UBOT — Annual Report 2020

Nov 16, 2020

Union Bank of Taiwan

Financial Statements for the Years Ended December 31, 2020 and 2019 and Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Stockholders Union Bank of Taiwan

Opinion

We have audited the accompanying financial statements of Union Bank of Taiwan (the “Bank”), which comprise the balance sheets as of December 31, 2020 and 2019, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Bank as of December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Public Banks and Regulations Governing the Preparation of Financial Reports by Securities Firms.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The key audit matters of the Bank’s financial statements for the year ended December 31, 2020 are described as follows:

Assessment of the Impairment of Discounts and Loans

As of December 31, 2020, the net amount of discounts and loans of the Bank was represented approximately 57% of total assets, and was considered material to the financial statements as a whole. Refer to Note 14 to the financial statements. The Bank’s management performs loan impairment assessment by making critical judgements on accounting estimates and assumptions; therefore, we determined allowance for possible losses on discounts and loans as a key audit matter for the year ended December 31, 2020.

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The Bank’s management periodically performs loan impairment assessment through making judgements to measure the loss allowance at an amount equal to 12-month expected credit losses or the lifetime expected credit losses. Also, the allowance provision should comply with the classification of credit assets required by the relevant regulations on making provision issued by the authorities.

For the accounting policies and relevant information on loan impairment assessment, refer to Notes 4, 5 and 14 to the financial statements.

The main audit procedures we performed in response to certain aspects of the key audit matter described above were as follows:

1. We obtained an understanding of the relevant internal controls in respect of the Bank’s loan impairment assessment and tested the operating effectiveness of such controls.

2. We tested the classification of credit assets in accordance with relevant regulations issued by management and authorities. In addition, we evaluated the reasonableness of the adjustments to the classification.

3. We assessed the reasonableness and consistency of the methodology applied by management in the calculation of expected credit losses; we tested the completeness of the loans and the accuracy of the calculation of expected credit losses for selected loans.

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

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Public Banks and Regulations Governing the Preparation of Financial Reports by Securities Firms, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Auditor’s Responsibilities for the Audit of the Financial Statements

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

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As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

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

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

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

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

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the year ended December 31, 2020 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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The engagement partners on the audits resulting in this independent auditors’ report are Jui-Chan Huang and Chen-Hsiu Yang.

Deloitte & Touche Taipei, Taiwan Republic of China

March 29, 2021

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.

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BALANCE SHEETS DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

UNION BANK OF TAIWAN

ASSETS CASH AND CASH EQUIVALENTS (Notes 4 and 6) DUE FROM THE CENTRAL BANK AND CALL LOANS TO OTHER BANKS (Notes 7 and 43) FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 4 and 8) FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (Notes 4, 5, 9 and 11) INVESTMENTS IN DEBT INSTRUMENTS AT AMORTIZED COST (Notes 4, 10 and 11) SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL (Notes 4 and 12) RECEIVABLES, NET (Notes 4, 5, 13 and 15) CURRENT TAX ASSETS (Note 4) DISCOUNTS AND LOANS, NET (Notes 4, 5, 14, 15 and 42) INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD, NET (Notes 4 and 16) OTHER FINANCIAL ASSETS, NET (Notes 4, 17 and 43) PROPERTY AND EQUIPMENT, NET (Notes 4 and 18) RIGHT-OF-USE ASSETS (Notes 4 and 19) INTANGIBLE ASSETS (Notes 4 and 20) Goodwill Computer software Total intangible assets DEFERRED TAX ASSETS (Notes 4 and 40) OTHER ASSETS, NET (Notes 4, 21, 29, 42 and 44) TOTAL LIABILITIES AND EQUITY DEPOSITS FROM THE CENTRAL BANK AND OTHER BANKS (Note 22) DUE TO THE CENTRAL BANK AND OTHER BANKS (Note 23) FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 4 and 8) SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Notes 4 and 24) PAYABLES (Notes 25 and 42) CURRENT TAX LIABILITIES (Note 4) DEPOSITS AND REMITTANCES (Notes 26 and 42) BANK DEBENTURES (Notes 4 and 27) OTHER FINANCIAL LIABILITIES PROVISIONS (Notes 4, 15 and 28) LEASE LIABILITIES (Notes 4, 19 and 42) DEFERRED TAX LIABILITIES (Notes 4 and 40) OTHER LIABILITIES (Notes 30, 42 and 44) Total liabilities EQUITY Share capital Ordinary shares Preference shares Total share capital Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity TOTAL		2020 Amount % $ 8,141,334 1 24,325,798 3 33,967,730 5 52,807,395 7 90,697,662 12 63,872,973 9 22,703,290 3 44,382 - 424,304,969 57 5,863,071 1 4,471,836 1 7,892,451 1 1,639,260 - 1,985,307 - 170,823 - 2,156,130 - 636,906 - 2,751,600 - $ 746,276,787 100 $ 11,942,863 2 3,786,720 1 206,002 - 44,428,176 6 5,430,396 1 106,676 - 608,269,514 81 7,200,000 1 115,361 - 244,939 - 1,621,207 - 1,635,842 - 1,098,256 - 686,085,952 92 30,933,688 4 2,000,000 - 32,933,688 4 8,040,035 1 7,883,630 1 627,440 - 4,854,972 1 13,366,042 2 5,851,070 1 60,190,835 8 $ 746,276,787 100		2019
				Amount % $ 10,937,284 2 17,344,886 3 30,599,774 4 40,962,420 6 104,170,149 15 51,360,225 8 20,432,902 3 49,185 - 386,383,784 56 5,375,020 1 3,520,128 1 7,945,393 1 1,361,636 - 1,985,307 - 142,872 - 2,128,179 - 540,779 - 3,267,302 - $ 686,379,046 100 $ 11,300,923 2 - - 650,981 - 65,377,436 10 4,519,286 1 364,806 - 533,655,963 78 10,200,000 1 111 - 249,967 - 1,338,560 - 1,569,639 - 903,073 - 630,130,745 92 28,844,553 4 2,000,000 - 30,844,553 4 8,035,484 1 6,875,793 1 627,440 - 5,180,139 1 12,683,372 2 4,684,892 1 56,248,301 8 $ 686,379,046 100

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

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UNION BANK OF TAIWAN

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

NET INTEREST (Notes 4, 32 and 42) Interest revenue Interest expense Net interest NET REVENUE OTHER THAN INTEREST Commissions and fee revenue, net (Notes 4 and 33) Gain on financial assets and liabilities at fair value through profit or loss (Notes 4 and 34) Realized gain on financial assets at fair value through other comprehensive income (Note 35) Share of profit of subsidiaries and associates (Notes 4 and 16) Foreign exchange gain (loss), net (Note 4) Reversal of impairment loss (impairment loss) on assets (Notes 4 and 36) Securities brokerage fee revenue, net Loss on disposal of properties and equipment, net (Note 4) Other noninterest gain, net TOTAL NET REVENUE PROVISIONS (Notes 4, 5 and 15) Provision of allowance for doubtful accounts and provision for losses on commitments and guarantees		2020 Amount % $ 11,858,192 98 4,158,730 34 7,699,462 64 2,869,110 24 1,710,809 14 407,220 3 25,788 - (946,549) (8) 128,860 1 171,805 2 (7,119) - 19,109 - 12,078,495 100 267,216 2		2019 Amount % $ 12,023,379 103 5,459,519 47 6,563,860 56 2,777,365 24 1,411,067 12 336,640 3 105,216 1 363,269 3 (42,921) - 98,868 1 (3,427) - 50,419 - 11,660,356 100 235,584 2	Percentage Increase (Decrease)
					% (1) (24) 17 3 21 21 (75) (361) 400 74 108 (62) 4 13 (Continued)

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UNION BANK OF TAIWAN

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING EXPENSES Employee benefit expense (Notes 4, 29, 37 and 42) Depreciation and amortization (Notes 4 and 38) Others (Notes 39 and 42) Total operating expenses INCOME BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 40) NET INCOME OTHER COMPREHENSIVE INCOME Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized gain on investments in equity instrument at fair value through other comprehensive income Share of the other comprehensive income (loss) of subsidiaries and associates accounted for using the equity method Income tax relating to items that will not be reclassified subsequently to profit or loss (Note 40) Items that will not be reclassified subsequently to profit or loss, net of income tax		2020 Amount % $ 3,695,508 31 753,311 6 3,512,000 29 7,960,819 66 3,850,460 32 408,751 4 3,441,709 28 11,842 - 812,340 7 (39,030) - (109,493) (1) 675,659 6		2019 Amount % $ 3,588,081 31 809,417 7 3,052,907 26 7,450,405 64 3,974,367 34 614,910 5 3,359,457 29 172,852 2 2,247,568 19 1,000 - (334,744) (3) 2,086,676 18	Percentage Increase (Decrease)
					% 3 (7) 15 7 (3) (34) 2 (93) (64) (4,003) (67) (68) (Continued)

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UNION BANK OF TAIWAN

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of the financial statements of foreign operations Share of other comprehensive income (loss) of subsidiaries and associates accounted for using the equity method Unrealized gain (loss) on investments in debt instruments at fair value through other comprehensive income Income tax relating to items that may be reclassified subsequently to profit or loss (Note 40) Items that may be reclassified subsequently to profit or loss, net of income tax Other comprehensive income for the year, net of income tax TOTAL COMPREHENSIVE INCOME EARNINGS PER SHARE (NEW TAIWAN DOLLARS; Note 41) Basic Diluted		2020 Amount % $ (625,885) (5) 14,117 - 1,005,636 8 125,177 1 519,045 4 1,194,704 10 $ 4,636,413 38 $0.96 $0.96		2019 Amount % $ (227,061) (2) (9,459) - 1,604,564 14 45,412 - 1,413,456 12 3,500,132 30 $ 6,859,589 59 $0.93 $0.93	Percentage Increase (Decrease)
					% 176 249 (37) 176 (63) (66) (32)

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

(Concluded)

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UNION BANK OF TAIWAN

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2019 Appropriation of the 2018 earnings Legal reserve Special reserve Stock dividends on common shares Cash dividends on preference shares Net income for the year ended December 31, 2019 Other comprehensive income for the year ended December 31, 2019 Acquisition of interest in subsidiary Share-based payment Disposal of investments in equity instruments designated as at fair value through other comprehensive income BALANCE AT DECEMBER 31, 2019 Appropriation of the 2019 earnings Legal reserve Cash dividends on common shares Stock dividends on common shares Cash dividends on preference shares Net income for the year ended December 31, 2020 Other comprehensive income for the year ended December 31, 2020 Share-based payment Disposal of investments in equity instruments designated as at fair value through other comprehensive income BALANCE AT DECEMBER 31, 2020		Share Capital (Notes 31 and 37) Ordinary Shares Preference Shares Total $ 26,900,129 $ 2,000,000 $ 28,900,129 - - - - - - 1,883,009 - 1,883,009 - - - - - - - - - - - - 61,415 - 61,415 - - - 28,844,553 2,000,000 30,844,553 - - - - - - 2,019,119 - 2,019,119 - - - - - - - - - 70,016 - 70,016 - - - $ 30,933,688 $ 2,000,000 $ 32,933,688	Share Capital (Notes 31 and 37) Ordinary Shares Preference Shares Total $ 26,900,129 $ 2,000,000 $ 28,900,129 - - - - - - 1,883,009 - 1,883,009 - - - - - - - - - - - - 61,415 - 61,415 - - - 28,844,553 2,000,000 30,844,553 - - - - - - 2,019,119 - 2,019,119 - - - - - - - - - 70,016 - 70,016 - - - $ 30,933,688 $ 2,000,000 $ 32,933,688	Capital Surplus (Note 31) $ 8,032,413 - - - - - - - 3,071 - 8,035,484 - - - - - - 4,551 - $ 8,040,035	Retained Earnings (Notes 4 and 31)	Retained Earnings (Notes 4 and 31)	Total $ 11,220,664 - - (1,883,009) (480,000) 3,359,457 139,435 (6,698) - 333,523 12,683,372 - (288,446) (2,019,119) (480,000) 3,441,709 6,144 - 22,382 $ 13,366,042	Other Equity (Notes 4 and 31) Exchange Differences on Translation of the Financial Statements of Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Foreign Operations Comprehensive Income Total $ (413,524) $ 2,073,347 $ 1,659,823 - - - - - - - - - - - - - - - (191,108) 3,551,805 3,360,697 - (2,105) (2,105) - - - - (333,523) (333,523) (604,632) 5,289,524 4,684,892 - - - - - - - - - - - - - - - (486,591) 1,675,151 1,188,560 - - - - (22,382) (22,382) $ (1,091,223) $ 6,942,293 $ 5,851,070	Total Equity $ 49,813,029 - - - (480,000) 3,359,457 3,500,132 (8,803) 64,486 - 56,248,301 - (288,446) - (480,000) 3,441,709 1,194,704 74,567 - $ 60,190,835
								Exchange Differences on Translation of the Financial Statements of Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Foreign Operations Comprehensive Income $ (413,524) $ 2,073,347 - - - - - - - - - - (191,108) 3,551,805 - (2,105) - - - (333,523) (604,632) 5,289,524 - - - - - - - - - - (486,591) 1,675,151 - - - (22,382) $ (1,091,223) $ 6,942,293
		Ordinary Shares $ 26,900,129 - - 1,883,009 - - - - 61,415 - 28,844,553 - - 2,019,119 - - - 70,016 - $ 30,933,688	Preference Shares $ 2,000,000 - - - - - - - - - 2,000,000 - - - - - - - - $ 2,000,000		Legal Reserve $ 5,988,776 887,017 - - - - - - - - 6,875,793 1,007,837 - - - - - - - $ 7,883,630	Special Reserve Unappropriated Earnings $ 612,656 $ 4,619,232 - (887,017) 14,784 (14,784) - (1,883,009) - (480,000) - 3,359,457 - 139,435 - (6,698) - - - 333,523 627,440 5,180,139 - (1,007,837) - (288,446) - (2,019,119) - (480,000) - 3,441,709 - 6,144 - - - 22,382 $ 627,440 $ 4,854,972

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

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UNION BANK OF TAIWAN

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expense Amortization expense Expected credit losses/provision of allowance for doubtful accounts Gain on disposal of financial assets at fair value through profit or loss Interest expense Interest revenue Dividend income Share of profit of subsidiaries and associates Loss on disposal of properties and equipment Gain on disposal of investments Impairment loss (reversed) recognized on financial assets Reversal of impairment losses on nonfinancial asset Gain on disposal of collaterals Changes in operating assets and liabilities Due from the Central Bank and call loans to banks Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Investments in debt instruments at amortized cost Receivables Discounts and loans Other financial assets Deposits from the Central Bank and other banks Financial liabilities at fair value through profit or loss Securities sold under repurchase agreements Payables Deposits and remittances Other financial liabilities Provision for employee benefits Other liabilities Cash generated from (used in) operations Interest received Dividend received Interest paid Income tax paid Net cash generated from (used in) operating activities	2020 $ 3,850,460 677,907 75,404 267,216 (1,656,347) 4,158,730 (11,858,192) (446,311) (25,788) 7,119 (15,371) (122,109) (6,751) (256) (7,457,990) (1,372,342) (9,992,508) 13,628,315 (2,391,120) (38,232,449) (977,008) 641,940 (784,246) (20,949,260) 1,319,242 74,613,551 115,250 9,474 100 3,076,660 12,008,785 451,540 (4,492,295) (673,949) 10,370,741	2019 $ 3,974,367 726,896 82,521 235,584 (1,375,876) 5,459,519 (12,023,379) (347,509) (105,216) 3,427 (24,322) 63,106 (20,185) (43,640) 6,069,171 8,381,253 (3,985,154) (10,706,007) (2,575,866) (59,783,147) (506,469) (88,918) (906,274) 21,043,048 (2,391,267) 19,269,163 (11,714) 154,120 1,800 (29,430,968) 11,888,433 348,864 (5,397,067) (104,519) (22,695,257) (Continued)

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UNION BANK OF TAIWAN

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of associates Payments for properties and equipment Proceeds from disposal of properties and equipment Decrease in settlement fund Increase in refundable deposits Decrease in refundable deposits Payments for intangible assets Proceeds from disposal of collaterals Payments for right-of-use assets Increase in other assets Decrease in other assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in due to Central Bank and other banks Proceeds from issue of bank debentures Repayments of bank debentures Proceeds from guarantee deposits received Repayment of the principal portion of lease liabilities Increase in other liabilities Dividends paid Net cash used in 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	2020 $ (500,000) (250,161) 20 616 - 299,631 (34,797) 7,007 - - 179,962 (297,722) 3,786,720 - (3,000,000) 11,412 (409,986) 170,189 (768,446) (210,111) (623,188) 9,239,720 62,774,587 $ 72,014,307	2019 $ (564,394) (286,869) 48 448 (449,180) - (44,804) 63,825 (974) (355,463) - (1,637,363) - 2,000,000 (1,500,000) 7,390 (412,491) 248,855 (480,000) (136,246) (227,286) (24,696,152) 87,470,739 $ 62,774,587 (Continued)

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UNION BANK OF TAIWAN

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (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, 2020 and 2019:

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 **
		2020 $ 8,141,334 - 63,872,973 $ 72,014,307	2019 $ 10,937,284 477,078 51,360,225 $ 62,774,587

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

(Concluded)

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NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

UNION BANK OF TAIWAN

1. GENERAL INFORMATION

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

The Bank engages in activities allowed under the Banking Law, which include 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 Union Bills Finance Corporation (UBF) on August 16, 2010, with the Bank as the surviving entity.

On August 26, 2015, the board of directors of the Bank resolved to merge UIB in order to integrate the resources, strengthen management and business synergy. The merger was approved by the Financial Supervisory Commission (FSC) under Rule No. 10502022990. The effective date of this merger was August 1, 2016.

To integrate resources and enhance operating effectiveness, The Bank requested to purchase Union Securities Investment Trust Corporation’s equity, which was approved by the board of directors on May 9, 2018. The investment was approved by the Financial Supervisory Commission (FSC) under Rule No. 10802037180 on March 27, 2019. The Bank acquired 64.44% and 0.16% equity interest of Union Securities Investment Trust Corporation on July 5, 2019 and December 27, 2019, respectively. After the transaction was completed, the percentage of total equity interest increased from 35% to 99.60%.

In order to actively support the FSC’s needs to adapt to the nation’s overall industry development, and to boost the diversification of the corporate banking business as well as improve the efficiency in the use of funds, Union Bank of Taiwan established Union Venture Capital in coordination with the nation’s financial policies, which was approved by the board of directors on September 26, 2018. The investment was approved by the Financial Supervisory Commission (FSC) under Rule No. 10802042270. Union Venture Capital had been established by the Bank on November 21, 2019. The total investment amount was $800,000 thousand, and the Bank held 100% of Union Venture Capital’s shares.

As of December 31, 2020, the Bank’s operating units included Banking, Trust, Wealth Management, Security Finance, Bills Finance, International Banking Department of the Head Office, Insurance Agency Department, an Offshore Banking Unit (OBU), 3 overseas representative offices in Hong Kong, Ho Chi Minh City and Hanoi, Vietnam, and 90 domestic branches (including the business department).

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.

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

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2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the board of directors and authorized for issue on March 10, 2021.

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

• a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Public Banks and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the FSC

Except for the following, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Public Banks and the IFRSs endorsed and issued into effect by the FSC did not have any material impact on the Bank’s accounting policies:

• 1.) Amendments to IFRS 3 “Definition of a Business”

The bank applies the amendments to IFRS 3 to transactions that occur on or after January 1, 2020. The amendments clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. To determine whether an acquired process is substantive, different criteria apply, depending on whether there are outputs at the acquisition date. In addition, the amendments introduce an optional concentration test that permits a simplified assessment of whether or not an acquired set of activities and assets is a business.

• 2) Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform”

Upon retrospective application of the amendments, the Bank complied with the hedge accounting requirements under the assumption that the interest rate benchmark (such as the London Interbank Offered Rate or LIBOR) on which the hedged cash flows and cash flows from the hedging instrument are based will not be altered as a result of interest rate benchmark reform.

• 3) Amendments to IAS 1 and IAS 8 “Definition of Material”

The bank adopted the amendments starting from January 1, 2020. The threshold of materiality that could influence users has been changed to “could reasonably be expected to influence”. Accordingly, disclosures in the consolidated financial statements do not include immaterial information that may obscure material information

• b. The IFRSs endorsed by the Financial Supervisory Commission (FSC) for application starting from 2021

New IFRSs Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9” Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform - Phase 2” Amendment to IFRS 16 “Covid-19 - Related Rent Concessions”	Effective Date Announced by IASB
	Effective immediately upon promulgation by the IASB January 1, 2021 June 1, 2020

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

“Interest Rate Benchmark Reform - Phase 2” primarily amends IFRS 9, IFRS 7 and IFRS 16 to provide practical relief from the impact of the interest rate benchmark reform.

Changes in the basis for determining contractual cash flows as a result of interest rate benchmark reform

The changes in the basis for determining contractual cash flows of financial assets, financial liabilities or lease liabilities are accounted for by updating the effective interest rate at the time the basis is changed, provided the changes are necessary as a direct consequence of the reform and the new basis is economically equivalent to the previous basis.

Hedging accounting

The amendments provide the following temporary exceptions to hedging relationships that are subject to the reform:

• a) The changes to the hedging relationship that are needed to reflect changes required by the reform are treated as a continuation of the existing hedging relationship, and do not result in the discontinuation of hedge accounting or the designation of a new hedging relationship.

• b) If an entity reasonably expects that an alternative benchmark rate will be separately identifiable within a period of 24 months, it is not prohibited from designating the rate as a non-contractually specified risk component if it is not separately identifiable at the designation date.

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

• d) An entity should allocate the hedged items of a group hedge that is subject to the reform to subgroups based on whether the hedged items have been changed to reference an alternative benchmark rate, and should designate the hedged benchmark rate separately.

Except for the above impact, as of the date the 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.

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

Effective Date New IFRSs Announced by IASB (Note 1) “Annual Improvements to IFRS Standards 2018-2020” January 1, 2022 (Note 2) Amendments to IFRS 3 “Reference to the Conceptual Framework” January 1, 2022 (Note 3) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 January 1, 2023 (Continued)

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New IFRSs Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” Amendments to IAS 1 “Disclosure of Accounting Policies” Amendments to IAS 8 “Definition of Accounting Estimates” Amendments to IAS 16 “Property, Plant and Equipment - Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract”	Effective Date Announced by IASB (Note 1)
	January 1, 2023 January 1, 2023 (Note 6) January 1, 2023 (Note 7) January 1, 2022 (Note 4) January 1, 2022 (Note 5)

(Concluded)

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

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

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

• Note 4: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.

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

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

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

• 1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture”

The amendments stipulate that, when the bank sells or contributes assets that constitute a business (as defined in IFRS 3) to an associate or joint venture, the gain or loss resulting from the transaction is recognized in full. Also, when the bank loses control of a subsidiary that contains a business but retains significant influence or joint control, the gain or loss resulting from the transaction is recognized in full.

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Conversely, when the bank sells or contributes assets that do not constitute a business to an associate or joint venture, the gain or loss resulting from the transaction is recognized only to the extent of the bank’s interest as an unrelated investor in the associate or joint venture, i.e., the bank’s share of the gain or loss is eliminated. Also, when the bank loses control of a subsidiary that does not contain a business but retains significant influence or joint control over an associate or a joint venture, the gain or loss resulting from the transaction is recognized only to the extent of the bank’s interest as an unrelated investor in the associate or joint venture, i.e., the bank’s share of the gain or loss is eliminated.

2) Annual Improvements to IFRS Standards 2018-2020

Several standards, including IFRS 9 “Financial Instruments”, were amended in the annual improvements. IFRS 9 requires the comparison of the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received, with that of the cash flows under the original financial liability when there is an exchange or modification of debt instruments. The new terms and the original terms are substantially different if the difference between those discounted present values is at least 10%. The amendments to IFRS 9 clarify that the only fees that should be included in the above assessment are those fees paid or received between the borrower and the lender.

3) Amendments to IFRS 3 “'Reference to the Conceptual Framework”

The amendments replace the references to the Conceptual Framework of IFRS 3 and specify that the acquirer shall apply IFRIC 21 “Levies” to determine whether the event that gives rise to a liability for a levy has occurred at the acquisition date.

4) Amendments to IAS 16 “Property, Plant and Equipment: Proceeds before Intended Use”

The amendments prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The cost of those items is measured in accordance with IAS 2 “Inventories”. Any proceeds from selling those items and the cost of those items are recognized in profit or loss in accordance with applicable standards.

The amendments are applicable only to items of property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021. The bank will restate its comparative information when it initially applies the aforementioned amendments.

• 5) Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract”

The amendments specify that when assessing whether a contract is onerous, the “cost of fulfilling a contract” includes both the incremental costs of fulfilling that contract (for example, direct labor and materials) and an allocation of other costs that relate directly to fulfilling contracts (for example, an allocation of depreciation for an item of property, plant and equipment used in fulfilling the contract).

The bank will recognize the cumulative effect of the initial application of the amendments in the retained earnings at the date of the initial application.

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• 6) Amendments to IAS 1 “Disclosure of Accounting Policies”

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

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

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

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

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

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

• b) The bank chose the accounting policy from options permitted by the standards;

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

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

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

• 7) Amendments to IAS 8 “Definition of Accounting Estimates”

The amendments define that accounting estimates are monetary amounts in financial statements that are subject to measurement uncertainty. In applying accounting policies, the bank may be required to measure items at monetary amounts that cannot be observed directly and must instead be estimated. In such a case, the bank uses measurement techniques and inputs to develop accounting estimates to achieve the objective. The effects on an accounting estimate of a change in a measurement technique or a change in an input are changes in accounting estimates unless they result from the correction of prior period errors.

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.

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

The financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Public Banks and Regulations Governing the Preparation of Financial Reports by Securities Firms.

Basis of Preparation

The financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair value. 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 investments in subsidiaries and associates. 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 as the amounts attributable to the owner of the Bank in its consolidated financial statements, adjustments arising from the differences in accounting treatments between the parent company only basis and the consolidated basis were made to investments accounted for using the equity method, share of profit or loss of subsidiaries and associates, share of other comprehensive income of subsidiaries, associates and related equity items, as appropriate, in the financial statements.

Foreign Currencies

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

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise except for exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognized initially in other comprehensive income and reclassified from equity to profit or loss on the disposal of the net investments.

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

Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

For the purposes of presenting financial statements, the assets and liabilities of the Bank’s foreign operations (including subsidiaries, associates, joint ventures and branches in other countries that use currencies which are different from the currency of the Bank) are translated into the presentation currency, the New Taiwan dollar, as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; and income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

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Investments Accounted for Using the Equity Method

The Bank uses the equity method to account for its investments in subsidiaries and associates.

• a. Investments in subsidiaries

A subsidiary is an entity (including a structured entity) that is controlled by the Bank.

Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Bank’s share of the profit or loss and other comprehensive income of the subsidiary. The Bank also recognizes the changes in the Bank’s share of equity of subsidiaries attributable to the Bank.

Changes in the Bank’s ownership interest in a subsidiary that do not result in the Bank losing control of the subsidiary are equity transactions. The Bank recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.

When the Bank’s share of losses of a subsidiary exceeds its interest in that subsidiary (which includes any carrying amount of the investment accounted for using 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.

Any excess of the cost of acquisition over the Bank’s share of the net fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Bank’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognized immediately in profit or loss.

The Bank assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the financial statements of the investee company as a whole. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Bank recognizes the reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

When the Bank loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date when control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of the previous investment at the date when control is lost is recognized as a gain or loss in profit or loss. Besides, 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 if the Bank had directly disposed of the related assets or liabilities.

Profits or losses resulting from downstream transactions are eliminated in full only in the Bank’s financial statements. Profits and losses resulting from upstream transactions and transactions between subsidiaries are recognized only in the Bank’s financial statements only to the extent of interests in the subsidiaries that are not related to the Bank.

b. Investments 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. The Bank uses the equity method to account for its investments in associates.

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

Any excess of the cost of acquisition over the Bank’s share of the net fair value of the identifiable assets and liabilities of an associate or a joint venture at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Bank’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

When the Bank subscribes for additional new shares of an associate at a percentage different from its existing 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 such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in capital surplus from investments in associates accounted for using the equity method. If the Bank’s ownership interest is reduced due to its additional subscription of the new shares of the 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 had directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for using 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 using 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 obligations, or constructive obligations, or made payments on behalf of that associate.

The entire carrying amount of an investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is deducted from 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 its investment ceases to be an associate. Any retained investment is measured at fair value at that date, and the fair value is regarded as the investment’s fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate. 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. If an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the Bank continues to apply the equity method and does not remeasure the retained interest.

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 that interests in the associate are not related to the Bank.

Financial Instruments

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

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

• a. Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

1) Measurement categories

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

• a) Financial assets at FVTPL

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

A financial asset may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise.

Financial assets at FVTPL are subsequently measured 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 dividends or interest earned on such a financial asset. Fair value is determined in the manner described in Note 48.

• b) Financial assets at amortized cost

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

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

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

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents and trade receivables at amortized cost, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

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

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

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

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

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

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

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

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

Cash equivalents include time deposits with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

• c) Investments in debt instruments at FVTOCI

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

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

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

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

• d) Investments in equity instruments at FVTOCI

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

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

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

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2) Impairment of financial assets

The Bank recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables), investments in debt instruments at FVTOCI, lease receivables, as well as contract assets.

For financial instruments and contract assets, the Bank recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Bank measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

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

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 collectability 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 collectability.

The MOF regulations also require the grouping of credit assets into these five classes: Normal, special mention, substandard, doubtful and losses; the minimum loan loss provision and guarantee reserve for the unsound credit assets (those other than normal) should be 2%, 10%, 50% and 100%, respectively, of the outstanding credit balance.

The MOF issued a guideline stating that from January 1, 2014, the minimum loan loss provision and guarantee should be the sum of 1% of the outstanding balance of the normal credit asset’s claim, 2% of the balance of special mention credit assets, 10% of the balance of substandard credit assets, 50% of the balance of doubtful credit assets, and the full balance of losses credit assets (excluding assets that represent claims against the central and local government in Taiwan). Also, in accordance with Rule No. 10300329440 issued by FSC, the minimum allowance for mortgage loans should be 1.5%.

Credits deemed uncollectable 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.

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

• 3) 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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If the Bank neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Bank recognizes its retained interest in the asset and any associated liability for amounts it may have to pay. If the Bank retains substantially all the risks and rewards of ownership of a transferred financial asset, the Bank continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.

b. Equity instruments

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

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

The repurchase of the Bank’s own equity instruments is recognized in and deducted directly from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issuance or cancellation of the Bank’s own equity instruments.

c. Financial liabilities

• 1) Subsequent measurement

A financial liability may be designated as at FVTPL 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 that would otherwise arise; or

• b) The financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and has performance 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; or

• c) The contract contains one or more embedded derivatives so that the entire combined contract (asset or liability) can be designated as at FVTPL.

For a financial liability designated as at FVTPL, the amount of changes in fair value attributable to changes in the credit risk of the liability is presented in other comprehensive income and will not be subsequently reclassified to profit or loss. The remaining amount of changes in the fair value of that liability which incorporates any interest or dividends paid on such financial liability is presented in profit or loss. The gain or loss accumulated in other comprehensive income will be transferred to retained earnings when the financial liability is derecognized. If this accounting treatment related to credit risk would create or enlarge an accounting mismatch, all changes in the fair value of the liability are presented in profit or loss.

Fair value is determined in the manner described in Note 45.

Financial guarantee contracts

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

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

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

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2) Derecognition of financial liabilities

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

• d. Derivative financial instruments

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

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

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.

Repurchase and Resale Transactions

Securities purchased under resale agreements and securities sold under repurchase agreements 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 accumulated depreciation and accumulated impairment loss.

Freehold land is not depreciated.

Depreciation of property and equipment is recognized using the straight-line method. Each significant part is depreciated separately. If the lease term of an item of property and equipment is shorter than its useful life, such asset is depreciated over its lease term. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effects of any changes in the estimates accounted for on a prospective basis.

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For a contract where an owner of land provides land for construction of buildings by a property developer in exchange for a certain percentage of the buildings, any exchange gain or loss is recognized when the exchange transaction occurs, if the buildings acquired are classified as property, plant and equipment and the exchange transaction has commercial substance.

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

Goodwill

Goodwill arising from the acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment loss.

For the purposes of impairment testing, goodwill is allocated to each of the Bank’s cash-generating units or groups of cash-generating units (referred to as “cash-generating units”) that are expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually or more frequently when there is an indication that the unit may be impaired, by comparing its carrying amount, including the attributed goodwill, with its recoverable amount. However, if the goodwill allocated to a cash-generating unit was acquired in a business combination during the current annual period, that unit shall be tested for impairment before the end of the current annual period. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then pro rata to the other assets of the unit based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or loss. Any impairment loss recognized on goodwill is not reversed in subsequent periods.

If goodwill has been allocated to a cash-generating unit and the entity disposes of an operation within that unit, the goodwill associated with the operation which is disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal and is measured on the basis of the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Intangible Assets

Intangible assets acquired separately

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

Derecognition

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

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 and net realizable value as of the balance sheet date.

• 27 -

Impairment of Tangible and Intangible Assets (Excluding Goodwill)

At the end of each reporting period, the Bank reviews the carrying amounts of its tangible and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered any 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. Corporate assets are allocated to cash-generating units on a reasonable and consistent basis of allocation.

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

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

Leasing

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

For a contract that contains a lease component and non-lease components, the Bank allocates the consideration in the contract to each component on the basis of the relative stand-alone price and accounts for each component separately.

• a. The Bank as lessor

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

When the Bank subleases a right-of-use asset, the sublease is classified by reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. However, if the head lease is a short-term lease that the Bank, as a lessee, has accounted for applying recognition exemption, the sublease is classified as an operating lease.

Under finance leases, the lease payments comprise fixed payments, in-substance fixed payments, variable lease payments which depend on an index or a rate, residual value guarantees, the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and payments of penalties for terminating a lease if the lease term reflects such termination, less any lease incentives payable. The net investment in a lease is measured at (a) the present value of the sum of the lease payments receivable by a lessor and any unguaranteed residual value accrued to the lessor plus (b) initial direct costs and is presented as a finance lease receivable. Finance lease income is allocated to the relevant accounting periods so as to reflect a constant, periodic rate of return on the Bank’s net investment outstanding in respect of leases.

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

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

• 28 -

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

• b. The Bank as lessee

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

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

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

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments, variable lease payments which depend on an index or a rate, residual value guarantees, the exercise price of a purchase option if the Bank is reasonably certain to exercise that option, and payments of penalties for terminating a lease if the lease term reflects such termination, less any lease incentives receivable. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Bank uses the lessee’s incremental borrowing rate.

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

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

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.

• 29 -

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.

Employee Benefits

• a. Short-term employee benefits

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

• b. Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions.

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

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

• c. Other long-term employee benefits

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

• d. Termination benefits

A liability for a termination benefit is recognized at the earlier of when the Bank can no longer withdraw the offer of the termination benefit and when the Bank recognizes any related restructuring costs.

Income Tax

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

• a. Current tax

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

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

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

• 30 -

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 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 taxes for the period

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity; in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity, respectively. 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 the regulations of the Ministry of Finance, the interest revenue on credits covered by agreements that extend their repayment periods is recorded as deferred revenue and recognized as revenue upon collection.

Service fees are recognized when a major part of the earnings process is completed and cash is collected.

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

• 31 -

The points earned by customers under loyalty program are treated as multiple-element arrangements, in which consideration is allocated to the goods or services and the award credits based on fair value through the eyes of the customer. The consideration is not recognized in earnings at the original sales transactions but at the time when the points are redeemed and the Bank’s obligation is fulfilled.

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.

Estimated Impairment of Financial Assets

The provision for impairment of loans, receivables, investments in debt instruments and financial guarantee contracts is based on assumptions about risk of default and expected loss rates. The Bank uses judgment in making these assumptions and in selecting the inputs to the impairment calculation, based on the Bank’s historical experience, existing market conditions as well as forward looking estimates as of the end of each reporting period. For details of the key assumptions and inputs used, see Note 48. Where the actual future cash inflows are less than expected, a material impairment loss may arise.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checks for clearing Due from banks		December 31	December 31
		2020 $ 5,740,402 1,171,066 1,229,866 $ 8,141,334	2019 $ 6,865,456 1,076,011 2,995,817 $ 10,937,284

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

Deposit reserve - checking account Required deposit reserve Deposit reserve - foreign-currency deposits Call loans to banks		December 31	December 31
		2020 $ 8,585,673 15,640,347 99,778 - $ 24,325,798	2019 $ 2,968,938 13,808,552 90,318 477,078 $ 17,344,886

Under a directive issued by the Central Bank of the ROC, the Bank determines monthly NTD-denominated reserve deposits at prescribed rates based on the average balances of customers’ NTD-denominated deposits, which are subject to withdrawal restrictions.

• 32 -

In addition, the foreign-currency reserve deposits are determined at rates prescribed for balances of foreign-currency deposits. These reserves may be withdrawn anytime and do not bear interest.

8. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets designated as at fair value through profit or loss Government bond Negotiable certificated of deposit Commercial paper Domestic listed stock Beneficiary certificates Asset-backed securities Future exchange margins Derivative financial instruments Foreign exchange forward contracts Currency swap contracts Option contracts Financial liabilities held for trading Derivative financial instruments Option contracts Foreign exchange forward contracts Currency swap contracts Cross-currency swap contracts		December 31	December 31
		2020 $ 298,124 999,450 31,361,157 50,496 513,710 57,897 56,665 33,337,499 60,430 514,083 55,718 630,231 $ 33,967,730 $ 55,694 17,419 132,889 - $ 206,002	2019 $ - - 29,670,103 - 532,562 67,361 61,302 30,331,328 42,044 199,417 26,985 268,446 $ 30,599,774 $ 26,976 27,623 578,677 17,705 $ 650,981

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, 2020 and 2019 were as follows:

Currency swap contracts Foreign exchange forward contracts Cross-currency swap contracts Option contracts Buy Sell	December 31
	2020 2019 $ 70,857,503 $ 67,054,535 1,755,782 3,223,477 - 3,638,415 1,779,078 1,178,033 1,779,078 1,178,033

As of December 31, 2020 and 2019, financial assets at fair value through profit and loss in the amounts of $17,501,131 thousand and $13,458,214 thousand, respectively, were sold under repurchase agreements.

• 33 -

9. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Investments in equity instruments at FVTOCI Domestic listed shares Overseas listed shares Domestic unlisted shares Investments in debt instruments at FVTOCI Overseas corporate bonds Overseas bond debentures Overseas government bonds Corporate bonds Government bonds		December 31	December 31
		2020 $ 4,231,079 5,847,572 1,475,939 11,554,590 14,093,944 6,190,979 6,192,951 8,410,769 6,364,162 41,252,805 $ 52,807,395	2019 $ 1,364,797 5,311,947 1,047,719 7,724,463 9,801,611 5,394,699 5,772,116 6,736,723 5,532,808 33,237,957 $ 40,962,420

Details of the Banks investments in foreign and domestic listed and unlisted shares are as follows:

Taiwan Futures Exchange LINE Bank Taiwan Limited Financial Information Service Co., Ltd. Taiwan Asset Management Corporation Taiwan Depository & Clearing Corporation iPass Corporation Taiwan Financial Asset Service Corporation Others		December 31	December 31
		2020 $ 474,583 411,657 309,392 77,164 65,631 60,044 48,105 29,363 $ 1,475,939	2019 $ 439,293 - 294,550 77,077 59,862 84,205 48,244 44,488 $ 1,047,719

a. Investments in equity instruments at FVTOCI

These investments in equity instruments are not held for trading. Instead, they are held for long-term strategic purposes. The management of the bank considers the fact if the investment classified as fair value through profit or loss, it does not correspond with the purpose. Therefore, the management elected to designate these investments in equity instruments as at FVTOCI.

• b. Investments in debt instruments at FVTOCI

For further information regarding credit risk management and impairment assessment of financial assets at FVTOCI, refer to Note 11.

The Bank sold $9,216,124 thousand and $19,671,156 thousand of financial assets at FVTOCI under a repurchase agreement on December 31, 2020 and 2019, respectively.

• 34 -

10. INVESTMENTS IN DEBT INSTRUMENTS AT AMORTIZED COST

Negotiable certificates of deposit Debt instruments Government bonds Overseas asset-backed securities		December 31	December 31
		2020 $ 51,275,000 10,252,526 29,170,136 39,422,662 $ 90,697,662	2019 $ 42,960,000 11,173,137 50,037,012 61,210,149 $ 104,170,149

For further information regarding credit risk management and impairment assessment on financial assets at amortized cost, refer to Note 11.

The Bank sold financial assets at amortized cost under repurchase agreements in the amounts of $23,249,254 thousand and $44,134,600 thousand in 2020 and 2019, respectively.

11. CREDIT RISK MANAGEMENT FOR INVESTMENTS IN DEBT INSTRUMENTS

Debt instruments that the Bank invested in have been further split into two categories, financial assets at FVTOCI and financial assets at amortized cost.

Book value Loss allowance Fair value adjustment Book value Loss allowance Fair value adjustment	December 31, 2020
	Financial Assets at FVTOCI Financial Assets at Amortized Cost $ 39,606,238 $ 39,602,262 (62,099) (179,600) 1,708,666 - $ 41,252,805 $ 39,422,662 December 31, 2019	Total $ 79,208,500 (241,699) 1,708,666 $ 80,675,467
	Financial Assets at FVTOCI Financial Assets at Amortized Cost $ 32,635,267 $ 61,513,617 (81,219) (303,468) 683,909 - $ 33,237,957 $ 61,210,149	Total $ 94,148,884 (384,687) 683,909 $ 94,448,106

The Bank continuously monitors the external credit rating information and price movements of the debt instruments invested in to assess whether their credit risks have significantly increased since initial recognition.

The Bank takes into consideration the multi-period default probability table for each rating of securities issued by credit rating agencies and the recovery rates of different types of bonds to assess the 12-month expected credit losses or lifetime expected credit losses.

• 35 -

The carrying values of financial assets at FVTOCI and at amortized cost sorted by credit rating are as follows:

				Carrying Value
				(Including
				Premiums and
				Discounts) on
		ECL Recognition	Expected Credit	December 31,
Credit Ratings	Definition	Basis	Loss Rate	2020
Low credit risk	Low credit risk at the	12-month expected	0%-4.0303%	$ 80,675,467
	reporting date	credit losses
Significant increase in	Credit risk has increased	Lifetime expected	(Note)	-
credit risk	significantly since initial	credit losses
	recognition
Default	Objective evidence of	Lifetime expected	100%	-
	impairment at the	credit losses
	reporting date
				Carrying Value
				(Including
				Premiums and
				Discounts) on
		ECL Recognition	Expected Credit	December 31,
Credit Ratings	Definition	Basis	Loss Rate	2019
Low credit risk	Low credit risk at the	12-month expected	0%-4.2026%	$ 94,448,106
	reporting date	credit losses
Significant increase in	Credit risk has increased	Lifetime expected	(Note)	-
credit risk	significantly since initial	credit losses
	recognition
Default	Objective evidence of	Lifetime expected	100%	-
	impairment at the	credit losses
	reporting date

Note: Credit rating of investment made in debt instruments on December 31, 2020 and 2019 was normal, it did not apply.

The following table shows changes in balances of loss allowances of financial assets at FVTOCI and debt instruments at amortized cost, sorted by credit risk ratings resulting from the application of IFRS 9:

Balance as of January 1, 2020 Changes in credit risk ratings Low credit risk to significant increase in credit risk Significant increase in credit risk to default	Credit Risk Ratings
	Low Credit Risk Significant Increase in Credit Risk (Lifetime Expected Credit Losses with No Credit Impairment) Default Evidence of Impairment (Lifetime Expected Credit Losses with Credit Impairment) $ 384,687 $ - $ - - - - - - - (Continued)

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New debt instruments purchased Derecognition Changes in risk or model parameters Change in exchange rates Loss allowance on December 31, 2020 Balance as of January 1, 2019 Changes in credit risk ratings Low credit risk to significant increase in credit risk Significant increase in credit risk to low credit risk Significant increase in credit risk to default New debt instruments purchased Derecognition Changes in risk or model parameters Change in exchange rates Loss allowance on December 31, 2019

Credit Risk Ratings

Low Credit Risk Significant Increase in Credit Risk (Lifetime Expected Credit Losses with No Credit Impairment) Default Evidence of Impairment (Lifetime Expected Credit Losses with Credit Impairment) $ 9,311 $ - $ - (114,854) - - (16,566) - - (20,879) - - $ 241,699 $ - $ - $ 316,146 $ 13,313 $ - - - - 13,313 (13,313) - - - - 45,738 - - (567) - - 17,935 - - (7,878) - - $ 384,687 $ - $ - (Concluded)

12. SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL

Commercial paper Corporate bonds Negotiable certificates of deposit Maturity date Resale price		December 31
	2020 2019 $ 21,377,310 $ 24,223,631 39,645,492 22,966,283 2,850,171 4,170,311 $ 63,872,973 $ 51,360,225 2021.01-2021.03 2020.01-2020.02 $ 63,877,099 $ 51,375,398

The securities purchased under resale agreements had not been sold under repurchase agreements.

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13. RECEIVABLES, NET

Notes and accounts receivable Interbank clearing fund receivable Investment receivable Interest receivable Accounts receivable factoring without recourse Acceptances receivable Collections receivable Others Less: Allowance for doubtful accounts	December 31	December 31
	2020 $ 17,725,376 1,818,946 1,078,978 913,909 480,043 107,221 119,055 648,434 22,891,962 188,672 $ 22,703,290	2019 $ 16,761,640 1,200,345 545,843 1,050,920 443,208 112,902 231,540 286,756 20,633,154 200,252 $ 20,432,902

The changes in gross carrying amounts of receivables for the year ended December 31, 2020 and 2019 were as follows:

12-month Expected-credit Losses Lifetime Expected-credit Losses Lifetime Expected-credit Losses (Credit- impaired Financial Assets) Balance at January 1, 2020 $ 19,416,706 $ 106,235 $ 1,110,213 Receivables assessed collectively (319,562) 18,859 300,703 Receivables purchased or originated 10,234,882 32,872 92,118 Write-offs - - (197,910) Derecognition (7,591,515) (54,574) (257,065) Balance at December 31, 2020$ 21,740,511 $ 103,392 $ 1,048,059 Balance at January 1, 2019 $ 16,786,150 $ 99,394 $ 1,253,721 Receivables assessed collectively (328,036) 20,798 307,238 Receivables purchased or originated 8,716,507 40,544 107,104 Write-offs - - (283,411) Derecognition (5,757,915) (54,501) (274,439) Balance at December 31, 2019$ 19,416,706 $ 106,235 $ 1,110,213

Total $ 20,633,154 - 10,359,872 (197,910) (7,903,154) $ 22,891,962 $ 18,139,265 - 8,864,155 (283,411) (6,086,855) $ 20,633,154

Refer to Note 48 for the impairment loss analysis of receivables.

• 38 -

The Bank has accrued an allowance for doubtful accounts on receivables, the changes in allowance for doubtful accounts on receivables for the year ended December 31, 2020 and 2019 were as follows:

12-month Expected- credit Losses Lifetime Expected- credit Losses Lifetime Expected- credit Losses (Credit- impaired Financial Assets) Impairment Loss under IFRS 9 Difference of Impairment Loss under (Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-accrual Loans) Balance at January 1, 2020 $ 43,935 $ 18,491 $ 93,187 $ 155,613 $ 44,639 Changes of financial instruments recognized at the beginning of the current reporting period Transfers to Lifetime ECL (424 ) 491 (67 ) - - Credit-impaired financial assets (79,269 ) (34,145 ) 113,414 - - 12-month ECL 433 (294 ) (139 ) - - Derecognition of financial assets in the current reporting period (20,567 ) (5,558 ) (14,849 ) (40,974 ) - New financial assets purchased or originated 92,024 37,452 85,991 215,467 - Difference of impairment loss under regulations - - - - 11,471 Write-offs - - (197,910 ) (197,910 ) - Recovery of written-off receivables - - 225,537 225,537 - Change in others (89 ) 129 (225,051 ) (225,011 ) - (160) - - (160) - Balance at December 31, 2020 $ 35,883 $ 16,566 $ 80,113 $ 132,562 $ 56,110 12-month Expected- credit Losses Lifetime Expected- credit Losses Lifetime Expected- credit Losses (Credit- impaired Financial Assets) Impairment Loss under IFRS 9 Difference of Impairment Loss under (Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-accrual Loans) Balance at January 1, 2019 $ 22,109 $ 17,977 $ 157,800 $ 197,886 $ 70,666 Changes of financial instruments recognized at the beginning of the current reporting period Transfers to Lifetime ECL (225 ) 329 (104 ) - - Credit-impaired financial assets (79,108 ) (33,206 ) 112,314 - - 12-month ECL 453 (334 ) (119 ) - - Derecognition of financial assets in the current reporting period (6,919 ) (5,267 ) (12,950 ) (25,136 ) - New financial assets purchased or originated 107,776 38,816 119,258 265,850 - Difference of impairment loss under regulations - - - - (26,027 ) Write-offs - - (283,411 ) (283,411 ) - Recovery of written-off receivables - - 230,839 230,839 - Change in others (55 ) 176 (230,440 ) (230,319 ) - Change in others (96) - - (96) - Balance at December 31, 2019 $ 43,935 $ 18,491 $ 93,187 $ 155,613 $ 44,639

Total $ 200,252 - - - (40,974 ) 215,467 11,471 (197,910 ) 225,537 (225,011 ) (160) $ 188,672 Total $ 268,552 - - - (25,136 ) 265,850 (26,027 ) (283,411 ) 230,839 (230,319 ) (96) $ 200,252

• 39 -

14. DISCOUNTS AND LOANS, NET

Discounts and overdraft Accounts receivable - financing Loans Short-term - unsecured - secured Medium-term - unsecured - secured Long-term - unsecured - secured Import and export negotiations Overdue loans Less: Allowance for doubtful accounts		December 31	December 31
		2020 $ 29,755 30,810 50,188,146 74,450,827 33,808,522 81,554,274 9,446,186 178,920,373 275,199 379,110 429,083,202 4,778,233 $ 424,304,969	2019 $ 27,537 19,570 50,364,941 73,471,679 30,733,615 69,154,200 7,877,847 158,405,628 271,447 356,275 390,682,739 4,298,955 $ 386,383,784

As of December 31, 2020 and 2019, the balances of nonaccrual loans were $379,110 thousand and $356,275 thousand, respectively. The unrecognized interest revenues on nonperforming loans were $9,925 thousand in 2020 and $9,095 thousand in 2019.

In 2020 and 2019, the Bank wrote off certain credits after completing the required legal procedures.

The Bank had set up an allowance for doubtful accounts on discounts and loans.

The changes in the gross carrying amounts on receivables for the year ended December 31, 2020 and 2019 were as follows:

12-month Expected-credit Losses Lifetime Expected-credit Losses Lifetime Expected-credit Losses (Credit- impaired Financial Assets) Balance at January 1, 2020 $ 387,137,800 $ 2,015,580 $ 1,529,359 Discount and loans assessed collectively (925,107) 529,854 395,253 Discount and loans purchased or originated 237,208,758 406,605 407,431 Write-offs - - (122,057) Derecognition (197,751,130) (1,077,776) (671,368) Balance at December 31, 2020$ 425,670,321 $ 1,874,263 $ 1,538,618

Total $ 390,682,739 - 238,022,794 (122,057) (199,500,274) $ 429,083,202 (Continued)

• 40 -

12-month Expected-credit Losses Lifetime Expected-credit Losses Lifetime Expected-credit Losses (Credit- impaired Financial Assets) Balance at January 1, 2019 $ 327,119,720 $ 1,798,887 $ 1,771,899 Discount and loans assessed collectively (748,108) 301,219 446,889 Discount and loans purchased or originated 224,778,107 747,886 202,096 Write-offs - - (81,255) Derecognition (164,011,919) (832,412) (810,270) Balance at December 31, 2019$ 387,137,800 $ 2,015,580 $ 1,529,359

Total $ 330,690,506 - 225,728,089 (81,255) (165,654,601) $ 390,682,739 (Concluded)

Refer to Note 48 for the impairment loss analysis of discounts and loans.

The Bank has accrued an allowance for doubtful accounts on discount and loans; the changes in allowance for doubtful accounts on discounts and loans for the years ended December 31, 2020 and 2019 were as follows:

12-month Expected- credit Losses Lifetime Expected- credit Losses Lifetime Expected- credit Losses (Credit- impaired Financial Assets) Balance at January 1, 2020 $ 240,125 $ 175,604 $ 372,647 Changes of financial instruments recognized at the beginning of the current reporting period Transfers to Lifetime ECL (366 ) 2,069 (1,703 ) Credit-impaired financial assets (319 ) (13,684 ) 14,003 12-month ECL 28,352 (21,828 ) (6,524 ) Derecognition of financial assets in the current reporting period (198,594 ) (111,620 ) (124,322 ) New financial assets purchased or originated 209,392 37,334 217,432 Difference of impairment loss under regulations - - - Write-offs - - (122,057 ) Recovery of written-off receivables - - 294,757 Change in others (28,318 ) 38,631 (210,220 ) Change in exchange rate (4,685) - - Balance at December 31, 2020 $ 245,587 $ 106,506 $ 434,013

Impairment Loss under IFRS 9 Difference of Impairment Loss under (Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-accrual Loans) Total $ 788,376 $ 3,510,579 $ 4,298,955 - - - - - - - - - (434,536 ) - (434,536 ) 464,158 - 464,158 - 481,548 481,548 (122,057 ) - (122,057 ) 294,757 - 294,757 (199,907 ) - (199,907 ) (4,685) - (4,685) $ 786,106 $ 3,992,127 $ 4,778,233 (Continued)

• 41 -

12-month Expected- credit Losses Lifetime Expected- credit Losses Lifetime Expected- credit Losses (Credit- impaired Financial Assets) Balance at January 1, 2019 $ 170,493 $ 162,436 $ 284,614 Changes of financial instruments recognized at the beginning of the current reporting period Transfers to Lifetime ECL (245 ) 2,983 (2,738 ) Credit-impaired financial assets (223 ) (17,140 ) 17,363 12-month ECL 18,486 (13,622 ) (4,864 ) Derecognition of financial assets in the current reporting period (125,299 ) (87,556 ) (13,245 ) New financial assets purchased or originated 196,926 76,698 86,993 Difference of impairment loss under regulations - - - Write-offs - - (81,255 ) Recovery of written-off receivables - - 291,920 Change in others (18,434 ) 51,805 (206,141 ) Change in exchange rate (1,579) - - Balance at December 31, 2019 $ 240,125 $ 175,604 $ 372,647	Impairment Loss under IFRS 9 Difference of Impairment Loss under (Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-accrual Loans) $ 617,543 $ 3,235,110 - - - - - - (226,100 ) - 360,617 - - 275,469 (81,255 ) - 291,920 - (172,770 ) - (1,579) - $ 788,376 $ 3,510,579	Total $ 3,852,653 - - - (226,100 ) 360,617 275,469 (81,255 ) 291,920 (172,770 ) (1,579) $ 4,298,955

(Concluded)

15. BAD-DEBT EXPENSES AND PROVISION FOR LOSSES ON COMMITMENTS AND GUARANTEES

Provision of allowance for doubtful accounts Receivables Discounts and loans Reserve for losses on guarantees Reserve for losses on loan commitments		December 31	December 31
		2020 $ (39,047) 311,263 (5,000) - $ 267,216	2019 $ (15,632) 237,216 5,000 9,000 $ 235,584

16. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD, NET

Investments in subsidiaries Investments in associates		December 31	December 31
		2020 $ 4,326,082 1,536,989 $ 5,863,071	2019 $ 3,787,538 1,587,482 $ 5,375,020

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a. Investments in subsidiaries

Union Finance and Leasing International Corporation (UFLIC) Union Securities Investment Trust Corporation (USITC) Union Finance International (H.K.) Limited Union Information Technology Corporation (UIT) Union Venture Capital Corporation		December 31	December 31
		2020 $ 2,998,319 414,021 129,604 13,462 770,676 $ 4,326,082	2019 $ 2,973,739 388,935 104,186 20,832 299,846 $ 3,787,538

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 Information Technology Corporation (UIT) Union Venture Capital Corporation	December 31
	2020 2019 100.00% 100.00% 99.60% 99.60% 99.99% 99.99% 99.99% 99.99% 100.00% 100.00%

To integrate resources and enhance operating effectiveness, the investment was approved by the Financial Supervisory Commission (FSC) under Rule No. 10802037180 on March 27, 2019.The bank spend $264,909 thousand dollars to purchase 65% equity interest from Union Securities Investment Trust Corporation’s shareholder on July 5, 2019 and December 27, 2019, respectively. After the transaction was completed, the percentage of total equity interest increased from 35% to 99.60%. For the disclosure related to purchase of USITC, refer to Note 56 to the financial statement of equity transactions with non-controlling interests of Union Bank of Taiwan for the year ended December 31, 2020 and 2019.

In order to actively support the FSC’s needs to adapt to the nation’s overall industry development, and to boost the diversification of the corporate banking business as well as improve the efficiency in the use of funds, Union Bank of Taiwan established Union Venture Capital in coordination with the nation’s financial policies, which was approved by the board of directors on September 26, 2018. The investment was approved by the Financial Supervisory Commission (FSC) under Rule No. 10802042270. The investment was approved by the Financial Supervisory Commission (FSC) under Rule No. 10802042270 on March 28, 2019. The total investment amount was $800,000 thousand, and the Bank held 100% of Union Venture Capital’s shares as of December 31, 2020

b. Investments in associates

Not individually material Union Real-Estate Management Corporation Line BIZ+ Taiwan Limited		December 31	December 31
		2020 $ 52,281 1,484,708 $ 1,536,989	2019 $ 52,513 1,534,969 $ 1,587,482

• 43 -

The summarized financial information in respect of the Bank’s associates is set out below:

Net loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ (50,493)	2019 $ (35,980)

To promote innovative financial technology services and popularize mobile payment endorsed by the government, the board of directors of the Bank approved the investment in Line BIZ+ Taiwan Limited on July 25, 2018 and later acquired 5,471 thousand of their ordinary shares with a price of $1,579,977 thousand on September 21, 2018, resulting in a 10% shareholding and a seat on the board. The Bank has significant influence over Line BIZ+ Taiwan Limited; thus, the Bank uses the equity method to account for the investment. And included the goodwill amount $977,235 thousand in the cost.

The Bank’s share of profit and other comprehensive income recognized from investments in associates other than Line BIZ+ Taiwan Limited during the fiscal years 2020 and 2019 were based on financial statements audited by their respective auditors for the same reporting periods as those of the Bank

Management of the Bank considers the fact that numbers quoted from the non-audited financial statements of Line BIZ+ Taiwan Limited will not lead to material misstatements on the Bank’s financial statements.

17. OTHER FINANCIAL ASSETS, NET

Pledged assets (Note 43) Due from banks - certificate of deposit Others		December 31	December 31
		2020 $ 1,468,848 2,979,551 23,437 $ 4,471,836	2019 $ 1,424,467 2,092,376 3,285 $ 3,520,128

The amount of due from banks - time deposits with maturities longer than three months or certificate of deposits that cannot be cancelled or used.

18. PROPERTY AND EQUIPMENT, NET

Cost Balance at January 1, 2019 Additions Disposals Reclassification Balance at December 31, 2019 Accumulated depreciation Balance at January 1, 2019 Depreciation Disposals Balance at December 31, 2019 Balance at December 31, 2019, net	Land $ 3,845,398 - - - 3,845,398 - - - - $ 3,845,398	Buildings Machinery and Computer Equipment Transportation Equipment $ 5,174,469 $ 1,343,694 $ 309,762 18,590 60,183 11,019 - (42,074 ) (6,041 ) 985 17,743 1,676 5,194,044 1,379,546 316,416 1,658,030 1,033,152 261,941 128,883 114,205 15,266 - (40,032) (5,894) 1,786,913 1,107,325 271,313 $ 3,407,131 $ 272,221 $ 45,103	Lease Improvements $ 375,761 20,690 (1,864 ) 10,626 405,213 187,269 50,841 (578) 237,532 $ 167,681	Prepayments for Equipment Total $ 73,811 $ 11,122,895 176,387 286,869 - (49,979 ) (42,339) (11,309) 207,859 11,348,476 - 3,140,392 - 309,195 - (46,504) - 3,403,083 $ 207,859 $ 7,945,393 (Continued)

• 44 -

Cost Balance at January 1, 2020 Additions Disposals Reclassification Balance at December 31, 2020 Accumulated depreciation Balance at January 1, 2020 Depreciation Disposals Balance at December 31, 2020 Balance at December 31, 2020, net	Land $ 3,845,398 48,665 - 35,492 3,929,555 - - - - $ 3,929,555	Buildings Machinery and Computer Equipment Transportation Equipment $ 5,194,044 $ 1,379,546 $ 316,416 17,180 66,077 23,424 - (114,170 ) (5,451 ) 1,012 130,282 387 5,212,236 1,461,735 334,776 1,786,913 1,107,325 271,313 126,132 78,261 13,126 - (107,246) (5,236) 1,913,045 1,078,340 279,203 $ 3,299,191 $ 383,395 $ 55,573	Lease Improvements $ 405,213 42,674 - 10,033 457,920 237,532 45,379 - 282,911 $ 175,009	Prepayments for Equipment Total $ 207,859 $ 11,348,476 52,141 250,161 - (119,621 ) (210,272) (33,066) 49,728 11,445,950 - 3,403,083 - 262,898 - (112,482) - 3,553,499 $ 49,728 $ 7,892,451 (Concluded)

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

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

In August 2016, the Bank acquired a piece of land in Tucheng Dist. from New Taipei City through the public auction in order to construct business operation office for $423,916 thousand. The Bank completed the payment and obtained the ownership of the land in October 2016. On November 9, 2016, the board of directors of the Bank and UFLIC, the property developer, resolved respectively to enter into a cooperation contract with each other to cooperatively construct a building. Upon completion of the building, the ownership thereof will be attributed to the Bank and UFLIC. Per contract, the Bank will provide its land (estimated cost amounting to $439,626 thousand) in Tucheng District, New Taipei City for constructing the building, and UFLIC will render funds and donate a piece of land originally reserved for the public facilities to the government in exchange for transfer development rights (TDR) to increase the building area. The funds and the TDR amounted to an aggregate of $447,614 thousand. The building area increased due to the exercise of the TDR belonged to UFLIC.

On July 25, 2018, the board of directors of the Bank and UFLIC resolved to rescind the cooperation contract in Tucheng District, New Taipei City. To avoid additional time and cost on transfer development right and field investigation on the project, the Bank and UFLIC have agreed upon UFLIC to continue finishing the project while the Bank will engage third parties to construct on the land owned. The Bank has paid to the government all the fees and the price of land originally reserved for the public facilities in exchange for transfer development rights (TDR) to increase the building area.

• 45 -

19. LEASE ARRANGEMENTS

• a. Right-of-use assets

b. c.	Carrying amount Land and buildings Additions to right-of-use assets Depreciation charge for right-of-use assets Land and buildings Lease liabilities Carrying amounts Range of discount rate for lease liabilities was as follows: Land and buildings Other lease information Expenses relating to short-term leases Total cash outflow for leases		December 31	December 31	December 31
		2020 2019 $ 1,639,260 $ 1,361,636 For the Year Ended December 31
				2020 2019 $ 706,653 $ 589,466 $ 415,009 $ 417,701 December 31
			2020 2019 $ 1,621,207 $ 1,338,560 December 31
		2020 2019 0.73%-0.93% 0.90%-0.93% For the Year Ended December 31
				2020 $ 206,167 $ (616,153)	2019 $ 214,161 $ (626,652)

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

20. 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 was no longer required from January 1, 2006.

The Bank merged with Union Bills Finance Corporation on August 16, 2010, with the Bank as the surviving entity, and recognized goodwill amounting to $130,498 thousand.

• 46 -

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, 2020 and 2019, the balances of accumulated impairment were both $902,691 thousand.

21. OTHER ASSETS, NET

Refundable deposits Prepaid expenses Prepaid pensions cost (Note 29) Others		December 31	December 31
		2020 $ 2,232,783 353,828 164,801 188 $ 2,751,600	2019 $ 2,533,030 580,516 153,564 192 $ 3,267,302

22. DEPOSITS FROM THE CENTRAL BANK AND OTHER BANKS

Call loans from banks Deposits from Chunghwa Post Co., Ltd. Overdraft Deposits from the Central Bank and other banks		December 31	December 31
		2020 $ 6,078,420 5,599,730 137,622 127,091 $ 11,942,863	2019 $ 5,500,000 5,599,730 55,409 145,784 $ 11,300,923

23. DUE TO THE CENTRAL BANK AND OTHER BANKS

Due to the Central Bank		December 31	December 31
		2020 $ 3,786,720	2019 $ -

• 47 -

24. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Commercial paper Asset-based securities Corporate bonds Government bonds Financial bonds Negotiable certificated of deposit Maturity date Repurchase price		December 31
	2020 2019 $ 16,513,416 $ 13,471,704 18,014,455 34,959,474 5,011,996 8,259,790 2,749,077 4,177,567 1,138,946 4,508,901 1,000,286 - $ 44,428,176 $ 65,377,436 2021.01-2021.04 2020.01-2020.07 $ 43,452,064 $ 65,663,465

25. PAYABLES

Investments payable Notes and checks in clearing Accrued expenses Interest payable Collections payable Bank acceptances payable Tax taxable Reimbursed for settlement Others		December 31	December 31
		2020 $ 1,349,789 1,171,066 860,672 573,653 391,944 107,221 103,685 69,746 802,620 $ 5,430,396	2019 $ 455,093 1,076,011 891,680 894,802 237,076 112,902 108,324 127,990 615,408 $ 4,519,286

26© . DEPOSITS AND REMITTANCES

Savings deposits Demand deposits Time deposits Checking deposits Negotiable certificates of deposit Inward and outward remittances		December 31	December 31
		2020 $ 364,921,557 115,561,141 113,473,414 13,941,078 305,900 66,424 $ 608,269,514	2019 $ 327,270,693 93,047,892 107,187,235 5,866,457 234,500 49,186 $ 533,655,963

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27. BANK DEBENTURES

First issue of subordinated bank debentures in 2013; fixed rate at 2.10%; maturity: December 2020 First issue of subordinated bank debentures in 2015; fixed rate at 2.08%; maturity: April 2022 First issue of subordinated bank debentures in 2016; no maturity date and non-cumulative; redeemable at face value plus interest accrued under the approval of the authorities when the issue term is over 5.1 years; fixed rate at 4.20% First issue of subordinated bank debentures in 2017; no maturity date and non-cumulative; redeemable at face value plus interest accrued under the approval of the authorities when the issue term is over 5.1 years; fixed rate at 4.20% First issue of subordinated bank debentures in 2019; fixed rate at 1.10%; maturity: September 2026 First issue of subordinated bank debentures in 2019; fixed rate at 1.23%; maturity: September 2029		December 31	December 31
		2020 $ - 2,200,000 2,500,000 500,000 500,000 1,500,000 $ 7,200,000	2019 $ 3,000,000 2,200,000 2,500,000 500,000 500,000 1,500,000 $ 10,200,000

28. PROVISIONS

Reserve for losses on guarantees and loan commitments Others		December 31	December 31
		2020 $ 216,360 28,579 $ 244,939	2019 $ 221,488 28,479 $ 249,967

• 49 -

The Bank has accrued an allowance for doubtful accounts on guarantees and loan commitments; the changes in allowance for doubtful accounts on guarantees and loan commitments for the years ended December 31, 2020 and 2019 were as follows:

12-month Expected- credit Losses Lifetime Expected- credit Losses Lifetime Expected- credit Losses (Credit- impaired Financial Assets) Impairment Loss under IFRS 9 Difference of Impairment Loss under (Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-accrual Loans) Balance at January 1, 2020 $ 51,294 $ 3,753 $ 28,150 $ 83,197 $ 138,291 Changes of financial instruments recognized at the beginning of the current reporting period Transfers to Lifetime ECL (99 ) 99 - - - Credit-impaired financial assets (182 ) (17 ) 199 - - 12-month ECL 1,170 (1,170 ) - - - Derecognition of financial assets in the current reporting period (33,417 ) (2,608 ) (28,300 ) (64,325 ) - New financial assets purchased or originated 30,763 1,609 95 32,467 - Difference of impairment loss under regulations - - - - 27,017 Change in others (159 ) - - (159 ) - Change in exchange rates (128) - - (128) - Balance at December 31, 2020 $ 49,242 $ 1,666 $ 144 $ 51,052 $ 165,308 Balance at January 1, 2019 $ 24,420 $ 3,405 $ 28,732 $ 56,557 $ 150,982 Changes of financial instruments recognized at the beginning of the current reporting period Transfers to Lifetime ECL (20 ) 20 - - - Credit-impaired financial assets (34 ) (8 ) 42 - - 12-month ECL 736 (716 ) (20 ) - - Derecognition of financial assets in the current reporting period (16,943 ) (2,660 ) (28,733 ) (48,336 ) - New financial assets purchased or originated 43,186 3,672 28,129 74,987 - Difference of impairment loss under regulations - - - - (12,691 ) Change in others - 40 - 40 - Change in exchange rates (51) - - (51) - Balance at December 31, 2019 $ 51,294 $ 3,753 $ 28,150 $ 83,197 $ 138,291

Total $ 221,488 - - - (64,325 ) 32,467 27,017 (159 ) (128) $ 216,360 $ 207,539 - - - (48,336 ) 74,987 (12,691 ) 40 (51) $ 221,488

29. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

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

• 50 -

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 2% 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 and in the Bank’s Business Department in the committee’s name.

The fund is deposited in the Bank of Taiwan under management of Bureau of Labor Funds, Ministry of Labor. The Bank has no right to influence the investment policy and strategy. Before the end of each year, the Bank assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Bank is required to fund the difference in one appropriation that should be made before the end of March of the next year.

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

Present value of defined benefit obligation Fair value of plan assets Deficit (surplus) Net defined benefit asset		December 31	December 31
		2020 $ (1,626,432) 1,791,233 164,801 $ 164,801	2019 $ (1,667,125) 1,820,689 153,564 $ 153,564

Movements in net defined benefit liabilities were as follows:

Present Value of the Defined Benefit Obligation Fair Value of the Plan Assets Balance at January 1, 2019 $ (1,604,372) $ 1,585,640 Service cost Current service cost (15,948) - Net interest income (expense) (16,175) 15,986 Recognized in profit or loss (32,123) 15,986 Remeasurement Return on plan assets (excluding amounts included in net interest) - 258,055 Actuarial loss - changes in financial assumptions (56,455) - Actuarial gain - experience adjustments (28,748) - Recognized in other comprehensive income (85,203) 258,055 Contributions from the employer - 15,581 Benefits paid 54,573 (54,573) Balance at December 31, 2019 $ (1,667,125) $ 1,820,689

Total $ (18,732) (15,948) (189) (16,137) 258,055 (56,455) (28,748) 172,852 15,581 - $ 153,564 (Continued)

• 51 -

Present Value of the Defined Benefit Obligation Fair Value of the Plan Assets Balance at January 1, 2020 $ (1,667,125) $ 1,820,689 Service cost Current service cost (14,966) - Net interest income (expense) (11,705) 12,783 Recognized in profit or loss (26,671) 12,783 Remeasurement Return on plan assets (excluding amounts included in net interest) - 17,997 Actuarial loss - changes in financial assumptions (56,783) - Actuarial gain - experience adjustments 50,628 - Recognized in other comprehensive income (6,155) 17,997 Contributions from the employer - 13,283 Benefits paid 73,519 (73,519) Balance at December 31, 2020 $ (1,626,432) $ 1,791,233

Total $ 153,564 (14,966) 1,078 (13,888) 17,997 (56,783) 50,628 11,842 13,283 - $ 164,801 (Concluded)

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

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

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

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

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

Discount rate Expected rates of future salary increase	December 31
	2020 2019 0.383% 0.702% 2.50% 2.50%

• 52 -

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

Discount rate(s) 0.25% increase 0.25% decrease Expected rate(s) of salary increase 0.25% increase 0.25% decrease		**December **	31
		2020 $ (43,062) $ 44,723 $ 43,074 $ (41,709)	2019 $ (46,310) $ 48,173 $ 46,541 $ (44,991)

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

The expected contributions to the plan for the next year The average duration of the defined benefit obligation		**December **	31
		2020 $ 13,615 11 years	2019 $ 15,971 12 years

30. OTHER LIABILITIES

Advance receipts Guarantee deposits received Others		December 31	December 31
		2020 $ 903,350 119,397 75,509 $ 1,098,256	2019 $ 699,003 107,985 96,085 $ 903,073

31. EQUITY

a. Capital 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	December 31
		2020 4,500,000 $ 45,000,000 3,093,369 $ 30,933,688	2019 4,500,000 $ 45,000,000 2,884,455 $ 28,844,553

Fully paid ordinary shares, which have a par value of NT$10, carry one vote per share and carry a right to dividends.

• 53 -

Preferred stock

Due to the capital needs of the Bank for future long-term business development and operational scale expansion, the Bank’s shareholders approved and authorized the board of directors to issue ordinary shares or special shares for domestic cash capital increase (one or both, as appropriate) in accordance with the provisions of the Articles of Incorporation or the relevant laws and regulations, in order to raise the long-term funds. The total funds to be raised through issuing new shares as authorized this time shall not be more than NT$10 billion (inclusive) as the principle. The number of shares for issue shall not be more than 800,000,000 shares (inclusive) as the principle. On June 28, 2017, the Banks’s board of directors resolved to issue preferred stock - A totaling 200,000 thousand shares, with a par value of NT$10, at NT$50 per share in the total amount of NT$10,000,000 thousand on December 28, 2017. The issuance of shares has been approved by the FSC under Order No. 1060033586 issued on September 1, 2017.

On October 24, 2017, the capital from issue of preferred stock - A amounted to NT$10,000,000 thousand. The preferred stock - A was listed on Taiwan Stock Exchange on December 1, 2017.

The rights and other important conditions of issuance of the preferred stock - A are as follows:

• 1) Tenor: Perpetual.

• 2) Dividend Yield: An annual dividend yield is set at 4.8% (5-year IRS 0.89125%+3.90875%) per annum of the issue price at the pricing day. The 5-year IRS will be reset on the next business day after each 5.5 anniversary day after issuance thereafter. The pricing date for reset is the second business day of financial industry in Taipei immediately preceding each reset date. The 5-year IRS rate is the arithmetic mean of 5-year IRS rates appearing on Reuters pages “PYTWDFIX” and “COSMOS3” at 11:00 a.m. (Taipei time) on the relevant pricing date for reset. If such rate cannot be obtained, the Bank will determine the rate based on reasonable market price with good faith.

• 3) Dividend Payment: Whereas the Bank profit in a fiscal year, the profit shall be first utilized for paying taxes, offset losses of previous years, and from the remaining profit set aside amount as legal reserve, and set aside or reverse special reserve in accordance with the laws and regulations, and distribute dividends to the preferred shareholders. The Bank has the sole discretion on the distribution of dividends of preferred stocks - A, which includes but not limited to the Bank’s discretion to resolve not to distribute dividends to the preferred shareholders if there is no surplus, or if earnings in the fiscal year are insufficient to fully pay off dividends to the shareholders of the preferred stocks, or if the distribution of dividends of preferred stocks may cause Total Capital Adequacy Ratio to be less than the authority’s minimum requirement, or if the Bank has other essential considerations. If the Bank resolves not to distribute dividends to the preferred shareholders, the shareholders of preferred stock - A shall raise no objection. The unpaid dividend will not be carried forward to years with earnings. The stock dividends of preferred stocks - A are distributed by cash in one payment annually. After the shareholders, in their meeting, approved the appropriation of the earnings of the fiscal year as proposed by the board of directors and resolved to distribute from the earnings cash dividends, the board of directors sets the record date of preferred stock - A for payment of dividends. Dividend is calculated based on the proportion of the number of days that the stocks are issued in a fiscal year, starting from the date of issuance to the record date (or redemption date) of dividend. The amount of dividends distributed should be listed on the dividend statements.

• 4) Restrictions on Payment of Dividends to Ordinary shares: Except for the dividends prescribed in the preceding subparagraphs herein, the shareholders of preferred stock - A are not entitled to participate in the distribution of cash or stock dividends with regard to the ordinary shares derived from earnings or capital reserves.

• 54 -

• 5) Redemption: After 5.5 years from the issue date, the bank may, subject to the competent authority’s approval, redeem a portion or all of the outstanding shares of preferred stock - A at any time at the issue price. The rights and obligations associated with any remaining outstanding shares of preferred stock - A shall continue as specified herein. If the stockholders’ meeting approves the distribution of dividends in the year the Bank redeems the outstanding shares of preferred stock - A, the dividends payable shall be calculated at the ratio of the number of days outstanding from beginning of year to the redemption date to total days in a fiscal year.

• 6) Liquidation preference: In the event of liquidation, except when the competent authority assigned officials to take receivership over the Bank, order the Bank to suspend and wind up business, or liquidate the Bank, in accordance with the “Regulations Governing the Capital Adequacy and Capital Category of Banks”, the order of priority for the distribution of the earnings and assets of the shareholders of preferred stock - A is the same as that of a common stockholder, the shareholders of preferred stock - A shall be given priority to claim on the Bank’s remaining assets over the shareholders of common stocks, and equal to shareholders of other preferred stock issued by the Bank, but subordinate to the holders of Tier 2 capital, depositors, and other general creditors, and not more than the issuance amount of outstanding shares of preferred stock - A.

• 7) Voting Rights or Election Rights: The shareholders of preferred stock - A are not entitled to any voting rights or election rights in shareholders’ meeting. However, they may vote in preferred stock - A shareholders’ meetings and in general shareholder meetings with regard to agenda items concerning rights and obligations of the shareholders of preferred stock - A.

• 8) Preferred stock - A shall not be converted into common stocks. The shareholders of the preferred stocks shall not require the Bank to redeem the rights of the preferred stocks - A.

• 9) When the bank issues new shares in cash, the shareholders of preferred stock - A and the common stock shall be entitled to equivalent preemptive rights on the new shares.

• b. Capital surplus

Issuance of preference shares Treasury stock transactions Ordinary share - premium		December 31	December 31
		2020 $ 8,000,000 32,413 7,622 $ 8,040,035	2019 $ 8,000,000 32,413 3,071 $ 8,035,484

The capital surplus from shares issued in excess of par (additional paid-in capital from issuance of ordinary shares, preference 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.

• 55 -

d. Special reserve

Items referred to under Rule No. 1010012865, Rule No. 1030006415 issued by the FSC and the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated to or reversed from a special reserve by the Bank.

If a special reserve appropriated on the first-time adoption of IFRSs relates to investment properties other than land, the special reserve may be reversed continuously over the period of use. The special reserve relating to land may be reversed on the disposal or reclassification of the related assets.

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.

According to Order No. 10510001510 issued by the FSC, a special reserve should be appropriated between 0.5% and 1% of net income after tax when banks appropriate earnings of 2016 through 2018. Since 2017, the Bank is allowed to reverse the special reserve at the amount of the costs of employee transfer and arrangement in connection with the development of financial technology.

According to Order No. 1010012865 and No. 10510001510 issued by the FSC, the Bank appropriated special reserves as follows:

Balance at January 1 Special reserves appropriated Balance at December 31		December 31	December 31
		2020 $ 627,440 - $ 627,440	2019 $ 612,656 14,784 $ 627,440

• e. Retained earnings and dividend policy

The shareholders of the Bank held their regular meeting on May 31, 2019 and resolved the amendments to the Bank’s Articles of Incorporation (the “Articles”). The amendments explicitly stipulate that at the end of each half of the accounting year, the Bank may propose a proposal for the distribution of surplus or loss for the first half of the fiscal year, together with the business report and financial statements submitted to the audit committee for review, which are subject to the resolution of the board of directors. When allocating surpluses, in addition to estimating and retaining taxable donations, making up for losses according to law, and making statutory surplus reserves, it is also advisable to retain employee compensation.

Under the dividends policy as set forth in the amended Articles, if the Bank has made a profit at the end of the fiscal year, in addition to paying income tax in accordance with the law, losses from prior years should first be compensated, then 30% shall be provided as legal reserve. Special reserve may also be provided in accordance with the law or as required for business. The remaining amount together with the accumulated undistributed profit from the previous year shall be subject to a profit distribution proposal prepared by the board of directors and shall be submitted to the shareholders’ meeting for a resolution regarding the distribution of shareholders’ dividends and bonuses.

When distributing the surplus of the preceding paragraph, the statutory surplus reserve and the capital reserve by way of issuing new shares, the shareholders’ meeting will be held to make a special resolution; the cash assignor is authorized to distribute the surplus by the board of directors with more than two-thirds of the directors attending and resolution of more than half of the directors, and a report of such distribution should be submitted in the shareholders’ meeting.

• 56 -

Under the dividends policy as set forth in the Articles before the amendments, if the Bank has made a profit at the end of the fiscal year, in addition to paying income tax in accordance with the law, losses from prior years should first be compensated, then 30% shall be provided as legal reserve. Special reserve may also be provided in accordance with the law or as required for business. The remaining amount together with the accumulated undistributed profit from the previous year shall be subject to a profit distribution proposal prepared by the board of directors and shall be submitted to the shareholders’ meeting for a resolution on the distribution of shareholders’ dividends and bonuses.

When distributing the surplus of the preceding paragraph, the statutory surplus reserve and the capital reserve by way of issuing new shares, the shareholders’ meeting will be held to make a special resolution; the cash assignor is authorized to distribute the surplus by the board of directors with more than two-thirds of the directors attending and the resolution of more than half of the directors, and a report of such distribution should be submitted in the shareholders’ meeting. The dividends and bonuses under the first paragraph shall be distributed in cash or stock, as determined by the board of directors based on the financial status at the time, future profitability status and capital budget planning of the Bank. In principle, if the ratio between the Bank’s own capital and risky assets after distribution will be lower than the ratio stipulated by the competent authority by 1%, issuance of stock dividend may be given priority; before the level of capital reserve reaches the amount of total capital, profit distribution in cash shall not exceed 15% of the total capital.

The appropriations from the earnings of 2019 and 2018 were approved in stockholders’ meetings on May 28, 2020 and May 31, 2019, respectively. The appropriations and dividends per share were as follows:

Legal reserve Special reserve Cash dividends on ordinary shares Share dividends on ordinary shares Cash dividends on preferred shares	Appropriation of Earnings 2019 2018 $ 1,007,837 $ 887,017 - 14,784 288,446 - 2,019,119 1,883,009 480,000 480,000	Dividends Per Share (NT$)
		2019 2018 $ 0.1 $ - 0.7 0.7 2.4 2.4

The appropriations from the 2020 earnings were proposed by the board of directors on March 10, 2021. The appropriations, including the dividends per share, were as follows:

	Appropriation	Dividends Per
	of Earnings	Share (NT$)
Legal reserve	$ 1,041,070
Special reserve	1,951,916	$0.631
Stock dividends on ordinary shares	480,000	2.4
Cash dividends on preference shares

The appropriation of earnings for 2020 will be approved in stockholders’ meeting to be held on May 28, 2021.

• 57 -

f. Other equity items

• 1) Exchange differences on translation of foreign operations

Balance at January 1 Exchange differences arising on translation of the foreign operations Income tax on exchange differences on translation of the net assets of foreign operations Share of exchange difference of subsidiaries accounted for using the equity method Balance at December 31 2) Unrealized gain (loss) on financial assets at FVTOCI	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2020 $ (604,632) (625,885) 125,177 14,117 $ (1,091,223)	2019 $ (413,524) (227,061) 45,412 (9,459) $ (604,632)

Balance at January 1 Generated this year Unrealized gain (loss) Debt instruments Equity instruments Adjustments to loss allowance for debt instruments Share of associates Disposal of debt instruments Other comprehensive loss for the year Acquisition of interest in subsidiary Accumulated gain (loss) transferred retained earnings denied from disposal of equity instruments at FVTOCI Balance at year-end 32. NET INTEREST	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 5,289,524 1,040,127 705,215 (19,120) (35,700) (15,371) 1,675,151 - (22,382) $ 6,942,293	2019 $ 2,073,347 1,611,224 1,947,394 17,662 (153) (24,322) 3,551,805 (2,105) (333,523) $ 5,289,524

Interest revenue Discounts and loans Debt instruments at amortized cost Financial assets at FVTOCI Credit card Securities purchased under resell agreements Due from the Central Bank and call loans to other banks Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 8,073,680 1,621,720 958,260 834,266 221,157 127,370 21,739 11,858,192	2019 $ 7,825,653 1,912,430 901,475 836,083 269,316 231,389 47,033 12,023,379 (Continued)

• 58 -

Interest expense Deposits Securities sold under repurchase agreements Bank debentures Due to Chunghwa Post Co., Ltd. Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 3,189,807 571,777 256,508 39,340 101,298 4,158,730 $ 7,699,462	2019 $ 3,900,744 1,203,134 246,880 48,489 60,272 5,459,519 $ 6,563,860 (Concluded)

33. COMMISSION AND FEE REVENUE, NET

Commission and fee revenue Insurance commission Credit cards and cash cards Trust business Loan business Interbank service fee Underwriting business Guarantee business Others Commission and fee expense Credit card Interbank service fee Acquiring liquidation deal Verification of credit Agency fee Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 638,744 1,596,391 572,023 350,161 104,690 88,911 117,207 255,667 3,723,794 658,125 28,786 15,256 39,014 17,209 96,294 854,684 $ 2,869,110	2019 $ 871,886 1,319,093 478,926 390,072 101,056 79,377 109,034 245,553 3,594,997 632,799 22,966 17,221 35,532 17,117 91,997 817,632 $ 2,777,365

• 59 -

34. GAIN ON FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

Realized gain or loss on financial assets at fair value through profit or loss Currency swap contracts Foreign exchange forward contracts Commercial paper Beneficial securities and shares Option contracts Government bonds Corporate bonds Interest revenue Dividend Principal guaranteed notes Cross currency swap contract Future exchange margins Unrealized gain or loss on financial assets at fair value through profit or loss Beneficial securities and shares Government bonds and corporate bonds Commercial paper Derivative financial assets and liabilities	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 512,717 37,061 14,104 10,156 1,769 8,046 1,632 245,917 54,462 11,725 16,175 (1,406) 912,358 538 (444) (6,922) 805,279 798,451 $ 1,710,809	2019 $ 959,335 324,367 8,220 239,738 3,125 1,783 - 272,159 35,191 33,242 61,109 1,124 1,939,393 49,998 8,302 (1,257) (585,369) (528,326) $ 1,411,067

35. REALIZED GAIN ON FINANCIAL ASSETS AT FVOCI

Dividend revenue Net profit from disposal of bonds	For the Year Ended	For the Year Ended	December 31
		2020 $ 391,849 15,371 $ 407,220	2019 $ 312,318 24,322 $ 336,640

36. IMPAIRMENT LOSS (REVERSAL OF LOSS)

Debt instruments at FVTOCI Financial assets at amortized cost Foreclosed collaterals	For the Year Ended	For the Year Ended	December 31
		2020 $ 14,349 107,760 6,751 $ 128,860	2019 $ (19,605) (43,501) 20,185 $ (42,921)

• 60 -

37. SALARY AND BENEFITS OF EMPLOYEES

Salaries and wages Pension Defined contribution plans Defined benefit plans Labor insurance and national health insurance Remuneration of directors Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 3,165,954 149,995 13,888 296,614 13,430 55,627 $ 3,695,508	2019 $ 3,085,297 136,845 16,137 284,701 13,366 51,735 $ 3,588,081

In 2020 and 2019, the Bank had an average of 4,019 and 3,987 employees, respectively, and 8 non-employee directors in both years.

According to the Bank’s Articles, the Bank accrued compensation of employees and remuneration of directors at the rates between 1% and 5% and no higher than 0.1%, respectively, of net profit before income tax, compensation of employees and remuneration of directors. The compensation of employees and remuneration of directors for the years ended December 31, 2020 and 2019 which have been approved by the Bank’s board of directors on March 10, 2021 and March 10, 2020, respectively, were as follows:

Accrual Rate

Compensation of employees Remuneration of directors	For the Year Ended December 31
	2020 2019 1.84% 1.84% 0.09% 0.09%

Amount

Compensation of employees Remuneration of directors and supervisors	For the Year Ended December 31	For the Year Ended December 31
	2020 Cash Share $ - $ 72,242 3,534 -	2019
		Cash Share $ - $ 74,567 3,647 -

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

The number of shares of the compensation of employees, which was determined by dividing the amount of the compensation of employees resolved for 2020 and 2019 by $10.85 and $10.65, respectively, which is the closing price per share on the day immediately preceding the meeting of the Bank’s board of directors was 6,658 thousand shares and 7,002 thousand shares for 2020 and 2019, respectively.

There was no difference between the actual amounts of compensation of employees and remuneration of directors paid and the amounts recognized in the financial statements for 2020 and 2019.

Information on the compensation of employees and remuneration of directors resolved by the Bank’s board of directors in 2020 and 2019 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

• 61 -

38. DEPRECIATION AND AMORTIZATION

Property and equipment Intangible assets Right of use assets	For the Year Ended	For the Year Ended	December 31
		2020 $ 262,898 75,404 415,009 $ 753,311	2019 $ 309,195 82,521 417,701 $ 809,417

39. OTHER OPERATING EXPENSES

Rental Taxation and government fee Advertisement Outsourcing service Postage/cable charge Computer operating Deposit insurance Maintenance charge Marketing Printing and binding Donation Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 206,167 610,516 1,024,785 335,177 261,337 181,941 149,368 127,336 46,832 47,288 20,831 500,422 $ 3,512,000	2019 $ 214,161 603,211 599,870 315,017 259,700 166,438 140,993 114,228 91,122 48,470 24,423 475,274 $ 3,052,907

40. INCOME TAX

a. Income tax recognized in profit or loss

The main components of income tax expense were as follows:

Current tax Current year Additional income tax on unappropriated earnings Prior year’s adjustments Deferred tax Current year Income tax expense recognized in profit or loss	**For the Year Ended **	**For the Year Ended **	December 31
		2020 $ 429,260 1,516 (7,785) (14,240) $ 408,751	2019 $ 464,521 - 4,803 145,586 $ 614,910

• 62 -

A reconciliation of accounting profit and current income tax expenses for the years ended December 31, 2020 and 2019 is as follows:

Income before tax Income tax expense at the 20% statutory rate Tax-exempt income Loss on disposal of investments in overseas equity instruments at fair value through other comprehensive income Nondeductible expenses in determining taxable income Additional income tax under the Alternative Minimum Tax Act Unrecognized deductible temporary differences 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
		2020 $ 3,850,460 $ 770,092 (411,849) - - 56,777 - (7,785) 1,516 $ 408,751	2019 $ 3,974,367 $ 794,873 (212,815) 1,387 4,275 - 22,387 4,803 - $ 614,910

As the appropriation of the 2020 earnings is uncertain, the income tax consequences of the 2020 unappropriated earnings cannot be reliably determined.

b. Income tax recognized in other comprehensive income

Deferred tax Recognized in other comprehensive income: Exchange differences on the translation of financial statements of foreign operations Unrealized loss on financial assets at FVTOCI Actuarial gains and losses on defined benefit plans Total income tax expenses (benefit) recognized in other comprehensive income	**For the Year Ended **	**For the Year Ended **	December 31
		2020 $ 125,177 (107,125) (2,368) $ 15,684	2019 $ 45,412 (300,174) (34,570) $ (289,332)

• 63 -

c. Deferred tax assets and liabilities

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

For the year ended December 31, 2020

					Recognized	Recognized	in
						Other
			Recognized in		Comprehensive
	Opening Balance		Profit	or Loss		Income		Closing Balance
Deferred tax assets
Temporary differences
Impairment loss of financial instruments	$	42,700	$	(8,700 )	$		-	$	34,000
Employee benefit plan		173,984		2,336			-		176,320
Payable for annual leave		7,370		1,397			-		8,767
Allowance for possible losses and reserve for losses on
guarantees		81,727		11,286			-		93,013
Exchange difference on translation of foreign
operations		143,010		-		125,177			268,187
Others		91,988		(35,369)			-		56,619
	$	540,779	$	(29,050)	$	125,177		$	636,906
Deferred tax liabilities
Temporary differences
Financial assets at fair value through other
comprehensive income	$	(996,121 )	$	-	$	(107,125 )		$	(1,103,246 )
Amortization of goodwill impairment loss		(397,061 )		-			-		(397,061 )
Others		(176,457)		43,290		(2,368)			(135,535)
	$	(1,569,639)	$	43,290	$	(109,493)		$	(1,635,842)
For the year ended December 31, 2019

					Recognized	Recognized	in
						Other
			Recognized in		Comprehensive
	Opening Balance		Profit or Loss			Income		Closing Balance
Deferred tax assets
Temporary differences
Impairment loss of financial instruments	$	54,652	$	(11,952 )	$		-	$	42,700
Employee benefit plan		174,762		3,136		(3,914 )			173,984
Payable for annual leave		6,120		1,250			-		7,370
Allowance for possible losses and reserve for losses on
guarantees		129,642		(47,915 )			-		81,727
Exchange difference on translation of foreign
operations		97,598		-		45,412			143,010
Others		24,239		67,749			-		91,988
		487,013		12,268		41,498			540,779
Loss carryforwards		147,764		(147,764)			-		-
	$	634,777	$	(135,496)	$	41,498		$	540,779
Deferred tax liabilities
Temporary differences
Financial assets at fair value through other
comprehensive income	$	(695,947 )	$	-	$	(300,174 )		$	(996,121 )
Amortization of goodwill impairment loss		(397,061 )		-			-		(397,061 )
Others		(135,711)		(10,090)		(30,656)			(176,457)
	$	(1,228,719)	$	(10,090)	$	(330,830)		$	(1,569,639)

• 64 -

• d. Income tax assessments

Examined and Cleared

Union Bank of Taiwan

Through 2017

41. EARNINGS PER SHARE

Basic earnings per share Diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 0.96 $ 0.96	2019 $ 0.93 $ 0.93

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

Net Profit for the Period

Net profit Less: Dividends on preference shares Earnings used in the computation of basic earnings per share Earnings used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 3,441,709 (480,000) $ 2,961,709 $ 2,961,709	2019 $ 3,359,457 (480,000) $ 2,879,457 $ 2,879,457

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

Weighted average number of ordinary shares used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares Compensation or bonuses of employees Weighted average number of ordinary shares used in the computation of diluted earnings per share	**For the Year Ended **	**For the Year Ended **	December 31
		2020 3,092,030 8,059 3,100,089	2019 3,085,172 7,943 3,093,115

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

The weighted average number of shares outstanding used for the earnings per share computation was adjusted retroactively for the issuance of bonus shares on July 31, 2020. The basic and diluted earnings per share were adjusted both from $1.00 to $0.99 for the year ended December 31, 2019

• 65 -

42. 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 Finance International (H.K.) Limited Subsidiary Union Securities Investment Trust Corporation (USITC) Subsidiary Union Venture Capital Co., Ltd. (UVC) Subsidiary Union Capital (Cayman) Corp. (UCCC) Subsidiary of UFLIC New Asian Ventures Ltd. (New Asian) Subsidiary of UFLIC Union Capital (Singapore) Holding Pte. Ltd. (UCSH) Subsidiary of Cayman Uflc Capital (Singapore) Holding Pte. Ltd. (UFLC) Subsidiary of Cayman Kabushiki Kaisha UCJ1 (KK) Subsidiary of UCSH and UFLC Tokutei Mokuteki Kaisha SSG15 (TMK SSG15) Subsidiary of UCSH and KK Tokutei Mokuteki Kaisha SSG12 (TMK SSG12) Subsidiary of UFLC and KK Tokutei Mokuteki Kaisha SSG16 (TMK SSG16) Subsidiary of UFLC and KK Corner Union Venture Capital, LLC (Delaware) Subsidiary of UVC Corner Union LLC DAG I-U, LLC Subsidiary of UVC and Corner Union Venture Capital, LLC (Delaware) Corner Union LLC Subsidiary of UVC and Corner Union Venture Capital, LLC (Delaware) Na he yi hau electric power Inc. Subsidiary of UVC Ting Jie Electric Power Inc Subsidiary of UVC Union Energy Co., Ltd Subsidiary of UVC Union Private Equity Co., Ltd. Subsidiary of USITC Union Real-Estate Management Corporation Associates LINE BIZ+ Taiwan, Ltd. (LINE PAY) Associates Hung-Kou Construction Inc., Ltd. (Hung-Kou) Related party in substance The Liberty Times Co., Ltd. (Liberty Times) Related party in substance Long Shan Lin Corporation Related party in substance Yong-Xuan Co., Ltd. (Yong-Xuan) Related party in substance Union Enterprise Construction Co., Ltd. (UECC) Related party in substance Yu-Pang Co., Ltd. (Yu-Pang) Related party in substance Union Recreation Enterprise Corporation Related party in substance Union Optronics Co., Ltd. (Union Optronics) Related party in substance Hi-Life International Co., Ltd. (Hi-Life) Related party in substance Securities Investment Trust Funds Issued by Union Securities Investment Trust Union Green Energy Private Equity Limited Partnership USITC and UFLIC are general partnership of the private fund Others Directors, managers and their relatives and affiliates

• 66 -

b. Significant transactions with related parties:

1) Loans

December 31, 2020

Highest Balance in the Account Volume or Year Ended December 31, Ending Type Name 2020 Balance Consumer loans 20 $ 16,372 $ 9,649 Self-used housing mortgage loans 56 171,171 88,730 Others UFLIC 1,727,263 1,459,606 Others 6 12,384 11,396	Loan Classification Differences in Terms of Transaction Normal Nonper- forming with Those for Unrelated Loans Loans Collaterals Parties $ 9,649 $ - Land, buildings and cars None 88,730 - Real estate None 1,459,606 - Land and buildings None 11,396 - Land and buildings None

December 31, 2019

									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	2019	Balance	Loans		Loans	Collaterals	Parties
Consumer loans		19	$ 15,965 $	9,481 $	9,481	$	-	Land, buildings and cars	None
Self-used housing		49	166,350	102,797	102,797		-	Real estate	None
mortgage loans
Others		UFLIC	1,808,727	1,734,111	1,734,111		-	Land and buildings	None
Others		8	16,095	11,146	11,146		-	Land and buildings	None
			December 31				Interest Revenue
			Amount	%		Rate		Amount	%
2020		$	1,569,381	0.37	1.15%-3.00%			$ 30,326	0.26
2019			1,857,535	0.48	1.56%-2.64%			34,984	0.29

2) Deposits

2020 2019	December 31 Amount % $ 14,511,786 2.39 6,024,277 1.13	Interest Expense
		Rate (Note) Amount % 0%-4.80% $ 29,002 0.70 0%-4.80% 51,120 0.94

Note: Including foreign currency interest rate.

• 3) Guarantees and letters of credit

December 31, 2020

December 31, 2020
	Highest
	Balance in		Balance of
	the Year		Guarantees
	Ended		and Letters
	December 31,	Ending	of Credit
Name	2020	Balance		(Note)	Rate	Collateral
Union Recreation Enterprise	$ 19,316	$ 19,316	$	-	0.5%	Time deposits
Corporation
The Liberty Times Co., Ltd.	2,517	-		-	-	Time deposits
Long Shan Lin Corporation	71,040	71,040		-	0.5%	Time deposits
Hi-Life International Co.,	20,300	20,300		-	0.4%	Time deposits
Ltd.

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December 31, 2019

	Highest
	Balance in		Balance of
	the Year		Guarantees
	Ended		and Letters
	December 31,	Ending	of Credit
Name	2019	Balance		(Note)	Rate	Collateral
Union Recreation Enterprise	$ 19,316	$ 19,316	$	-	0.5%	Time deposits
Corporation
The Liberty Times Co., Ltd.	2,630	-		-	-	Time deposits
Long Shan Lin Corporation	71,040	71,040		-	0.5%	Time deposits
Hi-Life International Co.,	114,324	18,500		-	0.4%	Time deposits
Ltd.

Note: Reserve for guarantee loss is provided on the basis of the estimated unrecoverable amount.

4) 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, Insurance Agency Department, Credit Card Department, the Northern Collateral Appraisal Center, and some 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:

2020 Yu-Pang Hung-Kuo Yong-Xuan UECC 2019 Yu-Pang Hung-Kuo Yong-Xuan UECC	Lease Deposit (Part of Other Assets) Amount % $ 456,046 20.43 219,465 9.83 15,029 0.67 4,384 0.20 Lease Deposit (Part of Other Assets) Amount % $ 454,888 17.96 219,465 8.66 14,220 0.56 4,384 0.17	Lease Liabilities
		Amount % $ 22,754 1.40 407,013 25.11 158,935 9.80 55,324 3.41 Lease Liabilities
		Amount % $ 22,870 1.71 62,672 4.68 174,406 13.03 8,665 0.65

The Bank rented cars for business use from UFLIC; the rental expenses were $11,061 thousand in 2020 and $10,771 thousand in 2019. Rentals payable as of December 31, 2020 and 2019 were $41 thousand and $40 thousand, respectively.

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The Bank rented space to install an ATM of Hi-life International Corporation, the rent expense was $65 in 2020 thousand and $1,372 thousand in 2019. Rental payable as December 31, 2020 and 2019 were $5 thousand and $14 thousand, respectively.

• b) The Bank as lessor

The Bank’s South Taoyuan Branch, Kaohsiung Branch, Minchuan Branch, Fucheng Branch, Jiuru Branch, Xing-Zhong Branch and Tun-Hua Branch leased part of their office premises to UFLIC and UVC under operating lease agreements starting from December 2014 to August 2019, from January 2016 to December 2020, from August 2016 to July 2021, from June 2013 to June 2023, from May 2017 to April 2022, from November 2017 to October 2022 and from November 2019 to October 2124, respectively. The leasing revenues received were $1,599 thousand and $1,594 thousand in 2020 and 2019, respectively. The lease deposits received (included in other liabilities) were $406 thousand and $436 thousand in 2020 and 2019, respectively.

• 5) UIT sold computers and related materials and software and provided network services to the Bank. The purchase and service fees were $136,744 thousand in 2020 and $127,815 thousand in 2019.

• 6) LINE PAY provided the use of its consumer platform to the Bank. The maintenance fee of the platform as of December 31, 2020 and 2019 were $25,252 thousand and $4,273 thousand, respectively.

• 7) LINE PAY provided the credit card bonus points and cooperative marketing activities to the Bank. The advertising fee as of December 31, 2020 and 2019 were $695,168 thousand and $136,198 thousand, respectively.

• 8) Hi-Life provided the commodity bonus exchange and marketing activities to the Bank. The advertising fee were $867 thousand and $815 thousand in 2020 and 2019, respectively.

• 9) Derivative financial instruments

The currency swap contract undertaken by the Bank and UCCC has expired in June 2019.

Gain (loss) on financial instruments at fair value through profit or loss UCCC	2019 $ (4,209)

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.

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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
		2020 $ 35,501 1,230 36,731 3,338 $ 40,069	2019 $ 36,916 1,150 38,066 8,473 $ 46,539

Compensation of directors and management personnel is determined by the remuneration committee on the basis of individual performance and market trends.

43. PLEDGED ASSETS

As of December 31, 2020, the Bank deposit of $1,000,000 in Central Bank Reserve Account, for undertaking the loan facility to help small and medium sized companies hit by the COVID-19 pandemic.

As of December 31, 2020 and 2019, government bonds and bank debentures, which amounted to $293,305 thousand and $318,605 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, brokering life insurance, property and casualty insurance, and as trust reserve.

As of December 31, 2020 and 2019, the Bank pledged a time deposit of $1,100,000 thousand and $1,100,000 thousand (part of other financial assets), respectively, to Mega International Commercial Bank and Mizuho Bank to be part of the latter’s online bank-to-bank payment system.

44. CONTINGENCIES AND COMMITMENTS

a. As of December 31, 2020 and 2019, 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
	2020 2019 $ 124,910,213 $ 115,314,710 290,942,911 280,852,350 1,012,925 893,729 15,593,398 15,348,358 24,196,090 28,655,887 - 64,613 1,377,300 1,402,600 85,935,248 75,781,532 4,985,682 5,966,407

b. Computer equipment purchase contracts

As of December 31, 2020 and 2019, the Bank had contracts to buy computer equipment and software for $209,281 thousand and $200,379 thousand, respectively, of which $120,972 thousand and $90,973 thousand had been paid as of December 31, 2020 and 2019, respectively.

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45. OTHER

Since January 2020, the COVID-19 pandemic has influenced the global economy; it is causing uncertainty in the economic growth. The Bank increased the level of risk advisory, pressure test, loan management and continuously tracking different financial risks data. After critical analysis, the Bank concluded that the effect of the COVID-19 pandemic will not influence the Bank to continue operating or cause significant asset impairment loss.

46. TRUST BUSINESS UNDER THE TRUST LAW

Balance Sheet of Trust Accounts December 31, 2020

Trust Assets Bank deposits Investments Mutual funds Debt Common stock Accounts receivable Stock in custody Real estate - land and building Total	Amount Trust Liabilities and Capital $ 8,157,969 Management fee payable Income tax payable 47,850,626 Marketable securities payable 3,971 Trust capital 330,003 Reserve and deficit 9,687 16,366,695 13,216,297 $ 85,935,248 Total	Amount $ 13 706 16,366,695 69,507,816 60,018 $ 85,935,248

Note: The foreign currency amount of mutual funds was included in OBU on December 31, 2020.

Balance Sheet of Trust Accounts December 31, 2019

Trust Assets Bank deposits Investments Mutual funds Common stock Accounts receivable Stock in custody Real estate - land and building Total	Amount Trust Liabilities and Capital $ 6,167,712 Management fee payable Income tax payable 44,205,497 Marketable securities payable 685,405 Trust capital 9,605 Reserve and deficit 12,005,099 12,708,214 $ 75,781,532 Total	Amount $ 7 697 12,005,099 63,716,585 59,144 $ 75,781,532

Note: The foreign currency amount of mutual funds was included in OBU on December 31, 2019.

• 71 -

Income Statement of Trust Accounts Year Ended December 31, 2020

Trust income Interest revenue - demand accounts Interest revenue - time deposits Interest revenue - debt Cash dividends - common stock Income from beneficiary certificates Realized capital gain - fund Unrealized capital gain - fund Unrealized capital gain - common stock at stock exchange market Total trust income Trust expense Management expense Taxation Agency fees Unrealized capital loss - common stock at stock exchange market Unrealized capital loss - debt Realized capital loss - fund Unrealized capital loss - fund Others Total trust expense Gain before tax Income tax expense Net gain

Amount $ 628 21,286 100 9,077 269 287 311 45,250 77,208 15,827 5,487 3,152 238 45 1,186 423 1,687 28,045 49,163 (1,593) $ 47,570

Note: The above trust income statements were not included in the Bank’s income statements.

Income Statement of Trust Accounts Year Ended December 31, 2019

Trust income Interest revenue - demand accounts Interest revenue - time deposits Cash dividends - common stock Income from beneficiary certificates Realized capital gain - fund Unrealized capital gain - fund Unrealized capital gain - common stock at stock exchange market Total trust income	Amount $ 931 18,509 7,924 261 1,011 226 49,185 78,047 (Continued)

• 72 -

Amount

Trust expense Management expense Taxation Agency fees Unrealized capital loss - common stock at stock exchange market Realized capital loss - fund Unrealized capital loss - fund Others Total trust expense Loss before tax Income tax expense Net loss	$ 10,965 7,806 3,741 281 223 548 256 23,820 54,227 (1,306) $ 52,921 (Concluded)

Note: The above trust income statements were not included in the Bank’s income statements.

Trust Property and Equipment Accounts December 31, 2020

Investment Portfolio Bank deposits Investments Mutual funds Debt Common stock Accounts receivable Stock in custody Real estate - land and buildings	Amount $ 8,157,969 47,850,626 3,971 330,003 9,687 16,366,695 13,216,297 $ 85,935,248

Note: The foreign currency amount of mutual funds was included in OBU on December 31, 2020.

Trust Property and Equipment Accounts December 31, 2019

Investment Portfolio Bank deposits Investments Mutual funds Common stock Accounts receivable Stock in custody Real estate - land and buildings	Amount $ 6,167,712 44,205,497 685,405 9,605 12,005,099 12,708,214 $ 75,781,532

Note: The foreign currency amount of mutual funds was included in OBU on December 31, 2019.

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47. FINANCIAL INSTRUMENTS

• a. Information on 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 equity investments with unlisted shares or no active market and complex foreign exchange options.

• 74 -

• b. The fair value hierarchies of the Bank’s financial instruments as of December 31, 2020 and 2019 were as follows:

(In Thousands of New Taiwan Dollars)

Measured at fair value on a recurring basis Nonderivative financial instruments Assets Financial assets at fair value through profit or loss (FVTPL) Financial assets mandatorily classified as at FVPTL Beneficiary certificates Commercial paper Negotiable certificated of deposit Asset-based securities Stock Debt investment Futures exchange margins Financial assets at fair value through other comprehensive income Stock Debt investments Derivative financial instruments Assets Financial assets at FVTPL Liabilities Financial liabilities at FVTPL Measured at fair value on a recurring basis Nonderivative financial instruments Assets Financial assets at fair value through profit or loss (FVTPL) Financial assets mandatorily classified as at FVPTL Beneficiary certificates Commercial paper Asset-based securities Futures exchange margins Financial assets at fair value through other comprehensive income Stock Debt investments Derivative financial instruments Assets Financial assets at FVTPL Liabilities Financial liabilities at FVTPL	December 31, 2020
	Total Level 1 Level 2 Level 3 $ 513,710 $ 513,710 $ - $ - 31,361,157 - 31,361,157 - 999,450 - 999,450 - 57,897 - 57,897 - 298,124 - 298,124 - 50,496 50,496 - - 56,665 56,665 - - 11,554,590 10,078,651 - 1,475,939 41,252,805 - 41,252,805 - 630,231 - 574,513 55,718 206,002 - 150,308 55,694 December 31, 2019
	Total Level 1 Level 2 Level 3 $ 532,562 $ 532,562 $ - $ - 29,670,103 - 29,670,103 - 67,361 - 67,361 - 61,302 61,302 - - 7,724,463 6,676,744 - 1,047,719 33,237,957 - 33,237,957 - 268,446 - 241,461 26,985 650,981 - 624,005 26,976

• 75 -

• c. 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, fair value through other comprehensive income 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 contracts 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.

• 3) Fair value adjustment

Credit risk assessment adjustment

Credit risk assessment adjustment refers to the fair value of the over the counter (OTC) derivative financial commodity contracts, which also reflects the credit risk of both parties. It can be mainly divided into “credit evaluation adjustment” and “debit evaluation adjustment”:

• a) Credit value adjustments (CVA): A transaction in a non-concentrated trading market, that is, the adjustment of the derivatives contract evaluation in the OTC transaction, which reflects the possibility of the Company may not be able to collect the full market value or the counterparty may default on the repayment on the fair value.

• 76 -

• b) Debit value adjustments (DVA): It refers to the transactions of the non-concentrated trading market, that is, the adjustment of the derivatives contract evaluation in the OTC transaction, which reflects the possibility that the Company may not be able to collect the full market value or the counterparty may default on the repayment of the fair value.

Both CVA and DVA are concepts of estimated loss, calculated as the probability of default (PD) multiplied by the default loss rate (LGD) and multiplied by the exposure at default (EAD).

For customers with external credit ratings, the default probability is based on the default probability corresponding to the external rating; for customers without external credit ratings, the impairment rate calculated according to the bank’s loan and receivable impairment assessment and the average incidence of impairment is taken as the default probability.

The Bank uses the fair value of OTC derivatives to calculate the amount of default risk (EAD).

The Bank uses 60% as the default loss rate based on the recommendation of “IFRS 13 CVA and DVA Related Disclosure Guidelines” of the Stock Exchange.

The Bank incorporates the credit risk assessment adjustment into the fair value calculation of financial instruments to reflect the counterparty’s credit risk and the Bank’s credit quality.

• 4) Transfer between Level 1 and Level 2

There was no material transfer between Level 1 and Level 2 for 2020 and 2019.

• 5) Reconciliation of Level 3 items of financial instruments

• a) Reconciliation of Level 3 items of financial assets

For the year ended December 31, 2020

(In Thousands of New Taiwan Dollars)

Items	Beginning Balance	Valuation G	ains (Losses)	Amount o	f Increase	**Amount o **	f Decrease	Ending Balance
		In Net Income	In Other Comprehen- sive Income	Purchase or Change in FairValue	Transfer to Level 3	Sale or Change in FairValue	Transfer from Level 3
Financial assets at fair value through profit or loss Derivative financial assets Financial assets at fair value through other comprehensive income Investments in equity instruments	$ 26,985 1,047,719	$ 10,676 -	$ - (48,834)	$ 53,028 -	$ - 500,000	$ (34,971 ) (22,946)	$ - -	$ 55,718 1,475,939

• 77 -

For the year ended December 31, 2019

(In Thousands of New Taiwan Dollars)

Items	Beginning Balance	Valuation G	ains (Losses)	Amount o	f Increase	**Amount o **	f Decrease	Ending Balance
		In Net Income	In Other Comprehen- sive Income	Purchase or Change in FairValue	Transfer to Level 3	Sale or Change in FairValue	Transfer from Level 3
Financial assets at fair value through profit or loss Derivative financial assets Financial assets at fair value through other comprehensive income Investments in equity instruments	$ 36,521 1,011,440	$ (13,802 ) -	$ - 38,657	$ 27,875 -	$ - -	$ (23,609 ) (2,378)	$ - -	$ 26,985 1,047,719

b) Reconciliation of Level 3 items of financial liabilities

For the year ended December 31, 2020

(In Thousands of New Taiwan Dollars)

Items	Beginning Balance	Valuation G	ains (Losses)	Amount o	f Increase	**Amount o **	f Decrease	Ending Balance
		In Net Income	In Other Comprehen- sive Income	Purchase or Change in FairValue	Transfer to Level 3	Sale or Change in FairValue	Transfer from Level 3
Financial liabilities at fair value through profit or loss Derivative financial liabilities	$26,976	$22,568	$ -	$36,334	$ -	$ (30,184)	$ -	$55,694

For the year ended December 31, 2019

(In Thousands of New Taiwan Dollars)

Items	Beginning Balance	Valuation G	ains (Losses)	Amount o	f Increase	**Amount o **	f Decrease	Ending Balance
		In Net Income	In Other Comprehen- sive Income	Purchase or Change in FairValue	Transfer to Level 3	Sale or Change in FairValue	Transfer from Level 3
Financial liabilities at fair value through profit or loss Derivative financial liabilities	$36,522	$ (14,128)	$ -	$31,111	$ -	$ (26,529)	$ -	$26,976

• 78 -

• 6) Quantitative information of significant unobservable inputs - Level 3 fair value measurement

December 31, 2020

Item	Product	Fair Value	Valuation Technique	Significant Unobservable Inputs	Interval (Weighted- average)	Relation Between Input and FairValue
Derivative financial Instruments Financial assets at fair value through profit or loss Non-derivative financial instruments Financial assets at fair value through other comprehensive income Derivative financial instruments Financial liabilities at fair value through profit or loss	Foreign exchange options Investment in equity instruments Foreign exchange options	$ 55,718 1,475,939 55,694	Option pricing model Assets value model Option pricing model	Ratio Allowance of minority interest Ratio	AUD/JPY 9.51%-10.18% AUD/USD 9.72% EUR/USD 6.87%-8.15% NZD/USD 10.16%-10.68% USD/CNH 6.10% USD/TWD 4.30%-5.95% USD/ZAR 15.80%-16.22% 10%-20% AUD/JPY 9.51%-10.18% AUD/USD 9.72% EUR/USD 6.87%-8.15% NZD/USD 10.16%-10.68% USD/CNH 6.10% USD/TWD 4.30%-5.95% USD/ZAR 15.80%-16.22%	The higher the ratio is, the higher the fair value The higher the equity dispersion is, the lower the fair value The higher the ratio is, the higher the fair value

• 79 -

December 31, 2019

Item	Product	Fair Value	Valuation Technique	Significant Unobservable Inputs	Interval (Weighted- average)	Relation Between Input and FairValue
Derivative financial Instruments Financial assets at fair value through profit or loss Non-derivative financial instruments Financial assets at fair value through other comprehensive income Derivative financial instruments Financial liabilities at fair value through profit or loss	Foreign exchange options Investment in equity instruments Foreign exchange options	$ 26,985 1,047,719 26,976	Option pricing model Assets value model Option pricing model	Ratio Allowance of minority interest Ratio	AUD/JPY 8.73%-8.74% AUD/USD 6.69% EUR/USD 5.26% USD/JPY 4.87%-5.77% USD/TWD 3.45%-4.65% USD/ZAR 11.26-%-14.35% 10%-20% AUD/JPY 8.73%-8.74% AUD/USD 6.69% EUR/USD 5.26% USD/JPY 4.87%-5.77% USD/TWD 3.45%-4.65% USD/ZAR 11.26-%-14.35%	The higher the ratio is, the higher the fair value The higher the equity dispersion is, the lower the fair value The higher the ratio is, the higher the fair value

• 7) The assessment process of Level 3 fair value measurement

To ensure that the product assessment results can be close to the market, the risk management department of the Bank is responsible for the verification of the independent fair value. For products assessed by the model, before daily assessment, the information required for the assessment will be verified as correct and consistent with each other and the department will calibrate the model to the market quotation and update the input value required for the assessment model. In addition to regular checking of the accuracy of the assessment model, the reasonableness of the prices provided by third parties will also be checked

• 8) Sensitivity analysis of Level 3 fair value if reasonably possible alternative assumptions were used

The Bank’s Level 3 financial instruments are foreign exchange options and unlisted shares. When engaging in foreign exchange option transactions, the Bank makes a match for other banks and unlisted shares 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.

• 80 -

The fair value measurement of financial instrument is reasonable although the use of different valuation models or parameters may lead to different results. For financial instruments classified in Level 3, if the parameter changes by 10%, the effects on profit or loss or other comprehensive income for the current periods are as follows:

December 31, 2020

Financial assets at fair value through other comprehensive income Investments in equity instruments December 31, 2019 Financial assets at fair value through other comprehensive income Investments in equity instruments	Changes in Fair Value Are Reflected in Other Comprehensive Income for the Current Period
	Favorable Changes Unfavorable Changes $ 147,594 $ (147,594) Changes in Fair Value Are Reflected in Other Comprehensive Income for the Current Period
	Favorable Changes Unfavorable Changes $ 104,772 $ (104,772)

• d. Fair value of financial instruments that are not measured at fair value

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.

• 1) Information of fair value

Financial assets Financial assets measured at amortized cost Financial liabilities Bank debentures	December 31	December 31
	2020 Carrying Amount Estimated Fair Value $ 90,697,662 $ 93,603,257 7,200,000 7,280,129	2019
		Carrying Amount Estimated Fair Value $ 104,170,149 $ 106,472,282 10,200,000 10,218,066

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2) Fair value hierarchy

Items		December 31, 2020	December 31, 2020
	**Total **	Level 1	Level 2	Level 3
Financial assets Financial assets measured at amortized cost Financial liabilities Bank debentures	$ 93,603,257 7,280,129	$ - -	$ 93,603,257 7,280,129	$ - -
Items		December 31, 2019
	Total	Level 1	Level 2	Level 3
Financial assets Financial assets measured at amortized cost Financial liabilities Bank debentures	$ 106,472,282 10,218,066	$ - -	$ 106,472,282 10,218,066	$ - -

48. 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.

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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.

• 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.

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• 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 of directors.

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.

• 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, 2020	December 31, 2019
Irrevocable standbyloan commitment	$ 9,449,892	$ 9,548,993
Unused letters of credit	1,012,925	893,729
Otherguarantees	15,593,398	15,348,358
Unused credit card commitments	290,942,911	280,852,350
December 31, 2020 Collateral Netting Arrangements In-balance sheet items Discount and loans $ 357,981,083 $ - December 31, 2019 Collateral Netting Arrangements In-balance sheet items Discount and loans $ 319,506,390 $ -	Other Credit Enhancement $ - Other Credit Enhancement $ -	Total $ 357,981,083 Total $ 319,506,390

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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, 2020	December 31, 2020	December 31, 2019	December 31, 2019
	Amount	%	Amount	%
Private enterprises	$117,401,556	26.37	$106,475,131	26.19
Profit organization	107,900	0.02	-	-
Government organizations	36,370,927	8.17	35,884,136	8.83
Nonprofit organizations	584,112	0.13	797,036	0.20
Private organizations	289,106,008	64.93	262,021,341	64.44
Financial institutions	627	-	787	-
Foreign enterprises	1,693,804	0.38	1,408,776	0.34
Total	$445,264,934	100.00	$406,587,207	100.00

b) By geographical area

The Bank’s operations are mainly in Taiwan.

c) By collaterals

	December 31, 2020	December 31, 2020	December 31, 2019	December 31, 2019
	Amount	%	Amount	%
Unsecured	$79,092,381	17.76	$78,566,192	19.32
Secured
Financial instruments	10,345,503	2.32	11,439,874	2.81
Stocks	12,565,587	2.82	11,341,285	2.80
Properties	309,013,003	69.40	278,572,709	68.51
Movables	20,259,264	4.55	18,660,538	4.59
Guarantees	12,682,520	2.85	7,520,867	1.85
Others	1,306,676	0.30	485,742	0.12
Total	$445,264,934	100.00	$406,587,207	100.00

• 85 -

• 8) Analysis of impairment for financial assets

On the basis of the result of a credit evaluation, the Bank may require collaterals before the credit facilities are granted. To minimize 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 close monitoring of the value of collaterals to ensure repayment. 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

The Bank observes the value of collateral for financial instruments and takes into consideration the impairment loss that should be recognized for financial assets that are credit-impaired. The values of the credit-impaired financial assets and the values of collateral to mitigate potential losses are as follows:

2020

Credit-impaired financial assets Receivables Credit cards Other Discounts and loans 2019 Credit-impaired financial assets Receivables Credit cards Other Discounts and loans	Carrying Amount Allowance for Impairment Loss $ 1,016,564 $ 56,259 31,495 23,854 1,538,618 434,013 $ 2,586,677 $ 514,126 Carrying Amount Allowance for Impairment Loss $ 1,080,427 $ 66,157 29,786 27,030 1,529,359 372,647 $ 2,639,572 $ 465,834	Exposure Amount (Amortized Cost) Fair Value of Collateral $ 960,305 $ - 7,641 11,671 1,104,605 3,555,487 $ 2,072,551 $ 3,567,158 Exposure Amount (Amortized Cost) Fair Value of Collateral $ 1,014,270 $ - 2,756 17,534 1,156,712 3,510,967 $ 2,173,738 $ 3,528,501

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• 9) Judgment that credit risk has increased significantly since the initial recognition - 2018

On each reporting date, the Bank assesses the change in the default risk of financial assets, as well as considers reasonable and corroborative information that shows the credit risk has increased significantly since initial recognition, to determine whether the credit risk has increased significantly. The main considerations include:

Quantitative indicators

• a) The borrower pays the amount for contracts overdue for at least one month (more than or equal to 30 days for the credit card business), or the amounts for other contracts that are overdue for at least one month (more than or equal to 30 days for the credit card business).

• b) Debt instruments whose prices on the reporting date have fallen more than 40% from the original price since the acquisition date.

• c) Debt instruments that have non-investment grades based on the debt (priority), issuer, and guarantor’s credit rating and that have fallen by more than two grades and whose prices have fallen by more than 15% on the reporting date.

Qualitative indicators

• a) The borrower’s check bounced due to insufficient funds in the Bank’s checking account, or announced as a rejected account.

• b) The borrower’s collateral was seized.

• c) The borrower’s debt has been recognized as a non-accrual loan or transferred to bad debt by other financial institutions.

• d) The borrower has been reorganized.

• e) An auditors’ report on the borrower has been released where it was stated that a material uncertainty exists that may cast significant doubt on the borrower’s ability to continue as a going concern.

• f) The borrower has other bad debts that indicate that the borrower’s ability to perform its debt obligations is weak or has signs of impairment, which has been assessed to affect its operations or repayment ability.

• 10) Definition of default and credit impaired financial assets

The Bank uses the same definitions for default and credit impairment of financial assets. If one or more of the conditions below are met, the Bank determines that the financial assets have defaulted and are credit impaired. The main considerations include:

• a) The borrower pays the amount for contracts overdue for at least 3 months (90 days and above for the credit card business).

• b) The debtor has significant financial difficulties (e.g., the debtor has ceased operations, is bankrupt, or has liquidated).

• c) Economic or legal considerations, concessions to borrowers with financial difficulties (such as debt negotiations).

• 87 -

If the financial assets no longer meet the definition of default and credit impairment, they are judged as regaining their status of meeting performance obligations and are no longer regarded as financial assets that have defaulted and are credit impaired.

11) Reversal policy

When the Bank is not reasonably expected to recover all or part of the financial assets, the indicators that all or part of the financial assets that cannot be reasonably expected to be recovered include the following:

• a) Recourse activities have stopped.

• b) The borrower is assessed to have insufficient assets or sources of income to pay the outstanding amount.

The financial assets that have been written off by the Bank may still have ongoing recourse activities in accordance with the relevant policies.

• 12) Contractual cash flow modification of financial assets

The Bank may modify the contractual cash flow of financial assets due to the borrower’s financial difficulties, increase in the recovery rate of the doubtful borrowers, or to maintain customer relationships. The modification of the contractual terms of the financial assets may include extending the contract period, modifying the interest payment time, and modifying the agreed interest rate or the exemption of some of the outstanding debts. The modification of contractual cash flows of financial assets may result in the delisting of existing financial assets in accordance with the Bank’s financial assets delisting policy and recognition of new financial assets at fair value.

If the contractual cash flow modification of a financial asset does not result in a derecognition, the Bank assesses whether the credit risk of the financial asset has increased significantly by comparing the following:

• a) Risk of default on the reporting date (based on modified contract terms).

• b) The risk of default at the time of original recognition (based on the original unmodified contract terms).

The Bank considers the borrower’s subsequent payment in accordance with the revised terms and several relevant behavioral indicators to assess the probability of default of the revised financial assets and confirm whether the contract modification improves or restores the ability of the bank to recover the relevant contract payments. If the borrower pays the contract amount according to the revised terms and shows good payment behavior, it can be determined that the credit risk is reduced and the loss allowance will be measured by the 12-month expected credit loss model.

The Bank regularly reviews the changes in credit risk of the revised financial assets in accordance with relevant policies, and evaluates whether there is a significant increase in credit risk following the revised financial assets based on a specific model.

• 88 -

13) Measurement of expected credit losses

For the purpose of assessing expected credit losses, credit assets are classified into the following groups based on the credit risk characteristics of the borrower’s industry, credit risk rating, collateral type and remaining maturity period:

Business	Group	**Definition **
Corporate banking	Corporate banking	Corporate bankingbusiness
Consumer banking	Mortgages	Mortgage business
	Financial loans	Financial loan business
	Credit card	Credit card business
	Others	Other business

The Bank adopts the 12-month ECL model to evaluate the loss allowance of financial instruments whose credit risk have not increased significantly since initial recognition, and adopts the lifetime ECL model to evaluate the loss allowance of financial instruments whose credit risk has increased significantly since initial recognition or of that are credit-impaired.

The Bank considers both the 12-month and lifetime probability of default (“PD”) of the borrower with the loss given default (“LGD”), multiplied by the exposure at default (“EAD”), as well as the impact of time value, to calculate the 12-month ECLs and lifetime ECLs, respectively.

“PD” refers to the borrower’s probability to default and “LGD” refers to losses caused by the default. The Bank calculates the “PD” and “LGD” used in the impairment assessment of the credit business according to each group’s historical information (such as credit loss experience) from internal statistical data, and after adjustment of the historical data based on current observable and forward-looking macroeconomic information.

Gross carrying amount Less: Allowance for impairment loss Less: Additional impairment loss required under		Account Receivable
		December 31, 2020
	Stage 1 12-month ECL $ 21,740,510 35,883 - $ 21,704,627	Stage 3 Additional Stage 2 Lifetime ECL Lifetime ECL (Credit-impaired Financial Assets) Impairment Loss Required under Regulations $ 103,393 $ 1,048,059 $ - 16,566 80,113 - - - 56,110 $ 86,827 $ 967,946 $ 56,110	Total $ 22,891,962 132,562 56,110 $ 22,703,290

Gross carrying amount Less: Allowance for impairment loss Less: Additional impairment loss required under		Account Receivable
		December 31, 2019
	Stage 1 12-month ECL $ 19,416,706 43,935 - $ 19,372,771	Stage 3 Additional Stage 2 Lifetime ECL Lifetime ECL (Credit-impaired Financial Assets) Impairment Loss Required under Regulations $ 106,235 $ 1,110,213 $ - 18,491 93,187 - - - 44,639 $ 87,744 $ 1,017,026 $ 44,639	Total $ 20,633,154 155,613 44,639 $ 20,432,902

• 89 -

Gross carrying amount Less: Allowance for impairment loss Less: Additional impairment loss required under			Discounts and Loans
			December 31, 2020
		Stage 1 12-month ECL $ 425,670,321 245,587 - $ 425,424,734	Stage 3 Additional Stage 2 Lifetime ECL Lifetime ECL (Credit-impaired Financial Assets) Impairment Loss Required under Regulations $ 1,874,263 $ 1,538,618 $ - 106,506 433,756 - - - 3,992,384 $ 1,767,757 $ 1,104,862 $ 3,992,384	Total $ 429,083,202 785,849 3,992,384 $ 424,304,969

Gross carrying amount Less: Allowance for impairment loss Less: Additional impairment loss required under			Discounts and Loans
			December 31, 2019
		Stage 1 12-month ECL $ 387,137,800 240,125 - $ 386,897,675	Stage 3 Additional Stage 2 Lifetime ECL Lifetime ECL (Credit-impaired Financial Assets) Impairment Loss Required under Regulations $ 2,015,580 $ 1,529,359 $ - 175,604 372,647 - - - 3,510,579 $ 1,839,976 $ 1,156,712 $ 3,510,579	Total $ 390,682,739 788,376 3,510,579 $ 386,383,784

When the Bank estimates the 12-month and lifetime expected credit losses for its loan commitments, it will give different credit conversion factors according to the characteristics of each product. The Bank will also take into consideration the amount that is expected to be utilized within 12 months from the reporting date and the expected lifetime of each commitment in determining the default risk amount that is used to calculate the expected credit loss

The estimation techniques or material assumptions used to assess expected credit losses have not changed significantly during the current period.

14) Consideration of forward-looking information

The Bank’s credit (including credit card) segments are based on different loan properties, such as corporate banking, consumer finance, credit, car loans and credit cards, and forward-looking model estimates are carried out, based on actual default rates and overall economic variables of each segment in the past quarters. The default rate for the next year is estimated using the credit risk chain model, by estimating the relationship between the default rate and the overall economic variables. The investment function makes reference to external credit ratings in their consideration of forward-looking information.

• 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.

• 90 -

• 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) For maintaining solvency and meeting the needs of emergency assistance arrangements, the Bank holds cash and high-quality, liquid interest-bearing assets. The assets held for liquidity risk management include cash and cash equivalents, due from Central Bank and call loans to other banks, financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income, financial assets at amortized cost, discounts and loans, available-for-sale financial assets, held-to-maturity financial assets, and debt instruments with no active market, etc.

• b) The Bank disclosed the analysis of cash outflows from nonderivative financial liabilities by the residual maturities as of the balance sheet dates. The amounts of cash outflows are based on contractual cash flows, so some amounts may not correspond to those that shown in the balance sheets.

  • i. The maturity analysis of financial liabilities

Call loans and due to banks Due to the Central Bank and other bank Securities sold under repurchase agreements Payables Deposits and remittance Bank debentures Other liabilities

December 31, 2020

Due in One Month Due Between after One Month and Three Months Due Between after Three Months and Six Months Due Between after Six Months and One Year Due after One Year Total $ 6,060,273 $ 5,342,540 $ 525,050 $ 15,000 $ - $ 11,942,863 26,000 35,650 84,300 248,720 3,392,050 3,786,720 25,701,954 18,720,220 6,002 - - 44,428,176 3,193,456 1,180,689 873,480 164,672 18,099 5,430,396 40,978,581 64,746,534 82,685,570 157,934,658 261,924,171 608,269,514 - - - - 7,200,000 7,200,000 - - - - 94,683 94,683

• 91 -

The maturity analysis of lease liability:

Lease liabilities Call loans and due to banks Securities sold under repurchase agreements Payables Deposits and remittance Bank debentures Other liabilities Lease liabilities				December 31, 2020	December 31, 2020
		Less than A Year $ 389,156	1-5 years $ 1,047,837	5-10 years 10-15 Year $ 155,267 $ 62,791 December 31, 2019		15-20 Year $ 6,370	Total $ 1,661,421
		Due in One Month $ 7,201,193 21,683,238 2,069,134 39,135,312 - 16,105	Due Between after One Month and Three Months $ 59,680 43,444,198 1,299,264 61,742,848 - 9	Due Between after Three Months and Six Months Due Between after Six Months and One Year $ 3,025,050 $ 1,015,000 - 250,000 896,265 235,823 75,966,212 147,981,777 - 3,000,000 14 28 December 31, 2019		Due after One Year $ - - 18,800 208,829,814 7,200,000 91,940	Total $ 11,300,923 65,377,436 4,519,286 533,655,963 10,200,000 108,096
		Less than A Year $ 344,824	1-5 years $ 700,362	5-10 years $ 204,453	10-15 Year $98,557	15-20 Year $ 16,370	Total $ 1,364,566

• ii. 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 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 Derivative financial liabilities to be settled at net amounts Forward exchange contracts				December 31, 2020	December 31, 2020
		0-30 Days $ 18,335,891 18,222,640 113,251 - $ 113,251	31-90 Days $ 11,082,638 11,065,864 16,774 - $ 16,774	91-180 Days 181 Days- 1 Year $ 492,466 $ 831,586 488,806 826,142 3,660 5,444 - - $ 3,660 $ 5,444 December 31, 2019		Over 1 Year $ - - - - $ -	Total $ 30,742,581 30,603,452 139,129 - $ 139,129
		0-30 Days $ 21,333,779 20,984,823 348,956 - $ 348,956	31-90 Days $ 30,830,364 30,572,337 258,027 - $ 258,027	91-180 Days $ 242,689 237,459 5,230 - $ 5,230	181 Days- 1 Year $ 64,427 64,260 167 - $ 167	Over 1 Year $ - - - - $ -	Total $ 52,471,259 51,858,879 612,380 - $ 612,380

iii. 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, 2020	December 31, 2020
		0-30 Days 31-90 Days $ 1,738 $ 5,357	91-180 Days 181 Days- 1 Year $ 2,058 $ 11,917 December 31, 2019		Over 1 Year $ -	Total $ 21,070
		0-30 Days 31-90 Days $ 1,321 $ 2,136	91-180 Days $ 1,617	181 Days- 1 Year $ 4,365	Over 1 Year $ -	Total $ 9,439

• 92 -

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 items.

• 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.

• 93 -

• 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 2020 and 2019, 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 $734,108 thousand and $373,604 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.

• 94 -

• 7) Foreign currency rate risk information

The information on significant foreign financial assets and liabilities is as follows:

Unit: Foreign Currency (In Thousands)/NT$(In 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

December 31, 2020

Foreign Currencies Exchange Rate New Taiwan Dollars $ 3,761,165 28.5080 $ 107,223,292 7,084,894 0.2765 1,958,838 6,024 38.9163 234,437 147,591 21.9740 3,243,151 287,833 3.6775 1,058,492 16,364 22.3575 365,860 829,320 4.3813 3,633,524 4,355 21.5790 93,974 1,173,971 1.9510 2,290,464 1,493 32.3587 48,327 460 0.9517 438 24,718 20.5970 509,109 42,365 35.0534 1,485,056 3,242,858 28.5080 92,447,394 8,120,551 0.2765 2,245,178 6,028 38.9163 234,582 147,527 21.9740 3,241,745 288,067 3.6775 1,059,354 16,344 22.3575 365,408 829,328 4.3813 3,633,560 4,306 21.5790 92,928 1,173,864 1.9510 2,290,254 1,543 32.3587 49,916 24,681 20.5970 508,348 35,505 35.0534 1,244,575

• 95 -

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

December 31, 2019

Foreign Currencies Exchange Rate New Taiwan Dollars $ 2,754,263 30.1060 $ 82,919,842 3,231,344 0.2770 895,215 204 39.5382 8,071 2,494 21.1013 52,625 43,216 3.8660 167,076 1,545 23.0821 35,671 770,337 4.3231 3,330,235 104 22.3654 2,325 9,934 2.1380 21,239 120 31.0595 3,742 460 1.0091 465 690 20.2674 13,988 7,982 33.7368 269,290 2,332,777 30.1060 70,230,593 2,085,975 0.2770 577,900 201 39.5382 7,963 2,452 21.1013 51,735 42,734 3.8660 165,211 1,624 23.0821 37,496 768,870 4.3231 3,323,895 71 22.3654 1,599 10,481 2.1380 22,409 120 31.0595 3,728 512 20.2674 10,385 9,120 33.7368 307,675

• 96 -

• f. Transfers of financial assets.

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

		December 31, 2020	December 31, 2020
Category of Financial Assets	Carrying Amount of Transferred Financial Asset	Carrying Amount of Associated Financial Liability	Fair Value of Transferred Financial Asset	Fair Value of Associated Financial Liability	Fair Value of Net Position
Financial assets at fair value through profit or loss Securities sold under repurchase agreements	$17,501,131	$17,513,701	$17,501,131	$17,513,701	$ (12,570)
Financial assets at fair value through other comprehensive income Securities sold under repurchase agreements	9,216,124	8,900,020	9,216,124	8,900,020	316,104
Financial assets at amortized costs Securities sold under repurchase agreements	23,249,254	18,014,455	25,511,315	18,014,455	7,496,860

		December 31, 2019	December 31, 2019
Category of Financial Assets	Carrying Amount of Transferred Financial Asset	Carrying Amount of Associated Financial Liability	Fair Value of Transferred Financial Asset	Fair Value of Associated Financial Liability	Fair Value of Net Position
Financial assets at fair value through profit or loss Securities sold under repurchase agreements	$13,458,214	$13,471,704	$13,458,214	$13,471,704	$ (13,490)
Financial assets at fair value through other comprehensive income Securities sold under repurchase agreements	19,671,156	16,946,258	19,671,156	16,946,258	2,724,898
Financial assets at amortized costs Securities sold under repurchase agreements	44,134,600	34,959,474	45,837,805	34,959,474	10,878,331

• g. Offsetting financial assets and financial liabilities.

The Bank is eligible to present certain derivative assets and derivative liabilities on a net basis on the balance sheets since the offsetting criteria are met. Cash collateral has also been paid by part of counterparties for the net amount of the derivative assets and derivative liabilities. The cash collateral does not meet the offsetting criteria, but it can be set off against the net amount of the derivative assets and derivative liabilities in the case of default and insolvency or bankruptcy, in accordance with an associated collateral arrangement.

• 97 -

The tables below present the quantitative information on financial assets and financial liabilities that have been offset in the balance sheets or that are covered by enforceable master netting arrangements or similar agreements.

		December 31, 2020	December 31, 2020
Financial Assets	Gross Amount of Recognized Financial Asset (a)	Gross Amount of Recognized Financial Assets Offset in the Balance Sheets (b)	Net Amount of Financial Assets Presented in the Balance Sheets (c)=(a)-(b)	Related Amount Not Offset in the Balance Sheets (d)		Net Amount (e)=(c)-(d)
				Financial Instrument	Cash Collateral Pledged
Derivatives	$630,231	$ -	$630,231	$ 1,704	$ -	$628,527
		December 31, 2020
Financial Liabilities	Gross Amount of Recognized Financial Liabilities (a)	Gross Amount of Recognized Financial Liabilities Offset in the Balance Sheets (b)	Net Amount of Financial Liabilities Presented in the Balance Sheets (c)=(a)-(b)	Related Amount Not Offset in the Balance Sheets (d)		Net Amount (e)=(c)-(d)
				Financial instrument	Cash Collateral Pledged
Derivatives	$206,002	$ -	$206,002	$ 96,346	$ -	$109,656
		December 31, 2019
Financial Assets	Gross Amount of Recognized Financial Assets (a)	Gross Amount of Recognized Financial Assets Offset in the Balance Sheets (b)	Net Amount of Financial Assets Presented in the Balance Sheets (c)=(a)-(b)	Related Amount Not Offset in the Balance Sheets (d)		Net Amount (e)=(c)-(d)
				Financial Instrument	Cash Collateral Pledged
Derivatives	$268,446	$ -	$268,446	$ 6,490	$ -	$261,956
		December 31, 2019
Financial Liabilities	Gross Amount of Recognized Financial Liabilities (a)	Gross Amount of Recognized Financial Liabilities Offset in the Balance Sheets (b)	Net Amount of Financial Liabilities Presented in the Balance Sheets (c)=(a)-(b)	Related Amount Not Offset in the Balance Sheets (d)		Net Amount (e)=(c)-(d)
				Financial instrument	Cash Collateral Pledged
Derivatives	$650,981	$ -	$650,981	$82,775	$ -	$568,206

49. 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 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.

• 98 -

c.

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

Items (Note 2)	Year	Year	December 31, 2020	December 31, 2020
			Own Capital Adequacy Ratio	Capital Adequacy Ratio
Eligible capital	Common equityTier 1 Ratio		$40,774,470	$40,287,801
	Other Tier 1 capital		12,096,138	12,984,989
	Tier 2 capital		8,100,742	11,372,099
	Eligible capital		60,971,350	64,644,889
Risk-weighted assets	Credit risk	Standard	358,829,620	370,831,564
		Internal rating-based approach	-	-
		Asset securitization	1,457,002	1,457,002
	Operational risk	Basic indicator approach	21,379,484	25,122,017
		Standard/alternative standardized approach	-	-
		Advanced measurement approach	-	-
	Market risk	Standard	30,328,618	32,384,711
		Internal model approach	-	-
	Total risk-weighted assets		411,994,724	429,795,294
Capital adequacyrate			14.80%	15.04%
Ratio of common stockholders’ equityto risk-weighted assets			9.90%	9.37%
Ratio of Tier 1 capital to risk-weighted assets			12.83%	12.39%
Leverage ratio			6.55%	6.49%

Items (Note 2)	Year	Year	December 31, 2019	December 31, 2019
			Own Capital Adequacy Ratio	Capital Adequacy Ratio
Eligible capital	Common equityTier 1 Ratio		$37,440,298	$37,013,051
	Other Tier 1 capital		11,559,375	12,506,259
	Tier 2 capital		6,347,143	9,685,896
	Eligible capital		55,347,143	59,205,206
Risk-weighted assets	Credit risk	Standard	322,422,791	343,086,746
		Internal rating-based approach	-	-
		Asset securitization	700,692	700,692
	Operational risk	Basic indicator approach	19,966,470	23,560,822
		Standard/alternative standardized approach	-	-
		Advanced measurement approach	-	-
	Market risk	Standard	23,513,386	24,423,563
		Internal model approach	-	-
	Total risk-weighted assets		376,603,339	391,771,913
Capital adequacyrate			14.70%	15.11%
Ratio of common stockholders’ equityto risk-weighted assets			9.94%	9.45%
Ratio of Tier 1 capital to risk-weighted assets			13.01%	12.64%
Leverage ratio			6.53%	6.52%

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.”

• 99 -

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

• 6) Leverage ratio = Tier 1 capital ÷ Exposure Measurement

The Banking Law and related regulations require that the Bank maintain its unconsolidated and consolidated CARs at a minimum of 10.5%, the Tier 1 Capital Ratio at a minimum of 8.5% and the Common Equity Tier 1 Ratio at a minimum of 7.0%. 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.

50. 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 4.

• 2) Concentration of credit extensions

(In Thousands of New Taiwan Dollars, %)

	December 31, 2020
Rank (Note 1)	Company Name	Credit Extension Balance	% to Net Asset Value
1	GroupG - real estate development	$2,541,500	4.22
2	CompanyH- retail of other food and beverages	2,003,000	3.33
3	CompanyB - other financial intermediation	1,459,000	2.42
4	Company S- automotive manufacturing	1,230,000	2.04
5	CompanyM - sportingand athletic articles manufacturing	974,000	1.62
6	Company Q- telecommunications	955,043	1.59
7	Company C- instant food manufacturing	907,194	1.51
8	CompanyW - real estate development	800,000	1.33
9	Company V- accommodation	799,600	1.33
10	CompanyK- manufacture of rubberproducts	790,000	1.31

• 100 -

December 31, 2019	December 31, 2019	December 31, 2019	December 31, 2019
Rank (Note 1)	Company Name	Credit Extension Balance	% to Net Asset Value
1	CompanyH - retail of other food and beverages	$1,863,000	3.31
2	CompanyB - other financial intermediation	1,734,111	3.08
3	Group U- real estate development	1,708,700	3.04
4	GroupF -gasoline stations industry	1,668,136	2.97
5	Group S- automotive manufacturing	1,505,300	2.68
6	GroupE - Cable TV industry	1,126,451	2.00
7	CompanyM - sportingand athletic articles manufacturing	874,000	1.55
8	CompanyC - instant food manufacturing	849,892	1.51
9	Company O- real estate development	752,650	1.34
10	CompanyK - other financial,insurance and real estate	750,000	1.33

b. Market risk

Interest Rate Sensitivity December 31, 2020

(In Thousands of New Taiwan Dollars, %)	(In Thousands of New Taiwan Dollars, %)	(In Thousands of New Taiwan Dollars, %)	(In Thousands of New Taiwan Dollars, %)	(In Thousands of New Taiwan Dollars, %)	(In Thousands of New Taiwan Dollars, %)
Items	1 to 90 Days	91 to 180 Days	181 Days to One Year	Over One Year	Total
Interest rate-sensitive assets	$532,258,985	$10,984,353	$12,845,941	$71,950,434	$628,039,713
Interest rate-sensitive liabilities	290,976,871	222,689,736	70,806,321	25,993,196	610,466,124
Interest rate-sensitivegap	241,282,114	(211,705,383)	(57,960,380)	45,957,238	17,573,589
Net worth					56,248,988
Ratio of interest rate-sensitive assets to liabilities					102.88%
Ratio of interest rate sensitivity gapto net worth					31.24%

December 31, 2019

(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	$487,276,944	$ 5,795,273	$14,257,749	$54,605,447	$561,935,413
Interest rate-sensitive liabilities	276,366,269	185,995,639	64,178,888	23,014,898	549,555,694
Interest rate-sensitivegap	210,910,675	(180,200,366)	(49,921,139)	31,590,549	12,379,719
Net worth					54,385,473
Ratio of interest rate-sensitive assets to liabilities					102.25%
Ratio of interest rate sensitivity gapto net worth					22.76%

• Note 1: The above amounts included only the New Taiwan dollar 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).

• 101 -

Interest Rate Sensitivity December 31, 2020

(In Thousands of U.S. Dollars, %)	(In Thousands of U.S. Dollars, %)	(In Thousands of U.S. Dollars, %)	(In Thousands of U.S. Dollars, %)	(In Thousands of U.S. Dollars, %)	(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	$2,142,337	$ 504,181	$ 164,487	$1,402,049	$4,213,054
Interest rate-sensitive liabilities	1,601,332	433,271	492,622	702,642	3,229,867
Interest rate-sensitivegap	541,005	70,910	(328,135)	699,407	983,187
Net worth					175,908
Ratio of interest rate-sensitive assets to liabilities					130.44%
Ratio of interest rate sensitivity gapto net worth					558.92%

December 31, 2019

(In Thousands of U.S. Dollars, %)	(In Thousands of U.S. Dollars, %)	(In Thousands of U.S. Dollars, %)	(In Thousands of U.S. Dollars, %)	(In Thousands of U.S. Dollars, %)	(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	$1,803,811	$ 208,307	$ 158,745	$2,353,718	$4,524,581
Interest rate-sensitive liabilities	2,186,417	384,781	504,069	432,092	3,507,359
Interest rate-sensitivegap	(382,606)	(176,474)	(345,324)	1,921,626	1,017,222
Net worth					90,557
Ratio of interest rate-sensitive assets to liabilities					129.00%
Ratio of interest rate sensitivity gapto net worth					1,123.29%

• Note 1: The above amounts included only U.S. dollar 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	Items	For the Year Ended December 31, 2020	For the Year Ended December 31, 2019
Return on total assets	Before income tax	0.54	0.60
	After income tax	0.48	0.51
Return on common equity	Before income tax	6.99	8.12
	After income tax	6.14	6.69
Net income ratio		28.49	28.81

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

• 102 -

Note 4: Income before (after) income tax represents income for the years ended December 31, 2020 and 2019.

• 2) Maturity analysis of assets and liabilities

Maturity Analysis of Assets and Liabilities December 31, 2020

(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	$691,415,883	$196,433,057	$32,469,854	$49,004,565	$ 94,019,121	$319,489,286
Main capital outflow on maturity	796,002,195	84,997,650	113,456,441	103,382,981	191,598,487	302,566,636
Gap	(104,586,312)	111,435,407	(80,986,587)	(54,378,416)	(97,579,366)	16,922,650

December 31, 2019

(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	$618,783,183	$153,846,953	$58,053,755	$42,402,390	$86,341,158	$278,138,927
Main capital outflow on maturity	718,840,408	82,162,339	102,869,688	97,317,383	182,098,850	254,392,148
Gap	(100,057,225)	71,684,614	(44,815,933)	(54,914,993)	(95,757,692)	23,746,779

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, 2020

(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	$4,339,872	$ 686,488	$1,448,642	$ 535,083	$ 170,022	$1,499,637
Main capital outflow on maturity	4,318,776	923,214	1,130,312	472,516	585,694	1,207,040
Gap	21,096	(236,726)	318,330	62,567	(415,672)	292,597

December 31, 2019

(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	$ 4,660,738	$ 795,520	$ 1,073,236	$ 218,610	$ 159,193	$ 2,414,179
Main capital outflow on maturity	4,650,739	1,045,685	1,759,373	424,397	572,968	848,316
Gap	9,999	(250,165)	(686,137)	(205,787)	(413,775)	1,565,863

• 103 -

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).

51. PARTIALLY ACQUIRED SUBSIDIARY - NO INFLUENCE ON CONTROLLING

The bank acquired 64.44% and 0.16% equity interest of Union Securities Investment Trust Corporation on July 5, 2019 and December 27, 2019, respectively. After the transaction was completed, the amount of total equity interest increased from 35% to 99.60%.

The transaction did not affect the control of USITC by the Bank. For the disclosure relating to the purchase of USITC, refer to Note 56 to the financial statements for the years ended December 31, 2020.

52. 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: None

• 3) Marketable securities held: The Bank - not applicable; investee - Table 2 (attached)

• 4) Marketable securities acquired or disposed of at costs or prices of at least $300 million or 10% of the paid-in capital: Table 3 (attached)

• 5) Acquisition of individual real estate at costs of at least $300 million or 10% of the paid-in capital: None

• 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: Table 4 (attached)

• 9) Sale of nonperforming loans: None

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 5 (attached)

• 12) Names, locations and other information of investees on which the Bank exercises significant influence: Table 6 (attached)

• 13) Derivative transactions: Note 8

• b. Investment in Mainland China: None

• 104 -

53. SEGMENT INFORMATION

The Bank has disclosed its segment information in the consolidated financial statements. Thus, no segment information is presented in the parent company only financial statements.

• 105 -

TABLE 1

UNION BANK OF TAIWAN

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2020 (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 Amount	Reason for Short-term Financing	Allowance for Impairment Loss	**Collateral **	**Collateral **	Financing Limit for Each Borrower	Aggregate Financing Limit
												Item	Value
1	Union Financial and Leasing International Corporation	Union Capital (Singapore) Holding PTE. Ltd. Uflc Capital (Singapore) Holding PTE. Ltd. Feng Sheng Steel CO., LTD. Minamoto Kitazawa International Co., Ltd. Megaful CO., LTD.	Receivables of affiliates Receivables of affiliates Account receivable Account receivable Account receivable	$ 1,022,980 (JPY 3,700,000 ) 1,797,127 (JPY 6,500,000 ) 18,000 35,000 66,100	$ 1,022,980 (JPY 3,700,000 ) 1,797,127 (JPY 6,500,000 ) 18,000 35,000 66,100	$ 726,378 (JPY 2,627,225 ) 1,527,228 (JPY 5,523,808 ) 13,622 23,808 64,161	1.5 1.5 7-10 3-6 3-6	Business transaction Business transaction Short-term financing Short-term financing Short-term financing	$ 1,022,980 (JPY 3,700,000 ) 1,797,127 (JPY 6,500,000 ) - - -	- - Business financing Business financing Business financing	$ - - 136 476 642	- - Real estate Real estate Real estate	$ - - 19,326 27,400 73,484	$ 2,998,292 2,998,292 2,998,292 2,998,292 2,998,292	$ 2,998,292 2,998,292 2,998,292 2,998,292 2,998,292
2	Union Capital (Singapore) Holding Pte. Ltd.	Kabushiki Kaisha UCJ1 (Japan)	Receivables of affiliates	525,314 (JPY 1,900,000 )	525,314 (JPY 1,900,000 )	405,284 (JPY 1,465,865 )	2.75	Business transaction	525,314 (JPY 1,900,000 )		-	-	-	2,998,292	2,998,292
3	Uflc Capital (Singapore) Holding PTE. Ltd.	Kabushiki Kaisha UCJ1 (Japan)	Receivables of affiliates	912,387 (JPY 3,300,000 )	912,387 (JPY 3,300,000 )	789,493 (JPY 2,855,504 )	2.75	Business transaction	912,387 (JPY 3,300,000 )		-		-	2,998,292	2,998,292

• 106 -

TABLE 2

UNION BANK OF TAIWAN

MARKETABLE SECURITIES HELD DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars and Foreign Currency, Unless Stated Otherwise)

Holding Company	Type and Issuer/ Name of Marketable Security	Issuer’s Relationship with Holding Company	Financial Statement Account		December 31, 2020	December 31, 2020		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 (USITC)	Stock Shin Kong Financial Holdings Hey-Song Corporation ERA Communications Co., Ltd. Beneficiary certificates Union Advantage Global FI Portfolio Fund Union Golden Balance Fund Union Green Energy Private Equity Limited Partnership Stock ELTA Technology Co., Ltd. Stock Fundrish Securities Co., Ltd. Beneficiary certificates Union Advantage Global FI Portfolio Fund Union Emerging Asia Bond A Union Money Market Union Golden Balance Fund Union China	- - - Securities investment trust issued by USITC Securities investment trust issued by USITC - - - Securities investment trust issued by USITC Securities investment trust issued by USITC Securities investment trust issued by USITC Securities investment trust issued by USITC Securities investment trust issued by USITC	Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income 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 other comprehensive income Financial assets at fair value through other comprehensive income 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	801 4,551 425 6,114 854 3,019 566 1,068 486 1,230 83 80	$ 7,056 149,955 1,415 101,190 26,658 556,334 27,041 5,126 17,670 5,675 16,377 2,583 2,935	0.007 1.13 0.33 14.38 0.94	$ 7,056 149,955 1,415 100,828 22,653 556,334 30,300 5,126 17,670 5,675 16,377 2,583 2,935

(Continued)

• 107 -

Holding Company	Type and Issuer/ Name of Marketable Security	Issuer’s Relationship with Holding Company	Financial Statement Account		December 31, 2020	December 31, 2020		Note
				Shares/Piece/ Units (In Thousands)	Carrying Value	Percentage of Ownership (%)	Market Value or Net Asset Value
Union Finance International (HK) Limited Union Venture Capital Co., Ltd. Corner Ventures DAG I-U, LLC (Delaware, US)	Union Technology Fund Union APEC Balanced A Union Asian High Yield Bond A Union Global High Dividend Strategic Investment Fund (USD-A) Stock Apple Computer Inc. Obsidian Mr. Cooper Group Inc. Microsoft Corp. Nvidia Corp. Stock Greenway environmental technology CO., LTD. RFD Micro Electricity Co., Ltd. Hope vision CO., LTD. Cosmos foreign exchange Intl. Co., Ltd. Stock Dantari Pharmaceuticals, LLC Fabric Ltd. Healthy.io Limited Prismo Systems Inc.	Securities investment trust issued by USITC Securities investment trust issued by USITC Securities investment trust issued by USITC Securities investment trust issued by USITC - - - -	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 other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income	210 1,358 2,300 438 5 17 1 3 3 1,100 2,521 1,200 1,100 Preferred stock 260 Preferred stock 182 Preferred stock 2 Preferred stock 6 Preferred stock 31 Preferred stock 49	$ 3,920 23,340 24,667 5,095 US$ 663 US$ 11 US$ 46 US$ 667 US$ 1,567 17,761 107,543 31,954 95,046 US$ 260 US$ 992 US$ 95 US$ 291 US$ 1,559 US$ 378	2.82 15.69 2.49 9.17 - - - - - -	$ 3,920 23,340 24,667 5,095 US$ 663 US$ 11 US$ 46 US$ 667 US$ 1,567 17,761 107,543 31,954 95,046 US$ 260 US$ 992 US$ 95 US$ 291 US$ 1,559 US$ 378

(Continued)

• 108 -

Holding Company	Type and Issuer/ Name of Marketable Security	Issuer’s Relationship with Holding Company	Financial Statement Account		December 31, 2020	December 31, 2020		Note
				Shares/Piece/ Units (In Thousands)	Carrying Value	Percentage of Ownership (%)	Market Value or Net Asset Value
Corner Union LLC (Delaware, US) Union Private Equity Co., Ltd.	Nexar Ltd. Latigo Biotherapeutics, Inc. Oncovalent Therapeutics Inc. Twin Health, Inc. Stock Healthy.io Limited Beneficiary certificates Union Green Energy Private Equity Limited Partnership	- - -	Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss	Preferred stock 83 Preferred stock 222 Preferred stock 102 Preferred stock 186 Preferred stock 30	US$ 945 US$ 154 US$ 106 US$ 614 US$ 1,500 20	- - - - -	US$ 945 US$ 154 US$ 106 US$ 614 US$ 1,500 20

(Concluded)

• 109 -

TABLE 3

UNION BANK OF TAIWAN

MARKETABLE SECURITIES ACQUIRED OR DISPOSED OF PROPORTION SHARE INVESTMENT OF AT LEAST NT$300 MILLION OR 10% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name	Type and Name of Marketable Securities	Financial Statement Account	Counterparty	Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition		Disposal	Disposal		Ending	Balance
					Number of Shares	Amount	Number of Shares	Amount	Carrying Amount	Gain (Loss) on Disposal	Number of Shares	Amount	Number of Shares	Amount
Union Bank of Taiwan Union Finance and Leasing International Corporation	Stock LINE Bank Taiwan Limited Beneficiary certificates Union Green Energy Private Equity Limited Partnership	Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss	LINE Bank Taiwan Limited Union Green Energy Private Equity Limited Partnership	- -	- -	$ - -	50,000 -	$ 500,000 556,334	- -	$ - -	- -	$ - -	50,000 -	$ 411,657 556,334

Note 1: The securities mentioned in this table refer to stocks, bonds, beneficiary certificates and securities derived from the above items.

Note 2: Investors who use the equity method in their securities accounts must fill in these two columns, the rest are not.

Note 3: The accumulated buying and selling amount should be calculated separately at market price whether it reaches 300 million yuan or 10% of the paid-in capital.

• 110 -

TABLE 4

UNION BANK OF TAIWAN AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$300 MILLION OR 10% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate		Overdue	Amounts Received in Subsequent Period	Allowance for Impairment Loss
					Amount	Actions Taken
Union Finance and Leasing International Corporation Union Finance and Leasing International Corporation Union Capital (Singapore) Holding Pte. Ltd. Uflc Capital (Singapore) Holding Pte. Ltd.	Union Capital (Singapore) Holding Pte. Ltd. Uflc Capital (Singapore) Holding Pte. Ltd. Kabushiki Kaisha UCJ1 (Japan) Kabushiki Kaisha UCJ1 (Japan)	Subsidiary Subsidiary Subsidiary Subsidiary	$ 726,378 (JPY 2,627,225) 1,527,228 (JPY 5,523,808) 405,284 (JPY 1,465,865) 789,493 (JPY 2,855,504)	- - - -	$ - - - -	- - - -	$ - - - -	$ - - - -

• 111 -

TABLE 5

UNION BANK OF TAIWAN

ASSET QUALITY - NONPERFORMING LOANS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, %)

	Period	Period		December 31, 2020	December 31, 2020	December 31, 2020			December 31, 2019	December 31, 2019	December 31, 2019
	Items		Nonperforming Loan (Note 1)	Loan	Ratio of Nonperforming Loan (Note 2)	Allowance for Possible Losses	Coverage Ratio (Note 3)	Nonperforming Loans (Note 1)	Loans	Ratio of Nonperforming Loans (Note 2)	Allowance for Credit Losses	Coverage Ratio (Note 3)
Corporate banking	Secured		$ 239,421	$112,515,889	0.21%	$ 1,751,804	507.05%	$ 264,677	$105,089,682	0.25%	$ 1,609,158	464.60%
	Unsecured		106,065	68,184,808	0.16%			81,673	65,572,028	0.12%
Consumer banking	Housingmortgage(Note 4)		150,626	191,585,318	0.08%	2,410,675	1,600.44%	113,546	169,441,368	0.07%	2,132,294	1,877.91%
	Cash card		86	15,487	0.56%	2,811	3,268.60%	613	22,454	2.73%	4,407	718.92%
	Small-scale credit loans(Note 5)		90,413	35,040,265	0.26%	380,303	420.63%	96,288	29,698,095	0.32%	331,493	344.27%
	Other (Note 6)	Secured	17,774	19,393,472	0.09%	232,640	1,221.72%	16,482	18,483,090	0.09%	221,603	1,331.51%
		Unsecured	1,268	2,347,963	0.05%			161	2,376,022	0.01%
Loan			605,653	429,083,202	0.14%	4,778,233	788.94%	573,440	390,682,739	0.15%	4,298,955	749.68%
			Nonperforming Receivables (Note 1)	Receivables	Ratio of Nonperforming Receivables (Note 2)	Allowance for Credit Losses	Coverage Ratio (Note 3)	Nonperforming Receivables (Note 1)	Receivables	Ratio of Nonperforming Receivables (Note 2)	Allowance for Credit Losses	Coverage Ratio (Note 3)
Credit cards			25,247	17,280,465	0.15%	142,695	565.20%	36,959	16,237,934	0.23%	159,838	432.47%
Accounts receivable factoredwithout recourse			-	480,043	-	4,800	-	-	443,208	-	4,432	-

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, in 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.

(Continued)

• 112 -

Not reported as nonperforming loans or nonperforming receivables

Items Types	December 31, 2020	December 31, 2020	December 31, 2019	December 31, 2019
	Not Reported as Nonperforming **Loan **	Not Reported as Nonperforming Receivable	Not Reported as Nonperforming **Loan **	Not Reported as Nonperforming Receivable
Amounts of executed contracts on negotiated debts not reported as nonperforming loans and receivables (Note 1)	$ 14,432	$ 68,937	$ 21,195	$ 96,575
Amounts of discharged and executed contracts on clearance of consumer debts not reported as nonperforming loans and receivables(Note 2)	198,375	730,286	136,314	738,307
Total	212,807	799,223	157,509	834,882

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)

• 113 -

TABLE 5

UNION BANK OF TAIWAN

INFORMATION ON AND PROPORTIONATE SHARE IN INVESTEES DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars)

Invest company	Investee Company	Location	Main Business and Product	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 (%)
Union bank of Taiwan Union Finance and Leasing International Corporation Union Capital (Cayman) Corp.	Financial-related Union Finance and Leasing International Corporation Union Finance International (HK) Limited Union Securities Investment Trust Corporation Union Information Technology Corporation Union Venture Capital Corporation Ipass Corporation Taiwan Gin Lian Asset Management Corporation Taiwan Financial Asset Service Corporation 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 LINE BIZ+ Taiwan., Ltd. Nonfinancial-related Union Real-Estate Management Corporation Fu Hua Venture Corporation Li Yu Venture Corporation Lian An Service Corporation Taiwan Power Corporation LINE Bank Taiwan Limited Nonfinancial-related Union Capital (Cayman) Corp. New Asian Ventures Ltd. Nonfinancial-related Union Capital (Singapore) Holding Pte. Ltd. Uflc Capital (Singapore) Holding Pte. Ltd.	Taipei Hong Kong Taipei Taipei Taipei Kaohsiung Taipei Taipei Taipei Taipei Taipei Taipei Taipei Taipei Taipei Taipei Taipei Taipei Taipei Taipei Taipei Cayman BVI Singapore Singapore	Installment, leasing and accounts receivable factoring Import and export accommodation Securities investment trust Software and hardware product retail and distribution, system programming development, system development outsourcing, website design, e-commerce, etc. Venture Investment IC card Purchase, sale and management of nonperforming loans from financial institutions Property auction Purchase, sell and manage nonperforming loans from financial institution Foreign exchange brokering Information service Financial service Futures clearing International trade, data processing service Data processing, digital information supply and third party payment services Construction plan review and consulting Investment Investment Security service Electricity - related business Banking Investments, overseas financing, equipment leasing, installment selling, acquisition of account receivable Investments, overseas financing, equipment leasing, installment selling, acquisition of account receivable Investments, overseas financing, equipment leasing, installment selling, acquisition of account receivable Investments, overseas financing, equipment leasing, installment selling, acquisition of account receivable	100.00 99.99 99.60 99.99 100.00 11.40 0.57 2.94 6.44 0.81 2.47 0.25 2.04 1.00 10.00 40.00 5.00 4.76 5.00 0.0012 5.00 100.00 100.00 100.00 100.00	$ 2,998,319 129,604 414,021 13,462 770,676 60,044 77,164 48,105 4,366 7,352 309,392 65,631 474,583 3,213 1,484,708 52,281 1,558 4,076 1,517 3,651 411,657 59,507 51,998 71,359 (JPY 258,098) 87,823 (JPY 317,646)	$ 33,995 30,813 24,241 (543) (12,225) - - - - - - - - - (50,261) (232) - - - - - 58,188 799 1,682 (JPY 6,052) (4,855) (JPY 17,470)	153,000 30,000 31,014 1,000 80,000 13,000 6,000 5,000 386 160 12,875 945 7,216 600 5,471 2,000 156 558 125 395 50,000 50 - - -	- - - - - - - - - - - - - - - - - - - - - - - -	153,000 30,000 31,014 1,000 80,000 13,000 6,000 5,000 386 160 12,875 945 7,216 600 5,471 2,000 156 558 125 395 50,000 50 - - -	100.00 99.99 99.60 99.99 100.00 11.40 0.57 2.94 6.44 0.81 2.47 0.25 2.04 1.00 10.00 40.00 5.00 4.76 5.00 0.0012 5.00 100.00 100.00 100.00 100.00	Note 3 Note 4 Note 4

• 114 -

Invest company	Investee Company	Location	Main Business and Product	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 (%)
Union Capital (Singapore) Holding Pte. Ltd. Kabushiki Kaisha UCJ1 Uflc Capital (Singapore) Holding Pte. Ltd. Union Securities Investment Trust Co., Ltd. Union Venture Capital Co., Ltd. Corner Union Venture Capital, LLC.	Nonfinancial-related Kabushiki Kaisha UCJ1 Tokutei Mokuteki Kaisha SSG15 Nonfinancial-related Tokutei Mokuteki Kaisha SSG15 Tokutei Mokuteki Kaisha SSG12 Tokutei Mokuteki Kaisha SSG16 Nonfinancial-related Kabushiki Kaisha UCJ1 Tokutei Mokuteki Kaisha SSG12 Tokutei Mokuteki Kaisha SSG16 Financial-related Union Private Equity Co., Ltd. Nonfinancial-related Na He Yi Hau Electric Power Inc. Ting Jie Electric Power Inc. Union Energy Co., Ltd. Corner Union Venture Capital, LLC. Nonfinancial-related Corner Ventures DAG I-U, LLC. Corner Union, LLC.	Japan Japan Japan Japan Japan Japan Japan Japan Taiwan Taiwan Taiwan Taiwan United States of America United States of America United States of America	Buy, sell and lease real estate Real estate securitization Real estate securitization Real estate securitization Real estate securitization Buy, sell and lease real estate Real estate securitization Real estate securitization Investment services Electricity - related business Electricity - related business Investment advisory services and energy related business Investment Investment Investment	30.55 49.00 51.00 51.00 51.00 69.45 49.00 49.00 100.00 99.93 90.00 100.00 100.00 100.00 100.00	$ 134,251 (JPY 485,570) 214,705 (JPY 776,564) 223,454 (JPY 808,209) 289,552 (JPY 1,047,276) 193,439 (JPY 699,647) 305,215 (JPY 1,103,926) 278,211 (JPY 1,006,256) 185,867 (JPY 672,260) 29,492 144,447 (1,795) 99 234,511 (US$ 7,950) 185,106 (US$ 6,493) 41,952 (US$ 1,472)	$ 1,140 (JPY 4,103) 21,069 (JPY 75,814) 21,929 (JPY 78,909) 16,815 (JPY 62,976) 10,184 (JPY 36,647) 2,593 (JPY 9,329) 16,815 (JPY 60,506) 9,785 (JPY 35,210) (508) (4,453) (2,695) (1) 2,201 (US$ 74) 713 (US$ 24) 840 (US$ 28)	9 Note 6 Preferred stock 15 Preferred stock 20 Preferred stock 13 21 Note 7 Note 5 3,000 14,890 90 10 - - -	- - - - - - - -	9 Note 6 Preferred stock 15 Preferred stock 20 Preferred stock 13 21 Note 7 Note 5 3,000 14,890 90 10 - - -	30.55 49.00 51.00 51.00 51.00 69.45 49.00 49.00 100.00 99.93 90.00 100.00 100.00 100.00 100.00	Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4

Note 1: Except for LINE BIZ+ Taiwan., Ltd, the investees’ information shown above is based on audited financial reports as of December 31, 2018.

• 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.

Note 3: Union Capital (Singapore) Holding Pte. Ltd., Uflc Capital (Singapore) Holding Pte. Ltd. and Tokutei Mokuteki Kaisha SSG15, SSG12 and SSG16 - the audited statements of stockholders’ equity as of September 30, 2019. Kabushiki Kaisha UCJ1 - unaudited statements of stockholders’ equity as of September 30, 2019.

Note 4: Refers to 1 share of common stock and 13 thousand shares of preferred stock.

• Note 5: Refers to 1 share of common stock and 14 thousand shares of preferred stock.

• Note 6: Refers to 1 share of common stock and 19 thousand shares of preferred stock.

(Concluded)

• 115 -

TABLE 6

UNION BANK OF TAIWAN

INFORMATION OF MAJOR SHAREHOLDERS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Name of Major Shareholder	Shares	Shares	Shares
	Number of Shares			Percentage of Ownership (%)
	Ordinary Shares	Preferred Shares	Total
Tsong-Li Investment Co., Ltd. Pai-Sheng Investment Co., Ltd	246,153 156,818	- 8,167	246,153 164,985	7.47 5.00

• Note 1: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares and preferred shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (including treasury shares) by the Company as of the last business day for the current quarter. The share capital in the consolidated financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.

• Note 2: If a shareholder delivers the shareholdings to the trust, the above information will be disclosed by the individual truster who opened the trust account. For shareholders who declare insider shareholdings with ownership greater than 10% in accordance with the Security and Exchange Act, the shareholdings include shares held by shareholders and those delivered to the trust over which shareholders have rights to determine the use of trust property. For information relating to insider shareholding declaration, please refer to Market Observation Post System.

• 116 -

UNION BANK OF TAIWAN

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

Item Major Accounting Items in Assets, Liabilities and Equity Statement of cash and cash equivalents Statement of financial assets at fair value through profit or loss Statement of financial assets at fair value through other comprehensive income Statement of investments in debt instruments at amortized cost Statement of securities purchased under resale agreements Statement of changes in investments accounted for using the equity method Statement of property and equipment Statement of other assets Statement of deposits Statement of securities sold under repurchase agreement Statement of bank debentures Statement of interest revenue Statement of interest expense Major Accounting Items in Profit or Loss Statement of net profit or loss other than interest Statement of employee benefit expenses

Statement Index

1 2 3 4 5 6 Note 18 7 8 9 10 11 12 13 14

• 117 -

STATEMENT 1

UNION BANK OF TAIWAN

STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Items Cash on hand (Note) Checks for clearing Due from banks	Amounts $ 5,740,402 1,171,066 1,229,866 $ 8,141,334

Note: Including US$7,159 thousand @28.508, JPY927,238 thousand @0.2765, HK$41,492 thousand @3.6775, EUR3,191 thousand @35.0534 and CNY20,459 thousand @4.3813.

• 118 -

STATEMENT 2

UNION BANK OF TAIWAN

STATEMENT OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Financial Instrument Name Par Value Shares Rate (%) Acquisition Cost Beneficiary certificates 37,474 $ 503,141 Commercial paper 31,397,000 0.22-0.97 31,369,385 Asset-based securities 46,054 7.00-9.98 46,054 Future exchange margins 56,665 Government bond 300,000 0.25 298,713 Stock 489 48,073 Negotiable certificates of deposits 1,000,000 0.29-0.31 1,000,000 Derivative instruments Foreign exchange forward contracts Currency swap contracts Option contracts

Credit Risk Due Fair Value to Changes in Unit Price Total Amount Fair Value Note 9.44-29.95 $ 513,710 $ - 31,361,157 - 57,897 - Due before April 2025 56,665 - 298,124 - 77-166 50,496 - 999,450 - 60,430 - 514,083 - 55,718 - 630,231 $ 33,967,730

Unit Price 9.44-29.95 77-166

Note 1: The amount of each individual item in others does not exceed 5% of the account balance.

Note 2: $17,501,131 thousand of financial instruments at fair value through profit or loss was sold under repurchase agreements.

• 119 -

STATEMENT 3

UNION BANK OF TAIWAN

STATEMENT OF FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Shares Financial Instrument Name (In Thousands) Par Value Rate (%) Acquisition Cost Loss Allowance Government bonds (Note 1) $ 6,050,000 0.50-2.00 $ 6,207,372 $ - Overseas government bonds (Note 1) 5,655,987 2.38-4.50 5,614,047 (8,892) Corporate bonds (Note 1) 8,350,000 0.44-1.41 8,366,938 (3,589) Overseas corporate bonds (Note 1) 13,352,158 1.28-11.75 13,387,066 (17,789) Overseas bond debentures (Note 1) 5,865,044 0.93-6.80 5,941,716 (31,829) Domestic listed shares (Note 1) 98,814 3,913,008 - Overseas listed shares VISA 939 331,343 - Unlisted shares 97,227 982,698 - $ 44,744,188 $ (62,099)

FairValue

Total Amount Unit Price $ 6,364,162 6,192,951 8,410,769 14,093,944 6,190,979 4,231,079 5,847,572 $6,225 1,475,939 $ 52,807,395

Note 1: The amount of each individual item in others does not exceed 5% of the account balance.

Note 2: $9,216,124 thousand of financial instruments at fair value through other comprehensive income was sold under repurchase agreements.

• 120 -

STATEMENT 4

UNION BANK OF TAIWAN

STATEMENT OF INVESTMENTS IN DEBT INSTRUMENTS AT AMORTIZED COST DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

				Unamortized	Unamortized
					Premiums
Bond Name	Par Value	Loss	Allowance	(Discounts)		Rate (%)	Carrying Value	Collateral	Note
Government bonds	9,775,700	$	-	$	476,826	0.50-2.63	$ 10,252,526	None
Asset-based securities (Note 2)	29,322,172		(179,600)		27,564	1.50-5.50	29,170,136	None
Negotiable certificates of deposits (NCD)
NCD issued by the CBC	51,275,000		-		-		51,275,000	None
							$ 90,697,662

• Note 1: The par value of asset-based securities is its initial investment amount.

Note 2: The amount of each individual item in others does not exceed 5% of the account balance.

Note 3: $23,249,254 thousand of financial instruments at amortized cost was sold under repurchase agreements.

• 121 -

STATEMENT 5

UNION BANK OF TAIWAN

STATEMENT OF SECURITIES PURCHASED UNDER RESALE AGREEMENTS DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Items Par Value Commercial paper $ 21,409,500 Corporate bonds 39,396,000 Negotiable certificates of deposits 2,850,000	Book Value Note $ 21,377,310 39,645,492 2,850,171 $ 63,872,973

Note: The amount of each individual item in others does not exceed 5% of the account balance.

• 122 -

STATEMENT 6

UNION BANK OF TAIWAN

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Investee Company Union Finance and Leasing International Corporation (UFLIC) Union Securities Investment Trust Corporation (USITC) Union Finance Internation (HK) Limited Union Information Technology Corporation (UIT) Union Venture Capital Co., Ltd. Associates Union Real Estate Management Corporation LINE BIZ+ Taiwan, Ltd.	Balance, January 1, 2020 Shares Amount 144,000 $ 2,973,739 29,879 388,935 30,000 104,186 1,000 20,832 30,000 299,846 2,000 52,513 5,471 1,534,969 $ 5,375,020	Increase (Decrease) in Addition in Investment Decrease in Investment Using Equity Shares Amount Shares Amount Method 9,000 $ - - $ 9,415 $ 33,995 1,140 845 - - 24,241 - - - 5,395 30,813 - - - 6,827 (543) 50,000 500,000 - 16,945 (12,225) - - - - (232) - - - - (50,261) $ 500,845 $ 38,582 $ 25,788	Balance, December 31, 2020 Shares % Amount 153,000 100.00 $ 2,998,319 31,019 99.60 414,021 30,000 99.99 129,604 1,000 99.99 13,462 80,000 100.00 770,676 2,000 40.00 52,281 5,471 10.00 1,484,708 $ 5,863,071	Market Value or Net Assets Value Collateral $ 2,998,319 None 414,021 None 129,604 None 13,462 None 770,676 52,281 None 1,484,708 $ 5,863,071
	Shares 144,000 29,879 30,000 1,000 30,000 2,000 5,471	Shares 9,000 1,140 - - 50,000 - -	Shares % 153,000 100.00 31,019 99.60 30,000 99.99 1,000 99.99 80,000 100.00 2,000 40.00 5,471 10.00

Note: The amount of increase and decrease in the current period is due to recognition of the unrealized gains and losses of financial assets at fair value through other comprehensive income, the remeasurement of defined benefit plans and exchange differences on translating foreign operations.

• 123 -

STATEMENT 7

UNION BANK OF TAIWAN

STATEMENT OF OTHER ASSETS DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Items Refundable deposits Prepaid expenses Prepaid pension cost Others (Note)	Amount $ 2,232,783 353,828 164,801 188 $ 2,751,600

Note: The amount of each individual item in others does not exceed 5% of the account balance.

• 124 -

STATEMENT 8

UNION BANK OF TAIWAN

STATEMENT OF DEPOSITS DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Items Saving deposits Withdrawals of interest savings deposits Demand deposits Round-amount savings deposits Staff demand savings deposits Regular deposits Time deposits General deposits Policy-based deposits Foreign-exchange time deposits Demand deposits General deposits Foreign-exchange deposits Checking deposits Negotiable certificates of deposits Inward and outward remittances	Amounts $ 141,564,383 174,833,841 46,548,945 1,701,219 273,169
	364,921,557
	48,224,694 13,822,480 51,426,240
	113,473,414
	85,578,314 29,982,827
	115,561,141
	13,941,078
	305,900
	66,424
	$ 608,269,514

• 125 -

STATEMENT 9

UNION BANK OF TAIWAN

STATEMENT OF SECURITIES SOLD UNDER REPURCHASE AGREEMENT DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Items Face value Commercial paper $ 16,522,500 Assets-based securities 23,249,254 Negotiable certificate of deposits 1,000,000 Corporate bonds 4,818,828 Government bonds 2,747,753 Financial bonds 1,282,860	Amount Note $ 16,513,416 18,014,455 1,000,286 5,011,996 2,749,077 1,138,946 $ 44,428,176

• 126 -

STATEMENT 10

UNION BANK OF TAIWAN

STATEMENT OF BANK DEBENTURES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

			Interest Payment		Coupon Rate		Balance, End of
Bonds Name	Trustee	Issuance Date	Date	Terms of Bank Debentures	(%)	Total Amount	Year
First issue of subordinated bank debentures in 2015	-	2015/04/22	On 4/22 annually	Interest payable annually after the issue date, principal repayable on maturity	2.08	$ 2,200,000	$ 2,200,000
First issue of subordinated bank debentures in 2016	-	2016/03/29	On 7/1 annually	Redeemable at face value plus interest accrued under the approval of the	4.20	2,500,000	2,500,000
				authorities when the issue term is over 5.1 years
First issue of subordinated bank debentures in 2017	-	2017/02/23	On 7/1 annually	Redeemable at face value plus interest accrued under the approval of the	4.20	500,000	500,000
				authorities when the issue term is over 5.1 years
First issue of subordinated bank debentures in 2019	-	2019/09/26	On 9/26 annually	Interest payable annually after the issue date, principal repayable on maturity	1.10	500,000	500,000
First issue of subordinated bank debentures in 2019	-	2019/09/26	On 9/26 annually	Interest payable annually after the issue date, principal repayable on maturity	1.23	1,500,000	1,500,000
						$ 7,200,000	$ 7,200,000

• 127 -

STATEMENT 11

UNION BANK OF TAIWAN

STATEMENT OF INTEREST REVENUE FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Items Discounts and loans Short-term loans Medium-term loans Long-term loans Short-term secured loan Medium-term secured loan Long-tern secured loan Other (Note) Credit card interest Due from the Central Bank and call loans to bank Reverse repurchased agreement Investment in marketable securities Fair value through other comprehensive income Investments in debt instruments at amortized cost Other (Note)

Amounts $ 509,957 1,062,962 156,994 1,536,113 1,628,221 2,999,973 179,460 8,073,680 834,266 127,370 221,157 958,260 1,621,720 2,579,980 21,739 $ 11,858,192

Note: The amount of each individual item in others does not exceed 5% of the account balance.

• 128 -

STATEMENT 12

UNION BANK OF TAIWAN

STATEMENT OF INTEREST EXPENSE FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Items Deposits Time deposits Lump sum deposits Principal deposits Foreign exchange time deposits Demand saving deposits Other (Note) Bills and bonds sold under repurchase agreements Bank debentures payables Postal remittance Other (Note)	Amounts $ 399,977 420,461 1,317,221 810,861 178,108 63,179 3,189,807 571,777 256,508 39,340 101,298 $ 4,158,730

Note: The amount of each individual item in others does not exceed 5% of the account balance.

• 129 -

STATEMENT 13

UNION BANK OF TAIWAN

STATEMENT OF NET PROFIT OR LOSS OTHER THAN INTEREST DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Items Rental revenue Bad debts written off Other (Note)	Amounts $ 14,483 (7,556) 12,182 $ 19,109

Note: The amount of each individual item in others does not exceed 5% of the account balance.

• 130 -

STATEMENT 14

UNION BANK OF TAIWAN

STATEMENT OF EMPLOYEE BENEFIT EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Items Employee benefit expenses Salaries and wages Labor insurance and national health insurance Pension Directors remuneration Others			Amount	Amount	Total Note $ 3,165,954 296,614 163,883 14,708 55,627 $ 3,696,786
		Personnel Expenses $ 3,165,954 296,614 163,883 13,430 55,627 $ 3,695,508	Net Profits Other than Interest $ - - - - - $ -	Other Operating Expenses $ - - - 1,278 - $ 1,278

• Note 1: In 2020 and 2019, the Bank had an average of 4,019 and 3,987 employees, respectively, and 8 non-employee directors in both years.

• Note 2: In 2020 and 2019, the annual average employee benefits expenses was $918 thousand and $898 thousand, respectively.

• Note 3: In 2020 and 2019, the annual average salaries and wages were $789 thousand and $775 thousand, respectively.

• Note 4: The average adjustment to salaries and wages is 1.81%.

Note 5: The bank’s salary and remuneration policies are as follows:

• a. The director’s remuneration is based on “Director’s Remuneration Approval Principle”, director’s remuneration mainly include meeting attendance and remuneration. The remuneration is paid in fixed amount, the amount cannot exceed 0.1% of the bank’s profit.

• b. The Bank has “Manager’s Salary Bracket”, the fixed salary is based on comprehensive considerations such as responsibilities of the position, work ability performance and professional skills required for the position, and is assessed with reference to the industry standard. Other than fixed salary and allowance, bonus is based on the Bank’s overall operating performance, personal performance and 1% to 5% of employees’ compensation. Therefore, manager’s remuneration and bank’s overall operation performance is closely related. If there is a major risk event that will effects company’s goodwill, inappropriate internal management or fraud occur, it will influence the manager’s bonus. Every quarter the bank’s risk management department will analysize risk control and level of exposure and report to the board of directors.

(Continued)

• 131 -

• c. In the Bank “Human Resources Management Regulation of Salary’s Guideline”, it regulate the standard of employees’ salary, allowance and bonus and also applied to corporate social responsibility policy to make the reasonable salary and remuneration policies. Which include regular salary promotion and legitimate salary adjustment. If the Bank has profit, the board of director will consider the bank overall operating performance to give employees year-end bonus, performance bonus and employee provision, that is about 1% to 5% of profit.

(Concluded)

• 132 -

Union Bank of Taiwan

Securities Department Disclosure Years Ended December 31, 2020 and 2019

• 133 -

UNION BANK OF TAIWAN SECURITIES DEPARTMENT

BALANCE SHEETS DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents Financial assets at fair value through profit and loss (Note 5) Financial assets at fair value through other comprehensive income - current (Note 6) Receivables, net (Note 7) Prepayments Other current assets Total current assets NON-CURRENT ASSETS Financial assets at amortized cost (Note 8) Operating guaranty deposits (Note 9) Settlement clearing deposits (Note 10) Refundable deposits Inter department debits (Note 15) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Securities sold under repurchase agreements (Note 10) Accounts payable (Note 11) Receipts under custody Other payables Total current liabilities NON-CURRENT LIABILITIES Inter department (Note 15) Total liabilities EQUITY Registered operating capital Retained earnings Other equity Unrealized gain on financial assets at fair value through other comprehensive income Unrealized gain on available for sale financial assets Total equity TOTAL		2020 Amount % $ 200 - 298,124 3 5,963,441 68 1,448,070 17 10,191 - 78,311 1 7,798,337 89 715,346 8 150,000 2 23,753 - 35,975 1 - - 925,074 11 $ 8,723,411 100 $ 4,945,148 57 1,420,825 16 79,240 1 42,305 - 6,487,518 74 1,266,017 15 7,753,535 89 840,000 10 84,461 1 45,415 - 969,876 11 $ 8,723,411 100		2019
				Amount % $ 200 - - - 3,116,471 65 603,460 13 5,462 - 329 - 3,725,922 78 719,695 15 150,000 3 24,370 - 35,975 1 119,898 3 1,049,938 22 $ 4,775,860 100 $ 3,311,735 70 584,479 12 1,264 - 13,640 - 3,911,118 82 - - 3,911,118 82 840,000 18 17,632 - 7,110 - 864,742 18 $ 4,775,860 100

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

• 134 -

UNION BANK OF TAIWAN SECURITIES DEPARTMENT

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

REVENUES (Note 4) Brokerage fee revenue, net (Note 15) Underwriting business revenue Net profit from sale of operation securities - dealing Interest revenue Net gains on measurement at fair value through profit or loss for securities held for operations Net gains on investments in debt instruments at fair value through other comprehensive income Commission revenues Other operating revenues Expected credit loss (Note 4) Total revenues COST AND EXPENSES Brokerage fee expenses, net Financial costs Employee benefit expenses (Note 13) Depreciation and amortization Others (Note 14) Total cost and expenses NON-OPERATING INCOME AND EXPENSES Other gains and losses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 4) NET INCOME OTHER COMPREHENSIVE INCOME Items that may be reclassified subsequently to profit or loss: Unrealized gain on investment in debt instruments at fair value through other comprehensive income TOTAL COMPREHENSIVE LOSS		2020 Amount % $ 184,249 73 407 - 8,046 3 38,944 16 52 - - - 2,456 1 16,905 7 (524) - 250,535 100 12,820 5 3,236 1 108,946 44 11,202 4 62,546 25 198,750 79 51,927 21 103,712 42 19,251 8 84,461 34 38,305 15 $ 122,766 49		2019
				Amount % $ 105,996 66 371 - 1,783 1 33,617 21 431 - 346 - 1,727 1 17,090 11 7 - 161,368 100 7,498 5 3,380 2 98,219 61 12,901 8 56,117 35 178,115 111 38,255 24 21,508 13 3,876 2 17,632 11 70 - $ 17,702 11

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

• 135 -

UNION BANK OF TAIWAN SECURITIES DEPARTMENT

NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. ORGANIZATION AND OPERATIONS

The securities department of the Union Bank of Taiwan (the Department) was established on July 27, 1994 and obtained the securities dealer’s license from the authorities on August 11, 2010. The Department is principally engaged in the provision of brokerage services and the bonds and securities business. The Department’s working capital were both $840,000 thousand as of December 31, 2020 and 2019

The numbers of employees in the Department as of December 31, 2020 and 2019 were 125 and 117, respectively.

2. APPROVAL OF FINANCIAL STATEMENTS

The board of directors approved and authorized the issue of the financial statements on March 10, 2021.

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

Refer to Note 3 to the financial statements of the Bank.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

The financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Firms.

Basis of Preparation

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

Classification of Current and Noncurrent Assets and Liabilities

Current assets include:

• a. Assets held primarily for the purpose of trading;

• b. Assets expected to be realized within 12 months after the reporting period; and

• c. Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

• 136 -

Current liabilities include:

• a. Liabilities held primarily for the purpose of trading;

• b. Liabilities due to be settled within 12 months after the reporting period; and

• c. Liabilities for which the Department does not have an unconditional right to defer settlement for at least 12 months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

Financial Instruments

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

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 FVTPL, financial assets at amortized cost, investments in debt instruments at FVTOCI and investments in equity instruments at FVTOCI.

• 1) Financial assets at FVTPL

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

A financial asset may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise.

Financial assets at FVTPL are subsequently measured 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 dividends or interest earned on such a financial asset. Fair value is determined in the manner described in Note 45.

• 2) Financial assets at amortized cost

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

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

• 137 -

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

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents and trade receivables at amortized cost, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

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

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

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

Cash equivalents include time deposits with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

• 3) Investments in debt instruments at FVTOCI

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

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

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

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

• 4) Investments in equity instruments at FVTOCI

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

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

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

• 138 -

• b. Impairment of financial assets

The Department recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables, loans and non-accrual loans), investments in debt instruments that are measured at FVTOCI, lease receivables, as well as contract assets.

For financial instruments and contract assets, the Department recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Department measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

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

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

• c. Derecognition of financial assets

The Department 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.

Recognition of Revenue

Revenue is recognized when it is realized or realizable and also when it is earned. Revenue earned from service is recognized when the service is rendered.

Taxation

Income tax expense is the sum of tax currently payable and deferred income tax.

5. FINANCIAL ASSETS AT FVTPL

Government bond

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December 31
2020 2019
-
$ 298,124 $
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• 139 -

6. FINANCIAL ASSETS AT FVTOCI

Corporate bonds Government bond		December 31	December 31
		2020 $ 3,678,536 2,284,905 $ 5,963,441	2019 $ 2,565,737 550,734 $ 3,116,471

The Department sold $4,642,462 thousand and $3,116,471 thousand of its financial assets at FVTOCI under several repurchase agreements on December 31, 2020 and 2019, respectively.

7. RECEIVABLES, NET

Investments receivable Interest receivable Reimbursed for settlement		December 31	December 31
		2020 $ 1,078,977 23,762 345,331 $ 1,448,070	2019 $ 545,843 17,623 39,994 $ 603,460

8. FINANCIAL ASSETS MEASURED AT COST

Debt instruments Government bonds		December 31	December 31
		2020 $ 715,346	2019 $ 719,695

9. OPERATING GUARANTEE DEPOSITS

Securities broker operating guarantee deposits Futures broker operating guarantee deposits Securities dealer operating guarantee deposits		December 31	December 31
		2020 $ 90,000 50,000 10,000 $ 150,000	2019 $ 90,000 50,000 10,000 $ 150,000

The Department placed $150,000 thousands in time deposits in designated banks as operating guarantee deposits as of December 31, 2020 and 2019 in accordance with the Securities and Exchange Act, Regulations Governing Securities Firms, Regulations Governing Offshore Funds, and Regulations Governing Futures Commission Merchants.

• 140 -

10. SETTLEMENT CLEARING DEPOSITS

Taiwan Stock Exchange Corporation settlement clearing deposits Taipei Exchange settlement clearing deposits		December	31
		2020 $ 13,737 10,016 $ 23,753	2019 $ 13,882 10,488 $ 24,370

The Department made deposits into the clearing and settlement fund in dedicated accounts for custody set up by the Taiwan Stock Exchange and the Taipei Exchange in accordance with the standards provided by the Taiwan Stock Exchange and the Taipei Exchange. With respect to interest accrued from utilization by the Taiwan Stock Exchange and Taipei Exchange of the clearing and settlement fund, the Taiwan Stock Exchange and Taipei Exchange settle accounts on a half-yearly basis and reimburse any remaining interest, after deducting applicable fees and taxes, to the securities firms in accordance with Securities and Exchange Act.

11. BONDS SOLD UNDER REPURCHASE AGREEMENTS

Government bonds Corporate bonds Maturity date Repurchase price		December 31	December 31
		2020 $ 1,045,735 3,899,413 $ 4,945,148 January to March 2021 $ 4,946,605	2019 $ 605,090 2,706,645 $ 3,311,735 January to July 2020 $ 3,314,382

12. PAYABLES

Investments receivable Reimbursed for settlement Others		**December 31 **	**December 31 **
		2020 $ 1,349,789 69,746 1,290 $ 1,420,825	2019 $ 455,093 127,991 1,395 $ 584,479

• 141 -

13. EMPLOYEE BENEFIT EXPENSE

Employee benefit expense Salaries Labor and health insurance Pension Others	For the Year Ended	For the Year Ended	December 31
		2020 $ 88,291 8,963 5,230 6,462 $ 108,946	2019 $ 78,299 8,627 4,889 6,404 $ 98,219

14. OTHER OPERATING EXPENSE

Computer operating Maintenance charge Postage/cable charge Taxation Utilities Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 9,666 4,973 4,482 4,185 2,053 37,187 $ 62,546	2019 $ 7,584 4,857 4,298 2,590 2,033 34,755 $ 56,117

15. RELATED-PARTY TRANSACTIONS

• a. Related parties

Related Party Union Bank of Taiwan	Relationship with the Department
	Headquarter of the Department

• b. Significant transactions between the Department and related parties

Related Party Account Union Bank of Taiwan Inter-Department Debits		**December 31 **	**December 31 **
		2020 $ (1,266,017)	2019 $ 119,898

Brokerage handling fees changed to related parties were adjusted to the account “Inter-Department Debits” and the rate and collection term were not significantly different from those with other customers.

• 142 -

16. FINANCIAL INSTRUMENTS

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

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.

Assets Financial assets at amortized cost Fair value hierarchy:		**December 31 **	**December 31 **	**December 31 **	**December 31 **	**December 31 **
		2020 Carrying Value Estimated Fair Value $ 715,346 $ 729,005			2019
		Carrying Value $ 715,346			Carrying Value $ 719,695	Estimated Fair Value $ 726,616
Item			December		31, 2020
		Total	Level 1		Level 2	Level 3
Financial asset Financial assets at amortized cost		$729,005	$ -		$729,005	$ -
Item			**December **		31, 2019
		Total	Level 1		Level 2	Level 3
Financial asset Financial assets at amortized cost		$726,616	$ -		$726,616	$ -

• b. The Department’s methods and assumptions used to measure the fair value of financial assets and liabilities are as follows:

• 1) The carrying values of cash, cash equivalents, receivables, net, other financial assets, other current assets, inter-department debits, payables, collection payments, other payables (other than tax payable) and other current liabilities approximate the fair values due to their short maturities.

• 2) The carrying values of operating guarantee deposits, settlement clearing deposits and refundable deposits approximate their fair values due to the fact that interest payments are collected and cash discounts are immaterial.

• 143 -

• 3) The information on the fair value hierarchies of the Department’s financial instruments as of December 31, 2020 and 2019 were as follows:

Item		December 31, 2020	December 31, 2020
	Total	Level 1	Level 2	Level 3
Measured at fair value on a recurring basis nonderivative financial instruments Assets Financial assets at FVTPL Bond investments Financial assets at FVTOCI Bond investments	$ 298,124 5,963,441	$ - -	$ 298,124 5,963,441	$ - -

Item		December 31, 2019	December 31, 2019
	Total	Level 1	Level 2	Level 3
Measured at fair value on a recurring basis nonderivative financial instruments Assets Financial assets at FVTOCI Bond investments	$3,116,471	$ -	$3,116,471	$ -

Refer to Note 45 for further information regarding the definitions of the 3 levels of fair value measurement.

That was no material transfer between Level 1 and Level 2 for 2020 and 2019.

• d. Information on financial risk management

• 1) Market risk

Transactions of the Department were all measured at fair value using reliable information, such as the market price, market interest rate and maturity date. Moreover, hedging strategies were also applied to mitigate risk exposure.

• 2) Credit risk

Credit risks refers to the Department’s exposure to financial losses due to inability of customers, bonds issuers, or counterparties to meet the contractual obligations on financial instruments. Before entering transactions, the Department evaluates the counterparty’s credit status with reference to external credit rating information. Furthermore, the Department assigns different transaction limits to counterparties of different credit ratings in order to mitigate default losses when extreme situations occur.

• 144 -

Investments in debt instruments made by the Department were composed of financial assets at FVTOCI and financial assets at amortized cost:

December 31, 2020

Carrying value Loss allowance Fair value December 31, 2019 Carrying value Loss allowance Fair value	FVTOCI Amortized Cost $ 5,920,442 $ 715,346 (1,208) - 44,207 - $ 5,963,441 $ 715,346 FVTOCI Amortized Cost $ 3,111,111 $ 719,695 (875) - 6,235 - $ 3,116,471 $ 719,695	Total $ 6,635,788 (1,208) 44,207 $ 6,678,787 Total $ 3,830,806 (875) 6,235 $ 3,836,166

The Department continuously monitors the external credit rating information and price movements of the debt instruments invested in to assess whether credit risk has significantly increased since initial recognition of the investment.

The Department takes into consideration the multi-period default probability table for each rating of securities issued by credit rating agencies and the recovery rates of different types of bonds to assess the 12-month expected credit losses or lifetime expected credit losses for these investments.

Debt investments at FVTOCI and at amortized cost, sorted by credit ratings, are shown as follows:

		Basis for		Carrying
		Recognizing	Expected	Amount at
		Expected	Credit	December 31,
Credit Risk Ratings	Definition	Credit Loss	Loss Rate	2020
Low credit risk	The debtor has low credit	12-month ECL	0%-0.06%	$ 6,678,787
	risk
Significant increase	Credit risk has increased	Lifetime ECL	Note	-
in credit risk	significantly since
	initial recognition
Default	Evidence of credit	Lifetime ECL	100%	-
	impairment

• 145 -

		Basis for		Carrying
		Recognizing	Expected	Amount at
		Expected	Credit	December 31,
Credit Risk Ratings	Definition	Credit Loss	Loss Rate	2019
Low credit risk	The debtor has low credit	12-month ECL	0%-0.06%	$ 3,836,166
	risk
Significant increase	Credit risk has increased	Lifetime ECL	Note	-
in credit risk	significantly since
	initial recognition
Default	Evidence of credit	Lifetime ECL	100%	-
	impairment

Note: Credit rating of investment in debt instruments on December 31, 2020 and 2019 was normal

The allowance for impairment loss of investments in debt instruments at FVTOCI and at amortized cost grouped by credit rating is reconciled as follows:

Balance at January 1, 2020 Changes in credit risk ratings Low credit risk to significant increase in credit risk Significant increase in credit risk to default New debt instruments purchased Derecognition Risk/model parameter change Other changes Balance at December 31, 2020 Balance at January 1, 2019 Changes in credit risk ratings Low credit risk to significant increase in credit risk Significant increase in credit risk to default New debt instruments purchased Derecognition Risk/model parameter change Other changes Balance at December 31, 2019

Credit Ratings

Low Credit Risk Significant Increase in Credit Risk Since Initial Recognition Evidence of Credit Impairment $ 875 $ - $ - - - - - - - 423 - - (74) - - - - - (16) - - $ 1,208 $ - $ - $ 882 $ - $ - - - - - - - 417 - - (343) - - - - - (81) - - $ 875 $ - $ -

• 146 -

• 3) Liquidity risk

The Department has low liquidity risk due to the fact that investments owned by the Department have relatively high liquidity. Besides, among those investments, the Department also set holding limits.

17. ADDITIONAL DISCLOSURES

Significant transactions and investees:

• a. Financing provided: None.

• b. Endorsement/guarantee provided: None.

• c. Acquisition of individual real estate at a costs of at least NT$100 million or 20% of the paid-in capital: None.

• d. Disposal of individual real estates at a prices of at least NT$100 million or 20% of the paid-in capital: None.

• e. Allowance for service fees to related parties amounting to at least NT$5 million: None.

• f. Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: None.

18. RELATED INFORMATION ON EQUITY INVESTMENTS IN INVESTEES: NONE

19. INVESTMENT IN MAINLAND CHINA: NONE

• 147 -

STATEMENT 1

UNION BANK OF TAIWAN SECURITIES DEPARTMENT

LIST OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOST - CURRENT DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Item Maturity Date Government bond A09109 2030/10/14	Fair Value Interest Rate % $ 300,000 0.2500	Issue Price $ 298,713	Fair Value
			Unit Price Total Price 99.3754 $ 298,124

• 148 -

STATEMENT 2

UNION BANK OF TAIWAN SECURITIES DEPARTMENT

LIST OF FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - CURRENT DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Item Maturity Date Interest Rate % Government bond A05113V 2021/10/25 0.63 A08109 2023/10/16 0.63 A09103 2029/06/26 0.50 Other (Note 2) Corporate bonds B618C1 2027/09/03 0.58 B903XP 2027/12/15 0.45 B903V4 2022/12/26 1.39 B903WJ 2022/12/15 0.88 B903X6 2024/12/16 0.75 Other (Note 2)	Accumulated Fair Value Impairment $ 300,000 $ - 600,000 - 750,000 - 600,000 - 2,250,000 - 300,000 (56) 500,000 (155) 400,000 (127) 300,000 (93) 470,000 (146) 1,680,000 (631) 3,650,000 (1,208) $ 5,900,000 $ (1,208)	Historical Cost Unit Price Total Price 99.9444 $ 299,833 101.2692 607,615 100.4816 753,612 599,560 2,260,620 100.1206 300,362 100.0000 500,000 101.0900 404,360 100.0000 300,000 100.0000 470,000 1,683,892 3,658,614 $ 5,919,234	Fair Value	Fair Value
		Unit Price 99.9444 101.2692 100.4816 100.1206 100.0000 101.0900 100.0000 100.0000	Unit Price 103.3799 102.8878 101.8630 100.0432 100.0000 101.7985 100.5942 101.2333	Total Price $ 301,140 617,327 763,973 602,465 2,284,905 300,129 500,000 407,194 301,783 475,796 1,693,634 3,678,536 $ 5,963,441

Note 1: Total amount under repurchase agreement is $4,642,462 thousand.

Note 2: Individual items have not exceeded 5% of the total amount.

• 149 -

STATEMENT 3

UNION BANK OF TAIWAN SECURITIES DEPARTMENT

LIST OF BONDS UNDER PURCHASE AGREEMENTS DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Government bond A05113V A09103 HB0701 HB0904 Other Corporate bonds B618C1 B903XP B903V4 B903WJ B903X6 Other (Note)	Transaction Terms Issue Date Maturity Date Interest Rate % 2020/12/21 2021/03/19 0.21 2020/11/11 2021/02/09 0.21 2020/12/21 2021/04/20 0.26 2020/11/18 2021/01/18 0.21 2020/12/30 2021/02/24 0.20 2020/12/25 2021/01/25 0.26 2020/12/17 2021/01/22 0.25 2020/12/31 2021/03/29 0.25 2020/12/07 2021/02/19 0.26 2020/12/21 2021/02/19 0.26 2020/12/07 2021/02/19 0.26	Fair Value $ 199,800 198,900 192,000 190,900 173,000 954,600 300,000 500,000 400,000 300,000 470,000 1,680,000 3,650,000 $ 4,604,600	Issue Price $ 219,319 214,947 210,622 209,873 190,974
			1,045,735
			318,438 550,000 425,074 320,004 490,500 1,795,397
			3,899,413
			$ 4,945,148

Note: Individual items have not exceeded 5% of the total amount.

• 150 -

STATEMENT 4

UNION BANK OF TAIWAN SECURITIES DEPARTMENT

LIST OF FINANCIAL ASSETS AT AMORTISED COST DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

								Provided as Guarantee
			Unamortized Gross			Accumulated		or Pledged as
Item	Total Amount	Maturity Date		Price	Interest Rate	Impairment	Book Value	Collateral
A03106H	700,000	2024/03/30	$	12,638	1.50%	$ -	$ 715,346	None

• 151 -

STATEMENT 5

UNION BANK OF TAIWAN SECURITIES DEPARTMENT

ITEM STATEMENT (SORTED BY BUSINESS CATEGORY) FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Profit (loss) Operating revenue Brokerage fee revenue Underwriting business revenue Profit from sale of operation securities - dealing Interest revenue Net profit from operating securities at fair value through profit or loss Commission revenue Others operating revenue Expected credit losses Operating expense Brokerage fee Finance cost Employee benefits expense Depreciation and amortization expense Other operating expense Profit (loss) Other income and losses Profit before tax Income tax expense Net profit (loss) Other comprehensive income Total comprehensive income		Broker Amount % $ 184,249 91 407 - - - - - - - 2,456 1 16,905 8 - - 204,017 100 12,820 6 3,236 2 95,854 47 11,202 5 44,641 22 167,753 82 36,264 18 51,927 25 88,191 43 17,638 8 70,553 35 - - $ 70,553 35		Dealer Amount % $ - - - - 8,046 17 38,944 84 52 - - - - - (524) (1) 46,518 100 - - - - 13,092 28 - - 17,905 39 30,997 67 15,521 33 - - 15,521 33 1,613 3 13,908 30 38,305 82 $ 52,213 112	Total % $ 184,249 73 407 - 8,046 3 38,944 16 52 - 2,456 1 16,905 7 (524) - 250,535 100 12,820 5 3,236 1 108,946 44 11,202 4 62,546 25 198,750 79 51,785 21 51,927 21 103,712 42 19,251 8 84,461 34 38,305 15 $ 122,766 49

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STATEMENT 6

UNION BANK OF TAIWAN SECURITIES DEPARTMENT

LIST OF BROKERAGE FEE REVENUE FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Securities Brokerage at Stock Exchange Market Securities Brokerage at Over the Counter Market Securities Lending Fee January $ 12,448 $ 2,732 $ - February 13,871 3,490 - March 20,934 4,791 - April 16,480 4,192 - May 17,832 5,581 - June 19,117 6,599 - July 28,838 10,552 - August 23,461 6,506 - September 20,213 5,623 - October 15,087 4,072 23 November 23,071 6,694 7 December 32,839 8,306 1 $ 244,191 $ 69,138 $ 31

Total $ 15,180 17,361 25,725 20,672 23,413 25,716 39,390 29,967 25,836 19,182 29,772 41,146 $ 313,360

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STATEMENT 7

UNION BANK OF TAIWAN SECURITIES DEPARTMENT

LIST OF DISCOUNTS ON BROKERAGE FEE REVENUE FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Month Stock Exchange Market January $ 4,562 February 5,716 March 7,735 April 6,699 May 7,140 June 7,584 July 11,928 August 9,996 September 8,536 October 6,299 November 10,053 December 14,372 $ 100,620	Over-the- Counter $ 920 1,364 1,827 1,586 2,178 2,781 4,441 2,665 2,487 1,686 2,872 3,684 $ 28,491	Total $ 5,482 7,080 9,562 8,285 9,318 10,365 16,369 12,661 11,023 7,985 12,925 18,056 $ 129,111

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STATEMENT 8

UNION BANK OF TAIWAN SECURITIES DEPARTMENT

LIST OF SECURITIES SOLD FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

	Revenue from
	Sale of		Cost of
Item	Securities	Securities Sold		Profit	or Loss
Dealer
Sold at the office
Financial assets at FVTPL
Government bonds	$ 4,736,209	$ 4,728,163		$	8,046

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STATEMENT 9

UNION BANK OF TAIWAN SECURITIES DEPARTMENT

LIST OF INTEREST REVENUE FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Items Interest revenue from bond investments Interest from financial assets at FVOCI Interest from financial assets at amortized cost Others	Amounts $ 30,500 8,431 38,931 13 $ 38,944

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STATEMENT 10

UNION BANK OF TAIWAN SECURITIES DEPARTMENT

LIST OF OPERATING EXPENSE FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Item Employee benefit expense Salary expense Insurance expense Pension expense Others (Note) Depreciation and amortization expense Depreciation expense Amortization expense Other operating expense Computer operating expense Maintenance expense Postage/cable fee Utilities Tax Others (Note)	2020 $ 88,291 8,963 5,230 6,462 108,946 5,983 5,219 11,202 9,666 4,973 4,482 2,053 4,185 37,187 62,546 $ 182,694	2019 $ 78,299 8,627 4,889 6,404 98,219 8,531 4,370 12,901 7,584 4,857 4,298 2,033 2,590 34,755 56,117 $ 167,237

Note 1: Total number of employees was 125 and 117 in 2020 and 2019, respectively.

Note 2: Individual items have not exceeded 5% of the total amount.

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