stock code 2834 2018 - irpro.co · v. operation summary 1. business activities 2. employees 3....
TRANSCRIPT
www.tbb.com.tw
臺灣中小企業銀行
一○七年年報
TA
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N B
US
INE
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An
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ort 2018
中 華 民 國 一 ○ 七 年 年 報
2018Taiwan Stock Exchange Market Observation Post System:
http://mops.twse.com.tw
TBB’s Annual Report is available at:https://www.tbb.com.tw
Published in March 2019
Notice to readers
If there is any discrepancy between the English version and Chinese version, the Chinese
version shall prevail.
Stock Code:2834
Taiwan Business Bank Head Office Address: No. 30, Ta Cheng St., Taipei, Taiwan, R.O.C. Tel: 886-2-2559-7171 Web Site: https://www.tbb.com.tw
Spokesperson Name: Chang-Yi Chen Title: Executive Vice President Tel: 886-2-2559-7222/886-2-2559-7171 ext:1711 E-mail Address: [email protected]
Deputy Spokesperson Name: Tseng-Hsiang Yu Title: S.V.P. & Chief Secretary Tel: 886-2-2550-5726 / 886-2-2559-7171 ext: 1511 E-mail Address: [email protected]
Deputy Spokesperson Name: Chih-Chien Chang Title: Executive Vice President Tel: 886-2-2550-9179 / 886-2-2559-7171 ext: 1411 E-mail Address: [email protected]
Stock Registration Agent Name: Yuanta Securities Co., Ltd. Address: B1, No. 210, Sec. 3, Chengde Rd., Datong Dist., Taipei, Taiwan, R.O.C. Tel: 886-2-2586-5859 Web Site: https://www.yuanta.com.tw
Rating Agency Name: Taiwan Ratings Co. Address: 49F, No. 7, Sec. 5, Xinyi Road, Taipei, Taiwan, R.O.C. Tel: 886-2-8722-5800 Web Site: http://www.taiwanratings.com
The CPA-auditor of the Financial Report Name: Tan-Tan Chung, Fung-Huei Lee Name of Employer: KPMG Certified Public Accountants Address: 68F, No. 7, Sec. 5, Xinyi Road, Taipei, Taiwan, R.O.C. Tel: 886-2- 8101-6666 Web Site: http://www.kpmg.com.tw
Flotation at Overseas Stock Exchange and Information Inquiry: None Please refer to Chapter X for the Directory of Head Office and Branch Units.
深 耕 臺 灣 連 結 亞 太 布 局 全 球
We can be the best !
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I. Letter to Shareholders1. Operation Results in 20182. Business Plans for 20193. Future Development Strategies4. Influencesfromtheexternalcompetitiveenvironment,legalenvironment,andtheoverall
economy
5. ResultsofLatestCreditRating
II. Bank Profile
III. Corporate Governance Report1. Organization2. Directors and Major Managers3. Operations of Corporate Governance4. Accounting Expenses5. Information on switching CPA6. Bank's Chairman, President, or any manager in charge of finance or accounting matters
who has, in the most recent year, held a position at the accounting firm of its CPA or at an affiliated enterprise
7. Changes in Shareholdings of Directors, Executive Officers, and Shareholders Conform to the Regulations Governing the Same Person or Same Concerned Party Holding the Issued Shares with Voting Rights over a Particular Ratio of a Bank, Article 11
8. Information Disclosing the Relationship among Top Ten Shareholders in the Relationship of Related Parties or Spouses, Blood Relatives within the Second Degree of Kinship
9. The joint venture directly or indirectly controlled and managed by Directors, President, Executive Vice Presidents and General Manager of each division or branch
IV. Fund-Raising Status1. Shares and Dividends2. Issuance Status of Financial Bonds3. Preferred Stocks, Global Depository Receipts, and Employee Stock Warrants, New
Restricted Employee Shares, Any Merger and Acquisition Activities, and Acceptance of Transfer of the Shares of Another Financial Institution
4. Status of Implementation of Capital Allocation Plans
V. Operation Summary1. Business Activities2. Employees3. Corporate responsibilities and moral conducts4. The number of non-managerial employees and the annual average employee benefit
expenses5. Information Equipment6. Labor-Management Relations7. Important contracts8. Relevant information on securitization products
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Contents
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T a i w a n B u s i n e s s B a n k
VI. Financial Status1 Brief Consolidated Balance Sheets and Consolidated Statements of
Comprehensive Income for the Past Five Years2. Financial Analysis for the Past Five Years3. Audit Committee's Audit Report on the 2018 Financial Statements4. Representation Letter for 2018 Consolidated Financial Statements5. Independent Auditors' Report for 2018 Consolidated Financial Statements6. 2018 Consolidated Financial Statements and Notes7. Independent Auditors' Report for 2018 Individual Financial Statements8. 2018 Individual Financial Statements Audited and Certified by Accountants9. Financial Difficulties Confronted by the Bank or Its Subsidiaries and the
Related Impacts
VII. Review, Analysis, and Risks of Financial Conditions and Performance
1. Financial position analysis2. Financial performance analysis3. Analysis of cash flow4. Impact of major capital expenditure on the company's financial business in
20185. Reinvestment policy for 2018, the main reasons for the profits/losses
generated thereby, the plan for improving profitability, and investment plans for the coming year
6. Risk management7. Crisis management and response mechanism8. Other significant events
VIII. Special Notes1. Information Regarding the Bank's Subsidiaries2. Progress of Private Placement of Securities and Financial Bonds3. The Bank's Subsidiaries' Shareholding or Disposal of the Bank's Shares4. Additional Disclosure5. Pursuant to Item 2, Paragraph 3, Article 36 of Security and Exchange Act,
the Incidence Exerting Material Influence on Shareholders' Rights or Security Prices
IX. Corporate Social Responsibility Report1. Environment2. Social3. Corporate Governance
X. Directory of Head Office and Branch Units
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T a i w a n B u s i n e s s B a n k
Letter to Shareholders
I
1. Operation Results in 2018
2. Business Plans for 2019
3. Future Development Strategies
4. Influences from the external competitive environment, legal environment, and the overall economy
5. Results of Latest Credit Rating
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Chairman
Bor-Yi Huang
The upward trend of the global economy in 2017 persisted through the beginning of 2018 and remained in sustained expansion. However, under the effects of tariffs imposed by major economies such as the US and the corresponding retaliatory measures implemented by other economies, global financial markets remained turbulent. Nevertheless, with the support of all our shareholders and clients, along with the dedicated efforts of our entire staff, the Bank managed to deliver brilliant results. In 2018, our profit before tax from continuing operations was NT$9.198 billion, representing an annual growth of 56.67%. Our non-performing loan ratio was 0.30%, and the coverage ratio of allowance for bad debts was 394.08%, both setting new best records.
In the future, the Bank will continue to carry through the internal controls using three lines of defense, strengthen the overall risk control, and promote relevant business according to the policies of the government; also, deepen fintech development with equal focuses on IT and information security control. We will continue to fulfill corporate social responsibility (CSR) initiatives and strengthen our momentum in charitable activities to attend to and care for the disadvantaged. With an aim of providing customers with satisfactory and comprehensive financial services, the Bank will continue to facilitate a cultural transformation for the corporate brand, endeavor to turn the Bank into a leading brand in the field of SME financing, and establish a solid foundation for the sustainable development of the Bank upon stepping into the next century.
The operation results in 2018 and the business plans for 2019 are summarized below:
1. Operation Results in 2018
(1) The Domestic and Overseas Financial EnvironmentsBenefiting from thestablegrowth in theglobaleconomy,marketconditions forsemiconductorsandthedemandformachineryexperiencedanupward trendinthefirstquarterof2018,leadingtoanexpansioninthecommodityexportsforTaiwan.Healthygrowth inpublicsalariesandtheheatedstockmarketledtoanincreaseinprivateconsumptionaswellasgovernmentspending.However,capital formationhadrecordedrealnegativegrowthdueto theslowdown incapitalexpendituresofmajorsemiconductorcompanies inTaiwan.The improvingemploymentcondition inTaiwangaverise to therobustgrowthofsalariesinthe2ndquarterof2018.Theincreaseinincomehelpedincreasetheconsumptionpowerofthepublic.ThecommodityexportsinTaiwanhadrecordedanexpansion togetherwith thecontribution fromthestablegrowthof theglobaleconomy,application foremergingtechnologies,andthestrongdemandformachinery.
Benefited from the sustainablegrowthof theglobal economyin the thirdquarter, theapplication foremerging technologiesremainedactive.With theglobaloilpricehoveringon thehighend,Taiwan'scommodityexportsdenominated inUSdollarsin the third quarterhad recordedanewhigh.Alongside thepickingupofsemiconductordevicepurchases,theinvestmentin constructionengineeringachieved robust growth, andgovernment investmenthad realizedsubstantialgrowth. Inthe fourthquarter, thegrowth ratesofcommodityexportswere flattenedby the slowdown in economic growthofmajor tradingpartners.Furthermore, theturbulenceofglobalfinancialmarketshadaffectedthedomesticstockmarketandconsumerconfidence.Also, thedelayedcapitalexpenditureprojectofsemiconductorcompaniesinTaiwanhadrestrictedthegrowthmomentumofprivateinvestments.
(2) Changes in the Bank's OrganizationA.Consideringthehigherrisksofrealestateloans,theAppraisal
Divisionof theRegionalOperationCenterwasre-establishedtostrengthentheriskcontrolandprofessionaldivisionofwork
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fortherealestateloans.B.AdjustedtheorganizationoftheBankaccordingtothe"ImplementationRulesofInternalAuditandInternal
ControlSystemofFinancialHoldingCompaniesandBanking Industries"asamendedby theFinancialSupervisoryCommission:a.Compliance&LegalDepartmentwasrenamedasComplianceDepartment; legalaffairswerehandedovertotheAdministrationManagementDepartment.
b.InformationSecuritySectionunder the InformationTechnologyDepartmentwasupgradedas theInformationSecurityDepartment,subordinatetotheRiskManagementCenter.
c.GeneralAffairsDepartmentwasrenamedasAdministrationManagementDepartment.
C.Established theStrategyDevelopmentCommittee,CSRCommittee,andCyberSecurityManagementCommittee;renamedtheOperatingManagementCenterandtheBusinessManagementDepartmentastheOperatingDevelopmentCenterandtheBusinessDevelopmentDepartment, respectively.TheInnovativeFinanceProjectOfficewasotherwiseestablishedtostrengthenthesupportformaterialpolicy-orientedloansofgreenfinance,urbanrenewal,andculturalinnovationindustries.
(3) Implementation of Business Plans and Operating StrategiesA.Profitability After-taxnetprofitfor2018amountedtoNT$7.641billion(before-taxnetprofitwasNT$9.198billion).The
BankcarriedoutacapitalincreaseviatransferredearningsofNT$2.459billionandissuedstockandcashdividendsofNT$0.40andNT$0.268pershare,respectively,forthepreviousyear(2017).
B.CorporateGovernancea.Reinforcementofinformationdisclosurechannelsandupgradingoftransparencyincorporategovernance
TheBankhas longstrivedtoenhance itscorporategovernance. Inadditiontovaluingthe importanceof informationdisclosureandstrengtheningtheprofessionalknowledgeofdirectors,alldirectorshavecompletedtherequiredtrainingsforcorporategovernance in2018.Tostrengthenthe independenceoftheperformanceevaluationoftheboardofdirectors,theBankhasalsoentrustedanexternalprofessionalindependent institutiontoconductperformanceevaluationof theboardofdirectorsat leastonceeverythreeyears.
b.Understanding theshareholderstructure,strengtheningcommunicationwith foreign investors,andcomingontrackwithinternationaltrends
Weactivelyincreasedourcommunicationchannelsfordomesticandoverseasinvestorsandaroadshowwas respectivelyheld in the firstandsecondhalfof2018.Each investorhas immediateaccess toinformationontheMarketObservationPostSystem,andcanobtainthesameinformationsimultaneouslyontheofficialTBBwebsite.TheBankalsoissuespressreleasesonanirregularbasis,givinginvestorsmultiplechannelsforacquiringTBBinformation.
C.CoreBusinesses:a.CorporateBanking
1)TheBankwasrecognizedasanOutstandingBankandreceivedaSpecialAward for theNationalDefenseIndustryfromtheFinancialSupervisoryCommissionfortheProgramtoEncourageLendingbyDomesticBankstoKeyInnovativeIndustries.
2)TheBankwasawarded theOutstandingBankby theFinancialSupervisoryCommission for theProgram toEncourageLoanProjectsbyDomesticBanks toTargetCountriesunder theNewSouthboundPolicy.
3)InrecognitionoftheBank'soutstandingperformanceinsmallandmediumenterprisefinancing,itwaspresentedwiththreeOutstandingBankforSmallandMediumEnterpriseCreditGuaranteeFinancingawardsbytheMinistryofEconomicAffairs: theCreditGuaranteePartnerAward,DirectGuaranteePerformanceAward,and theSmallandMediumEnterpriseFinancingServicePlatform InquiryPerformanceAward.
4)TheBankwasawardedtheOutstandingBankbytheExecutiveYuanfortheProgramof0206HualienEarthquakeGuaranteeFinancing&Loan.
5)TheBankreceivedtheCertificateofAppreciation fromtheMinistryofLabor for theEventofMicro-scaleEntrepreneurshipModelin2018.
06 Taiwan Business Bank Annual Report 2018
6)TheBankwasrecognizedastheBestBankforSMEsinTaiwanbyAsiamoney.
7)TheBankwasawardedtheExcellentBankofBestCorporateBankingandtheExcellentBankofBestBankforSMEsbyTaiwanAcademyofBankingandFinancefortheEliteAward.
8) TheBankwasawarded the2018Best fromtheBestServiceBank forStart-upEnterprises fromExcellenceMagazineunderthecategoryofnon-financialholdingbank.
9) Intheextensionofsmallandmediumenterpriseloans,theBankrankedNo.1inTaiwaninbothtotalamountandratioof loans transferred forguarantees to theSmallandMediumEnterpriseCreditGuaranteeFund.
b.ForeignExchangeOperations
1) TheBankstrengthened theabsorptionof foreign-currencydepositsandexpandedthescaleof itsdeposits.Theaccumulatedaveragebalanceofforeign-currencydepositsin2018grew10.85%over2017.
2) TheBankworkedvigorously toexpand foreign-currency loansandboost interestmargin income.Accumulatedaverageloansoutstandingin2018increasedby12.06%over2017.
c.WealthManagement
1) TheBankfocusedonstrengthening itswealth-managementbusinessbyvigorouslyexpandingfeeincomefromtheinsuranceandfundbusinesses,withboostingrevenueandgeneratingprofitastheprioritygoal.
2) Withthevigorouspromotionofaspecialprogramaimedatthemarketingofdesignatedproducts,feeincomefromthewealth-managementbusinesstotaledNT$1.57billionin2018.
D.InnovationinDigitalFinancialProductsandBusinessDevelopmenta.Continuous Innovation inDigitalBankingProducts to ImproveFinancialServices
1) MobileBankingInstantLoginFunctionwasinaugurated.2) TaiwanPayInstantTransactionandSmallAmountTransactionwas
inaugurated.3) TaiwanPayBarcodeandQRCodeScannedforPurchaseFunction
were inaugurated forstores toscan thebarcode/QRcodeof theconsumerwiththecodescannertocompletethedebitpaymentsforsuchpurchases.
4) The transaction functions of TBB Security and Non-predesignatedTransferwereopenedupformobilebanking.
5) Functions forauditing fixedcategoriesof taxessuchasPayment for Individual IncomeTax,VehicleLicenseTax,HouseTax, andLandValueTaxwereopenedup forTaiwanPay.
6) In response to thepolicyon the integrationofmobilepaymentande-invoicepromotedbythegovernment, thecloudinvoiceserviceformobilebankingwasinaugurated.
7) Openedup teller servicesofdeposits,withdrawal,andtransferwithoutfillingforms.
8) Telleroperationshavebeensimplified,theoperatingtimeforhand-writtencustomerapplicationformshasbeeneliminated,andapre-arrangedforeigncashfunctionhasbeenopenedupforcustomers.
b.Active promotionof thedigital bankingbusinessandbroaddevelopmentofcustomergroups
1) The Bank received the Best Service InnovationAwardpromotedby theElectronicPaymentFlowBusiness fromtheFinancialInformationServiceCompany.
President
Chien-An (James) Shih
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2) Participated in theTaiwanPayQRCode"MarketingRewards forBanks"organizedbyFinancialInformationServiceCo.,Ltd.andreceivedarewardofNT$0.2million.
3) ImprovedtheinteractionandattachmentbetweenthefansonFacebookwiththepageoftheBank,designed relevantevents for theproducts launchedby theBank,andsuccessfullyattracted themobileandInternetgroupsfromallagestoparticipateinsucheventsthroughFacebookasitsonlinemedia.
E.ExpansionoftheScopeofChannelServicesa.Makeadjustmentson the locationdistributionof theBank'sbusinessunits for the increaseofvalueregardingphysicalchannels,soastoprovidebetterandmorecomprehensivefinancialservices:
1) TheEastTaipeiBranchreallocationwascompletedandre-openedonMar.26,2018;thebranchwasrenamedastheSanXiaBranch.
2) TheYangMeiBranchrelocationwascompletedandre-openedonSep.10th,2018.3) TheWanHuaBranchrelocationwascompletedandre-openedonDec.24th,2018.
b.Inlinewiththegovernmentpolicytoactivelypromotethe5+2InnovativeIndustry,theBankestablisheditsventuresubsidiary,renderingfullsupporttoinnovation,creativity,andentrepreneurship,andvigorouslyfacilitatingthetransformationandupgradingoftheindustrialstructureinTaiwan.
c.Tohelp thesustainablegrowthofTaiwan,optimize the investmentenvironment,andsupport thedevelopmentof innovation,creativity,andentrepreneurship,weestablished the"InnovativeFinanceProjectOffice"tostrengthenthesupportsformaterialloansofgreenfinance,urbanrenewalandculturalinnovationindustries.
F. InformationSystemReinforcementandInformationSecurityPromotiona.Reinforcementoftheinformationsystemoperationtoimprovetheoperatingefficiency
1) TheBankemployed theupdateandHAsystemfor thedrivesof itscentralbillingmainframe toaccelerate thedataaccessspeedandupdated thecentralbillingmainframe toestablish theSYSPLEXsystemwithlocalHAgradually.
2) Establishedadatacenterandcompletedbuildingdatamoduleestablishmenttoacceleratetheinstantutilizationcapacityofdata.
3) TheBankintroducedthenewmulti-factorbiometricidentificationsystemandimprovementmeasuresfortheinformationsecurityprotectionsystemofourbusinesssystem.
b.ImplementationofInformationSecuritybytheCompetentInformationSecurityDepartment
1) SetuptheInformationSecurityDepartment,acompetentdepartment for informationsecuritywithindependenceinexertingitsfunctionalauthority,accordingtoArticle38-1ofImplementationRulesofInternalAuditandInternalControlSystemofFinancialHoldingCompaniesandBankingIndustries.TheCyberSecurityManagementPolicyand theCyberSecurityManagementCommitteewasestablishedinOctober2018tobeinchargeofthecoordinationandpromotionofmattersinrelationtothecybersecuritymanagementoftheBank.
2) Carriedout the"2018Financial InstitutionDDoSDrill"onDec.9th,2018, in linewith theFinancialSupervisoryCommission.
3) CompletedtheassessmentontheinformationsecurityofitscomputersysteminNov.2018,accordingto the"Regulations forAssessing the InformationSecurityof theComputerSystemofFinancialInstitutions."
4) Self-assessmentwascarriedout inaccordancewithSWIFTCustomerSecurityProgram(CSP)specifications,andwasapprovedbySWIFTinDecember2018.
5) Aprofessionalconsultantwascommissionedtohelpcarryout the23NYCRRPart500complianceprograminaccordancewith thenetworksecurityregulationsof theNewYorkStateDepartmentofFinancialServices(NYDFS),andtheconsultantconfirmedtheprocesscompletedinDecember2018.
G.ImplementationofLegalComplianceandAnti-MoneyLaunderingOperationsa.Implementationof legalcomplianceandanti-money laundering in linewith the regulationsof thecompetentauthority
1) Setupa competent legal compliancedepartment andestablished the legal compliance riskmanagementandsupervisionstructure.
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2) Enhanced the reporting systemandestablished the "RegulationsGoverning theHandlingofReportingCases."
3) TheAnti-MoneyLaunderingSectionof theTBB'sComplianceDepartmentconstantlyoverseestheBank's implementationofmattersregardinganti-moneylaunderingandcombattingthefinancingofterrorism.
4) In response to theon-siteevaluationof theAsia/PacificGrouponMoneyLaundering(APG)heldonNov.5th-16th,2018, theBankestablishedanAPGWorkTeam toprovide "highstandard"countermeasuresfortheevaluation.
b.Holdingofregularcomplianceandanti-moneylaunderingtraining
1) FiveAnti-moneyLaundering&CombattingtheFinancingofTerrorismSeminarswereheldinthefirsthalfof2018,strengthening theunderstandingofouremployeesregardinganti-money launderingandcombattingthefinancingof terrorismandformingan internalcomplianceculturetoanti-moneylaundering.
2) AComplianceOfficerSeminarwasheldineachthefirstandsecondhalvesof2018.c.Continuedthereinforcementofoverseascomplianceoperations for legalcomplianceandanti-moneylaunderingandstrengthenedtherelevantqualificationandtrainingforstaffoverseas.
d.Strengtheningofthemonitoringmechanismforcompliancefollow-up
e.Carryingoutannualprojectaudits forpersonal informationprotectionandanti-money launderingandcombatting the financingof terrorismbyaccountants inaccordancewith the ImplementationRulesofInternalAuditand InternalControlSystemofFinancialHoldingCompaniesandBanking Industries.Anaccounting firmwascommissioned tocarryout the “2017ProjectAudit forPersonal InformationProtectionandtheInternalControlSystemforAnti-MoneyLaunderingandCombattingtheFinancingofTerrorism.”
H.CorporateSocialResponsibilitya.Active implementationofcorporatesocial responsibilityandrealizationof thevalueof thesustainable
operation
1) Our“CSRReport”passedtwostagesofverificationbytheBritishStandardsInstitution(BSI)forthreeconsecutiveyears,andBSIissuedtheBankanIndependentAssuranceOpinionStatement.
2) TheBankreceivedtheSilverAward inthefinancialandinsurancegroupofcorporatesustainabilityreportdivisionunder the11thTCSATaiwanCorporateSustainabilityAwardsof2018organizedbytheTaiwan Institute forSustainableEnergyand theSustainabilityPerformanceAward fromBSIStandardsAwards.SuchachievementshelpupgradetheBank'svisibilityanditscorporateimageforCSR implementation.
3) TheCSRCommitteewasestablishedtotakechargeoftheproposalsandexecutionofCSRpoliciesorsystemsandenhancetheimplementationofCSRoftheBank,demonstratingtheimportancethattheBankattachedtoCSR.
b.Implementationofseniorcaringpolicy,donations todisadvantagedgroups,andactiveparticipation inpublicbenefitaffairs
1) TheBankhas initiated theProjectofSeniorDining&LearningCenterSponsorship.TheBankexclusivelyallocated3‰ofthegeneralcardconsumptionfromtheSilverLoveCreditCardissuedbytheBanktohelpseniorstodineandlearntogether.Thisoriginatedfromthenon-profitfundthatwasusedinbuildingaSchoolforSeniorsinthecommunitytohelptakecareofdisadvantagedseniorsinthelocalcommunityandimprovetheirlivingstandards.
2) Setupseniorcaringspots to improvethestandardsofcaringservicesatseniorwelfareagencies,providing localandappropriatecaringservicesaccessible todisadvantagedseniors.TheBankvigorouslydevotesinthepublicbenefitaffairstoachievethegoalof"aginginplace."
c.Fulfilling responsibility forenvironmentalprotectionandcontinuedenergyconservationandcarbonreductionefforts
1) TheEnvironmentalProtectionAdministrationof theExecutiveYuanand theDepartment ofEnvironmentProtectionof theTaipeiCityGovernmentcited theTBBsevenyears ina row foroutstandingperformanceingreenprocurement.
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2) TheTaipeiCityGovernmentpubliclycited theTBBfor receiving ISO50001EnergyManagementSystemscertificationandthedesignationofitsheadquartersasanenergy-saving-labelbuilding.
3) TheBankimplementedits“EnergyPolicies”and“MeasuresforWaterandElectricityConservation”withscheduled follow-upon thestatusofwaterandelectricityconservationbydifferentunitsand inclusionof the results inbusinessperformanceassessments.Variousenergyconservationimprovementprogramswerevigorously implemented inorder toenhancetheenergyefficiencyofequipmentandsaveonelectricitycosts.
(4) Budget ImplementationA.TheannualaveragebalanceofdepositswasNT$1,388.764billion,foranachievementrateof102.67%.B.Theannualaveragebalanceof loansoutstandingwasNT$446.579billion, foranachievement rateof
106.84%.C.TheforeignexchangebusinessamountedtoUS$69.688billion,foranachievementrateof95.46%.D.ThesecuritiesbrokeragebusinessamountedtoNT$291.045billion,foranachievementrateof104.58%.
(5) Revenues, Expenditures, and ProfitabilityA.Net incomefor2018amounted toNT$23.026billion;baddebtexpense,commitmentandprovision for
guaranteed liabilities totaledNT$794million;operatingexpenseswereNT$13.034billion;before-taxnetincomefromcontinuingoperationswasNT$9.198billion;netprofitaftertaxwasNT$7.641billion;returnonassetsratio(aftertax)amountedto0.48%;returnonequityratio(aftertax)amountedto9.51%;netprofitmargin(aftertax)was33.18%;andearningspershare(aftertax)wasNT$1.19.
B.Net incomebefore taxes (excludingprovisions) in2018amounted toNT$9.992billion,an increaseofNT$1.093billionover2017.NT$794millionwasallocatedasallowanceforbaddebtsinordertostrengthenriskappetite.Before-taxnetprofit for2018amountedtoNT$9.198billion,an increaseofNT$3.327billionover2017,primarilyduetogrowthindepositsandloans,anincreaseinnetinterestincome,anincreaseintheprofitorlossoftheinvestmentsinfinancialcommodities,andadecreaseinallowancesforbaddebts.
C.Thenon-performingloanratioattheendof2018stoodat0.30%,areductionof0.03%comparedwiththeendof2017;andthebad-debtcoverageratiowas394.08%,anincreaseof66.51%overtheendof2017.
(6) Research and DevelopmentA.EstablishmentofanExclusiveUnitforIndustryResearch
a.Atotalof174 industryanalysisreportswerewrittenandpublished in theBank'sE-Library in2018forcolleaguestoperuse.
b.Eliteprofessionalsfromindustry,government,andacademiaareinvitedtospeakonanirregularbasistohelptheBank'semployeesunderstandthelatesttrendsinindustrialdevelopment.
B.EncouragementofInnovationandProfessionalisminLinewithBusinessDevelopmentNeeds Business lecturesareheldonascheduledbasisandarichvarietyofdigital learningcoursesareoffered
toencourageemployees toengage in furtheron-the-jobstudiesandabsorbnewknowledge thatwillstrengthentheircompetitivenessandenhancetheirprofessionalknow-how.
2. Business Plans for 2019(1) Operating Directions and Policies
Facinganupsurgeoffintechandafinancialenvironmentwith increasingcompetition, theBankwilladhereto itscorevalueofSMESpecializedBankandutilize the fouraspectsof "Learning&Growth," "InternalProcedures,""Customers,"and"Finance"onthestrategymapwithabottom-upapproach,tocreateastrategicstructurewithspecifieddirectionsandcentralizedresources.Furthermore, in linewith themediumto longtermdevelopmentstrategiesplannedbytheStrategyDevelopmentCommittee,theBankwillachieveitsgoalofbecomingapremiumbankwithcomprehensive financialservicesbyrealizingouroperatingconceptof"Progress,Efficiency,andResponsibility."
A.Learning&Growtha.Improvetheprofessionalcompetenciesofouremployees:Enhancecultivationofprofessional talent fordigitalfinanceandinternationalfinance;valueprofessionalpersonnelforSMEs;strengthenmanagementandtalentcultivationforcriticalposts;establishatalentdatabasebycheckingthroughthecorehumanresources.
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b.Cultivatekeypersonnel:Develop the innovativecapacitiesofkeypersonnel throughrecruitmentandtrainingandexecutecustomer-orientedservicesandproductdevelopmentstrategies.
c.Optimize the labor structure:Revitalize retiredhuman resources toenhance the inheritanceofexperience;connectwith the tertiaryeducationsector for industry-academiacooperation;diversifyemploymentchannels;recruitsuitablepersonneltoreduceturnover.
d.Improve theperformanceof informationsystems: Increase investment in ITbuildingand integrate itcloselywithourbusiness;enhancetheoverallefficiencyoftheinformationsystem;improvediversityandinnovativecapacitiesofourITteam;reinforcethecultivationandmotivationofkeyITpersonneltolayasolidfoundationforinformationtechnology.
e.Enhancecybersecuritydefenseandmonitoringcapacity:TheBankestablished its cybersecuritymanagementsystemandmaintenanceplanandcontinues toorganize itscybersecurityupgradeandimprovementmeasures,aswellasenhancingcybersecuritytrainingtoreinforcecybersecurityprotectionabilityandrealizecybersecuritycompliance.
f. Optimizetheaccountabilitymechanism:Enhancetheleadingcapacitiesofthemanagementteamtoformtheorganizationandvaluethatallowsourfellowcolleaguestointernalizeitastheirmission,vision,andcorevalues,soastostrivetowardthegoaloftheBank'ssustainabledevelopment.
g.Realizethecorporatecultureof learningandsharing:Builda"learning"experienceinheritancesystembasedontheconceptof"learningbydoinganddoingbylearning"andencourageinternalinnovationbyyoungemployeestoinvigoratecorporatehumanresources.
B. InternalProceduresa.Improve themanagementbyobjectives:Establish thegoal through thePDCAcycleand realize theexecution,optimizetheevaluationmanagementsystemandreinforcetheconnectionbetweenevaluationandrewardstostimulateboostedperformance.
b.Optimize theprocedures forbetterefficiency:Value themanagement for the internalandoperatingprocess,regularlyexaminetheSOPforcontinuouscreationforthebestworkingprocess,andutilizetheinformationsystemtoassistinthemanualexamination,improvingefficiency.
c.Enhanceriskmanagement: Improveassetqualityandcoverage forallowance forbaddebts throughunderstanding,managingandreducingrisks,andenhancingriskcontrol.
d.Adoptintegratedmarketingtoincreasecustomercontribution:Integratemarketingresourcestoincreasedealingswithcustomers, increaseoverallcustomercontribution,andprovidecomprehensivefinancialservicesaccordingtotherequirementsforthebusinessdevelopmentofcustomers.
e.Providepremiumservices tobuildcustomer loyalty:Bearingcustomers' interests inmind,designcomprehensive financialservicesbasedoncustomers' requirements tomeet theirexpectationsanddemands,inturnbuildingcustomerloyalty.
f. Strengthencustomer relationshipswith thesecondgenerationupon thesuccessionof the familybusiness:Strengthenthecustomerrelationshipwith theyoungergenerationor thesecondgenerationupon thesuccessionof the familybusiness to improveSMEcustomers' support to theBankaftergenerationalchanges.
g.Adoptaclicks-and-mortarmethod to reinforcedigital financing:Adopt innovative thinking toenhancefinancialproductsandservices,optimizethetradingenvironmentfortheclicks-and-mortarchannel,andreinforcethedigitalfinanciallandscape.
h.Differentiatedproductsandmarketing:ApplyBigDataanalysistounderstandcustomerbehaviorpatternstoprovidecustomizedservicesandprecisemarketingservices.
i. Adheretorigorouscompliance:Enhancelegalcomplianceanddulycomplywiththemonitoringmeasuresof thecompetentauthorities;upholdprovisionsforanti-money launderingandcombatingthefinancingof terrorism; implementwhistle-blowerprotectionandupholdcustomer interests; thereby formingacorporateculturethatprioritizeslegalcompliance.
j. Strengthencorporategovernance:ImproveDirectors'functions,corporategovernancemechanisms,andoperationsoffunctionalcommittees;anddisclosematerialinformationregardingcorporategovernancetoimprovetransparencyforinformationdisclosure.
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k.Fulfillcorporatesocialresponsibility:Carefordisadvantagedgroups;participate incharitableactivities;attach importancetoenvironmentalprotection;and internalize the fulfilmentofsocial responsibility tofollowthecorporatespiritoftheBankregardingourprimarybusiness.
C. Customersa.Improvechannel servicequalityand integratecustomerviews fromall channels:Adjust channelpositioningaccordingtothebusinessrequirements;improvethevalueofphysicalchannels;expandtheservicescopeforchannels;andestablishadatamarketwiththecross-businessomnidirectionalsingleviewofcustomers.Thisshallbedonesoastofullypresentcustomerpreferencesandservicechannels,optimizingserviceandexperiencesforcustomers.
b.Focuson thenichemarketofSMEsandparticipate inCSRawards:SpecifypositioningasanSMEspecializedbank, focusingonthecorebusinessofSMEs,shapingthebrand imageofaprofessionalbank,andproactivelyparticipatinginrelevantCSRawardstodevelopaprofessionalimage,includingtheTCSATaiwanCorporateSustainabilityAwardsandElitesAward.
c.Enhancewealthmanagement services and gain trust from customers:Develop smartwealthmanagement;provideprofessionalservicesanddiversifiedwealthmanagementproducts tosatisfycustomers'demand;undertakedeep-rootedsupportforinvestmentanalysisinordertoprovidefinancialplanningservicesforownersandhigh-assetcustomers.
D.Financea.Increaseoperatingperformanceand take riskmanagement intoaccount:Expandoperatingscale,increasetheprofitmarginsofoverseasbranches,improveinterestratesanddiversifytheincomesourcesofservicechargestoenhanceprofitability.
b.Enhancecapitalandupholdshareholders' interests:Complywith themonitoring requirementsof thecompetentauthority regardingauthorizedcapital;ensureahealthycapitalstructureand thegoalofoptimizedresourceallocation;strengthentheriskappetitetoexpandgrowthofoperatingincome;achievethegoalofmaximizedshareholders'value.
E.Complywithmedium to long termdevelopment strategyasplannedby theStrategicDevelopmentCommitteea.Continuetocarryoutchanneladjustments; focusonthedevelopmentof thecorebusiness;strengthenthevalueofphysicalchannelstocorrespondtothemissionoftheBanktoprovideservicestoSMEsandtherequirementsformediumtolongtermbusinessdevelopment.
b.ImprovethefunctionsofRegionalOperationCentersandadjustthefunctionalauthorityofbranchesforemployeesforproperallocationofemployees.
c. Improve financeconsulting forstart-upandmicro-corporateclientsandassist in inheritancebetweengenerationsforSMEs.
(2) Business TargetsTogiveequalweight to theprotectionofshareholder interests, improvementof thecapitalstructure,andenhancementofassetquality,theBankhassetthefollowingtargetsinconsiderationoftheeconomicgrowthforecastoftheDirectorateGeneralofBudget,AccountingandStatisticsfor2019.
A.Annualaveragedepositbalance:NT$1,477.827billion.B.Annualaveragebalanceofloansoutstanding:NT$1,155.93billion.C.Totalforeignexchangetransactions:US$74.003billion.
3. Future Development Strategies
(1) Turn thecorporateculturearound,keeppacewith theongoingchanges,createacultureofaccountability,andfollowthroughwiththeimplementation.
(2) Highlightthebrandimageofaspecializedbank,enhancethepolicyfunctionoftheprofessionalbank,andstrengthentheSMEfinancingsystemwithjointeffortsoftheBankandtheSmallandMediumEnterpriseCreditGuaranteeFundofTaiwan.
12 Taiwan Business Bank Annual Report 2018
(3) Keepabreast thetrend in thesociety todevelop itsbusiness,providecustomer-orientedandfeatured financialproducts/financialservices,andvalue thesuccessionofgenerations toimprovecustomertrusts.
(4) Leverageonthebankingbusinessasitsstartingpoint,careforsocialissuesandpublicwelfare,andimplementcorporatesocialresponsibilities.
(5) Reinforce theoperating efficiency of all business groups through fine adjustments onorganizationormergesofbusinesses.
(6) Continue to improvee-bankingservicesandupgrade informationsystem,optimize internalprocedurestosupportvariousbusinessdevelopment.
(7) Cultivatedigitalizedandinternationalizedtalents,optimizehumanresourcesstructure,promotethecorporatecultureof"learningandsharing"throughtraining,andinturnsimproveemployees'loyalty.
(8) Improve theoptimal resourceallocation throughassetsactivation,andperformcashcapitalincreasetostrengthenourcapitalstructureinduecourse.
(9) Formacorporateculturethatprioritizeslegalcompliance,reinforceourriskcontrolandincreaseassetsquality,andstrengthenthethreelinesofdefenseforinternalcontrol.
4. Influences from the external competitive environment, legal environment, and the overall economy(1) External competitive environment
A.Impactsofpureonlinebankingonphysicalbanksa.Pureonlinebankingrefers to theexistenceofonly theheadofficeandcustomerservicecenterwithnophysicalbranchesorATMstoprovidefinancialservicesforaccountopening,depositing, transferoftransactions,credit loans,or investmentandwealthmanagementundertakenexclusivelyonline.Theoperatingcostforpureonlinebankingisrelativelylow;however,therequirementsforinformationsecurityremainhigh.Therefore,it isestimatedthatitmaydivideupthepartialconsumerfinancialmarketintheshortterm.However,itwouldbehardtoenterbusinessesinvolvingalargeamountofloanssuchasrealestatecreditandcorporatefinancing.
b.Businessesthatmaybecarriedoutbypureonlinebankingmaybeperformedbyonlinebankingservicesprovidedbygeneralbanks.Facingthechallenges imposedbypureonlinebanking, theBankwill fullyutilize fintech tomakeearly responses, including the transformationofphysicalbranchesaswellascontinualdevelopmentandoptimizationoftheonlinebankingbusiness.
B.Effectsfromopenbankinga.Openbankingmeans that,with thepriorconsent fromcustomers, theBankmayshare thecustomerdatawiththirdpartiesthroughdigitalconnectionmethodssuchasAPI,allowingcompaniesbeyondthescopeofthefinancialindustry(i.e.,technologycompanies,e-commerce,e-payment)tojointhefinancialbusinessecologyandutilizesuchresourcestodevelopinnovativeanddiverseservicesforconsumers.
b.TheBankwillopenup financial informationregardingcurrencyratesand interest rates to third-partycompanies forconnectionunder regulationsprescribedby theBankingAssociation.Also,within thepermissiblescopeoflawsandregulations,theBankwillcarryoutcross-fieldcooperationwithe-commerceande-paymentcompaniestoprovidemorehumanizedcommoditiesandgetclosertothepublicfinancesoastorealizeinclusivefinance.
(2) Regulatory EnvironmentA.Correspondingstrategiesof theBankuponthepromulgationof theCyberSecurityManagementActon
June6,2018:
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a.Established thecompetent informationsecuritydepartment (InformationSecurityDepartment)onSeptember1,2018, to takechargeof theplanning,monitoring,andexecutionof informationsecuritymanagement operations.CyberSecurityManagementPolicy andCyberSecurityManagementCommitteewerealsoestablishedinOctober2018torespondtotheoverallmanagement
b.In2019, theBankwillestablishacybersecuritymanagementandmaintenanceplanandsetup thecybersecurityreporting,countermeasures,anddrillssystemstoensurethesecurityofcybersystemsandinformationassetsoftheBank,optimizetheoverallcybersecuritystructureandreducetheoperatingrisksoftheBank.Informationsecurityinsurancewasplannedfortheremainingrisks,andtheBankiscurrentlylookingforsuitablecybersecurityinsuranceproductsfortheBank.
B.AccordingtotherequirementsunderArticle88oftheIncomeTaxAct,beforetransferringtheestatetotheadministrator,thewithholdingstatementmaybewaived.Uponthetransferofestatesbytheadministrator,theactualsuccessororthejuridicalpersonforremainingassetsshallcompletethewithholdingstatementtocarryoutthetax-inheritancereportingtasks.TheprogramoftheprojecthadbeencompletedandlaunchedonFebruary1,2019toavoidaffectingthereportingofinterestincome.
(3) Overall Operating EnvironmentGiventurbulence intheglobalfinancialmarkets,alongsideasignificantslowdownineconomicgrowth inthemajorcountries inEurope,JapanormainlandChina,majorprojections indicatethatglobaleconomicgrowthwillundergoadownwardadjustment in2019.However, theexpectedreductionhasremained insignificant,primarilydue to thedecrease inexpectedgrowth in theEurozone.Furthermore, it isexpected that theUSwillexperienceaslowdownineconomicgrowthuponcancelingitsfiscal incentives;whereasthedownturningrowth inmainlandChinamaybefaster thanexpected.Overall, it isexpectedthat theglobaleconomymayexperiencemoderategrowth.
5. Results of Latest Credit Rating
Date of Rating Rating InstitutionRatings
OutlookLong-term Credit Short-term Credit
2019.1.18 TaiwanRatings twAA- twA-1+ Stable
2019.1.18 Standard&Poor's BBB+ A-2 Stable
14 Taiwan Business Bank Annual Report 2018
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Bank Profile
II
1. Establishment and HistoryTheforerunnersoftheTaiwanBusinessBankweretwoprivatecooperativesavingsinstitutions,oneestablishedinTaipeiinJuneof1915andtheotherinTainanthefollowingmonth.TheTaipeiinstitutionwasmergedintoanothercompanyin1920andtheTainaninstitutionwasreorganizedunderadifferentnamein1926.
Following therestorationofTaiwan to theRepublicofChinaonOct.25,1945, these twosavings institutions,alongwithtwoothers,weretakenoverbytheTaiwanProvincialGovernmentand,onSep.1,1946werecombinedandreorganized intotheTaiwanMutualFinancialCo.OnMay31thefollowingyear, thisnewfinancial institutionabsorbedtheTokiwaRealEstateCo.,bringing itscapitalizationtoNT$10million. Itsnamewaschangedto theTaiwanProvincialLoansandSavingsCo.onJune1,1947andagaintotheTaiwanMutualLoansandSavingsCo.inJanuary1948.
ThegovernmentmovedtopromoteTaiwan'seconomicdevelopmentandboostthegrowthofitssmallandmediumenterprises(SMEs) in1975byrevising theBankingLawandwriting inanadditionalprovision foraspecializedSMEbank. In linewith thisgovernmentpolicy, theTaiwanMutualLoansandSavingsCo.wasreorganized intotheMediumBusinessBankofTaiwan(latertobeknownastheTaiwanBusinessBank,orTBB)onJuly1,1976,whereupon itbecameaspecializedbankchargedwith theprovisionof financialassistanceandguidance toSMEs.IthasbeencultivatingtheSMEfinancialservicesfieldnowformorethan40years.Later,tocopewiththeliberalizedand internationalized financialenvironment,and toconformto thegovernment'svisionofpromotingTaiwan tobecomeAsia-PacificRegionalOperationsCenter, theTBBwas transformed intoaprivatebankonJanuary22,1998andenteredintoawholenewera.
At the timeof theTBB'sreorganization in1976, ithadacapitalizationofNT$500million,50branches,and58sub-branches.Tobuildup theBank'soperatingcapitalandstrengthen itsoperatingstructure, repeatedcapitalincreaseshavebroughttotalcapitalizationtoNT$63,938.80milliontoday.TheBank'sstructuralframeworkhasalsobeenreadjustedconstantlyinresponsetochangesinthefinancialenvironmentandinbusinessneeds.AnAuditingDepartmentandaSecretarialDepartmentweresetupundertheBoardofDirectorsintheheadquarters.ApartfromComplianceDepartment,theBank'smanagementunitsinclude19departmentsunderthreemajorbusinessgroups,onedevelopmentcenterandtwomanagementcenters.TheBankhas125domesticbusinessunits(includingtheBankingDepartment)andanOffshoreBankingUnit,andalsooperateseightoverseasbranches, includingHongKongBranch,LosAngelesBranch,NewYorkBranch,SydneyBranch,BrisbaneBranch,ShanghaiBranch,WuhanBranchandTokyoBranch,alongwiththeYangonRepresentativeOfficeinMyanmar.RegionalOperationCentersweresetup tohandlebusinessdevelopmentandsupervision,centralizedbusinessmanagement,operationalservices,andotherbusinesssupport functions inorder toenhancebusinesspromotioncapabilityandreinforceassetqualitycontrol.Inaddition,DomesticProcessingCenterswereestablishedtoupgradeoperatingperformancethroughthecentralizedhandlingofdomesticremittances,billscollectionandwithdrawal.Inaddition,the“InnovativeFinanceProjectOffice”wasestablishedtostrengthenthesupportsforimportantloanstothegreenfinance,urbanrenewalandculturalinnovationindustries.TheCustomerServiceCenterwasalsoestablishedtotakechargeofthecustomeradvisoryservices.
Taiwan Business Bank Annual Report 201816
Executive Vice President
Chang-Yi Chen
Executive Vice President
Chih-Chien Chang
Executive Vice President
Yu-Min Chang
Chief Auditor
Chiu-Yen Chen
Executive Vice President
Gordon Y. Wang
Executive Vice President(Chief Compliance Officer)
Mei-Yeh Wu
2. Bank M&A, reinvestment in related enterprises, and reorganization in 2018 and to the end of February 2019TheBankcarriedoutnoM&Aorreorganizationduringthisperiod.Reinvestmentwasmadein100%ownershipinfiveenterprises—theTaiwanBusinessBankInsuranceAgencyCo.,Ltd,TaiwanBusinessBankPropertyInsuranceAgencyCo.,Ltd,TBB InternationalLeasingCo.,LtdandTBB(Cambodia)Microfinance InstituionPLC,TBBVentureCapitalCo.,Ltd.—andtheTBBInternationalLeasingCo.,Ltdreinvestedin100%ownershipinafirm,theTaiwanBusinessBankInternationalLeasingCo.,Ltd.
3. Membership in a designated financing hold company: None.
4. Major exchanges or transfers of shares by directors, supervisors, and others required to report shareholding under Article 25, Paragraph 3 of the Banking Law in 2018 and to the end of February 2019: None
5. Major changes in operating rights, operating methods, or business content; other major events of sufficient import to affect shareholder rights; and their influence on the Bank: None.
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Taiwan Business Bank Annual Report 201818
1. Organization
2. Directors and Major Managers
3. Operations of Corporate Governance
4. Accounting Expenses
5. Information on switching CPA
6. Bank's Chairman, President, or any manager in charge of finance or accounting matters who has, in the most recent year, held a position at the accounting firm of its CPA or at an affiliated enterprise
7. Changes in Shareholdings of Directors, Executive Officers, and Shareholders Conform to the Regulations Governing the Same Person or Same Concerned Party Holding the Issued Shares with Voting Rights over a Particular Ratio of a Bank, Article 11
8. Information Disclosing the Relationship among Top Ten Shareholders in the Relationship of Related Parties or Spouses, Blood Relatives within the Second Degree of Kinship
9. The joint venture directly or indirectly controlled and managed by Directors, President, Executive Vice Presidents and General Manager of each division or branch
Corporate Governance Report
III
192137565757
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63
1. Organization
(1) Organization Chart
Loan Supervision Committee
NPLManagementCommittee
TrustAssetEvaluationCommittee
Personnel Evaluation Committee
ITPlanning&DevelopmentCommittee
CyberSecurityManagementCommittee
StrategyDevelopmentCommittee
AuditCommittee
RemunerationCommittee
CRS Committee
Feb.28,2019
人人人人人
人人人人人人
人人人人人人
人人人人人人人
人人人人人人人
人人人人人
人人人
人人人
人人人人人
人人人人人
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人人人人人
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人人人
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人人人人人人人人人人人人
人人人人人人
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人人人
ComplianceAffairs
ALMCommittee
BusinessStrategyCommittee
AMLandCFTCommittee
RiskManagementCommittee
ComplianceDept.
RiskManagementCenter
OperatingDevelopment Center
TreasuryGroup
CorporateBankingGroup
PersonalBankingGroup
人人人ChiefAuditor
CorporateBankingDept.
AuditingDept.
PersonalBankingDept.
CreditCardDept.
WealthManagementDept.
SecuritiesDept.
Trust Dept.
SecretarialDept.
TreasuryDept.
RiskManagementDept.
OverdueLoan&Control Dept.
CreditInvestigationDept.
Loan SupervisionDept.
InformationTechnologyDept.
BusinessDevelopment Dept.
AccountingDept.
AdministrationManagement
Dept.
HumanResourcesDept.
BankingDept.DomesticBranches
InternationalBankingDept.
OffshoreBankingBranch
OverseasBranches
SecuritiesBranches
AdministrationManagementCenter
Personal Information ProtectionManagement
Committee
Shareholders'Meeting
BoardofDirectors PresidentChairmanof
theBoard
ExecutiveVicePresident
ChiefComplianceOffcer
DigitalBankingDept.
人人人人人Informationsecurity
Dept.
人人人InnovativeFinanceProjectOffice
人人人人人DomesticProcessingCenter
CustomerServiceCenter
Regional Operation Dept.
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(2) Operations of Major TBB UnitsA.CorporateBankingGroup Thisunithandlesfinancialservicesforcorporatecustomers, includingbusinessplanning,promotion,and
improvement in respect to loanproducts, forexproducts,andcorporate financialplanningproducts. Itunderstandscustomers'needsandproactivelycarriesoutmarketing,and isresponsiblefordevelopmentandserviceinregardtotheGroup'sproductsandcustomersaswellasforimprovementoftheBank'sassetquality,operatingincome,andprofit.TheCorporateBankingDept.andInternationalBankingDept.operateundertheCorporateBankingGroup.
B.PersonalBankingGroup Thisunithandlesplanning,promotion,and improvementof theBank'spersonal loanproducts, financial
planning forcustomers,andmarketingservices for financialplanningproducts. Itcarriesoutproactivemarketingbasedonanunderstandingofcustomers'needs, is responsible fordevelopmentandserviceinregardtotheGroup'sproductsandcustomers,andmaintains improvementof theBank'sassetquality,operating income,andprofit.ThePersonalBankingDept.,CreditCardDept.,WealthManagementDept.,SecuritiesDept,andTrustDept.operateunderthePersonalBankingGroup.
C.TreasuryGroup TheTreasuryGrouphandlesplanning,promotion,and improvementof theBank's financialbusinesses,
andisresponsiblefordevelopmentandserviceinregardtotheGroup'sproductsandcustomersaswellasformaintaining improvementof theBank'sassetquality,operating income,andprofit.TheTreasuryDept.operatesundertheTreasuryGroup.
D.RiskManagementCenter TheRiskManagementCenterhandlesriskcontrol,maintenanceof thequalityof theBank's loanassets,
and investigationandreviewof loancasesandproducts,economicand financial researchand industryinvestigation,collectionofoverdue loansand informationsecuritymatters.TheLoanSupervisionDept.,CreditInvestigationDept.,OverdueLoan&ControlDept.,RiskManagementDept.andInformationSecurityDept.operateundertheRiskManagementCenter.
E. Operating Development Center TheOperatingDevelopmentCenter ischargedwithbank-wideperformanceanalysis,managementand
planningforoperationalmanagementandinformationoperations,provisionoffullandnecessarysupportforbusinessdevelopment,andsimplificationoftheplanningprocess,soastoachieveoperationalcentralizationandupgradeoperationalefficiency.TheCenteralsohandlesplanningand implementationofbank-wideoperatingstrategy formulationandpublic relations.TheBusinessDevelopmentDept.and InformationTechnologyDept.operateundertheCenter.
F. AdministrationManagementCenter ThisCenterhandlestheplanningandimplementationofdocumentadministration,confidentialmatters,legal
affairs,humanresources,andaccountingsystems,aswellasothermattersnotassignedtootherunits.TheHumanResourcesDept.,AdministrationManagementDept.andAccountingDept.operateundertheCenter.
G.ComplianceAffairs ComplianceDept.handlestheplanning,managementandimplementationoflegalcompliancesystemand
AML&CFTrelatedmatters.
2020 Taiwan Business Bank Annual Report 2018
2. Directors and Major Managers
(1) Board of DirectorsA.BoardofDirectors December 31, 2018
Title Nationality Name GenderDate
Elected(yy/mm)
Tenure(15th)
InitialInauguration Date
ShareholdingOn Inauguration Current Shareholding
ShareholdingBy Self, Spouse &
Minor Children
Shareholding Under Other's
Title Prime Experience & EducationCurrent Positions in the Bank and
Other Companies
Being the Spouse or Relative within 2 Tiers of Other
Managers, Directors and Supervisors
Shares % Shares % Shares % Shares % Title Name Relationship
Chairman(MinistryofFinanceRepresentative)
R.O.C. Bor-YiHuang M JUN29,
2018
JUN29,2018ToJUN28,2021
NOV24,2017 135,631,247 2,21 141,056,496 2,21 320,400 0 0 0
EducationPh.D.,DepartmentofEconomics,NationalTaipeiUniversityExperiencePresident,TaiwanAcademyofBankingandFinanceSupervisor,EntieCommercialBankExecutiveDirector,BankOFKoahsiungDirector,E.SUNFHCExecutiveDirector,SmallandMediumEnterpriseCreditGuaranteeFundofTaiwanPresident,E.SUNSecuritiesVicePresident,TimesSecuritiesDirectorofCollegeofManagement,DeanofAcademicAffairs,DeanofStudentAffairs,ShihChienUniversity
Supervisor,TaiwanAssetManagementCorporationSupervisor,TaiwanUrbanRegeneration&FinancialServicesCo.Ltd.Director,TaiwanAcademyofBankingandFinance
None None None
ManagingDirectorandPresident(MinistryofFinanceRepresentative)
R.O.C. Chien-AnShih M JUN29,
2018
JUN29,2018ToJUN28,2021
MAR21,2018 135,631,247 2,21 141,056,496 2,21 416,000 0 0 0
EducationMBA,SaginawValleyStateUniversityofMichigan,USAExperiencePresident,ChangHwaBankExecutiveVicePresident,ChangHwaBankSeniorVicePresident&DivisionHead,TreasuryDivision,ChangHwaBankSeniorVicePresident&DivisionHead,DomesticBanlkingDivision,ChangHwabankVicePresident&ChiefRepresentative,KunshanRepresentativeOffice,ChangHwaBankVicePresident&AssistantGeneralManager,OffshoreBankingBranch,ChangHwaBank
President,TaiwanBusinessBankDirector,SunsinoDevelopment AssociateInc.Director,Small&MediumEnterpriseCreditGuaranteeFundofTaiwan
None None None
ManagingDirector(BankofTaiwanRepresentative)
R.O.C. Li-LingLin F JUN29,2018
JUN29,2018ToJUN28,2021
OCT19,2012 1,058,933,860 17,22 1,101,291,214 17,22 0 0 0 0
EducationB.A.,MoneyandBanking,NationalChengchiUniversityExperience13th&14thManagingDirector,TaiwanBusinessBankManager,DepartmentofCorporateFinance,BankOfTaiwanManager,DepartmentofRiskManagement,BankOfTaiwanManager,DunhuaBranch,BankOfTaiwanDeputyGeneralmanager,DepartmentofCorporateFinance,BankOfTaiwan
ExecutiveVicePresident,BANKOFTAIWAN
None None None
ManagingDirecto(IndependentDirector)
R.O.C. Xin-WuLin M JUN29,2018
JUN29,2018ToJUN28,2021
JUN29,2018 0 0 0 0 0 0 0 0
EducationPH.D.,DepartmentofEconomics,NationalTaiwanUniversityExperienceDirector(Independent),LandBankofTaiwan6thMember,FairTradeCommssionAntitrustfollowsthetopexecutive,AUOptronicsCorporationFull-timeresearcher&Director,ResearchDivisionⅢ,TaiwanInstituteofEconomicResearchFull-timeassociateresearcher&Director,ResearchDivisionⅢ,TaiwanInstituteofEconomicResearch
Full-timeResearcher&Director,ResearchDivision Ⅲ,TaiwanInstituteofEconomicResearchIndependentDirector,FitTechCo.,Ltd.
None None None
ManagingDirector(MinistryofFinanceRepresentative)
R.O.C. Lien-WenLiang F JUN29,
2018
JUN29,2018ToJUN28,2021
JUN29,2018 135,631,247 2,21 141,056,496 2,21 0 0 0 0
EducationPH.D.,DepartmentofAgriculturaleconomics,HokkaidoUniversity,JPNExperienceAssistantProfessor,DepartmentofFinanceandbanking,ShihChienUniversityAssistantProfessor,DepartmentofFinanceandCooperativeEconomics,NationalTaipeiUniversityViceDirector,FinancialResearchInstitute,TaiwanAcademyofBankingandFinanceFull-TimeAssociateResearcher,FinancialResearchinstitute,TaiwanAcademyofBankingandFinanceAssistantResearcher,BasicFinancialResearchandTrainingCenterLecturer,DepartmentofEconomics,FuJenCatholicUniversityColumnist,CommercialTimes
AssociateProfessor,Department of FinanceandResearch,ChineseCultureUniversity
None None None
Director(MinistryofFinanceRepresentative)
R.O.C. Shiu-YenLin F JUN29,
2018
JUN29,2018ToJUN28,2021
FEB27,2014 135,631,247 2,21 141,056,496 2,21 0 0 0 0
EducationM.S.,DepartmentofEconomics,NationalTaiwanUniversityExperience13th&14thManagingDirector,TaiwanBusinessBankChiefSecretary,NationalTreasuryAdministration,MinistryofFinanceTeamleader,NationalTreasuryAdministration,MinistryofFinanceDeputyhead,NationalTreasuryAdministration,MinistryofFinance
Deputydirector,NationalTreasuryAdministration,MinistryofFinance
None None None
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Title Nationality Name GenderDate
Elected(yy/mm)
Tenure(15th)
InitialInauguration Date
ShareholdingOn Inauguration Current Shareholding
ShareholdingBy Self, Spouse &
Minor Children
Shareholding Under Other's
Title Prime Experience & EducationCurrent Positions in the Bank and
Other Companies
Being the Spouse or Relative within 2 Tiers of Other
Managers, Directors and Supervisors
Shares % Shares % Shares % Shares % Title Name Relationship
Director(MinistryofFinanceRepresentative)
R.O.C. Wen-ChiehWang M JUN29,
2018
JUN29,2018ToJUN28,2021
JUN10,2014 135,631,247 2,21 141,056,496 2,21 0 0 0 0
EducationPh.D.,CollegeofLaw,NationalChengchiUniversityExperience13th,14thManagingDirector,TaiwanBusinessBankVisitingscholar,CollegeofLaw,NationalHarvardUniversityDirector,CollegeofLaw,NationalChengchiUniversityChiefSecretary,Secretariat,NationalChengchiUniversityDirector,TheInstituteofLawandInterdisciplinayStudies,ChengchiUniversity
ExecutiveVicePresident,NationalChengchiUniversity
None None None
Director(MinistryofFinanceRepresentative)
R.O.C. Hung-ShengYu M JUN29,
2018
JUN29,2018ToJUN28,2021
JUL1,2013(Note)
135,631,247 2,21 141,056,496 2,21 23,617 0 0 0
EducationM.S.,ExecutiveMasterofBusinessAdministration,LingTungUniversityExperience13th&14thDirector,TaiwanBusinessBank1THto6THMember&Director&ManagingDirector,TBBIndustryUnionSupervisor,TaiwanFederationofFinancialUions3THMember,LaborDisputeArbitrationCommittee,MinistryofLaborMember,BasicSalaryReviewCommittee,MinistryofLaborManagingDirector,TaiwanConfedertionofTradeUnionsSupervisor,TaiwanFederationofLabor
Chairman,TBBIndustryUnion None None None
Director(BankofTaiwanRepresentative)
R.O.C. Pei-MingHuang M JUN29,
2018
JUN29,2018ToJUN28,2021
JUL16,2011(Note)
1,058,933,860 17,22 1,101,291,214 17,22 0 0 0 0
EducationB.A.,DepartmentofBusiness,NationalOpenUniversityExperienceDirector,DepartmentofHumanResourceste,BankOfTaiwanManager,NanXinZhuangBranch,BankOfTaiwanManager,ChongsinBranch,BankOfTaiwanDirector,TaiwanFire&MarineInsuranceCompany,Ltd.13th&14thDirector,TaiwanBusinessBank
Director,Department ofHumanResourceste,BankOfTaiwan
None None None
Director(BankofTaiwanRepresentative)
R.O.C.Cheng-ChuanKang
M JUN29,2018
JUN29,2018ToJUN28,2021
JUN29,2018 1,058,933,860 17,22 1,101,291,214 17,22 0 0 0 0
EducationB.A.,DepartmentofStatistics,TamkangUniversityExperienceManager,DepartmentofCreditManagement,BankOfTaiwanManager,NaiHuBranch,BankOfTaiwanDeputyManager,DepartmentofPlanning,BankOfTaiwan
Manager,Department ofDomesticOperations,BankOfTaiwanSupervisor,TaiwanAssetManagementCorporation
None None None
Director(LandBankofTaiwanRepresentative)
R.O.C. Ying-MingHe M JUN29,
2018
JUN29,2018ToJUN28,2021
MAY23,2017 149,244,703 2,43 155,214,491 2,43 0 0 0 0
EducationB.A.,DepartmentofBusinessAdministration,ChineseCultureUniversityExperienceEVP&ChiefAuditor,LandBankOfTaiwanEVP&ChiefComplianceOfficer,LandBankOfTaiwanManager,DepartmentofCreditManagement,LandBankOfTaiwanManager,DepartmentofCreditReview,LandBankOfTaiwanManager,ChungHsiaoBranch,LandBankOfTaiwanManager,HanPingBranch,LandBankOfTaiwan
ExecutiveVicePresident,LandBankOfTaiwanDirector,AgriculturalCreditGuaranteeFund
None None None
Director(TBBIndustryUnionRepresentative)
R.O.C. Feng-YungLiu M JUN29,
2018
JUN29,2018ToJUN28,2021
JUN29,2018 2,376,684 0,04 3,555,207 0,04 28,118 0 0 0
EducationNationalTseng-WenHomeEconomics&CommercialVocationalHighSchoolExperienceMember,TBBIndustryUnionDirector,TBBIndustryUnionEmployee,TaiwanBusinessBank
ManagingDirector,TBBIndustryUnionEmployee,TaiwanBusinessBank
None None None
Director R.O.C. Che-NanWang M JUN29,
2018
JUN29,2018ToJUN28,2021
JUL22,2012 1,276,494 0,02 6,806,753 0,11 6,806,753 0,11 0 0
EducationB.A.,KindaiUniversity,JPNExperience13th&14thDirector,TaiwanBusinessBankMember,OverseasCommunityAffairsCouncil,RepublicofChinaDirector,TaichungCommercialBankCo.,Ltd
HonoraryPresidentoftheRepublicofChinaontheKindaiUniversityAdvisoryCommittee Member,Overseas CommunityAffairsCouncil,RepublicofChina
None None None
Director(IndependentDirector)
R.O.C. Jin-LongLiu M JUN29,
2018
JUN29,2018ToJUN28,2021
JUN29,2018 0 0 0 0 0 0 0 0
EducationPh.D.,DepartmentofEconomics,NorthCarolinaStateUniversity,USAExperienceAssociateProfessor,GrduateInstituteofIndustrialEconomics,NationalCentralUniversityDirector,GrduateInstituteofIndustrialEconomics,NationalCentralUniversityVisitingAssociateProfessor,DukeUniversityVisitingscholar,FoundationforScholarlyExchange
Professor,GraduateInstituteofIndustrialEconomics,NationalCentralUniversitySupervisor,IntegratedServiceTechnologyInc.
None None None
2222 Taiwan Business Bank Annual Report 2018
Title Nationality Name GenderDate
Elected(yy/mm)
Tenure(15th)
InitialInauguration Date
ShareholdingOn Inauguration Current Shareholding
ShareholdingBy Self, Spouse &
Minor Children
Shareholding Under Other's
Title Prime Experience & EducationCurrent Positions in the Bank and
Other Companies
Being the Spouse or Relative within 2 Tiers of Other
Managers, Directors and Supervisors
Shares % Shares % Shares % Shares % Title Name Relationship
Director(IndependentDirector)
R.O.C. Wei-ShengHuang M JUN29,
2018
JUN29,2018ToJUN28,2021
JUN29,2018 0 0 0 0 0 0 0 0
EducationTextileDivision,SouthernTaiwanUniversityofScienceandTechnology.ExperienceIndependentDirector,ChinaSteelCorporationChairman,Small&MediumEnterpriseCreditGuaranteeFundofTaiwanDirector,TaiwanSmall&MediumEnterpriseCounselingFoundationSupervisor,FirstFinancialHoldingCo.,Ltd.Supervisor,FirstCommercialBankCo.,Ltd.Chairman,YangshengKnittingCo.,Ltd.Chairman,WeifanglongCo.,Ltd.
Director,UUPONInc. None None None
Note: Pei-MingHuangPreviousterm:JUL16,2011toAUG22,2012(BankofTaiwanRepresentative) Hung-ShengYuPreviousterm:JUL1,2013toJUN30,2014(TBBIndustryUnionRepresentative)
B.MajorShareholdersofJuristicPersonShareholdersDecember 31, 2018
Juristic Person Shareholder Major Shareholders of Juristic Person Shareholders
MinistryofFinance GovernmentAgency
BankofTaiwan TaiwanFinancialHoldingCo.,Ltd.(100%)
LandBankofTaiwan MinistryofFinance(100%)
TBBIndustryUnion JuridicalAssociation
IndependentDirector Yaw-HueiHuang
C.MajorShareholdersofMajorJuristicPersonShareholdersoftheBankDecember 31, 2018
Juristic Person Shareholder Major Shareholders of Juristic Person Shareholders
TaiwanFinancialHoldingCo.,Ltd. MinistryofFinance(100%)
Juristic Person Shareholder Major Shareholders of Juristic Person Shareholders
TaiwanFinancialHoldingCo.,Ltd. MinistryofFinance(100%)
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D.ProfessionalKnowledgeandIndependenceofDirectors
Qualifications
Name
Qualifications (Note 1)
Independent Status (Note 2)
Number of Other Public Companies
Serving as anIndependent
DirectorA B C 1 2 3 4 5 6 7 8 9 10
Bor-YiHuang 0
Chien-AnShih 0
Li-LingLin 0
Xin-WuLin 1
Lien-WenLiang 0
Shiu-YenLin 0
Wen-ChiehWang 0
Hung-ShengYu 0
Cheng-ChuanKang 0
Pei-MingHuang 0
Ying-MingHe 0
Feng-YungLiu 0
Che-NanWang 0
Jin-LongLiu 0
Wei-ShengHuang 0
Note1: DirectorsandSupervisorsshallmeetoneof the followingprofessional requirements, togetherwithat least fiveyearworkexperience:
A. An instructororhigher inadepartmentofcommerce, law,finance,accountingorotheracademicdepartmentrelatedto thebankingbusinessinapublic/privatejuniorcollege,collegeoruniversity.
B. Ajudge,publicprosecutor,attorney,certifiedpublicaccountant,orotherprofessionalortechnicalspecialistwhohaspassedanationalexaminationandhasbeenawardedacertificateinaprofessionalnecessaryforthebankingbusiness.
C. Withworkexperience in the fieldsofcommerce, law, finance,accountingorotherprofessionnecessary for thebankingbusiness.
Note2:Duringthetwoyearsbeforebeingelectedorduringthetermofoffice,membersshallmeetthefollowingtermswith“”mark.(1) Neitheremployeesofthebanknoritsaffiliates.(2) Neitheradirectororasupervisorofthebanknoritsaffiliates.(Thisrestrictiondoesnotapplytoindependentdirectorpositions
inthebank,itsparentcompanyorsubsidiary,whichhavebeenappointedinaccordancewithSecuritiesandExchangeActorlawsoftheregisteredcountry.)
(3) Individualshareholderwhoholdsshares, togetherwith thoseheldbyhis/herspouse,minorchildren,orheldunderothers'names,inanaggregateamountof1%ormoreofthetotaloutstandingsharesofornaturalpersonswhorankamongthetop10shareholdersintermsofthesharevolumeheldareexcluded.
(4) Thespouseorrelativewithin theseconddegreeofkinship,or linealrelativewithin thethirddegreeofkinship,ofanyof thepersonsintheprecedingthreesubparagraphsareexcluded.
(5) Directors,supervisors,oremployeesofa juristicpersonshareholder thatdirectlyhold5%ormoreof the totaloutstandingsharesofthebankorranksamongthetop5juristicpersonshareholdersinthetermsofsharevolumeheldareexcluded.
(6) Directors,supervisors,themanagerialofficer,ortheshareholderholding5%ormoresharesofaspecificcompanyorinstitutionthatalsohavefinancialorbusinessdealingswiththebankareexcluded.
(7) Aprofessional,owner,partner,director,supervisor,or themanagerialofficerandhis/herspouseofasoleproprietorship,partnership,company,or institutionthatprovidescommercial, legal,financial,accountingorconsultingservicesto thebankor itsaffiliatesisexcluded.However,membersoftheRemunerationCommitteethat implementtheauthorityaccordingtotheArticle7oftheRegulationsGoverningtheAppointmentandExerciseofPowersbytheRemunerationCommitteeofaCompanyWhoseStockisListedontheStockExchangeorTradedOvertheCounterareincludedwithouttheabovementionedlimitation.
(8) Aspouseorrelativewithintheseconddegreeofkinshipamongdirectorsisexcluded.(9) AnyofthecircumstancesinthesubparagraphsofArticle30oftheCompanyActdoesn'thappen.(10) It isn't in thecapacityofagovernmentagency,a juristicpersonor its representative,asprovided in theArticle27of the
CompanyAct,thathasbeenelected.
2424 Taiwan Business Bank Annual Report 2018
E.Boarddiversitypolicyandimplementationa OnOct.25,2017,a resolutionwaspassedon the17thBoardMeetingof the14thBoard toamend"CorporateGovernancePrinciples,"andArticle34thereofspecifiedtheBoarddiversitypolicy.TheBankadoptedthecandidatenominationsystemfor theselectionof theBoardmembersaccording toArticle20oftheArticlesofAssociationoftheBankandcarriedoutnominationsandreviewonqualificationsofdirectorcandidatesaccordingtoArticle192-1oftheCompanyLaw.Aftertheinclusionintothelistofthedirectorcandidate,anelectionshallbecarriedoutaccordingtotheRegulationsGoverningtheElectionofDirectorsoftheBanktoensurethediversityandindependenceoftheBoard.
b Regardingthelistofthe15Boardmembersofthe15thBoard,therewere4directors(26.6%)whoareemployees,3independentdirectorswithjobtenurealllessthan3years(20%),3femaledirectors(20%)and12maledirectors(80%).Thereare6directorswith theiragerangingfrom50-60,8directorswiththeiragerangingfrom60-70,and1directorwithageabove70.Afteranassessment,all thedirectorsareexpertsinitemsofoperatingjudgment,operatingmanagement,risksmanagement,industrialknow-how, internationalmarket, leadership,anddecision-making.Bor-YiHuang,Chien-AnShih,Shiu-YenLin,Lien-WenLiang,Xin-WuLin,Jin-LongLiu,Hung-ShengYu,Li-LingLin,Pei-MingHuang,Ying-MingHe,Cheng-ChuanKang,Feng-YungLiu,Che-NanWang,andWei-ShengHuangspecialize inaccountingandfinancialanalysis;Wen-ChiehWangspecializes in legalaffairs.Regardingthediversityof theBoard, theBankhascompliedwithArticle34of theCodeofCorporateGovernancePracticesoftheBank.TheprofessionofdirectorsissufficienttohelpthenatureoftheBankasanSMESpecializedBankandcompliancewithgovernmentpolicies,soastopromotebusinessesofyoungentrepreneurshipand innovative financing,greenfinancing,culturalandcreative financing,senior financing,andurbanregenerationfinancing,fulfillingthecorporatesocialresponsibilities.
c ThediversitypolicyfortheBoardoftheBankhasbeendisclosedonthecorporatewebsiteoftheBankandtheMarketObservationPostSystem.
(2) Information of President, Executive Vice President, Vice President and Managers of Departments and Branches
December 31, 2018
Title Nationality Name Gender Effective
Date
Shareholding Amount
Shareholding by Spouse & Minor
Children
Shareholding Under Others'
Title Prime Experience & Education
Services Concurrently with the Other Campany
The Spouse or Relative within 2 Tiers of General Managers
Shares (%) Shares (%) Shares (%) Title Name Relation- ship
President R.O.C Chien-AnShih M 20180321 416,000 0 0 0 0 0MBA, SaginawValleyStateUniversityofMichigan,USA
Director,SunsinoDevelopmentAssociateInc.Director,Small&MediumEnterpriseCreditGuaranteeFundofTaiwan
None
ExecutiveVicePresident R.O.C Chang-YiChen M 20120824 505,908 0 6,414 0 0 0 BusinessAdministration,
NationalTaiwanUniversity
Chairman,TBB(Cambodia)MicrofinanceInstitutionPlcSupervisor,TaiwanBusinessBankInsuranceAgencyCo.,Ltd.Director,TaiwanBusinessBankInternationalLeasingCo.,Ltd.
None
ExecutiveVicePresident R.O.C Chih-ChienChang M 20130529 188,099 0 0 0 0 0
MBA, NationalTaiwanUniversityofScienceandTechnology
Chairman,TaiwanBusinessBankInsuranceAgencyCo.,Ltd.Chairman,TaiwanBusinessBankPropertyInsuranceAgencyCo.,Ltd.
None
ExecutiveVicePresident R.O.C Yi-YunWang M 20160101 207,405 0 0 0 0 0
MBA, UniversityofConnecticut,USA
Chairman,TBBInternationalLeasingCo.,Ltd.Director,TaiwanBusinessBankInsuranceAgencyCo.,Ltd.Chairman,TaiwanBusinessBankInternationalLeasingCo.,Ltd.Chairman,TBBVentureCapitalCo.,Ltd.
None
ExecutiveVicePresident R.O.C Mei-YehWu F 20160201 418,250 0 0 0 0 0
MBA, NationalTaiwanUniversityofScienceandTechnology
Director,TaiwanIncubatorSMEDevelopmentCorporationDirector,TaiwanFinancialAssetServiceCo.
None
ExecutiveVicePresident R.O.C Chun-ShengTseng M 20170930 182,696 0 0 0 0 0
MasterofBiotechnologyProcessDevelopmentManagement, NationalChin-YiUniversityofTechnology
None None
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Title Nationality Name Gender Effective
Date
Shareholding Amount
Shareholding by Spouse & Minor
Children
Shareholding Under Others'
Title Prime Experience & Education
Services Concurrently with the Other Campany
The Spouse or Relative within 2 Tiers of General Managers
Shares (%) Shares (%) Shares (%) Title Name Relation- ship
EVP&ChiefAuditor R.O.C Chiu-YenChen F 20160201 199,337 0 1,049 0 0 0 Statistics,
NationalChengchiUniversity None None
SVP&ChiefSecretary, SecretarialDept.
R.O.C Tseng-HsiangYi M 20180723 111,491 0 0 0 0 0IndustrialManagement,TaiwanUniversityofScienceAndTechnology
None None
SVP, Business Development Dept.
R.O.C Chang-YuLin M 20180723 194,931 0 0 0 0 0 Accounting, FuJenUniversity
Director,TaiwanBusinessBankInternationalLeasingCo.,Ltd.Director,TBB(Cambodia)MicrofinanceInstitutionPlcDirector,TBBVentureCapitalCo.,Ltd.
None
SVP, Loan Supervison Dept.
R.O.C Yu-MinChang M 20160715 158,198 0 4,422 0 0 0 MBA, TamkangUniversity
Director,TaiwanBusinessBankInsuranceAgencyCo.,Ltd.
None
VP&GM, CreditInvestigation Dept.
R.O.C Chi-FenYen F 20180208 117,580 0 0 0 0 0 BusinessAdministration, FuJenUniversity None None
SVP&GM, AuditingDept. R.O.C Tzong-WenChou M 20180208 110,033 0 0 0 0 0
TransportationandCommunicationMangementScience,NationalChengKungUniversity
None None
SVP&GM, AdminstrationManagementDept.
R.O.C Yung-YuSong M 20180827 101,466 0 91,409 0 0 0 MBA, NationalCentralUniversity None None
SVP&GM, HumanResourcesDept.
R.O.C Jia-RueyLuan M 20160715 146,874 0 0 0 0 0DepartmentofStatistics, NationalChengKungUniversity
None None
SVP, DigitalBankingDept.
R.O.C Ting-HueiLiao M 20170718 217,389 0 105,040 0 0 0Ph.D.,DepartmentofBankingandFinance, TamkangUniversity
Supervisor,Financiale-solutionCo.,Ltd. None
VP&GM, OverdueLoan&ControlDept.
R.O.C Li-YuehHsu F 20180208 26,647 0 0 0 0 0 Law, NationalTaiwanUniversity None None
SVP, PersonalBankingDept.
R.O.C Yin-ChengTseng F 20180208 141,507 0 0 0 0 0 DepartmentofLaw, NationalChengchiUniversity
Supervisor,TaiwanBusinessBankPropertyInsuranceAgencyCo.,Ltd.
None
SVP, TreasuryDept. R.O.C Chih-WeiChen M 20180723 0 0 0 0 0 0
MasterofFinancialManagement, NationalCentralUniversity
Supervisor,TBBInternationalLeasingCo.,Ltd.SupervisorTaiwanBusinessBankInternationalLeasingCo.,Ltd.Director,TBBVentureCapitalCo.,Ltd.
None
SVP, Information TechnologyDept.
R.O.C Ching-YunKuo F 20170718 204,054 0 25,078 0 0 0 Law, NationalTaiwanUniversity None None
SVP&GM, ComplianceDept.
R.O.C Hsih-HuiChen F 20110825 112,674 0 0 0 0 0 Law,FuJenUniversity None None
ActingVP&GM, Information SecurityDept.
R.O.C Yi-ChinChai M 20180723 32,172 0 0 0 0 0
MasterofInformationManagement, NationalTaiwanUniversityofScienceandTechnology
None None
SVP, WealthManagementDept.
R.O.C Chu-JouChen F 20180718 220,272 0 0 0 0 0 BusinessAdministration,SoochowUniversity
Director,CDIB&PartnersInvestmentHoldingCorp.Director,TaiwanBusinessBankInsuranceAgencyCo.,Ltd.
None
SVP, CreditCardDept. R.O.C Wen-ShuLin F 20180208 108,203 0 0 0 0 0 BusinessAdministration,
SoochowUniversity None None
SVP, Corporate BankingDept.
R.O.C Tsung-ChuHsieh M 20180208 117,111 0 0 0 0 0 PublicFinance, NationalChengchiUniversity
Director,ChaofuRealEstateManagementCo.,Ltd.Director,TaiwanBusinessBankPropertyInsuranceAgencyCo.,Ltd.Director,TBBInternationalLeasingCo.,Ltd.Director,TBBVentureCapitalCo.,Ltd.
None
VP&GM, RiskManagementDept.
R.O.C Hsiou-ChenKang F 20180208 107,120 0 0 0 0 0 Economics, NationalTaiwanUniversity
Director,TBBInternationalLeasingCo.,Ltd. None
2626 Taiwan Business Bank Annual Report 2018
Title Nationality Name Gender Effective
Date
Shareholding Amount
Shareholding by Spouse & Minor
Children
Shareholding Under Others'
Title Prime Experience & Education
Services Concurrently with the Other Campany
The Spouse or Relative within 2 Tiers of General Managers
Shares (%) Shares (%) Shares (%) Title Name Relation- ship
SVP&GM, AccountingDept. R.O.C Yu-ChuanChou F 20180208 121,446 0 799 0 0 0
Accounting, NationalChungHsingUniversity
Supervisor,TBBVentureCapitalCo.,Ltd. None
VP&GM, Trust Dept. R.O.C Pi-YuChang F 20180723 107,677 0 0 0 0 0
Accounting, NationalChungHsingUniversity
None None
SVP, SecuritiesDept. R.O.C Li-HuiChang F 20180723 126,204 0 0 0 0 0
CooperativeEconomic, NationalChungHsingUniversity
None None
SVP, International BankingDept.andAuthorizedOfficer,YangonRepresentative Office
R.O.C Sung-ShuiChiu M 20180327 141,308 0 7,910 0 0 0 Economics, NationalTaiwanUniversity Director,TaipaiForexInc. None
VP&GM, Innovative FinanceProjectOffice
R.O.C Tung-HsiChen M 20181221 0 0 0 0 0 0
DepartmentofLandEconomics, NationalChungHsingUniversity
None None
VP&GM, Regional Operation Center North1
R.O.C Tsun-LinYeh M 20170513 112,520 0 0 0 0 0Department of Business Administration, NanyaInstituteofTechnology
None None
VP&GM, Regional Operation Center North2
R.O.C Chiang-ShuLin M 20181029 118,447 0 0 0 0 0 TestileDepartment, VanungUniversity None None
VP&GM, Regional Operation Center North3
R.O.C Mei-ChunLin F 20180208 253,622 0 0 0 0 0BusinessManagement,NationalChengKungUniversity
None None
VP&GM, Regional Operation Center Central
R.O.C Kuo-LiangTseng M 20181029 107,437 0 0 0 0 0MasterofFinance, NationalYunlinUniversityofScienceandTechnology
None None
VP&GM, Regional Operation Center South1
R.O.C Fu-MingHsu M 20170203 324,448 0 0 0 0 0Department of Business Administration, FengChiaUniversity
None None
VP&GM, Regional Operation Center South2
R.O.C Wen-HsiuHuang M 20180208 146,270 0 0 0 0 0Department of Business Administration,TunghaiUniversity
None None
VP&GM, DomesticProcessingCenter
R.O.C Huei-NaiHung F 20140514 107,174 0 0 0 0 0 Accounting, FuJenUniversity None None
VP&GM, ChiLinBranch R.O.C Hsiao-MingChen M 20170203 106,820 0 0 0 0 0 MasterofEconomics,
NationalTaiwanUniversity None None
VP&GM, ChungHoBranch
R.O.C Li-FangLee F 20170203 107,641 0 0 0 0 0 Economics, ChineseCultureUniversity None None
VP&GM, PoAiBranch R.O.C Chih-YangHuang M 20160715 112,505 0 0 0 0 0
AccountingandStatistics, International Business College
None None
VP&GM, NorthTaoyuanBranch
R.O.C Shuan-HuaLiu F 20180208 39,104 0 0 0 0 0
MasterofMarketingandLogisticsmanagement, HsingWuUniversityofScienceandTechnology
None None
VP&GM, NanKenBranch R.O.C Yu-ChiaoWei F 20180208 99,172 0 7,949 0 0 0
DepartmentofEconomics, NationalChungHsingUniversity
None None
VP&GM, SiTuenBranch R.O.C Yuan-HsuehHsiao M 20180208 107,331 0 0 0 0 0
EMBA, TaichungHealthandManagementCollage
None None
VP&GM, ChungMinBranch
R.O.C Yun-ShiangTsai M 20181029 50,000 0 0 0 0 0DepartmentOfFinance, ChaoYangUniversityOfTechnology
None None
VP&GM, KinmenBranch R.O.C Cheng-ChuanLin M 20170203 194 0 0 0 0 0
BankManagementDepartment, TamsuiExfordCollege
None None
VP&GM, BankingDepartment
R.O.C Long-JiunnWu M 20181029 199,769 0 0 0 0 0
DepartmentFinanceandTaxation, NationalChungHsingUniversity
None None
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Title Nationality Name Gender Effective
Date
Shareholding Amount
Shareholding by Spouse & Minor
Children
Shareholding Under Others'
Title Prime Experience & Education
Services Concurrently with the Other Campany
The Spouse or Relative within 2 Tiers of General Managers
Shares (%) Shares (%) Shares (%) Title Name Relation- ship
VP&GM, TaYaBranch R.O.C Chih-ChengCho M 20170718 53,051 0 0 0 0 0
AppliedBusiness, NationalTaichungUniversityofScienceandTechnology
None None
VP&GM, JenTaBranch R.O.C Chien-ChungLin M 20160715 50,660 0 57,479 0 0 0 InternationalTrade,
ChineseCultureUniversity None None
VP&GM, JenAiBranch R.O.C Mei-ChihHou F 20160301 110,997 0 0 0 0 0 Banking,
FengChiaUniversity None None
VP&GM, SungShanBranch
R.O.C Bi-ChuChuang F 20181029 107,943 0 0 0 0 0
DepartmentofFinanceandTaxation,NationalChungHsingUniversity
None None
VP&GM, ChienChengBranch
R.O.C Guei-JinChiou F 20160301 124,422 0 0 0 0 0
ExecutiveMasterofBusinessAdministrationinInternational, NationalTaipeiUniversity
None None
VP&GM, ShihLinBranch R.O.C Wen-FangLin M 20180827 5,356 0 0 0 0 0
DepartmentofMedicalAdministration, YuanpeiJuniorCollegeofMedicalTechnology
None None
VP&GM, YungHoBranch R.O.C Sung-NanChiao M 20170718 41,161 0 891 0 0 0 Accounting,
SoochowUniversity None None
VP&GM, HsinTienBranch R.O.C Fuh-YuhYeh M 20160301 107,303 0 964 0 0 0 Business,
NationalOpenUniversity None None
VP&GM, HsinChuangBranch
R.O.C Ching-KueiHsieh F 20170203 113,090 0 0 0 0 0 Insurance,TamkangUniversity None None
VP&GM, HwaChengBranch
R.O.C Ruey-shyangGuo M 20181029 110,093 0 0 0 0 0 MBA, BaruchCollge,CUNY None None
VP&GM, SungKiangBranch
R.O.C Chao-LiehChen M 20170718 809 0 964 0 0 0 EMBA, TamkangUniversity None None
VP&GM, TaipeiBranch R.O.C Tien-HangTsai M 20180208 144,265 0 0 0 0 0
MasterofScienceinManagement, U.SInternationalUniversity
None None
VP&GM, WanHuaBranch R.O.C Yueh-YenWeng F 20170718 78,425 0 0 0 0 0 BusinessAdministration,
NationalChengchiUniversity None None
VP&GM, SouthTaipeiBranch
R.O.C Jiunn-chiuWang M 20181029 22,733 0 0 0 0 0 Statistics, TamkangUniversity None None
VP&GM, FuHsinBranch R.O.C Yueh-ChiaoWu F 20170203 112,476 0 0 0 0 0
DepartmentofAppliedBusiness, NationalTaipeiCollegeofBusiness
None None
VP&GM, ChungShangBranch
R.O.C Yen-HsuehChang F 20181029 2,026 0 0 0 0 0Department of Business Administration, TamkangUniversity
None None
VP&GM, ChienKuoBranch
R.O.C Tien-ChinLin M 20180208 108,165 0 0 0 0 0 Economics, TunghaiUniversity None None
VP&GM, NaiHuBranch R.O.C Tai Sun F 20180208 202,143 0 0 0 0 0 InternationalTrade,
MingChuanCollege None None
VP&GM, NanKingEastRoadBranch
R.O.C Kuo-ShuTseng M 20170513 74,360 0 0 0 0 0MasterofFinance, NationalChiaoTungUniversity
None None
VP&GM, ChungHsiaoBranch
R.O.C Yen-LingChen F 20170718 107,732 0 0 0 0 0
Department of InternationalTrade,TakmingJuniorCollegeofCommerce
None None
VP&GM, WorldTradeCenterBranch
R.O.C Chao-ChihChueh F 20150207 108,229 0 0 0 0 0
Dept. of Business Management, ChinaJuniorCollegeofMunicipality
None None
VP&GM, YungTrinBranch R.O.C Ching-HsiuLiu F 20170718 21,411 0 0 0 0 0
InternationalTrade,ChungYuanChristianUniversity
None None
VP&GM, NanKangBranch R.O.C Fu-LongChen M 20170718 99,736 0 0 0 0 0 EngineeringMachinery,
PingtungAgricultural None None
VP&GM, SungNanBranch R.O.C Ming-HuiChen F 20180208 20,800 0 0 0 0 0
MasterofBusinessAdministrationinInternationalBusiness,NationalDongHwaUniversity
None None
VP&GM, DongHuBranch R.O.C Ming-HsyangKuo M 20180522 0 0 18,687 0 0 0
Department of Cooperative Economics, TamkangUniversity
None None
2828 Taiwan Business Bank Annual Report 2018
Title Nationality Name Gender Effective
Date
Shareholding Amount
Shareholding by Spouse & Minor
Children
Shareholding Under Others'
Title Prime Experience & Education
Services Concurrently with the Other Campany
The Spouse or Relative within 2 Tiers of General Managers
Shares (%) Shares (%) Shares (%) Title Name Relation- ship
VP&GM, TaAnBranch R.O.C Hsueh-RuLiu F 20150207 109,033 0 0 0 0 0
DepartmentofIndustrialManagement, ChinyiInstituteofTechnology
None None
VP&GM, ShuangHoBranch
R.O.C Chao-HwaHsu F 20160301 190,654 0 0 0 0 0InternationalTrade, NationalTaipeiCollegeofBusiness
None None
VP&GM, JimHoBranch R.O.C Jiann-YeaShyu M 20180723 9,205 0 0 0 0 0
DepartmentofFinance,NationalTaipeiCollegeofBusiness
None None
VP&GM, WuKuBranch R.O.C Ying-CheFang M 20170203 189,388 0 0 0 0 0
MasterofManagementSciences, TamKangUniversity
None None
VP&GM, LinKuoBranch R.O.C Yueh-ChinWang F 20170718 107,827 0 3,443 0 0 0
Accounting, HsingWuCollegeofCommerce
None None
VP&GM, PanChiaoBranch
R.O.C Wan-JuShih F 20180723 109,383 0 0 0 0 0 MasterofEconomics, SoochowUniversity None None
VP&GM, ShuLinBranch R.O.C Yen-HuiTu M 20171030 217,015 0 0 0 0 0
FinancialFinance, TakmingUniversityofScienceandTechnology
None None
VP&GM, TuChengBranch R.O.C Nien-TzuChen F 20180208 108,066 0 0 0 0 0 Accounting,
FuJenUniversity None None
VP&GM, HweiLongBranch
R.O.C Chiu-ChinChen F 20171030 108,191 0 0 0 0 0
Department of Business Administration, ChungYuanChristianUniversity
None None
VP&GM, HsiChihBranch R.O.C Fang-ChuanChiu M 20180723 107,751 0 0 0 0 0
Department of Transportation andLogistics, FengChiaUniversity
None None
VP&GM, SanxiaBranch R.O.C Pao-ShengLin M 20180208 111,248 0 45,904 0 0 0 BusinessAdministration,
FuJenUniversity None None
VP&GM, KeelungBranch R.O.C Hsien-MinChen M 20160715 108,346 0 0 0 0 0
FinanceandTaxation, NationalTaipeiCollegeofBusiness
None None
VP&GM, PuChyaBranch R.O.C Mei-HuiChen F 20140212 183,421 0 190,268 0 0 0
BankInsurance, NationalTaipeiCollegeofBusiness
None None
VP&GM, NorthSanChungBranch
R.O.C Hsiu-HsinHou M 20170203 107,703 0 0 0 0 0 Bank&InsuranceSection, HsingWuBusinessCollege None None
VP&GM, SouthSanChungBranch
R.O.C Yen-HueyWang F 20170718 105,960 0 215 0 0 0 BankingandInsurance, MingChuanCollege None None
VP&GM, LuChowBranch R.O.C Chin-HsiangLin M 20180723 164,598 0 0 0 0 0
MasterofBusinessAdministration,TatungUniversity
None None
VP&GM, ILanBranch R.O.C Pi-ChuanChien F 20170203 108,807 0 1,131 0 0 0
SupplementaryOpenJuniorCollegeForPublicAdministration, NationalChengchiUniversity
None None
VP&GM, LoTungBranch R.O.C Shu-ChinLin F 20160301 107,570 0 0 0 0 0 I-LANCommercialVocational
SeniorHighSchool None None
VP&GM, SuAwBranch R.O.C Ping-HuiLee M 20180723 47,628 0 0 0 0 0
IndustrialManagement, SouthernTaiwanIndustrialCollege
None None
VP&GM, YangMeiBranch R.O.C Su-FenChen F 20160715 107,532 0 9,896 0 0 0 Accounting,
SoochowUniversity None None
VP&GM, HuKouBranch R.O.C Shu-EChen F 20170718 0 0 98,244 0 0 0
MasterofInternationalBusiness, ChungYuanChristianUniversity
None None
VP&GM,TaoyuanBranch R.O.C Shy-YuanWu M 20150207 40,183 0 0 0 0 0 Accounting,
FuJenUniversity None None
VP&GM, TaYuanBranch R.O.C Li-ChuanHuang F 20170718 70,997 0 62,400 0 0 0
BusinessManagementInstitute, ChungHuaUniversity
None None
VP&GM, TaShiBranch R.O.C Chin-HoHuang M 20180723 109,739 0 3,763 0 0 0
Department of Cooperative Economics, TamkangUniversity
None None
VP&GM, ChungLiBranch R.O.C Jiann-GwoGuu M 20180208 142,304 0 96,107 0 0 0 AccountingStatistics,
TamsuiExfordCollege None None
VP&GM, NeiLiBranch R.O.C Min-ChungHsieh M 20170718 25,721 0 0 0 0 0
MasterofAccountingandInformationTechnology, NationalChungChengUniversity
None None
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Title Nationality Name Gender Effective
Date
Shareholding Amount
Shareholding by Spouse & Minor
Children
Shareholding Under Others'
Title Prime Experience & Education
Services Concurrently with the Other Campany
The Spouse or Relative within 2 Tiers of General Managers
Shares (%) Shares (%) Shares (%) Title Name Relation- ship
VP&GM, HsinMingBranch R.O.C Yu-PeiLiao F 20180208 12,894 0 0 0 0 0
Department of Business Administration, NationalChungHsingUniversity
None None
VP&GM, EastTaoyuanBranch
R.O.C Chiu-YuLin F 20170203 42,848 0 64,272 0 0 0 Economics, FuJenUniversity None None
VP&GM, HsinWuBranch R.O.C Shu-FenLi F 20180208 30,841 0 0 0 0 0 InternationalTrade,
HsingWuBusinessCollege None None
VP&GM, HsinChuBranch R.O.C Kuan-YauCheng M 20180208 107,120 0 0 0 0 0 NationalHsinchuCommercial
&VocationalHighSchool None None
VP&GM, ChuPeiBranch R.O.C Bih-LienFang F 20170718 663,612 0 0 0 0 0
Department of Business Administration, NationalChengKungUniversity
None None
VP&GM, HsinchuScienceBasedIndustrialParkBranch
R.O.C Nai-ChiaChi M 20170718 177,107 0 0 0 0 0GraduateInstituteofIndustrialEconomics,NationalCentralUniversity
None None
VP&GM, PaTeBranch R.O.C Li-HueiChen M 20180208 31,200 0 0 0 0 0
MasterofBusinessAdministration, TamkangUniversity
None None
VP&GM, Luong Tan Branch
R.O.C Sheng-WangChang M 20170718 105,763 0 5,930 0 0 0
DepartmentofBusinessManagement,ChinMinInstituteofTechnology
None None
VP&GM, ChuTungBranch R.O.C Ming-TangChen M 20160301 111,671 0 0 0 0 0
DepartmentofIndustrialManagement, LunghwaUniversityofScienceandTechnology
None None
VP&GM, ChuNanBranch R.O.C Hsiu-ChiaoLin F 20170203 229,692 0 380,751 0 0 0 BusinessManagement,
TamkangUniversity None None
VP&GM, TouFenBranch R.O.C Kuan-YiHuang M 20170203 53,620 0 0 0 0 0
MasterofScienceandTechnologyManagement, ChungHuaUniversity
None None
VP&GM, MaioLiBranch R.O.C Shin-MaoLin M 20160301 52,136 0 0 0 0 0
BusinessAdministration, NationalTaichungCollegeofBusiness
None None
VP&GM, FengYuanBranch
R.O.C Li-ChungLin M 20180723 114,127 0 0 0 0 0BusinessAdministration, NationalTaichungCollegeofBusiness
None None
VP&GM, TaiPingBranch R.O.C Ping-SungYang M 20181029 306,419 0 145 0 0 0 Accounting,
FengChiaUniversity None None
VP&GM, TaChiaBranch R.O.C Man-ChungYeh M 20181029 241 0 0 0 0 0
InternationalTrade, NationalTaichungCollegeofBusiness
None None
VP&GM, ShaLuBranch R.O.C Chih-ChengChen M 20170203 115,187 0 0 0 0 0 DepartmentofBusiness,
NationalOpenUniversity None None
VP&GM, WuJihBranch R.O.C Meng-ShinJeng M 20181029 157,592 0 42,838 0 0 0 PublicFinance,
FengChiaUniversity None None
VP&GM, TaichungBranch R.O.C Meng-LiangSu M 20181029 108,170 0 0 0 0 0
Accounting, NationalChung HsingUniversity
None None
VP&GM, MinChenBranch R.O.C Shun-TsengLiao M 20160301 159,193 0 0 0 0 0 BusinessManagement,
SoochowUniversity None None
VP&GM, HsingChungBranch
R.O.C Yih-ShiouWang M 20160301 137,371 0 0 0 0 0 EMBA, FengChiaUniversity None None
VP&GM, PeiTuenBranch R.O.C Kuo-TsunPai M 20180208 108,422 0 0 0 0 0 DepartmentofBusiness,
NationalOpenUniversity None None
VP&GM, NanTouBranch R.O.C Liang-PinChen M 20180723 764 0 737 0 0 0
MasterofFinance, NationalYunlinUniversityofScienceandTechnology
None None
VP&GM, Tsao Tuen Branch
R.O.C Tsai-RongHung F 20180208 164,825 0 0 0 0 0MasterofFinance, NationalYunlinUniversityofScienceandTechnology
None None
VP&GM, PuLiBranch R.O.C Fu-ChingChou M 20170901 104,035 0 0 0 0 0
DepartmentofAppliedBusiness, TaichungUniversityofScienceandTechnology
None None
VP&GM, TanTzeBranch R.O.C Cheng-AnHsieh M 20170901 117,384 0 36,880 0 0 0 MasterofInsurance,
FengChiaUniversity None None
VP&GM, ChuShanBranch R.O.C Jung-YuHuang M 20170203 108,310 0 0 0 0 0 Accounting,
FengChiaUniversity None None
3030 Taiwan Business Bank Annual Report 2018
Title Nationality Name Gender Effective
Date
Shareholding Amount
Shareholding by Spouse & Minor
Children
Shareholding Under Others'
Title Prime Experience & Education
Services Concurrently with the Other Campany
The Spouse or Relative within 2 Tiers of General Managers
Shares (%) Shares (%) Shares (%) Title Name Relation- ship
VP&GM, ChangHwaBranch
R.O.C Ming-YiLin M 20180208 335,520 0 240,805 0 0 0
DepartmentofAppliedBusiness, TaichungUniversityofScienceandTechnology
None None
VP&GM, HoMeiBranch R.O.C A-ChangYang M 20170203 165,108 0 0 0 0 0
Department of International Trade, FengChiaUniversity
None None
VP&GM, YuanLinBranch R.O.C Yueh-ManSung F 20181029 129,901 0 0 0 0 0
InternationalTrade, NationalTaichungCollegeofBusiness
None None
VP&GM, PeiTouBranch R.O.C Chien-TaWu M 20181224 65,217 0 0 0 0 0 EMBA,
NationalChiNanUniversity None None
VP&GM, ErhLinBranch R.O.C Li-MoYang M 20170203 232,683 0 0 0 0 0 Statistics,
FuJenUniversity None None
VP&GM, TouLiuBranch R.O.C His-HerPai M 20180208 172,303 0 79 0 0 0
MasterofAppliedEconomics, NationalChungHsingUniversity
None None
VP&GM, PeiKangBranch R.O.C Wen-ChiChen M 20181029 69,443 0 0 0 0 0
MasterofFinance, NationalYunlinUniversityofScienceandTechnology
None None
VP&GM, HuWeiBranch R.O.C Chin-HsuehLi M 20151103 211,114 0 0 0 0 0
DepartmentofAccountingandStatistics, OpenCollegewithNationalChangKungUniversity
None None
VP&GM, ChiaYiBranch R.O.C Su-YingTsai F 20180208 113,022 0 0 0 0 0
Department of International Trade, OpenCollegewithNationalChangKungUniversity
None None
VP&GM, MingHsiungBranch
R.O.C I-ManChen F 20181029 109,562 0 75 0 0 0 Business, ProvidenceCollege None None
VP&GM, ChiaHsinBranch R.O.C Jiann-JangLin M 20160513 57,818 0 69,969 0 0 0
DepartmentofAccountingandStatistics, TatungInstituteofCommerceandTechnology
None None
VP&GM, HsinYingBranch R.O.C Chia-ChengLiu M 20180208 55,476 0 0 0 0 0
DepartmentofAccountingandStatistics, TatungInstituteofCommerceandTechnology
None None
VP&GM, KaiYuanBranch R.O.C Feng-FuChen M 20160715 110,432 0 10,022 0 0 0 Accounting,
FuJenUniversity None None
VP&GM, YunKangBranch R.O.C Hsin-ChuanHsiao M 20170203 132,273 0 93,786 0 0 0
DepartmentofAccountingandStatistics, TatungInstituteofCommerceandTechnology
None None
VP&GM, ShiueChiaBranch
R.O.C Chih-MingChuang M 20160715 109,352 0 0 0 0 0Statistics, NationalChungHsingUniversity
None None
VP&GM, ShanHwaBranch
R.O.C Guo-ShiangHuang M 20170203 45,576 0 81,004 0 0 0CooperativeEconomics, NationalChungHsingUniversity
None None
VP&GM, YungTaBranch R.O.C Chien-LaiSu M 20181224 736 0 0 0 0 0
MasterofBusiness&Management, NationalUniversityofTainan
None None
VP&GM, TainanBranch R.O.C Yung-ShengHu M 20170203 112,420 0 716 0 0 0
DepartmentofIndustrialManagement, SouthernTaiwanInstituteofTechnology
None None
VP&GM, JenTeBranch R.O.C Chin-HsiuChen F 20180208 227,322 0 32,142 0 0 0 BankingandInsurance,
MingChuanCollege None None
VP&GM, ChengKungBranch
R.O.C Chang-HuiHsu F 20180723 91,798 0 10,632 0 0 0DepartmentofBankandInsurance, ChineseCultureUniversity
None None
VP&GM, East Tainan Branch
R.O.C Shun-HoChen M 20180208 109,101 0 0 0 0 0 BusinessAdministration, FengChiaUniversity None None
VP&GM, AnPingBranch R.O.C Mei-ChenChen F 20180208 126,557 0 10,040 0 0 0
MBA, NationalChengKungUniversity
None None
VP&GM, HuaLienBranch R.O.C Chiou-HwaSu F 20170203 29,728 0 0 0 0 0 PublicFinanceandTaxation,
DahanInstituteofTechnology None None
VP&GM, TaiTungBranch R.O.C Wen-JangJou M 20180208 102,483 0 0 0 0 0
MasterofTropicalAgricultureandInternationalCooperation, PingtungUniversityofScience&Technology
None None
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Title Nationality Name Gender Effective
Date
Shareholding Amount
Shareholding by Spouse & Minor
Children
Shareholding Under Others'
Title Prime Experience & Education
Services Concurrently with the Other Campany
The Spouse or Relative within 2 Tiers of General Managers
Shares (%) Shares (%) Shares (%) Title Name Relation- ship
VP&GM, EastKaohsiungBranch
R.O.C Leh-ChinKuo F 20180208 88,011 0 0 0 0 0MasterofFinance, KaohsiungFirstUniversityofScienceandTechnology
None None
VP&GM, KangShanBranch
R.O.C Der-HsungLin M 20160715 107,651 0 0 0 0 0 BankIsurance, MeihoUniversity None None
VP&GM, NorthFengShanBranch
R.O.C Cheng-HungWang M 20180208 169,038 0 75 0 0 0 Accounting, FengChiaUniversity None None
VP&GM, LingYaBranch R.O.C Ya-HuaSu F 20160301 163,010 0 0 0 0 0 Banking,
NationalChengchiUniversity None None
VP&GM, KaohsiungBranch
R.O.C Chin-ChuanSu M 20140514 293,415 0 0 0 0 0Accounting, NationalChungHsingUniversity
None None
VP&GM, NorthKaohsiungBranch
R.O.C An-YunLin F 20170414 213,482 0 46,429 0 0 0MasterofFinance, KaohsiungFirstUniversityofScienceandTechnology
None None
VP&GM, TaChangBranch R.O.C Li-JungLin F 20180208 118,631 0 0 0 0 0 DepartmentofBusiness,
NationalOpenUniversity None None
VP&GM, ChienChenBranch
R.O.C Tzu-IHuang M 20180208 111,291 0 0 0 0 0 BusinessAdministration, ChengShiuUniversity None None
VP&GM, JeouRuBranch R.O.C Wen-TaiYang M 20160301 108,720 0 0 0 0 0 BusinessManagement,
TatungUniversity None None
VP&GM, SanMingBranch R.O.C Ching-WenLee M 20180827 71,315 0 52 0 0 0
DepartmentofStatistics, NationalChengKungUniversity
None None
VP&GM, FengShanBranch
R.O.C Kuang-TsaiWang M 20170203 107,425 0 0 0 0 0MBA, NationalSunYat-senUniversity
None None
VP&GM, TaFaBranch R.O.C Jung-LingWang M 20160715 107,903 0 0 0 0 0 FinaceTaxation,
FengChiaUniversity None None
VP&GM, Ping Tung Branch
R.O.C Hsueh-HsiaChen F 20180827 227,926 0 0 0 0 0
Shipping&TransportationManagement, NationalTaiwanOceanUniversity
None None
VP&GM, XiaoGangBranch
R.O.C Shih-YuanLin M 20160715 125,282 0 100 0 0 0 InternationalTrade, ChineseCultureUniversity None None
VP&GM, ChiaoChouBranch
R.O.C Shuang-ChenSu M 20160301 107,797 0 0 0 0 0 BusinessAdministration, TamsuiExfordCollege None None
VP&GM, OffshoreBankingUnit
R.O.C Ching-YangLee F 20150403 109,145 0 0 0 0 0 MBA, CMSU None None
VP&GM, LosAngelesBranch
R.O.C Shenn-BaoJean M 20180430 110,807 0 0 0 0 0 Economics, SoochowUniversity None None
VP&GM, HongKongBranch
R.O.C Jen-JungFan M 20160919 107,685 0 0 0 0 0
Department of Business Management, NationalSunYat-senUniversity
None None
VP&GM, SydneyBranch R.O.C Be-YunTong F 20140327 169,591 0 0 0 0 0
Business&SecretarialScience, TamsuiExfordCollege
None None
VP&GM, ShanghaiBranch R.O.C Yuan-YuanYing F 20160613 193,271 0 0 0 0 0
MBA, NationalKaohsiungFirstUnversityofScienceandTechnology
None None
VP&GM, BrisbaneBranch R.O.C Sue-JenChen F 20180413 950 0 62 0 0 0
MasterofInternationalBusiness, SoochowUniversity
None None
VP&GM, NewYorkBranch R.O.C Feng-YingChen F 20160609 110,115 0 0 0 0 0 Banking,
NationalChengchiUniversity None None
VP&GM, WuhanBranch R.O.C Chin-FuChiang M 20180516 176,039 0 5,943 0 0 0
MBA, NationalTaiwanUniversityofScienceandTechnology
None None
VP&GM, TokyoBranch R.O.C Cheng-HungChang M 20180815 104,572 0 0 0 0 0 MBA,
UniversityofWisconsin,USA None None
3232 Taiwan Business Bank Annual Report 2018
(3) Compensation for 2018A.CompensationforDirectors
Unit: NT$1,000
Title Name
Compensation Ratio of total remuneration
(A+B+C+D) to net income (%)
Relevant remuneration received by directors who are also employees Ratio of total compensation
(A+B+C+D+E+F+G) to net income (%)
Compensation paid to
directors from an invested company
other than the company´s subsidiary
Rewards (A) Pension and Separation Pay (B)
Earning Distribution (C)
Business Affair Expense (D)
Salary, Bonus and Special
Disbursement (E)
Pension and Separation Pay (F)
Employee BonusDistribution (G)
TBBAll
companies in finance statement
TBBAll
companies in finance statement
TBBAll
companies in finance statement
TBBAll
companies in finance statement
TBBAll
companies in finance statement
TBBAll
companies in finance statement
TBBAll
companies in finance statement
TBBAll companies
in finance statement TBB
All companies in finance statementCash Stock Cash Stock
MinistryofFinanceRepresentatives
Ex-ChairmanRueen-Fong
Chu
Chairman Bor-YiHuang
Ex-PresidentTsan-Huang
Chou
President Chien-AnShih
Director Shiu-YenLin
DirectorWen-Chieh
Wang
ManagingDirector Lien-WenLiang
Director Hung-ShengYu
BankofTaiwanRepresentatives
Ex-ManagingDirector Hong-ChiChang
ManagingDirector Li-LingLin
Director Pei-MingHuang
Director Cheng-ChuanKang
LandBankofTaiwanRepresentative
Director Ying-MingHe
AMISMACHINERYINDUSTRYCO.,LTD.Representatives
Ex-Director Jong-JyrKau
Director Che-NanWang
TBBIndustryUnionRepresentatives
Ex-Director Ming-HuaShie
Director Feng-YungLiu
Ex-IndependentManagingDirector
Chau-ChenYang
Ex-IndependentDirector Yaw-HueiHuang
Ex-IndependentDirector Chih-YuCheng
IndependentManagingDirector Xin-WuLin
IndependentDirector Jin-LongLiu
IndependentDirector
Wei-ShengHuang
Total 10,964 10,964 58,374 58,374 2,681 2,681 0.94% 0.94% 9,607 9,607 11,185 11,185 368 - 368 - 1.22% 1.22% 187
Note:1. TheBankpaidthedriversforChairmanBor-YiHuang,Ex-PresidentTsan-HuangChouandcurrentPresidentChien-AnShihintotalofNT$2,010thousanddollars.
2.Ex-ChairmanRueen-FongChuandEx-PresidentTsan-HuangChouwere retiredonNov.24,2017andMar.22,2018,respectively.
3.DirectorChe-NanWangwastherepresentativeofAmisMachineryIndustryCo.,Ltd.duringJanuary1~June29,2018.
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Classification of Compensation for Directors
Name of Directors
Amount of total remuneration (A+B+C+D) Amount of total remuneration (A+B+C+D+E+F+G)
TBB All the companies in the finance statement
ITBB All Joint Ventures
J
~NT$2,000,000
Hung-ShengYu,Ming-HuaShie,Feng-YungLiu,Shiu-YenLin,Wen-ChiehWang,Lien-WenLiang,Li-LingLin,Hong-ChiChang,Pei-MingHuang,Cheng-ChuanKang,Ying-MingHe,Jong-JyrKau,Che-NanWang,Chau-ChenYang,Chih-YuCheng,Yaw-HueiHuang,Xin-WuLin,Jin-LongLiu,Wei-ShengHuang
Hung-ShengYu,Ming-HuaShie,Feng-YungLiu,Shiu-YenLin,Wen-ChiehWang,Lien-WenLiang,Li-LingLin,Hong-ChiChang,Pei-MingHuang,Cheng-ChuanKang,Ying-MingHe,Jong-JyrKau,Che-NanWang,Chau-ChenYang,Chih-YuCheng,Yaw-HueiHuang,Xin-WuLin,Jin-LongLiu,Wei-ShengHuang
Hung-ShengYu,Ming-HuaShie,Feng-YungLiu,Shiu-YenLin,Wen-ChiehWang,Lien-WenLiang,Li-LingLin,Hong-ChiChang,Pei-MingHuang,Cheng-ChuanKang,Ying-MingHe,Jong-JyrKau,Che-NanWang,Chau-ChenYang,Chih-YuCheng,Yaw-HueiHuang,Xin-WuLin,Jin-LongLiu,Wei-ShengHuang
Hung-ShengYu,Ming-HuaShie,Feng-YungLiu,Shiu-YenLin,Wen-ChiehWang,Lien-WenLiang,Li-LingLin,Hong-ChiChang,Pei-MingHuang,Cheng-ChuanKang,Ying-MingHe,Jong-JyrKau,Che-NanWang,Chau-ChenYang,Chih-YuCheng,Yaw-HueiHuang,Xin-WuLin,Jin-LongLiu,Wei-ShengHuang
NT$2,000,000(inclusive)~NT$5,000,000 Rueen-FongChu Rueen-FongChu Rueen-FongChu,Chien-AnShih
Rueen-FongChu,Chien-AnShih
NT$5,000,000(inclusive)~NT$10,000,000(exclusive) Bor-YiHuang Bor-YiHuang Bor-YiHuang Bor-YiHuang
NT$10,000,000(inclusive)~NT$15,000,000(exclusive) - - Tsan-HuangChou Tsan-HuangChou
NT$15,000,000(inclusive)~NT$30,000,000(exclusive) - - - -
NT$30,000,000(inclusive)~NT$50,000,000(exclusive) - - - -
NT$50,000,000(inclusive)~NT$100,000,000(exclusive) - - - -
NT$100,000,000~ - - - -
Total 21 Persons 21 Persons 23 Persons 23 Persons
Note:CompensationforEx-PresidentTsan-HuangChou(retiredonMarch22,2018)hasincludedthepensionpayment.
B.CompensationforPresidentandExecutiveVicePresidentsJanuary 1, 2018 ~ December 31, 2018 Unit: NT$1,000
Title Name
Salary (A)Pension and Bonus and Special Ratio of
total Salary Separation Pay (B)
Bonus and Special Disbursement (C) Employee Bonus of Earning Distribution (D)
Ratio of total remuneration
(A+B+C+D) to net income (%)All the companies in the finance statement
Compensation paid to
directors from an invested
company other than the
company´s subsidiary TBB
All the companies
in the finance
statement
TBB
All the companies
in the finance
statement
TBB
All the companies
in the finance
statement
TBB All the companies in the finance statement
TBB
All the companies
in the finance
statementCash
dividendsStock
dividendsCash
dividendsStock
dividends
President Chien-AnShih Yes
ExecutiveVicePresident Chang-YiChen
ExecutiveVicePresident
Chih-ChienChang
ExecutiveVicePresident Yi-YunWang
ExecutiveVicePresident Mei-YehWu Yes
ExecutiveVicePresident
Chun-ShengTseng
EVP&ChiefAuditor Chiu-YenChen
President(Application
for retirement effectiveon2018/3/22)
Tsan-HuangChou
ExecutiveVicePresident(Application
for retirement effectiveon2017/6/28)
Kun-ShanChen
Total 17,443 17,443 11,185 11,185 13,052 13,052 1,627 1,627 0.57% 0.57% 194
Note:TheremunerationfordriversofthePresidentandEVPs:TheBankpaidthedriversintotalofNT$7,052thousandin2018.
3434 Taiwan Business Bank Annual Report 2018
Classification of Compensation forPresident and Executive Vice President
Name of President and Executive Vice President
TBB All investee companies
~NT$2,000,000 Kun-ShanChen Kun-ShanChen
NT$2,000,000(inclusive)~NT$5,000,000(exclusive)
Chien-AnShih, Chang-YiChen,Chih-ChienChang, Yi-YunWang,Mei-YehWu, Chun-ShengTseng,Chiu-YenChen
Chien-AnShih, Chang-YiChen,Chih-ChienChang, Yi-YunWang,Mei-YehWu, Chun-ShengTseng,Chiu-YenChen
NT$5,000,000(inclusive)~NT$10,000,000(exclusive)
NT$10,000,000(inclusive)~NT$15,000,000(exclusive) Tsan-HuangChou Tsan-HuangChou
Total 9 Persons 9 Persons
Note:CompensationforEx-PresidentTsan-HuangChouhasincludedthepensionpayment.
C.MembersoftheManagementTeamReceivingEmployeeBonus&BonusDistributionDecember 31, 2018 Unit: NT$1,000; %
Title Name Stock Dividends
Cash Dividends Amount
TotalTotal/After tax Profit
(%)
ExecutiveVicePresident Chang-YiChen
ExecutiveVicePresident Chih-ChienChang
ExecutiveVicePresident Yi-YunWang
ExecutiveVicePresident Mei-YehWu
ExecutiveVicePresident Chun-ShengTseng
EVP&ChiefAuditor Chiu-YenChen
SVP&GM,TreasuryDept. Chih-WeiChen
SVP&GM,AccountingDept. Yu-ChuanChou
GeneralManagersofDepartmentsandBranches
Tseng-HsiangYi,Chang-YuLin,Yu-MinChang,Chi-FenYen,Tzong-WenChou,Yung-YuSong,Jia-RueyLuan,Ting-HueiLiao,Li-YuehHsu,Yin-ChengTseng,Ching-YunKuo,Hsih-HuiChen,Yi-ChinChai,Chu-JouChen,Wen-ShuLin,Tsung-ChuHsieh,Hsiou-ChenKang,Pi-YuChang,Li-HuiChang,Sung-ShuiChiu,Tung-HsiChen,Tsun-LinYeh,Chiang-ShuLin,Mei-ChunLin,Kuo-LiangTseng,Fu-MingHsu,Wen-HsiuHuang,Huei-NaiHung,Hsiao-MingChen,Li-FangLee,Chih-YangHuang,Shuan-HuaLiu,Yu-ChiaoWei,Yuan-HsuehHsiao,Yun-ShiangTsai,Cheng-ChuanLin,Long-JiunnWu,Chih-ChengCho,Chien-ChungLin,Mei-ChihHou,Bi-ChuChuang,Guei-JinChiou,Wen-FangLin,Sung-NanChiao,Fuh-YuhYeh,Ching-KueiHsieh,Ruey-shyangGuo,Chao-LiehChen,Tien-HangTsai,Yueh-YenWeng,Jiunn-chiuWang,Yueh-ChiaoWu,Yen-HsuehChang,Tien-ChinLin,TaiSun,Kuo-ShuTseng,Yen-LingChen,Chao-ChihChueh,Ching-HsiuLiu,Fu-LongChen,Ming-HuiChen,Ming-HsyangKuo,Hsueh-RuLiu,Chao-HwaHsu,Jiann-YeaShyu,Ying-CheFang,Yueh-ChinWang,Wan-JuShih,Yen-HuiTu,Nien-TzuChen,Chiu-ChinChen,Fang-ChuanChiu,Pao-ShengLin,Hsien-MinChen,Mei-HuiChen,Hsiu-HsinHou,Yen-HueyWang,Chin-HsiangLin,Pi-ChuanChien,Shu-ChinLin,Ping-HuiLee,Su-FenChen,Shu-EChen,Shy-YuanWu,Li-ChuanHuang,Chin-HoHuang,Jiann-GwoGuu,Min-ChungHsieh,Yu-PeiLiao,Chiu-YuLin,Shu-FenLi,Kuan-YauCheng,Bih-LienFang,Nai-ChiaChi,Li-HueiChen,Sheng-WangChang,Ming-TangChen,Hsiu-ChiaoLin,Kuan-YiHuang,Shin-MaoLin,Li-ChungLin,Ping-SungYang,Man-ChungYeh,Chih-ChengChen,Meng-ShinJeng,Meng-LiangSu,Shun-TsengLiao,Yih-ShiouWang,Kuo-TsunPai,Liang-PinChen,Tsai-RongHung,Fu-ChingChou,Cheng-AnHsieh,Jung-YuHuang,Ming-YiLin,A-ChangYang,Yueh-ManSung,Chien-TaWu,Li-MoYang,His-HerPai,Wen-ChiChen,Chin-HsuehLi,Su-YingTsai, I-ManChen,Jiann-JangLin,Chia-ChengLiu,Feng-FuChen,Hsin-ChuanHsiao,Chih-MingChuang,Guo-ShiangHuang,Chien-LaiSu,Yung-ShengHu,Chin-HsiuChen,Chang-HuiHsu,Shun-HoChen,Mei-ChenChen,Chiou-HwaSu,Wen-JangJou,Leh-ChinKuo,Der-HsungLin,Cheng-HungWang,Ya-HuaSu,Chin-ChuanSu,An-YunLin,Li-JungLin,Tzu-IHuang,Wen-TaiYang,Ching-WenLee,Kuang-TsaiWang,Jung-LingWang,Hsueh-HsiaChen,Shih-YuanLin,Shuang-ChenSu,Ching-YangLee,Shenn-BaoJean,Jen-JungFan,Be-YunTong,Yuan-YuanYing,Sue-JenChen,Feng-YingChen,Chin-FuChiang,Cheng-HungChangTotal162Persons
Total 0 40,378 40,378 0.53%
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(4) The analysis of the percentage of total remuneration paid to the Directors, President and Vice Presidents in the last two fiscal years to net profit after tax in the parent company individual financial statements, the policy, standards and package of remuneration payment, the procedures for determination of remuneration and the connection between business performance and future risksA.In2017and2018,thepercentageoftheremuneration(includingsalaries,incentives,retirementallowance,
andemployeebonus)paidtoDirectors,President,andVicePresidentstonetprofitaftertaxintheparentcompanyindividualfinancialstatementswere1.24%,0.74%,1.22%,and0.57%,respectively.
B.Theanalysisofpolicy,standards,andpackageofremunerationpaymenta Directors
AccordingtotherequirementsunderArticle41oftheArticlesofAssociationoftheBank,shall therebeprofitsoftheyearandexceptforretainingthecompensationamountforlossesfrompreviousyears,theBankshallallocatenomorethan0.6%astheremunerationofDirectors.
Furthermore,accordingtotherequirementsunderArticle21oftheArticlesofAssociationoftheBank,theBoardwasauthorizedtodeterminetheremunerationofdirectors,andsuchamountshallbedeterminedaccordingtothegeneralremunerationofferedwithintheindustry.
The remunerationpaid to thedirectors isbasedon thestandards in the industry, the respectiveperformanceofdirectors, theperformanceofcorporateoperations,andtheresultsof theperformanceassessmentbytheBoard.Theremunerationfor independentdirectorsshallbesubject to themonthlypaymentplan for remunerationpassedat thegeneralshareholders'meeting in2011.Except for themonthlyfixedremunerationspayment,suchdirectorsshallnotreceivethedirectorremunerationspecifiedintheArticlesofAssociation.
Directors' remunerationdistributed in2017wasNT$36,582,000,and thedirectors' remunerationproposedtobedistributedin2018shallbeNT$58,374,000.
b President,VicePresidents,andChiefAuditor RegardingtheremunerationpaidtothePresident,VicePresidents,andChiefAuditor,exceptforgivingconsiderationstothestandardintheindustry,personalperformanceandcorporatebusinessperformancearealso taken intoaccount.Moreover,suchremunerationshallbebasedon relevant requirementsof "Directions forSalaryPayment toEmployees," "Directions forPaymentofNewYear,Festival,andPerformanceBonuses,""Directions forPaymentofEmployeeBonus,"and"RemunerationCommitteeOrganizationalProcedures."
C.Theproceduresforthedeterminationofremunerationandconnectionbetweenbusinessperformanceandfuturerisks:a Directors RegardingthebonusofDirectorsof theBank, theArticlesofAssociationhasprovidedthat,shall therebeprofitsoftheyearandexceptforretainingthecompensationamountforlossesfrompreviousyears,theBankshallallocatenomorethan0.6%astheremunerationofDirectors.Theshareholders'meetingauthorized theBoard todetermine thepayment forsuchremunerationaccording to thestandards inthe industry, therespectiveperformanceofdirectors, theperformanceofcorporateoperations,andtheresultsoftheperformanceassessmentbytheBoard.Relevantperformanceassessmentwasproposedat themeetingof theRemunerationCommitteefordiscussionandwassubmittedtoandapprovedbytheBoardmeeting.Regardingtheremunerationfor independentdirectors, theBoardshalldetermineareasonableremunerationdifferentfromthatofthegeneraldirectorsaccordingtotherelevantstandardswithintheindustry.Exceptforthemonthlyfixedremunerationspayment,suchdirectorsshallnotreceivethedirectorremunerationspecifiedintheArticlesofAssociation.ForlossesincurredtotheBankresultingfromdubiousactsofthedirectors,theAuditCommitteeshallexertcontrolandsupervisionontheexistingandpotentialrisks,andimposenecessarypunishmentaccordingtotherelevantlawsandregulations.
b President,VicePresidents,andChiefAuditor TheapprovalproceduresfortheremunerationofPresident,VicePresidents,andChiefAuditorshallbebasedonrelevantrequirementsof"DirectionsforSalaryPaymenttoEmployees,""DirectionsforPaymentofNewYear,Festival,andPerformanceBonuses""Directions forPaymentofEmployeeBonus,"and"RemunerationCommitteeOrganizationalProcedures."Suchremunerationshallbe implementedandpaidafteranassessmentofperformancebasedonthe"DirectionsforEmployeeAudit,""DirectionsforPerformanceAudit,"and"DirectionsforAdministrativeIncentivesforPerformanceAudit"oftheBank,withconsiderationto thegeneralstandardwithin the industry.Furthermore, theremunerationandrelevantperformanceassessmentoftheBank'smanagersshallbeproposedatthemeetingoftheRemunerationCommitteefordiscussionannually,andtheresultsthereofshallbesubmittedtotheBoardforapprovals.Amongwhich, thebonuspartshallbe linkedtoandsubject to thebeforetaxnetprofitachievingrate,
3636 Taiwan Business Bank Annual Report 2018
businessperformancefinancialindications,andpersonalauditresultsoftheBank.ForlossesincurredtotheBankresultingfromdubiousactsofPresident,VicePresidents,andChiefAuditor,theBoardshallnotonlyapprovethedismissalofthemandceasethepaymentofremuneration,butalsoimposenecessarypunishmentaccordingtotherelevantlawsandregulations.
3. Operations of Corporate Governance
(1) Operation of Board of DirectorsAtotalofeleven(11)meetingswereheldbytheBoardinthemostrecentyear(2018).TheattendanceofthemembersoftheBoardwasasfollows:
December 31, 2018
Title NameNumber of required
attendance (A)
Number of actual attendance (B)
Number of delegated
attendance
Actual attendance rate
(%) (B/A)
Name of the legal entity represented Remarks
Director Bor-YiHuang 11 11 0 100 MinistryofFinance
ManagingDirector Chien-AnShih 10 10 0 100 MinistryofFinance AppointedonMarch21,2018
ManagingDirector Tsan-HuangChou 1 1 0 100 MinistryofFinance RetiredonMarch
21,2018ManagingDirector Li-LingLin 11 10 1 90.9 BankofTaiwanCo.Ltd.
ManagingDirector Hong-ChiChang 1 1 0 100 BankofTaiwanCo.Ltd. RetiredonMarch
20,2018ManagingDirector(IndependentDirector) Xin-WuLin 6 5 1 83.3 AppointedonJune
29,2018ManagingDirector(IndependentDirector)
Chau-ChenYang 5 2 3 40 RetiredonJune29,
2018
ManagingDirector Lien-WenLiang 6 6 0 100 MinistryofFinance AppointedonJune29,2018
Director Shiu-YenLin 11 11 0 100 MinistryofFinance
Director Wen-ChiehWang 11 10 1 90.9 MinistryofFinance
Director Hung-ShengYu 11 11 0 100 MinistryofFinance
Director Cheng-ChuanKang 6 6 0 100 BankofTaiwanCo.Ltd. AppointedonJune
29,2018
Director Pei-MingHuang 11 11 0 100 BankofTaiwanCo.Ltd.
Director Ying-MingHe 11 11 0 100 LandBankofTaiwanCo.,Ltd.Director Che-NanWang 11 10 1 90.9
Director Jong-JyrKau 5 5 0 100 AMISMACHINERYINDUSTRYCO.,LTD.
AppointedonJune29,2018
Director Feng-YungLiu 6 6 0 100 TBBIndustryUnion AppointedonJune29,2018
Director Ming-HuaShie 5 5 0 100 TBBIndustryUnion RetiredonJune29,2018
IndependentDirector Jin-LongLiu 6 6 0 100 AppointedonJune29,2018
IndependentDirector Chih-YuCheng 5 3 2 60 RetiredonJune29,2018
IndependentDirector Wei-ShengHuang 6 6 0 100 AppointedonJune
29,2018
IndependentDirector Yaw-HueiHuang 5 5 0 100 RetiredonJune29,
2018
Otheritemsthatshallberecorded:1.Whenoneofthefollowingsituationsoccurredtotheoperationsoftheboard,statethedateandtermoftheboardmeeting,thecontentofproposals,opinionsofallindependentdirectorsandtheCompany'sactionsinresponsetotheopinionsoftheindependentdirectors:(1)Matters included inArticle14-3of theSecuritiesandExchangeAct:Notapplicable, theCompanyhasalready
establishedanAuditCommittee.(2)OtherresolutionsoftheBoard,whichtheindependentdirector(s)voicedobjectionorreservationthataredocumentedor
issuedthroughawrittenstatementinadditiontotheabove:None.2.WhenDirectorsabstainthemselvesforbeingastakeholderincertainproposals,thenameoftheDirectors,thecontentoftheproposal,reasonsforabstentionsandtheresultsofvotingcountsshouldbestated.(1)Regardingtheresolution"PresidentNomination"atthe7thextraordinaryBoardmeetingofthe14thBoardonMarch21,
2018,exceptfortheManagingDirectorChien-AnShih,whoabstainedfromthediscussionofappointmentandremoval,theremainingdirectorshaveapprovedtheresolutionasproposed.
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(2)Regardingtheresolution"CanceltheNon-CompetitionRestrictionontheDIrectorsoftheCompany"atthe20thBoardmeetingofthe14thBoardonMarch21,2018,exceptforDirectorYing-MingHe,asastakeholder,whoabstainedfromthediscussion,theremainingdirectorshaveapprovedtheresolutionasproposed.
(3)Regarding theresolution"ManagingDirectorHong-ChiChangwho isoriginallyassignedby theBankofTaiwan totheBankastheequityrepresentativehasretiredfromhisdutyonMarch20,2018;therefore,pleasecarryouttheby-electionfor theManagingDirector"at the21stBoardmeetingof the14thBoardonMay9,2018,except forDirectorLi-LingLin,as thenomineeand in favorof thediscussionamongDirectors,whoabstainedfromthediscussion, theremainingdirectorshaveapprovedunanimouslytoelectDirectorLi-LingLinastheManagingDirector.
(4)Regardingtheresolution"CreditLoansforMegaBillsFinanceCo.,Ltd."atthe22ndBoardmeetingofthe14thBoardonJune14,2018,exceptforManagingDirectorShiu-YenLin,asastakeholder,whoabstainedfromthediscussion,theremainingdirectorshaveapprovedtheresolutionasproposed.
(5)Regardingtheresolution"PresidentNomination"atthe2ndextraordinaryBoardmeetingofthe15thBoardonJune29,2018,exceptfortheManagingDirectorChien-AnShih,whoabstainedfromthediscussionofappointmentandremoval,theremainingdirectorshaveapprovedtheresolutionasproposed.
(6)Regarding the resolution "Appoint3 IndependentDirectorsof theBankas thememberof the4thRemunerationCommitteeof theBank"at the2ndextraordinaryBoardmeetingof the15thBoardonJune29,2018,except for theIndependentDirectorXin-WuLin, IndependentDirectorJin-LongLiu,andIndependentDirectorWei-ShengHuang,asstakeholders,whoabstainedfromthediscussion,theremainingdirectorshaveapprovedtheresolutionasproposed.
(7)RegardingthedonationsofNT$2.5millionto"TBBIndustryUnion"in2019describedin"Chapter4.OperatingExpense-I.BusinessExpense-Donations"oftheresolution"BudgetDraftoftheBankforNextYear(2019)"atthe3rdBoardmeetingof the15thBoardonOctober24,2018,except forDirectorHung-ShengYuandDirectorFeng-YungLiu,asstakeholders,whoabstainedfromthediscussion,theremainingdirectorshaveapprovedtheresolutionasproposed.
(8) (VI)Regarding the resolution"Drafting theAttendancePaymentStandards for IndependentDirectorsof theBankParticipating inFunctionalCommitteeMeetingsandOtherMeetingsOther thanManagingDirectorsMeeting,AuditCommittee,andRemunerationCommittee"atthe3rdBoardmeetingofthe15thBoardonOctober24,2018,exceptfortheIndependentDirectorXin-WuLin,IndependentDirectorJin-LongLiu,andIndependentDirectorWei-ShengHuang,asstakeholders,whoabstainedfromthediscussion,theremainingdirectorshaveapprovedtheresolutionasproposed.
(9)Regardingtheresolution"AllocateNT$7millionfromtheCharitablePaymentofourheadquarterastheDonationtotheTBBIndustryUnion"atthe4thBoardmeetingofthe15thBoardonDecember19,2018,exceptforDirectorHung-ShengYuandDirectorFeng-YungLiu,asstakeholders,whoabstained fromthediscussion, theremainingdirectorshaveapprovedtheresolutionasproposed.
3.Goals (e.g.,establishinganAuditCommittee,enhancing information transparency)primed toenhance theBoardofDirectors'professionalismandtheassessmentontheirexecutionprocessfortheyearandthemostrecentyear:(1)ContinualeducationforDirectorsregardingprogramsoncorporategovernance.Thecontinuingeducationhourforeach
Directorin2018hascompliedwiththerequirementsunder"DirectionsfortheImplementationofContinuingEducationforDirectorsandSupervisorsofTWSEListedandTPExListedCompanies."
(2)TheBankamendeditsregulationsgoverningproceduresfortheBoardofdirectorsmeetingaccordingtorequirementsofArticle7underthe"RegulationsGoverningProcedureforBoardofDirectorsMeetingsofPublicCompanies,"statedthatatleastoneindependentdirectorshallattendtheBoardmeetinginperson.InthecaseofaBoardmeetingconcerninganymatterrequiredtobesubmittedforaresolutionbytheBoard,all independentdirectorsshallattend inperson; ifan independentdirector isunabletoattend inperson,heorsheshallappointanother independentdirector toattendashisorherproxy.TheBoardmeetingsconvenedin2018havecompliedwiththerequirementofhavingatleastoneindependentdirectorattendingtheBoardmeetinginperson
AttendanceofIndependentDirectorspresentingattheBoardmeetings
Title Name
Number of required
attendance (A)
Number of actual
attendance (B)
Number of delegated
attendance
Actual attendance
rate (%) (B/A)Remarks
ManagingDirector(IndependentDirector) Xin-WuLin 6 5 1 83.3 Appointedon
June29,2018
ManagingDirector(IndependentDirector) Chau-ChenYang 5 2 3 40 Retiredon
June29,2018
IndependentDirector Jin-LongLiu 6 6 0 100 AppointedonJune29,2018
IndependentDirector Chih-YuCheng 5 3 2 60 RetiredonJune29,2018
IndependentDirector Wei-ShengHuang 6 6 0 100 Appointedon
Jun.29,2018
Remarks Yaw-HueiHuang 5 5 0 100 RetiredonJune29,2018
3838 Taiwan Business Bank Annual Report 2018
(2) Audit Committee activitiesAtotalof thirteen(13)meetings(A)wereheldby theAuditCommittee in themostrecentyear(2018).TheattendanceofIndependentDirectorswasasfollows:
December 31, 2018
Title NameNumber of required
attendance (A)
Number of actual attendance (B)
Number of delegated
attendance
Actual attendance rate (%)
(B/A)Remarks
ManagingDirector(IndependentDirector) Xin-WuLin 5 5 0 100 Appointedon
June29,2018ManagingDirector
(IndependentDirector) Chau-ChenYang 8 5 3 62.5 RetiredonJune29,2018
IndependentDirector Jin-LongLiu 5 5 0 100 AppointedonJune29,2018
IndependentDirector Chih-YuCheng 8 8 0 100 RetiredonJune29,2018
IndependentDirector Wei-ShengHuang 5 5 0 100 AppointedonJune29,2018
IndependentDirector Yaw-HueiHuang 8 8 0 100 RetiredonJune29,2018
Otheritemsthatshallberecorded:1.WheretheproceedingsoftheAuditCommitteemeetingincludeoneofthefollowingcircumstances,thendescribethedate,session,andmotionoftheboardmeeting,therelevantresolutionsoftheAuditCommittee,andtheCompany'shandlingofthecommentsoftheAuditCommittee:(1) AllconditionsstatedinArticle14-5oftheSecuritiesandExchangeAct.
Board Date/Period
AgendaThe resolution results of the Audit Committee and the Company's
response regarding the Audit Committee's opinions
The19thBoardmeetingofthe14thBoardonFebruary7,2018
ResolutionoftheproposednominationregardingthesuccessionofManagerYu-JuanChouoftheJianguoBranchasthedirectoroftheAccountingDepartmenttofillinthevacancyofthedirectorofAccountingDepartmentuponhis/herretirementonMarch1,2018.
ResolutionresultsoftheAuditCommittee:Passed,andsubmittedtotheBoardforconsideration.TheCompany'sresponsetotheopinionsoftheAuditingCommittee:Resolutionpassedbyalldirectorsinattendancewithconsent.
The20thBoardmeetingofthe14thBoardonMarch21,2018
Resolutionof"AuditedIndividualandConsolidatedFinancialStatementbyCPA"andthedraftreportsoftheCompanyfor2017(fromJanuary1toDecember31,2017).
ResolutionresultsoftheAuditCommittee:Passed,andsubmittedtotheBoardforconsideration.TheCompany'sresponsetotheopinionsoftheAuditingCommittee:Resolutionpassedbyalldirectorsinattendancewithconsent.
The20thBoardmeetingofthe14thBoardonMarch21,2018
Resolutionoftheproposedamendmentto"DirectionsforOperatingSystemsforBanksConductingFinancialDerivativesBusinessofTaiwanBusinessBank"(hereinafter,the"Directions")inresponsetotherevisionof"RegulationsGoverningInternalOperatingSystemsandProceduresforBanksConductingFinancialDerivativesBusiness"bytheFinancialSupervisionCommission(hereinafter,"FSC").
ResolutionresultsoftheAuditCommittee:Paragraph2,Article4wasrevisedas"...financialproductsknow-howandmanagement,tradingexperiencerecognition...,"themeaningofthetextisambiguousthatwhetherthetextmeans"managementortradingexperience"or"managementandtradingexperience.Pleaseclarifytheintentofthecompetentauthorityandrevisetotextwithaccuratemeaning.Passedafterrevision,andsubmittedtotheBoardforconsideration.TheCompany'sresponsetotheopinionsoftheAuditingCommittee:Resolutionpassedbyalldirectorsinattendancewithconsent.
The21stBoardmeetingofthe14thBoardonMay9,2018
Resolutionoftheproposedprocurementof"CentralAccountHostandDriveConfigurationUpdateandProjectServices"inresponsetothedemandforthebusinessgrowthoftheBankandtheimprovementonthesustainableoperatingandsecurityprotectioncapacities.
AuditCommitteeresolution:(I)Theresolutionrelatesaprocurementthatinvolvesprocurementdemandatthesametime;theproposerwaschanged;theproposalbecamejointlyproposedbytheInformationTechnologyDepartmentandtheGeneralAffairsDepartment.(II)Regardingthemaintenancerate,addthedescriptiontospecifyitisan"annual"rate;pleasealsomakeadditionstotherequirementsunderSubparagraph1,Paragraph1,Article10of"DirectionsforConstructionWork,Purchase,CustomizationandSellingofPropertiesofTaiwanBusinessBank."(III)AddsupplementarynotesonthemaintenancerateofequipmentinrelationstocentralhostsintheindustrywhenreportingtotheBoard.Passedafterrevision,andsubmittedtotheBoardforconsideration.TheCompany'sresponsetotheopinionsoftheAuditingCommittee:Resolutionpassedbyalldirectorsinattendancewithconsent.
The21stBoardmeetingofthe14thBoardonMay9,2018
Resolutionoftheproposedamendmentto"StrategiesandRegulationsGoverningOperatingSystemsforBanksConductingFinancialDerivativesBusinessofTaiwanBusinessBank"(hereinafter,the"Strategies&Regulations")inresponsetotherevisionof"RegulationsGoverningInternalOperatingSystemsandProceduresforBanksConductingFinancialDerivativesBusiness"bytheFinancialSupervisionCommission(hereinafter,"FSC").
ResolutionresultsoftheAuditCommittee:Passed,andsubmittedtotheBoardforconsideration.TheCompany'sresponsetotheopinionsoftheAuditingCommittee:Resolutionpassedbyalldirectorsinattendancewithconsent.
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Board Date/Period
AgendaThe resolution results of the Audit Committee and the Company's
response regarding the Audit Committee's opinions
The22ndBoardmeetingofthe14thBoardonJune14,2018
Resolutionoftheproposedamendmentto"RegulationsforInternalControlSystemforFuturesIntroducingBrokerBusiness"(includingtheinternalcontrolsystem,internalauditimplementationrules,auditstatement,andauditworkingpaper)oftheBank.
ResolutionresultsoftheAuditCommittee:Passed,andsubmittedtotheBoardforconsideration.TheCompany'sresponsetotheopinionsoftheAuditingCommittee:Resolutionpassedbyalldirectorsinattendancewithconsent.
The22ndBoardmeetingofthe14thBoardonJune14,2018
Resolutionoftheproposedamendmentto"RegulationsforInternalControlSystemforSecuritiesFirms"(includingtheinternalcontrolsystem,internalauditimplementationrules,auditstatement,andauditworkingpaper)oftheBank.
ResolutionresultsoftheAuditCommittee:Revisethecomparisontableandstate"Removed"intherevisiondescriptioncolumnfortheremovaloftheexistingarticleonpage20,insteadofstating"Removed"intherevisioncontentcolumn.Passedafterrevision,andsubmittedtotheBoardforconsideration.TheCompany'sresponsetotheopinionsoftheAuditingCommittee:Resolutionpassedbyalldirectorsinattendancewithconsent.
The1stBoardmeetingofthe15thBoardonJuly18,2018
Resolutionofthepersonalchangeonfinancialsupervisoraccordingtothebusinessrequirements.
ResolutionresultsoftheAuditCommittee:Passed,andsubmittedtotheBoardforconsideration.TheCompany'sresponsetotheopinionsoftheAuditingCommittee:Resolutionpassedbyalldirectorsinattendancewithconsent.
The2ndBoardmeetingofthe15thBoardonAugust22,2018
Resolutionof"AuditedIndividualandConsolidatedFinancialStatementbyCPA"andthedraftreportsoftheCompanyforthefirsthalfof2018(fromJanuary1toJune30,2018).
ResolutionresultsoftheAuditCommittee:Passed,andsubmittedtotheBoardforconsideration.TheCompany'sresponsetotheopinionsoftheAuditingCommittee:Resolutionpassedbyalldirectorsinattendancewithconsent.
The2ndBoardmeetingofthe15thBoardonAugust22,2018
Resolutionoftheproposedamendmentto"StrategiesandRegulationsGoverningOperatingSystemsforBanksConductingFinancialDerivativesBusinessofTaiwanBusinessBank"(hereinafter,the"Strategies&Regulations").
ResolutionresultsoftheAuditCommittee:Passed,andsubmittedtotheBoardforconsideration.TheCompany'sresponsetotheopinionsoftheAuditingCommittee:Resolutionpassedbyalldirectorsinattendancewithconsent.
The3rdBoardmeetingofthe15thBoardonOctober24,2018
Resolutionofsubmittingthe"BudgetDraftoftheBankforNextYear(2019)."
ResolutionresultsoftheAuditCommittee:Passed,andsubmittedtotheBoardforconsideration.TheCompany'sresponseregardingtheAuditCommittee'sopinions:RegardingtheresolutionofdonationsofNT$2.5millionto"TBBIndustryUnion"in2019describedin"Chapter4.OperatingExpense-I.BusinessExpense-Donations,"exceptforDirectorHung-ShengYuandDirectorFeng-YungLiu,asstakeholders,whoabstainedfromthediscussion,theremainingdirectorshaveapprovedtheresolutionasproposed.
The3rdBoardmeetingofthe15thBoardonOctober24,2018
Resolutionofamendingthe"RegulationsforInternalControlSystemforSecuritiesFirms"(includingtheinternalcontrolsystem,internalauditimplementationrules,auditstatement,andauditworkingpaper)oftheBank.
TheCompany'sresponseregardingtheAuditCommittee'sopinions:Approvedforratification,andsubmittedfortheBoardtoratify.TheCompany'sresponsetotheopinionsoftheAuditingDepartment:Resolutionpassedbyalldirectorsinattendancewithconsentforapprovingratification.
The4thBoardmeetingofthe15thBoardonDec.19,2018
ResolutionoftheproposedengagementofTan-TanChungandChun-GuangChen(bothaccountants)fromKPMGbytheBankregardingitsfinancialreport,taxassessmentandcertification,agreementprocedureprojectauditingandotherbusinesses,withprofessionalchargesonauditingof(similiarlyhereinafter)NT$6.7millionintotal.
ResolutionresultsoftheAuditCommittee:Passed,andsubmittedtotheBoardforconsideration.TheCompany'sresponsetotheopinionsoftheAuditingCommittee:Resolutionpassedbyalldirectorsinattendancewithconsent.
The4thBoardmeetingofthe15thBoardonDecember19,2018
ResolutionoftheproposedallocationofNT$7millionfromthecharitablepaymentofourheadquarterasthedonationtotheTBBIndustryUniontofosterharmoniouslaborrelations,promotecharitableeventsoftheBankandfulfillitscorporatesocialresponsibility.
TheCompany'sresponseregardingtheAuditCommittee'sopinions:SuchamountshallbedonatedtotheTBBIndustryUnionforpromotingcharitableeventswhilenospecificcharitableeventsshallbedesignated.Pleasereviseanddescribe.Passedafterrevision,andsubmittedtotheBoardforconsideration.TheCompany'sresponseregardingtheAuditCommittee'sopinions:ExceptforDirectorHung-ShengYuandDirectorFeng-YungLiu,asstakeholders,whoabstainedfromthediscussion,theremainingdirectorshaveapprovedtheresolutionasproposed.
(2) Exceptfortheitemsintheprecedingissues,otherresolutionsapprovedbytwo-thirdsofallthedirectorbutyettobeapprovedbytheAuditCommittee:None.
4040 Taiwan Business Bank Annual Report 2018
2.Directorsabstainingincertainproposalsforbeingastakeholder,(thenameoftheDirector(s),thecontentoftheproposal,reasonsforabstentionsandtheresultsofvotingcountsshallbestated):No.
3.CommunicationbetweendirectorsandheadofinternalauditandCPA(includingmaterialissues,auditmethodsandresultsrelatingtotheCompany'sfinancesandbusiness).
Date Communication target Communication content Recommendations from Independent
Directors and the Company's response
2018/03/16 CPA Auditingmatterstothefinancialreportof2018andthedescriptionofanddiscussionontheresults.
Norecommendationmadeduringthemeeting.
2018/05/04 CPAAuditingmatterstothefinancialreportofQ1in2018andthedescriptionofanddiscussionontheresults.
Norecommendationmadeduringthemeeting.
2018/08/13 CPANegotiationtoconfirmtheauditingtimeandrelatedmattersandfocusesontheinterimreport.
Norecommendationmadeduringthemeeting.
2018/08/17
InternalAuditOfficer(includingauditpersonnel)
1.Communicationregardingthecurrentorganization,humanresource,andexecutionoftheCompany.
2.Discussionontheauditconductedbythecompetentauthorityandtheimprovementregardinganyproblemfoundintherecentsignificantaudittodomesticandoverseasbranches.
3.Adoptionofarisk-orientedandinformationaltool-basedapproachtoexchangeopinionsonthefutureaudittarget.
Norecommendationmadeduringthemeeting.
2018/08/17 CPADiscussiononthekeyauditmattersandresultsregardingtheindividualfinancialreportfromJanuarytoJune2018.
Norecommendationmadeduringthemeeting.
2018/10/22 CPA
1.Discussiononthechangesintheconsolidatedstatementofprofitorlossfortherecentperiods,includingeffectsafterthetransformationofoperatingstrategiesandpotentialprobabilityrisks.
2.Discussedontheestimationmethodfortaxamount.
RecommendationsfromIndependentDirectors:Itisrecommendedthatthetaxingexperiencesineachcountryshallbeconsideredbeforemakinganappropriateestimationtothetaxamount.TheCompany'sresponse:HandledaccordingtotheIndependentDirectors'recommendation.
4.Keyannualemphasis inworkingfor theAuditCommittee:TheAuditCommitteeaimstoassist theBoardinusingtheappropriateexpressionsof theCompany's financial statements;appointing (dismissing) theCPAandassuring its independenceandperformance;andoverseeingeffectiveimplementationofinternalcontrols,compliancewithlaws,regulations,andrules;aswellasimplementingcontrolsforexistingorpotentialrisks.(1) SupervisetheappropriateexpressionsintheCompany'sfinancialstatements:Reviewtheannualfinancialstatements,operating
reports,andearningdistributioneachyear(consideredandpassedatthe6thmeetingofthe3rdAuditCommittee),andissuethereviewreporttotheshareholders'meetingaccordingtotherequirementsunderArticle219oftheCompanyActapprovedbyparagraph3,Article14-4oftheSecuritiesandExchangeAct.
(2) Appointment(dismissal)oftheCPAandassuringits independenceandperformance:Evaluatetheappointment(dismissal)oftheCPAandundertakingtheannualassessmentoftheindependenceandperformanceoftheCPA(consideredandpassedatthe4thmeetingofthe3rdAuditCommittee);andreporttotheshareholders'meetingforreview(consideredandpassedatthe4thmeetingofthe15thBoard).
(3) Effectiveimplementationofinternalcontrols:TheBankhasestablishedtheorganization,structure,andauthorization,andhaspreparedthe internalauditworkbookandtheworkingpaper.These itemsshallcontainevaluationsof therequirementsandthebusinessprocessundertheinternalcontrolsystemtodeterminewhetherthecurrentsystemandprocedureshaveproperinternalcontrols inplace;whether thedepartmentscomplywithrelevantrequirementsanddulyexecutethe internalcontrols;andtherationaleoftheeffectsofexecutingsuchinternalcontrols,andproposalsofimprovementrecommendationsatanytime.Theinternalauditshallcarryout theauditactivityaccordingtotherules,andshallsubmitreports totheBoardandtheAuditCommitteeonaregularbasis.
(4) Complywithrelevantlaws,regulations,andrulesaswellascontroloverexistingandpotentialrisks:Thelawsandregulationsof theheadquarterscomplywith theprovisionsof thecompetentauthority, in that itshall report theexecutionof theBank'scompliancewiththesystemtotheAuditCommitteeandtheBoardatleasteveryhalfyear.Thelegalcompliancesysteminplaceinthesecondhalfof2017andthefirsthalfof2018wasreportedtothe19thmeetingofthe2ndAuditCommitteeonFebruary2,2018,andtothe19thBoardmeetingofthe14thBoardonFebruary7,2018,aswellastothe2ndmeetingofthe3rdAuditCommitteeonAugust17,2018andthe2ndBoardmeetingofthe15thBoardonAugust22,2018,respectively.
(5) Others:Personnelchangesfortheaccountingsupervisor(discussedduringthe19thmeetingofthe2ndAuditCommittee)andpersonnelchangesforthefinancialsupervisor(discussedduringthe1stmeetingofthe3rdAuditCommittee).
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(3) Strategy Development Committee activitiesAtotalofone(1)meetingwasheldbytheStrategyDevelopmentCommitteeinthemostrecentyear(2018).Theattendanceofcommitteememberswasasfollows:
December 31, 2018
Title NameNumber of required
attendance (A)
Number of actual
attendance (B)
Number of delegated
attendance
Actual attendance
rate (%) (B/A)Remarks
Chairman Bor-YiHuang 1 1 0 100
ManagingDirector Chien-AnShih 1 1 0 100
ManagingDirector(IndependentDirector) Xin-WuLin 1 1 0 100
IndependentDirector Jin-LongLiu 1 1 0 100
IndependentDirector Wei-ShengHuang 1 1 0 100
(4) CSR Committee activitiesAtotalofone(1)meetingwasheldbytheCSRCommitteeinthemostrecentyear(2018).Theattendanceofcommitteememberswasasfollows:
December 19, 2018
Title NameNumber of required
attendance (A)
Number of actual
attendance (B)
Number of delegated
attendance
Actual attendance
rate (%) (B/A)Remarks
Chairman Bor-YiHuang 1 1 0 100
ManagingDirector Chien-AnShih 1 1 0 100
ManagingDirector(IndependentDirector) Xin-WuLin 1 1 0 100
IndependentDirector Jin-LongLiu 1 1 0 100
IndependentDirector Wei-ShengHuang 1 1 0 100
(5) Items disclosed in accordance with the Corporate Governance Best Practice Principlesfor Banking Industry: Please refer to the Bank's website under About TBB > CorporateGovernance and Investor Relations (https://www.tbb.com.tw/).
(6) State of corporate governance, shortcomings in Corporate Governance Best Practice Principles for Banking Industry, and the cause of the said gaps
Assessed items
State of operations Gaps with the Corporate Governance Practices Best Practice
Principles for the Banking Industry, and the cause of the said
gaps
Yes No Summary
1. Structureofthebank'sshareholdersandequities
(1) Doesthebankstipulateandimplementasetofinternalprocedurestohandleshareholders'suggestions,queries,disputesandlitigations?
(2) Doesthebankkeeptrackofthemajorcontrollingshareholdersaswellastheirownershipstructures?
(3) Doesthebanksetupafirewallandriskcontrolmechanismtoreducetherisksinvolvedwiththebank'srelatedcompanies?
TheBankhasestablishedcustomercomplaintsproceduresand thecustomercomplaintandstockaffairscontactwindow,whichwill look into thecircumstancesupon receivingrecommendations,doubts,ordisputes,andpass the task to relevantdepartments forhandling.TheBankalsohasaspokespersontoaddresstheproblemtoexternalparties.
TheBankreferstothedeclarationofchangesintheRegisterofShareholderswhenclosingthestocktransferandthemonthlyreport for internalparties tokeeptrackandunderstandtheshareholdingchangesofsubstantialshareholdersandanalyze the finalcontrollerofsubstantialshareholders.
Thedirectionsandprocedures for themanagementof reinvestmentbusinessof theBankproviderelevant requirements for thesupervisorsof its relatedcompanies,benefitting ineffectivecontroloveritsperformanceandbusinessoverview.Inrespectofthefirewallmechanism,personnel,accounting,assets,andfinancedepartmentsallhavedistinctoperations.LoanstorelatedcompaniesareallsubjecttotherelevantlawsandregulationsunderArticle32andArticle33oftheBankingAct.
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4242 Taiwan Business Bank Annual Report 2018
Assessed items
State of operations Gaps with the Corporate Governance Practices Best Practice
Principles for the Banking Industry, and the cause of the said
gaps
Yes No Summary
2. Boardofdirectorsanditsresponsibilities
(1) ApartfromtheRemunerationCommitteeandAuditCommittee,doesthebankassembledotherfunctionalcommitteesatitsowndiscretion?
(2) DoesthebankregularlyevaluatetheindependenceofCPAs?
1. TheBankhasestablished theAuditCommittee,RemunerationCommittee,CorporateSocialResponsibilityCommittee,andStrategicDevelopmentCommitteeundertheBoard.
2. There isnonominationcommittee;however, theArticlesofAssociationof theBankprovidethattheelectionofDirectorsshalladoptthenominationsystem.Anyre-electionofDirectorsshallbesubject tonominationandsubject totheapprovalof theBoardbeforebeingproposedattheShareholders'meetingforelection.The15thBoardwaselectedattheAnnualShareholders'Meetingin2018.
Regularassessmenton the independenceof theappointedCPA iscarriedoutannuallysubmittedtotheBoardmeetingforapprovalbeforegrantingtheappointmentTheestimatehadbeencarriedoutatthe4thmeetingofthe15thBoardonDecember19,2018,accordingto the requirementsunderArticle38of "CorporateGovernancePracticesBestPracticePrinciples for theBanking Industry"andArticle68of "StatementonAuditingStandardsNo.46,"withreferencetotheindependenceofCPAintheCPAAuditingPlan.Theassessingitemsareasfollow:1. TheCPAappointedby theBankdoesnotprovideaccount-keeping, financialsystem
design introduction,appraisal (assessment)business,management function,actuaryservices, internalauditoutsourcing,humanresourcesservices, investmentconsultancy,andlegalservices.
2. TheCPAappointedbytheBankdoesnotundertakecontingencycasesonprofessionalcharges(i.e.,proceedings),activeorconfidentialtaxavoidanceplanandpersonaltaxationcaseforfinancialdirector(above).
3. The2appointedCPAshavenotbeenappointedforover7years,whichcomplieswiththe requirementsunderArticle38of "CorporateGovernancePracticesBestPracticePrinciples for theBankingIndustry"andArticle68of"StatementonAuditingStandardsNo.46."
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3. IntheeventthebankisapubliclylistedorOTC-listedcompany,hasthebankinstitutedadedicated(orconcurrent)corporategovernanceunitorpersonneltobeinchargeofaffairsrelatingtocorporategovernance(includingbutnotlimitedtotheprovisionofnecessarydataforDirectorsandSupervisorstoexecutetheirduties,administeringmattersrelatingtotheBoardofDirectors'meetingsandshareholders'meetingsinaccordancewithlaw,administeringcompanyincorporationandchangeinincorporation,andproducingminutebooksfortheBoardofDirectors'andshareholders'meetings)?
Relevantdepartmentoftheheadquarter,suchasBoardSecretariatDepartment,shallbethedepartmentfully(jointly)responsibleforthecorporategovernance.Passedatthe6thmeetingof the15thBoard,ExecutiveVicePresidentChih-ChienChangwasdesignatedas themanagerforcorporategovernancetoprotecttheshareholders' interestsandstrengthenthefunctionoftheBoard.Mr.YihasheldthepostofdirectorinrelationtoaffairsoffinanceandcorporategovernanceforoverthreeyearswithhandlingmattersconcerningthecomplianceofBoardmeetingsandShareholders'meetings,preparing themeetingminutes forBoardmeetingandShareholders'meeting,providingassistance forDirectorsandSupervisorswhenassumingofficeandcontinuingeducation,providingrequiredinformationforexecutingbusiness,providingassistanceregardingtheircompliancewiththelawashisprimaryduties.Affairscarriedoutinrelationtothecorporategovernancein2018areasfollow:1. OnMarch20andMarch21,2018, thecorporateshareholderBankofTaiwanand
theMinistryofFinance re-assigned theequity representative.TheBoardSecretariatDepartmenthasdisclosedmaterial informationand reported to theBoardmeetingaccordingtotherequirements.Moreover,theAdministrationManagementDepartmenthasappliedfor thealterationregistrationtotheMinistryofEconomicAffairs,andbothtasksweresuccessfullycompleted.
2. ProvideDirectors thecontinuingeducation informationregardingcorporategovernanceandtrack thecontinuingeducationconditions. In2018, thecontinuingeducationforallDirectorscompliedwith thehoursprescribed in the"Directions for the ImplementationofContinuingEducationforDirectorsandSupervisorsofTWSEListedandTPExListedCompanies."
3. Providing logisticsofBoardmeetings for11 times,succeeded indelivering thenoticeofmeetingsand theagenda toDirectors7daysprior to thedateof themeetinganddispatchedthemeetingminuteswithin20daysfromtheendingoftheBoardmeeting.
4. ProvidingthelogisticsfortheannualShareholders'meetingof2018,includingdispatchingthenoticeof themeeting20daysprior to themeeting,preparing theagendaof theShareholders'meeting,andpublishingthemeetingminutesoftheShareholders'meetingwithin20daysfromtheendingofthemeeting,andalltasksweresuccessfullycompleted.
5. ThenumberofcasesrequiredtrackingfortheexecutionofBoardmeetingsin2018was466intotal,andtheexecutivedepartmentshavesuccessfullycompletedallcases.
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4. Doesthebankestablishachanneltocommunicatewithshareholders(includingbutnotlimitedtoshareholders,employeesandcustomers,etc.)?
1. Stakeholdersmaycontact theBank throughmethodsofpresenting themselvesat the bank, letter,phonecall, fax,ande-mail.Areportingmailboxandadirect linearealsoin placeforreportingmattersofbreachoftrust.2. EstablishingIRtoolsinthe Investors Relations onourcorporatewebsite tobenefitour servicestoinvestors.3. Set up AboutTBB > CorporateSocialResponsibility > RelationshipwithStakeholders on ourcorporatewebsite,establishingAuditCommitteecontactwindow, Q&Aforstakeholders,contactwindowforstakeholders,verificationofstakeholders,etc.,to
respondtotheissuesourstakeholders'concern,protectingtheirinterests.
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Assessed items
State of operations Gaps with the Corporate Governance Practices Best Practice
Principles for the Banking Industry, and the cause of the said
gaps
Yes No Summary
5. Informationdisclosure(1)Doesthebanksetupawebsitefor
thedisclosureofrelevantinformationonfinancialstatusandcorporategovernance?
(2)Doesthebanktakeanyothermethodstodiscloseitsinformation(e.g.Englishwebsite,aspecialgroupengagedongatheringandcompilingthebank'sinformation,theinformationannouncedthroughthebank'sspokesman,andregularinvestorconferenceprocessdisclosedonthebank'swebsite)?
1. Disclosureof informationsuchasAboutTaiwanBusinessBank,Financial Information,News&Event,ShareholderService,and IRTools in the Investors Relations onthe
corporatewebsite.2. Disclosureof thecorporategovernancestructure,Board,Boardresolutions,attendance
ofDirectorsatBoardmeetingsandcontinuingeducationcircumstances, internalaudit,regulations regardingcorporategovernanceaswellas thecommunicationbetweenIndependentDirectors,internalauditsupervisor,andCPAinAboutTaiwanBusinessBank>CorporateGovernanceonthecorporatewebsite.
1. To realize theopen information, theBankhasestablished the "Procedures for theOperations forDisclosing InformationExternally."According to the requirements, thedisclosure tobereportedsuchas informationonfinanceandbusinessshallbecarriedoutbydesignatedpersonnelof therelevantdepartment inaccordancewith theduties.Furthermore, informationsuchasAboutTaiwanBusinessBank,Financial Information,News&Event,ShareholderService,andIRToolsisprovidedintheInvestorRelationsonthecorporatewebsite;anEnglishwebsitewasalsoestablished for foreign investors toaccessrelevantinformation.
2. Themechanismofspokespersonisresponsibleforprovidingdescriptionsandannouncingthenewstoexternalparties,soastoensureinvestorsmayreceiveaccuratenews.
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6. DoesthebankhaveotherrelevantinformationforbetterunderstandingtheBank'scorporategovernanceoperation(suchasemployeerights,caringforemployees,investorsrelationship,stakeholderrights,on-the-jobeducationofdirectorsandsupervisors,implementationofriskmanagementpoliciesandriskassessmentstandards,implementationofcustomerpolicies,liabilityinsurancepoliciespurchasedbythebankfordirectorsandsupervisors,anddonationstopoliticalparties,interestedparties,orcharityorganizations)?
1. Toclarifytherightsandobligationsofemployeesandtheemployer,theBankestablishedthe “WorkingRules”according to theLaborStandardsActand relevant lawsandregulations,withreferencetothenatureof thebanking industry, toregulateemployees'rights.TheBankalsoestablishedthe“DirectionsforMeasuresofPrevention,Complaint,andPunishmentofSexualHarassmentat theWorkplaceofTaiwanBusinessBank”asregulationsaccordingtotheActofGenderEqualityinEmployment.
2. CaringforEmployees:(1) Employeesareassetsof thecorporates.TheBankhassparednoefforts incaring
for itsemployees.Exceptforestablishingworkingrulesandpersonnelmanagementrulesaccording to relevant labor lawssuchas theLaborStandardsAct, theBankcompliedwith the lawsand regulationsand insured for theLabor Insurance,NationalHealth Insurance,andprovisionof retirementpension for itsemployees.Italsoorganizeshealthcheck foremployeesregularly,providesdiscountedgroupmedical insuranceandcasualty insurance toprotect the livesofouremployees,allowingemployeestoexert their talentsatworkworry-free.Also, tostrengthenthecompetitivenessofouremployeesandimprovetheirprofessionalknow-how,theBankorganizestrainingcoursesfordifferentbusinessesaccordingtotheannualemployeetrainingplan,provideadiversifiedprogramsonthedigitallearningwebsite,andholdsnonscheduledcelebrityseminarsandprofessional lecturesviavideo.TheBankhasacomprehensivesystemof remunerationand rewardsaswellas thepromotionchannel,diversified trainingandwelfaremeasures thatattractandretain talents,joininghandsfortheprosperityoftheCompany.
(2) TheBank values the rights of our employees and holds the regular labor-managementconferenceswhereemployeesandtheemployermayconductsufficientcommunicationsandnegotiations regarding the rightsofemployeesorwelfare,signing thegroupagreementandmaintaining thepeaceful labor-managementrelationship.
3. Torealize thecorporategovernance, theBanksubscribed for “Directors'andOfficers'LiabilityInsurance”forDirectorsandofficersoftheBanksinceJanuary5,2016.Thelatestinsuredcircumstanceshavebeenreportedatthe5thBoardmeetingofthe15thBoard.
4. TheBankestablished the“Directions forProcessingofDonationsofTaiwanBusinessBank”toregulatethecharitablegroupdonationprojectswherethestakeholder(s)actsastherepresentativeorthemanager.
5. TheBankconsidersthatproperhandlingofcustomercomplaintsmayimprovetheservicequalityandrealize thecontrol foroperatingrisks.TheBankestablishedthe“CustomerComplaintCenter”torespondtocustomercomplaints,andestablishedthe“DirectionsfortheProcessingofCustomerComplaints”oftheBankforcompliance.
6. TheBankestablishedthehandlingproceduresandregulations in responseto"scamsagainstfinancialinstitutionsbyscoundrels,""reportandcontactformajorcontingencies,"and"reportandcontact fordisastrousemergencies" toactivelycare forandeffectivelyremindourcustomerstoavoidthelossesresultingfromscams.
7. To improveourattentionattachesto thehandlingofwithcustomers'disputes, increasetheefficiencyandquality forhandlingconsumptiondisputes,andprotect the rightsofconsumers, theBankestablished the"ConsumerDisputesHandlingSystem,"and theAuditingDepartmentshallreviewtheexecution.
8. Toprotectcustomer rightsandbenefits,optimize thebusinessoperation, theBankestablishedthe"ConsumerProtectionPolicyofTaiwanBusinessBank"and"ProceduresforConsumerProtectionProceduresofTaiwanBusinessBank,"anddesignated theresponsibledepartment to inspect theeffectivenessof theconsumerprotectionsystem.TheAuditingDepartmentshallberesponsibleforexaminetheexecutionandrealizetheprotectionforconsumers.
9. To treatShareholders ina fairmanner, theBankestablished the"Procedures for theOperations forDisclosing InformationExternally," "Directions forEquityManagement,"and "EthicalCorporateManagementBestPracticePrinciples,"whichclearlystatedthat the internalpersonnel isprohibited fromtradingsecuritiesof theBankbefore theannouncementofrelevantinformation.
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4444 Taiwan Business Bank Annual Report 2018
Assessed items
State of operations Gaps with the Corporate Governance Practices Best Practice
Principles for the Banking Industry, and the cause of the said
gaps
Yes No Summary
7. WithrespecttotheresultsofannualcorporategovernanceevaluationmostrecentlyissuedbytheCorporateGovernanceCenterofTaiwanStockExchange,pleasedescribetheimprovementsandprovidepriorityandmeasurestoenhancethosemattersthathavenotyetbeenimproved.
TheBankamended theRegulations forBoardPerformanceAssessment,stating that theassessment forBoardperformanceshallbeoutsourcedevery threeyears.Theboardperformanceassessmentof2018hadbeencompletedattheendofFebruary2019andwillbereportedatthe6thmeetingofthe15thBoard.
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(7) Operations of the Remuneration CommitteeA.MembersoftheRemunerationCommittee
Title(Note 3)
Qualifications
Name
Qualifications Qualifications
(Note 1)
Independent Status (Note 2) Number of Serving as the
Member of Remuneration Committee for Other Public Companies
Note
A B C 1 2 3 4 5 6 7 8
ManagingDirector(IndependentDirector) Xin-WuLin 0 Appointedon
2018/6/29
IndependentDirector Jin-LongLiu 0 Appointedon2018/6/29
IndependentDirector Wei-ShengHuang 0 Appointedon2018/6/29
ManagingDirecto(IndependentDirector) Chau-ChenYang 0 Resignedon
2018/6/28
IndependentDirector Chih-YuCheng 0 Resignedon2018/6/28
IndependentDirector Yaw-HueiHuang 0 Resignedon2018/6/28
Note1: DirectorsandSupervisorsshallmeetoneof the followingprofessional requirements, togetherwithat least five-yearworkexperience:A. Aninstructororhigherinadepartmentofcommerce,law,finance,accounting,orotheracademicdepartmentrelatedtothe
bankingbusinessinapublic/privatejuniorcollege,college,oruniversity.B. Ajudge,publicprosecutor,attorney,certifiedpublicaccountant,orotherprofessionalortechnicalspecialistwhohaspassed
anationalexaminationandhasbeenawardedacertificateinaprofessionalnecessaryforthebankingbusiness.C.Withworkexperience in thefieldsofcommerce, law,finance,accounting,orotherprofessionnecessaryfor thebanking
business.Note2: Duringthetwoyearsbeforebeingelectedorduringthetermofoffice,membersshallmeetthefollowingtermswith“”mark.
(1) Neitheremployeesofthebanknoritsaffiliates.(2) Neitheradirectororasupervisorof thebanknor itsaffiliates. (This restrictiondoesnotapply to independentdirector
positions in thebank, itsparentcompanyorsubsidiary,whichhavebeenappointed inaccordancewithSecuritiesandExchangeActorlawsoftheregisteredcountry.)
(3) Individualshareholderwhoholdsshares,togetherwiththoseheldbyhis/herspouse,minorchildren,orheldunderothers'names, inanaggregateamountof1%ormoreof thetotaloutstandingsharesof thebankornaturalpersonswhorankamongthetop10shareholdersintermsofthesharevolumeheldareexcluded.
(4) Thespouseorrelativewithintheseconddegreeofkinship,orlinealrelativewithinthethirddegreeofkinship,ofanyofthepersonsintheprecedingthreesubparagraphsareexcluded.
(5) Directors,supervisors,oremployeesofajuristicpersonshareholderthatdirectlyhold5%ormoreofthetotaloutstandingsharesofthebankorranksamongthetop5juristicpersonshareholdersinthetermsofsharevolumeheldareexcluded.
(6) Directors,supervisors, themanagerialofficer,or theshareholderholding5%ormoresharesofaspecificcompanyorinstitutionthatalsohavefinancialorbusinessdealingswiththebankareexcluded.
(7) Aprofessional,owner,partner,director,supervisor,or themanagerialofficerandhis/herspouseofasoleproprietorship,partnership,company,orinstitutionthatprovidescommercial,legal,financial,accountingorconsultingservicestothebankoritsaffiliatesisexcluded.
(8)AnyofthecircumstancesinthesubparagraphsofArticle30oftheCompanyActdoesn'thappen.
B.ResponsibilityoftheRemunerationCommittee TheRemunerationCommitteeshallexercisetheduecareofagoodadministratorandperformthefollowing
dutiesabidebyitsobligations:a.Formulateandregularlyreviewthepolicy,system,standardsandstructureoftheperformanceappraisal,salaryandremunerationofdirectorsandmanagerialofficers.
b.Regularlyreviewandstimulatethesalaryandremunerationofdirectorsandmanagerialofficers.
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C.OperationofRemunerationCommittee:a.TheBankhasaRemunerationCommitteecomposedof3members.
b.Termofofficeof thecurrentmembers:FromJune29,2018 toJune28,2021.TheRemunerationCommitteemetsix(6) times(A) in themost recentyear.Thetablebelowprovides informationon thequalificationsandattendanceofthemembers.
Title Name Number of actual attendance (B)
Number of delegated attendance
Actual attendance rate (%)(B/A)(Note) Remarks
CommitteeChair Xin-WuLin 3 100 AppointedonJune29,2018;requiredattendance3times;withanattendancerateof100%.
Member Jin-LongLiu 3 100 AppointedonJune29,2018;requiredattendanceof3times;withanattendancerateof100%.
Member Wei-ShengHuang 3 100 AppointedonJune29,2018;requiredattendanceof3times;withanattendancerateof100%
CommitteeChair Chih-YuCheng 3 100 ResignedonJune28,2018;requiredattendanceof3times;withanattendancerateof100%.
Member Chau-ChenYang 3 100 ResignedonJune28,2018;requiredattendanceof3times;withanattendancerateof100%.
Member Yaw-HueiHuang 3 100 ResignedonJune28,2018;requiredattendanceof3times;withanattendancerateof100%.
Otheritemsthatshallberecorded:1.If theBoardofDirectorsdoesnotadoptoramend therecommendationsmadeby theRemunerationCommittee, thedate,andsessionoftheBoardofDirectors'meeting,resolutions,votingresultsandhandlingofopinionsoftheRemunerationCommitteebytheBankshouldbedisclosed(iftheremunerationapprovedbytheBoardofDirectorsisbetterthanthatoftheRemunerationCommittee,thediscrepanciesandrelatedreasonsshouldbestated):None.
2.ForthedecisionsmadebytheRemunerationCommittee,iftherearememberswhovetoedorwithheldfromthedecisionandtherearedocumentedrecords,thedate,number,contentofthemotion,allmembers'opinions,andwaysinhandlingtheseopinionsshouldbeelaborated:None.
3.Discussionoftheproposalandhandlingofopinionsfor2018
Board Date/Period Agenda The resolution results of the Remuneration Committee and the Company's response regarding the Remuneration Committee's opinions
The20thBoardmeetingofthe14thBoardonMarch21,2018
Theallocatedanddistributedamountandpercentage fortheremunerationofemployeesandDirectorsin2017wereproposed tobeNT$272,350,373andNT$36,581,648,aswellas4.467%and0.6%,respectively.
Resolution resultsof theRemunerationCommittee:Passed,andsubmitted to theBoardforconsideration.TheCompany's response regarding theRemunerationCommittee's opinions:Resolutionpassedbyalldirectorsinattendancewithconsent.
The20thBoardmeetingofthe14thBoardonMar.21,2018
Resolution of regular assessment of supervisors andmanagersoftheBank.
Resolution resultsof theRemunerationCommittee:Passed,andsubmitted to theBoardforconsideration.TheCompany's response regarding theRemunerationCommittee's opinions:Resolutionpassedbyalldirectorsinattendancewithconsent.
The1stBoardmeetingofthe15thBoardonJuly18,2018
ResolutionofremunerationdistributionoftheBankin2017. Resolution resultsof theRemunerationCommittee:Passed,andsubmitted to theBoardforconsideration.TheCompany's response regarding theRemunerationCommittee's opinions:Resolutionpassedbyalldirectorsinattendancewithconsent.
The1stBoardmeetingofthe15thBoardonJuly18,2018
Resolutionof thepersonalchangeonfinancialsupervisoraccordingtothebusinessrequirements.
Resolution resultsof theRemunerationCommittee:Passed,andsubmitted to theBoardforconsideration.TheCompany's response regarding theRemunerationCommittee's opinions:Resolutionpassedbyalldirectorsinattendancewithconsent.
The3rdBoardmeetingofthe15thBoardonOctober24,2018
Resolution of theproposed revision of “Directions forRetirement,Gratuity,andLayoffofEmployeesofTaiwanBusinessBank.”
Resolution resultsof theRemunerationCommittee:Passed,andsubmitted to theBoardforconsideration.TheCompany's response regarding theRemunerationCommittee's opinions:Resolutionpassedbyalldirectorsinattendancewithconsent.
The4thBoardmeetingofthe15thBoardonDecember19,2018
Resolution of reporting the implementation results ofthenormaldiscounted retirementplanof theBankandproposed toadjust thenumberofmonths for incentivepaymentsince2020.
Resolution resultsof theRemunerationCommittee:Passed,andsubmitted to theBoardforconsideration.TheCompany's response regarding theRemunerationCommittee's opinions:Resolutionpassedbyalldirectorsinattendancewithconsenttoadjustthenumberofmonths;thewholecasewaspassedafterrevision.
The4thBoardmeetingofthe15thBoardonDecember19,2018
Resolution of carrying out the proposed employeeshareholdingtrustandestablishtheEmployeeShareholdingTrustCommittee of theBank to improve employees'benefits,cohesivenessandreinforcetheequityoftheBank.
ResolutionresultsoftheRemunerationCommittee:Agreedonamendingwordingsandadjustmentsonarticlesequence.Passedafterrevision,andsubmittedtotheBoardforconsideration.TheCompany's response regarding theRemunerationCommittee's opinions:Resolutionpassedbyalldirectors inattendancewithconsent;however, theHumanResourcesDepartmentshalldetermine if it is required to report to theMinistryofFinance.
Note1:WheremembersoftheRemunerationCommitteeresignbeforetheendoftheyear,theNotescolumnshallbeannotatedwiththedateofresignation.Actualpresencerate(%)shallbecalculatedusingthenumberofRemunerationCommitteemeetingsconvenedandactualpresenceduringthetermofservice.
Note2:Whenanelection isheld for theRemunerationCommitteebefore theendof theyear,membersofboth thenewandoldcommitteeshallbe listed inseparatecolumnsandnotedasnew,oldorre-electedmembers,alongwiththeelecteddate, intheremarkcolumn.Theactualpresencerate(%)shallbecalculatedusingthenumberofRemunerationCommitteemeetingsconvenedandactualpresenceduringthetermofservice.
4646 Taiwan Business Bank Annual Report 2018
(8) Corporate Social Responsibility
Assessed items
Current Operation (Note 1) Gaps with the Corporate Social
Responsibility Best Practice Principles
for TWSE/GTSM Listed Companies and root causes
Yes No Summary
1. ExercisingCorporateGovernance
(1)Doesthebankdeclareits corporatesocialresponsibility
policyandexaminetheresultsoftheimplementation?
(2)Doesthebankorganizesocialresponsibilitytrainingonaregularbasis?
(3)Doesthebankhaveaunitthatspecializes(orisinvolved)inCSRpractices?IstheCSRunitrunbyseniormanagementandreportsitsprogresstotheboardofdirectors?
(4)Doesthebanksetupareasonableremunerationpolicycommensuratewithemployees'performanceappraisalsandCSR?Istheremunerationpolicysupportedbyaneffectivereward/disciplinesystem?
1. TheBankspecified in itsArticlesofAssociation that thepurposeof theBank is tocomplywiththenationalfiscalpolicy,providecreditsforthepublicandSMEs,andhelpSMEsimprovingtheirproductionfacilities,financialstructures,andensurethehealthyoperationsandmanagement.TheBankshallalsoadopttheCorporateSocialResponsibilityBestPracticePrinciplesasitsstandardtorealizetheresponsibilitiesasthespecializedbankforSMEstomaintainthestabilityofsocialfinanceandactivelyparticipateinmattersofsocialenvironments,promotionofsocialwelfare,andcaringfortheunderprivileged.
2. To realize the social corporate responsibility andpromote the balances and sustainabledevelopmentof theeconomy,society,andecologicalenvironment, theBankestablished the“CorporateSocialResponsibilityBestPracticePrinciples”andprepared theCorporateSocialResponsibilityReport thatpublishedonthewebsiteof theBank,disclosingthepromotionof theBank'ssocialresponsibility.
The trainingprogramof theBank includescontents related tosocial responsibility; italsoassignsemployeestoparticipateinexternaltrainingprogramsinrelationtocorporatesocialresponsibility.
1. TheBankhasestablished the “CSRCommittee”anddisclosed information related to theorganizationalstructureof theCSRCommitteeon theBank’swebsite.The"CorporateSocialResponsibilityBestPracticePrinciples"wasalso inplace,statingthat theCSRCommitteeshallreporttotheBoardannuallyontheimplementationofcorporatesocialresponsibilities.ThemeetingoftheCSRCommitteeshallbeconductedeveryhalfayearandthefrequencymaybeadjustedasnecessary,butatleastannually.
2. Workgroupssubordinate to theCSRCommitteeshall compile the resultsof implementingcorporatesocial responsibilitiesof theyear(pleaserefer to IX.“CorporateSocialResponsibilityReport”),andsetupnewtargetsandexecutionplansfornextyear.TherelevantreportshallbesubmittedtotheBoardforapprovalanddisclosedintheannualreportandontheBank’swebsite.
TheBankhasestablished the "Directions forSalaryPayment toEmployees"and"Directions forPaymentofNewYear,Festival,andPerformanceBonuses,"whichawardsemployeebonusaccordingtotheoperatingperformanceoftheBankandconsiderstheyear-endauditresultsoftheemployeesasthebasisforpromotionandsalary.Furthermore,theEmployeeRewardandPunishmentRegulationsoftheBankprovideclearpunishmenttermsregardingviolationofbusinessethicsorconductofbriberyandcorruption,withdismissalfromofficeastheheaviestpunishment.Inaddition,theRegulationsalsosetout therewardprovisionsregardingpreventionorreportingofmisconductsor fraud,effectivelyencouragingemployeestorealizebusinessethicsandfulfillsocialresponsibilities.
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2. FosteringtheSustainableEnvironment
(1)Doesthebankendeavorto utilizeallresourcesmore
efficientlyanduserenewablematerialswhichhavealowimpactontheenvironment?
(2)Doesthebankestablishproperenvironmental management systemsbasedonthecharacteristicsoftheirindustries?
(3)Doesthebankmonitortheimpactofclimatechangesonitsoperatingactivities,implementgreenhousegasemission-checks,formulateenergy-savingandcarbon-emissionreductionaswellasgreenhousegas-reductionstrategies?
1. Tonercartridgesareprovidedtorecyclingcompaniesforrecyclingandreusing.2. Promotionofdouble-sidedprintingtosavetheusageofpaper.3. Engagingrecyclingcompaniestohandleordonateold“computerequipment,”4. ContinuoususingpaperrollsfreeofBPA.5. FullyreplacingofficelightingsatourbusinesspromisestoLEDlightingswith“EnergyLable.”6. Lightings inpublicareasandemergency lightings in theheadquarterbuildingarereplacedwith
newLEDlightings.
1. Executingenvironmentcleaningandmaintenanceaccordingtothe“ProcedureGuidelinesfortheCleaningandMaintenanceofBusinessPremises”andimplementthewastesortinginresponsetoenvironmentalprotection.
2. Tosaveenergyonasustainedbasis,theBankcompliedwiththeISO50001EnergyManagementandpublishedtheenergypolicyonourofficialwebsite,andbuilt themanagementsystemandregulationsforenergyusage.TheheadquarterbuildingwasawardedthecertificateforISO50001EnergyManagementSystem.
1. Compliancewith"RulesofEnergySavingforSpecifiedEnergyUsers"promulgatedbytheMinistryofEconomicAffairsandTaipeiCitySelf-GovernmentOrdinanceforEnergySavingandCarbonEmissionReduction,theaverageair-conditioningtemperaturewithinbusinesspromisesandofficesremainedat26°Corabove.
2. TheBank implements thewaterandenergysavingmeasuresandtracksthewaterandenergyusageofeachdepartmentasareferencefortheevaluationofoperatingperformance.
3. Reviewofexecutionineachimprovementplanforenergysavingtoenhancetheenergyefficiencyofequipmentandcutdowntheutilityexpenses.
4. Declaration of "Information onGreenhouseGasesEmission andReduction" on MarketObservationPostSystemofTWSEfordisclosing theresultsof theBank'senergysavingandcarbonemissionreductionexecution.
5. Introductionof ISO14064GreenhousegasesPart1:SpecificationwithGuidancetodisclosethegreenhousegasesemissionoftheheadquarterbuilding.
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3. PreservingPublicWelfare(1)Doesthebankdevelopitspolicies
andproceduresinaccordancewithlawsandtheInternationalBillofHumanRights?
TheregulationsonpersonnelaffairsoftheBankareestablishedinaccordancewiththerelevantlaborlaws,withreferenceto internationallyrecognizedprinciplesconcerningbasichumanrightsof labor.TheBankadoptsanequalemploymentpolicyirrespectiveofgender,race,age,marriagestatus,andfamilyconditions,anddeliversequalopportunitiesprinciplesinrespectofcompensation,employmentconditions,training,andpromotiontoprotectthelegalrightsofemployees.
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Assessed items
Current Operation (Note 1) Gaps with the Corporate Social
Responsibility Best Practice Principles
for TWSE/GTSM Listed Companies and root causes
Yes No Summary
(2)Doesthebankhaveavenuesthroughwhichemployeesmayraisecomplaints?Areemployeecomplaintsbeinghandledproperly?
(3)Doesthebankprovidesafeandhealthyworkenvironmentsforitsemployees,andorganizetrainingonsafetyandhealthforitsemployeesonaregularbasis?
(4)Doesthebankhaveacommunicationchannelbetweenthebankanditsemployees,andthemeansthroughwhichemployeesarenotifiedofmaterialchangesinthebank'soperations?
(5)Doesthebankimplementaneffectivetrainingprogramthathelpsemployeesdevelopskillsoverthecourseoftheircareer?
(6)Doesthebankimplementconsumerprotectionpoliciesandgrievanceprocedureswithregardstoitsresearch,development,procurement,operationandserviceactivities?
(7)Doesthebankcomplywithlawsandinternationalstandardswithregardstothemarketingandlabelingofproductsandservices?
(8)Doesthebankevaluatesuppliers'environmentalandsocialconductsbeforecommencingbusinessrelationships?
(9)Isthebankentitledtoterminatesupplyagreementatanytimewithamajorsupplier,ifthesupplierisfoundtohaveviolateditscorporatesocialresponsibilitiesandcausedsignificantimpactsagainsttheenvironmentorthesociety?
Employeesof theBankmay fileacomplaint inwriting todirectorsatall levelsatany timewithtelephoneandonlinecomplaintmethodsalsoavailable,andtheheadquarterwillassignspecialistsforproperhandling.
TheBankprovidesregularhealthcheckeveryone-to-twoyearand three-houroccupationalsafetytrainingforemployeesonactivedutieseverythree-year,respectively.TheBankalsoengagedvisitingservicedoctors, recruited regularnursingpersonnel,andestablishedhealthservice roomsandbreastfeedingroomstocarefortheemployees'healthandaddresstheimportanceofhealth.
Matters involving therightsorwelfareofemployeesareregularlysubmitted to labor-managementconferencesfordiscussion,oralabor-managementnegotiationmaybeinitiatedinadvance.TheBankalsosetupchannelsforemployeestoexpresstheiropinionsinordertorespectandprotectthelegalrightsofouremployees fully.Forchanges inoperationsor requirements thatmayhavesignificanteffectsonemployees,exceptfordispatchingletterstoalldepartmentsof theBankandrequiringforannouncingsuchchangesduringbusinessmeetings, theBankalsousesvideoconference for theentireBankforeffectivenotice.
TheBankestablishes theannualemployee trainingplanaccording to functionandexperiencesofemployees, includingcomprehensiveprogramssuchasgeneralknowledgeprogram fornewemployees, foundationprogram,advanceprogramandworkshops forvariousbusiness,aswellasofficertrainingandseminars.TheBankalsoassignsrelevantpersonneltoparticipateinprofessionaltrainingprogramsorganizedbyexternal institutionsorengageexternalprofessional lecturers toprovide lessons,cultivating theprofessionalskillsandknowledgeofouremployees,exerting theeffectof training-application integration,soasto improvethecareerdevelopmentpotentials forouremployees.
Please refer to IX.CorporateSocialResponsibilityReport -3. (2)ReinforcementofConsumerProtection.
Except forcomplyingwithrelevantrequirementsof theBank, themarketinganddescription for theproductsandservicesalsoabidebytherelevantregulations, letters,andordersfromthecompetentauthorityaswellasinternationalstandards.
Thecontractof theBanksetout terms that requirecontractors to fulfillsocialandenvironmentalprotectionresponsibilities,toimprovetheobligationsofcontractors.
Thecontractof theBankprovides thatwheresuppliersviolate itscorporatesocial responsibilitypoliciesandgeneratematerialeffectstotheenvironmentandsociety, theBankmayterminatesuchcontractsuponverifyingthat theviolationsweretrue,soas torequirecontractors to fulfill theself-managementregardingtheirsocialresponsibilities.
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4. EnhancingInformationDisclosure Doesthebankdiscloserelevant
andreliableinformationrelatingtotheircorporatesocialresponsibilityonitswebsiteandthe“MOPS”sectionofthewebsitefortheTaiwanStockExchange?
1. Establishmentof"CorporateSocialResponsibility"sectiononthewebsiteoftheBanktodiscloseinformationrelatedtocorporatesocialresponsibility.
2. Disclosureofthe"CorporateSocialResponsibilityReport"oftheBankonthewebsiteoftheBankandMarketObservationPostSystem.
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5. RegardingBanksestablishedtheirCorporateSocialResponsibilityBestPracticePrinciplesaccordingto"CorporateSocialResponsibilityBestPracticePrinciplesforTWSE/GTSMListedCompanies,"pleasespecifythegapsbetweenitsoperationsandtheprovisionsintheCode:TheBankestablishedits"CorporateSocialResponsibilityBestPracticePrinciples"accordingto"CorporateSocialResponsibilityBestPracticePrinciplesforTWSE/GTSMListedCompanies"topromotetheperformanceofcorporatesocialresponsibility,andnosuchgapexists.
6. Otherimportantinformationcontributestounderstandingtheoperationsofcorporatesocialresponsibility:PleaserefertoIX.CorporateSocialResponsibilityReport.
7. Wherethecorporatesocialresponsibilityreportofthebankhaspassedtheverificationstandardsofrelevantcertificationinstitution,pleasespecify:TaiwanBusinessBank'sCorporateSocialResponsibility(CSR)ReporthaspassedtheverificationconductedbyBritishStandardsInstitution(BSI)accordingtoAA1000(Accountability)Type1andguidelinesofGRIStandards.ContentdisclosedintheCSRReportoftheBankcompliedwiththecoreoptionsofGRIStandards2016;BSIhasalsoissuedanIndependentAssuranceOpinionStatementtotheBank.
Note1:Provideabriefdescriptionintheappropriatecolumn,regardlessofwhether"yes"or"no"isselected.
4848 Taiwan Business Bank Annual Report 2018
(9) Implementation of Business Integrity
Assessed items
State of operations Gaps with the Ethical Corporate Management Best
Practice Principles for TWSE/GTSM Listed Companies and the
cause of the said gaps
Yes No Summary
1. Policiesandstrategiesestablishedtoensurebusinessintegrity
(1)HasthebankstatedinitsMemorandumorexternalcorrespondenceaboutthepoliciesandpracticesithastomaintainbusinessintegrity?Aretheboardofdirectorsandthemanagementcommittedinfulfillingthiscommitment?
(2)Doesthebankhaveanymeasuresagainstdishonestconducts?Arethesemeasuressupportedbyproperprocedures,behavioralguidelines,disciplinaryactionsandcomplaintsystems?
(3)HasthebanktakenstepstopreventoccurrenceslistedinArticle7,Paragraph2of“EthicalCorporateManagementBestPracticePrinciplesforTWSE/GTSM-ListedCompanies”orbusinessconductsthatarepronetointegrityrisks?
TheBankengagesinbusinessactivitiesonthebasisoffairness,honesty,integrity,andtransparency,anddiscloses theEthicalCorporateManagementBestPracticePrinciplesof theBankonMarketObservationPostSystemandthecorporatewebsiteoftheBank.Toproactivelypreventanyunethicalbehavior,theWorkingRulesoftheBankprovidesthat,anemployeeshallnottakeadvantageofhis/herpost tobreak therulesorcommit jobbery for illegal interestsofhimself/herselforothers;also,theemployeesshallnotacceptanygiftsorenjoyother illegitimatebenefits.TheBankcontinuesorganizing the relevant training todeepenemployee'scognitiononmoralbehaviorandethicalcorporatemanagementaswellasitspractices.
TheBanksets legalcomplianceas its fundamentalpremise formaterializingethical corporatemanagement.TheEmployeeRewardandPunishmentRegulationsandProcedureGuidelines forGeneralEvaluationprovideclearpunishmenttermsregardingviolationofbusinessethicsorconductofbriberyandcorruption,withdismissal fromofficeas theheaviestpunishment. Inaddition, theRegulationsalsosetout therewardprovisionsregardingpreventionorreportingofmisconductsorfraud.Article11underthe“DirectionsforHandlingReportedCases”oftheBankprovidesthat,uponthecompletionof the investigationregardingthereportedcase,where it isverifiedthat theallegedpersonneldidviolaterelevant lawsandregulationsor therequirementsunder theethicalcorporatemanagementpoliciesof theBank,request theallegedpersonnel tostopsuchconducts immediatelyandimposeproperpunishmentsaccordingtotherelatedrequirementsoftheBank,soastoeffectivelypreventunethicalbehaviors.
Employeesof theBankshallcomplywith the internalcontrolsystemof theBankwhencarryingoutbusiness.TheBankstipulatespreventivemeasures forarticulation in itsbusiness rules; forexample,under"DirectionsforConstructionWorkaswellasPurchase,CustomizationandSellingofProperties,"Article21providesthat"personnelwhomanagesconstructionworkaswellaspurchasing,andcustomizingpropertiesshallnotdirect the inspectionofsuchproject,andpersonnel involved inthe joint inspectionshallnotperformthemonitoring;personnelwhomanagessellingofpropertiesshallnotdirect the inspectionofsuchproject."Furthermore,Article27providesthatmanagingandsupervisingpersonnel forconstructionworkaswellaspurchasing,andcustomizingandsellingofpropertiesatall levelsshallbestrictlyprohibited fromacceptingmealbanquet invitationandgiftstoensure integrityand justice; regular rotationshallbe implemented formanagingprocurementpersonnel."Themanagingcolleaguesarerequiredtocomplywithsuchprovisions.Shalltherebeanymisconduct,reporttothePersonnelEvaluationCommitteeforreviewandhandling,soastopreventunethicalbehaviors.Thesignedcontractsprohibitsuppliersfromconductinganyillegalactsthatmayinfringeintellectualpropertyrights,etc.Regardingthecredit loansforstakeholders,basedonArticle32,Article33oftheBankActanditsrelevantrequirements,theBankestablishedthe"ProceduresofCreditLoansforStakeholders"andcarriedoutthepre-loanreview,post-loanreview,aswellasregularandnonscheduledreviewstogiveeffecttothepreventivemeasures.
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2. Actionstoensurebusinessintegrity
(1)Doesthebankevaluatetheintegrityofallcounterpartiesithasbusinessrelationshipswith?Arethereanyintegrityclausesintheagreementsitsignswithbusinesspartners?
(2)Doesthebankhaveaunitthatspecializes(orisinvolved)inbusinessintegrity?Doesthisunitreportitsprogresstotheboardofdirectorsonaregularbasis?
Article20undertheEthicalCorporateManagementBestPracticePrinciplesoftheBankprovidesthat,whensigningacontractwithothers, it isrequiredtofullyunderstandtheotherparty's integrity.ThecontractshallincludetermsofcomplyingwiththeethicalcorporatemanagementoftheBankandshallstipulatethatwhenthecounterpartyinthetransactionengagesinunethicalbehaviors,theBankmayterminateorcancelthetermsofthecontractatanytime.AsspecifiedinthebusinessrulesforcreditinvestigationandSOP,thecredit investigationforvarioustypesof loansshallbecarriedoutthroughsearching internalandexternaldatabasesandfield inspectiontoevaluatethecredit recordsof thecounterparty.Furthermore,whenprocessingpurchaseortender,wheretheassignedpersonnelfromtheawardedsupplierofthepurchasingprojectengagesinanyillegalconducts,leakageofconfidentialinformationor fault that results in lossesof theBank, thesuppliershallbe jointly responsible forcompensating the losses. Inaddition, refer to theGovernmente-Procurementsystemregardingsuppliersontheblacklist;theBankmayrejectsuchsupplierstoparticipateinthetender.
TheBoardSecretariatDepartmentof theBankis theresponsibledepartmentforethicaloperations.ThedepartmentwillreporttotheBoardregardingtheexecutionofethicaloperationsforthepreviousyearbeforeQ1of theyear.Performanceof integrityoperations in2018(submittedtothe5thBoardmeetingofthe15thBoardonJanuary20,2019)focusesonfouraspectsasfollow:1. Legalcomplianceisthefundamentalpremiseformaterializingethicalcorporatemanagement:12
sessionswereheldforlegalcompliancetraining.2. Ethicaltraining:Newemployeetrainingwasheldfor547employeesanddigital learningfor4878
employees.3. Violationofethicalcorporatemanagement:None.4. Protectionandconflictof interestsconcerningstakeholders:Employeecommunication(5 labor-
managementconferenceswereheld),customercommunication (handled293FSCcomplaintcases in total),shareholder/investorcommunication(Total2roadshowswereheld),9casesofconflictofinterestsforBoard(ManagingBoard)meetingintotal.
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Assessed items
State of operations Gaps with the Ethical Corporate Management Best
Practice Principles for TWSE/GTSM Listed Companies and the
cause of the said gaps
Yes No Summary
(3)Doesthebankhaveanypolicythatpreventsconflictofinterest,andchannelsthatfacilitatethereportingofconflictinginterests?
(4)Hasthebankimplementedeffectiveaccountingandinternalcontrolsystemsformaintainingbusinessintegrity?Arethesesystemsreviewedbyinternalorexternalauditorsonaregularbasis?
(5)Doesthebankorganizeinternalorexternaltrainingonaregularbasistomaintainbusinessintegrity?
RegardingtheresolutionsattheBoardmeeting,wheresuchresolutionsrelatetotheinterestsofDirectors,managers,authorizedpartiesof theBank,orotherstakeholderspresentingatorattendingtheBoard,orthelegalentitybeingonepresented,disclosethematerialcontentofsuchinterests.IfsuchinterestsmaybeharmfultotheinterestsoftheBank,suchpersonnelshallpresenthis/heropinionandanswerinquiries,andshallnotparticipateinthediscussionandpoll.Also,suchpersonnelshallabstainfromthediscussionandthepoll,andshallnotrepresentotherDirectorstoexercisetheirvotingrights.Directorsshallmaintaindisciplineamongoneanotherandnotinappropriatelysupportoneanother.Furthermore,theInternalControlSystemforSecuritiesFirmsprovides that theCompanyshallexaminetheconsignedtradingby internalstaffof theCompanyafterclosing thedeal forensuringwhethersuch transaction involvesundisclosedinformation,or is inconflictsof interestswith theCompanyorotherclientsandshallbeavoided.Theinternalcontrolsystemshallprescribetheexaminationprocedures.TheBankestablishedtheStakeholdersRelationsonitscorporatewebsitetoprovideacommunicationchannelforstakeholders.
1. TheBankadoptedtheaccountingsystemestablishedaccordingtotheInternationalFinancialReportingStandardsrecognizedbytheFSCforitsoperations.
2. TheBankhasdulycompliedwith“ImplementationRulesof InternalAuditandInternalControlSystemofFinancialHoldingCompaniesandBankingIndustries,”establishedan internalcontrolsystemandimplementedrisksmanagement;theexclusivelyindependentauditdepartmentshallcarryouttheaudittoensurethedesignandexecutionofthesystembeingcontinuinglyeffective.
3. TheAuditingDepartmentshallcarryout theauditbusinessaccordingtothe“ImplementationRulesofInternalAuditandInternalControlSystemofFinancialHoldingCompaniesandBankingIndustries”andthe“InternalAuditOperationGuidelines,”andshallreporttotheBoardandAuditCommitteeregardingtheauditbusinessatleasteverysixmonths.
4. TheAuditingDepartmentshallconduct:(a)ageneralauditandaprojectauditregardingthedomesticoperations, finance,assetscustody,and information technologydepartsat leastonceayear; (b)aprojectaudit regardingothermanagementdepartmentsat leastonceayear; (c)ageneralauditregardingtheregionaloperationcenters,domesticprocessingcenters,andoverseasbranchesatleastonceayear;(d)auditsonoverseasrepresentativeofficesbymeansofauditingreportsoron-sitauditsatafrequencyadjustedasnecessary;(e)aprojectauditregardingthefinance,riskmanagement,andlegalcomplianceofsubsidiarieseverysixmonths;and(f)engageresponsibleauditpersonnel for thesecuritiesbusinesstocarryout the internalauditoperations; theAuditingDepartmentshallsupervisetheauditeverysixmonths.
Regardingtheethical trainingprogramof theBank, therelevantbusinessdepartmentsshallpromotetheinternalandexternalrequirementsthroughmanagingthetraining, includingcontents inrelationtoethicaloperationssuchaslawsandregulationspromotion,legalresponsibilitiesofemployeesoftheBank,etc.Itshallalsoorganizethebusinessfoundationprogramfornewemployeesuponthedateofarrivingathis/herpostandarrangeprogramsfor"LegislativeRequirements forFinancialPractitioners,"whichshallbeprimarilybasedontheregulations(includingethicaltraining).10echelonsoftrainingwereorganizedduring2018,547newemployeescompletedtrainingintotal,andtheBankalsoassignedpersonneltoparticipateinexternaltrainingregardingethicaloperationsandcorporatesocialresponsibilityinduecourse.
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3. Implementationofamisconductreportingsystem
(1)Doesthebankprovideincentivesandmeansforemployeestoreportmalpractices?Doesthebankassigndedicatedpersonneltoinvestigatethereportedmalpractices?
(2)Hasthebankimplementedanystandardproceduresorconfidentialitymeasuresforhandlingreportedmalpractices?
(3)Doesthebankassureemployeeswhoreportmalpracticesthattheywillnotfacerepercussionsformakingsuchreports?
1. Toestablishanethicalandtransparentcorporatecultureandpromotinghealthyoperations, theBankestablished the “Directions forHandlingReportedCases”basedon the “ImplementationRulesofInternalAuditandInternalControlSystemofFinancialHoldingCompaniesandBankingIndustries,”“RegulationsGoverning theEstablishmentof InternalControlSystemsbyServiceEnterprises inSecuritiesandFuturesMarkets,”and “EthicalCorporateManagementBestPracticePrinciples forTWSE/GTSMListedCompanies.”
2. PublishingthereportchannelattheintegratedentrancewebpagefortheofficialwebsiteandtheinternalsystemforemployeesandsettingupindependentreportingmailboxanddirectlinethatisdisclosedonthecorporatewebsiteforusagebyinternalandexternalpartiesoftheBank;specialistswillbehandlingsuchreportingmatters.
The“DirectionsforHandlingReportedCases”oftheBankhasstatedtheresponsibledepartment,SOPforinvestigation,andexecutionofrelatedconfidentialitysystemregardinganyreportedcases.
Article12underthe"DirectionsforHandlingReportedCases"oftheBankhasprovidedthattheBankshallkeepconfidentialregardingtheinformationthatissufficienttoidentifytheinformant, includingname,age,residence,andidentityoftheinformant.Exceptforotherwiseprovidedbythelaws,nothirdpartyisallowedtobrowseortranscribe.TheBankmaynotcarryoutdismissal,discharge,demotion,paycutregardingtheinformant,orformdamagestotherightsthattheinformantisentitledtoaccordingtolawsandregulations,contracts,orpractices,orotheradverseactions.However,wheretheinformantreporteduntruefactsorsetunjustifiedbenefitsastargetsshallbeexcluded.
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4. Enhancedinformationdisclosure Hasthebankdiscloseditsintegrity
principlesandprogressonitswebsiteandMOPS?
The"EthicalCorporateManagementBestPracticePrinciples"of theBank isdisclosedon theMarketObservationPostSystemanditscorporatewebsite.TheBankwillfacilitatetodisclosetheethicaloperationsonthecorporatewebsiteunder AboutTBB > CorporateGovernance.
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5. IftheBankhasformulateditsownprinciplesofintegrityoperationbasedon"EthicalCorporateManagementBestPracticePrinciplesforTWSE/GTSMListedCompanies,"pleasestatethedifferencebetweenitsprinciplesanditsoperation:Nodifference.
6. OtherimportantinformationcontributestounderstandingtheethicaloperationsoftheBank(suchastheBankexaminingandrevisingitsEthicalCorporateManagementBestPracticePrinciples):SubmitannuallyitsexecutionofethicaloperationstotheBoardanddisclosetheindependentreporte-mailanddirectlinethatencouragesinternalandexternalpersonneltoreportunethicalbehaviors.
5050 Taiwan Business Bank Annual Report 2018
(10) Procedures for Handling Material Inside Information:TheBank reports its informationaccording to the "TaiwanStockExchangeCorporationProcedures forVerificationandDisclosureofMaterial InformationofCompanieswithListedSecurities," "TaiwanStockExchangeCorporationRulesGoverning InformationFilingbyCompanieswithTWSEListedSecuritiesandOffshoreFund InstitutionswithListedOffshoreExchangeTradedFunds,"and"TaiwanBusinessBankProceduresforExternalInformationDisclosures."
(11) Inquiry for Corporate Governance Principles and relevant rules: Please refer to AboutTBB > Corporate Governance > Rules of Corporate Governance (https://www.tbb.com.
tw/web/guest/-429).(12) Other important information contributes to understanding the operations of corporate
governance: Please refer to About TBB > Corporate Governance and Investor Relations (https://www.tbb.com.tw/).(13) Execution of the internal control system
A.Internalcontrolsystemstatement
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Matters to be improved for the internal control system of Taiwan Business Bank and the improvement plan(Valuation date: December 31, 2018)
Matters to be improved Improvement MeasuresEstimated time for
the completion of the improvement
For implementinganti-money launderingoperations, thebackgroundandtherationaleforsuspicioustransactionsshowing thesignsofmoney launderingwerenotdulyverified.For trustactivitiesandapprovingsubscriptionoffinancialproducts,nopropercomputercontrolprocesswasinplace.Forfundtransactionthroughonlinebanking,noproperexaminationmechanismwasinplace.TheFSChasdetermined that theBankshallmake rectificationregardingtheabovementioned.
1.TheBankhasaddedthemandatorycolumnsfortransactionmonitoringinthesystem,whichshalldulyverify thebackgroundand therationale forsuch transactions; themanagersshallperformthereviewsubsequently.
2.TheBankhasaddedmeasures forsystemcontrol, theapprovaloffinancialproducttransactionsshallbesubjecttoconfirmationwiththecustomersregardingthenatureofinvestmentriskrating.
3.TheBankhas improved the fund transactionexaminationsystem, fund transactionsthroughonlinebankingusingthesameIPaddressofanexternalcomputerarealsoincluded in thescopeof theexaminationcontrol,and themanagersshallconductmonthlyreviews.
Completed.
Therewereerrorsindeclarationformsfiledtocompetentauthorities.
TheBankhasdevelopedthesystematiccontrol,establishedSOPreviewmechanisminfiling,andimproveditstrainingtoensuretheprecisionofdeclaration.
Completed.
B.WhereCPAsarecommissionedtoaudittheCompany'sinternalcontrolsystems,theauditreportpreparedbytheCPAsshouldbedisclosed
5252 Taiwan Business Bank Annual Report 2018
C. Overall information security implementation statement
Items to be improved and Countermeasures of Overall Information Security Implementation of Taiwan Business Bank
(Base Date: December 31, 2018)
Items to be improved Countermeasures Estimated time of completion
None
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Items to be improved and Countermeasures of Overall Information Security Implementation of Taiwan Business Bank
(Base date: December 31, 2018)
Items to be improved Countermeasures Estimated time of completion
None
5454 Taiwan Business Bank Annual Report 2018
(14) Sanctions imposed for violation of laws and regulations and corrective actions taken in the most recent two years and up to the end of February 2019A.Discloseanyindictmentofaresponsiblepersonoremployeebyaprosecutorforanoffenserelatedtothe
occupation During thecredit investigationactivities regarding loansapplicationmade to○○BranchbyJin○○Co.
Ltd.,Xiang○○Co.Ltd.,andJie○○ IndustrialCo.Ltd., theemployee○○Hsu fromthe○○BranchwassuspectedofbeingworkingwithGao○○FraudulentLoanGroup to improvehis/her results.EmployeeHsuacknowledgedthatsuchcompanieswerenotabletosecureanyloansduetonointentionofmakingrepaymentor that suchcompanieswereshell firmsor theactual representativeshadquestionablecredibilities.However,EmployeeHsuhidsuchinformationfromthecreditinvestigationreportandresultedin theuninformedBankandCreditGuaranteeFundgranted loansandguarantees indefault (theBankdiscoveredunusualfactorsinthecaseforXiang○○Co.Ltd.anddidnotgranttheloan;CreditGuaranteeFunddiscoveredunusualcircumstancesfactorsinthecaseforJie○○IndustrialCo.Ltd.anddidnotprovidetheguarantee, theBankthereforerejectedthe loan).TaiwanTaoyuanDistrictProsecutorsOffice initiatedanindictmentagainstEmployeeHsuforthecrimesofviolatingthebreachoftrust(committedandattempt)underArticle125-2oftheBankActonSeptember1,2014,andillegalbenefitbyfraudunderArticle339oftheCriminalAct(pre-revision)onJune18,2014.After thehearingatTaiwanTaoyuanDistrictCourt, theverdictofthefirstinstancedeliveredthatEmployeeHsuoftheBankwasinnocentonJune1,2018.TaiwanTaoyuanDistrictProsecutorsOfficewasdissatisfiedwiththeverdictandthereforelodgedanappealonJune29,2018.ThehearingiscurrentlybeingprocessedbyTaiwanHighCourt(2018Jin-shang-su-ziNo.42).
B.DiscloseanyfineimposedbytheFinancialSupervisoryCommissionforviolationofalaworregulation:a.ItwasfoundthattheBankhasnotfiledreportstotheInvestigationBureau,MinistryofJusticeforcurrencytransactionsaboveacertainamount.OnOctober27,2017, theFSC imposeda fineofNT$400,000accordingtoParagraph3,Article7oftheMoneyLaunderingControlAct.
b.Thebackgroundandtherationaleforsuspicioustransactionsthatshowsthesignsofmoneylaunderingwerenotdulyverified.Ajudgmentwasarrivedatafterre-examinationandstudyingthattheBankdidnotreporttotheInvestigationBureau,MinistryofJustice.OnOctober27,2017,theFSCimposedafineofNT$1,000,000accordingtoParagraph4,Article8oftheMoneyLaunderingControlAct.
c.TheBankcarriedoutcredit investigationandloansactivitiesforChingFuShipbuildingCo.Ltd.withouthavingrelevantinternalcontrolsystemsinplaceandfailedtodulyimplementsuchsystemtoeffectivelycontroltheloanrisks,whichviolatestherequirementsunderParagraph1,Article45-1oftheBankingAct.OnDecember29,2017,theFSCimposedafineofNT$2,000,000accordingtoParagraph7,Article129oftheBankingAct.
C.DiscloseanymattersinwhichsanctionswereimposedbytheFinancialSupervisoryCommissionpursuanttoArticle61-1oftheBankingAct:a.ThereviewandtransactionmonitoringforOBUaccountopeningwereimprecise.OnJune14,2017,theFSChasdeterminedthat theBankshallmakecorrectionregardingtheabovementionedaccordingtoparagraph1,Article61-1oftheBankingAct.
b.Itwasverifiedthatdefectsexistinthederivativesbusinessandinformationsecuritycontrolactivities.OnOctober27,2017, theFSChasdeterminedthat theBankshallmakecorrectionregardingtheabove-mentionedaccordingtoparagraph1,Article61-1oftheBankingAct.
c. Itwasverifiedthatdefectsexistintheanti-moneylaunderingactivities,trustbusiness,approvingfinancialproductssubscriptionandonlinebankingbusiness.OnDecember5,2018,theFSChasdeterminedthattheBankshallmakecorrectionregardingtheabove-mentionedaccordingtoparagraph1,Article61-1oftheBankingAct.
D.Discloseanysecurityincidentarisingfromemployeeinfidelityormaterialcontingenciesorfailuretofaithfullyabidebysecuritymaintenancework.Ifactuallosses,whethersinglyorinaggregate,exceedNT$50millioninanygivenyear:None.
E.OthermattersthatmustbedisclosedpursuanttoFinancialSupervisoryCommissiondesignation:None.
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(15) Material resolutions of a Shareholders' meeting or a Board meeting during 2018 and up to the end of February 2019A.ResolutionsattheShareholders'meetingof2018(2018.6.29)andresolutionexecutionprocess
Reason for the resolution Decision-making and Implementation
Resolutiontoratifytheannualfinalstatementandstatementsfor2017
TheShareholders'meetinghasratifiedtheannualfinalstatementandstatementsfor2017.
Resolutiontoratifytheannualearningsdistributionfromthefinalaccountsof2017.
TheShareholders'meeting has ratified the surplus distribution from the finalaccountsof2017andtheexecutionofsuchdistribution(cashdividendpershareofNT$0.268andstockdividendpershareofNT$0.3),andthedistributionwasmadetoShareholdersonOctober11,2018.
Resolutiontocarryoutacapitalincreaseviatransferredearningsinaccordancewiththeearningsdistributionfor2017.
Reported to theFinancialSupervisoryCommissionupon receiving theapprovalfromtheShareholders'meeting,andwaspubliclyannouncedandbecameeffectiveonAugust10,2018.Also, thealteration registrationwascompletedaccording totheapproval fromtheMinistryofEconomicAffairs throughLetterJing-shou-shang-ziNo.10701121060onSeptember21,2018.Stockcertificateswere transferredtoshareholdersonOctober11.2018,and the listing for tradingofournewsharescompletedsmoothly.
ResolutionofrevisingtheArticlesofAssociationoftheCompany
Reported to theMinistryofEconomicAffairsuponreceiving theapproval fromtheShareholders'meeting.Thealteration registrationwascompletedaccording to theapproval fromtheMinistryofEconomicAffairs throughLetterJing-shou-shang-ziNo.10701087000onJuly18,2018.
Removalofnon-competitionclausesfortheCompany'sDirectors.
Canceled thenon-competition restrictionon theMinistryofFinance (directorsofcompaniessuchasTaiwanFinancialHolding),BankofTaiwanCo.,Ltd.(directorsofcompaniessuchasFirstFinancialHolding),LandBankofTaiwanCo.,Ltd.(directorsofcompaniessuchasUnitedTaiwanBank),Li-LingLin (representativeofBankofTaiwanCo.,Ltd.),Cheng-ChuanKang(representativeofBankofTaiwanCo.,Ltd.),andYing-MingHe(representativeofLandBankofTaiwanCo.,Ltd.),uponreceivingtheapprovalfromtheShareholders'meeting,andpublishedontheMarketObservationPostSystem.
B.MaterialresolutionsofBoardmeetingsfor2018anduptotheendofFebruary2019:Pleasereferto AboutTBB > CorporateGovernance > Resolutionsof theBoardonthewebsiteof theBank (https://www.tbb.
com.tw).
(16) For 2018 and up to the end of February 2019, disclose any dissenting opinion of any director regarding any material resolution passed by the Board, where there is a record or written statement of such opinion: None.
(17) For 2018 and up to the end of February 2019, the resignations and dismissals of relevant personnel to the financial report
Dec. 31, 2018
Title Name Date of arrival Date of dismissal Reason for resignation or dismissal
President Tsan-HuangChou 2016.7.13 2018.3.22 Retirement
SVP&GM,AccountingDepartment Jin-FuYang 2015.12.1 2018.2.8 Retired
SVP&GM,TreasuryDepartment Chu-JouChen 2016.7.15 2018.7.18 ReassignedastheSVP&GMoftheWealth
ManagementDepartmentoftheBank
Note:RelevantpersonneloftheBankreferstoChairman,President,financialofficer,accountingofficer,andinternalauditofficer.
4. Accounting Expenses
(1) CPA professional charges grading table
Name of the accounting firm Name of the CPA Audit period Notes
KPMG Tan-TanChung Feng-HuiLee 2018.1.1-2018.12.31
5656 Taiwan Business Bank Annual Report 2018
Unit: NTD
Professional chargeFee range Accounting charge Non-accounting
charge Total
1 LessthanNT$2,000,000
2 NT$2,000,000(inclusive)toNT$4,000,000
3 NT$4,000,000(inclusive)toNT$6,000,000
4 NT$6,000,000(inclusive)toNT$8,000,000
5 NT$8,000,000(inclusive)toNT$10,000,000
6 MorethanNT$10,000,000(inclusive) 12,028 13,206 25,234
Unit: NT$ 1,000
CPAFirmTitle
CPAName
Auditingshared
expenses
Non-accounting charge CPAAudit period
NotesSystem design
Corporate registration
Human Resources
Others (Note) Subtotal
KPMGTan-TanChung
12,028 190 13,016 13,206 2018.1.1-2018.12.31Feng-HuiLee
Note:During2018, theprimarycontentof theservice for"Others" included in thenon-audit fees is theaudit fees forsignificantbaddebtsamounted toNT$130,000, legalcomplianceriskmanagementandsupervisionamounted toNT$5,040,000,audit feesforpersonaldataprotectionamountedtoNT$1,850,000,audit fees foranti-money launderingandcombattingthefinancingofterrorismcontrollingprojectamountedtoNT$3,832,000,doubleexaminationreport fore-payment institutionrevenueamountedtoNT$60,000,andoperatingassessmentreport for informationsystemandsecuritycontrolamountedtoNT$450,000, issuanceof financialdebtsdoubleexaminationopinion formamounted toNT$60,000, independentcomplianceassessment forwealthmanagementanddepositprotectionamountedtoNT$1,491,000,andbridgingvisasamountedtoNT$103,000.
(2) Having altered the CPA firm and the audit fee in the altering year is less than that in the previous year: None.
(3) For companies whose audit shared expenses have decreased by 15% or more, the ratio of the decrease in audit shared expense and the reason should be disclosed: None.
5. Information on switching CPA: None
6. Bank's Chairman, President, or any manager in charge of finance or accounting matters who has, in the most recent year, held a position at the accounting firm of its CPA or at an affiliated enterprise: None.
7. Changes in Shareholdings of Directors, Executive Officers, and Shareholders Conform to the Regulations Governing the Same Person or Same Concerned Party Holding the Issued Shares with Voting Rights over a Particular Ratio of a Bank, Article 11
(1) Changes in ShareholdingUnit: Share
Title Name
2018 As of Feb 28, 2019
Changes in shareholding
Changes in pledged
shareholdingChanges in
shareholdingChanges
in pledged shareholding
Chairman(MinistryofFinanceRepresentative) Bor-YiHuang 320,400 0 0 0
ManagingDirectorandPresident(MinistryofFinanceRepresentative)
Chien-AnShih 416,000 0 0 0
ManagingDirector(BankofTaiwanRepresentative) Li-LingLin 0 0 0 0
ManagingDirecto(IndependentDirector) Xin-WuLin 0 0 0 0
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2018 As of Feb 28, 2019
Changes in shareholding
Changes in pledged
shareholdingChanges in
shareholdingChanges
in pledged shareholding
ManagingDirector(MinistryofFinanceRepresentative)
Lien-WenLiang 0 0 0 0
Director(MinistryofFinanceRepresentative) Shiu-YenLin 0 0 0 0
Director(MinistryofFinanceRepresentative) Wen-ChiehWang 0 0 0 0
Director(MinistryofFinanceRepresentative) Hung-ShengYu 908 0 0 0
Director(BankofTaiwanRepresentative) Pei-MingHuang 0 0 0 0
Director(BankofTaiwanRepresentative) Cheng-ChuanKang 0 0 0 0
Director(LandBankofTaiwanRepresentative) Ying-MingHe 0 0 0 0
Director(TBBindustryunionRepresentative) Feng-YungLiu 1,081 0 0 0
Director Che-NanWang 5,530,259 0 1,400,000 0
Director(IndependentDirector) Jin-LongLiu 0 0 0 0
Director(IndependentDirector) Wei-ShengHuang 0 0 0 0
Manager Chien-AnShih 416,000 0 0 0
Manager Chang-YiChen 19,458 0 0 0
Manager Chih-ChienChang 7,234 0 0 0
Manager Yi-YunWang 7,977 0 0 0
Manager Mei-YehWu 16,086 0 0 0
Manager Chun-ShengTseng 7,026 0 0 0
Manager Chiu-YenChen 7,666 0 0 0
Manager Tseng-HsiangYi 4,288 0 0 0
Manager Chang-YuLin 7,497 0 0 0
Manager Yu-MinChang 6,084 0 0 0
Manager Chi-FenYen 14,522 0 0 0
Manager Tzong-WenChou 4,232 0 0 0
Manager Yung-YuSong 3,902 0 0 0
Manager Jia-RueyLuan 5,649 0 0 0
Manager Ting-HueiLiao 108,361 0 0 0
Manager Li-YuehHsu 5,832 0 0 0
Manager Yin-ChengTseng 5,442 0 0 0
Manager Chih-WeiChen 0 0 0 0
Manager Ching-YunKuo 7,848 0 0 0
Manager Hsih-HuiChen 4,333 0 0 0
Manager Yi-ChinChai 1,237 0 0 0
Manager Chu-JouChen 8,472 0 0 0
Manager Wen-ShuLin 4,161 0 0 0
Manager Tsung-ChuHsieh 4,504 0 0 0
Manager Hsiou-ChenKang 4,120 0 0 0
Manager Yu-ChuanChou 4,671 0 0 0
Manager Pi-YuChang 4,141 0 0 0
Manager Li-HuiChang 4,854 0 0 0
Manager Sung-ShuiChiu 5,434 0 0 0
Manager Tung-HsiChen 0 0 0 0
Manager Tsun-LinYeh 4,327 0 0 0
Manager Chiang-ShuLin 4,555 0 0 0
Manager Mei-ChunLin 9,754 0 0 0
5858 Taiwan Business Bank Annual Report 2018
Title Name
2018 As of Feb 28, 2019
Changes in shareholding
Changes in pledged
shareholdingChanges in
shareholdingChanges
in pledged shareholding
Manager Kuo-LiangTseng 4,132 0 0 0Manager Fu-MingHsu 12,478 0 0 0Manager Wen-HsiuHuang 5,625 0 0 0Manager Huei-NaiHung 4,122 0 0 0Manager Hsiao-MingChen 4,108 0 0 0Manager Li-FangLee 4,140 0 0 0Manager Chih-YangHuang 4,327 0 0 0Manager Shuan-HuaLiu 1,504 0 0 0Manager Yu-ChiaoWei 3,814 0 0 0Manager Yuan-HsuehHsiao 4,128 0 0 0Manager Yun-ShiangTsai 50,000 0 0 0Manager Cheng-ChuanLin 7 0 0 0Manager Long-JiunnWu 7,684 0 0 0Manager Chih-ChengCho 2,040 0 0 0Manager Chien-ChungLin 1,948 0 0 0Manager Mei-ChihHou 4,269 0 0 0Manager Bi-ChuChuang 4,151 0 0 0Manager Guei-JinChiou 4,785 0 0 0Manager Wen-FangLin 206 0 0 0Manager Sung-NanChiao 21,583 0 0 0Manager Fuh-YuhYeh 4,127 0 0 0Manager Ching-KueiHsieh 4,349 0 0 0Manager Ruey-shyangGuo 4,234 0 0 0Manager Chao-LiehChen 31 0 0 0Manager Tien-HangTsai 5,548 0 0 0Manager Yueh-YenWeng 61,862 0 0 0Manager Jiunn-chiuWang (430) 0 0 0Manager Yueh-ChiaoWu 4,326 0 0 0Manager Yen-HsuehChang 78 0 0 0Manager Tien-ChinLin 4,160 0 0 0Manager Tai Sun 7,774 0 0 0Manager Kuo-ShuTseng 2,860 0 0 0Manager Yen-LingChen 4,143 0 0 0Manager Chao-ChihChueh 4,162 0 0 0Manager Ching-HsiuLiu 823 0 0 0Manager Fu-LongChen 36,528 0 10,000 0Manager Ming-HuiChen 20,800 0 0 0Manager Ming-HsyangKuo 0 0 0 0Manager Hsueh-RuLiu 4,193 0 0 0Manager Chao-HwaHsu 7,332 0 0 0Manager Jiann-YeaShyu 354 0 0 0Manager Ying-CheFang 7,284 0 0 0Manager Yueh-ChinWang 4,147 0 0 0Manager Wan-JuShih 4,207 0 0 0Manager Yen-HuiTu 8,346 0 0 0Manager Nien-TzuChen 4,156 0 0 0Manager Chiu-ChinChen 4,161 0 0 0Manager Fang-ChuanChiu 4,144 0 0 0Manager Pao-ShengLin 4,278 0 0 0Manager Hsien-MinChen 4,167 0 0 0Manager Mei-HuiChen 7,054 0 0 0Manager Hsiu-HsinHou 4,142 0 0 0
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Title Name
2018 As of Feb 28, 2019
Changes in shareholding
Changes in pledged
shareholdingChanges in
shareholdingChanges
in pledged shareholding
Manager Yen-HueyWang 4,075 0 0 0
Manager Chin-HsiangLin 6,330 0 0 0
Manager Pi-ChuanChien 4,184 0 0 0
Manager Shu-ChinLin 4,137 0 0 0
Manager Ping-HuiLee 1,649 0 0 0
Manager Su-FenChen 4,135 0 0 0
Manager Shu-EChen 0 0 0 0
Manager Shy-YuanWu (67686) 0 0 0
Manager Li-ChuanHuang 2,730 0 0 0
Manager Chin-HoHuang 4,220 0 0 0
Manager Jiann-GwoGuu 5,473 0 0 0
Manager Min-ChungHsieh 989 0 0 0
Manager Yu-PeiLiao 495 0 0 0
Manager Chiu-YuLin 1,648 0 0 0
Manager Shu-FenLi 5,993 0 0 0
Manager Kuan-YauCheng 4,120 0 0 0
Manager Bih-LienFang 25,523 0 0 0
Manager Nai-ChiaChi 6,811 0 0 0
Manager Li-HueiChen 1,200 0 0 0
Manager Sheng-WangChang 4,067 0 0 0
Manager Ming-TangChen 4,295 0 0 0
Manager Hsiu-ChiaoLin 8,834 0 0 0
Manager Kuan-YiHuang 2,062 0 0 0
Manager Shin-MaoLin (50,995) 0 0 0
Manager Li-ChungLin 4,389 0 0 0
Manager Ping-SungYang 11,785 0 0 0
Manager Man-ChungYeh 10 0 0 0
Manager Chih-ChengChen 4,430 0 0 0
Manager Meng-ShinJeng 6,061 0 0 0
Manager Meng-LiangSu 4,160 0 0 0
Manager Shun-TsengLiao 6,122 0 0 0
Manager Yih-ShiouWang 5,283 0 0 0
Manager Kuo-TsunPai 4,170 0 0 0
Manager Liang-PinChen 29 0 0 0
Manager Tsai-RongHung 6,339 0 0 0
Manager Fu-ChingChou 4,001 0 0 0
Manager Cheng-AnHsieh 4,514 0 0 0
Manager Jung-YuHuang 4,165 0 0 0
Manager Ming-YiLin 12,904 0 0 0
Manager A-ChangYang 6,350 0 0 0
Manager Yueh-ManSung 4,996 0 0 0
Manager Chien-TaWu 2,509 0 0 0
Manager Li-MoYang 8,949 0 0 0
Manager His-HerPai 6,627 0 0 0
Manager Wen-ChiChen 2,671 0 0 0
Manager Chin-HsuehLi 8,119 0 0 0
Manager Su-YingTsai 4,347 0 0 0
Manager I-ManChen 4,214 0 0 0
Manager Jiann-JangLin 2,223 0 0 0
Manager Chia-ChengLiu 2,133 0 0 0
Manager Feng-FuChen 4,247 0 0 0
6060 Taiwan Business Bank Annual Report 2018
Title Name
2018 As of Feb 28, 2019
Changes in shareholding
Changes in pledged
shareholdingChanges in
shareholdingChanges
in pledged shareholding
Manager Hsin-ChuanHsiao 5,087 0 0 0
Manager Chih-MingChuang 4,205 0 0 0
Manager Guo-ShiangHuang 1,752 0 0 0
Manager Chien-LaiSu 29 0 0 0
Manager Yung-ShengHu 4,323 0 0 0
Manager Chin-HsiuChen 8,743 0 0 0
Manager Chang-HuiHsu 3,530 0 0 0
Manager Shun-HoChen 4,196 0 0 0
Manager Mei-ChenChen 4,867 0 0 0
Manager Chiou-HwaSu 1,143 0 0 0
Manager Wen-JangJou (4,637) 0 0 0
Manager Leh-ChinKuo 3,385 0 0 0
Manager Der-HsungLin 4,140 0 0 0
Manager Cheng-HungWang 6,501 0 0 0
Manager Ya-HuaSu 6,269 0 0 0
Manager Chin-ChuanSu 11,285 0 0 0
Manager An-YunLin 8,210 0 0 0
Manager Li-JungLin 4,562 0 0 0
Manager Tzu-IHuang 4,280 0 0 0
Manager Wen-TaiYang 4,181 0 0 0
Manager Ching-WenLee 2,743 0 0 0
Manager Kuang-TsaiWang 4,131 0 0 0
Manager Jung-LingWang 4,150 0 0 0
Manager Hsueh-HsiaChen 8,766 0 0 0
Manager Shih-YuanLin 4,818 0 0 0
Manager Shuang-ChenSu 4,146 0 0 0
Manager Ching-YangLee 4,197 0 0 0
Manager Shenn-BaoJean 4,261 0 0 0
Manager Jen-JungFan 4,141 0 0 0
Manager Be-YunTong 6,522 0 0 0
Manager Yuan-YuanYing 7,433 0 0 0
Manager Sue-JenChen 36 0 0 0
Manager Feng-YingChen 4,235 0 0 0
Manager Chin-FuChiang 6,770 0 0 0
Manager Cheng-HungChang 4,022 0 0 0
Manager(Note2) Mu-XiangWu - - 0 0
Manager(Note2) Shu-TingChen - - 0 0
Manager(Note2) Yun-HuiZhang - - 0 0
Manager(Note2) Dong-HanLu - - 0 0
Manager(Note2) Shui-QiangFang - - 0 0
Manager(Note2) Meng-XunSong - - 0 0
Manager(Note2) Qing-WenLi - - 0 0
Manager(Note2) Jun-DaLin - - 0 0
Manager(Note2) Jing-YiLin - - 0 0
TheGovernmentorJuristicPersonShareholderRepresentativebyDirector(Note1)
MinistryofFinance 5,425,249 0 0 0
TheGovernmentorJuristicPersonShareholderRepresentativebyDirector(Note1)
BankofTaiwan 42,357,354 0 0 0
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Title Name
2018 As of Feb 28, 2019
Changes in shareholding
Changes in pledged
shareholdingChanges in
shareholdingChanges
in pledged shareholding
TheGovernmentorJuristicPersonShareholderRepresentativebyDirector(Note1)
LandBankofTaiwan 5,969,788 0 0 0
TheGovernmentorJuristicPersonShareholderRepresentativebyDirector(Note1)
TBBindustryunion 1,178,523 0 0 0
Note1: Theshareholderholding1%ormoreoftheBank'sshares.Note2: Thenewmanagerapprovedby the5thBoardMeetingof the15thBoardofDirectorsonJan30,2019.("-"meansthat the
informationdoesnotneedtobedisclosed.)
(2) Information of shareholding transfer: Not applicable.
(3) Information for shareholding pledge: None.
8. Information Disclosing the Relationship among Top Ten Shareholders in the Relationship of Related Parties or Spouses, Blood Relatives within the Second Degree of KinshipInformationontheRelationshipamongTopTenShareholders
Feb. 28, 2019
NameShareholding
Shareholding by Spouse & Minor
Children
Shareholding under others' names
Names and the Relationship among the Top Ten Shareholders in the Relationship of
Related Parties or Spouses, Blood Relatives within the Second Degree of Kinship
Note
Shares % Shares % Shares % Name Relation
BankofTaiwan(Representative:Ju-ChengLu)
1,101,291,214 17.22% 0 0 0 0 MinistryofFinance
TaiwanFinancialHoldingCo.,Ltd.,awholly-ownedsubsidaryofMinistryofFinance
LandBankofTaiwan(Representative:Zhong-YuanLing)
155,214,491 2.43% 0 0 0 0 MinistryofFinance
LandBankofTaiwan,awholly-ownedsubsidaryofMinistryofFinance
MinistryofFinance(Representative:Jian-RongSu)
141,056,496 2.21% 0 0 0 0
BankofTaiwanTaiwanFinancialHoldingCo.,Ltd.,awholly-ownedsubsidaryofMinistryofFinance
LandBankofTaiwan
LandBankofTaiwan,awholly-ownedsubsidaryofMinistryofFinance
VanguardEmergingMarketsStockIndexFundASeriesofVanguardInternationalEquityIndexFunds
76,062,940 1.19% 00 0 0 0 None None
KinMingInvestmentCo.,Ltd(Representative:Zhao-HuaSu)
69,455,812 1.09% 0 0 0 0 None None
JPMorganChaseBankN.A.TaipeiBranchincustodyforVanguardTotalInternationalStockIndexFundaseriesofVanguardStarFunds
67,026,528 1.05% 0 0 0 0 None None
Chun-JinShi 66,325,865 1.04% 14,531,340 0.23% 0 0 None None
BES Engineering Corporation (Representative:Hua-YangShen)
58,864,000 0.92% 0 0 0 0 None None
ChinaMan-MadeFiberCorporation(Representative:Gui-XianWang)
57,390,095 0.90% 0 0 0 0 None None
MorganStanley&Co.InternationalPlc 53,364,503 0.83% 0 0 0 0 None None
Note:Shareholdingamountrepresentsthenumberofsharesrecordedonthelastex-dividendbasisdate.
6262 Taiwan Business Bank Annual Report 2018
9. The joint venture directly or indirectly controlled and managed by Directors, President, Executive Vice Presidents and General Manager of each division or branchOmnibusShareholdingRatio
Dec. 31, 2018
Unit: Share; %
Name of Joint Venture (Note)
The Bank's Investment
The joint venture directly or indirectly controlled
and managed by Directors, President, Executive Vice Presidents and General
Manager of each division or branch
Omnibus Investment
Shares % Shares % Shares %
TaipeiForexInc. 700,000 3.5318% 2,100,000 10.5954% 2,800,000 14.1272%
FinancialInformationServiceCo.,Ltd.
6,116,873 1.1718% 20,588,991 3.9443% 26,705,864 5.1161%
TaiwanStockExchangeCo. 6,588,724 0.9496% 90,269,366 13.0096% 96,858,090 13.9592%
TaiwanFuturesExchangeCo. 3,340,910 1.0000% 10,189,778 3.0500% 13,530,688 4.0500%
TaiwanAssetManagementCorporation
60,000,000 5.6754% 120,000,000 11.3507% 180,000,000 17.0261%
TaiwanFinancialAssetServiceCorporation
5,000,000 2.9412% 15,000,000 8.8235% 20,000,000 11.7647%
SunnyAssetManagementCorporation
46,062 0.7678% 74,729 1.2457% 120,791 2.0135%
FinancialeSolutionCo.,Ltd. 905,475 4.1158% 2,156,769 9.8034% 3,062,244 13.9192%
TaiwanDepository&Cleansing Corporation
307,306 0.0830% 264,835 0.0715% 572,141 0.1545%
TaiwanMobilePaymentCo. 600,000 1.0000% 2,400,000 4.0000% 3,000,000 5.0000%
TaiwanPowerCompany 1,451,523 0.0044% 918,981,385 2.7848% 920,432,908 2.7892%
TaiwanSugarCorporation 16,831,537 0.2986% 24,307,963 0.4312% 41,139,500 0.7298%
TaiwanIncubatorSMEDevelopment Corporation
3,417,440 4.8438% - - 3,417,440 4.8438%
Sunsino Development AssociatedInc.
1,480,402 3.1166% - - 1,480,402 3.1166%
CDIB&PartnersInvestmentHoldingCorp.
54,000,000 4.9505% - - 54,000,000 4.9505%
TaipeiFinancialCenterCo. 11,760,000 0.8000% 11,760,000 0.8000%
TaiwanUrbanRegeneration&FinancialServicesCo.,Ltd.
2,500,000 5.0000% 5,000,000 10.0000% 7,500,000 15.0000%
ChaofuRealEstateManagementCo.,Ltd.
150,000 3.0000% 150,000 3.0000%
AsiaPacificTelecomCo.,Ltd. 15,000,000 0.3490% 825,000 0.0192% 15,825,000 0.3682%
TaiwanHighSpeedRailCorporation
44,500,000 0.7906% 24,365 0.0004% 44,524,365 0.7910%
TaiwanBusinessBankInsuranceAgencyCo.,Ltd.
500,000 100.000% - - 500,000 100.000%
TaiwanBusinessBankPropertyInsuranceAgencyCo.,Ltd.
300,000 100.000% - - 300,000 100.000%
TBB International Leasing Co.,Ltd.
150,000,000 100.000% - - 150,000,000 100.000%
TBB(Cambodia)MicrofinanceInstitutionPlc
20,000 100.000% 20,000 100.000%
TBBVentureCapitalCo.,Ltd. 30,000,000 100.000% 30,000,000 100.000%
TaiwaniaCapitalBuffaloIIBioventures,LP
1.6900% 1.6900%
Note:Long-terminvestmentoftheBank.
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64 Taiwan Business Bank Annual Report 2018
1. Shares and Dividends
2. Issuance Status of Financial Bonds
3. Preferred Stocks, Global Depository Receipts, and Employee Stock Warrants, New Restricted Employee Shares, Any Merger and Acquisition Activities, and Acceptance of Transfer of the Shares of Another Financial Institution
4. Status of Implementation of Capital Allocation Plans
Fund-Raising Status
IV
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Ⅳ1. Shares and Dividends
(1) Capital SourcesUnit: Shares; NT$
Year/ Month
Issuing Price
Authorized Capital Paid-in Capital Note
Shares Amount Shares Amount Sources of Capital Others
Sep. 2018 10.00 8,000,000,000 80,000,000,000 6,393,880,193 63,938,801,930
Capital IncreasedbyEarnings2,459,184,690
LetterNo.10701121060issuedbyMOEAregistrationeffectiveonSep.21,2018.
Unit: Shares
Category of SharesAuthorized Capital
NoteOutstanding Shares Un-issued Shares Total
CommonShares 6,393,880,193 1,606,119,807 8,000,000,000
ListedSharesPreferredShares 0 0 0
Total 6,393,880,193 1,606,119,807 8,000,000,000
(2) Structure of Shareholders Feb. 28, 2019
Structure of Shareholders
QuantityGovernment Institutions
Financial Institutions
Other Juristic Person
ShareholderPersonal
Shareholder
Foreign Institutions
and Personal Shareholder
Total
NumberofShareholders 3 8 324 146,401 690 147,426
ShareholdingAmount 182,037,693 1,334,028,822 581,361,967 2,728,896,249 1,567,555,462 6,393,880,193
ShareholdingRatio(%) 2.85 20.86 9.09 42.68 24.52 100.00
(3) Distribution of Shareholding
Par Value NT$10Feb. 28, 2019
Classification of Shareholding Number of Shareholders Shareholding Amount Shareholding Ratio (%)
1 to 999 41,681 11,812,984 0.18
1,000to5,000 50,453 131,184,951 2.05
5,001to10,000 18,712 150,079,077 2.35
10,001to15,000 9,810 130,297,403 2.04
15,001to20,000 4,874 92,373,009 1.44
20,001to30,000 7,035 185,698,236 2.9
30,001to40,000 2,713 99,675,681 1.56
40,001to50,000 2,517 121,910,993 1.91
50,001to100,000 4,610 347,915,575 5.44
100,001to200,000 2,745 398,176,357 6.23
200,001to400,000 1,197 350,399,471 5.48
400,001to600,000 371 190,085,979 2.97
600,001to800,000 190 137,626,602 2.15
800,001to1,000,000 96 90,105,181 1.41
1,000,001to99,999,999,999 422 3,956,538,694 61.89
Total 147,426 6,393,880,193 100.00
66 Taiwan Business Bank Annual Report 2018
(4) Major ShareholdersFeb. 28, 2019
Shareholder's Name Shareholding Amount
Shareholding Ratio (%)
BankofTaiwan 1,101,291,214 17.22%
LandBankofTaiwan 155,214,491 2.43%
MinistryofFinance 141,056,496 2.21%
VanguardEmergingMarketsStockIndexFundASeriesofVanguardInternationalEquityIndexFunds 76,062,940 1.19%
KinMingInvestmentCo.,Ltd 69,455,812 1.09%
JPMorganChaseBankN.A.TaipeiBranch in custody forVanguardTotalInternationalStockIndexFundaseriesofVanguardStarFunds 67,026,528 1.05%
ChunJinShi 66,325,865 1.04%
BES Engineering Corporation 58,864,000 0.92%
ChinaMan-MadeFiberCorporation 57,390,095 0.90%
MorganStanley&Co.InternationalPlc 53,364,503 0.83%
Note:Shareholdingamountrepresentsthenumberofsharesrecordedonthelastex-dividendbasisdate.
(5) Market Price Per Share, Net Value, EPS, Dividends, and Related Information for the Past Two Years (based on consolidated financial information)
YearItem 2017 2018 As of Feb. 28,
2019
MarketPricePerShare(NT$)
Max 8.63 11.35 11.50
Min 8.10 8.30 10.25
Average 8.34 9.72 10.95
NetValuePerShare
BeforeDistribution 12.33 13.27 -
AfterDistribution - - -
Earnings Per Share
WeightedAverageNumberofShares(beforeadjustment)
6,147,962,000shares
6,393,881,000shares
6,393,881,000shares
WeightedAverageNumberofSharesafteradjustment)
6,393,881,000shares - -
EarningsPerShare(beforeadjustment)(NT$) 0.82 1.19 -
EarningsPerShare(afteradjustment)(NT$) 0.79 - -
DividendsPerShare(NT$)
CashDividends 0.268 (Note3) -
StockDividends
StockDividendsfromSurplus 0.40 (Note3) -
CapitalSurplusDistribution - - -
AccumulatedUndistributedDividend - - -
Return on Investment Analysis
Price/Earnings(P/E)Ratio 10.17 8.17 -
Price/DividendRatio(Note1) 31.12 - -
CashDividendYield(Note2) 3.21 - -
Note:1. Price/DividendRatio=MarketPricePerShare/CashDividendsPerShare.2. CashDividendYield=CashDividend/AveragePriceoftheMonth*100%.3. Tobedeterminedinaccordancewiththeresolutionsofshareholders'meeting.
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Ⅳ(6) Dividend Policy and Distributions
A.DividendpolicyprescribedintheArticlesofAssociationoftheBank:Pleasereferto“EarningsDistributionandDividendPolicy”inthe“NotestotheFinancialStatements”of“VI.FinancialStatus”.
B.Dividenddistributiontobeproposedintheupcomingshareholders'meeting:AcashdividendofNT$0.30pershareandastockdividendofNT$0.50pershareareproposedtobedistributedfromthecapitalsurplusof2018oftheBank.
(7) Impacts of the Stock Dividends to be Proposed in the Upcoming Shareholders' Meeting to Operating Performance and Earnings Per ShareAccordingtotherequirementsunderArticle6ofRegulationsGoverningthePublicationofFinancialForecastsofPublicCompaniesissuedbytheFSC,theBankcannotprovideacompletefinancialinformationof2019forthereasonthatrelevantfinancialforecastwasnotperformed.
(8) Employees and Directors' CompensationA.Percentageorscopeofemployeesanddirectors'compensationsetoutintheArticlesofAssociationofthe
Bank:Pleasereferto“EmployeesandDirectors'Compensation”inthe“NotestotheFinancialStatements”of“VI.FinancialStatus”.
B. If theamountsofestimatedemployeesanddirectors' remunerationdiffer from theactualdistributionamountssubsequentlyresolvedbytheshareholders'meeting,thedifferenceswillberecordedasachangeinaccountingestimateinthesameyearastheshareholders'resolution.
C.StatusofcompensationdistributionasapprovedbytheBoardofDirectorsa.TheBankhasproposeda totalofNT$583,736thousandofemployees' remunerationandNT$58,374thousandofdirectors'remunerationtobedistributedfor2018.
b.Theamountofanyemployeecompensationdistributed instocksasapercentageof thesumof thecurrentafter-taxnet incomeand totalemployeecompensation:TheBankhasnotdistributedanyemployeecompensationinstocksduring2018.
D.Actualallocationofemployeesanddirectors'compensationforthepreviousyear:Accordingtotheresolutionof theshareholders'meetingonJun.29,2018,profitsharingbonus toemployeesandcompensationtodirectorswereNT$272,350thousandandNT$36,582thousand,respectively,equivalenttotheestimatessetoutinthefinancialstatementof2017.
(9) Share Redemption by the Bank in 2018 and as of the End of February 2019: None.
68 Taiwan Business Bank Annual Report 2018
2. Issuance Status of Financial Bonds
Tier of Financial Bonds(Note 1)
Tranche 99-1 (A) non-cumulative perpetual subordinated bonds
(Note 6)
Tranche 99-1 (B) non-cumulative perpetual subordinated bonds
(Note 6)
Tranche 102-1 long-term subordinated bonds
(Note 6)
ApprovalDateandApprovalDocumentNumberoftheCentralCompetentAuthority
Aug.4,2010LetterofJin-Guan-Yin-Guo-ZiNo.09900289540
Aug.4,2010LetterofJin-Guan-Yin-Guo-ZiNo.09900289540
Jan.28,2013LetterofJin-Guan-Yin-Guo-ZiNo.10200016490
DateofIssuance Sep.23,2010 Sep.23,2010 Mar.25,2013
NominalValue NT$10million NT$10million NT$10million
PlaceofIssuanceandTrading(Note2) Taiwan Taiwan Taiwan
Currency NewTaiwanDollar NewTaiwanDollar NewTaiwanDollar
IssuePrice Issuedatfullfacevalue Issuedatfullfacevalue Issuedatfullfacevalue
TotalAmount NT$3.2billion NT$0.8billion NT$5billion
Coupon Rates
Thefirst10years'couponratesafterissuance:Atthefloatinginterestrateonaone-yeartimegeneraldeposit,aspostedbytheChunghwaPostCo.,Ltd.,plus1.34percentagepoints;startingfromthe11thyear,atthefloatinginterestrateonaone-yeartimegeneraldeposit,aspostedbytheChunghwaPostCo.,Ltd.,plus2.34percentagepoints
Thefirst10years'couponratesafterissuance:atthefixedrateof3.05%perannum;fromthe11thyear,atthefixedrateof4.05%perannum.
Annualratefixedat1.68%
Term Nomaturitydate Nomaturitydate 7-yeartermMaturitydate:March25,2020
PriorityofDistribution
SubordinatetotheholdersoftheBank'sTierIIsubordinatedbondsandotherordinarycreditors
SubordinatetotheholdersoftheBank'sTierIIsubordinatedbondsandotherordinarycreditors
Superiortostockholders'rightsinassetsecuritizationandsubordinatetoalldepositorsandotherordinarycreditors
Guarantor None None None
Trustee None None None
UnderwritingAgency None None None
VerificationLawyer None None None
VerificationAccountant(Note3)
KPMGTan-TanChung,CPA
KPMGTan-TanChung,CPA
KPMGTan-TanChung,CPA
VerificationFinancialInstitution None None None
PaymentMethod
10years(including)afterthebondisissued,theBankmayredeemthebond,upontheapprovalofthecompetentauthority,infullatitsfacevaluewiththeaccruedinterestpaid.
10years(including)afterthebondisissued,theBankmayredeemthebond,upontheapprovalofthecompetentauthority,infullatitsfacevaluewiththeaccruedinterestpaid.
Lumpsumpaymentatmaturity(bulletloan)
OutstandingBalances NT$3.2billion NT$0.8billion NT$5billion
Paid-inCapitalofthePrecedingYear NT$38.735billion NT$38.735billion NT$48.982billion
NetWorthofPaid-inCapitalAfterFinalReportforthePrecedingYear NT$41.727billion NT$41.727billion NT$55.038billion
PaymentStatus Normal Normal Normal
RedemptionorEarlySettlement Term
10years(including)afterthebondisissued,theBankmayredeemthebond,upontheapprovalofthecompetentauthority,infullatitsfacevaluewiththeaccruedinterestpaid.
10years(including)afterthebondisissued,theBankmayredeemthebond,upontheapprovalofthecompetentauthority,infullatitsfacevaluewiththeaccruedinterestpaid.
None
ConversionandExchangeTerms None None None
RestrictionTerm(Note4) Subordinatebonds Subordinatebonds Subordinatebonds
NetWorthofPaid-inCapitalAfterFinalReportforthePrecedingYear 105.69 105.69 88.85
ApplicationofFunds Medium-tolong-termloans Medium-tolong-termloans Medium-tolong-termloans
EligibleEquityCapital Tier I Capital Tier I Capital Tier II Capital
CreditRatingAgencies,EvaluationDateandRatingScore(Note5)
Jan.25,2017Taiwanratings:twA-
Jan.25,2017Taiwanratings:twA-
Jan.25,2017Taiwanratings:twA-
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ⅣTier of Financial Bonds(Note 1)
Tranche 102-2 (A) long-term subordinated bonds (Note 6)
Tranche 102-2 (B) long-term subordinated bonds (Note 6)
Tranche 104-1 non-cumulative perpetual subordinated bonds
(Note 6)ApprovalDateandApprovalDocumentNumberoftheCentralCompetentAuthority
Oct.2,2013LetterofJin-Guan-Yin-Guo-ZiNo.10200273730
Oct.2,2013LetterofJin-Guan-Yin-Guo-ZiNo.10200273730
Apr.8,2015LetterofJin-Guan-Yin-Guo-ZiNo.10400065480
DateofIssuance Nov.25,2013 Nov.25,2013 Jun.18,2015NominalValue NT$10million NT$10million NT$10millionPlaceofIssuanceandTrading(Note2) Taiwan Taiwan Taiwan
Currency NewTaiwanDollar NewTaiwanDollar NewTaiwanDollarIssuePrice Issuedatfullfacevalue Issuedatfullfacevalue IssuedatfullfacevalueTotalAmount NT$3.1billion NT$2.9billion NT$5billion
Coupon Rates
1. TheannualrateiscalculatedinsimpleinterestbasedontheIndexRateplus0.52%.TheIndexRateistheaverageofthefixingrateofthe90-dayNTDcommercialpapersinthesecondarymarketshownonp.6165ofReutersinformationscreenat11:00am(Taipeitime)twobusinessdaysbeforetheinterestaccuraldate.
2.SinceJanuary1,2015,theIndexRatehasbeenchangedtothe3-month“TaipeiInterbankOfferedRate(TAIBOR)”publishedtwobusinessdaysbeforetheinterestaccrualdateonthewebsiteofBankersAssociationoftheRepublicofChina.
Annualratefixedat1.92% Annualratefixedat3.9%
Maturity 7-yeartermMaturitydate:November25,2020
7-yeartermMaturitydate:November25,2020 Nomaturitydate
PriorityofDistribution
Superiortostockholders'rightsinassetsecuritizationandsubordinatetoalldepositorsandotherordinarycreditors
Superiortostockholders'rightsinassetsecuritizationandsubordinatetoalldepositorsandotherordinarycreditors
SubordinatetotheholdersoftheBank'sTierIIsubordinatedbondsandotherordinarycreditors
Guarantor None None NoneTrustee None None NoneUnderwritingAgency None None NoneVerificationLawyer None None NoneVerificationAccountant(Note3)
KPMGTan-TanChung,CPA
KPMGTan-TanChung,CPA
KPMGFeng-HuiLee,CPA
VerificationFinancialInstitution None None None
PaymentMethod Lumpsumpaymentatmaturity(bulletloan)
Lumpsumpaymentatmaturity(bulletloan)
5years(including)afterthebondisissued,theBankmayredeemthebond,upontheapprovalofthecompetentauthority,infullatitsfacevaluewiththeaccruedinterestpaid.
OutstandingBalances NT$3.1billion NT$2.9billion NT$5billionPaid-inCapitalofthePrecedingYear NT$48.982billion NT$48.982billion NT$52.979billion
NetWorthofPaid-inCapitalAfterFinalReportforthePrecedingYear NT$55.038billion NT$55.038billion NT$62.738billion
PaymentStatus Normal Normal Normal
RedemptionorEarlySettlement Term
None None 5years(including)afterthebondisissued,theBankmayredeemthebond,upontheapprovalofthecompetentauthority,infullatitsfacevaluewiththeaccruedinterestpaid.
ConversionandExchangeTerms None None NoneRestrictionTerm(Note4) Subordinatebonds Subordinatebonds SubordinatebondsNetWorthofPaid-inCapitalAfterFinalReportforthePrecedingYear 93.48 93.48 66.31
ApplicationofFunds Medium-tolong-termloans Medium-tolong-termloans Medium-tolong-termloansEligibleEquityCapital Tier II Capital Tier II Capital Tier I CapitalCreditRatingAgencies,EvaluationDateandRatingScore(Note5)
Jan.25,2017Taiwanratings:twA-
Jan.25,2017Taiwanratings:twA-
70 Taiwan Business Bank Annual Report 2018
Tier of Financial Bonds(Note 1)
Tranche 104-2 (A) long-term subordinated bonds (Note 6)
Tranche 104-2 (B) long-term subordinated bonds (Note 6)
Tranche 105-1 non-cumulative perpetual subordinated bonds
(Note 6)
Approva l Da te and Approva lDocumentNumberof theCentralCompetentAuthority
Apr.8,2015LetterofJin-Guan-Yin-Guo-ZiNo.10400065480
Apr.8,2015LetterofJin-Guan-Yin-Guo-ZiNo.10400065480
Jun.24,2016LetterofJin-Guan-Yin-Guo-ZiNo.10500148070
DateofIssuance Aug.31,2015 Aug.31,2015 Sep.20,2016
NominalValue NT$10million NT$10million NT$10million
PlaceofIssuanceandTrading(Note2) Taiwan Taiwan Taiwan
Currency NewTaiwanDollar NewTaiwanDollar NewTaiwanDollar
IssuePrice Issuedatfullfacevalue Issuedatfullfacevalue Issuedatfullfacevalue
TotalAmount NT$4.7billion NT$0.3billion NT$8billion
Coupon Rates Annualratefixedat2.05% Annualratefixedat2.10% Annualratefixedat3.20%
Term 8-yeartermMaturitydate:August31,2023
10-yeartermMaturitydate:August31,2025 Nomaturitydate
PriorityofDistribution
Superior tostockholders' rights inassetsecuritizationandsubordinatetoalldepositorsandotherordinarycreditors
Superior tostockholders' rights inassetsecuritizationandsubordinatetoalldepositorsandotherordinarycreditors
Subordinate to theholdersof theBank'sTier IIsubordinatedbondsandotherordinarycreditors
Guarantor None None None
Trustee None None None
UnderwritingAgency None None None
VerificationLawyer None None None
VerificationAccountant(Note3)
KPMGFeng-HuiLee,CPA
KPMGFeng-HuiLee,CPA
KPMGTan-TanChung,CPA
VerificationFinancialInstitution None None None
PaymentMethod Lump sum payment atmaturity(bulletloan)
Lump sum payment atmaturity(bulletloan)
5yearsand3months (including)after thebond is issued, theBankmay redeem thebond, upon theapprovalofthecompetentauthority,in full at its face valuewith theaccruedinterestpaid.
OutstandingBalances NT$4.7billion NT$0.3billion NT$8billion
Paid-inCapital of thePrecedingYear NT$52.979billion NT$52.979billion NT$56.846billion
NetWorthofPaid-inCapitalAfterFinalReportforthePrecedingYear NT$62.738billion NT$62.738billion NT$67.659billion
PaymentStatus Normal Normal Normal
RedemptionorEarlySettlement Term None None
5yearsand3months (including)after thebond is issued, theBankmay redeem thebond, upon theapprovalofthecompetentauthority,in full at its face valuewith theaccruedinterestpaid..
ConversionandExchangeTerms None None None
RestrictionTerm(Note4) Subordinatebonds Subordinatebonds Subordinatebonds
NetWorthofPaid-inCapitalAfterFinalReportforthePrecedingYear 72.68 72.68 71.02
ApplicationofFunds Medium-tolong-termloans Medium-tolong-termloans Medium-tolong-termloans
EligibleEquityCapital Tier II Capital Tier II Capital Tier I Capital
CreditRatingAgencies,EvaluationDateandRatingScore(Note5)
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(Note 1)
Tranche 105-2long-term subordinated bonds
(Note 6)
Tranche 106-1 (A) long-term subordinated bonds (Note 6)
Tranche 106-1 (B) long-term subordinated bonds (Note 6)
Approva l Da te and Approva lDocumentNumberof theCentralCompetentAuthority
Jun.24,2016LetterofJin-Guan-Yin-Guo-ZiNo.10500148070
Jun.24,2016LetterofJin-Guan-Yin-Guo-ZiNo.10500148070
Jun.24,2016LetterofJin-Guan-Yin-Guo-ZiNo.10500148070
DateofIssuance Dec.20,2016 Mar.28,2017 Mar.28,2017
NominalValue NT$10million NT$10million NT$10million
PlaceofIssuanceandTrading(Note2) Taiwan Taiwan Taiwan
Currency NewTaiwanDollar NewTaiwanDollar NewTaiwanDollar
IssuePrice Issuedatfullfacevalue Issuedatfullfacevalue Issuedatfullfacevalue
TotalAmount NT$2.7billion NT$0.39billion NT$0.25billion
Coupon Rates Annualratefixedat1.40% Annualratefixedat1.50% Annualratefixedat1.60%
Term 7-yeartermMaturitydate:December20,2023
7-yeartermMaturitydate:March28,2024
8-yeartermMaturitydate:March28,2025
PriorityofDistribution
Superior tostockholders' rights inassetsecuritizationandsubordinatetoalldepositorsandotherordinarycreditors
Superior tostockholders' rights inassetsecuritizationandsubordinatetoalldepositorsandotherordinarycreditors
Superior tostockholders' rights inassetsecuritizationandsubordinatetoalldepositorsandotherordinarycreditors
Guarantor None None None
Trustee None None None
UnderwritingAgency None None None
VerificationLawyer None None None
VerificationAccountant(Note3)
KPMGTan-TanChung,CPA
KPMGTan-TanChung,CPA
KPMGTan-TanChung,CPA
VerificationFinancialInstitution None None None
PaymentMethod Lump sum payment atmaturity(bulletloan)
Lump sum payment atmaturity(bulletloan)
Lump sum payment atmaturity(bulletloan)
OutstandingBalances NT$2.7billion NT$0.39billion NT$0.25billion
Paid-inCapital of thePrecedingYear NT$56.846billion NT$59.689billion NT$59.689billion
NetWorthofPaid-inCapitalAfterFinalReportforthePrecedingYear NT$67.659billion NT$70.87billion NT$70.87billion
PaymentStatus Normal Normal Normal
RedemptionorEarlySettlement Term None None None
ConversionandExchangeTerms None None None
RestrictionTerm(Note4) Subordinatebonds Subordinatebonds Subordinatebonds
NetWorthofPaid-inCapitalAfterFinalReportforthePrecedingYear 71.02 64.48 64.48
ApplicationofFunds Medium-tolong-termloans Medium-tolong-termloans Medium-tolong-termloans
EligibleEquityCapital Tier II Capital Tier II Capital Tier II Capital
CreditRatingAgencies,EvaluationDateandRatingScore(Note5)
72 Taiwan Business Bank Annual Report 2018
Tier of Financial Bonds(Note 1)
Tranche 106-1 (C) long-term subordinated bonds (Note 6)
Tranche 106-2 long-term subordinated bonds (Note 6)
Tranche 106-3 unsecured US dollar bonds (Note 6)
Approva l Da te and Approva lDocumentNumberof theCentralCompetentAuthority
Jun.24,2016LetterofJin-Guan-Yin-Guo-ZiNo.10500148070
Jun.24,2016LetterofJin-Guan-Yin-Guo-ZiNo.10500148070
Apr.28,2017LetterofJin-Guan-Yin-Guo-ZiNo.10600090390
DateofIssuance Mar.28,2017 May23,2017 Oct.27,2017
NominalValue NT$10million NT$10million US$1million
PlaceofIssuanceandTrading(Note2) Taiwan Taiwan Taiwan
Currency NewTaiwanDollar NewTaiwanDollar USdollar
IssuePrice Issuedatfullfacevalue Issuedatfullfacevalue Issuedatfullfacevalue
TotalAmount NT$3.36billion NT$1.3billion US$0.12billion
Coupon Rates Annualratefixedat1.850% Annualratefixedat1.850% Issuedaszerocouponbond,withaninternalrateofreturnof4.10%
Term 10-yeartermMaturitydate:March28,2027
10-yeartermMaturitydate:May23,2027
30-yeartermMaturitydate:October27,2047
PriorityofDistribution
Superior tostockholders' rights inassetsecuritizationandsubordinatetoalldepositorsandotherordinarycreditors
Superior tostockholders' rights inassetsecuritizationandsubordinatetoalldepositorsandotherordinarycreditors
Thedistributionpriorityisequivalenttootherunsecuredcreditorsof theBank
Guarantor None None None
Trustee None None None
UnderwritingAgency None None None
VerificationLawyer None None None
VerificationAccountant(Note3)
KPMGTan-TanChung,CPA
KPMGTan-TanChung,CPA
KPMGTan-TanChung,CPA
VerificationFinancialInstitution None None None
PaymentMethod Lump sum payment atmaturity(bulletloan)
Lump sum payment atmaturity(bulletloan)
Except for the redemptionvia the“issuer'sright”, thebond issubjectto lumpsumrepaymentatmaturity(bulletloan).
OutstandingBalances NT$3.36billion NT$1.3billion US$0.12billion
Paid-inCapital of thePrecedingYear NT$59.689billion NT$59.689billion NT$59.689billion
NetWorthofPaid-inCapitalAfterFinalReportforthePrecedingYear NT$70.87billion NT$70.87billion NT$70.87billion
PaymentStatus Normal Normal Normal
RedemptionorEarlySettlement Term
None None Issuer's redemptionright:10yearsafter thebond is issued, theBankmay redeem thebond in full, oneacheffectivedayof redemptionand at the par value prices pershare as set out in the bondsredemptiontable.
ConversionandExchangeTerms None None None
RestrictionTerm(Note4) Subordinatebonds Subordinatebonds
NetWorthofPaid-inCapitalAfterFinalReportforthePrecedingYear 64.48 66.32 62.96
ApplicationofFunds Medium-tolong-termloans Medium-tolong-termloans Medium-tolong-termloans
EligibleEquityCapital Tier II Capital Tier II Capital No
CreditRatingAgencies,EvaluationDateandRatingScore(Note5)
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ⅣTier of Financial Bonds
(Note 1)Tranche 107-1
unsecured senior bonds (Note 6)Tranche 107-2 long-term
subordinated bonds (Note 6)Tranche 107-3 unsecured US
dollar bonds (Note 6)
Approva l Da te and Approva lDocumentNumberof theCentralCompetentAuthority
Nov.15,2017LetterofJin-Guan-Yin-Guo-ZiNo.10600265650
Jun.6,2018LetterofJin-Guan-Yin-Guo-ZiNo.10702114820
Apr.28,2017LetterofJin-Guan-Yin-Guo-ZiNo.10600090390
DateofIssuance Jan.5,2018 Aug.20,2018 Sep.27,2018
NominalValue NT$10million NT$10million US$1million
PlaceofIssuanceandTrading(Note2) Taiwan Taiwan Taiwan
Currency NewTaiwanDollar NewTaiwanDollar USdollar
IssuePrice Issuedatfullfacevalue Issuedatfullfacevalue Issuedatfullfacevalue
TotalAmount NT$1billion NT$5.45billion US$0.18billion
Coupon Rates Annualratefixedat0.70% Annualratefixedat1.450% Issuedaszerocouponbond,withaninternalrateofreturnof4.70%
Term 3-yeartermMaturitydate:January5,2021
10-yeartermMaturitydate:August20,2028
30-yeartermMaturitydate:September27,2048
PriorityofDistribution
Equivalent to other unsecuredcreditorsoftheBank
Superior tostockholders' rights inassetsecuritizationandsubordinatetoalldepositorsandotherordinarycreditors
Equivalent to other unsecuredcreditorsoftheBank
Guarantor None None None
Trustee None None None
UnderwritingAgency None None None
VerificationLawyer None None None
VerificationAccountant(Note3)
KPMGTan-TanChung,CPA
KPMGTan-TanChung,CPA
KPMGTan-TanChung,CPA
VerificationFinancialInstitution None None None
PaymentMethod Lump sum payment atmaturity(bulletloan)
Lump sum payment atmaturity(bulletloan)
Except for the redemptionvia the“issuer'sright”, thebond issubjectto lumpsumrepaymentatmaturity(bulletloan).
OutstandingBalances NT$1billion NT$5.45billion US$0.18billion
Paid-inCapital of thePrecedingYear NT$61.48billion NT$61.48billion NT$61.48billion
NetWorthofPaid-inCapitalAfterFinalReportforthePrecedingYear NT$75.818billion NT$75.818billion NT$75.818billion
PaymentStatus Normal Normal Normal
RedemptionorEarlySettlement Term
None None Issuer's redemption right:5yearsafter thebond is issued, theBankmay redeem thebond in full, oneacheffectivedayof redemptionand at the par value prices pershare as set out in the bondsredemptiontable.
ConversionandExchangeTerms None None None
RestrictionTerm(Note4) Subordinatebonds
NetWorthofPaid-inCapitalAfterFinalReportforthePrecedingYear 60.19 67.37 74.66
ApplicationofFunds Medium-tolong-termloans Medium-tolong-termloans Medium-tolong-termloans
EligibleEquityCapital No Tier II Capital No
CreditRatingAgencies,EvaluationDateandRatingScore(Note5)
74 Taiwan Business Bank Annual Report 2018
3. Preferred Stocks, Global Depository Receipts, and Employee Stock Warrants, New Restricted Employee Shares, Any Merger and Acquisition Activities, and Acceptance of Transfer of the Shares of Another Financial Institution: None.
4. Status of Implementation of Capital Allocation Plans
(1) Plan DetailsA.ToimprovetheBank'scapitaladequacyandrisk-bearingcapacityinresponsetothecapitalrequirementof
businessdevelopment,theissuanceofNT$5.45billionsoflong-termsubordinatedbondswascompletedonAugust20,2018.
B. Inorder toexpandthenumberofoverseasbranches, increase the investment levelof foreigncurrencybonds,andeffectivelyreducerisksincapital liquidity, theissuanceof$0.18billionofunsecuredUSdollarbondswascompletedonSeptember27,2018.
C.Inresponsetothegovernment's“5+2”industrialpolicyagendaandhelpthefund-raisinginthegreenenergyindustrywiththeaimoffulfillingCSR,theBankcompletedtheissuanceofseniorunsecuredgreenbondsintheamountofNT$1billiononJanuary5,2018.
(2) Status of ImplementationAnalysisofthechangesofmajorfinancialratios,capitaladequacyratios,andafter-taxearningspershareoftheBank:
Unit: NT$1,000 ; %
YearItems 2018 2017 Increase/Decrease
FinancialRatios
After-taxReturnonAssets(ROA) 0.48% 0.33% 0.15%
After-taxReturnonShareholders'Equity(ROE) 9.51% 6.87% 2.64%
CapitalAdequacyRatio 12.70% 12.27% 0.43%
NetProfitAfterTax 7,640,542 5,039,924 2,600,618
EarningsPerShareAfterTax 1.19 0.79 0.40
Note:1.Earningspershareiscalculatedaccordingtotheweightedaveragenumberofsharesofthecurrentfiscalyear.Theeffectsof
retrospectiveadjustmentsapplytobasicearningspersharefor2017.2.Netprofitaftertaxfor2018totaledNT$7.641billion,increasedbyNT$2.601billionfrom2017.
1. Business Activities
2. Employees
3. Corporate responsibilities and moral conducts
4. The number of non-managerial employees and the annual average employee benefit expenses
5. Information Equipment
6. Labor-Management Relations
7. Important contracts
8. Relevant information on securitization products
Operation Summary
V
76909292
92939495
1. Business Activities
(1) Principal Activities for Different Areas of BusinessA.CorporateBanking
a.Corporatefinancingloan
Engageindifferentcorporateloans,projectloans,syndication,billsdiscounting,domesticletterofcreditissuing,guaranteeprovision,aswellasaccountsreceivablefinancingandfactoring.
b.Foreignexchange
Engagein import,export, foreign-currencydeposits, foreignexchange,foreign-currencyloans,forfaitingoftimecreditwithoutrecourse,andoverseasfinancing.
B.PersonalBankinga. Personal loans
Engageinpersonalmortgageandconsumerfinanciingbusiness,etc.
b.Creditcard
Engageincreditcardissuanceandacquiringbusinesses.
c.Wealthmanagement
Selectwealthmanagementcommoditieswithproven investmentperformance in linewith themarkettrend,continue to focusonourwealthmanagementcustomersanddeveloppotentialcustomers toexpandthebreadthanddepthofrelationshipwithcustomers.
d.Trusts
1) Monetarytrust:Fiduciaryinvestmentsindomesticandoverseasmarketablesecurities,advancetrust,realestatetransactiontrust,civilservantsestatetrust,governmentprojectssubsidytrust,caringtrust,insurancetrust,third-partypaymenttrust,andothermonetarytrusts.
2) Custodianbusiness:Entrustedforkeepingdomesticsecurities investment trust fund,entrustedforkeeping investment-linkedproductsunder investmentdiscretionaryaccountoperationconcerninginvestment trustby insurancecompanies,andentrusted forkeepingoperationbondand foreigninvestmentsafe-keeping.
3) Others:Realestate trust,superficies trust,marketablesecurities trust,andmarketablesecuritiescertificationservices.
e.Securities
Engage inmarketablesecurities transactions,margin tradingandshortselling,aswellas futuresintroducingbrokerservices.
C.FinanceLogistics Engage in thecapitalmovement forNewTaiwanDollarsand foreigncurrencies, foreignexchange
transaction,marketablesecuritiestransactions,long-termequityinvestments,financialproductsmarketing,andderivativesbusiness.
D. Deposits Engage incheckdeposits,passbookdeposit,certificatedeposit, taxcollection,national treasuryagent,
collections,andremittance.E.E-Banking Engageine-bankingservicessuchaspersonalintenetbanking,corporateintenetbanking,globaleBanking,
mobilebanking, telephonebanking,eATM,onlinecashregister,nationalpayment,parkingfeecollection,virtualaccounts,digitaldepositaccount,cross-bordere-Pay,Alipay,depositaccountacquisitionwithQRCode,servicessuchasACH(eACH,eDDA),andcross-borderonlineshopping (cross-borderoutwardremittance).
(2) Business Overview for the Past Two YearsA.CorporateBanking
Taiwan Business Bank Annual Report 201876
a.Corporatefinancingloan Unit: NT$ million
Year
Items
2018 2017 Increase (Decrease) %Amount Percentage % Amount Percentage %
SMEsloanbalances 471,227 68.88 437,181 60.34 7.79
Large enterprises loan balances 130,192 19.03 114,595 15.81 13.61
Governmentandpublicenterpriseloanbalances
82,739 12.09 172,789 23.85 -52.12
CorporatebankingNewTaiwanDollarloanbalances
684,158 85.34 724,565 85.73 -5.58
Foreigncurrencyloanbalances 117,562 14.66 120,611 14.27 -2.53
Total 801,720 100.00 845,176 100.00 5.14
b.Foreignexchange
Unit: NT$ million
Year
Items
2018 2017 Increase (Decrease) %Amount Percentage % Amount Percentage %
Foreigncurrencydemanddeposit 89,239 41.61 103,839 48.46 -14.06
Foreigncurrencytimedeposit 125,239 58.39 110,453 51.54 13.39
Total 214,478 100.00 214,292 100.00 0.09
Unit: US$ million
YearItems 2018 2017 Increase
(Decrease) %Volumeofforeignexchangebusiness 69,688 70,845 -1.63
Note:ThevolumeofforeignexchangebusinessisthesumofDBUandOBU.
B.Personalbankinga. Personal loans
Unit: NT$ million
Year
Items
2018 2017 Increase (Decrease) %Amount Percentage % Amount Percentage %
Consumer loan balances 7,920 2.81 10,162 3.72 -22.06
Mortgagebalances 191,707 68.13 184,592 67.57 3.85
Otherpersonalloanbalances 81,779 29.06 78,423 28.71 4.28
Total 281,406 100.00 273,177 100.00 3.01
b.WealthmanagementUnit: NT$ million
Year
Items
2018 2017 Increase (Decrease) %Amount Percentage % Amount Percentage %
Servicefeeincomefortrustfunds 440.66 28.11 504.35 30.93 -12.63
Servicefeeforlifeinsurancecollection(Note1,Note2)
1,089.13 69.47 1,089.04 66.79 0.01
Servicefeeforpropertyinsurancecollection(Note2)
34.17 2.18 33.75 2.07 1.24
Goldpassbookincome 3.78 0.24 3.33 0.20 13.51
Total 1,567.74 100.00 1,630.47 100.00 -3.85
Note1:Mortgage life insuranceandservice fee incomeforcreditcardmarketing/telemarketingof insurancearenotincludedintheservicefeeincomeforlifeinsurance
Note2:ThesplittingrateregardinglifeinsuranceandpropertyinsurancebetweentheBankandTaiwanBusinessBankInsuranceAgencyCo.,Ltd.for2018and2017was7:3.
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c.TrustsUnit: NT$ million
YearItems 2018 2017 Increase
(Decrease) %Fiduciaryinvestmentsindomesticandoverseasmarketablesecuritiesbalances 55,521 55,924 -0.72
Custodianbankbalances(Note) 88,233 71,144 24.02 Othertrustsbalances 17,894 16,976 5.41
Note:The“Custodianbankbalances” includesbalancesofsecuritiesinvestmenttrustfundheldintrustanddiscretionaryinvestmentassetsheldintrust.
d.CreditcardUnit: NT$ million/card
YearItems 2018 2017 Increase
(Decrease) %Cardtransactionvolume 12,207 11,456 6.55Numberofissuedcards 326,737 324,952 0.55
e.SecuritiesUnit: NT$ million/lot
YearItems 2018 2017 Increase
(Decrease) %Securitiesbrokertransactedamount 291,045 255,495 13.91Averagesecuritiesfinancingbalances 2,344 1,924 21.83Lotamountforfutures(lot) 234,278 235,655 -0.58
C.FinanceLogisticsa.Foreigncurrencyandforeigncapitaltransaction
Unit: US$ million
YearItems
2018 2017 Increase (Decrease) %Amount Percentage % Amount Percentage %
Forwards 432 0.36 884 0.64 -51.16%SWAP 24,434 20.32 24,222 17.44 0.88%Non-deliverableforwards 0 0 15 0.01 -100.00%Options 249 0.21 735 0.53 -66.12%Inter-bank borrowings andinter-bankloans 95,125 79.11 96,273 69.30 -1.19%
Total 120,240 100.00 122,129 100.00 -1.55%
Note: Thevolumeofforeignexchangetransactionisthesumofthetransactionvolumeofourheadofficeanditsoverseasbranches.
b.StockfundinvestmentUnit: NT$ million
YearItems
2018 2017 Increase (Decrease) %Amount Percentage % Amount Percentage %
Shares 2,158 99.04 1,478 99.33 46.01%Funds 21 0.96 10 0.67 110.00%Total 2,179 100.00 1,488 100.00 46.43%
Note: Statedattheinitialacquisitioncosts.c.Bondsandnotes
Unit: NT$ million
Year
Items
At the end of 2018 At the end of 2017 Increase (Decrease) %Amount Percentage % Amount Percentage %
Short-termnotes 169,731 51.16 124,830 46.68 35.96Certificatesofdepositacquisition 165,150 124,330
Commercialpaperacquisition 4,581 500Acceptancesacquisition 0Bonds 161,997 48.84 142,565 53.32 13.63Governmentdebts 73,254 73,324Corporatebonds 42,720 36,405Financialbonds 44,711 32,836Beneficiarysecuritiesandasset-backedsecurities 1,312 0 0.00
Total 331,728 100.00 265,596 100.00 24.89
Note:Statedattheinitialacquisitioncosts.
Taiwan Business Bank Annual Report 201878
d.Reinvestment:Please refer to "FinancialAssetsCarriedatCosts" in the "Notes to theFinancialStatements"under"VI.FinancialStatus".
D.NewTaiwanDollarDepositsbusinessUnit: NT$ million
Year
Items
At the end of 2018 At the end of 2017 Increase (Decrease) %Amount Percentage % Amount Percentage %
DemandDeposits 605,798 52.56 609,605 52.62 -0.62
Time Deposits 546,914 47.44 548,941 47.38 -0.37
Total 1,152,712 100 1,158,546 100.00 -0.50
E.E-BankingUnit: Customer/Transaction
YearItems At the end of 2018 At the end of 2017 Increase (Decrease) %
Numberofinternetbankingcustomers 1,388,314Customers 1,257,046Customers 10.44%
Numberofmobilebankingcustomers 107,087Customers 101,835Customers 5.15%
Numberofe-bankingtransactions 9,646,150Transactions 8,710,820Transactions 10.73%
(3) Operating Plan for 2019A.CorporateBanking
a.Corporatefinancingloan
1) FocusonthekeybusinesspromotionforSMEs.2) Continuecooperatingwiththegovernmenttosupportthepolicyforkeyinnovativeindustry.3) Established "InnovativeFinancingProjectOffice" tosupport thedevelopmentof the innovative
industry.4) Expandtheloanscalesandmarketshareforindustrialzones.5) Providecounselforthedevelopmentofyoungentrepreneursandthemicro-scaleenterprisestofulfill
itscorporatesocialresponsibilities.6) ActivelyorganizethesyndicatedloansforSMEs.7) Strengthenthecreditguaranteefundstransferringtoreducetherisk-adjustedassetsoftheBank.
b.Foreignexchange
1) Strengthentheexpansionofourforeignexchangebusiness.i. Adopt incentivemeasuresorprojects induecourse;activelyexpand thesizeofour foreignexchangedeposits.
ii. Help importers/exporters inutilizingderivatives topromote thegrowthof foreignexchangebusiness.
iii.Improvethe interactionswithregionaloperationcenters tocollectivelyprovideassistanceto thedevelopmentofforeignexchangebusinessforbranchesinthejurisdiction.
iv.Enhancetrainingto improveprofessionalcompetenciesfor foreignexchange,minimizeoperatingrisks,andincreasetheservicequalityofforeignexchangebusiness.
2) Considering thesizeof theBank,ouroverseasbranches takerisksandrevenue intoaccount tooperate inaprudentmannerandremaincautiousregarding thecompliancewith local regulatorymeasures.Also,due to thedifferences inregionalcharacters, legalandsupervisionstrength,ouroverseasbranchesmayexpand theirbusinessesaccording to thebusiness licenseheldby thebranch,policyofourheadoffice,aswellas factorsof localpoliticalandeconomicsituations,andindustrialchanges.
B.PersonalBankinga. Personal loans
1) Adjust themortgagepricing strategy in response tomarket changes to stabilize thegrowthmomentumofpersonalfinancingloans.
2) Stepupefforts inexpandingbatch-processingmortgagesources to improve thevolumeandperformanceofmortgage.
3) Improvevalue-addedforthemortgage,increasethecoverageandpenetrationofourmortgageandlifeinsurancebusiness,aswellasthecollectionofpersonalloansystemoperatingcharges,soastoimprovetheincomeoftheBank.
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4) ExpandthemarketsizeofpersonalwealthmanagementandconsumerloanfortheBank,focusonwealthmanagementloansandmicro-creditloanswithhigherreturns.
5) Expandthedevelopmentofemployeegrouploan;focusoncorporatecustomershavingproventrackrecordswith theBankandvisitproper targetcustomergroups to improveourpersonal financingbusiness.
6) Focusonemployeesfromcorporatecustomersusingourpayroll transferservices to increasetherevenueofpersonalfinancingfortheBank.
b.Wealthmanagement
1) Respondtogovernmentpoliciesandfulfill itscorporatesocialresponsibilities;provide"micro-injuryinsurance"and"micro-whole life insurance"tosupplementtheshortfallofsocial insuranceorsocialassistancesystem.
2) Inresponseto thedemandfor themiddle-agedandseniorgroupandnursingand long-termcaredemandarisingfromthe increaseof theelderpopulation, theBankcontinuesto introducevarioustypesofwealthmanagementand insuranceproductswith focuseson"annuity," "medicine,"and"long-termcare"tohelpcustomersbuildhighqualityandcarefreeseniorliveswithstableeconomicsources.
3) Invest inpremiumwealthmanagementcustomersandtakethe initiativetodevelop;provideassetsallocationplanaccordingtotherequirementsandtheinvestmentnatureofcustomers;fullyexertthemarketingcapacitiesofemployeestoimproveourservicefeeincome.
4) Establisha rankingsystemforprofessionalcompetencies,provide trainingandmanagement forwealthmanagementpersonnel,enhancetheirmarketingtechniques,utilizethewealthmanagementdatabaseeffectively,and take the initiative toseek interactingopportunitieswithcustomers toincreasesalesperformanceandcreatethewin-winsituation.
5) Activelypromotecross-departmental resources integration tocreatesynergyeffects thatdeliversatisfactoryconditionsforallpartiesinvolved.
6) Improveperformancemanagement,establishdynamicassessmentobjectivesforbranches,motivateourfellowemployeestoscalenewheightsandstriveforhonor,soastoachievethefullyearbudgettarget.
c.Trusts
1) Expandtheassetscaleinourcustodythroughcross-industrycooperation.Wecontinuetocooperatewith insurancecompanies tosafekeep the targetmaturity funds related to investment-linkedproducts,soas toprovidehealthy investment instrumentswith lowvolatility toourcustomersandimprovetheassetscaleandrevenueinourcustody.
2) Continue introducingoffshoredebentureproductswithmarketabilityandsatisfy thedemand fromhigh-assetcustomerstoincreasethemarketcompetitivenessoftheBank.
3) Combinegovernmentalandprivateresourcestobuildnursinghomesbywayofurbanregeneration;acceleratetheseniorindustrydevelopmentandprovidenursingandretirementintegrationservicestotheelders.
4) Complywith thegovernmentpolicyandparticipate in thePropertyTrust for theSeniorand theDisabilitiesevaluationandcontinuetoimplementtrustactivitiesinordertofulfillthecorporatesocialresponsibilityoftheBank.
5) Providetrustservicesforrealestateandcapitalaccordingtotheurbanregenerationandhazardousconstructionfacilityforcityamenitiesandlivingenvironmentimprovement.
6) Helpseniorowners forsmooth transitionsofbusinessandwealth to theirsuccessors,ensure thesustainabletransitionsoffamilybusinesses,providecareforthedescendants,andsatisfytheneedfortransmissionthroughsuccessivegenerationsforfamilybusinesses;throughwhich,extendingtherelationshipbetweentheBankandtheownerinthefirstgenerationtothenextgeneration.
7) Promoteemployeebenefitssaving/shareholdingtrustfortheemployeecohesivenessofthecorporate,improvethestabilityoflifeforemployeesafterretirement,fosterharmoniouslaborrelations,maintaincompanyequity,deliveringhealthydevelopment for thecorporateand increasedbusinessvolumebetweencorporatecustomersandtheBank.
8) Planandmaintainthepublicwelfareandbenefit trust tocarefor thecommunity, improvethe livingandcaringstandardsforseniorsandtheunderprivilegedgroups.
d.Creditcard
1) ContinuethepromotionfortheSilverLoveCreditCard,inwhichtheBankexclusivelyallocated3‰ofthegeneralcardconsumptiontohelpseniorstodineandlearntogether.
Taiwan Business Bank Annual Report 201880
2) Adapttothepaymenttrendandpromoteitsmobilepaymentbusiness.3) Implement thegovernment'spolicyofe-payment to improve theperformanceofe-payment.The
Bankwillkeepuptheefforttoadvertiseandencourageourcustomerstopaytheirconsumptionsandgovernmentalfeeswithcreditcards.
4) Topreventthewasteoncreatingcardsandmaintaincosts,theBankkeepstrackofcardusageofourcustomerstoimprovetheeffectiverateofcreditcards.
5) Participate incross-industrystrategicalliancestoseekcross-industryallianceswithmoderatesizeandsimilarphilosophy to launchcreditcards,keepondevelopingstoreswithdiscountdealsorusingpaymentbyinstallmentservices,andorganizemarketingeventswithstoresfromtimetotime,suchasfreegiftswithcreditcardpurchasesachievingaprescribedamountto increasecreditcardissuanceandtradevolume.
6) Carryouton-goingpromotion for theacquiringbusiness tobuildcloser relationshipswithstores,andinturnsrealizecross-sellingforotherfinancialproductsof theBankandmaintainingcustomerrelationships.
e.Securities
1) Improvecross-sellingbusiness,activelypromotesecuritiesbusiness,andmaintain theBranchesEmployeeSecuritiesReferralAdministrativeRewardMeasures.
2) Vigorouslycooperatewithbranches to jointlyvisit the targetcustomergroups, fullyexerting theintegralmarketingfunctionoftheBankandimprovetheoverallcontributionofcustomers.
3) Our training forsecuritypersonnel focusesonprogramsrelated to legalcompliance,anti-moneylaundering,andriskscontrol,enhancingouremployees'professionalknow-howforsecuritiesandfutures investment.
4) Inorder tocomplywith theContinuousTradingsystemtobeduly implementedbyTaiwanStockExchangeinMarch2020,theBankintendstocarryoutsecuritiesmainframeandhardwareupgradesandapplicationsystemrepairprocedures.
5) Tobettermeet the investmentdemand fromourcustomers, theBank intends toestablishan"e-instantaccounting"systemin2019thatallowscustomerstohaveinstantaccesstoinformationontheirpersonalaccountonlinetoboostthecustomersatisfaction.
C.FinanceLogistics(1) Enhancecapitalmanagementandoperatingefficiencytomaintainliquidityandimprovecapitalutilization
income.
(2) Activelycarryoutforeignexchangeoperationstoincreaseexchangegains.
(3) Closelymonitordomesticandoverseasgovernmentalandeconomicconditionstogetholdoftheoverallmarket investment trend.Selectpremiumstock indifferent industries induecourse tobalance theinvestmentallocationandincreaseourinvestmentincome.
(4) Improve theplanningandmanagement forour reinvestmentbusiness to increase thereinvestmentincomeoftheBank.
(5) Cautiouslyselectpremiuminvestmenttargetswithgrowthpotentialsandfinancialhealthtoexpandourinvestmentportfolio,boostingforeigncurrencysecuritiesincome.
(6) ImplementKYCsystemandassessmentforproductadequacy;closelymonitorcustomers'creditlimitsandcarryoutriskscontrol.
D. Deposits(1) Focusonexploringgeneralcorporateandpersonaldemanddepositsopportunitiesandcomplywith
incentivesupervisionandevaluations, improvethedepositspromotionmomentumofbranches,andexpandthesizeofprimarydepositcustomers.
(2) Advanceourdepositsservicesandreinforceourassistancetobranchesintermsofbusinessexpansion.
(3) Acquirestabledepositcapitalinduecourseaccordingtotherequirementsofbusinessdevelopmentandstrictlycontroldepositcosts.
E.E-Bankinga.IntroducingFinTechanddigitalequipmentintobranches
1) Valuecustomerexperiences:Customersmaycomplete financialproduct transactionbyusingautomaticequipmentandsimplifytelleroperationstocutdownthewaitingtime,providingnewserviceexperiencesforcustomers.
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2) Improvedigital functionsofbranches: Improvesystemfunctionsofbrancheswiththe integrationofdigitaltechnologyandbusinessprocedurestoincreaseoperatingefficiencyandaccuracy.
b.Optimizevirtualchannels
1) Optimizeinternetbankingfunctions:Rebuildthenewgenerationinternetbanking,upgradeapplicationsystemsofpersonal internetbanking,eATMandmobilebanking,andplan forestablishing therevisionsofonlinecorporatebankingandmobilebanking to fullyoptimize the internetbankingchannelsoftheBank.
2) HiBankoptimizationandupgrade:PlanforfinancialproductswithbetterdiversityprofileforHiBankplatformandprovideafinancialdepartmentstoremeetingcustomers'requirements.
3) Robotadvisor:LaunchedAIWealthManagement tohelpcustomerswith investmentandwealthmanagement;itsfeatureoflowservicechargesdeliversthegoaloffinancialinclusion.
c.Emergingpaymentandcross-industryalliances
1) Continueexpanding thescopeofservice forTaiwanPay:Sparenoefforts in involvingauthorizedstores,taxpayment,andcollectioninstitutions.
2) Cooperatewithotherpaymentcompanies:Allowdepositscustomersof theBank tobindwith theaccountof thecooperatingmobilepaymentcompaniesfor topup,debitpayment forconsumption,renderingaconvenientpaymentmethod.
3) ImproveACHgatewayserviceplatform:Carryoutanoverallupgrade forserviceperformanceofACHcollectionandpaymentplatformthrougheACHandeDDAonlineauthorization,collectionandpaymentfunction.
4) Establishmultipleacquiringsystems:Providebasic facilities forauthorizedstoresmanagingandcontrol,accountingprocedures,andorder treatment, reserve theexpansionofmultiplepaymentmethodsofauthorizedstoredfor theconvenienceof theBanktodevelopotheremergingpaymentoperationsinthefuture.
d.Exploredigitalmarketingchannels tocreatenewopportunities:UsetheexistingFacebookpageof theBankastheexclusiveplatformtopresentmarketingeventadvertisementwithlivelyandbrightlythemed;interactwiththeyounggenerationtobuildanew,youngimageforourcompanythathasonehundredyearsofhistory.
F. RisksManagementa.Toenhancethesystemformonitoringanomaliesanddeviation fromthemarketpriceduringfinancialproducts transaction, theBankestablishedthe"TaiwanBusinessBankFinancialProductsTransactionDeviationfromMarketPriceMonitoringProcedures."
b.Forvalidassessmentregardingthecreditrisksforbuildingfinancingproject loansandimprovementontherisksmeasurementcapacitiesforbuildingfinancing, theBankestablishedthe internalcredit ratingmodelforcivilworkfinancingandloans.
c. Implement"ChannelingCostsofRiskCapital intoEarningsofDomesticBranchesEvaluation"systemtoguidebranchesadjusting the loanstructure toreducerisk-adjustedassetsand improvethecapitaladequacyrate.
d.Pursueenhancing linking functionamong the top threemanaging tools foroperating risks,allowingmanagement tools tosupportand link tooneanother,performcross-overanalysisandverification, toimprovetheBank'scapacityforactiveandadvancecontrolonoperatingrisks.
G.Legalcomplianceandanti-moneylaunderinga.Reinforce thecontrolmeasures foranti-money launderingandcombatting the financingof terrorismaccordingtotheresultsandrecommendationsfromtheAPGon-siteevaluation.
b.Strengthenthesupervisionforthefirstlineofdefenseandsamplingtestforourbranches
c.Establishthemanagingsystemoflegalcompliance,anti-moneylaundering,andcombattingthefinancingofterrorismforoverseasbranches
d.Organizetrainingonanon-goingbasis
(4) Market AnalysisA.GeographicScopeofOperations Apart frombeingaspecializedbank forSMEs, theBankalsoprovidesdiversifiedservices inpersonal
financing,wealthmanagement,andprofessionalfinancingfield.Withourbranchesspreadingacrossthe
Taiwan Business Bank Annual Report 201882
nation,wehave125branchesinTaiwanand1OffshoreBankingUnit,8overseasbranchesinHongKong,LosAngeles,Sydney,Shanghai,Brisbane,Wuhan,NewYork,andTokyoaswellasonerepresentativeofficeinYangon,Myanmar.
B.Marketsupplyanddemandandmarketgrowthinthefuture In2018,theglobaleconomywasexpectedtoshowapositivetrend. InTaiwan,theFinancialSupervisory
Commission(FSC)continuedtoamendtheregulationstofacilitatetheexpansionofdomesticandoverseasbusinessand increase thecompetitivenessofbanks inTaiwan.Furthermore,with the rapidgrowthofFinTechdevelopment,domesticandoverseasloansandwealthmanagementbusinessisexpectedtoshowagrowingtrend.However, theR&DofFinTechresulted in the increasingcosts forbanks.Drivenby theincreaseininvestmentnetprofit,theoverallearningsforthebankingindustryin2018areexpectedtorecordanupwardtrendascomparedtothatof2017.
Regarding the futuredevelopmentofourbusiness,under thepressureofdisposingofcapitaland thecircumstancesthattheperformanceofoverseasinterestratedifferentialremainshigherthanthedomesticperformance,overseasloansbecometheprimarytargetfortheloanbusinessofdomesticbanksin2019.Participating inoverseassyndicationprojectsandprovidingcross-border financingservices remainasthemajor two loansources.However, theoverseasmarketoperationofdomesticbanks isstill facingtremendousfluctuations in thefinancialmarketresultingfromthetradewarbetweentheU.S.andPRC,which is likely to lead toexposureupsurge foroverseas loansand investment, in turns reducing thesubstantialprofits.Corporateloansandmortgagearetheprimarybusinessesofthedomesticloanmarket.Amongwhich,except forgeneral financingregardingcorporate financing, toexpand tonewcustomersgroupandboost thegrowthof loans,domesticbanksexpect tocontinue its focuseson"5+2"creativeindustriesandstrengthenthecredit insurancecooperationwithSMEs in2019.Regarding themortgagemarket,itisexpectedthatdomesticbankswillcontinueprovidinglowerinterestsrateforthesub-loangroupatthematurityoftheirgraceperiodandthosewithahigherinterestratein2019.Themortgagebusinessofdomesticbanksin2019expectstorecordaslightgrowth.Regardingwealthmanagement,thelowerinterestratedifferentialmakeswealthmanagementmore important,whichnotonlydisposeofcapitalbutalsoincreasethecustomeradhesionandservicecharges income.BenefittedfromthecontinualestablishmentofBigData, theBankmanagedtocontinuallyenhancetheproductprecisionfor thewealthmanagementdemandofourcustomers.Therefore,leveragingthecontributionfrombothsidesofdemandandsupplyinwealthandmanagementmarket,thebusinessisexpectedtorecordcontinuinggrowthin2019.
Regardingtheindustrialcompetitiveness,inordertoimprovethecompetitivenessforthebanksinTaiwan,increaseoverseasoperatingstrength,andsettle the issueofhavingmorethanenoughbranchesfor thebanking industry inTaiwan, thegovernmenthasbeenactivelysearchingfor the improvingmethods.TheFSCissuedthe"private-bank-mergers"solutionin2018,andthederegulationofstandardsrelatedto"hostiletakeover"wasreleased inAugust. It isexpectedthat thedevelopmentofpolicieswillgraduallyunfold in2019.However,themanagementteamofthemergedbanksgenerallyfindithardtoacceptsuchmergers;itisexpectedthatsuccessfulmergerswillremaintough.
Overall,duetothecontinualamendmentofregulationsbytheFSCandtherapiddevelopmentofFinTech,plus thecompaniesactivelyseekingthebreakingpointforenteringnewmarkets,thecompetitivenessforthebankingindustryfordomesticandoverseasbusinessesaswellastheoverseaslayoutwereimproved.Also,withcompaniescontinuallyadjusting their loanandbusinessstructural ratio to improvetheirprofitmargin, it isexpectedthat,evenwiththeconstant interferencetotheglobaleconomyfromthetradewarinitiatedbytheU.S., thebanking industrymaystill improvetheiroverallmargin in2019ascomparedto2018.
C.Positiveandnegativefactorsaffectingcompetitivenichesandlong-termdevelopment,aswellasresponsestrategies
Regardingthefast-changingglobalfinancingandeconomicstate, theBankmayencounter thefollowingcircumstances:a.Favorablefactors
1) Eventhoughcentralbanksacrosstheglobehavebeenslowlytighteningthemoneysupply;however,exceptfortheU.S.,theoverallinterestrateremainslow,wheretheoutlookforinflationremainsmildwithnosignofstagflation;therehavebeennosystematicrisks.
2) TheBankpossessesprofoundlocaloperationbasisandextensivegroupsofcustomershavinglong-termrelationshipswiththeBank.
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3) Leverageonthecompetitiveadvantageof"Financing+Counselling," theBankhasbeenfocusingontheSMEsloanbusinessinthelongrun,assuminganessentialpartinthemarketshareofSMEsloanswiththebenefitofscaleprofit.
b.UnfavorableFactors
1) ThetradewarbetweentheU.S.andthePRCledto increasing internationaleconomicexposures,whichmayendangercorporateswith theirprimarymanufacturingbaseorconsumermarkets inMainlandChina,addinguncertaintiestotheeconomicgrowthofTaiwan.
2) Increasingcompetitionamongourbusinessforhighhomogeneityinproductsandservicesprovided.c.Countermeasures
1) Conservativeandstablestrategiesare intendedtobetakenforour investmentoperatingtoobtainstablereturns.
2) Consider factorsof risksand returns tomakeeffectiveadjustmentsonassetsallocation for theincreaseofoverallincome.
3) FocusonthedevelopmentwithSMEsandcontinuetostrengthenourspecializedfieldofSMEswithconsiderationsequallygiventofinancingandcounseling,fullyexertingourfunctionasaspecializedbankforSMEs.
4) Integratemarketing resources, focusonproductpromotion, realizecross-selling,and increasedbusinessvolumewithtargetingcustomerstoimprovetheoverallcontributionsofcustomers.
5) Leverageonthechanneladvantagesandcooperatewiththeflexiblemarketingmanagementtohelppromotetheoperatingperformanceandimproveservicesforcustomers.
6) Establishmarketsegregationsandcarryoutgroupedandgradedmanagementaccordingtoassetsofcustomers; focuson targetedwealthmanagementcustomersandprovidecustomized integralplanningforfinanceandassetforsuchcustomers.
7) Introducediversifiedproducts,fixateonthecooperativerelationshipregardinginvestmentcredit,andexpandthe investmentchoicestosatisfycustomers'need,enhancecompetitiveness,and improveservicefeeincome.
(5) Financial Product Research and Business Development SummaryA.PrimaryFinancialProductsandSizeofNewlyAddedBusinessDepartment,andProfitorLossforthePast
TwoYearsa.MajorfinancialproductsoftheBankforthepasttwoyears
1) Providing"Wonderful IndustrialZoneConcessionalLoan,"and the loanbalanceswereNT$97.07billionattheendofFebruary2019.
2) Providing the "PreferentialLoans forKey Innovative Industries,"and the loanbalanceswereNT$88.31billionattheendofFebruary2019.
3) Providingthe"GreenEnergySustainableProjectLoan,"andtheloanbalanceswereNT$0.413billionattheendofFebruary2019.
4) Providing the"2018HappyHomeland"mortgageproject,and the loanbalanceswereNT$4.821billionattheendofFebruary2019.
5) Providingtheretirementhousing"JoyfulRetirement"project,andtheloanbalanceswereNT$0.721billionattheendofFebruary2019.
6) Providingthe"EternalPeaceandGoodHealth"houseguaranteedloan,andtheloanbalanceswereNT$8.381billionattheendofFebruary2019.
7) Providingthe"HeartofGold"civilandteachingpersonnelcredit loan,andthe loanbalanceswereNT$0.902billionattheendofFebruary2019.
8) Providingthe"CorporateEliteLoan"mortgageproject,andtheloanbalanceswereNT$11.79billionattheendofFebruary2019.
9) Providingthe"NewImmigrantsMortgage"project,andtheloanbalanceswereNT$10.389millionattheendofFebruary2019.
10) IssuanceoftheSilverLoveCreditCardinJune2018,andtheBankexclusivelyallocated3‰ofthegeneralcardconsumptiontohelpseniorstodineandlearntogether.AttheendofFebruary2019,theaccumulatedvolumeofcirculationwas17,509cards,theaccumulatedgeneralcardconsumptionwasNT$1,337,728,000,andtheaccumulatednon-profitfundwasNT$4,007,000.
11) Thedepositbalancesforthe"ExcellentRateLargeAmountDemandDeposits"projectattheendof2018wereNT$20billion;thedepositbalancesforthe"PreferentialGoldDemandDeposits"projectattheendof2018wereNT$15billion.
Taiwan Business Bank Annual Report 201884
b.NewlyaddedbusinessdepartmentsoftheBankforthepasttwoyears
1) TheNewYorkBranchcommencedoperatingonFebruary27,2017,providingservicesofloans,etc.;theloanbalanceattheendofFebruary2019wasapproximatelyNT$4.966billion.
2) TheTokyoBranchcommencedoperatingonNovember9,2017,engagingbusinessesofdeposits,loans,and foreignexchange; the loanbalanceat theendofFebruary2019wasapproximatelyNT$3.47billion.
B.R&Dexpensesandresults,andthefutureR&Dplana.R&Dexpensesforthepasttwoyears
Unit: NT$ thousand
Year 2018 2017
Amount 27,990 22,836
b.R&Dresultsforthepasttwoyears
1) Provideindustrialinformationonaregularbasis To improve theprofessionalknowledgeandexpertiseof industries forouremployees, industrial
analysisreportswerewrittenbytheBankonaregularbasis;96industrialdynamicsreports,12profileanalysisondomesticandoverseaseconomicsandfinance,8monthlystatementforindustrialtrend,4quarterlyreportsforprospectsofdomesticindustries,and54projectreportswerecompletedduring2018.
96industrialdynamicsreports,12profileanalysisondomesticandoverseaseconomicsandfinance,8monthlystatementforindustrialtrend,4quarterlyreportsforprospectsofdomesticindustries,and6projectreportsareexpectedtobecompletedduring2019.
2) Analysis,reports,andresearchonparticularandmajorindustriesi. Giventhestringentenvironmentalprotectioncontrol inthePRC,the legalizationofenvironmentalprotectionpolicieshasbeencarriedout.Revisionsandsupplementsonrelevantenvironmentallawsand regulationshavebeenpromulgatedsuccessively,andenvironmentalprotectionaspriorityhasbecomearegularsystem insteadofashort-livedpoliticalslogan.Furthermore, thetarget forsuchsystems isnotmerelyrestrictedtoTaiwanesefirms,butalsodifferent industries.Therefore,theBankwrotethe"ImpactsontheTaiwaneseFirmsaswellastheRisksandBusinessOpportunitiesto theBankResultingfromthePollutionControlOrder in thePRC"toanalyzetheimpactsandriskstheTaiwanesefirmsandtheBankmaybeexposedto,respectively.Weexpectedtofindnewbusinessopportunitiesasreferencestoourheadofficefordecisionsonadjustingtheindustrialcreditloans.
ii. Due to the tradewarbetween theU.S.and thePRCand theslowdownof thesemiconductormarket, theBankwrote the"OperatingChallenges forSemiconductorChannelFirms in2019"accordingly, topointout thatcommoditiessoldbysemiconductorchannelfirmsare in thenatureofcomplexspecificationsandbroadselectionsofitems.Also,themajorityofsuchcompaniesarefacingoperatingchallengessuchastheshort lifecycleandlowmarginofproducts.Besides,dueto theextensivescopeof thesalesmarket,exchangeraterisk isalso thebusinessrisk that isgenerallyfacedbysuchcompanies.ItisexpectedthatsuchinformationwouldbenefitandallowallemployeesoftheBanktounderstandtheindustrialtrend.
iii.Organizedandcoordinated thesyndicated loansprojects in linewith theBank,continuinglycompletedthethematicreportsof"ZincRelatedIndustriesinTaiwan,"FoodIndustry,""ProcessingandPreservingofAquaticProductsandRelatedProducts"asreferencestotheBankfordecisionsonadjustingtheindustrialcreditloans.
3) InFebruaryandNovember2017, thecore informationsystems implementation for theNewYorkBranchandtheTokyoBranchwerecompleted.Personnelwassuccessivelyassignedtothebranchesfortrainingprovision,soastohelpthesystemsetupandday-to-daymaintenanceandoperatingtasksforthecommencementofthebranches.
4) Pre-arrangedoutwardforeign-currencyremittancefunction:Telleroperationshavebeensimplified,theoperatingtimeforhand-writtencustomerapplicationformshasbeeneliminated,andthefunctionhasbeenopenedupforcustomersatsmartbranchessinceMar.6,2017.
5) Tomeetthecapitalrequirementsforthedomesticandoverseaschannellayoutandimprovetherisksassumption, theBankcompleted the issuanceof long-termsubordinatedbonds in theamountofNT$5.3billiononMarch28andMay23,2017.
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6) Thebuildingof thecoresystemandSWIFTsystemat theHongKongBranchwaspulledbacktoTaiwanandwascompletedinMay2017,whichintegratesandsharesinformationsystems,allowinganeffectivereductionontheequipmentmanagementandoperatingcostsforoverseasbranches.
7) Theestablishmentofthetwo-factorbiometricsystemandimprovementoninformationsecuritycontrolsystemwerecompletedinJune2017tosetafoundationforinformationsecuritycontrol,reinforcingthee-bankingoftheBankregardingcustomerverification.
8) The trustsassetsmanagementsystemwas introducedonJune27,2017 to improveourservicequality.
9) Digitaldepositaccount(Type1):openedupforcustomerstouseonJuly28,2017toenhancedigitalservicesandfunction.
10) Cross-borderonlineshopping(cross-borderoutwardremittance): InauguratedonAugust1,2017,allowingclients topay forTaobaoandTmallonlinepurchaseswithTaiwanBusinessBank'sATMcards.
11) Themaintenancecontract for the"FinancialTransactionManagementSystem(KONDORsystem)SoftwareandHardwareandProjectServiceProgram"wassignedonAugust2,2017,toimproveouroperatingefficiency.
12) In response to thedigital financingdeveloping trend, theBankaimsatcreatingcomprehensiveelectronicservices forsecurities. InSeptember2017,weaddedonlineservicesof"onlinesigningservices for riskdisclosurestatementofsecurities transactions," "emergingstocksonlineorderingsystem,"and"webpageupdate,"providinginstantandconvenientoperatingfunctionstocustomers.
13) Establishmentofprotectionsoftware formobilebankingandmobile corporatebankingwerecompleted inMarchandSeptember2017, respectively, to reinforce thesecurity forcustomertransactions.
14) The "QRCodeMobilePayment" functionwascompleted inSeptember2017, togetherwith thesecuritycontrolsystem"TaiwanBusinessBankSecurity",customersmayuse the interbankQR-Codeplatformoffinancialcompaniestocarryoutthedebitpaymentsforconsumptions.Functionsofshoppingbytransfer,transferpayment,andP2Ptransferwereintroducedsubsequentlytotargetthebusinessopportunitiesfrommobilepaymentservices.
15) TodevelopthemobilepaymentandauthorizedstoresacquiringservicesofTaiwanPayinthemobilebankingappof theBank,weprovideservices forcustomers tomakepayment forconsumption,payment(tax),shopbyusingourmobilebankingandhelpthebusinessunittointroducetheTaiwanPaycollectionservices:i. SinceSeptember15,2017,customersmayuse theQRCodescanning function in themobilebankingapptoperformthepaymentforconsumption.
ii.QRCode-depositaccountacquiringserviceswereinauguratedonSep.15,2017,madeavailabletobeappliedbyindividualsornon-individualwithoperatingbusinessandcollectionrequirements,soas toenhance themarket competitivenessof theBank regardingacquiringservices forauthorizedstores.
iii.SinceDecember12,2017,customersareallowedtousedthemobilebankingappoftheBanktopaythecreditcardbillsoftheBankorotherbanksandusetheshoppingbytransferservice.
iv.OnDecember28,2017, the"TaiwanPay"QRCodecollectionservicewas introduced into thetuitionandmiscellaneousbillsforschools.
16) New"WealthManagementSystem"waslaunchedonOctober2,2017,toimproveourservicequality.17) Tostrengthentheoperatingscaleof"TBB(Cambodia)MicrofinanceInstitutionPlc,"oursubsidiaryin
Cambodia,thecentralbankofCambodiaapprovedtheestablishmentoftheChamkarMonBranchonAugust30,2017;thebranchopenedforoperationonOctober2,2017.
18) Inductivedebitcard:TheinductivedebitcardwaslaunchedonOctober16,2017.TheBankaddedthecontactlesspayment forconsumption to theexistingATMcardof theBankand redesignedthemodelofnewcards.Customersmayperformcontactlessconsumptionwith theirATMcardsatauthorizedstores.
19) Inorder toexpandthenumberofoverseasbranchesand increasethe investment levelof foreigncurrencybonds,andeffectivelyreducerisksincapitalliquidity,theBankissuedunsecuredUSdollarbondsintheamountofUS$0.12billiononOctober27,2018.
20) Tocomplywith the informationsecurity requirementsand improve the functionsofsoftwareandhardware, theBank inaugurated theprocurementproject for theestablishmentofshort-termbillsclearing-settlementmechanismandthesystemfunctionadjustmentinOctober2017.
Taiwan Business Bank Annual Report 201886
21) After theadditionofonline transactions forcustomersonNovember2,2017, "noticeof internetbankingtransactions"willbedispatchedtocustomersthroughe-mail.
22) Addedthe"TBBCardlessWithdrawal"functionfortheATMsoftheBank:FromNovember28,2017,customersmayusetheTBBSecurityontheirmobiledevicestoapplyforthisserviceandsetupthewithdrawalpassword thatallows themtoset thewithdrawalamountwith theirmobiledeviceandpresentattheautomatedserviceequipmentoftheBankforfetchingsuchcash.
23) FromDecember1,2017,thehandling,throughtheTaiwanClearingHouse,ofelectronicDirectDebitAuthorization(eDDA)andenhancedAutomatedClearingHouse(eACH)functionsoftheAutomatedClearingHouse(ACH)hasbeenadded.
24) FromDecember18,2017,NegotiableCertificatesofDeposit in foreigncurrency(ForeignCurrencyNCD)wasmadeavailabletogeneral investors,whichprovidestheBankanewsourceforgainingforeigncurrencycapitalandexpandsthesizeofforeignexchangedepositsoftheBank.
25) Theplanning for "FinancialTransactionManagementSystem(KONDOR)andThomsonReutersServer"procurementprojectwascompletedonDecember29,2017; theofficialapplicationofsuchsystemswillsignificantlyimprovetheoperatingefficiencyoftheinformationsystem.
26) Inorder tocomplywith thedigital financing3.0policyandprovidecustomerswithconvenientservices,theBanknewlyadded"personalloanservice"tothemobilebankingappoftheBank.TheserviceconnectstotheinternetbankingoftheBanktofulfillcustomers'requirementsoffastserviceswithoutpresentingatthecounter.
27) The issuanceofseniorunsecuredgreenbonds in theamountofNT$1billionwascompletedonJanuary5,2018.
28) TheaccessibleeATM received the certificationofWebContentAccessibilityGuidelines2.0ConformanceLevelAAAonJanuary31,2018.
29) Overseasbonds investments commenced fromMarch1, 2018; relevant operatingmanuals,booklet, formswereadded,and thestandardoperatingprocedureswereestablished to improvethe investmentandwealthmanagementservicesprovided tocustomers,satisfying thewealthmanagementrequirementsfromcustomersandreducingoperatingrisks.
30) TaiwanPaylinkstothe"Paytax"onlinetaxpaymentplatformbytheMinistryofFinance:FromMarch31,2018,functionsforauditingfixedcategoriesoftaxessuchaspaymentforIndividualIncomeTax,VehicleLicenseTax,HouseTax,andLandValueTaxwereopenedupforTaiwanPay.
31) Pre-arranged foreigncash function:Telleroperationshavebeensimplified, theoperating timeforhand-writtencustomerapplication formshasbeeneliminated,and thepre-arranged foreigncashfunctionhasbeenopenedupforcustomersattheirmobiledevices,personalPC,ortheSmartTableatsmartbranchessinceMarch22,2018.
32) TaiwanPayaddedbarcodeandQRcodescanned forpurchase function: In response tomulti-paymentscenarios,thefunctioninTaiwanPaywasinauguratedforstorestoscanthebarcodeandQRcodeoftheconsumerswiththecodescannertocompletethedebitpaymentsforsuchpurchases.
33) TheaccessibleinternetbankingreceivedthecertificationofWebContentAccessibilityGuidelines2.0ConformanceLevelAAonMay7,2018.
34) TBBSecuritysystemwasaddedtothenon-predesignatedtransferwithmobilebanking:Toexpandtheservicescopeofmobilebanking,theexecutionof"non-predesignatedtransfer"functionthroughTBBsecuritywithmobilebankingwasinauguratedonMay15,2018.
35) TheaccessibleofficialwebsitereceivedthecertificationofWebContentAccessibilityGuidelines2.0ConformanceLevelAAonMay29,2018.
36) “Theapplicationplatformfor thedisabilities toapply forATMinter-bank transaction feereductiononline”wasaddedonJuly1,2018.
37) Fast login functionaddedtomobilebanking:Tosimplify the loginserviceexperiences forusersofmobilebanking,"mobilebankingfast loginfunction"wasinauguratedonJuly3,2018,providingtheloginfunctionforcustomerstologinthroughbiometrics(i.e.,fingerprint,facialrecognition)orpatternrecognition.
38) TheBankwas invited to theceremonyof "PropertyTrust for theSeniorand theDisabilitiesEvaluation"heldby theFSConJuly12,2018.Thenursing trustbusinessof theBankrecordedoutstandingperformancein2017andreceivedanawardfromtheFSCasrecognition.
39) Thebankestablished theriskhierarchy for theoverseasbonds to implement thecommodity riskhierarchyandtheprincipleofcustomeradaptationonJuly25,2018.
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40) Themainframereportwas transferred toanopensystem;phaseonedatasourcecollectionwascompletedinJuly2018,andtherelevantreportwasprepared.
41) TaiwanPayfasttransactionandsmallamounttransactionwasaddedtomobilebanking:Tosimplifythetransactionprocedures forTaiwanPaymobilepayment,TaiwanPayfast transactionandsmallamount transactionwas inauguratedonAugust9,2018.WhenusingTaiwanPayforconsumptiondebiting,shoppingby transfer,payment, taxpayment,andpersonal transfer,customersmayusebiometricsverificationandpatternrecognitiontoconfirmthetransactionandcompletetheTaiwanPaytransaction,facilitatingthemobilepaymentprocedures.
42) TheBank issued the long-termsubordinated financialbonds in theamountofNT$5.45billiononAugust20,2018.
43) TheBankamendedtheoperatingregulationsformonitoringprocedureofanti-moneylaunderingandcombattingthefinancingofterrorismforsuspectedeventsonSeptember6,2018.
44) TheBankcompletedthe issuanceofunsecuredUSdollar financialbonds in theamountof$0.18billiononSeptember27,2018.
45) Inresponsetotheupgraderequirementsforouroperatingsystem,theBankcarriedouttheupgradeforshort-termbillsclearing-settlementbankingmechanisminSeptember2018.
46) TheindividualsegmentoperationsforthreedistrictsinNorthernTaiwanwerecompletedinSeptember2018toimproveitsnetworkstructureandimprovetheoperatingefficiency.
47) ThenewmainframeharddriveoperatingsysteminformationtransferwascompletedonOctober20,2018,toacceleratethedataaccessspeed.
48) The localand remotebackupmechanism for thenewmainframeharddrivewascompletedonOctober27,2018.
49) Inresponsetothepolicydirectionof thegovernmentandtohelpdomestic industriestoobtain therequiredfundsfordevelopment, theBankreinvested in itswholly-ownedTBBVentureCapitalCo.,Ltd.,withaninvestmentamountofNT$2billion,whichwasofficiallyopenedonOctober23,2018.
50) Upgradeof theprogramming languagePL/Iof thecentralmainframetoEnterprisePL/IV4.4, thehighestcompatibleversioncurrentlyavailable,wascompletedonNovember17,2018, tosmoothlyconnecttothesubsequentmainframeupgradeandsystemmaintenanceandoperation.
51) OnNovember17,2018,theBankaddedthefunctionfortheendsystemtoprint"Non-discretionaryMoneyTrustsAcquisition/ConversionApplication"and"Non-discretionaryMoneyTrustsInvestingonOverseasBondsAcquisition/RedemptionApplication"withspecifictransactiontimeautomatically.
52) Financialblockchainconfirmationservices:Trailrunfor"FinancialBlockchainConfirmationServices"hascompletedtheconfirmationoperationonNovember29,2018.
53) Establishedthedatawarehousemoduleandcollecttheinternalandexternaldatafortheindustryforrapiddataprocessing.TheestablishmentofthedatamodulewascompletedinDecember2018andhadbeenprovidingtobranchesforusesuccessively.
54) Free-of-formfunction:Toprovideconvenientservicestocustomers, free-of-formserviceregardingdepositing,withdrawal,and transfer forover-the-counterserviceshavebeen inauguratedsinceDecember24,2018.
55) Reset thepersonal internetbankingusername,passwordonline:To improve theconvenience forcustomers, theBankprovidedcustomers toreset thepersonal internetbankingusername, login,transactionpasswordonlinefromDecember24,2018.
56) TheBankentered intoaGlobalMasterRepurchaseAgreementwithBANKSINOPACCOMPANYLIMITEDonDecember26,2018.
57) Carriedoutupgrades for thepersonal internetbanking,eATM,andmobilebankingapplicationsystem,aswellassoftwareandhardwareequipmentbystage.Introducingmicro-servicesystemforthefinancialmodule;phaseonemulti-languagewebpagewaslaunchedonDecember28,2018.
58) Personalinternetbankingrevisionestablishment:Toprovidecustomerswithdiversifiedservices,theBankopenedupthemulti-languageservicesof thenewgeneration internetbankingforcustomers.EnglishandSimplifiedChineseversionsbecameavailableforcustomers.TheBankalsoredesignedthewebpageversionoftheinternetbankingtothatpresentedwithbrightercolor,allowingcustomerstodistinguishtheloginscreenandprovidethemwithbrandnewexperiences.
59) TheBankamendedthereviewrequirementswithapprovalleveltobeincreasedfornon-discretionarymoneytrustsindomesticandoverseassecuritiesaccountopeningswhencustomersinvolvehigherriskfactorsofmoney-launderingandterrorismfinancingonDecember28,2018.
60) CarryingoutthespeedraisingforVPN;thebandwidthwasincreasedto20Mbps/60Mbps(uploading/
Taiwan Business Bank Annual Report 201888
downloading).Divert theadministrationandbusinessnetworkconnectionyetcarryout thebackupprocedures foroneanother for thebranches,andallocate thebandwidthmoreefficiently.AsofDecember2018,head-endroutingoperationswerecompletedfor24branches,ourheadoffice,anddomesticoperationcenters.
61) Financingpatent:TodevelopFinTech, theBankhadappliedfor39patentsto IntellectualPropertyOffice,MOEAbytheendofDecember2018.26ofsuchapplicationswereapproved(including16utilitymodelpatentand10inventionspatent).
c.FutureResearchandDevelopment(R&D)PlansandtheR&Dexpensesexpectedtobeinvested
1) R&Dbudgetfor2019isNT$50,426,000.2) AlipayfromfinancialcompaniescombineswithTaiwanPay:Providingaccessforcustomerstouse
mobilebanking functionofscanningpayment foronlineconsumptionregardingoffshoreshoppingwebsitessuchasTaobaoorTmall.ThesystemwoulddeducttheamountfromtheATMcardaccountofthecustomerwhentheQRCodewasscannedforpayingtheconsumption;thesystemisexpectedtobelaunchedinJanuary2019.
3) TaiwanPayRedEnvelopeIssuingandLottery:InresponsetotheupcomingChineseNewYear,theBankprovides theredenvelope issuing function forTaiwanPaymobilepayment.Thecustomersmayselecttheredenvelopestylefrommobilepayment(TaiwanPay)andscantheQRCodeofthereceivertotransferandpassout theredenvelope.Customersmayalsosendtheredenvelopandgreetingstothereceiversthroughmessagingapps.ThefunctionisexpectedtobelaunchedbytheendofJanuary2019.
4) ItisexpectedthattheoldharddrivestransferfortheterminalsystemofbrancheswouldbecompletedinMarch2019.
5) Mobilepaymentscanning forwithdrawal:Customersmayuse themobilebankingof theBank toselect theaccount forwithdrawingfromandcomplete thecashwithdrawalafter the interactiveQRCodescanningbytheATM.ThefunctionisexpectedtobelaunchedbytheendofMarch2019.
6) It isexpectedthattheupgradeforcentralsinglemainframewillbecompletedinApril2019andtheParallelSysplexshallbecompletedinMay2020.
7) HCEinductivewithdrawal:CustomersmayuseTBBcloudpaymentdebitcard(i.e., theTaiwanPaymobilebankingAPP) tocomplete thecashwithdrawalafterselectingTBBcloudforpaymentandperforminductionattheinductionarea.ThefunctionisexpectedtobelaunchedbytheendofJune2019.
8) CombineTaiwanPaywithcreditcards:CustomersareallowedtousemobilebankingtosetupcreditcardsthatarecommonlyusedforthescanningpaymentofTaiwanPay.Uponpurchasing,customersmayscan theQRCodeof thestoresandusecreditcards (scanningmode) topay,orpresentthecreditcardpaymentQRCodeforstores tocan(scannedmode) forpayment. Thefunction isexpectedtobelaunchedinJune2019.
9) Itisexpectedthatthesimplifiedclosingaccountproceduresshallbecompletedinthesecondquarterof 2019.
10) It isexpected that therebuildingof terminalsystemsforbrancheswillbecommenced in the thirdquarterof2019.
11) Improving theapplicationsystemforpersonal internetbanking,onlinecorporatebanking,eATM,andmobilebanking.Updatinghardwareequipmentand introducing thesystematicstructures forfinancialmodulemicro-services.Re-designthewebsitetosimplifytheproceduresandstepclosertotherequirementsofcustomers.ThepersonalinternetbankingandeATMareexpectedtocompleteinJuly2019andOctober2019,respectively.
12) Additionof two-factorauthenticationservicesforeDDAinternetbanking:Toreinforcethecollectionbusinessof theBankandstrengthen theexistingeDDAandeACHbusiness functions, theBankaddedservicesandfunctions(i.e.,internetbankingverificationandauthorization)throughelectronicDirectDebitAuthorization(eDDA)andenhancedAutomatedClearingHouse(eACH)functionsforamoreconvenientcustomerserviceisexpectedtocompleteinDecember2019.
13) Digitalbillboard:Tocreateapaperlessdigital financingenvironment forourbranches, theBankuses thebillboard todisplay itsproductpostersandpropagandaregardingannouncements fromthecompetentauthorityor theBank,which improvesthebranches'cleannessofenvironmentandavoidsomissionsofinformationbybranchesthroughcentralcontrol.ItisexpectedtobecompletedinDecember2019.
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(6) Short- and Long-Term Business Development PlansA.Short-termbusinessdevelopmentplan:Pleasereferto“(3)OperatingPlanfor2019”inthischapter.B.Long-termbusinessdevelopmentplan:Pleaserefer to“3.FutureDevelopmentStrategies” in"I.Letter to
Shareholders."
2. Employees
(1) Employees Information
Year 2017 2018 From this year toFeb. 28, 2019
Numberofemployees 4957 5082 5134
Averageage 44.82 44.62 44.30
Averageyearofservice 18.39 17.83 17.42
PercentageDistributionofAcademicQualifications-(%)
Ph.D. 0.12 0.18 0.19
Master'sdegree 14.43 15.51 16.01
University/College 76.44 75.93 75.69
Highschool 8.49 7.93 7.66
Belowsighschool 0.52 0.45 0.45
Nameandnumberofemployeeswhoholdprofessionallicenses
Licensesfortrusts 4228 4311 4286
Financialplanner 1659 1686 1675
SeniorQualificationExaminationforProfessionalandTechnicalPersonnel(LawyersandCharteredPublicAccountant)
13 13 13
QualificationExaminationforSeniorSecuritiesSpecialist 1668 1699 1675
QualificationExaminationforSecuritiesInvestmentAnalyst 83 87 86
QualificationExaminationforFuturesSpecialist 2014 2070 2064
GradeaboveS2forFLPT® 795 976 984
Internalauditor 12 12 12
BasicProficiencyTestonBankInternalControls 3496 3580 3557
FinancialRiskManager(FRM) 13 13 13
CertifiedFinancialPlanner(CFP) 11 14 14
QualificationExaminationforPropertyandInsuranceBroker 14 13 13
QualificationExaminationforPropertyInsuranceAgent 9 9 9
QualificationExaminationforPersonalInsuranceBroker 8 8 8
QualificationExaminationforPersonalInsuranceAgent 7 7 7
QualificationExaminationforInvestment-orientatedInsuranceProductRepresentative 3901 4004 3964
PropertyInsuranceRepresentative 3431 3610 3591
PersonalInsuranceRepresentative 4335 4433 4410
TestfortheSalesofNon-investment-orientedLifeInsurancewithPaymentinForeignCurrencybyPersonalInsuranceRepresentative
2835 2999 2972
Taiwan Business Bank Annual Report 201890
(2) Studies and Training for EmployeesA.CompletedalltrainingaccordingtoEnforcementGuidelinesforTrainingforEmployeesofTaiwanBusiness
Bank,Ltd.andthe2018EmployeesTrainingPlanwithatotalof367sessions(including306sessionsofbusinessseminars,23sessionsofbusinessfoundation,4sessionsofmanagers,25sessionsofweekendclasses,9sessionsof lectures/orientations)held,withanadditional31sessions to theoriginalplanned336sessions.Theexecutionratethroughouttheyearwas109.2%,thetotalnumberofpeopletrainedwas42,124, theemployer trainingratewasapproximately8.29 timesperperson,and theannualemployeetrainingexpenseswereNT$122,997,000intotal.
B. InresponsetotheBank4.0digitalfinancingenvironment,theBankprovidesaseriesofcoursesinrelationtodigitalmarketingforitsemployeestogainaprofoundinsightintoFinTechandinnovation,correspondingtothefuturetransformationopportunitiesforbanks.
C.Tostrengthenthecompetitivenessof theBankand improvetheprofessionalknowledge,expertise,andfunction,theBankorganizedbusinessdirectingandmanagementdevelopmenttrainingcoursestoboostthequalityofourmanagementandreducetheoperatingrisks.
D.Thecompetentauthorityfromourheadofficewillassignrelevantpersonneltoparticipateintrainingcoursesorganizedbyexternalprofessional training institutions,encouragingemployeestoabsorbnewknowledgeandimprovetheirprofessionalcompetencies,soastomeettherequirementsonprofessionalcompetenciesforthebusinessdevelopmentoftheBank,comprehensivelypromotethebusinessdevelopment.
(3) Employee Code of Conduct and EthicsTheBankattachesgreat importance to theemployeecodeofconductandethics.Allofouremployeesareprovidedwith theworking rules for them toclearlyunderstand theirown rightsandcodeofconducttobeobserved, including loyaltyanddedication, legalcomplianceand faithfulness,honestyand integrity,professionalcommitment,confidentiality,andcourtesy.Ouremployeesalsoadheretoahighstandardofmoralandethics.
(4) Protective Measures for the Safety of the Work Environment and Personal Safety of the Employees
Items Description
Accesscontrol 1.Rigorousaccesscontrolmonitorsystemisavailableduringdaytimeandnighttime.2.TheBankhassignedacontractwiththesecuritycompanyregardingnighttimeandweekendstoprotectthesafetyofthebranches.
3.Connectwiththepoliceandpublicsecurityunitasaprecaution.
Maintenanceandinspectionoftheequipment
1.AccordingtotherequirementsunderRegulationsfor InspectingandReportingBuildingsPublicSecurity,theBankshallengageprofessionalcompaniestocarryoutthesecurityinspectioneverytwotofouryears.
2.TheBankcommissionedprofessionalorganizations to inspect the firesafety facilitieseveryyearasrequiredbytheFireServicesAct.
3.According to theCodeofPractice forOccupationalHealthandSafetyof theBank, themaintenanceand inspectionformotorcycles,airconditioners,vehicles,coincounters,kitchen,holepuncher,andbillcounterarecarriedoutperday; themaintenanceand inspection forairconditioners, first-aidkit, fireserviceequipment,andelevatorsarecarriedoutpermonth;themaintenanceandinspectionforvehiclesarecarriedoutpermonthperseason; themaintenanceand inspection forhigh/lowvoltageelectricalequipmentarecarriedoutpersixmonths;themaintenanceandinspectionformotorcycles,fireserviceequipment,andelevatorsarecarriedoutperyear,andthemaintenanceandinspectionformotorcyclesarecarriedoutperthreeyears.
Measuresanddamagecontrolfordisasterprevention
1.TheBankhasdisasterprevention,rescuenotes,andoccupationalaccidentreportingproceduresinplace,including"DisasterEmergencyResponseCountermeasuresManual,""ManagementGuidelinesforMajorContingencies," "ProcedureGuidelines forSecurityandGroupingofBranches," "CodeofPractice forOccupationalHealthandSafety,""RegulationsGoverningOccupationalHealthandSafety,""WorkplaceSelf-InspectionPlan,"and"ProcedureGuidelinesforEquipmentMaintenance."Suchproceduresspecifytheresponsibilitiesandmission forpersonnelateach levelbeforeandaftermaterialeventsofnaturaldisastersandmaterialemergenciesof robberies.Anti-robberydrillsareperformed twiceayearatourbranches.
2.Except for theorganizationof theCivilDefenseCorps,ourheadofficealsoengages thecompetentauthorityregardingfireservicestoorganizethefireservicelectures.
3.Tosafeguardthesecurityandhealthofouremployees, theOccupationalSafetySectionsubordinatestotheHumanResourcesDepartmentisinplaceforthepromotionofsafetyandhealthaffairs.
PhysicalHealth 1.Healthcheckandhealthmanagement:Regularhealthcheck isprovided foremployees,andmedicalworkerspresentat thebrancheswillofferhealthguidelinesandrecommendations toemployeeswhoreceiveabnormalresultsofthehealthcheck.
2.Hygieneoftheworkingenvironment:Smokingisprohibitedatallbusinesspremises.TheBankalsocarriesoutregularofficecleaningandsterilizationandset17thofeachmonthasthecleaningday.
3.Inordertohelpvoluntaryhealthmanagementofouremployees,theBankorganizeshealthseminar,CPRtraining,andprovideshealth-relatedprogramsonthedigital learningwebsiteof theBankforour fellowcolleaguestolearnnewknowledgefromtheinternetandenrichtheirconceptsofhealth.
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Items Description
MentalHealth 1.Providephysicalandmentalrelaxationforemployees:Tohelpcareforthelivingqualityofouremployeesandrelievetheirstressfromworkplaceandfamily,theBankprovidesprogramsofpressurerelease,familycare,emotioncontrol,andencouragementon itsdigital learningplatform forour fellowcolleagues toaccess,adjustingmentalhealthinduecourse.
2.Expressingopinions:TheBankhasestablishedawebsiteexclusive foremployees,providingopiniondiscussionzone,proposalzone,operation forms,andmanualdownloadzone, legalarticles, learningzone,andtrainingannouncementzoneforemployeestoexpresstheiropinions,emotions,andcarryoutinteractivelearning.
3.Preventionofsexualharassmentattheworkplace:Establishreportregulationsandpunitiveterms.
Adviceonhazardousfactorsduringoperations of contractors
Settingupthe“Adviceonhazardousanalysisduringoperationsenvironmentofcontractors”and“Q&A”intheexclusivezonefortheemployeesoftheBankaccordingtothegovernmentregulations.
Insuranceandmedicalallowances
1.TheBankprovideslaborinsurance(includingoccupationalinjuryanddisease)andhealthinsurancetoitsemployeesaccordingtothe law,andnegotiatewith insurancecompaniestoprovidecasualty insurance,accidentmedicalinsurance,andcancerinsurancetotheBank'semployeesandtheirfamiliesatarateofconcession.
2.TheBankofferswork-relatedcasualtyinsuranceforallouremployeeswithcoverageofNT$3million.Forwork-relateddisabilityorwork-relateddeaths,theinsuranceclaimwillbeusedtosupporttheemployeeoritssuccessors.
3.Providediseasesubsidiestoourclerks,theirspouses,anddescendants.
3. Corporate responsibilities and moral conducts: Please refer to Ⅸ. Corporate Social Responsibility Report.
4. The number of non-managerial employees and the annual average employee benefit expenses.
Unit: Person; NT$; %
YearItems 2017 2018 Growth Rate
NumberofNon-managerialEmployees 3,970 4,077 2.70%
Theannualaverageemployeebenefitexpenses fornon-managerialemployees 1,256,735 1,373,375 9.28%
Note:Tofacilitatethehumanresourcesrenewal, theBank increasedtherecruitment foryoungemployees in2018,while thereweresenioremployeesretiredduringthesameperiod,andthenumberofemployeesincreasedby107. In2018, theachievingrateof thebefore-taxprofitwas125.96%.It isestimatedthat theperformancebonusandemployees'compensationwill recordanincreaseascomparedtothatof2017,resultinginagrowthof12.23%inannualemployeebenefitexpensesfornon-managerialemployees.
5. Information Equipment
(1) Primary hardware: Central accounting mainframe, foreign exchange mainframe, fund mainframe, automatic tape library of the mainframe, virtual tape library of the mainframe, hard drive of the mainframe, laser printer of the mainframe, hard drive of the open system, tape library of the open system, virtual tape library of the open system, server of the open system, and network equipment.
(2) Primary information system: Deposits system, loans system, remittance system, foreign exchange system, credit card system, general ledger system, e-banking information system, teller terminal system, seal/signature verification system of the Bank, ATM system, ATM monitoring system, the central operating system for collection bill and outward remittance, statement management and inquiry system, CRM system, digital branches system, AML system, fund system, wealth management system, and overseas branches system.
Taiwan Business Bank Annual Report 201892
(3) Information operating projectA.Updating thecentralaccountingmainframetoestablish theParallelSYSPLEXsystemwith localbackup
step-by-step,soastoensurethecontinuousoperationsofthesystem,providingundisruptedservices.B.Establishingadatacenter tocollect internalandexternaldata,process information inashort time,and
strengthenthecapacityfordataintegrationandanalysis.Combinemassdatawithin-depthlearningfortheusageofproductdesign,risksanalysis,andcustomermarketing,acceleratingthebusinesspromotionandriskscontrol.
C.Organizing the foreigncurrencysystemand theNewTaiwanDollarsystem integration forsingleentry,providingaunifiedoperating interfaceof tellerand integratedservices forcustomers,and rebuild theterminalsystematourbrancheswithauser-friendlyoperatinginterface.
D.TheBankintroducedthenewmulti-factorbiometricsystem(suchastheapplicationofdigitalvein,fingerprintrecognition,andfacerecognition)andproactively invest in theresearchanddevelopmentof technologyfieldssuchasinnovativepaymentandtransactionsecurity,soastoprovideanintegralrecognitionsystemforalldevices,expandingthedigitalfinancialsphereoftheBank.
E. Improving thequalityof informationserviceand theknowledgeandcompetenceofprofessionalstaff,establishingaknowledgebankandafunctionmapforprofessionalstaff,thusbenefittingtheinheritanceandsharingofexperiences.
(4) Emergency backup and security protection measures for information operationsA.Centralmainframebackup Theoperatingcenterof theBank locates inLinkou,andaremotebackupcenter locates inTaipei;both
centersadopt thewarmbackupmodel.Duringbusinesshours,wheredisastersoccurred in thecentralcomputerfacilities,thebackupcomputerfacilitieswouldrestorethecrucialsystemwithin4hourstomaintainthe fundamentalservicesprovidedby theBank. Inaddition, toenhancethefamiliarityofouremployeestoward theoperatingproceduresand thecompletenessof theverificationdocument, remotebackuprehearsalsarecarriedouttwiceayear.
B.Branchesbackup Ourbranchesareequippedwithbackupnetworks.Also,whenaccidentsoccurandtheconnectionsystemis
down,customersmaypresentatthenearbybranchwithrelevantdocumentsforhandling.C.ComputervirusandhackerinvasionprecautionforcomputerequipmentoftheBank
a.Spamfilteringandmaliciousemailblockingsystemis inplace;meanwhile,externalemailaccountsareprohibited,andlettershavebeendispatchedtoalldepartmentsregardinginternalcontroloperations.
b.BuildingantiviruswallsforInternet,dual-firewallsystem,andIntrusionPreventionSystem(IPS);monitortheaccesstoDMZzone(i.e., internetbanking, theentryportal,andonlinefinancingsystem,etc.)andserverzone(i.e.,applicationserver,anddatabaseserver,etc.),aswellasallexternalwebsiteconnectionmadebyouremployees,toreinforcethecybersecurityprotection.
c.Constructionof theWebApplicationFirewall (WAF)andenhance thesecurity forwebapplicationvulnerabilitiesandblockwebpageattacksontheapplicationlevel(i.e.,DoS,andSQLinjection,etc.).
d.CarryingoutinformationsecurityvulnerabilityscanningandpenetrationscanregularlyandsetupinternalvulnerabilityscanningsystemtoscanPCs,newlylaunchedbusiness,andtestingsystemsoftheBanktoreinforcethesecuritysystem.
6. Labor-Management Relations
(1) Welfare measure of the CompanyA.TheBankhasalibrarythathasbooksinChineseandforeignlanguagesavailableforemployees.B.Employeesmayusetheiroff-hourstoparticipate in languagestudiesandfitnessprogramsandapplyfor
subsidiesaccordingtotheBank'srequirements.C.Thecafeteriaattheheadquarterprovidesdeliciouslunchatadecentpriceforemployees.D.Except foremployees involvinginthesecuritiesbusiness,all theemployeesmayenjoybluechipratefor
depositsandloans.E.Foremployeesreachingtheageofretirementorattheageof60orabove,theBankwillprovidebonuses
forthethreeimportantChineseholidaystothosewhoarewillingtoretirevoluntarily.
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F. TheBankprovides insurance forallemployeeswithcoverageofNT$3million regardingemergenciesrelatedtowork;employeesmayapplyforclaimsfrominsurancecompaniesconcerningwork-relatedinjuryorillnessorwork-relateddeath.
G.TheBankhasestablishedan"EmployeeBenefitsCommittee"thatwithholdsthe0.5%of theemployees'salariesasthebenefitpaymentpermonthandallocate0.15%of therevenuefor theEmployeeBenefitsCommitteetoorganizeanduseinmattersinrelationtoemployeebenefits,includingeducationscholarshipsforchildrenofemployees,diseasesubsidies toourclerks, theirspouses,anddescendants,employeesfertilitysubsidies,provisionofone-yeartermgroupinsurance,andbenefitpaymentforthethreeimportantChineseholidaysforemployeesonduties.
H.TheBankcommencedtheEmployeeStockOwnershipTrustinthefirstquarterof2019,creatingawin-winsituationfortheBankanditsemployees.
(2) Retirement systemTheBankshall setaside thepension (contribution rateof6%)permonth todeposit in theemployees'individualpensionaccounts foremployeeseligible for thenewlaborpensionplan.TheBankshallsetasideemployees' retirementallowance (contribution rateof7.64%at theendof2018)permonth todeposit infinancial institutionsdesignatedbythegovernment foremployeeseligible for theold laborpensionplan.Asof theendof2018,balances in theemployees' retirementallowanceaccountwasoverNT$4.9billion.TheBankhasestablishedtheLaborRetirementAllowanceSupervisionCommitteetosupervisetheutilizationandcontributionofretirementreservefunds.Regardingtheproceduresandconditionsforretirementapplication,theBankcomplieswiththe"DirectionforEmployees'Retirement,ConsolationPayment,andDischargewithSeverancePaymentofTBB"andthe"GroupContract"signedbetweentheBankandtheTBBIndustryUnionforemployees'retirement.
(3) Labor-management Agreements and Protective Measures for Employee Rights and InterestsTheBankconvenes labor-managementconferencesregularlyaccording to"Regulations for ImplementingLabor-ManagementMeeting" tonegotiateemployeerightsand interests,and implementsaccording to theresolutionsattheconferences;theexecutionprocessremainswell.
(4) Losses arising from labor disputes in the most recent year and up to the end of February 2019: None.
(5) Current or future potential losses arising from labor disputes: None.
7. Important contracts
Nature of contract Parties Starting date of the contract Major contents Restrictive terms
Outsourcingcontract TaiwanMobilePaymentCo.,Ltd.
FromDecember25,2014,toDecember24,2016(Automaticrenewalfor2yearsuponexpiry,andthesameappliesthereafter)
JointhePaymentServiceProviderTSM(PSPTSM)andoutsourcedataprocessingservicestoTaiwanMobilePaymentCo.,Ltd.includingcardcreation(i.e.,creditcard,anddebitcard,etc.)formobilepaymentinstrumentsandlifecyclemanagementforcards.
Confidentialityclause
Outsourcingcontract SYSTEXCorporation
FromJuly1,2016toJune3,2018(Automaticextensionfor1yearuponexpiry,andupto2times)
Creditcardrelatedoperations-Operationsofformprinting,fillingandsealing,andposting.
Confidentialityclause
Outsourcingcontract FinancialInformationServiceCo.,Ltd.
FromDecember1,2013,toDecember31,2014(Automaticextensionfor1yearuponexpiry,andsamerulesapplysubsequently)
Creditcardrelatedoperations-Operationsofinternationalcardspurchaseandauthorization,operationsofcardopening/cardsuspension/reportingofloss,cashadvance,emergencyservices.
Confidentialityclause
Taiwan Business Bank Annual Report 201894
Nature of contract Parties Starting date of the contract Major contents Restrictive terms
Outsourcingcontract TaiwanFamilyMartCo.,Ltd.
FromOctober1,2012,toDecember31,2013(Automaticextensionfor1yearuponexpiry,andsamerulesapplysubsequently)
Creditcardoperations-Collectingthecreditcardbillpaymentfromthecardholders. Confidentiality
clause
OutsourcingcontractHongLiAssetsManagementConsultancyCo.,Ltd.
FromNovember7,2007,onward(NoexpirationdateandtheBankmayterminatethecontractatanytime)
Outsourcingdebtcollectionforcreditcardandconsumerfinance
Confidentialityclause
Outsourcingcontract
HongKongGoldPartners(Asia)AssetManagementCo.,Ltd.TaiwanBranch
FromNovember7,2007,onward(NoexpirationdateandtheBankmayterminatethecontractatanytime)
Outsourcingdebtcollectionforcreditcardandconsumerfinance
Confidentialityclause
OutsourcingcontractTaiwanSecurityCo.,Ltd.andLeeBaoSecurityCo.,Ltd.
Establishedonthedateofsigningbythesigningdepartmentforatermofoneyear(thecontracthasanautomaticextensionterm)
Cashtransitoperation-Temporaryandpay-per-use(2firms)
None
OutsourcingcontractTaiwanSecurityCo.,Ltd.andLeeBaoSecurityCo.,Ltd.
Establishedonthedateofsigningbythesigningdepartmentforatermofoneyear(thecontracthasanautomaticextensionterm)
Cashtransitoperation-Charterbymonth(2firms) None
Outsourcingcontract ChungHwaExpressCorp.
Establishedonthedateofsigningbythesigningdepartmentforatermofoneyear,thecontractwillautomaticallyextendfor1year,andsamerulesapplysubsequently
Marketablesecurities,notes,andreceiptstransitoperations None
OutsourcingcontractAnFengEnterpriseCo.,Ltd.andLianAnServiceCo.,Ltd.
Establishedonthedateofsigningbythesigningdepartmentforatermof1year,andthecontracthasanautomaticextensionterm
ATMreplenishingoperations(2firms) None
Outsourcingcontract
ShinKongSecurityCo.,Ltd.,TaiwanSecomCo.,Ltd.andChinaSteelSecurityCo.,Ltd.
Establishedonthedateofsigningbythesigningdepartmentforatermof3years,andthecontracthasanautomaticextensionterm
ATMvideomonitoringoperations(3firms) None
Outsourcingcontract YuenFoongPaperCo.,Ltd.
2018.7.24-2019.7.23(thecontracthasanautomaticextensiontermfortherenewalof1year)
Mattersofprintingcashdividendscheck,dataprocessingandfoldingforpostage.
None
Outsourcingcontract YuenFoongPaperCo.,Ltd.
2018.10.1-2019.9.30(thecontracthasanautomaticextensionterm)
Logisticsfordataprocessing-NoticeoperationsforNewTaiwanDollartimedepositsautomaticrenewaluponexpiry.
None
Outsourcingcontract SYSTEXCorporation
2017.3.1-2019.2.28(Automaticextensionforhalfyearuponexpiry,andupto2times)
Operationsofformprinting,cuttingandfolding,fillingandsealing,andpostingregardingdomesticandoverseasmutualfundinvestmentreportoperations.
None
Outsourcingcontract SYSTEXCorporation
2017.7.1-2019.6.30(Automaticextensionforhalfyearuponexpiry,andupto2times)
Mattersofprinting,fillingandsealing,andpostingofbalancesverificationstatementregardingtransactionswithcustomers.
None
Outsourcingcontract SYSTEXCorporation
2017.6.1-2019.5.31(Automaticextensionforhalfyearuponexpiry,andupto2times)
Printing,fillingandsealing,andpostingofe-banktransfertransactionstatement.
None
8. Relevant information on securitization products: The Bank has not offered securitization products.
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Taiwan Business Bank Annual Report 201896
VI
1. Brief Consolidated Balance Sheets and Consolidated Statements of Comprehensive Income for the Past Five Years
2. Financial analysis for the past five years
3. Audit Committee's Audit Report on the 2018 Financial Statements
4. Representation Letter for 2018 Consolidated Financial Statements
5. Independent Auditors' Report for 2018 Consolidated Financial Statements
6. 2018 Consolidated Financial Statements and Notes
7. Independent Auditors' Report for 2018 Individual Financial Statements
8. 2018 Individual Financial Statements Audited and Certified by Accountants
9. Financial Difficulties Confronted by the Bank or Its Subsidiaries and the Related Impacts
Financial Status
97
101106
107
108
111
213
216
223
224 Taiwan Business Bank Annual Report 2018
Review, Analysis, and Risks of Financial Conditions and Performance
VII
1. Financial position analysis
2. Financial performance analysis
3. Analysis of cash flow
4. Impact of major capital expenditure on the company's financial business in 2018
5. Reinvestment policy for 2018, the main reasons for the profits/losses generated thereby, the plan for improving profitability, and investment plans for the coming year
6. Risk management
7. Crisis management and response mechanism
8. Other significant events
225226226226
227
227239239
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Ⅶ1. Financial position analysis
Consolidated comparative analysis of financial conditionsUnit: NT$1,000; %
Year
Item
Difference
2018 2017 Amount %
Cash and cash equivalents, Due from the Central Bank and call loans to banks 133,016,947 152,634,715 (19,617,768 ) (12.85 )
Financial assets at fair value through profit or loss 7,134,604 1,061,789 6,072,815 571.94
Financial assets measured at fair value through other comprehensive income 73,164,201 0 73,164,201
Investments in debt instruments at amortized cost 261,470,496 0 261,470,496
Securities purchased under resell agreements 2,386,518 3,998,104 (1,611,586 ) (40.31 )
Receivables-net 45,652,981 23,951,301 21,701,680 90.61
Current income tax assets 64,880 129,455 (64,575 ) (49.88 )
Discounts and loans-net 1,074,627,748 1,111,559,969 (36,932,221 ) (3.32 )
Available-for-sale financial assets - net 0 66,233,836 (66,233,836 )
Held-to-maturity financial assets-net 0 202,967,083 (202,967,083 )
Other financial assets-net 17,971 2,159,191 (2,141,220 ) (99.17 )
Premises and equipment-net 14,309,738 14,226,866 82,872 0.58
Intangible assets-net 286,054 274,349 11,705 4.27
Deferred income tax assets 1,646,991 1,222,464 424,527 34.73
Other assets-net 5,261,326 3,674,849 1,586,477 43.17
Total assets 1,619,040,455 1,584,093,971 34,946,484 2.21
Deposits from the Central Bank and other banks 91,314,543 93,529,770 (2,215,227 ) (2.37 )
Due to the Central Bank and other banks 591,988 31,464 560,524 1,781.48
Financial liabilities at fair value through profit or loss 9,339,273 3,732,481 5,606,792 150.22
Securities sold under repurchase agreements 1,657,706 1,105,596 552,110 49.94
Payables 58,674,131 36,630,052 22,044,079 60.18
Current income tax liabilities 1,017,575 62,495 955,080 1,528.25
Deposits and remittances 1,311,041,103 1,316,023,711 (4,982,608 ) (0.38 )
Financial debentures 47,450,000 41,000,000 6,450,000 15.73
Other financial liabilities 7,507,715 10,120,545 (2,612,830 ) (25.82 )
Provision for liabilities 3,565,727 3,515,351 50,376 1.43
Deferred income tax liabilities 880,738 881,318 (580 ) (0.07 )
Other Liabilities 1,146,937 1,643,515 (496,578 ) (30.21 )
Total liabilities 1,534,187,436 1,508,276,298 25,911,138 1.72
Equity attributable to owners of parent company 84,853,019 75,817,673 9,035,346 11.92
Common stock 63,938,802 61,479,617 2,459,185 4.00
Retained earnings 18,007,553 14,644,284 3,363,269 22.97
Other items in equity 2,906,664 (306,228 ) 3,212,892 (1,049.18 )
Total equity 84,853,019 75,817,673 9,035,346 11.92
There have been no significant changes (a significant change refer to a change over 20% between the current period and the previous period, and the amount of such change amounted to NT$10 million) in assets, liabilities, and total shareholders' equity for the past two years.
226 Taiwan Business Bank Annual Report 2018
2. Financial performance analysis
Consolidated operational performance analysis Unit: NT$1,000; %
YearItem 2018 2017 Amount increased
(decreased)Ratio of changes
(%)Net interest income 17,197,876 15,425,422 1,772,454 11.49
Non-interest net income 5,829,071 5,437,273 391,798 7.21
Bad debts expense, commitment and guarantee liability provision (794,134 ) (3,028,711 ) (2,234,577 ) (73.78 )
Operating expenses (13,034,396 ) (11,962,883 ) 1,071,513 8.96
Income before income tax 9,198,417 5,871,101 3,327,316 56.67
Income tax expense (gain) (1,557,875 ) (831,177 ) 726,698 87.43
Income after income tax 7,640,542 5,039,924 2,600,618 51.60
Net profit of this period 7,640,542 5,039,924 2,600,618 51.60
Analysis on increase/decrease in ratio:Net profit for 2018 increased by NT$2.601 billion; this was mainly due to the growth of deposits and loans, the increase in Net interest income, the increase in profit and loss of financial product investments and the reduction of allowances for bad debts.
3. Analysis of cash flow
(1) Analysis of liquidity for the past two years (based on the consolidated financial information)
YearItem 2018 2017 Increase (Decrease)
Cash flow ratio 31.91% 4.48% 27.43%
Cash flow adequacy ratio 3,177.03% 4,404.56% (1,227.53% )
Cash flow satisfaction ratio (83.60% ) (285.13% ) 201.53%
Analysis of increase/decrease in ratios:The ratios of increase and decrease in the above table are primarily due to the net cash inflows from operating activities in 2018 increased as compared to that of 2017.
(2) Analysis of cash liquidity for the coming year (based on the individual financial information)
Unit: NT$1,000
Initial cash balance①
Expected net cash flow resulting from the year's business
activities ②
Expected net cash flow throughout the
year ③
Expected sum of cash surplus
(inadequacy)①+②+③
Remedial measures for cash inadequacy
Investment planning
Financial planning
45,706,331 (5,745,468) 5,329,782 45,290,645 - -
4. Impact of major capital expenditure on the company's financial business in 2018
(1) The use of major capital expenditures and source of capitalUnit: NT$1,000
Planning itemsActual or expected source of
capital
Actual or expected date of
completion
Total capital required
Use of actual or expected capital
2015 2016 2017 2018 2019
Purchase of machinery and equipment - computer equipment
Own funds 2019/12/31 2,228,706 260,525 292,771 373,781 640,157 661,472
Purchase of premise of the Banks' headquarter Own funds 2019/12/31 501,799 0 0 98,799 0 403,000
Maintenance and renovation work for the premise of the headquarter
Own funds 2019/12/31 683,949 40,026 101,602 65,245 22,276 454,800
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Ⅶ(2) Expected potential benefits
To improve the corporate image of the Bank, service quality, stabilize the operating branches, and expand our service network.
5. Reinvestment policy for 2018, the main reasons for the profits/losses generated thereby, the plan for improving profitability, and investment plans for the coming year
During 2018, the primary profiting sources for the reinvestment business are the cash dividends income and the operating performance returns from the reinvestment companies. In the future, shall there be appropriate investment targets or investments made according to factors of government policies, the Bank will carry out relevant procedures after due assessment.
6. Risk management
(1) Structure of the Bank's risk management organization and the policyA. Structure of the risk management organization
a. Risk Management Committee
The Chairman shall assign the chairman of the Risk Management Committee, and the committee member includes the President, Executive Vice President who is not the legal compliance officer of the Bank's headquarters, and the General Managers of departments under the Bank's headquarter (excluding the General Manager of the Auditing Department). The Committee is established to provide a sound risks management system, strengthen the efficacy of risk management, and execute the risk management and monitoring for the Bank. In principle, a meeting shall be convened per month, and the chairman of the committee may convene an extraordinary meeting when necessary. Its duties are as follow:
1) Analyze significant local and foreign economic, financial, and industrial risks, and review on responding plans.
2) Risk exposures in the risk management report and review on resolutions.3) The review shall be based on the rules and regulations, limitation, management indicator, and
responding solutions for exceeding the limitation in relation to risk management approved by the Board of Directors (Managing Directors)
4) Supervise the capital adequacy management of the Bank.5) Review or supervise relevant matters that shall be reported to the Risk Management Committee
according to the requirements from the local and foreign competent authority.6) Review or supervise other matters related to risk management. Risk Management Department is a staff unit of the Committee, responsible for meeting agenda
preparation, convening notice, meeting process, meeting minutes, and resolutions tracking and management, and it shall report the material resolutions from the Risk Management Committee and risk exposures to the Board of Directors (Managing Directors) regularly.
Risk Management Committee
ALM Committee
Loan Supervision Committee
NPL Management Committee
Executive Vice President
Risk Management Center
Board of Directors
Chairman
President
228 Taiwan Business Bank Annual Report 2018
b. ALM Committee
The ALM Committee of the Bank is chaired by the President, and the committee member includes Executive Vice President, General Managers from departments in charge of deposits, loans, financial trading, funding allocation, and risk management. The Committee is responsible for the monitoring and management of interest rate risk in banking book (IRRBB) and funding liquidity risks. It convenes regular meetings to evaluate the analysis and measurement method for funding liquidity risks and IRRBB, review on the management policy for funding liquidity risks and IRRBB, relevant limitation, and management indicators, listen to exposure reports for interest risks and funding liquidity risks and adjust the debt-asset ratio period structure and the funding maturity structure of the Bank.
c. Loan Supervision Committee
The Loan Supervision Committee of the Bank is convened by the Executive Vice President. In principle, the Committee is convened once a week to review credit loans projects of large denomination loans, foreign currencies, and guarantees.
d. NPL Management Committee
The NPL Management Committee of the Bank is convened by the Executive Vice President. The convener may invite members to convene the meeting of the Committee according to the business requirement at any time to discuss the countermeasures for non-performing loans and overdue loans.
B. Risk management policy Establish a risk management mechanism for risk identification, measurement, supervision, and control,
construct an integrated risk management system, adopt risk management oriented operating model, and control the reasonability of risk and return according to the statuary funding ratio, to achieve the operating goal and improve the shareholders' equity. It covers credit risk, market risk, operating risk, IRRBB, and funding liquidity risk management, and funding adequacy management.
(2) Information on the Nature and Amount of All Types of RiskA. Credit Risk Management System and Capital Charges
Credit Risk Management System2018
Item Content
1. Credit Risk Management Strategies, Goals, Policies and Procedures
I. Credit risk strategies(I) Establish proper credit risk control environment, including credit verification procedures, credit
management, measurement, and supervision procedures, as well as credit risk control.(II) Credit risks regarding counterparties (including counterparties, borrower, and debtor), such as
default risk and delivery risk, are included in the scope of control.(III) Periodically develop advanced credit risk measuring methods to measure credit risk, and gradually
introduce such methods into our business procedures.II. Credit risk management goals Within the scope of acceptable credit risk to the Bank, maintain adequate capital to achieve a reasonable
state between risk and returns.III. Credit risk management policies
(I) Fully understand the credit status of borrowers or counterparties and the usage of borrowings and repayment sources of the borrowers.
(II) Prudently assess the credit risk condition of borrowers or counterparties and attach attention to the adequacy of the collateral and the guarantee to measure risks and interests.
(III) Establish a credit rating system regarding the credit status of the borrowers or consider the ratings of the customers from external credit rating institutions as the reference for accepting credit loan cases and setting interests rate.
IV. Credit risk management procedures(I) Establish a comprehensive credit approval procedure, including mechanisms such as credit
investigation, credit loans, post-loan management, and claims management, to manage credit risks in an appropriate manner.
(II) Regularly carry out control for the concentration of corporate risk regarding nations, financial industries, industries, or conglomerates.
(III) Regularly report to the senior management and the Risk Management Committee regarding the credit risk limitation utilization. Shall there be abnormal losses, establish the responding countermeasures immediately and report to the senior management to minimize the potential losses.
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ⅦItem Content
2. Credit risk management organization and framework
I. Board of Directors: The Board of Directors is the highest decision-making level for credit risk management, which supervises the effective operation for credit risk management. Credit risk management policies and standards are regularly reviewed by the Board of Directors meeting to ensure the efficacy of risk management and the optimized allocation of the resources.
II. Risk Management Committee: Responsible for the review of relevant information and issues about credit risk.
III. Loan Supervision Department: Responsible for credit loan management and credit loan review.IV. Credit Investigation Department: Responsible for the credit investigation business and its management
and planning, industrial analysis.V. Overdue Loan & Control Department: Responsible for matters in relation to post-loan management, non-
performing loans, non-accrual loans, and bad debt claims.VI. Risk Management Department: Responsible for the measurement, evaluation, monitoring, management,
disclosure, and reporting of credit risks.
3. Scope and features of the credit risk reporting and measurement system
I. Credit risk reporting Convene meetings of the Risk Management Committee every month, report to the senior management
regarding the alert for counterparties, and the concentration control for the industry, group, country, and financial industry, and discuss the relevant information concerning the credit risk exposures of the Bank.
II. Credit risk measurement system(I) The Bank currently adopts the credit risk standard method to calculate the capital charges; the risk
management system generates the statement for reporting to the competent authorities automatically by month, and report to the senior management and the Risk Management Committee.
(II) The Bank has established multiple limitation control mechanisms (including, country, financial industry, industry, group, counterparty of derivative) and monitored the above risk limitation on a daily basis. In the case of exceeding the alert value or above 90% of the limitation, the Bank will establish the relevant countermeasures.
(III) The Bank has established an internal credit rating system and verified the rating results regularly. Currently, the rating results are included as part of the review regulations and the Bank is planning to expand the applicable scope for such business gradually.
4. Credit Risk Avoidance or Mitigation Polices, and Monitoring the Continued Effectiveness of Risk Avoidance and Mitigation Tools
I. Credit Risk Hedging or Mitigation Policies:(I) Reduce the credit risk for the Bank through credit deduction methods of transferring credit trust fund
guarantee, collecting collateral and asked for guarantors.(II) Establish the management limitation for credit risk concentration, such as limitation for the country,
financial industry, industry, group, individual corporate, to prevent over-centralized risks.II. Monitoring the Continued Effectiveness of Risk Hedging and Mitigation Tools:
(I) Through post-loan management and review mechanism, understand the usage of collateral and carry out the interim management inspection for the credit trust fund guarantee, so as to continue monitoring the credit risk undertaken by the Bank.
(II) Regularly monitor the credit risk concentration limitation, exposures distribution, and asset quality changes of the Bank to correspond to the changes of the financial states, review the credit risk control measures in due time, and regularly report to the senior management and the Risk Management Committee.
5. Approach Adopted for Statutory Capital Charges
The standardized approach.
Exposure After Risk Mitigation and Capital Charges via Credit Risk Standardized ApproachDecember 31, 2018 (Unit: NT$1,000)
Types of Exposure Exposure After Risk Mitigation Capital Charge
Sovereign States 312,660,472 17,225
Non-central Government Public Sectors 88,536,147 2,016,863
Banks (including multilateral development banks) 123,206,179 4,077,557
Corporations (including securities and insurance companies) 619,191,362 43,012,005
Retail Claims 283,147,912 15,652,312
Residential Real Estate 158,809,122 5,719,375
Equity Investments 4,385,711 350,857
Other assets 83,944,019 2,108,722
Total 1,673,880,924 72,954,916
Note 1: Please fill in according to the information as of the quarter before the date printing the annual report.Note 2: Capital Charges = Exposure After Risk Mitigation x Statutory Minimum Capital Adequacy Ratio.
230 Taiwan Business Bank Annual Report 2018
B. Securitization Risk Management System, Exposure and Capital Charges
Securitization Risk Management System2018
Item Explanation
1. Securitization Management Strategies and Procedures I. Securitization Management Strategies Currently, the Bank does not engage in business related to founding
banks, and it may only invest in securitized products with certain ratings approved by Taiwan Rating, S&P, Moody's, and FITCH according to the requirements under the "Directions for New Taiwan Dollar Capital Utilization Management of TBB" and "Directions for Investments in Foreign Currency Marketable Securities Management of TBB" approved by the Board of Directors of the Bank.
II. Securitization Management Procedures(I) Before investing in marketable securitized securities, such investment
shall be passed by the review team and shall be approved by the report within the authorized limits of each level.
(II) Subsequent evaluation, limitation monitoring, and stop-loss mechanism shall be controlled according to the relevant regulations.
2. Securitization Management Organization and Framework I. Board of Directors: Approve the authorized limitation for all levels.II. Trading department: Engage in investment for securitized products
within the prescribed limitation according to the relevant regulations of the Bank.
III. Risk Management Department: Perform the control according to evaluation, limitation monitoring, and stop-loss mechanism of the investment position according to the abovementioned regulations.
IV. Operating department: Carry out subsequent operations of settlement.
3. Scope and Features of Securitization Risk Reporting and Measurement Systems
The Risk Management Department shall be responsible for the calculation of the limitation of investment position and capital charges and shall report to the President by month.
4. Securitization Risk Hedging or Mitigation Policies, and Monitoring the Continued Effectiveness of Risk Avoidance and Mitigation Tools
Invest in securitized products with certain ratings approved by Taiwan Rating, S&P, Moody's, and FITCH.
5. Approach adopted for statutory capital charges Perform according to the Standard Law of Securitized Seal according to the third part of "Calculation Method Description and Forms regarding the Equity Capital and Risk Assets of the Bank."
6. Overall requirements for qualitative disclosure, including:(1) Purpose of securitization activities and types of
risk that the bank undertakes and retains in re-securitization activities
(2) Other Risks Inherent in Securitized Assets (e.g. Liquidity Risk)
(3) Ro les P layed by the Bank in Processes o f Securitization and Degrees of the Bank's Participation in Each Process
(4) Monitoring Procedures for Changes in Credit and Market Risks Involved in Securitization Risk Exposure
(5) Credit Risk Mitigation Management Policies Used by the Bank to Mitigate Risks Retained by Securitization and Re-securitization
Currently, the Bank does not engage in founding bank business.
7. Policies for Securitization Currently, the Bank does not engage in founding bank business.
8. The Names of External Credit Assessment Institutions (ECAI) Used in Securitization in Banking Books and the Usage of Each Type of Securitization Risk Exposure
Currently, the Bank does not engage in founding bank business.
9. Significant Changes in Quantitative Information since the Last Reporting (e.g. Asset Movements between Banking Books and Trading Books)
None
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Ⅶ
Securitization Risk Exposure and Capital ChargeDecember 31, 2018 (Unit: NT$1,000)
Traditional Style Portfolio Style Total
Exposure Exposure
Asset Type Existing or Purchased Securitized
Product
Providing Liquidity Facility
Providing Credit
Enhancement
Subtotal(1)
Capital Charge
(2)
Existing or Purchased Securitized
Product(3)
Capital Charge
(4)
Exposure(5)=(1)+(3)
Capital Charge
(6)=(2)+(4)
Pre-securitization
Capital Charges
Non-founding
Bank
Banking Book
Real Estate Mortgage Securities
1,323,102 1,323,102 21,170 1,323,102 21,170
Trading Book
Subtotal 1,323,102 1,323,102 21,170 1,323,102 21,170
FoundingBanking
Banking Book
Trading Book
Subtotal
Total 1,323,102 1,323,102 21,170 1,323,102 21,170
Information on Securitized Product1. Statement for investment in securitized products
December 31, 2018; Unit: NT$ 1,000
Item (Note 1) Accounting Category Original Cost Total Fair Value Profit/Loss
Accumulated Impairment
Carrying Amount
Collateralized mortgage obligations (CMO)
Inves tments in deb t ins t ruments measured at amortized costs - corporate bond
451,942.00 5,478.00 0.00 447,940.00
Collateralized mortgage obligations (CMO)
Inves tments in deb t ins t ruments measured at amortized costs - corporate bond
441,425.00 7,947.00 0.00 436,357.00
Collateralized mortgage obligations (CMO)
Inves tments in deb t ins t ruments measured at fair value through other comprehensive income - corporate bond
429,565.00 10,726.00 0.00 428,079.00
Note 1: The table includes domestic and overseas securitized products, and the items are accounted for according to the following accounting categories:(1) Mortgage-backed securities (MBS): Including residential mortgage-backed securities (RMBS), commercial mortgage-
backed securities (CMBS), collateralized mortgage obligations (CMO), and other mortgage-backed securities.(2) Beneficiary Asset-backed securitization (ABS): Including collateralized loan obligations (CLO), collateralized bond
obligations (CBO), credit card receivables securitization, auto loan securitization, consumption loan/cash card securitization, lease securitization, other securitizations.
(3) Asset-backed commercial papers (ABCP).(4) Collateralized debt obligations (CDO).(5) Mortgage securitization: Refer to real estate asset trust (collectively, "REAT").(6) Bonds issued under structured investment vehicles (SIV).(7) Other securitized products.
Note 2: The table includes beneficiary securities or asset-backed securities with banks as founding institutions.
232 Taiwan Business Bank Annual Report 2018
2. (1) Disclosure of investments in securitized products with an original value over NT$300 million (excluding those held by the Bank in the capacity as the founding institution with a view to strengthened credit):
Unit: NT$ 1,000
Name of securities (Note 2)
Accounting Category
Currency Issuer and
Location
Date of Purchase
Maturity date
Coupon Rate(%)
Credit Ratings
Method of Interest Payment
and Principal Repayment
Original Cost
Total Fair Value
Profit/Loss
Accumulated Impairment
Carrying Amount
Attachment Point
Content of Asset Pool
US3137FGJD84 Investments in debt instruments measured at amortized costs - corporate bond
USD US 2018/10/17 2014/10/15 3.5 AAA Announce the interests for the next period and the amount of principal repayment by month
451,942.00 5,478.00 0 447,940.00 California: 13.15%; Texas: 9.52%; Florida: 8.28%; Arizona:7.22%; Colorado: 5.97%; Other: 55.86%
US3137F4VQ28 Investments in debt instruments measured at amortized costs - corporate bond
USD US 2018/10/17 2046/09/15
3.5 AAA Announce the interests for the next period and the amount of principal repayment by month
441,425.00 7,947.00 0 436,357.00 California: 12.42%; Texas: 11.77%; Florida: 8.37%; Colorado: 5.52%; Arizona: 5.31%; Other:56.61%.
US3136B3KS88 Investments in debt instruments measured at fair value through other comprehensive income - corporate bond
USD US 2018/11/15
2048/11/25
4.0 AAA Announce the interests for the next period and the amount of principal repayment by month
429,565.00 10,726.00 0 428,079.00 California: 72.3%; Washington: 6.7%; New Jersey: 4.2%; Colorado:3.2%; Other: 13.6%.
Note 1: The table includes domestic and overseas securitized products.Note 2: Specify the full name separately for the same securitized products in different tranches.Note 3: Please fill in the results of the latest credit rating.Note 4: Attachment point refers to the ratio of the amount of the total issued tranches with an order of priority of payment later the
tranches held by the Bank accounting for the total issued amount of such securitized products. For instance, where the Bank purchased the A tranche collateralized debt obligation (CDO), the tranches with an order of priority of payment later A tranche are BBB tranche and equity tranche, and the issue amount of BBB tranche and equity tranche account for 12% of the total issue amount of the CDO; therefore, the attachment point for A tranche shall be 12%.
Note 5: Asset pool refers to the asset portfolio that entrusted to the trustee or transferred to the special purpose company by the founding institution. Please fill in the asset category (senior or subordinated), breakdown, carrying amount denominated in the original currency, and the number of entries of the asset portfolio.
(2) Disclosure of Information on the Positions Held by the Bank in the Capacity as the Founding Bank with a View to Strengthened Credit:
Unit: NT$ 1,000
Name of Security
Accounting Category
Currency Purchase date
Maturity date Coupon Rate Credit Rating Method of Interest Payment and
Principal Repayment
Original Cost Total Fair Value Profit/
Loss
Accumulated Impairment
Carrying Amount
Attachment Point
Content of Asset Pool
Note: Please refer to Table 2 (1) above for the definition and description of the columns.
(3) Disclosure of Information of the Discredited or Liquidated Securitized Commodities Held by the Bank in the Capacity as the Buyer Institution:
Unit: NT$ 1,000
Name of Security Currency Founding Institution Maturity Date Content of the Contract Contract Performance (Note)
Note: Where the Bank has purchased assets according to contracts, please set out the reference market price of the acquired assets.
3. Disclosure of the Bank Serving as Guaranteeing Institution or Liquidity Provider for Securitized Products, and Amount:
Unit: NT$ 1,000
Name of Security
Currency Founding Institution
Maturity Date Coupon Rate Credit Rating Role (Note 1)
Amount (Note 2)
Attachment Point
Content of Asset Pool
Note 1: When serving as guaranteeing institution for securitized products, please fill in the column "Guaranteeing institution." When serving as a provider of liquidity financing, please fill in the column "Provider of the liquidity financing."
Note 2: When the Bank is serving as guaranteeing institution, please specify the guarantee amount; when the Bank is serving as a provider of liquidity financing, please specify the limitation.
Note 3: Please refer to Table 2. (1) above for the definition and description of the columns.
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C. Operational risk management system and capital charges
Operational risk management system2018
Item Content
1. Operational Risk Management Strategies and Procedures
I. The operational risk management strategies of the Bank aim to establish an appropriate operational management environment. Through the implementation of operating risk management structure approved by the Board of Directors and the rigorous execution of such structure by the senior managers, the Bank ensures that all relevant operational risks have been monitored by using appropriate evaluation procedures.
II. To optimize the function of operational risk management, the Bank grasps the scope of operational risk through managing procedures of risk identification, risk evaluation, risk measurement, risk monitoring and communication. The Bank also adopts appropriate measures to ensure a duly management for the relevant operational risk, efficiently allocate limited resources to the operational risk management tasks.
2. Operational Risk Management Organization and Framework
I. Board of Directors: Approve the risk management policies for the Risk Management Committee to execute the relevant management
and monitoring matters.II. Risk Management Committee Responsible for the review on information and issues related to the operational risk of the Bank.III. Risk Management Department
(I) Execute the risk management policies approved by the Board of Directors.(II) Establish the operational risk management system and risk management tools.(III) Monitor, analyze, and report to the Bank regarding information on operational risk.
IV. Authority Department of Business(I) Identify and analyze the potential operational risk of each business.(II) Establish the standard operation procedures (SOP) as the basis for business execution(III) Set up business regulations and operational procedures that cover the operational risk points and relevant
control measures.(IV) Manage and report the operational risk of each business.
V. Auditing Department Conduct regular audit regarding the risk management operations for the departments of the Bank.VI. All departments of the Bank
(I) Daily operations shall comply with and execute the operational management requirements.(II) Report the operational risk management information according to the requirements.
3. Scope and Features of Operational Risk Reporting and Measurement Systems
I. The Bank conducts its operational risk measurement primarily through three operational risk management tools:(I) Loss data collection (LDC) for operational risk-
A. The LDC for operational risk of the Bank covers operational risk incidents arising from all business activities. Departments file such incidents through the “Operational Risk Management (ORM) System” and provide details regarding the registering items of the operational risk incidents.
B. Improve the cognition to risk for all employees of the Bank through the implementation of ORM System and relevant training and assist the incident occurring department in performing proper improvement plan and tracking the management execution.
(II) Key risk indicators (KRI) for operational risk -A. Adopt the view of the Bank's risk management, consider the data availability, indicator management
efficacy, and risk significance among the operational risk items concerned by the businesses to establish the Bank's key risk indicators with effective management benefits.
B. Each risk indicator has an alert value that is based on the historical statistics or experiences of the Bank, which is used as the basis for determining whether active management is required for the indicator. The authorities of the Bank carry out risk control through monitoring the exposures of the indicators, so as to prevent the occurrence of potential operating risk incidents for each department.
(III) Risk and control self-assessment (RCSA) for operational risk -A. Regarding the RCSA system of the Bank, the authority department of business at the Bank's headquarter
prepares a self-assessment questionnaire in respect of risk and control of its business procedures and the business execution departments and supervision departments shall conduct the self-assessment concerning execution and management according to the risk and control assessment scale, and self-assess the risk results to provide an responding plan, allowing the Bank to analyze the exposures of potential operational risk.
B. When carrying out the self-assessment, departments of the Bank may assess the residual risk hierarchy of operational risk items concerning the effect of the residual risk and the probability of the residual risk. Departments shall also assess the effectiveness of the control with respect to the execution of control and relevance.
C. The Bank compiles and analyzes the risk control self-assessment results of the departments and prepare the risk control self-assessment chart. Regarding items with higher risks, the authority department shall propose the action plan to respond accordingly.
II. The content of the Bank's operational risk management report includes the disclosure regarding the Bank's operational risk information and exposure monitoring status. The report is prepared and reported by the Risk Management Department on a regular basis with a scope covering operational risk incidents, operational risk indicators, trend analysis, and department improvement and tracking opinion, as well as the measurement and analysis regarding the operational risk incident occurring frequency and severity based on the risk matrix formed with the top eight business types and the top seven incident types, as the reference of improvement for relevant operating procedures.
234 Taiwan Business Bank Annual Report 2018
Item Content
4. Operational Risk Hedging or Risk Mitigation Policies, and Monitoring the Continued Effectiveness of Risk Hedging and Mitigation Tools
I. The Bank has stipulation such as guidelines, procedures, and regulations to control and mitigate the operational risk of the Bank. In addition, business departments adopt reasonable responding measures according to the loss probability and the amount arising from the operational risk, respectively, i.e., directly avoid processing, transfer partial or entire risk by way of transfer or charges, or process after an evaluation on profit and risk.
II. Operational risk hedging or risk mitigation of the Bank is primarily processed through insurance or outsourcing, so as to transfer and mitigate the losses of operational risks arising from human, system, or operation negligence, or external incidents.
III. To minimize human factors, natural disasters, and other significant emergencies affecting the reputation or endangering the normal operation of the Bank and the financial order, the Bank has established operational processing procedures and relevant regulations for departments to comply with, so as to instantly minimize the damages and resume the normal operation in a short time.
IV. Unscheduled reports regarding crisis management of the Bank are submitted to the Risk Management Committee and senior managers to monitor the operational risks exposures and response capabilities of the Bank.
5. Approach Adopted for Statutory Capital Charges
The standardized approach.
Operational Risk Capital ChargesDecember 31, 2018
(Unit: New Taiwan Dollar)
Year Gross profit Capital Charge
2016 19,677,692
2017 20,722,679
2018 22,560,518
Total 62,960,889 2,957,737
D. The Market Risk Management System and Capital Charges
The Market Risk Management System - Standard Law2018
Item Content
1. Market Risk Management Strategies and Procedures
I. Management Strategies(I) Implement market risk management according to “TBB Market Risk Management Standards” and other
relevant regulations to achieve the operating goals and maintain the healthy capital adequacy ratio.(II) Subject to the risk appetite approved by the Board of Directors (Managing Directors), the Bank adopts
various risk control mechanisms to effectively utilize and manage its capital, ensuring that the market risk exposures are within the bearable scope and the Bank may still achieve its goal for earning.
II. Management Procedures(I) Risk Identification According to the requirements under the “TBB Market Risk Management Standards,” a proper market
risk evaluation shall be performed before promoting a financial product; documentation of such evaluation shall be preserved for further reference. Content for the evaluation includes identification of risk factors, cost-benefit analysis, market liquidity, risk countermeasure, the adequacy of the risk management system and the effect of exposure to market risk by the Bank.
(II) Risk measurement1. The risk management department shall draw up the market risk positions, sensitivity, value-at-risk and
suspension limit, and report to the Directors (Managing Directors) for approvals of execution.2. The risk measurement (or valuation) for the financial products of the Bank are carried out on the
different information system, and the market data and model parameters used in the valuation were sampled regularly to check their reasonability.
(III) Risk monitoring1. Regularly prepare the valuation report of financial products and submit to the senior management for
approval, and used as the basis for the execution of daily risk management.2. There are requirements concerning limitation and stop-loss in place for all financial transactions; risk
control mechanisms of stop-loss, suspension, and post-management will be carried out according to the requirements when the losses amount from the valuation exceeds the limitation.
(IV) Risk Reporting Risk management department regularly reports the current conditions of market risk management to the
Directors (Managing Directors) and senior management, allowing them to grasp the risk exposures and adjust the management measures in due time.
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2. Market Risk Management Organization and Framework
I. Board of Directors: The highest market risk management and supervision unit, responsible for approving the market risk
management policies and all risk limitation.II. Risk Management Committee Responsible for the review on issues and responding plans related to the market risk of the Bank.III. Risk Management Department
(I) Establish market risk management operating procedures and relevant regulations.(II) Plan and execute a market risk management business.(III) Establish market risk management-related systems.(IV) Report the market risk management execution of the Bank to senior management and Directors (Managing
Directors) on a regular basis.
3. Scope and Features of Market Risk Reporting and Measurement Systems
I. Scope and features of the measurement system(I) Evaluate and monitor market risk exposure on a daily basis, including the expected and non-expected
losses caused by adverse changes in market price resulted from interest rate, equity, exchange rate and commodities on and off the balance sheet.
(II) Adopts the historical simulation method to calculate the value at risk (VaR) on the financial trading management system on a daily basis and observe its changing trends to report at the Risk Management Committee meeting per month.
(III) The VaR measurement scope includes all positions of foreign exchange risk and commodity risks, as well as the trading books positions of interest rate and equity securities risk. There are VaR limitation control mechanisms in place for interests rate, equity, foreign exchange, and overall position.
II. Connotations of Market Risk Report(I) Regularly report to the Directors (Managing Directors) and Risk Management Committee regarding the
amount of asset portfolio exposures, providing references to senior management for decision-making.(II) The market risk report of the Bank includes the valuation on the exchange rate, interest rate, equity
securities positions, and profit or loss, so as to monitor the profit or loss for the market risk positions.(III) The risk management department reports the equity securities, governments bonds, foreign exchange
trading positions, and profit or loss valuation on a daily basis, so as to grasp the daily routine market risk control at any time.
4. Market Risk Hedging or Mitigation Policies, and Monitoring the Continued Effectiveness of Risk Hedging and Mitigation Tools
The financial transactions of the Bank mostly involve simple financial products. Regarding complex financial products from the customer end, the Bank, in principle, will carry out back to back hedging and covering to avoid market risks effectively. In addition, when engaging in hedging transactions with different contractual terms, the financial trading department shall specify matters of hedged items, hedging relationship, nature of the hedged risks, and the mitigation effects of the valuation risks. Risk management departments shall regularly carry out measurements regarding the effects of executing risks mitigation.
Approach Adopted for Statutory Capital Charges
The standardized measurement method.
Market risk capital chargesDecember 31, 2018
(Unit: NT$1000)
Category of Risk Capital Charge
Interest Rate Risk 533,409
Equity Risk 10,558
Foreign Exchange Risk 403,558
Commodity Risk 0
Total 947,525
236 Taiwan Business Bank Annual Report 2018
E. Liquidity risks include the maturity analysis regarding assets and liabilities as well as management methods for assets liquidity and the cash flow gap liquidity
Liquidity Risk Management System2018
Item Content
1. Liquidity Risk Management Strategies and Procedures
I. Liquidity risk management strategies(I) Monitor the liquidity risk positions according to the liquidity risk management policies and limitation
approved by the Board of Directors.(II) Established the “TBB Directions for funding Liquidity Risk Management” and “TBB Management
Guidelines for funding Liquidity Risk Management” for the compliance of the Bank, so as to effectively control the funding liquidity risks.
(III) Overseas branches shall establish regulations related to liquidity risk management according to the business nature and the requirements of the competent local authority; such regulations shall be executed after being approved by the President, and the Risk Management Department shall be responsible for the monitoring.
II. Liquidity risk management procedures(I) Discuss and formulate directions, management guidelines for liquidity risk management, and
contingency plan for funding liquidity risk and conduct a review on a yearly basis.(II) Identify, measure, supervise, and control the funding liquidity risk and establish stable operating
procedures and structures.(III) Report to the ALM committee regarding the measurement results for funding liquidity risk on a
monthly basis and report to the Board of Directors regarding funding liquidity risk and stress test results.
2. Liquidity Risk Management Organization and Framework
I. Board of Directors: The highest liquidity risk management and supervision unit, responsible for approving the directions for liquidity risk management and all risk limitation, and shall review on a yearly basis, so as to ensure the effectiveness of the liquidity risk management.
II. ALM Committee: The Bank established an ALM Committee subordinated to the President, responsible the supervision for liquidity risk exposures and the approval of responding plan upon conditions exceeding management indicators.
III. Treasury Department: Execute daily funding allocation operations to ensure sufficient fundings are in place to satisfy all funding requirements.
IV. Risk Management Department: Responsible for the identification, measurement, monitoring, disclosure, and reporting of liquidity risk.
3. Scope and Features of Liquidity Risk Reporting and Measurement Systems
The Bank uses the ALM system to calculate the liquidity gap on a monthly basis, allocates items of funding inflow and outflow to each time slot according to the remaining maturity date, calculates the funding gap, to measure the funding gap within each time slot. Also, it prepares the statement of term structures of the maturity date, to contain liquidity gap within the limitation, making sure that that the Bank will have sufficient capacity to fulfill its obligation in due course.
4. Funding strategies of the Bank: Policy of mismatching funding sources and funding tenor, and centralized or decentralized funding strategies
I. The ratio of wholesale NT$ time deposits accounts shall be accounted for less than 1% total time deposits of the Bank in principle.
II. The ratio of deposits balances per account for wholesale deposits accounts (sum of demand and time deposits) shall be accounted for less than 2% total NT$ deposits (excluding time deposits transferred from post offices) of the Bank in principle.
III. Regarding depositors exceeding the above ratio, the Risk Management Department shall report to the ALM Committee on a monthly basis.
IV. The ratio of total deposits balances (demand and time) of the top 10 customers of the Bank shall be accounted for less than 30% total NT$ deposits (excluding time deposits transferred from post offices) of the Bank in principle; however, where the ratio is over 24%, the authority department shall propose countermeasure and report to the ALM Committee.
V. Prepare the “Wholesale Time Deposits Transaction List” and “Wholesale Deposits Transaction List”
5. Liquidity risk hedging or mitigation policies, and monitoring the continued effectiveness of risk hedging and mitigation tools
I. The Bank has “Contingency Plan for Funding Liquidity Risk” in place to respond to liquidity crisis such as abnormal withdrawal of deposits, huge loss of funding, or material shortage of liquidity, to minimize liquidity risk and maintain the normal operation of the Bank.
II. Review the “TBB Directions for Funding Liquidity Risk Management,” “TBB Management Guidelines for Funding Liquidity Risk Management,” and “Contingency Plan for Funding Liquidity Risk” to effectively control the funding liquidity risk.
III. Where the funding liquidity risk limitation is exceeded or other significant events have occurred that may lead to a funding liquidity crisis, the Risk Management Department shall immediately call for a meeting with other related departments to formulate countermeasures, submit to the ALM Committee for discussion and execute by the relevant business authority after receiving the approvals from the President, and shall report to the Board of Directors (Managing Directors).
6. Description on how to conduct a stress test
I. Conduct stress tests on the crisis occurred to the individual banks, and the crisis occurred to the overall market on a quarterly basis.
II. Convene a meeting with related business departments to formulate the stress environments and the target value for risk management; submit to the President for approval and conduct the stress test on a yearly basis.
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7. Summary for liquidity contingency plans
When significant events occurred to the Bank that may incur funding liquidity crisis, and convene the ALM Committee meeting and establish a contingency workforce that is in charge of the following:I. Allocate sufficient cash for support.II. Deal with abnormal wholesale deposits and funding withdrawals.III. Issue statement to clarify the truth.IV. Maintain the operating orders.V. Provide information related to crisis management, funding changes, and available balances of the
Bank from time to time according to the requirements of external processing institutions to allow such institutions to grasp the actual circumstances of the Bank in a short time and provide assistance to the Bank in due course.
VI. Avoid conditions of over-utilization regarding deposits in the interbank accounts and proactively contact the correspondent bank to maintain the current limitations.
VII. By the end of such events, in order to repay the borrowings and strengthened the confidence of the depositors, the Bank's headquarter and branches shall assign material officers to visit designated key accounts on site.
To accelerate the re-deposits of the deposits and fully eliminate the concerns from all parties, the Bank shall publish a declaration to describe the entire events and show gratitude to related departments for their support.
a. Structural Analysis of the Maturity of New Taiwan DollarsDecember 31, 2018 (Unit: NT$1000)
TotalAmount for the Remaining Period Prior to the Maturity Date
0-10 days 11-30 days 31-90 days 91-180 days 181 days-1 year Over one year
Primary inflow upon maturity 1,386,992,267 142,043,052 117,357,985 158,442,815 154,433,257 103,970,117 710,745,041
Primary outflow upon maturity 1,739,903,414 114,961,489 96,567,905 187,352,640 207,077,947 318,556,969 815,386,464
Gap -352,911,147 27,081,563 20,790,080 -28,909,825 -52,644,690 -214,586,852 -104,641,423
Note: The table includes the NT$ amount of the entire Bank, including an estimated outflow of loan commitments NT$344,259,726,000.
b. Structural Analysis of the Maturity of US DollarsDecember 31, 2018 (Unit: US$ 1,000)
TotalAmount for the Remaining Period Prior to the Maturity Date
0-30 days 31-90 days 91-180 days 181 days-1 year Over one year
Primary maturityCash inflow 10,656,284 4,816,832 1,872,015 527,466 400,721 3,039,250
Primary maturityCash outflow 11,623,232 3,692,617 2,791,061 1,010,782 1,107,184 3,021,588
Gap -966,948 1,124,215 -919,046 -483,316 -706,463 17,662
Note: The table includes the US$ amount of the entire Bank, including an estimated outflow of loan commitments NT$1,152,522,000.
(3) Impact of changes of important domestic and international policies and laws on the Bank's finance and business, and response measures: None.
(4) Impact of changes in technology and industry on the Bank's finance and business, and response measuresIn an environment threatened by cybersecurity, to increase the growth of digital (mobile) financial business and maintain the effective risk control, the Bank is intended to carry out the strengthening measures for cybersecurity governance from aspects of governance, management, and technology; descriptions are as below:
A. Incorporated cybersecurity management to the governance structure of the Bank: Established the information security responsible department, formulated cybersecurity management policies, and set up the Cyber Security Management Committee.
B. Three lines of defense mechanism for the division of work: Three lines of defense mechanism is adopted for the relevant operations of cybersecurity control. The first line of defense shall be the information communication system management and using department of the Bank, responsible for the execution and maintenance. The second line of defense shall be the Information Security Department, responsible for the overall planning. The third line of defense shall be the Auditing Department, responsible for the legal compliance and audit.
238 Taiwan Business Bank Annual Report 2018
C. Promote cybersecurity management by adopting the view of "risk management": Make use of international cybersecurity risk management model to regularly evaluate the cybersecurity management mechanisms and the execution capacities; also, form a continual improving management cycle through constant optimization.
D. Establish applicable information security management system (ISMS): Carry out information communication system of the Bank and information assets check, risk valuation, and corresponding risk improvement, to comply with the international standards ISO 27001 ISMS Mechanism, and gradually introduce to all departments of the Bank for the application.
E. Improve the responding capacities and identification capacities for cybersecurity events: Establish and improve the reporting procedures and contingency plans for cybersecurity events, and carry out information security anti-hacker practices to enhance the responding and coordinating competencies for the employees of the Bank in the face of emergencies.
F. Set up intelligence analysis and alert system for cybersecurity threats: Make use of real-time cybersecurity sharing and analysis, such as F-ISAC, to provide the information required by the Bank regarding real-time and historical cybersecurity events, and assist the branches of the Bank to execute cybersecurity management activities.
G. Improve the cybersecurity cognitive promotion and training for all employees of the Bank, and improve the cybersecurity function competencies of the cybersecurity personnel, requiring them to obtain professional cybersecurity certificates.
(5) Impact of changes in the Bank's image on corporate risk management and response measuresWhere the external parties recognize the Bank for its excellent business performances, the Bank will generally grasp the timely opportunities of news and carry out relevant promotional activities, so as to improve the image of the Bank. Shall there be untrue rumors or negative media press that adversely affects the image of the Bank, the Bank will proactively verify the truth, provide instant verification or engage media to make a balance, protecting the reputation and image of the Bank.
(6) The expected benefits and possible risks to engage in mergers and acquisitions (M&A) and the countermeasures: None.
(7) The expected benefits and possible risks to expand the branches and the countermeasuresIn 2018, the Bank had not expanded its branches and only carried out adjustment for its domestic branches.
(8) Risks derived from the concentration of operations, and countermeasures: None.
(9) The impact on the Company, and risk due to changes in managerial authority, and the countermeasures: None
(10) The effects of Directors or substantial shareholders holding more than 1% of shareholdings transferring or converting a large amount of equity on the Bank, as well as the risks, and countermeasures The equity changes in Directors and the corporate shareholder represented by the Director are reported according to the Securities and Exchange Act, and kept tracked by the Bank at any time. Furthermore, the Bank carries out the promotions to shareholders holding more than 1% of the shareholders of the Bank required by Article 25 under the Banking Act within 10 days from the suspension of share transfer, reminding them to notify the shareholding changes to the Bank according to the Banking Act, to achieve the stable operations of the Bank.
(11) Litigious or non-litigious mattersThe World Trade Center Branch of the Bank carried out the outward collection project under the letter of credits for its customer Chih Seen Industrial Co., Ltd. in 1996, and it is suspected that the importer L' International Compagnie de Commercialisation et D'Investissement in the Republic of Zaire (hereinafter, “I.C.C.I. Company”) incurred losses due to Chi Seng Industrial Co., Ltd. holding counterfeit notes and has not performed the exports. The I.C.C.I. Company filed a prosecution to the Brussels Commercial Court in November 1998 and requested the issuing bank of the certificate and the Bank to make a joint compensation amounting to US$7.83 million, plus interests, losses, and fees. On August 31, 2005, the Court pronounced the judgment that the
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Bank shall make compensation of US$7.674 million plus interests to the I.C.C.I. Company. The Bank engaged a local attorney to file an appeal, and the Brussels Appellate Court had made its interlocutory judgment in February 2011, considering that both the Bank and I.C.C.I. Company had faults and made its judgment regarding the proportion of fault on November 16, 2011, sentencing that the Bank shall be responsible for 90% of the proportion of fault. The Bank lodged an appeal regarding the interlocutory judgment of the second instance on November 3, 2011; however, the Court of Final Appeal rejected the appeal from the Bank. Therefore, losing the lawsuit was confirmed. However, the Bank and I.C.C.I. Company was not able to reach a consensus on the exchange rate and calculation for the amount of compensation. In October 2016, I.C.C.I. Company filed an application to the Frankfurt Court to impound the deposits of the Bank at the correspondent bank. Subsequently, the Bank provided security deposits of €13.2 million to the Court to release the order. In July 2017, I.C.C.I. Company applied for the enforcement regarding abovementioned security deposits, and the Court transferred such security deposits to I.C.C.I. Company without any consultations. Therefore, the Bank filed a lawsuit of debtor disagreement. However, the Frankfurt Court rejected the lawsuit of the Bank in November 2018. The bank is now in the course of filing an appeal. Furthermore, as of December 31, 2018, the Bank had provided the compensation for losses of NT$183,923,000 and €8,000,000 for the case.
(12) Other significant risks and response measuresTo strengthen the risk management for the loan business and avoid excessive centralized loans to industries, group corporations, and individual corporations, the Bank established the “Management Guidelines for Credit Risk Limitations Control” and “Procedures for Credit Risk Limitations and Control of Credit Loans” to regulate its risk limits for loans, and thus diversify the risk.
7. Crisis management and response mechanism
(1) The Bank has established the "Guideline for Material Contingencies Handling Mechanisms." Shall there be bank runs for deposits, robberies, fraud, fire, flood, natural disaster, violence, or other significant matters, the department shall immediately notify the Business Development Department of the Bank with a call and describe the relevant circumstances according to the requirements under the Guideline to carry out the related reporting and contingency process. The Business Development Department shall notify the President immediately to adopt appropriate countermeasures, convene the contingency workforce meeting when necessary, and taking the initiatives to assign staff for assistance in branches to take required measures. Report the relevant data to the FSC, the Central Bank, Central Deposit Insurance Corporation, and the Ministry of Finance, and closely work with the responding measures of the competent authority. The spokesman of the Bank will take the initiative the release the press, directing the news report regarding the event toward the facts, instead of exaggerating, and affecting the reputation of the Bank.
(2) Respond to natural disaster factors according to the "TBB Management Guidelines for Branches Concerning Foreign Currency Transaction and Capital Operations during Natural Disasters." When the Bank's headquarter has called off work due to natural disaster while partial branches are still operating as usual, such guidelines provide a basis for branches that carry out foreign currency transactions and capital operations.
(3) Emergency backup and security protection measures for information equipment: Please refer to "Emergency backup and security protection measures for information operations" in Chapter V "Operation Summary."
(4) Responding to the probability of significant funding outflow, the Bank has established the "Directions for Contingencies Response" and "Funding Liquidity Risk Management," describing the contingency measures to be adopted when liquidity crisis occurred.
(5) The Bank has established the "Occupational Safety and Health Code," which sets out the relevant occupational safety and health standards, maintenance and inspection method for each equipment, and designates specialists to carry out safety and health inspection regularly to ensure related equipment to function normally, minimize accidents, and protect the personal safety of the employees. Upon disasters, a comprehensive security inspection shall be carried out according to the "Disaster Contingency Manual." Regarding damaged branch premises or significant operating equipment, the Bank will adopt the necessary reinforcement or repair to ensure operational safety. For equipment that cannot be reinforced or repaired in a short time, a temporary substitute plan is also provided to help the restoration of all businesses.
8. Other significant events: The Company has no designated hedging instrument for hedging accounting.
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Special Notes
VIII
1. Information Regarding the Bank's Subsidiaries
2. Progress of Private Placement of Securities and Financial Bonds
3. The Bank's Subsidiaries' Shareholding or Disposal of the Bank's Shares
4. Additional Disclosure
5. Pursuant to Item 2, Paragraph 3, Article 36 of Security and Exchange Act, the Incidence Exerting Material Influence on Shareholders' Rights or Security Prices
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VIII1. Information Regarding the Bank's Subsidiaries
(1) Organization Chart of Affiliated Enterprises
Taiwan Business Bank, Ltd.
(2) Information of Affiliated Enterprises
Enterprise Name Established Date Address Paid-In Capital Major Business
Taiwan Business Bank Insurance Agency Co., Ltd. 2002.03.27 2F, No. 158, Songjiang Rd., Taipei City,
Taiwan, R.O.C. NT$ 5 million Life insurance agency
Taiwan Business Bank Property Insurance Agency Co., Ltd.
2008.11.10 2F, No. 158, Songjiang Rd., Taipei City, Taiwan, R.O.C. NT$ 3 million Property insurance
agency
TBB International Leasing Co., Ltd. 2013.04.03 5F, No. 151, Sec. 4, Nanjing E. Rd.,
Songshan Dist., Taipei City, Taiwan, R.O.C. NT$ 1.5 billion Financial lease
Taiwan Business Bank International Leasing Co., Ltd.
2014.06.16Room 368, 302 Part, No.211, North Fute Road, Free Trade Zone, Pudong District, Shanghai
CNY$ 170 million Financial lease
TBB (Cambodia) Microfinance Institution Plc 2015.08.10
2E/2F Street 315, Sangkat BoeungKok 1, Khan Toul Kork, Phnom Penh, Cambodia.
US$ 20 million SME and personal finance business
TBB Venture Capital Co., Ltd. 2018.09.07 11F, No. 30, Ta Cheng St., Taipei City,
Taiwan, R.O.C. NT$ 300 million Venture capital business
Taiwan Business Bank Insurance Agency Co., Ltd.
TBB Venture Capital Co., Ltd.
TBB (Cambodia) Microfinance Institution Plc
TBB International Leasing Co., Ltd.
Taiwan Business Bank Property Insurance Agency Co., Ltd.
Taiwan Business Bank International Leasing
Co., Ltd.
100% Ownership
100% Ownership
242 Taiwan Business Bank Annual Report 2018
(3) Directors, Supervisors and Presidents of Affiliated Enterprises
Enterprise Name Title NameShareholding
Shares %
Taiwan Business Bank Insurance Agency Co., Ltd.
ChairmanDirectorDirectorSupervisorPresident
Chih-Chien ChangYi-Yun WangYu-Min ChangChang-Yi ChenWen-Ling Wang
500,000 100%
Taiwan Business Bank Property Insurance Agency Co., Ltd.
ChairmanDirectorDirectorSupervisorPresident
Chih-Chien ChangTsung-Chu HsiehChu-Jou ChenYin-Cheng TsengChi-Feng Cheng
300,000 100%
TBB International Leasing Co., Ltd.
ChairmanDirectorDirectorSupervisorPresident
Yi-Yun WangTsung-Chu HsiehHsiou-Chen KangChih-Wei ChenYin-Ta Chen
150,000,000 100%
Taiwan Business Bank International Leasing Co., Ltd.
ChairmanDirectorDirectorSupervisorPresident
Yi-Yun WangChang-Yi ChenChang-Yu LinChih-Wei ChenJaw-Jiun Lai
- 100%
TBB (Cambodia) Microfinance Institution Plc
ChairmanDirectorDirectorIndependent DirectorPresident
Chang-Yi ChenChang-Yu LinJung-Pin HuangTien-Liang HsuHo-Wen Yang
20,000 100%
TBB Venture Capital Co., Ltd.
ChairmanDirectorDirectorDirectorDirectorSupervisorSupervisorPresident
Yi-Yun WangChang-Yu LinTsung-Chu HsiehChih-Wei ChenJung-Fang KuoTun-Kung ChengYu-Chuan ChouShao-Huang Chen
30,000,000 100%
(4) Operations Overview of Affiliated Enterprises Unit: NT$ Thousand
Enterprise Name Capital Total Asset
Total Liability Net Value Operating
RevenueOperating Revenue
Current Profit and
Loss(After-tax)
EPS(After-tax)
Taiwan Business Bank Insurance Agency Co., Ltd.
5,000 563,934 169,454 394,480 1,825,965 480,217 384,479 768.96
Taiwan Business Bank Property Insurance Agency Co., Ltd.
3,000 21,726 6,305 15,421 48,900 11,758 9,422 31.41
TBB International Leasing Co., Ltd. (Consolidated)
1,500,000 1,545,932 139,579 1,406,353 385,995 32,421 22,722 0.15
TBB (Cambodia) Microfinance Institution Plc
614,730 1,103,758 532,272 571,486 55,834 -30,482 -27,815 -0.45
TBB Venture Capital Co., Ltd. 300,000 297,560 799 296,761 0 -3,547 -3,239 -0.11
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VIII(5) Consolidated Financial Statement of Affiliated Enterprises
The financial statements of the reinvestment companies with more than 50% of equity owned by the Bank have been incorporated into the consolidated statements. Please refer to the 2018 Consolidated Financial Statements and notes in VI "Financial Status."
2. Progress of Private Placement of Securities and Financial Bonds: None.
3. The Bank's Subsidiaries' Shareholding or Disposal of the Bank's Shares: None.
4. Additional Disclosure: None.
5. Pursuant to Item 2, Paragraph 3, Article 36 of Security and Exchange Act, the Incidence Exerting Material Influence on Shareholders' Rights or Security Prices: None.
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IXCorporate Social Responsibility Report
1. Environment
2. Social
3. Corporate Governance
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IXThe fulfillment of Corporate Social Responsibility (CSR) has always been one of the TBB's core operating principles. In addition to the pursuit of business performance, the provision of employee value-added, and an emphasis on shareholder interests, the Bank uses concrete action to fulfill its CSR by starting out from the banking industry itself and participating actively in public-benefit activities, showing care for society, enhancing customer benefits, reinforcing care for employees, and striving to become an outstanding bank with sustainable operation.
To reinforce the fulfillment of its Corporate Social Responsibility (CRS) and exhibit the importance that the TBB attaches to CSR, the TBB set up a Corporate Social Responsibility (CSR) Initiative Committee, which was subsequently promoted to the Corporate Social Responsibility Committee, responsible for the proposal and execution of CSR policies or systems, and report to the Board of Directors regarding the results of executing the CSR of the TBB.
The committee charter of the Corporate Social Responsibility Committee was promulgated on November 14, 2018. There are currently 5 members. Except for the Chairman and the President undertaking posts of committee chairman the mandatory member, respectively, the remaining 3 members are Independent Directors. There are Corporate Governance Subcommittee, Customer Rights Subcommittee, Sustainable Environment Subcommittee, Social Benefit Subcommittee, and Employee Care Subcommittee in place, and the first Subcommittee meeting for 2019 was convened on March 29, 2019 to discuss the implementation results of 2018. The Bank will take the core financing business as the starting point in carrying out CSR within its scope of businesses.
Corporate Governance
CustomerRights
SustainableEnvironment
SocialBenefit
EmployeeCare
Integrity management, maintenance of shareholder rights, equal treatment of shareholders, reinforcement of the structure and operation of the Board of Directors, enhancement of information transparency, risk management, organizational strategy
Provision of detailed information on products and services, protection of customers' personal information security, provision of appeal channels, maintenance of customer relationships
Environmentally sustainable development, green financial products, green procurement and supplier management, energy conservation and carbon reduction
Attention to social issues, support for disadvantaged groups, involvement in community development, promotion of art activities and sports, molding of the corporate image
Enhancement of staff welfare, strengthening of staff training, reinforcement of labor relations communication, creation of an outstanding work environment
CSR CommitteeCommittee Chairman:Chairman of the Board
Executive SecretaryGM of Business
Development Dept.
The TBB's achievements in the field of corporate social responsibility in 2018, divided into Environmental, Social and Corporate Governance (ESG) categories, are described below:
1. Environment
(1) Extension of Environmentally Friendly Enterprise Project LoansIn its advancement toward such sustainable environment goals as lowering energy consumption and reducing pollution, in addition to the implementation of corporate environmental protection in the review of loan applications, the TBB will continuously promote project loans under the “Preferential Loans for the Procurement of Renewal Energy Equipment,” “Machinery and Equipment Upgrading Loans,” “Preferential Loans for Key Innovative Industries,” and "Project Loans for Green Energy Sustainability" programs. In October 2018, the Bank amended the “Project Loans for Green Energy Sustainability,” extending the target scope to natural persons, to promote green energy industries including wind power, solar power generation, the procurement of renewable energy, and energy conservation with the aims of establishing a low-carbon economy, achieving the goal of sustainable social development, and generating a win-win for economic development and environmental protection.
246 Taiwan Business Bank Annual Report 2018
(2) Implementation of Carbon Reduction and Energy Conservation Policy to Stimulate Sustainable Environmental DevelopmentA. The Bank implemented its “Energy Policy” and “Measures for Water and Electricity Conservation,” with
scheduled follow-up on the status of water and electricity conservation by different units and inclusion of the results in business performance assessments. Various energy conservation improvement programs were forcefully carried out in order to enhance the energy efficiency of equipment and save on electricity costs.
B. LED Energy Label lighting is used in office premises bank-wide, with more than 28,000 lights installed, greatly reducing the electricity used for lighting at business premises. About 3.54 million kilowatt-hours are saved annually, reducing carbon dioxide emissions by 1,845 metric tons—equivalent to the planting of 168,000 trees a year, enough to develop 4.7 Da'an Forest Parks. In this way, the Bank contributes to energy conservation and carbon reduction, and the protection of the environment.
C. The Bank's headquarters carried out the renewal of a VSD chiller and installed an energy management system as well as LED lighting for public areas. Third party verification showed that these improvements boosted the energy efficiency of equipment by more than 37.2%, saving about 273,000 kilowatt-hours per year, reducing carbon dioxide emissions by 167 metric tons, and saving NT$1.55 million in electricity costs annually. The electricity contract capacity of the Bank's headquarters was cut twice from 1,150 kilowatts to 750 kilowatts in recent years.
D. The main source of the Bank's energy use is electrical power, which causes indirect greenhouse gas emission. According to statistics, the electricity used in office premises bank-wide in 2018 was 20,406,432 kilowatt-hours, resulting in approximately 11,305 metric tons of carbon dioxide emissions. Compared with the previous year, the Bank has reduced electricity consumption by 1.64% and carbon dioxide emissions by 380 metric tons in the past two years.
E. Completion of 10 business units, including Fuxing and Banqiao, as well as adjustment of the contracted electricity demand of the Information Technology Department's Linkou equipment room, resulting in a cost saving of about NT$900,000.
F. In order to control the electricity consumption to avoid a waste of energy, the Bank conducted the installation of digital power meters and informatization of electricity consumption management at the headquarters, Chongqing South Building, Lin Kou Branch, Sung Shan Branch, Jia Sin Branch, East Tainan Branch, Hu Wei Branch, Cheng Kung Branch, and Hua Lien Branch.
(3) Superior Performance Record in Implementing Environmental ProtectionA. The Bank signed a “Letter of Intent for Green Procurement by Private Enterprises and Groups” with
the Environmental Protection Administration, Executive Yuan, and has been cited by the Environmental Protection Administration and the Taipei City Government's Department of Environmental Protection for “Outstanding Performance in Green Procurement” for seven years in a row.
B. The Bank's headquarters building has received ISO 50001 Energy Management System certification.
2. Social(1) Promotion of Social Benefit and Participation in Community Development
A. Charity sponsorship in support of public benefit activitiesa. To help with the media exposure of charity and public benefit groups, the TBB disclosed information on
charitable donations on the Credit Card Section of its official website.
b. Sponsorship was provided to the Huashan Social Welfare Foundation in organizing the "Love to Seniors and Love to Reunion" event that prepares 100 portions of free Chinese New Year meals and year-end parties for the disadvantaged.
c. In the midnight on Feb. 6, 2018, an earthquake with the magnitude of 7.0 has struck Hualien City causing serious damages and injuries. The Bank has made charitable donations in the amount of NT$2,000,000 to help the disaster relief because the Bank understands and sympathizes with the trauma caused by the Hualien earthquake. The Bank adheres to the human sympathy and performs its corporate social responsibility to assist the Hualien region in post-earthquake reconstruction.
d. To encourage the public to exercise, the Bank provided sponsorship to the "Ministry of Finance 2018 Uniform Invoice Cup Taoyuan Road Running," which commenced on June 24, 2018 and attracted more than 500 people from 21 branches to participate. The public in the Taoyuan region were welcomed to participate in the event for free. Furthermore, the Bank also collected the uniform invoices at the road running event and gathered over 50,000 invoices to donate to various disadvantaged groups.
e. To fulfill the CSR and take care of the disadvantaged groups in rural areas, the Bank continued to sponsor the “2018 Food (Goods) Bank” organized by the Taiwan Futures Exchange. Since the commencement
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IXof the program, the Bank has helped more than 110,000 families and 410,000 persons. With funds being collected, bulk supplies were procured and donated to disadvantaged groups throughout Taiwan.
f. To help with sluggish sales of onions for farmers in Pingtung, the Bank purchased 1,500 bags of onions weighing a total of 22 tons from the Pingtung Country Hengchun Farmers' Association, and distributed onions to clients and colleagues as gifts.
g. Sponsorship is provided to the Anue in organizing the "2018 Care for and Look after Seniors" for its 19th-anniversary celebration, which fulfills its CSR and corresponds to the theme of the Bank to support in public benefit activities.
h. Sponsorship is provided to Taipei Kuanyin-Line Psychological and Social Service Association in organizing charity concerts, the proceeds from the fund-raising were used in events such as "Community based Preventive Care for Active Ageing and Long-term Care." So far, the Association has cared for more than 300,000 persons.
i. Participated in the 2018 Financial Services Public Benefit Carnival (Taoyuan) organized by the Taiwan Financial Services Roundtable. The Bank has set up 2 booths and provided 400 souvenirs to promote financial knowledge and public welfare through game playing and interaction with the public.
j. Upholds to the humanitarian spirit and assists the healthy growth of the vulnerable children, the Bank continued to care for aboriginal schools, medium- and low-income households, grand-parenting children, and single-parent children living in the rural areas and sponsored the cost of nutritious breakfasts for Saijia Elementary School, Duona Elementary School, Nanfeng Elementary School and Shuanglong Elementary School in 2018 School Year. The number of persons sponsored by this program has reached more than 2,000.
k. Upholds to the humanitarian spirit and exerts the CSR, the Bank acted in line with the Ministry of Finance and made donations to the post-disaster reconstruction plan for 0823 Flood in Southern Taiwan, helping flood victims in recovering from Disaster and home reconstruction.
l. Sponsorship is provided to the Taiwan Fund for Children and Families Kinmen Branch in organizing the "Children Community Support Center (Support Branch) Building Plan." The plan is estimated to provide services to more than 400 children.
B. Participation in community developmenta. The Bank has issued “Silver Love” credit cards and set aside 0.3% of the card consumption amount to
sponsor Kaohsiung City Qishan District Sugar Refinery Community Development Association, Hualien County Hualien City Minsheng Community Development Association, Miaoli Sanyi Shuangtan Community Development Association, Chiayi County Budai Township Donggang Community Development Association, and Kinmen County Lieyu Township Shangchyi Village Qingqi Community Development Association to establish "Senior Learning Centers" for seniors to learn and dine together. The Bank assisted the communities in providing services such as health promotion for the elderly, social interaction, happy learning, happy dining and delays in disability by setting up senior caring spots to improve the standards of caring services at senior welfare agencies, providing local and appropriate caring services accessible to disadvantaged seniors, in hope to achieve the goal of "aging in local communities."
b. Sponsorship is provided to the New Taipei City Funciao Culture Association in organizing the "2018 Banqiao Wenchang Street School of Life" program, improving the public's understanding towards the historical sites and traditional culture in Banqiao area. 50 unique stalls were set up by local creators on-site to help promote culture, creativity, education and public welfare values and stimulate the public's cultural creativity.
c. Sponsorship was provided to the Pingtung County Government in organizing the "2019 Taiwan Lantern Festival in Pingtung" event, which attracted more than 10 million visitors, extensively promoting the Silver Love Credit Card issued by the Bank to call for more people participating in public welfare, to support the vulnerable senior groups.
d. The Bank participated in the Senior University lecture tour organized by the Trust Association and the New Taipei City Government to publicize the fact that senior citizens can carry out trust planning for their retirement, coordinate with the promotion of the government's major policy of long-term care for senior citizens and the handicapped, and fulfill its social responsibility. The response was enthusiastic.
(2) Support for Academic, Cultural, and Sports ActivitiesA. Support for educational development
a. The Bank devoted efforts to financial know-how publicity on campuses and in communities, laying a deep foundation for financial education by promoting proper financial management concepts and the prevention
248 Taiwan Business Bank Annual Report 2018
of financial fraud. The Bank was recognized for these efforts with a “Financial Knowledge Campaigns of Entering Campus and Community Award,” presented by the Banking Bureau of the Financial Supervisory Commission.
b. The Bank provides summer vacation part-time job vacancies for disadvantaged youngsters, to help take care of youngsters from families with weaker economic income and provide part-time job opportunities to young students. The Bank launches industry-university cooperative research projects with public and private universities to jointly provide lectures for nurturing elites and talents, strategically provides intern opportunities to train students, and plan to provide employment opportunities for students with excellent performances.
c. The Bank works vigorously to carry out the Ministry of Science and Technology's “Industry-University Cooperative Research Project on Broadcasting Production and Promotion of Popular Science Products” trust to advance cooperation between college/university and academic institutions and domestic and overseas media in broadcasting production, promote high-quality popular-science products, thereby expanding university broadcasting of popular science knowledge and enhancing the scientific literacy of Taiwan's people.
d. The Bank provided sponsorship for the 15th Cross-strait Financial Markets Development Seminar Committee of the Tamkang University to organize "Current and Future Cross-strait Financial Innovation Technology and Financial Supervision Seminar." The organizer invited about 150 people to attend the seminar, and 50 of them were international and cross-strait industry and government experts who participated in practical discussions and published academic papers.
e. The Bank provided sponsorship for the establishment of Taiwan-Asia Exchange Foundation, assisting in the promotion of businesses in relation to the "New Southbound Policy," The 2nd Yushan Forum held by the Foundation was attended by 66 ambassadors and representatives from 24 countries. Through the sharing of opinions, it helps to facilitate the diverse social, economic, and academic exchanges between Taiwan and Asian countries.
f. The Bank provided sponsorship for the Taiwan Economic Association in organizing its 2018 Annual Ceremony Plan and Paper Presentation, providing a platform for economic scholars to present and their papers and discuss their opinions.
g. To promote relevant knowledge on financial policies and market development to the public, the Bank provided sponsorship for the Chilee University of Technology in organizing the "Finance CEO Seminar." Domestic financial industry elites were invited to serve as lecturers, with topics focusing on major fiscal taxes and financial market related issues, and the seminar was opened to the public for participation.
B. Enhancement of the vogue for art and literature, and promotion of sports activitiesa. TBB sponsored the Su Tien-Chai Foundation Scholarship in holding 2 sessions of onstage play "Grandma
I Love You - 10 Signs of Alzheime," attracting approximately 1,000 people to participate. Through the tour performance, it wishes to improve the public's care and understanding for Alzheimer, and in turns learn more about how to prevent and delay the occurrence of Alzheimer.
b. TBB sponsored the General Association of Chinese Culture in organizing "My Zine - Independent Publishing Project in Taiwan vs. Netherlands Exhibition and Seminar," attracting about 1,300 visitors and 70% of them were young people aged 20-40. Also, the media has made 15 news reports regarding this event, helping to promote international interactions and the global exposure of Taiwan's culture.
c. TBB sponsored the udnFunLife Co., Ltd. in holding the "Berlin Philharmonic String Quintet." The concert was performed by five of the world's top classical musicians and almost 90% of the tickets were sold, showing the popularity of the concert.
d. Purchased 5,000 tickets for 2018 Taichung World Flora Exposition and invited customers of the Bank to participate and support such international exhibitive activities.
e. TBB sponsored the General Association of Chinese Culture in organizing 2018 Art and Culture Tea Party at the Taipei Guest House, which invited about 1,000 art and culture workers of different fields from across Taiwan to join and improve the innovative mechanism of culture and innovation industry, benefitting the establishment of relevant cultural policies by the government.
f. Sponsorship was provided for local sports activities, including Keelung City's “27th New Park Cup Basketball Championship” lasting for 30 days.
g. TBB sponsored the General Association of Chinese Culture in organizing the "The Soul of the Craftsman" video project and the "Hip Hop Night at NPM" cross-field new media and fashion exhibition. The exhibition manifests the fresh cultural atmosphere of Taiwan through recordings of hundreds of workers and trades, as well as performances of fashion shows and projection mapping shows. The number of participants in the Hip Hop Night at NPM event was about 600, and the number of live broadcast audiences was about 250,000.
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IX
h. Provided sponsorship in the event "2018 Dadaocheng International Festival of Arts" to strengthen the soft power of Taiwan's culture.
i. Provided sponsorship to MNA The Management of New Arts in organizing the "Orchestra dell'Accademia Nazionale di Santa Cecilia." The orchestra has a history of more than a century, and the romantic and enthusiastic music is recognized as the "Italian Rose", which was performed by contemporary conductor Pappano.
j. Provided sponsorship to the Taiwan Junior Chamber in organizing the Night of Taiwan event for "2018 Asia Pacific Conference in Kagoshima, Japan" to promote the current economic and cultural development in Taiwan, and introduce the tourism industry in Taiwan.
k. To nurture the innovative development of the fashion industry and improve the international profile of the fashion industry in Taiwan, the Ministry of Culture and the Ministry of Economic Affairs jointly promote the cooperation among the fashion industry, video/audio industry and art industry, etc. The first Taipei Fashion Week were held by C&A MEDIA and the sponsorship was provided by the Bank to jointly create a fashion design display platform.
l. The Bank has been dedicated to improving the overall cultural and art vibes in the society as well as the quality of education culture that it cooperated with the National Palace Museum to issue Friend of Palace Card. The Bank allocates 2‰ of the card consumption from such card to donate to the National Palace Museum as the promotional fund for culture, arts, and education, improving the public's living quality and culture and fulfilling its CSR.
m. Provided sponsorship in the art and culture event "8th Cross-Strait Quyi Festival," fulfilling the CSR and promote the charitable image of the Bank.
n. Provided sponsorship in the charitable event "X'mas Run" organized by the "Advanced Developers Association," so as to improve the charitable image of the Bank.
(3) Employee CareEmployees are the assets of a corporation. The Bank has spared no efforts in taking care of its employees. In addition to establishing work rules and human resources management rules in accordance with the Labor Standards Act and other relevant labor regulations, the Bank also complies with the law in providing labor insurance, national health insurance, and allocations for retirement funds. Employee health exams are carried out on a regular basis, and group medical care and accident insurance are offered on preferential terms in order to protect the living of employees so that they can fully express their professional skills at work.
A. Enhancement of Employees' Professional Knowledge To strengthen the competitiveness of employees and enhance their professional knowledge, the Bank
inaugurated training programs for different areas of business in accordance with its annual staff training plan, and also offered holiday courses in such subjects as digital finance and wealth management on a regular basis.
B. Creation of an excellent workplacea. In compliance with the Act of Gender Equality in Employment, the Bank has established regulations
for sexual harassment measures, complaints, and punishments so that employees will have a work environment free of sexual harassment.
b. To enhance the safety of the Bank's working environment, whenever a construction incident occurs, the contractor is issued a “contractor working environment and hazard factors notice” in order to reduce occupational accidents; in addition, the Bank holds “general worker safety and health training” to enhance employees' concept of safety and health.
c. The Bank provides its employees with a safe and healthy workplace, equipped with central air conditioning systems, abundant lighting, comfortable and appropriate working space, and emergency evacuation routes and exits. Elevators are maintained on a regular basis, firefighting equipment is available, and regular fire drills are held. Workplaces are disinfected and cleaned regularly, and door access safety controls are in place.
C. Establishment of Smooth Channels for Promotion and Communicationa. The Bank has a complete salaries/rewards system and promotion channels, as well as diversified training
and welfare measures designed to recruit and retain outstanding personnel who will work hard in concert with the Bank.
b. The Bank places utmost emphasis on employee rights and regularly calls labor-management meetings where the two sides can fully communicate and negotiate on employee rights and welfare issues, and sign the Collective Agreement, thereby maintaining harmonious labor-management relations.
250 Taiwan Business Bank Annual Report 2018
3. Corporate Governance(1) Fulfillment of responsibility as a specialized SME bank
A. Deep cultivation of the core SME businessa. Cooperated with Magazine of Business Today for the "2018 Business Today Young Entrepreneurship
Forum" event to promote the financing and counseling services of the Bank.b. Organized two sessions of Credit Guarantee Lectures in accordance with the policy of Small & Medium
Enterprise Credit Guarantee Fund of Taiwan to provide financing counsel services.c. Co-organized the "2018 New Southbound Forum" with the Economy Daily News to assist customers in
grasping the New Southbound business opportunities.d. Co-organized the "Care and Services for SME and Reinforce Financial Competitiveness" seminar in 2018
with the Taiwan Small & Medium Enterprise Counseling Foundation according to the policy of Small and Medium Enterprise Administration, Ministry of Economic Affairs. Through which, the Bank fulfilled the policy of the government in relation to the proactively counseling for SMEs, strengthening the financial management of the SMEs for them to successfully obtain the facilities required and enhance their competitive advantages.
e. Co-organized the "New Southbound National Investment Seminar" with the Agricultural Bank of Taiwan, and invited the World Taiwanese Chambers of Commerce and over 150 Taiwanese businessmen from across 32 countries to participate, exhibiting the determination of the Bank for contributing to the promotion of the New Southbound policies along with the top three credit guarantees funds, and the efficacy of leading customers to explore new business opportunities.
f. Aligning with the policy of Small and Medium Enterprise Administration under the Ministry of Economic Affairs, to assist in the healthy financial development of the SMEs, the Bank engaged the National Innovation and Entrepreneurship Association to organize 4 sessions of "2018 Plans for Facilitating the Healthy Financial Development of SMEs - Sharing New Knowledge of Finance and Accounting for SMEs/Risk Management," providing banking facility techniques and project loans.
B. Loan policy The Bank follows the spirit of the “Equator Principles” in its loan policy. In its extension of loans, the Bank fulfills its corporate social responsibility by taking the client's honesty
management, corporate governance, environmental protection, social responsibility, food safety, and labor safety into consideration in its loan evaluation and decision making, thereby exerting its influence on corporate social responsibility.
C. Donation to the SME Credit Guarantee Fund to support SME development In accordance with the provisions of Article 13 of the Act for the Development of Small and Medium
Enterprises, and as approved by its Board of Directors on Oct. 24, 2018, the Bank's apportioned contribution to the SME Credit Guarantee Fund for 2019 amounted to NT$304,986,903.
(2) Implementation of consumer protection and reinforcement of customer careA. Reinforcement of consumer protection
a. The Bank protects consumer rights through its Consumer Protection Policy and Consumer Protection Operating Procedures, which clearly state the measures to be implemented and designate an exclusive unit to review the effectiveness of the consumer protection mechanism. The Board of Directors Audit Committee is responsible for checking on the status of implementation.
b. In line with the implementation of the Consumer Debt Clearance Act, the Bank has set up a single window for taking applications and providing consultation on preliminary negotiations; thereby helping to lighten the debt burden on debtors. To date, this facility has helped 4,887 people to start new lives.
c. To carry through with consumer protection and comply with the rules of the competent authority, the Bank extends medium- and long-term loans secured by houses as well as loans that are secured by other real estate and whose purpose is the purchase of homes. The Bank strengthened its verbal explanation of “Special Reminders for Home Loans” to help borrowers understand the risk posed by interest-rate changes.
d. The Bank has established an “Operating Procedure for the Handling of Credit Card Disputes” and has set up a toll-free hotline, allowing the Credit Card Department to receive and handle customer complaints immediately.
e. In line with the "Psuedo Card Transaction Liability Shift Mechanism" announced by the International Credit Card Organizations, all ATMs of the Bank (425 in total, including 1 foreign currency ATM) have completed the ATM-EMV operations.
f. The whitelisting system was added to all ATMs of the Bank (425 in total, including 1 foreign currency ATM) on November 29, 2018, and the protection function has been activated to prevent the attack from illegal programs.
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IXB. Implementation of customer service and care
a. To bring financial services closer to the disabled and gradually build up an obstacle-free environment for financial transactions, the TBB boosted the ratio of its accessible ATMs to 97% by the end of December 2018.
b. To facilitate the application for exemption or reduction of fees on interbank ATM withdrawals by the disabled, the Bank has added the online application since Jul. 1, 2018.
c. To take care of young people and disadvantaged groups, the Bank carried out the Ministry of Finance's “Preferential Housing Loan Program for Successful Family Foundation of Youth” and the Construction and Planning Agency, Ministry of the Interior's “Housing Subsidy and Home Improvement Loans.” By the end of December 2018, a total of 24,528 and 1,206 of these loans, respectively, had been extended, with the accumulated value amounting to a respective NT$98.329 billion and NT$2.358 billion.
d. Increase the interactions and interchanges between the Bank and the wealth management customers, three "Duo of Abundant Profits and Security" large-scale customer seminars were held separately in the Northern, Central, and Southern Taiwan, assisting customers to accomplish the assets accumulation and security through setting their financial targets.
e. Held five divisional "Good Friends - Heart to Heart" small scale high-assets customer seminars to develop deep relationships with customers.
f. Held the "New Highlight for China Investment in the PRC - One Click to Learn Healthcare" customer seminar, allowing customers to attend to both their assets allocation and physical health.
C. Creating financial products that conform to social trends and customer needsa. The Bank follows the principles of care and sharing, and provides clients with professional and
customized financial and asset planning services that help them realize their desire to “create, conserve, and pass on wealth.” This assists customers in building a high-quality life of economic stability and carefree leisure.
b. In response to Taiwan's aging population and low birth rate, the Bank constantly introduces trust products including nursing care trust, disability trust, and insurance trust, and has planned out a trust model that combines asset management and nursing care. This adds assurance and peace of mind for customers and fulfills the Bank's corporate social responsibility while offering a full range of financial services.
c. Issued the "Silver Love Credit Card." The Bank exclusively allocated 3‰ of the general card consumption from the Silver Love Credit Card to help seniors to dine and learn together.
d. In coordination with the “Loans for Youth Overseas Experience” program of the Youth Development Administration, Ministry of Education, the TBB exclusively provides young people aged 20 to 30 with loans for overseas study, self-guided travel, and working holidays, helping them to realize their dreams of living overseas. As of the end of December 2018, the Bank had provided NT$527 million in these loans to 4,478 persons, helping numerous young students to pursue their dreams overseas, and thereby received a certificate of appreciation and the trophy from the Youth Development Administration, Ministry of Education as a recognition of the Bank's efforts.
e. To help increase birth rates, the TBB continues to extend childbirth consumer loans, lightening the burden on family finances by providing the capital needed to pay for bearing children. By the end of December 2018, 1,336 of these loans for a total of NT$504 million had been extended.
f. To help seniors to invigorate their assets and stabilize their livings, the Bank continued to promote the "Joyful Retirement" project. By the end of December 2018, a total of 164 of these loans had been extended, with the contract amount and the appropriation amount accumulated to NT$1,081 million and NT$774 million, respectively.
(3) Upgrading of information transparency, and reinforcement of communication with shareholders and investorsThe TBB is engaged in a long-term effort to upgrade its corporate governance, pursue even better operating performance, and constantly enhance asset quality and competitiveness so as to reinforce its operating structure and create greater value for its shareholders. In addition, the Bank works vigorously to reinforce channels of communication with its domestic and overseas shareholders and investors. The concrete methods used to do this are as follows:
A. Holding of a shareholders' regular meeting every six months.B. Holding of a road show in the first and second halves of each year to provide a complete statement of the
Bank's operating situation.C. The Bank has established a special window and mailbox for immediate response to queries raised by
shareholders and investors.D. The Bank posts monthly revenue and financial status information on its official website, and Chinese and
English versions of major company news items and the status of corporate social responsibility are posted there as well. This helps domestic and overseas investors understand the status of the Bank's operations.
252 Taiwan Business Bank Annual Report 2018
XDirectory of Head Office and Branch Units
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XTBB'S OFFICES ADDRESS TEL NO. SWIFT ADDRESS
Head Office 30 Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171Banking Department 30 Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171 MBBTTWTP010Trust Department 15F, 30 Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171Securities Department(Banking Broker) 4F, 30 Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171
International Banking Department 3F, 30 Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171 MBBTTWTP
Chi Lin Branch 46, Sec. 2, Minquan E. Rd., Zhongshan Dist., Taipei City, Taiwan, R.O.C. (02)25417171 MBBTTWTP001
Chung Ho Branch 634-10, Jingping Rd., Zhonghe Dist, New Taipei City, Taiwan, R.O.C. (02)22427171 MBBTTWTP002
Po Ai Branch 419, Mingcheng 2nd Rd., Zuoying Dist., Kaohsiung City, Taiwan, R.O.C. (07)5567171
North Taoyuan Branch 985 Chunri Rd., Taoyuan Dist., Taoyuan City, Taiwan, R.O.C. (03)3567171 MBBTTWTP004
Nan Ken Branch 381 Zhongzheng Rd., Luzhu Dist., Taoyuan City, Taiwan, R.O.C. (03)3227171 MBBTTWTP005
Si Tuen Branch 839/847 Sec. 4, Taiwan Blvd., Xitun Dist., Taichung City , Taiwan R.O.C. (04)23587171 MBBTTWTP006
Chung Min Branch 301 Zhongming S. Rd., West Dist., Taichung City, Taiwan, R.O.C. (04)23057171 MBBTTWTP007
Kinmen Branch 116, Minquan Rd., Jincheng Township, Kinmen County, Taiwan, R.O.C. (082) 316871 MBBTTWTP009
Ta Ya Branch 161 Daya Rd., Daya Dist., Taichung City, Taiwan, R.O.C (04)25687171 MBBTTWTP011
Jen Ta Branch 183 Fengnan Rd., Nanzi Dist., Kaohsiung City, Taiwan, R.O.C. (07)3537171 MBBTTWTP012
Jen Ai Branch 357, Sec. 4, Ren'ai Rd., Da'an Dist., Taipei City, Taiwan, R.O.C. (02)27217171 MBBTTWTP020
Sung Shan Branch 147, Sec. 4, Nanjing E. Rd., Songshan Dist., Taipei City, Taiwan, R.O.C. (02)27167171 MBBTTWTP021
Chien Cheng Branch (Banking Broker)
76 Nanjing W. Rd., Datong Dist., Taipei City, Taiwan, R.O.C. (02)25507171 MBBTTWTP022
Shih Lin Branch 601 Zhongzheng Rd., Shilin Dist., Taipei City, Taiwan, R.O.C (02)28117171 MBBTTWTP023
Yung Ho Branch 168 Zhulin Rd., Yonghe Dist., New Taipei City, Taiwan, R.O.C. (02)29277171 MBBTTWTP024
Hsin Tien Branch 192, Sec. 2, Zhongxing Rd., Xindian Dist., New Taipei City, Taiwan, R.O.C. (02)29117171 MBBTTWTP025
Hsin Chuang Branch 16, Sec. 1, Zhonghua Rd., Xinzhuang Dist., New Taipei City, Taiwan, R.O.C. (02)29907171 MBBTTWTP026
Hwa Cheng Branch 25, Touqian Rd., Xinzhuang Dist., New Taipei City, Taiwan, R.O.C. (02)29977171 MBBTTWTP027
Sung Kiang Branch 158 Songjiang Rd., Zhongshan Dist., Taipei City, Taiwan, R.O.C. (02)25377171 MBBTTWTP040
Taipei Branch (Banking Broker)
72, Sec. 1, Chongqing S. Rd., Zhongzheng Dist., Taipei City, Taiwan, R.O.C. (02)23717171 MBBTTWTP050
Wan Hua Branch 103, Kangding Rd., Wanhua Dist., Taipei City, Taiwan, R.O.C. (02)23387171 MBBTTWTP060
South Taipei Branch 93, Sec. 2, Roosevelt Rd., Da'an Dist., Taipei City, Taiwan, R.O.C. (02)23697171 MBBTTWTP061
Fu Hsin Branch 390, Sec. 1, Fuxing S. Rd., Da'an Dist., Taipei City, Taiwan, R.O.C. (02)27057171 MBBTTWTP070
Chung Shan Branch 17 Changchun Rd., Zhongshan Dist., Taipei City, Taiwan, R.O.C. (02)25517171 MBBTTWTP080
Chien Kuo Branch 4, Sec. 3, Minquan E. Rd., Zhongshan Dist., Taipei CIty, Taiwan, R.O.C. (02)25097171 MBBTTWTP081
Nai Hu Branch 15, Alley 360, Sec. 1, Naihu Rd., Naihu Dist., Taipei City, Taiwan, R.O.C. (02)27997171 MBBTTWTP082
Nan King East Road Branch
311, Sec. 3, Nanjing E. Rd., Songshan Dist., Taipei City, Taiwan, R.O.C. (02)27127171 MBBTTWTP090
Chung Hsiao Branch 267, Sec. 3, Chung Hsiao E. Rd., Taipei City, Taiwan, R.O.C. (02)27727171 MBBTTWTP100
World Trade Center Branch
547 Guangfu S. Rd., Xinyi Dist., Taipei City, Taiwan, R.O.C. (02)23457171 MBBTTWTP102
Yung Trin Branch 552, Sec. 5, Chung Hsiao E. Rd., Taipei City, Taiwan, R.O.C. (02)23467171 MBBTTWTP103
Nan Kang Branch 19-2 Sanchong Rd., Nangang Dist., Taipei City, Taiwan, R.O.C. (02)26553771 MBBTTWTP105
254 Taiwan Business Bank Annual Report 2018
TBB'S OFFICES ADDRESS TEL NO. SWIFT ADDRESS
Sung Nan Branch 161, Sec. 1, Keelung Rd., Xinyi Dist., Taipei City, Taiwan, R.O.C. (02)27647171 MBBTTWTP110
Dong Hu Branch 152, Sec. 6, Minquan E. Rd., Naihu Dist., Taipei City, Taiwan, R.O.C. (02)87929771 MBBTTWTP111
Ta An Branch 92, Sec. 2, Dunhua S. Rd. Da'an Dist., Taipei City, Taiwan, R.O.C. (02)27007171 MBBTTWTP120
Shuang Ho Branch 356 Zhonghe Rd., Zhonghe Dist., New Taipei City, Taiwan, R.O.C. (02)22327171 MBBTTWTP121
Jim Ho Branch 403, Sec. 2, Zhongshan Rd., Zhonghe Dist., New Taipei City, Taiwan, R.O.C. (02)22287171 MBBTTWTP122
Wu Ku Branch 95 Wugong Rd., Wu Ku Industrial Zone, Xinzhuang Dist., New Taipei City, Taiwan, R.O.C. (02)22987171 MBBTTWTP130
Lin Kou Branch 1F-2, 188 Zhongshan Rd., Linkou Dist., New Taipei City, R.O.C. (02)26037171 MBBTTWTP131
Pan Chiao Branch 2-1 Mingde St., Banqiao Dist., New Taipei City, Taiwan, R.O.C. (02)29687171 MBBTTWTP140
Shu Lin Branch 217, Sec. 1, Zhongshan Rd., Shulin Dist., New Taipei City, Taiwan, R.O.C. (02)26757171 MBBTTWTP141
Tu Cheng Branch 126, Sec. 2, Zhongyang Rd., Tucheng Dist., New Taipei City, Taiwan, R.O.C. (02)22737171 MBBTTWTP142
Hwei Long Branch 933 Zhongzheng Rd., Xinzhuang Dist., New Taipei City, Taiwan, R.O.C. (02)82097171 MBBTTWTP143
Xi Zhi Branch 75, Sec. 1, Xintai 5th Rd., Xizhi Dist., New Taipei City, R.O.C. (02)26987171 MBBTTWTP144
San Xia Branch 31, Daxue Rd., Sanxia Dist., New Taipei City, R.O.C. (02)26739871 MBBTTWTP148
Kee Lung Branch 9 Ai 3rd Rd., Ren'ai Dist., Keelung City, Taiwan, R.O.C. (02)24237171
Pu Chya Branch (Banking Broker)
62-1, Sec. 2, Zhongshan Rd., Banqiao Dist., New Taipei City, Taiwan, R.O.C. (02)29547171 MBBTTWTP151
North San Chung Branch
137, Sec. 4, Sanhe Rd., Sanchong Dist., New Taipei City, Taiwan, R.O.C. (02)22867171 MBBTTWTP152
South San Chung Branch
232, Sec. 1, Ziqiang Rd., Sanchong Dist., New Taipei City, Taiwan, R.O.C. (02)29827171 MBBTTWTP153
Lu Chow Branch 42 Yongle St., Luzhou Dist., New Taipei City, Taiwan, R.O.C. (02)28477171 MBBTTWTP154
I Lan Branch 305 Sec. 2,Zhongshan Rd., Yilan City, Yilan County, Taiwan, R.O.C. (03)9367171 MBBTTWTP160
Lo Tung Branch 15 Zhongzheng N. Rd., Luodong Township, Yilan County, Taiwan, R.O.C. (03)9567171
Su Aw Branch 96-1,Sec. 1, Zhongshan Rd., Su' ao Township, Yilan County, Taiwan, R.O.C. (03)9965051
Yang Mei Branch 146 Dacheng Rd., Yangmei Dist., Taoyuan City, Taiwan, R.O.C. (03)4786111 MBBTTWTP290
Hu Kou Branch 76, Sec. 1, Zhongcheng Rd., Hukou Township, Hsinchu County, Taiwan, R.O.C. (03)5997171 MBBTTWTP291
Taoyuan Branch(Banking Broker)
99 Zhonghua Rd. Taoyuan Dist., Taoyuan City, Taiwan, R.O.C. (03)3317171 MBBTTWTP300
Ta Yuan Branch 80 Zhongshan S. Rd., Dayuan Township, Taoyuan City, Taiwan, R.O.C. (03)3857171 MBBTTWTP301
Ta Shi Branch 80 Fuxing Rd., Daxi Dist., Taoyuan County, Taiwan, R.O.C. (03)3887171 MBBTTWTP302
Chung Li Branch 157 Zhongshan Rd., Zhongli Dist Taoyuan City, Taiwan, R.O.C. (03)4277171 MBBTTWTP310
Nei Li Branch 153 Zhongxiao Rd., Zhongli Dist., Taoyuan City, Taiwan, R.O.C. (03)4557171 MBBTTWTP311
Hsin Ming Branch 282 Minzu Rd., Zhongli Dist., Taoyuan City, Taiwan, R.O.C. (03)4027171 MBBTTWTP312
East Taoyuan Branch 1223, Sec. 2, Wanshou Rd., Guishan Dist., Taoyuan City, Taiwan, R.O.C. (03)3297171 MBBTTWTP313
Hsin Wu Branch 257 Zhongshan Rd., Xinwu Dist., Taoyuan CIty, Taiwan, R.O.C. (03)4777171
Hsin Chu Branch 154 Dongmen St., Hsinchu City, Taiwan, R.O.C. (03)5277171 MBBTTWTP320Chu Pei Branch (Banking Broker)
128 Xianzheng 9th Rd., Zhubei City, Hsinchu County, Taiwan, R.O.C. (03)5517171 MBBTTWTP321
Hsinchu Science Based Industrial Park Branch
NO.198, Guanxin Rd., Hsinchu City 300, Taiwan, R.O.C. (03)5637171 MBBTTWTP322
Pa Te Branch 789, Sec. 1, Jieshou Rd., Bade Dist., Taoyuan City, Taiwan, R.O.C. (03)3767171 MBBTTWTP330
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Luong Tan Branch 64 Longyuan Rd., Longtan Dist., Taoyuan City, Taiwan, R.O.C. (03)4807171 MBBTTWTP332
Chu Tung Branch 6 Donglin Rd., Zhudong Township, Hsinchu County, Taiwan, R.O.C. (03)5947171 MBBTTWTP340
Chu Nan Branch 29 Bo'ai St., Zhunan Township, Miaoli County Taiwan, R.O.C. (037)467171 MBBTTWTP350
Tou Fen Branch 90 Xinyi Rd., Toufen Township, Miaoli County, Taiwan, R.O.C. (037)687171 MBBTTWTP351
Maio Li Branch 606 Zhongzheng Rd., Miaoli City, Taiwan, R.O.C. (037)327171 MBBTTWTP360Feng Yuan Branch(Banking Broker)
1 Sanfeng Rd., Fengyuan Dist., Taichung City, Taiwan, R.O.C. (04)25267171 MBBTTWTP460
Tai Ping Branch (Banking Broker)
27 Zhongxing E. Rd., Taiping Dist., Taichung City, Taiwan, R.O.C. (04)22707171 MBBTTWTP470
Ta Chia Branch 14 Zhenzheng Rd., Dajia Dist., Taichung City, Taiwan, R.O.C. (04)26867171 MBBTTWTP480
Sha Lu Branch 1023 Sec. 7, Taiwan Blvd., Shalu Dist., Taichung City , Taiwan R.O.C. (04)26657171 MBBTTWTP482
Wu Jih Branch 616 Zhonghua Rd., Wuri Dist., Taichung City, Taiwan, R.O.C. (04)23387171 MBBTTWTP483
Taichung Branch(Banking Broker)
400 Sec. 1, Taiwan Blvd., Central Dist., Taichung City, Taiwan R.O.C. (04)22297171 MBBTTWTP490
Min Chen Branch 84 Minquan Rd., Central Dist., Taichung City, Taiwan, R.O.C. (04)22267171 MBBTTWTP491
Hsing Chung Branch 136 Taizhong Rd., South Dist., Taichung City, Taiwan, R.O.C. (04)22877171 MBBTTWTP500
Pei Tuen Branch 53 Jinhua N. Rd., Beitun Dist., Taichung City, Taiwan, R.O.C. (04)22307171 MBBTTWTP501
Nan Tou Branch 139 Fuxing Rd., Nantou City, Nantou County, Taiwan, R.O.C. (049)2237171 MBBTTWTP510
Tsao Tuen Branch 604 Zhongzheng Rd., Caotun Township, Nantou County, Taiwan, R.O.C. (049)2357171 MBBTTWTP511
Pu Li Branch 434 Zhongzheng Rd., Puli Township, Nantou County, Taiwan, R.O.C. (049)2997171
Tan Tze Branch 135, Sec. 2, Zhongshan Rd., Tanzi Dist., Taichung City, Taiwan, R.O.C. (04)25317171 MBBTTWTP521
Chu Shan Branch 919, Sec. 3, Jishan Rd., Zhushan Township, Nantou County, Taiwan, R.O.C. (049)2637171 MBBTTWTP530
Chang Hwa Branch 61 Guangfu Rd., Changhua City, Changhua County, Taiwan, R.O.C. (04)7257171 MBBTTWTP540
Ho Mei Branch 8 He'an St., Hemei Township, Changhua County, Taiwan, R.O.C. (04)7558131 MBBTTWTP541
Yuan Lin Branch 16 Minquan St., Yuanlin Township, Changhua County, Taiwan, R.O.C. (04)8377171 MBBTTWTP550
Pei Tou Branch 62 Gongqian St., Beidou Township, Changhua County, Taiwan, R.O.C. (04)8877171 MBBTTWTP560
Erh Lin Branch 2 Zhongzheng Rd., Erlin Township, Changhua County, Taiwan, R.O.C. (04)8957171 MBBTTWTP561
Tou Liu Branch 109 Datong Rd., Douliu City, Yunlin County, Taiwan, R.O.C. (05)5347171 MBBTTWTP660
Pei Kang Branch 65 Wenhua Rd., Beigang Township, Yunlin County, Taiwan, R.O.C. (05)7827171
Hu Wei Branch 45 Heping Rd., Huwei Township, Yunlin County, Taiwan, R.O.C. (05)6337171
Chia Yi Branch(Banking Broker) 132 Guanghua Rd., Chiayi City, Taiwan, R.O.C. (05)2287171 MBBTTWTP680
Ming Hsiung Branch(Banking Broker)
83, Sec. 3, Jianguo Rd., Minxiong Township, Chiayi County, Taiwan, R.O.C. (05)2207171 MBBTTWTP681
Chia Hsin Branch 766 Hsinming Rd., West Dist., Chiayi City, Taiwan, R.O.C. (05)286-7171 MBBTTWTP686
Hsin Ying Branch 216 Zhongshan Rd., Xinying Dist., Tainan City, Taiwan, R.O.C. (06)6357171 MBBTTWTP690
Kai Yuan Branch 12 Zhonghua Rd., Yongkang Dist., Tainan City, Taiwan, R.O.C. (06)3117171 MBBTTWTP691
Yun Kang Branch 79 Zhongzheng S. Rd., Yongkang Dist., Tainan City, Taiwan, R.O.C. (06)2517171 MBBTTWTP700
Shiue Chia Branch 87 Zhongshan Rd., Xuejia Dist., Tainan City, Taiwan, R.O.C. (06)7837171 MBBTTWTP701
Shan Hwa Branch 352 Zhongshan Rd., Shanhua Dist., Tainan City, Taiwan, R.O.C. (06)5816111 MBBTTWTP702
256 Taiwan Business Bank Annual Report 2018
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Yung Ta Branch 1532, Sec. 2, Yongda Rd., Yongkang Dist., Tainan City, Taiwan, R.O.C. (06)2337171 MBBTTWTP703
Tainan Branch(Banking Broker) 185 Zhongzheng Rd., Tainan City, Taiwan, R.O.C. (06)2247171 MBBTTWTP710
Jen Te Branch 339 Zhongshan Rd., Rende Dist., Tainan City, Taiwan, R.O.C. (06)2797171 MBBTTWTP711
Cheng Kung Branch 25 Gongyuan Rd., West Central Dist., Tainan City, Taiwan, R.O.C. (06)2217171 MBBTTWTP720
East Tainan Branch 75, Sec. 2, Zhonghua E. Rd., East Dist., Tainan City, R.O.C. (06)2687171 MBBTTWTP721
An Ping Branch 67, Sec. 1, Zhonghua W. Rd., East Dist., Tainan City, R.O.C (06)2657171 MBBTTWTP730
Hua Lien Branch 247 Zhongshan Rd., Hualien City, Hualien County, Taiwan, R.O.C. (03)8357171 MBBTTWTP760
Taitung Branch 335, Sec. 1, Zhonghua Rd., Taitung City, Taitung County, Taiwan, R.O.C. (089)327171
East Kaohsiung Branch 249 Zhongzheng 1st Rd., Lingya Dist., Kaohsiung City, Taiwan, R.O.C. (07)7167171 MBBTTWTP820
Kang Shan Branch(Banking Broker)
412 Gangshan Rd., Gangshan Dist., Kaohsiung City, Taiwan, R.O.C. (07)6227171 MBBTTWTP830
North Feng Shan Branch 28, Sec. 3, Jianguo Rd., Fengshan Dist., Kaohsiung City, Taiwan, R.O.C. (07)7767171 MBBTTWTP840
Ling Ya Branch 31 Qingnian 1st Rd., Lingya Dist., Kaohsiung City, Taiwan, R.O.C. (07)5377171 MBBTTWTP841
Kaohsiung Branch 79 Wufu 3rd Rd., Qianjin Dist., Kaohsiung City, Taiwan, R.O.C. (07)2717171 MBBTTWTP850
North Kaohsiung Branch(Banking Broker)
90, Fuxing 1st Rd., Xinxing Dist., Kaohsiung City, Taiwan, R.O.C. (07)2387171 MBBTTWTP851
Ta Chang Branch 116 Dachang 2nd Rd., Sanmin Dist., Kaohsiung City, Taiwan, R.O.C. (07)3827171
Chien Chen Branch 378-3 Minquan 2nd Rd., Qianzhen Dist., Kaohsiung City, Taiwan, R.O.C. (07)5355171 MBBTTWTP853
Jeou Ru Branch(Banking Broker)
255 Jiuru 2nd Rd., Sanmin Dist., Kaohsiung City, Taiwan, R.O.C. (07)3137171 MBBTTWTP860
San Ming Branch(Banking Broker)
153 Zhongshan 1st Rd., Xinxing Dist., Kaohsiung City, Taiwan, R.O.C. (07)2867171 MBBTTWTP870
Feng Shan Branch 157 Zhongshan Rd., Fengshan Dist., Kaohsiung City, Taiwan, R.O.C. (07)7107171
Ta Fa Branch No.5-3, Guanghua Rd., Daliao Dist., Kaohsiung City 831, Taiwan, R.O.C. (07)7887171 MBBTTWTP881
Ping Tung Branch(Banking Broker)
7 Hankou St., Pingtung City, Pingtung County, Taiwan, R.O.C. (08)7327171
Xiao Gang Branch 718 Hongping Rd., Xiaogang Dist., Kaohsiung City, Taiwan, R.O.C. (07)8016171 MBBTTWTP891
Chiao Chou Branch 100 Xinsheng Rd., Chaozhou Township, Pingtung County, Taiwan, R.O.C. (08)7807171
Offshore Banking Branch 3F, 30 Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171 MBBTTWTP893
Los Angeles Branch 633 West 5th St., Suite 2280, Los Angeles, CA 90071, U.S.A. 1-213-8921260 MBBTUS6L
Hong Kong Branch Suite 2705-9, 27F, Tower 6, The Gateway, Harbour City, Kowloon, Hong Kong 852-29710111 MBBTHKHH
Sydney Branch Suite 3, Level 24, 363 George Street, Sydney, NSW 2000, Australia 61-2-92623356 MBBTAU2S
Shanghai BranchRoom 3806, 38F, Longemont Yes Tower, 399 Kaixuan Road, Changning District, Shanghai 200051, China
86-21-62627171 MBBTCNSH
Brisbane Branch Suite 903, Level 9, 239 George Street, Brisbane, QLD 4000, Australia 61-7-33173000 MBBTAU2SBRI
Wuhan Branch 17F, Building 2, 108 Zhongbei Road, Wuchang District, Wuhan, Hubei Province 430077, China 86-27-59817171 MBBTCNSHWUH
New York Branch 32 Old Slip, 5F, New York, NY 10005, U.S.A. 1-646-213-3258 MBBTUS33
Tokyo Branch 707 Room, 7F, Tekko Building, 1-8-2 Marunouchi, Chiyoda-ku, Tokyo 100-0005, Japan 81-3-5220-3918 MBBTJPJT
Yangon Representative Office
422 Strand Road (Corner of Botahtaung Pagoda Road), #04-08, Botahtaung Township, Yangon, Republic of the Union of Myanmar
95-1-202101
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Ⅵ1. Brief Consolidated Balance Sheets and Consolidated Statements of
Comprehensive Income for the Past Five Years
(1) Brief Consolidated Balance Sheets and Brief Consolidated Statements of Comprehensive Income
Brief Consolidated Balance Sheets Unit: NT$1,000
2018 2017 2016 2015 2014Cash and cash equivalents, Due from the Central Bank and call loans to banks
133,016,947 152,634,715 140,184,210 159,946,581 126,086,689
Financial assets at fair value through profit or loss
7,134,604 1,061,789 1,443,693 2,082,611 2,610,707
Financial assets measured at fair value through other comprehensive income
73,164,201 0 0 0 0
Investment in debt instruments at amortized cost 261,470,496 0 0 0 0Securities purchased under resell agreements 2,386,518 3,998,104 619,201 26,784,515 5,527,837Receivables-net 45,652,981 23,951,301 24,000,980 24,697,758 21,821,960Current Income tax assets 64,880 129,455 116,062 293,454 235,755Discounts and loans-net 1,074,627,748 1,111,559,969 1,045,014,647 1,007,398,302 1,001,234,570Available-for-sale financial assets-net 0 66,233,836 73,330,688 25,668,785 16,043,539Held-to-maturity financial assets-net 0 202,967,083 192,523,259 206,277,479 194,541,571Other financial assets-net 17,971 2,159,191 2,132,723 2,086,966 3,268,115Premises and equipment-net 14,309,738 14,226,866 14,120,706 14,105,378 14,101,430Intangible assets-net 286,054 274,349 183,061 131,292 150,029Deferred income tax assets-net 1,646,991 1,222,464 1,240,678 1,437,671 2,125,784Other assets-net 5,261,326 3,674,849 3,819,074 4,980,803 4,642,581Total assets 1,619,040,455 1,584,093,971 1,498,728,982 1,475,891,595 1,392,390,567Deposits from the Central Bank and other banks 91,314,543 93,529,770 75,817,857 77,857,537 80,595,072Due to the Central Bank and other banks 591,988 31,464 0 0 0Financial liabilities at fair value through profit or loss
9,339,273 3,732,481 214,259 219,999 303,213
Securities sold under repurchase agreements 1,657,706 1,105,596 2,758,905 4,163,147 3,895,308Payables 58,674,131 36,630,052 35,412,594 30,924,431 30,556,802Current income tax liabilities 1,017,575 62,495 310,077 0 0Deposits and remittances 1,311,041,103 1,316,023,711 1,253,804,477 1,232,320,685 1,152,156,998Financial debentures 47,450,000 41,000,000 42,750,000 45,600,000 41,800,000Other financial liabilities 7,507,715 10,120,545 10,819,145 12,197,117 15,739,260Provision for liabilities 3,565,727 3,515,351 3,606,753 3,321,737 3,018,791Deferred income tax liabilities 880,738 881,318 884,569 920,890 898,420Other liabilities 1,146,937 1,643,515 1,480,006 706,923 688,786Total liabilities (Note 2)
Pre-distributed 1,534,187,436 1,508,276,298 1,427,858,642 1,408,232,466 1,329,652,650Post-distributed Note 3 1,508,276,298 1,427,858,642 1,408,232,466 1,329,652,650
Equity parent company 84,853,019 75,817,673 70,870,340 67,659,129 62,737,917Common stock(Note 2)
Pre-distributed 63,938,802 61,479,617 59,688,949 56,846,618 52,979,141Post-distributed Note 3 63,938,802 61,479,617 59,688,949 56,846,618
Retained earnings(Note 2)
Pre-distributed 18,007,553 14,644,284 12,210,873 10,685,563 9,694,559Post-distributed Note 3 10,537,445 9,811,377 7,274,766 5,827,082
Other items in equity 2,906,664 (306,228 ) (1,029,482 ) 126,948 64,217Total equity (Note2)
Pre-distributed 84,853,019 75,817,673 70,870,340 67,659,129 62,737,917Post-distributed Note 3 74,170,019 70,261,512 67,090,663 62,737,917
Note 1: The above five-year consolidated financial information has been calculated according to the balances certified by the CPA.Note 2: Regarding the above information on pre-distribution and post-distribution, the pre-distribution amount was based on the
amount certified by the CPA, while the post-distribution amount was based on the appropriation and distribution of surplus passed on the resolution of the shareholder's meeting in the following year.
Note 3: Distribution of earnings for 2018 has not yet been approved by the shareholders' meeting.
Taiwan Business Bank Annual Report 201898
Brief Individual Balance Sheets Unit: NT$1,000
2018 2017 2016 2015 2014Cash and cash equivalents, Due from the Central Bank and call loans to banks
132,686,605 152,408,883 139,847,761 159,308,692 125,326,200
Financial assets at fair value through profit or loss
6,934,604 1,061,789 1,443,693 2,082,611 2,610,707
Financial assets measured at fair value through other comprehensive income
73,164,201 0 0 0 0
Investment in debt instruments at amortized cost
261,470,496 0 0 0 0
Securities purchased under resell agreements
2,386,518 3,998,104 619,201 26,784,515 5,527,837
Receivables-net 43,698,543 22,353,991 22,842,758 23,742,638 21,194,833Current Income tax assets 64,842 129,435 114,583 291,981 235,755Discounts and loans-net 1,074,627,748 1,111,559,969 1,045,014,647 1,007,398,302 1,001,234,570Available-for-sale financial assets-net
0 66,233,836 73,330,688 25,668,785 16,043,539
Held-to-maturity financial assets-net 0 202,967,083 192,523,259 206,277,479 194,541,571Investment measured by equity method - net
2,684,501 2,345,937 1,852,246 1,880,519 1,577,561
Other financial assets-net 17,971 2,159,191 2,132,723 2,086,966 3,268,115Premises and equipment-net 14,298,525 14,216,773 14,112,644 14,098,277 14,097,127Intangible assets-net 284,944 273,608 181,992 130,222 148,787Deferred income tax assets-net 1,623,371 1,203,779 1,224,623 1,431,393 2,119,250Other assets-net 5,222,172 3,639,872 3,796,738 4,959,477 4,601,060Total assets 1,619,165,041 1,584,552,250 1,499,037,556 1,476,141,857 1,392,526,912Deposits from the Central Bank and other banks
91,314,543 93,529,770 75,817,857 77,857,537 80,595,072
Financial liabilities at fair value through profit or loss
9,339,273 3,732,481 214,259 219,999 303,213
Securities sold under repurchase agreements
1,657,706 1,105,596 2,758,905 4,163,147 3,895,308
Payables 58,620,227 36,591,457 35,360,208 30,860,359 30,517,274Current income tax liabilities 952,293 0 288,846 0 0Deposits and remittances 1,311,937,545 1,316,671,351 1,254,224,230 1,232,662,457 1,152,367,231Financial debentures 47,450,000 41,000,000 42,750,000 45,600,000 41,800,000Other financial liabilities 7,507,715 10,120,545 10,819,145 12,197,117 15,739,260Provision for liabilities 3,565,727 3,515,351 3,606,753 3,321,737 3,018,791Deferred income tax liabilities 880,738 881,318 884,569 919,119 893,575Other liabilities 1,086,255 1,586,708 1,442,444 681,256 659,271Total liabilities (Note 2)
Pre-distributed 1, 534,312,022 1,508,734,577 1,428,167,216 1,408,482,728 1,329,788,995Post-distributed Note 3 1,508,734,577 1,428,167,216 1,408,482,728 1,329,788,995
Common stock (Note 2)
Pre-distributed 63,938,802 61,479,617 59,688,949 56,846,618 52,979,141Post-distributed Note 3 63,938,802 61,479,617 59,688,949 56,846,618
Retained earnings(Note 2)
Pre-distributed 18,007,553 14,644,284 12,210,873 10,685,563 9,694,559Post-distributed Note 3 10,537,445 9,811,377 7,274,766 5,827,082
Other items in equity 2,906,664 (306,228 ) (1,029,482 ) 126,948 64,217Total equity (Note 2)
Pre-distributed 84,853,019 75,817,673 70,870,340 67,659,129 62,737,917Post-distributed Note 3 74,170,019 70,261,512 67,090,663 62,737,917
Note 1: The above individual financial information for the latest five years have been calculated according to the balances certified by the CPA.
Note 2: Regarding the above information on pre-distribution and post-distribution, the pre-distribution amount was based on the amount certified by the CPA, while the post-distribution amount was based on the appropriation and distribution of surplus passed on the resolution of the shareholder's meeting in the following year.
Note 3: Distribution of earnings for 2018 has not yet been approved by the shareholders' meeting.
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ⅥBrief Consolidated Statements of Comprehensive Income
Unit: NT$1,000
2018 2017 2016 2015 2014
Interest revenue 28,287,358 24,782,215 24,191,265 25,853,374 25,259,678
Less:Total interest expenses (11,089,482 ) (9,356,793 ) (9,195,062 ) (10,384,359 ) (10,469,421 )
Net interest income 17,197,876 15,425,422 14,996,203 15,469,015 14,790,257
Non-interest income 5,829,071 5,437,273 5,660,831 4,692,869 4,204,068
Net revenue 23,026,947 20,862,695 20,657,034 20,161,884 18,994,325
Bad debt expenses, commitment and guarantee liability provision
(794,134 ) (3,028,711 ) (2,504,194 ) (2,409,189 ) (2,538,587 )
Operating expenses (13,034,396 ) (11,962,883 ) (11,793,424 ) (11,556,531 ) (10,970,022 )
Income from continuing operations before income tax
9,198,417 5,871,101 6,359,416 6,196,164 5,485,716
Less: Income tax expenses (1,557,875 ) (831,177 ) (1,163,717 ) (1,083,128 ) (170,579 )
Income from continuing operations after income tax
7,640,542 5,039,924 5,195,699 5,113,036 5,315,137
Net income 7,640,542 5,039,924 5,195,699 5,113,036 5,315,137
Other comprehensive income (net of tax)
583,288 516,236 (1,416,022 ) (191,824 ) 169,212
Total comprehensive income 8,223,830 5,556,160 3,779,677 4,921,212 5,484,349
Net income parent company 7,640,542 5,039,924 5,195,699 5,113,036 5,315,137
Total Other comprehensive income parent company
8,223,830 5,556,160 3,779,677 4,921,212 5,484,349
Earnings per share (Note2) 1.19 0.79 0.85 0.86 0.93
Note 1: The above five-year consolidated financial information has been calculated according to the balances certified by the CPA.Note 2: Earnings per share is calculated based on the weighted average number of shares of the current year. The basic earning
per share for 2017, 2016, 2015, and 2014 have been adjusted based on the applicable retrospective effect.
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Brief Individual Statements of Comprehensive Income
Unit: NT$1,000
2018 2017 2016 2015 2014
Interest revenue 28,156,855 24,677,007 24,127,714 25,786,136 25,225,704
Less:Total interest expenses (11,082,469 ) (9,357,801 ) (9,195,987 ) (10,385,512 ) (10,474,182 )
Net interest income 17,074,386 15,319,206 14,931,727 15,400,624 14,751,522
Non-interest income 5,572,596 5,264,047 5,477,003 4,485,842 4,059,008
Net revenue 22,646,982 20,583,253 20,408,730 19,886,466 18,810,530
Bad debt expenses, commitment and guarantee liability provision
(745,770 ) (3,009,551 ) (2,463,643 ) (2,327,004 ) (2,501,587 )
Operating expenses (12,814,383 ) (11,785,693 ) (11,621,647 ) (11,390,118 ) (10,831,383 )
Income from continuing operations before income tax
9,086,829 5,788,009 6,323,440 6,169,344 5,477,560
Less: Income tax expenses (1,446,287 ) (748,085 ) (1,127,741 ) (1,056,308 ) (162,423 )
Income from continuing operations after income tax
7,640,542 5,039,924 5,195,699 5,113,036 5,315,137
Net income 7,640,542 5,039,924 5,195,699 5,113,036 5,315,137
Other comprehensive income (net of tax)
583,288 516,236 (1,416,022 ) (191,824 ) 169,212
Total comprehensive income 8,223,830 5,556,160 3,779,677 4,921,212 5,484,349
Earnings per share (Note 2) 1.19 0.79 0.85 0.86 0.93
Note 1: The above five-year individual financial information has been calculated according to the balances certified by the CPA.Note 2: Earnings per share is calculated based on the weighted average number of shares of the current year. The basic earning
per share for 2017, 2016, 2015, and 2014 have been adjusted based on the applicable retrospective effect.
(2) CPA-Auditor and Independent Auditors' Opinions of the Consolidated Financial Report:
Financial Year Independent Auditors' Opinions CPA-Auditor
2014 Unqualified opinion LEE, FENG HUI、CHEN, FU WEI
2015 Unqualified opinion LEE, FENG HUI、CHEN, FU WEI
2016 Unqualified opinion CHUNG, TAN TAN、LEE, FENG HUI
2017 Unqualified opinion CHUNG, TAN TAN、LEE, FENG HUI
2018 Unqualified opinion CHUNG, TAN TAN、LEE, FENG HUI
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Ⅵ2. Financial analysis for the past five years
(1) Analysis of financial ratio
Consolidated financial analysis
2018 2017 2016 2015 2014
Operation performance
Loan-to-deposit ratio (%) (Note 2)
79.41 81.67 81.63 79.91 84.64
NPL ratio (%) (Note 2) 0.30 0.33 0.43 0.48 0.46Interest expense to annual average deposits balances ratio (%)
0.67 0.60 0.61 0.75 0.78
Interest income to annual average credit loan balances ratio (%)
2.00 1.89 1.93 2.10 2.15
Total assets turnover rate (%) 1.44 1.35 1.39 1.41 1.40Average gain for employee (NT$'000) 4,385 4,092 4,160 4,038 3,925Average profit for employee (NT$'000) 1,455 989 1,046 1,024 1,098
Profitability
Return on Tier 1 capital (%) 10.22 6.86 8.14 9.11 8.99Return on asset (%) 0.48 0.33 0.35 0.36 0.39Return on equity (%) 9.51 6.87 7.50 7.84 8.86Net profit margin (%) 33.18 24.16 25.15 25.36 27.98
Earnings per share (NT$) 1.19 0.79 0.85 0.86 0.93
Financial structure
Debts to total assets ratio (%) 94.76 95.21 95.27 95.42 95.49Real estate and equipment to equity ratio (%)
16.86 18.76 19.92 20.85 22.48
Growth rateAsset growth ratio (%) 2.21 5.70 1.55 6.00 4.98Profit growth ratio (%) 56.67 (7.68 ) 2.63 12.95 42.24
Cash flowCash flow ratio (%) 31.91 4.48 40.07 (3.40 ) 41.38Cash flow adequacy ratio (%) (Note 3) 3,177.03 4,404.56 5,587.48 4,967.08 6,789.05Cash flow adequacy ratio (%) (83.60 ) (285.13 ) (128.24 ) 18.70 (792.81 )
Liquidity reserve ratio (%) 20.94 17.21 17.03 19.14 16.49Related Party Secured Loan (NT$'000) 9,598,016 9,042,678 8,401,148 9,039,394 8,426,293Ratio of Related Party Secured Loan to Total Loan (%) 0.88% 0.80% 0.78% 0.88% 0.82%
Operating scale
Market share of assets (%) 2.96 3.02 2.99 3.02 2.95Market share of net value (%) 2.20 2.07 2.03 2.09 2.07Market share of deposits (%) 3.38 3.50 3.44 3.53 3.52Market share of loans (%) 3.57 3.89 3.80 3.76 3.83
Annual profit growth rate increased in 2018: Primarily due to the profit before tax recorded an increase in 2018 as compared to 2017.In 2018, changes in cash flow related ratio had amounted to over 20%, which was primarily due to the net cash inflow from operating activities has increased as compared to that of 2017.
Note 1: The above five-year consolidated financial information has been calculated according to the balances certified by the CPA.2. Represent the key performance indicators with industry particularity of the Bank.3. Cash flow adequacy ratio: (Cash flow adequacy ratio of 2018): Based on the net cash inflow from operating activities and capital expenditures
prepared in accordance with IFRSs. (Cash flow adequacy ratio of 2017): Based on the net cash inflow from operating activities and capital expenditures
prepared in accordance with IFRSs. (Cash flow adequacy ratio of 2016): Based on the net cash inflow from operating activities and capital expenditures
prepared in accordance with IFRSs. (Cash flow adequacy ratio of 2015): Based on the net cash inflow from operating activities and capital expenditures
prepared in accordance with IFRSs for 2015, 2014, 2013, and 2012 while in accordance with financial accounting standards in Taiwan for 2011.
(Cash flow adequacy ratio of 2014): Based on the net cash inflow from operating activities and capital expenditures prepared in accordance with IFRSs for 2014, 2013, 2012 while in accordance with financial accounting standards in Taiwan for 2011 and 2010.
Taiwan Business Bank Annual Report 2018102
Calculations for the financial items are as follow:
1. Operation performance
(1) Loan-to-deposit ratio = Total loans / total deposits
(2) NPL ratio = Total not performing loans / total loans
(3) Interest expense to annual average deposits balances ratio = Total interest expenditures related to
deposits / annual average deposits balances
(4) Interest income to annual average credit loan balances ratio = Total interest income related to credit
loan balances / annual average credit loan balances
(5) Total assets turnover rate = Net revenue / total average assets
(6) Average gain for employee = Net revenue / total number of employees
(7) Average profit for employee = After-tax net profit / total number of employees
2. Profitability
(1) Return on Tier 1 capital = Before-tax profit or loss / average net Tier 1 capital
(2) Return on asset = After-tax profit or loss / average total assets
(3) Return on Equity = After-tax profit or loss / average total equity
(4) Net profit ratio = After-tax profit or loss / net revenue
(5) Earnings per share = (Income attributable to owners of the parent company – dividends on preferred
stock) / weighted average number of shares issued.
3. Financial structure
(1) Debt-asset ratio = Total liabilities / total assets
(2) Real estate and equipment to equity ratio = Net real estate and equipment / net equity
4. Growth rate
(1) Asset growth ratio = (Total assets of the current year - total assets of the previous year) / total assets of
the previous year
(2) Profit growth ratio = (Before-tax profit or loss of the current year - before-tax profit or loss of the previous
year) / before-tax profit or loss of the previous year
5. Cash flow
(1) Cash flow ratio = Net cash flow from operating activities / (interbank loans and overdrafts + commercial
paper payables + financial at fair value through profit or loss + notes issued under repurchase
agreement and bond indebtedness + amount payable with maturity within one year)
(2) Net cash flow adequacy ratio = Net cash flow from operating activities for the past five years / (capital
expenditures + cash dividend) for the past five years.
(3) Cash flow adequacy ratio = Net cash flow from operating activities / net cash flow from investment
activities
6. Liquidity reserve ratio = Current assets prescribed by the central bank / liabilities required liquid reserves
7. Operating scale
(1) Market share of assets = Total assets / total assets of all financial institutions available for deposits and
loans business
(2) Market share of net value = Net value / total net value of all financial institutions available for deposits
and loans business
(3) Market share of deposits = Total deposits / total deposits of all financial institutions available for deposits
and loans business
(4) Market share of loans = Total loans / total loans of all financial institutions available for deposits and
loans business
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ⅥIndividual financial analysis
2018 2017 2016 2015 2014
Operation performance
Loan-to-deposit ratio (%) (Note 2)
79.36 88.99 81.60 79.89 84.62
NPL ratio (%) (Note 2) 0.30 0.33 0.43 0.48 0.46
Interest expense to average deposits balances ratio (%)
0.67 0.60 0.61 0.75 0.78
Interest income to average credit loan balances ratio (%)
2.00 1.89 1.93 2.10 2.15
Total assets turnover rate (%) 1.41 1.34 1.37 1.39 1.38
Average revenue of employee (000') 4,365 4,078 4,139 4,009 3,904
Average profit of employee (000") 1,473 998 1,054 1,031 1,103
Profitability
Return on Tier 1 capital (%) 10.10 6.76 8.09 9.07 8.98
Return on asset (%) 0.48 0.33 0.35 0.36 0.39
Return on equity (%) 9.51 6.87 7.50 7.84 8.86
Net profit margin (%) 33.74 24.49 25.46 25.71 28.26
Earnings per share (NT$) 1.19 0.79 0.85 0.86 0.93
Financial structure
Debts to total assets ratio (%) 94.76 95.22 95.27 95.42 95.49
Real estate and equipment to equity ratio (%)
16.85 18.75 19.91 20.84 22.47
Growth rateAsset growth ratio (%) 2.18 5.70 1.55 6.00 4.98
Profit growth ratio (%) 56.99 (8.47 ) 2.50 12.63 42.28
Cash flow
Cash flow ratio (%) 32.50 4.82 41.36 (5.05 ) 41.64
Cash flow adequacy ratio (%) 3,275.58 4,582.30 5,837.69 5,182.68 6,889.04
Cash flow adequacy ratio (%) (84.42 ) (269.70 ) (132.32 ) 27.02 (680.45 )
Liquidity reserve ratio (%) 20.94 17.21 17.03 19.14 16.49
Related Party Secured Loan (NT$'000) 9,598,016 9,042,678 8,401,148 9,039,394 8,426,293
Ratio of Related Party Secured Loan to Total Loan (%) 0.88% 0.80% 0.78% 0.88% 0.82%
Operating scale
Market share of assets (%) 2.96 3.02 2.99 3.02 2.95
Market share of net value (%) 2.20 2.07 2.03 2.09 2.07
Market share of deposits (%) 3.38 3.5 3.44 3.53 3.52
Market share of loans (%) 3.57 3.89 3.80 3.76 3.83
1. Profit growth rate increased in 2018: Primarily due to the before-tax net profit recorded an increase in 2018 as compared to 2017.2. In 2018, changes in cash flow related ratio had amounted to over 20%, which was primarily due to the net cash inflow from
operating activities has increased as compared to that of 2017.
Note 1: The above five-year individual financial information has been calculated according to the balances certified by the CPA.2. Represent the key performance indicators with industry particularity of the Bank.3. Cash flow adequacy ratio: (Cash flow adequacy ratio of 2018): Based on the net cash inflow from operating activities and capital expenditures
prepared in accordance with IFRSs. (Cash flow adequacy ratio of 2017): Based on the net cash inflow from operating activities and capital expenditures
prepared in accordance with IFRSs. (Cash flow adequacy ratio of 2016): Based on the net cash inflow from operating activities and capital expenditures
prepared in accordance with IFRSs. (Cash flow adequacy ratio of 2015): Based on the net cash inflow from operating activities and capital expenditures
prepared in accordance with IFRSs for 2015, 2014, 2013, and 2012 while in accordance with financial accounting standards in Taiwan for 2011.
(Cash flow adequacy ratio of 2014): Based on the net cash inflow from operating activities and capital expenditures prepared in accordance with IFRSs for 2014, 2013, 2012 while in accordance with financial accounting standards in Taiwan for 2011 and 2010.
Taiwan Business Bank Annual Report 2018104
Calculations for the financial items are as follow:
1. Operation performance
(1) Loan-to-deposit ratio = Total loans / total deposits
(2) NPL ratio = Total not performing loans / total loans
(3) Interest expense to annual average deposits balances ratio = Total interest expenditures related to
deposits / annual average deposits balances
(4) Interest income to annual average credit loan balances ratio = Total interest income related to credit
loan balances / annual average credit loan balances
(5) Total assets turnover rate = Net revenue / total average assets
(6) Average gain for employee = Net revenue / total number of employees
(7) Average profit for employee = After-tax net profit / total number of employees
2. Profitability
(1) Return on Tier 1 capital = Before-tax profit or loss / average net Tier 1 capital
(2) Return on asset = After-tax profit or loss / average total assets
(3) Return on Equity = After-tax profit or loss / average total equity
(4) Net profit ratio = After-tax profit or loss / net revenue
(5) Earnings per share = (Income attributable to owners of the parent company – dividends on preferred
stock) / weighted average number of shares issued.
3. Financial structure
(1) Debt-asset ratio = Total liabilities / assets.
(2) Real estate and equipment to equity ratio = Net real estate and equipment / net equity
4. Growth rate
(1) Asset growth ratio = (Total assets of the current year - total assets of the previous year) / total assets of
the previous year
(2) Profit growth ratio = (Before-tax profit or loss of the current year - before-tax profit or loss of the previous
year) / before-tax profit or loss of the previous year
5. Cash flow
(1) Cash flow ratio = Net cash flow from operating activities / (interbank loans and overdrafts + commercial
paper payables + financial at fair value through profit or loss + notes issued under repurchase
agreement and bond indebtedness + amount payable with maturity within one year)
(2) Net cash flow adequacy ratio = Net cash flow from operating activities for the past five years / (capital
expenditures + cash dividend) for the past five years.
(3) Cash flow adequacy ratio = Net cash flow from operating activities / net cash flow from investment
activities
6. Liquidity reserve ratio = Current assets prescribed by the central bank / liabilities required liquid reserves
7. Operating scale
(1) Market share of assets = Total assets / total assets of all financial institutions available for deposits and
loans business
(2) Market share of net value = Net value / total net value of all financial institutions available for deposits
and loans business
(3) Market share of deposits = Total deposits / total deposits of all financial institutions available for deposits
and loans business
(4) Market share of loans = Total loans / total loans of all financial institutions available for deposits and
loans business
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Ⅵ(2) Capital adequacy ratio
Unit: NT$1,000
Capital Adequacy Ratio for the most recent 5 years (Note 1)
2018 2017 2016 2015 2014
Regulatory Capital
Common Equity 78,947,036 73,448,764 68,922,354 65,662,491 60,731,181
Additional Tier 1 Capital 13,386,998 14,140,802 14,664,225 7,057,157 2,532,896
Tier 2 Capital 29,797,442 25,396,643 20,221,002 19,689,051 18,043,384
Regulatory Capital 112,131,476 112,986,209 103,807,581 92,408,699 81,307,461
Total Risk-weighted Assets
Credit risk
Standardized Approach 912,764,211 871,996,666 818,988,412 770,946,612 726,103,364
Internal ratings-based Approach
Asset Securitization
Operational risk
Basic indicator Approach
32,959,913
Standardized Approach/AlternativeStandardized Approach
36,971,711 35,136,391 34,024,618 32,741,848
Advanced Measurement Approach
Market risk
Standardized Approach 11,844,063 13,786,563 18,539,100 18,682,350 12,022,600
Internal Models Approach
Total risk-weighted assets 961,579,985 920,919,620 871,552,130 822,370,810 771,085,877
Capital Adequacy Ratio (Note 2) 12.70% 12.27% 11.91% 11.24% 10.54%
Ratio of Tier 1 capital to risk-weighted assets 9.60% 9.51% 9.59% 8.84% 8.20%
Ratio of common equity to risk-weighted assets 8.21% 7.98% 7.91% 7.98% 7.88%
Leverage Ratio (Note 3) 5.40% 5.26% 5.30% 4.69% -
Please explain the reasons for the change in the capital adequacy ratio in the last two years(Note 4)。
Note 1: The above five-year Capital Adequacy Ratio has been audited and certified by accountants.2. Represent the key performance indicators with industry particularity of the Bank.3. Leverage ratio was disclosed since 2015.4. Changes for the latest two periods (2018 and 2017) have not reached 20%; analysis of the reason is exempted.
Calculation formula of Capital Adequacy Ratio is as follow:
1. Regulatory capital = Common equity + Additional Tier 1 capital + Tier 2 capital.
2. Total risk-weighted assets = Credit risk-weighted assets + Capital requirements of (operational risk + market
risk) × 12.5
3. Capital adequacy ratio = Regulatory capital / Total risk-weighted assets.
4. Ratio of Tier 1 capital to risk-weighted assets = (Common equity + Additional Tier 1 capital) / Total risk-
weighted assets.
5. Ratio of common equity to risk-weighted assets = Common equity / Total risk-weighted assets.
6. Leverage ratio = Net Tier 1 capital / Total exposures amount.
(3) Improvement measures for regulatory capital to risk-weighted assets ratio calculated according to Article 44 of the Banking Act is lower than the required ratio: No such cases.
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3. Audit Committee's Audit Report on the 2018 Financial Statements
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Ⅵ4. Representation Letter for 2018 Consolidated Financial Statements
Representation Letter
The entities that are required to be included in the combined financial statements of TAIWAN BUSINESS
BANK, LTD. as of and for the year ended December 31, 2018 under the Criteria Governing the Preparation
of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated
Enterprises are the same as those included in the consolidated financial statements prepared in conformity with
International Financial Reporting Standards No. 10 by the Financial Supervisory Commission, "Consolidated
Financial Statements." In addition, the information required to be disclosed in the combined financial statements
is included in the consolidated financial statements. Consequently, TAIWAN BUSINESS BANK, LTD. and
Subsidiaries do not prepare a separate set of combined financial statements.
Company name: TAIWAN BUSINESS BANK, LTD.
Chairman: Bor-Yi Huang
Date: March 26, 2019
Taiwan Business Bank Annual Report 2018108
5. Independent Auditors' Report for 2018 Consolidated Financial Statements
Independent Auditors' ReportTo the Board of Directors of Taiwan Business Bank, Ltd.:
Opinion
We have audited the consolidated financial statements of Taiwan Business Bank, Ltd. "the Bank" and its subsidiaries which comprise the consolidated balance sheets as of December 31, 2018 and 2017, the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Bank and its subsidiaries at December 31, 2018 and 2017, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Public Held Banks, and with the International Financial Reporting Standards ("IFRSs"), International Accounting Standards ("IASs"), interpretations developed by the International Financial Reporting Interpretations Committee ("IFRIC") or the former Standing Interpretations Committee ("SIC") endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.
Basis for Opinion
We conducted our audit in accordance with the Regulations Governing Auditing and Attestation of Financial Statements of Financial Industry by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditor' s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Bank and its subsidiaries in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China ("the Code"), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
1. The assessment of loans impairmentPlease refer to Note(4) (F) "Financial Instruments" for related accounting policy, Note 5 (A) for accounting assumptions and estimates, and Note 6 (F) "Discount and loans–net" and Note 6 (AO) "Financial Risk Information" for details of loans impairment, respectively.
The management of the Bank and its subsidiaries assess its loans to determine the impairment in accordance with IFRS 9. For the credit impaired cases which impairment has occurred since initial recognition, the measurement is based on expected future cash flow. The amount of expected credit loss (ECL) for non-credit impaired cases is evaluated by identifying whether the credit risk has significantly increased at the reporting date. If the credit risk of non-credit impaired cases has not significantly increased, the 12-month expected credit loss should be adopted, if the credit risk of non-credit impaired cases has significantly increased, the lifetime credit loss evaluation should be adopted. Except for the methods mentioned above, the management of the Bank and its subsidiaries should inspect whether the amount of impairment provision is in compliance with the minimum level required by the authority. Both the future cash flows of credit impaired cases and the main parameters which are used in calculated the non-credit cases, such as probability of default (PD), loss given default (LGD), forward-looking factors, and the judgments of whether the credit risk has significantly increased, all involved significant judgments and estimations. The movement of related parameters will have significant impact on the assessment of loans impairment. Therefore, the assessment on the impairment of loans has been identified as a key audit matters in our audit.
How the matter was addressed in our audit
Our principal audit procedures included: understanding the methodology used by the management to assess the impairment of loans, and performing the relevant control procedures. For the credit impaired assessment, we conducted
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Ⅵ
sampling tests to evaluate the use of the original effective interest rate, the appropriateness of the recoverable amount of expected future cash flows and value of collateral. For non-credit impaired assessment, we assessed the impairment model adopted by the management and reviewed the appropriated of the calculation of the impairment parameters and verified the completeness of the loans portfolio via sampling. Meanwhile, we assessed the impaired amounts recognized by the management were in compliance with the related regulations issued by authority.
Other Matters
Taiwan Business Bank, Ltd, has prepared its parent-company-only financial statements as of and for the years ended December 31, 2018 and 2017, on which we have issued an unmodified opinion.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Public Held Banks, and with the IFRSs, IASs, IFRC, SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Bank and its subsidiaries' ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance (including the Audit Committee) are responsible for overseeing the Bank and its subsidiaries' financial reporting process.
Auditors' Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the 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 consolidated financial statements.
As part of an audit in accordance with 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 consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank and its subsidiaries' 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 and its subsidiaries' ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Bank and its subsidiaries to cease to continue as a going concern.
Taiwan Business Bank Annual Report 2018110
5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
6. Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
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 determined those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partners on the audit resulting in this independent auditors' report are CHUNG, TAN TAN and LEE, FENG HUI.
KPMG
Taipei, Taiwan (Republic of China) March 26, 2019
Notes to Readers
The accompanying consolidated financial statements are intended only to present the consolidated statement of financial position, financial performance and its cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China.
The independent auditors' report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors' report and consolidated financial statements, the Chinese version shall prevail.
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Ⅵ6. 2018 Consolidated Financial Statements and Notes
(English Translation of Consolidated Financial Statements Originally Issued in Chinese)
TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2018 and 2017(expressed in thousands of New Taiwan dollars)
AssetsDecember31,2018 December 31,2017
Amount % Amount %
11000 Cash and cash equivalents (Notes 6(A) and 7) $ 46,036,673 3 51,292,359 3
11500 Due from the Central Bank and call loans to banks (Notes 6(B) and 7)
86,980,274 5 101,342,356 7
12000 Financial assets at fair value through profit or loss (Note 6(C))
7,134,604 - 1,061,789 -
12100 Financial assets at fair value through other comprehensive income(Notes 6(G) and (Q))
73,164,201 5 - -
12200 Investment in debt instruments at amortized cost(Note 6(I))
261,470,496 16 - -
12500 Securities purchased under resell agreements (Notes 6(D))
2,386,518 - 3,998,104 -
13000 Receivables-net (Note 6(E)) 45,652,981 3 23,951,301 2
13200 Current Income tax assets 64,880 - 129,455 -
13500 Discounts and loans-net (Notes 6(F) and 7) 1,074,627,748 67 1,111,559,969 70
14000 Available-for-sale financial assets-net (Notes 6(H) and (Q))
- - 66,233,836 4
14500 Held-to-maturity financial assets-net (Note 6(J)) - - 202,967,083 13
15500 Other financial assets-net (Note 6(K)) 17,971 - 2,159,191 -
18500 Premises and equipment-net (Note 6(L)) 14,309,738 1 14,226,866 1
19000 Intangible assets-net 286,054 - 274,349 -
19300 Deferred income tax assets-net (Note 6(Y)) 1,646,991 - 1,222,464 -
19500 Other assets-net (Note 6(M)) 5,261,326 - 3,674,849 -
Total assets $ 1,619,040,455 100 1,584,093,971 100
Taiwan Business Bank Annual Report 2018112
Liabilities and equity
December31,2018 December 31,2017
Amount % Amount %
Liabilities
21000 Deposits from the Central Bank and other banks (Notes 6(N) and 7)
$ 91,314,543 6 93,529,770 6
21500 Due to the Central Bank and other banks (Note 6(O))
591,988 - 31,464 -
22000 Financial liabilities at fair value through profit or loss (Notes 6(P) and (T))
9,339,273 1 3,732,481 -
22500 Securities sold under repurchase agreements (Note 6(Q))
1,657,706 - 1,105,596 -
23000 Payables (Note 6(R)) 58,674,131 4 36,630,052 2
23200 Current income tax liabilities 1,017,575 - 62,495 -
23500 Deposits and remittances (Notes 6(S) and 7) 1,311,041,103 81 1,316,023,711 83
24000 Financial debentures (Note 6(T)) 47,450,000 3 41,000,000 3
25500 Other financial liabilities (Note 6(U)) 7,507,715 - 10,120,545 1
25600 Provision for liabilities (Note 6(V)) 3,565,727 - 3,515,351 -
29300 Deferred income tax liabilities (Note 6(Y)) 880,738 - 881,318 -
29500 Other liabilities (Note 6(W)) 1,146,937 - 1,643,515 -
Total liabilities 1,534,187,436 95 1,508,276,298 95
Equity parent company
31101 Common stock (Note 6(X)) 63,938,802 4 61,479,617 4
Retained earnings:
32001 Legal reserve (Note 6(X)) 10,020,013 1 8,569,864 1
32003 Special reserve (Note 6(X)) 516,555 - 1,240,588 -
32005 Undistributed earnings (accumulated deficit) (Note 6(X))
7,470,985 - 4,833,832 -
32500 Other items in equity 2,906,664 - ( 306,228 ) -
Total equity 84,853,019 5 75,817,673 5
Total liabilities and equity $ 1,619,040,455 100 1,584,093,971 100
(The accompanying notes are an integral part of the consolidated financial reports.)
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Ⅵ(English Translation of Consolidated Financial Statements Originally Issued in Chinese)
TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIESConsolidated Statements of Comprehensive Income
For the years ended December 31, 2018 and 2017(expressed in thousands of New Taiwan dollars, except earnings per share)
107年度 106年度 變動百
金 額 % 金 額 % 分比%
41000 Interest revenue(Notes 6(AC) and 7) $ 28,287,358 123 24,782,215 119 1451000 Less:Total interest expenses(Notes 6(AC) and 7) (11,089,482 ) (48 ) (9,356,793 ) (45 ) 19
Net interest income 17,197,876 75 15,425,422 74 11Non-interest income
49100 Service fee and commision income(Notes 6(AD) and 13) 3,659,850 16 3,690,537 18 (1 )49200 Gains on financial assets or liabilities at fair value through profit
or loss - net(Note 6(AE)) 1,029,180 4 1,036,512 5 (1 )
49300 Realized gain on available-for-sale financial assets(Note 6(AG)) - - 109,753 - (100 )49310 Realized gain on financial assets measured at other
comprehensive income(Note 6(AF)) 374,849 2 - - -
49450 Gains on disposal of financial assets measured at amortized cost 130 - - - -49600 Foreign exchange gain 478,887 2 376,069 2 2749700 (Impairment loss on asssts) reversal of impairment loss on
aseets(Note 6(AH)) (28,297 ) - - - -
49800 Net other non-interest income (Note 6(AI)) 93,362 - (120,657 ) (1 ) 17749805 Net profit on financial assets measured at cost - - 141,240 1 (100 )49831 Securities brokering income-net 221,110 1 203,819 1 8
Net revenue 23,026,947 100 20,862,695 100 1058200 Bad debt expenses, commitment and guarantee liability
provision(Note 6(AJ)) (794,134 ) (3 ) (3,028,711 ) (15 ) (74 )
Operating expenses58500 Employee benefits expenses(Notes 6(AK) and 12) (8,325,594 ) (36 ) (7,460,684 ) (36 ) 1259000 Depreciation and amortization expense(Notes 6(AL) and 12) (472,783 ) (2 ) (417,760 ) (2 ) 1359500 Other general and administrative expense(Note 6(AM)) (4,236,019 ) (19 ) (4,084,439 ) (19 ) 4
Total operating expenses (13,034,396 ) (57 ) (11,962,883 ) (57 ) 961001 Income from continuing operations before income tax 9,198,417 40 5,871,101 28 5761003 Income tax expenses (Note 6(Y)) (1,557,875 ) (7 ) (831,177 ) (4 ) (87 )
Net income 7,640,542 33 5,039,924 24 5265000 Other comprehensive income:65200 Items that will not to be reclassified into profit or loss65201 Remeasurements of defined benefit plans (174,907 ) - (249,419 ) (1 ) 3065204 Revaluation gain from investments in equity instruments
measured at fair value through other comprehensive income 226,956 1 - - -
65220 Income tax related to items that will not to be reclassified into profit or loss (Note 6(Y))
71,895 - 42,401 - 70
Total items that will not to be reclassified into profit or loss 123,944 1 (207,018 ) (1 ) 160
65300 Items that are or may be reclassified subsequently to profit or loss
65301 Difference of foreign exchange in translating financial statements of foreign operating units
330,032 1 (982,775 ) (5 ) 134
65302 Unrealized gains on available-for-sale financial assets-net - - 1,540,838 8 (100 )65309 Revaluation gains on investment in debt instrument measured
at fair value through other comprehensive income 156,183 1 - - -
65310 (Impairment loss on) reversal of investments in debt instruments measured at fair value through other comprehensive income
8,363 - - - -
65320 Income tax related to items that are or may be reclassified to profit or loss (Note 6(Y))
(35,234 ) - 165,191 1 (121 )
Total items that are or may be reclassified subsequently to profit or loss
459,344 2 723,254 4 (36 )
65000 Other comprehensive income 583,288 3 516,236 3 13Total comprehensive income $ 8,223,830 36 5,556,160 27 48Earnings per share (in NT dollar)(Note 6 (AA)) Basic earnings per share (in NT dollar) $ 1.19 0.79Diluted earnings per share (in NT dollar) $ 1.18 0.78
Taiwan Business Bank Annual Report 2018114
(English Translation of Consolidated Financial Statements Originally Issued in Chinese)
TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES
Consolidated Statements of Changes in Equity
For the years ended December 31, 2018 and 2017 (Expressed In thousands of New Taiwan dollars)
Equity attributed to the parent company
Other item in equity
Retained earnings Difference of foreign
exchange in translating financial
statements of foreign operating
units
Unrealized gains from financial
assets measuredat fair value
through other comprehensive
income
Unrealized gains and losses on
available for sale financial
assets Common
stock Legal
reserve Special reserve
Undistributed earnings Total Total
Balance ─ January 1, 2017 $ 59,688,949 7,088,772 185,128 4,936,973 12,210,873 (19,637 ) - (1,009,845 ) 70,870,340
Net Income for the year ended December 31, 2017
- - - 5,039,924 5,039,924 - - - 5,039,924
Other comprehensive income (losses) for the year ended December 31, 2017
- - - (207,018 ) (207,018 ) (815,703 ) - 1,538,957 516,236
Total comprehensive income for the year ended December 31, 2017
- - - 4,832,906 4,832,906 (815,703 ) - 1,538,957 5,556,160
Earnings appropriation and distribution
Legal reserve appropriated - 1,481,092 - (1,481,092 ) - - - - -
Special reserve appropriated - - 1,055,460 (1,055,460 ) - - - - -
Common cash dividend - - - (608,827 ) (608,827 ) - - - (608,827 )
Common stock dividend 1,790,668 - - (1,790,668 ) (1,790,668 ) - - - -
Balance ─December 31, 2017 61,479,617 8,569,864 1,240,588 4,833,832 14,644,284 (835,340 ) - 529,112 75,817,673
Effects of retrospective application of new standards
- - - (98,187 ) (98,187 ) - 3,086,469 (529,112 ) 2,459,170
Balance at January 1, 2018 after adjustments
61,479,617 8,569,864 1,240,588 4,735,645 14,546,097 (835,340 ) 3,086,469 - 78,276,843
Net Income for the year ended December 31, 2018
- - - 7,640,542 7,640,542 - - - 7,640,542
Other comprehensive income (losses) for the year ended December 31, 2018
- - - (103,012 ) (103,012 ) 294,218 392,082 - 583,288
Total comprehensive income for the year ended December 31, 2018
- - - 7,537,530 7,537,530 294,218 392,082 - 8,223,830
Earnings appropriation and distribution
Legal reserve appropriated - 1,450,149 - (1,450,149 ) - - - - -
Reversal of special reserve - - (724,033) 724,033 - - - - -
Common cash dividend - - - (1,647,654 ) (1,647,654 ) - - - (1,647,654 )
Common stock dividend 2,459,185 - - (2,459,185 ) (2,459,185 ) - - - -
Disposal of investments in equity instruments designated at fair value through other comprehensive income
- - - 30,765 30,765 - (30,765 ) - -
Balance ─December 31, 2018 $ 63,938,802 10,020,013 516,555 7,470,985 18,007,553 (541,122 ) 3,447,786 - 84,853,019
(The accompanying notes are an integral part of the consolidated financial reports.)
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Ⅵ(English Translation of Consolidated Financial Statements Originally Issued in Chinese)
TAIWAN BUSINESS BANK, LTD. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the years ended December 31, 2018 and 2017 (Expressed In thousands of New Taiwan dollars)
For the years ended December 31,
2018 2017
Cash flows from operating activities:
Net income before tax $ 9,198,417 5,871,101
Adjustments:
Income and expenses items:
Depreciation expenses 373,990 337,771
Amortization expenses 98,793 79,989
Provision of bad debt expenses 708,787 3,019,425
Net loss on financial assets and liabilities at fair value through profit or loss 179,390 120,502
Interest expenses 11,089,482 9,356,793
Interest revenues (28,287,358 ) (24,782,215 )
Net change of provision for guarantee liabilities 58,710 9,286
Net change of other miscellaneous provision for liabilities 26,637 109,273
Losses on disposal and retirement of premises and equipment 1,155 1,972
Impairment loss on financial assets 28,297 -
Other - (276,880 )
Subtotal of income and expense items (15,722,117 ) (12,024,084 )
Change in Operating Assets and Liabilities:
Net Changes in Operating Assets:
Decrease (increase) in due from the Central Bank and call loans to banks 14,352,507 (10,723,869 )
(Increase) decrease in financial assets at fair value through profit or loss (6,012,905 ) 284,263
Decrease (increase) in securities purchased under resell agreements 1,611,586 (3,378,903 )
(Increase) decrease in receivables (21,399,195 ) 36,157
Decrease (increase) in discounts and loans 36,317,199 (69,501,470 )
Decrease (increase) in other financial assets 102,084 (59,822 )
Increase in other assets (719,250 ) (971,840 )
Net change in operating assets 24,252,026 (84,315,484 )
Net Change in Operating Liabilities:
(Decrease) increase in deposits from the Central Bank and other banks (2,215,227 ) 17,711,913
Increase in financial liabilities at fair value through profit or loss 5,367,493 3,495,360
Decrease in provisions for lawsuit - (466,884 )
Increase (decrease) in securities sold under repurchase agreements 552,110 (1,653,309 )
Taiwan Business Bank Annual Report 2018116
For the years ended December 31,
2018 2017
Increase in payables $ 21,184,352 $ 1,020,580
(Decrease) increase in deposits and remittances (4,982,608 ) 62,219,234
Decrease in other financial liabilities (2,603,441 ) (690,408 )
(Decrease) increase in provision for employee benefits (257,144 ) 39,039
Net Change in Operating Liabilities 17,045,535 81,675,525
Net Change in Operating Assets and Liabilities 41,297,561 (2,639,959 )
Sum of adjustments 25,575,444 (14,664,043 )
Cash provided by (used in) operating activities 34,773,861 (8,792,942 )
Interest collected 27,943,576 24,808,273
Interest paid (10,608,976 ) (9,159,915 )
Income tax paid (547,357 ) (800,310 )
Net Cash Flow Provided By Operating Activities 51,561,104 6,055,106
Cash Flows from Investing Activities:
Purchase of financial assets measured at fair value through other comprehensive income
(4,153,866 ) -
Purchase of investment in debt instruments at amortized cost (56,422,615 ) -
Disposal of available-for-sale financial assets - 8,635,810
Purchase of hold-to-maturity financial assets - (10,443,824 )
Purchase of premises and equipment (451,166 ) (469,381 )
Disposal of premises and equipment 195 66
(Increase) decrease in guarantee deposits paid (537,185 ) 300,272
Purchase of intangible assets (110,361 ) (146,591 )
Net Cash Flows Used in Investing Activities (61,674,998 ) (2,123,648 )
Cash Flows from Financing Activities:
Increase in due to the Central Bank and other banks 560,524 31,464
Issuance of financial debentures 6,450,000 5,300,000
Redemption of financial debentures - (7,050,000 )
Increase in guarantee deposits received 52,870 185,129
Decrease in lease payable (9,389 ) (8,192 )
Decrease in other liabilities (549,448 ) (21,620 )
Cash dividends (1,647,654 ) (608,827 )
Net Cash Provided by (Used in) Financing Activities 4,856,903 (2,172,046 )
Foreign exchange effect 1,305 (32,001 )
Net (decrease) increase in cash and cash equivalents (5,255,686 ) 1,727,411
Cash and cash equivalents, at the beginning of the period 51,292,359 49,564,948
Cash and cash equivalents, at the end of the period $ 46,036,673 51,292,359
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Ⅵ(English Translation of Consolidated Financial Statements Originally Issued in Chinese)
TAIWAN BUSINESS BANK, LTD.AND SUBSIDIARIES
Notes to the Consolidated Financial Statements For the years ended December 31, 2018 and 2017
(expressed in thousands of New Taiwan dollars unless otherwise stated)
1. COMPANY HISTORYTAIWAN BUSINESS BANK, LTD. (the "Bank") was formerly a general savings union known as "Taiwan Mutual
Financing Bank" or "Tai-Shio Mutual Financing Bank" when it was established in 1915. After several mergers and
acquisitions, it was renamed as Taiwan Business Bank, Ltd. in order to finance and provide banking assistance to
small and medium-size businesses on July 1, 1976. The Bank's major lines of business are the following:
(A) As prescribed by the Banking Law, provides professional services tailored to the needs of small and medium-
size businesses;
(B) Trust and securities brokerage businesses as approved by the relevant authority;
(C) International banking business; and
(D) Other relevant businesses as authorized by the relevant authority in-charge.
As of December 31, 2018, the Bank not only sets up the banking dept., international dept., securities dept. and
trust dept. under head office but also has 124 domestic branches, 1 offshore banking unit, 8 overseas branches, 1
oversea representative office and 17 securities brokerage locations.
The Bank became listed on the Taiwan Stock Exchange on January 3, 1998.
Under the "Statute for Privatization of State Enterprises" and upon the approval of Taiwan Province Government,
the shares of the Bank owned by the provincial government were sold to the public. In line with privatization of the
three other major Taiwan province government owned run commercial banks, the Bank had completed its own
privatization on January 22, 1998.
2. APPROVAL DATE AND PROCEDURES OF THE CONSOLIDATED FINANCIAL STATEMENTSThese consolidated financial statements were authorized for issuance by the Board of Directors on March 26, 2019.
3. NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS ADOPTED
(a) The impact of the International Financial Reporting Standards ("IFRSs") endorsed by the Financial Supervisory Commission, R.O.C. ("FSC") which have already been adopted.
The following new standards, interpretations and amendments have been endorsed by the FSC and are
effective for annual periods beginning on or after January 1, 2018.
New, Revised or Amended Standards and Interpretations Effective date per IASB
Amendment to IFRS 2 "Clarifications of Classification and Measurement of Share-based Payment Transactions" January 1, 2018
Amendments to IFRS 4 "Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts" January 1, 2018
IFRS 9 "Financial Instruments" January 1, 2018
Taiwan Business Bank Annual Report 2018118
New, Revised or Amended Standards and Interpretations Effective date per IASB
IFRS 15 "Revenue from Contracts with Customers" January 1, 2018
Amendment to IAS 7 "Statement of Cash Flows -Disclosure Initiative" January 1, 2017
Amendment to IAS 12 "Income Taxes- Recognition of Deferred Tax Assets for Unrealized Losses" January 1, 2017
Amendments to IAS 40 "Transfers of Investment Property" January 1, 2018
Annual Improvements to IFRS Standards 2014–2016 Cycle:
Amendments to IFRS 12 January 1, 2017
Amendments to IFRS 1 and Amendments to IAS 28 January 1, 2018
IFRIC 22 "Foreign Currency Transactions and Advance Consideration" January 1, 2018
Except for the following items, the Taiwan Business Bank, Ltd. believes that the adoption of the above
IFRSs would not have any material impact on its consolidated financial statements. The extent and impact of
signification changes are as follows:
(i) IFRS 9 "Financial Instruments"
IFRS 9 replaces IAS 39 "Financial Instruments: Recognition and Measurement" which contains
classification and measurement of financial instruments, impairment and hedge accounting.
As a result of the adoption of IFRS 9, The Bank and its subsidiaries adopted the consequential
amendments to IAS 1 "Presentation of Financial Statements", which requires the impairment of debt
investments at fair value through other comprehensive income and debt instruments measured at
amortized cost to be recognized in impairment of assets, the impairment of loan commitment recognized
in bad debt expenses and guarantee liability provisions. In addition, The Bank and its subsidiaries adopted
the amendments to IFRS 7 "Financial Instruments: Disclosures", disclosure the information in 2018, but
generally it has not been applied to the comparative information.
The Bank and its subsidiaries apply to IFRS 9, resulting the significant accounting policies changes are as
follows:
1) Classification of financial assets and financial liabilities
IFRS 9 contains three principal classification categories for financial assets: measured at amortized
cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss
(FVTPL). The classification of financial assets under IFRS 9 is generally based on the business
model in which a financial asset is managed and its contractual cash flow characteristics. The
standard eliminates the existing IAS 39 categories of held to maturity, available for sale financial
assets, financial assets carried at cost and debt instrument with no active market. Under IFRS 9,
derivatives embedded in contracts where the host is a financial assets in the scope of the standard
are never bifurcated. Instead, the hybrid financial instrument as a whole is assessed for classification.
For an explanation of how the Bank and its subsidiaries classifies and measures financial assets and
accounts for related gains and losses under IFRS 9, please refer to Note 4(F).
The adoption of IFRS 9 didn't have any significant impact on the Bank and its subsidiaries' accounting
policies on financial liabilities.
2) Impairment of financial assets
IFRS 9 replaces the 'incurred loss' model in IAS 39 with a forward-looking 'expected credit loss'
(ECL) model. The new impairment model will apply to financial assets measured at amortized cost
or FVOCI, except for investments in equity instruments, lease receivables, contract assets and the
financial guarantee contracts. Under IFRS 9, the credit loss are recognized earlier than they are
under IAS 39. Please refer to Note 4 (F).
3) Transition
The adoption of IFRS 9 has been applied retrospectively, except as described below:
• Differences in the carrying amounts of financial assets resulting from the adoption of IFRS 9
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Ⅵ
are recognized in retained earnings and other equities as on 1 January 2018. Accordingly, the
information presented for 2017 does not generally reflect the requirements on IFRS 9 and therefore
is not comparable to the information presented for 2018 under IFRS 9.
• The following assessments have been made on the basis of the facts and circumstances that exist
at the date of initial application.
— The determination of the business model within which a financial asset is held.
— The designation and revocation of previous designations of certain financial assets and
financial liabilities as measured at FVTPL.
— The designation of certain investments in equity instruments not held for trading as at FVOCI.
• If the debt securities had low credit risk at the date of initial application of IFRS 9, The Bank and its
subsidiaries may assume that the credit risk on its assets has not increased significantly since its
initial recognition.
4) Classification of financial assets on the date of initial application of IFRS 9
The following table shows the original measurement categories under IAS 39 and the new
measurement categories under IFRS 9 for each class of the Bank and its subsidiaries' financial
assets as of January 1, 2018.
IAS 39 IFRS 9
Measurement categories Carrying Amount Measurement categories Carrying Amount
Financial Assets
Cash and cash equivalents Amortized costs $ 51,292,359 Amortized costs 51,292,359
Due from the Central Bank and call loans to banks
Amortized costs 101,342,356 Amortized costs 101,342,356
Financial assets at fair value through profit or loss
Fair value through profit or loss
1,061,789 Fair value through profit orloss
1,061,789
Securities purchased under resellagreements
Amortized costs 3,998,104 Amortized costs 3,998,104
Receivables–net Amortized costs (Loans and Receivables)
23,951,301 Amortized costs (Loans and Receivables)
23,947,845
Discounts and loans– net Amortized costs (Loans and Receivables)
1,111,559,969 Amortized costs (Loans and Receivables)
1,111,614,910
Available-for-sale financial assets-net
Fair value through other comprehensive income(Debt instrument)
$63,608,278 Fair value through othercomprehensive income
58,426,093
Amortized costs 5,251,768
Fair value through other comprehensive income(Equity instruments)
2,625,558 Fair value through othercomprehensive income
2,625,558
Held-to-maturity financial assets-net
Amortized costs 202,967,083 Fair value through othercomprehensive income
3,158,835
Amortized costs 199,816,594
Other financial assets-net
Amortized costs (Measured at cost)
2,035,121 Fair value through othercomprehensive income
4,416,710
Other assets-net Amortized costs (Guarantee deposits paid)
321,496 Amortized costs 321,496
Note1: The corporate debt securities categorized as available-for-sale under IAS 39 are held by The Bank and its subsidiaries' s treasury unit in a separate portfolio to provide interest income; however they may be sold to meet liquidity requirements arising in the normal course of business. The Bank and its subsidiaries considers that these securities are held within a business model whose objective is achieved both by collecting contractual cash flows and by selling securities. The corporate debt securities and the contractual terms of these financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. These assets have therefore been classified as financial assets at FVOCI under IFRS 9. An allowance for impairment of $24,495 (effects of tax for $213) was recognized in opening retained earnings and other equity on transition to IFRS 9 on January 1, 2018.
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Note2: The investment in debt instruments that were previously classified to available- for-sale under IAS 39. The Bank and its subsidiaries evaluated that in the past these securities were held within a business model whose objective is achieved by collecting the contractual cash flows, and they will be possessed in the same purpose. Therefore, The Bank and its subsidiaries has classified the assets to debt investments measured at amortized costs. An increase of $1,559 in allowance for impairment and a decrease of $71,142 in valuation losses were recognized in retained earnings and other equity on January 1, 2018 respectively upon transition to IFRS 9.
Note3: These equity securities represent investments that The Bank and its subsidiaries intends to hold for the long term for strategic purposes. As permitted by IFRS 9, The Bank and its subsidiaries has designated these investments at the date of initial application as measured at FVOCI.
Note4: The investment in debt instruments that were previously classified as held-to-maturity are now classified as financial assets measured at fair value through other comprehensive income under IFRS 9. The Bank and its subsidiaries assesses that these securities are held within a business model whose objective is achieved by both collecting the contractual cash flows and by selling securities, and for which the contractual cash flows are fully be paid for the principal and interests incurred. An increase of $909 in allowance for impairment and $80,344 in valuation gains were recognized under retained earnings and other equity on January 1, 2018 respectively upon transition to IFRS 9.
Note5: The investment in debt instruments that were previously classified as held-to-maturity are now classified at amortized cost. The Bank and its subsidiaries assesses that these securities are held within a business model whose objective is achieved by collecting the contractual cash flows, and for which the contractual cash flows are fully be paid for the principal and interests incurred. An increase of $71,089 (effects of income tax for $144) in the allowance for impairment was recognized in opening retained earnings on January 1, 2018 upon transition to IFRS 9.
Note6: These equity securities represent investment that The Bank and its subsidiaries intends to hold for the long term for strategic purposes. As permitted by IFRS 9, The Bank and its subsidiaries has designated these investments at the date of initial application as measured at FVOCI. An increase of $2,381,589 in the valuation gains was recognized in other equity on January 1, 2018 upon transition to IFRS 9.
Note7: The allowance for bad debts of the financial assets were assessed in "incurred loss" model under IAS 39. It will be replaced with "expected credit loss" model under IFRS 9. Therefore, an increase of $494 (effects of income tax for $2) in the allowance for impairment was recognized in retained earnings on January 1, 2018 upon transition to IFRS 9.
TAIWAN BUSINESS BANK, LTD AND ITS SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT’D)
Financial assets under IAS 39 have transferred to IFRS 9, the following table reconciles the carrying amounts of
financial assets on January 1, 2018December 31,
2017 IAS39 Carrying amount Reclassifications Remeasurements
January 1, 2018IFRS 9 Carrying
amount
January 1, 2018 Retained earnings
impacts
January 1, 2018 Other equity
impacts Note Measured at fair value through profit or lossFrom measured at fair value through profit or loss (IAS39) $ 1,061,789 - - 1,061,789 - -Measured at fair value through other comprehensive income
Additions-debt instruments: From available for sale (IAS39) 63,608,278 - - (24,495 ) 24,495 From amortized cost (IAS39) Additions-equity instruments:
- 3,079,400 79,435 (909 ) 80,344
From available for sale (IAS39) 2,625,558 - - - - From measured at cost (IAS39) - 2,035,121 2,381,589 - 2,381,589 Deduction-debt and equity instruments: From available for sale (IAS39) to amortized cost (IFRS9)
- (5,253,327 ) 71,142 - 71,142
Total changes in fair value through other comprehensive income
66,233,836 (138,806 ) 2,532,166 68,627,196 (25,404 ) 2,557,570
Amortized cost Additions: From held-to-maturity (IAS 39) 202,967,083 - (71,089 ) (71,089 ) - From other financial assets-measured at cost (IAS 39) 2,035,121 - - - - From available for sale (IAS 39) - 5,253,327 (1,559 ) (1,559 ) - Deduction: To measured at fair value through other comprehensive income (IFRS 9)
- (5,114,521 ) - - -
Total changes of amortized cost assets 205,002,204 138,806 (72,648 ) 205,068,362 (72,648 ) - The balance of financial assets, the total balance of reclassification and remeasurement on January 1, 2018
$ 272,297,829 - 2,459,518 274,757,347 (98,052 ) 2,557,570
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For financial assets that have been reclassified to the investment in debt instruments that measured at amortized cost ,
the following table shows their fair value as of December 31, 2018 and the fair value gain or loss that would have been
recognized if these financial assets had not been reclassified as part of the transition to IFRS 9.
For the year ended December 31, 2018
Reclassify available-for-sale financial assets as investment in debt investment at amortized cost
Fair value as of December 31, 2018 5,267,055
Other comprehensive income that should have been recognized if the financial assets had not been reclassified
98,448
The following table reconciles the allowance for impairments based on "incurred loss model" under IAS 39 to the
allowance for impairment based on "expected loss model" (ECL) under IFRS 9 on 1 January, 2018.
The balance of allowance of
impairment loss under IAS39 and
the amount of provision under
IAS37 Reclassifications Remeasurements
The balance of allowance of
impairment loss under IFRS9
Loans and receivables (IAS39) / Financial assets measured at amortized cost (IFRS9)Due from Central Bank and call loans to banks $ 3,562 - - 3,562
Receivables 95,043 - (27,619 ) 67,424
Discounts and loans 5,892,515 - (259,138 ) 5,633,377
Other financial assets-Non-accrual loans transferred from non-loan financial assets
47,133 - 8,535 55,668
Other financial assets-Exchange bills negotiated 1 - (1 ) -
Additional provision of impairment loss in accordance with "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/Non-accrual Loans"
6,315,492 - 231,452 6,546,944
Subtotal 12,353,746 - (46,771 ) 12,306,975
Available-for-sale financial assets (IAS39) /Financial assets measured at fair value through other comprehensive income (IFRS9)Available-for-sale financial assets - - 24,495 24,495
Available-for-sale financial assets (IAS39) / Financial assets measured at amortized cost (IFRS9)Available-for-sale financial assets - - 1,559 1,559
Held-to-maturity (IAS39)/ Financial assets measured at fair value through other comprehensive income (IFRS9)Held-to-maturity financial assets - - 909 909
Held-to-maturity (IAS39)/ Financial assets measured at amortized cost (IFRS9)Held-to-maturity financial assets - - 71,089 71,089
Financing commitment and guarantee reserveLoans (Financing commitment) - - 45,029 45,029
Credit cards (Financing commitment) - - 2,236 2,236
Guarantee receivables / Letter of credit receivables - - 70,820 70,820
Additional provision of impairment loss in accordance with"Regulations Governing the Procedures forBanking Institutions to Evaluate Assets and Deal with Nonperforming/ Non-accrual Loans"
156,523 - (70,820 ) 85,703
Subtotal 156,523 - 47,265 203,788
Total $ 12,510,269 - 98,546 12,608,815
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(b) The impact of IFRS endorsed by FSC but not yet effective
The following new standards, interpretations and amendments have been endorsed by the FSC and are
effective for annual periods beginning on or after January 1, 2019 in accordance with Ruling No. 1070324857
issued by the FSC on July 17, 2018:
New, Revised or Amended Standards and InterpretationsEffective date per
IASB
IFRS 16 "Leases" January 1, 2019
IFRIC 23 "Uncertainty over Income Tax Treatments" January 1, 2019
Amendments to IFRS 9 "Prepayment features with negative compensation" January 1, 2019
Amendments to IAS 19 "Plan Amendment, Curtailment or Settlement" January 1, 2019
Amendments to IAS 28 "Long-term interests in associates and joint ventures" January 1, 2019
Annual Improvements to IFRS Standards 2015–2017 Cycle January 1, 2019
Except for the following items, the The Bank and its subsidiaries believes that the adoption of the above
IFRSs would not have any material impact on its consolidated financial statements. The extent and impact of
significant changes are as follows:
(i) IFRS 16"Leases"
IFRS 16 replaces the existing leases guidance, including IAS 17 Leases, IFRIC 4 Determining whether
an Arrangement contains a Lease, SIC-15 Operating Leases – Incentives and SIC-27 Evaluating the
Substance of Transactions Involving the Legal Form of a Lease.
IFRS 16 introduces a single and an on-balance sheet lease accounting model for lessees. A lessee
recognizes a right-of-use asset representing its right to use the underlying asset and a lease liability
representing its obligation to make lease payments. In addition, the nature of expenses related to those
leases will now be changed since IFRS 16 replaces the straight-line operating lease expense with a
depreciation charge for right-of-use assets and interest expense on lease liabilities. There are recognition
exemptions for short-term leases and leases of low-value items. The lessor accounting remains similar to
the current standard – i.e. the lessors will continue to classify leases as finance or operating leases.
1) Determining whether an arrangement contains a lease
On transition to IFRS 16, The Bank and its subsidiaries can choose to apply either of the following:
• IFRS 16 definition of a lease to all its contracts; or
• a practical expedient that does not need any reassessment whether a contract is, or contains, a
lease.
• The Bank and its subsidiaries plans to apply the practical expedient to grandfather the definition of
a lease upon transition. This means that it will apply IFRS 16 to all contracts entered into before
January 1, 2019 and identified as leases in accordance with IAS 17 and IFRIC 4.
2) Transition
As a lessee, The Bank and its subsidiaries can apply the standard using either of the following:
• retrospective approach; or
• modified retrospective approach with optional practical expedients.
The lessee applies the election consistently to all of its leases.
On January 1, 2019, The Bank and its subsidiaries plans to initially apply IFRS 16 using the modified
retrospective approach. Therefore, the cumulative effect of adopting IFRS 16 will be recognized
as an adjustment to the opening balance at January 1, 2019, with no restatement of comparative
information.
When applying the modified retrospective approach to leases previously classified as operating
leases under IAS 17, the lessee can elect, on a lease-by-lease basis, whether to apply a number
of practical expedients on transition. The Bank and its subsidiaries chooses to elect the following
practical expedients:
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- Apply a single discount rate to a portfolio of leases with similar characteristics.
- Apply the exemption not to recognize the right-of-use assets and liabilities to leases with lease term
that ends within 12 months of the date of initial application.
- Exclude the initial direct costs from measuring the right-of-use assets at the date of initial
application.
- Use hindsight when determining the lease term if the contract contains options to extend or
terminate the lease.
3) So far, the most significant impact identified is that The Bank and its subsidiaries will have to
recognize the new assets and liabilities for the operating leases of its offices. The Bank and its
subsidiaries estimated that the right-of-use assets and the lease liabilities to increase by 911,838
thousand and 891,321 thousand respectively, as well as the prepaid rents to decrease by 20,517
thousand on January 1, 2019. No significant impact is expected for the finance leases. Besides, The
Bank and its subsidiaries does not expect the adoption of IFRS 16 to have any impact on its ability to
comply with the revised maximum leverage threshold loan covenant.
(c) The impact of IFRS issued by IASB but not yet endorsed by the FSC
As of the date, the following IFRSs that have been issued by the IASB, but have yet to be endorsed by the
FSC:
New, Revised or Amended Standards and Interpretations Effective date per IASB
Amendments to IFRS 3 "Definition of a Business" January 1, 2020
Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture"
Effective date to be determined by IASB
IFRS 17 "Insurance Contracts" January 1, 2021
Amendments to IAS 1 and IAS 8 "Definition of Material" January 1, 2020
The Bank and its subsidiaries assessed that the above IFRSs may not be relevant.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe significant accounting policies presented in the consolidated financial statements are summarized as follows.
The following accounting policies were applied consistently throughout the periods presented in the consolidated
financial statements.
(A) Statement of compliance
These consolidated financial statements have been prepared in accordance with the Regulations Governing
the Preparation of Financial Reports by Public Banks (hereinafter referred to as the Regulation) and the
International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and
SIC Interpretations endorsed and issued into effect by the Financial Supervisory Commission, ROC.
(B) Basis of preparation
(a) Basis of measurement
The consolidated financial statements have been prepared on a historical cost basis except for the
following material items in the statement of financial position:
(1) Financial instruments measured at fair value through profit or loss (including derivative instruments);
(2) Financial instrument measured at fair value through other comprehensive income;
(3) Available-for-sale financial assets are measured at fair value (applicable before the year ended
December 31, 2017 ) ; and
(4) The net defined benefit liability (asset) is recognized as fair value of plan assets, less present value of
defined benefit obligation and the effect of the asset ceiling in Note 4(M).
Taiwan Business Bank Annual Report 2018124
(b) Consolidation of financial statement
The consolidation financial statements include the headquarter and all the domestic branches, foreign
branches and its subsidiaries. The internal transactions within the headquarter, the domestic branches
and the foreign branches are offset when preparing the consolidated financial statement.
(c) Functional and presentation currency
The functional currency of each entities is determined based on the primary economic environment in
which the entities operate. The consolidated financial statements are presented in New Taiwan Dollar,
which is the Bank's functional currency. All financial information presented in New Taiwan Dollar has been
rounded to the nearest thousand.
(C) Basis of consolidation
(a) Subsidiary
A subsidiary is an enterprise controlled by the Bank. The financial statements of subsidiaries are included
in the consolidated financial statements from the date that control commences until the date that control
ceases.
Gains or losses applicable to the non-controlling interests in a subsidiary are allocated to the non-
controlling interests even if doing so causes the non-controlling interests to have a deficit balance.
(b) Elimination of inter-group transaction
Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group
transactions are eliminated in preparing the consolidated financial statements. The unrealized profits
arising from the transactions with the investments under the equity method are eliminated to the extent of
the percentage of shares possessed by the group over the investee. The unrealized losses are eliminated
in the same way as the unrealized profit, but only under the circumstances that there are no evidences of
impairment.
List of subsidiaries in the consolidated financial statements
Shareholding (Holding %)
Established location
Main business scope
December 31, 2018
December 31, 2017
Taiwan Business Bank Insurance Agency Co., Ltd.
Taiwan Agent of personal insurance
100 100
Taiwan Business Bank PropertyInsurance Agency Co., Ltd.
Taiwan Agent of property insurance
100 100
TBB International Leasing Co., Ltd. Taiwan Leasing business 100 100
Taiwan Business Bank InternationalLeasing Co., Ltd.
China Leasing business 100 100
TBB (Cambodia) Microfinance Institution Plc
Cambodia Financial company 100 100
TBB Venture Capital Co., Ltd. Taiwan Investing business 100 -
(D) Foreign currency
(a) Foreign currency transaction
Transactions in foreign currencies are translated to the respective functional currencies of Group entities
at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign
currencies at the reporting date are retranslated to the functional currency at the exchange rate of Bank
of Taiwan at 10 AM. The foreign currency gain or loss on monetary items is the difference between
amortized cost in the functional currency at the beginning of the period adjusted for the effective interest
and payments during the period, and the amortized cost in foreign currency translated at the exchange
rate at the end of the period.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are
retranslated to the functional currency at the exchange rate at the date that the fair value was determined.
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Non-monetary items in a foreign currency that are measured based on historical cost are translated
using the exchange rate at the date of translation. Foreign currency differences arising on retranslation
are recognized in profit or loss, except for the equity instruments measured at fair value through other
comprehensive income (Be identified as available-for-sale before the year ended December 31, 2017)
which are recognized in other comprehensive income arising on the retranslation.
(b) Foreign operations
The income and expenses of foreign operations, excluding foreign operations in hyperinflationary
economies, are translated to the Bank and its subsidiaries' functional currency(not the currency under
highly inflation economy) by the following procedures:
(1) Assets and liabilities are translated at the date of the statement of financial position;
(2) Profit and loss are translated at the average rate (unless the exchange rate of the period fluctuates
intensively, then it applies the exchange rate on the trade date);
(3) Foreign currency differences are recognized in other comprehensive income.
All the translation differences arising from above procedures are presented in the foreign currency
translation reserve in equity. The exchange difference from translating net investments in foreign
operations is recognized in other comprehensive income. When a foreign operation is wholly or partially
disposed, the cumulative amount in the translation reserve related to that foreign operation is reclassified
to profit or loss as part of the gain or loss on disposal.
(E) Cash and cash equivalent
Cash and cash equivalent comprise cash on hand, petty cash, foreign currency on hand and cash in banks,
but excludes those items which are designated for specific purposes or restricted by contracts and law.
(F) Financial Instruments
All financial assets and liabilities of the Bank and its subsidiaries include derivative instruments, which are
according to the international financial reporting standards approved and issued by the FSC. They are
recognized on the consolidated balance sheet and are measured by the classification of the assets.
The routine transactions of financial assets are based on the trade-date accounting. The Bank and its
subsidiaries shall reclassify all affected financial assets only when it changes its business model for managing
their financial assets.
(a) Financial assets (applicable from January 1, 2018)
(1) Investment in debt instruments measured at amortized cost
A financial asset is measured at amortized coat if it meets both of the following conditions and is not
designated as at FVTPL:
• it is held within a business model whose objective is to hold assets to collect contractual cash
flows.
• its contractual terms give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
A financial asset measured at amortized cost is initially recognized at fair value, plus any directly
attributable transaction costs. These assets are subsequently measured at initial recognition amount
plus/minus accumulated amortization which is calculated using the effective interest method and the
loss allowance measured at amortized cost. Interest income, foreign exchange gains and losses, and
impairment loss, are recognized in profit or loss. Any gain or loss on derecognition is recognized in
profit or loss.
(2) Financial assets at fair value through other comprehensive income (FVOCI)
A debt investment is measured at FVOCI if it meets both of the following conditions and is not
designated as at FVPTL.
• it is held within a business model whose objective is achieved by both collecting contractual cash
flows and selling financial assets.
Taiwan Business Bank Annual Report 2018126
• its contractual terms give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Bank and its subsidiaries
may irrevocably elect to present subsequent changes in the investment's fair value in other
comprehensive income. This election is made on an investment-by-investment basis.
A financial asset measured at FVOCI is initially recognized at fair value, plus any directly attributable
transaction costs. These assets are subsequently measured at fair value. Interest income calculated
using the effective interest method, foreign exchange gains and losses, and impairment losses,
derived from debt investments are recognized as income in profit or loss, whereas dividends derived
from equity investments are recognized as income in profit or loss, unless the dividend clearly
represents a recovery of part of the cost of the investment. Other net gains and losses of financial
assets measured at FVOCI are recognized in OCI. On derecognition, gains and losses accumulated
in OCI of debt investments are reclassified to profit or loss. However, gains and losses accumulated in
OCI of equity investments are reclassified to retain earnings instead of profit or loss.
Dividend income derived from equity investments is recognized on the date that the Bank and its
subsidiaries' right to receive payment is established, which in the case of quoted securities is normally
the ex-dividend date.
(3) Financial assets at fair value through profit or loss (FVTPL)
All financial assets not classified as amortized cost or FVOCI described as above are measured at
FVTPL, including derivate financial assets. On initial recognition, the Bank and its subsidiaries may
irrevocably designate a financial asset, which otherwise meets the requirements to be measured at
amortized cost or at FVOCI, as at FVPTL if doing so eliminates or significantly reduces an accounting
mismatch that would otherwise arise.
Financial assets in this category are measured at fair value at initial recognition. Attributable
transaction costs are recognized in profit or loss as incurred. Subsequent changes that are measured
at fair value, which take into account any dividend and interest income, are recognized in profit or
loss.
(4) Loans and advances
Loans and advances are recorded as initial fair value (including direct transaction cost), and the
subsequent measurement recognizes interest income via effective interest rate method (if there is not
much difference then it can adopt straight line method) and is booked as per amortized cost deducted
by impairment loss. Interest accrual on loans and advances is suspended if either of the following
occurs:
• Payment of principal or interest is very likely not to be redeemed as per contracts.
• Non-performing loans are categorized as overdue loans in six months after the settlement period
ends.
(5) Impairment of financial assets
The Bank and its subsidiaries recognize loss allowances for expected credit losses on financial
assets measured at amortized cost, debt investments measured at FVOCI and loan commitments
and financial guarantee contracts. Equity instrument investment does not need to recognize expected
credit losses.
The Bank and its subsidiaries measures loss allowances at an amount equal to lifetime expected
credit loss (ECL), except for the following which are measured as 12-month ECL:
• debt securities that are determined to have low credit risk at the reporting date; and
• other debt securities, receivables, loan commitments and bank balances for which credit risk (i.e.
the risk of default occurring over the expected life of the financial instrument) has not increased
significantly since initial recognition.
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Lifetime ECLs are the ECLs that result from all possible default events over the expected life of
financial instrument.
12-month ECLs are the portion of ECLs that result from default events that are possible within the 12
month after the reporting date( or a shorter period if the expected life of the instruments is less than
12 months).
The maximum period considered when estimating ECLs is the maximum contractual period over
which the Bank and its subsidiaries is exposed to credit risk.
When determining whether the credit risk of financial asset has increased significantly since initial
recognition and when estimating ECL, the Bank and its subsidiaries considers reasonable and
supportable information that is relevant and available( without undue cost or effort). This includes both
quantitative and qualitative information and analysis, based on the Bank and its subsidiaries' historical
experience, informed credit assessment and including forward-looking information.
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present
value of all cash shortfalls. The difference between the cash flows due to the Bank and its subsidiaries
expect to receive. ECLs are discounted at the effective interest rate of the financial asset.
At each reporting date, the Bank and its subsidiaries assesses whether financial assets carried at
amortized cost, debt securities at FVOCI, loan commitments and contracts of financial guarantee are
credit-impaired. A financial asset is "credit-impaired" when one or move events that have a detrimental
impact on the estimated future cash flows of the financial asset have occurred. Evidence that a
financial assets is credit-impaired includes the following observable data:
• significant financial difficulty of the borrower or issuer;
• a breach of contract such as a default or being past due;
• the restructuring of a loan or advance by the borrowers on terms that the borrowers would not
consider otherwise;
• it is probable that the borrower will enter bankruptcy or other financial reorganization;
• the disappearance of an active market for a security because of financial difficulties; or
• to purchase or initiate financial assets at a substantial discount that reflects the credit losses that
have occurred.
Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying
amount of the assets. For debt securities at FVOCI, the loss allowance is charged to profit or loss and
is recognized in other comprehensive income.
In addition to estimate the allowance for bad debts and guarantee liability provisions as above,
according to "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and
Deal with Non-Performing and Non-Accrual Loans ", and considering the situation of their finance and
the default of principal and interest payment, the credit assets are classified as below:
• 1% of the first class credit assets deducted by the amount of credit assets from the government.
• 2% of the second class credit assets.
• 10% of the third class credit assets.
• 50% of the fourth class credit assets.
• 100% of the fifth class credit assets.
The allowance for bad debts and guarantee liability provisions were assessed by the previously stated
method shall not be less than the amount regulated by "Regulations Governing the Procedures for
Banking Institutions to Evaluate Assets and Deal with Non-Performing and Non-Accrual Loans.
Unrecoverable overdue loans and bad debts of the Bank and its subsidiaries, which are not able to be
recovered after the overdue collection process, are written-off after deducting the recoverable portion.
Upon approval by the board of directors and notification to supervisors, the excess amount of written
off loans over such allowance or reserve is reflected as a current loss.
Taiwan Business Bank Annual Report 2018128
(b) Financial liabilities (applicable from January 1, 2018)
(1) Financial liability measured at fair value through profit or loss, if one of the following conditions is met
• Financial liabilities held for trading
A financial liability is held for trading if it is acquired or incurred principally for the purpose of selling
or repurchasing it in the near term; on initial recognition it is part of a portfolio of identified financial
instruments that are managed together and for which there is evidence of a recent actual pattern of
short-term profit- taking. A derivative, except for a derivative that is a financial guarantee contract or
a designated and effective hedging instrument, is classified as instrument held for trading as well.
• Financial liabilities designated at fair value through profit or loss
Financial liabilities falling under this category are measured at fair value at initial recognition.
Attributable transaction costs are recognized in profit or loss as incurred. Subsequent changes
are measured at fair value and recognized in profit or loss. While for financial liabilities designated
at fair value through profit or loss, the changes in fair value generated from credit risk should be
recognized under other comprehensive income, except for avoiding accounting mismatch that
should be recognized in profit or loss.
(c) Reclassification of financial assets (applicable from January 1, 2018)
The Bank and its subsidiaries only reclassified all affected financial assets in accordance with the
regulations when changing the business model of managing financial assets. These changes are
expected to be extremely infrequent. In addition, the Bank and its subsidiaries must not reclassify any
financial assets and liabilities of equity instruments.
If the Bank and its subsidiaries reclassify financial assets in accordance with the aforesaid circumstances,
the reclassification shall be postponed from the reclassification date, and any previously recognized gains,
losses (including impairment losses or reversal of impairment loss) or interest shall not be restated.
(d) Financial assets and liabilities ( applicable before the years ended December 31, 2017)
(1) Financial assets and liabilities at fair value through profit or loss
Financial instruments in this category includes financial assets and liabilities classified as held-for-
trading and financial assets and liabilities designated as at fair value through profit or loss on initial
recognition. Financial instrument is classified in this category if acquired principally for the purpose
of selling or repurchasing in the short term. This type of financial asset is measured at fair value at
the time of initial recognition, and attributable transaction costs are recognized in profit or loss as
incurred. A regular way purchase or sale of financial assets shall be recognized and derecognized, as
applicable, using trade-date accounting. The derivative financial instruments held by the Bank and its
subsidiaries, except for those designated as hedging instruments, are classified under this account.
In addition, the Bank and its subsidiaries designates financial assets, other than ones classified as
held-for-trading, as at fair value through profit or loss at initial recognition under one of the following
situations:
A. A hybrid instrument contains one or more embedded derivatives;
B. Designation eliminates or significantly reduces a measurement or recognition inconsistency that
would otherwise arise; and
C. In accordance with the Bank and its subsidiaries' risk control policy or investment strategy, a set
of financial assets or liabilities and its components managed are also designated at fair value.
(2) Available for sale financial assets
Financial assets are measured at fair value and unrealized gains and losses thereon are recognized
as an adjustment item of equity. Financial instruments held by the Bank and its subsidiary are
recorded on the trade dates. Financial instruments are initially recognized at fair value plus transaction
costs. The impairment loss is recognized if there is evidence indicating that a decline in the value
of an investment is other than temporary. If the impairment loss in the following period is reduced,
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reversal of loss for equity investments is adjusted to equity, and reversal of loss for debt instrument is
credited to current income if the reduction of impairment loss resulted from a subsequent event.
(3) Held-to-maturity financial assets
Financial assets are measured at amortized cost and its interest income via effective rate. Financial
assets held by the Bank and its subsidiary are recorded on the trade dates and are initially recognized
at fair value plus transaction costs. The impairment loss is recognized if there is evidence indicating
that a decline in the value of an investment is other than temporary. If in a subsequent period, the
amount of the impairment loss decreases and the decrease can be related objectively to an event
occurring after the impairment was recognized, the previous recognized impairment loss is reversed
through the profit or loss. The carrying value after the reversal should not exceed the amortized
balance of the assets assuming no impairment loss was recognized.
(4) Financial assets measured at cost
Equity instruments with no quoted market price and whose fair value cannot be reliably measured are
stated at cost. The impairment loss is recognized if there is evidence indicating that a decline in the
value of an investment is other than temporary, and the impairment loss is irreversible.
(5) Debt instrument with no active market
These are debt instruments with no active market quote and measured at amortized cost. The
impairment loss is recognized if there is evidence indicating that a decline in the value of an
investment is other than temporary. If in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event occurring after the impairment
was recognized, the previous recognized impairment loss is reversed through the profit or loss .The
carrying value after the reverse should not exceed the amortized balance of the assets assuming no
impairment loss was recognized.
(6) Loans and advances
Loans and advances are recorded as initial fair value (including direct transaction cost), and the
subsequent measurement recognizes interest income via effective interest rate method (if there is not
much difference then it can adopt straight line method) and is booked as per amortized cost deducted
by impairment loss.
Interest accrual on loans and advances is suspended if either of the following occurs:
A. Payment of principal or interest is very likely not to be redeemed as per contracts.
B. Non-performing loans are categorized as overdue loans in six months after the settlement period
ends.
(7) Allowance for bad debts and provision for guarantee liabilities
Adequate allowance for bad debts is provided for loans and receivables by assessing whether there
is evidence indicating that a single financial asset or a group of financial assets are impaired per the "
Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-
Performing and Non- Accrual Loans," and the "Regulations Governing Institutions Engaging in Credit
Card Business".
For loans and receivables, the objective evidence should be identified first to reveal any impairment
existing for financial assets that are individually significant, and individual or collective impairment for
financial assets that are not individually significant. If no objective evidence of impairment exists in an
individually assessed financial asset, it should be included in a group of financial assets with similar
credit risk characteristics and collectively assessed for impairment. For assets which have recognized
impairment losses or continue to recognize impairment losses, the aforementioned assessment
method is not required.
If there is an objective evidence that an impairment loss on a financial asset has occurred, the amount
of the loss is recognized and measured via the difference between the asset' s carrying amount
and the present value of the estimated future cash flows discounted at the financial asset' s original
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effective interest rate; the amount of the loss should be recognized as bad debt expenses in profit
or loss of the current period. The estimate of future cash flows includes the recoverable amount of
collaterals and related insurances when determining the amount of the loss.
Above evidences of impairment loss usually include the following:
A. Significant financial difficulty occurs to the issuer or the debtor.
B. There are already default circumstances occur to the issuer or debtor, for example: default or
overdue payment of interest or principal.
C. The creditor give in to the debtor due to commercial or legal concern.
D. The debtor is likely to bankrupt or execute certain financial reorganization.
E. The issuer has financial difficulty and the financial assets cannot be traded in the active market.
F. The payment status of the debtor worsens.
G. The national and regional situation related to the default of the asset changes.
The Bank and its subsidiaries should recognize bad debt expenses when there is an impairment loss on
the financial assets measured at amortized cost.
The impaired amount is the difference between the book value of the financial asset and the sum of
estimated future cash flows discounted by the original effective rate. The book value of the financial
assets is reduced by the allowance account and the amount of impairment losses shall be recognized as
current gains and losses. When deciding the amount of the impairment loss, the estimate of future cash
flows should include the collaterals and the recoverable amount of relevant insurances.
According to "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal
with Non-Performing and Non-Accrual Loans ", the Bank shall provide the sum of the following to be the
allowance for bad debts:
• 1% of the first class credit assets deducted by the amount of credit assets from the government.
• 2% of the second class credit assets.
• 10% of the third class credit assets.
• 50% of the fourth class credit assets.
• 100% of the fifth class credit assets.
The allowance for bad debts assessed by the previously stated method shall not be less than the amount
regulated by "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal
with Non-Performing and Non-Accrual Loans ".
The Bank and its subsidiaries provide reserve for guarantee liabilities for off-balance- sheet non-
credit assets taking into account the regulation of "Regulations Governing the Procedures for Banking
Institutions to Evaluate Assets and Deal with Non-Performing and Non-Accrual Loans".
Unrecoverable overdue loans and bad debts, which are not able to be recovered after the overdue
collection process, are written-off after deducting the recoverable portion. Upon approval by the board of
directors and notification to supervisors, the excess amount of written off loans over such allowance or
reserve is reflected as a current loss.
Above amounts provided are booked under the account of bad debt expenses.
(e) Derecognition of financial assets and liabilities
The Bank and its subsidiaries shall derecognize a financial asset when the contractual rights to the
cash flows from the financial asset expire or when the Bank and its subsidiaries transfer substantially all
the risks and rewards of ownership of the financial assets. A financial liability should be removed from
the balance sheet when, and only when, it is extinguished, that is, when the obligation specified in the
contract is either discharged or cancelled or expires. If the bonds or stocks are taken as collateral, shall
not be derecognized because the Bank and its subsidiaries have retained substantially all the risks and
rewards of ownership. This is also applicable when the Bank and its subsidiaries conduct securitization
transactions and still retain some of the risks.
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(f) Financial instruments offsetting
A financial asset and a financial liability should be offset and the net amount reported when, and only
when, an entity has a legally enforceable right to set off the amounts; and intends either to settle on a net
basis, or to realize the asset and settle the liability simultaneously.
(G) Impairmentlossonnon-financialassets
The recoverable amount for an individual asset or a cash-generating unit is the higher of its fair value less
costs to sell or its value in use. If, and only if, the recoverable amount of an asset is less than its carrying
amount, the carrying amount of the asset shall be reduced to its recoverable amount. That reduction is an
impairment loss. An impairment loss shall be recognized immediately in profit or loss.
An impairment loss recognized in prior periods for an asset other than goodwill shall be reversed if, and only
if, there has been a change in the estimates used to determine the asset's recoverable amount since the last
impairment loss was recognized. If this is the case, the carrying amount of the asset shall be increased to its
recoverable amount, as a reversal of a previously recognized impairment loss.
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed
only to the extent that the asset' s carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortization, if no impairment loss had been recognized.
(H) Property, Plant and Equipment
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses. Cost includes expenditure that is directly attributed to the acquisition of the asset.
Subsequent expenditure is capitalized only when it is probable that the future economic benefits associated
with the expenditure will flow to the Group. The carrying amount of those parts that are replaced is
derecognized. Ongoing repairs and maintenance is expensed as incurred.
Land has an unlimited useful life and therefore is not depreciated. The estimated useful lives for the current
and comparative years of significant items of property, plant and equipment are as follows:
(a) Buildings 35-50 years
(b) Equipment and machine 3-8 years
(c) Lease asset 5 years
The Bank and its subsidiaries reviews and adjusts the residual value and the useful lives of assets at the end
of each fiscal year. Whenever there is evidence indicating that the carrying amount is unable to be recovered
due to environmental activities or changes, the Bank and its subsidiaries evaluate the impairment loss of
assets.
If the carrying amount is higher than the recoverable amount, the carrying amount is adjusted to the
recoverable amount. The recoverable amount is the fair value or the use value deducted by the disposition
expense.
The gain or loss on disposal is the difference between the carrying amount and net disposal proceeds,
and gain or loss on disposal shall be recognized as net gain or loss on non-other interest of consolidated
comprehensive income.
When purchasing machinery equipment and computer software, the education fee implied in the contract is
not recognized as the cost of machinery equipment and is recognized as expense.
For the lease contracts which regulate the Bank and its subsidiaries to restore the property to the original
status, the Group reviews the terms of each contract and calculated the present value of the restoration
expenses when signing the contracts. The decommissioning liability reserve is provided based on the
calculation and the discount rate is determined based on the Bank's policy.
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(I) Leasehold
Leases contract can be divided into operating lease contracts and financing (capital) lease contracts. If a
lease contract transfers almost all the risk and reward comes with the leasehold, the leasehold is considered
financing (capital) lease. If a lease contract does not transfers almost all the risk and reward comes with the
leasehold, the leasehold is considered operating lease.
Depreciation is calculated per the regulation of IAS 16 "Property, Plant and Equipment" and IAS 38 "Intangible
Assets". If there is no reason to be sure that the lessee will obtain the ownership of the assets at the end of
the lease period for financing leasehold, the assets shall be depreciated within the lease period or the durable
service time, whichever is shorter. The lease contracts of the Bank and its subsidiaries include operating lease
and financing lease.
(J) Deferred assets
The costs of installation for utilities, including electricity and water, as well as security facilities, are capitalized
and amortized equally over 5 years.
(K) Collateral assumed
Collaterals assumed are stated at the lower of net book value or net realizable value; i.e., the amount the
Bank receives when creditors cannot meet obligations and the collaterals and salvages are auctioned off.
Under FSC Letter Ruling (2)0948010856 on July 11, 2005, collateral assumed must be disposed before
December 31, 2005. If the Bank is unable to dispose the collateral assumed before December 31, 2005, it
reserves a provision for loss equal to the carrying value of the collateral assumed. On disposition of collateral,
the related provision is reversed. The selling price deducts the original book value of collateral assumed is
recognized as gain on sale of collateral assumed.
(L) Provisions
A provision is recognized if, as a result of a past event, the Bank and its subsidiaries has a present legal or
constructive obligation that can be estimated reliably, and it is probably that an outflow of economic benefits
will be required to settle the obligation. Provisions are determined by discounting the expected future cash
flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks
specific to the liability. Amortization of the discount is recognized as interest expense. Future operating loss
cannot be recognized as liability reserve.
Contingent liability refers to the possible obligation results from past events. The existence of contingent
liability can only be proved by whether one or more uncertain events which can not be controlled by the Bank
and its subsidiaries occurs or not. Contingent liability also refers to the current obligation results from a past
event, but not likely to cause outflow of economic resource to redeem the obligation or the amount of the
obligation cannot be measured reliably. The Bank and its subsidiaries do not recognized contingent liability
and disclose it per related regulations.
(M) Employeebenefit
(a) Short term employee benefit
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as
the related service is provided.
(b) Retirement benefit
The pension provision of the Bank and its subsidiaries includes defined contribution plan and defined
benefit plan. For the personnel of foreign offices, the Bank provides pension fund per the regulations of
the local authorities.
Defined contribution plan refers to the plan that the Bank and its subsidiaries annually provide certain
amount of money to funds to fulfill the obligation. The Bank and its subsidiaries provide pension based on
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compulsory obligation, contracts or voluntary will to public or private managed pension funds. If certain
pension fund fail to pay the employees the benefit which they deserve for the service they provided, the
Bank and its subsidiary do not hold legal or constructive obligation to pay additional provision. The Bank
and its subsidiaries recognize the pension fund provided as current pension cost on accrual basis.
The Bank' s net obligation in respect of defined benefit pension plans is calculated separately for each
plan by estimating the amount of future benefit that employees have earned in return for their service in
the current and prior periods; that benefit is discounted to determine its present value. Any unrecognized
past service costs and the fair value of any plan assets are deducted. The discount rate is the yield at
the reporting date on government bonds that have maturity dates approximating the terms of the Bank' s
obligations and that are denominated in the same currency in which the benefits are expected to be paid.
The calculation is performed annually by a qualified actuary using the projected unit credit method. When
the calculation results in a benefit to the Bank, the recognized asset is limited to the total of the present
value of economic benefits available in the form of any future refunds from the plan or reductions in future
contributions to the plan. In order to calculate the present value of economic benefits, consideration is
given to any minimum funding requirements that apply to any plan in the Bank and its subsidiaries. An
economic benefit is available to the Bank and its subsidiaries if it is realizable during the life of the plan, or
on settlement of the plan liabilities.
If the benefits of a plan are improved, the pension cost incurred from the portion of the increased benefit
relating to past service by employees, is recognized immediately in profit or loss.
The remeasurements of net defined benefit liability (asset) include:
(1) Actuarial gains and losses;
(2) Return on plan assets, excluding net interest on the net defined benefit liability (asset); and
(3) The effect of the asset ceiling, excluding net interest on the net defined benefit liability (asset).
The remeasurements of defined benefit liability (asset) are recognized as other comprehensive income
with a corresponding debit or credit to retained earnings in the period in which they occur.
Gains or losses on the curtailment or settlement of a defined benefit plan are recognized when the
curtailment or settlement occurs. The gain or loss on curtailment arises from any changes in the fair
value of plan assets, any changes in the present value of the defined benefit obligation, and any related
actuarial gains or losses and past service cost which had not previously been recognized.
(c) Deposits with favorable rate
The Bank provides deposits with favorable rate to employees, which include current employee fix
amount deposits with favorable rate and retired employee fix amount deposits with favorable rate.
The rate difference between the favorable rate and the market rate belongs to the category of employee
benefit.
According to article 28 of "Regulations Governing the Preparation of Financial Report by Public Banks",
the additional interests result from the difference between deposit with favorable rate and the deposits
with market interest rate shall be calculated by actuary per the regulations related to defined benefit
plan in IAS 19 . The parameters of actuarial assumptions shall follow the regulations of the competent
authority.
In accordance with the regulation of "Discussion of the employee benefit actuarial assumption related
matter for adopting IAS 19 with respect to the additional interest of employee deposits with favorable rate"
issued by the Banking Bureau, the difference between the actual payment and the estimated retirement
benefit obligation is deemed as changes in accounting estimate and is recognized in profit or loss.
(d) Termination benefits
Termination benefits are recognized as an obligation when the Group is demonstrably committed, without
realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the
normal retirement date, or to provide termination benefits as a result of an offer made to encourage
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voluntary redundancy. The Bank and its subsidiaries recognize liabilities when a formal irrevocable
termination project is undertaken or when benefit is provided for encouraging voluntary resignation. If
benefits are payable more than 12 months after the reporting period, then they are discounted to their
present value.
(N) Income tax
Income tax expenses refer to current and deferred income taxes. All current and deferred taxes shall be
recognized in profit or loss except for the items related to business combinations or recognized directly in
equity or other comprehensive income.
Current income tax includes tax payable or tax refundable on taxable income (loss) for the year calculated
using the statutory tax rate on the reporting date or the actual legislative tax rate, as well as tax adjustments
related to prior years.
Deferred income tax is measured and recognized based on the temporary difference between the carrying
amount of the assets and liabilities for financial reporting purpose and the amount served as the taxable
basis. It is measured by the tax rate which the assets expected to be realized or liabilities to be settled and is
based on tax rates that have been enacted or substantively enacted on the balance sheet date.
The land incremental tax results from the revaluation per relevant regulations is categorized as taxable
temporary difference and is recognized as deferred tax liabilities.
Deferred tax assets and liabilities may be offset against each other if the following criteria are met:
(a) The entity has the legal right to settle tax assets and liabilities on a net basis; and
(b) The taxing of deferred tax assets and liabilities fulfills one of below scenarios:
(1) Levied by the same taxing authority; or
(2) Levied by different taxing authorities, but where each such authority intends to settle tax assets and
liabilities (where such amounts are significant) on a net basis every year of the period of expected
asset realization or debt liquidation, or where the timing of asset realization and debt liquidation is
matched.
A deferred tax asset is recognized for the carry forward of unused tax losses, unused tax credits, and
deductible temporary differences to the extent that it is probable that future taxable profit will be available
against which the unused tax losses, unused tax credits, and deductible temporary differences can be
utilized. Such unused tax losses, unused tax credits, and deductible temporary differences are also
revaluated every year on the financial reporting date, and adjusted based on the probability that future
taxable profit will be available against which the unused tax losses, unused tax credits, and deductible
temporary differences can be utilized.
The surtax on undistributed earnings is recognized as current expense on the date when the stockholders
decide not to distribute the earnings in the annual meetings.
(O) Revenue recognition
Interest is recognized according to interest method. Interest accrual is suspended from the date when the loan
is reclassified to non-performing loan and only when the Bank and its subsidiaries receive cash, the revenue
is recognized.
The revenue of handling fee is recognized when cash collected or when the process of the profit are mostly
completed. In addition, for the individual loan which does not belong to labor service and the handling fee
is over 1% of the principal, the interest rate shall be adjusted from the original agreed interest rate to the
effective interest rate. For the individual loan which does not belong to the service and the handling fee is less
that 1% of the principal, the recognition of the revenue should be deferred and be recognized as revenue
during the loan period.
(P) Earnings per share (EPS)
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EPS is based on the weighted-average number of shares outstanding. In the event of capital increase through
capitalization of retained earnings, capital surplus, or employee bonuses, EPS is retroactively adjusted based
on the percentage of capital increase, regardless of the period when the incremental shares are outstanding.
The employee bonuses of the Bank and its subsidiaries issued by stocks were dilutive potential common
shares. If the potential common shares have a non-dilutive effect, the Bank and its subsidiaries should only
disclose the basic earnings per share. On the contrary, if the potential common shares have a dilutive effect,
the Bank and its subsidiaries should disclose both the basic and diluted earnings per share. In calculating
the diluted earnings per share, it is based on the assumption that all dilutive potential common shares are
outstanding, and therefore the net income and the shares outstanding shall be adjusted in accordance with
the calculation.
(Q) Operating segments
Operating segment is the component of the Bank and its subsidiaries that engages in business activities from
which it may earn revenues and incur expenses (including revenues and expenses relating to transactions
with other components of the Bank and its subsidiaries). The segment's operating results are reviewed
regularly by the Bank's chief operating decision maker to make decisions pertaining to the allocation of
resources to the segment and to assess the performance for which discrete financial information is available.
5. SIGNIFICANT ACCOUNTING ASSUMPTIONS AND JUDGMENTS, AND MAJOR SOURCES OF ESTIMATION UNCERTAINTYThe preparation of the consolidated financial statements in conformity with the Regulations and the IFRSs endorsed
by the FSC requires management to make judgments, estimates and assumptions that affect the application of the
accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ
from these estimates.
The management inspects estimates and basic assumptions continuously, changes in accounting estimate will be
recognized in the periods which the change occurred and future periods effected.
Information about critical judgments in applying accounting policies that have the most significant effect on the
amounts recognized in the consolidated financial statements is as following :
(A) Impairment losses on loans
The impairment of loans of the Bank and its subsidiaries was evaluated by identifying the credit risk of those
financial assets have significantly increased or not at the reporting date if the credit risk has not significant
incurred, the 12-month expected credit loss should be adopted to evaluate, or the lifetime credit loss
evaluation should be adopted.
To evaluate the expected credit losses for 12-month and lifetime, the Bank and its subsidiaries considers
the unfavorable changes of payment status or the economic conditions of the countries or areas related to
the default loans. When analyzing expected cash flows, the estimates by the management are based on the
pass losses experience from assets with similar credit risk characteristics. In order to reduce losses from
the difference between estimated and actual amount, the Bank and its subsidiaries has considered historical
experience, current economic conditions and forward-looking information at the reporting date to determine
the assumptions to be used in calculating the impairments and the select inputs.
(B) Retirementbenefit
The present value of the retirement benefit obligation is the actuarial result based on several assumptions.
Any change of the assumptions may influence the carrying amount of the retirement benefit obligation.
Taiwan Business Bank Annual Report 2018136
The assumptions applied to determine net pension cost (revenue) include the discount rate. The Bank and
its subsidiaries determine the appropriate discount rate at the end of each year and apply it to calculate
the present value of the future cash outflows which are to be paid to the retirement benefit obligation. To
determine the appropriate discount rate, the Bank and its subsidiaries should consider the interest rate of
high quality corporate bonds and government bonds. The currency of the retirement benefit shall be the
same as that of the high quality corporate bond or government bonds and the duration till maturity date shall
comply with the duration of the related pension obligation. Other significant assumptions of retirement benefit
obligation are based on the current market situation.
6. EXPLANATION OF SIGNIFICANT ACCOUNTS
(A) Cash and cash equivalents
December 31, 2018 December 31, 2017
Petty cash and revolving fund $ 9,463,764 9,129,276
Foreign currencies on hand 1,001,582 944,558
Checks for clearing 12,965,443 13,350,478
Due from other banks 22,605,884 27,868,047
Total $ 46,036,673 51,292,359
(B) Due from the Central Bank and call loans to banks
December 31, 2018 December 31, 2017
Due from the Central Bank $ 50,348,172 56,328,785
Deposits transferred to the Central Bank 74,869 76,720
Call loans to banks 36,557,233 44,936,851
Trust fund indemnity reserve deposited 80,000 70,000
Securities serving as trust fund indemnity reserve deposited (80,000 ) (70,000 )
Total $ 86,980,274 101,342,356
As of December 31, 2018 and 2017, in accordance with the Banking Law and the Central Bank Law, the
required reserve deposited by the Bank and its subsidiaries with the Central Bank amounted to $50,137,774,
and $56,131,096, of which $34,763,628, and $34,812,779 respectively, were restricted and such restriction
may only be lifted when the required reserve is adjusted to a lower amount.
Effective December 2000, in accordance with the amended "Rules Governing Adjustments to and Review of
Deposits in Financial Institutions and Reserve for Other Liabilities", the Bank provides the required additional
reserve on foreign currency deposits. As of December 31, 2018 and 2017, the required reserve with the
Central Bank amounted to $210,398 and $197,689 respectively, and its use was unrestricted.
As of December 31, 2018 and 2017, deposits collected on behalf of the armed forces, prisons, and other
national deposits were restricted.
Effective January 20, 2001, in accordance with the requirement of the Central Bank of China, the Bank and
its subsidiaries complies with Clause 34 of the Trust Law to treat the discretionary trust of investments in
overseas marketable securities as a default loss reserve. As of December 31, 2018 and 2017, the Bank
deposited marketable securities of $80,000, and $70,000 as trust fund reserves.
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Ⅵ(C) Financialassetsatfairvaluethroughprofitorloss
December 31, 2018 December 31, 2017
Financial assets designated at fair value through profit or loss:
Linked deposits $ 1,506,135 -
Overseas bonds 403,572 237,652
Financial assets at fair value through profit or loss, mandatorily measured at fair value:
Derivative instruments not used for hedging:
Foreign exchange forward contracts 5,687
Currency swap contracts 287,665
Foreign currency options-call 3,886
Stock index futures 30,452
Non-derivative financial assets
Commercial paper 4,581,217
Listed and OTC stocks 48,910
Beneficiary certificates 67,080
Financial debentures 200,000
Financial assets held for trading:
Derivative instruments not used for hedging:
Foreign exchange forward contracts 63,784
Currency swap contracts 241,588
Foreign currency options-call 8,621
Structured product options-call 81
Stock index futures 454
Non-derivative financial assets
Commercial paper 499,459
Beneficiary certificates 10,150
Total $ 7,134,604 1,061,789
Derivative financial instruments are used for hedging foreign exchange risk and interest rate risk arising from
operating, financing and investing activities. The Bank and its subsidiaries held derivative financial instruments
which did not apply to hedge accounting are as follows (financial assets reported as financial assets at fair
value through profit or loss, mandatorily measured at fair value on December 31, 2018 and as financial assets
held for trading on December 31, 2017) :
December 31, 2018
Amount of contracts (in thousands)
Currency Matured duration
Foreign exchange forward contracts $ 1,000 EUR 2019/1/24~2019/1/24
Foreign exchange forward contracts 672,346 JPY 2019/1/4~2019/4/22
Foreign exchange forward contracts 875,469 TWD 2019/1/4~2019/9/12
Foreign exchange forward contracts 27,352 USD 2019/1/31~2019/3/29
Foreign exchange forward contracts 5,252 CNY 2019/1/21~2019/3/15
Currency swap contracts 800 AUD 2019/1/2
Currency swap contracts 22,012 CAD 2019/1/25~2019/3/22
Currency swap contracts 2,565,277 CNY 2019/1/9~2019/11/1
Currency swap contracts 90,000 EUR 2018/12/31~2019/10/11
Currency swap contracts 18,200 GBP 2019/1/3~2019/2/25
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December 31, 2018
Amount of contracts (in thousands)
Currency Matured duration
Currency swap contracts $ 40,000 HKD 2019/1/23
Currency swap contracts 4,251,853 JPY 2019/1/7~2019/6/14
Currency swap contracts 30,000 NZD 2019/1/18~2019/2/19
Currency swap contracts 1,000 CHF 2019/2/15
Currency swap contracts 12,537,712 TWD 2019/1/2~2019/10/9
Currency swap contracts 3,258,522 USD 2019/1/2~2019/12/31
Currency swap contracts 2,137,013 ZAR 2018/12/31~2019/3/5
Option contracts-call 8,000 AUD 2019/1/29~2019/3/25
Option contracts-call 6,800 EUR 2019/1/4~2019/3/20
Option contracts-call 21,300 USD 2019/1/11~2019/9/27
Option contracts-put 8,000 AUD 2019/1/29~2019/3/25
Option contracts-put 6,800 EUR 2019/1/4~2019/3/20
Option contracts-put 21,300 USD 2019/1/11~2019/9/27
December 31, 2017
Amount of contracts (in thousands)
Currency Matured duration
Foreign exchange forward contracts $6,656 JPY 2018/4/3~2018/6/5
Foreign exchange forward contracts 1,742,481 TWD 2018/4/20~2018/8/17
Currency swap contracts 10,760 AUD 2018/1/2~2018/1/22
Currency swap contracts 27,285 CAD 2018/1/22~2018/3/16
Currency swap contracts 1,430,000 CNY 2018/1/4~2018/2/27
Currency swap contracts 139,000 EUR 2018/1/26~2018/12/31
Currency swap contracts 1,000 GBP 2018/2/27
Currency swap contracts 151,000 HKD 2018/1/3~2018/2/13
Currency swap contracts 13,222,385 JPY 2018/1/18~2018/5/8
Currency swap contracts 33,250 NZD 2018/1/4~2018/2/12
Currency swap contracts 5,000 SGD 2018/1/5
Currency swap contracts 14,893,793 TWD 2018/1/2~2018/12/28
Currency swap contracts 2,557,353 USD 2018/1/2~2018/5/2
Currency swap contracts 1,963,112 ZAR 2018/1/2~2018/2/26
Option contracts-call 2,000 AUD 2018/1/29
Option contracts-call 45,000 USD 2018/1/11~2018/11/1
Option contracts-put 2,000 AUD 2018/1/29
Option contracts-put 45,000 USD 2018/1/2~2018/12/31
(D) Securities purchased under resell agreements
December 31, 2018 December 31, 2017
Securities under resell agreements $ 2,386,518 3,998,104
Face amount 2,388,800 4,000,000
Resell period 2019.1.2~2019.1.3 2018.1.3~2018.1.12
Range of resell interest rate 0.62%~0.63% 0.38%~0.42%
Resell price $ 2,386,828 3,998,530
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Ⅵ(E) Receivables–net
December 31, 2018 December 31, 2017Interest receivable $ 3,300,752 2,953,720Acceptances receivable 1,411,879 1,694,044Accrued incomes 73,545 86,075Accounts receivable 950,935 577,647Accounts receivable factoring without recourse 566,451 512,299Spot exchange receivable-foreign currencies 36,539,337 15,317,678Refinancing guaranty deposits 13,025 -Guaranteed proceeds receivable from refinancing 10,968 -Receivable from credit card 1,300,607 1,261,322Receivable from security brokerage 43,252 90,981Settlement fund 337,174 61,723Installment receivables and leases 1,051,763 1,186,271Receivable from fail derivative instrument contracts - 9,119Notes receivables - 802Other receivables 189,023 307,380Sub-total 45,788,711 24,059,061Less: Allowance for bad debts (135,730 ) (107,760 )Net $ 45,652,981 23,951,301
The outstanding contract amount of financial assets that have been written off and still have recourse as of December 31, 2018 and 2017 were $77,039,223 and $77,229,642, respectively.The change in allowance for bad debts was as follows:
For the years ended December 31, 2018 2017
Beginning balance (according to IAS39) $ 107,760 112,735Adjustment of initial application of IFRS9 3,456 -Beginning balance (according to IFRS 9) 111,216 112,735Provision 40,120 20,243Write-off (16,607 ) (24,328 )Write-off recovered 31 -Foreign exchange 970 (890 )Ending balance $ 135,730 107,760
(F) Discounts and loans–net
December 31, 2018 December 31, 2017Import/export bills negotiated $ 502,839 251,330Bills and notes discounted 1,709,185 1,831,622Overdrafts 36,758 8,401Secured overdrafts 2,877,536 1,433,386Short-term loans 172,635,763 266,520,172Short-term secured loans 196,148,277 183,379,076Margin loans receivable 1,845,664 2,341,425Medium-term loans 135,528,776 118,666,041Medium-term secured loans 151,382,900 151,462,973Long-term loans 15,495,441 14,229,721Long-term secured loans 407,310,715 380,822,519Overdue loans 2,449,090 3,029,112Sub-total 1,087,922,944 1,123,975,778Less: Adjustment of discount and premium (261,045 ) (257,796 )Less: Allowance for bad debts (13,034,151 ) (12,158,013 )Net $ 1,074,627,748 1,111,559,969
Taiwan Business Bank Annual Report 2018140
The change in allowance for bad debts is as follows:
For the years ended December 31,
2018 2017
Beginning balance (according to IAS39) $ 12,158,013 12,549,963
Adjustment of initial application of IFRS9 (54,941 ) -
Beginning balance (according to IFRS 9) 12,103,072 12,549,963
Provision 704,605 3,549,074
Transfer out (44,688 ) (584,242 )
Write-off (2,626,396 ) (3,906,067 )
Write-off recovered 2,890,761 589,858
Foreign exchange 6,797 (40,573 )
Ending balance $ 13,034,151 12,158,013
(G) Financial asset at fair value through other comprehensive income
December 31, 2018
Debt instruments measured at fair value through other comprehensive income:
Government bonds $ 31,926,679
Corporate bonds 21,716,510
Overseas bonds 11,764,869
Subtotal 65,408,058
Equity instruments measured at fair value through other comprehensive income:
Listed and OTC stocks 3,500,614
Unlisted and non-OTC stocks 4,212,027
Real estate investment trusts 43,502
Subtotal 7,756,143
Total $ 73,164,201
1. Investment in debt instruments measured at fair value through other comprehensive income
The Bank and its subsidiaries assessed that the above bond investments were held within a business
model whose objective was achieved by both collecting contractual cash flows and selling financial assets.
The bond investments have been classified as the financial asset measured at fair value through other
comprehensive income since January 1, 2018. Some of the investment in debt instruments measured at
fair value through other comprehensive income are used as repurching condition. Please refer to Note 6 (Q)
for more details.
2. Investment in equity instruments measured at fair value through other comprehensive income
On January 1, 2018, the Bank and its subsidiaries designated the investments shown above as equity
securities as at fair value through other comprehensive income because these equity securities represent
those investment intending to hold for long-term for strategic purpose. These investments were classified
as available-for-sale financial assets on December 31, 2017. The unlisted and non-OTC securities have
been classified as financial assets measured at fair value through other comprehensive income since
January 1, 2018 and were recognized as other financial assets carried at cost on December 31, 2017.
The Bank and its subsidiaries designated the investments shown above as equity instruments as at fair
value through other comprehensive income, therefore, The Bank and its subsidiaries were recognized
$276,340 and $16,587 as dividend revenue for the year ended December 31, 2018 of equity instruments
and disposal equity instruments.
The Bank and its subsidiaries sell the investments which were designated as at fair value through other
comprehensive income due to assets allocation. The fair value of disposed is $368,739 and gains on
disposal is $30,765 for the year ended December 31, 2018. Thus, accumulated gains on disposal were
transferred from other equity to retained earnings.
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3. Please refer to Note 6(AO) for the credit risk (including the impairment in debt instruments) and market
risk information.
4. The Bank and its subsidiaries assessed the impairment of financial assets measured at fair value through
other comprehensive income as of December 31, 2018. The changes in allowance for credit losses
attribute to the financial assets were as follows:
For the year ended December 31, 2018
Beginning balance $ -
Adjustments of initial application of IFRS 9 25,404
Beginning balance (according to IFRS 9) 25,404
Provision 8,363
Foreign exchange (2 )
Ending balance $ 33,765
(H) Available-for-salefinancialassets–net
December 31, 2017
Government bonds $ 37,660,906
Corporate bonds 18,500,141
Overseas bonds 7,447,231
Listed and OTC stocks 2,625,558
Total $ 66,233,836
Please refer to Note 6(Q) for the information with regard to repurchase conditions for available-for-sale
financial assets shown above.
(I) Investment in debt instruments at amortized cost
December 31, 2018
Certificates of deposit with the Central Bank $ 165,150,000
Government bonds 34,922,034
Corporate bonds 19,229,940
Overseas bonds 41,889,974
Negotiable certificates of deposit 371,676
Subtotal 261,563,624
Less:Accumulated impairment (93,128 )
Total $ 261,470,496
The Bank and its subsidiaries assessed that these financial assets were held to maturity to collect the
contractual cash flows, which consisted solely of payments of principal and interest on principal amount
outstanding. Therefore, these investments were classified as financial assets measured at amortized cost on
January 1, 2018.
1. Please refer to Note 6(AO) for credit risk.
2. The pledged assets provided by the above investment in debt instruments at amortized cost were shown
follows:
December 31, 2018Reserve for provisional seizure by the court, international card payment reserve, trust claim reserve and operating guaranty funds
$ 869,100
Overseas branches required reserve of overdraft guarantee 64,544
Daylight overdraft guarantee (Certificates of deposit with the Central Bank ) 2,000,000
Guarantee for borrowing US dollars 23,000,000
Guarantee for borrowing JPY dollars 200,000
Total $ 26,133,644
Taiwan Business Bank Annual Report 2018142
3. The Bank and its subsidiaries assessed the impairment of investment in debt instruments at amortized cost as December 31, 2018. The changes in allowance for credit losses attribute to these financial assets were as follows:
For the year ended December 31, 2018
Beginning balance $ -Adjustments of initial application of IFRS 9 72,648Beginning balance (according to IFRS 9) 72,648Provision 19,934Foreign exchange 546Ending balance $ 93,128
4. Disposal gain(loss) on disposal investment in assets at amortized cost:
For the year ended December 31, 2018 The carrying amount at
the date of derecognition Gain (Loss) on disposalOverseas bonds $ 86,063 130
TheBankanditssubsidiariesderecognized investment infinancialassetsmeasuredatamortizedcostdue to the increase of credit risk and the prepayment of the investment in debt instruments at amortized cost.
(J) Held-to-maturityfinancialassets–net
December 31, 2017Certificates of deposit with the Central Bank $ 124,330,000Government bonds 32,958,891Corporate bonds 16,215,509Overseas bonds 29,400,355Negotiable certificates of deposit 62,328Total $ 202,967,083
As of December 31, 2017, held-to-maturity financial assets provided and deposited as reserve for provisional seizure by the court, international card payment reserve, trust claim reserve and operating guaranty funds amounted to $715,700. As of December 31, 2017, the overseas branches have provided $62,328, for the reserve of overdraft guarantee.
In order to comply with the immediate tax settlements mechanism of Central Bank and the interbank funds transfer system, the Bank provided time deposits with the Central Bank all amounting to $8,200,000 as overdraft guarantee as of December 31, 2017. The amount of the guarantee could be modified anytime and the remaining amount could be served as liquid reserves.
As of December 31, 2017, in compliance with the item 16 of "Guidelines Governing Financial Institution in Conducting Treasury Affairs Authorized by Central Bank", the Bank provided secured central bank certificates of deposit with face value of $1,505,000 to the Central Bank. When certain conditions are satisfied, the Bank will be returned the certificates without interest from Central Bank.
As of December 31, 2017, the Bank provided Central bank certificates of deposit with face value of $17,000,000 to serve as a guarantee for borrowing US dollars from Central bank.
(K) Otherfinancialassets–net
December 31, 2018 December 31, 2017Non-accrual loans transferred from non-loan financial assets $ 105,200 208,339Less: Allowance for bad debts (87,249 ) (84,410 )Non-accrual loans transferred from non-loan financial assets-net 17,951 123,929Exchange bills negotiated 20 142Less: Allowance for bad debts exchange bills negotiated - (1 )Exchange bills negotiated-net 20 141Financial assets carried at cost - 2,035,121Total $ 17,971 2,159,191
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(a) Financial assets carried at cost were as follows:
InvesteeDecember 31, 2017
Amount %Taiwan Power Company $ 11,427 -Taiwan Sugar Corporation 58,294 0.30Sunysino Development Associated Inc. 17,440 3.12Taiwan Incubator SME Development Corporation 29,000 4.84Taipei Forex Inc. 7,000 3.53Financial Information Service Co., Ltd. 45,500 1.14CDIB & Partners Investment Holding Corp. 500,000 4.95Taiwan Stock Exchange Corp. 198,012 0.95Taiwan Futures Exchange Co., Ltd. 20,000 1.00Taiwan Asset Management Corp 750,000 5.68Taiwan Finance Asset Service Corp 50,000 2.94Financial eSolution Co., Ltd. 9,245 4.12Taiwan Depository and Clearing Corp. 4,639 0.08Sunny Asset Management Corporation 460 0.77Taiwan Mobile Payment Co. 6,000 1.00Taipei Financial Center Corp. 328,104 0.80Total 2,035,121
(b) The change in allowance for bad debts was as follows:
For the years ended December 31, 2018 2017
Beginning balance (according to IAS39) $ 84,411 60,202Adjustments of initial application of IFRS 9 4,714 -Beginning balance (according to IFRS 9) 89,125 60,202Reversal (45,387 ) (550,888 )Transfer in 44,688 584,242Write-off (26,368 ) (34,107 )Written-off recovered 25,191 24,962Ending balance $ 87,249 84,411
(L) Premises and equipment–net
December 31, 2018 Cost Revaluation appreciation
Accumulated depreciation
Accumulated impairment Total
Land $ 6,737,960 2,986,161 - 14,031 9,710,090Buildings 7,824,415 31,184 4,027,738 14,754 3,813,107
Machinery 2,094,860 - 1,739,374 - 355,486
Transportation equipment 277,877 - 242,753 - 35,124Miscellaneous equipment 579,568 - 492,179 - 87,389Leasehold improvement 138,783 - 55,180 - 83,603Construction in progress 31,065 - - - 31,065
Prepayment for equipment 171,807 - - - 171,807
Leased assets 75,518 - 53,451 - 22,067Total $ 17,931,853 3,017,345 6,610,675 28,785 14,309,738
December 31, 2017 Cost Revaluation appreciation
Accumulated depreciation
Accumulated impairment Total
Land $ 6,678,952 2,986,161 - 14,031 9,651,082Buildings 7,699,394 31,184 3,849,763 14,754 3,866,061Machinery 2,072,355 - 1,760,891 - 311,464Transportation equipment 280,450 - 243,860 - 36,590Miscellaneous equipment 590,195 - 504,628 - 85,567Leasehold improvement 104,639 - 33,406 - 71,233Construction in progress 17,726 - - - 17,726Prepayment for equipment 56,593 - - - 56,593Prepayment for real estate 98,799 - - - 98,799Leased assets 74,596 - 42,845 - 31,751Total $ 17,673,699 3,017,345 6,435,393 28,785 14,226,866
Taiwan Business Bank Annual Report 2018144
Change of cost
January 1, 2018 Increase DecreaseForeign
ExchangeDecember
31,2018
Land $ 9,665,113 59,008 - - 9,724,121
Buildings 7,730,578 125,021 - - 7,855,599
Machinery 2,072,355 167,919 149,244 3,830 2,094,860
Transportation equipment 280,450 10,254 14,815 1,988 277,877
Miscellaneous equipment 590,195 23,703 35,589 1,259 579,568
Leasehold improvement 104,639 33,845 5,720 6,019 138,783
Construction in progress 17,726 70,300 56,961 - 31,065
Prepayment for equipment 56,593 132,835 17,776 155 171,807
Prepayment for real estate 98,799 - 98,799 - -
Leased assets 74,596 1,540 624 6 75,518
Total $ 20,691,044 624,425 379,528 13,257 20,949,198
January 1, 2017 Increase DecreaseForeign
ExchangeDecember
31,2017
Land $ 9,665,113 - - - 9,665,113
Buildings 7,518,038 212,540 - - 7,730,578
Machinery 1,966,592 184,111 82,939 4,591 2,072,355
Transportation equipment 286,164 8,192 14,213 307 280,450
Miscellaneous equipment 580,418 35,885 25,304 (804 ) 590,195
Leasehold improvement 69,916 41,142 3,799 (2,620 ) 104,639
Construction in progress 153,162 32,147 167,583 - 17,726
Prepayment for equipment 62,933 26,271 31,107 (1,504 ) 56,593
Prepayment for real estate - 98,799 - - 98,799
Leased assets 72,495 2,101 - - 74,596
Total $ 20,374,831 641,188 324,945 (30 ) 20,691,044
Change of depreciation
January 1, 2018 Increase DecreaseForeign
ExchangeDecember 31,
2018
Buildings $ 3,849,763 177,975 - - 4,027,738
Machinery 1,760,891 126,024 148,553 1,012 1,739,374
Transportation equipment 243,860 13,461 14,563 (5 ) 242,753
Miscellaneous equipment 504,628 22,639 35,282 194 492,179
Leasehold improvement 33,406 23,289 5,620 4,105 55,180
Leased assets 42,845 11,226 624 4 53,451
Total $ 6,435,393 374,614 204,642 5,310 6,610,675
January 1, 2017 Increase DecreaseForeign
ExchangeDecember 31,
2017
Buildings $ 3,682,819 166,944 - - 3,849,763
Machinery 1,733,509 110,338 79,299 (3,657 ) 1,760,891
Transportation equipment 244,838 13,334 14,146 (166 ) 243,860
Miscellaneous equipment 509,879 20,832 25,204 (879 ) 504,628
Leasehold improvement 22,725 14,987 3,799 (507 ) 33,406
Leased assets 31,570 11,336 - (61 ) 42,845
Total $ 6,225,340 337,771 122,448 (5,270 ) 6,435,393
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Accumulated impairment
January 1, 2018 Increase Decrease Foreign Exchange December 31,2018Land $ 14,031 - - - 14,031
Buildings 14,754 - - - 14,754
Total $ 28,785 - - - 28,785
January 1, 2017 Increase Decrease Foreign Exchange December 31,2017Land $ 14,031 - - - 14,031
Buildings 14,754 - - - 14,754
Total $ 28,785 - - - 28,785
When the Bank and its subsidiaries first adopted IFRSs, it elected to apply the revaluation amount calculated
per the regulation of GAAP of R.O.C as the original cost on the transition date.
As of December 31, 2018 and 2017, the appreciation from revaluation of properties all amounted to
$3,017,345. Reserve for land incremental tax all amounted to $879,056 (Recognized under deferred tax
liabilities).
As of December 31, 2018 and 2017, land which was illegally occupied amounted to $5,496, respectively. Part
of the illegally occupied land would be disposed after the Bank received the certificate of legal costs and the
rest would be auctioned at appropriate time.
(M) Other assets-netDecember 31, 2018 December 31, 2017
Office supplies $ 28,261 27,997
Prepayments 4,261,033 3,269,987
Operating guaranty deposits and settlement fund 31,011 30,608
Guarantee deposits paid 858,681 321,496
Deferred assets 16 40
Temporary payments and suspense accounts 80,253 -
Proceeds of settlement and credit transaction 2,071 24,721
Total $ 5,261,326 3,674,849
(N) Deposits from the Central Bank and other banksDecember 31, 2018 December 31, 2017
Deposits from the Central Bank $ 251,673 304,431
Call loans from the Central Bank 15,367,500 16,234,960
Deposits from banks 64,602 100,305
Call loans from banks 18,991,607 18,439,863
Overdrafts on banks 812,952 1,680,993
Deposits transferred from Chunghwa Post Co., Ltd. 55,826,209 56,769,218
Total $ 91,314,543 93,529,770
(O) Due to the Central Bank and other banksDecember 31, 2018 December 31, 2017
Due to banks $ 591,988 31,464
Due to banks:
Chang Hwa Commercial Bank, Ltd. (SH)
December 31, 2018 December 31, 2017
Interbanks borrowing (CNY) $ 14,750 6,917
Interest rate 5.2250% 4.99%
Maturity date June 22, 2020~February 13, 2021
August 30,2020
Taiwan Business Bank Annual Report 2018146
First Bank (Ximen)
December 31, 2018 December 31, 2017Interbanks borrowing (CNY) $ 800 -
Interest rate 5.4625%
Maturity date May 18, 2020
Taichung Commercial Bank Co., Ltd. (OBU)
December 31, 2018 December 31, 2017Interbanks borrowing (USD) $ 15,000 -
Interest rate 4.5815%~ 4.6290%
Maturity date May 28, 2021
First Bank (OBU)
December 31, 2018 December 31, 2017Interbanks borrowing (USD) $ 1,000 -
Interest rate 4.6953%
Maturity date December 4, 2019
Sunny Bank (OBU)
December 31, 2018 December 31, 2017Interbanks borrowing (USD) $ 1,000 -
Interest rate 4.0056%
Maturity date January 25, 2019
(P) Financialliabilitiesatfairvaluethroughprofitorloss
December 31, 2018 December 31, 2017
Financial liabilities designated at fair value through profit or loss:
Financial debentures $ 9,162,841 3,565,337
Financial liabilities held for trading:
Derivative instruments not used for hedging
Foreign exchange forward contracts 11,546 8,420
Currency swap contracts 161,000 150,009
Foreign currency option-put 3,886 8,633
Structured product option-put - 82
Total $ 9,339,273 3,732,481
Please refer to 6(T) for the information of financial liabilities designated at fair value through profit and loss.
Please refer to 6(C) for the nominal amount of unsettled financial derivatives instrument contracts of
December 31, 2018 and 2017.
(Q) Securities sold under repurchase agreements
December 31, 2018
Assets Par value
Selling Price (Recognized insecurities sold under repurchase
agreements)
Designatedrepurchase
amountDesignated
repurchase dateFinancial assets at fair value through other comprehensive income
$ 1,628,596 1,657,706 1,660,551 Prior to June 14, 2019
December 31, 2017
Assets Par value
Selling Price (Recognized insecurities sold under repurchase
agreements)
Designatedrepurchase
amountDesignated
repurchase dateA v a i l a b l e - f o r - s a l e financial assets
$ 1,001,200 1,105,596 1,106,770 Prior to June 27, 2018
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Ⅵ(R) Payables
December 31, 2018 December 31, 2017
Interest payable $ 2,183,207 1,702,701
Accounts payable 12,976,337 13,363,952
Acceptances 1,476,163 1,724,173
Accrued expenses 3,223,896 2,522,471
Collection payable 612,741 590,876
Deposits received from securities borrowers 103,529 95,470
Guaranteed price deposits received from securities borrowers 111,936 111,668
Accounts payable factoring 177,759 153,704
Spot exchange payable- foreign currencies 36,521,898 15,315,863
Other payables 896,129 864,379
Trusted security payable 377,826 147,945
Other 12,710 36,850
Total $ 58,674,131 36,630,052
(S) Deposits and remittances
December 31, 2018 December 31, 2017
Savings deposits $ 617,461,408 607,119,560
Time deposits 341,309,350 329,695,922
Demand deposits 323,439,370 350,247,717
Checking account deposits 28,257,596 28,358,099
Remittances 573,379 602,413
Total $ 1,311,041,103 1,316,023,711
(T) Financial debentures
Bonds
Terms of Transactions Bond Issued
Issue dateMaturity
dateInterest Rate & repayment Type
Amount
December 31, 2018
December31, 2017
2010-1P A 09/23/2010 None The debentures bear annual interest rate which is the Chunghwa post's board average interest rate for 1-year time deposit plus 1.34% for the ten years after the issue date. The interest rate will be the Chunghwa post's board interest rate for 1-year time deposit plus 2.34% from the eleventh year. The debentures is redeemable per face value plus accrued interest at the interest payment date after ten years from the issue date under the consent of the competent authority.
Perpetual non- accumulated subordinated financial debentures
$ 3,200,000 3,200,000
2010-1P B 09/23/2010 None The debentures bear an interest rate of 3.05% for the first ten years after the issue date. The interest rate will be 4.05% from the eleventh year. The debentures is redeemable per face value plus accrued interest at the interest payment date after ten years from the issue date under the consent of the competent authority.
〞 800,000 800,000
2013-1 03/25/2013 03/25/2020 The debentures bear an annual interest rate of 1.68%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity.
Unsecured subordinated long-term financial debentures
5,000,000 5,000,000
2013-2A 11/25/2013 11/25/2020 (A) The debentures bear annual interest rate, which is the index rate plus 0.52%. The index rate is the average offer of 90-days CP which is indicated in Reuter's page 6165 at 11 A.M Taipei time, 2 operation days prior to the interest commencement date.
〞 3,100,000 3,100,000
Taiwan Business Bank Annual Report 2018148
Bonds
Terms of Transactions Bond Issued
Issue dateMaturity
dateInterest Rate & repayment Type
Amount
December 31, 2018
December31, 2017
(B) Since January 1, 2015 according to various indicators of interest rate changes during the value date two business days before the pricing (FIXING) Bank of the Republic of China Business Association National Union RCAs website "Taipei fixing the financial sector call loan rate (TAIBOR)" three-month interest rate fixing. Simple interest rate is accrued four times a year and paid annually. The principal will be repaid in full at maturity.
2013-2B 11/25/2013 11/25/2020 The debentures bear an annual interest rate of 1.92%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity.
〞 $ 2,900,000 $ 2,900,000
2015-1P 06/18/2015 None The debenture bear an annual interest rate of 3.9%. Simple interest is accrued and paid annually. The debentures is redeemable per face value plus accrued interest at interest payment date after five years from the issued date under the consent of the competent authority.
Perpetual non- accumulated subordinated financial debentures
5,000,000 5,000,000
2015-2A 08/31/2015 08/31/2023 The debenture bear an annual interest rate of 2.05%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity.
Unsecured subordinated long-term financial debentures
4,700,000 4,700,000
2015-2B 08/31/2015 08/31/2025 The debenture bear an annual interest rate of 2.10%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity.
〞 300,000 300,000
2016-1P 09/20/2016 None The debenture bear an annual interest rate of 3.2%. Simple interest is accrued and paid annually. The debentures is redeemable per face value plus accrued interest at interest payment date after five years and three months from the issued date under the consent of the competent authority
Perpetual non- accumulated subordinated financial debentures
8,000,000 8,000,000
2016-2 12/20/2016 12/20/2023 The debenture bear an annual interest rate of 1.40%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity.
Unsecured subordinated long-term financial debentures
2,700,000 2,700,000
2017-1A 03/28/2017 03/28/2024 The debentures bear an annual interest rate of 1.50%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity.
〞 390,000 390,000
2017-1B 03/28/2017 03/28/2025 The debentures bear an annual interest rate of 1.60%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity.
〞 250,000 250,000
2017-1C 03/28/2017 03/28/2027 The debentures bear an annual interest rate of 1.85%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity.
〞 3,360,000 3,360,000
2017-2 05/23/2017 05/23/2027 The debentures bear an annual interest rate of 1.85%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity.
〞 1,300,000 1,300,000
2018-1 01/05/2018 01/05/2021 The debentures bear an annual interest rate of 0.7%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity.
〞 1,000,000 -
2018-2 08/20/2018 08/20/2028 The debentures bear an annual interest rate of 1.45%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity.
〞
5,450,000 -
$ 47,450,000 41,000,000
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The Bank issued $120,000 thousands and $180,000 thousands dollar-denominated debentures with call
option that can be executed on strike price after five years from the issued date. Without executing call options
during the periods of debentures, the principal will be repaid in full at maturity. In order to avoid interest risk,
the Bank buys interest rate swap contracts that are classified as financial assets at fair value through profit
or loss. To eliminate the measurement or recognition inconsistency between IRSs and debentures, the Bank
classified the debentures into financial liabilities at fair value through profit or loss. The debentures are as
follows:
Bonds
Terms of Transactions Bond Issued
Issue date Maturity date Interest Rate & repayment Type
Amount
December 31, 2018
December31, 2017
2017-3 10/27/2017 10/27/2047 The zero-coupon debentures with call options can be executed on strikeprice after five years from the issued date. Without executing call options during the periods of debentures, the principal will be repaid in full at maturity.
Unsecured dollar- denominated senior financial debentures
$ 3,688,200 3,561,600
2018-3 09/27/2018 09/27/2048 The zero-coupon debentures with call options can be executed on strikeprice after five years from the issued date. Without executing call options during the periods of debentures, the principal will be repaid in full at maturity.
〞 5,532,300 -
Valuation adjustment (57,659 ) 3,737
$ 9,162,841 3,565,337
(U) Otherfinancialliabilities
December 31, 2018 December 31, 2017
Appropriated loans funds $ 7,486,694 10,090,135
Lease payable 21,021 30,410
Total $ 7,507,715 10,120,545
Cumulative earnings on appropriated loan fund is the project contract signed by National Development
Council, Small and Medium Enterprise Administration, Ministry of Economic Affairs, and the Bank. The
Bank appropriates the fund to the companies which meet the conditions for loans. The fund is classified as
principal account, interest yielding account, loaned account and un-loaned account. The interests paid to the
government are calculated respectively.
(V) Provision for liabilities
December 31, 2018 December 31, 2017Provision for guarantee liabilities $ 215,383 156,523
Provision for financing commitment 73,753 -
Provision for employee benefit 3,276,591 3,358,828
Total $ 3,565,727 3,515,351
Change of provision
January 1, 2018
IFRS 9Adjustment Increase Decrease Use
Foreign exchange
December 31, 2018
Provision for guarantee liabilities
$ 156,523 - 58,710 - - 150 215,383
Provision for financing commitment
- 47,265 26,637 - - (149 ) 73,753
Provision for employee benefit 3,358,828 - 444,090 453,021 73,306 - 3,276,591
Total $ 3,515,351 47,265 529,437 453,021 73,306 1 3,565,727
Taiwan Business Bank Annual Report 2018150
January 1, 2017 Increase Decrease Use
Foreign exchange
December 31, 2017
Provision for guarantee liabilities $ 147,491 9,286 - - (254 ) 156,523
Provision for lawsuit 346,491 109,273 - 466,884 11,120 -
Provision for employee benefit 3,112,771 504,152 208,775 49,320 - 3,358,828
Total $ 3,606,753 622,711 208,775 516,204 10,866 3,515,351
Please refer to Note 6(Z) for the information with regard to provision for employee benefit shown above.
(W) Other liabilities
December 31, 2018 December 31, 2017
Advance interest receipts $ 10,717 10,284
Unearned revenue 154,589 109,386
Other advances receipts 152,649 101,006
Guarantee deposits received 821,386 768,517
Temporary receipts and suspense accounts - 648,221
Other 7,596 6,101
Total $ 1,146,937 1,643,515
(X) Equity
(a) Common stock
As of December 31, 2018 and 2017, the Bank's authorized capital were $80,000,000 and the paid-in
capital for common shares of the Bank were $63,938,802 and $61,479,617, the face value of each share
is NTD $10. The outstanding shares were 6,393,881 and 6,147,962 thousand shares, respectively.
Pursuant to the resolution approved by the stockholders' meeting of the Bank on June 29, 2018, the
Bank increased its capital from the unappropriated retained earnings by $2,459,185 and issued 245,919
thousand shares. The capital increase has been approved by Financial Supervisory Commission and
came into effect on August 10, 2018. The base date of the capital increase is set on September 12, 2018.
The Bank has completed the registration of change in paid-in capital on September 21, 2018.
Pursuant to the resolution approved by the stockholders' meeting of the Bank on June 16, 2017, the
Bank increased its capital from the unappropriated retained earnings by $1,790,668 and issued 179,067
thousand shares. The capital increase has been approved by the Financial Supervisory Commission and
came into effect on July 7, 2017. The base date of the capital increase is set on August 7, 2017. The Bank
has completed the registration of change in paid-in capital on August 23, 2017.
(b) Capital surplus
Pursuant to the amendment of the Company Act which was published in January 2012, the Company can
only transfer realized capital surplus into capital or distribute cash dividends after the capital surplus be
used to offset a deficient. In compliance with the resolution, realized capital surplus includes the income
derived from the issuance of new shares at a premium and the income from endowments received by the
company. According to the Regulations Governing the Offering and Issuance of Securities by Securities
Issuers, the total amount of capital surplus to be used to increase capital shall not exceed 10% of total
paid-in capital.
(c) Earnings distribution and dividend policy
Under the Bank's Articles of Incorporation, earnings are used initially to pay for income taxes and restore
cumulative losses, and 30% of the remaining earnings is set aside as legal reserve. Special reserve
is appropriated from or reversed to earnings per other regulations. Add accumulated unappropriated
retained earnings from previous years as distributable dividends and the amount of dividends is resolved
by the annual stockholders' meeting according to the proposal submitted by the Board of Directors.
In order to continuously expand scale and increase profitability, the Bank, based on the future capital
budget plan, adopts residual dividend policy and primarily distributes stock dividend to ensure the capital
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is sufficient. When there is surplus of capital, the remaining capital can be distributed by cash dividend.
Cash dividend shall not be lower than 10% of the total dividend distributed. If the cash dividend distributed
per share is lower than NTD$ 0.1, except for otherwise resolved by the shareholder's meeting, it is not
distributed. If there is any situation conforms to that is regulated in article 44 item 1 of the Banking Act
of The Republic of China, the Bank is not allowed to distribute earnings by cash or purchase shares
outstanding. The maximum cash earning distribution is not allowed to be over 15% of the total paid in
capital unless the legal reserve reaches the total paid-in capital.
In compliance with the amendment of Company Act published in January 2012, if the Company incurs no
loss, under the consent of the shareholder's meeting, the Company is allowed to distribute new shares or
cash dividends from legal reserve to the extent that the legal reserve issued is the surplus exceeding 25%
of the paid in capital.
Under the Ruling No. 1010012865 issued on April 6, 2012 by the FSC, special reserve is appropriated
from retained earnings based on the equivalent amounts of the contra accounts in equity. This special
reserve may not be distributed as dividends to stockholders until the balances of these contra accounts in
equity are reversed.
The Bank resolved the earning distribution for the earnings of 2017 and 2016 in the shareholder's meeting
on June 29, 2018 and June 16, 2017, respectively. The dividends distributed were as follows:
For the years ended December 31,
2017 2016
Distribution rate (NT dollar) Amount
Distribution rate (NT dollar) Amount
Dividends to common share holders
Share $ 0.40 2,459,185 0.30 1,790,668
Cash 0.268 1,647,654 0.102 608,827
Total 4,106,839 2,399,495
(d) Other equity items
Unrealized gains from financial assets
measured at fair value through other
comprehensive income
Unrealized gains and losses on
available-for-salefinancial assets
exchange differences on translation of
foreign financial statements Total
January 1, 2018 $ - 529,112 (835,340 ) (306,228 )
Effects of retrospective application of new standards 3,086,469 (529,112 ) - 2,557,357
Balance at January 1, 2018 after adjustments 3,086,469 - (835,340 ) 2,251,129
Debt instruments measured at fairvalue through other comprehensive income
-Valuation adjustment 490,591 - - 490,591
-Realized amount (98,509 ) - - (98,509 )
Foreign currency translation difference-Exchange difference - - 294,218 294,218
Disposal of investments in equity instruments measured at fair value through other comprehensive income (30,765 ) - - (30,765 )
December 31, 2018 $ 3,447,786 - (541,122 ) 2,906,664
Taiwan Business Bank Annual Report 2018152
Unrealized gains from financial assets
measured at fair value through other
comprehensive income
Unrealized gains and losses on
available-for-salefinancial assets
exchange differences on translation of
foreign financial statements Total
January 1, 2017 $ - (1,009,845 ) (19,637 ) (1,029,482 )
Available-for-sale financial assets
-Valuation adjustment - 1,565,125 - 1,565,125
-Realized amount - (26,168 ) - (26,168 )
Foreign currency translation difference-Exchange difference - - (815,703 ) (815,703 )
December 31, 2017 $ - 529,112 (835,340 ) (306,228 )
(Y) Income taxes
According to the amendments to the "Income Tax Act" enacted by the office of the President of the Republic
of China (Taiwan) on February 7, 2018, an increase in the corporate income tax rate from 17% to 20% is
applicable upon filing the corporate income tax return commencing year 2018.
(a) The income tax expenses were as follows:
For the years ended December 31, 2018 2017
Current tax expense
Current period $ 1,910,481 800,257
Adjustment for prior periods 35,751 (191,611 )
Additional surtax on undistributed retained earnings - 5
1,946,232 608,651
Deferred tax expense
Origination and reversal of temporary different (388,357 ) 222,526
Income tax expenses $ 1,557,875 831,177
(b) The income tax (expenses) benefits recognized under other comprehensive income were as follows:
For the years ended December 31, 2018 2017
Items that will not reclassified subsequently to profit or loss:
Remeasurements of defined benefit plans $ 71,895 42,401
For the years ended December 31, 2018 2017
Items that may be reclassified subsequently to profit or loss:
Foreign exchange difference in translating financial statements of foreign operations
$ (35,814 ) 167,072
Unrealized gains (losses) on valuation of available-for-sale financial assets
- (1,881 )
Unrealized gains on valuation of financial assets measured at fair value through other comprehensive income
580 -
$ (35,234 ) 165,191
The reconciliation between the income tax expense (income) and net income before tax of the Bank and
its subsidiaries for 2018 and 2017 is as follows:
For the years ended December 31, 2018 2017
Income tax computed on net income before tax $ 1,848,646 1,002,844
Cessation tax of gains derived from the securities transactions (5,131 ) (3,818 )
Net income from offshore banking unit (212,852 ) (193,088 )
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ⅥFor the years ended December 31,
2018 2017Recognized (gain) loss from financial assets and liabilities measured at fair value through profit or loss
(14,420 ) 7,032
Cash Dividend (56,743 ) (38,311 )
Non-deductible expense 524 257
Adjustment in tax rate (148,021 ) -
Overseas branch income tax expenses 106,570 247,867
Additional surtax on undistributed retained earnings - 5
Underestimate (overestimate) prior income tax expense 35,751 (191,611 )
Income tax loss from unrecognized deferred tax assets 3,551 -
Income tax expense $ 1,557,875 831,177
(c) Changes in deferred tax assets and liabilities of the Bank and its subsidiaries are as follows:
For the years ended December 31, 2018
Beginning balance
Recognized in profit or loss
Recognized in other
comprehensive income Others Ending balance
Temporary difference
Deferred tax assets resulted from allowance for bad debts exceeding the limit regulated in Tax Law
$ 383,793 346,506 - (70 ) 730,229
Loss on assets impairment 40,593 12,823 - 146 53,562
Reserve for employee benefit liabilities 414,235 29,084 - - 443,319
Land value increment tax (879,056 ) - - - (879,056 )
Exchange differences from the translation of financial statements of foreign operations
171,093 - (35,814 ) - 135,279
Unrealized (gain) loss on valuation of financial assets measured at fair value through other comprehensive income
(2,262 ) - 580 - (1,682 )
Actuarial gains and losses 209,181 - 71,895 - 281,076
Other 245 (7 ) - 13 251
Subtotal 337,822 388,406 36,661 89 762,978
Losses carried forward 3,324 (49 ) - - 3,275
Net deferred tax assets (liabilities) $ 341,146 388,357 36,661 89 766,253
The information stated on the balance sheet is as follows: Deferred tax assets $ 1,222,464 1,646,991
Deferred tax liabilities $ 881,318 880,738
For the years ended December 31, 2017
Beginning balance
Recognized in profit or loss
Recognized in other
comprehensive income Others Ending balance
Temporary difference
Deferred tax assets resulted from allowance for bad debts exceeding the limit regulated in Tax Law
$ 546,478 (162,657 ) - (28 ) 383,793
Loss on assets impairment 40,593 - - - 40,593
Indemnity reserve 75,446 (75,446 ) - - -
Reserve for employee benefit liabilities 402,079 12,156 414,235
Land value increment tax (879,056 ) - - - (879,056 )
Taiwan Business Bank Annual Report 2018154
For the years ended December 31, 2017
Beginning balance
Recognized in profit or loss
Recognized in other
comprehensive income Others Ending balance
Exchange differences from the translation of financial statements of foreign operations
4,021 - 167,072 - 171,093
Unrealized valuation profit or loss on available-for-sale financial assets
(381 ) - (1,881 ) - (2,262 )
Actuarial gains and losses 166,780 - 42,401 - 209,181
Other 149 97 - (1 ) 245
Subtotal 356,109 (225,850 ) 207,592 (29 ) 337,822
Losses carried forward - 3,324 - - 3,324
Net deferred tax assets (liabilities) $ 356,109 (222,526 ) 207,592 (29 ) 341,146
The information stated on the balance sheet is as follows:
Deferred tax assets $ 1,240,678 1,222,464
Deferred tax liabilities $ 884,569 881,318
(c) The Bank' s income tax returns for years up to 2015 have been approved by the Tax Authority.
(d) The income tax returns of the subsidiaries Taiwan Business Bank International Leasing Co., Ltd. have
been approved until 2016 by the Tax authority. Taiwan Business Bank Insurance Agency Co., Ltd. and
Taiwan Business Bank Property Insurance Agency Co., Ltd. have been approved until 2017 by the Tax
authority.
(Z) Provisionforemployeebenefit
As of December 31, 2018 and 2017, the balance of provision for employee benefit of the Bank and its
subsidiaries were as follows:
December 31, 2018 December 31, 2017
Defined benefit plan $ 2,406,353 2,535,720
Employee deposit with favorable rate 870,238 823,108
$ 3,276,591 3,358,828
(a) Defined benefit plan
The reconciliation between the present value of defined benefit obligation and the fair value of defined
benefit plan assets of the Bank and its subsidiaries as follows:
December 31, 2018 December 31, 2017
Present value of defined benefit obligation $ 7,385,323 7,260,197
Less: Fair value of defined benefit plan assets (4,978,970 ) (4,724,477 )
$ 2,406,353 2,535,720
The Bank and its subsidiaries makes defined benefit plan contributions to the pension fund account at
Bank of Taiwan that provides pensions for employees upon retirement. The plans (covered by the Labour
Standards Law) entitle a retired employee to receive an annual payment based on years of service and
average salary for the six months prior to retirement.
(1) Composition of plan assets
The Bank and its subsidiaries allocates pension funds in accordance with the Regulations for
Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are
managed by the Labour Pension Fund Supervisory Committee. With regard to the utilization of the
funds, minimum earnings in the annual distributions on the final financial statements shall be no less
than the earnings attainable from the amounts accrued from two-year time deposits with interest rates
offered by local banks.
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The Bank of Taiwan labour pension reserve account balance for the Bank and its subsidiaries
amounted to $4,978,970 and $4,724,477 on December 31, 2018 and 2017. For information on the
utilization of the labour pension fund assets including the asset allocation and yield of the fund, please
refer to the website of the Labour Pension Fund Supervisory Committee.
(2) Changes in the present value of defined benefit obligations
The changes in the present value of defined benefit obligations of the Bank were as follows:
For the years ended December 31, 2018 2017
Defined benefit obligation on January 1 $ 7,260,197 7,241,938
Current service and interest cost 268,958 289,790
Remeasurements of the net defined benefit liability
-Actuarial gain and loss on experience adjustment 261,683 111,821
-Actuarial gain and loss on financial assumptions changed
61,966 126,516
Benefits paid by the plan (467,481 ) (509,868 )
Defined benefit obligation on December 31 $ 7,385,323 7,260,197
(3) Changes in the fair value of defined benefit plan assets
The changes in the fair value of defined benefit plan assets of the Bank were as follows:
For the years ended December 31, 2018 2017
Fair value of plan assets on January 1 $ 4,724,477 4,928,465
Interest income 46,905 58,868
Remeasurements of the net defined benefit liability
-plan assets revenue (excluded of current interest) 148,742 (11,082 )
Contributions made 526,327 258,094
Benefits paid by the plan (467,481 ) (509,868 )
Fair value of plan assets on December 31 $ 4,978,970 4,724,477
(4) Expenses recognized in profit or loss
The expenses recognized in profit or loss of the Bank were as follows :
For the years ended December 31, 2018 2017
Current service costs $ 198,096 204,840
Net interest on the net defined benefit liability 23,957 26,082
$ 222,053 230,922
(5) Remeasurements of the net defined benefit liability recognized in other comprehensive income
Accumulated remeasurements of the net defined benefit liability recognized in other comprehensive
income for the years ended December 31, 2018 and 2017 were as follows:
For the years ended December 31,
2018 2017
Amount on January 1 $ 1,230,475 981,056
Recognized during the period 174,907 249,419
Amount on December 31 $ 1,405,382 1,230,475
(6) Actuarial assumptions
The material actuarial assumptions used to determine present value of a defined benefit obligation on
the reporting date as follow :
December 31, 2018 December 31, 2017
Discount rate of defined benefit plan 0.90% 1.00%
Future salary increase rate 1.50% 1.50%
Taiwan Business Bank Annual Report 2018156
The expected allocation payment made by the Bank to the defined benefit plans for the one year
period after the reporting dates is $265,000.
The weighted average duration of defined benefit plans is 8.50 years.
(7) Sensitivity analysis
The effects of changes in major actuarial assumptions adopted in defined benefit obligation on
December 31, 2018 and 2017 were as follows :
Influence of defined benefit plan obligation
Increase0.25% Decrease0.25%
December 31, 2018
Discount rate(Change 0.25%) (2.08)% 2.15 %
Future salary increase rate(Change 0.25%) 2.06 % (2.01)%
Influence of defined benefit plan obligation
Increase0.25% Decrease0.25%
December 31, 2017
Discount rate(Change 0.25%) (2.17)% 2.25 %
Future salary increase rate(Change 0.25%) 2.16 % (2.10)%
The above sensitivity analysis is based on the effects of changes in assumptions single analysis under
other assumptions remain unchanged. In practice many changes in assumptions may be moving
.Sensitivity analysis and the net defined benefit liability on the balance sheet date are determined by
consistent method.
The methods and assumptions used in the preparation of the sensitivity analysis are consistent with
those for the prior period.
(b) Defined contribution plan
The Bank and its subsidiaries allocates 6% of each employee' s monthly wages to the labour pension
personal account at the Bureau of the Labour Insurance in accordance with the provisions of the Labour
Pension Act. Under this defined contribution plans, the Bank and its subsidiaries allocates a fixed amount
to the Bureau of the Labour Insurance without additional legal or constructive obligations.
The pension costs incurred from the contributions to the Bureau of the Labor Insurance amounted to
$115,178 and $99,714 for the years ended December 31, 2018 and 2017, respectively.
(c) Employee deposit with favorable rate
December 31, 2018 December 31, 2017
Present value of defined benefit obligation $ 870,238 823,108
Less: Fair value of defined benefit plan assets - -
Net defined benefit liability $ 870,238 823,108
The Bank and its subsidiaries conducted the obligation of time deposit with favorable rate for retired and
current employees based on the internal regulation "Saving Deposits for Employees".
(1) Changes in the present value of defined benefit obligations
Changes in the present value of defined benefit obligations of the Bank and its subsidiaries for the
years ended December 31, 2018 and 2017 were as follows:
For the years ended December 31, 2018 2017
Defined benefit obligation on January 1 $ 823,108 799,298
Interest cost 31,128 30,214
Remeasurements of the net defined benefit liability
-current actuarial gains and losses 199,223 172,756
Benefits paid by the plan (183,221 ) (179,160 )
Defined benefit obligation on December 31 $ 870,238 823,108
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(2) Changes in fair value of defined benefit plan assets
Changes in the fair value of the defined plan assets of the Bank and its subsidiaries for the years
ended December 31, 2018 and 2017 were as follows:
For the years ended December 31,
2018 2017
Fair value of plan assets on January 1 $ - -
Contributions made 183,221 179,160
Benefits paid by the plan (183,221 ) (179,160 )
Fair value of plan assets on December 31 $ - -
(3) Expenses recognized in profit or loss
The expenses recognized in profit or loss of the Bank were as follows :
For the years ended December 31,
2018 2017
Net interest on the net defined benefit liability $ 230,351 202,970
(4) Actuarial assumption
The material actuarial assumptions used to determine present value of a defined benefit obligation on
the reporting date as follow :
December 31, 2018 December 31, 2017
Discount rate of employee deposit with favorable rate 4.00% 4.00%
Rate of return for capital deposited 2.00% 2.00%
Annual Diminishing rate of account balanc 1.00% 1.00%
Possibility that employee deposit with favorable rate be modified 50.00% 50.00%
(AA) Earnings per share
For the years ended December 31,
2018 2017
Net income $ 7,640,542 5,039,924
Weighted average number of common stock shares outstanding (in thousands) (Note 1)
6,393,881 6,393,881
Basic earnings per shares (in dollars) $ 1.19 0.79
Dilutive potential common shares (in thousands) (Note 1,2) 56,400 33,759
Weighted average number of shares outstanding for diluted EPS (in thousands) (Note 1)
6,450,281 6,427,640
Diluted earnings per shares (in dollars) $ 1.18 0.78
Note 1: The basic earnings per share for the year ended December 31, 2017 has applied retrospective adjustments.Note 2: The shares were calculated based on the stock price on the balance sheet date.
(AB) Employees and directors' remuneration
According by the Bank's Articles of Incorporation. If there is an annual profit, distributable earnings shall be
aside to employees' remuneration from 1% to 6% and no more than 0.6% shall be aside to board of directors
as remuneration. But when there are accumulated losses, the Bank shall first remain earning for the deficit.
For the years ended December 31, 2018 and 2017, the estimated employee remuneration were $583,736
and $272,350, and the estimated directors' remuneration were $58,374 and $36,582, the estimates are
based on pre-tax net profit for the period, before deducting employee and director's remuneration, multiplied
by the elaboration of the Bank's Articles of Association of employee and the directors remuneration ratio,
and recognized as operating cost. If the board' s meeting decides to release stock dividends as employee' s
bonuses, the total number of employee bonus stocks to be issued shall be determined by the common stock
closing price of the day before the meeting date.
Taiwan Business Bank Annual Report 2018158
(AC) Net interest income
For the years ended December 31,
2018 2017
Interest revenue:
Loan $ 7,129,577 5,985,793
Secured loans 14,787,842 14,004,060
Bills negotiated 8,407 6,802
Bank overdraft 19,681 21,689
Discount 53,987 31,767
Time deposit from Central Bank 840,039 741,016
Due from the Central Bank 146,512 145,192
Call loans to banks 1,189,729 804,894
Bond 2,389,890 1,969,780
International credit card 56,566 58,017
Overdue loans 462,029 138,230
Bills 92,561 61,499
Due from other Banks 807,423 574,765
Other 303,115 238,711
Subtotal 28,287,358 24,782,215
Interest expense:
Deposits 9,310,001 7,807,526
Deposits from banks 32 35
Call loans from banks 752,941 514,224
Fund 2,817 6,843
Financial debentures 1,000,882 1,019,985
Bond sold under repurchase agreement 8,373 4,481
Imputed deposit interest and rent interest 13 13
Other 14,423 3,686
Subtotal 11,089,482 9,356,793
Total $ 17,197,876 15,425,422
(AD) Service fee and commission income
For the years ended December 31,
2018 2017
Service charge income:
Remittance service fee $ 92,242 98,636
Import bills negotiated service fee 62,266 62,985
Export bills negotiated service fee 20,612 20,589
Letter of credit service fee 11,608 14,822
Certification service fee 3,043 3,361
Acceptance service fee 3,008 2,137
Trust service fee 466,666 532,922
Guarantee service fee 159,768 158,355
Agency service fee 94,217 102,565
Interbank service fee 64,964 65,351
Card service fee 138,025 135,697
Commission revenue of insurance premium 1,875,002 1,787,996
Custodian service fee 165,568 143,679
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ⅥFor the years ended December 31,
2018 2017Foreign currency service fee $ 102,854 102,554
Commission of futures 7,423 5,989
Loan service fee 579,224 631,633
Miscellaneous fees 149,123 135,193
Subtotal 3,995,613 4,004,464
Service fee expense:
Foreign currency service fee 34,447 30,619
Interbank service fee 132,635 129,654
Trust service fee 2,012 3,248
Agency service fee 2,446 2,860
IC card service fee 69,856 67,593
Check clearing service fee 10,212 10,733
Remittance service fee 4,661 3,938
Custodian service fee 47,478 37,062
Call loans service fee 3,302 2,922
Miscellaneous fees 28,714 25,298
Subtotal 335,763 313,927
Total $ 3,659,850 3,690,537
(AE) Gains(losses)onfinancialassetsandliabilitiesatfairvaluethroughprofitorloss-net
For the years ended December 31,
2018 2017
Valuation profit and loss:
Corporate bonds $ 3,789 216
Financial debentures 44,053 (30,258 )
Stock of listed company (1,353 ) 850
Beneficiary certificates (3,970 ) 150
Commercial paper 335 (54 )
Option contracts (632 ) (4,309 )
Foreign exchange forward contracts (62,276 ) (15,834 )
Linked deposits (194,422 ) -
Currency swap contracts 35,086 (71,263 )
Subtotal (179,390 ) (120,502 )
Disposition profit and loss:
Government bond 240 -
Stock of listed company (36,698 ) 3,057
Beneficiary certificates (40,638 ) 50,287
Option contracts 5,147 17,136
Interest swap contracts 44,394 2,008
Foreign exchange forward contracts (41,276 ) 169,121
Currency swap contracts 1,245,294 913,315
Non-delivery forward contracts - (1,932 )
Subtotal 1,176,463 1,152,992
Dividend revenue 7,377 534
Interest income 24,730 3,488
Total $ 1,029,180 1,036,512
Taiwan Business Bank Annual Report 2018160
(AF) Realizedgainsonfinancialassetsmeasuredatfairvaluethroughothercomprehensiveincome
For the year ended December 31, 2018
Gains on disposal of government bond $ 96,020
Gains on disposition of corporate bonds 2,224
Gains on disposal of Financial debentures 265
Dividend revenue 276,340
Total $ 374,849
(AG)Realized(losses)gainsonavailable-for-salefinancialassets
For the year ended December 31, 2017
Losses on disposal of government bond $ (7,703 )
Gains on disposition of corporate bonds 24
Losses from disposition of financial debentures (1,700 )
Gains from disposal of beneficiary certificates 30,035
Gains from disposition of stock on listed company 5,512
Dividend revenue 83,585
Total $ 109,753
(AH) (Impairment loss on assets) reversal of impairment loss on assets
For the year ended December 31, 2018
Debt instrument measured at fair value through other comprehensive income $ (8,363 )
Debt instrument at amortized cost (19,934 )
Total $ (28,297 )
(AI) Net other non-interest income
For the years ended December 31, 2018 2017
Rental revenue of operating assets $ 9,424 9,531
Rental expense of operating assets (1,836 ) (1,856 )
Loss on disposal and retirement of premises and equipment (1,155 ) (1,972 )
Loss of account error (137 ) (133 )
Gold deposit book 3,392 2,873
Other operating expense (40,288 ) (153,476 )
Other miscellaneous income 123,962 24,376
Total $ 93,362 (120,657 )
(AJ) Bad debt expenses and guarantee liability provisions
For the years ended December 31, 2018 2017
Discounts, loans and overdue loans $ 704,605 3,549,074
Call loans to banks 9,449 996
Receivables and other financial assets (5,267 ) (530,645 )
Subtotal 708,787 3,019,425
Provision for guarantee liabilities 58,710 9,286
Provision for financing commitment 26,637 -
Total $ 794,134 3,028,711
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Ⅵ(AK) Employeebenefitexpenses
For the years ended December 31,
2018 2017
Salary expense $ 6,343,853 5,902,631
Labor and health insurance 446,028 424,366
Pension expense 337,231 330,636
Other employee benefit 1,198,482 803,051
Total $ 8,325,594 7,460,684
(AL) Depreciation and amortization expenses
For the years ended December 31,
2018 2017
Property and equipment depreciation $ 373,990 337,771
Amortization
Computer software 98,773 79,916
Other deferred charges 20 73
Total $ 472,783 417,760
(AM) Other general and administrative management expenses
For the years ended December 31,
2018 2017
Compensation loss $ 704 1,329
Water and electricity fee 93,096 92,342
Postage and telecommunication 175,140 161,774
Transportation fee 45,301 50,663
Printing and advertisement fee 239,439 236,176
Maintenance fee 47,399 41,816
Insurance fee 372,588 333,474
Professional service fee 329,717 246,983
Materials and supplies 75,670 138,417
Rental expenses 724,328 743,626
Duties and levies 1,374,585 1,287,841
Membership, donation and partaking 525,814 530,740
Storage, packing and processing 60,357 49,599
Cash transit 94,094 99,296
Other 77,787 70,363
Total $ 4,236,019 4,084,439
(AN) Financial Instruments
(a) Fair value information
(1) General description
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
The financial instruments are record as fair value when original recognizing, usually refer to the
transaction price in many circumstances. Except some amortized cost financial instruments, the
financial instruments are measured in fair value. A quoted market price in an active market provides
the most reliable evidence of fair value. If financial instruments are without active market, the Bank
and its subsidiaries adopted the value technique, refer to Bloomberg, Reuters or the price at which the
asset could be bought or sold in a current transaction between willing parties.
Taiwan Business Bank Annual Report 2018162
(2) The definition of fair value hierarchy
A. First tier
The input of this tier is quoted prices in active markets for identical financial instruments. The
active market is a market in which transactions for the homogenous assets or liabilities take place
with sufficient frequency and volume to provide pricing information. The stock of listed company
and the beneficiary certificates, government bonds and the derivative financial instruments with
public quote inactive market processed by the Bank and its subsidiaries belong to the First tier.
B. Second tier
The input of this tier are other than quoted market prices included within First tier that are
observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e. derived from
prices). The government bonds with lower trade volume, corporate bonds, financial debentures,
convertible corporate bonds and derivative instruments, including financial debentures the Bank
and its subsidiaries issued are belong to second tier.
C. Third tier and the subsidiaries
The input are unobservable for the asset or liability in market or counterparty prices.
Unobservable inputs like: Option pricing model using the historical volatility. Because the
historical volatility cannot represent the future volatility expected value of whole market
participants. The input parameter used to measure the fair value of this tier is not based on data
that can be obtained in the market but using a combination of complex market prices to estimate
their values. The assets have been categorized as a third tier 3, due to their fair market value
cannot be directly calculated. The equity instruments with no active market which the Bank and
its subsidiaries invested are third tier.
(3) Based on fair value measurement
A. The fair value hierarchy of information
The financial instruments which are record as fair value measure on an recurring basis, the fair
value hierarchy of information were as follows:
December 31, 2018
Assets and Liabilities Total 1st Tier 2nd Tier 3nd Tier
Instruments measured at fair value on a recurring basis
Non-derivative financial assets and liabilities:
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss,mandatorily (measured at fair value)
Security Investment $ 48,910 48,910 - -
Financial debentures 200,000 - - 200,000
Other 4,648,297 17,080 4,581,217 50,000
Financial assets designated at fair value through profit or loss
1,909,707 - 1,909,707 -
Financial assets measured at fair value through other comprehensive income
Security Investment 7,712,641 3,500,614 - 4,212,027
Bond Investment 65,408,058 53,643,189 11,764,869 -
Other 43,502 43,502 - -
Financial liabilities at fair value through profit or loss
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ⅥDecember 31, 2018
Assets and Liabilities Total 1st Tier 2nd Tier 3nd Tier
Financial liabilities designated at fair value through profit or loss
$ 9,162,841 - 9,162,841 -
Derivative financial assets and liabilities
Assets:
Financial assets at fair value through profit or loss
$ 327,690 - 327,690 -
Liabilities:
Financial liabilities at fair value through profit or loss
176,432 - 176,432 -
December 31, 2017
Assets and Liabilities Total 1st Tier 2nd Tier 3nd Tier
Instruments measured at fair valueon a recurring basis
Non-derivative financial assets and liabilities:
Financial assets at fair value through profit or loss
Financial assets held for trading
Other $ 509,609 10,150 499,459 -
Financial assets designated at fair value through profit or loss
237,652 - 237,652 -
Available-for sale financial assets
Security Investment 2,625,558 2,625,558 - -
Bond Investment 63,608,278 56,161,047 7,447,231 -
Financial liabilities at fair value through profit or loss
Financial liabilities designed at fair value through profit or loss on initial recognition
3,565,337 - 3,565,337 -
Derivative financial assets and liabilities
Assets:
Financial assets at fair value through profit or loss
$ 314,528 454 314,074 -
Liabilities:
Financial liabilities at fair value through profit or loss
167,144 - 167,144 -
B. Valuation techniques used in estimating the fair values of financial instruments
If the financial instruments has quoted price in an active market, the quoted price is regarded as
its fair value.
If the financial instruments of quoted price, which are from the Stock Exchange, Brokers,
Pricing service agencies or Government institutions, are timely and frequently, and reflects the
actual price, then the financial instruments has a quoted price in an active market. If the above
conditions are not fulfilled, the market is inactive.
Except for the above financial instruments of quoted price in an active market, there is no quoted
price in an active market for the financial asset, its fair value is estimated on the basis of the result
of a valuation technique that refers to quoted prices considered the identical financial instrument
with same characteristics and essential terms of transaction, Discounted-Cash-Flow model
and other valuation techniques including the model using market information to be made of the
calculation at the balance sheet date(eg Taipei Exchange reference yield curve, Reuters quoted
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the average commercial paper rate, the Taipei Financial industry call loan rate fixing TAIBOR).
The financial asset's fair value is estimated on the basis of the result of a valuation technique, the
Bank and its subsidiaries adopted that refers to quoted prices provided by financial institutions.
Ask (bid) is used to evaluate the selling (buying) position by the Bank and its subsidiaries if
the quoted price include ask and bid price. If there is not a quoted price for the financial asset,
transaction price close to the balance sheet date is the fair value.
Fair value of financial derivatives are the amount of cash to be paid or to be received by the Bank
and its subsidiaries, assuming that the contract will be terminated on the balance sheet date.
The Bank and its subsidiaries adopts mark-to-model prices which are usually adopted among
the banking industry, such as Discounted-Cash-Flow model and Black-Scholes model. The
Bank and its subsidiaries adopts the price data from Reuters and Bloomberg to calculate the fair
value of the holding position. The aforesaid price data is based upon the middle price and used
consistently by the Bank. Furthermore, the fair value of the embedded financial derivatives are
calculated based upon the quote from the counterparty, and separately calculated in accordance
with the contracts.
C. Adjustment for fair value
a. The restraint of evaluation model and uncertain inputs
The estimates of output-based value using the evaluation model, which may not reflect the
Bank's all related factors. Therefore the estimated value of the evaluation model will be
appropriately adjusted according to the extra parameters such as model risk or liquidity risk.
Information and price parameters used in the evaluation process after careful assessment,
and appropriately adjusted according to the current market situation.
b. Credit risk value adjustment
The Bank and its subsidiaries' credit risk value adjustment of OTC transaction derivative
instruments can be divided to Credit value adjustments (CVA) and debit value adjustments
(DVA). To reflect the fair value of the counterparty or the default, and the Bank and its
subsidiaries may not be received or paid full market value of trading possibilities.
The Bank and its subsidiaries would calculate credit valuation adjustment (CVA) by assessing
probability of default (PD) and loss given default (LGD) of the counterparty before multiplying
exposure at default (EAD) of the counterparty. On the contrary, debit valuation adjustment
(DVA).
The Bank and its subsidiaries assess the probability of default on the assumption of 60%, but
at the risk of the nature and circumstances of available data, we may use other loss given
default assumptions.
D. Transfers between first tier and second tier
There were no transfers between second tier and first tier for the years ended December 31,
2018 and 2017.
E. Changes in financial assets which were classified to third tier based on fair value measurement
Changes of financial assets categorized in the third tier
For the years ended December 31, 2018
Valuation profit and loss Increase Decrease
NameBeginning
balanceRecognized in profit or loss
Recognized in other
comprehensiveincome
Purchase or issue
Transfer in of third tier
SaleDisposition or
Settlement Transfer out of
third tierEnding balance
Financial assets at fair value through profit or loss
$ - - - 250,000 - - - 250,000
Equity instruments measured at fair value through other comprehensive income(Note)
4,416,710 - (65,522 ) 38,139 - 177,300 - 4,212,027
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Note: The equity instruments amounted to $4,416,710 previously classified as other financial assets earned at cost were switched from IAS39 to IFRS 9.
F. Profit and loss information of third tier
Current gain (loss) and other comprehensive income of holding assets are as follow:
For the year ended December 31, 2018
Realized on other comprehensive income (reported as unrealized gain (loss) from investments instruments measured at fair value through other comprehensive income)
(62,522)
G. Quantified information of the fair value measurement of significant unobservable inputs (the third
tier)
The financial instruments categorized in the third tier are most FVOCI. The quantified information
of significant unobservable inputs regarding the fair value measurement as follow:
December 31, 2018
fair valuevaluation methods
significant unobservable
inputs
inter-relationship between significant unobservable
inputs and fair value measurement
Financial asset at fair value through other comprehensive income
Stock of non- listed company $ 4,212,027 market approach assets approach
liquidity discount The higher market liquidity discount, the lower fair value.
income approach sustainable growth rate and cost of equity
The higher sustainable growth rate, the higher fair value.The higher growth rate of cost of equity, the lower fair value.
H. Sensitivity analysis of reasonably possible alternative assumptions for fair value measurement in
third tier.
Valuation techniques used by the Bank and its subsidiaries for fair value measurements of
financial instruments are appropriate. However, the use of different valuation models or inputs
could lead to different outcomes of fair value measurements. The following are the impact on the
other comprehensive profit and loss if using different assumptions:
a. Asset approach/ Market approach
The evaluation methods of the third tier financial instruments of the Bank and its subsidiaries
are mainly based on the market approach or the asset approach. If the liquidity discount
changes by 5% upwards or downwards, the impact on the other comprehensive profit and
loss is as follows:
the effects of changes in fair value to other comprehensive income
Favorable changes(-5%) Unfavorable changes(5%)
December 31, 2018
Financial assets at fair value through other comprehensive income
Unlisted and non-OTC stocks $ 240,675 (240,675)
b. Income approach
Adopting the income approach to evaluate the third tier financial instruments of the Bank and
its subsidiaries. The evaluation parameters are divided into sustainable growth rate and cost
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of equity capital. The effects of the two evaluation parameters on the other comprehensive
profit and loss are as follows:
1) sustainable growth rate
the effects of changes in fair value to other comprehensive income
Favorable changes(0.3%) Unfavorable changes(-0.3%)
December 31, 2018
Financial assets at fair value through other comprehensive income
Unlisted and non-OTC stocks $ 8,464 (7,720)
2) cost of equity
the effects of changes in fair value to other comprehensive income
Favorable changes(-3%) Unfavorable changes(3%)
December 31, 2018
Financial assets at fair value through other comprehensive income
Unlisted and non-OTC stocks $ 196,452 (64,402)
The favorable and unfavorable effects represent the changes in fair value, and fair value
is based on a variety of unobservable inputs calculated using a valuation technique. The
analysis above only reflects the effects of changes in a single input, and it does not include
the interrelationships with another input.
(4) Not based on fair value measurement
A. Fair value information
The following chart presents the financial instruments not based on fair value measurement of
the Bank and its subsidiaries. Except those items, others' fair value are reasonably approximate
value, the Bank and its subsidiaries does not disclosure their fair value.
December 31, 2018
Book value Fair value
Investment in debt instruments at amortized cost $ 261,470,496 261,756,260
December 31, 2017
Book value Fair value
Held-to-maturity financial assets-net $ 202,967,083 203,113,313
B. The fair value hierarchy of information
December 31, 2018
Assets and Liabilities Total 1st Tier 2nd Tier 3rd Tier
Investment in debt instruments at amortized
$ 261,756,260 54,658,948 207,097,312 -
December 31, 2017
Assets and Liabilities Total 1st Tier 2nd Tier 3rd Tier
Held-to-maturity financial assets-net $ 203,113,313 49,314,727 153,798,586 -
C. Valuation techniques
Methods and assumptions used by the Bank and its subsidiaries for evaluation of financial
instruments not measured by fair value were as follows:
a. Cash and cash equivalents, due from Central Bank and call loans to banks, securities
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purchased under resell agreements, receivables, non-accrual loans transferred from non-
loan financial assets, exchange bills negotiated guarantee deposits paid, temporary payments
and suspense accounts, proceeds of settlement and credit transaction, deposits from Central
Bank and other banks, securities sold under repurchase agreements, payables, other financial
liabilities , guarantee deposits received and temporary receipts and suspense accounts: since
these instruments have short maturities, the book value is adopted as a reasonable basis in
estimating the fair value.
b. Discounts and loans(including non-performing loans): the interest rate of bank loans,
dependent on the benchmark interest rate which plus or minus the input value(i.e. motorized
interest rate), said market rates, therefore, the book value of financial assets is equivalent to
their fair value. Among the case of fixed interest rate, the estimated fair value of long-term
loans using the discounted value of its expected cash flows, but this is minority, so the book
value of financial assets is equivalent to their fair value.
c. Investment in debt instruments at amortized cost (applicable from January 1, 2018) and
hold-to-maturity financial assets (applicable before the year ended December 31, 2017): the
quoted price is regarded as its fair value. If there is no quoted price in an active market for the
financial asset, its fair value is estimated on the basis of the result of a valuation technique.
1) Central Government Securities (NTD): using the comment of "Bonds a fair price for each
of times" from Taipei Exchange.
2) Corporate bonds and financial bonds (NTD): the present value or fair price of Taipei
Exchange determined using the future cash flow of yield curve discounting evaluation.
d. Deposits and remittance: to determine the fair value, considered Banking industry
characteristics, the market interest rates (i.e. market price) is the fair value. And deposits
are mostly due within one year, the carrying amounts is the fair value of reasonable basis.
The fixed interest rate of long-term deposits should be estimated by the discounted value of
its expected cash flows at fair value, and its maturity date no longer than three years, so its
estimated fair value of the carrying amount is considered reasonable.
e. Bank debentures payable: The bank debentures payable, issued by the Bank, whose stated
rate was equal the effective rate, using discounted cash flow projections to estimate the fair
value, equivalent to its book value.
f. Other financial assets– debt investment without active market (applicable before the year
ended December 31, 2017): If there is some dealing price, using the price to evaluate the fair
value. If there is not market value, using evaluation model to estimate the fair value.
g. Other financial assets– the financial assets using cost method (applicable before the year
ended December 31, 2017): Because there is without active price and estimated fair value's
variation material or the variation estimates cannot be reasonable assessment, the fair value
cannot be reliably measured, the Bank does not disclose their fair value.
(AO) Financial Risk Information
(a) General description
The goal of the financial risk management of the Bank is to effectively diversify, transfer and avoid risks by
taking customer service, financial business operating target, overall risk tolerance and external limitation
of laws into consideration and provide benefit to customers, shareholders and employees.
The Bank's Financial Risk Management policy is to establish a risk management mechanism in terms
of risk identification, risk measurement, risk monitoring, and risk control and to construct the overall
risk management system. It is to facilitate the business model with appropriate risk management and
Taiwan Business Bank Annual Report 2018168
to control the rationality between risks and rewards under the premise of legal capital ratio in order to
achieve operating targets and increase the value of the Bank for the shareholders. The scope covers the
management of credit risk, market risk, operation risk, banking book interest rate risk, capital liquidity risk,
and capital adequacy.
(b) Risk management organization structure
General managerRisk Management Committee
Vice presidentAssets and Liabilities Management Committee
Risk management center
Credit Examination Committee
Overdue Loans Clearing Committee
President
Board of directors
(1) Risk Management Committee
The chairperson of the Risk Management Committee is appointed by the president. The chairpersons
include general manager, deputy general manager of the non-regulatory compliance in head office
and department directors of head office (excluding the director of audit department in the Board). This
Committee is set up for the purpose of establishing a sound risk management system, strengthening
risk management and the implementation of the Bank's risk management and monitoring. The
meeting will be held once a month in principle. The meeting can be held by the chairman of the
Committee when it necessary. The duties are as follows:
A. Conduct Analysis and response project when significant domestic and foreign economic, financial
and industrial risk management occur.
B. Risk management report of various risk exposure and agenda processing.
C. The processing of examination of the risk management relevant policy of the Bank and limitations,
management indices and the response project when the risk exceeds the limitations.
D. Supervise the Bank's capital adequacy management.
E. Conduct or supervise the issues that have to report to Risk Management Committee according to
the regulations specified by the competent authority at home and abroad.
F. Conduct or supervise other risk management related issues.
Risk Management Department is the assistant unit of the Risk Management Committee. The
responsibility of the Risk Management Department is to execute preparing sittings agenda,
convening sittings, agenda processing, taking meeting minutes and tracking resolution and
regularly report the important resolution and various risk exposure to the board of (executive)
directors.
(2) Assets and Liabilities Management Committee
The chairperson of the Assets and Liabilities Management Committee is the general manager, and
the members are formed by the vice assistant general manager and the department heads of deposit,
loan, financial transaction, capital deployment and risk management units. The responsibility of the
Assets and Liabilities Management Committee is to monitor and manage the banking book interest
rate risk and capital liquidity risk and convenes meetings regularly, to approve the analyzing and
measurement methods of the capital liquidity risk and banking book interest rate risk exposure, to
examine the capital liquidity risk and banking book interest rate risk management policy as well as
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the relevant limitations and management indices, to receive interest rate risk and capital liquidity
risk exposure reports and adjust the assets and liabilities interest rate duration structure and capital
maturity structure.
(3) Credit Examination Committee
The convener of the Credit Examination Committee is the assistant general manager supervising
Risk Management Center. The Committee in principle convenes weekly to examine the modification
and establishment of the regulations (including main points, measures and procedures) for significant
loans, foreign exchange and guarantee cases.
(4) Overdue Loans Clearing Committee
The convener of the Overdue Loans Clearing Committee is the supervising vice president and the
executive secretary is the manager of the Creditor' s Right Management Department. The convener
holds meetings based on the necessity to clear the non-performing loans and non-accrual loans and
bad debts in order to improve the quality of the credit assets of the Bank and its subsidiaries.
(c) Credit risk
(1) Source and definition of credit risk
Credit risk refers to the default risk resulted from the inability to fulfill the contract obligations due to
deteriorating financial status of trade counterparties, pessimistic external economic situation or other
factors. The primary source of the credit risk of the Bank is the loan business, such as loans of various
terms, guarantees and letters of credit, loan commitments, etc., in addition, other sources of credit risk
include call loans from banks, securities investments, derivative financial instrument transactions, etc.
(2) Credit risk management policy
In order to control the credit risk to a tolerable scope, the Bank continuously conduct below
operations:
A. Fully understand the credit status and ratings of loan customers and trade counterparties as well
as the purposes and payments of loans.
B. Prudently evaluates the credit risk status of loan customers and trade counterparties and consider
the adequacy of collaterals and guarantees to assess risk and profit.
C. Establish credit rating mechanism for loan customers or apply the ratings from outside credit
rating institutions as the reference for undertaking credit cases or interest rate determination.
D. Modify relevant regulations to control the credit risk to a tolerable extent for the Bank.
The credit risk management procedure and measurement methods of the Bank's major business are as
follows:
A. Credit Business (Including loan commitments and guarantees)
The categorization and credit quality rating of credit assets are as follows:
a. Categorization of credit assets
The credit assets are classified into 5 categories. Except for normal credit assets which are
classified as the first category, others are classified, based on the assurance status and the
time overdue, as second category (need attention), third category (possible to recover), fourth
category (difficult to retrieve) and the fifth category (unable to retrieve). In order to manage
creditor's rights, the Bank established "Regulations Governing the Procedures to Evaluate
Assets and Deal with Non-performing/Non-accrual Loans", "Regulations Governing the
Reconciliation of Non- performing/Non-accrual Loans" and its operating procedure "Operating
procedure Governing the Collection of Non-performing/Non-accrual Loans" and "Code of
Conduct to Deal With Non-Performing Loans" to serve as the guidelines for dealing with non-
performing credit and overdue loans collection.
Taiwan Business Bank Annual Report 2018170
b. Categorization of credit quality
Based on historical default data, the Bank established internal credit rating model and
completed internal rating system to serve as a reference to credit risk control.
In order to develop an appropriate credit rating model for the Bank to evaluate the credit
risk for corporate banking customers and private banking customers, it applied statistical
methods, professional expert judgments and relevant customer information to fulfill the
requirements. The Bank examined whether the internal credit rating model is in conformity
with the actual scenario based on practical default data quarterly and adjusted all parameters
to optimize the estimated results.
B. Due from other banks and call loans to banks
The Bank evaluates the credit status of counterparties before transaction and takes the rating
information from domestic and foreign credit rating institutions into consideration to determine
various credit risk facilities for the counterparties.
C. Debt instrument investments and derivative financial instruments
The Bank manages credit risk of debt instruments through credit rating data of external
institutions, credit quality of bonds, geographic situations and counterparties' risk so as to identify
credit risk.
The financial institutions which the Bank conducts derivative instruments are mostly investment
quality and are controlled based on the trade amount (including loans at call). Counterparties
which do not have credit rating or which are of low quality shall be examined individually. For
counterparties which are general customers, the Bank controls the credit risk exposure based on
the derivative instrument risk facilities and conditions approved by general credit procedures.
(3) Determining the credit risk has increased significantly since initial recognition
At each reporting date, the Bank and its subsidiaries shall assess the change in the risk of a default
occurring over the expected life of the various credit assets and financial assets to determine whether
the credit risk has increased significantly since initial recognition. To make that assessment, the Bank
and its subsidiaries consider reasonable and supportable information ( including forward-looking
information) that is indicative of significant increases in credit risk since initial recognition. The main
considerations include:
A. credit assets
a. The borrowers failed to pay the principal and interest overdue for more than 30 days, less
than 90 days;
b. When the Bank and its subsidiaries conducts review or follow-up review of the relevant
management procedures after loan, it knows that the financial report of the borrowers have
been issued by the accountant and it has issued opinions of the significant doubt on the ability
to continue as a going concern;
c. The deposits and assets of borrowers are compulsorily executed, besides, the deposits are
compulsorily executed because of tax arrears. However, the borrowers that have enough
deposit to bear the cost that assessed by the Bank and its subsidiaries are except;
d. The Bank knows (if it has received the notice from court) that the collaterals are compulsory
executed by other bank;
e. Borrowers were notified the refund by the Bank and did not conduct refund notice;
f. The letter of credit insurance fund notice due to the related company's overdue debt in other
bank, the creditor to stop the delivery;
g. Because the borrowers have been involved in litigation and unfavorable judgments, their
ability of credit performance is affected;
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h. The customer is classified as an early warning account by the Bank or has bad credit that
aware by others.
B. Debt instrument investments
a. The latest credit rating on the report date was non-investment grade and fell more than two
levels than the original rating, or;
b. Investment target evaluation loss is up to 30% of investment cost.
(4) The credit risk has not increased significantly or judged as low credit risk on the report date
On each report date, the Bank and its subsidiaries assessed that there was no significant increase in
the risk of default for any credit asset during the expected duration of existence or a low credit risk.
The amount of expected credit losses was not taken as the change of credit risk, if the credit risk of
the credit asset was low on the report date, It also assumes that the credit risk of the credit asset
has not increased significantly since the initial recognition. The credit assets with low credit risk
refer to the low default risk and the borrower's ability to perform its contractual cash flow obligations
in the near term. No significant increase in risk relates to the borrower. The absence of economic,
operational, and adverse changes in financial conditions and other bad debt conditions did not affect
their ability to fulfill their contractual cash flow obligations. Financial assets on investment-grade or not
on investment-grade but the ratings are not significantly reduced are also considered to be low-risk
areas.
(5) Definitions of default and credit-impaired financial assets
A financial asset is credit-impaired when one or more events that have a detrimental impact on the
estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is
credit-impaired not only the borrower defaults the loan more than 90 days , it also includes observable
data as follows:
A. Credit assets
a. Significant financial difficulty of the issuer or the borrower;
b. A breach of contract, such as a default or past due event ;
c. The lender(s) of the borrower, for economic or contractual reasons relating to the borrower' s
financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not
otherwise consider;
d. It is becoming probable that the borrower will enter bankruptcy or other financial
reorganization;
e. The disappearance of an active market for that financial asset because of financial difficulties;
f. The purchase or origination of a financial asset at a considerable amount of discount that
reflects the incurred credit losses;
B. Debt instrument investments
a. Significant financial difficulty of the issuer;
b. The disappearance of an active market for that financial asset because of financial difficulties;
c. The purchase or origination of a financial asset at a considerable amount of discount that
reflects the incurred credit losses.
d. Counterparty defaulting on agreement of other financial instruments (e.g. transactions
settlement failure, a bank decide to execute early termination of transactions, or loans
originated from derivatives settlement failure).
(6) Write-off policy
The integral part or the portion of the credit assets that needs to be written-off should first be
approved during the board of directors' meeting; particularly, the portion that is deemed uncollectible.
The following are indicators that the financial assets are uncollectible:
Taiwan Business Bank Annual Report 2018172
A. The borrowers fail to recover all or part of the debt due to dissolution, escape, settlement,
bankruptcy or other reasons.
B. After the collateral and the assets of the principal and subordinate debtors have been priced low
or deducted from the first-order mortgage, they cannot be repaid, the execution costs are close or
may exceed the Bank' s reimbursable amount, and the implementation is not beneficial.
C. The collateral and the property of the principal and subordinate debtors were auctioned off at no
cost and were not bought by anyone, and there was no one have substantial benefits.
D. Overdue loan and non-accrual loan have exceeded the liquidation period for two years.
The bank and its subsidiaries, whose written-off claims may still have ongoing recourse and
continue to follow laws and regulations to pursue the proceedings.
(7) Modification of contractual cash flow of financial assets
The Bank and its subsidiaries may revise the contractual cash flow of the credit asset due to the
borrower's financial difficulties in negotiating, increasing the recovery rate of the borrowers that have
problems, or maintaining the customer relationship. The modification of the contractual terms of the
credit asset may include extending the contract period, modifying the payment time of interest, and
modifying agreement rate and so on. If the contractual cash flow modification of the credit asset is
due to the financial difficulty of the borrower, it is deemed as a impairment of the financial asset. If the
contractual cash flow modification is not due to the financial difficulties of the borrower, the existing or
projected unfavorable changes in the operating, financial or economic conditions under the borrower's
performance or the borrower's ability to make the borrower's ability to perform its debt obligations
vary significantly. The cause of anomalies or other bad debts is supplemented by an assessment of
whether the credit risk of financial assets has increased significantly.
(8) Measuring the expected credit losses
A. Adoption of methods and assumptions
After considering the attributes of financial assets and credit assets and the adequacy of default
experience, internal historical data or the information from external credit rating agency is used to
estimate the Probability of default (PD), Loss given default (LGD) , Exposure at default (EAD) and
other credit risk components.
In order to assess the expected credit losses of credit assets, the Bank and its subsidiaries are
divided into the following combinations depending on the credit risk characteristics such as the
identity of borrowers, products, and type of collateral:
Corporate banking
Government and public institution
Financial institution( including banks, ticket companies, securities finance companies)
Large Enterprise
The guarantee of the credit guarantee mechanism
Secured
Non-secured
Medium and small enterprises
The guarantee of the credit guarantee mechanism
Secured
Non-secured
Private banking
Mortgage
Microcredit
Other-Secured
Other-Non-secured
Entrepreneurship
The guarantee of the credit guarantee mechanism
Secured
Non-secured
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If the credit risk on a credit asset has not increased significantly since initial recognition or the
credit asset has low credit risk at the reporting date, the Bank and its subsidiaries shall measure
the allowance for impairment using the 12- month expected credit losses; if the credit risk on a
financial instrument has increased significantly or credit-impaired since initial recognition, the
Bank and its subsidiaries shall measure the allowance for impairment using the lifetime expected
credit losses.
In order to measure expected credit losses, the Bank and its subsidiaries considers the default
probability (Probability of default, "PD") of borrowers, and loss given default rate ("LGD")
multiplying the exposure at default ("EAD"), taking into account the time value of money as
well evaluate 12- month and lifetime loss.
Default probability is the default probability of the borrower (default and credit impairment of
financial assets), and the loss given default rate is the rate of loss caused by default by the
borrower. The default probability and default loss rate used in the impairment assessment of the
credit business are based on internal historical information of each group, and adjusted based on
current observable information and forward-looking general economic information.
The Bank and its subsidiaries measures the EAD based on the book value of loans at reporting
date. When estimating the 12-month and lifetime expected credit losses of the loan commitments
and financial guarantee contracts, the definition of the credit risk increasing significantly and
the credit-impaired assets are based on the rules mentioned above. Additionally, in order to
determine the EAD used to calculate expected credit loss of off-balance sheet items, the Bank
and its subsidiaries adopts the credit conversion factor(CCF) of standardized approach in credit
risk which is legislated in the regulation of Proprietary Capital and Risk Capital of Banks.
B. Consideration of forward-looking information
The Bank and its subsidiaries obtains forward-looking information which it takes into consideration
when determining whether the credit risk of financial instruments has increased significantly
since initial recognition and assessing the expected credit losses. The Bank and its subsidiaries
identified the relevant macroeconomic factors for credit risk of each portfolio by analyzing the
historically data. These macroeconomic factors include Taiwan GDP (not seasonally adjusted),
Taiwan's actual industrial production index, Taiwan's annual growth rate of retail sales, Taiwan's
real sales price index, unemployment rate (seasonally adjusted), Cathay National Real Estate
Index (national), Taiwan's real consumer price index (Not seasonally adjusted) and Taiwan's
annual growth in retail sales or other factors. The various economic factors and their impacts on
Probability of Default ("PD") are different depending on the type of financial instruments.
In order to determine the credit risk of investment in debt instruments at amortized cost and at
fair value through other comprehensive income has increased significantly, the Bank and its
subsidiaries uses the changes of external ratings published by international credit rating agencies
as the quantitative indicators, while the assessment of expected credit losses are calculated by
using the external ratings, as well as PD and Loss Given Default("LGD"), published by Moody'
s. Since the international credit rating agencies have already considered the forward-looking
information while evaluating the credit ratings, which the Bank and its subsidiaries considered
to be appropriate after its assessment, the credit ratings will be included in the Bank and its
subsidiaries' assessment of related expected credit losses.
(9) Credit risk hedging or diminishing.
A. Collaterals
The Bank adopts a series of policies and procedures to mitigate credit risk and enhance credit
risk tolerance. The method applied most is to request customers to provide collaterals. The Bank
Taiwan Business Bank Annual Report 2018174
established collateral accreditation code of conduct in term of collateral management and total
loan amount to regulate the scope of collaterals and the accreditation method and regularly
inspects the collaterals. When the collaterals devaluate or the concern of devaluation occurs, the
Bank shall increase collaterals or retrieve part of the loans to ensure the creditor's right is intact.
B. Limit of credit risk and the control of credit risk concentration
a. In order to avoid the situation that the credit risk of single customer being too high, the
credit limit of an individual, a related party or a related enterprise shall be in conformity
with "Authorization method for subsection 3 of Article 33 of the Banking Act of the Republic
of China" and the credit limit authorization steps are regulated in the Key Points of Credit
Engagement Authorization and the Key Points of Credit Engagement Authorization for
Overseas Branches of the Bank.
b. To enhance the risk concentration management, the Bank established regulations in terms
of countries, financial institutions, industries and group enterprises. The relevant limits are
reviewed and approved annually and the usage of the credit is monitored on a daily basis. In
addition, the results are reported regularly.
C. General agreement of net amount settlement
The transactions of the Bank are mostly settled with gross amount. Part of the transactions
agreed on net amount settlement. When a default occurs, the Bank terminates all the
transactions with the counterparty and settles by net amount to further lower credit risk.
D. Enhancement of other credit
The assessment of credit business apply to credit 5P principles, credit risk is offset by dividing
self-liquidating loan commitments as the main, and set the accounts to master the repayment
of cash flow. Also in terms of the credit agreement stipulates the offset.(i.e. all kinds of deposits,
except prohibition of low or the parties agreement, the Bank can set off all the debts), thus to
reduce the loan amount, shorter loan repayment period or are considered part or all of expiration
of acceleration clauses. To strengthen the protection of creditor and reduce credit risk, using
qualified and effective enhancement, such as the requirement of real property, personal property,
demand deposits, time deposits, securities and the guarantee of financial institution or the
credit guarantee mechanism approved by government.(e.g., Small & Medium Enterprise Credit
Guarantee Fund, Agricultural Credit Guarantee Fund, Overseas Credit Guarantee Fund)
(10) Information on the financial assets of the Bank and its subsidiaries that have been credit derogated
and the collateral for mitigating potential losses are as follows:
December 31, 2018Carrying amount
Allowance impairment
Exposure (measured at
amortized cost)Value of
collateralImpairment financial assets:Receivables Interest receivable 65,815 41,204 24,611 -Discounts and loans 16,553,430 4,659,004 11,894,426 15,595,114Non-accrual loans transferred from non-loan financial assets
105,200 54,231 50,969 -
Total impairment financial assets $ 16,724,445 4,754,439 11,970,006 15,595,114
Note: The value of collateral is the real estate appraisal information and credit guarantee agency guarantee amount levied by the Bank and its subsidiaries' credit assets.
(11) Credit risk concentration
The Bank and its subsidiaries do not conduct significant transaction with single customer or single
trade counterparty. The total amount of discounts and loans, overdue loans in terms of individual
customer or individual trade counterparty is not significant. The information of credit risk concentration
of the Bank's discounts and loans and overdue loans are divided by industries, geographic areas and
collaterals and listed as follows:
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A. By industry
Distribution of discounts and loans, overdue loans based on industries.December 31, 2018 December 31, 2017
Industry Amount % Amount %Private business $ 680,785,977 62.58% 632,336,673 56.26%Public business 39,994,081 3.67% 18,230,026 1.62%Government institution 42,745,443 3.93% 154,558,889 13.75%Nonprofit organization 3,235,117 0.30% 3,404,583 0.30%Individual 288,709,795 26.54% 281,987,758 25.09%Foreign financial institution 12,772,131 1.17% 12,030,852 1.07%Foreign non-financial institution 19,680,400 1.81% 21,426,997 1.91%Total $ 1,087,922,944 100.00% 1,123,975,778 100.00%
B. By geographic area
Distribution of discounts and loans, overdue loans based on geographic area.December 31, 2018 December 31, 2017
Area Amount % Amount %Domestic $ 1,055,470,413 97.02% 1,090,517,929 97.02%Foreign 32,452,531 2.98% 33,457,849 2.98%
Total $ 1,087,922,944 100.00% 1,123,975,778 100.00%
C. By collateral
Distribution of discounts and loans, overdue loans based on collateral.December 31, 2018 December 31, 2017
Collateral Amount % Amount %Unsecured $ 248,476,152 22.84% 336,350,132 29.92%Stock 9,232,197 0.85% 8,941,574 0.80%Bond 19,051,511 1.75% 15,024,111 1.34%Real estate 672,375,170 61.80% 626,803,813 55.77%Chattel 12,702,253 1.17% 12,456,604 1.11%Notes receivable 3,100,812 0.28% 3,834,168 0.34%Guarantee 113,770,575 10.46% 110,879,350 9.86%Other 9,214,274 0.85% 9,686,026 0.86%Total $ 1,087,922,944 100.00% 1,123,975,778 100.00%
Note: Secured credit are categorized in its respective item per the type of the collaterals. Non-secured credit (no collateral provided) is classified in fiduciary credit. If the credit amount is higher than the accreditation value, the credit amount within the accreditation is classified in the respective item, the credit amount exceeds the accreditation value is classified in fiduciary credit. The accreditation value is the value calculated per the accreditation regulations of the Bank and its subsidiaries, not the discounted value of the signed contract.
(12) Maximum credit risk exposure
A. The maximum credit exposure of the assets in the consolidated financial statement is
approximately the book value when not considering collaterals or other credit enhancement
instruments. The maximum credit exposure off the consolidated balance sheet (when not
considering collaterals or other credit enhancement instruments and not revocable) was as
follows:Maximum credit risk exposure
Off balance sheet items December 31, 2018 December 31, 2017Loan commitment signed and irrevocable $ 104,313,061 100,285,316Irrevocable credit card loan commitment 29,329,058 29,541,077Signed but not used L/C credit amount 8,830,536 10,243,024Various guarantee proceeds 18,362,275 15,067,259Total $ 160,834,930 155,136,676
The Management of the Bank and its subsidiaries evaluated the credit risk exposure and believed
that it is able to continuously control and minimize the off-balance-sheet credit risk exposure due
to its strict appraisal process and regular subsequent examination.
Taiwan Business Bank Annual Report 2018176
B. The credit quality analyses of the financial assets
a. Credit quality analysis of discounts and loans, receivables, guarantee and commitments
12-month ECL Lifetime ECL-not impairedLifetime ECL-
impaired
December 31, 2018 Excellent Good Medium Acceptable Under standard No rating Subtotal Excellent Good Medium Acceptable Under standard No rating Subtotal High risk Allowance impairment
Total
Receivable
Credit card $ 546,365 130,485 268,846 39,017 8,732 298,288 1,291,733 1,972 613 3,183 1,026 2,080 - 8,874 - 3,439 1,297,168
Acceptances receivable 536,265 431,071 248,116 67,306 - 122,030 1,404,788 - 513 6,578 - - - 7,091 - 14,214 1,397,665
Accounts receivable factoring - - - - - 566,451 566,451 - - - - - - - - 5,665 560,786
Other receivables 293,606 1,522,169 311,620 53,250 9,029 2,825,043 5,014,717 351 491 1,727 1,515 2,404 33,998 40,486 65,815 112,412 5,008,606
Discounts and loans
Private banking 109,714,063 102,082,939 70,464,120 4,278,416 1,585,150 2,614,256 290,738,944 85,992 110,913 308,885 162,536 229,961 6,195 904,482 3,305,807 3,400,597 291,548,636
Corporate banking 173,049,850 271,957,972 191,589,607 49,334,606 4,071,360 88,236,547 778,239,942 13,919 37,688 172,299 336,415 925,825 - 1,486,146 13,247,623 9,633,554 783,340,157
Other financial assets
Exchange bills - - - - - 20 20 - - - - - - - - - 20
Non-accrual loans transferred from non- loan financial assets
- - - - - - - - - - - - - - 105,200 87,249 17,951
Total $ 284,140,149 376,124,636 262,882,309 53,772,595 5,674,271 94,662,635 1,077,256,595 102,234 150,218 492,672 501,492 1,160,270 40,193 2,447,079 16,724,445 13,257,130 1,083,170,989
Guarantee and commitments $ 24,354,317 10,928,309 10,963,731 1,610,303 365,707 112,194,037 160,416,404 44,469 18,621 88,434 23,137 47,438 - 222,099 196,427 289,136 160,545,794
b. Debt instrument
12-month ECL Lifetime ECL-not impaired
Lifetime ECL-
impaired
December 31, 2018 Investment Sub investment
High risk No rating Subtotal Investment Sub investment
High risk No rating Subtotal High risk Total Accumulated impairment
(Note)
Fair value through other comprehensive profit or loss- bonds
Overseas bonds $ 11,764,869 - - - 11,764,869 - - - - - - 11,764,869 1,910
NT bonds 53,643,189 - - - 53,643,189 - - - - - - 53,643,189 31,855
Debts investment of measured at amortized cost
Overseas bonds 41,889,974 - - - 41,889,974 - - - - - - 41,889,974 18,115
NT bonds 54,151,974 - - - 54,151,974 - - - - - - 54,151,974 26,126
Certificates of deposit with the Central Bank
165,150,000 - - - 165,150,000 - - - - - - 165,150,000 48,771
Negotiable certificates of deposit
371,676 - - - 371,676 - - - - - - 371,676 116
Total $ 326,971,682 - - - 326,971,682 - - - - - - 326,971,682 126,893
Note: The cumulative impairment of the bond which measured at fair value through other comprehensive profit or loss is recognized as other equity.
C. The Maximum credit risk exposure for financial instruments are not subject to Impairment
regulations are as follows:
December 31, 2018Maximum credit risk exposure Collateral
Enhancement of other credit
Financial assets at fair value through profit or loss-Linked deposits $ 1,506,135 - -
-Debt investments 403,572 - --Commercial papers 4,581,217 - --Listed and OTC stocks 48,910 - --Beneficiary certificates 67,080 - - -Derivative instrument 327,690 176,599 627,412
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(13) Changes in the expected credit losses of the Bank and its subsidiaries
A. Receivables
For the year ended December 31, 2018
12-month ECLLifetime ECL-not impaired
Lifetime ECL- impaired Impaired (IFRS9)
Impairment difference of "Regulations Governing
the Procedures for Banking Institutions to
Evaluate Assets and Deal with Non- Performing and
Non- Accrual Loans " Total
Beginning balance $ 37,773 3,565 26,086 67,424 43,792 111,216
Changes in financial instruments that have been identified at the beginning of the period:
-Transfer to 12-months ECL 139 (114 ) (25 ) - -
-Transfer to lifetime ECL (1,958 ) 2,010 (52 ) - -
-Transfer to to the credit- impaired financial assets (233 ) (43 ) 116 (160 ) (160 )
-The financial assets that have been derecognized (8,859 ) (27 ) (11,328 ) (20,214 ) (20,214 )
New financial assets originated or purchased 19,921 127 6,304 26,352 26,352
Write-off - - (16,607 ) (16,607 ) (16,607 )
Other changes (8,319 ) 7,290 36,710 35,681 35,681
Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-Performing and Non- Accrual Loans " - - - - (538 ) (538 )
Ending balance $ 38,464 12,808 41,204 92,476 43,254 135,730
B. Discounts and loans
For the year ended December 31, 2018
12-month ECLLifetime ECL-not impaired
Lifetime ECL- impaired Impaired (IFRS9)
Impairment difference of "Regulations Governing
the Procedures for Banking Institutions to
Evaluate Assets and Deal with Non- Performing and
Non- Accrual Loans " Total
Beginning balance $ 2,277,834 32,442 3,323,101 5,633,377 6,469,695 12,103,072
Changes in financial instruments that have been identified at the beginning of the period:
-Transfer to 12-months ECL 12,113 (2,007 ) (10,106 ) - -
-Transfer to lifetime ECL (2,330 ) 12,155 (9,825 ) - -
-Transfer to to the credit- impaired financial assets (15,454 ) (12,239 ) 27,693 - -
-The financial assets that have been derecognized (1,319,687 ) (6,169 ) (556,996 ) (1,882,852 ) (1,882,852 )
New financial assets originated or purchased 1,398,612 4,163 1,222,628 2,625,403 2,625,403
Write-off - - (2,596,896 ) (2,596,896 ) (2,596,896 )
Other changes 423,289 38,071 3,259,405 3,720,765 3,720,765
Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-Performing and Non- Accrual Loans " - - - - (935,341 ) (935,341 )
Ending balance $ 2,774,377 66,416 4,659,004 7,499,797 5,534,354 13,034,151
Taiwan Business Bank Annual Report 2018178
C. Other financial assets
For the year ended December 31, 2018
12-month ECLLifetime ECL-not impaired
Lifetime ECL- impaired Impaired (IFRS9)
Impairment difference of "Regulations Governing
the Procedures for Banking Institutions to
Evaluate Assets and Deal with Non- Performing and
Non- Accrual Loans " Total
Beginning balance $ - - 55,668 55,668 33,457 89,125
Changes in financial instruments that have been identified at the beginning of the period:
-Transfer to to the credit- impaired financial assets - - 160 160 160
-The financial assets that have been derecognized - - (13 ) (13 ) (13 )
New financial assets originated or purchased - - 37,683 37,683 37,683
Write-off - - (39,267 ) (39,267 ) (39,267 )
Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-Performing and Non- Accrual Loans " - - - - (439 ) (439 )
Ending balance $ - - 54,231 54,231 33,018 87,249
D. Guarantee and commitments
For the year ended December 31, 2018
12-month ECLLifetime ECL-not impaired
Lifetime ECL- impaired Impaired (IFRS9)
Impairment difference of "Regulations Governing
the Procedures for Banking Institutions to
Evaluate Assets and Deal with Non- Performing and
Non- Accrual Loans " Total
Beginning balance $ 80,439 105 37,541 118,085 85,703 203,788
Changes in financial instruments that have been identified at the beginning of the period:
-Transfer to 12-months ECL 36 (36 ) - - -
-Transfer to lifetime ECL (304 ) 304 - - -
-Transfer to to the credit- impaired financial assets (20 ) (3 ) 23 - -
-The financial assets that have been derecognized (25,702 ) (39 ) (283 ) (26,024 ) (26,024 )
New financial assets originated or purchased 46,732 77 712 47,521 47,521
Other changes 4,960 10 (9,470 ) (4,500 ) (4,500 )
Impairment difference of "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-Performing and Non- Accrual Loans " - - - - 68,351 68,351
Ending balance $ 106,141 418 28,523 135,082 154,054 289,136
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E. Debts investment
For the year ended December 31, 2018
12-month ECLLifetime ECL -not
impairedLifetime ECL -
impaired Total
Beginning balance $ 98,052 - - 98,052
Added 84,844 - - 84,844
Derecognition (51,475 ) - - (51,475 )
Other changes (4,528 ) - - (4,528 )
Ending balance $ 126,893 - - 126,893
(14) Credit quality and overdue impairment loss of financial assets
Part of the financial assets, such as cash and cash equivalent, due from the Central Bank and call
loans to banks, financial assets at fair value through profit or loss, bills and bonds purchased under
resell agreement, guarantee deposits paid and operation guarantee deposits and settlement funds are
considered of minimum credit risk due to the good credit ratings of the trade counterparties.
Except for the abovementioned items, the credit quality analyses of the rest of the financial assets
were as follows:
A. Credit quality analysis of discounts and loans as well as receivablesNot overdue and not impair ent amount
Overdue but not impaired
(B)
Impaired amount
(C)Total
(A)+(B)+ (C)
Loss pro vided (D)
Net Amount (A)+(B)+(C)-(D)December 31, 2017 Excellent Good Medium Acceptable
Under standard No rating
Subtotal (A)
With objective evidence of impairment
Without objective
evidence of impairment
Receivable-Credit card $ 360,165 257,699 224,566 107,764 7,744 290,598 1,248,536 12,786 - 1,261,322 - 2,906 1,258,416-Other 647,362 1,944,782 251,796 1,941 - 4,325,435 7,171,316 - 69,966 7,241,282 40,223 64,631 7,136,428Discounts and loans 242,043,773 348,959,420 260,885,564 60,456,908 12,037,651 180,421,547 1,104,804,863 5,254,606 13,916,309 1,123,975,778 3,014,849 9,143,164 1,111,817,765Other financial assets - 135 - - - - 135 7 208,339 208,481 84,410 1 124,070Total $ 243,051,300 351,162,036 261,361,926 60,566,613 12,045,395 185,037,580 1,113,224,850 5,267,399 14,194,614 1,132,686,863 3,139,482 9,210,702 1,120,336,679
The abovementioned "Excellent" refers to the position which belongs to level 1 to level 4 of the
Bank' s internal credit rating system, "Good" refers to the position belongs to level 5 to level 9,
"Medium" refers to the position belongs to level 10 to level 17, "Acceptable" refers to the position
belongs to level 18 to level 23, "under standard" refers to the position belongs to level 24 to level
26 and "No rating" refers to the position which possesses no credit rating in the Bank's internal
rating system.
B. Credit quality analysis based on internal credit rating criteria of the not overdue and not impaired
discounts and loans and expressed by customer typesDecember 31, 2017 Excellent Good Medium Acceptable Under standard No rating Total
Private banking Secured $ 82,168,276 99,519,055 72,240,137 7,749,168 3,910,144 949,765 266,536,545 Non-secured 1,596,472 3,561,134 5,770,439 717,977 259,144 33,840 11,939,006Corporate banking Government and public institution - 8,500,026 - 9,730,000 - 154,546,400 172,776,426 Financial institution 445,200 9,783,651 2,925,696 1,056,286 - - 14,210,833 Margin loans receivable - - - - - 2,341,425 2,341,425 Large Enterprise- credit and guarantee fund
56,423 127,688 61,838 50,808 1,465 - 298,222
Large Enterprise-secured 53,936,174 12,548,765 8,863,437 781,039 1,124,643 13,400 77,267,458 Large Enterprise-unsecured 28,442,656 40,900,796 17,435,848 3,561,199 - 2,648,212 92,988,711 Medium and small enterprises- credit and guarantee fund
8,107,965 31,059,909 39,542,324 3,893,304 701,471 125,077 83,430,050
Medium and small enterprises- secured
54,334,619 120,145,035 90,604,804 27,324,111 4,943,616 6,323,051 303,675,236
Medium and small enterprises- unsecured
12,955,988 22,813,361 23,441,041 5,593,016 1,097,168 13,440,377 79,340,951
Total $ 242,043,773 348,959,420 260,885,564 60,456,908 12,037,651 180,421,547 1,104,804,863
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C. Credit quality analysis of security investmentsNot overdue and impaired position Overdue but
not impairedposition (B)
Impairment Total Loss Net amount
December 31, 2017 Investment Sub
investment High risk No rating Subtotal (A) position (C) (A)+(B)+(C) provided (D) (A)+(B)+(C)- (D)
Financial assets at fair value through profit or loss -Overseas bonds $ 148,483 - - 89,169 237,652 - - 237,652 - 237,652Available-for-sale financial assets-net -Overseas bonds 7,447,231 - - - 7,447,231 - - 7,447,231 - 7,447,231 -'NT bonds 56,161,047 - - - 56,161,047 - - 56,161,047 - 56,161,047
Hold-to-maturity financial assets-net -Overseas bonds 29,462,683 - - - 29,462,683 - - 29,462,683 - 29,462,683 -'NT bonds 49,174,400 - - - 49,174,400 - - 49,174,400 - 49,174,400
For the investment ratings of above tables, investment grade refers to AAA to BBB-, Sub
investment grade refers to BB+ ~B-, high risk refers to CCC+ and below. N¬o rating refers to the
bonds not graded by credit rating institution.
(15) Aging analysis of financial assets which are overdue but not impaired
Operation process delay of loan borrowers and other administrative factors may cause financial
assets to be overdue but not impaired. According to the internal risk management regulations of the
Bank and its subsidiaries, financial assets overdue within 90 days are not considered impaired unless
there are other evidence indicates otherwise.December 31, 2017
within 1 month 1~3 months over 3 months TotalAccount receivables -Credit card $ 4,709 8,009 68 12,786Discounts and loans Private banking -Secured 1,628,880 755,624 - 2,384,504 -Unsecured 77,463 12,041 - 89,504 Corporate banking -Large enterprise-unsecured 231,579 - - 231,579 -Medium and small enterprises- credit and guarantee fund
431,435 109,536 - 540,971
-Medium and small enterprises- secured
1,637,361 41,399 - 1,678,760
-Medium and small enterprises- unsecured
329,288 - - 329,288
Other financial assets - Exchange bills negotiated
7 - - 7
Total $ 4,340,722 926,609 68 5,267,399
(16) Impairment loss analysis of the financial assets
A. Discounts and loansDecember 31, 2017
Item Discounts and loans Allowance for bad debtsWith objective evidence of impairment
Individual assessment $ 9,175,584 1,526,757Collective assessment
Government and public institution 12,489 12,489Large enterprise- credit and guarantee fund 677 677Medium and small enterprises-credit and guarantee fund 2,110,157 566,066Medium and small enterprises-secured 445,903 379,086Medium and small enterprises-unsecured 67,484 35,018Private banking-secured 1,914,114 393,744Private banking-unsecured 188,400 100,003Preliminary negotiation projects 1,501 1,009Subtotal 13,916,309 3,014,849
Without objective evidence of impairment
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Item Discounts and loans Allowance for bad debtsCollective assessment
Government and public institution $ 172,776,426 164,688Financial institution 14,210,833 13,546Margin loans receivables 2,341,425 2,232Large enterprise- credit and guarantee fund 298,222 17,226Large enterprise secured 77,267,458 595,852Large enterprise-unsecured 93,220,290 1,800,673Medium and small enterprises-credit guarantee fund 83,971,021 1,435,548Medium and small enterprises-secured 305,353,996 3,434,854Medium and small enterprises-unsecured 79,670,239 1,014,982Private banking-secured 268,921,049 600,879Private banking-unsecured 12,028,510 62,684Subtotal 1,110,059,469 9,143,164
Total $ 1,123,975,778 12,158,013
B. ReceivablesDecember 31, 2017
Item Receivables Allowance for bad debtsWith objective evidence of impairment
Individual assessment $ 45,871 30,834Collective assessment 24,095 9,389Subtotal 69,966 40,223
Without objectiveCollective assessment
Credit card proceeds receivable 1,261,322 2,906Accounts receivable 577,647 15,589Installment accounts receivable and rents receivable 1,184,612 17,318Other receivables 248,192 1,745Acceptances receivable 1,694,044 16,940Accounts receivable factoring 512,299 5,123Notes receivable 802 -Interest receivable 2,953,720 7,916Subtotal 8,432,638 67,537
Total $ 8,502,604 107,760
C. Other financial assetsDecember 31, 2017
Item Other financial assets Allowance for bad debtsWith objective evidence of impairment
Individual assessment $ 147,423 1,250Collective assessment
Guarantee, acceptance and other advances 12,081 63,670Credit card 48,835 19,490
Subtotal 208,339 84,410Without objective evidence of impairment
Collective assessmentExchange bills negotiated 142 1
Total $ 208,481 84,411
(17) Collateral management policy
A. Collaterals are recognized under the account of other assets per the rules of "Regulations
Governing the Preparation of Financial Reports by Public Banks".
B. Details were as follows:
Collaterals refer to the collaterals provided by clients as guarantee which are undertaken through
public auction when the debtor is not able to fulfill its obligation. The collaterals assumed are
recognized using the prices undertaken per the rules of "Regulations Governing the Preparation
Taiwan Business Bank Annual Report 2018182
of Financial Reports by Public Banks" and measured by the book value or the fair value deducted
by cost of sale, whichever is lower, at the end of the period. Collaterals will be sold when they
are available to be sold and the proceeds received will be used to reduce the book amount of
collaterals.
(18) Disclosure required under "Regulations Governing the Preparation of Financial Reports by Public
Banks "
A. Loan quality:
Unit:In Thousands of New Taiwan Dollars, %
Month/Year December 31, 2018
ItemsNon-performing
loans Total loansNon-performing
loan ratioAllowance for credit losses Coverage ratio
Corporate finance
Secured 1,535,013 489,854,376 0.31% 5,777,173 376.36%Unsecured 507,030 312,809,178 0.16% 3,856,381 760.58%
Consumer finance
Residence mortgages(Note 4) 533,982 148,166,073 0.36% 1,762,103 329.99%Cash cards - 30 -% - -%Microcredit(Note 5) 14,358 835,206 1.72% 17,130 119.31%
Others (Note 6)
Secured 686,075 126,434,434 0.54% 1,496,212 218.08%Unsecured 31,053 9,823,647 0.32% 125,152 403.03%
total loan business 3,307,511 1,087,922,944 0.30% 13,034,151 394.08%
Overdue loans Total receivables Overdue ratioAllowance for
doubtful accountsRatio of allowance to overdue loans
Credit cards business 1,701 1,342,892 0.13% 27,773 1,632.75%Account receivable factoring-without recourse (Note 7) - 566,451 -% 5,665 -%
Month/Year December 31, 2017
ItemsNon-performing
loans Total loansNon-performing
loan ratioAllowance for credit losses Coverage ratio
Corporate finance
Secured 2,210,090 459,502,261 0.48% 4,883,523 220.96%Unsecured 502,548 386,586,608 0.13% 4,280,256 851.71%
Consumer finance
Residence mortgages(Note 4) 559,849 144,878,539 0.39% 1,543,058 275.62%Cash cards - 83 -% - -%Microcredit(Note 5) 15,497 921,674 1.68% 18,114 116.89%
Others (Note 6)
Secured 369,239 121,235,830 0.30% 1,278,420 346.23%Unsecured 54,400 10,850,783 0.50% 154,642 284.27%
total loan business 3,711,623 1,123,975,778 0.33% 12,158,013 327.57%
Overdue loans Total receivables Overdue ratioAllowance for
doubtful accountsRatio of allowance to overdue loans
Credit cards business 1,778 1,310,157 0.14% 22,396 1,259.62%Account receivable factoring-without recourse (Note 7) - 512,299 -% 5,123 -%
Note 1 Non-performing loans represent the amount of overdue loans as reported in accordance with the "Regulations on the Procedures for Banking Institutions to Evaluate Assets and Deal with Past Due/Non- performing Loans". The credit card overdue loans represent the amount of overdue loans as reported in accordance with Jin-Kuan-Yin-(4)-Zi No. 0944000378, dated July 6, 2005.
Note 2 Non-performing loan ratio = Non-performing loans÷ total loans; Credit card delinquency ratio = Overdue receivables÷ balance of receivables
Note 3 Coverage ratio for loans = allowance for credit losses ÷ non- performing loans; Coverage ratio for credit card business = allowance for credit losses ÷ overdue receivables.
Note 4 For residential mortgage loans, a borrower provides his/her (or spouse' s or minor child' s) house as collateral in full and pledges it to the financial institution for the purpose of obtaining funds to purchase property and to construct or repair a house.
Note 5 Microcredit loans are defined by Jin-Kuan-Yin-(4)-Zi No. 09440010950, dated December 19, 2005, and do not include credit cards or cash cards.
Note 6 Others in consumer finance are secured and unsecured consumer loans other than residential mortgage loans, cash card loans, and microcredit loans, and do not include credit cards.
Note 7 In accordance with Jin-Kuan-Yin-(5)-Zi No. 0944000494, dated July 19, 2005, the amounts of without-recourse factoring will be classified as overdue receivables within three months from the date that suppliers or insurance companies resolve
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not to compensate the loss.B. Overdue loans and receivables exempted from reporting
December 31, 2018 December 31, 2017
Loans may be exempted from reporting as a
non-performing loan
Receivables may be exempted from reporting as
overdue receivables
Loans may be exempted from reporting as a
non-performing loan
Receivables may be exempted from reporting as
overdue receivables
Pursuant to a contract under a debt negotiation plan
$ 1,305 4,139 2,016 5,636
Pursuant to a contract under a debt liquidation plan and a debt relief plan
76,801 36,408 83,319 41,422
Total $ 78,106 40,547 85,335 47,058
Note 1: In accordance with Jin-Kuan-Yin-(1)-Zi No. 09510001270, dated April 25, 2006, a bank is required to make supplemental disclosure of credit information which was approved under the debt coordination mechanism of unsecured consumer debts by the Bankers Association of the R.O.C.
Note 2: In accordance with Jin-Kuan-Yin-(1)-Zi No. 09700318940, dated September 15, 2008, a bank is required to make supplemental disclosure of credit information once debtors apply for pre-negotiation, relief and liquidation under the "Consumer Debt Clearance Act."
C. Concentration of credit extensions
Unit:In Thousands of New Taiwan Dollars, %
December 31, 2018
Ranking Group enterprise Credit amount Credit amount to equity ratio (%)
1 A company. (Railway transportation) 26,900,374 31.70%2 B group. (Steel rolling and extruding ) 8,830,249 10.41%3 C group. (Real estate for sale and rental with own or leased property) 8,327,022 9.81%4 D group. (Computer manufacturing) 6,796,732 8.01%5 E group. (Real estate development) 6,645,072 7.83%6 F group. (Other holding companies) 5,918,472 6.97%7 G group. (Chemical raw materials manufacturing) 5,379,013 6.34%8 H group. (Real estate development)) 4,311,031 5.08%9 I group. (Real estate for sale and rental with own or leased property) 4,173,592 4.92%
10 J group. (Steel smelting) 4,153,903 4.90%
December 31, 2017
Ranking Group enterprise Credit amount Credit amount to equity ratio (%)
1 A company. (Railway transportation) 27,877,573 36.77%
2 B group. (Steel rolling and extruding) 8,677,737 11.45%3 C group. (Real estate for sale and rental with own or leased property) 7,457,330 9.84%4 E group. (Real estate development) 6,659,072 8.78%5 K group. (Integrated circuits manufacturing) 6,000,000 7.91%6 G group. (Chemical raw materials manufacturing) 5,750,724 7.58%7 D group. (Computer manufacturing) 4,990,052 6.58%8 J group. (Steel smelting) 4,989,104 6.58%9 F group. (Other holding companies) 4,349,153 5.74%10 I group. (Real estate for sale and rental with own or leased property) 3,904,010 5.15%
Note 1 The top ten enterprise groups other than government or stated-owned enterprises are ranked according to their total outstanding credit amount. If the borrowers belong to an enterprise group, the aggregate credit balance of the enterprise should be calculated and disclosed as a code number for each such borrower together with an indication of the borrowers' line of business. In addition, if the borrowers are enterprise groups, the enterprise group' s industry sector with the maximum exposure to credit risk in its main industry sector should be disclosed, along with the "class" of the industry, in compliance with the Standard Industrial Classification System of the R.O.C. posted by the Directorate-General of Budget, Accounting and Statistics, Executive Yuan, R.O.C.
Note 2 Enterprise group is as defined in Article 6 of the "Supplementary Provisions to the Taiwan Stock Exchange Corporation Rules for Review of Securities Listings".
Note 3 Consists of loans (foreign currency imports financing, foreign currency export financing, notes discounted, customer overdrafts, short-term unsecured loans, short-term secured loans, receivables from securities lending, medium-term unsecured loans, medium-term secured loans, long-term unsecured loans long-term secured loans, non-performing loans), foreign currency long positions, accounts receivable factoring- without recourse, bankers' acceptance receivable, guarantees receivable.
Note 4 In the calculation of Credit amount to equity ratio, the domestic bank should be calculated in the net value of head office. The Foreign bank should be calculated in the net value of Taiwan branch.
Taiwan Business Bank Annual Report 2018184
(a) Liquidity risk
(1) The origin and definition of liquidity risk
Liquidity risk refers to the potential financial loss results from the inability to liquidate assets or obtain finance
to fulfill the financial obligation which is going to mature with sufficient fund, such as early rescind of time
deposits, the channels and terms to call loan from other bank are deteriorated due to the influence of specific
markets and the default of loan customers worsen and it is harder for the Bank to receive payments and
liquidate financial instruments. The abovementioned situations may diminish the source of cash for the Bank
to undertake loan business, trades and investment activities. Under some extreme circumstances, the lack
of liquidity may increase the potential possibility of reduction of the overall position of consolidated financial
statement, sale of assets and inability to fulfill loan obligation. Liquidity risk is an inherent risk of bank
operations and is influenced by specific or overall events in various markets. Those events include but not
limited to: Credit event, merger or buyout, systematic strike and natural disaster.
(2) The management policy, process and measurement of liquidity risk
A. Policy
a. In accordance with the target and limit for liquidity risk management approved by the board of
directors and monitor all liquidity risk positions.
b. Established "Directions Governing the Capital Liquidity Risk Management of Taiwan Business Bank"
and "Remarks Governing the Capital Liquidity Risk Management of Taiwan Business Bank" to serve
as guidance to effectively control capital liquidity risk.
c. Overseas branches shall regulate the code of conduct for liquidity risk management based on
business characteristics and the regulations of local authorities. After being approved by the general
manager, the Risk Management Department will be in charge of monitoring liquidity risk.
B. Process
a. Finance Department is in charge of daily capital deployment to ensure that the capital is sufficient to
cope with various demands for capital.
b. Risk Management Department is in charge of the identification, measurement, supervision and control
of capital liquidity risk to establish a firm operation process and structure.
c. Risk Management Department reports the result of capital liquidity risk measurement to the Assets
and Liabilities Management Committee on a monthly basis and reports the results of capital liquidity
risk and pressure test to the board of directors quarterly.
C. Measurement
a. Maturity gap: To place the inflows and outflows of capital into various time zones accordingly based on
the remaining days to maturity and calculate the gap of capital of each time zone in order to measure
the capital deficiency of each time zone.
b. Loan-deposit ratio: To calculate the deposits the Bank received which are used to conduct loan
business. In other words, the percentage of the total loan amount accounts for the total deposit
amount.
c. Capital concentration and stability: In order to prevent the Bank from over- relying on single trade
counterparty, product or market, the Bank observes several aspects such as the changes in large time
deposit customers, the percentage of demand deposits and the continuity of deposits.
d. Pressure test: Except for monitoring the capital demand under normal circumstances, the
Bank conducts pressure test regularly in order to evaluate the capital liquidity under abnormal
circumstances and ensure that the Bank is equipped with sufficient capital.
(3) Financial assets possessed for managing liquidity risk and maturity analysis for non-derivative financial liability
A. Financial assets possessed for managing liquidity risk
The Bank possesses cash and other high liquidity interest yielding assets to cope with payment
obligations and potential emergent capital demands in the market. The assets possessed for managing
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liquidity risk include cash and cash equivalent, due from the Central Bank and call loans to banks,
financial assets at fair value through profit or loss, discounts and loans, financial assets at fair
value through other comprehensive income (available-for-sale financial assets are applicable
before the year ended December 31, 2017), Investment in debt instruments at amortized cost(
held-to-maturity financial assets are applicable before the year ended December 31, 2017)
B. Maturity analysis for non-derivative financial liabilities
The table below shows the cash outflows from the non-derivative financial liabilities which are
possessed by the Bank based on the remaining days from the consolidated financial statement
date to the contract maturity date. The amount disclosed is based on the cash flows of the
contracts and thus part of the amount disclosed may not correspond to the amount disclosed in
the consolidated financial statement.
December 31, 2018
0-30 days 31-90 days 91 days-1 year 1-5 years Over 5 years Total
Major matured cash outflow $ 830,674,488 181,906,588 357,705,431 76,020,934 24,580,641 1,470,888,082Deposits from the Central Bank and banks 316,275 - - - - 316,275
Overdrafts on banks 812,952 - - - - 812,952Call loans from the Central Bank and banks 22,460,469 11,591,288 307,350 - - 34,359,107
Due to the central bank and other banks 30,735 - 30,735 530,518 - 591,988
Financial liabilities designated at fair value through profit or loss - - - - 9,162,841 9,162,841
Securities sold under repurchase agreement 369,337 626,644 661,725 - - 1,657,706
Interest payable 325,088 638,988 1,155,732 63,348 51 2,183,207Deposits transferred from Chunghwa Post Co., Ltd. 7,500,000 15,108,258 33,217,951 - - 55,826,209
Demand deposits 694,579,076 - - - - 694,579,076Time deposits 103,697,597 153,933,750 322,112,518 36,124,148 20,635 615,888,648Remittance 573,379 - - - - 573,379Financial debentures - - - 36,400,000 11,050,000 47,450,000Appropriated loan fund 9,580 7,660 219,420 2,902,920 4,347,114 7,486,694
December 31, 2017
0-30 days 31-90 days 91 days-1 year 1-5 years Over 5 years Total
Major matured cash outflow $ 842,064,235 172,333,314 362,842,204 67,423,723 22,385,238 1,467,048,714Deposits from the Central Bank and banks 404,736 - - - - 404,736
Overdrafts on banks 1,680,993 - - - - 1,680,993Call loans from the Central Bank and banks 24,404,249 8,488,697 1,781,877 - - 34,674,823
Due to the central bank and other banks - - - 31,464 - 31,464
Financial liabilities at fair value through profit or loss - - - - 3,565,337 3,565,337
Securities sold under repurchase agreement 211,737 236,468 657,391 - - 1,105,596
Interest payable 345,792 389,195 902,517 65,169 28 1,702,701Deposits transferred from Chunghwa Post Co., Ltd. 7,647,014 20,136,389 28,985,815 - - 56,769,218
Demand deposits 712,974,517 - - - - 712,974,517Time deposits 93,787,034 143,079,895 330,132,774 35,437,090 9,988 602,446,781Remittance 602,413 - - - - 602,413Financial debentures - - - 28,000,000 13,000,000 41,000,000Appropriated loan fund 5,750 2,670 381,830 3,890,000 5,809,885 10,090,135
Taiwan Business Bank Annual Report 2018186
(4) Derivative financial liabilities maturity analysis
A. Derivative financial instruments settled by net amount
The derivative instruments of the Bank and its subsidiaries whose possession are settled by
net amount include foreign derivative instruments, such as non-delivery forward contracts,
foreign exchange options settled by net amount. After evaluation the Bank concluded that the
maturity date is the basic element to comprehend all the derivative financial instruments listed
in the consolidated financial statement. The amount disclosed is based on the cash flows of the
contracts and thus part of the amount disclosed may not correspond to the amount disclosed in
the consolidated financial statement.
The maturity analysis of derivative financial liabilities settled by net amount is as follows:
December 31, 2017
0-30 days 31-90 days 91-180 days 181 days to 1 year Over1 year Total
Derivative financial liabilities at fair value through profit or loss
Foreign exchange derivative instrument
$ - - 1,240 1,140 - 2,380
B. Derivative financial instruments settled by gross amount
The derivative instruments of the Bank' s possession settled by gross amount include the
following:
a. Foreign exchange derivative financial instrument: Foreign exchange options settled by gross
amount, foreign exchange forward contracts and currency swap contracts.
b. Interest rate derivative financial instruments: interest rate swap contracts.
The table below shows the derivative financial instruments of the Bank and its subsidiaries
whose possession are settled by gross amount based on the remaining days from the
consolidated financial statement date to the contract maturity date. The amount disclosed
is based on the cash flow of the contracts and thus part of the amount disclosed may not
correspond to the amount disclosed in the consolidated financial statement. The maturity
analysis for derivative financial liabilities settled by gross amount is as follows:
December 31, 2018 0-30 days 31-90 days 91-180 days 181 days to 1 year Over 1 year Total
Derivative financial instruments at fair value through profit or loss
Foreign exchange derivative instrument
Cash outflow $ 26,416,112 36,190,587 2,891,375 3,868,099 - 69,366,173
Cash inflow 26,087,200 36,209,231 2,865,909 3,781,737 - 68,944,077
Total cash outflow 26,416,112 36,190,587 2,891,375 3,868,099 - 69,366,173
Total cash inflow 26,087,200 36,209,231 2,865,909 3,781,737 - 68,944,077
Net cash flow $ 328,912 (18,644 ) 25,466 86,362 - 422,096
December 31, 2017 0-30 days 31-90 days 91-180 days 181 days to 1 year Over 1 year Total
Derivative financial instruments at fair value through profit or loss
Foreign exchange derivative instrument
Cash outflow $ 59,440,726 20,530,843 5,330,127 4,499,139 - 89,800,835
Cash inflow 58,097,696 20,442,073 5,346,372 4,451,488 - 88,337,629
Total cash outflow 59,440,726 20,530,843 5,330,127 4,499,139 - 89,800,835
Total cash inflow 58,097,696 20,442,073 5,346,372 4,451,488 - 88,337,629
Net cash flow $ 1,343,030 88,770 (16,245 ) 47,651 - 1,463,206
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(5) Maturity analysis of off balance sheet items
The table below shows the maturity analysis of the off-balance-sheet items of the Bank based on the
remaining days from the consolidated financial statement date to the contract maturity date. For the
financial guarantee contracts issued, the maximum amount of the guarantee is listed in the earliest
time zone that the guarantee may be executed. The amount disclosed is based on the cash flows of
the contracts and thus part of the amount disclosed may not correspond to the amount disclosed in
the consolidated financial statement.
December 31, 2018 0-30 days 31-90 days 91-180 days 181 days to 1 year Over 1 year Total
Issued and irrevocable loan commitment
$ 156,603 5,403,482 40,354,160 11,521,819 46,876,997 104,313,061
Irrevocable credit card loan commitment
3,491 8,674 15,695 59,713 29,241,485 29,329,058
Issued but not yet executed letter of credit
3,100,804 4,493,508 754,936 431,297 49,991 8,830,536
Miscellaneous guarantee 18,362,275 - - - - 18,362,275Total $ 21,623,173 9,905,664 41,124,791 12,012,829 76,168,473 160,834,930
December 31, 2017 0-30 days 31-90 days 91-180 days 181 days to 1 year Over 1 year Total
Issued and irrevocable loan commitment
$ 224,055 1,095,821 1,132,840 32,673,322 65,159,278 100,285,316
Irrevocable credit card loan commitment
3,098 234,098 203,981 52,460 29,047,440 29,541,077
Issued but not yet executed letter of credit
3,662,841 5,462,286 698,346 141,046 278,505 10,243,024
Miscellaneous guarantee 15,067,259 - - - - 15,067,259Total $ 18,957,253 6,792,205 2,035,167 32,866,828 94,485,223 155,136,676
(6) Maturity analysis of lease contract commitments
The Bank and its subsidiaries only has operating lease contract, operating lease commitment refers
to, when the Bank and its subsidiaries is the lessor or lessee and under the irrevocable operating
lease conditions, the minimum total future rent payment. Below tables show the maturity analysis of
the Bank and its subsidiaries operating lease contract commitments:
December 31, 2018 Below 1 year 1-5 years Over 5 years Total
Operating lease expense (lessee) $ 328,756 476,264 65,366 870,386Operating lease income (lessor) 1,666 2,338 - 4,004
December 31, 2017 Below 1 year 1-5 years Over 5 years Total
Operating lease expense (lessee) $ 375,509 758,419 101,108 1,235,036Operating lease income (lessor) 1,025 1,389 - 2,414
The capital expenditure commitment of the Bank refers to the contract signed to obtain buildings and
equipment. The maturity analysis of the capital expenditure commitment of the Bank is as follows:
December 31, 2018 Below 1 year 1-5 years Over 5 years Total
Machinery and equipment $ 2,000,216 - - 2,000,216Communication and transportation equipment 16 - - 16Lease property 10,111 10,910 - 21,021Miscellaneous equipment 24 - - 24Total $ 2,010,367 10,910 - 2,021,277
December 31, 2017 Below 1 year 1-5 years Over 5 years Total
Machinery and equipment $ 714,899 - - 714,899Communication and transportation equipment 460 - - 460Lease property 10,068 20,342 - 30,410Miscellaneous equipment 75 - - 75Total $ 725,502 20,342 - 745,844
Taiwan Business Bank Annual Report 2018188
(7) Disclosures required by "Regulations Governing the Preparation of Financial Reports by Public
Banks"
A. Maturity analysis in New Taiwan dollars Unit : In Thousands of New Taiwan Dollars
December 31, 2018
Total
Amount during the maturity period from the balance sheet date to due date
0-10days 11-30days 31-90days 91-180days 181days-1year Over 1 year
Major maturity capital inflow
$ 1,386,992,267 142,043,052 117,357,985 158,442,815 154,433,257 103,970,117 710,745,041
Major maturity capital outflow
1,739,903,414 114,961,489 96,567,905 187,352,640 207,077,947 318,556,969 815,386,464
Gap (352,911,147 ) 27,081,563 20,790,080 (28,909,825 ) (52,644,690 ) (214,586,852 ) (104,641,423 )
Note: Listed amounts are denominated in New Taiwan dollars (i.e., excluding foreign – currency amounts) of the head office and domestic branches, including commitment of credit agreement and estimates to outflow $344,259,726.
December 31, 2017
Total
Amount during the maturity period from the balance sheet date to due date
0-10days 11-30days 31-90days 91-180days 181days-1year Over 1 year
Major maturity capital inflow
$ 1,364,209,249 125,241,132 130,619,593 128,736,427 176,150,942 169,428,890 634,032,265
Major maturity capital outflow
1,721,231,342 81,314,262 102,439,479 181,974,118 215,654,621 308,463,480 831,385,382
Gap (357,022,093 ) 43,926,870 28,180,114 (53,237,691 ) (39,503,679 ) (139,034,590 ) (197,353,117 )
Note: Listed amounts are denominated in New Taiwan dollars (i.e., excluding foreign – currency amounts) of the head office and domestic branches, including commitment of credit agreement and estimates to outflow $355,361,831.
B. Maturity analysis in U.S. dollars Unit : In Thousands of US Dollars
December 31, 2018
Total
Amount during the maturity period from the balance sheet date to due date
0-30days 31-90days 91-180days 181days-1year Over 1 year
Major matur i ty capital inflow
$ 10,656,284 4,816,832 1,872,015 527,466 400,721 3,039,250
Major matur i ty capital outflow
11,623,232 3,692,617 2,791,061 1,010,782 1,107,184 3,021,588
Gap (966,948 ) 1,124,215 (919,046 ) (483,316 ) (706,463 ) 17,662
Note: Including commitment of credit agreement and estimates to outflow US$1,152,522.
December 31, 2017
Total
Amount during the maturity period from the balance sheet date to due date
0-30days 31-90days 91-180days 181days-1year Over 1 year
Major matur i ty capital inflow
$ 10,164,920 5,444,707 1,902,732 467,530 365,842 1,984,109
Major matur i ty capital outflow
11,212,632 3,524,706 2,276,744 938,951 996,588 3,475,643
Gap (1,047,712 ) 1,920,001 (374,012 ) (471,421 ) (630,746 ) (1,491,534 )
Note: Including commitment of credit agreement and estimates to outflow US$1,080,947.
(e) Market risk
(1) Definition of market risk
Market risk refers to the possible loss of the Bank's business in or off the balance sheet results
from the disadvantageous fluctuation in market price in terms of interest rates, stock prices, foreign
exchange rates and commodity prices.
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(2) Policies and procedures of market risk management
A. Strategy
a. To carry out market risk management, achieve operation target and maintain healthy capital
adequacy by following "Directions Governing the Market Risk Management of Taiwan
Business Bank" and other relevant regulations.
b. Under the risk tolerance approved by the board of directors, the Bank applies various risk
control mechanism to effectively deploy and manage capital in order to maintain the market
risk exposure within the tolerable extent and achieve earning target.
B. Policies and procedures
In order to establish the market risk management mechanism and ensure that the market risk is
within the tolerable extent, the Bank set up directions governing the market risk management,
remarks governing the limit of market risk and financial product valuation procedures as the
primary management guidance. Other than what is stated above, the Bank also establish limit
control mechanism in terms of trade positions, stop-limit, suspensions and lines of alert based
on the operation notices and procedures of different financial products (including fix income
products, equity securities, foreign exchange transaction and derivative financial products).
(3) Process for market risk management
A. Risk identification
In accordance with the rules of "Directions Governing the Market Risk Management of Taiwan
Business Bank", the Bank shall conduct appropriate market risk evaluation and document
the process for later review before financial products are promoted. The content of evaluation
includes risk factors identification, evaluation methods, cost-benefit analysis, market liquidity,
risk strategy, adequacy of risk management mechanism and the influence on the Bank for
undertaking market risk.
B. Risk measurement
a. Annually based on the business development of transaction units and submit to the board
of directors for approval. For the units which the positions and limits remain unchanged after
evaluation, they can put the positions and limits into practice after receiving the approval from
the general manager.
b. The risk measurements (or evaluations) of the financial products of the Bank are conducted
through different information systems. For the market data and parameters of the models
applied for evaluation, they shall be inspected regularly to determine the rationality.
C. Risk monitoring
a. Valuation reports of various financial products are prepared regularly for high rank supervisors
to review and serve as the guidance for daily risk management operation.
b. All financial transactions are equipped with different regulations in terms of limit of loss and
stop-limit. Provided that the valuation loss amount is over the limit, a stop-limit, suspension
and subsequent risk control will be executed.
D. Risk report
Risk management department report current market risk management status of the Bank
to directors (executive directors) and high rank management to facilitate the directors and
management to control the risk exposure status and adjust management procedures properly.
(4) Scope and method of market risk management
A. Foreign exchange risk management
a. Definition of foreign exchange risk management
Foreign exchange risk refers to the potential profit or loss of the foreign currency financial
instruments which results from the transition among fluctuating currencies.
Taiwan Business Bank Annual Report 2018190
b. Applicable scope
All the financial instruments which apply to trading book position and banking book position
and involve in foreign currencies.
c. Purpose for foreign exchange risk management
To avoid loss of earnings or deterioration of financial status due to intensive fluctuation of
foreign exchange and to increase capital deployment efficiency and business operation
integrity.
d. Procedures of foreign exchange risk management
1) In order to control foreign exchange transaction risk, the Bank established trade position
authorization standard for financial transaction operations, trade units and traders in
current regulations. In addition, for non-commercial business foreign exchange operation,
all trade units submit the required amounts of position annually based on operation status.
Risk management department will evaluated the requirement and submit to the board of
directors' (executive directors) for approval. The demand will be executed after the board
of directors approved. For the units which the positions remain unchanged after evaluation,
they can put the positions into practice after receiving the approval from the general
manager.
2) The trade units conduct various foreign financial product business, they shall fully
understand the content of commodities, the risk tolerance and trade purpose. Trade units
shall establish financial products trading strategies based on market status in the meeting
every morning and submit the risk-benefit evaluation in the meeting minutes for the
department heads to review. The trading shall follow the relevant authorization rules of the
Bank and the stop-limit of all trade positions shall be executed reliably.
e. Process of foreign exchange risk management
1) Identification and measurement
A) Risk Management department established risk factor chart based on different financial
transactions to effectively identify risk factors and market risk resources. In addition,
the financial transactions which the Bank conducts deal with simple type financial
products. For complex financial products, the Bank conducts back-to-back hedge
covering to effectively avoid market risk.
B) Risk Management department has used Greek to measure the influence level of
exchange rate for held-for-trading spot exchange and exchange rate derivative, also
draft Greek's sensitivity allowance according to the yearly demand of trade units
and the state of utilization, and monitor the load of fluctuation of exchange rate in an
acceptable range each.
C) Positions of the trading book shall be evaluated daily where the positions of the
banking book shall be evaluated monthly. When there are public quotes for financial
instruments, the quotes shall be the prior evaluation prices. If the financial instruments
are evaluated by models, then they shall be evaluated by mathematic models prudently
and the assumptions and parameters of the models shall be reviewed regularly.
2) Monitoring and report
A) When the evaluation loss of non-commercial foreign exchange transactions is over the
limit, the trade units shall execute a stop- limit per the regulations. If the loss amount
reaches the suspension warning line or suspension limit of the financial transaction,
risk management units shall report to the general manager. Provided that the loss
amount reaches the annual suspension line, risk management department shall report
to the board of directors (executive directors).
B) Reports of operation results shall be prepared and submitted to the department heads
for approval on a daily basis.
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B. Equity security risk management
a. Definition of equity security risk
The market risks of the equity securities possessed by the Bank include the individual risk
results from the market price fluctuation of individual equity security and the general market
risk results from overall market price fluctuation.
b. Applicable scope
Financial instruments similar to equity security in all trading books.
c. Purpose of equity security risk management
To avoid loss of earnings or deterioration of financial status due to intensive fluctuation of equity
securities and to increase capital deployment efficiency and business operation integrity.
d. Procedures of equity security risk management
1) All trade units submit the required amounts of position annually base on operation status.
Risk management department will evaluate the requirement and submit to the board of
directors (executive directors). The demand will be executed after approved by the board
of directors.
2) The trade units shall predict the possible trend of domestic stock market based on
the information of foreign and domestic security markets so as to set up the operation
strategies and directions. The traders shall pay close attention to the market trend when
the market opens so as to conduct security transactions and the operations as well as the
meeting minutes shall be submitted to the department heads to review.
e. Process of equity security risk management
1) Identification and measurement
A) The risk management department apply Value at Risk models to measure the
market risk of equity security investment. Furthermore, based on the trade units'
operation demand and the risk limit established by the Bank' s risk tolerance, the risk
management units effectively control the variation of risk factors under an acceptable
extent.
B) Trading book position shall be evaluated daily. When there is a public quote in the
market, the quote shall be adopted as the prior evaluation price (If the transaction is
in secondary market and the liquidity is high, the closing price can be adopted as the
evaluation price); If the financial instruments are evaluated by models, then they shall
be evaluated by mathematic models prudently and the assumptions and parameters of
the models shall be reviewed regularly.
2) Monitoring and report
A) When the evaluation loss of equity security investment is over the limit, the trade units
shall execute a stop-limit per regulations. If the loss amount reaches the suspension
warning line or suspension limit of the financial transaction, risk management units
shall report to the general manager. Provided that the loss amount reaches the annual
suspension line, risk management department shall report to the board of directors
(executive directors).
B) Transaction reports shall be prepared and submitted to the department heads for
approval on a daily basis. And the investment gains or losses shall report to the board
of directors (executive directors) regularly for future reference.
C. Interest rate risk management
a. Definition of interest rate risk
Interest rate risk refers to the price decline of the Bank's financial products which contain
interest risk factors due to the disadvantageous changes in interest rate.
b. Applicable scope
Taiwan Business Bank Annual Report 2018192
Financial instruments which contain interest rate factors in all trading books.
c. Purpose of interest rate risk management
To avoid loss of earnings or deterioration of financial status due to intensive fluctuation of
interest rate and to increase capital deployment efficiency and business operation integrity.
d. Procedures of interest rate risk management
1) In order to control interest rate risk, the Bank established trade position authorization
standard for financial transaction operations, trade units and trade counterparties in current
regulations. In addition, for the positions held for trading, all trade units submit the required
amounts of position annually based on operation status. Risk management department
will evaluated the requirement and submit to the board of directors' (executive directors)
for approval. The demand will be executed after the board of directors approved.
2) The trade units shall consider safety, liquidity and profitability and gather market
information to assess the potential risk and benefit. In additional, the trade units shall
choose investment target prudently through analyzing the issuers' credit, financial status,
country risks and interest rate trends.
e. Process of interest rate risk management
1) Identification and measurement
A) The risk management department establish risk factor charts base on different financial
transaction to effectively identify risk factors and market risk resources. In addition, the
financial transactions which the Bank conducts deal with simple type financial products.
For complex financial products, the Bank conducts back-to-back hedge covering to
effectively avoid market risk.
B). Position of the trading book shall be evaluated daily. When there are public quotes for
financial instruments, the quotes shall be the prior evaluation prices. If the financial
instruments are evaluated by models, then they shall be evaluated by mathematic
models prudently and the assumptions and parameters of the models shall be
reviewed regularly.
2) Monitoring and report
A) The risk management department apply DV01 to measure to what extent the trading
book bond positions are influenced by the interest rate risk and set up interest rate
sensitivity limit base on the requirements of the trade units and the risk tolerance of the
Bank annually.
B) The trade units shall prepare the income assessment tables of trade positions and
traders for the department heads to review. In addition, when the evaluation loss
of the position is over the limit, the trade units shall execute a stop-limit per the
regulations. If the loss amount reaches the suspension warning line or suspension limit
of the financial transaction, risk management department shall report to the general
manager. Provided that the loss amount reaches the annual suspension line, risk
management units shall report to the board of directors (executive directors).
D. Concentration management
a. The trade counterparties of the Bank are mostly financial institutions. To avoid the risk being
over concentrated and enhance credit risk management, the Bank established financial
institution credit risk limit based on the world ranking of tier 1 capital and credit ratings from
The Banker. The trade units shall also pay attention to the changes of the credit status of
individual financial institution as well as the changes of the national credit rating to conduct the
transaction prudently.
b. For equity security investments, the Bank set up limits for single institution and single related
party.
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(5) Interest rate risk management of the banking book
A. The definition and management purpose for the interest rate risk of the banking book
a. The interest rate risk of the banking book refers to the negative effect towards the future net
interest income or economic value of equity results from the fluctuation of interest rate. Net
Interest Income (hereafter NII) is the total amount of interest revenue deducted by the total
amount of interest expense; Economic Value of Equity (hereafter EVE) is the total discounted
future cash inflow from assets deducted by the total discounted future cash outflow from
liabilities.
b. The management purpose of the interest rate risk management of the banking book is to
control the negative effect from the interest rate risk fluctuation towards NII or EVE within the
approved limit extent.
B. The process for the interest rate risk management of the banking book
a. Identification and measurement
When the Bank conducts interest rate related products, it identifies the reprising risk, yield
curve risk, basis risk and option characteristic risk and measures the possible influence on the
earnings and economic value results from interest rate fluctuation.
b. Monitoring and report
The Bank established limits of the ratio between interest-rate-sensitivity assets and interest-
rate-sensitivity liabilities, the effect to NII in 1 year when the market interest rate parallel
changes 1 BP and the effect to EVE when the market interest rate parallel changes 200 BP
to control the banking book interest rate risk. The results of interest rate risk measurement
are reported to the Assets and Liabilities Management Committee monthly and to the board
of directors (executive directors) quarterly. When the measurement result is over the limit,
relevant units shall be convened to establish responding plan and the plan shall be submitted
to the Assets and Liabilities Management Committee for discussion. After the plan is approved
by the general manager, it shall be executed by the relevant business units and report to the
board of directors (executive directors).
(6) Value at Risk
A. Description of Value at Risk
Value at Risk (VaR) is a statistical amount used to evaluate the maximum possible loss of
portfolio results from the changes of market risk factors within a certain period of time and a fixed
confidence interval.
B. Value at Risk models and assumptions
In order to enhance the market risk control operation, the Bank established quantified indices of
market risk for the equity security position of the trading book. Based on the historical information
of the last 1 year and applies Historical Simulation Method (with the confidence interval being
99% and the duration of possession being 1 day), the Bank calculates and monitors the trend of
Value at Risk.
C. The limit of Value at Risk model
Value at Risk is a tool to measure market risk under normal circumstance. The limits of the model
are listed below:
a. Value at Risk can not reflect the losses result from other type of risks, such as credit risk and
liquidity risk.
b. Value at Risk measures the possible loss of the position on hand at the end of the transaction
day, but it can not reflect the distribution of the part which actual loss exceeds Value at Risk.
c. Value at Risk model is based on historical data to evaluate the amount, and therefore it may
not be able to predict the future changes of risk factors, especially for those exceptions result
from significant market fluctuation.
Taiwan Business Bank Annual Report 2018194
(7) Foreign exchange risk disclosure and sensitivity analysis
A. Foreign exchange risk exposure
a. Significant net positions of foreign currencies (Market risk)
Significant net positions of foreign currencies (Market risk)
December 31, 2018
Currency Foreign currency amount NT$ amount
USD $ 470,443 14,459,066
JPY 2,965,336 822,584
CNY 135,296 604,638
AUD 16,208 350,984
EUR 3,495 122,954
Significant net positions of foreign currencies (Market risk)
December 31, 2017
Currency Foreign currency amount NT$ amount
USD $ 353,797 10,500,695
EUR 55,756 1,976,550
JPY 2,063,416 543,297
AUD 23,110 534,650
CNY 28,235 128,441
Note 1 Main foreign currencies are the top five foreign currencies ranked in NTD value.Note 2 Net foreign currency is the absolute value of the net value of each foreign currency.
b. Assets and liabilities of foreign currency
December 31, 2018
Currency
Monetary Financial assets Monetary Financial liabilities
Foreign currency amount
(in thousands) Spot rate NTD amount
Foreign currency amount
(in thousands) Spot rate NTD amount
USD $ 10,400,702 30.7350 319,665,576 9,815,937 30.7350 301,692,824
AUD 4,113,296 21.6550 89,073,425 4,061,406 21.6550 87,949,747
CNY 8,922,386 4.4690 39,874,143 8,717,386 4.4690 38,957,998
HKD 5,947,321 3.9230 23,331,340 5,666,020 3.9230 22,227,796
JPY 41,701,989 0.2774 11,568,132 40,269,290 0.2774 11,170,701
EUR 303,587 35.1800 10,680,191 303,677 35.1800 10,683,357
ZAR 4,782,950 2.1200 10,139,854 4,784,213 2.1200 10,142,532
GBP 40,606 38.9000 1,579,573 40,654 38.9000 1,581,441
NZD 61,409 20.6300 1,266,868 62,555 20.6300 1,290,510
CAD 45,171 22.5800 1,019,961 45,227 22.5800 1,021,226
CHF 6,529 31.1650 203,476 6,595 31.1650 205,533
SGD 5,427 22.4400 121,782 5,492 22.4400 123,240
Other (Note) - - 84,570 - - 91,209
Non-monetary Financial assets Non-monetary Financial liabilities
USD 556 30.7350 17,089 - - -
Note: Consolidated disclosure is applied for other currencies not over $100,000.
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Currency
Monetary Financial assets Monetary Financial liabilities
Foreign currency amount
(in thousands) Spot rate NTD amount
Foreign currency amount
(in thousands) Spot rate NTD amount
USD $ 9,787,378 29.6800 290,489,374 9,398,630 29.6800 278,951,337
AUD 3,851,446 23.1350 89,103,203 3,816,093 23.1350 88,285,312
CNY 7,131,376 4.5490 32,440,628 6,953,085 4.5490 31,629,584
HKD 6,306,122 3.7960 23,938,039 6,120,017 3.7960 23,231,585
JPY 41,354,855 0.2633 10,888,733 39,592,813 0.2633 10,424,788
EUR 520,113 35.4500 18,438,006 519,947 35.4500 18,432,121
ZAR 4,233,471 2.3900 10,117,996 4,232,608 2.3900 10,115,933
GBP 22,824 39.9300 911,362 22,836 39.9300 911,841
NZD 66,983 21.0700 1,411,332 66,913 21.0700 1,409,857
CAD 57,552 23.6300 1,359,954 57,570 23.6300 1,360,379
SGD 10,317 22.2000 229,037 10,396 22.2000 230,791
Other (Note) - - 137,744 - - 146,609
Note: Consolidated disclosure is applied for other currencies not over $100,000.
B. Foreign exchange risk sensitivity analysis (Change by 1%)
Foreign exchange risk sensitivity analysis is the analysis that given other conditions remain the
same, the influence on profit or loss and equity when each respective currency depreciate or
appreciate by 1%.
Currency
December 31, 2018
Depreciate by 1% Appreciate by 1%
Income Equity Income Equity
USD $ 23,357 (53,055 ) (23,357 ) 53,055
AUD 7,318 (15,365 ) (7,318 ) 15,365
HKD 3,050 (14,263 ) (3,050 ) 14,263
JPY 5,690 (4,431 ) (5,690 ) 4,431
GBP 100 - (100 ) -
SGD 14 - (14 ) -
ZAR 24 - (24 ) -
SEK 22 - (22 ) -
CHF 21 - (21 ) -
CAD 40 - (40 ) -
THB 44 - (44 ) -
EUR (153 ) - 153 -
NZD 229 - (229 ) -
CNY (1,334 ) - 1,334 -
Total $ 38,422 (87,114 ) (38,422 ) 87,114
Taiwan Business Bank Annual Report 2018196
Currency
December 31, 2017
Depreciate by 1% Appreciate by 1%
Income Equity Income Equity
USD $ 74,477 (47,576 ) (74,477 ) 47,576
AUD 8,052 (12,677 ) (8,052 ) 12,677
HKD 2,898 (10,011 ) (2,898 ) 10,011
JPY 5,286 (4,984 ) (5,286 ) 4,984
GBP 8 - (8 ) -
SGD 18 - (18 ) -
ZAR (24 ) - 24 -
SEK 4 - (4 ) -
CHF 57 - (57 ) -
CAD 66 - (66 ) -
THB 28 - (28 ) -
EUR (140 ) - 140 -
NZD (31 ) - 31 -
CNY (23,943 ) - 23,943 -
Total $ 66,756 (75,248 ) (66,756 ) 75,248
(8) Interest rate risk disclosure and sensitivity analysis
A. Interest rate sensitivity analysis
The assumption of interest rate sensitivity analysis is, under the circumstance that other
conditions remain the same, the yield of the market increase or decrease by 1 basis point (1 bp).
CurrencyDecember 31, 2018
Interest rate increases by 1 bp Interest rate decreases by 1 bp Income Equity Income Equity
Trading book
TWD $ - (4,175 ) - 4,175
Banking book
TWD - (50,411 ) - 50,411
USD 34 (12,593 ) (34 ) 12,593
AUD - (682 ) - 682
HKD - (20 ) - 20
CNY - (495 ) - 495
ZAR - (191 ) - 191
Total $ 34 (68,567 ) (34 ) 68,567
CurrencyDecember 31, 2017
Interest rate increases by 1 bp Interest rate decreases by 1 bp Income Equity Income Equity
Trading book
TWD $ 32 (9,936 ) (32 ) 9,936
Banking book
TWD - (56,530 ) - 56,530
USD 47 (4,058 ) (47 ) 4,058
AUD - (192 ) - 192
ZAR - (16 ) - 16
HKD - (95 ) - 95
CNY - (277 ) - 277
Total $ 79 (71,104 ) (79 ) 71,104
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B. Sensitivity analysis of expected net revenue/Sensitivity of equity in terms of interest rate
fluctuation
Scenario
December 31, 2018
Effect on NII in 1 year Effect on EVE in 1 year
TWD USD TWD USD
Interest rate increases by 100 bp 2,721,539 (17,175 ) (1,309,829 ) (30,545 )
Interest rate decreases by 100 bp (5,609,550 ) 6,550 1,726,999 34,423
Scenario
December 31, 2017
Effect on NII in 1 year Effect on EVE in 1 year
TWD USD TWD USD
Interest rate increases by 100 bp 3,165,803 (16,652 ) (1,292,836 ) (11,892 )
Interest rate decreases by 100 bp (5,986,102 ) (2,208 ) 2,104,453 12,402
(9) Equity security risk disclosure and sensitivity analysis
A. Equity security sensitivity analysis (Changes by 1%)
The assumption of equity security sensitivity analysis is, under the circumstance that other
conditions remain the same, the price of equity security increased or decreased by 1%.
ChangeDecember 31, 2018
Currency Income Equity
Equity security price increases by 1 % TWD 489 -
USD 6 -
Equity security price decreases by 1 % TWD (489 ) -
USD (6 ) -
ChangeDecember 31, 2017
Currency Income Equity
Equity security price increases by 1 % TWD 102 14,301
Equity security price decreases by 1 % TWD (102 ) (14,301 )
B. Value at Risk of equity security
Value at RiskFor the year ended December 31, 2018
Average Maximum Minimum
Equity security risk 13,763 5,130 25
Value at RiskFor the year ended December 31, 2017
Average Maximum Minimum
Equity security risk 58,287 80,781 40,227
(10) Disclosures required by "Regulations Governing the Preparation of Financial Reports by Public
Banks"
A. Analysis of interest rate-sensitive assets and liabilities (New Taiwan dollars)
Unit : In Thousands of New Taiwan Dollars, %
December 31, 2018Item 1~90 days 91~180 days 181days~1year over 1 year total
Interest rate-sensitive assets $ 1,094,648,453 7,655,531 23,923,254 157,779,086 1,284,006,324
Interest rate-sensitive liabilities 980,971,467 64,335,404 89,739,637 47,342,431 1,182,388,939
Interest rate sensitivity gap 113,676,986 (56,679,873 ) (65,816,383 ) 110,436,655 101,617,385
Net amount 84,853,019
Ratio of interest rate-sensitive assets to debt (%) 108.59
Ratio of interest rate-sensitive gap to net worth (%) 119.76
Taiwan Business Bank Annual Report 2018198
December 31, 2017Item 1~90 days 91~180 days 181days~1year over 1 year total
Interest rate-sensitive assets $ 1,123,566,515 13,243,882 11,024,511 121,866,618 1,269,701,526
Interest rate-sensitive liabilities 976,655,486 79,970,590 86,725,704 41,204,677 1,184,556,457
Interest rate sensitivity gap 146,911,029 (66,726,708 ) (75,701,193 ) 80,661,941 85,145,069
Net amount 75,817,673
Ratio of interest rate-sensitive assets to debt (%) 107.19
Ratio of interest rate-sensitive gap to net worth (%) 112.30
Note 1 The banking component refers to the Bank's amount of N.T.dollars and does not include contingent assets or liabilities.
Note 2 Interest rate-sensitive assets and liabilities refer to revenue or cost of interest– yielding assets and interest– bearing liabilities, which are affected by interest rate fluctuations.
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 (New Taiwan dollars interest-rate-sensitive assets and New Taiwan dollars interest-rate-sensitive liabilities).
B. Analysis of the interest-sensitive assets and liabilities (U.S. dollars)
Unit : In Thousands of US Dollars, %
December 31, 2018
Item 1~90 days 91~180 days 181days~1year over 1 year total
Interest rate-sensitive assets $ 3,871,699 444,219 174,371 724,152 5,214,441
Interest rate-sensitive liabilities 5,091,691 569,099 421,251 - 6,082,041
Interest rate sensitivity gap (1,219,992 ) (124,880 ) (246,880 ) 724,152 (867,600 )
Net amount 2,760,795
Ratio of interest rate-sensitive assets to debt (%) 85.74
Ratio of interest rate-sensitive gap to net worth (%) (31.43 )
December 31, 2017
Item 1~90 days 91~180 days 181days~1year over 1 year total
Interest rate-sensitive assets $ 4,469,367 374,144 88,227 410,338 5,342,076
Interest rate-sensitive liabilities 5,495,210 456,356 318,865 300 6,270,731
Interest rate sensitivity gap (1,025,843 ) (82,212 ) (230,638 ) 410,038 (928,655 )
Net amount 2,554,504
Ratio of interest rate-sensitive assets to debt (%) 85.19
Ratio of interest rate-sensitive gap to net worth (%) (36.35 )
Note 1 The banking component refers to the Bank's amount of U.S.dollars and does not include contingent assets or liabilities.
Note 2 Interest rate-sensitive assets and interest rate-sensitive liabilities refer to the interest yielding assets and interest paying liabilities which the revenue and cost are affected by interest rate fluctuation.
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 (U.S. dollars interest- rate-sensitive assets and U.S. dollars interest-rate-sensitive liabilities).
(f) Transferred financial assets that are not fully derecognized
The transactions, relating to transferred financial assets not qualifying for full derecognition, the Bank
and its subsidiaries conduct during daily operation mostly involve securities lending in accordance to
repurchase agreements. Since the right to receive contractual cash flow has been transferred to others
and the Bank and its subsidiaries' obligation to repurchase the transferred assets for a fixed price at a
future date is recognized under liability, for these transactions, the Bank and its subsidiaries can not use,
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sell or pledge those transferred financial assets in availability period, the Bank and its subsidiaries have
interest rate risk and credit risk, the said transferred assets are not fully derecognized.
As of December 31, 2018 and 2017, there were not any financial assets of the Bank that are not fully
derecognized.
(g) Offsetting financial assets and financial liabilities
The Bank and its subsidiaries have an exercisable master netting arrangement or similar agreement in
place with counterparties. When both parties reach a consensus regarding net settlement, the aforesaid
exercisable master netting arrangement or similar agreement can be net settled by offsetting financial
assets and financial liabilities. If not, the transaction can be settled at total amount. In the event of default
involving one of the parties, the other party can have the transaction net settled.
The following tables present the aforementioned offsetting financial assets and financial liabilities:
December 31, 2018
Financial assets that are offset, have an exercisable master netting arrangement or similar agreement
Item Gross amounts of recognized
financial assets(a)
Gross amounts of financial
liabilities offset in the balance
sheet(b)
Net amount of financial assets
presented in the balance sheet
(c)=(a)-(b)
Amounts not set off in the balance sheet(d)
Net amount (e)=(c)-(d)
Financial instruments
(Note)Cash collateral
received
Derivative financial instruments $ 121,120 - 121,120 627,412 176,599 (682,891)
December 31, 2018
Financial liabilities that are offset, have an exercisable master netting arrangement or similar agreement
ItemGross amounts of
recognized financial
liabilities(a)
Gross amounts of financial assets
offset in the balance
sheet(b)
Net amount of financial
liabilities presented in the
balance sheet (c)=(a)-(b)
Amounts not set off in thebalance sheet(d)
Net amount (e)=(c)-(d)
Financial instruments
(Note)Cash collateral
pledged
Derivative financial instruments $ 95,769 - 95,769 - 608,768 (512,999)
December 31, 2017
Financial assets that are offset, have an exercisable master netting arrangement or similar agreement
Item Gross amounts of recognized
financial assets(a)
Gross amounts of financial
liabilities offset in the balance
sheet(b)
Net amount of financial assets
presented in the balance sheet
(c)=(a)-(b)
Amounts not set off in thebalance sheet(d)
Net amount (e)=(c)-(d)
Financial instruments
(Note)Cash collateral
received
Derivative financial instruments $ 109,740 - 109,740 - 169,736 (59,996)
December 31, 2017
Financial liabilities that are offset, have an exercisable master netting arrangement or similar agreement
ItemGross amounts of
recognized financial
liabilities(a)
Gross amounts of financial assets
offset in the balance
sheet(b)
Net amount of financial
liabilities presented in the
balance sheet (c)=(a)-(b)
Amounts not set off in thebalance sheet(d)
Net amount (e)=(c)-(d)
Financial instruments
(Note)Cash collateral
pledged
Derivative financial instruments $ 63,552 - 63,552 - 76,266 (12,714)
Note: Master netting arrangements and non-cash financial collaterals are included.
Taiwan Business Bank Annual Report 2018200
(AP) Capital Management
(a) The Bank takes business development and risk control into consideration and calculates capital adequacy
per "Regulations Governing the Capital Adequacy Ratio and Capital Category of Banks" and "Calculation
Methods and Forms of Proprietary Capital and Risk Capital of Banks". The ratio between proprietary
capital and risk capital shall remain above the regulated minimum ratio.
(b) In order to maintain adequate capital and reach a balance between risk control and business development,
the Bank established "Directions Governing Capital Adequacy" as the guidance for controlling capital
adequacy. The scope of the directions include, except for the least capital requirements for credit risk,
market risk and operation risk, significant risk such as banking book interest rate risk, liquidity risk and
concentration risk. In addition, in order to link business strategies, capital and risk management, the Bank
sets up capital management plan annually for the president's approval and reports to Risk Management
Committee and the board of directors quarterly about relevant risks and capital control status.
(c) The Bank identifies, measures, monitors and reports various risks based on the directions, notices
and relevant rules of competent authority regarding credit risk, market risk, operation risk, legal and
compliance risk, interest rate risk of the banking book, liquidity risk and concentration risk so as to be
familiar with current business environment and monitors and adjusts capital adequacy effectively.
(d) To cope with the implementation of new Basel Accord, the Bank set up complete risk management
system, risk management operation tracking procedures to provide the management with appropriate risk
management information for making decisions. Therefore, the Bank is able to maintain adequate capital
within the tolerable extent and to ensure the provision of proprietary capital of the Bank corresponds with
the overall operating risk characteristics of the Bank.
(1) Tier 1 capital
A. Common stock equity: The item includes common stock deducted by treasury stock, goodwill and
other intangible assets, deferred tax assets based on future profit status of the Bank, unrealized
gain on finacial assets measured at fair value through other comprehensive income (unrealized
gain on available-for-sale financial assets are applicable before the year ended December 31,
2017), operating reserve and deficiency of allowance for bad debts, real estate retained earning
increment arising from applying the fair value or the revaluation reserve as the deemed cost when
first adopting IFRSs, and 25% of the investment on financial related business which is classified
in banking book.
B. Other tier 1 capital: Twenty-five percent of the perpetual non-accumulated subordinated financial
debentures deducted by the investment on financial related business which is classified in
banking book.
(2) Tier 2 capital
The item includes perpetual accumulated subordinated financial debentures, long term subordinated
debenture, real estate retained earning increment arising from applying the fair value or the
revaluation reserve as the deemed cost when first adopting IFRSs, 45% of unrealized gain on
financial assets measured at fair value through other comprehensive income (unrealized gain on
available-for-sale financial assets are applicable before the year ended December 31, 2017), and
50% of the investment on financial related business which is classified in banking book.
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ⅥItem December 31, 2018 December 31, 2017
Eligible capital
Common stock equity 78,947,036 73,448,764
Other tier 1 capital 13,386,998 14,140,802
Tier 2 captial 29,797,442 25,396,643
Eligible Capital 122,131,476 112,986,209
Risk-weighted assets
Credit risk
Standardized approach 912,764,211 871,996,666
Internal ratings-based approach - -
Securitization - -
Operational risk
Basic indicator approach - -
Standardized approach/selective standardized approach
36,971,711 35,136,391
Advanced measurement approach - -
Market riskStandardized approach 11,844,063 13,786,563
Internal model approach - -
Total risk-weighted assets 961,579,985 920,919,620
Capital adequacy ratio 12.70% 12.27%
Common stock equity/ Risk-weighted assets ratio 8.21% 7.98%
Tier 1 capital / Risk-weighted assets ratio 9.60% 9.51%
Leverage ratio 5.40% 5.26%
The formulas of the table are listed as follows:
A. The eligible capital, risk-weighted assets and exposure are calculated per "Regulations Governing the Capital Adequacy and Capital Category of Banks" and "The Calculation and Forms of Eligible Capital and Risk Assets of Banks".
B. The Bank shall fill out the capital adequacy of this period and last period. For the semi-annual report, the Bank shall disclose the capital adequacy of this period and last period and additionally disclose the capital adequacy of the previous period ended December 31.
C. Note 1. Eligible Capital = Common stock equity + Other Tier 1 Capital + Tier 2 CapitalNote 2. Total risk-weighted assets = Credit risk weighted asset+ (operational risk charge+market risk
charge) × 12.5Note 3. Capital adequacy ratio= Eligible Capital ÷ Risk weighted asset.Note 4. Common stock equity / Risk-weighted assets ratio= Common stock equity / total risk weighted
assetsNote 5. Tier 1 capital / Risk-weighted assets ratio = (Common stock equity+ other tier 1 capital)/ Risk-
weighted assetsNote 6. Leverage ratio = Net Tier 1 capital / Total risk exposure.
D. Above table is not required to be disclosed when preparing the financial reports of the first quarter and third quarter.
(AQ)Structuredentitiesthatnotincludedinconsolidatedfinancialreports
(a) The table below presents the types of structured entities that the Bank and its subsidiaries do not include
in consolidated financial reports but in which they hold an interest:
The types of structured entities Nature and purpose
Interests held by the Bank and its subsidiaries
Private fund Investing in funds that cannot be freely traded on the open market
Investing in units or limited partnership interests issued by these funds.
Asset backed securities
Investing in commercial real estate investment trusts
Investing in asset-backed securities issued by entities
(b) The scales of structured entities not included in consolidated financial reports were as follow:
December 31, 2018 December 31, 2017Private fund $ 50,000 -Asset backed securities 43,502 -Total $ 93,502 -
Taiwan Business Bank Annual Report 2018202
(c) The carrying amounts of interests held by the Bank and its subsidiaries in these structured entities were
as follows:
Assets held by the Bank and its subsidiaries December 31, 2018 December 31, 2017
Financial assets at fair value through profit or loss $ 50,000 -
Financial assets at fair value through other comprehensive income
43,502 -
total $ 93,502 -
The maximum amount of risk exposure the Bank and its subsidiaries endure to a loss incurred from
structured entity equities that are not included in consolidated financial reports is the carrying amount of
interests held by the Bank and its subsidiaries.
(d) As of December 31, 2018 the Bank and its subsidiaries have not provided any financial support to their
structured entity equities that are not included in consolidated financial reports.
7. RELATED PARTY TRANSACTIONS
(A) Names of related parties and relationship with the Bank
Name of related party Relationship with the Bank and its subsidiaries
Bank of Taiwan Corporate director of the Bank
Ministry of Finance, R.O.C Corporate director of the Bank
Land Bank of Taiwan Corporate director of the Bank
Other Major shareholders, directors (includes independent directors), president, executive vice president, managers and their second tier of kinship.
(B) Significantrelatedpartytransactions
(a) Due from other Banks
December 31, 2018
Amount %
Bank of Taiwan $ 129,756 0.57
Land Bank of Taiwan 6,036 0.03
Total $ 135,792 0.60
December 31, 2017
Amount %
Bank of Taiwan $ 141,044 0.51
Land Bank of Taiwan 1,250 -
Total $ 142,294 0.51
Interest rates are the same as those with regular clients.
(b) Deposits from other banks
December 31, 2018
Amount %
Land Bank of Taiwan $ 732 1.13
December 31, 2017
Amount %
Land Bank of Taiwan $ 1,496 1.49
Interest rates are the same as those with regular clients.
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Ⅵ
(c) Call loans to banks
For the years ended December 31, 2018 Maximum balance December 31, 2018 Interest income Annual interest rate
Bank of Taiwan $ 11,800,740 153,675 8,507 0.17%~3%
Land Bank of Taiwan 4,948,798 - 6,037 1.45%~2.77%
Total $ 16,749,538 153,675 14,544
For the years ended December 31, 2017 Maximum balance December 31, 2017 Interest income Annual interest rate
Bank of Taiwan $ 8,620,470 - 2,360 0.17%~3.40%
Land Bank of Taiwan 2,884,226 1,929,200 3,789 0.80%~2.62%
Total $ 11,504,696 1,929,200 6,149
Interest rates are the same as those with regular clients
(d) Call loans from banks
For the years ended December 31, 2018 Maximum balance December 31, 2018 Interest Expense Annual interest rate
Bank of Taiwan $ 5,210,241 - 2,978 0.05%~3.3%
Land Bank of Taiwan 10,067,317 - 19,615 0.18%~3.9%
Total $ 15,277,558 - 22,593
For the years ended December 31, 2017 Maximum balance December 31, 2017 Interest Expense Annual interest rate
Bank of Taiwan $ 9,228,701 - 5,177 0.32%~4.5%
Land Bank of Taiwan 13,580,150 1,484,000 18,690 0.03%~12%
Total $ 22,808,851 1,484,000 23,867
Interest rates are the same as those with regular clients.
(e) Deposits
December 31, 2018Amount %
Others $ 1,149,229 0.09
December 31, 2017Amount %
Others $ 1,660,259 0.13
Interest rates are the same as those with regular clients.
(f) Credit
December 31, 2018
Number of clients or name of
related partyMaximum balance
Ending balance
Performing situations
Collaterals
Difference from transaction terms
of non-related partiesCategory
Performing loan
Non-performing Loans
Employee consumer loans
151 808,222 384,533 384,533 - none/real estate
none
Self-use residence collateral loans
123 1,141,682 461,328 461,328 - real estate none
Others Si ○ ○ 726 726 726 - real estate none
Du ○ ○ 7,792 7,705 7,705 - real estate none
Wu ○ ○ 7,179 7,179 7,179 - real estate none
Cho ○ ○ 1,246 1,246 1,246 - real estate none
Chang ○ ○ 1,168 1,142 1,142 - real estate none
Chuang ○ ○ 1,565 1,565 1,565 - real estate none
Huang ○ ○ 5,699 5,699 5,699 - real estate none
Taiwan Business Bank Annual Report 2018204
December 31, 2017Number of clients or name of
related partyMaximum balance
Ending balance
Performing situations
Collaterals
Difference from transaction terms
of non-related partiesCategory
Performing loan
Non-performing Loans
Employee consumer loans
129 344,249 320,358 320,358 - none/real estate
none
Self-use residence collateral loans
118 473,764 394,610 394,610 - real estate none
Others Si ○ ○ 294 294 294 - real estate noneDu ○ ○ 7,345 7,345 7,345 - real estate none
Chiang ○ ○ 2,397 1,751 1,751 - real estate noneLiu ○ ○ 1,562 1,326 1,326 - real estate noneCho ○ ○ 899 768 768 - real estate none
Chang ○ ○ 944 944 944 - real estate noneLu ○ ○ 1,304 1,207 1,207 - real estate none
Huang ○ ○ 4,472 4,472 4,472 - real estate noneSimpro ○ ○ 1,883 967 967 - non-physical
collateralsnone
(g) Guarantees of credit: None.
(h) Service fees: None.
(i) Rental revenue: None.
(j) Derivatives financial instrument transactions: None.
(k) Sales of Non–Performing Loans Transactions: None.
(C) Major management salary information
For the years ended December 31, 2018 2017
Salary and other short-term employee benefit $ 142,217 114,312Retirement Benefit 1,826 1,760Total $ 144,043 116,072
8. PLEDGED ASSETS : Please refer to notes 6(I) and (J) for more details.
9. COMMITMENTS AND CONTINGENCIES
(A) Significantcommitmentsandcontingencieswereasfollows:
December 31, 2018 December 31, 2017
Marketable securities held for custody $ 14,045,346 13,357,412
Bills collected for others 47,768,037 51,172,708
Bills lent for others 28,686,169 27,951,849
Guarantees and letters of credit 27,192,811 25,310,283
Collaterals received 426 426
Trust liabilities 152,551,326 135,476,558
Travelers' check in custody for sale 59,725 66,423
Items held for custody 4,433,125 4,103,319
Registered government bonds for sale 65,842,800 68,651,600
Registered short-term bills for sale 1,471,796 1,323,800
Guarantee notes payable 26,069,360 27,915,700
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Ⅵ(B) Unrecognizedcontractualcommitments:
As of December 31, 2018 and 2017, major constructions in progress and purchases amounted to $1,095,465
and $559,663 respectively, of which $851,250 and $416,267 respectively, remained unpaid.
(C) The Bank’s trust department plans, manages, and operates trust services in accordance with the Banking Law and Trust Law. Special purpose funds are used to invest in market-able securities and the Bank also manages trust funds. The trust information as of De-cember31,2018and2017isasfollows:
Trust Balance Sheet
December 31, 2018 and 2017
Trust Assets December 31, 2018 December 31, 2017
Cash in Bank $ 3,469,268 2,697,388
Stocks 169,514 177,799
Funds 54,862,191 55,582,025
Bonds 233,392 -
Real estate 14,044,203 13,850,725
Securities custody 79,136,066 62,576,450
Other assets 636,692 592,171
Total trust assets $ 152,551,326 135,476,558
Trust Liabilities December 31, 2018 December 31, 2017
Payables $ 62 113
Securities held for custody 79,136,066 62,576,450
Trust capital 73,366,293 72,858,128
Reserves and accumulated loss (1,775,757 ) (1,933,370 )
Net income 1,824,662 1,975,237
Total trust liabilities $ 152,551,326 135,476,558
Trust Property Accounts
December 31, 2018 and 2017
Investment in December 31, 2018 December 31, 2017
Cash in bank $ 3,469,268 2,697,388
Stocks 169,514 177,799
Funds 54,862,191 55,582,025
Bonds 233,392 -
Real estate
Land 10,601,163 11,417,841
Buildings 49,612 51,154
Construction in progress 3,393,428 2,381,730
Securities in custody 79,136,066 62,576,450
Other assets 636,692 592,171
Total $ 152,551,326 135,476,558
Note: As of December 31, 2018 and 2017, the amounts above included OBU transaction on "foreign currency designated trust funds investment in foreign negotiable securities business" amounting to $945,302 and $748,020, respectively.
Taiwan Business Bank Annual Report 2018206
Trust Income Statement
For the years ended December 31, 2018 and 2017
Investment inFor the years ended December 31,
2018 2017Trust Revenue
Interest income $ 6,164 4,759Realized cpaital gain-fund - 21Realized capital gain-stock 2,520 1,686Cash dividend income of common stock 2,174,988 1,865,260Gains on property transaction 945,568 1,155,050Other revenue 220 202Sub-total 3,129,460 3,026,978
Trust ExpenseAdministrative expenses 54,540 68,913Postage and phone/fax expense 9 3Duties 36 -Realized capital loss-bonds 316 -Losses on property transaction 1,249,737 982,719Other expense 135 85Sub-total 1,304,773 1,051,720
Net income before tax 1,824,687 1,975,258Income tax expense (25 ) (21 )Net income after tax $ 1,824,662 1,975,237
(D) In 1996, the Bank's World Trade Center Branch was sued for handling a letter of credit export collection
from Chin Seen Industrial Co., which allegedly used a forged export document and failed to ship the goods
to the importer, the Internationale Compagnie de Commercialisation et d' Investissement SPRL (I.C.C.I.) of
the Republic of Zaire, suffered a loss thereon. In November 1998, I.C.C.I. initiated a case with the Court of
Commerce of Brussels in Belgium, requested the L/C opening bank (Banque Bruxelles Lambert, or BBL) and
the Bank to jointly pay compensation of US$7,830 thousands plus interest, losses, and expenses for the L/
C. On August 31, 2005, the Court of Commerce of Brussels rendered its judgment which the Bank has to
make compensation of US$7,674 thousands plus interest to I.C.C.I.. The Bank has engaged a local attorney
in Belgium to formally file an appeal. In February 2011, Court of Appeal in Brussels had made an intermediate
adjudication which I.C.C.I and the Bank are both responsible for the offense. Furthermore, on November
16, 2011, the judgment of the court indicated that the Bank should be responsible for 90% of the negligence
proportion. In terms of the judgment of the court of the second instance, the Bank has filed an appeal on
November 3, 2011. On February 6, 2013, the court overruled the Bank' s appeal and the Bank lost the case.
In October 2016, I.C.C.I initiated a case with the Court of Frankfurt in Germany, applied for seizing the bank
account in Germany, and the bank lodged guaranty money of EUR $13,200 thousands to the court to rescind
the order for attachment. In July 2017, I.C.C.I applied for compulsory execution to the guaranty money, the
court has transferred the guaranty money to I.C.C.I. The Bank filed the lawsuit objecting to the debt but the
court of Frankfurt in Germany overruled the appeal in November 2018. The Bank is filing an appeal. As of
December 31, 2018, the Bank has accrued the compensation of $183,923 and EUR$8,000 thousands.
(E) Among the private equity fund contracts signed by the Bank, the maximum amount of committed investment that has not been invested is
December 31, 2018 December 31, 2017
New Taiwan Dollar $ 50,000 -
Note: The committed investment amount that has been promised does not include the portion of the notified transaction that has not yet been delivered.
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Ⅵ10. LOSSES DUE TO MAJOR DISASTERS: None.
11. SUBSEQUENT EVENTS: None.
12. OTHER
(A) Employeebenefits,depreciation,depletionandamortizationexpenseswereasfollows:
Nature
For the years ended December 31,
2018 2017
Operating expense Operating expense
Employee benefit expenses
Salary expense $ 6,343,853 5,902,631
Labor and health insurance expenses 446,028 424,366
Pension expenses 337,231 330,636
Directors remuneration 68,049 46,091
Other employee benefit 1,130,433 756,960
Total employee benefit 8,325,594 7,460,684
Depreciation expenses 373,990 337,771
Amortization expenses 98,793 79,989
Total $ 8,798,377 7,878,444
The employee numbers amounted to 5,251 and 5,098 people as of December 31, 2018 and 2017,
respectively. The number of directors who are not employees amounted to 12 people.
The average employee benefit expense of the Bank and its subsidiaries for the years ended December 31,
2018 and 2017 were $1,576 and $1,458, respectively.
The average salary expense of the Bank and its subsidiaries for the years ended December 31, 2018 and
2017 were $1,211 and $1,161, respectively.
(B) Profitability
Unit: %
Item December 31, 2018 December 31, 2017
The ratio of return on assetsBefore income tax 0.57 0.38
After income tax 0.48 0.33
The ratio of return on equityBefore income tax 11.45 8.00
After income tax 9.51 6.87
Net income ratio 33.18 24.16
Note 1 The ratio of return on assets = Income before (after) income tax expense÷ average assets.Note 2 The ratio of return on equity = Income before (after) income tax expense ÷ average equity.Note 3 Net income ratio = Gain or loss after income tax expense ÷ Net revenue.Note 4 Income before (after) income tax expense refers to income accumulated from January of the current year to the current
period.
13. OTHER DISCLOSURES
(A) Informationonsignificanttransactions:
(a) Cumulative purchase or sale of the same investee's capital stock up to $300,000 or 10% of paid-in capital:
None.
(b) Acquisition of real estate amounting to over $300,000 or 10% of paid-in capital: None.
Taiwan Business Bank Annual Report 2018208
(c) Disposition of real estate amounting to over $300,000 or 10% of paid-in capital: None.
(d) Discount of commissions and handling fees with related parties amounting to over $5,000: None.
(e) Receivables from related parties amounting to over $300,000 or 10% of paid-in capital: None.
(f) Sale of non-performing loans information: None.
(g) Types of securitization goods and related information approved by financial assets securitization rules or
real estate securitization rules: None.
(h) Business relationship and significant transactions with the subsidiaries:
No Trader Counterparty Relationship
Transaction status for the year ended December 31, 2018
Account Amount Terms
Percentage accounted for
consolidated net revenue or total
assets
0 TAIWAN BUSINESS BANK, LTD.
Taiwan Business Bank Insurance Agency Co., Ltd.
1 Account Receivables
64,344 No difference with non-related parties
-%
0 TAIWAN BUSINESS BANK, LTD.
Taiwan Business Bank Insurance Agency Co., Ltd.
1 Deposits and remittances
448,863 No difference with non-related parties
0.03%
0 TAIWAN BUSINESS BANK, LTD.
Taiwan Business Bank Insurance Agency Co., Ltd.
1 Service revenue
1,208,460 No difference with non-related parties
5.25%
0 TAIWAN BUSINESS BANK, LTD.
Taiwan Business Bank Insurance Agency Co., Ltd.
1 Other net non- interest income
2,203 No difference with non-related parties
0.01%
0 TAIWAN BUSINESS BANK, LTD.
Taiwan Business Bank Property Insurance Agency Co., Ltd.
1 Account Receivables
4,137 No difference with non-related parties
-%
0 TAIWAN BUSINESS BANK, LTD.
Taiwan Business Bank Property Insurance Agency Co., Ltd.
1 Deposits and remittances
15,337 No difference with non-related parties
-%
0 TAIWAN BUSINESS BANK, LTD.
Taiwan Business Bank Property Insurance Agency Co., Ltd.
1 Service revenue
34,101 No difference with non-related parties
0.15%
0 TAIWAN BUSINESS BANK, LTD.
Taiwan Business Bank Property Insurance Agency Co., Ltd.
1 Other net non-interest income
245 No difference with non-related parties
-%
0 TAIWAN BUSINESS BANK, LTD.
TBB International Leasing Co., Ltd.
1 Deposits and remittances
153,548 No difference with non-related parties
0.01%
0 TAIWAN BUSINESS BANK, LTD.
TBB International Leasing Co., Ltd.
1 Other net non-interest income
691 No difference with non-related parties
-%
0 TAIWAN BUSINESS BANK, LTD.
TBB Venture Capital Co., Ltd.
1 Deposits and remittances
195,962 No difference with non-related parties
0.01%
0 TAIWAN BUSINESS BANK, LTD.
TBB Venture Capital Co., Ltd.
1 Other net non-interest income
59 No difference with non-related parties
-%
Note: 1. The meaning of the number is as follows.(1) Zero stands for the parent company(2) Subsidiaries are coded from No 1 per respective companies.
2. There are three kinds of relationships with counterparty:(1) Parent company to subsidiary (2) Subsidiary to parent company(3) Between subsidiaries
(i) Other significant transactions that might have influence over the decision making process of the financial
statements users: None.
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Ⅵ(B) Informationofinvestees:
(a) The following is the information on investees (excluding investment in mainland China):
(Unit : In Thousands of New Taiwan Dollars;thousand shares)
Name of investee LocationMain
business scope
Shareholding ratio
Book valueInvestment gain (loss)
The cross holding of the Bank and its related parties
NoteNumber
of shares
Number of prefomat shares
TotalNumber of
sharesShareholding
ratioTaiwan Business Bank Insurance Agency Co., Ltd.
2F, No.158,Songjiang Rd Taipei City
Agent of personal insurance
100.00% 394,480 384,479 500 - 500 100.00% Already written-off when preparing the consolidated financial statements
Taiwan Business Bank Property Insurance Agency Co., Ltd
2F, No.158,Songjiang Rd Taipei City
Agent of property insurance
100.00% 15,421 9,422 300 - 300 100.00% "
TBBInternational Leasing Co., Ltd
5F., No.151,Sec. 4, Nanjing E. Rd.,Taipei City
Leasing business
100.00% 1,406,353 22,722 150,000 - 150,000 100.00% "
TBB (Cambodia) Microfinance Institution Plc
Cambodia SMEs and personal finance business
100.00% 571,486 (28,932) 20 - 20 100.00%
TBB Venture Capital Co., Ltd.
11F, No.30,Ta-Chang Street, Taipei, Taiwan, R.O.C.
Investing business
100.00% 296,761 (3,239) 30,000 - 30,000 100.00% "
(b) Loans to others:
(Unit : In Thousands of New Taiwan Dollars)
NO.Loanfrom
Loanto
MainAccount
Relatedparty
MaximumAmount
Endingbalance
Actualamount
Range ofintrest rate
Mainloan
nature
Dealingamount
The neccessary reason for short-term
loans
Allowance forbad debts
Guarantee Limited amount
forindividual
object
Total limited amountfor loanName Value
1 TaiwanBusinessBankInternationalLeasing Co.,Ltd.
Shanghal-BuynowElectronic-InformationCo., Ltd.
Entrustedloan
No 63,204 53,666 80,442 6.5%~6.8% 1 80,442 None 471 land, building1~4F,undergroundparking lotB1~B2
853,579 351,588 1,406,353
2 TBBInternationalLeasing Co.,Ltd.
ChaoYang-International Co., Ltd.
Financialreceivables
No 10,000 4,230 10,000 5.5%~7% 2 - To the lenderfor buyinggoods
56 None - 351,588 1,406,353
2 TBBInternational Leasing Co., Ltd.
Argosy seafoods corporation
Financial receivables
No 30,000 25,112 30,000 5.7%~7.3% 2 - To the lender for buying goods
336 None - 351,588 1,406,353
Note1: The meaning of the number is as follows.(1) Zero stands for issuer.(2) Investee companies are coded from NO 1 per respective companies.
Note2: The quota / amount is still valid up to now.Note3: The meaning of the loan nature is as follows.
(1) 1 stands for business dealing.(2) 2 stands for the necessary for short-term loans.
Note4: Limited amount for individual object:25% net value of parent company. Note5: Total limited amount for loan: 100% net value of parent company.
Taiwan Business Bank Annual Report 2018210
(c) Endorsements and guarantee for others: None
(d) Acquisition of securities:
(Unit : In Thousands of New Taiwan Dollars)
Company acquired
Type and name of the
security
Relationship with the security issuer
Account
At the end of the period
NoteNumber of shares
Carrying amount
Share proportion
(Note 2)
Market price(Note 1)
Taiwan Business Bank InternationalLeasing Co., Ltd.
Not public The investee under the equity method of the subsidiary Taiwan Business Bank International Leasing Co., Ltd.
Investment under equity method
- 848,843 100.00% 848,843 The transaction has been written off whenpreparing theconsolidated financialstatements.
Note 1: Listed companies apply the market price to calculate the net amount of the shares possessed. Not listed companies and companies that are not in the over-the-counter market apply the share proportion to calculate the net amount of the shares possessed. The net amount of preferred stock is calculated based on the settlement.
Note 2: The share proportion of the preferred stock is calculated based on the shares the Company possessed divided by the shares issued.
(e) Accumulative purchases or sales of the same investee companies amounting to over $300,000 or 10% of
paid-in capital: None.
(f) Acquisition of real estate amounting to over $300,000 or 10% of paid-in capital: None.
(g) Disposition of real estate amounting to over $300,000 or 10% of paid-in capital: None.
(h) Discount of commissions and handling fees with related parties amounting to over $5,000: None.
(i) Receivables from related parties amounting to over $300,000 or 10% of paid-in capital: None.
(j) Transactions of financial derivatives: None.
(k) Sale of non-performing loans information: None.
(l) Types of securitization goods and related information approved by financial assets securitization rules or
real estate securitization rules: None.
(m) Other significant transactions that might have influence over the decision making process of the financial
statements users: None.
(C) InformationoninvestmentinmainlandChina:
(a) Name and major business item of the investee in China:
(Unit : In Thousands of New Taiwan Dollars)
Name of investee
company inMainland
China
Major business
Paid-in capitalInvestment
method
Accumulated amount transferred
from Taiwan, beginning of the
period
Investment transferred out or recovered
Accumulated amount transferred
from Taiwan,end of the period
The current profit or loss
ofthe investee
Shares directlyor indirectly possessed
by the Bank
Profit or loss recognized
Ending book value of
investment
Investment profit
transferred inTransferred out Recovered
Taiwan Business Bank , Ltd. Shanghai branch
Banking business
3,910,537(CNY800 million)
(Operating capital)
(e) 3,910,537(CNY800 million))
- - 3,910,537(CNY800 million)
- Shanghai branch of the Bank, not an investee company
- 4,107,869 None
Taiwan Business Bank , Ltd. Wuhan branch
Banking business
3,942,815(CNY800 million)
(Operating capital)
(e) 3,942,815(CNY800 million)
- - 3,942,815(CNY800 million)
- Wuhan branch of the Bank, not an investee company
- 3,904,453 "
Taiwan Business Bank International Leasing Co., Ltd.
Leasing business
838,305(CNY170 million)
(Operating capital)
(d) 838,305(CNY170 million)
- - 838,305(CNY170 million)
37,195 100% 37,195 848,843 "
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Ⅵ
Investment method is divided into five categories and are listed as follows:(a) Invest in a Chinese Company through remittance from the third party.(b) Establish a company in the third party and use the company to invest in a Chinese Company.(c) Reinvest in the existing company in the third party and use the company to invest in a Chinese company.(d) Directly invest in a Chinese company.(e) Other: establish a foreign branch.
(b) Limit of investment in China:
(Unit : In Thousands of New Taiwan Dollars)
Name of Company
Accumulated outflow of investment from Taiwan to Mainland China, end of the
period
Investment amount authorized by Investment
Commision, MOFA
Upper limit on investment authorized by Investment
Commission, MOEA
Taiwan Business Bank Co., Ltd.(Note)
8,691,657(CNY 1,770 million)
8,691,657(CNY 1,770 million)
50,911,811
Note: The investment amount in China of the subsidiary TBB International Leasing Co, Ltd is included.
14. SEGMENT INFORMATION
(A) General information
The chief operating decision maker is the general manager of the Bank and its subsidiaries who is in charge
of all major projects approval, budget review and performance measurement. In order to express operating
activities legitimately, the reportable segments of the Bank are Bank segment, Securities department,
Trust department and Others. Securities department, Trust department and Other segments don't meet the
quantitive thresholds, therefore regarded as the same reporting department. The main operations of the
banking sector are engaged in the exchange of foreign currency in connection with exports and imports and
the securities investment business. The major operating activities of securities department are securities
brokerage, financing, ancillary business of futures trading and providing clients a platform for securities
investment. The trust department mainly provides customers relevant financial services, including securities
review and approval, custodian bank service, new type trust business and specific trust funds investing in
domestic or foreign securities. Other segments include all the business of subsidiaries, which main operations
are insurance agents, property insurance agents, leasing, financing, and venture capital . The profit or loss of
the operating segments of the Bank and its subsidiaries is measured by net income before tax. The reported
amount is consistent with the data which was provided to the chief operating decision maker in order to use it
as the base of resource allocation and performance measurement.
(B) Segment information
For the year ended December 31, 2018 Bank Department
Securities, Trust and others
Interdepartment adjustment Total segment
Net interest income $ 16,855,464 339,556 2,856 17,197,876
Non-interest income 5,071,765 1,147,812 (390,506 ) 5,829,071
Net revenue 21,927,229 1,487,368 (387,650 ) 23,026,947
Bad debt expenses (750,799 ) (43,335 ) - (794,134 )
Operating expense (12,467,785 ) (569,809 ) 3,198 (13,034,396 )
Net income before tax $ 8,708,645 874,224 (384,452 ) 9,198,417
Total assets $ 1,603,542,532 19,153,231 (3,655,308 ) 1,619,040,455
Total liabilities $ 1,521,320,594 13,837,649 (970,807 ) 1,534,187,436
Taiwan Business Bank Annual Report 2018212
For the year ended December 31, 2017 Bank Department
Securities, Trust and others
Inter-department adjustment Total segment
Net interest income $ 15,082,655 342,767 - 15,425,422
Non-interest income 4,777,719 1,038,831 (379,277 ) 5,437,273
Net revenue 19,860,374 1,381,598 (379,277 ) 20,862,695
Bad debt expenses (3,003,316 ) (25,395 ) - (3,028,711 )
Operating expense (11,455,997 ) (510,025 ) 3,139 (11,962,883 )
Net income before tax $ 5,401,061 846,178 (376,138 ) 5,871,101
Total assets $ 1,565,867,091 21,296,209 (3,069,329 ) 1,584,093,971
Total liabilities $ 1,492,676,963 16,322,727 (723,392 ) 1,508,276,298
(C) Geographic information:
The Bank and its subsidiaries, based on the geographic location of foreign operating segments, to disclose
the information as below:
Net income before tax:
For the years ended December 31
Area 2018 2017
Taiwan $ 7,987,404 4,846,835
USA 236,337 143,868
Hong Kong 438,243 281,177
Australia 387,159 214,760
China 259,700 421,876
Cambodia (28,914 ) (9,233 )
Japan (81,512 ) (28,182 )
Total $ 9,198,417 5,871,101
Non-current assets:
Area December 31, 2018 December 31, 2017
Taiwan $ 19,639,128 17,978,580
USA 40,663 32,812
Hong Kong 27,678 27,236
Australia 15,952 9,630
China 40,328 38,658
Cambodia 38,793 38,436
Japan 54,576 50,712
Total $ 19,857,118 18,176,064
(D) Significantclientinformation:
No single customer represents 10% or more of the Bank and its subsidiaries' operating revenue. Therefore,
no disclosure of major customer information is required.
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Ⅵ7. Independent Auditors' Report for 2018 Individual Financial Statements
Independent Auditors' ReportTo the Board of Directors of Taiwan Business Bank, Ltd.:
Opinion
We have audited the financial statements of Taiwan Business Bank, Ltd. ("the Bank" ) which comprise the balance sheets as of December 31, 2018 and 2017, the statements of comprehensive income, changes in equity and cash flows for the years then ended, and 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, 2018 and 2017, 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 Held Banks, and the Regulations Governing the Preparation of Financial Reports by Securities Firms.
Basis for Opinion
We conducted our audit in accordance with the Regulations Governing Auditing and Attestation of Financial Statements of Financial Industry by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditor' s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Bank in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China ("the Code" ), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of 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 of the current period. 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.
1. The assessment of loans impairment
Please refer to Note(4) (E) "Financial Instruments" for related accounting policy, Note 5 (A) for accounting assumptions and estimates, and Note 6 (F) "Discount and loans– net" and Note 6 (AP) "Financial Risk Information" for details of loans impairment, respectively.
The management of the Bank assess its loans to determine the impairment in accordance with IFRS 9. For the credit impaired cases which impairment has occurred since initial recognition, the measurement is based on expected future cash flow. The amount of expected credit loss (ECL) for non-credit impaired cases is evaluated by identifying whether the credit risk has significantly increased at the reporting date. If the credit risk of non-credit impaired cases has not significantly increased, the 12-month expected credit loss should be adopted, if the credit risk of non-credit impaired cases has significantly increased, the lifetime credit loss evaluation should be adopted. Except for the methods mentioned above, the management of the Bank should inspect whether the amount of impairment provision is in compliance with the minimum level required by the authority. Both the future cash flows of credit impaired cases and the main parameters which are used in calculated the non-credit cases, such as probability of default (PD), loss given default (LGD), forward- looking factors, and the judgments of whether the credit risk has significantly increased, all involved
Taiwan Business Bank Annual Report 2018214
significant judgments and estimations. The movement of related parameters will have significant impact on the assessment of loans impairment. Therefore, the assessment on the impairment of loans has been identified as a key audit matters in our audit.
How the matter was addressed in our audit
Our principal audit procedures included: understanding the methodology used by the management to assess the impairment of loans, and performing the relevant control procedures. For the credit impaired assessment, we conducted sampling tests to evaluate the use of the original effective interest rate, the appropriateness of the recoverable amount of expected future cash flows and value of collateral. For non-credit impaired assessment, we assessed the impairment model adopted by the management and reviewed the appropriated of the calculation of the impairment parameters and verified the completeness of the loans portfolio via sampling. Meanwhile, we assessed the impaired amounts recognized by the management were in compliance with the related regulations issued by authority.
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 Held Banks, and the 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.
Auditors' Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the 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.
As part of an audit in accordance with 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 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 internal control.
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Ⅵ3. 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 the investment in other entities accounted for using the equity method to express an opinion on this financial statements. We are responsible for the direction, sueprvision 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 detemined those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partners on the audit resulting in this independent auditors' audit report are CHUNG, TAN TAN and LEE, FENG HUI.
KPMG
Taipei, Taiwan (Republic of China) March 26, 2019
Taiwan Business Bank Annual Report 2018216
8. 2018 Individual Financial Statements Audited and Certified by Accountants
(English Translation of Financial Statements Originally Issued in Chinese)
TAIWAN BUSINESS BANK, LTD.Balance Sheets
December 31, 2018 and 2017
(expressed in thousands of New Taiwan dollars)
Assets
December 31, 2018 December 31, 2017
Amount % Amount %
11000 Cash and cash equivalents $ 45,706,331 3 51,066,527 4
11500 Due from the Central Bank and call loans to banks
86,980,274 5 101,342,356 6
12000 Financial assets at fair value through profit or loss
6,934,604 - 1,061,789 -
12100 Financial assets at fair value through other comprehensive income
73,164,201 5 - -
12200 Investment in debt instruments at amortized cost 261,470,496 16 - -
12500 Securities purchased under resell agreements 2,386,518 - 3,998,104 -
13000 Receivables-net 43,698,543 3 22,353,991 2
13200 Current Income tax assets 64,842 - 129,435 -
13500 Discounts and loans-net 1,074,627,748 67 1,111,559,969 70
14000 Available-for-sale financial assets-net - - 66,233,836 4
14500 Held-to-maturity financial assets-net - - 202,967,083 13
15000 Investments measured by equity method -net 2,684,501 - 2,345,937 -
15500 Other financial assets-net 17,971 - 2,159,191 -
18500 Premises and equipment-net 14,298,525 1 14,216,773 1
19000 Intangible assets-net 284,944 - 273,608 -
19300 Deferred income tax assets-net 1,623,371 - 1,203,779 -
19500 Other assets-net 5,222,172 - 3,639,872 -
Total assets $ 1,619,165,041 100 1,584,552,250 100
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Ⅵ
Liabilities and equityDecember 31, 2018 December 31, 2017
Amount % Amount %
Liabilities:
21000 Deposits from the Central Bank and other banks $ 91,314,543 6 93,529,770 6
22000 Financial liabilities at fair value through profit or loss
9,339,273 1 3,732,481 -
22500 Securities sold under repurchase agreements 1,657,706 - 1,105,596 -
23000 Payables 58,620,227 4 36,591,457 2
23200 Current income tax liabilities 952,293 - - -
23500 Deposits and remittances 1,311,937,545 81 1,316,671,351 83
24000 Financial debentures 47,450,000 3 41,000,000 3
25500 Other financial liabilities 7,507,715 - 10,120,545 1
25600 Provision for liabilities 3,565,727 - 3,515,351 -
29300 Deferred income tax liabilities 880,738 - 881,318 -
29500 Other liabilities 1,086,255 - 1,586,708 -
Total liabilities 1,534,312,022 95 1,508,734,577 95
31101 Common stock 63,938,802 4 61,479,617 4
Retained earnings:
32001 Legal reserve 10,020,013 1 8,569,864 1
32003 Special reserve 516,555 - 1,240,588 -
32005 Undistributed earnings (accumulated deficit) 7,470,985 - 4,833,832 -
32500 Other items in equity 2,906,664 - (306,228 ) -
Total equity 84,853,019 5 75,817,673 5
Total liabilities and equity $ 1,619,165,041 100 1,584,552,250 100
Taiwan Business Bank Annual Report 2018218
(English Translation of Financial Statements Originally Issued in Chinese)
TAIWAN BUSINESS BANK, LTD.Statements of Comprehensive Income
For the years ended December 31, 2018 and 2017
(expressed in thousands of New Taiwan dollars, except earnings per share)
For the year ended December 31,
Percent Change
%
2018 2017
Amount % Amount %
41000 Interest revenue $ 28,156,855 124 24,677,007 120 14
51000 Less:Total interest expenses (11,082,469 ) (49 ) (9,357,801 ) (45 ) 18
Net interest income 17,074,386 75 15,319,206 75 11
Non-interest income
49100 Service fee and commision income 3,012,942 13 3,139,092 15 (4 )
49200 Gains on financial assets or liabilities at fair value through profit or loss - net
1,029,180 5 1,036,512 5 (1 )
49300 Realized gain on available-for-sale financial assets - - 109,753 - (100 )
49310 Realized gain on financial assets measured at other comprehensive income
374,849 2 - - -
49450 Gain on disposal of financial assets measured at amortized cost
130 - - - -
49600 Foreign exchange gain 478,887 2 376,072 2 27
49700 (Impairment loss on asssts) reversal of impairment loss on aseets
(28,297 ) - - - -
49750 Share of profit of associates and joint ventures accounted for using equity method
384,452 2 376,138 2 2
49800 Net other non-interest income 99,343 - (118,579 ) (1 ) 184
49805 Net profit on financial assets measured at cost - - 141,240 1 (100 )
49831 Securities brokering income-net 221,110 1 203,819 1 8
Net revenue 22,646,982 100 20,583,253 100 10
58200 Bad debt expenses, commitment and guarantee liability provision
(745,770 ) (3 ) (3,009,551 ) (15 ) (75 )
Operating expenses
58500 Employee benefits expenses (8,176,618 ) (36 ) (7,351,794 ) (36 ) 11
59000 Depreciation and amortization expense (468,765 ) (2 ) (413,696 ) (2 ) 13
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ⅥFor the year ended December 31,
Percent Change
%
2018 2017
Amount % Amount %
59500 Other general and administrative expense (4,169,000 ) (19 ) (4,020,203 ) (19 ) 4
Total operating expenses (12,814,383 ) (57 ) (11,785,693 ) (57 ) 9
61001 Income from continuing operations before income tax 9,086,829 40 5,788,009 28 57
61003 Income tax expenses (1,446,287 ) (6 ) (748,085 ) (4 ) (93 )
Net income 7,640,542 34 5,039,924 24 52
65000 Other comprehensive income:
65200 Items that will not to be reclassified into profit or loss
65201 Remeasurements of defined benefit plans (174,907 ) (1 ) (249,419 ) (1 ) 30
65204 Revaluation gain from investments in equity instruments measured at fair value through other comprehensive income
226,956 1 - - -
65220 Income tax related to items that will not to be reclassified into profit or loss
71,895 - 42,401 - 70
Total items that will not to be reclassified into profit or loss
123,944 - (207,018 ) (1 ) 160
65300 Items that are or may be reclassified subsequently to profit or loss
65301 Difference of foreign exchange in translating financial statements of foreign operating units
335,075 1 (980,585 ) (5 ) 134
65302 Unrealized gains on available-for-sale financial assets- net
- - 1,540,838 8 (100 )
65309 Revaluation gains on investment in debt instrument measured at fair value through other comprehensive income
156,183 1 - - -
65310 (Impairment loss on) reversal of investments in debt instruments measured at fair value through other comprehensive income
8,363 - - - -
65320 Income tax related to items that are or may be reclassified to profit or loss
(40,277 ) - 163,001 1 (125 )
Total items that are or may be reclassified subsequently to profit or loss
459,344 2 723,254 4 (36 )
65000 Other comprehensive income 583,288 2 516,236 3 13
Total comprehensive income $ 8,223,830 36 5,556,160 27 48
Earnings per share (in NT dollar)
Basic earnings per share (in NT dollar) $ 1.19 0.79
Diluted earnings per share (in NT dollar) $ 1.18 0.78
Taiwan Business Bank Annual Report 2018220
(English Translation of Financial Statements Originally Issued in Chinese)
TAIWAN BUSINESS BANK, LTD.Statements of Change in Equity
For the years ended December 31, 2018 and 2017
(expressed in thousands of New Taiwan dollars)
Retained earnings Other item in equity
Total
Difference of foreign exchange in translating financial
statements of foreign operating
units
Unrealized gains from financial
assets measuredat fair value
through other comprehensive
income
Unrealized gains and losses on
available for sale financial assets Common stock Legal reserve Special reserve
Undistributed earnings Total
Balance ─ January 1, 2017 $ 59,688,949 7,088,772 185,128 4,936,973 12,210,873 (19,637 ) - (1,009,845 ) 70,870,340
Net Income for the year ended December 31, 2017
- - - 5,039,924 5,039,924 - - - 5,039,924
Other comprehensive income (losses) for the year ended December 31, 2017
- - - (207,018 ) (207,018 ) (815,703 ) - 1,538,957 516,236
Total comprehensive income for the year ended December 31, 2017
- - - 4,832,906 4,832,906 (815,703 ) - 1,538,957 5,556,160
Earnings appropriation and distribution
Legal reserve appropriated - 1,481,092 - (1,481,092 ) - - - - -
Special reserve appropriated - - 1,055,460 (1,055,460 ) - - - - -
Common cash dividend - - - (608,827 ) (608,827 ) - - - (608,827 )
Common stock dividend 1,790,668 - - (1,790,668 ) (1,790,668 ) - - - -
Balance ─December 31, 2017 61,479,617 8,569,864 1,240,588 4,833,832 14,644,284 (835,340 ) - 529,112 75,817,673
Effects of retrospective application of new standards
- - - (98,187 ) (98,187 ) - 3,086,469 (529,112 ) 2,459,170
Balance at January 1, 2018 after adjustments
61,479,617 8,569,864 1,240,588 4,735,645 14,546,097 (835,340 ) 3,086,469 - 78,276,843
Net Income for the year ended December 31, 2018
- - - 7,640,542 7,640,542 - - - 7,640,542
Other comprehensive income (losses) for the year ended December 31, 2018
- - - (103,012 ) (103,012 ) 294,218 392,082 - 583,288
Total comprehensive income for the year ended December 31, 2018
- - - 7,537,530 7,537,530 294,218 392,082 - 8,223,830
Earnings appropriation and distribution
Legal reserve appropriated - 1,450,149 - (1,450,149 ) - - - - -
Reversaled of special reserve - - (724,033 ) 724,033 - - - - -
Common cash dividend - - - (1,647,654 ) (1,647,654 ) - - - (1,647,654 )
Common stock dividend 2,459,185 - - (2,459,185 ) (2,459,185 ) - - - -
Disposal of investments in equity instruments designated at fair value through other comprehensive income
- - - 30,765 30,765 - (30,765 ) - -
Balance ─December 31, 2018 $ 63,938,802 10,020,013 516,555 7,470,985 18,007,553 (541,122 ) 3,447,786 - 84,853,019
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Ⅵ(English Translation of Financial Statements Originally Issued in Chinese)
TAIWAN BUSINESS BANK, LTD.Statements of Cash Flows
For the years ended December 31, 2018 and 2017
(expressed in thousands of New Taiwan dollars)
For the years ended December 31,
2018 2017
Cash flows from operating activities:
Net income before tax $ 9,086,829 5,788,009
Adjustments:
Income and expenses items:
Depreciation expenses 370,604 334,299
Amortization expenses 98,161 79,397
Provision of bad debt expenses 660,423 3,000,265
Net loss on financial assets and liabilities at fair value through profit or loss
179,390 120,502
Interest expenses 11,082,469 9,357,801
Interest revenues (28,156,855 ) (24,677,007 )
Dividend revenues 355,800 143,672
Net change of provision for guarantee liabilities 58,710 9,286
Net change of other miscellaneous provision for liabilities 26,637 109,273
Share of profit of associates and joint ventuers accounted for using equity method
(384,452 ) (376,138 )
Losses on disposal and retirement of premises and equipment 1,155 1,972
Impairment loss on financial assets 28,297 -
Other - (317,484 )
Subtotal of income and expense items (15,679,661 ) (12,214,162 )
Change in Operating Assets and Liabilities:
Net Changes in Operating Assets:
Decrease (increase) in due from the Central Bank and call loans to banks
14,352,507 (10,723,869 )
(Increase) decrease in financial assets at fair value through profit or loss
(5,812,905 ) 284,263
Decrease (increase) in securities purchased under resell agreements 1,611,586 (3,378,903 )
(Increase) decrease in receivables (20,996,379 ) 487,561
Decrease (increase) in discounts and loans 36,317,199 (69,501,470 )
Decrease (increase) in other financial assets 102,084 (59,822 )
Increase in other assets (727,419 ) (926,327 )
Net change in operating assets 24,846,673 (83,818,567 )
Net Change in Operating Liabilities:
(Decrease) increase in deposits from the Central Bank and other banks
(2,215,227 ) 17,711,913
Taiwan Business Bank Annual Report 2018222
For the years ended December 31,
2018 2017
Increase in financial liabilities at fair value through profit or loss 5,367,493 3,495,360
Decrease in provisions for lawsuit - (466,884 )
Increase (decrease) in securities sold under repurchase agreements 552,110 (1,653,309 )
Increase in payables 21,240,603 1,034,371
(Decrease) increase in deposits and remittances (4,733,806 ) 62,447,121
Decrease in other financial liabilities (2,603,441 ) (690,408 )
(Decrease) increase in provision for employee benefits (257,144 ) 39,039
Net Change in Operating Liabilities 17,350,588 81,917,203
Net Change in Operating Assets and Liabilities 42,197,261 (1,901,364 )
Sum of adjustments 26,517,600 (14,115,526 )
Cash provided by (used in) operating activities 35,604,429 (8,327,517 )
Interest collected 27,816,690 24,709,329
Interest paid (10,601,963 ) (9,160,923 )
Income tax paid (510,148 ) (716,706 )
Net Cash Flow Provided By Operating Activities 52,309,008 6,504,183
Cash Flows from Investing Activities:
Purchase of financial assets measured at fair value through other comprehensive income
(4,153,866 ) -
Purchase of investment in debt instruments at amortized cost (56,422,615 ) -
Disposal of available-for-sale financial assets - 8,635,810
Purchase of hold-to-maturity financial assets - (10,443,824 )
Acquisition of investment under equity method (300,000 ) (308,600 )
Purchase of premises and equipment (446,775 ) (463,503 )
Disposal of premises and equipment 195 66
(Increase) decrease in guarantee deposits paid (529,738 ) 314,791
Purchase of intangible assets (109,329 ) (146,342 )
Net Cash Flows Used in Investing Activities (61,962,128 ) (2,411,602 )
Cash Flows from Financing Activities:
Issuance of financial debentures 6,450,000 5,300,000
Redemption of financial debentures - (7,050,000 )
Increase in guarantee deposits received 51,804 166,122
Decrease in lease payable (9,389 ) (8,192 )
Decrease in other liabilities (552,257 ) (21,858 )
Cash dividends (1,647,654 ) (608,827 )
Net Cash Provided by (Used in) Financing Activities 4,292,504 (2,222,755 )
Foreign exchange effect 420 (31,798 )
Net (decrease) increase in cash and cash equivalents (5,360,196 ) 1,838,028
Cash and cash equivalents, at the beginning of the period 51,066,527 49,228,499
Cash and cash equivalents, at the end of the period $ 45,706,331 51,066,527
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ⅥTaiwan Business Bank, Ltd.
Chairman: Bor-Yi Huang
President: Chien-An Shih
SVP&GM,
Accounting Dept.: Yu-Chuan Chou
9. Financial Difficulties Confronted by the Bank or Its Subsidiaries and the Related Impacts: None.
www.tbb.com.tw
臺灣中小企業銀行
一○七年年報
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中 華 民 國 一 ○ 七 年 年 報
2018Taiwan Stock Exchange Market Observation Post System:
http://mops.twse.com.tw
TBB’s Annual Report is available at:https://www.tbb.com.tw
Published in March 2019
Notice to readers
If there is any discrepancy between the English version and Chinese version, the Chinese
version shall prevail.
Stock Code:2834