
(03)428-0808
Gaorong Branch
No.226, Sec. 5, Minzu Rd., Zhongli District, Taoyuan City 320, Taiwan (R.O.C.)
(03)490-9777
Nankan Branch
No.137, Jhongjheng Rd., Lujhu District, Taoyuan City 338, Taiwan (R.O.C.)
(03)322-9699
Dajhu Branch
No.43, Dasin Rd., Lujhu District, Taoyuan City 338, Taiwan (R.O.C.)
(03)313-4688
Luzhu Branch
No.3, Sec. 1, Ren’ai Rd., Luzhu District , Taoyuan City 338, Taiwan (R.O.C.)
(03)222-1389
Hueilong Branch
No.253, Sec. 1, Wanshou Rd., Gueishan District, Taoyuan City 333, Taiwan (R.O.C.)
(02)8209-0808
Gueishan Branch
No.688, Sec. 2, Wanshou Rd., Gueishan District, Taoyuan City 333, Taiwan (R.O.C.)
(03)319-2323
Lungtan Branch
No.245, Jhongjheng Rd., Longtan District, Taoyuan City 325, Taiwan (R.O.C.)
(03)470-9188
Tayuan Branch
No.56, Jhongjheng E. Rd., Dayuan District, Taoyuan City 337, Taiwan (R.O.C.)
(03)385-0505
Hsinchu Branch
No.107, Jhongjheng Rd., Hsinchu City 300, Taiwan (R.O.C.)
(03)524-9966
Taichung Branch
No.9-5, Sec.2, Taiwan Blvd., Situn District, Taichung City 407, Taiwan (R.O.C.)
(04)2328-5666
North Taichung Branch
No.13, Sec. 3, Wunsin Rd., Situn District, Taichung City 407, Taiwan (R.O.C.)
(04)2311-8555
Wenhsin Branch
No.208-1, Sec. 4, Wunsin Rd., North District, Taichung City 404, Taiwan (R.O.C.)
(04)2298-0808
Beitun Branch
No.701, Sec. 4, Wunsin Rd., Beitun District, Taichung City 406, Taiwan (R.O.C.)
(04)2245-2636
Branch Name
Address
Telephone
Shulin Branch
No.275, Jhonghua Rd., Shulin District, New Taipei City 238, Taiwan (R.O.C.)
(02)8685-8939
Hsichih Branch
No.159, Sec. 1, Sintai 5th Rd., Sijhih District, New Taipei City 221, Taiwan (R.O.C.)
(02)8642-5289
Tucheng Branch
No.3, Chengtian Rd., Tucheng District, New Taipei City 236, Taiwan (R.O.C.)
(02)2268-1799
Taoyuan Branch
No.332, Sianfu Rd., Taoyuan District City, Taoyuan City 330, Taiwan (R.O.C.)
(03)339-5300
North Taoyuan Branch
No.191, Yong-an Rd., Taoyuan District City, Taoyuan City 330, Taiwan (R.O.C.)
(03)339-6262
South Taoyuan Branch
Building A, No.1308, Zhongshan Rd., Taoyuan District, Taoyuan City 330, Taiwan (R.O.C.)
(03)369-7388
Taoying Branch
No.343, Taoying Rd., Taoyuan District, Taoyuan City 330, Taiwan (R.O.C.)
(03)377-9797
Daye Branch
No.388, Sec. 1, Daye Rd., Taoyuan District, Taoyuan City 330, Taiwan (R.O.C.)
(03)357-7388
Chungli Branch
No.62, Sec. 1, Jhongyang W. Rd., Jhongli District, Taoyuan City 320, Taiwan (R.O.C.)
(03)426-5111
North Chungli Branch
No.222, Yuanhua Rd., Jhongli District, Taoyuan City 320, Taiwan (R.O.C.)
(03)426-1133
Neili Branch
No. 258, Sec. 1, Jhonghua Rd., Jhongli District, Taoyuan City 320, Taiwan (R.O.C.)
(03)435-1288
Chenshin Branch
No.189, Jianxing Rd., Jhongli District, Taoyuan City 320, Taiwan (R.O.C.)
(03)428-0808
Gaorong Branch
No.226, Sec. 5, Minzu Rd., Zhongli District, Taoyuan City 320, Taiwan (R.O.C.)
(03)490-9777
Nankan Branch
No.137, Jhongjheng Rd., Lujhu District, Taoyuan City 338, Taiwan (R.O.C.)
(03)322-9699
Dajhu Branch
No.43, Dasin Rd., Lujhu District, Taoyuan City 338, Taiwan (R.O.C.)
(03)313-4688
Luzhu Branch
No.3, Sec. 1, Ren’ai Rd., Luzhu District , Taoyuan City 338, Taiwan (R.O.C.)
(03)222-1389
Hueilong Branch
No.253, Sec. 1, Wanshou Rd., Gueishan District, Taoyuan City 333, Taiwan (R.O.C.)
(02)8209-0808
Gueishan Branch
No.688, Sec. 2, Wanshou Rd., Gueishan District, Taoyuan City 333, Taiwan (R.O.C.)
(03)319-2323
Lungtan Branch
No.245, Jhongjheng Rd., Longtan District, Taoyuan City 325, Taiwan (R.O.C.)
(03)470-9188
Tayuan Branch
No.56, Jhongjheng E. Rd., Dayuan District, Taoyuan City 337, Taiwan (R.O.C.)
(03)385-0505
Hsinchu Branch
No.107, Jhongjheng Rd., Hsinchu City 300, Taiwan (R.O.C.)
(03)524-9966
Taichung Branch
No.9-5, Sec.2, Taiwan Blvd., Situn District, Taichung City 407, Taiwan (R.O.C.)
(04)2328-5666
North Taichung Branch
No.13, Sec. 3, Wunsin Rd., Situn District, Taichung City 407, Taiwan (R.O.C.)
(04)2311-8555
Wenhsin Branch
No.208-1, Sec. 4, Wunsin Rd., North District, Taichung City 404, Taiwan (R.O.C.)
(04)2298-0808
Beitun Branch
No.701, Sec. 4, Wunsin Rd., Beitun District, Taichung City 406, Taiwan (R.O.C.)
(04)2245-2636
Branch Name
Address
Telephone
Shulin Branch
No.275, Jhonghua Rd., Shulin District, New Taipei City 238, Taiwan (R.O.C.)
(02)8685-8939
Hsichih Branch
No.159, Sec. 1, Sintai 5th Rd., Sijhih District, New Taipei City 221, Taiwan (R.O.C.)
(02)8642-5289
Tucheng Branch
No.3, Chengtian Rd., Tucheng District, New Taipei City 236, Taiwan (R.O.C.)
(02)2268-1799
Taoyuan Branch
No.332, Sianfu Rd., Taoyuan District City, Taoyuan City 330, Taiwan (R.O.C.)
(03)339-5300
North Taoyuan Branch
No.191, Yong-an Rd., Taoyuan District City, Taoyuan City 330, Taiwan (R.O.C.)
(03)339-6262
South Taoyuan Branch
Building A, No.1308, Zhongshan Rd., Taoyuan District, Taoyuan City 330, Taiwan (R.O.C.)
(03)369-7388
Taoying Branch
No.343, Taoying Rd., Taoyuan District, Taoyuan City 330, Taiwan (R.O.C.)
(03)377-9797
Daye Branch
No.388, Sec. 1, Daye Rd., Taoyuan District, Taoyuan City 330, Taiwan (R.O.C.)
(03)357-7388
Chungli Branch
No.62, Sec. 1, Jhongyang W. Rd., Jhongli District, Taoyuan City 320, Taiwan (R.O.C.)
(03)426-5111
North Chungli Branch
No.222, Yuanhua Rd., Jhongli District, Taoyuan City 320, Taiwan (R.O.C.)
(03)426-1133
Neili Branch
No. 258, Sec. 1, Jhonghua Rd., Jhongli District, Taoyuan City 320, Taiwan (R.O.C.)
(03)435-1288
Chenshin Branch
No.189, Jianxing Rd., Jhongli District, Taoyuan City 320, Taiwan (R.O.C.)
(03)428-0808
Gaorong Branch
No.226, Sec. 5, Minzu Rd., Zhongli District, Taoyuan City 320, Taiwan (R.O.C.)
(03)490-9777
Nankan Branch
No.137, Jhongjheng Rd., Lujhu District, Taoyuan City 338, Taiwan (R.O.C.)
(03)322-9699
Dajhu Branch
No.43, Dasin Rd., Lujhu District, Taoyuan City 338, Taiwan (R.O.C.)
(03)313-4688
Luzhu Branch
No.3, Sec. 1, Ren’ai Rd., Luzhu District , Taoyuan City 338, Taiwan (R.O.C.)
(03)222-1389
Hueilong Branch
No.253, Sec. 1, Wanshou Rd., Gueishan District, Taoyuan City 333, Taiwan (R.O.C.)
(02)8209-0808
Gueishan Branch
No.688, Sec. 2, Wanshou Rd., Gueishan District, Taoyuan City 333, Taiwan (R.O.C.)
(03)319-2323
Lungtan Branch
No.245, Jhongjheng Rd., Longtan District, Taoyuan City 325, Taiwan (R.O.C.)
(03)470-9188
Tayuan Branch
No.56, Jhongjheng E. Rd., Dayuan District, Taoyuan City 337, Taiwan (R.O.C.)
(03)385-0505
Hsinchu Branch
No.107, Jhongjheng Rd., Hsinchu City 300, Taiwan (R.O.C.)
(03)524-9966
Taichung Branch
No.9-5, Sec.2, Taiwan Blvd., Situn District, Taichung City 407, Taiwan (R.O.C.)
(04)2328-5666
North Taichung Branch
No.13, Sec. 3, Wunsin Rd., Situn District, Taichung City 407, Taiwan (R.O.C.)
(04)2311-8555
Wenhsin Branch
No.208-1, Sec. 4, Wunsin Rd., North District, Taichung City 404, Taiwan (R.O.C.)
(04)2298-0808
Beitun Branch
No.701, Sec. 4, Wunsin Rd., Beitun District, Taichung City 406, Taiwan (R.O.C.)
(04)2245-2636
Branch Name Address Telephone
Shulin Branch No.275, Jhonghua Rd., Shulin District, New Taipei City 238, Taiwan (R.O.C.) (02)8685-8939
Hsichih Branch No.159, Sec. 1, Sintai 5th Rd., Sijhih District, New Taipei City 221, Taiwan (R.O.C.) (02)8642-5289
Tucheng Branch No.3, Chengtian Rd., Tucheng District, New Taipei City 236, Taiwan (R.O.C.) (02)2268-1799
Taoyuan Branch No.332, Sianfu Rd., Taoyuan District City, Taoyuan City 330, Taiwan (R.O.C.) (03)339-5300
North Taoyuan Branch No.191, Yong-an Rd., Taoyuan District City, Taoyuan City 330, Taiwan (R.O.C.) (03)339-6262
South Taoyuan Branch Building A, No.1308, Zhongshan Rd., Taoyuan District, Taoyuan City 330, Taiwan (R.O.C.) (03)369-7388
Taoying Branch No.343, Taoying Rd., Taoyuan District, Taoyuan City 330, Taiwan (R.O.C.) (03)377-9797
Daye Branch No.388, Sec. 1, Daye Rd., Taoyuan District, Taoyuan City 330, Taiwan (R.O.C.) (03)357-7388
Chungli Branch No.62, Sec. 1, Jhongyang W. Rd., Jhongli District, Taoyuan City 320, Taiwan (R.O.C.) (03)426-5111
North Chungli Branch No.222, Yuanhua Rd., Jhongli District, Taoyuan City 320, Taiwan (R.O.C.) (03)426-1133
Neili Branch No. 258, Sec. 1, Jhonghua Rd., Jhongli District, Taoyuan City 320, Taiwan (R.O.C.) (03)435-1288
Chenshin Branch No.189, Jianxing Rd., Jhongli District, Taoyuan City 320, Taiwan (R.O.C.) (03)428-0808
Gaorong Branch No.226, Sec. 5, Minzu Rd., Zhongli District, Taoyuan City 320, Taiwan (R.O.C.) (03)490-9777
Nankan Branch No.137, Jhongjheng Rd., Lujhu District, Taoyuan City 338, Taiwan (R.O.C.) (03)322-9699
Dajhu Branch No.43, Dasin Rd., Lujhu District, Taoyuan City 338, Taiwan (R.O.C.) (03)313-4688
Luzhu Branch No.3, Sec. 1, Ren’ai Rd., Luzhu District , Taoyuan City 338, Taiwan (R.O.C.) (03)222-1389
Hueilong Branch No.253, Sec. 1, Wanshou Rd., Gueishan District, Taoyuan City 333, Taiwan (R.O.C.) (02)8209-0808
Gueishan Branch No.688, Sec. 2, Wanshou Rd., Gueishan District, Taoyuan City 333, Taiwan (R.O.C.) (03)319-2323
Lungtan Branch No.245, Jhongjheng Rd., Longtan District, Taoyuan City 325, Taiwan (R.O.C.) (03)470-9188
Tayuan Branch No.56, Jhongjheng E. Rd., Dayuan District, Taoyuan City 337, Taiwan (R.O.C.) (03)385-0505
Hsinchu Branch No.107, Jhongjheng Rd., Hsinchu City 300, Taiwan (R.O.C.) (03)524-9966
Taichung Branch No.9-5, Sec.2, Taiwan Blvd., Situn District, Taichung City 407, Taiwan (R.O.C.) (04)2328-5666
North Taichung Branch No.13, Sec. 3, Wunsin Rd., Situn District, Taichung City 407, Taiwan (R.O.C.) (04)2311-8555
Wenhsin Branch No.208-1, Sec. 4, Wunsin Rd., North District, Taichung City 404, Taiwan (R.O.C.) (04)2298-0808
Beitun Branch No.701, Sec. 4, Wunsin Rd., Beitun District, Taichung City 406, Taiwan (R.O.C.) (04)2245-2636

150

Bank Directory


Branch Name
Address
Telephone
Minchuan Branch
No.135, Mincyuan Rd., West District, Taichung City 403, Taiwan (R.O.C.)
(04)2220-6789
Hsitun Branch
No.277, Sec. 2, Situn Rd., Situn District, Taichung City 407, Taiwan (R.O.C.)
(04)2702-2152
Singchung Branch
No.406, Sec. 1, Fusing Rd., South District, Taichung City 402, Taiwan (R.O.C.)
(04)2261-4040
Fongyuan Branch
No.102, Fucian St., Fongyuan District, Taichung County 420, Taiwan (R.O.C.)
(04)2522-8800
Yuanlin Branch
No.785, Sec. 1, Jhongshan Rd., Yuanlin Township, Changhua County 510, Taiwan (R.O.C.)
(04)834-7666
South Yuanlin Branch
No.37, Sanmin St., Yuanlin Township, Changhua County 510, Taiwan (R.O.C.)
(04)832-6388
Chiayi Branch
No.285, Jhongshan Rd., Chiayi City 600, Taiwan (R.O.C.)
(05)228-5908
East Chiayi Branch
No.372-1, Gongming Rd., Chiayi City 600, Taiwan (R.O.C.)
(05)229-3922
Tainan Branch
No.271, Sec. 4, Simen Rd., North District, Tainan City 704, Taiwan (R.O.C.)
(06)251-3377
Fucheng Branch
No.92, Jhongjheng Rd., West Central District, Tainan City 700, Taiwan (R.O.C.)
(06)229-0866
Fuchiang Branch
No.15, Sec. 3, Dongmen Rd., East District, Tainan City 701, Taiwan (R.O.C.)
(06)260-1268
Kaiyuan Branch
No.229, Kaiyuan Rd., North District, Tainan City 704, Taiwan (R.O.C.)
(06)235-4445
South Tainan Branch
No.379, Sec. 1, Jinhua Rd., South District, Tainan City 702, Taiwan (R.O.C.)
(06)265-5663
Kaohsiung Branch
No.204, Guanghua 1st Rd., Lingya District, Kaohsiung City 802, Taiwan (R.O.C.)
(07)226-5353
Lingya Branch
No.30, Sihwei 4th Rd., Lingya District, Kaohsiung City 802, Taiwan (R.O.C.)
(07)338-6033
Sanmin Branch
No.73, Jiouru 1st Rd., Sanmin District, Kaohsiung City 807, Taiwan (R.O.C.)
(07)389-0258
Chiuju Branch
No.495, Jiouru 2nd Rd., Sanmin District, Kaohsiung City 807, Taiwan (R.O.C.)
(07)311-8871
North Kaohsiung Branch
No.548, Jiouru 2nd Rd., Sanmin District, Kaohsiung City 807, Taiwan (R.O.C.)
(07)322-3699
Fengshan Branch
No.224, Kaisyuan Rd., Fongshan District , Kaohsiung City 830, Taiwan (R.O.C.)
(07)763-8185
Wuchia Branch
No.173, Nanhua Rd., Fongshan District, Kaohsiung City 830, Taiwan (R.O.C.)
(07)721-5866
Pingtung Branch
No.172, Minzu Rd., Pingtung City, Pingtung County 900, Taiwan (R.O.C.)
(08)732-6777
Ho Chi Minh Representative
Office
12F.,8 Nguyen Hue Str., Dist.1, Ho Chi Minh City, Vietnam
(848)3825-0407
Hong Kong Representative
Office
Unit 18, 35/F, West Tower, Shun Tak Centre, 200 Connaught Road, Central, Hong Kong
(852)2521-1678
Branch Name
Address
Telephone
Minchuan Branch
No.135, Mincyuan Rd., West District, Taichung City 403, Taiwan (R.O.C.)
(04)2220-6789
Hsitun Branch
No.277, Sec. 2, Situn Rd., Situn District, Taichung City 407, Taiwan (R.O.C.)
(04)2702-2152
Singchung Branch
No.406, Sec. 1, Fusing Rd., South District, Taichung City 402, Taiwan (R.O.C.)
(04)2261-4040
Fongyuan Branch
No.102, Fucian St., Fongyuan District, Taichung County 420, Taiwan (R.O.C.)
(04)2522-8800
Yuanlin Branch
No.785, Sec. 1, Jhongshan Rd., Yuanlin Township, Changhua County 510, Taiwan (R.O.C.)
(04)834-7666
South Yuanlin Branch
No.37, Sanmin St., Yuanlin Township, Changhua County 510, Taiwan (R.O.C.)
(04)832-6388
Chiayi Branch
No.285, Jhongshan Rd., Chiayi City 600, Taiwan (R.O.C.)
(05)228-5908
East Chiayi Branch
No.372-1, Gongming Rd., Chiayi City 600, Taiwan (R.O.C.)
(05)229-3922
Tainan Branch
No.271, Sec. 4, Simen Rd., North District, Tainan City 704, Taiwan (R.O.C.)
(06)251-3377
Fucheng Branch
No.92, Jhongjheng Rd., West Central District, Tainan City 700, Taiwan (R.O.C.)
(06)229-0866
Fuchiang Branch
No.15, Sec. 3, Dongmen Rd., East District, Tainan City 701, Taiwan (R.O.C.)
(06)260-1268
Kaiyuan Branch
No.229, Kaiyuan Rd., North District, Tainan City 704, Taiwan (R.O.C.)
(06)235-4445
South Tainan Branch
No.379, Sec. 1, Jinhua Rd., South District, Tainan City 702, Taiwan (R.O.C.)
(06)265-5663
Kaohsiung Branch
No.204, Guanghua 1st Rd., Lingya District, Kaohsiung City 802, Taiwan (R.O.C.)
(07)226-5353
Lingya Branch
No.30, Sihwei 4th Rd., Lingya District, Kaohsiung City 802, Taiwan (R.O.C.)
(07)338-6033
Sanmin Branch
No.73, Jiouru 1st Rd., Sanmin District, Kaohsiung City 807, Taiwan (R.O.C.)
(07)389-0258
Chiuju Branch
No.495, Jiouru 2nd Rd., Sanmin District, Kaohsiung City 807, Taiwan (R.O.C.)
(07)311-8871
North Kaohsiung Branch
No.548, Jiouru 2nd Rd., Sanmin District, Kaohsiung City 807, Taiwan (R.O.C.)
(07)322-3699
Fengshan Branch
No.224, Kaisyuan Rd., Fongshan District , Kaohsiung City 830, Taiwan (R.O.C.)
(07)763-8185
Wuchia Branch
No.173, Nanhua Rd., Fongshan District, Kaohsiung City 830, Taiwan (R.O.C.)
(07)721-5866
Pingtung Branch
No.172, Minzu Rd., Pingtung City, Pingtung County 900, Taiwan (R.O.C.)
(08)732-6777
Ho Chi Minh Representative
Office
12F.,8 Nguyen Hue Str., Dist.1, Ho Chi Minh City, Vietnam
(848)3825-0407
Hong Kong Representative
Office
Unit 18, 35/F, West Tower, Shun Tak Centre, 200 Connaught Road, Central, Hong Kong
(852)2521-1678
Branch Name
Address
Telephone
Minchuan Branch
No.135, Mincyuan Rd., West District, Taichung City 403, Taiwan (R.O.C.)
(04)2220-6789
Hsitun Branch
No.277, Sec. 2, Situn Rd., Situn District, Taichung City 407, Taiwan (R.O.C.)
(04)2702-2152
Singchung Branch
No.406, Sec. 1, Fusing Rd., South District, Taichung City 402, Taiwan (R.O.C.)
(04)2261-4040
Fongyuan Branch
No.102, Fucian St., Fongyuan District, Taichung County 420, Taiwan (R.O.C.)
(04)2522-8800
Yuanlin Branch
No.785, Sec. 1, Jhongshan Rd., Yuanlin Township, Changhua County 510, Taiwan (R.O.C.)
(04)834-7666
South Yuanlin Branch
No.37, Sanmin St., Yuanlin Township, Changhua County 510, Taiwan (R.O.C.)
(04)832-6388
Chiayi Branch
No.285, Jhongshan Rd., Chiayi City 600, Taiwan (R.O.C.)
(05)228-5908
East Chiayi Branch
No.372-1, Gongming Rd., Chiayi City 600, Taiwan (R.O.C.)
(05)229-3922
Tainan Branch
No.271, Sec. 4, Simen Rd., North District, Tainan City 704, Taiwan (R.O.C.)
(06)251-3377
Fucheng Branch
No.92, Jhongjheng Rd., West Central District, Tainan City 700, Taiwan (R.O.C.)
(06)229-0866
Fuchiang Branch
No.15, Sec. 3, Dongmen Rd., East District, Tainan City 701, Taiwan (R.O.C.)
(06)260-1268
Kaiyuan Branch
No.229, Kaiyuan Rd., North District, Tainan City 704, Taiwan (R.O.C.)
(06)235-4445
South Tainan Branch
No.379, Sec. 1, Jinhua Rd., South District, Tainan City 702, Taiwan (R.O.C.)
(06)265-5663
Kaohsiung Branch
No.204, Guanghua 1st Rd., Lingya District, Kaohsiung City 802, Taiwan (R.O.C.)
(07)226-5353
Lingya Branch
No.30, Sihwei 4th Rd., Lingya District, Kaohsiung City 802, Taiwan (R.O.C.)
(07)338-6033
Sanmin Branch
No.73, Jiouru 1st Rd., Sanmin District, Kaohsiung City 807, Taiwan (R.O.C.)
(07)389-0258
Chiuju Branch
No.495, Jiouru 2nd Rd., Sanmin District, Kaohsiung City 807, Taiwan (R.O.C.)
(07)311-8871
North Kaohsiung Branch
No.548, Jiouru 2nd Rd., Sanmin District, Kaohsiung City 807, Taiwan (R.O.C.)
(07)322-3699
Fengshan Branch
No.224, Kaisyuan Rd., Fongshan District , Kaohsiung City 830, Taiwan (R.O.C.)
(07)763-8185
Wuchia Branch
No.173, Nanhua Rd., Fongshan District, Kaohsiung City 830, Taiwan (R.O.C.)
(07)721-5866
Pingtung Branch
No.172, Minzu Rd., Pingtung City, Pingtung County 900, Taiwan (R.O.C.)
(08)732-6777
Ho Chi Minh Representative
Office
12F.,8 Nguyen Hue Str., Dist.1, Ho Chi Minh City, Vietnam
(848)3825-0407
Hong Kong Representative
Office
Unit 18, 35/F, West Tower, Shun Tak Centre, 200 Connaught Road, Central, Hong Kong
(852)2521-1678
Branch Name
Address
Telephone
Minchuan Branch
No.135, Mincyuan Rd., West District, Taichung City 403, Taiwan (R.O.C.)
(04)2220-6789
Hsitun Branch
No.277, Sec. 2, Situn Rd., Situn District, Taichung City 407, Taiwan (R.O.C.)
(04)2702-2152
Singchung Branch
No.406, Sec. 1, Fusing Rd., South District, Taichung City 402, Taiwan (R.O.C.)
(04)2261-4040
Fongyuan Branch
No.102, Fucian St., Fongyuan District, Taichung County 420, Taiwan (R.O.C.)
(04)2522-8800
Yuanlin Branch
No.785, Sec. 1, Jhongshan Rd., Yuanlin Township, Changhua County 510, Taiwan (R.O.C.)
(04)834-7666
South Yuanlin Branch
No.37, Sanmin St., Yuanlin Township, Changhua County 510, Taiwan (R.O.C.)
(04)832-6388
Chiayi Branch
No.285, Jhongshan Rd., Chiayi City 600, Taiwan (R.O.C.)
(05)228-5908
East Chiayi Branch
No.372-1, Gongming Rd., Chiayi City 600, Taiwan (R.O.C.)
(05)229-3922
Tainan Branch
No.271, Sec. 4, Simen Rd., North District, Tainan City 704, Taiwan (R.O.C.)
(06)251-3377
Fucheng Branch
No.92, Jhongjheng Rd., West Central District, Tainan City 700, Taiwan (R.O.C.)
(06)229-0866
Fuchiang Branch
No.15, Sec. 3, Dongmen Rd., East District, Tainan City 701, Taiwan (R.O.C.)
(06)260-1268
Kaiyuan Branch
No.229, Kaiyuan Rd., North District, Tainan City 704, Taiwan (R.O.C.)
(06)235-4445
South Tainan Branch
No.379, Sec. 1, Jinhua Rd., South District, Tainan City 702, Taiwan (R.O.C.)
(06)265-5663
Kaohsiung Branch
No.204, Guanghua 1st Rd., Lingya District, Kaohsiung City 802, Taiwan (R.O.C.)
(07)226-5353
Lingya Branch
No.30, Sihwei 4th Rd., Lingya District, Kaohsiung City 802, Taiwan (R.O.C.)
(07)338-6033
Sanmin Branch
No.73, Jiouru 1st Rd., Sanmin District, Kaohsiung City 807, Taiwan (R.O.C.)
(07)389-0258
Chiuju Branch
No.495, Jiouru 2nd Rd., Sanmin District, Kaohsiung City 807, Taiwan (R.O.C.)
(07)311-8871
North Kaohsiung Branch
No.548, Jiouru 2nd Rd., Sanmin District, Kaohsiung City 807, Taiwan (R.O.C.)
(07)322-3699
Fengshan Branch
No.224, Kaisyuan Rd., Fongshan District , Kaohsiung City 830, Taiwan (R.O.C.)
(07)763-8185
Wuchia Branch
No.173, Nanhua Rd., Fongshan District, Kaohsiung City 830, Taiwan (R.O.C.)
(07)721-5866
Pingtung Branch
No.172, Minzu Rd., Pingtung City, Pingtung County 900, Taiwan (R.O.C.)
(08)732-6777
Ho Chi Minh Representative
Office
12F.,8 Nguyen Hue Str., Dist.1, Ho Chi Minh City, Vietnam
(848)3825-0407
Hong Kong Representative
Office
Unit 18, 35/F, West Tower, Shun Tak Centre, 200 Connaught Road, Central, Hong Kong
(852)2521-1678
Branch Name Address Telephone
Minchuan Branch No.135, Mincyuan Rd., West District, Taichung City 403, Taiwan (R.O.C.) (04)2220-6789
Hsitun Branch No.277, Sec. 2, Situn Rd., Situn District, Taichung City 407, Taiwan (R.O.C.) (04)2702-2152
Singchung Branch No.406, Sec. 1, Fusing Rd., South District, Taichung City 402, Taiwan (R.O.C.) (04)2261-4040
Fongyuan Branch No.102, Fucian St., Fongyuan District, Taichung County 420, Taiwan (R.O.C.) (04)2522-8800
Yuanlin Branch No.785, Sec. 1, Jhongshan Rd., Yuanlin Township, Changhua County 510, Taiwan (R.O.C.) (04)834-7666
South Yuanlin Branch No.37, Sanmin St., Yuanlin Township, Changhua County 510, Taiwan (R.O.C.) (04)832-6388
Chiayi Branch No.285, Jhongshan Rd., Chiayi City 600, Taiwan (R.O.C.) (05)228-5908
East Chiayi Branch No.372-1, Gongming Rd., Chiayi City 600, Taiwan (R.O.C.) (05)229-3922
Tainan Branch No.271, Sec. 4, Simen Rd., North District, Tainan City 704, Taiwan (R.O.C.) (06)251-3377
Fucheng Branch No.92, Jhongjheng Rd., West Central District, Tainan City 700, Taiwan (R.O.C.) (06)229-0866
Fuchiang Branch No.15, Sec. 3, Dongmen Rd., East District, Tainan City 701, Taiwan (R.O.C.) (06)260-1268
Kaiyuan Branch No.229, Kaiyuan Rd., North District, Tainan City 704, Taiwan (R.O.C.) (06)235-4445
South Tainan Branch No.379, Sec. 1, Jinhua Rd., South District, Tainan City 702, Taiwan (R.O.C.) (06)265-5663
Kaohsiung Branch No.204, Guanghua 1st Rd., Lingya District, Kaohsiung City 802, Taiwan (R.O.C.) (07)226-5353
Lingya Branch No.30, Sihwei 4th Rd., Lingya District, Kaohsiung City 802, Taiwan (R.O.C.) (07)338-6033
Sanmin Branch No.73, Jiouru 1st Rd., Sanmin District, Kaohsiung City 807, Taiwan (R.O.C.) (07)389-0258
Chiuju Branch No.495, Jiouru 2nd Rd., Sanmin District, Kaohsiung City 807, Taiwan (R.O.C.) (07)311-8871
North Kaohsiung Branch No.548, Jiouru 2nd Rd., Sanmin District, Kaohsiung City 807, Taiwan (R.O.C.) (07)322-3699
Fengshan Branch No.224, Kaisyuan Rd., Fongshan District , Kaohsiung City 830, Taiwan (R.O.C.) (07)763-8185
Wuchia Branch No.173, Nanhua Rd., Fongshan District, Kaohsiung City 830, Taiwan (R.O.C.) (07)721-5866
Pingtung Branch No.172, Minzu Rd., Pingtung City, Pingtung County 900, Taiwan (R.O.C.) (08)732-6777
Ho Chi Minh Representative
Office		 12F.,8 Nguyen Hue Str., Dist.1, Ho Chi Minh City, Vietnam (848)3825-0407
Hong Kong Representative
Office		 Unit 18, 35/F, West Tower, Shun Tak Centre, 200 Connaught Road, Central, Hong Kong (852)2521-1678

151

Union Bank of Taiwan

Financial Statements for the Years Ended December 31, 2014 and 2013 and Independent Auditors’ Report

152

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Stockholders Union Bank of Taiwan

We have audited the accompanying balance sheets of Union Bank of Taiwan (the “Bank”) as of December 31, 2014 and 2013, and the related statements of comprehensive income, changes in equity and cash flows for the years then ended. These financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements of Financial Institutions by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Union Bank of Taiwan as of December 31, 2014 and 2013, and its financial performance and its cash flows for the years then ended, in conformity with the Criteria Governing the Preparation of Financial Reports by Public Banks and other regulations.

March 18, 2015

Notice to Readers

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

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

  • -153

UNION BANK OF TAIWAN

BALANCE SHEETS DECEMBER 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars)

ASSETS
CASH AND CASH EQUIVALENTS (Notes 4 and 6)
DUE FROM THE CENTRAL BANK AND CALL LOANS TO OTHER BANKS (Note 7)
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 4, 5 and 8)
SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL (Notes 4 and 9)
RECEIVABLES, NET (Notes 4, 5, 10, 12 and 40)
CURRENT TAX ASSETS (Notes 4 and 38)
DISCOUNTS AND LOANS, NET (Notes 4, 5, 11, 12 and 40)
AVAILABLE-FOR-SALE FINANCIAL ASSETS, NET (Notes 4, 5, 13 and 40)
HELD-TO-MATURITY FINANCIAL ASSETS (Notes 4, 5 and 14)
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD, NET (Notes 4 and 15)
OTHER FINANCIAL ASSETS, NET (Notes 4, 15, 16 and 41)
PROPERTY AND EQUIPMENT, NET (Notes 4 and 17)
INTANGIBLE ASSETS (Note 4)
Goodwill (Notes 5 and 18)
Computer software
Total intangible assets
DEFERRED TAX ASSETS (Notes 4, 5 and 38)
OTHER ASSETS, NET (Notes 4, 19, 40 and 42)
TOTAL
LIABILITIES AND EQUITY
LIABILITIES
Due to the Central Bank and other banks (Note 20)
Financial liabilities at fair value through profit or loss (Notes 4 and 8)
Securities sold under agreements to repurchase (Notes 4 and 21)
Accounts payable (Note 22)
Deposits (Notes 23 and 40)
Bank debentures (Note 24)
Other financial liabilities (Note 25)
Provisions (Notes 4, 12 and 26)
Deferred tax liabilities (Notes 4, 5 and 38)
Other liabilities (Notes 28, 40 and 42)
Total liabilities
EQUITY
Capital stock
Common stock
Capital surplus
Retained earnings
Legal reserve
Special reserve
Unappropriated earnings
Total retained earnings
Other equity
Total equity
TOTAL		 2014 2013















Amount
%
$ 9,476,656
2
67,260,453
14
18,373,136
4
26,350,581
5
14,678,252
3
326,786
-
257,632,121
54
13,699,485
3
521,266
-
2,616,318
1
56,639,357
12
7,722,206
2
1,985,307
-
60,891

-

2,046,198
-
2,245,936
-
1,962,732

-

$ 481,551,483
100

$ 6,164,744
1
211,084
-
31,791,276
7
5,456,071
1
396,410,432
82
7,400,000
2
18,928
-
942,785
-
699,730
-
418,311

-

449,513,361
93

24,509,306

5

33,006

-

2,522,768
-
558,842
-
3,045,300

1

6,126,910

1

1,368,900

1

32,038,122

7

$ 481,551,483
100




































Amount
%
$ 7,693,960
2

70,874,052
16

9,863,257
2

20,230,519
5

13,742,618
3

160,660
-
230,142,592
53

8,500,192
2

428,017
-

2,567,706
1

57,830,216
13

7,630,976
2

1,985,307
-

59,559

-

2,044,866
-

2,826,055
1

1,925,098

-
$ 436,460,784
100
$ 4,924,611
1

16,006
-

24,582,657
5

4,168,148
1
365,120,161
84

7,400,000
2

201,858
-

752,628
-

556,558
-

314,825

-
408,037,452
93

22,165,251

5

34,288

-

1,685,037
1

914,439
-

2,792,439

1

5,391,915

2

831,878

-

28,423,332

7
$ 436,460,784
100

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

  • -154

UNION BANK OF TAIWAN

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

NET INTEREST (Notes 4, 30 and 40)
Interest revenues
Interest expenses
Net interest
NET REVENUES OTHER THAN
INTEREST
Commissions and fee revenues, net
(Notes 4, 31 and 40)
Gain on financial assets and liabilities
at fair value through profit or loss
(Notes 4 and 32)
Realized gain (loss) from
available-for-sale financial assets,
net (Notes 4 and 33)
Investment gain recognized under the
equity method (Note 4)
Foreign exchange gain (loss), net
(Note 4)
Reversal of asset impairments (Notes 4
and 34)
Gain on disposal of collaterals
assumed, net
Securities brokerage fee revenues, net
(Note 40)
Gain on unquoted equity investments,
net
Property gain (loss), net
Other noninterest net gains (losses)
Total net revenues other than
interest
TOTAL NET REVENUES
PROVISIONS (Notes 4 and 12)
Reversal of allowance for doubtful
accounts		 2014
Amount
%
$ 9,707,194
110
3,681,523
42
6,025,671
68
1,954,099
22
310,739
3
147,797
2
153,314
2
205,885
2
-
-
-
-
67,461
1
49,990
1
(1,814)
-
(63,627
)
(1
)
2,823,844
32
8,849,515
100
(494,806
)
(6
)		 2013

Amount
%
$ 9,271,343
109
3,350,022
39
5,921,321
70
1,664,374
20
678,127
8
(86,181)
(1)
197,750
2
(208,378)
(3)
120,187
1
10,353
-
54,181
1
49,025
1
2,255
-
76,142

1
2,557,835
30
8,479,156
100
(95,890
)
(1
)		 Percentage
Increase
(Decrease)












%
5
10
2
17
(54)
271
(22)
199
(100)
(100)
25
2
(180)
(184)
10
4
416
(Continued)
  • -155

UNION BANK OF TAIWAN

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING EXPENSES
Personnel expenses (Notes 4 and 35)
Depreciation and amortization
(Notes 4 and 36)
Others (Notes 37 and 40)
Total operating expenses
INCOME BEFORE INCOME TAX
INCOME TAX EXPENSE (Notes 4, 5
and 38)
CONSOLIDATED NET INCOME
OTHER COMPREHENSIVE INCOME
Exchange differences on translating
foreign operations
Unrealized gain on available-for-sale
financial assets
Share of other comprehensive income
of subsidiaries and associates
Actuarial loss arising on defined
benefit plans (Notes 4 and 27)
Income tax on the components of other
comprehensive expense (Note 38)
Other comprehensive income for
the year, net of income tax
TOTAL COMPREHENSIVE INCOME
EARNINGS PER SHARE (NEW
TAIWAN DOLLARS; Note 39)
Basic
Diluted		 2014
Amount
%
$ 2,743,129
31
203,904
2
2,721,734
31
5,668,767
64
3,675,554
42
581,759

7
3,093,795
35
560,226
6
224,145
3
(87,257)
(1)
(72,868)
(1)
(154,041
)
(2
)
470,205

5
$ 3,564,000
40
$ 1.26
$ 1.26		 2013

Amount
%
$ 2,621,626
31
208,651
3
2,405,987
28
5,236,264
62
3,338,782
39
470,891

5
2,867,891
34
251,127
3
692,783
8
13,801
-
(12,504)
-
(258,580
)
(3
)
686,627

8
$ 3,554,518
42
$ 1.18
$ 1.17		 Percentage
Increase
(Decrease)














%
5
(2)
13
8
10
24
8
123
(68)
(732)
483
(40)
(32)
-
$ $




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

(Concluded)

  • -156

UNION BANK OF TAIWAN

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2013
Special reserve carried with Rule No. 1010012865 issued by the
Financial Supervisory Commission
Appropriation of the 2012 earnings
Legal reserve
Cash dividends on preferred shares
Stock dividends on common shares
Stock dividends on preferred shares
Reversal of special reserve
Net income for the for the year ended December 31, 2013
Other comprehensive income for the year ended December 31,
2013
Total comprehensive income for the year ended December 31,
2013
Conversion of preferred stock
Share-based payment
BALANCE AT DECEMBER 31, 2013
Appropriation of the 2013 earnings
Legal reserve
Cash dividends on preferred shares
Stock dividends on common shares
Reversal of special reserve
Net income for the year ended December 31, 2014
Other comprehensive income for the year ended December 31,
2014
Total comprehensive income for the year ended December 31,
2014
Share-based payment
BALANCE AT DECEMBER 31, 2014		 Capital Stock (Note 29)
Common Stock Preferred Stock
Total

$ 20,060,202
$ 204,194
$ 20,264,396

-
-
-
-
-
-
-
-
-
1,839,520
-
1,839,520
18,725
-
18,725
-
-
-
-
-
-

-

-

-


-

-

-


204,194

(204,194
)
-


42,610

-

42,610

22,165,251
-
22,165,251
-
-
-
-
-
-
2,283,021
-
2,283,021
-
-
-
-
-
-

-

-

-


-

-

-


61,034

-

61,034

$ 24,509,306
$ -
$ 24,509,306
 Capital Stock (Note 29)
Common Stock Preferred Stock
Total

$ 20,060,202
$ 204,194
$ 20,264,396

-
-
-
-
-
-
-
-
-
1,839,520
-
1,839,520
18,725
-
18,725
-
-
-
-
-
-

-

-

-


-

-

-


204,194

(204,194
)
-


42,610

-

42,610

22,165,251
-
22,165,251
-
-
-
-
-
-
2,283,021
-
2,283,021
-
-
-
-
-
-

-

-

-


-

-

-


61,034

-

61,034

$ 24,509,306
$ -
$ 24,509,306
 Share Capital
$ 32,413

-
-
-
-
-
-
-

-


-


-


1,875

34,288
-
-
-
-
-

-


-


(1,282
)
$ 33,006
 Retained Earnings (Notes 4and 29) Retained Earnings (Notes 4and 29) Other Equity (Notes 4 and 29)
Unrealized
Exchange
Gain (Loss) on Differences on
Available-for-
Translating
sale Financial
Foreign
Assets
Operations
$ 413,490
$ (278,935)
-
-
-
-

-
-

-
-

-
-
-
-
-
-

496,017

201,306


496,017

201,306


-

-


-

-

909,507
(77,629)
-
-

-
-

-
-
-
-
-
-

120,140

416,882


120,140

416,882


-

-

$ 1,029,647
$ 339,253
 Total
$ 134,555

-
-
-
-
-
-
-

697,323


697,323


-


-

831,878

-
-
-
-
-

537,022


537,022


-

$ 1,368,900
 Total Equity
$ 25,005,371
-
-
(181,042)
-
-
-
2,867,891

686,627

3,554,518

-

44,485
28,423,332
-
(8,962)
-
-
3,093,795

470,205

3,564,000

59,752
$ 32,038,122
















Unrealized
Gain (Loss) on
Available-for-
sale Financial
Assets
$ 413,490

-
-

-

-

-
-
-

496,017


496,017


-


-

909,507
-

-

-
-
-

120,140


120,140


-

$ 1,029,647
Legal Reserve Special Reserve
$ 900,963
$ 608,209

-
507,984
784,074
-
-
-
-
-

-
-
-
(201,754)
-
-

-

-


-

-


-

-


-

-

1,685,037
914,439
837,731
-
-
-
-
-

-
(355,597)
-
-

-

-


-

-


-

-

$ 2,522,768
$ 558,842
 Unappropri-
ated Earnings
$ 3,064,835

(507,984)
(784,074)
(181,042)
(1,839,520)

(18,725)

201,754
2,867,891

(10,696
)


2,857,195


-


-

2,792,439
(837,731)
(8,962)
(2,283,021)


355,597
3,093,795

(66,817
)


3,026,978


-

$ 3,045,300
 Total
$ 4,574,007

-
-
(181,042)
(1,839,520)
(18,725)
-
2,867,891

(10,696
)

2,857,195


-


-

5,391,915
-
(8,962)
(2,283,021)
-
3,093,795

(66,817
)

3,026,978


-

$ 6,126,910










Common Stock P
$ 20,060,202

-
-
-
1,839,520
18,725
-
-

-


-


204,194


42,610

22,165,251
-
-
2,283,021
-
-

-


-


61,034

$ 24,509,306
 referred Stock
$ 204,194

-
-
-
-
-
-
-

-


-


(204,194
)

-

-

-
-
-
-
-

-


-


-

$ -

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

  • -157

UNION BANK OF TAIWAN

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax

Adjustments for:
Depreciation expenses
Amortization expenses
Gain on reversal of allowance for doubtful accounts
Net gain on disposal of financial assets designated as at fair value
through profit or loss
Interest expenses
Interest revenues
Dividend income
Share of profit of subsidiaries and associates
Loss (gain) on disposal of properties
Gain (loss) on disposal of investments
Reversal of impairment losses on nonfinancial asset
Reversal of impairment loss recognized on financial assets
Loss on disposal of distressed debt
Gain on disposal of collaterals
Changes in operating assets and liabilities
Increase in due from the Central Bank and call loans banks
Increase in financial assets at fair value through profit or loss
Decrease (increase) in accounts receivable
Increase in discounts and loans

Decrease (increase) in available-for-sale financial assets
Increase in other financial assets
Increase (decrease) in due to the Central Bank and other banks
Increase (decrease) in financial liabilities at fair value through profit
or loss
Increase (decrease) in securities sold under repurchase agreements
Increase (decrease) in accounts payable
Increase in deposits
Decrease in other financial liabilities
Increase (decrease) in provisions for employee benefits

Cash used in operations
Interest received
Dividend received
Interest paid
Income tax paid

Net cash generated from (used in) operating activities

CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in financial assets designated as at fair value through profit or
loss
Acquisition of debt instruments with no active market		 2014
$ 3,675,554
170,911
32,993
(494,806)
(310,739)
3,681,523
(9,707,194)
(87,464)
(153,314)
1,814
(110,320)
-
-
65,897
-
(386,401)
(6,423,256)
(780,117)
(27,256,804)
(4,864,527)
(2,231,324)
1,240,133
(1,655,522)
7,208,619
1,328,884
31,290,271
(182,930)

7,440

(5,940,679)
9,700,672
119,996
(3,662,732)

(178,635
)

38,622

72,367
(5,686,328)		 2013
$ 3,338,782

168,384

40,267
(95,890)
(678,127)

3,350,022
(9,271,343)
(77,149)
(197,750)

(2,255)
114,305
(51,593)
(68,594)

-
(10,353)
(3,495,138)
(2,433,626)
512,562
(28,373,615)
2,315,443
(3,695,447)

(190,826)
298,333

(3,706,692)

(2,247,667)

27,721,025
(104,534)

(26,661
)
(16,868,137)

9,330,915

267,481
(3,471,032)

(88,298
)
(10,829,071
)

1,033,116
(29,391,008)
(Continued)
  • 158 -

UNION BANK OF TAIWAN

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars)

Return of capital on debt instruments with no active market

Purchase of held-to-maturity financial assets
Return of capital on held-to-maturity financial assets
Purchase of financial assets measured at cost
Proceeds from disposal of financial assets measured at cost
Return of capital on financial assets carried at cost
Payments for properties
Proceeds of the disposal of properties
Increase in settlement fund
Decrease in settlement fund
Increase in refundable deposits
Decrease in refundable deposits
Payments for intangible assets
Proceeds of the disposal of collaterals
Decrease (increase) in other assets

Net cash generated from (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of the issue bank debentures
Repayments of bank debentures
Increase (decrease) in guarantee deposits received
Increase in other liabilities
Cash dividends paid

Net cash generated from financing activities

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE
OF CASH HELD IN FOREIGN CURRENCIES

NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
YEAR

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
 2014
$ 9,274,723
(360,837)
264,962
(6,000)
8,884
-
(242,469)
95
(845)
-
(74,762)
-
(31,056)
-

37,973


3,256,707

-
-
6,302
55,922

(8,962
)

53,262


554,167

3,902,758

82,024,479

$ 85,927,237
 2013
$ 24,850,343
(205,667)

614,805
-

-
34,663
(107,920)
17,628
-
1,228
-
163,314
(2,395)
162,554

(29,284
)

(2,858,623
)
3,000,000
(800,000)

(1,092)

10,760

(181,042
)

2,028,626

248,337
(11,410,731)

93,435,210
$ 82,024,479
(Continued)
  • 159 -

UNION BANK OF TAIWAN

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars)

Reconciliation of the amounts in the statements of cash flows with the equivalent items reported in the balance sheets as of December 31, 2014 and 2013:

Cash and cash equivalents in balance sheets
Due from the Central Bank and call loans to banks that meet the
definition of cash and cash equivalents in IAS 7”Cash Flow
Statements”
Securities purchased under agreements to resell that meet the definition
of cash and cash equivalents in IAS 7
Cash and cash equivalents in statements of cash flows		 **December 31 ** **December 31 **


2014
$ 9,476,656
50,100,000

26,350,581

$ 85,927,237
 2013
$ 7,693,960

54,100,000

20,230,519
$ 82,024,479

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

(Concluded)

  • 160 -

NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

UNION BANK OF TAIWAN

1. GENERAL INFORMATION

The Union Bank of Taiwan (the “Bank”) obtained approval from the Ministry of Finance (MOF) to be established on August 1, 1991 and was incorporated on December 31, 1991. It started operations on January 21, 1992.

The Bank engages in activities allowed under the Banking Law, which cover deposits, loans, discounts, remittances, acceptances, issuance of guarantees and letters of credit, short-term bills transactions, investments, foreign exchange transactions, savings, trust, etc.

On the Bank’s merger with Chung Shing Bank on March 19, 2005, the Bank took over all of the assets, liabilities and operating units of Chung Shing Bank.

The Bank merged with the Union Bills Finance Corporation (UBF) on August 16, 2010, with the Bank as the survivor entity.

As of December 31, 2012, the Bank’s operating units included Banking, Trust, Wealth Management, Security Finance, Bills Finance, International Banking Department of the Head Office, an Offshore Banking Unit (OBU), two overseas representative offices in Hong Kong and Vietnam, and 89 domestic branches.

The operations of the Bank’s Trust Department are (1) trust business planning, managing and operating; and (2) custody of nondiscretionary trust funds in domestic and overseas securities and mutual funds. These foregoing operations are regulated under the Banking Law and Trust Law.

The Bank’s shares are traded on the Taiwan Stock Exchange.

As of December 31, 2014 and 2013, the Bank had 3,356 and 3,249 employees, respectively.

The Bank’s financial statements are presented in New Taiwan dollars.

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the board of directors and authorized for issue on March 18, 2015.

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

  • a. The amendments to the Criteria Governing the Preparation of Financial Reports by Public Banks and the 2013 version of the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) endorsed by the FSC not yet effective

Rule No. 1030029342 and Rule No. 1030010325 issued by the FSC on April 3, 2014, stipulated that the Bank should apply the 2013 version of IFRS, IAS, IFRIC and SIC (collectively, the “IFRSs”) endorsed by the FSC and the related amendments to the Criteria Governing the Preparation of Financial Reports by Public Banks starting January 1, 2015.

  • 161 -

New, Amended and Revised Standards and Interpretations (the “New IFRSs”)

Effective Date Announced by IASB (Note)

Improvements to IFRSs (2009) - amendment to IAS 39 January 1, 2009 and January 1, 2010, as appropriate Amendment to IAS 39 “Embedded Derivatives” Effective for annual periods ended on or after June 30, 2009 Improvements to IFRSs (2010) July 1, 2010 and January 1, 2011, as appropriate Annual Improvements to IFRSs 2009-2011 Cycle January 1, 2013 Amendment to IFRS 1 “Limited Exemption from Comparative IFRS 7 July 1, 2010 Disclosures for First-time Adopters” Amendment to IFRS 1 “Severe Hyperinflation and Removal of Fixed July 1, 2011 Dates for First-time Adopters” Amendment to IFRS 1 “Government Loans” January 1, 2013 Amendment to IFRS 7 “Disclosure - Offsetting Financial Assets and January 1, 2013 Financial Liabilities” Amendment to IFRS 7 “Disclosure - Transfer of Financial Assets” July 1, 2011 IFRS 11 “Joint Arrangements” January 1, 2013 IFRS 12 “Disclosure of Interests in Other Entities” January 1, 2013 Amendments to IFRS 10, IFRS 11 and IFRS 12 “Consolidated January 1, 2013 Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance” Amendments to IFRS 10 and IFRS 12 and IAS 27 “Investment January 1, 2014 Entities” IFRS 13 “Fair Value Measurement” January 1, 2013 Amendment to IAS 1 “Presentation of Other Comprehensive Income” July 1, 2012 Amendment to IAS 12 “Deferred Tax: Recovery of Underlying January 1, 2012 Assets” IAS 19 (Revised 2011) “Employee Benefits” January 1, 2013 IAS 27 (Revised 2011) “Separate Financial Statements” January 1, 2013 IAS 28 (Revised 2011) “Investments in Associates and Joint January 1, 2013 Ventures” Amendment to IAS 32 “Offsetting Financial Assets and Financial January 1, 2014 Liabilities”

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

Except for the following, whenever applied, the initial application of the above 2013 IFRSs version and the related amendments to the Criteria Governing the Preparation of Financial Reports by Public Banks would not have any material impact on the Bank’s accounting policies:

1) IFRS 13 “Fair Value Measurement”

IFRS 13 establishes a single source of guidance for fair value measurements. It defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. The disclosure requirements in IFRS 13 are more extensive than those in the current standards. For example, quantitative and qualitative disclosures based on the three-level fair value hierarchy currently required for financial instruments only will be extended by IFRS 13 to cover all assets and liabilities within its scope.

The fair value measurements under IFRS 13 will be applied prospectively from January 1, 2015.

  • 162 -

  • 2) Amendment to IAS 1 “Presentation of Items of Other Comprehensive Income”

The amendment to IAS 1 requires items of other comprehensive income to be grouped into those that (1) will not be reclassified subsequently to profit or loss; and (2) will be reclassified subsequently to profit or loss when specific conditions are met. Income taxes on related items of other comprehensive income are grouped on the same basis. Under current IAS 1, there were no such requirements.

The Bank will retrospectively apply the above amendments starting from 2015. Items not expected to be reclassified to profit or loss are remeasurements of the defined benefit plans. Items expected to be reclassified to profit or loss are the exchange differences on translating foreign operations, unrealized gains (loss) on available-for-sale financial assets, and share of the other comprehensive income (except the share of the remeasurements of the defined benefit plans) of associates accounted for using the equity method. However, the application of the above amendments will not result in any impact on the net profit for the year, other comprehensive income for the year (net of income tax), and total comprehensive income for the year.

  • 3) Revision to IAS 19 “Employee Benefits”

The interest cost and expected return on plan assets used in current IAS 19 are replaced with a “net interest” amount, which is calculated by applying the discount rate to the net defined benefit liability or asset. In addition, the revised IAS 19 introduces certain changes in the presentation of the defined benefit cost, and also includes more extensive disclosures.

On initial application of the revised IAS 19 in 2015, the changes in cumulative employee benefit costs as of December 31, 2013 resulting from the retrospective application are adjusted to net defined benefit liabilities, deferred tax assets and retained earnings. In addition, in preparing the consolidated financial statements for the year ended December 31, 2015, the Bank would elect not to present 2014 comparative information about the sensitivity of the defined benefit obligation.

The anticipated impact of the initial application of the revised IAS 19 is detailed as follows:

Impact on assets, liabilities and equity
December 31, 2014
Effect on assets
Deferred tax assets

Effect on liabilities
Net defined benefit liabilities

Effect on equity
Retained earnings

January 1, 2014
Effect on assets
Deferred tax assets
 Carrying
Amount
Adjustments
Arising from
Initial
Application
$ 2,245,936
$ (478
)

$ 746,506
$ (2,810
)

$ 3,045,300
$ 2,332

$ 2,826,055
$ (565
)
 Adjusted
Carrying
Amount
$ 2,245,458
$ 743,696
$ 3,047,632
$ 2,825,490
(Continued)
  • 163 -
Effect on liabilities
Net defined benefit liabilities

Effect on equity
Retained earnings

Impact on total comprehensive income for
the year ended December 31, 2014
Employee benefit expenses

Income tax expense

Total effect on net profit for the year

Items that will not be reclassified to profit
or loss:
Remeasurements of defined benefit
plan
Income tax relating to items that will
not be reclassified

Total effect on other comprehensive
income for the year, net of income tax

Total effect on total comprehensive
income for the year
 Carrying
Amount
Adjustments
Arising from
Initial
Application
$ 666,199
$ (3,321
)

$ 2,792,439
$ 2,756

$ (31,079)
$ 1,193

5,283

(203
)

(25,796
)

990

(72,868)
(1,703)
12,387

289

(60,481
)

(1,414
)

$ (86,277
)
$ (424
)
 Adjusted
Carrying
Amount
$ 662,878
$ 2,795,195
$ (29,886)
5,080
(24,806
)
(74,571)
12,676
(61,895
)
$ (86,701
)

(Concluded)

  • 4) Amendments to IFRS 7 “Disclosure - Offsetting Financial Assets and Financial Liabilities”

The amendments to IFRS 7 require disclosure of information about rights of offset and related arrangements (such as collateral posting requirements) for financial instruments under enforceable master netting arrangements and similar arrangements.

  • 5) Amendments to IAS 32 “Offsetting Financial Assets and Financial Liabilities”

The amendments to IAS 32 clarify the requirements relating to the offset of financial assets and financial liabilities. Specifically, the amendments clarify the meaning of “currently has a legally enforceable right of set-off” and “simultaneous realization and settlement”.

6) Annual Improvements to IFRSs: 2009-2011 Cycle

Several standards including IFRS 1 “First-time Adoption of International Financial Reporting Standards”, IAS 1 “Presentation of Financial Statements”, IAS 16 “Property, Plant and Equipment”, IAS 32 “Financial Instruments: Presentation” and IAS 34 “Interim Financial Reporting” were amended in this annual improvement.

The amendments to IAS 1 clarify that an entity is required to present a balance sheet as at the beginning of the preceding period when a) it applies an accounting policy retrospectively, or makes a retrospective restatement or reclassifies items in its financial statements, and b) the retrospective application, restatement or reclassification has a material effect on the information in the balance sheet at the beginning of the preceding period. The amendments also clarify that related notes are not required to accompany the balance sheet at the beginning of the preceding period.

  • 164 -

The amendments to IAS 16 clarify that spare parts, stand-by equipment and servicing equipment should be recognized in accordance with IAS 16 when they meet the definition of property, plant and equipment and otherwise as inventory.

The amendments to IAS 32 clarify that income tax relating to distributions to holders of an equity instrument and to transaction costs of an equity transaction should be accounted for in accordance with IAS 12 “Income Taxes”.

The amendments to IAS 34 clarify that a measure of total liabilities for a reportable segment would be disclosed in interim financial reporting when such amounts are regularly provided to the chief operating decision maker of the Bank and there has been a material change from the amounts disclosed in the last annual financial statements for that reportable segment.

The initial application of the amendments to the Criteria Governing the Preparation of Financial Reports by Public Banks and the 2013 IFRSs version in 2015 is expected to have material effect on the consolidated balance sheet as of January 1, 2014. In preparing the consolidated financial statements for the year ended December 31, 2015, the Bank would present the consolidated balance sheet as of January 1, 2014 in accordance of the above amendments to IAS 1 and disclose related information in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”, but not required to make disclosures about the line items of the balance sheet as of January 1, 2014.

  • b. New IFRSs in issue but not yet endorsed by the FSC

The Bank has not applied the following New IFRSs issued by the IASB but not yet endorsed by the FSC. As of the date the consolidated financial statements were authorized for issue, the FSC has not announced their effective dates.

Effective Date New IFRSs Announced by IASB (Note 1) Annual Improvements to IFRSs 2010-2012 Cycle July 1, 2014 (Note 2) Annual Improvements to IFRSs 2011-2013 Cycle July 1, 2014 Annual Improvements to IFRSs 2012-2014 Cycle January 1, 2016 (Note 4) IFRS 9 “Financial Instruments” January 1, 2018 Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of January 1, 2018 IFRS 9 and Transition Disclosures” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets January 1, 2016 (Note 3) between an Investor and its Associate or Joint Venture” Amendments to IFRS 10, IFRS 12 and IAS 28 “Investment Entities: January 1, 2016 Applying the Consolidation Exception” Amendment to IFRS 11 “Accounting for Acquisitions of Interests in January 1, 2016 Joint Operations” IFRS 14 “Regulatory Deferral Accounts” January 1, 2016 IFRS 15 “Revenue from Contracts with Customers” January 1, 2017 Amendment to IAS 1 “Disclosure Initiative” January 1, 2016 Amendments to IAS 16 and IAS 38 “Clarification of Acceptable January 1, 2016 Methods of Depreciation and Amortization” Amendments to IAS 16 and IAS 41 “Agriculture: Bearer Plants” January 1, 2016 Amendment to IAS 19 “Defined Benefit Plans: Employee July 1, 2014 Contributions” Amendment to IAS 27 “Equity Method in Separate Financial January 1, 2016 Statements” (Continued)

  • 165 -

Effective Date New IFRSs Announced by IASB (Note 1) Amendment to IAS 36 “Impairment of Assets: Recoverable Amount January 1, 2014 Disclosures for Non-financial Assets” Amendment to IAS 39 “Novation of Derivatives and Continuation of January 1, 2014 Hedge Accounting” IFRIC 21 “Levies” January 1, 2014 (Concluded)

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

  • Note 2: The amendment to IFRS 2 applies to share-based payment transactions with grant date on or after July 1, 2014; the amendment to IFRS 3 applies to business combinations with acquisition date on or after July 1, 2014; the amendment to IFRS 13 is effective immediately; the remaining amendments are effective for annual periods beginning on or after July 1, 2014.

  • Note 3: Prospectively applicable to transactions occurring in annual periods beginning on or after January 1, 2016.

  • Note 4: The amendment to IFRS 5 is applied prospectively to changes in a method of disposal that occur in annual periods beginning on or after January 1, 2016; the remaining amendments are effective for annual periods beginning on or after January 1, 2016.

The initial application of the above New IFRSs, whenever applied, would not have any material impact on the Bank’s accounting policies, except for the following:

  • 1) IFRS 9 “Financial Instruments”

Recognition and measurement of financial assets

With regards to financial assets, all recognized financial assets that are within the scope of IAS 39 “Financial Instruments: Recognition and Measurement” are subsequently measured at amortized cost or fair value. Under IFRS 9, the requirement for the classification of financial assets is stated below.

For the Bank’s debt instruments that have contractual cash flows that are solely payments of principal and interest on the principal amount outstanding, their classification and measurement are as follows:

  • a) For debt instruments, if they are held within a business model whose objective is to collect the contractual cash flows, the financial assets are measured at amortized cost and are assessed for impairment continuously with impairment loss recognized in profit or loss, if any. Interest revenue is recognized in profit or loss by using the effective interest method;

  • b) For debt instruments, if they are held within a business model whose objective is achieved by both the collecting of contractual cash flows and the selling of financial assets, the financial assets are measured at fair value through other comprehensive income (FVTOCI) and are assessed for impairment. Interest revenue is recognized in profit or loss by using the effective interest method, and other gain or loss shall be recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses. When the debt instruments are derecognized or reclassified, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss.

  • 166 -

Except for above, all other financial assets are measured at fair value through profit or loss. However, the Bank may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in profit or loss. No subsequent impairment assessment is required, and the cumulative gain or loss previously recognized in other comprehensive income cannot be reclassified from equity to profit or loss.

The impairment of financial assets

IFRS 9 requires that impairment loss on financial assets is recognized by using the “Expected Credit Losses Model”. The credit loss allowance is required for financial assets measured at amortized cost, financial assets mandatorily measured at FVTOCI, lease receivables, contract assets arising from IFRS 15 “Revenue from Contracts with Customers”, certain written loan commitments and financial guarantee contracts. A loss allowance for the 12-month expected credit losses is required for a financial asset if its credit risk has not increased significantly since initial recognition. A loss allowance for full lifetime expected credit losses is required for a financial asset if its credit risk has increased significantly since initial recognition and is not low. However, a loss allowance for full lifetime expected credit losses is required for trade receivables that do not constitute a financing transaction.

For purchased or originated credit-impaired financial assets, the Bank takes into account the expected credit losses on initial recognition in calculating the credit-adjusted effective interest rate. Subsequently, any changes in expected losses are recognized as a loss allowance with a corresponding gain or loss recognized in profit or loss.

Hedge accounting

The main changes in hedge accounting amended the application requirements for hedge accounting to better reflect the entity’s risk management activities. Compared with IAS 39, the main changes include: (1) enhancing types of transactions eligible for hedge accounting, specifically broadening the risk eligible for hedge accounting of non-financial items; (2) changing the way hedging derivative instruments are accounted for to reduce profit or loss volatility; and (3) replacing retrospective effectiveness assessment with the principle of economic relationship between the hedging instrument and the hedged item.

2) Amendment to IAS 19: Amendment in 2013

The amended IAS 19 states that if contributions from employees or third parties are not linked to service, these contributions affect the remeasurement of the net defined benefit liability (asset). If the contributions are linked solely to service, the employees’ service rendered in that period in which they are paid, these contributions may be recognized as a reduction of service cost in the same period. If the contributions depend on the number of years of service, an entity is required to attribute these contributions to service periods as a reduction of service cost.

  • 3) Amendment to IAS 36 “Recoverable Amount Disclosures for Non-financial Assets”

In issuing IFRS 13 “Fair Value Measurement”, the IASB made consequential amendment to the disclosure requirements in IAS 36 “Impairment of Assets”, introducing a requirement to disclose in every reporting period the recoverable amount of an asset or each cash-generating unit. The amendment clarifies that such disclosure of recoverable amounts is required only when an impairment loss has been recognized or reversed during the period. Furthermore, the Bank is required to disclose the discount rate used in measurements of the recoverable amount based on fair value less costs of disposal measured using a present value technique.

  • 167 -

  • 4) Annual Improvements to IFRSs: 2010-2012 Cycle

Several standards including IFRS 2 “Share-based Payment”, IFRS 3 “Business Combinations” and IFRS 8 “Operating Segments” were amended in this annual improvement.

The amended IFRS 2 changes the definitions of “vesting condition” and “market condition” and adds definitions for “performance condition” and “service condition”. The amendment clarifies that a performance target can be based on the operations (i.e. a non-market condition) of the Bank or another entity in the same group or the market price of the equity instruments of the Bank or another entity in the same group (i.e. a market condition); that a performance target can relate either to the performance of the Bank as a whole or to some part of it (e.g. a division); and that the period for achieving a performance condition must not extend beyond the end of the related service period. In addition, a share market index target is not a performance condition because it not only reflects the performance of the Bank, but also of other entities outside the Bank.

IFRS 3 was amended to clarify that contingent consideration should be measured at fair value, irrespective of whether the contingent consideration is a financial instrument within the scope of IFRS 9 or IAS 39. Changes in fair value should be recognized in profit or loss.

The amended IFRS 8 requires an entity to disclose the judgments made by management in applying the aggregation criteria to operating segments, including a description of the operating segments aggregated and the economic indicators assessed in determining whether the operating segments have “similar economic characteristics”. The amendment also clarifies that a reconciliation of the total of the reportable segments’ assets to the entity’s assets should only be provided if the segments’ assets are regularly provided to the chief operating decision-maker.

IFRS 13 was amended to clarify that the issuance of IFRS 13 did not remove the ability to measure short-term receivables and payables with no stated interest rate at their invoice amounts without discounting, if the effect of not discounting is immaterial.

IAS 24 was amended to clarify that a management entity providing key management personnel services to the Bank is a related party of the Bank. Consequently, the Bank is required to disclose as related party transactions the amounts incurred for the service paid or payable to the management entity for the provision of key management personnel services. However, disclosure of the components of such compensation is not required.

  • 5) Annual Improvements to IFRSs: 2011-2013 Cycle

Several standards, including IFRS 3, IFRS 13 and IAS 40 “Investment Property”, were amended in this annual improvement.

IFRS 3 was amended to clarify that IFRS 3 does not apply to the accounting for the formation of all types of joint arrangements in the financial statements of the joint arrangement itself.

The scope in IFRS 13 of the portfolio exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis was amended to clarify that it includes all contracts that are within the scope of, and accounted for in accordance with, IAS 39 or IFRS 9, even if those contracts do not meet the definitions of financial assets or financial liabilities within IAS 32.

IAS 40 was amended to clarify that IAS 40 and IFRS 3 are not mutually exclusive and application of both standards may be required to determine whether the investment property acquired is acquisition of an asset or a business combination.

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  • 6) Amendments to IAS 16 and IAS 38 “Clarification of Acceptable Methods of Depreciation and Amortization”

The entity should use appropriate depreciation and amortization method to reflect the pattern in which the future economic benefits of the property, plant and equipment and intangible asset are expected to be consumed by the entity.

The amended IAS 16 “Property, Plant and Equipment” requires that a depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is not appropriate. The amended standard does not provide any exception from this requirement.

The amended IAS 38 “Intangible Assets” requires that there is a rebuttable presumption that an amortization method that is based on revenue that is generated by an activity that includes the use of an intangible asset is not appropriate. This presumption can be overcome only in the following limited circumstances:

  • a) In which the intangible asset is expressed as a measure of revenue (for example, the contract that specifies the entity’s use of the intangible asset will expire upon achievement of a revenue threshold); or

  • b) When it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated.

An entity should apply the aforementioned amendments prospectively for annual periods beginning on or after the effective date.

  • 7) IFRS 15 “Revenue from Contracts with Customers”

IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers, and will supersedes IAS 18 “Revenue”, IAS 11 “Construction Contracts” and a number of revenue-related interpretations from January 1, 2017.

When applying IFRS 15, an entity shall recognize revenue by applying the following steps:

  • Identify the contract with the customer;

  • Identify the performance obligations in the contract;

  • Determine the transaction price;

  • Allocate the transaction price to the performance obligations in the contracts; and

  • Recognize revenue when the entity satisfies a performance obligation.

When IFRS 15 is effective, an entity may elect to apply this Standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this Standard recognized at the date of initial application.

  • 8) Annual Improvements to IFRSs: 2012-2014 Cycle

Several standards including IFRS 5 “Non-current assets held for sale and discontinued operations”, IFRS 7, IAS 19 and IAS 34 were amended in this annual improvement.

IFRS 5 was amended to clarify that reclassification between non-current assets (or disposal group) “held for sale” and non-current assets “held for distribution to owners” does not constitute a change to a plan of sale or distribution. Therefore, previous accounting treatment is not reversed. The amendment also explains that assets that no longer meet the criteria for “held for distribution to owners” and do not meet the criteria for “held for sale” should be treated in the same way as assets that cease to be classified as held for sale.

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The amendments to IFRS 7 provide additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset. In addition, the amendments clarify that the offsetting disclosures are not explicitly required for all interim periods; however, the disclosures may need to be included in condensed interim financial statements to comply with IAS 34 under specific conditions.

  • 9) Amendment to IAS 1 “Disclosure Initiative”

The amendment clarifies that the consolidated financial statements should be prepared for the purpose of disclosing material information. To improve the understandability of its consolidated financial statements, the Bank should disaggregate the disclosure of material items into their different natures or functions, and disaggregate material information from immaterial information.

The amendment further clarifies that the Bank should consider the understandability and comparability of its consolidated financial statements to determine a systematic order in presenting its footnotes.

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

The financial statements have been prepared in accordance with the Criteria Governing the Preparation of Financial Reports by Public Banks and IFRSs as endorsed by the FSC.

Basis of Preparation

The financial statements have been prepared on the historical cost basis except for financial instruments that are measured at revalued amounts or fair values. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

When preparing its financial statements, the Bank used the equity method to account for its investment in subsidiaries, associates and jointly controlled entities. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the parent company only financial statements to be the same with the amounts attributable to the owner of the Bank in its consolidated financial statements, adjustments arising from the differences in accounting treatment between parent company only basis and consolidated basis were made to investments accounted for using equity method, share of profit or loss of subsidiaries, associates and joint ventures, share of other comprehensive income of subsidiaries, associates and joint ventures and related equity items, as appropriate, in the financial statements.

Foreign Currencies

In preparing the financial statements of each group entity, transactions in currencies other than the Bank’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

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

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Nonmonetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising on the retranslation of nonmonetary items are included in profit or loss for the period. If a gain or loss on a nonmonetary item is recognized in other comprehensive income, any foreign exchange component of that gain or loss is also recognized in other comprehensive income.

Nonmonetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

For the purposes of presenting financial statements, the assets and liabilities of the Bank’s foreign operations (including those of the subsidiaries, associates and joint ventures operations in other countries or currencies used that are different from that of the Bank) are translated into New Taiwan dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising are recognized in other comprehensive income (attributed to the owners of the Bank and noncontrolling interests as appropriate).

Investments Accounted for Using the Equity Method

  • a. Investments in subsidiaries

Subsidiaries are the entities controlled by the Bank.

Under the equity method, the investment is initially recognized at cost and the carrying amount is increased or decreased to recognize the Bank's share of the profit or loss and other comprehensive income of the subsidiary after the date of acquisition. The Bank also recognizes its share of the change in other equity of the subsidiary.

Changes in the Bank’s ownership interests in subsidiaries that do not result in the Bank’s loss of control over the subsidiaries are accounted for as equity transactions. Any difference between the carrying amounts of the investment and the fair value of the consideration paid or received is recognized directly in equity.

When the Bank’s share of losses of a subsidiary equals or exceeds its interest in that subsidiary (which includes any carrying amount of the investment in subsidiary accounted for by the equity method and long-term interests that, in substance, form part of the Bank’s net investment in the subsidiary), the Bank continues recognizing its share of further losses.

The acquisition cost in excess of the acquisition-date fair value of the identifiable net assets acquired is recognized as goodwill. Goodwill is not amortized. The acquisition-date fair value of the net identifiable assets acquired in excess of the acquisition cost is recognized immediately in profit or loss.

When testing for impairment, the cash-generating unit is determined based on the financial statements as a whole by comparing its recoverable amount with its carrying amount. If the recoverable amount of the asset subsequently increases, the reversal of the impairment loss is recognized as a gain, but the increased carrying amount of an asset after a reversal of an impairment loss shall not exceed the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized on the asset in prior years. An impairment loss recognized for goodwill shall not be reversed in a subsequent period.

When the Bank ceases to have control over a subsidiary, any retained investment is measured at fair value at that date and the difference between the previous carrying amount of the subsidiary attributable to the retained interest and its fair value is included in the determination of the gain or loss. Furthermore, the Bank accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required had the Bank directly disposed of the related assets or liabilities.

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Profits and losses from upstream transactions with a subsidiary and sidestream transactions between subsidiaries are recognized in the Bank’s financial statements only to the extent of interests in the subsidiary that are not related to the Bank.

b. Investment in Associates

An associate is an entity over which the Bank has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the operating and financial policy decision of an entity; it is not control over those policies.

The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting. Under the equity method, an investment in an associate is initially recognized at cost and adjusted thereafter to recognize the Bank’s share of the associate’s profit or loss and other comprehensive income of the associate. The Bank also recognizes its share of changes in the equity interests in an associate.

When the Bank subscribes for additional new shares of the associate at a percentage different from its current ownership percentage, the resulting carrying amount of the investment differs from the amount of the Bank’s proportionate interest in the associate. The Bank records this difference as an adjustment to investments, with the corresponding amount charged or credited to capital surplus. If the Bank’s ownership interest is reduced due to the additional subscription for the new shares of an associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate is reclassified to profit or loss on the same basis as would be required if the investee directly disposes of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for by the equity method is insufficient, the shortage is debited to retained earnings.

When the Bank’s share of losses of an associate equals or exceeds its interest in that associate (which includes any carrying amount of the investment accounted for by the equity method and long-term interests that, in substance, form part of the Bank’s net investment in the associate), the Bank discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Bank has incurred legal or constructive obligations, or made payments, on behalf of that associate.

Any acquisition cost in excess of the Bank’s share of the net fair value of the identifiable assets and liabilities of an associate recognized at the acquisition date is recognized as goodwill, which is included in the carrying amount of the investment and is not amortized. Any Bank’s share of the net fair value of the identifiable assets and liabilities in excess of the acquisition cost is recognized immediately in profit or loss.

The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

The Bank discontinues the use of the equity method from the date on which it ceases to have significant influence. Any retained investment is measured at fair value at that date and the fair value is regarded as its fair value on initial recognition as a financial asset. The difference between (a) the sum of the proceeds received and any retained interest and (b) the carrying amount of the investment in the associate at the date significant influence is lost is recognized in profit or loss. The Bank accounts for all amounts previously recognized in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities.

When the Bank transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the Bank’ financial statements only to the extent of the interests in the associate that are not related to the Bank.

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Financial Instruments

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

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

Financial assets

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

  • a. Measurement category

Financial assets are classified into the following categories: Financial assets at fair value through profit or loss, held-to-maturity investments, available-for-sale financial assets, and loans and receivables.

  • 1) Financial assets at fair value through profit or loss

A financial asset may be designated as at fair value through profit or loss upon initial recognition if:

  • a) Such designation eliminates or significantly reduces a measurement or recognition inconsistency; or

  • b) The financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Bank’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis to key management; or

  • c) The contract contains one or more embedded derivatives so that, the entire hybrid (combined) contract can be designated as at fair value through profit or loss.

Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividend or interest earned on the financial asset. Fair value is determined in the manner described in Note 44.

Investments in equity instruments under financial assets at fair value through profit or loss that do not have a quoted market price in an active market and that have fair value that cannot be reliably measured and derivatives that are linked to and must be settled by the delivery of these unquoted equity instruments are subsequently measured at cost less any identified impairment loss at the end of each reporting period and are recognized in a separate line item as financial assets carried at cost. If, in a subsequent period, the fair value of the financial assets can be reliably measured, the financial assets are remeasured at fair value. The difference between the carrying amount and the fair value is recognized in profit or loss.

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2) Held-to-maturity investments

Held-to-maturity investments are nonderivative financial assets with fixed or determinable payments and fixed maturity dates on which the Bank has the positive intent and ability to hold to maturity. In addition, they are not designated as at fair value through profit or loss, are not classified as available for sale, and do not meet the definition of loans and receivables. Foreign corporate bonds and debenture bonds that are above certain credit ratings and on which the Bank has a positive intent and ability to hold to maturity are classified as held-to-maturity investments.

After initial recognition, held-to-maturity investments are measured at amortized cost using the effective interest method less any impairment.

3) Available-for-sale financial assets

Available-for-sale financial assets are nonderivatives that are either designated as available-for-sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss.

The Bank holds government bonds, corporate bonds, listed stocks, mutual funds, negotiable certificates of deposit and commercial paper in an active market that are classified as trading and available-for-sale financial assets and are stated at fair value at each balance sheet date. Fair value is determined in the manner described in Note 44.

Available-for-sale financial assets are measured at fair value. Changes in the carrying amount of available-for-sale monetary financial assets relating to changes in foreign currency exchange rates, interest income calculated using the effective interest method and dividends on available-for-sale equity investments are recognized in profit or loss. Other changes in the carrying amount of available-for-sale financial assets are recognized in other comprehensive income and will be reclassified to profit or loss when the investment is disposed of or is determined to be impaired.

Dividends on available-for-sale equity instruments are recognized in profit or loss when the Bank’s right to receive the dividends is established.

Available-for-sale equity investments with no quoted prices in an active market and with fair values that cannot be reliably measured and derivatives that are linked to and must be settled by the delivery of these unquoted equity investments are measured at cost less any identified impairment loss at the end of each reporting period and are recognized in a separate line item as financial assets carried at cost. If, in a subsequent period, the fair value of the financial assets can be reliably measured, the financial assets are remeasured at fair value. The difference between carrying amount and fair value is recognized in other comprehensive income on financial assets. Any impairment losses are recognized in profit and loss.

4) Loans and receivables

Loans and receivables (including trade loans, receivables, cash and cash equivalent, debt investments with no active market, and nonperforming loans) are subsequently measured at amortized cost using the effective interest method less any impairment, except when short-term receivables have immaterial effect of discounting.

  • b. Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial assets, the estimated future cash flows of the investments have been affected.

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Certain categories of financial assets, such as loans, receivables, nonperforming loans and debt investments with no active market, are assessed for impairment collectively even if they are assessed as not impaired individually. Objective evidence of impairment of a portfolio of discounts and loans, receivables and nonperforming loans could include the significant financial difficulty of the debtor, economic or legal reasons relating to the debtor’s financial difficulties, a counterparty’s compromise on or breach of a contract, and an asset becoming more than three months overdue.

For financial assets carried at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets measured at amortized cost, if an impairment loss decreases and the decrease can be related objectively to an event occurring after the recognition of the impairment, the recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date of impairment reversal does not exceed what the amortized cost would have been had the impairment not been recognized.

For available-for-sale equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered an objective evidence of impairment.

For all other financial assets, objective evidence of impairment could include significant financial difficulty of the issuer or counterparty, breach of contract, such as a default or delinquency in interest or principal payments, it becoming probable that the borrower will enter bankruptcy or financial re-organization, or the disappearance of an active market for that financial asset because of financial difficulties.

When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income are reclassified to profit or loss in the period.

In respect of available-for-sale equity securities, impairment loss previously recognized in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income. In respect of available-for-sale debt securities, the impairment loss is subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

For financial assets that are carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables and other receivables (please specify) where the carrying amount is reduced through the use of an allowance account. When a trade receivable and other receivables are considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss except for uncollectible trade receivables and other receivables (please specify) that are written off against the allowance account.

  • c. Derecognition of financial assets

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

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On the full derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss.

Equity instruments

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

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Bank entity are recognized at the proceeds received, net of direct issue costs.

Repurchase of the Bank’s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Bank’s own equity instruments.

Financial liabilities

  • a. Subsequent measurement

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

  • 1) Financial liabilities at fair value through profit or loss

Financial liabilities are classified as at fair value through profit or loss when the financial liability is either held for trading or it is designated as at fair value through profit or loss.

A financial liability other than a financial liability held for trading may be designated as at fair value through profit or loss upon initial recognition when doing so results in more relevant information and if:

  • a) Such designation eliminates or significantly reduces a measurement or recognition inconsistency; or

  • b) The financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Bank’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis to key management personnel; or

  • c) A contract contains one or more embedded derivatives such that the entire hybrid (combined) contract can be designated as at fair value through profit or loss.

Financial liabilities at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any interest paid on the financial liability and is included in the other gains and losses line item. Fair value is determined in the manner described in Note 44.

  • 2) Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.

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Financial guarantee contracts issued by the Bank are initially measured at fair value and, if not designated as at fair value through profit or loss, are subsequently measured at the higher of the following and in compliance with the Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans:

  • a) The amount of the obligation under the contract, as determined in accordance with FSC-recognized IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”; and

  • b) The amount initially recognized less, where appropriate, cumulative amortization recognized in accordance with the FSC-recognized IAS 18 “Revenue.”

  • b. Derecognition of financial liabilities

The Bank derecognizes financial liabilities when, and only when, the Bank’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

Derivative financial instruments

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

Derivatives embedded in non-derivative host contracts are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics are not closely related to those of the host contracts and the contracts are not measured at fair value through profit or loss.

Nonperforming Loans

Under the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/Nonaccrual Loans” issued by the authorities, loans and other credits (including the accrued interests) that remain unpaid on their maturity are transferred immediately to nonperforming loans if the transfer is approved by the board of directors.

Nonperforming loans transferred from loans are recognized as discounts and loans, and those transferred from other credits are recognized as other financial assets.

Allowance for Doubtful Accounts and Reserve for Losses on Guarantees

In determining the allowance for credit losses and the reserve for losses on guarantees, the Bank assesses the balances of discounts and loans, receivables, nonperforming loans, and other financial assets as well as guarantees and acceptances for their collectibility and their specific risks or general risks as of the balance sheet date.

Under the regulations issued by the Ministry of Finance (MOF), the Bank evaluates credit balances on the basis of their estimated collectibility.

The MOF regulations also require the grouping of loans into these five classes: Normal, special mention, substandard, with doubtful collectibility and uncollectible; the minimum allowances for doubtful accounts and for losses on guarantees for these loans should be 1%, 2%, 10%, 50% and 100%, respectively, of outstanding credits.

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Later, the MOF issued a guideline stating that, within three years from January 1, 2011, the normal loans should have a minimum allowance of 1%, with the allowances for the four non-normal loans remaining the same. The Bank believes it can meet this new allowance requirement within three years from January 1, 2011.

Rule No. 10300329440 issued by FSC, stipulated the minimum the allowance for mortgage and improvement loans should be 1.5% by the end of 2016.

Credits deemed uncollectible may be written off if the write-off is approved by the board of directors. Recoveries of amounts previously written off are credited to the allowance account.

Repurchase and Resell Transactions

Securities purchased under agreement to resell and securities sold under agreements to repurchase are generally treated as collateralized financing transactions. Interest earned on reverse repurchase agreements or interest incurred on repurchase agreements is recognized as interest income or interest expense over the life of each agreement.

Property and Equipment

Property and equipment are stated at cost, less subsequent accumulated depreciation and subsequent accumulated impairment loss. This cost should be recognized as an asset only if it is probable that future economic benefits associated with the property and equipment item will flow to the Bank and if the cost of the item can be measured reliably.

Freehold land is not depreciated.

Depreciation is recognized as a systematic allocation of the cost of assets less their residual values over their estimated useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for prospectively.

Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

Goodwill

Goodwill (part of intangible assets) from business combination is recorded at acquisition cost and subsequently measured at cost less accumulated impairment.

For impairment test purposes, goodwill is allocated to each cash-generating unit (CGU) that is expected to benefit from the synergy of a business combination.

In testing assets for impairment, the Bank compares the carrying amounts of CGUS with allocated goodwill with their recoverable amounts on a yearly basis (or when impairment indicators exist). Goodwill arising in a business combination should be tested for impairment during the year in which goodwill is acquired. When the recoverable amount of a CGU is below the carrying amount, an impairment loss should be recognized to reduce first the carrying amount of goodwill of the CGU and then the carrying amounts of other assets of the CGU proportionately. Any impairment loss should be directly recognized as loss in the current period, and subsequent reversal of impairment loss is not allowed.

On CGU disposal, the amount attributable to goodwill is included in the CGU carrying amount to determine the gain or loss on disposal.

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Intangible Assets

Separate acquisition

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis. At year-end, the Bank examines its estimates of the asset useful lives, residual values and amortization method with the effect of any changes in estimate accounted for on a prospective basis. Unless the Bank expects to dispose of an intangible asset before the end of its useful life, the residual value of an intangible asset with limited useful life is estimated to be zero.

Derecognition

Gains or losses recognized on derecognition of an intangible asset are the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss in the period in which the asset is derecognized.

Foreclosed Collaterals

Collaterals assumed (included in other assets) are recorded at cost, which includes the assumed prices and any necessary repairs to make the collaterals saleable, and evaluated at the lower of cost or net realizable value as of the balance sheet date.

Impairment of Tangible and Intangible Assets (Excluded Goodwill)

At the end of each reporting period, the Bank reviews the carrying amounts of its tangible and intangible assets, excluding goodwill, for any indication of impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Bank estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a CGU is identified as having a carrying amount that includes assets that can be allocated on a reasonable and consistent basis to the CGU, corporate assets are also allocated to this CGU; otherwise, a portion of the carrying amounts of the corporate assets is allocated to the smallest group of cash-generating units to which a reasonable and consistent allocation of carrying amounts of the corporate assets can be made.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount.

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

Leasing

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

  • 179 -

  • a. Bank as lessor

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern of the lessee’s benefit from the use of the leased asset. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and amortized on a straight-line basis over the lease term. Contingent rents arising under operating leases are recognized as income in the period in which they are incurred.

Lease incentives offered in the operating lease are recognized as an asset. The aggregate cost of incentives is recognized as a reduction of rental income on a straight-line basis over the lease term.

  • b. Bank as lessee

Lease payments under an operating lease are expensed on a straight-line basis over the lease period. Under operating lease, contingent rentals are recognized as expenses at current period.

Lease incentives received under operating leases are recognized as a liability. The aggregate benefit of incentives is recognized as a reduction of rental expense on a straight-line basis.

Provisions

Provisions, including those arising from contractual obligation specified in service concession arrangement to maintain or restore infrastructure before it is handed over to the grantor, are measured at the best estimate of the discounted cash flows of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Retirement Benefit Costs

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

For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each reporting period. Actuarial gains and losses on the defined benefit obligation are recognized immediately in other comprehensive income. Past service cost is recognized immediately to the extent that the benefits are already vested, and otherwise is amortized on a straight-line basis over the average period until the benefits become vested.

The retirement benefit obligation recognized in the balance sheets represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to the unrecognized past service cost, plus the present value of available refunds and reductions of future contributions to the plan.

Curtailment or settlement gains or losses on the defined benefit plan are recognized when the curtailment or settlement occurs.

Income Tax

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

  • 180 -

a. Current tax

According to the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided for as income tax in the year the stockholders approve to retain the earnings.

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

b. Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary difference and unused loss carryforwards to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

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

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

Deferred tax assets and liabilities are measured at the amounts expected to be paid to (recovered from) taxation authorities, using the rates or laws that have been enacted or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets should reflect the tax consequences of how the Bank expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

c. Current and deferred tax for the period

For transactions recognized in profit or loss, current and deferred taxes are also recognized in profit or loss; for transactions recognized outside profit or loss, i.e., in other comprehensive income or directly in equity, the current and deferred taxes are also recognized in other comprehensive income or directly in equity. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

Interest Revenue and Service Fees

Interest revenue on loans is recorded by the accrual method. No interest revenue is recognized in the accompanying financial statements on loans and other credits extended by the Bank that are classified as nonperforming loans. The interest revenue on these loans/credits is recognized upon collection. Under a Ministry of Finance regulation, the interest revenue on credits covered by agreements that extend their repayment periods is recorded as deferred revenue and recognized as revenue upon collection

  • 181 -

Revenue from brokerage is recognized when the earnings process has been completed.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Bank’s accounting policies, 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 to be relevant. Actual results may differ from these estimates.

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

  • a. Held-to-maturity financial assets

Management has reviewed the Bank’s held-to-maturity financial assets in light of its capital maintenance and liquidity requirements and has confirmed the Bank’s positive intention and ability to hold these assets to maturity.

  • b. Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units (CGUs) to which goodwill has been allocated. The calculation of the value in use requires management to estimate a CGU’s future cash flows and a suitable discount rate in order to calculate the CGU’s net present value. When the actual future cash flows are less than expected, a material impairment loss may arise.

  • c. Estimated impairment of loans and receivables

When there is objective evidence of impairment loss, the Bank takes into consideration the estimation of future cash flows. Impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. If the actual future cash flows are less than expected, a material impairment loss may arise.

d. Fair value of financial instruments

As described in Note 44, Bank management uses its judgment in selecting an appropriate valuation technique for financial instruments with no quoted market prices in an active market. Valuation techniques commonly used by market practitioners are applied. For derivative financial instruments, assumptions are based on quoted market rates adjusted for specific features of the instruments. Other financial instruments are valued using a discounted cash flow analysis, which includes assumptions based on quoted market prices or rates (if available). The measurement of the fair values of unlisted equity investments includes assumptions not based on observable market prices or rates. Note 44 provides information on the key assumptions used in the determination of the fair values of financial instruments. Bank management believes that the chosen valuation techniques and assumption used are appropriate to the determination of the fair value of financial instruments.

  • 182 -

e. Employee benefits

For defined benefit retirement plans, the cost of providing benefits is determined using the project unit credit method, with actuarial valuations being carried out at the end of each reporting period. The use of estimations of the discount rate, staff turnover and long-term average rate of salary in actuarial valuations as well as changes in market and economic conditions may result in these estimations differing from the actual costs and amounts of obligations.

6. CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS
Cash on hand
Checks for clearing
Due from banks		 December 31


2014
$ 5,238,017

2,885,352
1,353,287

$ 9,476,656
 2013
$ 5,078,569
1,661,151
954,240
$ 7,693,960

7. DUE FROM THE CENTRAL BANK AND OTHER BANKS

DUE FROM THE CENTRAL BANK AND OTHER BANKS
Deposit reserve - checking account
Required deposit reserve
Deposit reserve - foreign-currency deposits
Deposit account in Central Bank		 December 31


2014
$ 6,913,974

10,198,902
47,577

50,100,000

$ 67,260,453
 2013
$ 7,083,159
9,645,968
44,925

54,100,000
$ 70,874,052

Under a directive issued by the Central Bank of the ROC, the Bank determines monthly the New Taiwan dollar (NTD)-denominated deposit reserves at prescribed rates based on the average balances of customers’ NTD-denominated deposits, which are subject to withdrawal restrictions.

In addition, the foreign-currency deposit reserves are determined at rates prescribed for balances of foreign-currency deposits. These reserves may be withdrawn anytime and are noninterest earning.

8. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets held for trading
Commercial paper
Government bonds
Quoted stocks		 December 31 December 31


2014
$ 15,797,263

154,538

131,750


16,083,551
 2013
$ 7,566,717
205,635

157,846

7,930,198
(Continued)
  • 183 -
Derivative instrument
Forward exchange contracts
Currency swap contracts
Option contracts
Financial assets designated as at fair value through profit or loss
Corporate bonds
Principal guaranteed notes
Financial liabilities held for trading
Derivative instrument
Forward exchange contracts
Option contracts
Currency swap contracts		 December 31 December 31









2014
$ 345,786

16,573

104,410


466,769


16,550,320

1,362,869

459,947


1,822,816

$ 18,373,136

$ 102,298

104,511

4,275

$ 211,084
 2013
$ 58,969
13,896

5,848

78,713

8,008,911
1,854,346

-

1,854,346
$ 9,863,257
$ 9,113
5,848

1,045
$ 16,006
(Concluded)

The Bank engaged in derivative transactions mainly to accommodate customers’ needs and manage its exposure positions. The financial risk management objective of the Bank was to minimize risks due to changes in fair value or cash flows.

The contract amounts (notional amounts) of the derivative transactions for accommodating customers’ needs and managing its exposure positions as of December 31, 2014 and 2013 were as follows:

Currency swap contracts
Forward exchange contracts
Option contracts
Buy
Sell		 December 31
2014
2013
$ 17,473,017
$ 11,816,654
13,973,014
3,439,655
5,199,453
1,789,879
5,199,453
1,789,879

As of December 31, 2014 and 2013, financial instruments at fair value through profit and loss in the amount of $10,329,832 thousand and $6,206,915 thousand were under agreement to repurchase agreements.

  • 184 -

9. SECURITIES PURCHASED UNDER RESELL AGREEMENTS

SECURITIES PURCHASED UNDER RESELL AGREEMENTS
Commercial paper
Government bonds
Corporate bonds
Date of the resell agreement
Amount of the resell		 December 31
2014
2013
$ 13,402,990
$ 10,811,209
330,016
3,200,000

12,617,575

6,219,310
$ 26,350,581
$ 20,230,519
2015.01-2015.02
2014.01-2014.02
$ 26,351,543
$ 20,239,311

The securities purchased under resell agreements had not been sold under repurchase agreements.

10. RECEIVABLES, NET

RECEIVABLES, NET
Notes and accounts receivable
Interbank clearing fund receivable
Interest receivable
Investment receivable
Acceptances receivable
Settlement price
Collections receivable
Asset-backed commercial paper
Others
Less: Allowance for doubtful accounts		 December 31



2014
$ 12,801,378

800,272
604,832
179,098
109,593
76,998
56,715
-

186,784

14,815,670

137,418

$ 14,678,252
 2013
$ 12,129,194
300,707
557,048
269,857
122,805
39,380
94,689
362,694

142,488
14,018,862

276,244
$ 13,742,618

Please refer to Note 45 for the impairment loss analysis of receivables.

The Bank has accrued an allowance for doubtful accounts on receivables. Please refer to Note 12 for the movements of allowance for doubtful accounts.

11. DISCOUNTS AND LOANS, NET

DISCOUNTS AND LOANS, NET
Discounts and overdraft
Accounts receivable - financing
Loans
Short-term
- unsecured
- secured
Medium-term - unsecured
- secured		 December 31
2014
2013
$ 731,098
$ 73,884
70,360
89,460
41,552,230
30,851,252
47,417,513
41,860,116
14,901,112
10,682,146
40,092,743
35,332,126
(Continued)
  • 185 -
Long-term
- unsecured
- secured
Import and export negotiations
Overdue loans
Less: Allowance for doubtful accounts		 December 31 December 31





2014
$ 4,296,467

110,906,045

93,307

138,360

260,199,235


2,567,114

$ 257,632,121
 2013
$ 5,025,448
108,049,889
106,955

595,752
232,667,028

2,524,436
$ 230,142,592
(Concluded)

As of December 31, 2014 and 2013, the balances of nonaccrual loans were $138,360 thousand and $595,752 thousand, respectively. The unrecognized interest revenues on nonperforming loans were $3,719 thousand in 2014 and $17,453 thousand in 2013.

In 2014 and 2013, the Bank wrote off certain credits after completing the required legal procedures.

Please refer to Note 45 for impairment loss analysis of discounts and loans. The Bank had set up an allowance for doubtful accounts on discounts and loans. Please refer to Note 12 for the movements in the allowance for doubtful accounts.

12. ALLOWANCE FOR DOUBTFUL ACCOUNTS

The movements in the allowance for doubtful accounts and reserve for losses on guarantees liabilities for the years ended December 31, 2014 and 2013 are summarized as follows:

Balance at January 1, 2014
Allowance (reversal of allowance)
for doubtful accounts
Write-offs
Recovery of written-off credits
Reclassification
Effects of exchange rate changes
Balance at December 31, 2014
Balance at January 1, 2013
Allowance (reversal of allowance)
for doubtful accounts
Write-offs		 Year Ended December 31, 2014


Receivables
Discounts and
Loans
Reserve for
Losses on
Guarantees
$ 276,244
$ 2,524,436
$ 85,000

(281,184)
(298,622)
85,000
(287,829)
(86,396)
-
385,187
466,996
-
45,000
(45,000)
-

-

5,700

-

$ 137,418
$ 2,567,114
$ 170,000

Year Ended December 31, 2013		 Total
$ 2,885,680
(494,806)
(374,225)
852,183
-

5,700
$ 2,874,532
Receivables
Discounts and
Loans
Reserve for
Losses on
Guarantees
$ 172,094
$ 2,225,915
$ 114,000

(130,351)
24,461
10,000
(196,152)
(313,480)
-		 Total
$ 2,512,009
(95,890)
(509,632)
(Continued)
  • 186 -
Recovery of written-off credits
Reclassification
Effects of exchange rate changes
Balance at December 31, 2013		 Year Ended December 31, 2013 Year Ended December 31, 2013


Receivables
Discounts and
Loans
$ 431,653
$ 546,951

(1,000)
40,000

-

589

$ 276,244
$ 2,524,436
 Reserve for
Losses on
Guarantees
$ -

(39,000)

-

$ 85,000
 Total
$ 978,604
-

589
$ 2,885,680
(Concluded)

13. AVAILABLE-FOR-SALE FINANCIAL ASSETS

AVAILABLE-FOR-SALE FINANCIAL ASSETS
Corporate bonds
Mutual funds
Overseas quoted stocks
Domestic quoted stocks
Government bonds
Negotiable certificates of deposit		 December 31


2014
$ 7,203,711

2,569,496
1,991,358
1,057,344
877,576

-

$ 13,699,485
 2013
$ 3,736,164
1,413,583
1,572,591
435,306
1,126,450
216,098
$ 8,500,192

The available-for-sale financial assets amounting to $2,835,067 thousand and $2,824,240 thousand as of December 31, 2014 and 2013, respectively, had been sold under repurchase agreements.

14. HELD-TO-MATURITY FINANCIAL ASSETS

HELD-TO-MATURITY FINANCIAL ASSETS
Government bonds
Asset-based securities
Negotiable certificates of deposit		 December 31


2014
$ 493,990

27,276

-

$ 521,266
 2013
$ 289,779
39,556

98,682
$ 428,017

The held-to-maturity investments had not been sold under repurchase agreements.

15. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD, NET

Investments in subsidiaries
Investments in associates		 December 31 December 31


2014
$ 2,562,135

54,183

$ 2,616,318
 2013
$ 2,513,412
54,294
$ 2,567,706
  • 187 -

a. Investments in subsidiaries

Union Finance and Leasing International Corporation (UFLIC)
Union Securities Investment Trust Corporation (USITC)
Union Finance International (H.K.) Limited
Union Insurance Broker Company (UIB)
Union Information Technology Corporation (UIT)		 December 31 December 31


2014
$ 2,294,342

144,819
81,269
25,237
16,468

$ 2,562,135
 2013
$ 2,255,382
138,406
79,679
27,037
12,908
$ 2,513,412

At the end of the reporting period, the proportion of ownership and voting rights in subsidiaries held by the Bank were as follows:

Union Finance and Leasing International Corporation (UFLIC)
Union Securities Investment Trust Corporation (USITC)
Union Finance International (H.K.) Limited
Union Insurance Broker Company (UIB)
Union Information Technology Corporation (UIT)		 December 31
2014
2013
100.00%
100.00%
35.00%
35.00%
99.99%
99.99%
100.00%
100.00%
99.99%
99.99%

The Bank’s share of profit and other comprehensive income of subsidiaries for the years ended December 31, 2014 and 2013 was based on the subsidiaries’ audited financial statements for the same reporting periods as those of the Bank.

b. Investment in as associates

Union Real-Estate Management Corporation
I Pass Corporation		 December 31


2014
$ 54,183


-

$ 54,183
 2013
$ 54,294

-
$ 54,294

Before the end of 2013, the Bank prepaid an investment of $130,000 thousand in I Pass Corporation (part of other financial assets, net). The investee was established on January 29, 2014. The Bank ceased to have significant influence on the investee when it did not subscribe for the new ordinary shares issued by the investee for cash. The Bank’s percentage of ownership thus decreased from 24.62% to 17.52%, and the Bank’s remaining interest in the investee was recognized under financial assets carried at cost.

At the end of the reporting period, the proportion of ownership and voting rights in associates held by the Bank were as follows:

Union Finance and Leasing International Corporation (UFLIC) December 31
2014
2013
40%
40%
  • 188 -

The summarized financial information in respect of the Bank’s associates was set out below:

Total assets
Total liabilities
Revenue
Loss for the year		 December 31 December 31

2014
2013
$ 237,775
$ 237,875
$ 102,319
$ 102,140
**Year Ended December 31 **
2014
$ -
$ (278
)		 2013
$ -
$ (491
)

The Bank’s share of the associate’s profit and other comprehensive income for 2014 and 2013 was based on the associate’s audited financial statements for the same reporting periods as those of the Bank.

16. OTHER FINANCIAL ASSETS, NET

OTHER FINANCIAL ASSETS, NET
Debt instruments with no active markets
Pledged assets (Note 41)
Due from banks - certificate of deposit
Financial assets carried at cost, net
Prepayments for shares		 December 31


2014
$ 45,121,992

8,357,344
2,644,570
515,451

-

$ 56,639,357
 2013
$ 48,516,710
8,769,791
-
413,715

130,000
$ 57,830,216
  • a. Debt instruments with no active markets

As of December 31, 2014 and 2013, debt instruments with no active markets and amounting to $27,263,845 thousand and $24,189,473 thousand, respectively, were under repurchase agreements.

  • b. Financial assets carried at cost, net
Unquoted stocks
Financial Information Service Company
I Pass Corporation (Note 15)
Taiwan Asset Management Corporation
Taiwan Future Exchange Corporation
Taiwan Financial Asset Service Corporation
Other		 December 31 December 31


2014
$ 118,782

123,320
75,000
71,250
50,000

77,099

$ 515,451
 2013
$ 118,782
-
75,000
71,250
50,000

98,683
$ 413,715

Financial assets carried at cost were unlisted common stocks with no quoted market prices in an active market and with fair values that could not be reliably measured. Thus, these assets were measured at cost less accumulated impairment.

  • 189 -

c. Due from banks - certificate of deposit

The amount of due from banks - certificate of deposit can not be cancelled or used.

17. PROPERTY AND EQUIPMENT, NET

Cost
Balance at January 1, 2013

Additions
Disposals
Reclassification

Balance at December 31,
2013

Accumulated depreciation
Balance at January 1, 2013
Depreciation
Disposals

Balance at December 31,
2013

Balance at January 1, 2013

Balance at December 31,
2013, net

Cost
Balance at January 1, 2014

Additions
Disposals
Reclassification

Balance at December 31,
2014

Accumulated depreciation
Balance at January 1, 2014
Depreciation
Disposals

Balance at December 31,
2014

Balance at December 31,
2014, net
 Land
$ 3,436,297

-
(14,590 )

-


3,421,707

-
-

-


-

$ 3,436,297

$ 3,421,707

Land
$ 3,421,707

-
-

-


3,421,707

-
-

-


-

$ 3,421,707
 Buildings
Machinery and
Computer
Equipment
Transportation
Equipment
$ 5,041,069
$ 1,337,753
$ 264,359

11,332
38,835
5,676
-
(46,134 )
(6,945 )

-

-

-


5,052,401

1,330,454

263,090

953,995
1,236,472
235,678
108,815
29,060
6,979

-

(45,405
)

(6,891
)


1,062,810

1,220,127

235,766

$ 4,087,074
$ 101,281
$ 28,681

$ 3,989,591
$ 110,327
$ 27,324

Buildings
Machinery and
Computer
Equipment
Transportation
Equipment
$ 5,052,401
$ 1,330,454
$ 263,090

20,960
47,377
9,969
-
(111,199 )
(4,786 )

174

1,830

1,619


5,073,535

1,268,462

269,892

1,062,810
1,220,127
235,766
111,194
25,393
5,994

-

(109,735
)

(4,616
)


1,174,004

1,135,785

237,144

$ 3,899,531
$ 132,677
$ 32,748
 Lease
Improvements

$ 371,165

35,941
-

-


407,106

311,496
23,530

-


335,026

$ 59,669

$ 72,080

Lease
Improvements

$ 407,106

60,194
(312 )

4,487


471,475

335,026
28,330

(37
)


363,319

$ 108,156
 Prepayments
for Equipment
$ -

16,136
-

(6,189
)


9,947

-
-

-


-

$ -

$ 9,947

Prepayments
for Equipment
$ 9,947

128,819
-

(11,379
)


127,387

-
-

-


-

$ 127,387
 Total
$ 10,450,643
107,920
(67,669 )

(6,189
)

10,484,705
2,737,641
168,384

(52,296
)

2,853,729
$ 7,713,002
$ 7,630,976
Total
$ 10,484,705
267,319
(116,297 )

(3,269
)

10,632,458
2,853,729
170,911

(114,388
)

2,910,252
$ 7,722,206

The above items of property and equipment were depreciated on a straight-line basis over the useful lives of the assets, estimated as follows:

The above items of property and equipment were depreciated on a
the assets, estimated as follows:		 straight-line basis over the useful lives of
Buildings
Main buildings 50-55 years
Equipment installed in buildings 5 years
Machinery and computer equipment 3-5 years
Transportation equipment 3-5 years
Lease improvements 5 years

18. GOODWILL

The Bank acquired Chung Shing Bank (“Chung Shing”) on March 19, 2005 and recognized goodwill amounting to $3,309,000 thousand. The goodwill amortization period was five years, and the amortization expense in 2005 was $551,500 thousand. However, the amortization of goodwill became no longer required from January 1, 2006.

  • 190 -

The Bank merged with Union Bills Finance Corporation on August 16, 2010, with the Bank as the survivor entity, and recognized goodwill amounting to $130,498 thousand.

For the impairment test on Chung Shing, the Bank treated individual business units as cash-generating units (CGUs). Goodwill resulting from the merger was allocated to the relevant CGUs. The recoverable amount was determined by the value in use of each CGU and was calculated at the present values of the cash flow forecast for the next five years based on the going-concern assumption. Future cash flows were estimated on the basis of Chung Shing’s present operations and will be adjusted depending on the business outlook and economic trends.

As of December 31, 2014 and 2013, the balances of accumulated impairment both were $902,691 thousand.

19. OTHER ASSETS, NET

OTHER ASSETS, NET
Refundable deposits
Prepaid expenses
Others		 December 31


2014
$ 1,817,016

127,934
17,782

$ 1,962,732
 2013
$ 1,741,409
152,047
31,642
$ 1,925,098

20. CALL LOANS AND DUE TO OTHER BANKS

Due to Chunghwa Post Co., Ltd.
Call loans from banks
Overdraft
Due to the Central Bank and other banks		 December 31 December 31


2014
$ 4,054,959

2,000,000
68,647
41,138

$ 6,164,744
 2013
$ 4,817,779
-
46,828
60,004
$ 4,924,611

21. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Asset-based securities
Commercial paper
Government bonds
Corporate bonds
Date of repurchase agreement
Amount of repurchase agreement		 December 31
2014
2013
$ 18,396,440
$ 15,274,500
10,186,820
6,006,325
1,129,932
1,456,239

2,078,084

1,845,593
$ 31,791,276
$ 24,582,657
2015.01-2015.03
2014.01-2014.06
$ 31,819,568
$ 24,604,370
  • 191 -

22. PAYABLES

PAYABLES
Notes and checks in clearing
Accrued expenses
Interest payable
Investments payable
Collections payable
Bank acceptances payable
Tax taxable
Provision for payment to the Bank’s check
Accounts payable on wire transfers received
Dishonored accounts payable
Others		 December 31


2014
$ 2,885,352

778,231
610,445
240,279
172,890
110,363
100,778
65,852
58,293
43,917
389,671

$ 5,456,071
 2013
$ 1,661,151
668,552
591,654
247,231
164,067
129,230
47,734
63,606
53,448
43,852
497,623
$ 4,168,148

23. DEPOSITS AND REMITTANCES

DEPOSITS AND REMITTANCES
Checking deposits
Demand deposits
Savings deposits
Time deposits
Negotiable certificates of deposit
Inward and outward remittances		 December 31



2014
$ 4,794,920

56,397,374
263,634,990

70,787,329
754,500

41,319

$ 396,410,432
 2013
$ 4,347,055
52,487,844
244,228,982
63,681,298
314,300

60,682
$ 365,120,161

24. BANK DEBENTURES

BANK DEBENTURES
First issue of subordinated bank debentures in 2009; fixed 2.95%;
maturity: June 2016
First issue of subordinated bank debentures in 2011; fixed 2.78%;
maturity: June 2018
First issue of subordinated bank debentures in 2012; fixed 2.32%;
maturity: March 2019
First issue of subordinated bank debentures in 2013; fixed 2.10%;
maturity: December 2020		 December 31


2014
$ 900,000

2,000,000
1,500,000
3,000,000

$ 7,400,000
 2013
$ 900,000
2,000,000
1,500,000
3,000,000
$ 7,400,000
  • 192 -

25. OTHER FINANCIAL LIABILITIES

OTHER FINANCIAL LIABILITIES
Principals of structured products
Funds obtained from the government - intended for specific types of
loans		 December 31


2014
$ 2,959


15,969

$ 18,928
 2013
$ 166,839

35,019
$ 201,858

26. PROVISIONS

PROVISIONS
Provisions for employee benefits
Reserve for losses on guarantees
Others		 December 31


2014
$ 747,935

170,000

24,850

$ 942,785
 2013
$ 667,628
85,000

-
$ 752,628

27. RETIREMENT BENEFITS PLANS

a. Defined contribution plans

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

The total expenses recognized in profit or loss for 2014 and 2013 of $101,999 thousand and $93,482 thousand, respectively, were contributions payable to these plans by the Bank at rates specified in the pension plan rules.

  • b. Defined benefit plans

The Bank adopted the defined benefit plan under the Labor Standards Law, 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 a certain percentage 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 or in the Bank’s Taipei branch in the committee’s name.

The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is under discretionary management by the Bureau of Labor Funds under the Ministry of Labor. In addition, based on the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, the return generated by the employees’ pension contributions should not be below the interest rate for a two-year time deposit with local banks.

  • 193 -

The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out on December 31, 2014 by actuaries. For 2014 and 2013, the Bank recognized employee benefit expenses of $31,079 thousand and $27,373 thousand, respectively, calculated using the actuarially determined pension cost rate as of December 31, 2014 and 2013, respectively.

The principal assumptions used in the purposes of the actuarial valuations were as follows:

Discount rate
Expected rate return on plan assets
Future salary increase rate		 Valuation at
December 31
2014
2013
1.75%
1.75%
1.50%
1.50%
3.00%
3.00%

The assessment of the overall expected rate of return was based on historical return trends and analysts’ predictions of the market for the asset over the life of the related obligation, taking into consideration how the plan assets are invested and the impact of the related minimum return.

Amounts recognized in profit or loss on respect of these defined benefit plans are as follows:

Current service cost
Interest cost
Expected return on plan assets
Past service cost		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31



2014
$ 18,711

23,101
(10,222)


(511
)

$ 31,079
 2013
$ 19,744
19,418
(11,278)

(511
)
$ 27,373

Actuarial gains and losses recognized in other comprehensive income were $72,868 thousand for 2014 and $12,504 thousand for 2013. The cumulative amount of actuarial gains and losses recognized in other comprehensive income as of December 31, 2014 and 2013 were $171,231 thousand and $98,363 thousand, respectively.

The balance sheets included the following amounts of the Bank’s obligations on its defined benefit plans:

Present value of the funded defined benefit obligation
Fair value of plan assets
Deficit
Past service cost not yet recognized
Net liability on the defined benefit obligation (included in
provisions for employee benefits)		 December 31 December 31



2014
$ 1,435,055

(691,360
)

743,695
2,811

$ 746,506
 2013
$ 1,325,371
(662,494
)
662,877
3,322
$ 666,199
  • 194 -

Movements in the present value of the defined benefit obligations were as follows:

Opening defined benefit obligation
Current service cost
Interest cost
Actuarial losses
Benefits paid
Closing defined benefit obligation
Movements in the fair value of the plan assets were as follows:		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2014
$ 1,325,371

18,711
23,101
75,257
(7,385
)

$ 1,435,055
 2013
$ 1,300,424
19,744
19,418
9,968
(24,183
)
$ 1,325,371
Opening fair value of plan assets
Expected return on plan assets
Actuarial gains
Contributions from the employer
Benefits paid
Closing fair value of plan assets		 **For the Year Ended ** **For the Year Ended ** December 31


2014
$ 662,494

10,222
2,389
23,640

(7,385
)

$ 691,360
 2013
$ 623,900
11,278
(2,536)
54,035

(24,183
)
$ 662,494

The major categories of plan assets at the end of the reporting period for each category were as follows:

Cash
Short-term bills
Bonds
Fix-income instruments
Equity securities
Others		 December 31
2014
19.12%
1.98%
11.92%
14.46%
49.69%

2.83%
100.00%		 2013
22.86%
4.10%
9.37%
18.11%
44.77%

0.79%
100.00%

The Bank chose to disclose the history of experience adjustments as the amounts determined for each accounting period prospectively from the date of transition to IFRSs:

Present value of defined benefit obligation
Fair value of plan assets
Deficit
Experience adjustments on plan liabilities
Experience adjustments on plan assets		 December 31 December 31




2014
$ 1,435,055

$ 691,360

$ 743,695

$ (75,257
)

$ 2,389
 2013
$ 1,325,371
$ 662,494
$ 662,877
$ (9,968
)
$ (2,536
)

The Bank expects to make a contribution of $35,528 thousand to the defined benefit plan during the annual period beginning after December 31, 2014.

  • 195 -

28. OTHER LIABILITIES

OTHER LIABILITIES
Advance receipts
Guarantee deposits received
Others		 December 31


2014
$ 272,494

97,783

48,034

$ 418,311
 2013
$ 185,498
91,481

37,846
$ 314,825

29. EQUITY

a. Capital stock

Common stock

Common stock
Number of shares authorized (in thousands)
Amount of shares authorized
Number of shares issued and fully paid (in thousands)
Amount of shares issued		 **December 31 **



2014

3,000,000

$ 30,000,000


2,450,930

$ 24,509,306
 2013

3,000,000
$ 30,000,000

2,216,525
$ 22,165,251

Fully paid common shares, which have a par value of NT$10, carry one vote per share and carry a right to dividends.

Preferred shares

In their meeting on June 15, 2007, the stockholders resolved to raise publicly or privately the Bank’s cash capital by $8,000,000 thousand through a one-time or a serial share issuance depending on the market situation. On September 26, 2007, the Bank privately issued 400,000 thousand preferred shares at NT$10.00 par value and 6% dividend rate.

Under the Bank’s Articles of Incorporation, after the Bank appropriates the legal and special reserves from its net income (less any deficit), the Bank should use part of the remainder as dividends to the preferred stockholders. In their meeting on June 13, 2008, the Bank’s stockholders passed a resolution to amend the Articles of Incorporation. Based on this amendment, the issuance of preferred dividends will no longer be whenever the Bank makes profits and instead will be made only under common stockholders’ resolutions approving this issuance. The preferred stockholders can participate in the distribution of the remaining earnings at the ratio of one preferred share for one common share after earnings distribution to the common stockholders but cannot participate in the distribution of capital surplus transferred to common stock. A preferred share can be converted into one common share a year after the issuance date. The Bank, upon getting approval from the Banking Bureau, can call back some or all the outstanding preferred shares after six years from the issuance date at the price of the issuance amount plus unpaid accumulated dividends.

On December 19, 2012 and August 23, 2013, the board of directors of the Bank approved the conversion of 282,089 thousand shares and 20,419 thousand shares, respectively, of preferred private-placement shares into private-placement common stock. The conversion amounts were $2,820,894 thousand and $204,194 thousand, with the record dates for conversion on December 31, 2012 and September 25, 2013, respectively. After the conversion, there was no preferred stock.

  • 196 -

b. Capital surplus

Arising from issuance of common shares
Treasury stock transactions		 **December ** **31 **


2014
$ 593


32,413

$ 33,006
 2013
$ 1,875

32,413
$ 34,288

The capital surplus from shares issued in excess of par (additional paid-in capital from issuance of common shares and treasury stock transactions) and donations may be used to offset a deficit; in addition, when the Bank has no deficit, this capital surplus may be distributed in cash or mar be capitalized within a certain percentage of the Bank’s paid-in capital once a year.

The capital surplus from long-term investments, employee stock options and conversion options may not be used for any purpose.

c. Legal reserve

Legal reserve should be appropriated until it equals the Bank’s paid-in-capital. Legal reserve may be used to offset deficit. If the Bank has no deficit and the legal reserve has exceeded 25% of its paid-in capital, the excess may be transferred to capital or distributed in cash. In addition, based on the Banking Act, if the legal reserve is less than the Bank’s paid-in capital, the amount that may be distributed in cash should not exceed 15% of the Bank’s paid-in-capital.

d. Special reserve

Under Rule No. 100116 and Rule No. 0950000507 issued by the Financial Supervisory Commission (FSC), an amount equal to the net debit balance of certain stockholders’ equity accounts (including unrealized revaluation increment, unrealized gain or loss on financial instruments, net loss not recognized as pension cost, cumulative translation adjustments) shall be transferred from unappropriated earnings to a special reserve before any appropriation of earnings generated before January 1, 2012 shall be made. Any special reserve appropriated may be reversed to the extent of the decrease in the net debit balance.

Under Rule No. 1010012865 issued by the FSC on April 6, 2012 and the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs,” on the first-time adoption of IFRSs, a company should appropriate as special reserve an amount that is the same as the sum of unrealized revaluation increment and cumulative translation differences (gains) transferred to retained earnings as a result of the Bank’s use of exemptions under IFRS 1 “First-time Adoption of International Financial Reporting Standards.” However, at the date of transition to IFRSs, if the increase in retained earnings that resulted from all IFRSs adjustments is not sufficient for this appropriation, only the increase in retained earnings that resulted from all IFRSs adjustments will be appropriated to special reserve. This special reserve may be reversed to retained earnings in proportion to the usage, disposal or reclassification of the related assets and thereafter distributed. The special reserve appropriated on the first-time adoption of IFRSs may be used to offset deficits in subsequent years. No appropriation of earnings should be made until any shortage of this special reserve is appropriated in subsequent years if the Bank has earnings and the original need to appropriate a special reserve is not eliminated.

The above special reserve may be used to offset a deficit; if the reserve has reached at least 50% of the paid-in capital, half of this special reserve may be capitalized.

  • 197 -

  • e. Retained earnings and dividend policy

The Bank’s Articles of Incorporation provide that annual net income less any prior years’ deficit should be appropriated in the following order:

  • 1) 30% as legal reserve;

  • 2) Special reserve, as deemed proper;

  • 3) Together with prior year’s unappropriated earnings: Dividends;

  • 4) The remainder:

  • a) Retained earnings, as deemed proper;

  • b) Employees’ bonus of at least 10% (excluding prior year’s unappropriated earnings);

  • c) The remainder: 0.5% as remuneration to directors and supervisors (excluding prior year’s unappropriated earnings) and bonus to stockholders as approved by the stockholders.

These appropriations should be resolved by the stockholders in, and given effect to in the financial statements of, the year following the year of earnings generation.

The board of directors decides the appropriation and distribution of cash and stock dividends, taking into account the Bank’s overall financial and economic condition, future profitability and capital expenditure requirements. In principle, when the Bank of International Settlement ratio is lower than the ratio approved by the authorities plus 1%, primarily stock dividends will be declared. If the legal reserve has not reached the Bank’s paid-in capital, cash dividends are limited to 15% of the Bank’s paid-in capital. The plan on employees’ bonus and remuneration to directors and supervisors is proposed by the board of directors.

For 2014 and 2013, the estimates of the bonus to employees were $69,510 thousand and $66,865 thousand, respectively, and the remunerations to directors and supervisors were $3,475 thousand and $3,343 thousand, respectively. The bonus to employees and remuneration to directors and supervisors were 10% and 0.5%, respectively, of net income (net of the bonus and remuneration) minus legal reserve, special reserve, and dividends. Material differences between these estimates and the amounts proposed by the Board of Directors in the following year are adjusted in the year of the board’s proposal. If the actual amounts subsequently approved by the stockholders differ from the proposed amounts, the differences are recorded in the year of stockholders’ resolution as a change in accounting estimate. If a share bonus is resolved to be distributed to employees, the number of shares is determined by dividing the amount of the share bonus by the closing price (after considering the effect of cash and stock dividends) of the shares of the day immediately preceding the stockholders’ meeting.

The appropriations from the earnings of 2013 and 2012 were approved in stockholders’ meetings on June 6, 2014 and June 14, 2013, respectively. The appropriations and dividends per share were as follows:


follows:
Legal reserve
Special reserve
Stock dividends on common shares
Cash dividends on preferred shares
Stock dividends on preferred shares		 2013
Dividend
Appropriation
of Earnings
Per Share
(NT$)
$ 837,731
(355,597)
2,283,021
$1.030
8,962
0.400
-
-		 2012
Dividend
Appropriation
of Earnings
Per Share
(NT$)
$ 784,074
(201,754)
1,839,520
$0.917
181,042
0.600
18,725
0.917
  • 198 -

The bonus to employees and remuneration to directors and supervisors that were approved in the stockholders’ meeting on June 14, 2013 were as follows:

Bonus to employees
Bonus to directors and
supervisors		 2013
Cash
Dividends
Stock
Dividends
$ -
$ 59,752
2,988
-		 2012
Cash
Dividends
Stock
Dividends
$ -
$ 44,485
2,224
-

The stock bonus to employees was $6,103 thousand and $4,261 thousand, determined by dividing the amount of the share bonus by the closing price (after considering the effect of cash and stock dividends) of the shares of the day immediately preceding the stockholders’ meeting in 2014 and 2013.

There was no difference between the amounts of the bonus to employees and the remuneration to directors and supervisors approved in the stockholders’ meetings in 2013 and the amounts recognized in the financial statements for the year ended December 31, 2012.

The bonus to employees and remuneration to directors and supervisors approved in the shareholders meeting on June 6, 2013 differed from the amounts recognized in the financial statements for the year ended December 31, 2013. The differences were adjusted to profit and loss for the year ended December 31, 2014.

The appropriations from the 2014 earnings were proposed by the board of directors on March 18, 2015. The appropriations, including the dividends per share, were as follows:

Appropriation Appropriation Dividends Per
of Earnings Share (NT$)
Legal reserve $ 928,139
Stock dividends on common shares 1,470,558 $0.60
Cash dividends on preferred shares 637,242 0.26

The proposed appropriations from the 2014 earnings, including the bonus to employees and remuneration to directors and supervisors, will be presented to the stockholders in their meeting on June 26, 2015.

The information on the proposed and resolved earnings appropriation is available on the Market Observation Post System web site of the Taiwan Stock Exchange.

Except for non-ROC resident stockholders, all stockholders receiving the dividends are allowed a tax credit equal to their proportionate share of the income tax paid by the Bank.

  • 199 -

f. Special reserve

Under Rule No. 1010012865 issued by the FSC, the Bank’s the special reserve appropriated following the first-time adoption of IFRSs was as follows:

Balance at January 1
Appropriated the special reserve
First-time adoption of IFRS
Reversal of special reserve
Reversal of other equity items minus
Balance at December 31		 December 31 December 31


2014
$ 914,439

-
(355,597
)

$ 558,842
 2013
$ 608,209
507,984
(201,754
)
$ 914,439

As of the IFRS transition date, the special reserve that should consist of an amount the same as the sum of the unrealized revaluation increment and cumulative translation gains transferred to retained earnings as a result of the Bank’s use of exemptions under IFRS 1 was greater than $507,984 thousand, the increase in retained earnings that resulted from all IFRSs adjustments, making this increase insufficient for special reserve appropriation; thus, as allowed under the above FSC rule, the Bank appropriated $507,984 thousand as special reserve.

If the special reserve appropriated on the first-time adoption of IFRSs relates to investment property other than land, the special reserve may be reversed continually over the period of property use. The special reserve for land may be reversed on disposal or reclassification.

g. Other equity items

  • 1) Exchange differences on translating foreign operations
Balance at January 1
Exchange differences arising on translating the foreign
operations
Income tax on related from translating the net assets of
foreign operations
Share of exchange difference of subsidiaries accounted for
using the equity method
Balance at December 31		 **For the Year Ended ** **For the Year Ended ** December 31


2014
$ (77,629)

560,226
(95,238)

(48,106
)

$ 339,253
 2013
$ (278,935)
251,127
(49,821)

-
$ (77,629
)
  • 2) Unrealized gain (loss) on available-for-sale financial assets
Balance at January 1
Unrealized gain from the revaluation of available-for-sale
financial assets
Income tax on unrealized gain from the revaluation of
available-for-sale financial assets		 For the Year Ended December 31
2014
2013
$ 909,507
$ 413,490
334,769
578,479
(71,190)
(210,886)
(Continued)
  • 200 -
Cumulative gain reclassified to profit or loss on sale of
available-for-sale financial assets
Share of exchange difference of subsidiaries accounted for
using the equity method
Balance at December 31		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2014
$ (110,624)

(32,815
)

$ 1,029,647
 2013
$ 114,304
14,120
$ 909,507
(Concluded)

30. NET INTEREST

NET INTEREST
Interest revenue
Discounts and loans
Debt instruments with no active market
Credit card
Due from the Central Bank and call loans to other banks
Available-for-sale financial assets
Securities purchased under resell agreements
Financial assets at fair value through profit or loss
Held-to-maturity financial assets
Others
Interest expense
Deposits
Securities sold under repurchase agreements
Bank debentures
Due to Chunghwa Post Co., Ltd.
Others		 For the Year Ended December 31





2014
$ 5,906,403

1,743,841
892,076
697,483
173,694
114,536
158,643
8,500
12,018

9,707,194

3,238,946
179,551
179,950
64,073
19,003

3,681,523

$ 6,025,671
 2013
$ 5,593,583
1,786,560
930,156
622,371
135,317
96,244
79,197
15,112
12,803
9,271,343
2,983,668
155,594
130,406
66,817
13,537
3,350,022
$ 5,921,321

31. COMMISSION AND FEE REVENUES, NET

COMMISSION AND FEE REVENUES, NET
Commission and fee revenues
Credit cards and cash cards
Trust business
Insurance commission
Loan business
Interbank service fee		 For the Year Ended December 31
2014
2013
$ 904,081
$ 873,171
380,874
277,182
461,761
285,871
165,316
154,683
122,726
110,200
(Continued)
  • 201 -
Guarantee business
Underwriting business
Remittances
Custody
Postage/cable charge
Agency
Import and export business
Others
Commission and fee expense
Credit card
Verification of credit
Interbank service fee
Acquiring liquidation deal
Agency fee
Others		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31





2014
$ 84,039

110,894
36,376
31,293
21,264
17,102
8,640
101,346

2,445,712

362,379
27,485
16,273
13,697
10,853
60,926

491,613

$ 1,954,099
 2013
$ 77,777
70,144
35,437
31,244
19,322
12,178
8,406
119,985
2,075,600
292,857
23,588
16,611
11,751
9,789
56,630
411,226
$ 1,664,374
(Concluded)

32. GAINS ON FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

LOSS
Realized gain or loss on financial assets at fair value through profit
or loss
Forward exchange contracts
Currency swap contracts
Convertible corporate bonds
Commercial paper
Option contracts
Beneficial securities and stocks
Government bonds
Dividend
Finance purchase under agreement to resell
Unrealized gain or loss on financial assets at fair value through profit
or loss
Derivative financial assets and liabilities
Government bonds and corporate bonds
Beneficial securities and stocks
Commercial paper		 **For the Year Ended ** December 31





2014
$ (172,136)

199,988
22,322
26,105
6,780
12,372
(5,826)
2,349

729


92,683

210,895
1,423
4,065

1,673


218,056

$ 310,739
 2013
$ 376,521
196,721
33,014
16,996
3,635
11,202
(4,549)
530

-

634,070
14,076
28,708
3,027

(1,754
)

44,057
$ 678,127
  • 202 -

33. REALIZED INCOME (LOSS) FROM AVAILABLE-FOR-SALE FINANCIAL ASSETS

Net income on disposal - beneficial securities
Dividend
Net income (loss) on disposal - stocks
Net income on disposal - corporate bonds
Net income on disposal - government bonds
Net income (loss) on disposal - commercial paper		 **For the Year Ended ** **For the Year Ended ** December 31


2014
$ 78,475

37,173
25,169

6,977
3

-

$ 147,797
 2013
$ 12,344
28,123
(130,210)
3,086
426

50
$ (86,181
)

34. REVERSAL OF IMPAIRMENT INCOME ON ASSETS

REVERSAL OF IMPAIRMENT INCOME ON ASSETS
Other financial assets
Foreclosed collaterals		 **For the Year Ended ** December 31


2014
$ -


-

$ -
 2013
$ 68,594

51,593
$ 120,187

35. EMPLOYEE BENEFIT EXPENSES

EMPLOYEE BENEFIT EXPENSES
Salaries and wages
Bonus
Pension
Labor insurance and national health insurance
Others		 For the Year Ended December 31


2014
$ 1,797,620

546,108
133,078
214,652
51,671

$ 2,743,129
 2013
$ 1,738,990
522,095
120,855
197,668
42,018
$ 2,621,626

As of December 31, 2014 and 2013, the Bank had 3,356 and 3,249 employees, respectively. For the years ended December 31, 2014 and 2013, the Bank’s average number of employees was 3,286 and 3,196, respectively.

36. DEPRECIATION AND AMORTIZATION

DEPRECIATION AND AMORTIZATION
Property and equipment
Intangible assets		 **For the Year Ended ** December 31


2014
$ 170,911


32,993

$ 203,904
 2013
$ 168,384

40,267
$ 208,651
  • 203 -

37. OTHER OPERATING EXPENSES

OTHER OPERATING EXPENSES
Rental
Outsourcing service
Taxation and government fee
Advertisement
Postage/cable charge
Computer operating
Deposit insurance
Maintenance charge
Marketing
Donation
Printing and binding
Others		 For the Year Ended December 31


2014
$ 602,907

291,642
395,589
350,663
229,186
153,583
115,548
101,214
57,972
35,999
42,585
344,846

$ 2,721,734
 2013
$ 586,807
267,036
243,917
284,132
215,614
155,868
107,944
110,782
56,826
26,328
39,385
311,348
$ 2,405,987

38. INCOME TAX

  • a. Income tax recognized in profit or loss

The main components of income tax expense were as follows:

Current tax
Current year
Prior year’s adjustments
Additional tax of unappropriated earnings
Deferred tax
Current year
Income tax expense recognized in profit or loss		 For the Year Ended For the Year Ended December 31



2014
$ 11,517

(840)

1,832

12,509

569,250

$ 581,759
 2013
$ 28,131
-

-
28,131

442,760
$ 470,891

A reconciliation of accounting profit and current income tax expenses for the years ended December 31, 2014 and 2013 is as follows:

Income before tax
Income tax expense at the 17% statutory rate
Nondeductible expenses in determining taxable income
Additional income tax under the Alternative Minimum Tax Act
Unrecognized deductible temporary differences
Additional tax of unappropriated earnings
Tax-exempt income
Adjustments for prior year’s tax
Income tax expense recognized in profit or loss		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31



2014
$ 3,675,554

$ 624,844

2
11,517
19,895
1,832
(75,491)
(840
)

$ 581,759
 2013
$ 3,338,782
$ 567,593
49
28,131
(36,715)
-
(88,167)
-
$ 470,891
  • 204 -

The applicable tax rate used by the Bank was 17%.

As the manner of the 2015 appropriation of the 2014 earnings is uncertain, the income tax consequences on the 2014 unappropriated earnings cannot be reliably determined.

b. Income tax recognized in other comprehensive income

For the Year Ended December 31
2014
2013
Deferred tax
Recognized in other comprehensive income:
Unrealized gains on available-for-sale financial assets
$ 71,190
$ 210,886
Exchange differences on the translation of financial statements
of foreign operations
95,238
49,821
Actuarial gains and losses on defined benefit plans

(12,387
)

(2,127
)
Total income tax expenses recognized in other comprehensive
income
$ 154,041
$ 258,580
Current tax assets and liabilities
December 31
2014
2013
Current tax assets
Tax refund receivable
$ 326,786
$ 160,660
Deferred tax assets and liabilities
The movements of deferred tax assets and deferred tax liabilities were as follows:
For the year ended December 31, 2014
Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other Com-
prehensive
Income
Closing
Balance
Deferred tax assets
Temporary differences
Impairment loss of financial
instruments
$ 166,201
$ (163,895)
$ -
$ 2,306
Exchange difference on
foreign operations
65,725
-
(65,725)
-
Employee benefit plan
111,816
1,264
12,387
125,467
Payable for annual leave
19,120
(757)
-
18,363
Allowance for possible
losses
60,493
(49,620)
-
10,873
Others

17,268

3,329

-

20,597
440,623
(209,679)
(53,338)
177,606
Loss carryforwards

2,385,432

(317,102
)

-

2,068,330
$ 2,826,055
$ (526,781
)
$ (53,338
)
$ 2,245,936
(Continued)		 **For the Year Ended ** **For the Year Ended ** December 31


2014
2013
$ 71,190
$ 210,886
95,238
49,821

(12,387
)

(2,127
)
$ 154,041
$ 258,580
**December 31 **
2014
$ 326,786

as follows:
Recognized in
Other Com-
prehensive
Income
$ -

(65,725)
12,387
-
-

-

(53,338)

-

$ (53,338
)
 2013
$ 160,660
Closing
Balance
$ 2,306
-
125,467
18,363
10,873

20,597
177,606

2,068,330
$ 2,245,936
(Continued)

Deferred tax assets
Temporary differences
Impairment loss of financial
instruments

Exchange difference on
foreign operations
Employee benefit plan
Payable for annual leave
Allowance for possible
losses
Others

Loss carryforwards
  • c. Current tax assets and liabilities

d. Deferred tax assets and liabilities

  • 205 -
Opening
Balance


Deferred tax liabilities
Temporary differences
Exchange difference on
foreign operations
$ -

Available-for-sale finance
assets
(210,886)
Amortization of goodwill
impairment loss
(330,292)
Others

(15,380
)

$ (556,558
)

For the year ended December 31, 2013
Opening
Balance


Deferred tax assets
Temporary differences
Impairment loss of financial
instruments
$ 165,843

Exchange difference on
translation of foreign
operations
115,546
Employee benefit plan
114,776
Payable for annual leave
14,783
Allowance for possible losses
37,811
Others

34,186

482,945
Loss carryforwards

2,822,272

$ 3,305,217

Deferred tax liabilities
Temporary differences
Available-for-sale financial
assets
$ -

Amortization of goodwill
impairment loss
(325,855)
Others

(8,525
)

$ (334,380
)
 Recognized in
Profit or Loss
Recognized in
Other Com-
prehensive
Income
$ -
$ (29,513)

-
(71,190)
(4,437)
-

(38,032
)

-

$ (42,469
)
$ (100,703
)

Recognized in
Profit or Loss
Recognized in
Other Com-
prehensive
Income
$ 358
$ -

-
(49,821)
(5,087)
2,127
4,337
-
22,682
-

(16,918
)

-

5,372
(47,694)
(436,840
)

-

$ (431,468
)
$ (47,694
)

$ -
$ (210,886)

(4,437)
-

(6,855
)

-

$ (11,292
)
$ (210,886
)
 Closing
Balance
$ (29,513)
(282,076)
(334,729)

(53,412
)
$ (699,730
)
(Concluded)
Closing
Balance
$ 166,201
65,725
111,816
19,120
60,493

17,268
440,623

2,385,432
$ 2,826,055
$ (210,886)
(330,292)

(15,380
)
$ (556,558
)

Deferred tax assets
Temporary differences
Impairment loss of financial
instruments

Exchange difference on
translation of foreign
operations
Employee benefit plan
Payable for annual leave
Allowance for possible losses
Others

Loss carryforwards


Deferred tax liabilities
Temporary differences
Available-for-sale financial
assets

Amortization of goodwill
impairment loss
Others

  • 206 -

  • e. Information about loss carryforwards

The Bank’s loss carryforwards as of December 31, 2014 were as followed:



Unused
Amount
Expiry Year
$ 4,693,212
2017
3,598,295
2018
3,654,948
2019

220,192
2020
$ 12,166,647
  • f. Information on the Bank’s integrated income tax
Unappropriated earnings
Unappropriated earnings generated on and after January 1,
1998
Imputation credits accounts		 December 31 December 31

2014
$ 3,045,300

$ 83,231
 2013
$ 2,792,439
$ 2,553

The creditable ratios for the distribution of the earnings of 2014 and 2013 were 2.73% (expected ratio) and 0%, respectively.

The Bank disagreed with the tax authorities’ assessment of its ending balance of imputation credit accounts (ICA) for 2012. It will determine the creditable ratios for the distribution of the 2013 earnings after its application for the reexamination of the 2012 ICA ending balance.

Under the Income Tax Law, for the distribution of earnings generated from January 1, 1998, the imputation credits allocable to ROC resident stockholders of the Bank are calculated on the basis of the creditable ratio as of the date of dividend distribution. The actual imputation credits allocable to stockholders of the Bank are based on the balance of the imputation credit accounts as of the date of dividend distribution. Thus, the expected creditable ratio for the 2014 earnings may differ from the actual creditable ratio to be used in allocating imputation credits to the stockholders.

  • g. The Bank’s income tax returns through 2008, 2011 and 2012 have been examined and cleared by the tax authorities. The Bank disagreed with the tax authorities’ assessment of the Bank’s 2011 and 2012 amortization of goodwill, 2012 imputation credits accounts. The Bank had applied for a re-examination.

  • 207 -

39. EARNINGS PER SHARE

The numerators and denominators used in computing earnings per share (EPS) are summarized as follows:

2014
Basic EPS
Income for the year
attributable to common
stockholders
Bonus to employees
Diluted EPS
2013
Basic EPS
Less: Preferred dividends
Basic EPS
Income for the year
attributable to common
stockholders
Effect of potential dilutive
convertible preferred stock
Bonus to employees
Diluted EPS		 Denominator
Numerator (Amounts)
(Shares in
Pretax
After Tax
Thousands)
$ 3,675,554
$ 3,093,795
2,448,322

-

-

9,325
$ 3,675,554
$ 3,093,795

2,457,647
$ 3,338,782
$ 2,867,891

(8,962
)

(8,962
)
3,329,820
2,858,929
2,427,976
8,962
8,962
14,993

-

-

8,021
$ 3,338,782
$ 2,867,891

2,450,990		 Earnings
Per Share (NT$)






Pretax
$ 3,675,554


-

$ 3,675,554

$ 3,338,782


(8,962
)

3,329,820
8,962

-

$ 3,338,782


Pretax
After Tax
$ 1.50
$ 1.26
$ 1.50
$ 1.26
$ 1.37
$ 1.18
$ 1.36
$ 1.17

If the Bank decides to settle the bonus to employees by cash or shares, the Bank should presume that the entire amount of the bonus will be settled in shares and the resulting potential shares should be included in the weighted average number of shares outstanding to be used in calculating the diluted EPS. This dilutive effect of the potential shares should be included in the calculation of diluted EPS until the stockholders resolve the number of shares to be distributed to employees at their meeting in the following year.

The Bank’s record dates for the distribution of stock dividends appropriated from the 2014 and 2013 earnings were August 2, 2014 and August 12, 2013, respectively.

The weighted average number of shares outstanding for EPS calculation has been retroactively adjusted for the issuance of employee stock bonuses and stock dividends. This adjustment caused the basic and diluted EPS after income tax for 2013 to decrease from NT$1.30 to NT$1.18 and from NT$1.29 to NT$1.17, respectively.

  • 208 -

40. RELATED-PARTY TRANSACTIONS

In addition to those disclosed in other footnotes, significant transactions between the Bank and related parties are summarized as follows:

a. Related parties and their relationships with the Bank

Related Party Relationship with the Bank Union Finance and Leasing International Corporation Subsidiary (UFLIC) Union Information Technology Corporation (UIT) Subsidiary Union Insurance Broker Company (UIB) Subsidiary Union Finance International (H.K.) Limited Subsidiary Union Securities Investment Trust Corporation (USITC) Subsidiary Union Capital (Cayman) Corp. Subsidiary of UFLIC New Asian Ventures Ltd. Subsidiary of UFLIC Union Capital (Singapore) Holding Pte. Ltd. (UCSH) Subsidiary of Cayman Kabushiki Kaisha UCJ1 (KK) Subsidiary of UCSH Tokutei Mokuteki Kaisha SSG15 (TMK SSG15) Subsidiary of USCH and KK Union Real-Estate Management Corporation Equity-method investee of the Bank Hung-Kou Construction Inc., Ltd. (“Hung-Kou”) Its chairman is a close relative of the Bank’s director/general manager Union Ran Zheng Co., Ltd. (URZ) Its chairman is a close relative of the Bank’s director/general manager The Liberty Times Co., Ltd. (“Liberty Times”) The Bank’s director/general manager and the chairman of the board of directors are the director and supervisor, respectively, of Liberty Times Long Shan Lin Corporation Its chairman is a close relative of the Bank’s director/general manager Yong-Xuan Co., Ltd. (“Yong-Xuan”) Its chairman is a close relative of the Bank’s director/general manager Union Enterprise Construction Co., Ltd. (UECC) Director of the Bank Yu-Pang Co., Ltd. (“Yu-Pang”) Director of the Bank Morgan Stanley Union Bank Assets Management Related party in substance Corporation (MSUB) Union Recreation Enterprise Corporation Related party in substance Others Directors, supervisors, managers, and their relatives and affiliates

  • b. Significant transactions with related parties:

  • 1) Loans

December 31, 2014

Highest
Balance in the
Account
Volume or
Year Ended
December 31,
Ending
Type
Name
2014
Balance
Consumer loans
4
$ 2,790
$ 2,538
Self-used housing
mortgage loans
15
78,683
71,341
Others
UFLIC
2,167,788
1,844,941
Others
5
586,736
586,697		 Loan Classification
Differences in
Terms of
Transaction
Normal
Nonper-
forming
with Those
for Unrelated
Loans
Loans
Collaterals
Parties
$ 2,538
$ -
-
None
71,341
-
Real estate
None
1,844,941
-
Land, buildings and
foreign time deposits
None
586,697
-
Land, plant buildings and
time deposits
None
  • 209 -

December 31, 2013

Differences in
Highest Terms of
Balance in the Loan Classification Transaction
Account Year Ended Nonper- with Those
Volume or
December 31,		 Ending Normal forming for Unrelated
Type Name 2013 Balance Loans Loans Collaterals Parties
Consumer loans 5 $ 3,785 $
3,707
 $
3,707		 $
-		 - None
Self-used housing 18 92,964 86,935 86,935 - Real estate None
mortgage loans
Others UFLIC 2,239,549 2,167,788
 2,167,788 - Land, buildings and None
foreign time deposits
Others 3 567,665 567,643 567,643 - Land, plant, buildings and None
time deposits
**December 31 ** Interest Revenue
Amount % Rate Amount %
2014 $ 2,505,517 0.97 1.34%-2.930% $
44,417		 0.46
2013 2,826,073 1.23 1.34%-3.185% 46,548 0.50
Deposits
December 31 Interest Expense
Amount % Rate Amount %
2014 $ 5,430,728 1.37 0%-3.80% $
39,643		 1.08
2013 5,471,612 1.50 0%-4.21% 33,499 1.00

2) Deposits

  • 3) Guarantees and letters of credit

December 31, 2014

December 31, 2014
Highest
Balance in Balance of
the Year Guarantees
Ended and Letters
December 31, Ending of Credit
Name 2014 Balance (Note) Rate Collateral
Union Recreation Enterprise
Corporation $ 39,874
 $ 39,874 $ - 0.3%-0.5% Time deposits
The Liberty Times Co., Ltd. 20,187 - - 0.05% Land and buildings
Long Shan Lin Corporation 71,040
 71,040 - 0.3% Time deposits
December 31, 2013
Highest
Balance in Balance of
the Year Guarantees
Ended and Letters
December 31, Ending of Credit
Name 2013 Balance (Note) Rate Collateral
Union Recreation Enterprise
Corporation $ 54,899
 $ 39,874 $ - 0.3%-0.5% Time deposits
The Liberty Times Co., Ltd. 17,390
 13,665 - 0.05% Land and buildings
Long Shan Lin Corporation 71,040
 71,040 - 0.3% Time deposits

Note: Reserve for guarantee loss is provided on the basis of the estimated unrecoverable amount.

  • 210 -

4) Securities brokerage fees

Securities brokerage fees
2014
2013		 For the Year Ended
December 31
Amount
%
$ 4,085
6.06
2,892
5.34

  • 5) Leases

  • a) The Bank as lessee

Under operating lease agreements with terms of one year to five years, the Bank rents from related parties office spaces for use by the Head Office, Trust, International Banking Department, Wealth Management, Information Technology Department, Consumer Banking Department, Credit Card Department, the Northern Collateral Appraisal Center, and five branches. Rentals are payable quarterly, with some contracts allowing placement with the lessors of lease deposits in lieu of rental payments. Rental expenses and lease deposits were as follows:

2014
Yu-Pang
Hung-Kuo
Yong-Xuan
UECC
UFLIC
2013
Yu-Pang
Hung-Kuo
Yong-Xuan
UECC
UFLIC		 Lease Deposit (Part of
Other Financial Assets)
Amount
%
$ 454,290
25.00
218,760
12.04
13,649
0.75
4,384
0.24
-
-
454,290
26.09
218,760
12.56
13,649
0.78
4,384
0.25
-
-		 Rental Expense (Part of
Other Operating Expense)
Amount
%
$ 14,821
2.46
100,675
16.70
57,514
9.54
9,266
1.54
3,447
0.57
14,821
2.53
100,675
17.16
57,514
9.80
9,266
1.58
3,447
0.59

The Bank rented cars for business use from UFLIC; the rental expenses were $9,756 thousand in 2014 and $9,615 thousand in 2013. Rentals payable as of December 31, 2014 and 2013 were $79 thousand and $85 thousand, respectively.

b) The Bank as lessor

The Bank’s South Taoyuan Branch, Kaohsiung Branch, Minchuan Branch, Chiayi Branch and Fucheng Branch leased part of their office premises to UFLIC under operating lease agreements starting from December 2014 to August 2019, from June 2011 to December 2015, from November 2011 to September 2017, from July 2014 to July 2019, and from June 2013 to June 2018, respectively. The leasing revenues received were $1,126 thousand and $910 thousand in 2013 and 2012, respectively. The lease deposits received (included in other liabilities) were $295 thousand and $235 thousand in 2013 and 2012, respectively.

  • 211 -

  • 6) Available-for-sale financial assets

As of December 31, 2014 and 2013, the Bank had purchased 97,504 thousand units and 59,386 thousand units, respectively, of beneficial certificates issued by USITC, which amounted to $1,213,925 thousand and $757,198 thousand, respectively.

  • 7) UIT sold computers and related materials and software and provided network services to the Bank. The purchase and service fees were $109,160 thousand in 2014 and $90,667 thousand in 2013.

  • 8) The Bank provided insurance consulting service and sales assistance to UIB. The commission and fee revenues were $198,735 thousand in 2014 and $173,769 thousand in 2013. The commission revenues on insurance premium (included in commissions and fee revenue) were $454,440 thousand in 2014 and $285,977 thousand in 2013.

  • 9) For credit card promotion, the Bank bought from Union Finance and Leasing International Corporation (UFLIC) classic commemorative watches and backpacks with authorized Ferrari logos for $25,767 thousand (included in other operating expenses) in 2013.

  • 10) In July 2013, the Bank made an agreement with USITC that the Bank will have custody of the bonds issued by Lehman Brother Treasury Co. after the liquidation of asset-backed commercial paper of Taishin International Bank Co., Ltd. issued by the Land Bank of Taiwan. The custodial fees were $25 thousand in 2014 and $9 thousand in 2013.

Under the Banking Law, except for consumer and government loans, credits extended by the Bank to any related party should be fully secured, and the credit terms for related parties should be similar to those for unrelated parties.

For transactions between the Bank and related parties, the terms are similar to those transacted with third parties, except for the preferential interest rates offered to Bank employees for savings and loans within prescribed amounts.

  • c. Compensation of directors, supervisors and management personnel:
Short-term employment benefits
Salaries
Transportation expenses
Post-employment benefits		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31



2013
$ 29,431


1,662

31,093

1,987

$ 33,080
 2012
$ 27,390

1,502
28,892

3,384
$ 32,276

Compensation of directors and management personnel is determined by the remuneration committee on the basis of individual performance and market trends.

41. PLEDGED ASSETS

As of December 31, 2014 and 2013, government bonds and bank debentures, which amounted to $107,400 thousand and $119,500 thousand (all amounts included in other financial assets), respectively, had been provided to the courts and the Bank of Taiwan as guarantee deposits on provisional seizures against the debtors’ properties, as reserve for credit card receivables, as guarantee deposits on bills finance operations, and as trust reserve. In addition, as of December 31, 2014 and 2013, negotiable certificates of deposit, which amounted to $8,100,000 thousand and $8,700,000 thousand, respectively (all amounts included in other financial assets), had been provided to the Central Bank as collateral for day-term overdraft.

  • 212 -

In 2014, the Bank pledged a time deposit of $200,000 thousand (part of other financial assets) to Mega International Commercial Bank to be part of the latter’s online bank-to-bank payment system.

42. CONTINGENCIES AND COMMITMENTS

a. As of December 31, 2014 and 2013, the Bank’s commitments consisted of the following:

Irrevocable standby loan commitment
Unused credit card commitment
Unused letters of credit
Other guarantees
Collections for customers
Travelers’ checks consigned-in
Guarantee notes payable
Trust assets
Marketable securities under custody		 December 31
2014
2013
$ 120,749,277
$ 76,818,305
180,297,105
183,598,978
966,744
724,584
13,189,724
10,679,535
24,869,977
25,007,132
132,133
146,347
8,435,400
4,350,700
58,538,229
59,050,568
406,380
407,669
  • b. The Bank as lessee

The Bank rents several office premises for its branches under operating leases with terms ranging between 2 and 20 years. All operating lease contracts over 5 years contain clauses for market rental reviews for every five years. The Bank does not have a bargain purchase option to acquire the leased premises at the expiration of the lease period.

As of December 31, 2014 and 2013, refundable deposits paid under operating leases were $793,634 thousand and $797,429 thousand, respectively (included in other assets - refundable deposits).

The Bank’s future minimum lease payments for noncancellable operating lease commitments were as follows:


follows:
Within 1 year
Over 1 year up to 5 years
Over 5 years		 December 31


2014
$ 379,580

754,928
594,003

$ 1,728,511
 2013
$ 440,696
582,874
331,668
$ 1,355,238
  • c. The Bank as lessor

The Bank rents out properties under operating leases with the terms ranging between 3 and 6 years. All operating lease contracts contain market review clauses so that the lessee has an option to renew. The lessee does not have a bargain purchase option to acquire the property at the expiration of the lease period.

As of December 31, 2014 and 2013, refundable deposits paid under operating leases were $3,705 thousand and $3,618 thousand, respectively (included in other liabilities - guarantee deposits received).

  • 213 -

The Bank’s future minimum lease payments for noncancellable operating lease commitments were as follows:


follows:
Within 1 year
Over 1 year up to 5 years		 December 31


2014
$ 10,426


13,190

$ 23,616
 2013
$ 9,190

11,293
$ 20,483
  • d. Computer equipment purchase contracts

As of December 31, 2014 and 2013, the Bank had contracts to buy computer equipment and software for $284,797 thousand and $20,921 thousand, respectively, of which $110,951 thousand and $10,738 thousand had been paid as of December 31, 2014 and 2013, respectively.

43. TRUST BUSINESS UNDER THE TRUST LAW

Trust Assets
Bank deposits

Investments
Mutual funds
Common stock
Short-term bills and securities
purchased under resell
agreements
Accounts receivable
Stock in custody
Real estate - land and building

Total
 Balance Sheet of Trust Accounts
December 31, 2014
Amount
Trust Liabilities and Capital
$ 2,810,860
Income tax payable

Marketable securities payable
36,510,764
Trust capital
153,330
Reserve and deficit

98,848
2,014
8,045,899

10,916,514
$ 58,538,229
Total
 Amount
$ 107
8,045,899
50,528,464

(36,241
)
$ 58,538,229
Trust Assets
Bank deposits

Investments
Mutual funds
Common stock
Short-term bills and securities
purchased under resell
agreements
Accounts receivable
Stock in custody
Real estate - land and building

Total
 Balance Sheet of Trust Accounts
December 31, 2013
Amount
Trust Liabilities and Capital
$ 4,341,603
Income tax payable

Marketable securities payable
35,670,405
Trust capital
153,251
Reserve and deficit

80,235
2,127
9,672,156

9,130,791
$ 59,050,568
Total
 Amount
$ 104
9,672,156
49,423,727

(45,419
)
$ 59,050,568
  • 214 -

Income Statement of Trust Accounts Year Ended December 31, 2014

Trust income
Interest revenue - demand accounts


Interest revenue - time deposits

Interest revenue - short-term bills and securities purchased under resell agreements

Income from beneficial certificates

Realized capital gain - fund

Unrealized capital gain - fund

Other revenue - tax refund additional of interest


Total trust income


Trust expense

Management expense

Taxation

Agents fee

Realized capital loss - fund

Unrealized capital loss - fund

Other


Total trust expense


Loss before tax


Income tax expense



Net loss

 Amount
$ 738
8,041
403
251
466
537

1

10,437
9,263
28,840
4,222
55
707

4,857

47,944
(37,507)

(746
)
$ (38,253
)

Note: The above trust income statements were not included in the Bank’s income statements.

Income Statement of Trust Accounts Year Ended December 31, 2013

Trust income
Interest revenue - demand accounts

Interest revenue - time deposits
Interest revenue - short-term bills and securities purchased under resell agreements
Cash dividends
Income from beneficial certificates
Realized capital gain - fund
Unrealized capital gain - GTSM stock
Unrealized capital gain - fund

Total trust income

Trust expense
Management expense
Taxation
Realized capital loss - fund
Unrealized capital loss - fund
Other

Total trust expense

Loss before tax

Income tax expense

Net loss
 Amount
$ 2,348
7,077
368
8,391
420
1,469
40,823

688

61,584
7,654
58,396
297
641

17,824

84,812
(23,228)

(1,304
)
$ (24,532
)

Note: The above trust income statements were not included in the Bank’s income statements.

  • 215 -

Trust Property and Equipment Accounts December 31, 2014

Investment Portfolio
Bank deposits

Investments

Mutual funds

Common stock

Short-term bills and securities purchased under resell agreements

Accounts receivable

Stock in custody

Real estate - land and buildings


 Amount
$ 2,810,860

36,510,764

153,330

98,848

2,014

8,045,899

10,916,514
$ 58,538,229

Note: The foreign currency amount of mutual funds was included in OBU on December 31, 2014.

Trust Property and Equipment Accounts December 31, 2013

Trust Property and Equipment Accounts
December 31, 2013
Investment Portfolio
Bank deposits

Investments
Mutual funds
Common stock
Short-term bills and securities purchased under resell agreements
Accounts receivable
Stock in custody
Real estate - land and buildings

 Amount
$ 4,341,603
35,670,405
153,251
80,235
2,127
9,672,156

9,130,791
$ 59,050,568

44. FINANCIAL INSTRUMENTS

  • a. Fair values of financial instruments

Except for the financial instruments shown in the following table, the management believes that the financial assets and financial liabilities recognized in the financial statements either have carrying amounts that approximate their fair values or have fair values that cannot be reasonably measured.

Financial assets
Held-to-maturity financial
assets
Debt instruments with no active
market		 December 31 December 31
2014
Carrying
Amount
Estimated
Fair Value
$ 521,266
$ 526,438
45,121,992
42,295,080		 2013
Carrying
Amount
Estimated
Fair Value
$ 428,017
$ 436,693
48,516,710
45,201,547
(Continued)
  • 216 -
Financial liabilities
Bank debentures		 December 31 December 31
2014
Carrying
Amount
Estimated
Fair Value
$ 7,400,000
$ 7,560,935		 2013
Carrying
Amount
Estimated
Fair Value
$ 7,400,000
$ 7,557,098
(Concluded)
  • b. The financial instruments measured at fair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants with full understanding of the sale or transfer transaction. The fair values of financial instruments at fair value, available-for-sale financial assets and hedging derivative financial instruments with quoted price in an active market are based on their market prices; financial instruments with no quoted prices in an active market are estimated by valuation methods.

1) Marking to market

This method should be used first to determine fair value. Following are the principles to follow in marking to market:

  • a) Ensure the consistency and integrity of market data.

  • b) The source of market data should be transparent and easy to access and can be referred to by independent resources.

  • c) Listed securities with tradable prices should be valued at closing prices.

  • d) Evaluating unlisted securities that lack tradable closing prices should use quoted prices from independent brokers.

2) Marking to model

The use of marking to model is suggested if marking to market is infeasible. This valuation methodology is based upon model inputs that are used to derive the value of the trading positions. The Bank uses the same estimations and assumptions as those used by market participants to determine the fair value.

The Bank uses the forward rates provided by Reuters to estimate the fair values of forward contracts, foreign exchange swap contracts, interest rate swap and cross-currency swap contacts and the discounted cash flow method to calculate the fair values of each contract. For foreign exchange option transactions, the Bank uses the option pricing models which are generally used by other market participants (e.g., the Black-Scholes model) to calculate the fair value of the contracts.

For debt instruments with no active market, the Bank estimates fair values based on prices quoted by counterparties and adjusted in accordance with the results of the evaluation of a debtor’s credit.

  • 217 -

  • c. Three-level fair value hierarchy

The definitions of each level of the fair value hierarchy are shown below:

1) Level 1

Level 1 financial instruments are traded in an active market in which there are quoted prices for identical assets and liabilities. An active market has the following characteristics:

  • a) All financial instruments in the market are homogeneous.

  • b) There are willing buyers and sellers in the market all the time.

  • c) The public can access the price information easily.

The products in this level, such as listed stocks and beneficial securities, usually have high liquidity or are traded in futures market or exchanges.

2) Level 2

The products in this level have fair values that can be inferred from either directly or indirectly observable inputs other than quoted prices in an active market. Examples of these inputs are:

  • a) Quoted prices from the similar products in an active market. This means the fair value can be derived from the current trading prices of similar products, and whether they are similar products should be judged on the characteristics and trading rules. The fair price valuation in this circumstance may be adjusted due to time differences, trading rule’s differences, interested parties’ prices, and the correlation of price between itself and the similar goods;

  • b) Quoted prices for identical or similar financial instruments in inactive markets;

  • c) For the marking-to-model method, the inputs to this model should be observable (such as interest rates, yield curves and volatilities). The observable inputs mean that they can be obtained from the market and can reflect the expectation of market participants;

  • d) Inputs that are derived from observable market data through correlation or other means.

The fair values of products categorized in this level are usually calculated using a valuation model generally accepted by the market. Examples are forward contracts, cross-currency swap, simple interest bearing bonds, convertible bonds and commercial paper.

3) Level 3

The fair values of the products in this level are typically based on management assumptions or expectations other than the direct market data. For example, historical volatility used in valuing options is an unobservable input because it cannot represent the entire market participants’ expectation on future volatility.

The products in this level are complex derivate financial instruments or products with prices that are provided by brokers. Examples are complex foreign exchange options.

  • 218 -

  • d. The fair value hierarchies of the Bank’s financial instruments as of December 31, 2014 and 2013 were as follows:

(In Thousands of New Taiwan Dollars)

Nonderivative financial instruments
Assets
Financial assets at fair value through
profit or loss (FVTPL)
Held-for-trading financial assets
Stock
Debt instruments
Commercial paper
Financial assets designated as at
FVTPL on initial recognition
Principal guaranteed notes
Available-for-sale financial assets
Stock
Debt instruments
Beneficial certificates
Derivative financial instruments
Assets
Financial assets at FVTPL
Liabilities
Financial liabilities at FVTPL
Nonderivative financial instruments
Assets
Financial assets at fair value through
profit or loss (FVTPL)
Held-for-trading financial assets
Stock
Debt instruments
Commercial paper
Financial assets designated as at
FVTPL on initial recognition
Available-for-sale financial assets
Stock
Debt instruments
Negotiable certificates of deposit
Beneficial certificates
Derivative financial instruments
Assets
Financial assets at FVTPL
Liabilities
Financial liabilities at FVTPL		 December 31, 2014
Total
Level 1
Level 2
Level 3
$ 131,750
$ 131,750
$ -
$ -
154,538
-
154,538
-
15,797,263
-
15,797,263
-
1,362,869
-
1,362,869
-
459,947
-
459,947
-
3,048,702
3,048,702
-
-
8,081,287
-
8,081,287
-
2,569,496
2,569,496
-
-
466,769
-
362,359
104,410
211,084
-
106,573
104,511
December 31, 2013
Total
Level 1
Level 2
Level 3
$ 157,846
$ 157,846
$ -
$ -
205,635
-
205,635
-
7,566,717
-
7,566,717
-
1,854,346
-
1,854,346
-
2,007,897
2,007,897
-
-
4,862,614
-
4,862,614
-
216,098
-
216,098
-
1,413,583
1,413,583
-
-
78,713
-
72,865
5,848
16,006
-
10,158
5,848

  • 219 -

  • e. Reconciliation of Level 3 items of financial instruments

  • 1) Reconciliation of Level 3 items of financial assets

For the year ended December 31, 2014

(In Thousands of New Taiwan Dollars)

Items Beginning
Balance		 Valuation
Gain (Loss)
in Net Income
or
Stockholders’
Equity		 Amount of Increase Amount of Increase Amount of Decrease Amount of Decrease Ending
Balance


Purchase or
Change in
Fair Value		 Transfer to
Level 3		 Sale or
Change in
Fair Value		 Transfer
from Level 3
Financial assets at fair
value through profit or
loss
Derivative financial
assets		 $ 5,848 $87,946 $30,035 $ - $ (19,419) $ - $104,410

For the year ended December 31, 2013

(In Thousands of New Taiwan Dollars)

Items Beginning
Balance		 Valuation
Gain (Loss)
in Net Income
or
Stockholders’
Equity		 Amount of Increase Amount of Increase Amount of Decrease Amount of Decrease Ending
Balance


Purchase or
Change in
Fair Value		 Transfer to
Level 3		 Sale or
Change in
Fair Value		 Transfer
from Level 3
Financial assets at fair
value through profit or
loss
Derivative financial
assets		 $ 908 $ (1,418) $23,268 $ - $ (16,910) $ - $ 5,848
  • 2) Reconciliation of Level 3 items of financial liabilities

For the year ended December 31, 2014

(In Thousands of New Taiwan Dollars)

Items Beginning
Balance		 Valuation
Gain (Loss)
in Net Income
or
Stockholders’
Equity		 Amount of Increase Amount of Increase Amount of Decrease Amount of Decrease Ending
Balance


Purchase or
Change in
Fair Value		 Transfer to
Level 3		 Sale or
Change in
Fair Value		 Transfer
from Level 3
Financial liabilities at fair
value through profit or
loss
Derivative financial
liabilities		 $ 5,848 $85,673 $39,021 $ - $ (26,031) $ - $104,511

For the year ended December 31, 2013

(In Thousands of New Taiwan Dollars)

Items Beginning
Balance		 Valuation
Gain (Loss)
in Net Income
or
Stockholders’
Equity		 Amount of Increase Amount of Increase Amount of Decrease Amount of Decrease Ending
Balance


Purchase or
Change in
Fair Value		 Transfer to
Level 3		 Sale or
Change in
Fair Value		 Transfer
from Level 3
Financial liabilities at fair
value through profit or
loss
Derivative financial
liabilities		 $ 908 $ (2,469) $25,948 $ - $ (18,539) $ - $ 5,848

  • 220 -

  • f. Transfer between Level 1 and Level 2

There was no material transfer between Level 1 and Level 2 for 2014 and 2013.

  • g. Sensitivity analysis of Level 3 fair value if reasonably possible alternative assumptions used

The Bank’s Level 3 financial instruments are foreign exchange options. When engaging in foreign exchange option transactions, the Bank makes a match for other banks and customers. Thus, the Bank does not hold positions, and its source of profit and loss is from receiving and paying premiums. The sensitivity analysis has no effect on profit and loss since the Bank does back-to-back transactions and the assets offset the liabilities.

45. FINANCIAL RISK MANAGEMENT

  • a. Overview

To deal with any expected or unexpected business risk, the Bank has established a comprehensive risk management system to allocate resources effectively and efficiently, strengthen business competitiveness, mitigate operational risk to a tolerable or acceptable level, and maintain the capital adequacy ratio to meet the minimum requirements of the authorities and the Basel Accord framework.

  • b. Risk management framework

The Board of Directors, which occupies the highest level in the Bank’s risk management framework, reviews risk management policies, the overall risk management framework and organization structure for carrying out responsibilities and exercising accountability. The Asset/Liability Management Committee inspects management reports or information provided by business units and the Risk Management Division. The Risk Management Division is an independent unit that is in charge of reviewing the risk management system designed by business units and the compliance with risk management requirements; this division also submits risk management reports to the authorities and develops a series of risk management tools to assess the risks identified. Business units establish risk control procedures, manage and monitor the implementation of those controls in operation units. Operation units perform daily risk management work and internal controls to ensure the accuracy and completeness of the risk management information generated.

  • c. Credit risk

  • 1) Credit risk definitions and sources

Credit risk refers to the risk of losses caused by borrowers, debtors, or counterparties’ failure to fulfill their contractual obligations due to deteriorating financial position or other factors. It arises principally from transactions involving discounts, loans, credit cards, due from or call loans to banks, debt investments and derivatives etc., and also from off-balance sheet products such as guarantees, acceptance, letters of credit and commitments.

2) Strategy/objectives/policies and processes

  • a) Credit risk management strategy: The Bank has established “Credit Risk Management Standards of Union Bank of Taiwan” as the basis of planning, implementing, and managing credit risk management system.

  • b) Credit risk management objective: The objectives are to establish and implement an effective credit risk management mechanism to mitigate credit risk, archive operational and management goals, and balance business development and risk control.

  • 221 -

  • c) Credit risk management policy: The policies are meant to ensure that credit risk falls within an acceptable range and that adequate capital is maintained to meet credit risk management objectives and create maximum risk-adjusted returns.

  • d) Credit risk management process: The Bank carries out credit risk identification, credit risk measurement, credit risk mitigation, credit risk monitoring and control and credit risk reporting process as part of its credit risk management mechanism.

  • 3) Credit risk management framework

  • a) The Board of Directors: The Board of Directors, the top risk supervisor of the Bank, reviews risk management policies, operational risk limits and the design and change of credit risk management framework.

  • b) Asset/Liability Management Committee: This committee inspects management reports or information provided by business units and the Risk Management Division.

  • c) Risk Management Division: The Risk Management Division is an independent unit that is in charge of the work related to three pillars of Basel and reviews the risk management system designed by business units and the compliance with risk management requirements; the division also submits risk management reports to the authorities and develops risk management tools to assess the risk identified.

  • d) Business units: Business units are responsible for establishing risk management regulations and risk control procedures and managing and monitoring the implementation of those controls in operation units.

  • e) Operation units: Under the risk management regulations and procedures set by business units, operation units perform daily risk management work and internal controls and prepares reports on these tasks.

  • 4) Credit risk measurement, control and reporting

  • a) The range of credit risk reporting:

    • i. Each business unit will regularly report the promotion of the business and the allocation of risk assets to the Assets/Liability Management Committee (ALMC).

    • ii. The Bank’s risk management department regularly monitors the credit limit control situations and reports to the ALMC the credit concentration and the status of each business’ achieving BIS (Bank for International Settlements) goals. The department also presents the volume of business NPL situation, credit concentration and the execution of credit risk control to the Board.

b) Measurement system:

The Bank’s credit risk management adopts the use of the standardized approach to calculate capital charge and regularly submits related reports to the government. The risk management division and business units implement the Bank’s management system and monitors the credit exposure of the business, industry, and countries as well as the concentration of credit and collateral to effectively measure and manage investment portfolio.

  • 222 -

5) Mitigation of risks or hedging of credit risk

The Bank is exposed to loss on each credit risk faced by its business. Thus, depending on the nature of the business and the cost considerations, the Bank will take appropriate measures to control risk. The Bank’s information systems provide information that can be used in managing risk control procedures, and the risk management division reports to the board every six months the business risk management status.

6) Maximum exposure to credit risk

The maximum credit exposures of assets in the balance sheet are almost equivalent to their carrying values. These off-balance sheet maximum credit exposures (excluding collaterals and other credit enhancement instruments) are shown as follows:

Off-Balance Sheet Items The Maximum Credit Exposure The Maximum Credit Exposure
December 31
2014 2013
Irrevocable standbyloan commitment $ 231,304 $ 407,811
Unused letters of credit 966,744
724,584
Otherguarantees 13,189,724
10,679,535
Unused credit card commitments 180,297,105 183,598,978
  • 7) Concentrations of credit risk exposure

Concentrations of credit risk arise when a number of counterparties or exposure have comparable economic characteristics, or such counterparties are engaged in similar activities, or operate in the same geographical areas or industry sectors, so that their collective ability to meet contractual obligations is uniformly affected by changes in economic or other conditions.

There can be credit risk concentrations in a bank’s assets, liabilities, or off-balance sheet items through the execution or processing of transactions (either product or service), or through a combination of exposures across these broad categories. These exposures can cover credits, loans and deposits, call loans to banks, investments, receivables and derivatives. To minimize its credit risk, the Bank maintains a diversified portfolio; limits its exposure to any one geographic region, country or individual creditor; and closely monitors its exposures. The Bank’s most significant concentrations of credit risk are summarized as follows:

a) By industry

December 31, 2014 December 31, 2014 December 31, 2013 December 31, 2013
Amount % Amount %
Private enterprises $69,979,750 25.59 $56,868,907 23.36
Public enterprises 4,306,000 1.57 4,038,000 1.66
Government organizations 28,801,024 10.53 19,000,000 7.8
Nonprofit organizations 784,346 0.29 1,054,984 0.43
Private organizations 168,054,945 61.45 160,782,463 66.04
Foreign enterprises 1,572,487 0.57 1,725,014 0.71
Total 273,498,552 100.00 243,469,368 100.00

b) By geographical area

The Bank’s operations are mainly in Taiwan.

  • 223 -

c) By collaterals

By collaterals
December 31, 2014 December 31, 2013
Amount % Amount %
Unsecured $55,910,805 20.44 $41,390,240 17.00
Secured
Financial instruments 7,536,027 2.76 6,721,311 2.76
Stocks 8,734,316 3.19 8,106,758 3.33
Properties 179,565,252 65.65 166,388,408 68.34
Movables 12,268,583 4.49 10,171,610 4.18
Guarantees 6,726,704 2.46 6,376,124 2.62
Others 2,756,865 1.01 4,314,917 1.77
Total 273,498,552 100.00 243,469,368 100.00
  • 224 -

8) Credit quality and impairment assessment

Some financial assets - cash and cash equivalents, due from the Central Bank and call loans to other banks, financial assets at fair value through profit or loss, repos and debt securities, refundable deposits, guaranty bonds and clearing and settlement fund - are regarded as having very low credit risk because of the good credit ratings of counterparties. Other financial assets not regarded as having low credit risk are summarized as follows:

a) Discounts, loans and receivables

December 31, 2014 Neithe r Past Due Nor Impaired r Past Due Nor Impaired Past Due But
Not Impaired
(B)		 Impaired
Amount (C)		 Total
(A)+(B)+(C)		 Loss Recognized(D) Loss Recognized(D) Net Total
(A)+(B)+(C)-(D)
Excellent Good Acceptable No Ratings Subtotal (A) With Objective
Evidence of
Impairment		 With No
Objective
Evidence of
Impairment
Receivables
Credit card business
Acceptances receivable
Others
Discounts and loans
Consumer finance
Corporate banking		 $ 7,089,540
78,690
1,623,334
85,934,030
72,999,666		 $ 3,926,720

30,903

84,327

30,294,705

46,899,194		 $ 51,007

-

23,427

18,587,670

839,663		 $ -

-

3,557

2,272,214

91,604		 $ 11,067,267

109,593

1,734,645

137,088,619

120,830,127		 $ 145,339

-

1,719

260,894

26,357		 $ 1,655,812

-

101,295

80,648

1,912,590		 $ 12,868,418
109,593
1,837,659
137,430,161
122,769,074		 $ 73,632
-
4,113
34,937
262,887		 $ 49,387

217

10,069

1,263,349

1,005,941		 $ 12,745,399

109,376

1,823,477

136,131,875

121,500,246
December 31, 2013 Neithe r Past Due Nor Impaired r Past Due Nor Impaired Past Due But
Not Impaired
(B)		 Impaired
Amount (C)		 Total
(A)+(B)+(C)		 Loss Recognized (D) Loss Recognized (D) Net Total
(A)+(B)+(C)-(D)
Excellent Good Acceptable No Ratings Subtotal (A) With Objective
Evidence of
Impairment		 With No
Objective
Evidence of
Impairment
Receivables
Credit card business
Acceptances receivable
Others
Discounts and loans
Consumer finance
Corporate banking		 $ 6,112,602
71,567
1,201,786
78,856,081
60,960,208		 $ 3,894,359

51,238

77,280

28,371,536

38,906,782		 $ 74,870

-

25,653

19,515,676

1,173,152		 $ -

-

3,194

1,915,312

-		 $ 10,081,831

122,805

1,307,913

128,658,605

101,040,142		 $ 168,377

-

2,090

309,645

25,270		 $ 1,945,801

-

390,045

81,889

2,551,477		 $ 12,196,009
122,805
1,700,048
129,050,139
103,616,889		 $ 89,021
-
118,839
45,771
476,265		 $ 44,886

255

23,243

1,350,220

652,180		 $ 12,062,102

122,550

1,557,966

127,654,148

102,488,444
  • 225 -

b) Credit quality analysis of securities

December 31, 2014 Neit her Past Due Nor Impaired Amount (Note) her Past Due Nor Impaired Amount (Note) her Past Due Nor Impaired Amount (Note) Past Due But Not
Impaired (B)		 Impaired
Amount
(C)		 Total
(A)+(B)+(C)		 Loss Recognized (D) Loss Recognized (D) Net Total
(A)+(B)+(C)-(D)
Investment
Grade		 Non-investment
Grade		 No Ratings Subtotal (A) With Objective
Evidence of
Impairment		 With Objective
Evidence of
Impairment
Available-for-sale financial assets
Investments in bonds
Investments in stocks
Others
Held-to-maturity financial assets
Investments in bonds
Others
Other financial assets
Investments in bonds
Investments in stocks		 $ 8,081,287
2,872,617
903,204
521,266
45,121,992
-		 $ -
176,085
-
-
-
-		 $ -
-
1,666,292
-
-
515,451		 $ 8,081,287
3,048,702
2,569,496
521,266
45,121,992
515,451		 $ -
-
-
-
-
-		 $ -
-
-
-
-
-		 $ 8,081,287
3,048,702
2,569,496
521,266
45,121,992
515,451		 $ -
-
-
-
-
-		 $ -
-
-
-
-
-		 $ 8,081,287
3,048,702
2,569,496
521,266
45,121,992
515,451
December 31, 2013 Neit her Past Due Nor Impaired Amount(Note) Past Due But Not
Impaired (B)		 Impaired
Amount
(C)		 Total
(A)+(B)+(C)		 Loss Recognized(D) Net Total
(A)+(B)+(C)-(D)
Investment
Grade		 Non-investment
Grade		 No Ratings Subtotal (A) With Objective
Evidence of
Impairment		 With Objective
Evidence of
Impairment
Available-for-sale financial assets
Investments in bonds
Investments in stocks
Others
Held-to-maturity financial assets
Investments in bonds
Others
Other financial assets
Investments in bonds
Investments in stocks		 $ 4,862,614
1,950,638
404,310
329,335
98,682
48,516,710
-		 $ -
57,259
-
-
-
-
-		 $ -
-
1,225,371
-
-
-
413,715		 $ 4,862,614
2,007,897
1,629,681
329,335
98,682
48,516,710
413,715		 $ -
-
-
-
-
-
-		 $ -
-
-
-
-
-
-		 $ 4,862,614
2,007,897
1,629,681
329,335
98,682
48,516,710
413,715		 $ -
-
-
-
-
-
-		 $ -
-
-
-
-
-
-		 $ 4,862,614
2,007,897
1,629,681
329,335
98,682
48,516,710
413,715

Note: The definitions are as follows:

  1. Investment grade: Credit rating is BBB - or higher or 1-5 TCRI corporate rating of TEJ if it is a publicly traded company.

  2. Non-investment grade: Credit rating is BB + or higher or 6-9 TCRI corporate rating of TEJ if it is a publicly traded company.

  3. No ratings: No external ratings.

  4. 226 -

9) Aging analysis of overdue but not yet impaired financial assets

Delays in processing payments by borrowers and other administrative reasons could result in financial assets becoming overdue but unimpaired. Based on the Bank’s internal risk management policies, financial assets that are 90 days overdue are not considered impaired unless evidences show otherwise.

The aging analysis of overdue but unimpaired financial assets was as follows:

December 31, 2014 December 31, 2014
Overdue Less
Than One
**Month **		 Overdue One
to Three
Months		 Overdue Over
Three to Six
Months		 Total
Accounts receivable
Credit cards
Others
Discounts and loans
Consumer finance
Corporate banking		 $ 111,489
1,116
210,783
14,082		 $ 33,850
603
50,111
12,275		 $ -
-
-
-		 $ 145,339
1,719
260,894
26,357
Credit cards
Others
Discounts and loans
Consumer finance
Corporate banking		 $ 111,489
1,116
210,783
14,082		 $ 33,850
$ -
603
-
50,111
-
12,275
-		 $ 33,850
$ -
603
-
50,111
-
12,275
-		 $ 145,339
1,719
260,894
26,357
December 31, 2013
Overdue Less
Than One
**Month **		 Overdue One
to Three
Months		 Overdue Over
Three to Six
Months		 Total
Accounts receivable
Credit cards
Others
Discounts and loans
Consumer finance
Corporate banking		 $ 133,441
1,435
250,725
15,933		 $ 34,936
655
58,920
9,337		 $ -
-
-
-		 $ 168,377
2,090
309,645
25,270

10) Analysis of impairment for financial assets

The Bank’s assessment of loans and receivables for impairment indicated no impairment loss on due from other banks, due from the Central Bank and call loans to other banks. The assessment of the other loans and receivables was as follows:

Discounts and loans

Type of Impairment Type of Impairment December 31, 2014 December 31, 2014 December 31, 2013 December 31, 2013
Discounts and
Loans		 Allowance for
Doubtful
Accounts		 Discounts and
Loans		 Allowance for
Doubtful
Accounts
With objective
evidence of
impairment		 Assessment of
individual
impairment		 $ 1,836,293 $ 227,055 $ 2,485,682 $ 439,408
Assessment of
collective
impairment		 337,726 70,769 384,979 82,628
With no
objective
evidence of
impairment		 Assessment of
collective
impairment		 258,432,705 2,269,290 230,200,571 2,002,400

  • 227 -

  • Note 1: The loans are those originated by the Bank, and are not net of the allowance for doubtful accounts and adjustments for discount (premium).

  • Note 2: The above loans include accrued interest receivables on loans, acceptances, guarantee payment receivables and exchange bills negotiated.

Receivables

Receivables Receivables
Type of Impairment December 31, 2014 December 31, 2013
Discounts and
Loans		 Allowance for
Doubtful
Accounts		 Discounts and
Loans		 Allowance for
Doubtful
Accounts
With objective
evidence of
impairment		 Individually
assessed for
impairment		 $ 26,892 $ 3,803 $ 1,177,944 $ 117,166
Collectively
assessed for
impairment		 1,655,812
73,632
1,945,801
89,021
With no
objective
evidence of
impairment		 Collectively
assessed		 11,209,700
59,983
10,246,666
70,057

  • Note 1: The receivables are those originated by the Bank, and are not net of the allowance for doubtful accounts and adjustments for discount (premium).

  • Note 2: The above receivables and allowances exclude accrued interest receivables on loans, acceptances, guarantee payments receivables, nondelivery receivables and option payments receivable, etc.

  • 11) Analysis of impairment for financial assets

On the basis of the result of a credit evaluation, the Bank may require collaterals before drawings are made on the credit facilities. For minimized credit risk, appropriate collaterals are required on the basis of the borrowers’ financials and debt service capabilities. All guarantees and appraisal procedures follow the authorities’ relevant regulations and the Bank’s internal rules. The Bank’s internal rules describe the acceptable types of collaterals, appraisal methods, appraisal process, and post-approval collateral management, which require the close monitoring of the value of collaterals to ensure repayment security. The main collateral types are summarized as follows: 

  - a) Real estate

  - b) Other property

  - c) Securities/stock

  - d) Deposits/certificates of deposits

  - e) Credit guarantee fund or government guarantee

  • d. Liquidity risk

  • 1) Source and definition of liquidity risk

Liquidity risk means banks cannot provide sufficient funding for asset size growth and for meeting obligations on matured liabilities or have to make late payments to counterparties or raise emergency funding to cover funding gaps.

  • 228 -

  • 2) Liquidity risk management strategy and principles

  • a) The Board of Directors, the top risk supervisor of the Bank, regularly reviews liquidity risk management policies. The Asset/Liability Management Committee, the top liquidity risk executive of the Bank, supervises the implementation of liquidity risk monitoring and control procedures and is responsible for taking any needed remedial measures.

  • b) In making internal transfer pricing, performance evaluation and new product development decisions, the operation units take liquidity cost and product effectiveness and risks into consideration and align their decisions with the Bank’s overall liquidity risk management policies.

  • c) The fund procurement department implements funding strategies in accordance with the conservatism principle to diversify the funding sources and negotiate reasonable repayment periods to ensure continuing participation in the lending market, and maintains a close relationship with fund providers to strengthen financing channels and ensure the stability and reliability of fund sources.

  • d) To strengthen liquidity risk management, the Bank has regulations requiring the daily execution of risk management procedures and the monitoring of implementation to maintain sufficient liquidity.

  • e) The risk management units report the Bank’s liquidity position to the Asset/Liability Management Committee monthly and report the Bank’s liquidity risk management to the Board of Directors regularly.

  • 3) The liquidity risk analysis of the cash inflow and outflow of assets and liabilities held for liquidity risk refers to the amounts of the obligations for the remaining maturity periods, i.e., from the reporting date to the contract maturity dates. The maturity analysis of financial assets and liabilities was as follows:

a) The maturity analysis of financial assets and liabilities

Assets
Cash and cash equivalents
Due from the Central Bank and other banks
Financial assets at fair value through profit or
loss
Securities purchased under resell agreements
Receivables
Available-for-sale financial assets
Discounts and loans
Held-to-maturity investments
Debt instruments with no active market
Financial assets carried at cost
Other financial assets - others
Liabilities
Call loans and due to banks
Financial liabilities at fair value through profit or
loss
Securities sold under repurchase agreements
Payables
Deposits and remittance
Bank debentures
Net liquidity gap		 December 31, 2014 December 31, 2014





Due in
One Month
$ 8,973,635

57,923,539
16,885,505
25,552,820
6,813,814
-
16,052,781
-
-
-

9,352,315

141,554,409

2,109,785
84,636
24,425,196
3,884,307
36,634,933

-


67,138,857

$ 74,415,552
 Due Between
after One
Month and
Three Months

$ 105,021

1,113,144
19,705
797,761
1,320,932
200,009
15,161,674
-
339,954
-

1,592,254


20,650,454

1,723,559
21,105
7,366,080
1,068,292
45,579,871

-


55,758,907

$ (35,108,453
)
 Due Between
after Three
Months and Six
Months
$ 192,000

1,189,456
67,346
-
1,606,552
-
35,144,098
27,276
2,006,612
-

-


40,233,340

2,092,100
65,708
-
381,122
61,507,310


-


64,046,240

$ (23,812,900
)
 Due Between
after Six
Months and
One Year
$ 206,000

2,697,045
247,461
-
3,117,726
471,944
46,231,792

-
7,907,357
-

-


60,879,325

239,300
39,457
-
105,488
101,328,175


-

101,712,420

$ (40,833,095
)
 Due after
One Year
$ -

4,337,269
1,153,119
-
1,956,646
13,027,532
147,608,890

493,990
34,868,069
515,451

57,345

204,018,311

-
178
-
16,862
151,360,143


7,400,000

158,777,183

$ 45,241,128
 Total
$ 9,476,656
67,260,453
18,373,136
26,350,581
14,815,670
13,699,485
260,199,235
521,266
45,121,992
515,451

11,001,914
467,335,839
6,164,744
211,084
31,791,276
5,456,071
396,410,432

7,400,000
447,433,607
$ 19,902,232
  • 229 -
Assets
Cash and cash equivalents
Due from the Central Bank and other banks
Financial assets at fair value through profit or
loss
Securities purchased under resell agreements
Receivables
Available-for-sale financial assets
Discounts and loans
Held-to-maturity investments
Debt instruments with no active market
Liabilities
Call loans and due to banks
Financial liabilities at fair value through profit or
loss
Securities sold under repurchase agreements
Payables
Deposits and remittance
Bank debentures
Net liquidity gap		 December 31, 2013 December 31, 2013





Due in
One Month
$ 7,190,960

61,998,949
7,985,111
17,806,782
5,540,820
50,039
14,243,314
5,101

-

114,821,076

106,832
5,902
17,504,555
2,653,349
33,101,655

-


53,372,293

$ 61,448,783
 Due Between
after One
Month and
Three Months

$ 105,000

969,979
1,458
2,423,737
1,982,917
-
11,881,784
198,944

133,356


17,697,175

-
3,105
7,078,102
859,693
38,885,529

-


46,826,429

$ (29,129,254
)
 Due Between
after Three
Months and Six
Months
$ 192,000

1,144,980
320,998
-
2,128,634
219,282
29,415,816
-

402,136


33,823,846

2,000,000
2,828
-
525,690
54,622,162

-


57,150,680

$ (23,326,834
)
 Due Between
after Six
Months and
One Year
$ 206,000

2,438,450
298,856
-
3,387,032
726,956
42,537,260

89,854

2,394,048


52,078,456

2,817,779
4,171
-
110,613
90,736,571


-


93,669,134

$ (41,590,678
)
 Due after
One Year
$ -

4,321,694
1,256,834
-
979,459
7,503,915
134,588,854

134,118

45,587,170

194,372,044

-
-
-
18,803
147,774,244


7,400,000

155,193,047

$ 39,178,997
 Total
$ 7,693,960
70,874,052
9,863,257
20,230,519
14,018,862
8,500,192
232,667,028
428,017

48,516,710
412,792,597
4,924,611
16,006
24,582,657
4,168,148
365,120,161

7,400,000
406,211,583
$ 6,581,014
  • b) The maturity analysis of derivatives financial liabilities - forward exchange contracts and currency swap contracts
Derivative financial liabilities to be settled at
gross amounts
Cash outflow
Cash inflow
Subtotal
Derivative financial liabilities to be settled at net
amounts
Forward exchange contracts
Derivative financial liabilities to be settled at
gross amounts
Cash outflow
Cash inflow
Subtotal
Derivative financial liabilities to be settled at net
amounts
Forward exchange contracts		 December 31, 2014 December 31, 2014



0-30 Days
$ 102,253,801

102,172,972

80,829

-

$ 80,829
 31-90 Days
$ 1,879,357


1,897,756

(18,399 )

-

$ (18,399
)
 91-180 Days
181 Days-
1 Year
$ 425,042
$ 137,374


430,151

134,831

(5,109 )
2,543

-

-

$ (5,109
)
$ 2,543

December 31, 2013		 Over 1 Year
$ -


-

-

-

$ -
 Total
$ 104,695,574
104,635,710
59,864

-
$ 59,864



0-30 Days
$ 5,303,323


5,298,468

4,855

939

$ 5,794
 31-90 Days
$ 477,929


475,043

2,886

-

$ 2,886
 91-180 Days
$ 414,710


413,292

1,418

-

$ 1,418
 181 Days-
1 Year
$ 10,347


10,257

90

-

$ 90
 Over 1 Year
$ -


-

-

-

$ -
 Total
$ 6,206,309

6,197,060
9,249

939
$ 10,188

c) The maturity analysis of derivatives financial liabilities - option contracts

Derivative financial liabilities to
be settled at net amounts
Derivative financial liabilities to
be settled at net amounts		 December 31, 2014
0-30 Days
31-90 Days
$ 1,361
$ 2,231
 91-180
Days
181 Days-
1 Year
$ 53,641
$ 22,802

December 31, 2013		 Over 1
Year
$ -
 Total
$ 80,035
0-30 Days
31-90 Days
$ -
$ -
 91-180
Days
181 Days-
1 Year
$ -
$ -
 Over 1
Year
$ -
 Total
$ -
  • 230 -

e. Market risk

  • 1) Source and definition of market risk

Market risk is defined as an unfavorable change in market prices (such as interest rates, exchange rates, stock prices and commodity prices), which may cause financial instruments classified in the trading book to give rise to a potential loss on or off the balance sheet.

  • 2) Market risk management strategy and processes

The Bank implements the “Market Risk Management Standards of Union Bank of Taiwan,” which had been approved by the Board of Directors, as the basis of market risk management.

The market risk management processes are risk identification, risk measurement, risk monitoring and control, risk reporting and risk mitigation.

  • a) Risk identification: For balance sheet and off-balance sheet items, the Bank identifies and assesses market risk factors of products and the investment business and subjects them to risk management, monitoring and control procedures.

  • b) Risk measurement: In principle, each investment or transaction has at least one risk measurement tool - such as sensitivity analysis, value at risk and stress testing, which can be applied to variables, such as fair market value and notional amounts, to quantify market risk.

  • c) Risk monitoring and control: Each operation unit observes the risk limit regulation stated in its operating manual and regularly monitors risk control. The department of risk management is responsible for summarizing and reporting the Bank’s overall market risk monitoring.

  • d) Risk reporting: The risk management reports are classified as regular report, over-limit report and exception report. Regular reports are the management statements sent to the appropriate level in accordance with certain requirements. Over-limit reports are about situations in which risk limits are exceeded. Exception reports contain operation units’ recommendations on how to meet temporary business needs.

  • e) Risk mitigation: An operation unit may take certain action to reduce risk, such as hedging, investment combination adjustment, position adjustment, setting a break-even point, halting new transactions, etc.

  • 3) Market risk management framework

  • a) The Board of Directors: The Board of Directors, the Bank’s top market risk supervisor, reviews risk management policies, operational risk limits and the design and change of the credit risk management framework.

  • b) Asset/Liability Management Committee: The Asset/Liability Management Committee inspects management reports or information provided by business units and the Risk Management Division.

  • c) Risk Management Division: The Risk Management Division is an independent unit in charge of the work related to three pillars of Basel and of the development of market risk management tools to assess and control the risk identified through setting risk limits.

  • d) Operation units: Operation units perform daily market risk management work and report the market risk of investment positions and related information to the authorities.

  • 231 -

  • 4) Market risk measurement, control and reporting

  • a) The market risk of the trading book financial instruments is measured in accordance with the fair market value or evaluation model and the profit and loss situation is evaluated regularly.

  • b) The business units and the risk management division prepares management reports periodically and report to the appropriate level.

  • c) The market risk management system combines the evaluation of the front and middle offices to generate information that will assist management in risk monitoring. Moreover, the system supports the capital accrual method being used by the Bank through generating internal and external reports for management’s decision, making.

  • 5) Market risk measurement of trading book

The Bank assesses the market risk exposure of the trading book in conformity with an assessment model using publicly quoted market prices or other measurement methods, including interest rate sensitivity analysis (DV01 value) and stress tests. The interest rate sensitivity analysis (DV01 value) refers to changes in market interest by 1 basis point (0.01%); the abnormal stress test system deals with market volatility and involves the regular estimation of possible losses (stress loss) and of the impact of stress test scenarios on major asset portfolios and the Bank’s profit and loss.

  • 6) Banking book market risk

  • a) Interest rate risk

The loans and deposits and other interest rate-related items in the Bank’s balance sheet, including interest rate sensitive assets and interest rate sensitive liabilities, are measured from the viewpoint of earnings because there is a risk of decrease in earnings due to adverse changes in interest rates for loans and deposits.

The earnings viewpoint mainly emphasizes the impact of interest rates on earnings, especially short-term earnings. For 2014 and 2013, assuming all market risk indicators, except interest rates, remained constant, an interest rate increase or decrease by 100bps would result in an increase or decrease in profit before tax by $219,359 thousand and $186,077 thousand, respectively.

  • b) Exchange rate risk

The exchange rate risk of the banking book refers to the business operation of the International Banking Department of the Bank’s Head Office and the operating funds in foreign currencies required by the ROC or local regulations; if there are adverse exchange rate changes, the income statement or cumulative translation adjustments in equity would be negatively affected.

The International Banking Department (IBD) of the Bank’s Head Office is a going concern, and its operating funds are foreign currencies for business needs. However, the exchange rate risk on these funds is not significant because the percentage of the operating funds to the Bank’s total assets is small, as shown by the immaterial ratio of the IBD’s cumulative translation adjustment to the Banks’ net worth.

  • 232 -

7) Foreign currency rate risk information

The information on significant foreign financial assets and liabilities is as follows:

Unit: Each Foreign Currency (Thousands)/NT$ (Thousands)

Financial assets
USD
JPY
GBP
AUD
HKD
CAD
CNY
SGD
ZAR
CHF
THB
NZD
EUR
Financial liabilities
USD
JPY
GBP
AUD
HKD
CAD
CNY
SGD
ZAR
CHF
NZD
EUR
Financial assets
USD
JPY
GBP
AUD
HKD
CAD
CNY		 December 31, 2014
Foreign
Currencies
Exchange
Rate
New Taiwan
Dollars
$ 1,875,170
31.718
$ 59,476,642
4,658,552
0.2651
1,235,141
3,387
49.3564
167,189
88,267
25.9644
2,291,804
101,744
4.0897
416,106
9,239
27.3219
252,420
823,061
5.1034
4,200,390
1,826
23.9870
43,810
668,814
2.7400
1,832,535
278
32.0546
8,921
15
0.9641
15
21,799
24.8574
541,857
21,235
38.5532
818,663
1,498,559
31.718
47,531,279
6,576,426
0.2651
1,743,634
3,397
49.3564
167,644
87,872
25.9644
2,281,542
101,775
4.0897
416,235
9,324
27.3219
254,746
846,139
5.1034
4,318,164
1,810
23.9870
43,426
668,576
2.7400
1,831,883
272
32.0546
8,725
21,795
24.8574
541,765
21,350
38.5532
823,129
December 31, 2013
Foreign
Currencies
Exchange
Rate
New Taiwan
Dollars
$ 1,875,249
29.95
$ 56,163,708
4,374,934
0.2852
1,247,897
4,108
49.4984
203,339
88,478
26.7184
2,363,990
104,187
3.8626
402,435
10,579
28.13
297,587
289,469
4.9437
1,431,052
(Continued)
  • 233 -
SGD
ZAR
CHF
THB
NZD
EUR
Financial liabilities
USD
JPY
GBP
AUD
HKD
CAD
CNY
SGD
ZAR
CHF
NZD
EUR		 December 31, 2013
Foreign
Currencies
Exchange
Rate
New Taiwan
Dollars
$ 1,887
23.6871
$ 44,698
782,339
2.8624
2,239,398
383
33.6554
12,890
106
0.913
97
25,806
24.5979
634,774
16,513
41.2831
681,708
1,517,860
29.95
45,459,907
4,552,288
0.2852
1,298,486
4,094
49.4984
202,646
88,386
26.7184
2,361,532
103,774
3.8626
400,840
10,596
28.13
298,065
287,840
4.6797
1,347,005
1,870
23.6871
44,295
782,213
2.8624
2,239,038
350
33.6554
11,779
25,836
24.5979
635,512
15,435
41.2831
637,204
(Concluded)

46. CAPITAL MANAGEMENT

  • a. Strategies to maintain capital adequacy

Under the regulations set by the authorities, the Bank complies with the requirements set each year for the minimum consolidated capital adequacy ratios, including the common equity Tier I capital ratio; the Bank’s leverage ratio is also in accordance with the requirements of the relevant authorities. These ratios are applied in accordance with the regulations announced by the authorities.

  • b. Capital assessment program

The capital ratios and leverage ratios are applied, analyzed, monitored and reported regularly, and are assigned to each business unit as the target capital adequacy ratios. The business units’ compliance with the ratio requirements is tracked regularly, and remedial action is taken if the capital and leverage ratio requirements are not met.

  • 234 -

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

Items(Note 2) Year Year December 31, 2014 December 31, 2014
Own Capital
Adequacy Ratio		 Consolidated
Capital
Adequacy Ratio
Eligible capital Common equityTier Ratio $26,380,471 $26,284,281
Other Tier capital -
-
Tier capital 6,462,888
9,094,428
Eligible capital 32,843,359
35,378,709
Risk-weighted
assets		 Credit risk Standard 214,775,638 222,043,054
Internal rating-based approach -
-
Asset securitization 1,262,627
1,262,627
Operational
risk		 Basic indicator approach 15,555,738
17,986,163
Standard/alternative standardized
approach		 -
-
Advanced measurement approach -
-
Market risk Standard 17,206,850
18,233,988
Internal model approach -
-
Total risk-weighted assets 248,800,853 259,525,832
Capital adequacyrate 13.20
13.63
Ratio of common stockholders’ equityto risk-weighted assets 10.60
10.13
Ratio of Tier 1 capital to risk-weighted assets 10.60
10.13
Leverage ratio 4.49
4.41

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

  • Note 2: Formulas used were as follows:

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

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

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

  • 4) Ratio of Common equity Tier 1 capital to risk-weighted assets = Common equity Tier 1 capital ÷ Risk-weighted assets.

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

  • 6) Leverage ratio = Common equity Tier 1 capital ÷ Exposure Measurement

  • 235 -

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

Items(Note 2) Year Year December 31, 2013 December 31, 2013
Own Capital
Adequacy Ratio		 Consolidated
Capital
Adequacy Ratio
Eligible capital Common equityTier 1 Ratio $23,562,741 $23,436,734
Other Tier 1 capital -
-
Tier 2 capital 6,624,701
9,229,142
Eligible capital 30,187,442
32,665,876
Risk-weighted
assets		 Credit risk Standard 190,948,228 199,611,322
Internal rating-based approach -
-
Asset securitization 1,219,545
1,252,907
Operational
risk		 Basic indicator approach 15,405,625
17,706,850
Standard/alternative standardized
approach		 -
-
Advanced measurement approach -
-
Market risk Standard 9,234,588
10,280,113
Internal model approach -
-
Total risk-weighted assets 216,807,986 228,851,192
Capital adequacyrate 13.92
14.27
Ratio of common stockholders’ equityto risk-weighted assets 10.87
10.24
Ratio of Tier 1 capital to risk-weighted assets 10.87
10.24
Leverage ratio 4.47
4.38
  • Note 1: Eligible capital and risk-weighted assets are calculated under the “Regulations Governing the Capital Adequacy Ratio of Banks” and the “Explanation of Methods for Calculating the Eligible Capital and Risk-weighted Assets of Banks.”

Note 2: Formulas used were as follows:

  • 1) Eligible capital = Tier 1 capital + Tier 2 capital + Tier 3 capital.

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

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

  • 4) Ratio of Tier 1 capital to risk-weighted assets = Tier 1 capital ÷ Risk-weighted assets.

  • 5) Ratio of Tier 2 capital to risk-weighted assets = Tier 2 capital ÷ Risk-weighted assets.

  • 6) Ratio of Tier 3 capital to risk-weighted assets = Tier 3 capital ÷ Risk-weighted assets.

  • 7) Ratio of common stock to total assets = Common stock ÷ Total assets.

  • 8) Leverage ratio = Tier 1 capital ÷ Adjusted average assets (average assets minus goodwill, unamortized loss from the sale of nonperforming loans, and items to be subtracted from Tier 1 capital which are covered by the “Explanation of Methods for Calculating the Eligible Capital and Risk-weighted Assets of Banks.”

  • 236 -

The Banking Law and related regulations require that the Bank maintain its unconsolidated and consolidated CARs at a minimum of 8.0%, the Tier 1 Capital Ratio at a minimum of 5.5% and the Common Equity Tier 1 Ratio at a minimum of 4.0%. In addition, if the Bank’s CAR falls below the minimum requirement, the authorities may impose certain restrictions on the amount of cash dividends that the Bank can declare or, in certain conditions, totally prohibit the Bank from declaring cash dividends.

47. ASSET QUALITY, CONCENTRATION OF CREDIT EXTENSIONS, INTEREST RATE SENSITIVITY, PROFITABILITY AND MATURITY ANALYSIS OF ASSETS AND LIABILITIES

Union Bank of Taiwan

  • a. Credit risk

  • 1) Asset quality

See Table 6.

  • 2) Concentration of credit extensions

(In Thousands of New Taiwan Dollars, %)

December 31, 2014
Rank
(Note 1)		 Company Name Credit
Extension
Balance		 % to Net
Asset
Value
1 GroupF - manufacture of chemical material $3,650,000 11.39
2 GroupO - financial intermediation 2,515,000 7.85
3 GroupD - real estate development 2,230,604 6.96
4 CompanyB - other financial intermediation 1,844,941 5.76
5 CompanyK - real estate development 1,765,000 5.51
6 Group U- real estate development 1,495,500 4.67
7 CompanyJ - other financial intermediation 1,000,000 3.12
8 CompanyZ - real estate development 820,000 2.56
9 CompanyE - real estate development 680,000 2.12
10 CompanyL - telephone and manufacturing 634,360 1.98

(In Thousands of New Taiwan Dollars, %)

December 31, 2013

(In Thousands of New Taiwan Dollars, %) (In Thousands of New Taiwan Dollars, %) (In Thousands of New Taiwan Dollars, %) (In Thousands of New Taiwan Dollars, %)
December 31, 2013
Rank
(Note 1)		 Company Name Credit
Extension
Balance		 % to Net
Asset
Value
1 CompanyB - other financial intermediation $2,167,788 7.63
2 GroupO - financial intermediation 1,658,000 5.83
3 CompanyK - real estate development 1,455,000 5.12
4 GroupF - manufacture of chemical material 1,453,022 5.11
5 GroupU - real estate development 1,133,140 3.99
6 CompanyZ - real estate development 820,000 2.88
7 CompanyD - real estate development 707,330 2.49
8 CompanyH - retail sale of other food and beverages 600,800 2.11
9 CompanyL - telephone and cellularphone manufacturing 599,000 2.11
10 Company G - renting and leasing of other transport
equipment		 588,750 2.07
  • 237 -

b. Market risk

Interest Rate Sensitivity December 31, 2014

Interest Rate Sensitivity
December 31, 2014		 Interest Rate Sensitivity
December 31, 2014		 Interest Rate Sensitivity
December 31, 2014		 Interest Rate Sensitivity
December 31, 2014		 Interest Rate Sensitivity
December 31, 2014		 Interest Rate Sensitivity
December 31, 2014
(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 rate-sensitive assets $ 341,924,166 $ 6,026,273 $ 6,993,835 $ 28,252,745 $ 383,197,019
Interest rate-sensitive liabilities 183,108,590 132,939,459
56,783,846
14,285,834		 387,117,729
Interest rate-sensitivegap 158,815,576 (126,913,186)
(49,790,011)
13,966,911
(3,920,710)
Networth 22,688,214
Ratio of interest rate-sensitive assets to liabilities 98.99%
Ratio of interest rate sensitivity gapto net worth (17.28%)

December 31, 2013

(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 rate-sensitive assets $ 310,119,147 $ 4,874,228 $ 9,110,013 $19,943,749 $ 344,047,137
Interest rate-sensitive liabilities 159,009,333 122,146,689
52,011,556
16,946,983		 350,114,561
Interest rate-sensitivegap 151,109,814 (117,272,461)
(42,901,543)
2,996,766
(6,067,424)
Networth 19,305,784
Ratio of interest rate-sensitive assets to liabilities 98.27%
Ratio of interest rate sensitivity gapto net worth (31.43%)

  • Note 1: The above amounts included only New Taiwan dollar amounts held by the Bank’s Head Office and branches (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 are 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 December 31, 2014

(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 rate-sensitive assets $ 501,353 $ 86,078 $ 256,094 $ 1,318,138 $ 2,161,663
Interest rate-sensitive liabilities 1,110,726 518,695 227,248 - 1,856,669
Interest rate-sensitivegap (609,373) (432,617) 28,846 1,318,138 304,994
Networth 340,456
Ratio of interest rate-sensitive assets to liabilities 116.43%
Ratio of interest rate sensitivity gapto networth 89.58%
  • 238 -

December 31, 2013

(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 rate-sensitive assets $ 203,657 $ 54,156 $ 81,256 $1,648,049 $1,987,118
Interest rate-sensitive liabilities 1,029,522 413,099 245,649 - 1,688,270
Interest rate-sensitivegap (825,865) (358,943) (164,393) 1,648,049 298,848
Networth 344,770
Ratio of interest rate-sensitive assets to liabilities 117.70%
Ratio of interest rate sensitivity gapto net worth 86.68%

  • Note 1: The above amounts included only U.S. dollar amounts held by the Bank’s Head Office, domestic branches, OBU and overseas branches 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 are 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)

  • c. Liquidity risk

  • 1) Profitability

(%)

(%)
Items **Year Ended ** **December 31 **
2014 2013
Return on total assets Before income tax 0.80 0.79
After income tax 0.67 0.68
Return on equity Before income tax 12.16 12.50
After income tax 10.23 10.74
Net income ratio 34.96 33.82

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

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

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

  • Note 4: Income before (after) income tax represents income for the years ended December 31, 2014 and 2013.

  • 239 -

2) Maturity analysis of assets and liabilities

Maturity Analysis of Assets and Liabilities December 31, 2014

(In Thousands of New Taiwan Dollars)

Total Remaining Period to Maturity Remaining Period to Maturity Remaining Period to Maturity
1-30 Days 31-90 Days 91-180 Days 181 Days-
1 Year		 Over 1 Year
Main capital inflow on
maturity		 $ 418,547,928 $ 136,874,790 $ 18,241,065 $ 37,960,366 $ 58,060,030 $ 167,411,677
Main capital outflow on
maturity		 523,943,968 68,899,444 64,337,213 76,586,325 130,924,133 183,196,853
Gap (105,396,040)
67,975,346		 (46,096,148)
(38,625,959)
(72,864,103)		 (15,785,176)

December 31, 2013

(In Thousands of New Taiwan Dollars)

Total Remaining Period to Maturity Remaining Period to Maturity Remaining Period to Maturity
1-30 Days 31-90 Days 91-180 Days 181 Days-
1 Year		 Over 1 Year
Main capital inflow on
maturity		 $376,406,219 $121,158,363 $17,247,970 $32,611,679 $52,610,070 $152,778,137
Main capital outflow on
maturity		 433,976,847 42,714,593 37,825,509 45,500,635 93,957,585 213,978,525
Gap (57,570,628)
78,443,770		 (20,577,539)
(12,888,956)
(41,347,515)		 (61,200,388)

Note: The above amounts are book value held by the onshore branches and offshore banking unit of the Bank in U.S. dollars, without off-balance sheet amounts (for example, the issuance of negotiable certificate of deposits, bonds or stocks).

Maturity Analysis of Assets and Liabilities December 31, 2014

(In Thousands of U.S. Dollars)

Total Remaining Period to Maturity Remaining Period to Maturity Remaining Period to Maturity
1-30 Days 31-90 Days 91-180 Days 181 Days-
1 Year		 Over 1 Year
Main capital inflow on
maturity		 $ 3,041,730 $1,120,262 $ 202,175 $ 92,699 $ 261,342 $1,365,252
Main capital outflow
on maturity		 3,041,680 1,287,046 526,655
653,823		 233,672 340,484
Gap 50 (166,784)
(324,480)
(561,124)
27,670		 1,024,768

December 31, 2013

(In Thousands of U.S. Dollars)

Total Remaining Period to Maturity Remaining Period to Maturity Remaining Period to Maturity
1-30 Days 31-90 Days 91-180 Days 181 Days-
1 Year		 Over 1 Year
Main capital inflow on
maturity		 $2,509,198 $ 638,507 $ 29,290 $ 55,522 $ 91,098 $1,694,781
Main capital outflow
on maturity		 2,509,115 983,840 405,951
527,642		 246,912 344,770
Gap 83 (345,333)
(376,661)
(472,120)
(155,814)		 1,350,011

Note: The above amounts are book value of the assets and liabilities held by the onshore branches and offshore banking unit of the Bank in U.S. dollars, without off-balance amounts (for example, the issuance of negotiable certificate of deposits, bonds or stocks).

  • 240 -

48. ADDITIONAL DISCLOSURES

Following are the additional disclosures required by the Securities and Futures Bureau for the Bank and its investees:

  • a. Related information of significant transactions and investees and (b) proportionate share in investees:

  • 1) Financing provided to other parties: The Bank - not applicable; investee - Table 1 (attached)

  • 2) Endorsement/guarantee provided: The Bank - not applicable; investee - Table 2 (attached)

  • 3) Marketable securities held: The Bank - not applicable; investee - Table 3 (attached)

  • 4) Marketable securities acquired and disposed of at costs or prices of at least $300 million or 10% of the paid-in capital: None

  • 5) Acquisition of individual real estate at costs of at least $300 million or 10% of the paid-in capital: The Bank - none; investee - Table 4 (attached)

  • 6) Disposal of individual real estate at costs of at least $300 million or 10% of the paid-in capital: None

  • 7) Allowance of service fees to related parties amounting to at least $5 million: None

  • 8) Receivables from related parties amounting to at least $300 million or 10% of the paid-in capital: None

  • 9) Sale of nonperforming loans: Table 5 (attached)

  • 10) Asset securitization under the “Regulations for Financial Asset Securitization”: None

  • 11) Other significant transactions which may affect the decisions of users of financial reports: Table 6 (attached)

  • 12) Names, locations and other information of investees on which the Bank exercises significant influence: Table 7 (attached)

  • 13) Derivative transactions: Note 8

  • b. Investment in Mainland China: None

49. INFORMATION SEGMENTS

The Bank has disclosed the segment information in the consolidated financial statements. Thus, no segment information is presented herein.

  • 241 -

TABLE 1

UNION BANK OF TAIWAN

LOANS PROVIDED TO OTHER PARTIES FOR THE YEAR ENDED DECEMBER 31, 2014 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No. Lender Borrower Financial
Statement Account		 Highest Balance
for the Period		 Ending Balance Actual
Borrowing
Amount		 Interest Rate
(%)		 Nature of Financing Business
Transaction
Amounts		 Reasons for
Short-term Financing		 Allowance for
Impairment
Loss		 Coll ateral Financing
Limit for Each
Borrower		 Aggregate
Financing Limit
Item Value
1 Union Financial and Leasing
International Corporation		 Union Capital (Cayman) Corp. Affiliates of receivable $ 587,616
(JPY 2,216,300)		 $ 496,145
(JPY 1,871,300)		 $ 496,145
(JPY 1,871,300)		 1.5 Short-term financing $ - Purchase operating
leasing assets		 $ - - $ - $ 917,737 $ 917,737
2 Union Capital (Cayman) Corp. Union Capital (Singapore)
Holding Pte. Ltd.		 Affiliates of receivable 962,833
(JPY 3,630,300
US$ 10)		 962,833
(JPY 3,630,300
US$ 10)		 962,833
(JPY 3,630,300
US$ 10)		 1.5 Short-term financing - Purchase operating
leasing assets		 - - -
2,294,342
2,294,342
3 Union Capital (Singapore)
Holding Pte. Ltd.		 Kabushiki Kaisha UCJ1 (Japan) Affiliates of receivable 368,125
( JPY 1,388,450)		 368,125
(JPY 1,388,450)		 368,125
(JPY 1,388,450)		 1.50-2.75 Short-term financing - Purchase operating
leasing assets		 - - -
2,294,342
2,294,342
  • 242 -

TABLE 2

UNION BANK OF TAIWAN

ENDORSEMENTS/GUARANTEES PROVIDED DECEMBER 31, 2014

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No. Endorsement/Guarantee
Provider		 Guaranteed Party Limits on
Endorsement/
Guarantee
Amount
Provided to
Each
Guaranteed
Party
Maximum
Balance for
the Year		 Ending
Balance		 Actual
Borrowing
Amount		 Amount of
Endorsement/
Guarantee
Collateralized
by Properties

Ratio of
Accumulated
Endorsement/
Guarantee to
Net Equity
Per the Latest
Financial
Statements

Aggregate
Endorsement/
Guarantee
Limit
Endorsement/
Guarantee
Given by
Parent on
Behalf of
Subsidiaries
Endorsement/
Guarantee
Given by
Subsidiaries
on Behalf of
Parent
Endorsement/
Guarantee
Given on
Behalf of
Companies in
Mainland
China
Name Nature of
Relationship
1 Union Capital (Cayman) Corp. Union Finance and Leasing International
Corporation		 Subsidiary $ 464,740 $ 400,000 $ - $ - $ - - $ 464,740 N Y N
  • 243 -

TABLE 3

UNION BANK OF TAIWAN

MARKETABLE SECURITIES HELD DECEMBER 31, 2014

(In Thousands of New Taiwan Dollars and Foreign Currency, Unless Stated Otherwise)

Holding Company Type and Issuer/
Name of Marketable Securities		 Issuer’s
Relationship
with Holding
Company		 Financial Statement Account December 31, 2014 December 31, 2014 Note
Shares/Piece/
Units
(In Thousands)		 Carrying Value
Percentage
of
Ownership
(%)		 Market Value
or Net Asset
Value
Union Finance and Leasing International
Corporation
Union Information Technology Corporation
Union Securities Investment Trust
Corporation (USITC)
Union Finance International (HK) Limited		 Stock
Masterlink Securities Corporation.
China Chemical Corporation
Taiwan Life Insurance Co., Ltd.
Union Capital (Cayman) Corp.
New Asian Ventures Ltd.
ERA Communications Co., Ltd.
Beneficial certificates
Union Advantage Global FI Portfolio Fund
Union Emerge Res-rich Countries HYBd B
Stock
ELTA Technology Co., Ltd.
Beneficial certificates
Union Advantage Global FI Portfolio Fund
The RSIT Enhanced Money Market
Union Emerging Asia Bond A
Union Money Market
Union Golden Balance Fund
Union Emerg Res-rich Countries HYBd A
Union China
Union Technology Fund
Union APEC Balanced A
Bond
HBOS Capital Funding LP
PHBS Ltd.
Stock
ING Group N.V.
Apple Computer Inc.
Merck & Co., Inc.
EBAY Inc.
Penn West Energy		 -
-
-
Subsidiary
Subsidiary
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-		 Available-for-sale financial assets
Available-for-sale financial assets
Available-for-sale financial assets
Equity investment - equity method
Equity investment - equity method
Unquoted equity instruments
Available-for-sale financial assets
Available-for-sale financial assets
Unquoted equity instruments
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss
Available-for-sale financial assets
Available-for-sale financial assets
Available-for-sale financial assets
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss		 882
356
2,593
50
-
425
5,074
5,898
2,382
1,068
1,297
486
1,459
575
800
1,006
1,460
1,001
900
500
33
3
12
14
119		 $ 8,820

7,271

48,626

464,740

79,986

1,415

78,481

56,730

23,240

16,516

15,254

5,285

18,940

8,643

8,116

19,106

13,404

10,686
US$ 905
US$ 487
US$ 847
US$ 500
US$ 500
US$ 500
US$ 2,111		 0.06
0.12
0.25
100.00
100.00
0.33
-
-
15.88
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-		 $ 8,820
7,271
48,626
464,740
79,986
7,009
78,481
56,730
34,164
16,516
15,254
5,285
18,940
8,643
8,116
19,106
13,404
10,686
US$ 905
US$ 487
US$ 847
US$ 500
US$ 500
US$ 500
US$ 2,111		 Note 4
Note 4
Note 4
Note 1
Note 1
Note 1
-
-
Note 3
-
-
-
-
-
-
-
-
-
-
-
Note 4
Note 4
Note 4
Note 4
Note 4

(Continued)

  • 244 -
Holding Company Type and Issuer/
Name of Marketable Securities		 Issuer’s
Relationship
with Holding
Company		 Financial Statement Account December 31, 2014 December 31, 2014 Note
Shares/Piece/
Units
(In Thousands)		 Carrying Value
Percentage
of
Ownership
(%)		 Market Value
or Net Asset
Value
New Asian Ventures Ltd.
Union Capital (Cayman) Corp.
Union Capital (Singapore) Holding PTE.
LTD.
Kabushiki Kaisha UCJ1		 Stock
Grace T.H.W. Holding Limited
Beneficial certificates
Union Capital (Singapore) Holding PTE. LTD.
Beneficial certificates
Kabushiki Kaisha UCJ1
Tokutei Mokuteki Kaisha SSG15
Beneficial certificates
Tokutei Mokuteki Kaisha SSG15		 -
-
-
-
-		 Unquoted equity instruments
Equity investment - equity method
Equity investment - equity method
Equity investment - equity method
Equity investment - equity method		 1,667
-
9
-
Preferred stock
37		 $ 64,320
JPY
(10,690)
JPY 457,152
JPY 1,776,951
JPY 1,849,272		 0.81
100.00
100.00
49.00
51.00		 US$ 2,800
JPY
(10,690)
JPY 457,152
JPY 1,776,951
JPY 1,849,272		 Note 2
Note 5
Note 5
Notes 5 and 6
Note 5

The Bank’s investees had investments in companies with shares having no quoted market prices. The net asset values of these companies were based on the following:

Note 1: Union Finance and Leasing International Corporation:

  • a. ERA Communications Co., Ltd. - the audited statements of stockholders’ equity as of December 31, 2013.

  • b. New Asian Ventures Ltd. and Union Capital (Cayman) Corp. - the audited statements of stockholders’ equity as of December 31, 2014.

Note 2: New Asian Ventures Ltd.:

Grace T.H.W. Holding Limited - unaudited statements of stockholders’ equity as of December 31, 2014.

Note 3: Union Information Technology Corporation:

ELTA Technology Co., Ltd. - unaudited statements of stockholders’ equity as of December 31, 2014.

  • Note 4: The market values of the listed and OTC stocks included in financial assets at fair value through profit or loss and available-for-sale financial assets were based on the daily closing prices as of balance sheet date. The market values of beneficial certificates were based on net asset values as of the balance sheet date.

  • Note 5: Union Capital (Singapore) Holding PTE. LTD. and Kabushiki Kaisha UCJ1 - unaudited statements of stockholders’ equity as of September 30, 2014. Tokutei Mokuteki Kaisha SSG15 - audited statements of stockholders’ equity as of September 30, 2014.

Note 6: Common stock 4 shares and preferred stock 36 thousand shares.

(Concluded)

  • 245 -

TABLE 4

UNION BANK OF TAIWAN

ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST $300 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2014

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Buyer Property Event Date Transaction
Amount		 Payment Status Counterparty Relationship Information on P revious Title Transf er If Counterparty Is a Related Party er If Counterparty Is a Related Party Pricing Reference
(Note 1)
Purpose of
Acquisition		 Other Terms
Property Owner Relationship Transaction Date Amount
Tokutei Mokuteki Kaisha
SSG15		 Investment property - land
and buildings		 2014.9.17 JPY 3,450,000 JPY 3,450,000 合同會社せ-ス Non-relate N N N $ - By appraisal report Operating leasing
assets		 Note 2

Note 1: The appraisal amount of the investment property was JPY3,620,000 thousand and JPY3,520,000, based on the valuations made by different independent qualified professional appraisers.

Note 2: In a real estate securitized preferred stock issued by Tokutei Mokuteki Kaisha SSG15, Union Capital (Singapore) Holding PTE. LTD. (owned by Union Capital (Cayman) Corp.) and Kabushiki Kaisha UCJ invested JPY1,778,900 thousand and JPY1,851,300 thousand, respectively, and acquired equity interests of 49% and 51%, respectively.

  • 246 -

TABLE 5

UNION BANK OF TAIWAN

SALE OF NONPERFORMING LOANS DECEMBER 31, 2014 (In Thousands of New Taiwan Dollars)

Transaction Date Transaction Partners Composition of Creditor’s Right Carrying Value
(Note 1)		 Sale Price Disposal Loss
(Note 2)		 Collateral Relationship
2014.04.17 Deutsche Bank AG London Branch
Bank of America, National Association		 Business loan
Business loan		 $ 211,138
234,388		 $ 180,567
198,761		 $ (30,571)
(35,627)		 -
-		 -
-

Note 1: Carrying value was original amount of credit reduced by allowance for credit loss.

Note 2: Include exchange loss.

  • 247 -

TABLE 6

UNION BANK OF TAIWAN

ASSET QUALITY

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars, %)

Period Period December 31, 2014 December 31, 2014 December 31, 2014
Items Nonperforming
Loans
(Note 1)		 Loans Ratio of
Nonperforming
Loans (Note 2)		 Allowance for
Possible Losses		 Coverage Ratio
(Note 3)
Corporate banking Secured $ 91,241 $68,956,431 0.13% $ 1,267,128 1,020.89%
Unsecured 32,878 53,812,643 0.06%
Consumer banking Housingmortgage(Note 4) 58,055 113,818,594 0.05% 1,079,016 1,858.61%
Cash card 1,508 116,389 1.30% 4,697 311.47%
Small scale credit loans(Note 5) 23,240 8,851,061 0.26% 83,909 361.05%
Other (Note 6) Secured 16,587 12,440,740 0.13% 132,364 795.36%
Unsecured 55 2,203,377 -
Loan 223,564 260,199,235 0.09% 2,567,114 1,148.27%
Nonperforming
Receivables
(Note 1)		 Receivables Ratio of
Nonperforming
Receivables		 Allowance for
Possible Losses		 Coverage Ratio
Credit cards 33,603 12,611,962 0.27% 123,019 366.10%
Accounts receivable factored without reco urse(Note 7) - - - - -

  • Note 1: Nonperforming loans are reported to the authorities and disclosed to the public, as required by the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/Non-accrued Loans.” Nonperforming credit card receivables are reported to the authorities and disclosed to the public, as required by the Banking Bureau’s letter dated July 6, 2005 (Ref. No. 0944000378).

  • Note 2: Ratio of nonperforming loans: Nonperforming loans ÷ Outstanding loan balance.

  • Ratio of nonperforming credit card receivables: Nonperforming credit card receivables ÷ Outstanding credit card receivables balance.

  • Note 3: Coverage ratio of loans: Allowance for possible losses for loans ÷ Nonperforming loans. Coverage ratio of credit card receivables: Allowance for possible losses for credit card receivables ÷ Nonperforming credit card receivables.

  • Note 4: The mortgage loan is for house purchase or renovation and is fully secured by housing that is purchased (owned) by the borrower, the spouse or the minor children of the borrowers.

  • Note 5: Based on the Banking Bureau’s letter dated December 19, 2005 (Ref. No. 09440010950), small-scale credit loans are unsecured, involve small amounts and exclude credit cards and cash cards.

  • Note 6: Other consumer banking loans refer to secured or unsecured loans that exclude housing mortgage, cash cards, credit cards and small-scale credit loans.

  • Note 7: As required by the Banking Bureau in its letter dated July 19, 2005 (Ref. No. 094000494), accounts receivable factored without recourse are reported as nonperforming receivables within three months after the factors or insurance companies refuse to indemnify banks for any liabilities on these accounts.

Not reported as nonperforming loans or nonperforming receivables

Not reported as nonperforming loans or nonperforming receivables
Items
Types		 December 31, 2014
Not Reported as
Nonperforming Loans		 Not Reported as
Nonperforming Receivables
Amounts of executed contracts on negotiated debts not reported as nonperforming loans and
receivables(Note 1)		 $ 106,998 $ 451,394
Amounts of discharged and executed contracts on clearance of consumer debts not reported
as nonperformingloans and receivables(Note 2)		 59,687 926,859
Total 166,685 1,378,253

  • Note 1: Amounts of executed contracts on negotiated debts that are not reported as nonperforming loans or receivables are reported in accordance with the Banking Bureau’s letter dated April 25, 2006 (Ref. No. 09510001270).

  • Note 2: Amounts of discharged and executed contracts on clearance of consumer debts that are not reported as nonperforming loans or receivables are reported in accordance with the Banking Bureau’s letter dated September 15, 2008 (Ref. No. 09700318940).

(Continued)

  • 248 -
Period Period December 31, 2013 December 31, 2013 December 31, 2013
Items Nonperforming
Loans
(Note 1)		 Loans Ratio of
Nonperforming
Loans (Note 2)		 Allowance for
Possible Losses		 Coverage Ratio
(Note 3)
Corporate banking Secured $ 558,269 $64,031,114 0.87% $ 1,125,846 194.43%
Unsecured 20,794 39,655,589 0.05%
Consumer banking Housingmortgage(Note 4) 49,239 110,096,437 0.04% 1,195,443 2,427.84%
Cash card 4,863 163,041 2.98% 9,280 190.83%
Small scale credit loans(Note 5) 19,482 6,996,991 0.28% 75,974 389.97%
Other (Note 6) Secured 21,204 10,037,162 0.21% 117,893 540.37%
Unsecured 613 1,686,694 0.04%
Loan 674,464 232,667,028 0.29% 2,524,436 374.29%
Nonperforming
Receivables
(Note 1)		 Receivables Ratio of
Nonperforming
Receivables		 Allowance for
Possible Losses		 Coverage Ratio
Credit cards 40,506 11,695,827 0.35% 133,906 330.58%
Accounts receivable factored without reco urse(Note 7) - - - - -

  • Note 1: Nonperforming loans are reported to the authorities and disclosed to the public, as required by the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/Non-accrued Loans.”

  • Nonperforming credit card receivables are reported to the authorities and disclosed to the public, as required by the Banking Bureau’s letter dated July 6, 2005 (Ref. No. 0944000378).

  • Note 2: Ratio of nonperforming loans: Nonperforming loans ÷ Outstanding loan balance. Ratio of nonperforming credit card receivables: Nonperforming credit card receivables ÷ Outstanding credit card receivables balance.

  • Note 3: Coverage ratio of loans: Allowance for possible losses for loans ÷ Nonperforming loans. Coverage ratio of credit card receivables: Allowance for possible losses for credit card receivables ÷ Nonperforming credit card receivables.

  • Note 4: The mortgage loan is for house purchase or renovation and is fully secured by housing that is purchased (owned) by the borrower, the spouse or the minor children of the borrowers.

  • Note 5: Based on the Banking Bureau’s letter dated December 19, 2005 (Ref. No. 09440010950), small-scale credit loans are unsecured, involve small amounts and exclude credit cards and cash cards.

  • Note 6: Other consumer banking loans refer to secured or unsecured loans that exclude housing mortgage, cash cards, credit cards and small-scale credit loans.

  • Note 7: As required by the Banking Bureau in its letter dated July 19, 2005 (Ref. No. 094000494), accounts receivable factored without recourse are reported as nonperforming receivables within three months after the factors or insurance companies refuse to indemnify banks for any liabilities on these accounts.

Not reported as nonperforming loans or nonperforming receivables

Not reported as nonperforming loans or nonperforming receivables
Items
Types		 December 31, 2013
Not Reported as
Nonperforming Loans		 Not Reported as
Nonperforming Receivables
Amounts of executed contracts on negotiated debts not reported as nonperforming loans and
receivables(Note 1)		 $ 143,389 $ 608,707
Amounts of discharged and executed contracts on clearance of consumer debts not reported
as nonperformingloans and receivables(Note 2)		 67,241 992,419
Total 210,630 1,601,126

  • Note 1: Amounts of executed contracts on negotiated debts that are not reported as nonperforming loans or receivables are reported in accordance with the Banking Bureau’s letter dated April 25, 2006 (Ref. No. 09510001270).

  • Note 2: Amounts of discharged and executed contracts on clearance of consumer debts that are not reported as nonperforming loans or receivables are reported in accordance with the Banking Bureau’s letter dated September 15, 2008 (Ref. No. 09700318940).

(Concluded)

  • 249 -

TABLE 7

UNION BANK OF TAIWAN

INFORMATION ON AND PROPORTIONATE SHARE IN INVESTEES DECEMBER 31, 2014

(In Thousands of New Taiwan Dollars)

Investee Company Location Main Businesses and Products Percentage
of
Ownership
(%)		 Carrying Value Investment
Gain (Loss)		 Proportionate Share of the Bank and
Its Subsidiaries in Investees		 Proportionate Share of the Bank and
Its Subsidiaries in Investees		 Proportionate Share of the Bank and
Its Subsidiaries in Investees		 Proportionate Share of the Bank and
Its Subsidiaries in Investees		 Note
Shares
(Thousands)		 Pro Forma
Shares (Note 2)		 **Total **
Shares
(Thousands)		 Percentage
of
Ownership
(%)
Financial-related
Union Finance and Leasing International
Corporation
Union Finance International (HK) Limited
Union Securities Investment Trust Corporation
Union Insurance Broker Company
Union Information Technology Corporation
Ipass Corporation
Taiwan Gin Lian Asset Management
Corporation
Taiwan Financial Asset Service Corporation
Huan Hua Securities Finance Co.
Sunny Asset Management Co.
Taipei Forex Inc.
Financial Information Service Co., Ltd.
Taiwan Depository & Clearing Corporation
Taiwan Futures Exchange Co., Ltd.
Taiwan Mobile Payment Corporation
Nonfinancial-related
Union Real-Estate Management Corporation
Fu Hua Venture Corporation
Jiao Da Venture Corporation
Li Yu Venture Corporation
Lian An Service Corporation
Taiwan Power Corporation		 Taipei
Hong Kong
Taipei
Taipei
Taipei
Kaohsiung
Taipei
Taipei
Taipei
Taipei
Taipei
Taipei
Taipei
Taipei
Taipei
Taipei
Taipei
Taipei
Taipei
Taipei
Taipei		 Installment, leasing and accounts receivable factoring
Import and export accommodation
Securities investment trust
Personal insurance agency
Software and hardware product retail and distribution
services
IC card
Purchase, sale and management of nonperforming loans
from financial institutions
Property auction
Securities finance
Purchase, sell and manage nonperforming loans from
financial institution
Foreign exchange brokering
Information service
Financial service
Futures clearing
International trade, data processing service
Construction plan review and consulting
Investments
Investment
Investment
Security service
Electricity-related business		 100.00
99.99
35.00
100.00
99.99
17.52
0.57
2.94
0.53
6.44
0.81
2.39
0.25
2.08
1.10
40.00
5.00
5.00
4.76
5.00
0.0012		 $ 2,294,342
81,269
144,819
25,237
16,468
123,320
75,000
50,000
20,055
3,864
2,113
118,782
13,916
71,250
6,000
54,183
16,452
637
6,437
1,501
6,124		 $ 122,329
1,699
15,987
10,802
9,288
(111)
-
-
-		 83,000
30,000
10,500
500
1,000
13,000
7,500
5,000
2,103
386
160
10,774
815
5,906
600

2,000
1,650
134
855
125
395		 -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-		 83,000
30,000
10,500
500
1,000
13,000
7,500
5,000
2,103
386
160
10,774
815
5,906
600
2,000
1,650
134
855
125
395		 100.00
99.99
35.00
100.00
99.99
17.52
0.57
2.94
0.53
6.44
0.81
2.39
0.24
2.08
1.10
40.00
5.00
5.00
4.76
5.00
0.0012		 Note 1
Note 1
Note 1
Note 1
Note 1
Note 1

Note 1: The investees’ information shown above is based on audited financial reports as of December 31, 2014.

Note 2: Pro forma shares are considered if equity securities - convertible bonds, warrants, etc. - or derivative contracts such as stock options, are converted to shares.

  • 250 -

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